<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 22, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
DOBSON/SYGNET COMMUNICATIONS COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
OKLAHOMA 4812 73-1110531
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
--------------------------
<TABLE>
<S> <C>
BRUCE R. KNOOIHUIZEN
13439 NORTH BROADWAY EXTENSION 13439 NORTH BROADWAY EXTENSION
SUITE 200 SUITE 200
OKLAHOMA CITY, OKLAHOMA 73114 OKLAHOMA CITY, OKLAHOMA 73114
(405) 391-8500 (405) 391-8500
(Address, including Zip Code, and telephone (Name, address, including Zip Code, and
number, including area code, of registrant's telephone number, including area code, of agent
principal executive offices) for service)
</TABLE>
------------------------
COPIES TO:
THEODORE M. ELAM, ESQ.
MCAFEE & TAFT A PROFESSIONAL CORPORATION
TENTH FLOOR, TWO LEADERSHIP SQUARE
211 NORTH ROBINSON
OKLAHOMA CITY, OKLAHOMA 73102
(405) 235-9621
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement under the earlier effective registration statement for
the same offering. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
12 1/4% Senior Notes due 2008.................... $200,000,000 100% $200,000,000 $55,600(1)
</TABLE>
(1) Estimated solely for purposes of computing the registration fee in
accordance with Rule 457(f)(2).
--------------------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8 of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8, may
determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 22, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PRELIMINARY PROSPECTUS
OFFER TO EXCHANGE
ALL OUTSTANDING 12 1/4%
SENIOR NOTES DUE 2008
($200,000,000 AGGREGATE PRINCIPAL
AMOUNT OUTSTANDING)
FOR
12 1/4% SENIOR NOTES DUE 2008 OF
DOBSON/SYGNET COMMUNICATIONS COMPANY
TERMS OF EXCHANGE OFFER
- Expires 5:00 p.m., New York City time, , 1999, unless extended
- Not subject to any condition other than that the Exchange Offer not
violate applicable law or any applicable interpretation of the Staff of
the Securities and Exchange Commission
- All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged
- Tenders of outstanding notes may be withdrawn any time prior to 5:00 p.m.
on the
business day prior to expiration of the Exchange Offer
- The exchange of notes will not be a taxable exchange for the U.S. federal
income tax purposes
- We will not receive any proceeds from the Exchange Offer
- The terms of the notes to be issued are substantially identical to the
outstanding notes, except for certain transfer restrictions and
registration rights relating to the outstanding notes
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN MATTERS THAT
SHOULD BE CONSIDERED BY INVESTORS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES TO BE DISTRIBUTED IN THE
EXCHANGE OFFER, NOR HAVE ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Certain Terms.............................................................................................. iii
Summary.................................................................................................... 1
Risk Factors............................................................................................... 13
The Exchange Offer......................................................................................... 21
Selected Consolidated Financial and Other Data............................................................. 29
Pro Forma Consolidated Financial Data...................................................................... 31
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 35
Business................................................................................................... 43
Management................................................................................................. 58
Certain Transactions....................................................................................... 60
Principal Shareholder...................................................................................... 60
Description of Certain Indebtedness........................................................................ 62
Description of the Notes................................................................................... 65
Certain U.S. Federal Tax Consequences to Non-United States Holders......................................... 98
Plan of Distribution....................................................................................... 100
Legal Matters.............................................................................................. 101
Experts.................................................................................................... 102
Where You Can Find More Information........................................................................ 102
Index to Financial Statements.............................................................................. F-1
</TABLE>
------------------------
No person is authorized in connection with the offering made hereby to give
any information or to make any representation not contained in this prospectus
or the accompanying Letter of Transmittal and, if given or made, such
information or representation not contained herein must not be relied upon as
having been authorized by us.
------------------------
The exchange offer is not being made to, nor will we accept surrenders for
exchange from, holders of our outstanding 12 1/4% senior notes due 2008 ("Old
Notes") in any jurisdiction in which this exchange offer or the acceptance
thereof would not be in compliance with the securities or "Blue Sky" laws of
such jurisdiction. Neither the delivery of this prospectus nor the accompanying
Letter of Transmittal, nor any exchange made hereunder shall under any
circumstances imply that the information herein is correct as of any date
subsequent to the date hereof.
------------------------
ii
<PAGE>
CERTAIN TERMS
For cellular regulatory purposes, the Federal Communications Commission
("FCC") has designated regions of the United States as either a Metropolitan
Statistical Area ("MSA") or a Rural Service Area ("RSA"). Interests in cellular
markets are commonly measured on the basis of the population of the MSA or RSA
served, with each person in the market area referred to as a "Pop." As used in
this offering memorandum, unless otherwise indicated, the term "Pops" means the
estimate of the population of an MSA or RSA, as derived from the KAGAN CELLULAR
TELEPHONE ATLAS FOR 1998 by Paul Kagan Associates, Inc. MSAs and RSAs are also
referred to as "markets." The term "CGSA" refers to the cellular geographic
service area. The term "system" means an FCC-licensed cellular telephone system.
The term "cell" refers to the service area of an individual transmitter located
in a cellular system. The term "footprint" refers to the total system coverage
area served under FCC license by a given licensee.
"Churn" means the number of cellular subscriber cancellations per period as
a percentage of the weighted average total cellular subscribers during such
period. "Penetration" means the total subscribers at the end of a period divided
by total Pops covered by the applicable FCC cellular licenses or authorizations.
The term "TDMA" means a digital technology that uses time division multiple
access and the term "CDMA" means a digital technology that uses code division
multiple access. The term "Telecommunications Act" refers to the
Telecommunications Act of 1996.
The term "AMPS" means advanced mobile phone service. The term "PCS" means
personal communications services. The term "ESMR" refers to enhanced specialized
mobile radio. The term "BTA" means Basic Trading Area. The term "MTA" means
Major Trading Area. The term "CMRS" means commercial mobile radio services. The
term "MSS" means mobile satellite services. The term "RF" means radio frequency.
The term "CTIA" means the Cellular Telecommunications Industry Association. The
term "RBOC" means the five remaining of the seven original Regional Bell
Operating Companies established by the Department of Justice's 1982 breakup of
the Bell System.
The term "Dobson" means Dobson Communications Corporation.
The term "Sygnet" means Sygnet Wireless Inc., its wholly owned subsidiary,
Sygnet Communications, Inc. The term "Sygnet Acquisition" means the merger of
Dobson/Sygnet Operating Company into Sygnet effective December 23, 1998.
The term "Horizon Acquisition" refers to the acquisition by Sygnet on
October 9, 1996 of the cellular systems and licenses for Pennsylvania 1,
Pennsylvania 2 (interim operating authority), Pennsylvania 6, Pennsylvania 7 and
New York 3 RSAs from Horizon Cellular Telephone Company of Chautauqua, L.P.,
Horizon Cellular Telephone Company of Crawford, L.P. and Horizon Cellular
Telephone Company of Indiana, L.P. for $252.9 million. The term "Erie
Acquisition" refers to the acquisition by Sygnet on September 30, 1995 of 95.5%
of the Erie Cellular Telephone Company, which owned the cellular systems and
license for the Erie, Pennsylvania MSA, for $40.5 million, and of the remaining
4.5% interest in November 1995 for $1.9 million. The term "Pennsylvania 2
Acquisition" refers to the pending purchase of Pennsylvania 2 RSA under the
agreement dated June 8, 1998 between Sygnet and Pinellas Communications for $6.0
million.
The term "Adjusted EBITDA" represents earnings before interest, income
taxes, depreciation and amortization and other non-cash expenses.
As used herein the following companies and businesses will be identified as
indicated: "AirTouch" means AirTouch Communications, Inc.; "ALLTEL" means ALLTEL
Corporation; "AT&T Wireless" means AT&T Wireless Services, Inc. and its
affiliates; "Bell Atlantic" means Bell Atlantic Corporation; "Ericsson" means
Telefonaktiebolaget LM Ericsson and its affiliates; "Fleet Investors" means,
collectively, certain affiliates of Fleet Financial Group; "Frontier" means
Frontier Communications; "GTE" means GTE Corporation and its affiliates; "ITDS"
means International Telecommunications Data Services; "Motorola" means Motorola,
Inc.; "NACN" means North American Cellular Network; "Nextel" means Nextel
Communications, Inc.; "Northern Telecom" means Northern Telecom, Inc.;
"Omnipoint" means Omnipoint Corporation; "SBC Communications" means SBC
Communications, Inc.; "Sprint" means Sprint Corporation and affiliated
companies; "SWBM" means Southwestern Bell Mobile Systems, Inc.; and "Vanguard"
means Vanguard Cellular Systems, Inc.
iii
<PAGE>
SUMMARY
THIS SUMMARY MAY NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO
YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS INCLUDING THE FINANCIAL DATA AND
RELATED NOTES, BEFORE MAKING AN INVESTMENT DECISION. THE TERMS "DOBSON/SYGNET,"
THE "COMPANY," "OUR COMPANY" AND "WE" AS USED IN THIS PROSPECTUS REFER TO
"DOBSON/SYGNET COMMUNICATIONS COMPANY" AND ITS SUBSIDIARIES AS A COMBINED
ENTITY, EXCEPT WHERE IT IS MADE CLEAR THAT SUCH TERM MEANS ONLY THE PARENT
COMPANY. REFERENCES TO A FISCAL YEAR END RELATE TO A YEAR ENDING ON DECEMBER 31.
INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER THE HEADING
"RISK FACTORS." IN ADDITION, CERTAIN STATEMENTS INCLUDE FORWARD-LOOKING
STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. SEE "FORWARD-LOOKING
STATEMENTS."
THE EXCHANGE OFFER
We completed on December 23, 1998 the private offering of $200.0 million of
12 1/4% Senior Notes due 2008. We entered into a registration agreement with the
initial purchasers in the private offering in which we agreed, among other
things, to deliver to you this Prospectus and to complete the Exchange Offer
within 180 days of the issuance of the 12 1/4% Senior Notes due 2008. You are
entitled to exchange in the Exchange Offer your outstanding notes for registered
notes with substantially identical terms. If the Exchange Offer is not completed
within 180 days of the issuance of the 12 1/4% Senior Notes due 2008, then the
interest rates on the notes will be increased to 12 3/4% per year. You should
read the discussion under the heading "Summary Description of the New Notes" and
"Description of the New Notes" for further information regarding the registered
notes.
We believe that the notes issued in the Exchange Offer may be resold by you
without compliance with the registration and prospectus delivery provisions of
the Securities Act, subject to certain conditions. You should read the
discussion under the headings "Summary of the Terms of Exchange Offer" and "The
Exchange Offer" for further information regarding the Exchange Offer and resale
of the notes.
THE COMPANY
We, through our wholly owned subsidiary, Sygnet, own and operate rural and
suburban cellular telephone systems serving a single large cluster of properties
with approximately 2.4 million Pops and 166,886 subscribers in northeastern
Ohio, western Pennsylvania and western New York. The cluster includes
Youngstown, Ohio, Erie, Pennsylvania, and suburban and rural areas between the
Cleveland, Akron-Canton, Pittsburgh, Buffalo and Rochester metropolitan areas.
We are a wholly owned subsidiary of Dobson.
Sygnet has grown rapidly through selective acquisitions and internal growth.
Between 1993 and 1997, Sygnet's revenues increased at a compounded annual growth
rate of 56.0% and its Adjusted EBITDA increased at a compounded annual growth
rate of 71.1%. Excluding properties acquired during that period, Sygnet's
revenues increased at a compounded annual growth rate of 23.9% and its Adjusted
EBITDA increased at a compounded annual growth rate of 34.2%, over the same
period. In addition, from December 31, 1993 to September 30, 1998, Sygnet's
penetration rate increased from 2.5% to 7.0%. For the nine months ended
September 30, 1998, Sygnet had revenue of $76.9 million, operating income of
$15.1 million and Adjusted EBITDA of $36.4 million.
On December 23, 1998, Dobson/Sygnet Operating Company, our subsidiary, was
merged into Sygnet. Sygnet has established and maintained a strong and visible
local presence. Since the merger, Sygnet's existing local management continues
to have day-to-day operating authority, with the flexibility to respond to
individual market requirements and to foster a strong sense of customer service
and community spirit. We expect to benefit from synergies resulting from
Dobson's centralization of certain functions such as control of pricing,
customer service and marketing, systems design, engineering, purchasing,
financial and administrative functions and from the consolidation of billing
functions. For example, we expect to consolidate Sygnet's three regional call
centers and one of Dobson's existing call centers. In addition, we
1
<PAGE>
expect the Sygnet Acquisition to strengthen and expand Dobson's and Sygnet's
existing roaming partner relationships with AT&T Wireless because certain Sygnet
properties are adjacent to AT&T Wireless properties.
Sygnet's markets are primarily rural and suburban and include a high
concentration of expressway corridors that tend to have a significant amount of
roaming activity. Roaming revenue represented approximately 32% (28% excluding
roaming by Sygnet customers into other Sygnet markets) of Sygnet's total
revenues for both the year ended December 31, 1997 and the nine months ended
September 30, 1998. Sygnet has entered into roaming agreements with operators of
cellular systems in adjoining MSAs and other MSAs which allow customers to roam
at competitive prices which, in certain instances, are comparable to Sygnet's
home area rates. Sygnet's principal roaming partners are AT&T Wireless, AirTouch
and SBC Communications. Sygnet also has roaming agreements with PCS providers,
such as AT&T Wireless and Sprint, to allow the PCS providers' customers with
dual mode telephones to roam in certain Sygnet markets.
Through selective acquisitions, Sygnet has created an integrated network of
rural and suburban cellular systems in a contiguous service area. The following
table sets forth certain data with respect to Sygnet's cellular systems:
<TABLE>
<CAPTION>
TOTAL TOTAL MARKET YEAR ACQUIRED
MARKETS (1) POPS SUBSCRIBERS (2) PENETRATION (3) BY SYGNET
- ---------------------------- --------- --------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Erie (4).................... 282,300 26,381 9.3% 1995
New York (5)................ 480,000 26,409 5.5% 1996
Pennsylvania (6)............ 890,300 49,516 5.6% 1996
Youngstown (7).............. 721,400 64,580 9.0% 1985, 1987 and 1991
--------- ------- --
Total..................... 2,374,000 166,886 7.0%
--------- ------- --
--------- ------- --
</TABLE>
- ------------------------------
(1) Except for Pennsylvania 2 RSA, Sygnet owns 100% of the licenses for these
markets.
(2) As of September 30, 1998.
(3) Determined by dividing total Sygnet subscribers by the total Pops covered by
the applicable FCC cellular licenses or authorizations held by Sygnet.
(4) The Erie market is composed of Erie, Pennsylvania MSA.
(5) The New York market is composed of New York 3 RSA.
(6) The Pennsylvania market is composed of Pennsylvania 1 RSA, Pennsylvania 2
RSA, Pennsylvania 6 RSA and Pennsylvania 7 RSA. Sygnet had previously
operated Pennsylvania 2 RSA under an interim operating authority, which was
terminated on June 3, 1997 when the FCC awarded a permanent license to
Pinellas Communications. On June 8, 1998, Sygnet entered into an agreement
to purchase Pennsylvania 2 RSA for $6.0 million in cash. Since then, Sygnet
has been operating Pennsylvania 2 under a management and lease agreement
with the present owner of Pennsylvania 2, which will continue in effect
until the FCC's grant of the license to the present owner is no longer
subject to reconsideration or judicial review.
(7) The Youngstown market is composed of: (i) Youngstown, Ohio MSA, which Sygnet
acquired in 1985; (ii) Sharon, Pennsylvania MSA, which Sygnet acquired in
1987; and (iii) Ohio 11 RSA, which Sygnet acquired in 1991.
BUSINESS STRATEGY
Our business strategy is to focus on integrating our operations with
Dobson's, increasing our market penetration and further developing our cellular
systems to sustain growth in our cash flows.
2
<PAGE>
SYGNET ACQUISITION AND FINANCING PLAN
On December 23, 1998, Dobson/Sygnet Operating Company, our subsidiary, was
merged with and into Sygnet. After the merger, Sygnet became our wholly owned
subsidiary and an indirect wholly owned subsidiary of Dobson. We paid $337.5
million in cash for all of the outstanding capital stock of Sygnet.
In order to finance the Sygnet Acquisition, we consummated the following
transactions:
- Dobson made an equity contribution of approximately $145.0 million to us
(the "Equity Contribution");
- Dobson/Sygnet Operating Company obtained a $430.0 million bank credit
facility with NationsBank, N.A. ("NationsBank"), as agent, consisting of
a $50.0 million reducing revolving credit facility (the "Revolving Credit
Facility") and $380.0 million of term loans (the "Term Loan Facilities")
(together the "New Bank Facilities");
- we issued and sold $200.0 million aggregate principal amount of the Old
Notes, of which approximately $67.7 million was used to purchase a
portfolio of U.S. government securities (the "Pledged Securities") that
are pledged as security for the first six scheduled interest payments on
the Notes;
- we repaid a $25.0 million loan from a subsidiary of Dobson used to make
the deposit for the Sygnet Acquisition;
- Sygnet repaid all indebtedness outstanding under Sygnet's existing bank
facility (the "Old Bank Facility");
- Sygnet repurchased (the "Sygnet Note Repurchase") all of Sygnet's
outstanding 11 1/2% Senior Notes due 2006 (the "Sygnet Notes") that were
tendered into Sygnet's offer to purchase the Sygnet Notes, which expired
December 21, 1998 (the "Sygnet Tender Offer"); and
- Sygnet sold substantially all of its owned cellular towers for $25.0
million in cash to Dobson Tower Company, a wholly owned subsidiary of
Dobson, which leased the cellular towers back to Sygnet (the "Tower Sale
Leaseback").
Each of these transactions (together with the Sygnet Acquisition, the
"Transactions") closed concurrently.
The following table illustrates the sources and uses of funds for the
Transactions (in millions):
<TABLE>
<CAPTION>
SOURCES OF FUNDS USES OF FUNDS
- ----------------------------------------------- -----------------------------------------------
<S> <C> <C> <C>
Old Notes issued.................... $ 200.0 Amount payable in the Sygnet
Acquisition (2)................... $ 337.5
Equity Contribution................. 145.0
New Bank Facilities (1)............. 407.0 Repayment of Old Bank Facility...... 199.0
Tower Sale Leaseback................ 25.0 Sygnet Note Repurchase.............. 136.1
Purchase of Pledged Securities...... 67.7
Fees and Expenses................... 36.7
--------- ---------
Total Sources of Funds.............. $ 777.0 Total Uses of Funds................. $ 777.0
--------- ---------
--------- ---------
</TABLE>
- ------------------------------
(1) Borrowings under the New Bank Facilities will be used to fund the $6.0
million purchase price for the Pennsylvania 2. Neither this amount, nor the
additional $25.0 million of borrowings described in Note 2 below, is
reflected in the sources and uses table.
(2) Includes $25.0 million borrowed from Dobson that was paid as a deposit for
the Sygnet Acquisition and was repaid in the Transactions.
3
<PAGE>
RISK FACTORS
An investment in the new notes involves a high degree of risk. See "Risk
Factors." The risks that a potential investor should consider before making an
investment in the new notes include, but are not limited to, risks associated
with:
- our leverage;
- our ability to meet required debt service;
- our refinancing risks;
- our status as a holding company;
- our ability to incur additional secured indebtedness;
- covenant restrictions contained in instruments governing our indebtedness,
including the notes;
- our obligation to repurchase the notes upon a change in control;
- risk associated with the Sygnet Acquisition and conflicts of interest;
- competition;
- rapid technological changes;
- our dependence on our key personnel;
- our reliance on the use of third party service marks;
- fraudulent conveyance statutes;
- regulations;
- equipment failure and natural disasters;
- reliance on one billing vendor;
- radio frequency emissions;
- the Year 2000 issue; and
- the absence of a public market for the notes and restrictions on the
transferability of the your notes.
4
<PAGE>
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
The Exchange Offer relates to the exchange of up to $200.0 million aggregate
principal amount of outstanding notes for an equal aggregate principal amount of
new notes. The new notes will be our obligations entitled to the benefits of the
indenture governing the outstanding notes. The form and terms of the new notes
are identical in all material respects to the form and terms of the outstanding
notes except that the new notes have been registered under the Securities Act of
1933, and therefore are not entitled to the benefits of the registration rights
granted under the registration rights agreement, executed as part of the
offering of the outstanding notes, dated December 23, 1998 among the Company and
the initial purchasers in the private offering, including NationsBanc Montgomery
Securities, LLC, Lehman Bankshares Inc., First Union Capital Markets, a division
of Wheat First Securities, Inc., and TD Securities (USA) Inc., relating to
certain contingent increases in the interest rates provided for pursuant
thereto.
<TABLE>
<S> <C>
Registration Rights
Agreement................... You are entitled to exchange your notes for registered notes
with substantially identical terms. The Exchange Offer is
intended to satisfy these rights. After the Exchange Offer
is complete, you will no longer be entitled to any exchange
or registration rights with respect to your notes.
The Exchange Offer............ We are offering to exchange $1,000 principal amount of
12 1/4% Senior Notes due 2008 which have been registered
under the Securities Act of 1933 for each $1,000 principal
amount of our outstanding 12 1/4% Senior Notes due 2008
which were issued in December 1998 in a private offering. In
order to be exchanged, an outstanding note must be properly
tendered and accepted. All outstanding notes that are
validly tendered and not validly withdrawn will be
exchanged.
As of this date there are $200.0 million principal amount of
notes outstanding.
We will issue registered notes on or promptly after the
expiration of the Exchange Offer.
Resale of the New Notes....... Based on an interpretation by the staff of the Commission
set forth in no-action letters issued to third parties,
including "Exxon Capital Holdings Corporation" (available
May 13, 1988) and "Morgan Stanley & Co. Incorporated"
(available June 5, 1991), we believe that the notes issued
in the exchange offer may be offered for resale, resold and
otherwise transferred by you without compliance with the
registration and prospectus delivery provisions of the
Securities Act of 1933 provided that:
- the notes issued in the Exchange Offer are being
acquired in the ordinary course of business;
- you are not participating, do not intend to
participate, and have no arrangement or understanding
with any person to participate, in the distribution of
the notes issued to you in the Exchange Offer;
- you are not a broker-dealer who purchased such
outstanding notes directly from us for resale pursuant
to Rule 144A or any other available exemption under
the Securities Act of 1933; and
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
- you are not our "affiliate".
If our belief is inaccurate and you transfer any note issued
to you in the Exchange Offer without delivering a prospectus
meeting the requirement of the Securities Act of 1933 or
without an exemption from registration of your notes from
such requirements, you may incur liability under the
Securities Act of 1933. We do not assume or indemnify you
against such liability.
Each broker-dealer that is issued notes in the Exchange
Offer for its own account in exchange for notes which were
acquired by such broker-dealer as a result of market-making
or other trading activities, must acknowledge that it will
deliver a prospectus meeting the requirements of the
Securities Act of 1933, in connection with any resale of the
notes issued in the Exchange Offer. The Letter of
Transmittal states that by so acknowledging and by
delivering a prospectus, such broker-dealer will not be
deemed to admit that it is an "underwriter" within the
meaning of the Securities Act of 1933. A broker-dealer may
use this Prospectus for an offer to resell, resale or other
retransfer of the notes issued to it in the Exchange Offer.
We have agreed that, for a period of 180 days after the date
of this Prospectus, we will make this Prospectus and any
amendment or supplement to this Prospectus available to any
such broker-dealer for use in connection with any such
resales. We believe that no registered holder of the
outstanding notes is an affiliate (as such term is defined
in Rule 405 of the Securities Act of 1933) of the Company.
The Exchange Offer is not being made to, nor will we accept
surrenders for exchange from, holders of outstanding notes
in any jurisdiction in which this Exchange Offer or the
acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Expiration Date............... The Exchange Offer will expire at 5:00 p.m., New York City
time, , 1999, unless we decide to extend the
expiration date.
Accrued Interest on the New
Notes and the Outstanding
Notes....................... The new notes will bear interest from December 23, 1998.
Holders of outstanding notes whose notes are accepted for
exchange will be deemed to have waived the right to receive
any payment of interest on such outstanding notes accrued
from December 23, 1998 to the date of the issuance of the
new notes. Consequently, holders who exchange their
outstanding notes for new notes will receive the same
interest payment on June 15, 1999 (the first interest
payment date with respect to the outstanding notes and the
new notes to be issued in the Exchange Offer) that they
would have received had they not accepted the Exchange
Offer.
Termination of the Exchange
Offer....................... We may terminate the Exchange Offer if we determine that our
ability to proceed with the Exchange Offer could be
materially impaired due to any legal or governmental action,
new law, statute, rule or regulation or any interpretation
of the staff of the Commission of any existing law, statute,
rule or regulation. We do
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
not expect any of the foregoing conditions to occur,
although there can be no assurance that such conditions will
not occur. Holders of outstanding notes will have certain
rights against our Company under the registration rights
agreement executed as part of the offering of the
outstanding notes should we fail to consummate the Exchange
Offer.
Procedures for Tendering
Outstanding Notes........... If you are a holder of a note and you wish to tender your
note for exchange pursuant to the Exchange Offer, you must
transmit to United States Trust Company of New York, as
exchange agent, on or prior to the Expiration Date:
either
- a properly completed and duly executed Letter of
Transmittal, which accompanies this Prospectus, or a
facsimile of the Letter of Transmittal, including all
other documents required by the Letter of Transmittal,
to the Exchange Agent at the address set forth on the
cover page of the Letter of Transmittal; or
- a computer-generated message transmitted by means of
DTC's Automated Tender Offer Program system and
received by the Exchange Agent and forming a part of a
confirmation of book entry transfer in which you
acknowledge and agree to be bound by the terms of the
Letter of Transmittal;
and, either
- a timely confirmation of book-entry transfer of your
outstanding notes into the Exchange Agent's account at
The Depository Trust Company ("DTC") pursuant to the
procedure for book-entry transfers described in this
Prospectus under the heading "The Exchange
Offer--Terms of the Exchange Offer--Procedures for
Tendering Old Notes" must be received by the Exchange
Agent on or prior to the Expiration Date; or
- the documents necessary for compliance with the
guaranteed delivery procedures described below.
By executing the Letter of Transmittal, each holder will
represent to us that, among other things, (i) the notes to
be issued in the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such new
notes whether or not such person is the holder, (ii) neither
the holder nor any such other person has an arrangement or
understanding with any person to participate in the
distribution of such new notes and (iii) neither the holder
nor any such other person is an "affiliate," as defined in
Rule 405 under the Securities Act of 1933 of the Company.
Special Procedures for
Beneficial Owners........... If you are the beneficial owner of notes and your name does
not appear on a security position listing of DTC as the
holder of such
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
notes or if you are a beneficial owner of registered notes
that are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and you wish
to tender such notes or registered notes in the Exchange
Offer, you should contact such person whose name your notes
or registered notes are registered promptly and instruct
such person to tender on your behalf. If such beneficial
holder wished to tender on his own behalf such beneficial
holder must, prior to completing and executing the Letter of
Transmittal and delivering its outstanding notes, either
make appropriate arrangements to register ownership of the
outstanding notes in such holder's name or obtain a properly
completed bond power from the registered holder. The
transfer of record ownership may take considerable time.
Guaranteed Delivery
Procedures.................. If you wish to tender your notes and time will not permit
your required documents to reach the Exchange Agent by the
Expiration Date, or the procedure for book-entry transfer
cannot be completed on time or certificates for registered
notes cannot be delivered on time, you may tender your notes
pursuant to the procedures described in this Prospectus
under the heading "The Exchange Offer--Terms of the Exchange
Offer--Guaranteed Delivery Procedures."
Withdrawal Rights............. You may withdraw the tender of your notes at any time prior
to 5:00 p.m., New York City time, on , 1999, the
business day prior to the Expiration Date, unless your notes
were previously accepted for exchange.
Acceptance of Outstanding
Notes and Delivery of
Exchange Notes.............. Subject to certain conditions (as summarized above in
"Termination of the Exchange Offer" and described more fully
under "The Exchange Offer--Conditions of the Exchange
Offer"), we will accept for exchange any and all outstanding
notes which are properly tendered in the Exchange Offer
prior to 5:00 p.m., New York City time, on the Expiration
Date. The notes issued pursuant to the Exchange Offer will
be delivered promptly following the Expiration Date.
Certain U.S. Federal Income
Tax Consequences............ The exchange of the notes will generally not be a taxable
exchange for United States federal income tax purposes. We
believe you will not recognize any taxable gain or loss or
any interest income as a result of such exchange.
Use of Proceeds............... We will not receive any proceeds from the issuance of notes
pursuant to the Exchange Offer. We will pay all expenses
incident to the Exchange Offer.
Exchange Agent................ United States Trust Company of New York is serving as
exchange agent in connection with the Exchange Offer. The
Exchange Agent can be reached at Corporate Trust
Administration, 114 West 47th Street, New York, NY
10036-1532. For more information with respect to the
Exchange Offer, the telephone number for the
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Exchange Agent is (212) 852-1000 and the facsimile number
for the Exchange Agent is (212) 852-1625.
</TABLE>
SUMMARY DESCRIPTION OF THE NEW NOTES
<TABLE>
<S> <C>
Notes Offered................. $200,000,000 aggregate principal amount of 12 1/4% Senior
Notes due 2008.
Maturity Date................. December 15, 2008.
Interest Payment Dates........ June 15 and December 15 of each year, commencing June 15,
1999.
Ranking....................... The notes will be unsecured senior subordinated obligations
and will be subordinated to all our exiting and future
senior indebtedness. The notes will rank equally with all
our other existing and future senior subordinated
indebtedness, and will rank senior to all our subordinated
indebtedness. The notes effectively will rank junior to all
liabilities of our subsidiaries. Because the notes are
subordinated, in the event of bankruptcy, liquidation or
dissolution, holders of the notes will not receive any
payment until holders of senior indebtedness have been paid
in full. The terms "senior indebtedness" and "subordinated
indebtedness" are defined in the "Description of the
Notes--Ranking" and "Description of the Notes--Certain
Definitions" sections of this Prospectus.
As of September 30, 1998, after giving pro forma effect to
the offering of the outstanding notes and our use of the net
proceeds from the offering and borrowings related to certain
acquisitions and related costs, we would have had no
indebtedness other than the notes and our subsidiaries would
have had $605.7 million of liabilities, including $398.2
million of indebtedness, all of which would have been
effectively senior to the notes.
Optional Redemption........... We may redeem the notes, in whole or in part, at any time on
or after December 15, 2003, at the redemption prices set
forth in this Prospectus.
Public Equity Offering
Optional Redemption......... Before December 15, 2001, we may redeem up to 35% of the
aggregate principal amount of the notes with the net
proceeds of a public equity offering at 112.25% of the
principal amount thereof, plus accrued interest, if at least
65% of the aggregate principal amount of the notes
originally issued remains outstanding after such redemption.
See "Description of the Notes--Optional Redemption."
Change of Control............. Upon certain change of control events, each holder of notes
may require us to repurchase all or a portion of its notes
at a purchase price equal to 101% of the principal amount
thereof, plus accrued interest. See "Description of the
Notes--Certain Definitions" for the definition of a Change
of Control.
Certain Covenants............. The indenture governing the notes will contain covenants
that, among other things, will limit our ability and the
ability of our restricted subsidiaries to:
- incur additional indebtedness,
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
- pay dividends on, redeem or repurchase our capital
stock,
- make investments,
- issue or sell capital stock of restricted
subsidiaries,
- engage in transaction with affiliates,
- create certain liens,
- sell assets, and
- consolidate, merge or transfer all or substantially
all our assets and the assets of our subsidiaries on a
consolidated basis.
These covenants are subject to important exceptions and
qualifications, which are described under the heading
"Description of the Notes" in this Prospectus.
Exchange Offer; Registration
Rights...................... Under a registration rights agreement executed as part of
the offering of the outstanding notes, we have agreed to:
- prepare and file a registration statement enabling
note holders to exchange the privately placed notes for
publicly registered notes with identical terms,
- use our best efforts to cause the registration
statement to become effective
- and to consummate the exchange offer within 180 days
after December 23, 1998, and
- use our best efforts to file a shelf registration
statement for the resale of the notes if we cannot
effect an exchange offer within the time periods
listed above and in certain other circumstances.
The interest rate on the notes will increase if we do not
comply with our obligations under the registration rights
agreement. See "The Exchange Offer."
Risk Factors.................. See "Risk Factors" for a discussion of factors you should
carefully consider before deciding to invest in the notes.
</TABLE>
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of the new notes
pursuant to this Prospectus.
10
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth certain historical consolidated financial
data for Sygnet with respect to each of the three years in the period ended
December 31, 1997 and for the nine months ended September 30, 1997 and 1998. The
summary historical consolidated financial data as of and for each of the three
years in the period 1995 to 1997 have been derived from Sygnet's audited
consolidated financial statements. The summary historical consolidated financial
data as of and for the nine months ended September 30, 1997 and 1998 have been
derived from Sygnet's unaudited consolidated financial statements. In the
opinion of management, the unaudited financial statements have been prepared on
the same basis as Sygnet's audited consolidated financial statements and include
all adjustments, which consist only of normal recurring adjustments, necessary
for a fair presentation of the information set forth therein. Operating results
for the nine months ended September 30, 1998 are not necessarily indicative of
results that may be expected for the full year. The pro forma consolidated
statement of operations data give effect to the Transactions as if they occurred
on January 1, 1997 and the pro forma consolidated balance sheet data give effect
to the Transactions as if they occurred on September 30, 1998. The summary
unaudited pro forma consolidated financial data are based on currently available
information and certain assumptions that management believes are reasonable. The
pro forma consolidated financial information does not purport to represent what
the Company's results of operations would have been if the Transactions had been
completed on such dates, nor does it purport to indicate the future financial
position or results of future operations of the Company. The information as set
forth below should be read in conjunction with "Use of Proceeds," "Selected
Consolidated Financial and Other Data," "Pro Forma Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and the related notes
thereto included elsewhere in this offering memorandum.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------- --------------------
PRO FORMA
1995 (1) 1996 (2) 1997 1997 1997 1998
----------- --------- --------- ----------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Subscriber revenue.............................. $ 17,191 $ 31,085 $ 52,639 $ 55,154 $ 38,531 $ 46,738
Roaming revenue................................. 4,176 9,687 26,993 23,378 19,868 24,753
Equipment sales................................. 1,529 2,417 4,323 4,323 3,051 4,253
Other revenue................................... 1,681 1,607 1,679 1,679 1,308 1,190
----------- --------- --------- ----------- --------- ---------
Total revenue................................... 24,577 44,796 85,634 84,534 62,758 76,934
----------- --------- --------- ----------- --------- ---------
Costs and expenses:
Cost of services................................ 3,366 5,509 10,048 10,731 7,175 9,005
Cost of equipment sales......................... 4,164 5,816 9,663 9,663 6,806 7,790
General and administrative...................... 5,564 9,852 16,976 15,171 11,667 14,665
Selling and marketing........................... 3,082 6,080 10,841 12,046 7,466 9,057
Depreciation and amortization................... 3,487 10,038 28,719 74,769 21,143 21,343
----------- --------- --------- ----------- --------- ---------
Total costs and expenses........................ 19,663 37,295 76,247 122,380 54,257 61,860
----------- --------- --------- ----------- --------- ---------
Operating income (loss)........................... 4,914 7,501 9,387 (37,846) 8,501 15,074
Interest expense................................ (2,660) (11,174) (29,902) (60,388) (22,558) (21,613)
Other income (expense), net..................... (304) (195) (101) (101) 6 (340)
----------- --------- --------- ----------- --------- ---------
Income (loss) before income taxes and
extraordinary item............................ 1,950 (3,868) (20,616) (98,285) (14,051) (6,879)
Income tax benefit.............................. -- -- -- 37,349 -- --
Extraordinary loss on extinguishment of debt.... -- (1,420) -- -- -- --
----------- --------- --------- ----------- --------- ---------
Net income (loss)............................... $ 1,950 $ (5,288) $ (20,616) $ (60,936) $ (14,051) $ (6,879)
----------- --------- --------- ----------- --------- ---------
----------- --------- --------- ----------- --------- ---------
<CAPTION>
PRO FORMA
1998
-----------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Subscriber revenue.............................. $ 48,876
Roaming revenue................................. 20,717
Equipment sales................................. 4,253
Other revenue................................... 1,190
-----------
Total revenue................................... 75,036
-----------
Costs and expenses:
Cost of services................................ 8,648
Cost of equipment sales......................... 7,790
General and administrative...................... 12,067
Selling and marketing........................... 11,003
Depreciation and amortization................... 55,788
-----------
Total costs and expenses........................ 95,296
-----------
Operating income (loss)........................... (20,260)
Interest expense................................ (45,253)
Other income (expense), net..................... (340)
-----------
Income (loss) before income taxes and
extraordinary item............................ (65,853)
Income tax benefit.............................. 25,024
Extraordinary loss on extinguishment of debt.... --
-----------
Net income (loss)............................... $ (40,829)
-----------
-----------
</TABLE>
(SEE FOOTNOTES ON FOLLOWING PAGE.)
11
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------- --------------------
PRO FORMA
1995 (1) 1996 (2) 1997 1997 1997 1998
----------- --------- --------- ----------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Adjusted EBITDA (3)............................... $ 8,401 $ 17,539 $ 38,106 $ 36,923 $ 29,644 $ 36,417
Ratio of earnings to combined fixed charges and
preferred stock dividends (4)................... 1.67x -- -- -- -- --
Capital expenditures, excluding cost of
acquisitions.................................... $ 9,056 $ 10,050 $ 25,576 $ 25,576 $ 16,979 $ 11,469
OTHER DATA:
Ending cellular subscribers (at period end)....... 44,665 106,574 142,934 142,934 130,146 166,886
Cellular penetration (at period end) (5).......... 4.4% 4.5% 6.0% 6.0% 5.5% 7.0%
Cellular churn (6)................................ 1.4% 1.3% 1.3% 1.3% 1.3% 1.5%
Average monthly revenue per cellular subscriber
(7)............................................. $ 46 $ 42 $ 36 $ 38 $ 36 $ 34
Marketing and selling costs per gross additional
cellular subscriber (8)......................... $ 370 $ 321 $ 291 $ 312 $ 306 $ 287
Cellular cell sites (at period end)............... 41 114 163 163 152 181
<CAPTION>
PRO FORMA
1998
-----------
<S> <C>
OTHER FINANCIAL DATA:
Adjusted EBITDA (3)............................... $ 35,528
Ratio of earnings to combined fixed charges and
preferred stock dividends (4)................... --
Capital expenditures, excluding cost of
acquisitions.................................... $ 11,469
OTHER DATA:
Ending cellular subscribers (at period end)....... 166,886
Cellular penetration (at period end) (5).......... 7.0%
Cellular churn (6)................................ 1.5%
Average monthly revenue per cellular subscriber
(7)............................................. $ 35
Marketing and selling costs per gross additional
cellular subscriber (8)......................... $ 331
Cellular cell sites (at period end)............... 181
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-------------------------
ACTUAL PRO FORMA
--------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Property and equipment, net......................................................................... $ 52,138 $ 42,915
Total assets........................................................................................ 333,296 950,733
Total debt.......................................................................................... 302,644 598,155
Stockholders' equity................................................................................ 12,339 145,000
</TABLE>
- ------------------------------
(1) Includes the operations of the systems acquired in the Erie Acquisition from
September 30, 1995, the date of acquisition.
(2) Includes the operations of the systems acquired in the Horizon Acquisition
from October 9, 1996, the date of acquisition.
(3) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, other income, extraordinary items, and
changes in accounting principles. In addition, the Indenture governing the
Notes contains certain covenant requirements that are based on Adjusted
EBITDA. See "Description of the Notes--Covenants." Adjusted EBITDA is not
derived pursuant to generally accepted accounting principles and should not
be construed as an alternative to net income, as a measure of performance,
or to cash flows, as a measure of liquidity. Adjusted EBITDA, as measured by
the Company, may differ significantly from similarly named measurements of
other companies and, as a consequence, may not provide any degree of
reliable comparability. The calculation of Adjusted EBITDA does not include
the Company's commitments for capital expenditures or payments of debts and
should not be deemed to represent funds available to the Company.
(4) "Earnings" is defined as earnings before extraordinary items and accounting
changes, interest expense, amortization of deferred financing costs, taxes
and the portion of rent expense under operating leases representative of
interest. Fixed charges consist of interest expense, amortization of
deferred financing costs and a portion of rent expense under operating
leases representative of interest. For the years ended December 31, 1996 and
1997 and for the nine months ended September 30, 1997 and 1998, Sygnet's
earnings were insufficient to cover its combined fixed charges and preferred
stock dividends by $4.6 million, $22.7 million, $16.2 million and $6.6
million, respectively. On a pro forma basis, for the year ended December 31,
1997 and the nine months ended September 30, 1998, the Company's earnings
would have been insufficient to cover its combined fixed charges and
preferred stock dividends by $100.4 million and $65.9 million, respectively.
(5) Determined by dividing Sygnet's total ending cellular subscribers for the
period by the estimated total Pops covered by applicable FCC cellular
licenses or authorizations held by Sygnet.
(6) Churn means the number of cellular subscriber cancellations per period as a
percentage of the weighted average total cellular subscribers during such
period. Churn is stated as the average monthly churn rate for the period.
(7) Excludes roaming and equipment revenue.
(8) Determined by dividing cellular marketing and selling costs by the gross
cellular subscribers added during such period. Cellular marketing and
selling costs represent selling expenses and losses incurred on equipment
sales and equipment rentals.
12
<PAGE>
RISK FACTORS
IN ADDITION TO THE INFORMATION CONTAINED IN THIS PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN EVALUATING THE COMPANY AND ITS
BUSINESS.
LEVERAGE
We are highly leveraged. At September 30, 1998, assuming that the
Transactions had been completed at the time, we would have had approximately
$598.2 million of consolidated indebtedness (including $398.2 million under the
New Bank Facilities) and $145.0 million of consolidated stockholder's equity. In
addition, under the same assumptions, our subsidiaries would have been able to
borrow $31.8 million of additional debt under the New Bank Facilities. The
indenture governing the notes also allows us and our subsidiaries to incur
substantial additional debt in the future. For the year ended December 31, 1997
and the nine months ended September 30, 1998, assuming the Transactions had been
completed on January 1, 1997, our Adjusted EBITDA would have been insufficient
to cover its interest expense by $23.4 million and $9.7 million, respectively,
and our Adjusted EBITDA minus interest expense and capital expenditures
(excluding costs of acquisitions) would have been $(49.0) million and $(21.2)
million, respectively. For the year ended December 31, 1997, under the same
assumptions, our earnings would have been insufficient to cover our combined
fixed charges and preferred stock dividends by $100.4 million. For the nine
months ended September 30, 1998, under the same assumptions, our earnings would
have been insufficient to cover our combined fixed charges and preferred stock
dividends by $65.9 million. Our level of indebtedness could have important
consequences, including:
- the debt service requirements could make it more difficult for us to make
required payments under the notes;
- our ability to borrow additional money for working capital, capital
expenditures, debt service requirements or other purposes will be limited;
- a substantial portion of our future cash flow from operations will be
required to pay principal and interest on its indebtedness and will not be
available for our business;
- our flexibility in planning for, or reacting to changes in, our business
and our ability to take advantage of future business opportunities may be
restricted;
- we may be more highly leveraged than certain of our competitors, which may
place us at a competitive disadvantage; and
- our high degree of leverage could make us more vulnerable in the event of
a downturn in our business.
ABILITY TO MEET DEBT SERVICE REQUIREMENTS
In order for us to be able to meet our debt service requirements, including
our obligations under the notes, we must successfully implement our strategy.
Our strategy will be to focus on integrating our operations with Dobson's,
increasing our market penetration and further developing our cellular systems.
We cannot assure you that we will successfully implement our strategy or that we
will be able to generate enough cash flow from operating activities to meet our
debt service obligations as well as our other cash requirements, including for
working capital and capital expenditures. Furthermore, if Sygnet and its
subsidiary are unable to satisfy any of the covenants under the New Bank
Facilities, including financial covenants, they will be unable to borrow under
the New Bank Facilities during that time. Failure to obtain such financing could
result in the delay or abandonment of some or all of our plans, which could
limit our ability and that of our subsidiaries to meet debt service obligations
(including obligations with respect to the notes) and could have a material
adverse effect on our business. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
The ability of our subsidiaries to borrow under the New Bank Facilities will be
limited by the requirement that, on a quarterly basis beginning December 31,
2000, the amount available under the New Bank Facilities will
13
<PAGE>
reduce until they terminate. The reduction in availability may require us to
make significant principal payments thereunder. See "Description of Certain
Indebtedness."
REFINANCING RISK
We will need to refinance the New Bank Facilities and the notes at their
maturities. Our ability to do so will depend on, among other things, our
financial condition at the time, the restrictions in the instruments governing
their indebtedness and other factors, including market conditions, beyond our
control. If any of this indebtedness cannot be refinanced, it may cause a
default under the notes and we may be unable to meet our obligations under the
notes. In addition, in the event the implementation of our strategy to maintain
and expand our systems is delayed or we do not generate sufficient cash flow to
meet our debt service requirements, we may need to seek additional financing. We
cannot assure you that we could obtain any such refinancing or financing or
that, if obtained, it would be on acceptable terms. In the absence of such
refinancing or financing, we could be forced to sell assets at unfavorable
prices in order to make up for any shortfall. At September 30, 1998, after
giving effect to the Transactions, approximately 86.7% of our assets would have
consisted of intangible assets, principally licenses granted by the FCC. The
value of our intangible assets will depend upon a variety of factors, including
the success of our business and the wireless telecommunications industry in
general. In addition, transfers of interests in such licenses require FCC
approval. As a result, we cannot assure you that the assets could be sold
quickly enough, or for sufficient amounts, to enable us to meet our obligations,
including our obligations with respect to the Notes.
HOLDING COMPANY STRUCTURE
We are a holding company with no direct operations and no significant assets
other than the stock of Sygnet and its operating subsidiary, Sygnet
Communications, Inc. ("Sygnet Communications"). We will be dependent on the cash
flows of Sygnet and its subsidiary to meet our obligations, including our
obligations to pay interest and principal on the notes. Sygnet and Sygnet
Communications' ability to distribute funds to us will be restricted by the
terms of their existing and future indebtedness, including the New Bank
Facilities. See "Description of Certain Indebtedness--New Bank Facilities."
Sygnet and Sygnet Communications are separate legal entities that have no
obligation to make any funds available for the notes. Because Sygnet and Sygnet
Communications have not guaranteed the notes, any right we may have (and
therefore the holders of the notes) to receive assets of Sygnet or Sygnet
Communications upon their liquidation or reorganization will be effectively
junior to the claims of the creditors of such companies (including trade
creditors and holders of indebtedness), except to the extent we are a creditor
of Sygnet or Sygnet Communications. Sygnet has pledged the stock of Sygnet
Communications to secure borrowings under the New Bank Facilities. In addition,
Sygnet and its subsidiary have granted liens on substantially all of their
assets as security for the obligations under the New Bank Facilities. At
September 30, 1998, after giving effect to the Transactions, Sygnet and its
subsidiary would have had $605.7 million of liabilities, including $398.2
million of indebtedness, all of which would have been secured and effectively
senior to the Notes. See "Pro Forma Consolidated Financial Data" and
"Description of Certain Indebtedness."
ABILITY TO INCUR ADDITIONAL SECURED INDEBTEDNESS
At September 30, 1998, after giving effect to the Transactions, we would
have had no outstanding indebtedness, other than the notes, and our subsidiaries
would have had $605.7 million of liabilities, including $398.2 million of
secured indebtedness, all of which would have been effectively senior to the
notes. The indenture governing the notes permits us and our subsidiaries to
incur additional indebtedness and to secure such indebtedness. In the event
Sygnet or its subsidiary borrows additional funds under the New Bank Facilities
or we or our subsidiaries obtain additional funds through the incurrence of
other secured indebtedness and we or our subsidiaries default with respect to
any such indebtedness, the holders of such indebtedness would be entitled to
payment out of the proceeds of their collateral prior to the holders of general
unsecured indebtedness, including the notes, despite the existence of an event
of default
14
<PAGE>
with respect to the notes. Assets remaining after satisfaction of the claims of
creditors of Sygnet and its subsidiaries and the holders of our secured
indebtedness of the Company may not be sufficient to pay amounts due on any or
all of the notes then outstanding. See "Description of the Notes."
COVENANT RESTRICTIONS
The indenture governing the notes and the credit agreement relating to the
New Bank Facilities (the "Credit Agreement") restrict or prohibit our ability
and that of our subsidiaries to incur additional indebtedness, pay dividends,
repay subordinated indebtedness prior to their maturities, sell assets, make
investments, engage in transactions with stockholders and affiliates, issue
capital stock, create liens or engage in mergers or acquisitions. In particular,
the New Bank Facilities limit the ability of Sygnet and Sygnet Communications to
pay dividends necessary for us to make payments on the notes. In addition, the
New Bank Facilities require Sygnet and us to maintain certain financial ratios.
See "Description of Certain Indebtedness--New Bank Facilities." These
restrictions may limit our ability and that of our subsidiaries to obtain future
financings, fund capital expenditures, or engage in other business activities
that may be in our interest. Our future indebtedness and that of our
subsidiaries may also contain significant restrictions.
Our failure or that of our subsidiaries to comply with the restrictions in
their financing agreements could lead to a default under the terms of such
indebtedness and the notes even though we may be able to meet our debt service
obligations. In the event of a default, the holders of such indebtedness could
elect to declare all such indebtedness to be due and payable together with
accrued interest. We cannot assure you that we and our subsidiaries would be
able to make such payments or borrow enough funds from other sources to make any
such payments. Even if we could obtain additional financing, we cannot assure
you that it would be on terms that are acceptable to us. In addition, Sygnet's
obligations under the New Bank Facilities are secured by substantially all
assets of Sygnet and its subsidiaries. The pledge of the assets of Sygnet and
its subsidiaries to existing lenders could impair our ability and that of our
subsidiaries to obtain favorable financing. See "Description of Certain
Indebtedness."
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
We must offer to purchase the notes upon the occurrence of a Change of
Control at a purchase price equal to 101% of their principal amount, plus
accrued interest. See "Description of the Notes-- Repurchase of Notes upon a
Change of Control."
The New Bank Facilities prohibit us from prepaying the notes, including
required prepayments following a Change of Control. Prior to commencing an offer
to purchase, we would be required to (1) repay in full all of our indebtedness
and that of our subsidiaries that would prohibit the repurchase of the notes,
including indebtedness under the New Bank Facilities, or (2) obtain any consents
required to permit the repurchase. If we were unable to repay all of such
indebtedness or were unable to obtain the necessary consents, then we would be
unable to offer to purchase the notes, resulting in an event of default under
the indenture governing the notes. We cannot assure you that we will have enough
funds available at the time of any Change of Control offer to make any debt
payment (including repurchases of notes) as described above.
The events that constitute a Change of Control under the indenture may also
be events of default under the New Bank Facilities or our other indebtedness and
that of our subsidiaries. Such events may permit the lenders under such debt to
declare the debt due and payable and, if the debt is not paid, to require us or
our subsidiaries to sell assets that secure such debt in order to repay the
lenders. In this case, our ability to raise cash to repurchase the notes would
be limited and would reduce the practical benefit of the offer to purchase
provisions to the holders of the notes. See "Description of Certain
Indebtedness."
RISKS ASSOCIATED WITH THE SYGNET ACQUISITION; CONFLICTS OF INTEREST
Dobson intends to integrate the operations of Sygnet with its existing
cellular operations by centralizing pricing, customer service and marketing,
systems design, engineering, purchasing and financial and administrative
functions and from the consolidation of billing functions. However, we may face
some
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difficulties as a result of (1) the loss of key Sygnet personnel, (2) the
integration of our corporate, accounting, financial reporting and management
information systems with Dobson's systems and (3) the strain on Dobson's
existing personnel who will largely manage both businesses. In addition,
telecommunications providers generally experience higher customer and employee
turnover rates during and after an acquisition. We cannot assure you that Dobson
will be able to successfully integrate Sygnet's operations or manage Sygnet's
business. Failure to integrate operations effectively and on a timely basis
could have a material adverse effect on our financial condition and results of
operations.
All of our outstanding capital stock is owned by Dobson. In the future we
may engage in transactions with Dobson and its affiliates. Everett R. Dobson,
the Chairman and Chief Executive Officer of Dobson, serves as our Chairman and
Chief Executive Officer. In addition, G. Edward Evans, President and Chief
Operating Officer of Dobson's cellular operations, serves as our President and
Chief Operating Officer; Bruce R. Knooihuizen, the Vice President and Chief
Financial Officer of Dobson, serves as our Vice President and Chief Financial
Officer; and Stephen T. Dobson, the Secretary of Dobson, serves as our Treasurer
and Secretary. As a result, we are controlled by Dobson and Dobson is in a
position that may result in conflicts of interest with respect to transactions
involving Dobson and us, including negotiating the terms for providing services
to each other or enforcing any such arrangements. In addition, certain decisions
concerning our operations or financial structure may present conflicts of
interest between Dobson and the holders of the Notes.
Certain of Dobson's markets are close to Sygnet's markets in Pennsylvania
and New York. Although our directors who are also directors or officers of
Dobson have certain fiduciary obligations to us, such directors and Dobson are
in positions that may create potential conflicts of interest with respect to
certain business opportunities available to and certain transactions involving
us. Neither Everett R. Dobson, Mr. Evans, Mr. Knooihuizen, nor Stephen T. Dobson
is obligated to present to us any particular investment opportunity which comes
to their attention, even if such opportunity is of a character which might be
suitable for investment by us.
COMPETITION
The telecommunications industry is highly competitive. Many of our
competitors and potential competitors have substantially greater financial,
personnel, technical, marketing and other resources than do we, as well as other
competitive advantages. Currently the FCC authorizes only two cellular licensees
to operate in each license area and we compete in each of our markets with one
other cellular licensee. Competition for subscribers between cellular licensees
in a given license area is based principally upon price, the services and
enhancements offered, the technical quality of the cellular system, customer
service, system coverage and capacity. We also compete, although to a lesser
extent, with resellers, paging companies and landline telephone service
providers.
As a result of recent regulatory and legislative initiatives, our cellular
operations may face increased competition from entities which use other
communications technologies or other radio frequency spectrum such as broadband
PCS licensees and enhanced specialized mobile radio ("ESMR") licensees. The FCC
has authorized as many as six broadband PCS licensees to provide services in
each of our markets, although not all of these licensees have begun servicing
those markets. Our operations may also face competition from other technologies
developed in the future including, but not limited to, satellite systems and
services provided over spectrum allocated to the Wireless Communications
Services ("WCS") and General Wireless Communications Services ("GWCS"). While
mobile services are not currently feasible on WCS spectrum, and GWCS spectrum
has not been licensed, mobile operations are not prohibited on such spectrum and
may emerge at some future date. We believe the likelihood of near-term
competition from such services is reduced because the areas in which we operate
are less densely populated. However, one or more of the technologies we
currently use in our business may become inferior or obsolete at some time in
the future. See "Business--Competition."
We may not be able to continue to compete successfully and new technologies
and products that are more commercially accepted than ours may be developed.
Some competitors may market other services
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such as long distance, cable television access or landline local exchange
services with their wireless offerings. There has been an industry trend of
declining average revenue per minute, as competition between service providers
has led to reductions in rates for airtime and subscriptions and other charges.
We expect that this trend will continue. See "Business--Competition" for more
detailed information on our competitive environment.
RAPID TECHNOLOGICAL CHANGES
The telecommunications industry is subject to rapid and significant changes
in technology, including advancements protected by intellectual property laws.
Significant changes can be seen in the increasing pace of digital upgrades in
existing analog wireless systems, evolving industry standards, the availability
of new radio frequency spectrum allocations for wireless services, ongoing
improvements in the capacity and quality of digital technology, shorter
development cycles for new products and enhancements, developments in emerging
wireless transmission technologies and changes in end-user requirements and
preferences. International standards bodies and national regulators will
consider technology standards for new third-generation wireless technologies in
coming years, and we cannot assure you that our current technologies will be
compatible with such technologies. In addition, we may be required to select in
advance one technology over another. However, at the time we must make our
investment, we may not be able to accurately predict which technology will prove
to be the most economic, efficient or capable of attracting customer usage. We
also face uncertainty as to the extent of future customer demand as well as the
extent to which airtime and monthly access rates may continue to decline. The
effect of technological changes on our business cannot be predicted, and we
cannot assure you that technological developments will not have a material
adverse effect on us.
DEPENDENCE ON KEY PERSONNEL
A small number of management and operating personnel at Dobson will also
manage and oversee our operations. The loss of certain of these individuals
could have a material adverse effect on us. We believe that our ability to
successfully manage our planned growth will depend in large part on our
continued ability to attract and retain highly skilled and qualified personnel.
See "--Risks Associated with the Sygnet Acquisition; Conflicts of Interest" and
"Management."
RELIANCE ON USE OF THIRD-PARTY SERVICE MARK
We intend to continue to use the registered service mark CELLULAR
ONE-Registered Trademark- to promote the services Sygnet offers. Sygnet has
five-year contracts with Cellular One Group, the owner of the service mark, for
three of its four markets. These contracts begin to expire in 2001, and Sygnet
has an option to renew each of these contracts for two additional five-year
terms. See "Business--Service Marks." Under these agreements, Sygnet must meet
specified operating and service quality standards for its systems. If these
agreements are not renewed or if we fail to meet the applicable quality
standards, our ability both to attract new subscribers and retain existing
subscribers could be impaired. Recently, AT&T Wireless, which had been the
single largest user of the CELLULAR ONE-Registered Trademark- name, has
significantly reduced its use of the brand name as a primary service mark. If,
for this or some other reason beyond our control, the CELLULAR ONE-Registered
Trademark- mark was to suffer diminished marketing appeal, our ability both to
attract new subscribers and retain existing subscribers could be materially
impaired.
FRAUDULENT CONVEYANCE STATUTES
Various laws enacted to protect creditors may apply to our incurrence of
indebtedness and other obligations in connection with the Transactions,
including the issuance of the notes. If a court were to find in a lawsuit by one
or more of our unpaid creditors or its or their representatives that we did not
receive fair consideration or reasonably equivalent value for incurring such
indebtedness or obligation and, at the time of such incurrence, we: (i) were
insolvent; (ii) were rendered insolvent by reason of such incurrence; (iii) were
engaged in a business or transaction for which our remaining assets constituted
unreasonably small capital; or (iv) intended to incur or believed we would incur
obligations beyond our ability to pay
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such obligations as they mature, such court, subject to applicable statutes of
limitation, could decide to invalidate, in whole or in part, such indebtedness
and obligations as fraudulent conveyances or subordinate such indebtedness and
obligations to our existing or future creditors.
The measure of insolvency for purposes of determining whether we made a
fraudulent conveyance will vary depending on the law of the jurisdiction which
is being applied. Generally, however, we would be considered insolvent at a
particular time if (i) the sum of our debts was then greater than all of our
property at a fair valuation or (ii) if the present fair saleable value of our
assets was then less than the amount that would be required to pay our probable
liabilities on our existing debts as they became due. On the basis of Sygnet's
historical financial information, Sygnet's recent operating history and other
factors, our management believes that, after giving effect to the Transactions,
we will not be rendered insolvent, will have sufficient capital for the business
in which we will be engaged and will be able to pay its debts as they mature;
however, our management has not obtained any independent opinion regarding such
issues. In addition, we cannot assure you as to what standard a court would
apply in making such determinations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
POTENTIAL FOR ADVERSE REGULATORY CHANGE AND THE NEED FOR REGULATORY APPROVALS
The licensing, construction, operation, acquisition and sale of cellular
systems, as well as the number of cellular and other wireless licensees
permitted in each market, are regulated by the FCC. Changes in the regulation of
wireless activities and wireless carriers or the loss of any license or licensed
area could have a material adverse effect on our operations. In addition, all
cellular licenses in the United States must be renewed after the expiration of
their initial ten-year term. Our cellular licenses begin to expire in October
2000. We believe that each of these licenses will be renewed based upon FCC
rules establishing a presumption in favor of licensees that have complied with
their regulatory obligations during the initial license period. We cannot assure
you, however, that the FCC will renew our licenses. See "Business-- Regulation."
EQUIPMENT FAILURE AND NATURAL DISASTER
A major equipment failure or a natural disaster affecting our central
switching office, our microwave links or certain of our cell sites could have a
material adverse effect on our operations.
RELIANCE ON ONE BILLING VENDOR
We rely primarily on one vendor to produce all of our customer billings. If
this billing vendor for any reason were to encounter significant problems
affecting its ability to perform its billing functions for us, our ability to
generate billings to its customers would be materially impaired, until a new
arrangement could be established.
RADIO FREQUENCY EMISSION CONCERNS
Media reports have suggested that certain radio frequency ("RF") emissions
from cellular telephones may be linked to cancer, and may interfere with
pacemakers and other medical devices. Concerns over RF emissions may discourage
the use of cellular telephones, which could have a material adverse effect on
our business. On August 1, 1996, the FCC released a report and order, which
became effective in August 1996 as to mobile and portable devices and October
1997 for cellular, that updates the guidelines and methods it uses for
evaluating RF emissions from radio equipment, including cellular telephones and
transmitting facilities. We do not believe these guidelines will have a material
impact on our operations. While the FCC's rules impose more restrictive
standards on RF emissions from lower power devices such as cellular telephones,
we believe, based on the certificates of manufacturers, that all cellular
telephones currently provided by Sygnet to its customers, as well as Sygnet's
transmitting facilities, comply with the FCC's standards. See
"Business--Regulation."
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RISKS ASSOCIATED WITH THE YEAR 2000 ISSUE
The "Year 2000 Issue" is the result of the inability of some computer
programs to distinguish the year 1900 from the year 2000. Most computer programs
and operating systems were written using two digits to define the applicable
year rather than four digits. This means that any equipment containing computer
programs with time-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. In some instances this could result in
system failures, disruption in operations and possible inaccuracies of data.
Sygnet has substantially completed an inventory of all its systems and
equipment in each market to determine the impact of the Year 2000 Issue. Based
on this inventory, Sygnet has contacted its significant vendors to determine how
their products and services might be affected by the Year 2000 Issue. Generally,
Sygnet is relying upon representations made by the vendors as to their state of
readiness for the Year 2000 Issue. Based on internal evaluations and on
information provided by these vendors, certain systems have been upgraded and
tested for Year 2000 compliance. Sygnet estimates that it is 60% complete with
this phase of the project.
Sygnet is placing special emphasis on areas that present a risk of
materially interrupting its revenue stream in the event of a Year 2000 problem.
Presently, it appears three main systems have the potential to materially
interrupt the revenue stream due to the Year 2000 Issue. They are the two
cellular switches, which could prevent calls from being made, and the billing
system, which could prevent Sygnet from billing and subsequently receiving
revenue from its customers. To address this risk, the Northern Telecom switch,
which serves Sygnet's Ohio and Pennsylvania markets, has recently undergone a
software upgrade to a Year 2000 compliant version. Sygnet has monitored testing
of this software in a Year 2000 situation with commonly known critical dates and
has encountered no problems. Accordingly, Sygnet has deemed this system to have
a minimal risk of failure regarding the Year 2000 Issue and will not develop
contingency plans for the Northern Telecom switch unless new information becomes
available that suggests a contingency plan is warranted. The Ericsson switch,
which serves Sygnet's New York market, is expected to have its software upgraded
to a Year 2000 compliant version in the first quarter of 1999. In connection
with the planned upgrade of the New York system, the Company plans to replace
the Ericsson switching equipment with Northern Telecom equipment that is
believed to be Year 2000 compliant. In addition, the upgrade of the billing
system software to a Year 2000 compliant version is expected to be completed in
the first quarter of 1999. The vendor that provides this system has indicated
that Year 2000 compliance testing will be completed by June of 1999. Sygnet has
deemed this system to have a moderate risk of not being able to handle the Year
2000 requirements and a contingency plan is being prepared that may include
selecting a new billing vendor in mid-1999.
The cost of testing and upgrading these systems can not be determined at
this time. Our current estimate of the cost of becoming Year 2000 compliant is
$250,000 or less. This estimate may change significantly downward or upward as
the process continues or if problems arise with either a switch or billing
system. Additionally, this estimate may change substantially if other systems or
vendors are unable to become Year 2000 compliant causing a material interruption
of the revenue stream.
LACK OF PUBLIC MARKET FOR THE NOTES; RESTRICTIONS ON TRANSFERABILITY
The notes are a new issue of securities for which there is currently no
active trading market. The notes may trade for less than their initial offering
price, depending upon prevailing interest rates, the market for similar
securities, our financial condition and prospects and other factors beyond our
control, including general economic conditions. We do not intend to apply for a
listing or quotation of the notes. Although the Initial Purchasers have informed
us that they intend to make a market in the notes, they are not obligated to do
so and any such market making activities may be discontinued at any time without
notice. Accordingly, we cannot assure you as to the development or liquidity of
any trading market for the Notes.
Your notes have not been registered under the Securities Act or any state
securities laws and may not be offered or sold, except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws, or pursuant to an
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effective registration statement. We have registered the New Notes under the
Securities Act and are obligated to use our best efforts to complete an exchange
offer for the Notes or register resales of the Notes under the Securities Act,
but we cannot assure you as to the development or liquidity of the trading
market of the Notes thereafter. See "Description of the Notes--Registration
Rights."
FORWARD-LOOKING STATEMENTS
The description of our plans set forth herein, including our strategies,
planned capital expenditures, Year 2000 preparedness and anticipated cost
savings, are forward-looking statements. These plans involve a number of risks
and uncertainties. Important factors that could cause actual capital
expenditures, Year 2000 preparedness, acquisition activity, or our performance
to differ materially from our plans include, without limitation:
- our ability to satisfy the financial covenants of its existing and future
debt instruments and to raise additional capital;
- our ability to integrate our operations with Dobson's existing operations
and to successfully market our services and products to existing and new
customers;
- our ability to install equipment and expand and upgrade our systems in a
timely manner and to manage our rapid growth successfully;
- our ability to compete effectively against competitors with greater
financial, technical, marketing and other resources and respond
effectively to changes in end-user requirements and preferences;
- the inability of third party vendors to provide products and services
which are Year 2000 compliant;
- the development of other technologies and products that may gain more
commercial acceptance than ours; and
- adverse regulatory changes.
We cannot assure you that anticipated future results will be achieved. Actual
events or results may differ materially as a result of risks to which we are or
may be subject. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. We do not
intend to update or revise these forward-looking statements to reflect events or
circumstances after the date hereof including, without limitation, changes in
our business strategy or planned capital expenditures, or to reflect the
occurrence of unanticipated events.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on December 23, 1998 to NationsBanc
Montgomery Securities LLC, Lehman Brothers Inc., First Union Capital Markets, a
division of Wheat First Securities, Inc., and TD Securities (USA) Inc.
(together, the "Initial Purchasers") in reliance on Section 4(2) of the
Securities Act. The Initial Purchasers offered and sold the Old Notes only (i)
to "qualified institutional buyers" (as defined in Rule 144A) in compliance with
Rule 144A and (ii) outside the United States to persons other than U.S. Persons,
which term includes dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust), in reliance upon Regulation S under the Securities Act.
In connection with the sale of the Old Notes, the Company and the Initial
Purchasers entered into a Registration Rights Agreement dated as of December 23,
1998, which required the Company to file with the Commission a registration
statement under the Securities Act with respect to the new notes (the "New
Notes," together with the Old Notes, the "Notes") and use its best efforts to
cause such registration statement to become effective under the Securities Act
and, upon the effectiveness of that registration statement, to offer to the
holders of the Old Notes the opportunity to exchange their Old Notes for a like
principal amount of New Notes, which will be issued without a restrictive legend
and which may be reoffered and resold by the holder without restrictions or
limitations under the Securities Act. A copy of the Registration Rights
Agreement has been filed as an exhibit to the registration statement (the
"Registration Statement") of which this Prospectus is a part. The Exchange Offer
is being made pursuant to the Registration Rights Agreement to satisfy the
Company's obligations thereunder. The term "holder" with respect to the Exchange
Offer means any person in whose name Old Notes are registered on the Company's
books or any other person who has obtained a properly completed stock power from
the registered holder, or any person whose Old Notes are held of record by The
Depository Trust Company ("DTC") who desires to deliver such Old Notes by
book-entry transfer at DTC.
The Company has not requested, and does not intend to request, an
interpretation by the staff of the Securities and Exchange Commission (the
"Commission") with respect to whether the New Notes issued pursuant to the
Exchange Offer in exchange for the Old Notes may be offered for sale, resold or
otherwise transferred by any holder without compliance with the registration and
prospectus delivery provisions of the Securities Act of 1933, as amended (the
"Securities Act"). Based on interpretations by the staff of the Commission set
forth in no-action letters issued to third parties, the Company believes the New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by any holder thereof
(other than broker-dealers, as set forth below, and any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and that such holder has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. Any holder who tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating in a distribution of the New
Notes or who is an affiliate of the Company may not rely upon such
interpretations by the staff of the Commission and, in the absence of an
exemption therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. Failure to comply with such requirements in such instance may
result in such holder incurring liabilities under the Securities Act for which
the holder is not indemnified by the Company. Each broker-dealer (other than an
affiliate of the Company) that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. The Company has
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agreed that, for a period of 180 days after the Exchange Date, it will make the
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
The Exchange Offer is not being made to, nor will the Company accept
surrenders for exchange from, holders of Old Notes in any jurisdiction in which
this Exchange Offer or the acceptance thereof would not be in compliance with
the securities or blue sky laws of such jurisdiction.
By tendering in the Exchange Offer, each holder of Old Notes will represent
to the Company that, among other things, (i) the New Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the holder, (ii)
neither the holder of Old Notes nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes, (iii) if the holder is not a broker-dealer, or is a broker-dealer but
will not receive New Notes for its own account in exchange for Old Notes,
neither the holder nor any such person is engaged in or intends to participate
in the distribution of such New Notes, and (iv) neither the holder nor any such
other person is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act or, if such holder is an "affiliate," that such holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
Following the completion of the Exchange Offer, none of the Old Notes will
be entitled to the contingent increase in interest rate applicable to the Old
Notes. Following the consummation of the Exchange Offer, holders of Old Notes
will not have any further registration rights, and the Old Notes will continue
to be subject to certain restrictions on transfer. See "--Consequences of
Failure to Exchange." Accordingly, the liquidity of the market for the Old Notes
could be adversely affected. See "Risk Factors-- Consequences of the Exchange
Offer on Non-Tendering holders of the Old Notes."
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Old Notes may wish to
consult their own financial advisors and tax advisors with respect to their
particular tax situation in making their own decisions on whether to participate
in the Exchange Offer.
TERMS OF THE EXCHANGE OFFER
GENERAL Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and all
Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount of
New Notes in exchange for each $1,000 principal amount of Old Notes accepted in
the Exchange Offer. Holders may tender some or all of their Old Notes pursuant
to the Exchange Offer. However, Old Notes may be tendered only in amounts that
are integral multiples of $1,000 principal amount.
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes except that the New Notes will
be registered under the Securities Act and, therefore, certificates representing
New Notes will not bear legends restricting the transfer thereof. The New Notes
will evidence the same debt as the Old Notes, will be entitled to the benefits
of the Indenture and will be treated as a single class thereunder with any Old
Notes that remain outstanding. The Exchange Offer is not conditioned upon any
minimum number of Old Notes being tendered for exchange.
As of December 31, 1998, $200,000,000 aggregate principal amount of the Old
Notes were outstanding. The Prospectus, together with the Letter of Transmittal,
is being sent to all registered holders.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Oklahoma General Corporation Act or the indenture governing the Notes (the
"Indenture") in connection with the Exchange Offer. The Company intends to
conduct the Exchange Offer in accordance with the provisions of the Registration
Rights Agreement and the applicable requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder. Old Notes
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which are not tendered for exchange in the Exchange Offer will remain
outstanding and interest thereon will continue to accrue, but such Old Notes
will not be entitled to any rights or benefits under the Registration Rights
Agreement.
The Company will be deemed to have accepted validly tendered Old Notes when,
as and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders for the
purposes of receiving the New Notes from the Company. If any tendered Old Notes
are not accepted for exchange because of an invalid tender, the occurrence of
certain other events set forth herein or otherwise, certificates for any such
unaccepted Old Notes will be returned, without expense, to the tendering holder
thereof as promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS. The term "Expiration Date" shall
mean 5:00 p.m., New York City time, on , 1999, unless the Company, in
its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended. Although the Company has no current intention to extend the
Exchange Offer, the Company reserves the right to extend the Exchange Offer at
any time and from time to time by giving oral or written notice to the Exchange
Agent and by timely public announcement communicated, unless otherwise required
by applicable law or regulation, by making a release to the Dow Jones News
Service. During any extension of the Exchange Offer, all Old Notes previously
tendered pursuant to the Exchange Offer and not withdrawn will remain subject to
the Exchange Offer. The date of the exchange of the New Notes for Old Notes will
be as soon as practicable following the Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions of
the Exchange Offer" shall not have been satisfied, by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (ii) to
amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by oral or written notice thereof to the registered holders. If the
Exchange Offer is amended in any manner determined by the Company to constitute
a material change, the Company will promptly disclose such amendment by means of
a prospectus supplement that will be distributed to the registered holders, and
the Company will extend the Exchange Offer for a period of time, depending upon
the significance of the amendment and the manner of disclosure to the registered
holders, if the Exchange Offer would otherwise expire during such period.
In all cases, issuance of the New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of a properly completed and duly executed Letter of
Transmittal and all other required documents; provided, however, that the
Company reserves the absolute right to waive any conditions of the Exchange
Offer or defects or irregularities in the tender of Old Notes. If any tendered
Old Notes are not accepted for any reason set forth in the terms and conditions
of the Exchange Offer or if Old Notes are submitted for a greater principal
amount than the holder desires to exchange, such unaccepted or non-exchanged Old
Notes or substitute Old Notes evidencing the unaccepted portion, as appropriate,
will be returned without expense to the tendering holder, unless otherwise
provided in the Letter of Transmittal, as promptly as practicable after the
expiration or termination of the Exchange Offer.
INTEREST ON THE NEW NOTES. Holders of Old Notes that are accepted for
exchange will not receive accrued interest thereon at the time of exchange.
However, each New Note will bear interest from the
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most recent date to which interest has been paid on the Old Notes or New Notes,
or if no interest has been paid on the Old Notes or the New Notes, from December
23, 1998.
PROCEDURES FOR TENDERING OLD NOTES. The tender to the Company of Old Notes
by a holder thereof pursuant to one of the procedures set forth below will
constitute an agreement between such holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal. A holder of the Old Notes may tender such Old Notes by (i) properly
completing and signing a Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to a Letter of Transmittal shall be deemed to
include a facsimile thereof) and delivering the same, together with any
corresponding certificate or certificates representing the Old Notes being
tendered (if in certificated form) and any required signature guarantees, to the
Exchange Agent at its address set forth in the Letter of Transmittal on or prior
to the Expiration Date (or complying with the procedure for book-entry transfer
described below), or (ii) complying with the guaranteed delivery procedures
described below.
If tendered Old Notes are registered in the name of the signer of the Letter
of Transmittal and the New Notes to be issued in exchange therefor are to be
issued (and any untendered Old Notes are to be reissued) in the name of the
registered holder (which term, for the purposes described herein, shall include
any participant in DTC (also referred to as a book-entry facility) whose name
appears on a security listing as the owner of Old Notes), the signature of such
signer need not be guaranteed. In any other case, the tendered Old Notes must be
endorsed or accompanied by written instruments of transfer in form satisfactory
to the Company and duly executed by the registered holder and the signature on
the endorsement or instrument of transfer must be guaranteed by an eligible
guarantor institution which is a member of one of the following recognized
signature guarantee programs (an "Eligible Institution"): (i) The Securities
Transfer Agents Medallion Program (STAMP), (ii) The New York Stock Exchange
Medallion Signature Program (MSF), or (iii) The Stock Exchange Medallion Program
(SEMP). If the New Notes or Old Notes not exchanged are to be delivered to an
address other than that of the registered holder appearing on the note register
for the Old Notes, the signature in the Letter of Transmittal must be guaranteed
by an Eligible Institution.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT
TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO THE EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
The Company understands that the Exchange Agent has confirmed with DTC that
any financial institution that is a participant in DTC's system may utilize
DTC's Automated Tender Offer Program ("ATOP") to tender Old Notes. The Company
further understands that the Exchange Agent will request, within two business
days after the date the Exchange Offer commences, that DTC establish an account
with respect to the Old Notes for the purpose of facilitating the Exchange
Offer, and any participant may make book-entry delivery of Old Notes by causing
DTC to transfer such Old Notes into the Exchange Agent's account in accordance
with DTC's ATOP procedures for transfer. However, the exchange of the Old Notes
so tendered will only be made after timely confirmation (a "Book-Entry
Confirmation") of such book-entry transfer and timely receipt by the Exchange
Agent of an Agent's Message (as defined in the next sentence), and any other
documents required by the Letter of Transmittal. The term "Agent's Message"
means a message, transmitted by DTC and received by the Exchange Agent and
forming part of Book-Entry Confirmation, which states that DTC has received an
express acknowledgment from a participant tendering Old Notes which are the
subject of such Book-Entry Confirmation and that such
24
<PAGE>
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Company may enforce such agreement against such
participant.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Old Notes (or a confirmation of book-entry transfer of such
Old Notes into the Exchange Agent's account at DTC), is received by the Exchange
Agent, or (ii) a Notice of Guaranteed Delivery or letter, telegram or facsimile
transmission to similar effect (as provided below) from an Eligible Institution
is received by the Exchange Agent. Issuances of New Notes in exchange for Old
Notes tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram
or facsimile transmission to similar effect (as provided below) by an Eligible
Institution will be made only against submission of a duly signed Letter of
Transmittal (and any other required documents) and deposit of the tendered Old
Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Old Notes will be
determined by the Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders not in proper
form or the acceptance for exchange of which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Exchange Offer or any defect or irregularity
in the tender of any Old Notes. None of the Company, the Exchange Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Any Old Notes received by the Exchange Agent that are not validly
tendered and as to which the defects or irregularities have not been cured or
waived, or if Old Notes are submitted in principal amount greater than the
principal amount of Old Notes being tendered by such tendering holder, such
unaccepted or non-exchanged Old Notes will be returned by the Exchange Agent to
the tendering holder, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion (a) to
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date, and (b) to the extent permitted by applicable law, to
purchase Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers will differ from the terms
of the Exchange Offer.
GUARANTEED DELIVERY PROCEDURES. If the holder desires to accept the
Exchange Offer and time will not permit a Letter of Transmittal or Old Notes to
reach the Exchange Agent before the Expiration Date or the procedure for the
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if the Exchange Agent has received at its office, on or prior to the
Expiration Date, a letter, telegram or facsimile transmission from an Eligible
Institution setting forth the name and address of the tendering holder, the
name(s) in which the Old Notes are registered and the certificate number(s) of
the Old Notes to be tendered, and stating that the tender is being made thereby
and guaranteeing that, within three New York Stock Exchange trading days after
the date of execution of such letter, telegram or facsimile transmission by the
Eligible Institution, such Old Notes, in proper form for transfer (or a
confirmation of book-entry transfer of such Old Notes into the Exchange Agent's
account at DTC), will be delivered by such Eligible Institution together with a
properly completed and duly executed Letter of Transmittal (and any other
required documents). Unless Old Notes being tendered by the above-described
method are deposited with the Exchange Agent within the time period set forth
above (accompanied or preceded by a properly competed Letter of Transmittal and
any other required documents), the Company may, at its option, reject the
tender. Copies of a Notice of Guaranteed Delivery which may be used by Eligible
Institutions for the purposes described in this paragraph are available from the
Exchange Agent.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL. The Letter of
Transmittal contains, among other things, the following terms and conditions,
which are part of the Exchange Offer.
25
<PAGE>
The party tendering Old Notes for exchange (the "Transferor") exchanges,
assigns and transfers the Old Notes to the Company and irrevocably constitutes
and appoints the Exchange Agent as the Transferor's agent and attorney-in-fact
to cause the Old Notes to be assigned, transferred and exchanged. The Transferor
represents and warrants that it has full power and authority to tender,
exchange, assign and transfer the Old Notes and to acquire New Notes issuable
upon the exchange of such tendered Old Notes, and that, when the same are
accepted for exchange, the Company will acquire good and unencumbered title to
the tendered Old Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim. The Transferor also warrants
that it will, upon request, execute and deliver any additional documents deemed
by the Company to be necessary or desirable to complete the exchange, assignment
and transfer of tendered Old Notes or to transfer ownership of such Old Notes on
the account books maintained by DTC. All authority conferred by the Transferor
will survive the death, bankruptcy or incapacity of the Transferor and every
obligation of the Transferor shall be binding upon the heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives of such Transferor.
By executing a Letter of Transmittal, each holder will make to the Company
the representations set forth above under the heading "--Purpose and Effect of
the Exchange Offer."
WITHDRAWAL OF TENDERS OF OLD NOTES. Except as otherwise provided herein,
tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the names of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) contain a statement that
such holder is withdrawing its election to have such Old Notes exchanged, (iv)
be signed by the holder in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Old Notes register the
transfer of such Old Notes in the name of the person withdrawing the tender, and
(v) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. If Old notes have been tendered pursuant
to the procedure for book-entry transfer, any notice of withdrawal must specify
the name and number of the account at the book-entry transfer facility. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Old Notes so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer and no New
Notes will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Any Old Notes which have been tendered but which are not
accepted for exchange will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described above under
"--Procedures for Tendering Old Notes" at any time prior to the Expiration Date.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, or any extension of
the Exchange Offer, the Company shall not be required to accept for exchange, or
exchange New Notes for, any Old Notes, and may terminate the Exchange Offer as
provided herein on or before the Expiration Date, if:
(a) any statute, rule or regulation shall have been enacted, or any
action shall have been taken by any court or governmental authority which,
in the reasonable judgment of the Company, would prohibit, restrict or
otherwise render illegal consummation of the Exchange Offer; or
26
<PAGE>
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its subsidiaries
has occurred which, in the reasonable judgment of the Company, might
materially impair the ability of the Company to proceed with the Exchange
Offer or materially impair the contemplated benefits of the Exchange Offer
to the Company; or
(c) there shall occur a change in the current interpretations by the staff
of the Commission which, in the Company's reasonable judgment, might materially
impair the Company's ability to proceed with the Exchange Offer
and the Company does not wave such event or change.
If the Company determines in its sole discretion that any of the above
conditions have not been satisfied on or prior to the Expiration Date, the
Company may (i) refuse to accept any Old Notes and return all tendered Old Notes
to the tendering holders, (ii) extend the Exchange Offer and retain all Old
Notes tendered prior to the Expiration Date, subject, however, to the right of
holders to withdraw such Old Notes (see "--Terms of the Exchange
Offer--Withdrawal of Tenders of Old Notes"), or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all validly tendered
Old Notes which have not been withdrawn. If such waiver constitutes a material
change to the Exchange Offer, the Company will promptly disclose such waiver by
means of a prospectus supplement that will be distributed to the registered
holders, and the Company will extend the Exchange Offer for a period of time,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders, if the Exchange Offer would otherwise expire during such
period.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange Agent
for the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
P.O. Box 844 Corporate Trust Operations 111 Broadway
Cooper Station Department Lower Level
New York, NY 10276-0844 770 Broadway - 13th Floor New York, NY 10006
Attn: Corporate Trust New York, NY 10003 Attn: Corporate Trust
Services Services
(registered or certified
mail
recommended)
</TABLE>
By Facsimile:
(212) 420-6152
(For Eligible Institutions Only)
Confirm by Telephone:
(800) 548-6565
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telecopy, telephone or in person by officers and regular
employees of the Company and its affiliates. No additional compensation will be
paid to any such officers and employees who engage in soliciting tenders.
27
<PAGE>
The Companyy has not retained any dealer-manager or other soliciting agent
in connection with the Exchange Offer and will not make any payments to brokers,
dealers or others soliciting acceptance of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus, the Letter of
Transmittal and related documents to the beneficial owners of the Old Notes and
in handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and transfer agent and registrar, accounting and legal fees and printing
costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Old Notes pursuant to the Exchange Offer. If, however, New Notes, or Old
Notes for principal amounts not tendered or accepted for exchange, are to be
delivered to, or are to be issued in the name of, any person other than the
registered holder of the Old Notes tendered or if a transfer tax is imposed for
any reason other than the exchange of the Old Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities within the meaning of Rule 144 of the
Securities Act. Accordingly, such Old Notes may be resold only (i) to the
Company or any subsidiary thereof, (ii) to a qualified institutional buyer in
compliance with Rule 144A, (iii) to an institutional accredited investor that,
prior to such transfer, furnishes to the Trustee a signed letter containing
certain representations and agreements relating to the restrictions on transfer
of the Old Notes (the form of which letter can be obtained from the Trustee)
and, if such transfer is in respect of an aggregate principal amount of Old
Notes at the time of transfer of less than $100,000, an opinion of counsel
acceptable to the Company that such transfer is in compliance with the
Securities Act, (iv) outside the United States in compliance with Role 904 under
the Securities Act, (v) pursuant to the exemption from registration provided by
Section 4(2) of under the Securities Act, and Rule 144 adopted thereunder (if
available), or (vi) pursuant to an effective registration statement under the
Securities Act. The liquidity of the Old Notes could be adversely affected by
the Exchange Offer. Following the consummation of the Exchange Offer, holders of
the Senior Preferred Stock will have no further registration rights under the
Registration Rights Agreement and will not be entitled to the contingent
increase in the dividend rate applicable to the Old Notes.
28
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth certain historical consolidated financial
data for Sygnet with respect to each of the five years in the period ended
December 31, 1997 and for the nine months ended September 30, 1997 and 1998. The
selected historical consolidated financial data as of each of the five years
ended December 31, 1997 were derived from Sygnet's audited consolidated
financial statements and for the nine months ended September 30, 1997 and 1998
have been derived from Sygnet's unaudited consolidated financial statements. In
the opinion of management, the unaudited consolidated financial statements have
been prepared on the same basis as Sygnet's audited consolidated financial
statements and include all adjustments, which consist only of normal recurring
adjustments, necessary for a fair presentation of the information set forth
therein. Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of results that may be expected for the full year. The
information as set forth below should be read in conjunction with "Use of
Proceeds," "Pro Forma Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the related notes thereto included elsewhere in this
offering memorandum.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- --------------------
1993 1994 1995(1) 1996(2) 1997 1997 1998
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SUBSCRIBER DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Subscriber revenue............................. $ 8,878 $ 11,312 $ 17,191 $ 31,085 $ 52,639 $ 38,531 $ 46,738
Roamer revenue................................. 3,107 4,145 4,176 9,687 26,993 19,868 24,753
Equipment sales................................ 1,098 1,172 1,529 2,417 4,323 3,051 4,253
Other revenue.................................. 1,391 1,420 1,681 1,607 1,679 1,308 1,190
--------- --------- --------- --------- --------- --------- ---------
Total revenue.................................... 14,474 18,048 24,577 44,796 85,634 62,758 76,934
Costs and expenses:
Cost of services............................... 2,515 3,452 3,366 5,509 10,048 7,175 9,005
Cost of equipment sales........................ 930 1,624 4,164 5,816 9,663 6,806 7,790
General and administrative..................... 4,412 4,467 5,564 9,852 16,976 11,667 14,665
Selling and marketing.......................... 2,166 2,555 3,082 6,080 10,841 7,466 9,057
Depreciation and amortization.................. 1,951 2,639 3,487 10,038 28,719 21,143 21,343
--------- --------- --------- --------- --------- --------- ---------
Total costs and expenses....................... 11,974 14,737 19,663 37,295 76,247 54,257 61,860
--------- --------- --------- --------- --------- --------- ---------
Operating income................................. 2,500 3,311 4,914 7,501 9,387 8,501 15,074
Interest expense............................... (702) (988) (2,660) (11,174) (29,902) (22,558) (21,613)
Other income (expense), net.................... (275) (601) (304) (195) (101) 6 (340)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before extraordinary item........ 1,523 1,722 1,950 (3,868) (20,616) (14,051) (6,879)
Extraordinary loss on extinguishment of debt... -- -- -- (1,420) -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss).............................. $ 1,523 $ 1,722 $ 1,950 $ (5,288) $ (20,616) $ (14,051) $ (6,879)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Dividends on preferred stock................... -- -- -- (718) (2,122) (2,122) --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) applicable to common
stockholders................................. $ 1,523 $ 1,722 $ 1,950 $ (6,006) $ (22,738) $ (16,173) $ (6,879)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) per share applicable to
common stockholders:(3)
Before extraordinary item.................... $ (.74) $ (2.93) $ (2.21) $ (.75)
Extraordinary item........................... (.23) -- -- --
--------- --------- --------- ---------
Net income (loss)............................ $ (.97) $ (2.93) $ (2.21) $ (.75)
--------- --------- --------- ---------
--------- --------- --------- ---------
OTHER FINANCIAL DATA:
Adjusted EBITDA (4).............................. $ 4,451 $ 5,950 $ 8,401 $ 17,539 $ 38,106 $ 29,644 $ 36,417
Ratio of earnings to combined fixed charges and
preferred stock dividends (5).................. 3.11x 2.60x 1.67x -- -- -- --
Capital expenditures, excluding cost of
acquisitions................................... $ 3,630 $ 5,793 $ 9,056 $ 10,050 $ 25,576 $ 16,979 $ 11,469
OTHER DATA:
Ending cellular subscribers (at period end)...... 18,037 24,124 44,665 106,574 142,934 130,146 166,886
Cellular penetration (at period end) (6)......... 2.5% 3.3% 4.4% 4.5% 6.0% 5.5% 7.0%
Cellular churn (7)............................... 1.3% 1.5% 1.4% 1.3% 1.3% 1.3% 1.5%
Average monthly revenue per cellular subscriber
(8)............................................ $ 50 $ 45 $ 46 $ 42 $ 36 $ 36 $ 34
Marketing and selling costs per gross additional
cellular subscriber (9)........................ $ 391 $ 393 $ 370 $ 321 $ 291 $ 306 $ 287
Cellular cell sites (at period end).............. 18 24 41 114 163 152 181
</TABLE>
(SEE FOOTNOTES ON FOLLOWING PAGE.)
29
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------- SEPTEMBER 30,
1993 1994 1995 1996 1997 1998
--------- --------- --------- --------- --------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Property and equipment, net............................. $ 11,127 $ 14,084 $ 21,049 $ 43,959 $ 53,007 $ 52,138
Total assets............................................ 20,553 27,418 79,618 344,178 340,986 333,296
Long-term debt.......................................... 10,928 18,264 69,500 312,250 305,500 302,644
Mandatorily redeemable preferred stock.................. -- -- -- 19,718 -- --
Stockholders' equity (deficit).......................... 5,329 4,769 4,286 (1,982) 19,218 12,339
</TABLE>
- ------------------------------
(1) Includes the operations of the system acquired in the Erie Acquisition from
September 30, 1995, the date of acquisition.
(2) Includes the operations of the systems acquired in the Horizon Acquisition
from October 9, 1996, the date of acquisition.
(3) Net income (loss) per share applicable to common stockholders for the three
years ended December 31, 1995 is not provided because there is no meaningful
data for those periods.
(4) Adjusted EBITDA is provided because it is a measure commonly used in the
telecommunications industry to determine a company's ability to incur or
service debt. Adjusted EBITDA is not derived according to generally accepted
accounting principles and should not be considered as an alternative to net
income, as a measure of performance, or to cash flows, as a measure of
liquidity. The calculation of Adjusted EBITDA does not include the Company's
commitments for capital expenditures or payments of debts and should not be
deemed to represent funds available to the Company.
(5) "Earnings" is defined as earnings before extraordinary items and accounting
changes, interest expense, amortization of deferred financing costs, taxes
and the portion of rent expense under operating leases representative of
interest. Fixed charges consist of interest expense, amortization of
deferred financing costs and a portion of rent expense under operating
leases representative of interest. For the years ended December 31, 1996 and
1997 and the nine months ended September 30, 1997 and 1998, earnings were
insufficient to cover combined fixed charges and preferred stock dividends
by $4.6 million, $22.7 million, $16.2 million, and $6.6 million,
respectively.
(6) Determined by dividing Sygnet's total ending cellular subscribers for the
period by the estimated total Pops covered by applicable FCC cellular
licenses or authorizations held by Sygnet.
(7) Churn means the number of cellular subscriber cancellations per period as a
percentage of the weighted average total cellular subscribers during such
period. Churn is stated as the average monthly churn rate for the period.
(8) Excludes roaming and equipment revenue.
(9) Determined by dividing cellular marketing and selling costs by the gross
cellular subscribers added during such period. Cellular marketing and
selling costs represent selling expenses and losses incurred on equipment
sales and equipment rentals.
30
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated condensed financial
statements have been prepared to give effect to the Transactions. The
accompanying unaudited pro forma consolidated condensed statements of operations
of the Company for the year ended December 31, 1997 and the nine months ended
September 30, 1998 give effect to the Transactions as if they occurred on
January 1, 1997. The accompanying unaudited pro forma consolidated condensed
balance sheet as of September 30, 1998 has been prepared as if the Transactions
occurred as of that date. The Sygnet Acquisition has been accounted for using
the purchase method of accounting. The unaudited pro forma consolidated
financial information assumes that all of the Sygnet Notes are tendered in the
Sygnet Note Repurchase and the aggregate purchase price for the Sygnet Notes is
$135.8 million and does not give effect to the Pennsylvania 2 Acquisition.
The unaudited pro forma consolidated condensed financial statements have
been prepared on the basis of certain assumptions that the Company believes are
reasonable, including assumptions relating to the allocation of the
consideration to be paid in the Sygnet Acquisition to the assets and liabilities
acquired, based on estimates of fair values using available information provided
by the management of Sygnet. The unaudited pro forma consolidated condensed
financial statements do not give effect to certain cost savings that the Company
will seek to obtain following the Sygnet Acquisition.
The unaudited pro forma consolidated condensed financial statements and
notes thereto are provided for informational purposes only and do not purport to
be indicative of the results that would have actually been obtained had the
Transactions been completed on the dates indicated or that may be expected to
occur in the future. The unaudited pro forma consolidated financial statements
and notes thereto should be read in conjunction with "Use of Proceeds,"
"Selected Consolidated Financial and Other Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business-- Markets
and Systems" and the historical financial statements and notes thereto included
elsewhere in this offering memorandum.
31
<PAGE>
DOBSON/SYGNET COMMUNICATIONS COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-------------------------------------------
THE COMPANY
SYGNET ADJUSTMENTS PRO FORMA
---------- ---------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING REVENUE:
Subscriber revenue................................................. $ 52,639 $ 2,515(1) $ 55,154
Roaming revenue.................................................... 26,993 (3,615)(1) 23,378
Equipment sales.................................................... 4,323 -- 4,323
Other revenue...................................................... 1,679 -- 1,679
---------- -------- -------------
Total operating revenue.......................................... 85,634 (1,100) 84,534
---------- -------- -------------
OPERATING EXPENSES:
Service............................................................ 10,048 683 (1)(2 10,731
Equipment.......................................................... 9,663 -- 9,663
General and administrative......................................... 16,976 (1,805)(1) 15,171
Marketing and selling.............................................. 10,841 1,205(1) 12,046
Depreciation and amortization...................................... 28,719 46,050 (2)(3 74,769
---------- -------- -------------
Total operating expenses......................................... 76,247 46,133 122,380
---------- -------- -------------
OPERATING INCOME (LOSS).............................................. 9,387 (47,233) (37,846)
Interest expense................................................... (29,902) (30,436)(4) (60,338)
Other expense, net................................................. (101) -- (101)
---------- -------- -------------
LOSS BEFORE INCOME TAXES............................................. (20,616) (77,669) (98,285)
INCOME TAX BENEFIT................................................... -- 37,349(5) 37,349
---------- -------- -------------
NET LOSS............................................................. $ (20,616) $ (40,320) $ (60,936)
---------- -------- -------------
---------- -------- -------------
</TABLE>
- ------------------------------
(1) To reclassify certain operating revenues and expenses to conform with
Dobson's presentation.
(2) To reflect the impact of the elimination of the depreciation related to the
sale of the towers and the estimated increase in rental expense attributable
to the leases, pursuant to the Tower Sale Leaseback.
(3) To reflect the additional depreciation and amortization resulting from the
allocation of the purchase price to property and equipment, cellular license
acquisition costs and intangible assets. Property and equipment is being
depreciated over two to ten years, cellular license acquisition costs over
15 years and intangible assets over five to ten years. The 15 year period
used for cellular license acquisition costs is based primarily on the
Company's internal analysis of the recovery period for its cellular
investments, which indicates that such costs will be recovered through
operations over a period of not more than 15 years. Other factors considered
include the competitive nature of the cellular industry, the rate of
technological change and risk of obsolescence, and the specific terms and
characteristics of the licenses. See "Risk Factors--Competition" and
"--Rapid Technological Changes."
(4) To reflect (i) the elimination of $29.9 million of interest expense
(including $1.1 million of amortization of deferred financing costs)
associated with indebtedness of the Sygnet Notes and the Old Bank Facility
which will be repaid as part of the Transactions, (ii) $24.5 million of
interest expense relating to the $200.0 million principal amount of the Old
Notes, (iii) $33.4 million of interest expense relating to the estimated
$398.3 million of borrowings under the New Bank Facilities (assuming a
weighted average interest rate of 8.38%), (iv) $.2 million of interest
expense relating to the unused principal amount of the New Bank Facilities
(assuming a commitment fee of .5%), (v) $.8 million of amortization of
deferred financing costs relating to the estimated $8.2 million of debt
issuance costs incurred in connection with the offering of the Old Notes and
(vi) $1.5 million of amortization of deferred financing costs relating to
the estimated $12.6 million of debt issuance costs incurred in connection
with the New Bank Facilities.
For each .25% change in the assumed interest rate on the New Bank Facilities,
interest expense would change by $1.0 million for the year ended December
31, 1997.
(5) To reflect an adjustment to income tax expense for the effects of the
Transactions, including an income tax benefit for Sygnet's pro forma pre-tax
loss during the period, assuming a 38% effective tax rate.
32
<PAGE>
DOBSON/SYGNET COMMUNICATIONS COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1998
--------------------------------------------
THE COMPANY
SYGNET ADJUSTMENTS PRO FORMA
---------- ----------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING REVENUE:
Subscriber revenue................................................ $ 46,738 $ 2,138(1) $ 48,876
Roaming revenue................................................... 24,753 (4,036)(1) 20,717
Equipment sales................................................... 4,253 -- 4,253
Other revenue..................................................... 1,190 -- 1,190
---------- ----------------- -------------
Total operating revenue......................................... 76,934 (1,898) 75,036
---------- ----------------- -------------
OPERATING EXPENSES:
Service........................................................... 9,005 (357)(1)(2) 8,648
Equipment......................................................... 7,790 -- 7,790
General and administrative........................................ 14,665 (2,598)(1) 12,067
Marketing and selling............................................. 9,057 1,946(1) 11,003
Depreciation and amortization..................................... 21,343 34,445 (2)(3 55,788
---------- ----------------- -------------
Total operating expenses........................................ 61,860 33,436 95,296
---------- ----------------- -------------
OPERATING INCOME (LOSS)............................................. 15,074 (35,334) (20,260)
---------- ----------------- -------------
Interest expense.................................................. (21,613) (23,640)(4) (45,253)
Other expense, net................................................ (340) -- (340)
---------- ----------------- -------------
LOSS BEFORE INCOME TAXES............................................ (6,879) (58,974) (65,853)
INCOME TAX BENEFIT.................................................. -- 25,024(5) 25,024
---------- ----------------- -------------
NET LOSS............................................................ $ (6,879) $ (33,950) $ (40,829)
---------- ----------------- -------------
---------- ----------------- -------------
</TABLE>
- ------------------------------
(1) To reclassify certain operating revenues and expenses to conform with
Dobson's presentation.
(2) To reflect the impact of the elimination of the depreciation related to the
sale of the towers and the estimated increase in rental expense attributable
to the leases, pursuant to the Tower Sale Leaseback.
(3) To reflect the additional depreciation and amortization resulting from the
allocation of the purchase price to property and equipment, cellular license
acquisition costs and intangible assets. Property and equipment is being
depreciated over two to ten years, cellular license acquisition costs over
15 years and intangible assets over five to ten years. The 15 year period
used for cellular license acquisition costs is based primarily on the
Company's internal analysis of the recovery period for its cellular
investments, which indicates that such costs will be recovered through
operations over a period of not more than 15 years. Other factors considered
include the competitive nature of the cellular industry, the rate of
technological change and risk of obsolescence, and the specific terms and
characteristics of the licenses. See "Risk Factors--Competition" and
"--Rapid Technological Changes."
(4) To reflect (i) the elimination of $21.6 million of interest expense
(including $.9 million of amortization of deferred financing costs)
associated with indebtedness of the Sygnet Notes and the Old Bank Facility
which will be repaid as part of the Transactions, (ii) $18.4 million of
interest expense relating to the $200 million principal amount of the Old
Notes, (iii) $25.0 million of interest expense relating to the estimated
$398.3 million of borrowings under the New Bank Facilities (assuming a
weighted average interest rate of 8.38%), (iv) $.1 million of interest
expense relating to the unused principal amount of the New Bank Facilities
(assuming a commitment fee of .5%), (v) $.6 million of amortization of
deferred financing costs relating to the estimated $8.2 million of debt
issuance costs incurred in connection with the offering of the Old Notes and
(vi) $1.1 million of amortization of deferred financing costs relating to
the estimated $12.6 million of debt issuance costs incurred in connection
with the New Bank Facilities.
For each .25% change in the assumed interest rate on the New Bank Facilities,
interest expense would change by approximately $.7 million for the nine
months ended September 30, 1998.
(5) To reflect an adjustment to income tax expense for the effects of the
Transactions, including an income tax benefit for Sygnet's pro forma pre-tax
loss during the period, assuming a 38% effective tax rate.
33
<PAGE>
DOBSON/SYGNET COMMUNICATIONS COMPANY
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-----------------------------------------------------------
DOBSON/SYGNET
COMBINED THE COMPANY
COMPANIES(1) SYGNET ADJUSTMENTS PRO FORMA
------------- ---------- ----------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Current Assets...................................... $ -- $ 16,443 $ -- $ 16,443
Pledged Securities.................................. -- -- 67,661(2) 67,661
Deposits............................................ 25,000 -- (25,000)(3) --
Property, Plant and Equipment....................... -- 52,138 (9,223)(3)(4) 42,915
Cellular License Acquisition Cost................... -- 241,062 525,452(3) 766,514
Intangible Assets................................... 3,426 23,653 30,221 (3)(5 57,300
------------- ---------- ----------------- -------------
Total Assets...................................... $ 28,426 $ 333,296 $ 589,111 $ 950,833
------------- ---------- ----------------- -------------
------------- ---------- ----------------- -------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities................................. $ 3,426 $ 18,313 $ (3,426) $ 18,313
Payables--Affiliate................................. 25,000 -- (25,000)(3) --
Long-term debt, net of current portion.............. -- 302,644 295,611(6) 598,255
Deferred Credits.................................... -- -- 189,265(3) 189,265
Stockholder's Equity/Net Assets..................... -- 12,339 132,661(7) 145,000
------------- ---------- ----------------- -------------
Total Liabilities and Stockholder's Equity........ $ 28,426 $ 333,296 $ 589,111 $ 950,833
------------- ---------- ----------------- -------------
------------- ---------- ----------------- -------------
</TABLE>
- ------------------------------
(1) Represents the combined historical balance sheets of Dobson/Sygnet Operating
Company and the Company.
(2) To reflect the estimated $67.7 million in restricted cash to be held in a
pledged account to secure and fund the first six scheduled interest payments
on the Notes.
(3) To allocate the purchase price of the Sygnet Acquisition, including the
related deferred income tax liability to the assets acquired. The purchase
price allocation excludes the $6.0 million to be paid for the Pennsylvania 2
Acquisition.
(4) To reflect the impact of the elimination of the purchase price related to
the sale of the towers, pursuant to the Tower Sale Leaseback.
(5) To reflect an estimated $20.8 million of debt issuance costs incurred with
the Notes and the New Bank Facilities.
(6) To reflect (i) the elimination of $302.6 million of Sygnet's indebtedness
that will be repaid as part of the Transactions (including $110.0 million of
Sygnet Notes which the Company estimates will be repurchased for $136.1
million in the Sygnet Note Repurchase), (ii) the incurrence of $398.3
million of indebtedness under the New Bank Facilities and (iii) the issuance
of $200.0 million of Notes.
(7) To reflect (i) the elimination of stockholders' equity of Sygnet and (ii) a
capital contribution from Dobson of $145.0 million.
34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Sygnet owns and operates cellular telephone systems serving a large cluster
of properties with approximately 2.4 million Pops and 166,886 subscribers
located in northeastern Ohio, western Pennsylvania and western New York.
Sygnet's cellular systems are located in Youngstown, Ohio and Erie,
Pennsylvania, and in primarily rural and suburban areas between the Cleveland,
Akron-Canton, Pittsburgh, Buffalo and Rochester metropolitan areas. The
following discussion and analysis is of the historical financial condition and
results of operation of Sygnet and should be read in conjunction with Sygnet's
consolidated financial statements and the notes thereto appearing elsewhere in
this offering memorandum.
Sygnet's operating results have been significantly affected as a result of
the Horizon Acquisition in October 1996 and the Erie Acquisition in September
1995. The systems acquired for $252.9 million in the Horizon Acquisition serve
contiguous markets representing approximately 1.4 million Pops in western
Pennsylvania and New York. The systems acquired in the Erie Acquisition for
$42.5 million represent approximately 282,300 Pops.
Sygnet's revenues primarily consist of (i) service revenue, which includes
charges to the Company's subscribers for access and usage; (ii) roaming revenue,
which includes charges to cellular providers for providing service to their
subscribers in the Company's service areas; and (iii) equipment revenue, from
sales of wireless telephone equipment. There has been an industry trend of
declining average revenue per minute, as competition among service providers has
led to reductions in rates for airtime and subscriptions and other charges and
the Company expects that this trend will continue. The Company believes that the
impact of this trend will be mitigated by increases in the number of cellular
telecommunications subscribers and the number of minutes of usage per
subscriber. There has also been a broad trend in the wireless telecommunications
industry of declining average revenue per subscriber. The Company believes that
the downward trend is primarily the result of the addition of new lower usage
customers who utilize cellular services for personal convenience, security or as
a backup for their traditional landline telephone. Although Sygnet has
experienced a decline in average revenue per subscriber, Sygnet has introduced
new pricing plans, which have increased its number of subscribers.
Roaming accounted for 31.5% and 32.2% of Sygnet's revenue for the year ended
December 31, 1997 and the nine months ended September 30, 1998, respectively.
While the industry trend is to reduce roaming rates, the Company believes that
Sygnet's roaming rates are generally lower than rates offered by others in or
near its systems. However, the Company cannot assure you that this trend will
not materially impact the Company in the future. On a pro forma basis giving
effect to the Horizon Acquisition, roaming yield (roamer service revenue, which
includes airtime, toll charges and surcharges, divided by roaming minutes of
use) was $.57, $.55, $.58 and $.57 per minute for the years ended December 31,
1995, 1996 and 1997 and for the nine months ended September 30, 1998,
respectively.
Included in the Company's roaming revenue for the years ended December 31,
1995, 1996 and 1997 and for the nine months ended September 30, 1997 and
September 30, 1998, respectively, was $.1 million, $.9 million, $3.6 million,
$2.5 million and $4.0 million attributable to Sygnet customers roaming out of
their home areas but in other Sygnet markets.
The Company's primary operating expense categories include cost of service
and equipment, marketing and selling, general and administrative, and
depreciation and amortization.
Cost of service consists primarily of costs associated with billing, amounts
paid for interconnection and call delivery and amounts paid to third-party
cellular providers for providing service to the Company's subscribers when
roaming, offset by the amount billed to the Company's subscribers. Changes in
the interconnection charge rate structure imposed by the FCC or mandated by the
Telecommunications Act may have a material impact on the Company. See
"Business--Regulation."
35
<PAGE>
Cost of equipment represents the cost associated with telephone equipment
and accessories sold to customers. In recent years, Sygnet and other cellular
companies have increased the use of discounts on phone equipment and free phone
promotions, as competition between service providers has intensified. As a
result, Sygnet has incurred, and expects to continue to incur, losses on
equipment sales, which have affected marketing and selling costs per gross
additional cellular subscriber. While the Company expects to continue these
discounts and promotions, the Company believes that the use of such promotions
will lead to increased revenue from increases in the number of cellular
subscribers.
Marketing and selling costs primarily consist of advertising costs and
compensation paid to sales personnel and independent agents and retail store
operations' costs. Commissions are paid to direct sales personnel primarily for
the amount of new business generated. Independent sales agents receive
commissions for generating new sales and ongoing sales to existing customers.
General and administrative costs include all infrastructure costs such as
customer support, collections, corporate administration, costs to maintain and
operate cell sites and customer retention costs.
Depreciation and amortization relates primarily to switching and cell site
equipment, customer lists and license costs.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997
REVENUE. For the nine months ended September 30, 1998, Sygnet's total
revenue increased 22.6% to $76.9 million, from $62.8 million in the first nine
months of 1997. The growth in revenue was the result of continued growth of the
subscriber base and increased roaming revenue generated by additional usage.
Subscriber revenue grew 21.3% to $46.7 million for the nine months ended
September 30, 1998 from $38.5 million in the comparable period in 1997 mainly as
a result of continued subscriber growth, despite a decline in average revenue
per subscriber. Sygnet's number of subscribers increased by 28.2% to 166,886 at
September 30, 1998 from 130,146 at September 30, 1997 due to internal growth. On
a per subscriber basis, average monthly subscriber revenue per subscriber
declined by 6.8% to $33.85 for the nine months ended September 30, 1998 from
$36.33 during the comparable period in 1997. This was due to competitive market
pressures, continuing promotional activity and the changing mix of subscribers
reflecting increasing levels of subscribers who purchase less expensive rate
plans that include packaged minutes of use.
Roamer revenue grew 24.6% to $24.8 million during the nine months ended
September 30, 1998 compared to $19.9 million in the comparable period in 1997.
This increase was mainly a result of increased roaming traffic throughout all of
Sygnet's systems which more than offset the decline in roaming revenue per
minute of use. Roaming minutes of use increased by 30.5% to 43.6 million for the
nine months ended September 30, 1998 from 33.4 million for the comparable period
in 1997. Roaming revenue per minute, including toll, for the nine months ended
September 30, 1998 decreased to $0.57 from $0.59 for the comparable period in
1997. This decrease was mainly a result of increased intrasystem roaming traffic
that is priced lower than other roaming traffic.
Equipment sales revenue increased 39.4% to $4.3 million for the nine months
ended September 30, 1998 from $3.1 million in the comparable period in 1997.
This increase was due mainly to an increased number of telephones and
accessories sold to new customers as well as from additional sales of equipment
to existing customers for retention purposes for which credits are given on the
sales price and reflected in general and administrative costs.
COST OF SERVICES. Cost of services increased 25.5% to $9.0 million for the
nine months ended September 30, 1998 from $7.2 million for the comparable period
in 1997. This increase was mainly a result of an increase in home subscriber net
roaming costs as well as increased billing and call delivery expenses associated
with the growth in the subscriber base. The increase in net roaming costs is
attributed mostly to
36
<PAGE>
increased levels of intrasystem roaming for which rates to customers are lower
than other roaming traffic which has stimulated usage. Partially offsetting this
increase are lower costs to Sygnet for long distance charges and the elimination
of costs associated with a terminated switching agreement. As a percentage of
total revenue, cost of services was 11.7% for the nine months ended September
30, 1998 compared to 11.4% for the same period in 1997.
COST OF EQUIPMENT SALES. Cost of equipment sales increased 14.5% to $7.8
million for the nine months ended September 30, 1998 from $6.8 million in the
comparable 1997 period. This increase was due mainly to an increased number of
telephones and accessories sold to existing subscribers, as well as equipment
subsidies and sales to new subscribers, offset by a reduction in the average
cost of telephones and accessories.
GENERAL AND ADMINISTRATIVE COSTS. General and administrative costs
increased 25.7% to $14.7 million for the nine months ended September 30, 1998
from $11.7 million for the comparable period in 1997. This increase was mainly a
result of the growth in the subscriber base which caused an increase in
compensation and increased customer retention costs due to competitive
pressures. As a percentage of total revenues, general and administrative expense
was 19.1% for the nine months ended September 30, 1998 compared to 18.6% for the
same period in 1997.
SELLING AND MARKETING COSTS. Selling and marketing costs increased 21.3% to
$9.1 million for the nine months ended September 30, 1998 from $7.5 million for
the comparable period in 1997. This increase is mainly due to an increase in new
subscribers added period to period which caused higher compensation and
commission expenses as well as an increase in advertising and promotional
expenses. Selling and marketing cost per gross new subscriber, including
equipment subsidies, decreased by 6.2% to $287 for the nine months ended
September 30, 1998 from $306 for the comparable period in 1997. This was
primarily a result of an improvement in the margin on telephone and accessory
subsidies and sales.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased 1.0%
to $21.3 million for the nine months ended September 30, 1998 from $21.1 million
for the comparable period in 1997 due primarily to the depreciation on higher
levels of fixed assets resulting from capital expenditures for system growth.
This increase more than offset the decrease in depreciation due to certain cell
site equipment obtained in the Horizon Acquisition which become fully
depreciated in April 1998. For the nine months ended September 30, 1998, Sygnet
incurred $11.5 million in capital expenditures, primarily for cell site and
system enhancements.
INTEREST EXPENSE, NET. Interest expense decreased 4.2% to $21.6 million for
the nine months ended September 30, 1998 from $22.6 million for the comparable
period in 1997. This decrease was primarily a result of a lower level of
borrowing due to the repayment of certain indebtedness with the proceeds from
the sale of common stock.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
REVENUE. For 1997, Sygnet's total revenue increased 91.2% to $85.6 million
from $44.8 million for 1996. The growth in revenue was the result of the Horizon
Acquisition, which occurred on October 9, 1996, and continued growth of the
subscriber base.
Subscriber revenue grew by 69.3% to $52.6 million for 1997 from $31.1
million for 1996 mainly as a result of the Horizon Acquisition and continued
subscriber growth. Subscriber revenue, on a pro forma basis giving effect to the
Horizon Acquisition, would have grown by 22.7% due to growth in the subscriber
base, offset by a decline in average revenue per subscriber. Sygnet's
subscribers grew by 34.1% to 142,934 at December 31, 1997 from 106,574 at
December 31, 1996 due mainly to internal growth. On a pro forma basis giving
effect to the Horizon Acquisition, average monthly subscriber revenue per
subscriber would have declined by 7.3% to $35.91 during 1997 from $38.75 in
1996. This was due to the changing mix of
37
<PAGE>
subscribers reflecting increasing levels of subscribers purchasing less
expensive rate plans that include limited free minutes of use, increased
promotional activity and competitive market pressures.
Roamer revenue increased 178.6% to $27.0 million during 1997 from $9.7
million for 1996. This increase was mainly a result of the Horizon Acquisition
as well as increased roaming traffic throughout all of Sygnet's systems. On a
pro forma basis giving effect to the Horizon Acquisition, roamer revenue would
have grown by 21.5% due to a greater volume of roaming traffic offset by a
reduction in roaming revenue per minute. Roaming revenue per minute for 1997
would have decreased to $0.58 from $0.59 for 1996 on a pro forma basis giving
effect to the Horizon Acquisition mainly as a result of reductions in roaming
rates with roaming partners.
Equipment sales increased 78.9% to $4.3 million for 1997 compared to $2.4
million for 1996. This increase was due mainly to the Horizon Acquisition, an
increased number of telephones and accessories distributed as new subscriber
acquisitions increased, as well as from additional sales of equipment to
existing customers. On a pro forma basis giving effect to the Horizon
Acquisition, equipment sales for 1997 would have increased 12.4% over 1996.
COST OF SERVICES. Cost of services increased 82.4% to $10.0 million during
1997 from $5.5 million for 1996 due mainly to the Horizon Acquisition. On a pro
forma basis giving effect to the Horizon Acquisition, cost of services for 1997
would have increased by 12.0% from 1996. This increase was mainly a result of an
increase in billing, call delivery and roaming costs associated with the growth
in the subscriber base, partially offset by lower rates for interconnection and
long distance charges. As a percentage of total revenues, on a pro forma basis
giving effect to the Horizon Acquisition, cost of services was 11.7% in 1997
compared to 12.7% in 1996.
COST OF EQUIPMENT SALES. Cost of equipment sales increased 66.2% to $9.7
million for 1997 from $5.8 million in 1996. This increase was due mainly to the
Horizon Acquisition and to an increased number of telephones and accessories
distributed as new subscriber acquisitions increased. Sales of equipment to
existing subscribers were also responsible for a portion of this increase. On a
pro forma basis giving effect to the Horizon Acquisition, cost of equipment
sales for 1997 would have increased 18.6% over 1996.
GENERAL AND ADMINISTRATIVE COSTS. General and administrative costs grew
72.3% to $17.0 million in 1997 from $9.9 million in 1996. This increase was due
primarily to the Horizon Acquisition and an increase in costs due to internal
growth. On a pro forma basis giving effect to the Horizon Acquisition, general
and administrative expenses for 1997 would have increased 19.8% over 1996. This
increase was mainly a result of an increase in compensation, customer retention,
occupancy and maintenance expenses associated with the growth in the subscriber
base as well as the additional cell sites added during 1997. As a percentage of
total revenues, on a pro forma basis giving effect to the Horizon Acquisition,
general and administrative expense would have been 19.8% in 1997 compared to
20.0% in 1996.
SELLING AND MARKETING COSTS. Selling and marketing costs grew 78.3% to
$10.8 million for 1997 from $6.1 million in 1996. This increase is due to the
Horizon Acquisition and a higher level of new subscribers added period to
period. On a pro forma basis giving effect to the Horizon Acquisition, selling
and marketing costs grew by 12.3% and selling and marketing cost per gross new
subscriber decreased to $291 in 1997 from $324 in 1996 reflecting a decrease in
cost of telephone and accessories in addition to improved operating
efficiencies.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$28.7 million for 1997 from $10.0 million in 1996 due to depreciation on higher
levels of fixed assets resulting from the Horizon Acquisition and purchases of
equipment to enhance systems in existing markets, and amortization of the
license acquired in the Horizon Acquisition. The amortization of the acquired
cellular licenses and subscriber lists contributed $10.3 million to this
increased amortization. For 1997, the Company spent $25.6 million in capital
expenditures, primarily for new cell sites, cell site conversions, and system
growth.
38
<PAGE>
INTEREST EXPENSE, NET. Interest expense increased to $29.9 million in 1997
from $11.2 million in 1996. This increase was primarily a result of increased
borrowings associated with the Horizon Acquisition.
NET OPERATING LOSSES. At December 1997, Sygnet had a net operating loss
carryforward of $28.7 million. No benefit of the loss carryforward has been
recorded in 1997. If, in the future, this loss carryforward is utilized, the
related benefits will be recorded.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
REVENUE. For 1996, Sygnet's total revenue increased 82.3% to $44.8 million
from $24.6 million for 1995. The growth in revenue was the result of the Horizon
and Erie Acquisitions and continued growth of the subscriber base.
Subscriber revenue grew 80.8% to $31.0 million for 1996 compared to $17.2
million for 1995 mainly as a result of the Horizon and Erie Acquisitions and
continued subscriber growth. Sygnet's subscribers increased to 106,574 at
December 31, 1996 from 44,665 at December 31, 1995 due mainly to the Horizon
Acquisition as well as internal growth. On a pro forma basis giving effect to
the Horizon Acquisition, the subscriber base increased by 36.8% to 106,574 at
December 31, 1996 from 77,891 at December 31, 1995. On a per subscriber basis
giving effect to the Horizon Acquisition, average monthly subscriber revenue
would have declined to $38.75 during 1996 from $41.66 in 1995 due in part to the
changing mix of subscribers reflecting increasing levels of subscribers
purchasing less expensive rate plans that include limited free minutes of use as
well as competitive market pressures.
Roamer revenue increased 132.0% to $9.7 million during 1996 compared to $4.2
million in 1995. This increase was mainly a result of the Horizon and Erie
Acquisitions as well as increased roaming traffic throughout all of Sygnet's
systems. Roamer revenue per minute during 1996 decreased to $.55 from $.57 in
1995. This decrease was due mainly to reductions made to roaming rates received
from other cellular carriers in the first quarter of 1995 which were in effect
for the full year in 1996, mitigated by the effects of the Horizon Acquisition.
Equipment sales increased 58.0% to $2.4 million in 1996 compared to $1.5
million in 1995. This increase was due mainly to the Horizon and Erie
Acquisitions and an increased number of telephones and accessories distributed
as new subscriber acquisitions increased, as well as from additional sales of
equipment to existing customers. Other revenue declined 4.4% to $1.6 million in
1996 from $1.7 million in 1995 as equipment rental revenue continued to decrease
due to the continued phase out of rental programs.
COST OF SERVICES. Cost of services increased 63.7% to $5.5 million in 1996
from $3.4 million in 1995 due mainly to the Horizon and Erie Acquisitions. Cost
of services decreased to 12.3% of total revenues in 1996 from 13.7% in 1995, as
a result of operating efficiencies gained from the Horizon and Erie
Acquisitions.
COST OF EQUIPMENT SALES. Cost of equipment sales increased 39.7% to $5.8
million in 1996 from $4.2 million in 1995. This increase was due mainly to the
Horizon and Erie Acquisitions and to an increased number of telephones and
accessories distributed as new subscriber acquisitions increased. The increased
cost of equipment sold resulting from the increase in gross activations was
mitigated by the declining cost to acquire new telephones.
GENERAL AND ADMINISTRATIVE COSTS. General and administrative costs
increased 77.1% to $9.9 million in 1996 from $5.6 million in 1995. This increase
is due primarily to the Horizon and Erie Acquisitions and the effects of a third
quarter 1995 one time adjustment to the personal property tax accrual resulting
from a substantial decrease in tax rates.
SELLING AND MARKETING COSTS. Selling and marketing costs increased 97.3% to
$6.1 million in 1996 from $3.1 million in 1995. This increase is due to the
Horizon and Erie Acquisitions and a higher level of
39
<PAGE>
new subscribers added period to period. Selling and marketing cost per gross new
subscriber, including equipment subsidies, decreased 10.1% to $310.0 in 1996
from $345.0 for 1995 as a result of a decrease in cost of telephones and
accessories in addition to improved efficiencies.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
187.9% to $10.0 million in 1996 from $3.5 million in 1995 due to depreciation on
higher levels of fixed assets resulting from the Horizon and Erie Acquisitions
and purchases for system growth, and amortization of the licenses acquired in
the Horizon and Erie Acquisitions. The amortization of the acquired cellular
licenses and subscriber lists contributed $3.4 million to this increased
amortization. For 1996, Sygnet spent $10.0 million in capital expenditures,
primarily for new cell sites, cell site conversions, and system growth.
INTEREST EXPENSE, NET. Interest expense increased to $11.2 million in 1996
from $2.7 million in 1995. This increase was primarily a result of increased
borrowings associated with the Horizon and Erie Acquisitions.
EXTRAORDINARY LOSS. In October 1996, Sygnet incurred an extraordinary loss
of $1.4 million to write off unamortized financing costs associated with an
extinguished bank credit agreement.
IMPACT OF YEAR 2000
The Year 2000 Issue is the result of the inability of some computer programs
to distinguish the year 1900 from the year 2000. Most computer programs and
operating systems were written using two digits to define the applicable year
rather than four digits. This means that any equipment containing computer
programs with time-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. In some instances this could result in
system failures, disruption in operations and possible inaccuracies of data.
Sygnet has substantially completed an inventory of all its systems and
equipment in each market to determine the impact of the Year 2000 Issue. Based
on this inventory, Sygnet has contacted its significant vendors to determine how
their products and services might be affected by the Year 2000 Issue. Generally,
Sygnet is relying upon representations made by the vendors as to their state of
readiness for the Year 2000 Issue. Based on internal evaluations and on
information provided by these vendors certain systems have been upgraded and
tested for Year 2000 compliance. Sygnet estimates that it is 60% complete with
this phase of the project.
Sygnet is placing special emphasis on areas that present a risk of
materially interrupting its revenue stream in the event of a Year 2000 problem.
Presently, it appears three main systems have the potential to materially
interrupt the revenue stream due to the Year 2000 Issue. They are the two
cellular switches, which could prevent calls from being made, and the billing
system, which could prevent Sygnet from billing and subsequently receiving
revenue from its customers. To address this risk, the Northern Telecom switch,
which serves Sygnet's Ohio and Pennsylvania markets, has recently undergone a
software upgrade to a Year 2000 compliant version. Sygnet has monitored testing
of this software in a Year 2000 situation with commonly known critical dates and
has encountered no problems. Accordingly, Sygnet has deemed this system to have
a minimal risk of failure regarding the Year 2000 Issue and will not develop
contingency plans for the Northern Telecom switch unless new information becomes
available that suggests a contingency plan is warranted. The Ericsson switch,
which serves Sygnet's New York market, is expected to have its software upgraded
to a Year 2000 compliant version in the first quarter of 1999. In connection
with the planned upgrade of the New York system, the Company plans to replace
the Ericsson switching equipment with Northern Telecom equipment that is
believed to be Year 2000 compliant. In addition, the upgrade of the billing
system software to a Year 2000 compliant version is expected to be completed in
the first quarter of 1999. The vendor that provides this system has indicated
that Year 2000 compliance testing will be completed by June of 1999. Sygnet has
deemed this system to have a moderate risk of not being able to
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handle the Year 2000 requirements and a contingency plan is being prepared that
may include selecting a new billing vendor in mid-1999.
The cost of testing and upgrading these systems can not be determined at
this time. Management's current estimate of the cost of becoming Year 2000
compliant is $250,000 or less. This estimate may change significantly downward
or upward as the process continues or if problems arise with either a switch or
billing system. Additionally, this estimate may change substantially if other
systems or vendors are unable to become Year 2000 compliant causing a material
interruption of the revenue stream.
LIQUIDITY AND CAPITAL RESOURCES
Sygnet has historically relied on internally generated funds to fund debt
service and a substantial portion of its capital expenditures. Bank credit
facilities and equity issuances have been used for additional support of capital
expenditure programs and to fund acquisitions.
Net cash provided by operating activities was $13.5 million for the nine
months ended September 30, 1998 compared to $7.1 million for the comparable
period in 1997. The increase was primarily the result of the increase in
operating income, offset somewhat by a decrease in net working capital. Net cash
provided by operating activities was $9.4 million for 1997 compared to $14.8
million for 1996 and $2.4 million in 1995. This decrease from 1996 to 1997 was
primarily due to interest paid of $30.0 million in 1997 compared to $4.7 million
in 1996, which was offset significantly by the increase in revenue due to growth
in subscribers. The increase from 1995 to 1996 was primarily the result of the
increase in the number of subscribers and their related growth in revenue.
Net cash used in investing activities was $11.1 million for the nine months
ended September 30, 1998 compared to $17.6 million for the comparable period in
1997. In 1998, this activity reflects decreased levels of purchases of property
and equipment primarily for system buildout in addition to proceeds of $300,000
associated with the sale of an undeveloped patent to an officer/shareholder of
Sygnet. In 1997, this activity reflects final payments made in connection with
the Horizon Acquisition and the completion of the buildout of the system
acquired in the Horizon Acquisition. Net cash used in investing activities,
which totaled $25.8 million, $264.2 million and $49.1 million for the years
ended December 31, 1997, 1996 and 1995, respectively, principally related to the
system buildout in 1997, the Horizon Acquisition in 1996 and the Erie
Acquisition in 1995 and capital expenditures required to support the growth of
the business.
Net cash used in financing activities was $2.9 million for the nine months
ended September 30, 1998 compared to $10.0 million provided by financing
activities for the comparable period in 1997 as the combination of reduced
capital expenditures and increased cash flow from operating activities reduced
the need for outside financing. In 1997, this activity included $43.6 million in
net proceeds from the sale of Sygnet's common stock which were used primarily to
redeem the remaining outstanding preferred stock and to reduce amounts
outstanding under Sygnet's Old Bank Facility and fund capital expenditures. Net
cash provided by financing activities was $15.0 million for 1997 compared to
$251.2 million for 1996 and $46.6 million in 1995. The 1996 amount includes
primarily funds received, net of financing cost, from the issuance of the Sygnet
Notes and preferred stock and borrowings under the Old Bank Facility to fund
acquisitions. Dividends of $.3 million and $1.2 million were paid in 1996 and
1995, respectively.
The Company expects its capital expenditures to total approximately $16.0
million for 1999; through September 30, 1998, Sygnet had expended $11.5 million.
Of the amount expected to be made in 1999, $7.5 million is expected to be made
to upgrade the New York system to TDMA IS-136. The amount and timing of capital
expenditures may vary depending on the rate at which the Company expands and
develops its cellular systems and whether the Company consummates additional
acquisitions. In addition, Sygnet expects to borrow $6.0 million under the New
Bank Facilities to close the Pennsylvania 2 Acquisition and additional amounts
to pay any accrued interest under Sygnet's Old Bank Facility and the Sygnet
Notes.
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The Company's New Bank Facilities will aggregate $430.0 million, consisting
of a $50.0 million Revolving Credit Facility and $380.0 million of Term Loan
Facilities. Obligations under the New Facilities are secured by a pledge of the
capital stock of Sygnet's operating subsidiary as well as a lien on
substantially all of the assets of Sygnet and its operating subsidiary. The New
Bank Facilities require Sygnet and the Company to maintain certain financial
ratios. The failure to maintain such ratios would constitute an event of
default, notwithstanding Sygnet's ability to meet its debt service obligations.
See "Description of Certain Indebtedness." The ability of Sygnet to borrow under
the New Bank Facilities will be limited by the requirement that, on a quarterly
basis beginning December 31, 2000, the amount available under the New Bank
Facilities will reduce until they terminate.
As part of the Transactions, Sygnet sold to Dobson Tower Company, a wholly
owned subsidiary of Dobson, substantially all of the towers owned by Sygnet for
$25.0 million. Dobson Tower Company has leased these towers back to Sygnet under
an operating lease. The lease is for an initial term of five years, with annual
lease payments of approximately $1.6 million.
On September 30, 1998 after giving pro forma effect to the Transactions, the
Company and its subsidiaries would have approximately $598.2 million of
indebtedness outstanding.
Although the Company cannot provide you any assurance, the Company believes
that, assuming successful implementation of the Company's strategy, including
the further development of Sygnet's cellular systems and significant and
sustained growth in Sygnet's cash flow, borrowings under the New Bank Facilities
and cash flow from operations, will be sufficient to fund the Pennsylvania 2
Acquisition and to satisfy the Company's currently expected capital expenditure,
working capital and debt service obligations. However, the Company will need to
refinance the New Bank Facilities and the Notes at their maturities. The
Company's ability to do so will depend on, among other things, its financial
condition at the time, the restrictions in the instruments governing its
indebtedness and other factors, including market conditions beyond the control
of the Company. See "Risk Factors--Refinancing Risk." The actual amount and
timing of the Company's future capital requirements may differ materially from
the Company's estimates as a result of, among other things, the demand for the
Company's services and regulatory, technological and competitive developments.
Sources of additional financing may include commercial bank borrowings, vendor
financing and the sale of equity or debt securities. The Company cannot assure
you that any such financing will be available on acceptable terms or at all.
EFFECT OF NEW ACCOUNTING STANDARDS
In June 1997, the FASB issued Statement No. 130, Reporting Comprehensive
Income, which is required to be adopted effective January 1, 1998. This
Statement establishes standards for the reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
Reclassification of financial statements for earlier periods presented is
required. The implementation of Statement No. 130 did not have a material effect
on Sygnet's financial statements.
In June 1997, the FASB also issued Statement No. 131, Disclosures About
Segments of an Enterprise and Related Information, which is required to be
adopted effective January 1, 1998. This Statement changes the way companies
report segment information in annual financial statements and also requires
those companies to report selected segment information in interim financial
reports to shareholders. The implementation of Statement No. 131 did not have a
material effect on Sygnet's financial statement disclosures.
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BUSINESS
Sygnet owns and operates rural and suburban cellular telephone systems
serving a single large cluster of properties with approximately 2.4 million Pops
and 166,886 subscribers in northeastern Ohio, western Pennsylvania and western
New York. The cluster includes Youngstown, Ohio, Erie, Pennsylvania, and
suburban and rural areas between the Cleveland, Akron-Canton, Pittsburgh,
Buffalo and Rochester metropolitan areas. The Company is a wholly owned
subsidiary of Dobson.
Sygnet has grown rapidly through selective acquisitions and internal growth.
Between 1993 and 1997, Sygnet's revenues increased at a compounded annual growth
rate of 56.0% and its Adjusted EBITDA increased at a compounded annual growth
rate of 71.1%. Excluding properties acquired during that period, Sygnet's
revenues increased at a compounded annual growth rate of 23.9% and its Adjusted
EBITDA increased at a compounded annual growth rate of 34.2% over the same
period. In addition, from December 31, 1993 to September 30, 1998, Sygnet's
penetration rate increased from 2.5% to 7.0%. For the nine months ended
September 30, 1998, Sygnet had revenue of $76.9 million, operating income of
$15.1 million and Adjusted EBITDA of $36.4 million.
On December 23, 1998 Dobson/Sygnet Operating Company, a subsidiary of the
Company, merged into Sygnet. Sygnet has established and maintained a strong and
visible local presence. Since the merger, Sygnet's existing local management
will continue to have day-to-day operating authority, with the flexibility to
respond to individual market requirements and to foster a strong sense of
customer service and community spirit. The Company expects to benefit from
synergies resulting from Dobson's centralization of certain functions such as
control of pricing, customer service and marketing, systems design, engineering,
purchasing, financial and administrative functions and from the consolidation of
billing functions. For example, after the Sygnet Acquisition, the Company
expects to consolidate Sygnet's three regional call centers and one of Dobson's
existing call centers. In addition, the Company expects the Sygnet Acquisition
to strengthen and expand Dobson's and Sygnet's existing roaming partner
relationships with AT&T Wireless because certain Sygnet properties are adjacent
to AT&T Wireless properties.
Sygnet's markets are primarily rural and suburban and include a high
concentration of expressway corridors that tend to have a significant amount of
roaming activity. Roaming revenue represented approximately 32% (28% excluding
roaming by Sygnet customers into other Sygnet markets) of Sygnet's total
revenues for both the year ended December 31, 1997 and the nine months ended
September 30, 1998. Sygnet has entered into roaming agreements with operators of
cellular systems in adjoining MSAs and other MSAs which allow customers to roam
at competitive prices which, in certain instances, are comparable to Sygnet's
home area rates. Sygnet's principal roaming partners are AT&T Wireless, AirTouch
and SBC Communications. Sygnet also has roaming agreements with PCS providers,
such as AT&T Wireless and Sprint, to allow the PCS providers' customers with
dual mode telephones to roam in certain Sygnet markets.
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Through selective acquisitions, Sygnet has created an integrated network of
rural and suburban cellular systems in a contiguous service area. The following
table sets forth certain data with respect to Sygnet's cellular systems:
<TABLE>
<CAPTION>
TOTAL TOTAL MARKET YEAR ACQUIRED
MARKETS (1) POPS SUBSCRIBERS (2) PENETRATION (3) BY SYGNET
- ---------------------------- --------- --------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Erie (4).................... 282,300 26,381 9.3% 1995
New York (5)................ 480,000 26,409 5.5% 1996
Pennsylvania (6)............ 890,300 49,516 5.6% 1996
Youngstown (7).............. 721,400 64,580 9.0% 1985, 1987 and 1991
--------- ------- --
Total..................... 2,374,000 166,886 7.0%
--------- ------- --
--------- ------- --
</TABLE>
- ------------------------
(1) Except for Pennsylvania 2 RSA, Sygnet owns 100% of the licenses for these
markets.
(2) As of September 30, 1998.
(3) Determined by dividing total Sygnet subscribers by the total Pops covered by
the applicable FCC cellular licenses or authorizations held by Sygnet.
(4) The Erie market is composed of Erie, Pennsylvania MSA.
(5) The New York market is composed of New York 3 RSA.
(6) The Pennsylvania market is composed of Pennsylvania 1 RSA, Pennsylvania 2
RSA, Pennsylvania 6 RSA and Pennsylvania 7 RSA. Sygnet had previously
operated Pennsylvania 2 RSA under an interim operating authority, which was
terminated on June 3, 1997 when the FCC awarded a permanent license to
Pinellas Communications. On June 8, 1998, Sygnet entered into an agreement
to purchase Pennsylvania 2 RSA for $6.0 million in cash. Since then, Sygnet
has been operating Pennsylvania 2 under a management and lease agreement
with the present owner of Pennsylvania 2, which will continue in effect
until the FCC's grant of the license to the present owner is no longer
subject to reconsideration or judicial review.
(7) The Youngstown market is composed of: (i) Youngstown, Ohio MSA, which Sygnet
acquired in 1985; (ii) Sharon, Pennsylvania MSA, which Sygnet acquired in
1987; and (iii) Ohio 11 RSA, which Sygnet acquired in 1991.
BUSINESS STRATEGY
The Company's business strategy is to focus on integrating its operations
with Dobson's, increasing its market penetration and further developing its
cellular systems to sustain growth in the Company's cash flows. The principal
elements of the Company's strategy include:
INTEGRATE OPERATIONS WITH DOBSON. Dobson intends to integrate the
operations of Sygnet with its existing cellular operations to achieve economies
of scale. Management believes that these increased efficiencies will come from
the centralized control of pricing, customer service and marketing, system
design, engineering, purchasing, financial and administrative functions and from
the consolidation of billing functions. For example, the Company expects to
consolidate Sygnet's three regional call centers and one of Dobson's existing
call centers. Following the Sygnet Acquisition, Dobson's subscribers will
approximately double to 329,906 and its total Pops will likewise increase to 5.2
million. Dobson intends to use its increased size to improve its leverage in
negotiating prices and services from third party service providers and equipment
vendors.
EXPAND STRATEGIC RELATIONSHIPS. The Company intends to continue to maintain
and expand strategic relationships with operators of wireless systems in major
MSAs near the Company's systems. These relationships include roaming agreements
which allow the Company's subscribers to use the system in the neighboring MSA
at favorable rates. Under these agreements, the MSA operator's subscribers
receive similar benefits roaming in the Company's areas. Sygnet has agreements
with the dominant cellular operators in the neighboring MSAs and RSAs, including
AT&T Wireless, AirTouch and SBC Communications. The Company also has agreements
with PCS providers, such as AT&T Wireless and Sprint, to allow
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the PCS providers' customers with dual mode telephones to roam in certain Sygnet
markets. By entering into these strategic agreements, the Company is able to
increase its roaming revenue and offer its subscribers larger areas in which the
Company's rates apply.
AGGRESSIVE LOCAL MARKETING AND PROMOTION OF CELLULAR SERVICES. The Company
plans to continue to distinguish Sygnet as the local market's leading cellular
services provider, stressing its service quality, local sales offices and
commitment to the community. Sygnet's sales efforts have been conducted
primarily through its 51 retail outlets and its direct sales force and, to a
lesser extent, through independent agents. The Company believes that, as an
operator with strong local distribution of products and services, Sygnet has an
advantage over its competitors who do not emphasize a local presence or focus on
local market requirements and community involvement. The Company intends to
continue to open new retail outlets and coordinate marketing efforts with
Dobson's centralized marketing department, which should increase efficiencies by
spreading costs over a larger customer base.
TARGETED SALES EFFORTS. The Company's marketing programs seek to attract
subscribers who are likely to generate high monthly revenue and low churn rates.
The Company will undertake extensive market research to identify and design
marketing programs to attract these subscribers and tailor distinctive rate
plans and roaming rates to emphasize the quality, value and advantage of
Sygnet's cellular service. In addition, the Company intends to maintain Sygnet's
sales force compensation system, which is designed to maximize the acquisition
of these high use, reduced churn subscribers. Sygnet's marketing programs and
compensation systems are designed to increase monthly revenue per subscriber and
lower marketing and selling costs per additional subscriber.
SUPERIOR CUSTOMER SERVICE. The Company intends to maintain a high level of
customer satisfaction through a variety of techniques, including 24-hour
customer service. The Company will continue to support local customer service
through its direct sales force and its retail stores. Management believes that
Sygnet's emphasis on superior customer service has enabled it to achieve an
average monthly churn rate of 1.3% for the year ended December 31, 1997 and 1.5%
for the nine months ended September 30, 1998.
CONTINUED SYSTEM DEVELOPMENT. The Company believes that increasing capacity
and upgrading its systems will attract additional subscribers, enhance the use
of its systems by existing subscribers, increase roaming activity and further
enhance the overall efficiency of the network. Sygnet upgraded its Erie,
Youngstown and Pennsylvania markets with TDMA IS-136 digital technology to
enable it to increase roaming (by servicing the increasing number of digital
cellular subscribers and PCS subscribers with dual mode telephones) and provide
enhanced capabilities, including caller ID, longer battery life and zone
billing. Sygnet's digital system covered approximately 84% of its subscribers at
September 30, 1998. The Company plans to upgrade its New York market to TDMA
IS-136 in 1999 which will expand digital coverage to substantially all of its
markets. Since the beginning of 1995, Sygnet has spent approximately $56.2
million to upgrade and expand its network. The Company intends to continue to
improve coverage, increase capacity and build out its systems, and plans to
invest approximately $16.0 million in 1999, which amount includes upgrading its
New York system to TDMA IS-136.
MARKETS AND SYSTEMS
Sygnet's operations are conducted in a single large cluster of properties
with approximately 2.4 million Pops and 166,886 subscribers in northeastern
Ohio, western Pennsylvania and western New York. The cluster includes four
markets: the Youngstown market, the Erie market, the Pennsylvania market, and
the New York market. To date, Sygnet has converted 130 of its 181 cell sites to
TDMA IS-136 digital service. The following is a description of Sygnet's cellular
markets.
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YOUNGSTOWN MARKET
GENERAL. The Youngstown market is composed of the Youngstown, Ohio MSA, the
Sharon, Pennsylvania MSA and the Ohio 11 RSA. Sygnet initiated cellular
operations in the Youngstown market in 1985 when it acquired its license from
the FCC for the Youngstown, Ohio MSA.
LOCATION. The Youngstown market covers a contiguous area that is located at
a midway point between Pittsburgh and Cleveland along the Ohio Turnpike and
Interstate 76 and includes Interstate 80, a major transportation access route
from the midwest to New York City.
MARKETING. The Company operates under the brand name Wilcom Cellular in the
Youngstown market. The Company currently has 18 retail locations and
approximately 22 sales agents in the area.
SYSTEMS. There are 55 cell sites covering substantially all of the total
Pops in the Youngstown market. The Company has completed upgrading its system in
this area to analog/TDMA IS-136 digital service.
ERIE MARKET
GENERAL. The Erie market is composed of the Erie, Pennsylvania MSA. The
Company initiated cellular operations in the Erie market in September 1995
following the Erie Acquisition.
LOCATION. The Erie market covers a contiguous area that includes Interstate
90, which connects Buffalo and Cleveland, and Interstate 79, which connects Erie
directly to Pittsburgh.
MARKETING. The Company operates under the brand name CELLULAR
ONE-Registered Trademark- in the Erie market. The Company currently has eight
retail locations and approximately 12 sales agents in the area.
SYSTEMS. There are 14 cell sites covering substantially all of the total
Pops in the Erie market. The Company has completed upgrading its system in this
area to analog/TDMA IS-136 digital service.
PENNSYLVANIA MARKET
GENERAL. The Pennsylvania market is composed of Pennsylvania 1 RSA,
Pennsylvania 2 RSA, Pennsylvania 6 RSA and Pennsylvania 7 RSA. Sygnet operated
the Pennsylvania 2 RSA under an interim operating authority which was terminated
upon the granting by the FCC of a permanent license to its present owner,
Pinnellas Communications. On June 8, 1998, Sygnet entered into an agreement with
Pinellas Communications to purchase the Pennsylvania 2 RSA. Since then, Sygnet
has been operating Pennsylvania 2 under a management and lease agreement with
Pinellas Communications, which will continue in effect until the FCC's grant of
the license to Pinellas Communications is no longer subject to reconsideration
or judicial review. The FCC has, however, separately approved the transfer of
the license from Pinellas Communications to Sygnet.
LOCATION. The Pennsylvania market covers a contiguous area that includes
Interstate 79 and Interstate 80, which link the major population centers in
north-central Pennsylvania, including Pittsburgh and Erie. The Pennsylvania
market also includes Route 60, a recently completed toll road, which serves as
an expressway to Pittsburgh International Airport.
MARKETING. The Company operates under the brand name CELLULAR
ONE-Registered Trademark- in the Pennsylvania market. The Company currently has
12 retail locations and approximately 15 sales agents in the area.
SYSTEMS. There are 62 cell sites covering substantially all of the total
Pops in the Pennsylvania market. The Company has substantially completed
upgrading its system in this area to analog/TDMA IS-136 digital service. Upon
acquisition of Pennsylvania 2 RSA from Pinellas, the Company will build out this
system and install TDMA IS-136 digital service.
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NEW YORK MARKET
GENERAL. The New York market is composed of the New York 3 RSA. The Company
initiated cellular operations in the New York market in October 1996 following
the Horizon Acquisition.
LOCATION. The New York market is located in the western part of New York
and includes six counties. The system borders Buffalo and Rochester to the
north, Erie, Pennsylvania to the west and Binghamton/Elmira to the east.
Interstates 90 and 390 and Route 17 run through the New York region. Interstate
90 (the New York Thruway) connects Buffalo, Rochester and Erie. Interstate 390
connects Rochester, Corning, Binghamton and Elmira. Route 17 connects Interstate
390 west to Interstate 90 in Erie.
MARKETING. The Company operates under the brand name CELLULAR
ONE-Registered Trademark- in the New York market. The Company currently has 13
retail locations and 11 sales agents in the area.
SYSTEMS. There are 50 cell sites covering substantially all of the total
Pops in the New York market. The Company has not upgraded its system in this
area to digital service. The Company expects to upgrade the New York market to
TDMA IS-136 digital service in 1999.
PRODUCTS AND SERVICES
The Company provides a variety of cellular services and products designed to
address a range of consumer, business and personal security needs. In addition
to mobile voice transmission, the Company offers ancillary services such as call
forwarding, call-waiting, three-party conference calling, voice message storage
and retrieval and no-answer transfer. The nature of the services offered by the
Company varies depending upon the market area. The Company also sells cellular
equipment at discount prices and uses free phone promotions to encourage use of
its mobile services.
The Company offers cellular service for a fixed monthly access fee
(accompanied by varying allotments of included or "free" minutes), plus
additional variable charges per minute of use and for custom calling features.
Various pricing programs (which are generally based on one year service
contracts) are utilized. Unlike some of its competitors, the Company designs
rate plans on a market-by-market basis. Generally, these rate plans include
high-volume user plans, medium-volume user plans, basic plans and economy plans.
In general, rate plans which include a higher monthly access fee typically
include a lower usage rate per minute. An ongoing review of equipment and
servicing pricing is maintained to ensure the Company's competitiveness and, as
appropriate, revisions to pricing of service plans and equipment are made to
meet the demands of the local marketplace.
The Company has upgraded substantially all of its cellular systems
(excluding its New York system) to TDMA IS-136 digital technology to enable it
to increase roaming (by servicing the increasing number of digital cellular
subscribers and PCS subscribers with dual mode phones) and provide enhanced
capabilities, including caller ID, longer battery life and zone billing. The
Company expects to upgrade its New York region to TDMA IS-136 digital technology
in 1999. Because its digital switches will be capable of handling both analog
and digital transmission, the Company will be able to continue to offer analog
cellular service to those customers who do not transfer to digital handsets.
Sygnet recently commenced marketing digital cellular services to its customers.
CUSTOMER SERVICE
Customer service will remain an essential element of the Company's marketing
and operating philosophy. The Company is committed to attracting new subscribers
and retaining existing subscribers by providing consistently high-quality
customer service. In each of its markets, the Company maintains installation and
repair facilities and a local staff, including a market manager, customer
service representatives and technical and sales representatives. Each cellular
service area handles its own customer-related
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<PAGE>
functions such as customer activations, account adjustments and rate plan
changes. Local offices and installation and repair facilities enable the Company
to service customers better, schedule installations and make repairs. Through
the use of sophisticated, centralized monitoring equipment, the Company will be
able to centrally monitor the technical performance of its cellular service
areas.
In addition, the Company's customers are able to report cellular telephone
service or account problems 24-hours a day to a call service center on a
toll-free access number (with no airtime charge). As soon as practicable after
the Sygnet Acquisition, the Company expects to consolidate Sygnet's three
regional call centers and one of Dobson's existing call centers. Management
believes its emphasis on customer service affords it a competitive advantage
over its large competitors.
SALES, MARKETING AND DISTRIBUTION
The Company will continue to focus its marketing program on attracting
subscribers who are likely to generate high monthly revenue and low churn rates.
The Company undertakes extensive market research to identify and design
marketing programs to attract these subscribers and tailor distinctive rate
plans and roaming rates to emphasize the quality, value and the advantage of the
Company's cellular service. The Company has established marketing alliances with
neighboring cellular systems to create larger "home rate" areas and to
effectively expand the Company's footprint in order to increase its roaming
revenue and to attract new subscribers. The Company markets its service
offerings primarily through its direct sales force and Company-owned retail
stores. The Company also uses a network of dealers and other agents, such as
electronics stores, car dealerships and department stores. In addition to these
traditional channels, the Company's marketing team evaluates other, less
traditional, methods of distributing the Company's services and products, such
as targeted telemarketing and direct mail programs.
The Company will continue to market its cellular products and services under
the brand names Wilcom Cellular, which has strong regional recognition in the
Youngstown region, and CELLULAR ONE-Registered Trademark-, one of the most
recognized brand names in the cellular industry. The national advertising
campaign conducted by the Cellular One Group enhances the Company's advertising
exposure at a fraction of the cost of what could be achieved by the Company
alone. See "--Service Marks."
Management trains and compensates its sales force in a manner designed to
stress the importance of customer service, high penetration levels and minimum
acquisition costs per subscriber. The Company believes that its direct sales
force is better able to select and screen new subscribers and select pricing
plans that realistically match subscriber means and needs than are independent
agents. In addition, the Company motivates its direct sales force to sell
appropriate rate plans to subscribers, thereby reducing churn, by linking
payment of commissions to subscriber retention. As a result, the Company
believes its use of a direct sales force keeps marketing costs low both
directly, because commissions are lower, and indirectly, because subscriber
retention is higher than when independent agents are used.
The Company believes that the after-sale telemarketing program conducted by
its sales force and customer service personnel helps to reduce its churn rate.
This program enhances customer loyalty and allows the sales staff to check
customer satisfaction as well as to offer additional calling features, such as
voicemail, call waiting and call forwarding.
At September 30, 1998, Sygnet had 24 retail stores and 27 other retail
outlets. The retail stores range in size from 1,500 square feet to 5,000 square
feet, and each retail store is fully equipped to handle customer service and
telephone maintenance and installation. Some of these stores are also authorized
warranty repair centers. The Company's stores provide subscriber-friendly retail
environments (extended hours, large selection, an expert sales staff and
convenient locations) which make the sales process quick and easy for the
subscriber. The retail outlets, other than retail stores, consist of kiosks in
malls and other stores.
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ROAMING
The Company believes that regional roaming is an important service component
for many subscribers. The Company believes that roaming will continue to be a
substantial source of revenue for the Company due, in part, to the fact that
Sygnet's cellular system is located in rural and suburban areas with a high
concentration of commuting customers and expressway corridors that tend to
result in a significant amount of roaming activity. Sygnet has entered into
roaming agreements with operators of cellular systems in adjoining MSAs and RSAs
and others which provide for roaming rates that allow customers to roam at
competitive prices which, in certain instances, are comparable to home area
rates. The Company believes this increases usage on all wireless systems,
including the Company's. Sygnet's principal roaming partners are AT&T Wireless,
AirTouch and SBC Communications. Sygnet also has agreements with PCS providers,
including AT&T Wireless and Sprint, to allow PCS providers' customers with dual
mode phones to roam in certain Sygnet markets.
Sygnet has agreements with NACN, which is the largest wireless telephone
network system in the world linking cellular operators throughout the United
States and Canada. NACN connects key areas across North America so that
customers can use their cellular phones to place and receive calls in these
areas as easily as they do in their home areas. Through NACN, customers receive
calls automatically without the use of complicated roaming codes as they roam in
more than 5,000 cities and towns in the United States and Canada. In addition,
special services such as call forwarding and call waiting automatically follow
subscribers as they travel. While the industry trend is to reduce roaming rates,
the Company believes that Sygnet's roaming rates are generally lower than the
rates offered by others in or near its systems and that Sygnet's roaming rates
are not materially impacted by this trend. The Company, however, can provide no
assurance that this trend will not materially impact the Company in the future.
TECHNOLOGY AND SYSTEM DEVELOPMENT
OVERVIEW. Historically, most cellular services have transmitted voice and
data signals over analog-based systems, which use one continuous electronic
signal that varies in amplitude or frequency over a single radio channel.
Digital systems, on the other hand, convert voice or data signals into a stream
of digits that is compressed before transmission, enabling a single radio
channel to carry multiple simultaneous signal transmissions. This enhanced
capacity, along with enhancements in digital protocols, allows digital-based
wireless technologies to offer new and enhanced services, such as greater call
privacy and single number (or "find me") service, and more robust data
transmission features, such as "mobile office" applications (including
facsimile, electronic mail and connecting notebook computers with computer/data
networks).
While digital technology serves generally to reduce transmission
interference relative to analog technology, capacity limitations in the 8
kilobit cellular digital handsets now deployed by most digital cellular
operators also cause a perceptible decline in transmission quality. This gap in
transmission quality has proven to be a significant barrier to cellular
operators seeking to switch their customers from analog to digital service.
Enhanced 13 kilobit digital handsets are now available for digital cellular
systems. These new handsets offer improved digital transmission.
SYSTEM DEVELOPMENT. At September 30, 1998, the Sygnet network included a
Northern Telecom cellular switch (which presently serves all areas but the New
York market) and an Ericsson cellular switch (which presently serves the New
York market), 181 cell sites and a large microwave network with 151 links.
Substantially all of the Sygnet system (excluding its New York system) supports
AMPS and TDMA services. As of September 30, 1998, Sygnet had converted 130 of
its 181 cell sites to TDMA IS-136 digital technology. The Company intends to
upgrade its New York market to TDMA IS-136 digital technology with Northern
Telecom equipment in 1999. The Company develops or builds out its cellular
service areas by adding channels to existing cell sites and by building new cell
sites with an emphasis on improving coverage for hand-held phones in
heavily-trafficked areas. Such development is designed to increase
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capacity and to improve coverage in response to projected subscriber demand and
in response to competitive factors. Projected subscriber demand is calculated
for each cellular service area on a cell-by-cell basis. Sygnet has historically
met such demand through a combination of augmenting channel capacity in existing
cell sites and building new cell sites.
System expansion by cell site construction is expected to enable the Company
to continue to add and retain subscribers, enhance subscriber use of the
systems, increase roamer traffic due to the larger geographic area covered by
the cellular network and further enhance the overall efficiency of the network.
The Company believes that the increased cellular coverage will have a positive
impact on market penetration and subscriber usage.
Sygnet owns 124 of the 134 cellular towers it uses. In connection with the
Sygnet Acquisition, Sygnet intends to sell substantially all of these towers to
Dobson Tower Company, a subsidiary of Dobson in the Tower Sale Leaseback. See
"Certain Transactions."
DIGITAL TECHNOLOGY. Digital signal transmission is accomplished through the
use of frequency management technologies, or "protocols." These protocols
"manage" the radio channel either by dividing it into distinct time slots (TDMA)
or by assigning specific coding instructions to each packet of digitized data
that comprises a signal (CDMA). While the FCC has mandated that licensed
cellular systems in the U.S. must utilize compatible analog signaling protocols,
at present there is no required universal digital signaling protocol. Because
the CDMA and TDMA protocols are incompatible, a subscriber of a system that
relies on TDMA technology, for example, will be unable to use his handset when
traveling in an area served only by CDMA, unless he carries a dual-mode handset
(which is not yet available) that permits the subscriber to use the cellular
system in that area. However, the FCC or industry organizations may decide to
move toward a universal digital switching protocol in the future.
Over the next decade, it is expected that many cellular systems will convert
from analog to digital technology. This conversion is due in part to capacity
constraints in many of the largest cellular markets, such as New York, Los
Angeles and Chicago. As carriers reach limited capacity levels, certain calls
may be unable to be completed, especially during peak hours. Digital technology
increases system capacity and offers other advantages, often including improved
overall average signal quality, improved call security, potentially lower
incremental costs for additional subscribers and the ability to provide data
transmission services. The conversion from analog to digital technology is
expected to be an industry-wide process that will take a number of years to
complete. While management does not believe that its network will experience
capacity constraints in the foreseeable future that would require converting its
network from analog to digital technology, it has converted its systems, other
than its New York systems, to TDMA IS-136 digital service so that its
subscribers will enjoy the added benefits of digital technology, and the Company
will benefit from increased roamer revenue (by servicing the increasing number
of digital cellular subscribers and PCS subscribers with dual mode phones).
INFORMATION SYSTEMS. Home subscriber billing functions for the Company's
cellular operations are provided by International Telecommunications Data
Service ("ITDS"), which is also the primary provider of billing services for
Dobson. Proprietary software furnished by ITDS serves all functions of billing
for the corporate and retail locations. All administrative and customer
maintenance functions are handled in-house with invoice processing and printing
handled by ITDS. The Company uses complementing software to the billing system
allowing the use of credit, collection, and switch interfaces.
SERVICE MARKS
In its cellular telephone business, Sygnet is currently licensed to use the
CELLULAR ONE-Registered Trademark- service mark in its Erie, New York and
Pennsylvania regions. CELLULAR ONE-Registered Trademark- is a registered service
mark with the U.S. Patent and Trademark Office. The service mark is owned by
Cellular One Group, a Delaware general partnership of Cellular One Marketing,
Inc., a subsidiary of SWBM, together with Cellular One Development, Inc., a
subsidiary of AT&T Wireless, and Vanguard. The Company uses the CELLULAR
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ONE-Registered Trademark- service mark to identify and promote its cellular
telephone service pursuant to licensing agreements with Cellular One Group (the
"Licensor"). Licensing and advertising fees are determined based upon the
population of the licensed areas. The licensing agreements require Sygnet to
provide high-quality cellular telephone service to its customers and to maintain
a certain minimum overall customer satisfaction rating in surveys commissioned
by the Licensor. The licensing agreements which Sygnet has entered into are for
original five-year terms that expire beginning in 2001. These agreements may be
renewed at Sygnet's option, subject to the satisfaction of certain operating
standards, for two additional five-year terms. See "Risk Factors--Reliance on
Use of Third-Party Service Mark."
The Company currently operates in the Youngstown region under the
unregistered tradename "Wilcom Cellular." The Company also uses "Sygnet
Wireless, Inc." and "Sygnet Communications, Inc." as unregistered tradenames.
COMPETITION
The Company competes with various companies in each of its markets. Overall,
the Company competes against four distinct cellular system operators.
The following chart lists the Company's cellular competitors:
<TABLE>
<CAPTION>
MARKETS CELLULAR COMPETITORS
- ------------------------------- -------------------------------------------------------------
<S> <C>
Erie GTE Mobilnet
New York Frontier
Pennsylvania ALLTEL and Bell Atlantic
Youngstown ALLTEL
</TABLE>
PCS licenses in the Company's markets have been awarded to Ameritech
Wireless, Aerial Communications, AT&T Wireless, Devon Mobile Communications, New
England Wireless, Nextwave and Omnipoint. To date no PCS licensee is actively
marketing PCS services in the Company's markets, although certain licensees have
built out portions of the highway corridors.
The wireless telecommunications industry is experiencing significant
technological change, as evidenced by the increasing pace of improvements in the
capacity and quality of digital technology, shorter cycles for new products and
enhancements, and changes in consumer preferences and expectations. Accordingly,
the Company expects competition in the wireless telecommunications business to
be dynamic and intense as a result of the entrance of new competitors and the
development of new technologies, products and services.
Each of the markets in which the Company competes is served by other two-way
wireless service providers, including licensed cellular and PCS operators. Many
of these competitors have been operating for a number of years, currently serve
a substantial subscriber base and have significantly greater financial and
technical resources than those available to the Company. Some competitors may
market other services, such as long distance, landline local exchange services
and internet access, with their wireless telecommunication service offerings.
Several of the Company's competitors are operating, or planning to operate,
through joint ventures and affiliation arrangements, wireless telecommunications
systems that encompass most of the United States.
In each of its markets, the Company competes primarily against one other
facilities-based cellular carrier. Competition for customers between cellular
licensees is based principally upon price, the services and enhancements
offered, the technical quality of the cellular system, customer service, system
coverage and capacity. Such competition may increase to the extent that licenses
are transferred from smaller, stand-alone operators to larger, better
capitalized and more experienced cellular operators that may be able to offer
consumers certain network advantages.
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Cellular carriers also face to a lesser extent competition from PCS, ESMR
and mobile satellite service ("MSS") systems, as well as from resellers of these
services and cellular service. In the future, cellular operators may also
compete more directly with traditional landline telephone service providers.
Continuing technological advances in telecommunications make it impossible to
predict the extent of future competition. However, due to the depth and breadth
of these competitive services offered by operators using these other
technologies, such competition could be significant and is expected to become
more intense.
The FCC requires that all cellular system operators provide service to
resellers on a nondiscriminatory basis. A reseller provides cellular service to
customers but does not hold an FCC license or own cellular facilities. Instead,
the reseller buys blocks of cellular telephone numbers from a licensed carrier
and resells service through its own distribution network to the public.
Therefore, a reseller may be both a customer of a cellular licensee's services
and a competitor of that licensee. Several well-known telecommunications
companies resell cellular service as a complement to their long distance, local
telephone, paging, cable television or internet offerings.
The most likely future source of direct competition to cellular providers in
the near term from a new technology is broadband PCS. Broadband PCS services
consist of wireless two-way telecommunications services for voice, data and
other transmissions employing digital micro-cellular technology. PCS operates in
the 1850 to 1990 MHz band. PCS technology utilizes a network of small,
low-powered transceivers placed throughout a neighborhood, business complex,
community or metropolitan area to provide customers with mobile and portable
voice and data communications. Many PCS licensees that will compete with the
Company have access to substantial capital resources. In addition, many of these
companies or their predecessors and affiliates already operate large cellular
telephone systems and thus bring significant wireless experience.
ESMR is a wireless communications service supplied by converting analog SMR
services into an integrated, digital transmission system. The ESMR system
incorporates characteristics of cellular technology, including multiple low
power transmitters and interconnection with the landline telephone network. ESMR
service providers, such as Nextel, may compete with analog cellular service by
providing high quality digital communication technology, lower rates, enhanced
privacy and additional features such as electronic mail and built-in paging.
ESMR handsets are likely to be more expensive than cellular telephones.
A consortium of telecommunications providers known as American Mobile
Satellite Corporation has been licensed by the FCC to provide MSS and is
currently providing such services. The FCC has also licensed four entities to
provide MSS as low earth-orbit satellite-based systems. One such licensee,
controlled by Motorola, operates a low earth-orbit satellite-based system called
"Iridium" and recently initiated such service in some markets. None of the other
licensees have yet launched MSS service. Other proposals for MSS are pending
before the FCC. The FCC is developing rules for these services and international
and foreign regulatory authorities must also approve aspects of some MSS
services. Mobile satellite systems could augment or replace communications
within land-based cellular systems. While the Company may experience increased
competition from low earth-orbit satellite-based systems in the future, to date,
such systems have not affected the Company's operations.
The commercial development and deployment of most of these new technologies
remain in an early phase. The Company expects this activity to be focused
initially in relatively large markets in view of the substantial costs involved
in building and launching systems using these technologies. The Company believes
that it can effectively face this competition from its position as an incumbent
in the cellular industry with a high quality network, an extensive footprint
that is not capacity constrained, strong distribution channels, superior
customer service capabilities and an experienced management team. Since the
Company operates in medium to small markets, the new entrants may be unable to
offer wireless service at competitive rates in many of the Company's markets in
the near term. The extensive capital
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expenditures required to deploy infrastructure are more readily justifiable from
an economic standpoint in larger, more densely populated urban areas, than in
the rural areas in which the Company operates.
REGULATION
OVERVIEW. The wireless telecommunications industry is subject to extensive
governmental regulation on the federal level and to varying degrees on the state
level. Many aspects of such regulation have been impacted by the enactment of
the Telecommunications Act and have been the subject of administrative
rulemakings that are significant to the Company. The following is a summary of
the federal laws and regulations that materially affect the cellular
communications industry and a description of certain state laws. This section
does not purport to be a summary of all present and proposed federal, state and
local regulations and legislation relating to the cellular communications
industry.
FEDERAL REGULATION. The licensing, construction, modification, operation,
ownership and acquisition of cellular telephone systems are subject to
regulations and policies of the FCC under the Communications Act of 1934, as
amended (the "Communications Act"). The FCC has promulgated rules and
regulations governing, among other things, applications to construct and operate
cellular communications systems, applications to transfer control of or assign
cellular licenses and technical and operational standards for the operation of
cellular systems (such as maximum power and antenna height).
The FCC licenses cellular systems in accordance with 734 geographically
defined market areas comprising 306 MSAs and 428 RSAs. In each market, the
frequencies allocated for cellular telephone use are divided into two equal 25
MHz blocks and designated as wireline and non-wireline. Apart from the different
frequency blocks, there is no technical difference between wireline and
non-wireline cellular systems and the operational requirements imposed on each
by the FCC are the same. However, no entity may own, directly or indirectly,
more than a 5% interest in both systems in any one MSA or RSA, unless such
ownership will not pose a substantial threat to competition, and no entity may,
directly or indirectly, own a controlling interest in, or otherwise have the
ability to control, both such systems. The FCC may prohibit or impose conditions
on transfers of licenses. In addition, under FCC rules, no person may have an
attributable interest in a total of more than 45 MHz of licensed, broadband PCS,
cellular and ESMR spectrum regulated as Commercial Mobile Radio Services
("CMRS") with significant overlap in any geographic area (significant overlap
will occur when at least 10% of the population of the PCS licensed service areas
is within the CGSA (as defined below) and/or the ESMR service area).
Under FCC rules, the authorized service area of a cellular provider in each
of its markets is referred to as the "Cellular Geographic Service Area" or
"CGSA." The CGSA may conform exactly with the boundaries of the FCC designated
MSA or RSA, or it may be larger or smaller, subject to certain minimum service
requirements. A cellular licensee has the exclusive right to expand its CGSA
boundaries within the licensee's MSA or RSA for a period of five years after
grant of the licensee's initial construction permit. At the end of this
five-year build-out period, however, any entity may apply to serve portions of
the MSA or RSA of at least 50 square miles in size outside the licensee's then
designated CGSA. Sygnet's five year buildout period has expired in all of its
existing markets, with the exception of Pennsylvania 2 RSA.
Cellular service providers also must satisfy a variety of FCC requirements
relating to technical and reporting matters. One such requirement is the
coordination of proposed frequency usage with adjacent cellular users,
permittees and licensees in order to avoid interference between adjacent
systems. In addition, the height and power of base station transmitting
facilities and the type of signals they emit must fall within specified
parameters. The Company is obligated to pay certain annual regulatory fees to
the FCC in connection with its cellular operations, as well as other fees
necessary to support centralized numbering, administration of telephone numbers,
the provision of telecommunications relay services for the hearing-impaired and
applications' filing fees.
The Communications Act requires prior FCC approval for transfers to or from
the Company of a controlling interest in any license or construction permit, or
any rights thereunder. All of the applications
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requesting the FCC's approval for the transfers of control and license
assignments associated with the Sygnet Acquisition have been granted by the FCC.
Although there can be no assurance that any future requests for approval of
applications filed will be approved or acted upon in a timely manner by the FCC,
the Company has no reason to believe such requests or applications would not be
approved or granted in due course.
The FCC also regulates a number of other aspects of the cellular business.
For example, the FCC regulates cellular resale practices and recently extended
the resale requirement to broadband PCS and ESMR licensees. Cellular, PCS and
ESMR providers may not restrict any customer's resale of their services or
unreasonably discriminate against resellers of their services. All resale
obligations for cellular, broadband PCS and ESMR operators will terminate on
November 24, 2002. The FCC has also adopted requirements for cellular and other
providers of two-way voice services to implement basic and enhanced 911
services. These services provide emergency service providers with the ability to
better identify and locate callers using wireless services, including callers
using special devices for the hearing impaired. The Company's implementation of
these services is scheduled to occur in several stages ending in October 2001.
Cellular and PCS carriers are also required to provide law enforcement agencies
with capacity to support lawful wiretaps by March 12, 2001 and technical
assistance for wiretaps by June 30, 2000. These wireless 911 and law enforcement
requirements may create additional capital obligations for the Company to make
necessary system changes.
In addition, the FCC regulates the ancillary service offerings that cellular
and PCS licensees can provide and recently revised its rules to permit cellular,
broadband PCS, paging and ESMR licensees to offer fixed services on a co-primary
basis along with mobile services. This rule change may facilitate the provision
of wireless local loop service, which involves the use of wireless links to
provide local telephone service by cellular licensees, as well as broadband PCS
and ESMR licensees. In this regard, the FCC also recently adopted telephone
number portability rules for local exchange carriers, as well as cellular,
broadband PCS and ESMR licensees, that could facilitate the development of local
exchange competition, including wireless local loop service. The new number
portability rules generally require cellular, broadband PCS and ESMR licensees
to have the capability to deliver calls from their systems to ported numbers by
December 31, 1998 and offer number portability and roaming to ported numbers by
March 31, 2000. These requirements may result in added capital expenditures for
the Company to make necessary system changes, although the Company currently has
no plans for any such expenditures.
Initial cellular licenses are generally granted for terms of ten years,
beginning on the date of the grant of the initial operating authority, and are
renewable upon application to the FCC. Sygnet's cellular licenses expire at
various dates beginning in October 2000. Licenses may be revoked and license
renewal applications denied for cause after appropriate notice and hearing. Near
the conclusion of the license term, licensees must file applications for renewal
of licenses to obtain authority to operate for up to an additional 10-year term.
The FCC will award a renewal expectancy to a cellular licensee that meets
certain standards of past performance. If the existing licensee receives a
renewal expectancy, it is very likely that the existing licensee's cellular
license will be renewed without becoming subject to competing applications. To
receive a renewal expectancy, a licensee must show that it has provided
"substantial" service during its past license term, and has substantially
complied with applicable FCC rules and policies and the Communications Act.
"Substantial" service is defined as service which is sound, favorable and
substantially above a level of mediocre service that might only minimally
warrant renewal. If the existing licensee does not receive a renewal expectancy,
competing applications for the license will be accepted by the FCC and the
license may be awarded to another entity.
In order to increase competition in wireless communications, promote
improved quality and service and make available the widest possible range of
wireless services, federal legislation was enacted directing the FCC to allocate
radio frequency spectrum for PCS by competitive bidding. A PCS system operates
under a protected geographic service area license granted by the FCC for either
an MTA or BTA on one of six frequency blocks allocated for broadband PCS
service. The FCC has divided the United States and its
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possessions and territories into PCS markets made up of 493 BTAs and 51 MTAs. As
many as six licensees will compete in each PCS service area. The FCC has
allocated 120 MHz of radio spectrum in the 2 GHz band for licensed broadband PCS
services. The FCC divided the 120 MHz of spectrum into six individual blocks,
each of which is allocated to serve either MTAs or BTAs. The spectrum allocation
includes two 30 MHz blocks (A and B Blocks) licensed for each of the 51 MTAs,
one 30 MHz block (C Block) licensed for each of the 493 BTAs, and three 10 MHz
blocks (D, E and F Blocks) licensed for each of the 493 BTAs, a total of more
than 2,000 licenses.
Applications for FCC authority may be denied and in extreme cases licenses
may be revoked if the FCC finds that an entity lacks the requisite "character"
qualifications to be a licensee. In making the determination, the FCC considers
whether an applicant or licensee has been the subject of adverse findings in a
judicial or administrative proceeding involving felonies, the possession or sale
of unlawful drugs, fraud, antitrust violations or unfair competition, employment
discrimination, misrepresentations to the FCC or other government agencies, or
serious violations of the Communications Act or FCC regulations.
If the FCC determines that the public interest would be served, it may
revoke the Company's cellular licenses or require an ownership restructuring if
greater than 25 percent of the Company's equity is owned of record or voted by
aliens or their representatives, a foreign government or its representative, or
any corporation organized under the laws of a foreign country. The FCC will
generally permit additional indirect ownership in excess of the statutory 25
percent benchmark where that interest is to be held by an entity or entities
from member countries of the World Trade Organization ("WTO"). For investors
from non-WTO countries, however, the FCC will determine whether the home country
of the foreign investor extends reciprocal treatment called "equivalent
competitive opportunities" to U.S. entities. If such opportunities do not exist,
it is unlikely that the FCC will permit investment beyond the 25 percent
benchmark. These restrictions could adversely affect the Company's ability to
attract additional equity financing.
Interconnection charges paid to local exchange carriers are a major
component of the Company's cost of service. Changes in the interconnection
charge rate structure imposed by the FCC or mandated by the Telecommunications
Act may have a material impact on the Company.
The Telecommunications Act, which makes significant changes to the
Communications Act and terminated the antitrust consent decree applicable to the
RBOCs, affects the telecommunications industry. This legislation, among other
things, affects competition for local telecommunications services,
interconnection arrangements for carriers, universal service funding and the
provision of interexchange services.
The Telecommunications Act requires state public utilities commissions
and/or the FCC to implement policies that mandate reciprocal compensation
between local exchange carriers, a category that will, for these purposes,
include cellular carriers, for interconnection services at rates more closely
related to cost. On August 1, 1996, the FCC adopted rules implementing the
interconnection policies imposed by the Telecommunications Act. Various aspects
of the order not directly related to interconnection between wireless carriers
and local exchange carriers are currently being reviewed by the U.S. Supreme
Court and the FCC's orders are currently subject to a federal appellate court
stay. If the FCC's rules are upheld on appeal, such action could result in
further reductions of the Company's interconnection expenses.
The Telecommunications Act requires the FCC to adopt rules that require
interstate communications carriers, including cellular carriers, to "make an
equitable and non-discriminatory contribution" to a universal service fund that
reimburses communications carriers that provide basic communications services to
users who receive services at subsidized rates. These rules could result in
increased costs for the Company's cellular operations. The Telecommunications
Act also eases the restrictions on the provision of interexchange telephone
services by wireless carriers affiliated with RBOCs. RBOC-related wireless
carriers have interpreted the legislation to permit immediate provision of long
distance call delivery for their cellular customers.
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The Telecommunications Act specifically exempts all cellular carriers from
the obligation to provide equal access to interstate long distance carriers.
However, the Telecommunications Act gives the FCC the authority to impose rules
to require unblocked access through carrier identification codes or 800/888
numbers, so that cellular subscribers are not denied access to the long distance
carrier of their choosing, if the FCC determines that the public interest so
requires. The Company currently provides "dial around" equal access to all of
its customers.
The Telecommunications Act also imposes restrictions on a telecommunications
carrier's use of customer proprietary network information. FCC rules
implementing these restrictions could impose new costly obligations on the
Company and impose burdens on its current marketing activities.
The overall impact of the Telecommunications Act on the business of the
Company is unclear and will likely remain so for the foreseeable future. The new
limitations on local zoning requirements may facilitate the construction of new
cell sites and related facilities. See "--State, Local and Other Regulation."
However, other provisions of the statute relating to interconnection, telephone
number portability, equal access, use of customer proprietary network
information and resale could subject the Company to additional costs and
increased competition.
STATE, LOCAL AND OTHER REGULATION. The Communications Act preempts state or
local regulation of the entry of, or the rates charged by, any commercial mobile
service or any private mobile service provider, which includes cellular
telephone service providers. The FCC has denied the petition of eight states to
continue their rate regulation authority, including authority over cellular
operators. As a practical matter, the Company is free to establish rates and
offer new products and service with a minimum of regulatory requirements. The
three states in which the Company will operate upon completion of the Sygnet
Acquisition maintain nominal oversight jurisdiction, primarily focusing upon
prior approval of acquisitions and transfers and resolution of customer
complaints.
The location and construction of cellular transmitter towers and antennas
are subject to FCC and Federal Aviation Administration regulations and are
subject to federal, state and local environmental regulation, as well as state
or local zoning, land use and other regulation. Before a system can be put into
commercial operation, the grantee of a construction permit must obtain all
necessary zoning and building permit approvals for the cell sites and microwave
tower locations and must secure state certification, if required. The time
needed to obtain zoning approvals and requisite state permits varies from market
to market and state to state. Likewise, variations exist in local zoning
processes. In addition, any proposed site must comply with the FCC's
environmental rules.
Zoning and planning regulation may become more restrictive in the future as
many broadband PCS carriers are now seeking sites for network construction. The
Telecommunications Act provides limited relief from state and local laws that
arbitrarily restrict the expansion of personal wireless services, which include
cellular, PCS and ESMR systems. For example, under the Telecommunications Act,
localities are now precluded from denying zoning approval for cell sites based
upon electromagnetic emission concerns, if the cellular operator's system
complies with FCC emissions standards. In addition, localities are prohibited
from adopting zoning requirements that prohibit or have the effect of
prohibiting personal wireless services, or that discriminate between
"functionally equivalent" services. Notwithstanding these new requirements,
wireless carriers have had various degrees of success in challenging offensive
zoning requirements and it is still unclear whether the costs of expanding
cellular systems by adding cell sites will increase and whether significant
delays will be experienced due to local zoning regulations.
The Company can provide no assurance that any state or local regulatory
requirements currently applicable to the Company's systems will not be changed
in the future or that regulatory requirements will not be adopted in those
states and localities which currently have none.
FUTURE REGULATION. From time to time, legislation that could affect the
Company, either beneficially or adversely, is proposed by federal or state
legislators. There can be no assurance that federal or state
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legislation will not be enacted, or that regulations will not be adopted or
actions taken by the FCC or state regulatory authorities, that might adversely
affect the business of the Company. Changes such as the allocation by the FCC of
radio spectrum to services that compete with the Company's business could
adversely affect the Company's operating results.
EMPLOYEES AND AGENTS
As of September 30, 1998, Sygnet had approximately 455 employees and had
agreements with more than 60 independent sales agents. None of Sygnet's
employees is represented by a labor organization, and the Company considers
Sygnet's employee relations to be good.
PROPERTIES
The Company maintains its headquarters in Oklahoma City, Oklahoma. Sygnet
owns office buildings in Youngstown and Warren, Ohio and land for a proposed
office site in Boardman, Ohio. As of September 30, 1998, the Company's cellular
operations leased 55 and owned 2 retail sales and administrative offices. The
Company anticipates that it will review these leases from time to time and may,
in the future, lease or acquire new facilities as needed. The Company does not
anticipate that it will encounter any material difficulties in meeting its
future needs for any leased space. The Company owned 4 cell sites and 124 towers
and leased 177 cell sites and 10 towers as of September 30, 1998. As part of the
Transactions, Sygnet sold substantially all of its owned towers to Dobson Tower
Company, a subsidiary of Dobson, which leased these towers back to Sygnet. See
"Certain Transactions."
LEGAL PROCEEDINGS
Sygnet is not currently involved in any pending legal proceedings that
individually or in the aggregate are material to Sygnet. Sygnet is a party to
routine filings and customary regulatory proceedings with the FCC and state
public utility commissions relating to its operations.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Upon completion of the Transactions, Albert H. Pharis Jr., Sygnet's former
President and Chief Executive Officer, became a director of and entered into a
consulting arrangement with Dobson under which he will provide services to all
of Dobson's cellular subsidiaries. Dana L. Schmaltz also joined the Board of
Directors of Dobson and its cellular subsidiaries upon completion of the
Transactions. In addition, Craig T. Sheetz, Sygnet's former Vice President and
Chief Financial Officer, serves as Executive Vice President of Operations of
Dobson for Dobson's cellular subsidiaries.
The directors and executive officers of the Company are set forth below.
Certain of the officers and directors hold or have held positions in Dobson and
several of its subsidiaries. The ages of the persons set forth below are as of
December 31, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- -----------------------------------------------------------------------
<S> <C> <C>
Everett R. Dobson (1).............. 38 Chairman of the Board and Chief Executive Officer
G. Edward Evans.................... 37 President and Chief Operating Officer
Bruce R. Knooihuizen............... 42 Vice President and Chief Financial Officer
Stephen T. Dobson (1).............. 35 Secretary, Treasurer and Director
Russell L. Dobson (1).............. 63 Director
Justin L. Jaschke.................. 39 Director
Albert H. Pharis, Jr............... 48 Director
Dana L. Schmaltz................... 31 Director
</TABLE>
- ------------------------
(1) Everett R. Dobson and Stephen T. Dobson are sons of Russell L. Dobson.
EVERETT R. DOBSON has served as a Chairman and Chief Executive Officer of
the Company since its formation in 1998 and as a director and officer of Dobson
since 1982. From 1990 to 1996, he served as a director, President and Chief
Operating Officer of Dobson and President of Dobson's cellular subsidiaries. He
was elected Chairman of the Board and Chief Executive Officer of Dobson in April
1996. Mr. Dobson served on the board of the Cellular Telecommunications Industry
Association ("CTIA") in 1993 and 1994. He holds a B.A. in Economics from
Southwestern Oklahoma State University ("SWOSU") where he currently sits on the
SWOSU Foundation Board and chairs the investment committee.
G. EDWARD EVANS has served as President and Chief Operating Officer of the
Company since its formation in 1998 and has served as President of Dobson's
cellular subsidiaries since January 1997. Mr. Evans was employed by BellSouth
Mobility, Inc. from 1993 to 1996, serving as General Manager-- Kentucky,
director of Field Operations at the company's corporate office in Atlanta and
Director of Marketing--Alabama. He was an Area Manager and a Market Manager of
United States Cellular, Inc. from 1990 to 1993 and was a Sales Manager of GTE
Mobilnet from 1989 to 1990. Mr. Evans serves on the board of CTIA. He has an
M.B.A. from Georgia State University.
BRUCE R. KNOOIHUIZEN has served as Vice President and Chief Financial
Officer of the Company since its formation in 1998 and has served as Vice
President and Chief Financial Officer of Dobson since July 1996. From 1994 to
1996, Mr. Knooihuizen was Chief Financial Officer and Secretary for The Westlink
Co. in San Diego, a wireless provider which was formerly an operating unit of U
S WEST. Previously, he was Treasurer and Controller of Ameritech Cellular from
1990 to 1994, Director, Accounting Operations of Ameritech Applied Technologies
from 1988 to 1990, and Controller of Ameritech Properties in 1988, all located
in Chicago. From 1980 to 1988 he held various financial and accounting positions
with The Ohio Bell Telephone Company. Mr. Knooihuizen received a B.S. in finance
from Miami University in Oxford, Ohio and an M.B.A. in finance from the
University of Cincinnati.
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STEPHEN T. DOBSON has been Secretary, Treasurer and a director of the
Company since its formation in 1998. He has been a director of Dobson since
1990. He has served as Secretary of Dobson since 1990 and served as Treasurer of
Dobson from 1991 until September, 1998 and Treasurer and Secretary of Dobson
Telephone Company since 1994 and 1990, respectively. Mr. Dobson has served as
President and a director of Dobson's wireline operations since 1997. Mr. Dobson
is a member of the Western Rural Telephone Association ("WRTA"), National
Telephone Cooperative Association and Telecommunications Resellers Association.
He holds a B.S. in business administration from the University of Central
Oklahoma.
RUSSELL L. DOBSON has been a director of the Company since its formation in
1998 and of Dobson since 1990 and was Chairman of the Board and Chief Executive
Officer from 1990 to 1996. Mr. Dobson joined his father at Dobson Telephone
Company in 1956 and became the controlling owner and Chief Executive Officer in
1975 when he purchased his father's interest. He has been active in many
industry-related groups, including the OTA, WRTA and Organization for the
Protection and Advancement of Small Telephone Companies.
JUSTIN L. JASCHKE has been a director of the Company since its formation in
1998 and of Dobson since October 1996. Mr. Jaschke has been the Chief Executive
Officer and a Director of Verio, Inc., a privately held Internet access
provider, since its inception in March 1996. Prior to forming Verio, Inc., Mr.
Jaschke served as Chief Operating Officer for Nextel following its merger with
OneComm Corporation ("OneComm") in July of 1995. Mr. Jaschke served as OneComm's
President and a member of its Board of Directors from 1993 until the merger with
Nextel. Mr. Jaschke currently serves as Chairman of the Board of Directors of
V-I-A Internet, Inc. and also serves on the Board of Directors of Metricom,
Inc., a wireless data communications provider. From May 1990 to April 1993, Mr.
Jaschke served as President and CEO of Bay Area Cellular Telephone Company. From
November 1987 to May 1990, Mr. Jaschke was Vice President of Corporate
Development of PacTel Cellular, and from 1985 to 1987 was Director of Mergers
and Acquisitions of PacTel Corporation. Prior to that, Mr. Jaschke was a
management consultant with Marakon Associates. Mr. Jaschke has a B.S. in
mathematics from the University of Puget Sound and an M.S. in management from
the Massachusetts Institute of Technology Sloan School of Management.
ALBERT H. PHARIS, JR. has served as President, Chief Executive Officer and
Director of Sygnet since Sygnet's inception in 1985. He has been active as a
board member of CTIA since 1985 and as a member of the CTIA Executive Committee
since 1989. He has also been Chairman of CTIA's Small Operators Caucus. Mr.
Pharis became a director of the Company and of Dobson in December 1998.
DANA L. SCHMALTZ became a director of the Company in accordance with the
terms of the Stockholders' Agreement dated December 23, 1998 between the Company
and J.W. Childs Associates, L.P. Mr. Schmaltz is a Vice President of J.W. Childs
Associates, L.P. and has been at J.W. Childs Associates, L.P. since February
1997. From 1995 to 1997, Mr. Schmaltz was an associate at DLJ Merchant Banking,
Inc. Mr. Schmaltz graduated from the Harvard Graduate School of Business
Administration in 1995.
COMPOSITION OF BOARD OF DIRECTORS
The Company's Board of Directors presently consists of five directors.
Directors and executive officers of the Company are elected to serve until they
resign or are removed, or are otherwise disqualified to serve, or until their
successors are elected and qualified. Directors of the Company are elected for
one-year terms at the annual meeting of stockholders which is held in April of
each year. Officers of the Company are appointed at the Board's first meeting
after each annual meeting of stockholders.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
ANNUAL COMPENSATION OTHER ANNUAL UNDERLYING
------------------------------- COMPENSATION OPTION AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR SALARY BONUS ($) (# OF SHARES) COMPENSATION ($)
- ----------------------------------- --------- --------- --------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Everett R. Dobson.................. 1998 $ -- $ -- $ -- -- $ --
Chairman of the Board and Chief
Executive Officer
</TABLE>
- ------------------------
(1) Everett R. Dobson was elected Chief Executive Officer of the Company on July
26, 1998 and he received no compensation from the Company during 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a separate compensation committee of its Board of
Directors. The Board of Directors will set the compensation for its executive
officers and Everett R. Dobson, Chairman of the Board and Chief Executive
Officer, and Stephen T. Dobson, Treasurer and Secretary, are directors and
participate in these deliberations concerning executive officer compensation.
Each of the directors of the Company also serves on the board of directors of
Dobson and on the boards of directors of various subsidiaries of Dobson. As
such, each of the directors will participate in the deliberations concerning
executive officer compensation for Dobson and its subsidiaries.
STOCK OPTION PLANS
Key employees of the Company may participate in the Dobson Communications
1996 Stock Option Plan which permits the grant of stock options to purchase
Class B Common Stock of Dobson.
CERTAIN TRANSACTIONS
The Company has adopted a policy requiring that any material transaction
between the Company and persons or entities affiliated with officers, directors,
or principal stockholders of the Company be on terms no less favorable to the
Company than reasonably could have been obtained in an arm's length transaction
with independent third parties. Any other matters involving potential conflicts
of interests are to be resolved by the Board of Directors on a case-by-case
basis.
Dobson provides certain administrative services, including accounting,
information systems management, human resources management and marketing to the
Company and its subsidiaries. Additionally, officers of the Company are also
officers of Dobson and various of its other subsidiaries. These officers perform
functions for all of the Dobson subsidiaries, including the Company and its
subsidiaries. The Company will reimburse Dobson based on Dobson's cost of
providing the services.
The Company is a party to a tax sharing agreement with Dobson and its other
subsidiaries. The Company, as a member of the affiliated group with Dobson will
join with Dobson and its other subsidiaries in filing a consolidated federal
income tax return. Under the tax sharing agreement, each subsidiary's
contribution toward the group's consolidated federal income tax liability is
determined as if such party were at all times a separate taxpayer not included
in the group. Based on this determination of separate tax liability, each
subsidiary pays to Dobson an amount in lieu of taxes equal to the amount the
subsidiary would be obligated to pay if it filed returns as a separate taxpayer.
If, but only to the extent that, the group realizes a tax benefit for any
taxable year as a result of the inclusion of a subsidiary's tax items in the
determination of tax liability of the group, Dobson will pay to the subsidiary
an amount equal to such tax benefits realized.
As part of the Transactions, Sygnet sold substantially all of the towers
owned by Sygnet to Dobson Tower Company, a wholly owned subsidiary of Dobson,
for $25.0 million. Dobson Tower Company then
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leased the towers back to Sygnet under an operating lease, with annual lease
payments of approximately $1.6 million.
PRINCIPAL SHAREHOLDER
All of the issued and outstanding capital stock of the Company is owned
beneficially and of record by Dobson. Everett R. Dobson beneficially owns
capital stock of Dobson representing 84.8% of the voting power of Dobson's
outstanding capital stock.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
NEW BANK FACILITIES
The New Bank Facilities provided by NationsBank, as Agent, include a $50.0
million senior secured, reducing revolving credit facility (the "Revolving
Credit Facility") and a series of three term loans aggregating $380.0 million
("Term Loan Facilities") to be used for permitted acquisitions, restricted
payments, the Sygnet Acquisition, to refinance Sygnet's existing indebtedness
and to fund capital expenditures, permitted investments, working capital and
other corporate purposes.
The following summary of the material provisions of the New Bank Facilities
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the definitive loan documents. Capitalized terms that
are used but not defined in this section have the meanings that are given such
terms in the definitive loan agreement.
The New Bank Facilities aggregate $430.0 million and include (a) a $50.0
million, 7 3/4 year reducing revolving credit facility, (b) a $125.0 million,
7 3/4 year term loan ("Term Loan A"), (c) a $155.0 million, 8 1/4 year term loan
("Term Loan B") and (d) a $100.0 million, 9 year term loan ("Term Loan C").
Borrowings under the Revolving Credit Facility and Term Loans A and B will
bear interest, payable at least quarterly, at Sygnet's option, at (a) the
"Applicable Margin" plus the greater of (i) the Federal Funds Effective Rate
plus 0.5% and (ii) the prime rate (the "Base Rate"), or (b) the "Applicable
Margin" plus Reserve Adjusted LIBOR ("LIBOR") for interest periods of 1, 2, 3 or
6 months. The "Applicable Margin" for the Revolving Credit Facility and Term
Loan A fluctuates based on Sygnet's leverage and is the Base Rate plus 0.75% to
2.00% or LIBOR plus 1.75% to 3.00%. For Term Loan B, the "Applicable Margin"
fluctuates based on Sygnet's leverage and is the Base Rate plus 1.75% to 2.25%
or LIBOR plus 2.75% to 3.25%. Term Loan C will bear interest at LIBOR plus 3.75%
for interest periods of 1, 2, 3 or 6 months.
Commencing with the quarter ending December 31, 2000, the borrowing
commitment under the Revolving Credit Facility and Term Loan A will reduce
quarterly under the following annual amortization schedule:
<TABLE>
<CAPTION>
YEAR ANNUAL AMORTIZATION
- ------------------------------------------------------------------------- -----------------------
<S> <C>
2000..................................................................... 5.0%
2001..................................................................... 7.5%
2002..................................................................... 7.5%
2003..................................................................... 12.5%
2004..................................................................... 15.0%
2005..................................................................... 25.0%
2006..................................................................... 27.5%
</TABLE>
Commencing with the quarter ending December 31, 2000, Term Loan B will
reduce quarterly under the following annual amortization schedule:
<TABLE>
<CAPTION>
YEAR ANNUAL AMORTIZATION
- ------------------------------------------------------------------------- -----------------------
<S> <C>
2000..................................................................... 2.5%
2001..................................................................... 2.5%
2002..................................................................... 2.5%
2003..................................................................... 7.5%
2004..................................................................... 15.0%
2005..................................................................... 25.0%
2006..................................................................... 27.5%
2007..................................................................... 17.5%
</TABLE>
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<PAGE>
Term Loan C will amortize annually under the following schedule:
<TABLE>
<CAPTION>
YEAR ANNUAL AMORTIZATION
- ------------------------------------------------------------------------- -----------------------
<S> <C>
1999-2006................................................................ 1.0%
2007..................................................................... 92.0%
</TABLE>
The commitments under the New Bank Facilities will all be permanently
reduced by an amount equal to 100% of the net cash proceeds from sales of assets
in excess of $5.0 million, to the extent not reinvested within 12 months, by an
amount equal to 100% of the net cash proceeds received from certain equity or
debt issuances and by 75% or 50% of excess cash flow, depending on Sygnet's
leverage. In addition, to the extent amounts have been borrowed in respect of
the Tower Sale Leaseback, such amounts shall be repaid with the net proceeds
therefrom and the commitments under each of Term Loan A and Term Loan B will
decrease by $10.0 million.
Sygnet may, without premium or penalty, prepay advances bearing interest
based on the Base Rate at any time and may, without premium or penalty, prepay
advances bearing interest based on the LIBOR rate at the end of an applicable
interest period. Term Loan C may be redeemed in whole or in part at 102% of the
principal amount through December 31, 1999, 101% of the principal amount through
December 31, 2001 and thereafter at 100%.
The New Bank Facilities contain a number of covenants including, among
others, covenants limiting the ability of Sygnet and each of its subsidiaries to
incur debt, make loans, create liens, make guarantees and investments, change
their business, engage in transactions with affiliates, sell assets, enter into
restrictive agreements, engage in sale leaseback transactions or new business
and engage in mergers and acquisitions. The New Bank Facilities will contain
other usual and customary negative and affirmative covenants, including Year
2000 compliance.
The New Bank Facilities restrict Sygnet and Sygnet Communications from
declaring and paying distributions or making restrictive payments. However,
Sygnet will be permitted to pay dividends to pay (i) scheduled interest on the
Notes commencing after the first six interest payments on the Notes and (ii)
regularly scheduled payments on up to $120,000,000 in liquidation preference
value of Dobson's preferred stock, commencing January 15, 2003, in each case
unless if at the time of such dividend or distribution an event of default
(other than an event of default resulting solely from the breach of a
representation or warranty) exists or would be caused by such dividend or
distribution; provided that, with respect to any event of default (other than a
payment default (including by way of acceleration), a bankruptcy event with
respect to the Company, Sygnet or Sygnet Communications or Dobson or any of its
restricted subsidiaries or the loss of a material license or cellular system),
Sygnet and Sygnet Communications will not be prohibited from paying dividends to
the Company to pay scheduled interest on the Notes for more than 180 days.
Sygnet is required to maintain certain financial ratios, including, among
others, a ratio of total debt to cash flow, a ratio of operating cash flow to
pro forma debt service, a ratio of operating cash flow to cash interest expense
and a fixed charge coverage ratio. In addition, Dobson and the Company will be
required to maintain a ratio of debt to operating cash flow.
Failure to satisfy any of the financial covenants will constitute an Event
of Default under the New Bank Facilities, permitting the lenders, after notice,
to terminate the commitment and/or accelerate payment of outstanding
indebtedness notwithstanding the ability of Sygnet to meet its debt service
obligations. The New Bank Facilities include other customary events of default
including, without limitation, loss of franchise or any material license; breach
of representations, warranties and covenants; insolvency or bankruptcy of Sygnet
or any of its subsidiaries or of Dobson or any of its subsidiaries; cross
default to other material indebtedness, leases, contracts of Sygnet, its
subsidiaries, or of Dobson and its subsidiaries (excluding Logix Communications
Enterprises, Inc.); any material adverse change; dissolution or termination of
Sygnet or any of its subsidiaries or of Dobson; if Dobson fails to maintain
direct voting
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<PAGE>
and economic control of Sygnet and its subsidiaries; and if less than two-thirds
of the existing executive management team of Dobson continue to hold executive
positions with Dobson.
Sygnet's obligations under the New Bank Facilities are guaranteed by its
subsidiaries. Borrowings under the New Bank Facilities will be secured by a
first perfected security interest in all assets of Sygnet and its present and
future subsidiaries including a pledge of all intercompany notes.
SYGNET NOTES
On September 26, 1996, Sygnet issued $110 million in aggregate principal
amount of 11 1/2% Senior Notes which mature in October 2006. The Sygnet Notes
were issued under an Indenture dated as of September 26, 1996 between Sygnet and
Fleet National Bank, as trustee. The Old Notes bear interest at an annual rate
of 11 1/2%, payable semi-annually on each April 1 and October 1. On December 23,
1998, Sygnet completed its purchase of all of the Sygnet Notes.
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<PAGE>
DESCRIPTION OF THE NOTES
The Notes are issued under an Indenture, dated as of December 23, 1998,
between the Company, as issuer, and United States Trust Company of New York (the
"Trustee"). A copy of the Indenture is available upon request from the Company.
The following summary of certain provisions of the Indenture does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture, including the definitions of certain terms
therein and those terms made a part thereof by the Trust Indenture Act of 1939,
as amended. Whenever particular defined terms of the Indenture not otherwise
defined herein are referred to, such defined terms are incorporated herein by
reference. For definitions of certain capitalized terms used in the following
summary, see "--Certain Definitions." The term "Company" as used in this
"Description of the Notes" means Dobson/Sygnet Communications Company, excluding
its subsidiaries.
GENERAL
The Notes are unsecured (except to the extent described under "--Pledged
Securities" below), unsubordinated obligations of the Company, initially limited
to $200.0 million aggregate principal amount, and will mature on December 15,
2008. Each Note will initially bear interest at 12 1/4% per annum from the
Closing Date or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semiannually (to Holders of record at the
close of business on the June 1 or December 1 immediately preceding the Interest
Payment Date) on June 15 and December 15 of each year commencing June 15, 1999.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of New York (which initially will
be the corporate trust office of the Trustee at United States Trust Company of
New York, 114 W. 47th Street, New York, New York 10036, Attention: Corporate
Trust Department); PROVIDED that, at the option of the Company, payment of
interest may be made by check mailed to the Holders at their addresses as they
appear in the Security Register.
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 of principal amount and any integral multiple thereof.
See "--Book-Entry, Delivery and Form." No service charge will be made for any
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith.
The Company may, subject to the covenants described below under "Covenants"
and applicable law, issue additional Notes under the Indenture. The Notes
offered hereby and any additional Notes subsequently issued would be treated as
a single class for all purposes under the Indenture.
OPTIONAL REDEMPTION
The Notes are redeemable, at the Company's option, in whole or in part, at
any time or from time to time, on or after December 15, 2003 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular
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<PAGE>
Record Date that is prior to the Redemption Date to receive interest due on an
Interest Payment Date), if redeemed during the 12-month period commencing
December 15 of the years set forth below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2003........................................................................ 106.125%
2004........................................................................ 103.063
2005........................................................................ 101.531
2006 and thereafter......................................................... 100.000%
</TABLE>
In addition, at any time prior to December 15, 2001, the Company may redeem
up to 35% of the principal amount of the Notes originally issued with the Net
Cash Proceeds of one or more sales of Capital Stock of the Company (other than
Disqualified Stock), at any time as a whole or from time to time in part, at a
Redemption Price (expressed as a percentage of principal amount) of 112.25%,
plus accrued and unpaid interest to the Redemption Date (subject to the rights
of Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on an Interest Payment Date); PROVIDED
that at least 65% of the aggregate principal amount of Notes originally issued
remains outstanding after each such redemption and any such redemption must
occur within 60 days after the related sale of Capital Stock.
In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not listed on a national securities exchange, by lot or by such other
method as the Trustee in its sole discretion shall deem to be fair and
appropriate; PROVIDED that no Note of $1,000 in principal amount or less shall
be redeemed in part. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note.
REGISTRATION RIGHTS
The Company and the Initial Purchasers entered into a Registration Rights
Agreement (the "Registration Rights Agreement") on December 23, 1998. Pursuant
to the Registration Rights Agreement the Company agreed, for the benefit of the
Holders, at its expense, to (1) file a registration statement (the "Exchange
Offer Registration Statement") with the Commission with respect to a registered
offer to exchange the Notes for a new issue of debt securities of the Company
(the "Exchange Notes") to be issued under the Indenture in the same aggregate
principal amount as and with terms that will be identical in all respects to the
Notes (except that the Exchange Notes will not contain transfer restrictions),
(2) use its best efforts to cause the Exchange Offer Registration Statement to
be declared effective under the Securities Act and (3) use its best efforts to
consummate the Exchange Offer. Promptly after the Exchange Offer Registration
Statement is declared effective, the Company will offer the Exchange Notes in
exchange for surrender of the Notes (the "Exchange Offer"). The Company will
keep the Exchange Offer open for not less than 20 business days after the date
notice of the Exchange Offer is mailed to the Holders. For each Note tendered to
the Company pursuant to the Exchange Offer and not validly withdrawn by the
Holder thereof, the Holder of such Note will receive an Exchange Note having a
principal amount equal to the principal amount of such surrendered Note.
Based on existing interpretations of the Securities Act by the staff of the
Commission set forth in several no-action letters to third parties, and subject
to the immediately following sentence, the Company believes that the Exchange
Notes that will be issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by the Holders thereof without further
compliance with the registration and prospectus delivery provisions of the
Securities Act. However, any purchaser of Notes who is an "affiliate" of the
Company or who intends to participate in the Exchange Offer for the purpose of
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<PAGE>
distributing the Exchange Notes, (1) will not be able to rely on the
interpretations by the staff of the Commission set forth in the above-mentioned
no-action letters, (2) will not be able to tender its Notes in the Exchange
Offer and (3) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or transfer of
the Notes unless such sale or transfer is made pursuant to an exemption from
such requirements.
Each Holder who wishes to exchange Notes for Exchange Notes in the Exchange
Offer is required to represent that (1) it is not an affiliate of the Company,
(2) any Exchange Notes to be received by it were acquired in the ordinary course
of its business and (3) at the time of commencement of the Exchange Offer, it
has no arrangement with any person to participate in the distribution (within
the meaning of the Securities Act) of the Exchange Notes. In addition, in
connection with any resales of Exchange Notes, any broker-dealer (an "Exchanging
Dealer") who acquired the Notes for its own account as a result of market-making
activities or other trading activities must deliver a prospectus meeting the
requirements of the Securities Act. The Commission has taken the position that
Exchanging Dealers may fulfill their prospectus delivery requirements with
respect to the Exchange Notes (other than a resale of an unsold allotment form
the original sale of the Notes) with the prospectus contained in the Exchange
Offer Registration Statement. Under the Registration Rights Agreement, the
Company is required to allow Exchanging Dealers to use the prospectus contained
in the Exchange Offer Registration Statement in connection with the resale of
such Exchange Notes.
If any changes in law or applicable interpretations of the staff of the
Commission do not permit the Company to effect the Exchange Offer, or if for any
reason the Exchange Offer is not consummated within 180 days of the Closing Date
or in certain other circumstances, the Company will, at its expense (1) file
with the Commission a shelf registration statement (the "Shelf Registration
Statement") covering resales of the Notes, (2) use its best efforts to cause the
Shelf Registration Statement to be declared effective under the Securities Act
and (3) keep effective the Shelf Registration Statement until two years after
the Closing Date (or such shorter period of time that will terminate when all
the Notes covered thereby have been sold pursuant thereto or in certain other
circumstances). The Company will, in the event of the filing of a Shelf
Registration Statement, provide to each Holder covered by the Shelf Registration
Statement copies of the prospectus that is a part of the Shelf Registration
Statement, notify each Holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to permit unrestricted
resales of the Notes. A Holder that sells such Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to the
purchaser, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement that are applicable to such
Holder (including certain indemnification obligations). In addition, each Holder
will be required to deliver certain information to be used in connection with
the Shelf Registration Statement in order to have its Notes included in the
Shelf Registration Statement.
If either (a) the Exchange Offer is not consummated on or prior to June 21,
1999 or (b) a Shelf Registration Statement is not declared effective when
required, the Company will pay liquidated damages ("Liquidated Damages") to each
Holder of Notes in an amount equal to .5% per annum of the principal amount
thereof, payable on June 15 and December 15. Upon the consummation of the
Exchange Offer or the effectiveness of the Shelf Registration Statement, as the
case may be, Liquidated Damages will cease to accrue.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Registration Rights Agreement.
PLEDGED SECURITIES
Pursuant to the Indenture, on the Closing Date the Company purchased and
pledged to the Trustee for the benefit of the Holders of the Notes the Pledged
Securities in such amount as will be sufficient upon
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receipt of scheduled interest and principal payments of such securities to
provide for payment in full of the first six scheduled interest payments due on
the Notes. The Company used approximately $67.7 million of the net proceeds of
the Offering to acquire the Pledged Securities. The Pledged Securities have been
pledged by the Company to the Trustee for the benefit of the Holders of the
Notes pursuant to the Pledge Agreement and will be held by the Trustee in the
Pledge Account. Pursuant to the Pledge Agreement, immediately prior to an
Interest Payment Date on the Notes, the Company may either deposit with the
Trustee from funds otherwise available to the Company cash sufficient to pay the
interest scheduled to be paid on such date or the Company may direct the Trustee
to release from the Pledge Account proceeds sufficient to pay interest then due
on the Notes. In the event that the Company exercises the former option, the
Company may thereafter direct the Trustee to release to the Company proceeds or
Pledged Securities from the Pledge Account in like amount. A failure by the
Company to pay interest on the Notes in a timely manner through the first six
scheduled interest payment dates will constitute an immediate Event of Default
under the Indenture, with no grace or cure period.
The Notes are secured in part by a first priority security interest in the
Pledged Securities and in the Pledge Account and, accordingly, the Pledged
Securities and the Pledge Account will also secure repayment of the principal
amount of the Notes to the extent of such security. Under the Pledge Agreement,
once the Company makes the first six scheduled interest payments on the Notes,
all of the remaining Pledged Securities and any other amounts in the Pledge
Account, if any, will be released from the Pledge Account and thereafter the
Notes will be unsecured.
RANKING
The Notes are unsubordinated Indebtedness of the Company and rank equally in
right of payment with all other unsubordinated indebtedness of the Company and
senior in right of payment to all subordinated indebtedness of the Company.
After giving PRO FORMA effect to the Transactions, as of September 30, 1998, the
Company would have had on an unconsolidated basis no indebtedness other than the
Notes. The Company is a holding company and the Notes will be effectively
subordinated to all existing and future liabilities (including trade payables)
of the Company's subsidiaries. As of September 30, 1998, on the same pro forma
basis, the subsidiaries of the Company would have had $605.7 million of
liabilities including $398.2 million of indebtedness, all of which would have
been effectively senior to the Notes. See "Capitalization."
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the
Indenture for the definition of all terms as well as any other capitalized term
used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition by a Restricted Subsidiary and not Incurred in connection
with, or in anticipation of, such Person becoming a Restricted Subsidiary or
such Asset Acquisition; PROVIDED that Indebtedness of such Person which is
redeemed, defeased, retired or otherwise repaid at the time of or immediately
upon consummation of the transactions by which such Person becomes a Restricted
Subsidiary or such Asset Acquisition shall not be Acquired Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Subsidiaries for such period
determined in conformity with GAAP; PROVIDED that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without duplication):
(i) the net income of any Person (other than net income attributable to
a Restricted Subsidiary) in which any Person (other than the Company or any
of its Restricted Subsidiaries) has a joint interest and the net income of
any Unrestricted Subsidiary, except to the extent of the amount of dividends
or
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other distributions actually paid to the Company or any of its Restricted
Subsidiaries by such other Person or such Unrestricted Subsidiary during
such period;
(ii) solely for the purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
the "Limitation on Restricted Payments" covenant described below (and in
such case, except to the extent includable pursuant to clause (i) above),
the net income (or loss) of any Person accrued prior to the date it becomes
a Restricted Subsidiary or is merged into or consolidated with the Company
or any of its Restricted Subsidiaries or all or substantially all of the
property and assets of such Person are acquired by the Company or any of its
Restricted Subsidiaries;
(iii) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not at the time permitted by the
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable
to such Restricted Subsidiary;
(iv) any gains or losses (on an after-tax basis) attributable to Asset
Sales;
(v) except for purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of the
"Limitation on Restricted Payments" covenant described below, any amount
paid or accrued as dividends on Preferred Stock of the Company or any
Restricted Subsidiary owned by Persons other than the Company and any of its
Restricted Subsidiaries; and
(vi) all extraordinary gains and extraordinary losses, net of tax.
"Adjusted Consolidated Net Tangible Assets" means the total amount of assets
of the Company and its Restricted Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (i) all
current liabilities of the Company and its Restricted Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles (other than
Federal Communications Commission license acquisition costs), all as set forth
on the most recent quarterly or annual consolidated balance sheet of the Company
and its Restricted Subsidiaries, prepared in conformity with GAAP and filed with
the Commission.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries; PROVIDED that such Person's
primary business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such investment or (ii)
an acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person other than the Company or any of its
Restricted Subsidiaries that constitute substantially all of a division or line
of business of such Person; PROVIDED that the property and assets acquired are
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of
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the Capital Stock of any Restricted Subsidiary or (ii) all or substantially all
of the assets that constitute a division or line of business of the Company or
any of its Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by way
of merger, consolidation or sale-leaseback transaction) in one transaction or a
series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property and assets of the Company or any of its Restricted
Subsidiaries outside the ordinary course of business of the Company or such
Restricted Subsidiary and, in each case, that is not governed by the provisions
of the Indenture applicable to mergers, consolidations and sales of all or
substantially all of the assets of the Company; PROVIDED that "Asset Sale" shall
not include (a) sales or other dispositions of inventory, receivables and other
current assets, (b) sales, transfers or other dispositions of assets
constituting a Restricted Payment permitted to be made under the "Limitation on
Restricted Payments" covenant, (c) sales or other dispositions of assets for
consideration at least equal to the fair market value of the assets sold or
disposed of, to the extent that the consideration received consists of property
or assets (other than current assets) of a nature or type or that are used in a
business (or a company having property or assets of a nature or type, or engaged
in a business) similar or related to the nature or type of the property and
assets of, or business of, the Company and its Restricted Subsidiaries existing
on the date of such sale or other disposition, (d) sales, transfers or other
dispositions of assets with a fair market value (as certified in an Officer's
Certificate) not in excess of $5.0 million in any transaction or series of
related transactions or (e) the Tower Sale.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Bank Agent" means NationsBank, N.A., or its successors as agent for the
lenders under the New Credit Agreement.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether now outstanding or
issued after the Closing Date, including, without limitation, all Common Stock
and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) (a) prior to the occurrence of a
Public Market, a "person" or "group" (within the meaning of Section 13(d) or
14(d)(2) under the Exchange Act) becomes the ultimate "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of Voting Stock representing a
greater percentage of the total voting power of the Voting Stock of (x) Dobson
Communications, on a fully diluted basis, than is beneficially owned by Everett
R. Dobson and his Affiliates on such date or (y) the Company, on a fully diluted
basis, than is beneficially owned by the Existing Stockholders on such date and
(b) after the occurrence of a Public Market, a "person" or "group" (within the
meaning of Section 13(d) or 14(d)(2) under the Exchange Act) becomes the
ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
more than 35% of the total voting power of the Voting Stock of the Company on a
fully diluted basis and such ownership represents a greater percentage of the
total voting power of the Voting Stock of the Company, on a fully diluted basis,
than is held by the Existing
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Stockholders on such date; or (ii) individuals who on the Closing Date
constitute the Board of Directors (together with any new directors (x) whose
election by the Board of Directors or whose nomination for election by the
Company's stockholders was approved by a vote of at least a majority of the
members of the Board of Directors then in office who either were members of the
Board of Directors on the Closing Date or whose election or nomination for
election was previously so approved or (y) so long as no "person" or "group"
(within the meaning of Section 13(d) or 14(d)(2) under the Exchange Act) becomes
the ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) of Voting Stock representing a greater percentage of the total voting power
of the Voting Stock of Dobson Communications, on a fully diluted basis, than is
beneficially owned by Everett R. Dobson and his Affiliates on such date, whose
election was approved by Dobson Communications) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally issued under
the Indenture.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's equity, other than Preferred Stock of
such Person, whether now outstanding or issued after the Closing Date, including
without limitation, all series and classes of such common stock.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income (i) Consolidated Interest Expense,
(ii) income taxes, (other than income taxes (either positive or negative)
attributable to extraordinary and non-recurring gains or losses or sales of
assets), (iii) depreciation expense, (iv) amortization expense, and (v) all
other non-cash items reducing Adjusted Consolidated Net Income (other than items
that will require cash payments and for which an accrual or reserve is, or is
required by GAAP to be, made), less all non-cash items increasing Adjusted
Consolidated Net Income, all as determined on a consolidated basis for the
Company and its Restricted Subsidiaries in conformity with GAAP; PROVIDED that,
if any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary,
Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in
accordance with GAAP) by an amount equal to (A) the amount of the Adjusted
Consolidated Net Income attributable to such Restricted Subsidiary multiplied by
(B) the percentage ownership interest in the income of such Restricted
Subsidiary not owned on the last day of such period by the Company or any of its
Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by the Company or any of its
Restricted Subsidiaries) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by the Company and its Restricted Subsidiaries during such
period; EXCLUDING, HOWEVER, (i) any amount of such interest of any Restricted
Subsidiary if the net income of such Restricted Subsidiary is excluded in the
calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the
definition thereof (but only in the same proportion as the net income of such
Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof) and (ii) any
premiums, fees and expenses (and any amortization thereof) payable in connection
with the offering of the Notes, all as determined on a consolidated basis
(without taking into account Unrestricted Subsidiaries) in conformity with GAAP.
"Consolidated Leverage Ratio" means, on any Transaction Date, the ratio of
(i) the aggregate amount of Indebtedness of the Company and its Restricted
Subsidiaries on a consolidated basis outstanding on such Transaction Date to
(ii) the aggregate amount of Consolidated EBITDA for the then most recent four
fiscal quarters for which financial statements of the Company have been filed
with the Commission (such
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four fiscal quarter period being the "Four Quarter Period"); PROVIDED that in
making the foregoing calculation (A) pro forma effect shall be given to any
Indebtedness that is to be Incurred or repaid on the Transaction Date as if such
Incurrence or repayment had occurred on the first day of such Four Quarter
Period; (B) pro forma effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving pro forma effect to the application of proceeds
of any Asset Disposition) that occur during the period beginning on the first
day of the Four Quarter Period and ending on the Transaction Date (the
"Reference Period") as if they had occurred and such proceeds had been applied
on the first day of such Reference Period; and (C) pro forma effect shall be
given to asset dispositions and asset acquisitions (including giving pro forma
effect to the application of proceeds of any asset disposition) that have been
made by any Person that has become a Restricted Subsidiary or has been merged
with or into the Company or any Restricted Subsidiary during such Reference
Period and that would have constituted Asset Dispositions or Asset Acquisitions
had such transactions occurred when such Person was a Restricted Subsidiary as
if such asset dispositions or asset acquisitions were Asset Dispositions or
Asset Acquisitions that occurred on the first day of such Reference Period;
PROVIDED that to the extent that clause (B) or (C) of this sentence requires
that pro forma effect be given to an Asset Acquisition or Asset Disposition,
such pro forma calculation shall be based upon the four full fiscal quarters
immediately preceding the Transaction Date of the Person, or division or line of
business of the Person, that is acquired or disposed of for which financial
information is available.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity as set forth on the most recently available quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries (which
shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Disqualified Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of the Company or any of its Restricted Subsidiaries, each item to
be determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; PROVIDED that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in "Limitation on Asset Sales" and
"Repurchase of Notes upon a Change of Control" covenants described below and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to the
"Limitation on Asset Sales" and "Repurchase of Notes upon a Change of Control"
covenants described below.
"Dobson Communications" means Dobson Communications Corporation, an Oklahoma
corporation.
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"Existing Stockholders" means (i) Everett R. Dobson and his Affiliates and
(ii) Dobson Communications, so long as no "person" or "group" (within the
meaning of Section 13(d) or 14(d)(2) under the Exchange Act) becomes the
ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
more than 35% of the total voting power of the Voting Stock of Dobson
Communications on a fully diluted basis and such ownership represents a greater
percentage of the total voting power of the Voting Stock of Dobson
Communications, on a fully diluted basis, than is held by the Existing
Stockholders in clause (i) on such date.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indenture shall be
made without giving effect to (i) the amortization of any expenses incurred in
connection with the offering of the Notes and (ii) except as otherwise provided,
the amortization of any amounts required or permitted by Accounting Principles
Board Opinion Nos. 16 and 17.
"Government Securities" means direct obligations of, obligations fully
guaranteed by, or participations in pools consisting solely of obligations of or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States of
America is pledged and which are not callable or redeemable at the option of the
issuer thereof.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); PROVIDED that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Indebtedness by reason of a Person becoming a
Restricted Subsidiary; PROVIDED that neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):
(i) all indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments,
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(iii) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto, but excluding obligations with respect to letters of credit
(including trade letters of credit) securing obligations (other than
obligations described in (i) or (ii) above or (v), (vi) or (vii) below)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if drawn upon, to the extent
such drawing is reimbursed no later than the third Business Day following
receipt by such Person of a demand for reimbursement),
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or taking
delivery and title thereto or the completion of such services, except Trade
Payables,
(v) all obligations of such Person as lessee under Capitalized Leases,
(vi) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
PROVIDED that the amount of such Indebtedness shall be the lesser of (A) the
fair market value of such asset at such date of determination and (B) the
amount of such Indebtedness,
(vii) all Indebtedness of other Persons Guaranteed by such Person to the
extent such Indebtedness is Guaranteed by such Person and
(viii) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date (or in the case of a revolving credit or other
similar facility, the total amount of funds outstanding and/or available on the
date of determination) of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, PROVIDED (A) that
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP, (B) money borrowed at the time of the
Incurrence of any Indebtedness in order to pre-fund the payment of interest on
such Indebtedness shall be deemed not to be "Indebtedness" so long as such money
is held to secure the payment of such interest and (C) that Indebtedness shall
not include any liability for federal, state, local or other taxes.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement, but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP, recorded as accounts receivable
on the balance sheet of the Company or its Restricted Subsidiaries) or a capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include (i) the designation
of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair
market value of the Capital Stock (or any other Investment), held by the Company
or any of its Restricted Subsidiaries, of (or in) any Person that has ceased to
be a Restricted Subsidiary, including without limitation, by reason of any
transaction permitted by clause (iii) of the "Limitation on the Issuance and
Sale of Capital Stock of Restricted Subsidiaries" covenant. For purposes of the
definition of "Unrestricted Subsidiary" and the "Limitation on Restricted
Payments" covenant described below, (i) "Investment" shall include the fair
market value of the assets (net
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of liabilities (other than liabilities to the Company or any of its
Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities (other than liabilities to the Company or any
of its Subsidiaries)) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary of the Company as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as determined in conformity with GAAP and
(b) with respect to any issuance or sale of Capital Stock, the proceeds of such
issuance or sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary of the Company)
and proceeds from the conversion of other property received when converted to
cash or cash equivalents, net of attorney's fees, accountants' fees,
underwriters' or placement agents' fees, discounts or commissions and brokerage,
consultant and other fees incurred in connection with such issuance or sale and
net of taxes paid or payable as a result thereof.
"New Credit Agreement" means the credit agreement dated as of the Closing
Date between Dobson/ Sygnet Operating Company and NationsBank, N.A. and certain
other financial institutions, together with any agreements, instruments and
documents executed or delivered pursuant to or in connection with such credit
agreement (including without limitation any Guarantees and security documents),
in each case as such credit agreement or such agreements, instruments or
documents may be amended (including any amendment and restatement thereof),
supplemented, extended, renewed, replaced or otherwise modified from time to
time (including any agreement extending the maturity of, refinancing or
otherwise restructuring (including the inclusion of additional borrowers
thereunder that are subsidiaries of the Company) all or a portion of the
Indebtedness under such agreement or any successor agreement).
"Offer to Purchase" means an offer by the Company to purchase Notes from the
Holders commenced by mailing a notice to the Trustee and each Holder stating:
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(i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis;
(ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed) (the "Payment Date");
(iii) that any Note not tendered will continue to accrue interest
pursuant to its terms;
(iv) that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest on and after the Payment Date;
(v) that Holders electing to have a Note purchased pursuant to the Offer
to Purchase will be required to surrender the Note, together with the form
entitled "Option of the Holder to Elect Purchase" on the reverse side of the
Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day immediately preceding the
Payment Date;
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and
(vii) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; PROVIDED that each Note purchased and each new Note
issued shall be in a principal amount of $1,000 or integral multiples
thereof.
On the Payment Date, the Company shall (i) accept for payment on a pro rata
basis Notes or portions thereof validly tendered pursuant to an Offer to
Purchase; (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Notes or portions thereof so accepted; and (iii) deliver,
or cause to be delivered, to the Trustee all Notes or portions thereof so
accepted together with an Officers' Certificate specifying the Notes or portions
thereof accepted for payment by the Company. The Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail to such
Holders a new Note equal in principal amount to any unpurchased portion of the
Note surrendered; PROVIDED that each Note purchased and each new Note issued
shall be in a principal amount of $1,000 or integral multiples thereof. The
Company will publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the Paying Agent
for an Offer to Purchase. The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that the Company
is required to repurchase Notes pursuant to an Offer to Purchase.
"Permitted Investment" means:
(i) an Investment in the Company or a Restricted Subsidiary or a Person
which will, upon the making of such Investment, become a Restricted
Subsidiary or be merged or consolidated with or into or transfer or convey
all or substantially all its assets to, the Company or a Restricted
Subsidiary; PROVIDED that such person's primary business is related,
ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such Investment;
(ii) Temporary Cash Investments;
(iii) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP;
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(iv) stock, obligations or securities received in satisfaction of
judgments;
(v) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and worker's compensation, performance and
other similar deposits;
(vi) Interest Rate Agreements and Currency Agreements designed solely to
protect the Company or its Restricted Subsidiaries against fluctuations in
interest rates or foreign currency exchange rates; and
(vii) loans or advances to officers or employees of the Company or of any
Restricted Subsidiary that do not in the aggregate exceed $3 million at any
time outstanding.
"Permitted Liens" means:
(i) Liens for taxes, assessments, governmental charges or claims that
are being contested in good faith by appropriate legal proceedings promptly
instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made;
(ii) statutory and common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
Liens arising in the ordinary course of business and with respect to amounts
not yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made;
(iii) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security;
(iv) Liens incurred or deposits made (including deposits made to the
FCC) to secure the performance of tenders, bids, leases, statutory or
regulatory obligations, bankers' acceptances, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other
obligations of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);
(v) easements, rights-of-way, municipal and zoning ordinances and
similar charges, encumbrances, title defects or other irregularities that do
not materially interfere with the ordinary course of business of the Company
or any of its Restricted Subsidiaries;
(vi) Liens (including extensions and renewals thereof) upon real or
personal property acquired after the Closing Date; PROVIDED that (a) such
Lien is created solely for the purpose of securing Indebtedness Incurred, in
accordance with the "Limitation on Indebtedness" covenant described below,
(1) to finance the cost (including the cost of design, development,
improvement, construction, installation or integration) of the item of
property or assets subject thereto and such Lien is created prior to, at the
time of or within six months after the later of the acquisition, the
completion of construction or the commencement of full operation of such
property or (2) to refinance any Indebtedness previously so secured, (b) the
principal amount of the Indebtedness secured by such Lien does not exceed
100% of such cost and (c) any such Lien shall not extend to or cover any
property or assets other than such item of property or assets and any
improvements on such item;
(vii) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the Company and its
Restricted Subsidiaries, taken as a whole;
(viii) Liens encumbering property or assets under construction arising
from progress or partial payments by a customer of the Company or its
Restricted Subsidiaries relating to such property or assets;
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(ix) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease;
(x) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
(xi) Liens on property of, or on shares of Capital Stock or Indebtedness
of, any Person existing at the time such Person becomes, or becomes a part
of, any Restricted Subsidiary; PROVIDED that such Liens do not extend to or
cover any property or assets of the Company or any Restricted Subsidiary
other than the property or assets acquired;
(xii) Liens in favor of the Company or any Restricted Subsidiary;
(xiii) Liens arising from the rendering of a final judgment or order
against the Company or any Restricted Subsidiary of the Company that does
not give rise to an Event of Default;
(xiv) Liens securing reimbursement obligations with respect to letters of
credit that encumber documents and other property relating to such letters
of credit and the products and proceeds thereof;
(xv) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(xvi) Liens encumbering customary initial deposits and margin deposits,
and other Liens that are either within the general parameters customary in
the industry and incurred in the ordinary course of business, in each case,
securing Indebtedness under Interest Rate Agreements and Currency Agreements
and forward contracts, options, future contracts, futures options or similar
agreements or arrangements designed solely to protect the Company or any of
its Restricted Subsidiaries from fluctuations in interest rates, currencies
or the price of commodities;
(xvii) Liens arising out of conditional sale, title retention, consignment
or similar arrangements for the sale of goods entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business in
accordance with the past practices of the Company and its Restricted
Subsidiaries prior to the Closing Date;
(xviii) Liens that secure Indebtedness with an aggregate principal amount
not in excess of $5 million at any time outstanding; and
(xix) Liens on or sales of receivables.
"Pledge Account" means an account established with the Trustee pursuant to
the terms of the Pledge Agreement for the deposit of the Pledged Securities to
be purchased by the Company with the net proceeds from the Notes.
"Pledge Agreement" means the Collateral Pledge and Security Agreement, dated
as of the Closing Date, made by the Company in favor of the Trustee, governing
the disbursement of funds from the Pledge Account, as such agreement may be
amended, restated, supplemented or otherwise modified from time to time.
"Pledged Securities" means the Government Securities to be purchased by the
Company and held in the Pledge Account in accordance with the Pledge Agreement.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's preferred or preference equity, whether
now outstanding or issued after the Closing Date, including, without limitation,
all series and classes of such preferred stock or preference stock.
"Public Equity Offering" means an underwritten primary public offering of
Common Stock of the Company pursuant to an effective registration statement
under the Securities Act.
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A "Public Market" shall be deemed to exist if (i) a Public Equity Offering
has been consummated and (ii) at least 15% of the total issued and outstanding
Common Stock of the Company has been distributed by means of an effective
registration statement under the Securities Act or sales pursuant to Rule 144
under the Securities Act.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Significant Subsidiary" means, at any date of determination, any Restricted
Subsidiary that, together with its Subsidiaries, (i) for the most recent fiscal
year of the Company, accounted for more than 10% of the consolidated revenues of
the Company and its Restricted Subsidiaries or (ii) as of the end of such fiscal
year, was the owner of more than 10% of the consolidated assets of the Company
and its Restricted Subsidiaries, all as set forth on the most recently available
consolidated financial statements of the Company for such fiscal year.
"S&P" means Standard & Poor's Ratings Service and its successors.
"Stated Maturity" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subsidiary" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the voting power of the
outstanding Voting Stock is owned, directly or indirectly, by such Person and
one or more other Subsidiaries of such Person.
"Sygnet Acquisition" means, collectively, the transfer of the stock of
Dobson/Sygnet Operating Company to the Company and the merger of Dobson/Sygnet
Operating Company with and into Sygnet Wireless, Inc., pursuant to which Sygnet
Wireless, Inc. will survive as a Wholly Owned Restricted Subsidiary of the
Company.
"Temporary Cash Investment" means any of the following:
(i) direct obligations of the United States of America or any agency
thereof or obligations fully and unconditionally guaranteed by the United
States of America or any agency thereof,
(ii) time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued
by a bank or trust company which is organized under the laws of the United
States of America, any state thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50 million (or the
foreign currency equivalent thereof) and has outstanding debt which is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker
dealer or mutual fund distributor,
(iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above,
(iv) commercial paper, maturing not more than 90 days after the date of
acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's or "A-1" (or
higher) according to S&P, and
(v) securities with maturities of six months or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
S&P or Moody's.
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"Tower Lease" means the lease of the towers sold in the Tower Sale pursuant
to a tower lease agreement between Sygnet Communications, Inc. and Dobson Tower
Company.
"Tower Sale" means the sale of substantially all of Sygnet Communications,
Inc.'s towers to Dobson Tower Company or any of its Affiliates.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any Indebtedness
by the Company or any of its Restricted Subsidiaries, the date such Indebtedness
is to be Incurred and, with respect to any Restricted Payment, the date such
Restricted Payment is to be made.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; PROVIDED that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under the "Limitation on Restricted
Payments" covenant described below and (C) if applicable, the Incurrence of
Indebtedness and the Investment referred to in clause (A) of this proviso would
be permitted under the "Limitation on Indebtedness" and "Limitation on
Restricted Payments" covenants described below. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED
that immediately after giving effect to such designation (x) all Liens and
Indebtedness of such Unrestricted Subsidiary outstanding immediately after such
designation would, if Incurred at such time, have been permitted to be incurred
for all purposes of the Indenture and (y) no Default or Event of Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly providing the Trustee a copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
COVENANTS
The Indenture will contain, among others, the following covenants.
LIMITATION ON INDEBTEDNESS
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes and other
Indebtedness existing on the Closing Date); PROVIDED that the Company may Incur
Indebtedness, and any Restricted Subsidiary may Incur Acquired Indebtedness, if,
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after giving effect to the Incurrence of such Indebtedness and the receipt and
application of the proceeds therefrom, the Consolidated Leverage Ratio would be
less than 8 to 1, for Indebtedness Incurred on or prior to December 31, 1999, or
7 to 1, for Indebtedness Incurred thereafter.
Notwithstanding the foregoing, the Company and any Restricted Subsidiary
(except as specified below) may Incur each and all of the following:
(i) Indebtedness, and refinancings thereof, outstanding at any time
under the New Credit Agreement in an aggregate principal amount not to
exceed $450.0 million, less any amount of such Indebtedness permanently
repaid as provided under the "Limitation on Asset Sales" covenant described
below;
(ii) Indebtedness owed (A) to the Company evidenced by a promissory note
or (B) to any of its Restricted Subsidiaries; PROVIDED that any event which
results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than to
the Company or another Restricted Subsidiary) shall be deemed, in each case,
to constitute an Incurrence of such Indebtedness not permitted by this
clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of which
are used to refinance or refund, then outstanding Indebtedness, other than
Indebtedness Incurred under clause (i), (ii), (iv), (vi), (viii) or (x) of
this paragraph, and any refinancings thereof in an amount not to exceed the
amount so refinanced or refunded (plus premiums, accrued interest, fees and
expenses); PROVIDED that Indebtedness the proceeds of which are used to
refinance or refund the Notes or Indebtedness that is PARI PASSU with, or
subordinated in right of payment to, the Notes shall only be permitted under
this clause (iii) if (A) in case the Notes are refinanced in part or the
Indebtedness to be refinanced is PARI PASSU with the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made
PARI PASSU with, or subordinate in right of payment to, the remaining Notes,
(B) in case the Indebtedness to be refinanced is subordinated in right of
payment to the Notes, such new Indebtedness, by its terms or by the terms of
any agreement or instrument pursuant to which such new Indebtedness is
issued or remains outstanding, is expressly made subordinate in right of
payment to the Notes at least to the extent that the Indebtedness to be
refinanced is subordinated to the Notes and (C) such new Indebtedness,
determined as of the date of Incurrence of such new Indebtedness, does not
mature prior to the Stated Maturity of the Indebtedness to be refinanced or
refunded, and the Average Life of such new Indebtedness is at least equal to
the remaining Average Life of the Indebtedness to be refinanced or refunded;
and PROVIDED FURTHER that in no event may Indebtedness of the Company be
refinanced by means of any Indebtedness of any Restricted Subsidiary
pursuant to this clause (iii);
(iv) Indebtedness (A) in respect of performance, surety or appeal bonds
provided in the ordinary course of business, (B) under Currency Agreements
and Interest Rate Agreements; PROVIDED that such agreements (a) are designed
solely to protect the Company or its Subsidiaries against fluctuations in
foreign currency exchange rates or interest rates and (b) do not increase
the Indebtedness of the obligor outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest rates
or by reason of fees, indemnities and compensation payable thereunder; or
(C) arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, or from Guarantees or letters of
credit, surety bonds or performance bonds securing any obligations of the
Company or any of its Restricted Subsidiaries pursuant to such agreements,
in any case Incurred in connection with the disposition of any business,
assets or Restricted Subsidiary (other than Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such business, assets
or Restricted Subsidiary for the purpose of financing such acquisition), in
an amount not to exceed the gross proceeds actually received by the Company
or any Restricted Subsidiary in connection with such disposition;
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(v) Indebtedness of the Company, to the extent the net proceeds thereof
are promptly (A) used to purchase Notes tendered in an Offer to Purchase
made as a result of a Change in Control or (B) deposited to defease the
Notes as described below under "Defeasance";
(vi) Guarantees of the Notes and Guarantees of Indebtedness of the
Company by any Restricted Subsidiary provided the Guarantee of such
Indebtedness is permitted by and made in accordance with the "Limitation on
Issuances of Guarantees by Restricted Subsidiaries" covenant described
below;
(vii) Indebtedness Incurred to finance the cost (including the cost of
design, development, construction, installation or integration) of tangible
telecommunications network assets, equipment or inventory acquired by the
Company or a Restricted Subsidiary after the Closing Date;
(viii) Indebtedness of the Company, and any refinancings thereof, not to
exceed, at any one time outstanding, two times the Net Cash Proceeds
received by the Company after the Closing Date as a capital contribution or
from the issuance and sale of its Capital Stock (other than Disqualified
Stock) to a Person that is not a Subsidiary of the Company to the extent
such Net Cash Proceeds have not been used pursuant to clause (C) (2) of the
first paragraph or clause (iii), (iv), (v) or (viii) of the second paragraph
of the "Limitation on Restricted Payments" covenant described below to make
a Restricted Payment; PROVIDED that such Indebtedness does not mature prior
to the Stated Maturity of the Notes and has an Average Life longer than the
Notes;
(ix) Indebtedness of Sygnet Wireless, Inc. and its Subsidiaries on the
Closing Date; provided that upon consummation of the Sygnet Acquisition, no
such Indebtedness (other than any of the 11 1/2% Senior Notes due 2006 of
Sygnet Wireless, Inc. not tendered into Sygnet Wireless, Inc.'s tender
offer) shall remain outstanding; and
(x) Indebtedness, and any refinancings thereof, outstanding at any time
in an aggregate amount not to exceed $10 million, less any amount of such
Indebtedness permanently repaid as provided under the "Limitation on Asset
Sales" covenant described below.
(b) Notwithstanding any other provision of this "Limitation on
Indebtedness" covenant, the maximum amount of Indebtedness that the Company or a
Restricted Subsidiary may Incur pursuant to this "Limitation on Indebtedness"
covenant shall not be deemed to be exceeded, with respect to any outstanding
Indebtedness due solely to the result of fluctuations in the exchange rates of
currencies.
(c) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, (1) Indebtedness Incurred under the
New Credit Agreement on or prior to the Closing Date, and any of Sygnet
Wireless, Inc.'s 11 1/2% Senior Notes due 2006, shall be treated as Incurred
pursuant to clause (i) of the second paragraph of this "Limitation on
Indebtedness" covenant, (2) Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and (3) any Liens
granted pursuant to the equal and ratable provisions referred to in the
"Limitation on Liens" covenant described below shall not be treated as
Indebtedness. For purposes of determining compliance with this "Limitation on
Indebtedness" covenant, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses, the Company, in its sole discretion, shall classify, and from time to
time may reclassify, such item of Indebtedness and only be required to include
the amount and type of such Indebtedness in one of such clauses.
LIMITATION ON RESTRICTED PAYMENTS
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend or make any distribution
on or with respect to its Capital Stock held by Persons other than the Company
or any of its Restricted Subsidiaries (other than (x) dividends or distributions
payable solely in shares of its Capital Stock (other than Disqualified Stock) or
in options, warrants or other rights to acquire shares of such Capital Stock and
(y) pro rata dividends or distributions
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on Common Stock of Restricted Subsidiaries held by minority stockholders,
PROVIDED that such dividends do not in the aggregate exceed the minority
stockholders' pro rata share of such Restricted Subsidiaries' net income from
the first day of the fiscal quarter beginning immediately following the Closing
Date) (ii) purchase, redeem, retire or otherwise acquire for value any shares of
Capital Stock of (A) the Company or an Unrestricted Subsidiary (including
options, warrants or other rights to acquire such shares of Capital Stock) held
by any Person or (B) a Restricted Subsidiary (including options, warrants or
other rights to acquire such shares of Capital Stock) held by any Affiliate of
the Company (other than a Wholly Owned Restricted Subsidiary) or any holder (or
any Affiliate of such holder) of 5% or more of the Capital Stock of the Company,
(iii) make any voluntary or optional principal payment, or voluntary or optional
redemption, repurchase, defeasance, or other acquisition or retirement for
value, of Indebtedness of the Company that is subordinated in right of payment
to the Notes or (iv) make any Investment, other than a Permitted Investment, in
any Person (such payments or any other actions described in clauses (i) through
(iv) being collectively "Restricted Payments"), if, at the time of, and after
giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be continuing,
(B) the Company could not Incur at least $1.00 of Indebtedness under the
first paragraph of the "Limitation on Indebtedness" covenant or
(C) the aggregate amount of all Restricted Payments (the amount, if
other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution) made after the Closing Date shall exceed the sum of
(1) 50% of the aggregate amount of the Adjusted Consolidated Net
Income (or, if the Adjusted Consolidated Net Income is a loss, minus 100%
of the amount of such loss) (determined by excluding income resulting
from transfers of assets by the Company or a Restricted Subsidiary to an
Unrestricted Subsidiary) accrued on a cumulative basis during the period
(taken as one accounting period) beginning on the first day of the fiscal
quarter immediately following the Closing Date and ending on the last day
of the last fiscal quarter preceding the Transaction Date for which
reports have been filed with the Commission PLUS
(2) the aggregate Net Cash Proceeds received by the Company after
the Closing Date as a capital contribution or from the issuance and sale
permitted by the Indenture of its Capital Stock (other than Disqualified
Stock) to a Person who is not a Subsidiary of the Company (except to the
extent such Net Cash Proceeds are used to Incur Indebtedness pursuant to
clause (viii) under the "Limitation on Indebtedness" covenant) or from
the issuance to a Person who is not a Subsidiary of the Company of any
options, warrants or other rights to acquire Capital Stock of the Company
(in each case, exclusive of any Disqualified Stock or any options,
warrants or other rights that are redeemable at the option of the holder,
or are required to be redeemed, prior to the Stated Maturity of the
Notes) PLUS
(3) an amount equal to the net reduction in Investments (other than
reductions in Permitted Investments) in any Person resulting from
payments of interest on Indebtedness, dividends, repayments of loans or
advances, returns of capital or other transfers of assets, in each case
to the Company or any Restricted Subsidiary or from the Net Cash Proceeds
from the sale of any such Investment (except, in each case, to the extent
any such payment or proceeds are included in the calculation of Adjusted
Consolidated Net Income), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided
in the definition of "Investments"), not to exceed, in each case, the
amount of Investments previously made by the Company or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary.
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The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of
payment to the Notes including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for, Indebtedness Incurred
under clause (iii) of the second paragraph of part (a) of the "Limitation on
Indebtedness" covenant;
(iii) the repurchase, redemption or other acquisition of Capital Stock of
the Company (or options, warrants or other rights to acquire such Capital
Stock) in exchange for, or out of the proceeds of a substantially concurrent
capital contribution or offering of, shares of Capital Stock (other than
Disqualified Stock) of the Company (or options, warrants or other rights to
acquire such Capital Stock, exclusive of any options, warrants or other
rights that are redeemable at the option of the holder, or are required to
be redeemed, prior to the Stated Maturity of the Notes);
(iv) the making of any principal payment or the repurchase, redemption,
retirement, defeasance or other acquisition for value of Indebtedness of the
Company which is subordinated in right of payment to the Notes in exchange
for, or out of the proceeds of, a substantially concurrent capital
contribution or offering of, shares of the Capital Stock (other than
Disqualified Stock) of the Company (or options, warrants or other rights to
acquire such Capital Stock, exclusive of any options, warrants or other
rights that are redeemable at the option of the holder, or are required to
be redeemed, prior to the Stated Maturity of the Notes);
(v) the declaration or payment of dividends on the Common Stock of the
Company following a Public Equity Offering of such Common Stock, of up to 6%
per annum of the Net Cash Proceeds received by the Company in such Public
Equity Offering;
(vi) payments or distributions, to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger or
transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or substantially
all of the property and assets of the Company;
(vii) the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of the Company to the extent
necessary in the good faith judgment of the Board of Directors of the
Company, to prevent the loss or secure the renewal or reinstatement of any
license or franchise held by the Company or any Restricted Subsidiary from
any governmental agency;
(viii) Investments in any Person the primary business of which is related,
ancillary or complementary to the business of the Company and its Restricted
Subsidiaries on the date of such Investments; PROVIDED that the aggregate
amount of Investments made pursuant to this clause (viii) does not exceed
the sum of (a) $10 million plus the amount of Net Cash Proceeds received by
the Company after the Closing Date as a capital contribution or from the
sale of its Capital Stock (other than Disqualified Stock) to a Person who is
not a Subsidiary of the Company, except to the extent such Net Cash Proceeds
are used to Incur Indebtedness pursuant to clause (viii) under the
"Limitation on Indebtedness" covenant or to make Restricted Payments
pursuant to clause (C)(2) of the first paragraph, or clauses (iii), (iv) or
(v) of this paragraph, of this "Limitation on Restricted Payments" covenant,
plus (b) the net reduction in Investments made pursuant to this clause
(viii) resulting from distributions on or repayments of such Investments or
from the Net Cash Proceeds from the sale of any such Investment (except in
each case to the extent any such payment or proceeds is included in the
calculation of Adjusted Consolidated Net Income) or from such Person
becoming a Restricted Subsidiary (valued in each case as provided in the
definition of "Investments"), PROVIDED that the net reduction in any
Investment shall not exceed the amount of such Investment;
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(ix) Investments acquired as a capital contribution or in exchange for
Capital Stock (other than Disqualified Stock) of the Company; or
(x) the purchase, redemption, retirement or other acquisition for value
of Capital Stock of the Company, or options to purchase such shares, held by
directors, employees or former directors or employees of the Company or any
Restricted Subsidiary (or their estates or beneficiaries under their
estates) upon death, disability, retirement, termination of employment or
pursuant to the terms of any agreement under which such shares of Capital
Stock or options were issued; PROVIDED that the aggregate consideration paid
for such purchase, redemption, acquisition, cancellation or other retirement
of such shares of Capital Stock or options after the Closing Date does not
exceed $1 million in any calendar year;
PROVIDED that, except in the case of clauses (i) and (iii), no Default or Event
of Default shall have occurred and be continuing or occur as a consequence of
the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph (other
than the Restricted Payment referred to in clause (ii) thereof, an exchange of
Capital Stock for Capital Stock or Indebtedness referred to in clause (iii) or
(iv) thereof and an Investment referred to in clause (ix) thereof), and the Net
Cash Proceeds from any capital contribution or any issuance of Capital Stock
referred to in clauses (iii), (iv) and (viii), shall be included in calculating
whether the conditions of clause (C) of the first paragraph of this "Limitation
on Restricted Payments" covenant have been met with respect to any subsequent
Restricted Payments. In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is PARI PASSU with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the first paragraph
of this "Limitation on Restricted Payments" covenant only to the extent such
proceeds are not used for such redemption, repurchase or other acquisition of
Indebtedness.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by the
Company or any other Restricted Subsidiary, (ii) pay any Indebtedness owed to
the Company or any other Restricted Subsidiary, (iii) make loans or advances to
the Company or any other Restricted Subsidiary or (iv) transfer any of its
property or assets to the Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Date in the New Credit Agreement, the
Indenture or any other agreements in effect on the Closing Date, and any
amendments, extensions, refinancings, renewals or replacements of such
agreements; PROVIDED that the encumbrances and restrictions in any such
amendments, extensions, refinancings, renewals or replacements are no less
favorable in any material respect to the Holders than those encumbrances or
restrictions that are then in effect and that are being extended,
refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or assets of
such Person acquired by the Company or any Restricted Subsidiary, existing
at the time of such acquisition and not incurred in contemplation thereof,
which encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property or
assets of such Person so acquired;
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(iv) in the case of clause (iv) of the first paragraph of this
"Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries" covenant, (A) that restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) existing
by virtue of any transfer of, agreement to transfer, option or right with
respect to, or Lien on, any property or assets of the Company or any
Restricted Subsidiary not otherwise prohibited by the Indenture or (C)
arising or agreed to in the ordinary course of business, not relating to any
Indebtedness, and that do not, individually or in the aggregate, detract
from the value of property or assets of the Company or any Restricted
Subsidiary in any manner material to the Company or any Restricted
Subsidiary;
(v) with respect to a Restricted Subsidiary and imposed pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary; or
(vi) contained in the terms of any Indebtedness of a Restricted
Subsidiary, or any agreement pursuant to which such Indebtedness was issued,
if the encumbrance or restriction applies only in the event of a payment
default or a default with respect to a financial covenant contained in such
Indebtedness or agreement, if the encumbrance or restriction is not
materially more disadvantageous to the Holders of the Notes than is
customary in comparable financings (as determined by the Company) and if the
Company determines that any such encumbrance or restriction will not
materially affect the Company's ability to make principal or interest
payments on the Notes.
Nothing contained in this "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries" covenant shall prevent the
Company or any Restricted Subsidiary from (1) creating, incurring, assuming or
suffering to exist any Liens otherwise permitted in the "Limitation on Liens"
covenant or (2) restricting the sale or other disposition of property or assets
of the Company or any of its Restricted Subsidiaries that secure Indebtedness of
the Company or any of its Restricted Subsidiaries.
LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES
The Company will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except:
(i) to the Company or a Wholly Owned Restricted Subsidiary;
(ii) issuances of director's qualifying shares or sales to foreign
nationals of shares of Capital Stock of foreign Restricted Subsidiaries, to
the extent required by applicable law;
(iii) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary,
PROVIDED any Investment in such Person remaining after giving effect to such
issuance or sale would have been permitted to be made under the "Limitation
on Restricted Payments" covenant, if made on the date of such issuance or
sale; and
(iv) sales of Common Stock of a Restricted Subsidiary; PROVIDED that the
Net Cash Proceeds, if any, of such sale are applied in accordance with
clause (A) or (B) of the "Limitation on Asset Sales" covenant described
below.
LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED SUBSIDIARIES
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is PARI PASSU
with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to the Indenture providing for a Guarantee
(a "Subsidiary Guarantee") of
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payment of the Notes by such Restricted Subsidiary and (ii) such Restricted
Subsidiary waives, and will not in any manner whatsoever claim or take the
benefit or advantage of, any rights of reimbursement, indemnity or subrogation
or any other rights against the Company or any other Restricted Subsidiary as a
result of any payment by such Restricted Subsidiary under its Subsidiary
Guarantee; PROVIDED that this paragraph shall not be applicable to any Guarantee
of any Restricted Subsidiary that existed at the time such Person became a
Restricted Subsidiary and was not Incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary. If the
Guaranteed Indebtedness is (A) PARI PASSU with the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be PARI PASSU with, or subordinated to, the
Subsidiary Guarantee or (B) subordinated to the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee
at least to the extent that the Guaranteed Indebtedness is subordinated to the
Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's and each
Restricted Subsidiary's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by the Indenture) or (ii) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
LIMITATION ON LIENS
The Company will not, and will not permit any Restricted Subsidiary to,
create, incur, assume or suffer to exist any Lien on any of its assets or
properties of any character, or any shares of Capital Stock or Indebtedness of
any Restricted Subsidiary, without making effective provision for all of the
Notes and all other amounts due under the Indenture to be directly secured
equally and ratably with (or, if the obligation or liability to be secured by
such Lien is subordinated in right of payment to the Notes, prior to) the
obligation or liability secured by such Lien.
The foregoing limitation does not apply to:
(i) Liens existing on the Closing Date;
(ii) Liens granted after the Closing Date on any assets or Capital Stock
of the Company or its Restricted Subsidiaries created in favor of the
Holders;
(iii) Liens with respect to the assets of a Restricted Subsidiary granted
by such Restricted Subsidiary to the Company or a Wholly Owned Restricted
Subsidiary to secure Indebtedness owing to the Company or such other
Restricted Subsidiary;
(iv) Liens securing Indebtedness which is Incurred to refinance secured
Indebtedness which is permitted to be Incurred under clause (iii) of the
second paragraph of the "Limitation on Indebtedness" covenant; PROVIDED that
such Liens do not extend to or cover any property or assets of the Company
or any Restricted Subsidiary other than the property or assets securing the
Indebtedness being refinanced;
(v) Liens on the Capital Stock of, or any property or assets of, a
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary
permitted under the "Limitation on Indebtedness" covenant;
(vi) Liens securing Indebtedness Incurred under clause (i) of the second
paragraph of the "Limitation on Indebtedness" covenant; or
(vii) Permitted Liens.
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LIMITATION ON SALE-LEASEBACK TRANSACTIONS
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any sale-leaseback transaction involving any of its assets or
properties whether now owned or hereafter acquired, whereby the Company or a
Restricted Subsidiary sells or transfers such assets or properties and then or
thereafter leases such assets or properties or any part thereof or any other
assets or properties which the Company or such Restricted Subsidiary, as the
case may be, intends to use for substantially the same purpose or purposes as
the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback transaction
if (i) the lease is for a period, including renewal rights, of not in excess of
three years; (ii) the lease secures or relates to industrial revenue or
pollution control bonds; (iii) the transaction is solely between the Company and
any Wholly Owned Restricted Subsidiary or solely between Wholly Owned Restricted
Subsidiaries; (iv) the Tower Sale and the Tower Lease; or (v) the Company or
such Restricted Subsidiary, within twelve months after the sale or transfer of
any assets or properties is completed, applies an amount not less than the net
proceeds received from such sale in accordance with clause (A) or (B) of the
first paragraph of the "Limitation on Asset Sales" covenant described below.
LIMITATION ON TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate of such
holder) of 5% or more of any class of Capital Stock of the Company or with any
Affiliate of the Company or any Restricted Subsidiary, except upon fair and
reasonable terms no less favorable to the Company or such Restricted Subsidiary
than could be obtained, at the time of such transaction or, if such transaction
is pursuant to a written agreement, at the time of the execution of the
agreement providing therefor, in a comparable arm's-length transaction with a
Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(i) transactions (A) approved by a majority of the members of the Board
of Directors who do not have any material direct or indirect financial
interest in or with respect to such transactions or (B) for which the
Company or a Restricted Subsidiary delivers to the Trustee a written opinion
of a nationally recognized investment banking firm stating that the
transaction is fair to the Company or such Restricted Subsidiary from a
financial point of view;
(ii) any transaction solely between the Company and any of its Wholly
Owned Restricted Subsidiaries or solely between Wholly Owned Restricted
Subsidiaries;
(iii) the payment of reasonable and customary regular fees to directors
of the Company who are not employees of the Company;
(iv) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company
files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes;
(v) the Tower Sale and the Tower Lease; provided that the Company and
its Restricted Subsidiaries receive at least $25 million from the Tower Sale
and the annual rental expense under the Tower Lease is no more than $1.6
million;
(vi) transactions between the Company or any of its Restricted
Subsidiaries and Dobson Communications or its Affiliates on terms of the
kind customarily employed to allocate charges among members of a
consolidated group of entities, in any such case that are fair and
reasonable to the Company or such Restricted Subsidiary; PROVIDED that the
aggregate consideration subject to such transactions does not exceed $3
million in any calendar year; or
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(vii) any Restricted Payments not prohibited by the "Limitation on
Restricted Payments" covenant.
Notwithstanding the foregoing, any transaction covered by the first
paragraph of this "Limitation on Transactions with Stockholders and Affiliates"
covenant and not covered by clauses (ii) through (vii) of this paragraph, the
aggregate amount of which (x) exceeds $1.0 million in value, must be approved or
determined to be fair in the manner provided for in clause (i)(A) or (B) above
or (y) exceeds $5.0 million in value, must be approved or determined to be fair
in the manner provided for in clause (i)(B) above.
LIMITATION ON ASSET SALES
The Company will not, and will not permit any Restricted Subsidiary to,
consummate any Asset Sale, unless (i) the consideration received by the Company
or such Restricted Subsidiary is at least equal to the fair market value of the
assets sold or disposed of and (ii) at least 85% of the consideration received
consists of cash or Temporary Cash Investments.
In the event and to the extent that the Net Cash Proceeds received by the
Company or any of its Restricted Subsidiaries from one or more Asset Sales
occurring on or after the Closing Date in any period of 12 consecutive months
exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of the
date closest to the commencement of such 12-month period for which a
consolidated balance sheet of the Company and its subsidiaries has been filed
with the Commission), then the Company shall or shall cause the relevant
Restricted Subsidiary to:
(i) within 12 months after the date Net Cash Proceeds so received exceed
10% of Adjusted Consolidated Net Tangible Assets
(A) apply an amount equal to such excess Net Cash Proceeds to
permanently repay Senior Indebtedness of the Company or any Restricted
Subsidiary providing a Subsidiary Guarantee pursuant to the "Limitation
on Issuances of Guarantees by Restricted Subsidiaries" covenant described
above or Indebtedness of any other Restricted Subsidiary, in each case
owing to a Person other than the Company or any of its Restricted
Subsidiaries or
(B) invest an equal amount, or the amount not so applied pursuant to
clause (A) (or enter into a definitive agreement committing to so invest
within 12 months after the date of such agreement), in property or assets
(other than current assets) of a nature or type or that are used in a
business (or in a company having property and assets of a nature or type,
or engaged in a business) similar or related to the nature or type of the
property and assets of, or the business of, the Company and its
Restricted Subsidiaries existing on the date of such investment and
(ii) apply (no later than the end of the 12-month period referred to in
clause (i)) such excess Net Cash Proceeds (to the extent not applied
pursuant to clause (i)) as provided in the following paragraph of this
"Limitation on Asset Sales" covenant. The amount of such excess Net Cash
Proceeds required to be applied (or to be committed to be applied) during
such twelve-month period as set forth in clause (i) of the preceding
sentence and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Limitation on Asset Sales" covenant totals at least $5 million, the Company
must commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a pro rata basis an
aggregate principal amount of Notes equal to the Excess Proceeds on such date,
at a purchase price equal to 100% of the principal amount thereof, plus, in each
case, accrued interest (if any) to the Payment Date.
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REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
The Company must commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount thereof, plus accrued
interest (if any) to the Payment Date.
There can be no assurance that the Company will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well as
may be contained in other securities of the Company which might be outstanding
at the time). The above covenant requiring the Company to repurchase the Notes
will, unless consents are obtained, require the Company to repay all
indebtedness then outstanding which by its terms would prohibit such Note
repurchase, either prior to or concurrently with such Note repurchase.
COMMISSION REPORTS AND REPORTS TO HOLDERS
At all times from and after the earlier of (i) the date of the commencement
of an Exchange Offer or the effectiveness of the Shelf Registration Statement
(the "Registration") and (ii) June 21, 1999, in either case, whether or not the
Company is then required to file reports with the Commission, the Company shall
file with the Commission all such reports and other information as it would be
required to file with the Commission by Sections 13(a) or 15(d) under the
Securities Exchange Act of 1934 if it were subject thereto. The Company shall
supply the Trustee and each Holder or shall supply to the Trustee for forwarding
to each such Holder, without cost to such Holder, copies of such reports and
other information. In addition, at all times prior to the earlier of the date of
the Registration and June 21, 1999, the Company shall, at its cost, deliver to
each Holder of the Notes quarterly and annual reports substantially equivalent
to those which would be required by the Exchange Act. In addition, at all times
prior to the Registration, upon the request of any Holder or any prospective
purchaser of the Notes designated by a Holder, the Company shall supply to such
Holder or such prospective purchaser the information required under Rule 144A
under the Securities Act.
EVENTS OF DEFAULT
The following events are defined as "Events of Default" in the Indenture:
(a) default in the payment of principal of (or premium, if any, on) any
Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise;
(b) default in the payment of interest on any Note when the same becomes
due and payable, and such default continues for a period of 30 days;
PROVIDED that a failure to make any of the first six scheduled interest
payments on the Notes in a timely manner will constitute an Event of Default
with no grace or cure period;
(c) default in the performance or breach of the provisions of the
Indenture applicable to mergers, consolidations and transfers of all or
substantially all of the assets of the Company or the failure to make or
consummate an Offer to Purchase in accordance with the "Limitation on Asset
Sales" or "Repurchase of Notes upon a Change of Control" covenant;
(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in the Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) above) and such
default or breach continues for a period of 30 consecutive days after
written notice by the Trustee or the Holders of 25% or more in aggregate
principal amount of the Notes;
(e) there occurs with respect to any issue or issues of Indebtedness of
the Company or any Significant Subsidiary having an outstanding principal
amount of $5 million or more in the aggregate for all such issues of all
such Persons, whether such Indebtedness now exists or shall hereafter be
created, (I) an event of default that has caused the holder thereof to
declare such Indebtedness to be
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due and payable prior to its Stated Maturity and such Indebtedness has not
been discharged in full or such acceleration has not been rescinded or
annulled within 30 days of such acceleration and/or (II) the failure to make
a principal payment at the final (but not any interim) fixed maturity and
such defaulted payment shall not have been made, waived or extended within
30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $5 million in the aggregate for all such final
judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered against the
Company or any Significant Subsidiary and shall not be paid or discharged,
and there shall be any period of 30 consecutive days following entry of the
final judgment or order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged against all such
Persons to exceed $5 million during which a stay of enforcement of such
final judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect;
(g) a court having jurisdiction in the premises enters a decree or order
for (A) relief in respect of the Company or any Significant Subsidiary in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (B) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Company or any Significant Subsidiary or for all or substantially all
of the property and assets of the Company or any Significant Subsidiary or
(C) the winding up or liquidation of the affairs of the Company or any
Significant Subsidiary and, in each case, such decree or order shall remain
unstayed and in effect for a period of 30 consecutive days;
(h) the Company or any Significant Subsidiary (A) commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant
Subsidiary or for all or substantially all of the property and assets of the
Company or any Significant Subsidiary or (C) effects any general assignment
for the benefit of creditors; or
(i) the Pledge Agreement shall cease to be in full force and effect or
enforceable in accordance with its terms, other than in accordance with its
terms.
If an Event of Default (other than an Event of Default specified in clause
(g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes, then outstanding, by written notice to
the Company (and to the Trustee if such notice is given by the Holders), may,
and the Trustee at the request of such Holders shall, declare the principal of,
premium, if any, and accrued interest on the Notes to be immediately due and
payable. Upon a declaration of acceleration, such principal of, premium, if any,
and accrued interest shall be immediately due and payable. In the event of a
declaration of acceleration because an Event of Default set forth in clause (e)
above has occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (e) shall be remedied or cured by the
Company or the relevant Significant Subsidiary or waived by the holders of the
relevant Indebtedness within 60 days after the declaration of acceleration with
respect thereto. If an Event of Default specified in clause (g) or (h) above
occurs with respect to the Company, the principal of, premium, if any, and
accrued interest on the Notes then outstanding shall IPSO FACTO become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. At any time after declaration of acceleration, but
before a judgment or decree for the payment of the money due has been obtained
by the Trustee, the Holders of at least a majority in principal amount of the
outstanding Notes by written notice to the Company and to the
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Trustee, may waive all past defaults and rescind and annul a declaration of
acceleration and its consequences if (i) all existing Events of Default, other
than the nonpayment of the principal of, premium, if any, and interest on the
Notes that have become due solely by such declaration of acceleration, have been
cured or waived and (ii) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction. For information as to the waiver of
defaults, see "--Modification and Waiver."
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders of Notes not joining in the giving
of such direction and may take any other action it deems proper that is not
inconsistent with any such direction received from Holders of Notes. A Holder
may not pursue any remedy with respect to the Indenture or the Notes unless: (i)
the Holder gives the Trustee written notice of a continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of outstanding
Notes make a written request to the Trustee to pursue the remedy; (iii) such
Holder or Holders offer the Trustee indemnity satisfactory to the Trustee
against any costs, liability or expense; (iv) the Trustee does not comply with
the request within 60 days after receipt of the request and the offer of
indemnity; and (v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the Trustee a
direction that is inconsistent with the request. However, such limitations do
not apply to the right of any Holder of a Note to receive payment of the
principal of, premium, if any, or interest on, such Note or to bring suit for
the enforcement of any such payment, on or after the due date expressed in the
Notes, which right shall not be impaired or affected without the consent of the
Holder.
The Indenture will require certain officers of the Company to certify, on or
before a date not more than 90 days after the end of each fiscal year, that a
review has been conducted of the activities of the Company and its Restricted
Subsidiaries and the Company's and its Restricted Subsidiaries' performance
under the Indenture and that the Company has fulfilled all obligations
thereunder, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default and the nature and status thereof. The
Company will also be obligated to notify the Trustee of any default or defaults
in the performance of any covenants or agreements under the Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person or permit any Person to merge
with or into the Company unless:
(i) the Company shall be the continuing Person, or the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or that acquired or leased such property and assets of the Company
shall be a corporation organized and validly existing under the laws of the
United States of America or any jurisdiction thereof and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee,
all of the obligations of the Company on all of the Notes and under the
Indenture;
(ii) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a pro forma
basis, the Company or any Person becoming the successor obligor of the Notes
shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction;
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(iv) immediately after giving effect to such transaction on a pro forma
basis the Company, or any Person becoming the successor obligor of the
Notes, as the case may be, could Incur at least $1.00 of Indebtedness under
the first paragraph of the "Limitation on Indebtedness" covenant; PROVIDED
that this clause (iv) shall not apply to a consolidation or merger with or
into a Wholly Owned Restricted Subsidiary with a positive net worth;
PROVIDED that, in connection with any such merger or consolidation, no
consideration (other than Common Stock in the surviving Person or the
Company) shall be issued or distributed to the stockholders of the Company;
and
(v) the Company delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (iii) and (iv)) and Opinion of Counsel, in each case stating that
such consolidation, merger or transfer and such supplemental indenture
complies with this provision and that all conditions precedent provided for
herein relating to such transaction have been complied with;
PROVIDED, HOWEVER, that clauses (iii) and (iv) above shall not apply if, in the
good faith determination of the Board of Directors of the Company, whose
determination shall be evidenced by a Board Resolution, the principal purpose of
such transaction is to change the state of incorporation of the Company;
PROVIDED that any such transaction shall not have as one of its purposes the
evasion of the foregoing limitations.
DEFEASANCE
DEFEASANCE AND DISCHARGE. The Indenture provides that the Company will be
deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the 123rd day after the deposit referred to below, and
the provisions of the Indenture will no longer be in effect with respect to the
Notes (except for, among other matters, certain obligations to register the
transfer or exchange of the Notes, to replace stolen, lost or mutilated Notes,
to maintain paying agencies and to hold monies for payment in trust) if, among
other things, (A) the Company has deposited with the Trustee, in trust, money
and/or U.S. Government Obligations that through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of, premium, if any, and accrued
interest on the Notes on the Stated Maturity of such payments in accordance with
the terms of the Indenture and the Notes, (B) the Company has delivered to the
Trustee (i) either (x) an Opinion of Counsel to the effect that Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
the Company's exercise of its option under this "Defeasance" provision and will
be subject to federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit, defeasance and
discharge had not occurred, which Opinion of Counsel must be based upon (and
accompanied by a copy of) a ruling of the Internal Revenue Service to the same
effect unless there has been a change in applicable federal income tax law after
the Closing Date such that a ruling is no longer required or (y) a ruling
directed to the Trustee received from the Internal Revenue Service to the same
effect as the aforementioned Opinion of Counsel and (ii) an Opinion of Counsel
to the effect that the creation of the defeasance trust does not violate the
Investment Company Act of 1940 and after the passage of 123 days following the
deposit (except with respect to any trust funds for the account of any Holder
who may be deemed an "insider" for purposes of the United States Bankruptcy
Code, after one year following the deposit); the trust funds will not be subject
to the effect of Section 547 of the United States Bankruptcy Code or Section 15
of the New York Debtor and Creditor Law, (C) immediately after giving effect to
such deposit on a pro forma basis, no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or during the period
ending on the 123rd day after the date of such deposit, and such deposit shall
not result in a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound and (D) if at
such time the Notes are listed on a national securities exchange, the Company
has delivered to the Trustee an Opinion of Counsel to the effect that the Notes
will not be delisted as a result of such deposit, defeasance and discharge.
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DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT. The
Indenture further provides that the provisions of the Indenture will no longer
be in effect with respect to clauses (iii) and (iv) under "Consolidation, Merger
and Sale of Assets" and all the covenants described herein under "Covenants,"
clauses (c) and (d) under "Events of Default" with respect to such clauses (iii)
and (iv) under "Consolidation, Merger and Sale of Assets" and such covenants and
clauses (e) and (f) under "Events of Default" shall be deemed not to be Events
of Default, upon, among other things, the deposit with the Trustee, in trust, of
money and/or U.S. Government Obligations that through the payment of interest
and principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of, premium, if any, and
accrued interest on the Notes on the Stated Maturity of such payments in
accordance with the terms of the Indenture and the Notes, the satisfaction of
the provisions described in clauses (B)(ii), (C) and (D) of the preceding
paragraph and the delivery by the Company to the Trustee of an Opinion of
Counsel to the effect that, among other things, the Holders will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and defeasance of certain covenants and Events of Default and will be subject to
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred.
DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT. In the event the Company
exercises its option to omit compliance with certain covenants and provisions of
the Indenture with respect to the Notes as described in the immediately
preceding paragraphs and the Notes are declared due and payable because of the
occurrence of an Event of Default that remains applicable, the amount of money
and/or U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Notes at the time of their Stated Maturity
but may not be sufficient to pay amounts due on the Notes at the time of the
acceleration resulting from such Event of Default. However, the Company will
remain liable for such payments.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding Notes; PROVIDED, HOWEVER, that no
such modification or amendment may, without the consent of each Holder affected
thereby, (i) change the Stated Maturity of the principal of, or any installment
of interest on, any Note, (ii) reduce the principal of, or premium, if any, or
interest on, any Note, (iii) change the place or currency of payment of
principal of, or premium, if any, or interest on, any Note, (iv) impair the
right to institute suit for the enforcement of any payment on or after the
Stated Maturity (or, in the case of a redemption, on or after the Redemption
Date) of any Note, (v) reduce the above-stated percentage of outstanding Notes
the consent of whose Holders is necessary to modify or amend the Indenture, (vi)
waive a default in the payment of principal of, premium, if any, or interest on
the Notes or (vii) reduce the percentage or aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults.
NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS OR
EMPLOYEES
The Indenture provides that no recourse for the payment of the principal of,
premium, if any, or interest on any of the Notes or for any claim based thereon
or otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company in the Escrow and Security Agreement, the
Indenture, or in any of the Notes or because of the creation of any Indebtedness
represented thereby, shall be had against any incorporator, stockholder,
officer, director, employee or controlling person of the Company or of any
successor Person thereof. Each Holder, by accepting the Notes, waives and
releases all such liability.
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CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of a Default, the
Trustee will not be liable, except for the performance of such duties as are
specifically set forth in such Indenture. If an Event of Default has occurred
and is continuing, the Trustee will use the same degree of care and skill in its
exercise of the rights and powers vested in it under the Indenture as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
The Indenture and provisions of the Trust Indenture Act of 1939, as amended,
incorporated by reference therein contain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases or to realize on certain property received by it in respect of
any such claims, as security or otherwise. The Trustee is permitted to engage in
other transactions; PROVIDED, HOWEVER, that if it acquires any conflicting
interest, it must eliminate such conflict or resign.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth herein, the Notes have initially been issued in the form
of one or more global notes. The global notes will be deposited on the Closing
Date with, or on behalf of, The Depository Trust Company (the "Depositary") and
registered in the name of Cede & Co., as nominee of the Depositary (such nominee
being referred to herein as the "Global Note Holder").
Notes offered and sold in reliance on Regulation S will initially be
represented by one or more permanent global notes in definitive, fully
registered form (the "Offshore Global Note") which will be registered in the
name of the Global Note Holder and deposited on behalf of the purchasers of the
Notes represented thereby with a custodian for the Global Note Holder for credit
to the respective accounts of the purchasers (or to such other accounts as they
may direct) at the Euroclear System ("Euroclear") or Cedel Bank, societe anonyme
("Cedel Bank"). Prior to the 40th day after the later of the commencement of
this offering and the Closing Date, interests in the Offshore Global Note may
only be held through Euroclear or Cedel Bank.
Notes offered and sold to "Qualified Institutional Buyers" in reliance on
Rule 144A under the Securities Act will be represented by one or more permanent
global notes in definitive, fully registered form (the "U.S. Global Note" and
together with the Offshore Global Note, the "Global Notes") which will be
registered in the name of the Global Note Holder and deposited on behalf of the
purchasers of the Notes represented thereby with a custodian for the Global Note
Holder for credit to the respective accounts of the purchasers (or to such other
accounts as they may direct) at the Depositary.
Notes (1) transferred to institutional "accredited investors" who are not
"Qualified Institutional Buyers" (as such terms are defined under "Notice to
Investors" elsewhere herein ("Non-Global Purchasers")) or (2) issued as
described under "Certificated Notes" below, will be issued in registered,
definitive, certificated form (the "Certificated Notes"). Upon the transfer of
Certificated Notes to a Qualified Institutional Buyer or in an offshore
transaction under Regulation S, such Certificated Notes may, unless the Global
Note shall have previously been exchanged in whole for Certificated Notes, be
exchanged for an interest in a Global Note representing the principal amount of
the Notes being transferred upon delivery of appropriate certificates to the
Trustee.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in such securities between Participants through electronic book-entry changes in
accounts of its Participants. The Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants") that clear through or
maintain a custodial relationship with a
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Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by or on behalf of the Depositary only through
Participants or Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (1) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants designated by the Initial Purchasers with portions of
the principal amount of the Global Notes and (2) ownership of the Notes
evidenced by the Global Notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary
(with respect to the interests of the Participants), the Participants and the
Indirect Participants. Prospective purchasers are advised that the laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to own, transfer or pledge
Notes evidenced by the Global Notes will be limited to such extent. For certain
other restrictions on the transferability of the Notes, see "Notice to
Investors."
Investors may hold their interests in the Offshore Global Note directly
through Euroclear or Cedel Bank, if they are participants in such systems, or
indirectly through organizations that are participants in such systems.
Beginning 40 days after the later of the commencement of this offering and the
Closing Date (but not earlier), investors may also hold such interests through
organizations other than Euroclear or Cedel Bank that are Participants in the
Depositary. Euroclear and Cedel Bank will hold such interests in the Offshore
Global Note on behalf of their participants through customers' securities
accounts in their respective names on the books of their respective
depositaries, which in turn will hold such interests in the Offshore Global Note
in customers' securities acocunts in the depositaries' names on the books of the
Depositary.
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Note. Beneficial owners of Notes evidenced by the
Global Notes will not be considered the owners or Holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any aspect
of the records of the Depositary relating to the Notes.
Payments in respect of the principal of, premium, if any, and interest on
any Notes registered in the name of the Global Note Holder on the applicable
record date will be payable by the Trustee to or at the direction of the Global
Note Holder in its capacity as the registered Holder under the Indenture. Under
the terms of the Indenture, the Company and the Trustee may treat the persons in
whose names Notes, including the Global Notes, are registered as the owners
thereof for the purpose of receiving such payments. Consequently, neither the
Company nor the Trustee has or will have any responsibility or liability for the
payment of such amounts to beneficial owners of Notes. The Company believes,
however, that it is currently the policy of the Depositary to immediately credit
the accounts of the relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant security as shown on the records of the Depositary. Payments by the
Participants and Indirect Participants to the beneficial owners of Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Participants and Indirect Participants.
Transfers between Participants will be effected in accordance with the
Depositary's rules and will be settled in immediately available funds. If a
holder requires physical delivery of a Certificated Note for any reason,
including to sell Notes to persons in states which require physical delivery of
such securities or to pledge such securities, such holder must transfer its
interest in the Global Notes in accordance with the normal procedures of the
Depositary and in accordance with the procedures set forth in the Indenture.
Before February 2, 1999, transfers by an owner of a beneficial interest in
the Offshore Global Note to a transferee who takes delivery of such interest
through the U.S. Global Note will be made only in accordance with the applicable
procedures and upon receipt by the Trustee of a written certification from the
transferor of the beneficial interest in the form provided in the Indenture to
the effect that such
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transfer is being made to a person whom the transferor reasonably believes is a
Qualified Institutional Buyer within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A.
Transfers by an owner of a beneficial interest in the U.S. Global Note to a
transferee who takes delivery of such interest through the Offshore Global Note,
whether before, on or after the 40th day after the later of the commencement of
this offering and the Closing Date, will be made only upon receipt by the
Trustee of a certification to the effect that such transfer is being made in
accordance with Regulation S. Transfers of Certificated Notes to persons who
will hold through the U.S. Global Note or the Offshore Global Note will be
subject to certifications provided by the Trustee.
CERTIFICATED NOTES
Transferees of Notes who are not "Qualified Institutional Buyers" as defined
in Rule 144A under the Securities Act may hold Notes only in the form of
Certificated Notes. All such Certificated Notes would be subject to the legend
requirements described herein under "Notice to Investors." In addition, if (1)
the Company notifies the Trustee in writing that the Depositary is no longer
willing or able to act as a depositary and the Company is unable to locate a
qualified successor within 90 days or (2) the Company, at its option, notifies
the Trustee in writing that it elects to cause the issuance of Notes in the form
of Certificated Notes under the Indenture then, upon surrender by the Global
Note Holder of the Global Notes, Certificated Notes will be issued to each
person that the Global Note Holder and the Depositary identify as being the
beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture will require that payments in respect of the Notes represented
by the Global Notes (including principal, premium, if any, and interest) be made
by wire transfer of immediately available funds to the accounts specified by the
Global Note Holder. With respect to Certificated Notes, the Company will make
all payments of principal, premium, if any, and interest by wire transfer of
immediately available funds to the accounts specified by the Holders thereof or,
if no such account is specified, by mailing a check to each Holder's registered
address. Notes represented by the Global Notes are expected to be eligible to
trade in the PORTAL market and to trade in the Depositary's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
Notes will, therefore, be required by the Depositary to be settled in
immediately available funds. The Company expects that secondary trading in the
Certificated Notes will also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel Bank participant purchasing an interest in a Global Note from a
Participant in the Depositary will be credited, and any such crediting will be
reported to the relevant Euroclear or Cedel Bank participant, during the
securities settlement processing day (which must be a business day for Euroclear
or Cedel Bank) immediately following the settlement date of the Depositary. The
Depositary has advised the Company that cash received in Euroclear or Cedel Bank
as a result of sales of interests in a Global Note by or through a Euroclear or
Cedel Bank participant to a Participant will be received with value on the
settlement date of the Depositary but will be available in the relevant
Euroclear or Cedel Bank cash account only as of the business day for Euroclear
or Cedel Bank following the Depositary's settlement date.
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CERTAIN U.S. FEDERAL TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following summary describes the material anticipated U.S. federal income
tax consequences of the purchase, ownership and disposition of the Notes by
Non-United States Holders (as defined below). Except where noted, it deals only
with Notes held as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"), and does not discuss all
of the tax consequences that may be relevant to a holder in light of his
particular circumstances. Furthermore, the discussion below is based upon the
provisions of the Code and regulations, administrative and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed, revoked
or modified with possible retroactive effect so as to result in U.S. federal
income tax consequences different from those discussed below.
As used herein, "Non-United States Holder" or "Non-U.S. Holder" means any
person or entity that is, as to the United States, a foreign corporation, a
nonresident alien individual, a nonresident fiduciary of a foreign estate or
trust or a foreign partnership one or more of the members of which is, as to the
United States, a foreign corporation, a nonresident alien individual or a
nonresident fiduciary of a foreign estate or trust.
ALL PROSPECTIVE PURCHASERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE PURCHASE
OWNERSHIP AND DISPOSITION OF THE NOTES.
TAXATION OF INTEREST ON THE NOTES
If a Non-U.S. Holder of a Note does not satisfy all of the conditions
discussed in the next paragraph, the Non-U.S. Holder will be subject to a 30%
U.S. federal withholding tax with respect to payments of interest on the Note
(the "30% U.S. Withholding Tax"). If applicable to a Non-U.S. Holder of a Note,
the 30% U.S. Withholding Tax must be withheld by the Company or its paying agent
from any payments of interest with respect to the Note.
The 30% U.S. Withholding Tax is not applicable to payments of interest with
respect to a Note, if the Non-U.S. Holder of the Note (i) does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote within the meaning of Section 871(h)(3)
of the Code and the regulations thereunder, (ii) is not a controlled foreign
corporation related, directly or indirectly, to the Company through stock
ownership, (iii) is not a bank whose receipt of interest on a Note is described
in Section 881(c)(3)(A) of the Code and (iv) satisfies the statement requirement
set forth in Sections 871(h) and 881(c) of the Code and the Treasury Regulations
thereunder (the "Statement Requirement").
To satisfy the Statement Requirement, the Non-U.S. Holder of a Note or a
financial institution holding the Note on behalf of such Non-U.S. Holder must
provide, in accordance with specified procedures, the Company or its paying
agent with a statement to the effect that the beneficial owner of the Note is
not a U.S. person. These requirements will be met if (x) the Non-U.S. Holder
provides his name and address, and certifies, under penalties of perjury, that
he is not a U.S. person (which certification may be made on an IRS Form W-8 or
Form W-8IMY (or substitute form)) or (y) a financial institution holding the
Note on behalf of the Non-U.S. Holder certifies, under penalties of perjury,
that such statement has been received by it and furnishes a paying agent with a
copy thereof.
With respect to Notes held by a foreign partnership, under current law, the
IRS Form W-8 or Form W-8IMY (or substitute form) may be provided by the foreign
partnership. However, for interest and sale proceeds paid with respect to a Note
after December 31, 1999, unless the foreign partnership has entered into a
withholding agreement with the IRS, a foreign partnership will be required, in
addition to providing an intermediary IRS Form W-8 (or substitute form), to
attach an appropriate certification by each partner. Treasury Regulations
generally effective for payments made after December 31, 1999, modify
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certain of the Statement Requirements. It is possible that the Company and other
withholding agents may request a new withholding exemption form from holders in
order to qualify for continued exemption from withholding under the Treasury
Regulations when they become effective. Prospective investors, including foreign
partnerships and their partners, should consult their tax advisors regarding
possible additional reporting requirements.
The 30% U.S. Withholding Tax is not imposed or may be reduced or eliminated
with respect to the payments of interest on a Note, if the Company or its paying
agent receives IRS Form 4224 or Form W-8ECI (or substitute form) or IRS Form
1001 or Form W8BEN (or substitute form) (or, after December 31, 1999, IRS Form
W-8 or Form W-8IMY (or substitute form)) from the Non-U.S. Holder of the Note,
establishing, unless the Company has knowledge to the contrary, either (i) that
interest paid on the Note is effectively connected with the conduct of a trade
or business in the U.S. or (ii) that a tax treaty applies to reduce the rate of,
or eliminate, the withholding tax, respectively. Interest paid to a Non-U.S.
Holder that is effectively connected with the conduct by the holder of a trade
or business in the U.S. is generally taxed on a net income basis at the
graduated rates that are applicable to U.S. persons. In the case of a Non-U.S.
Holder that is a corporation, such effectively connected income may also be
subject to the U.S. federal branch profits tax (which is generally imposed on a
foreign corporation on the deemed repatriation from the U.S. of effectively
connected earnings and profits) at a 30% rate (unless the rate is reduced or
eliminated by an applicable income tax treaty and the holder is a qualified
resident of the treaty country).
SALE, EXCHANGE OR OTHER DISPOSITION OF NOTES
A Non-U.S. Holder will generally not be subject to U.S. federal income or
withholding tax with respect to capital gain recognized on a sale, exchange or
other disposition of the Notes unless (i) the gain is effectively connected with
a trade or business of the Non-U.S. Holder in the U.S., (ii) in the case of a
Non-U.S. Holder who is an individual, such holder is present in the U.S. for 183
or more days in the taxable year of the sale or other disposition and certain
other conditions are met, or (iii) the Non-U.S. Holder is subject to tax
pursuant to certain provisions of the Code applicable to U.S. expatriates.
Gain recognized by a Non-U.S. Holder on a sale, exchange or other
disposition of the Notes that is effectively connected with the conduct by the
Holder of a trade or business in the U.S. is generally taxed on a net income
basis at the graduated rates that are applicable to U.S. persons. In the case of
a Non-U.S. Holder that is a corporation, such effectively connected income may
also be subject to the U.S. branch profits tax (which is generally imposed on a
foreign corporation on the deemed repatriation from the United States of
effectively connected earnings and profits) at a 30% rate (unless the rate is
reduced or eliminated by an applicable income tax treaty and the Holder is a
qualified resident of the treaty country).
The exchange of a Note by a Non-U.S. Holder for an Exchange Note pursuant to
the Exchange Offer should not constitute a taxable exchange. A Non-U.S. Holder
should have the same tax basis and holding period in the Exchange Note as it did
in the Note.
FEDERAL ESTATE TAX
A Note beneficially owned by an individual who at the time of death is a
Non-U.S. Holder will not be subject to U.S. federal estate tax as a result of
such individual's death, provided that such individual does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote within the meaning of Section 871(h)(3)
of the Code and provided that the interest payments with respect to such Note
would not have been, if received at the time of such individual's death,
effectively connected with the conduct of a U.S. trade or business by such
individual.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
No information reporting or backup withholding will be required with respect
to payments made by the Company or its paying agent to a Non-U.S. Holder if the
Statement Requirement has been met and the payor does not have actual knowledge
that the Non-U.S. Holder is a U.S. person.
In addition, information reporting and backup withholding will not apply if
payments on a Note are paid or collected by a foreign office of a nominee,
custodian or other foreign agent on behalf of the beneficial owner of such Note,
or if a foreign office of a broker pays the proceeds of the sale of a Note to
the beneficial owner thereof. However, payments made or collected by such
nominee, custodian, agent or broker that is, for U.S. federal income tax
purposes, (i) a U.S. person, (ii) a controlled foreign corporation, or a foreign
person 50% or more of whose gross income is effectively connected with a U.S.
trade or business for a specified three year period, or (iii) (with respect to
payments made after December 31, 1999) a foreign partnership with certain
connections to the U.S., will be subject to information reporting (but not
backup withholding) unless such nominee, custodian, agent or broker has in its
records documentary evidence that the beneficial owner is not a U.S. person and
certain other conditions are met, or the beneficial owner otherwise establishes
an exemption. Backup withholding may apply to any payment that such broker is
required to report if the broker has actual knowledge that the payee is a U.S.
person. Payments to or through the U.S. office of a broker will be subject to
information reporting and backup withholding unless the Holder certifies, under
penalties of perjury, that it is not a U.S. person or otherwise establishes an
exemption.
Treasury Regulations generally effective for payments made after December
31, 1999, modify certain of the certification requirements for backup
withholding. It is possible that the Company and other withholding agents may
request a new withholding exemption form from holders in order to qualify for
continued exemption from backup withholding under the Treasury Regulations when
they become effective. Non-U.S. Holders should consult their own tax advisors
regarding the application of information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and the
procedures for obtaining such an exemption, if available. Any amounts withheld
under the backup withholding rules generally will be allowed as a refund or
credit against the Non-U.S. Holder's U.S. federal income tax liability and may
entitle such Holder to a refund, provided the required information is furnished
to the IRS.
PLAN OF DISTRIBUTION
There has previously been only a limited secondary market and no public
market for the Old Notes. The Company does not intend to apply for the listing
of the Notes on a national securities exchange or for their quotation through
The Nasdaq Stock Market. The Notes are eligible for trading in the PORTAL
market. The Company has been advised by the Initial Purchasers that the Initial
Purchasers currently intend to make a market in the Notes; however, no Initial
Purchaser is obligated to do so and any market making may be discontinued by any
Initial Purchaser at any time. In addition, such market making activity may be
limited during the Exchange Offer. Therefore, there can be no assurance that an
active market for the Old Notes or the New Notes will develop. If a trading
market does not develop or is not maintained, holders of Notes may experience
difficulty in reselling Notes. If a trading market develops for the Notes,
future trading prices of such securities will depend on many factors, including,
among other things, prevailing interest rates, the Company's results of
operations and the market for similar securities. Depending on such factors,
such securities may trade at a discount from their offering price.
BROKER-DEALERS WHO DID NOT ACQUIRE OLD NOTES AS A RESULT OF MARKET MAKING
ACTIVITIES OR TRADING ACTIVITIES MAY NOT PARTICIPATE IN THE EXCHANGE OFFER.
With respect to resale of New Notes, based on an interpretation by the staff
of the Commission set forth in no-action letters issued to third parties, the
Company believes that a holder (other than a person
100
<PAGE>
that is an affiliate of the Company within the meaning of Rule 405 under the
Securities Act or a "broker" or "dealer" registered under the Exchange Act) who
exchanges Old Notes for New Notes in the ordinary course of business and who is
not participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the New
Notes, will be allowed to resell the New Notes to the public without further
registration under the Securities Act and without delivering to the purchasers
of the New Notes a prospectus that satisfies the requirements of Section 10
thereof. However, if any holder acquires New Notes in the Exchange Offer for the
purpose of distributing or participating in a distribution of the New Notes,
such holder cannot rely on the position of the staff of the Commission
enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988) or
similar no-action letters or any similar interpretive letters and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction, unless an exemption from
registration is otherwise available.
As contemplated by the no-action letters mentioned above and the
Registration Rights Agreement, each holder accepting the Exchange Offer is
required to represent to the Company in the Letter of Transmittal that (i) the
New Notes are to be acquired by the holder in the ordinary course of business,
(ii) the holder is not engaging and does not intend to engage in the
distribution of the New Notes, and (iii) the holder acknowledges that, if such
holder participates in the Exchange Offer for the purpose of distributing the
New Notes, such holder must comply with the registration and prospectus delivery
requirements of the Securities Act and cannot rely on the above no-action
letters.
Any broker or dealer registered under the Exchange Act (each a
"Broker-Dealer") who holds Old Notes that were acquired for its own account as a
result of market-making activities or other trading activities (other than Old
Notes acquired directly from the Company or an affiliate of the Company) may
exchange such Old Notes for New Notes pursuant to the Exchange Offer, however,
such Broker-Dealer may be deemed an underwriter within the meaning of the
Securities Act and, therefore, must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the New
Notes received by it in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of this
Prospectus. The Company has agreed to cause the Exchange Offer Registration
Statement, of which this Prospectus is a part, to remain continuously effective
for a period of 180 days, if required, from the Exchange Date, and to make this
Prospectus, as amended or supplemented, available to any such Broker-Dealer for
use in connection with resales. Any Broker-Dealer participating in the Exchange
Offer will be required to acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resales of New
Notes received by it in the Exchange Offer. The delivery by a Broker-Dealer of a
prospectus in connection with resales of New Notes shall not be deemed to be an
admission by such Broker-Dealer that it is an underwriter within the meaning of
the Securities Act. The Company will not receive any proceeds from any sale of
New Notes by a Broker-Dealer.
New Notes received by Broker-Dealers for their own account pursuant to the
Exchange Offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the New Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such Broker-Dealer and/or the
purchasers of any such New Notes.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Notes are being
passed upon for the Company by McAfee & Taft A Professional Corporation,
Oklahoma City, Oklahoma.
101
<PAGE>
EXPERTS
The consolidated financial statements of Sygnet Wireless, Inc., at December
31, 1996 and 1997 and for each of the three years in the period ended December
31, 1997 appearing in this Prospectus and registration statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and are included in reliance upon such report
given upon the authority of such firm as experts in auditing and accounting.
The consolidated balance sheets of Dobson/Sygnet Communications Company and
Dobson/Sygnet Operating Company, included in this Prospectus and in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants as indicated in their reports appearing herein in reliance
upon the authority of said firm as experts in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
This Prospectus constitutes a part of the Registration Statement filed by us
with the Commission under the Securities Act. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all of the
information contained in the Registration Statement and the exhibits and
schedules thereto. Therefore, we make in this Prospectus reference to the
Registration Statement and to the exhibits and schedules thereto. For further
information about us and about the securities we hereby offer, you should
consult the Registration Statement and the exhibits and schedules thereto. You
should be aware that statements contained in this Prospectus concerning the
provisions of any documents filed as an exhibit to the Registration Statement or
otherwise filed with the Commission are not necessarily complete, and in each
instance reference is made to the copy of such document so filed. Each such
statement is qualified in its entirety by such reference.
Upon effectiveness of the Registration Statement of which the Prospectus is
a part, we will become subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a result,
we will file periodic reports, proxy statements and other information with the
Commission. You may read and copy reports, proxy statements and other
information we file at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington
D.C. 20549 and at the regional offices of the Commission located at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Suite 1400, Northwestern
Atrium Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661.
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference facilities. Copies of documents we file can also be obtained at
prescribed rates by writing to the Commission, Public Reference Section, 450
Fifth Street, N.W., Washington, D.C. 20549. You may also access this information
electronically through the Commission's web page on the Internet at
http://www.sec.gov. This web site contains reports, proxy statement and other
information regarding registrants such as ourselves that have filed
electronically with the Commission.
The indenture governing the outstanding notes provides that we will furnish
to the holders of the notes copies of the periodic reports required to be filed
with the Commission under the Exchange Act. Even if we are not subject to the
periodic reporting and informational requirements of the Exchange Act, we will
make such filings to the extent that such filings are accepted by the
Commission. We will make these filings regardless of whether we have a class of
securities registered under the Exchange Act. Furthermore, we will provide the
Trustee for the notes and the holders of the notes within 15 days after such
filings with annual reports containing the information required to be contained
in Form 10-K, and quarterly reports containing the information required to be
contained in Form 10-Q promulgated by the Exchange Act. From time to time, we
will also provide such other information as is required to be contained in Form
8-K promulgated by the Exchange Act. If the filing of such information is not
accepted by the Commission or is prohibited by the Exchange Act, we will then
provide promptly upon written request, at our cost, copies of such reports to
prospective purchasers of the notes.
102
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
SYGNET WIRELESS, INC.
Report of independent auditors........................................................................... F-2
Consolidated balance sheets as of December 31, 1996 and 1997............................................. F-3
Consolidated statements of operations for the years ended December 31, 1995, 1996 and 1997............... F-4
Consolidated statements of shareholders' equity (deficit) for the years ended December 31, 1995, 1996 and
1997................................................................................................... F-5
Consolidated statements of cash flows for the years ended December 31, 1995, 1996 and 1997............... F-6
Notes to consolidated financial statements............................................................... F-7
Consolidated balance sheets as of December 31, 1997 and September 30, 1998 (unaudited)................... F-17
Consolidated statements of operations for the nine months ended September 30, 1997 and 1998
(unaudited)............................................................................................ F-18
Consolidated statements of cash flows for the nine months ended September 30, 1997 and 1998
(unaudited)............................................................................................ F-19
Notes to consolidated financial statements (unaudited)................................................... F-20
DOBSON/SYGNET COMMUNICATIONS COMPANY
Report of independent public accountants................................................................. F-22
Balance sheet as of September 30, 1998................................................................... F-23
Notes to balance sheet................................................................................... F-24
DOBSON/SYGNET OPERATING COMPANY
Report of independent public accountants................................................................. F-26
Balance sheet as of September 30, 1998................................................................... F-27
Notes to balance sheet................................................................................... F-28
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Sygnet Wireless, Inc.
We have audited the accompanying consolidated balance sheets of Sygnet
Wireless, Inc. as of December 31, 1996 and 1997, and the related consolidated
statements of operations, shareholders' equity (deficit), and cash flows for
each of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Sygnet
Wireless, Inc. at December 31, 1996 and 1997 and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Cleveland, Ohio
February 6, 1998
F-2
<PAGE>
SYGNET WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------
1996 1997
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 2,257,748 $ 860,086
Accounts receivable, less allowance for doubtful accounts of $809,800 at
December 31, 1997 and $1,168,800 at December 31, 1996........................ 8,857,028 10,711,627
Inventory...................................................................... 1,696,952 1,867,445
Prepaid expenses............................................................... 531,171 309,460
-------------- --------------
Total current assets......................................................... 13,342,899 13,748,618
Other assets:
Cellular licenses--net......................................................... 252,271,468 245,866,235
Customer lists--net............................................................ 24,535,885 19,382,087
Deferred financing costs--net.................................................. 10,068,956 8,982,430
-------------- --------------
Total other assets........................................................... 286,876,309 274,230,752
Property and equipment--net...................................................... 43,958,969 53,007,015
-------------- --------------
Total assets................................................................. $ 344,178,177 $ 340,986,385
-------------- --------------
-------------- --------------
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable............................................................... $ 2,826,629 $ 3,264,206
Deferred revenue............................................................... 1,679,873 2,058,066
Accrued expenses and other liabilities......................................... 2,744,789 4,196,230
Interest payable............................................................... 6,940,623 6,749,755
-------------- --------------
Total current liabilities.................................................... 14,191,914 16,268,257
Long-term debt................................................................... 312,250,000 305,500,000
Redeemable Series A Senior Cumulative Nonvoting Preferred Stock, $.01 par,
aggregate redemption value of $20,690,411, 500,000 shares authorized, 200,000
shares issued and outstanding and warrants..................................... 19,718,028 --
Shareholders' equity (deficit):
Common shares, $.01 par, Class A, 1 vote per share; 60,000,000 shares
authorized; 4,010,653 shares issued and outstanding as of December 31, 1997;
2,653 shares issued and outstanding as of December 31, 1996.................. 27 40,107
Common shares, $.01 par, Class B, 10 votes per share; 10,000,000 shares
authorized; 5,159,977 shares issued and outstanding as of December 31, 1997;
6,167,977 shares issued and outstanding as of December 31, 1996.............. 61,679 51,599
Additional paid-in capital..................................................... 5,812,211 47,598,498
Retained deficit............................................................... (7,605,730) (28,222,124)
Note receivable from officer/shareholder....................................... (249,952) (249,952)
-------------- --------------
Total shareholders' equity (deficit)............................................. (1,981,765) 19,218,128
-------------- --------------
Total liabilities, redeemable preferred stock and shareholders' equity
(deficit)...................................................................... $ 344,178,177 $ 340,986,385
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes.
F-3
<PAGE>
SYGNET WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------
1995 1996 1997
------------- ------------- --------------
<S> <C> <C> <C>
REVENUE:
Subscriber revenue............................................... $ 17,191,291 $ 31,084,883 $ 52,638,712
Roamer revenue................................................... 4,175,809 9,687,284 26,992,584
Equipment sales.................................................. 1,529,284 2,416,769 4,323,052
Other revenue.................................................... 1,680,544 1,607,245 1,679,412
------------- ------------- --------------
Total revenue.................................................. 24,576,928 44,796,181 85,633,760
COSTS AND EXPENSES:
Cost of services................................................. 3,365,954 5,508,386 10,048,416
Cost of equipment sales.......................................... 4,163,890 5,816,144 9,663,251
General and administrative....................................... 5,563,887 9,852,004 16,975,592
Selling and marketing............................................ 3,082,492 6,080,308 10,841,059
Depreciation and amortization.................................... 3,486,554 10,038,439 28,718,937
------------- ------------- --------------
Total costs and expenses....................................... 19,662,777 37,295,281 76,247,255
------------- ------------- --------------
INCOME FROM OPERATIONS............................................. 4,914,151 7,500,900 9,386,505
OTHER:
Interest expense................................................. 2,660,248 11,173,688 29,901,678
Other expense, net............................................... 303,867 194,723 101,221
------------- ------------- --------------
(LOSS) INCOME BEFORE EXTRAORDINARY ITEM............................ 1,950,036 (3,867,511) (20,616,394)
Extraordinary loss on extinguishment of debt....................... -- (1,420,864) --
------------- ------------- --------------
NET (LOSS) INCOME.................................................. $ 1,950,036 $ (5,288,375) $ (20,616,394)
------------- ------------- --------------
------------- ------------- --------------
Earnings per share information (pro forma for 1996):
Loss before preferred stock dividend and accretion............... (5,288,375) $ (20,616,394)
Preferred stock dividend and accretion........................... $ (718,028) $ (2,121,423)
------------- --------------
Net loss applicable to common shareholders....................... $ (6,006,403) $ (22,737,817)
------------- --------------
------------- --------------
Net loss per share applicable to common shareholders
Before extraordinary item...................................... $ (.74) $ (2.93)
Extraordinary item............................................. (.23) --
------------- --------------
Net loss....................................................... $ (.97) $ (2.93)
------------- --------------
------------- --------------
Weighted average common shares outstanding......................... 6,170,630 7,773,370
------------- --------------
------------- --------------
</TABLE>
See accompanying notes.
F-4
<PAGE>
SYGNET WIRELESS, INC.
CONSOLIDATERD STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
WILCOM CORPORATION SYGNET COMMUNICATIONS, INC.
COMMON STOCK COMMON STOCK
---------------------------------------------- ---------------------------------------------
TYPE A TYPE B TYPE A TYPE B
---------------------- ---------------------- -------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- --------- ----------- --------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of January 1, 1995..... 500 $ 12,500 2,500 $ 62,500 209,362 $ 209,362 1,046,801 $ 1,046,801
Net Income......................
Dividends declared..............
Type A common stock
repurchased...................
Type B common stock
repurchased...................
----- --------- ----------- --------- --------- --------- ---------- -----------
Balance as of December 31, 1995... 500 12,500 2,500 62,500 209,362 209,362 1,046,801 1,046,801
Net loss........................
Dividends declared..............
Corporate merger................ (500) (12,500) (2,500) (62,500) 4,360 4,360 21,800 21,800
Retirement of treasury stock.... (8,024) (40,173)
Sygnet Wireless
capitalization................ (205,698) (213,722) (1,028,428) (1,068,601)
Capital contribution of
S Corporation earnings........
Preferred stock dividend........
Accretion of preferred stock....
Exchange of common shares.......
----- --------- ----------- --------- --------- --------- ---------- -----------
Balance as of December 31, 1996... -- -- -- -- -- -- -- --
Net loss........................
Preferred Stock dividend........
Accretion of Preferred Stock....
Stock option compensation.......
Excess of redemption price over
carring value of Preferred
Stock.........................
Net Proceeds from issuance of
stock to Boston Venture.......
Exchange of Common Shares.......
----- --------- ----------- --------- --------- --------- ---------- -----------
Balance as of December 31,
1997.......................... -- $ -- -- $ -- -- $ -- -- $ --
----- --------- ----------- --------- --------- --------- ---------- -----------
----- --------- ----------- --------- --------- --------- ---------- -----------
<CAPTION>
SYGNET WIRELESS, INC.
------------------------------------------- NOTE
RECEIVABLE TREASURY
CLASS A CLASS B ADDITIONAL RETAINED FROM STOCK
-------------------- --------------------- PAID-IN EARNINGS OFFICER/ ---------
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) SHAREHOLDER SHARES
--------- --------- ---------- --------- ----------- ------------ ------------ ---------
<S> <C>
Balance as of January 1, 1995..... -- $ -- -- $ -- $ 4,170,368 $ (482,842) $ (249,952) --
Net Income...................... 1,950,036
Dividends declared.............. (713,519)
Type A common stock
repurchased................... 8,024
Type B common stock
repurchased................... 40,173
--------- --------- ---------- --------- ----------- ------------ ------------ ---------
Balance as of December 31, 1995... -- -- -- -- 4,170,368 753,675 (249,952) 48,197
Net loss........................ (5,288,375)
Dividends declared.............. (261,625)
Corporate merger................ 48,840
Retirement of treasury stock.... (1,718,991) (48,197)
Sygnet Wireless
capitalization................ 6,170,630 61,706 1,220,617
Capital contribution of
S Corporation earnings........ 2,809,405 (2,809,405)
Preferred stock dividend........ (690,411)
Accretion of preferred stock.... (27,617)
Exchange of common shares....... 2,653 27 (2,653) (27)
--------- --------- ---------- --------- ----------- ------------ ------------ ---------
Balance as of December 31, 1996... 2,653 27 6,167,977 61,679 5,812,211 (7,605,730) (249,952) --
Net loss........................ (20,616,394)
Preferred Stock dividend........ (1,149,040)
Accretion of Preferred Stock.... (46,849)
Stock option compensation....... 306,000
Excess of redemption price over
carring value of Preferred
Stock......................... (925,534)
Net Proceeds from issuance of
stock to Boston Venture....... 3,000,000 30,000 43,601,710
Exchange of Common Shares....... 1,008,000 10,080 (1,008,000) (10,080)
--------- --------- ---------- --------- ----------- ------------ ------------ ---------
Balance as of December 31,
1997.......................... 4,010,653 $ 40,107 5,159,977 $ 51,599 $47,598,498 $(28,222,124) $ (249,952) $ --
--------- --------- ---------- --------- ----------- ------------ ------------ ---------
--------- --------- ---------- --------- ----------- ------------ ------------ ---------
<CAPTION>
AMOUNT
-----------
Balance as of January 1, 1995..... $ --
Net Income......................
Dividends declared..............
Type A common stock
repurchased................... $ (312,936)
Type B common stock
repurchased................... $(1,406,055)
-----------
Balance as of December 31, 1995... $(1,718,991)
Net loss........................
Dividends declared..............
Corporate merger................
Retirement of treasury stock.... 1,718,991
Sygnet Wireless
capitalization................
Capital contribution of
S Corporation earnings........
Preferred stock dividend........
Accretion of preferred stock....
Exchange of common shares.......
-----------
Balance as of December 31, 1996... --
Net loss........................
Preferred Stock dividend........
Accretion of Preferred Stock....
Stock option compensation.......
Excess of redemption price over
carring value of Preferred
Stock.........................
Net Proceeds from issuance of
stock to Boston Venture.......
Exchange of Common Shares.......
-----------
Balance as of December 31,
1997.......................... $ --
-----------
-----------
</TABLE>
See accompanying notes
F-5
<PAGE>
SYGNET WIRELESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------
1995 1996 1997
-------------- --------------- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) income............................................... $ 1,950,036 $ (5,288,375) $ (20,616,394)
Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
Depreciation.................................................. 2,765,816 5,948,693 16,018,841
Amortization.................................................. 720,738 4,089,746 12,700,096
Compensation expense from issuance of stock options........... -- -- 306,000
Loss on disposal of equipment................................. 161,222 177,633 102,955
Extraordinary loss on extinguishment of debt.................. -- 1,420,864 --
Changes in operating assets and liabilities:
Accounts receivable......................................... (2,838,833) (184,315) (1,854,599)
Inventory................................................... (184,951) (287,900) (170,493)
Prepaid and deferred expenses............................... 7,951 28,649 232,548
Accounts payable and accrued expenses....................... (589,925) 2,424,406 2,866,653
Accrued interest payable.................................... 452,933 6,481,912 (190,868)
-------------- --------------- --------------
Net cash provided by operating activities....................... 2,444,987 14,811,313 9,394,739
INVESTING ACTIVITIES
Acquisitions of Horizon and Erie................................ (40,533,104) (254,150,136) (599,442)
Purchases of property and equipment............................. (9,056,098) (10,049,999) (25,575,837)
Proceeds from sale of equipment................................. 513,730 -- 405,995
-------------- --------------- --------------
Net cash used in investing activities........................... (49,075,472) (264,200,135) (25,769,284)
FINANCING ACTIVITIES
Dividends paid.................................................. (1,158,980) (261,625) --
Proceeds from long-term debt.................................... 51,986,188 320,750,000 30,500,000
Principal payments on long-term debt............................ (750,000) (78,000,000) (37,250,000)
Increase in financing costs..................................... (1,716,230) (10,290,097) (65,376)
Net proceeds from issuance of preferred stock................... -- 19,000,000 --
Redemption of preferred stock................................... -- -- (21,839,451)
Net proceeds from issuance of common stock...................... -- -- 43,631,710
Purchase of treasury stock...................................... (1,718,991) -- --
-------------- --------------- --------------
Net cash provided by financing activities....................... 46,641,987 251,198,278 14,976,883
(Decrease) increase in cash and cash equivalents................ 11,502 1,809,456 (1,397,662)
Cash and cash equivalents at beginning of year.................. 436,790 448,292 2,257,748
-------------- --------------- --------------
Cash and cash equivalents at end of year........................ $ 448,292 $ 2,257,748 $ 860,086
-------------- --------------- --------------
-------------- --------------- --------------
</TABLE>
See accompanying notes
F-6
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
These financial statements include the combined financial statements of
Sygnet Communications, Inc. ("Sygnet") and Wilcom Corporation ("Wilcom") through
August 31, 1996, the effective date of the merger described below, and the
consolidated accounts of Sygnet Wireless, Inc. and its wholly-owned subsidiary
Sygnet Communications, Inc. ("Sygnet") (hereinafter collectively referred to as
the "Company") thereafter. The Company owns and operates cellular telephone
systems serving one large cluster with an approximate population of 2.4 million
in Northeastern Ohio, Western Pennsylvania and Western New York.
On August 19, 1996, the shareholders of Sygnet and Wilcom effected a
corporate restructuring whereby Wilcom was merged into Sygnet and shareholders
of Wilcom received 8.72 shares of Sygnet common stock for each share of Wilcom
common stock held as of August 31, 1996, the effective date of the merger. This
merger was a business combination between entities under common control whereby
the assets and liabilities so transferred were accounted for at historical cost
in a manner similar to that in pooling-of-interest accounting. Also, in
conjunction with this merger, the shareholders of Sygnet amended the articles of
incorporation to change Sygnet's name to Sygnet Wireless, Inc.
Prior to the restructuring, Sygnet and Wilcom had been operating their
cellular business through three partnerships (Youngstown Cellular Telephone
Company ("YCTC")), Erie Cellular Telephone Company ("Erie"), and Wilcom
Cellular) and Sharon--Youngstown Cellular, Inc. ("Sharon"). As a result of the
restructuring and merger, Sharon was renamed Sygnet and is the wholly-owned
subsidiary and operating company of Sygnet Wireless, Inc. The existence of YCTC,
Erie, and Wilcom Cellular terminated on October 1, 1996 when all partnership
interests transferred to Sygnet.
2. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the FASB issued Statement No. 130, REPORTING COMPREHENSIVE
INCOME, which is required to be adopted effective January 1, 1998. This
Statement establishes standards for the reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
Reclassification of financial statements for earlier periods presented is
required. The impact of Statement No. 130 on the Company's financial statements
is not expected to be material.
In June 1997, the FASB also issued Statement No. 131, DISCLOSURES ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, which is required to be
adopted effective January 1, 1998. This Statement changes the way companies
report selected segment information in annual financial statements and also
requires those companies to report selected segment information in interim
financial reports to shareholders. The impact of Statement No. 131 on the
Company's financial statement disclosures is not expected to be material.
3. ACQUISITIONS
On October 9, 1996, the Company acquired certain cellular licenses,
property, equipment, customer lists, current assets and current liabilities of
Horizon Cellular Telephone Company of Chautauqua L.P., Horizon Cellular
Telephone Company of Crawford L.P., and Horizon Cellular Telephone Company of
Indiana L.P. (hereinafter collectively referred to as "Horizon") for cash of
$252.9 million. The acquired systems provide cellular service to an estimated
population of 1.4 million in contiguous markets in Western Pennsylvania and
Western New York.
F-7
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
3. ACQUISITIONS (CONTINUED)
On September 30, 1995, Sygnet, as a general partner, purchased 95.46% of
Erie for cash of $40.53 million. On November 30, 1995, Sharon purchased 4.54% of
Erie for $1.92 million, which was paid on February 12, 1996.
The above transactions were accounted for as purchases and, accordingly, the
results of operations of the companies acquired have been included in the
consolidated financial statements since the dates of acquisition.
Cash paid for acquisitions is summarized below:
<TABLE>
<CAPTION>
1995 1996
------------- --------------
<S> <C> <C>
Current assets acquired....................................... $ 923,234 $ 3,613,696
Property and equipment........................................ 1,349,195 18,986,400
Cellular licenses............................................. 40,289,743 207,223,616
Customer lists................................................ 25,700,000
Current liabilities assumed................................... (108,878) (774,134)
------------- --------------
Net assets and liabilities acquired........................... 42,453,294 254,749,578
Amounts payable in future periods............................. (1,920,190) (599,442)
------------- --------------
Cash paid..................................................... $ 40,533,104 $ 254,150,136
------------- --------------
------------- --------------
</TABLE>
The pro forma unaudited condensed combined results of operations for the
year ended December 31, 1996 as if the purchase occurred on January 1, 1996 are
as follows:
<TABLE>
<CAPTION>
1996
--------------
<S> <C>
Revenue....................................................................... $ 69,851,000
--------------
--------------
Loss before extraordinary item................................................ $ (15,283,000)
--------------
--------------
Net loss...................................................................... $ (16,704,000)
--------------
--------------
Pro forma net loss per share applicable to common shareholders................ $ (3.25)
--------------
--------------
</TABLE>
4. SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of the parent
company and its wholly-owned subsidiary. Intercompany balances and transactions
have been eliminated in the consolidated financial statements.
CASH EQUIVALENTS
The Company considers all liquid investments with a maturity of three months
or less when purchased to be cash equivalents.
F-8
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORY
Inventory consisting of merchandise purchased for resale is stated at the
lower of cost or market determined by the first-in, first-out (FIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are depreciated over their
estimated useful lives calculated under the straight-line or double-declining
balance methods.
INTANGIBLE ASSETS
The FCC issues licenses that enable cellular carriers to provide cellular
service in specific geographic areas. The FCC grants licenses for a term of up
to 10 years and generally grants renewals if the licensee has complied with its
obligations under the Communications Act of 1934. In 1993, the FCC adopted
specific standards to apply to cellular renewals, concluding it will award a
renewal to a cellular licensee that meets certain standards of past performance.
Historically, the FCC has granted license renewals routinely. The Company
believes that it has met, and will continue to meet all requirements necessary
to secure renewal of its cellular licenses.
The Company has acquired cellular licenses and customer lists through its
acquisition of interests in various cellular systems. The cost of licenses and
customer lists acquired was $231,003,426 in 1996. The Company uses a 40 year
useful life to amortize its licenses under the straight-line method. Purchased
cellular and paging customer lists are being amortized over 5 years under the
straight-line method. The components of intangible assets at December 31 are
summarized below:
<TABLE>
<CAPTION>
1996 1997
-------------- --------------
<S> <C> <C>
Cellular licenses............................................ $ 255,849,696 $ 255,849,696
Customer lists............................................... 25,819,792 25,819,792
-------------- --------------
281,669,488 281,669,488
Accumulated amortization..................................... (4,862,135) (16,421,166)
-------------- --------------
$ 276,807,353 $ 265,248,322
-------------- --------------
-------------- --------------
</TABLE>
Amortization expense was $523,768, $3,652,470 and $11,559,031 in 1995, 1996
and 1997, respectively.
The ongoing value and remaining useful lives of intangible and other
long-term assets are subject to periodic evaluation and the Company currently
expects the carrying amounts to be fully recoverable. When events and
circumstances indicate that intangible and other long-term assets might be
impaired, an undiscounted cash flow methodology would be used to determine
whether an impairment loss would be recognized.
REVENUE RECOGNITION
The Company earns revenue primarily by providing cellular services to its
customers (Subscriber Revenue) and from the usage of its system by the customers
of other cellular carriers (Roamer Revenue). Access revenue for Subscriber
Revenue is billed one month in advance. Revenue is recognized as service is
rendered. Subscriber acquisition costs (primarily commissions and loss on
equipment sales) are expensed when incurred.
F-9
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED FINANCING COSTS
Deferred financing costs are being amortized over the terms of the bank
credit facility and senior notes. Accumulated amortization was $266,084 and
$1,409,754 at December 31, 1996 and 1997, respectively. Amortization expense was
$196,170, $437,276 and $1,141,065 in 1995, 1996 and 1997, respectively. Upon
entering into a new bank credit facility in October 1996, an extraordinary loss
of $1,420,864 was incurred to write-off unamortized financing costs under the
extinguished bank credit agreement as described in Note 6.
ADVERTISING COSTS
Advertising costs are recorded as expense when incurred. Advertising expense
was $933,498, $1,225,151 and $1,841,138 in 1995, 1996 and 1997, respectively.
NET LOSS PER COMMON SHARE
In 1997, the Company adopted FASB Statement No. 128, EARNINGS PER SHARE,
which replaced the computation of primary and fully diluted earnings per share
with basic and diluted earnings per share. No restatement of prior year earnings
per share amounts was necessary since the impact was not significant.
Net loss per share is computed using the weighted average number of shares
of common stock outstanding during the period. The pro forma net loss per share
for 1996 is based on the number of common shares outstanding, as if the
corporate restructuring described in Note 1 occurred at the beginning of the
year. The effect of stock options is not included in the computation of dilutive
earnings per share since it is anti-dilutive.
Losses applicable to common shareholders include adjustments for Preferred
Stock dividends and accretions and the excess of the redemption price paid over
the carrying value of the Preferred Stock. Earnings per share for 1995 is not
presented because such data prior to the restructuring described in Note 1 is
not meaningful.
STOCK COMPENSATION
The Company accounts for its stock-based employee compensation arrangements
based on the intrinsic value of the equity instruments granted, as set forth in
APB Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. Actual
results may differ from those estimates.
SIGNIFICANT CONCENTRATIONS
In connection with providing cellular services to customers of other
cellular carriers, the Company has contractual agreements with those carriers
which provide for agreed upon billing rates between the parties. Approximately
62%, 48% and 43% of the Company's Roamer Revenue was earned from two cellular
carriers in 1995, 1996 and 1997, respectively.
F-10
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS
Derivative financial instruments are used by the Company in the management
of interest rate exposure and are accounted for on an accrual basis. Income and
expense are recorded in the same category as that arising from the related
liability being hedged (i.e., adjustments to interest expense).
The Company uses variable interest rate credit facilities to finance
acquisitions and operations of the Company. The Company may reduce its exposure
to fluctuations in interest rates by creating offsetting positions through the
use of derivative financial instruments. The Company does not use derivative
financial instruments for trading or speculative purposes, nor is the Company a
party to leveraged derivatives. The notional amount of interest rate swaps is
the underlying principal amount used in determining the interest payments
exchanged over the life of the swap. The notional amount is not a measure of the
Company's exposure through its use of derivatives.
The Company may be exposed to credit loss in the event of nonperformance by
the counterparties to its interest rate swap agreements. The Company anticipates
the counterparties will be able to fully satisfy its obligations under the
agreements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
At December 31, 1996 and 1997, the carrying value of cash equivalents,
accounts receivable, the interest rate swap and the long-term bank debt
approximated fair value. The fair value of the long-term unsecured senior notes,
calculated based on quoted market prices, was $112,750,000 and $118,800,000 at
December 31, 1996 and 1997, respectively.
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
USEFUL LIFE 1996 1997
------------- -------------- --------------
<S> <C> <C> <C>
Land, building and improvements............... 5-19 years $ 7,296,770 $ 10,575,573
Cellular system and equipment................. 2.5-19 years 41,498,865 57,010,440
Customer premise equipment.................... 3 years 1,690,906 665,935
Office furniture and equipment................ 3-10 years 4,341,459 9,257,464
Cell site construction in progress............ 1,076,817 1,522,275
-------------- --------------
55,904,817 79,031,687
Accumulated depreciation...................... (11,945,848) (26,024,672)
-------------- --------------
$ 43,958,969 $ 53,007,015
-------------- --------------
-------------- --------------
</TABLE>
At December 31, 1997, the Company had purchase commitments of approximately
$9.3 million for equipment.
F-11
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
6. LONG-TERM DEBT
On September 19, 1996, the Company issued $110,000,000 11 1/2% unsecured
Senior Notes due October 1, 2006 (the Notes). The Notes pay interest
semiannually on April 1 and October 1 of each year commencing April 1, 1997. The
Notes are redeemable at the option of the Company at redemption prices
(expressed as a percentage of principal amount) ranging from 105.75% in 2001 to
100.00% in 2005 and thereafter. Among other things, the Notes contain certain
covenants which limit additional indebtedness, payment of dividends, sale of
assets or stock, changes in control and transactions with related parties. The
proceeds from the Notes were used to repay amounts borrowed under a $75 million
bank credit agreement and to finance the acquisition of Horizon described in
Note 3.
On October 9, 1996, Sygnet entered into a new financing agreement (the Bank
Credit Facility) with a commercial bank group. The Bank Credit Facility is a
senior secured reducing revolver that provides Sygnet the ability to borrow up
to $300.0 million through June 30, 1999. Mandatory reductions in the revolver
occur quarterly thereafter through June 30, 2005, when the Bank Credit Facility
terminates. The Bank Credit Facility is secured by certain assets and the stock
of Sygnet. The Bank Credit Facility provides for various borrowing rate options
based on either a fixed spread over the London Interbank Offered Rate (LIBOR) or
the prime rate. Interest payments are made quarterly. As of December 31, 1997,
$195.5 million was outstanding under the Bank Credit Facility.
Among other things, the Bank Credit Facility contains financial covenants
which require the maintenance of debt service ratios and the hedging of interest
rate risk and limit distributions to shareholders and sales of assets. In
connection with these covenants, the Company has a three year interest rate swap
with a total underlying notional amount of $80 million. The swap agreements
converted the interest rate on $80 million notional amount of the credit
facility from a variable rate based upon a three month LIBOR (5.81% at December
31, 1997) to fixed rates ranging from 5.79% to 6.03%. Amounts paid or received
under these agreements are recognized as adjustments to interest expense.
There are no future minimum payments based upon the borrowing levels at
December 31, 1997 for the next five years.
Interest paid was $2,202,345, 4,691,776 and $30,076,031 in 1995, 1996 and
1997 respectively.
7. LEASES
The Company has entered into various operating leases for land and office
facilities. Leases for tower sites provide for periodic extensions of lease
periods with future lease payments indexed to the consumer price index.
F-12
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
7. LEASES (CONTINUED)
Minimum future rental payments under operating leases having remaining terms
in excess of one year as of December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998........................................... $1,777,262
1999........................................... 1,445,209
2000........................................... 1,182,204
2001........................................... 817,668
2002........................................... 505,431
Thereafter..................................... 6,657,092
----------
Total.......................................... $12,384,866
----------
----------
</TABLE>
Rent expense was approximately $460,800, $906,042 and $2,077,644 in 1995,
1996 and 1997, respectively.
8. RETIREMENT PLAN
The Company sponsors a 401(k) retirement and profit sharing plan which
covers substantially all its employees. Eligible employees can contribute from
1% to 15% of their compensation. The Company, at its discretion, may match a
portion of the employee's contribution. The Company may also, at its discretion,
make additional profit sharing contributions to the plan. Total pension expense
was $114,000, $181,000 and $293,000 in 1995, 1996 and 1997, respectively.
9. REDEEMABLE PREFERRED STOCK AND WARRANTS
On April 3, 1997, 100,000 shares of Series A Senior Cumulative Nonvoting
Preferred Stock (Preferred Stock) were redeemed by the Company at a cost of
$10,000,000 which was funded by the Bank Credit Facility. On June 20, 1997, the
remaining 118,394.51 shares of Preferred Stock were redeemed by the Company at a
cost of $11,839,451. This redemption was funded by the Common Stock Sale
described in Note 10.
The Preferred Stock had a redemption value of $100 per share and was
recorded at fair value on the date of issuance less issuance costs. Dividends
were cumulative from the date of issuance, accrued quarterly in arrears and were
payable in shares of Preferred Stock. The dividend rates increased annually from
15% in 1997 to 21% in 2000 and thereafter. As of December 31, 1996, the Company
accrued stock dividends in the amount of $690,411 (which represented 6,904
shares). The Preferred Stock included the potential issuance of warrants to
purchase shares of the Company's Class A Common Stock. For financial reporting
purposes, the estimated fair value of the warrants was included with the
Preferred Stock in the accompanying balance sheet and the excess of the
redemption value of the Preferred Stock over the carrying value was accreted by
periodic charges to additional paid-in capital over the life of the issue. No
warrants were issued.
The Company has authorized 5 million shares of Nonvoting Preferred Stock,
par value $.01 per share, of which 500,000 are designated as Series A Senior
Cumulative Nonvoting Preferred Stock.
F-13
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
9. REDEEMABLE PREFERRED STOCK AND WARRANTS (CONTINUED)
The Company has also authorized 10 million shares of Voting Preferred Stock,
par value $.01 per share, none of which are issued as of December 31, 1997.
10. SHAREHOLDERS' EQUITY
On June 20, 1997, the Company issued and sold 3,000,000 shares of Class A
Common Stock, $.01 par value, to Boston Ventures Limited Partnership V (Boston
Ventures) at a price of $15 per share (Common Stock Sales). The proceeds of
$43.6 million, net of issuance fees of $1.4 million, were used to redeem the
remaining outstanding Preferred Stock as described in Note 9, and to reduce
amounts outstanding under the Bank Credit Facility. As a condition of the Common
Stock Sales, Boston Ventures appointed two representatives on the Company's
eleven member board of directors.
In August 1997, Boston Ventures purchased 1,000,000 shares of Class B Common
Stock from shareholders pursuant to a tender offer which upon purchase based on
the requirements of the corporate restructuring described in Note 1, became
Class A Common Stock.
On August 28, 1996, the Company approved a plan to recapitalize the Company
whereby the Sygnet common stock Type A (205,698 shares) and Type B (1,028,428
shares) were converted into 6,170,630 shares of Sygnet Wireless, Inc. Class B
common stock in a 5 for 1 split, effective on September 20, 1996. These shares
are entitled to ten votes per share.
On January 5, 1995, Sygnet repurchased 8,024 Type A shares for $39.00 per
share and 40,173 Type B shares for $35.00 per share from a shareholder for
approximately $1,719,000. These shares were accounted for at cost and held as
treasury stock until August 28, 1996 when they were retired.
Under the most restrictive of the covenants discussed in Note 6, the Company
could not declare any additional dividends on its common stock at December 31,
1997.
On December 29, 1994, the Company received a promissory note from an
officer/shareholder for $249,952 for the purchase of common shares from a
shareholder. The note requires annual payment of interest at 8.23% with
principal repayment commencing on December 31, 1998 through December 31, 2001.
11. INCOME TAXES
On August 31, 1996, Sygnet and Wilcom terminated their status as Subchapter
S Corporations. As a result of this termination, application of the provisions
of Statement of Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME
TAXES, requires deferred income taxes to be provided for differences in the
basis for tax purposes and for financial accounting purposes of recorded assets
and liabilities. As a result of the termination of their Subchapter S
Corporation status, Sygnet and Wilcom contributed their undistributed earnings
to additional paid-in capital. At December 31, 1997, the Company has net
operating loss carryforwards of $28.7 million that expire in 2011 and 2012. For
financial reporting purposes, a valuation allowance of $7,747,300 has been
recognized to offset the net deferred tax assets which primarily relate to the
net operating loss carryforward.
F-14
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
11. INCOME TAXES (CONTINUED)
Amounts for deferred tax assets and liabilities at December 31, 1996 and
1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation.................................................. $ 787,200 $ --
Amortization.................................................. 1,271,800 3,593,000
------------- -------------
Total deferred tax liabilities.................................. 2,059,000 3,593,000
Deferred tax assets:
AMT credit carryforward....................................... 63,400 63,400
Allowance for doubtful accounts............................... 397,400 275,300
Depreciation.................................................. 958,400
Net operating loss carryforward............................... 2,550,000 9,756,800
Other......................................................... 201,700 390,400
------------- -------------
3,212,500 11,444,300
Valuation allowance............................................. (1,153,500) (7,851,300)
------------- -------------
Total deferred tax assets....................................... 2,059,000 3,593,000
------------- -------------
Net deferred tax assets......................................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The components of the income tax provision (benefit) in the consolidated
statements of operations for the year ended December 31, 1996 and 1997 are as
follows:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Cumulative effect of conversion from S to C corporation
status........................................................ $ 745,000 $ --
Deferred income tax (benefit)................................... (1,898,500) (6,697,800)
Valuation allowance............................................. 1,153,500 6,697,800
------------- -------------
Total provision for income tax (benefit)........................ $ -- $ --
------------- -------------
------------- -------------
</TABLE>
12. STOCK OPTION PLAN
The Company has stock option plans that provide for the purchase of Class A
common stock by employees and directors of the Company. Under the stock option
plans the Company is authorized to issue 1,250,000 options for the purchase of
shares of Class A common stock (1,000,000 for employees and 250,000 for
non-employee directors). These options vest over a period ranging from grant
date to five years, are exercisable based upon the terms of the grants and
expire at the end of ten years. The Company applies APBO No. 25, ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES and related Interpretations in accounting for the
plan, which requires that for certain options granted, the Company recognizes as
compensation expense the excess of the deemed fair value for accounting purposes
of the common stock over the exercise price of the options. For the majority of
options, no compensation cost has been recognized. Had compensation plans been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method of SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, the Company's net loss and net loss per share would not have been
materially different from the amounts reported.
F-15
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
12. STOCK OPTION PLAN (CONTINUED)
For pro forma calculations the fair value of each option is estimated on the
date of grant using the Minimum Value option-pricing model with the following
weighted-average assumptions used for grants in both 1996 and 1997: risk-free
interest rates ranging from 5.9% to 6.9% and average expected lives ranging from
5.25 to 7.5 years for issued options.
A summary of the status of the company's stock option plan as of December
31, 1996 and 1997 and changes during the years then ended is presented below:
<TABLE>
<CAPTION>
1996 1997
----------------------------- -----------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
---------- ----------------- ---------- -----------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year........... -- $ -- 533,200 $ 10.00
Granted.................................... 533,200 10.00 183,000 10.31
Exercised.................................. -- -- -- --
Canceled................................... -- -- --
---------- ------ ---------- ------
Outstanding at year end.................... 533,200 10.00 716,200 $ 10.08
---------- ------ ---------- ------
---------- ------ ---------- ------
Options exercisable at year end............ -- 651,200
Weighted-average fair value of options
granted during the year.................. $ -- $ 7.80
Weighted-average remaining contractual
life..................................... 9.68 8.87
</TABLE>
At December 31, 1997, there were 533,800 options available for future grant.
F-16
<PAGE>
SYGNET WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
1997 1998
-------------- --------------
(NOTE) (UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 860,086 $ 467,124
Accounts receivable, less allowance for doubtful accounts of $565,862 at
September 30, 1998 and $809,800 at December 31, 1997......................... 10,711,627 13,506,769
Inventory...................................................................... 1,867,445 1,539,169
Prepaid expenses............................................................... 309,460 929,915
-------------- --------------
Total current assets......................................................... 13,748,618 16,442,977
Other assets:
Cellular licenses--net......................................................... 245,866,235 241,062,311
Customer lists--net............................................................ 19,382,087 15,527,090
Deferred financing costs--net.................................................. 8,982,430 8,126,156
-------------- --------------
Total other assets........................................................... 274,230,752 264,715,557
Property, plant and equipment--net............................................... 53,007,015 52,137,706
-------------- --------------
Total assets................................................................. $ 340,986,385 $ 333,296,240
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................... $ 3,264,206 $ 1,807,017
Deferred revenue............................................................... 2,058,066 2,381,739
Accrued expenses and other liabilities......................................... 4,196,230 4,591,172
Interest payable............................................................... 6,749,755 9,533,632
-------------- --------------
Total current liabilities.................................................... 16,268,257 18,313,560
Long-term debt................................................................... 305,500,000 302,644,000
Shareholders' equity:
Common shares, $.01 par, Class A, 1 vote per share, 60,000,000 shares
authorized, 4,734,091 shares issued and outstanding as of September 30, 1998;
4,010,653 shares issued and outstanding as of December 31, 1997.............. 40,107 47,341
Common shares, $.01 par, Class B, 10 votes per share; 10,000,000 shares
authorized, 4,436,539 shares issued and outstanding as of September 30, 1998;
5,159,977 shares issued and outstanding as of December 31, 1997.............. 51,599 44,365
Additional paid-in capital....................................................... 47,598,498 47,598,498
Retained deficit................................................................. (28,222,124) (35,101,572)
Note receivable from officer/shareholder......................................... (249,952) (249,952)
-------------- --------------
Total shareholders' equity................................................... 19,218,128 12,338,680
-------------- --------------
Total liabilities and shareholders' equity................................... $ 340,986,385 $ 333,296,240
-------------- --------------
-------------- --------------
</TABLE>
NOTE: THE BALANCE SHEET AT DECEMBER 31, 1997 HAS BEEN DERIVED FROM THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS AT THAT DATE BUT DOES NOT INCLUDE ALL OF THE
INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
FOR COMPLETE FINANCIAL STATEMENTS.
F-17
<PAGE>
SYGNET WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1997 1998
-------------- --------------
<S> <C> <C>
Revenue:
Subscriber revenue.............................................................. $ 38,531,124 $ 46,738,516
Roamer revenue.................................................................. 19,868,262 24,752,828
Equipment sales................................................................. 3,050,594 4,252,652
Other revenue................................................................... 1,307,703 1,190,063
-------------- --------------
Total revenue..................................................................... 62,757,683 76,934,059
Costs and expenses:
Cost of services................................................................ 7,175,048 9,004,943
Cost of equipment sales......................................................... 6,806,047 7,789,947
General and administrative...................................................... 11,666,527 14,664,517
Selling and marketing........................................................... 7,465,863 9,056,770
Depreciation and amortization................................................... 21,142,930 21,343,437
-------------- --------------
Total costs and expenses.......................................................... 54,256,415 61,859,614
-------------- --------------
Income from operations............................................................ 8,501,268 15,074,445
Other:
Interest expense, net........................................................... 22,558,545 21,612,673
Other........................................................................... (6,174) 341,220
-------------- --------------
Net income (loss)................................................................. $ (14,051,103) $ (6,879,448)
-------------- --------------
-------------- --------------
Earnings per share information:
Net income (loss)............................................................... $ (14,051,103) $ (6,879,448)
Preferred stock dividend and accretion.......................................... (2,121,472) --
-------------- --------------
Net income (loss) applicable to common shareholders............................. $ (16,172,575) $ (6,879,448)
-------------- --------------
-------------- --------------
Net income (loss) per share applicable to common shareholders................... $ (2.21) $ (.75)
-------------- --------------
-------------- --------------
Common shares outstanding......................................................... 7,302,498 9,170,630
-------------- --------------
-------------- --------------
</TABLE>
F-18
<PAGE>
SYGNET WIRELESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER
30,
------------------------------
1997 1998
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.......................................................................... $ (14,051,103) $ (6,879,448)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation.................................................................... 11,614,565 11,828,239
Amortization.................................................................... 9,528,365 9,515,198
Loss (gain) on disposal of assets............................................... (14,358) 109,104
Changes in operating assets and liabilities:
Accounts receivable........................................................... (2,269,177) (2,795,142)
Inventory..................................................................... 413,076 328,276
Prepaid and deferred expenses................................................. 188,487 (620,455)
Accounts payable and accrued expenses......................................... 732,773 (738,574)
Accrued interest payable...................................................... 982,713 2,783,877
-------------- --------------
Net cash provided by operating activities......................................... 7,125,341 13,531,075
INVESTING ACTIVITIES
Business acquisition.............................................................. (599,442) --
Purchases of property and equipment............................................... (16,979,123) (11,468,537)
Proceeds from sale of assets...................................................... 20,995 400,500
-------------- --------------
Net cash used in investing activities............................................. (17,557,570) (11,068,037)
FINANCING ACTIVITIES
Proceeds from long-term debt...................................................... 23,500,000 16,894,000
Principal payments on long-term debt.............................................. (35,250,000) (19,750,000)
Increase in financing costs....................................................... (308,666) --
Redemption of preferred stock..................................................... (21,839,451) --
Net proceeds from sale of common stock............................................ 43,875,000 --
-------------- --------------
Net cash (used in) provided by financing activities............................... 9,976,883 (2,856,000)
Decrease in cash and cash equivalents............................................. (455,346) (392,962)
Cash and cash equivalents at beginning of period.................................. 2,257,748 860,086
-------------- --------------
Cash and cash equivalents at end of period........................................ $ 1,802,402 $ 467,124
-------------- --------------
-------------- --------------
</TABLE>
F-19
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
These financial statements include the consolidated accounts of Sygnet
Wireless, Inc. (the "Company") and its wholly-owned subsidiary Sygnet
Communications, Inc. ("Sygnet"). The Company owns and operates cellular
telephone systems serving one large cluster with an approximate population of
2.4 million in Northeastern Ohio, Western Pennsylvania and Western New York.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine-month period ended September 30,
1998 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1998. For further information, refer to the consolidated
financial statements and notes thereto included in the Company's annual report
on Form 10-K for the fiscal year ended December 31, 1997 (File No. 333-10161)
filed with the Securities and Exchange Commission.
2. AGREEMENT AND PLAN OF MERGER
On July 28, 1998, the Company entered into an Agreement and Plan of Merger
("Merger") with a subsidiary of Dobson Communications Corporation ("Dobson")
pursuant to which Dobson will acquire all outstanding shares of common stock of
the Company for an aggregate amount of $337.5 million, or approximately $34.51
per share. The agreement is pending regulatory approval and is expected to close
in the fourth quarter of 1998.
3. LONG-TERM DEBT
The Company has $110.0 million 11 1/2% unsecured Senior Notes due October 1,
2006 (the "Notes"). The Notes pay interest semiannually on April 1 and October 1
of each year. The Notes are redeemable at the option of the Company at
redemption prices (expressed as a percentage of principal amount) ranging from
105.75% in 2001 to 100.00% in 2005 and thereafter. Among other things, the Notes
contain certain covenants which limit additional indebtedness, payment of
dividends, sale of assets or stock, changes in control and transactions with
related parties.
Sygnet has a financing agreement (the "Bank Credit Facility") with a
commercial bank group. The Bank Credit Facility is a senior secured reducing
revolver that provides Sygnet the ability to borrow up to $300.0 million through
June 30, 1999. Mandatory reductions in the revolver occur quarterly thereafter
through June 30, 2005, when the Bank Credit Facility terminates. The Bank Credit
Facility is secured by certain assets and the stock of Sygnet. The Bank Credit
Facility provides for various borrowing rate options based on either a fixed
spread over the London Interbank Offered Rate (LIBOR) or the prime rate. As of
September 30, 1998, the amount outstanding under the Bank Credit Facility is
$192.6 million.
4. REDEEMABLE PREFERRED STOCK AND WARRANTS
On April 3, 1997, 100,000 shares of Series A Senior Cumulative Nonvoting
Preferred Stock ("Preferred Stock"), were redeemed by the Company at a cost of
$10.0 million which was funded by the Bank Credit Facility. On June 20, 1997,
the remaining 118,394.51 shares of Preferred Stock were redeemed by
F-20
<PAGE>
SYGNET WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. REDEEMABLE PREFERRED STOCK AND WARRANTS (CONTINUED)
the Company at a cost of $11,839,451. This redemption was funded by the Common
Stock Sale described in Note 5.
The Preferred Stock had a redemption value of $100 per share and was
recorded at fair value on the date of issuance less issuance costs. Dividends
were cumulative from the date of issuance, accrued quarterly in arrears and were
payable in shares of Preferred Stock. The dividend rates increased annually from
15% in 1997 to 21% in 2000 and thereafter. The Preferred Stock included the
potential issuance of warrants to purchase shares of the Company's Class A
Common Stock. For financial reporting purposes, the estimated fair value of the
warrants was included with the Preferred Stock in the accompanying balance sheet
and the excess of the redemption value of the Preferred Stock over the carrying
value was accreted by periodic charges to additional paid-in capital over the
life of the issue. No warrants were issued.
The Company has authorized 5 million shares of Nonvoting Preferred Stock,
par value $.01 per share, of which 500,000 are designated as Series A Senior
Cumulative Nonvoting Preferred Stock.
5. SHAREHOLDERS EQUITY
On June 20, 1997, the Company issued and sold 3,000,000 shares of Class A
Common Stock, $.01 par value, to Boston Ventures Limited Partnership V ("Boston
Ventures") at a price of $15 per share ("Common Stock Sale"). The proceeds of
$43.9 million, net of issuance fees, were used to redeem the remaining
outstanding Preferred Stock as described in Note 4, and to reduce amounts
outstanding under the Bank Credit Facility. As a condition of the Common Stock
Sale, Boston Ventures has two representatives on the Company's eleven member
board of directors.
In August 1997, Boston Ventures purchased 1,000,000 shares of Class B Common
Stock from shareholders pursuant to a tender offer which, upon purchase, became
Class A Common Stock.
6. COMMITMENTS AND CONTINGENCIES
In accordance with the Merger (see Note 2), the Company may be liable to pay
severance benefits and incentive compensation for an approximate amount of $1.9
million to certain employees if the Merger occurs and certain other conditions
are met before December 31, 1998.
On June 8, 1998, the Company entered into an agreement with Pinellas
Communications to purchase the license to operate a cellular telephone system in
the Rural Service Area PA-2. The purchase price is $6.0 million and the
transaction is expected to close in the fourth quarter of 1998.
F-21
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Dobson/Sygnet Communications Company:
We have audited the accompanying balance sheet of Dobson/Sygnet
Communications Company (an Oklahoma corporation) as of September 30, 1998. This
financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Dobson/Sygnet Communications
Company as of September 30, 1998, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma,
December 2, 1998
F-22
<PAGE>
DOBSON/SYGNET COMMUNICATIONS COMPANY
BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
CASH................................................................. $ 100
---------
---------
STOCKHOLDER'S EQUITY
STOCKHOLDER'S EQUITY
Common stock, $1.00 par value, 500 shares authorized
and 100 shares issued and outstanding............................ $ 100
---------
---------
</TABLE>
F-23
<PAGE>
DOBSON/SYGNET COMMUNICATIONS COMPANY
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
1. ORGANIZATION:
The Company was incorporated under the name Front Nine Holdings, Inc. as an
Oklahoma corporation on July 23, 1998. Subsequently, the Company changed its
name to Dobson/Sygnet Communications Company (the "Company") and amended its
certificate of incorporation on December 2, 1998 to reflect this change. The
Company is a wholly owned subsidiary of Dobson Communications Corporation
("Dobson Communications").
CAPITAL RESOURCES AND GROWTH
The Company's total indebtedness and debt service requirements will
substantially increase as a result of the transactions described in Note 3, and
the Company will be subject to significant financial restrictions and
limitations. If the Company is unable to borrow sufficient funds through bank
financing, capital contributions from Dobson Communications and the senior notes
described in Note 3, the Company may be unable to borrow additional funds from
other sources during such time period to fund planned capital expenditures, its
ongoing operations or other permissible uses.
The Company's ability to manage future growth will depend upon its ability
to monitor operations, control costs, maintain effective quality controls and
significantly expand the Company's internal management, technical and accounting
systems, all of which will result in higher operating expenses. Any failure to
expand these areas and to implement and improve such systems, procedures and
controls in an efficient manner at a pace consistent with the growth of the
Company's business could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's cash flows currently are entirely dependent upon Dobson
Communications and such dependency will continue at least until such time as the
Company completes the merger of Sygnet's operations into the Company.
2. SIGNIFICANT ACCOUNTING POLICIES:
CASH AND CASH EQUIVALENTS
Cash and cash equivalents on the accompanying balance sheet includes cash
and short-term investments with original maturities of three months or less.
3. ACQUISITIONS:
On July 28, 1998, Dobson/Sygnet Operating Company ("Operating"), an
affiliate of the Company entered into a definitive agreement to acquire the
stock of Sygnet for $337.5 million. Sygnet owns and operates cellular systems in
Ohio, Pennsylvania and New York covering an estimated population base of 2.4
million people. In connection with the acquisition, Operating plans to redeem
Sygnet's senior notes ($110 million at September 30, 1998) and refinance
Sygnet's credit facility ($192.6 million at September 30, 1998) herein referred
to as the ("Refinancings"). In connection with the Sygnet acquisition, Operating
will also be required to finance the acquisition of Pennsylvania 2 RSA for $6.0
million.
In July 1998, Operating placed $25 million into escrow pending the close of
the Sygnet acquisition. The Company expects to finance the remaining purchase,
consisting of the remaining $312.5 million of stock, the Refinancings and the
Pennsylvania 2 RSA acquisition, through a combination of bank financing
described in Note 4, capital contributions from Dobson Communications and the
issuance of senior notes.
F-24
<PAGE>
DOBSON/SYGNET COMMUNICATIONS COMPANY
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
3. ACQUISITIONS: (CONTINUED)
Upon the issuance of senior notes by the Company, it will purchase the stock of
Operating and contribute the net proceeds of the senior notes offering to
Operating. The Sygnet and Pennsylvania 2 RSA acquisitions are expected to close
in the fourth quarter of 1998 or early in 1999.
4. LONG-TERM DEBT:
In connection with the pending Sygnet acquisition, Operating received
commitments for a new $450.0 million credit facility to be secured by the assets
acquired in the Sygnet acquisition. Operating also obtained commitments for
bridge financing. Subsequent to September 30, 1998, the commitments for bridge
financing expired. In connection with the bridge financing, Operating incurred
$3.36 million in fees to obtain the bridge financing.
F-25
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Dobson/Sygnet Operating Company:
We have audited the accompanying balance sheet of Dobson/Sygnet Operating
Company (an Ohio corporation) as of September 30, 1998. This financial statement
is the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Dobson/Sygnet Operating Company as
of September 30, 1998, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma,
December 2, 1998
F-26
<PAGE>
DOBSON/SYGNET OPERATING COMPANY
BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
CASH........................................................................... $ 100
----------
OTHER ASSETS:
Deposit...................................................................... 25,000,000
Deferred costs............................................................... 3,425,658
----------
Total other assets......................................................... 28,425,658
----------
Total assets............................................................... $28,425,758
----------
----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable............................................................... $3,425,658
----------
Total current liabilities.................................................. 3,425,658
PAYABLES--AFFILIATE............................................................ 25,000,000
STOCKHOLDER'S EQUITY
Common stock, $1 par value, 500 shares authorized and 100 shares issued and
outstanding................................................................ 100
----------
Total liabilities and stockholder's equity................................. $28,425,758
----------
----------
</TABLE>
F-27
<PAGE>
DOBSON/SYGNET OPERATING COMPANY
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
1. ORGANIZATION:
The Company was incorporated under the name SWI Acquisition Corp., as an
Ohio corporation on July 23, 1998. Subsequently, the Company changed its name to
Dobson/Sygnet Operating Company and amended its certificate of incorporation on
August 25, 1998 to reflect this change. The Company is a wholly owned subsidiary
of Dobson Communications Corporation ("Dobson Communications"). The Company
currently serves as the company for the pre-acquisition activity of Sygnet
Wireless, Inc. ("Sygnet") (See Note 3) and, upon consummation of the Sygnet
acquisition, will merge with Sygnet.
CAPITAL RESOURCES AND GROWTH
The Company's total indebtedness and debt service requirements will
substantially increase as a result of the transactions described in Note 3, and
the Company will be subject to significant financial restrictions and
limitations. If the Company is unable to raise sufficient funds through the bank
financing, capital contributions from Dobson Communications and the senior notes
issued by Dobson/Sygnet Communications Company described in Note 3, the Company
may be unable to borrow additional funds from other sources in the future to
fund planned capital expenditures, its ongoing operations or other permissible
uses.
The Company's ability to manage future growth will depend upon its ability
to monitor operations, control costs, maintain effective quality controls and
significantly expand the Company's internal management, technical and accounting
systems, all of which will result in higher operating expenses. Any failure to
expand these areas and to implement and improve such systems, procedures and
controls in an efficient manner at a pace consistent with the growth of the
Company's business could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's cash flows currently is entirely dependent upon Dobson
Communications and such dependency will continue at least until such time as the
Company completes the merger of Sygnet's operations into the Company.
2. SIGNIFICANT ACCOUNTING POLICIES:
CASH AND CASH EQUIVALENTS
Cash and cash equivalents on the accompanying combined balance sheet
includes cash and short-term investments with original maturities of three
months or less.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company assesses potential impairments of long-lived assets and certain
identifiable intangibles when there is evidence that events or changes in
circumstances indicate that an asset's carrying value may not be recoverable. An
impairment loss is recognized when the sum of the expected future net cash flows
is less than the carrying amount of the asset. No such losses have been
identified by the Company.
DEFERRED COSTS
Deferred costs consist primarily of fees incurred to secure long-term debt
and acquisition costs. Deferred financing costs will be amortized on a
straight-line basis over the term of the debt. Acquisition
F-28
<PAGE>
DOBSON/SYGNET OPERATING COMPANY
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
costs will be allocated to the appropriate balance sheet accounts in the Sygnet
purchase price allocation and will be amortized accordingly.
3. ACQUISITIONS:
On July 28, 1998, the Company entered into a definitive agreement to acquire
the stock of Sygnet for $337.5 million. Sygnet owns and operates cellular
systems in Ohio, Pennsylvania and New York covering an estimated population base
of 2.4 million people. In connection with the acquisition, the Company plans to
redeem Sygnet's senior notes ($110.0 million at September 30, 1998) and
refinance Sygnet's credit facility ($192.6 million at September 30, 1998) herein
referred to as the ("Refinancings"). In connection with the Sygnet acquisition,
the Company will also be required to finance the acquisition of Pennsylvania 2
RSA for $6.0 million.
In July 1998, the Company placed $25.0 million into escrow pending the close
of the Sygnet acquisition. The Company expects to finance the remaining
purchase, consisting of the remaining $312.5 million of stock, the Refinancings
and the Pennsylvania 2 RSA acquisition, through a combination of bank financing
described in Note 4, capital contributions from Dobson Communications and the
issuance of senior notes by Communications. The Sygnet and Pennsylvania 2 RSA
acquisitions are expected to close in the fourth quarter of 1998 or early in
1999.
4. LONG-TERM DEBT:
In connection with the pending Sygnet acquisition, the Company received
commitments for a new $450.0 million credit facility to be secured by the assets
acquired in the Sygnet acquisition. As part of the Sygnet acquisition, the
Company also obtained commitments for bridge financing. Subsequent to September
30, 1998, the commitments for bridge financing expired. In connection with the
bridge financing, the Company incurred $3.36 million in fees to obtain the
bridge financing. These fees are reflected in deferred cost on the accompanying
balance sheet.
5. RELATED PARTY TRANSACTIONS
The Company had payables to Dobson Communications and certain of its
subsidiaries totaling $25.0 million at September 30, 1998 representing advances
related to the Sygnet acquisition described in Note 3. The Company expects to
repay these advances in connection with consummation of the acquisition with
proceeds from long-term debt. Accordingly, the payables to these affiliates have
been reflected as a non-current liability in the accompanying balance sheet.
F-29
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Oklahoma General Corporation Act under which the Company
is incorporated, Article X of the Company's Amended Certificate of Incorporation
provides for indemnification of each of the Company's officers and directors
against (a) expenses, including attorney's fees, judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
any action, suit or proceeding brought by reason of his being or having been a
director, officer, employee or agent of the Company, or of any other
corporation, partnership, joint venture, or other enterprise at the request of
the Company, other than an action by or in the right of the Company, provided
that he acted in good faith and in a manner he reasonably believed to be in the
best interest of the Company, and with respect to any criminal action, he had no
reasonable cause to believe that his conduct was unlawful and (b) expenses
(including attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of any action or suit by or in the
right of the Company brought by reason of his being or having been a director,
officer, employee or agent of the Company, or any other corporation,
partnership, joint venture, or other enterprise at the request of the Company,
provided that he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interest of the Company; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged liable to the Company, unless and
only to the extent that the court in which such action or suit was decided has
determined that the person is fairly and reasonably entitled to indemnification
for such expenses which the court shall deem proper. The Company's bylaws
provide for similar indemnification. These provisions may be sufficiently broad
to indemnify such persons for liabilities arising under the Securities Act of
1933, as amended.
The Company's directors and officers are also insured against claims arising
out of the performance of their duties in such capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT METHOD OF
NUMBERS DESCRIPTION FILING
- --------- ------------------------------------------------------------------------------ -------------
<C> <S> <C>
2.1 Agreement and Plan of Merger dated July 28, 1998 between Sygnet Wireless, Inc.
and Dobson/Sygnet Operating Company (formerly known as Front Nine Operating
Company) (without schedules). (1) [2.0]
2.2 Purchase Agreement dated July 8, 1998 by and between Sygnet Communications,
Inc. and Pinellas Communications. (2) [10.32]
2.3 Asset Acquisition Agreement dated July 11, 1996 among Horizon Cellular
Telephone Company of Chantaugua, L.P., Horizon Cellular Telephone Company of
Crawford, L.P. and Sygnet Communications, Inc. (3) [10.17]
2.4 Agreement for Purchase of Partnership Interest dated September 15, 1995 by and
between Sygnet Communications, Inc. and Erie Cellular Systems, Inc.
(formerly McCaw Communications of Erie, Inc.). (3) [10.18]
2.5 Agreement to Furnish Schedules. (4)
3.1 Registrant's Amended Certificate of Incorporation. (4)
3.2 Registrant's Amended Bylaws. (4)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT METHOD OF
NUMBERS DESCRIPTION FILING
- --------- ------------------------------------------------------------------------------ -------------
<C> <S> <C>
4.1 Indenture dated December 23, 1998 between Registrant, as Issuer, and United
States Trust Company of New York, as Trustee. (1) [4.1]
4.2 Form of Note under Indenture (contained in Exhibit 4.1 hereto). (1) [4.1]
4.3 Pledge Agreement dated December 23, 1998 between Registrant, as Pledgor, and
NationsBanc Montgomery Securities LLC, Lehman Brothers, Inc., First Union
Capital Markets, a division of Wheat First Securities, Inc. and TD
Securities (USA) Inc., as Initial Purchasers, and United States Trust
Company of New York, as Trustee. (4)
4.4 Registration Rights Agreement dated December 23, 1998 between Registrant and
NationsBanc Montgomery Securities LLC, Lehman Brothers Inc., First Union
Capital Markets, a division of Wheat First Securities, Inc. and TD
Securities (USA) Inc. (4)
4.5 Credit Agreement among the Agents and Lenders named therein and Dobson/Sygnet
Operating Company, dated as of December 23, 1998. (4)
5 Opinion of McAfee & Taft A Professional Corporation. (4)
10.1 Asset Purchase Agreement dated December 23, 1998 by and between Sygnet
Communications, Inc. and Dobson Tower Company. (4)
10.2 Master Site License Agreement dated December 23, 1998 by and between Sygnet
Communications, Inc. and Dobson Tower Company. (4)
10.3.1 Cellular One License Agreement effective December 1, 1996, between Cellular
One Group and Erie Cellular Telephone Company. **
10.3.2 Cellular One License Agreement, effective as of December 17, 1996, between
Cellular One Group and Sygnet Communications, Inc. (PA-1). **
10.3.3 Cellular One License Agreement, effective as of November 7, 1996, between
Cellular One Group and Sygnet Communications, Inc. (PA-6). **
10.3.4 Cellular One License Agreement, effective as of January 30, 1997, between
Cellular One Group and Sygnet Communications, Inc. (PA-7). **
10.3.5 Cellular One License Agreement, effective as of January 1, 1997, between
Cellular One Group and Sygnet Communications, Inc. (NY-3). **
10.4 Intercarrier Services Agreement dated April 25, 1995 between Youngstown
Cellular Telephone Company and EDS Personal Communications Corporation, with
Amendment dated April 10, 1996. (3) [10.13]
10.4.1 Amendment No. 2 dated August 1, 1997 to Intercarrier Services Agreement dated
April 25, 1995 between Youngstown Cellular Telephone Company and EDS
Personal Communications Corporation. (4)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT METHOD OF
NUMBERS DESCRIPTION FILING
- --------- ------------------------------------------------------------------------------ -------------
<C> <S> <C>
10.5 Northern Telecom, Inc. DMS-MTX Cellular Supply Agreement dated June 1, 1996
between Youngstown Cellular Telephone Company and Northern Telecom, Inc. (3) [10.12]
10.5.1 Amendment No. 1 dated April 15, 1998 to Northern Telecom, Inc. DMS-MTX
Cellular Supply Agreement dated June 1, 1996 between Youngstown Cellular
Telephone Company and Northern Telecom, Inc. (4)
10.6* Consulting Agreement, dated December 21, 1998 between Dobson Communications
Corporation and Albert H. Pharis, Jr. (4)
12 Ratio of earnings to combined fixed charges and preferred stock dividends. (4)
21 Subsidiaries. (4)
23.1 Consent of McAfee & Taft A Professional Corporation will be contained in
Exhibit 5 hereto. (4) [5]
23.2 Consent of Arthur Andersen LLP (Oklahoma City -- DSCC). (4)
23.3 Consent of Ernst & Young LLP (Cleveland--Sygnet). (4)
24 Power of Attorney. (4)
27 Financial Data Schedule. (4)
99.1 Letter of Transmittal. (4)
99.2 Notice of Guarantee of Delivery. (4)
99.3 Guidelines for Certification of Taxpayer Identification Number. (4)
99.4 Company letter. (4)
99.5 Client letter. (4)
99.6 Instruction to Beneficial Holders. (4)
</TABLE>
- ------------------------
* Management contract or compensatory plan or arrangement.
** To be filed by amendment.
(1) Filed as an exhibit to the Current Report on Form 8-K of Dobson
Communications Corporation (333-23769) filed on January 7, 1999, as the
exhibit number indicated in brackets and incorporated by reference herein.
(2) Filed as an exhibit to the Quarterly Report of Sygnet Wireless, Inc.
(333-10161) on Form 10-Q for the quarterly period ended June 30, 1998, as
the exhibit number indicated in brackets and incorporated by reference
herein.
(3) Filed as an exhibit to the Sygnet Wireless, Inc. Registration Statement on
Form S-1 (Registration No. 333-10161), as the exhibit number indicated in
brackets and incorporated by reference herein.
(4) Filed herewith.
(b) Financial Statement Schedules
None.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
II-3
<PAGE>
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registration pursuant to the provisions described under Item 20, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnifications against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amended Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Oklahoma City,
State of Oklahoma, on the 22 day of January, 1999.
<TABLE>
<S> <C> <C>
DOBSON/SYGNET COMMUNICATIONS COMPANY
By: /s/ Everett R. Dobson
-----------------------------------------
Everett R. Dobson
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 22 day of January, 1999.
NAME TITLE
- ------------------------------ ----------------------------------------
/s/ Everett R. Dobson Chairman of the Board, President and
- ------------------------------ Chief Executive Officer (Principal
Everett R. Dobson Executive Officer) and Director
/s/ Stephen T. Dobson Secretary and Director
- ------------------------------
Stephen T. Dobson
/s/ Bruce R. Knooihuizen Vice President and Chief Financial
- ------------------------------ Officer (Principal Financial Officer)
Bruce R. Knooihuizen
/s/ Trent LeForce Corporate Controller (Principal
- ------------------------------ Accounting Officer)
Trent LeForce
Director
- ------------------------------
Russell L. Dobson
/s/ Justin L. Jaschke Director
- ------------------------------
Justin L. Jaschke
/s/ Albert H. Pharis, Jr. Director
- ------------------------------
Albert H. Pharis, Jr.
Director
- ------------------------------
Dana L. Schmaltz
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT METHOD OF
NUMBERS DESCRIPTION FILING
- --------- ------------------------------------------------------------------------------ -------------
<C> <S> <C>
2.1 Agreement and Plan of Merger dated July 28, 1998 between Sygnet Wireless, Inc.
and Dobson/Sygnet Operating Company (formerly known as Front Nine Operating
Company) (without schedules). (1) [2.0]
2.2 Purchase Agreement dated July 8, 1998 by and between Sygnet Communications,
Inc. and Pinellas Communications. (2) [10.32]
2.3 Asset Acquisition Agreement dated July 11, 1996 among Horizon Cellular
Telephone Company of Chantaugua, L.P., Horizon Cellular Telephone Company of
Crawford, L.P. and Sygnet Communications, Inc. (3) [10.17]
2.4 Agreement for Purchase of Partnership Interest dated September 15, 1995 by and
between Sygnet Communications, Inc. and Erie Cellular Systems, Inc.
(formerly McCaw Communications of Erie, Inc.). (3) [10.18]
2.5 Agreement to Furnish Schedules. (4)
3.1 Registrant's Amended Certificate of Incorporation. (4)
3.2 Registrant's Amended Bylaws. (4)
4.1 Indenture dated December 23, 1998 between Registrant, as Issuer, and United
States Trust Company of New York, as Trustee. (1) [4.1]
4.2 Form of Note under Indenture (contained in Exhibit 4.1 hereto). (1) [4.1]
4.3 Pledge Agreement dated December 23, 1998 between Registrant, as Pledgor, and
NationsBanc Montgomery Securities LLC, Lehman Brothers, Inc., First Union
Capital Markets, a division of Wheat First Securities, Inc. and TD
Securities (USA) Inc., as Initial Purchasers, and United States Trust
Company of New York, as Trustee. (4)
4.4 Registration Rights Agreement dated December 23, 1998 between Registrant and
NationsBanc Montgomery Securities LLC, Lehman Brothers Inc., First Union
Capital Markets, a division of Wheat First Securities, Inc. and TD
Securities (USA) Inc. (4)
4.5 Credit Agreement among the Agents and Lenders named therein and Dobson/Sygnet
Operating Company, dated as of December 23, 1998. (4)
5 Opinion of McAfee & Taft A Professional Corporation. (4)
10.1 Asset Purchase Agreement dated December 23, 1998 by and between Sygnet
Communications, Inc. and Dobson Tower Company. (4)
10.2 Master Site License Agreement dated December 23, 1998 by and between Sygnet
Communications, Inc. and Dobson Tower Company. (4)
10.3.1 Cellular One License Agreement effective December 1, 1996, between Cellular
One Group and Erie Cellular Telephone Company. **
10.3.2 Cellular One License Agreement, effective as of December 17, 1996, between
Cellular One Group and Sygnet Communications, Inc. (PA-1). **
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT METHOD OF
NUMBERS DESCRIPTION FILING
- --------- ------------------------------------------------------------------------------ -------------
<C> <S> <C>
10.3.3 Cellular One License Agreement, effective as of November 7, 1996, between
Cellular One Group and Sygnet Communications, Inc. (PA-6). **
10.3.4 Cellular One License Agreement, effective as of January 30, 1997, between
Cellular One Group and Sygnet Communications, Inc. (PA-7). **
10.3.5 Cellular One License Agreement, effective as of January 1, 1997, between
Cellular One Group and Sygnet Communications, Inc. (NY-3). **
10.4 Intercarrier Services Agreement dated April 25, 1995 between Youngstown
Cellular Telephone Company and EDS Personal Communications Corporation, with
Amendment dated April 10, 1996. (3) [10.13]
10.4.1 Amendment No. 2 dated August 1, 1997 to Intercarrier Services Agreement dated
April 25, 1995 between Youngstown Cellular Telephone Company and EDS
Personal Communications Corporation. (4)
10.5 Northern Telecom, Inc. DMS-MTX Cellular Supply Agreement dated June 1, 1996
between Youngstown Cellular Telephone Company and Northern Telecom, Inc. (3) [10.12]
10.5.1 Amendment No. 1 dated April 15, 1998 to Northern Telecom, Inc. DMS-MTX
Cellular Supply Agreement dated June 1, 1996 between Youngstown Cellular
Telephone Company and Northern Telecom, Inc. (4)
10.6* Consulting Agreement, dated December 23, 1998 between Dobson Communications
Corporation and Albert H. Pharis, Jr. (4)
12 Ratio of earnings to combined fixed charges and preferred stock dividends. (4)
21 Subsidiaries. (4)
23.1 Consent of McAfee & Taft A Professional Corporation will be contained in
Exhibit 5 hereto. (4) [5]
23.2 Consent of Arthur Andersen LLP (Oklahoma City -- DSCC). (4)
23.3 Consent of Ernst & Young LLP (Cleveland--Sygnet). (4)
24 Power of Attorney. (4)
27 Financial Data Schedule. (4)
99.1 Letter of Transmittal. (4)
99.2 Notice of Guarantee of Delivery. (4)
99.3 Guidelines for Certification of Taxpayer Identification Number. (4)
99.4 Company letter. (4)
99.5 Client letter. (4)
99.6 Instruction to Beneficial Holders. (4)
</TABLE>
- ------------------------
* Management contract or compensatory plan or arrangement.
** To be filed by amendment.
<PAGE>
(1) Filed as an exhibit to the Current Report on Form 8-K of Dobson
Communications Corporation (333-23769) filed on January 7, 1999, as the
exhibit number indicated in brackets and incorporated by reference herein.
(2) Filed as an exhibit to the Quarterly Report of Sygnet Wireless, Inc.
(333-10161) on Form 10-Q for the quarterly period ended June 30, 1998, as
the exhibit number indicated in brackets and incorporated by reference
herein.
(3) Filed as an exhibit to the Sygnet Wireless, Inc. Registration Statement on
Form S-1 (Registration No. 333-10161), as the exhibit number indicated in
brackets and incorporated by reference herein.
(4) Filed herewith.
<PAGE>
DOBSON/SYGNET COMMUNICATIONS COMPANY
13439 NORTH BROADWAY EXTENSION
OKLAHOMA CITY, OKLAHOMA 73114
January 22, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Unfiled Schedules
Ladies and Gentlemen:
Dobson/Sygnet Communications Company (the "Company") is a party to
certain plans of acquisition, reorganization, arrangement, liquidation or
succession filed herewith. The Company has not filed, and may not file in the
future the schedules or similar attachments to all of these exhibits.
Pursuant to Item 601(b)(2) of Regulation S-K, the Company hereby agrees to
furnish the Commission a copy of any such unfiled schedules or similar
attachments upon request.
Very truly yours,
/s/ Bruce R. Knooihuizen
------------------------------
Bruce R. Knooihuizen
Vice President and Chief
Financial Officer
-5-
<PAGE>
CERTIFICATE OF INCORPORATION
OF
FRONT NINE HOLDINGS, INC.
FIRST: The name of the corporation is FRONT NINE HOLDINGS, INC..
SECOND: The address of the corporation's registered office in the State
of Oklahoma is 13439 North Broadway Extension, Oklahoma City, Oklahoma,
73114. The name of the corporation's registered agent at such address is
Everett R. Dobson.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the general
corporation law of the State of Oklahoma.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is 500 shares, with a par value of $1.00 per share,
all of which shall be Common Stock.
The Board of Directors of the corporation shall have full authority, to
the extent permitted by law, to increase, decrease or otherwise adjust the
capital stock of the corporation, to designate the classes or series thereof
and to determine whether all or any part of such stock shall have voting
powers, full or limited, or no voting powers, and to determine such
designations, and such powers, preferences, relative, participating or
optional, or other special rights and the qualifications, limitations or
restrictions thereof as the Board shall from time to time determine in duly
adopted resolutions.
At any time and from time to time when authorized by resolution of the
Board of Directors and without any action by its shareholders, the
corporation may issue or sell any shares of its capital stock of any class or
series, whether out of the unissued shares thereof authorized by the
Certificate of Incorporation of the corporation as originally filed or by an
amendment thereof or out of shares of its capital stock acquired by it after
the issue thereof, and whether or not the shares thereof so issued or sold
shall confer upon the holders thereof the right to exchange or convert such
shares for or into other classes or any series thereof. When similarly
authorized, but without any action by its shareholders, the corporation may
issue or grant rights, warrants or options, in bearer or registered or such
other form as the Board of Directors may determine, for the purchase of
shares of the capital stock of any class or series of the corporation within
such period of time, or without limit as to time, to such aggregate number of
shares, and at such price per share, as the board of Directors may determine.
Such rights, warrants or options may be issued or granted separately or in
connection with the issue of any bonds, debentures, notes, obligations or
other evidences of indebtedness or shares of the capital stock of any class
or series of the corporation and for such consideration and
<PAGE>
on such terms and conditions as the Board of Directors in its sole discretion
may determine. In each case, the consideration to be received by the
corporation for any such shares so issued or sold shall be such as shall be
fixed from time to time by resolution of the Board of Directors.
FIFTH: The name and mailing address of the incorporator is as follows:
<TABLE>
<CAPTION>
Name Mailing Address
---- ---------------
<S> <C>
Stuart A. Knarr Two Leadership Square, Suite 418
211 N. Robinson
Oklahoma City, OK 73102
</TABLE>
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
(a) To adopt, amend or repeal the Bylaws of the corporation;
(b) To authorize and cause to be executed or granted mortgages,
security interests and liens upon the real and personal property of the
corporation;
(c) To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose and to abolish
any such reserve in the manner in which it was created;
(d) By a majority of the whole Board of Directors, to designate one
or more committees, each committee to consist of one (1) or more of the
directors of the corporation. The board may designate one (1) or more
directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution or in the Bylaws of the
corporation, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers
which may require it; provided, however, the Bylaws may provide that in the
absence or disqualification of any member of such committee or committees,
the member or members thereof present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in
the place of any such absent or disqualified member; and
(e) When and as authorized by the affirmative vote of
<PAGE>
the holders of a majority of the stock issued and outstanding having
voting power given at a shareholders' meeting duly called upon such
notice as is required by law, or when authorized by the written consent
of the holders of a majority of the voting stock issued and outstanding,
to sell, lease or exchange all or substantially all of the property and
assets of the corporation, including its goodwill and its corporate
franchises, upon such terms and conditions and for such consideration,
which may consist in whole or in part of other securities of, any other
corporation or corporations, as its Board of Directors shall deem
expedient and for the best interests of the corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its shareholders or any class of them, any court of equitable
jurisdiction within the State of Oklahoma, on the application in a summary
way of this corporation or of any creditor or shareholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 1106 of Title 18 of the Oklahoma Statutes or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 1100 of Title
18 of the Oklahoma Statutes order a meeting of the creditors or class of
creditors, and/or of the shareholders or class of shareholders of this
corporation, as the case may be, to be summoned in such manner as the court
directs. If a majority in number representing three-fourths (3/4ths) in
value of the creditors or class of creditors, and/or of the shareholders or
class of shareholders of this corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this corporation as
consequence of such compromise or arrangement, the compromise or arrangement
and the reorganization shall, if sanctioned by the court to which the
application has been made, be binding on all the creditors or class of
creditors and/or on all the shareholders or class of shareholders of this
corporation, as the case may be, and also this corporation.
EIGHTH: Meetings of shareholders may be held within or out of the State
of Oklahoma, as the Bylaws may provide. The books of the corporation may be
kept (subject to applicable law) inside or outside the State of Oklahoma at
such place or places as may be designated from time to time by the Board of
Directors or in the Bylaws of the corporation. Elections of directors need
not be by written ballot unless the Bylaws of the corporation shall so
provide.
NINTH: To the extent permitted by law, no contract or transaction
between the corporation and one or more of its directors or officers, or
between the corporation and any other corporation, partnership, association
or other organization in which one or more of its directors or officers are
directors or officers or have a financial interest, shall be void or voidable
<PAGE>
solely for this reason, or solely because the directors or officers are
present at or participate in the meeting of the board or committee thereof
which authorized the contract or transaction, or solely because the directors
or officers or their votes are counted for such purpose.
TENTH: A director of the corporation shall not be personally liable to
the corporation or its shareholders for damages for breach of fiduciary duty
as a director, except for personal liability for (i) acts or omissions by
such director not in good faith or which involve intentional misconduct or a
knowing violation of law; (ii) the payment of dividends or the redemption or
purchase of stock in violation of Section 1041 or Section 1052 of the Act;
(iii) any breach of such director's duty of loyalty to the corporation or its
shareholders; or (iv) any transaction from which such director derived an
improper personal benefit.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding, if he acted in good faith and in a manner he reasonably believed
to be in the best interest of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not itself create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in, or
not opposed to, the best interests of the corporation and with respect to any
criminal action or proceeding had reasonable cause to believe that his
conduct was unlawful.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interest of the corporation; except that no indemnification
<PAGE>
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought
shall determine, upon application, that despite the adjudication of
liability, but in the view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the
court shall deem proper.
Expenses, including fees and expenses of counsel, incurred in defending
a civil, criminal, administrative or investigative action, suit or proceeding
may be paid by the corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized herein.
The corporation may purchase (upon resolution duly adopted by the Board
of Directors) and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability.
To the extent that a director, officer, employee or agent of, or any
other person entitled to indemnity hereunder by, the corporation has been
successful on the merits or otherwise in defense of any action, suit, or
proceeding referred to herein or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorney's
fees) actually and reasonably incurred by him in connection therewith.
Every such person shall be entitled, without demand by him upon the
corporation or any action by the corporation, to enforce his right to such
indemnity in an action at law against the corporation. The right of
indemnification and advancement of expenses hereinabove provided shall not be
deemed exclusive of any rights to which any such person may now or hereafter
be otherwise entitled and specifically, without limiting the generality of
the foregoing, shall not be deemed exclusive of any rights pursuant to
statute or otherwise, of any such person in any such action, suit or
proceeding to have assessed or allowed in his favor against the corporation
or otherwise, his costs and expenses incurred therein or in connection
therewith or any part thereof.
ELEVENTH: In furtherance and not in limitation of the powers conferred
by the laws of the State of Oklahoma, the Board of Directors is expressly
authorized to adopt, amend or repeal the
<PAGE>
Bylaws of the corporation.
TWELFTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by law, and all rights conferred upon the
shareholders herein are granted subject to this reservation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the Oklahoma General Corporation
Act, make this Certificate, hereby declaring and certifying that this is the
act and deed of the undersigned and that the facts herein stated are true, as
of January 13, 1999.
/s/ Stuart A. Knarr
------------------------------
STUART A. KNARR, INCORPORATOR
<PAGE>
AMENDMENT OF CERTIFICATE OF INCORPORATION
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
101 State Capitol Building
Oklahoma City, Oklahoma 73105
The undersigned, G. Edward Evans and Stephen T. Dobson, certify that
they are the President and Secretary, respectively, of Front Nine Holdings
Company, a corporation organized and existing under the laws of the State of
Oklahoma (the "Corporation"), and do hereby further certify as follows:
1. This Amendment of Certificate of Incorporation was duly adopted in
accordance with the provisions of Section 1077 of the General
Corporation Act (the "Act") by Joint Consent of the Directors and Sole
Shareholder of Front Nine Holdings Company in accordance with Section
1027 and Section 1073 of the Act.
2. The name of the Corporation is to be changed from Front Nine Holdings
Company to:
Dobson/Sygnet Holdings Company
IN WITNESS WHEREOF, said Corporation has caused this certificate to be
signed by its President and attested by its Secretary, this _____ day of
August, 1998.
By: /s/ G. Edward Evans
--------------------------------
G. Edward Evans, President
ATTEST:
/s/ Stephen T. Dobson
- ----------------------------
Stephen T. Dobson, Secretary
(SEAL)
<PAGE>
AMENDMENT OF CERTIFICATE OF INCORPORATION
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
101 State Capitol Building
Oklahoma City, Oklahoma 73105
The undersigned, G. Edward Evans and Stephen T. Dobson, certify that
they are the President and Secretary, respectively, of Dobson/Sygnet Holdings
Company, a corporation organized and existing under the laws of the State of
Oklahoma (the "Corporation"), and do hereby further certify as follows:
1. This Amendment of Certificate of Incorporation was duly adopted in
accordance with the provisions of Section 1077 of the General
Corporation Act (the "Act") by Joint Consent of the Directors and Sole
Shareholder of Dobson/Sygnet Holdings Company in accordance with
Section 1027 and Section 1073 of the Act.
2. The name of the Corporation is to be changed from Dobson/Sygnet
Holdings Company to:
Dobson/Sygnet Communications Company
IN WITNESS WHEREOF, said Corporation has caused this certificate to be
signed by its President and attested by its Secretary, this 30th day of
November, 1998.
By: /s/ G. Edward Evans
--------------------------------
G. Edward Evans, President
ATTEST:
/s/ Stephen T. Dobson
- ----------------------------
Stephen T. Dobson, Secretary
(SEAL)
<PAGE>
BYLAWS
OF
DOBSON/SYGNET COMMUNICATIONS COMPANY,
F/K/A DOBSON/SYGNET HOLDINGS COMPANY,
F/K/A FRONT NINE HOLDINGS, INC.
<PAGE>
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Oklahoma City,
County of Oklahoma, State of Oklahoma.
Section 2. The corporation may also have offices at such other places
both within and out of the State of Oklahoma as the Board of Directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. With respect to voting powers, except as otherwise required
by the Oklahoma General Corporation Act, the voting rights of all shares are
as set forth in the Certificate of Incorporation, as may be amended, on file
with the Oklahoma Secretary of State.
Section 2. Meetings of shareholders for any purpose may be held at such
time and place, within or without the State of Oklahoma, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 3. Annual meetings of shareholders, commencing with the year
1999, shall be held on the second Tuesday of April, if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 9:00 a.m.,
or at such time or date as shall be determined by Board of Directors. At the
annual meeting, shareholders shall elect a board of directors, and transact
such other business as may be properly brought before the meeting.
Section 4. Written notice of the annual meeting, stating the place,
date and hour of such meeting, shall be given to each shareholder entitled to
vote thereat not less than ten (10) days nor more than sixty (60) days before
the date of the meeting unless otherwise required by law.
Section 5. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten (10) days before every
meeting of shareholders, a complete list of the shareholders entitled to vote
at the meeting, arranged in alphabetical order, showing the address of and
the number of shares registered in the name of each shareholder. Such list
shall be open to the examination of any shareholder, for any purpose germane
to the meeting, during ordinary business hours, for a period of at least ten
(10) days prior to the election, either at a place within the city where the
meeting is to be held or at the place where the meeting is to be held, and
the list
<PAGE>
shall be produced and kept at the time and place of the meeting during the
whole time thereof, and subject to the inspection of any shareholder who may
be present.
Section 6. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by law or by the Certificate of
Incorporation, may be called by the Chairman of the Board of Directors or the
President and shall be called by the President or Secretary at the request in
writing of a majority of the Board of Directors, or at the request in writing
of shareholders owning a majority in amount of the entire capital stock of
the corporation issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting.
Section 7. Written notice of a special meeting of shareholders, stating
the place, date, hour and the purpose or purposes thereof, shall be given to
each shareholder entitled to vote thereat, not less than ten (10) days nor
more than sixty (60) days before the date fixed for the meeting unless
otherwise required by law. Business transacted at any special meeting of the
shareholders shall be limited to the purposes stated in the notice.
Section 8. The chairman of any meeting of shareholders or the holders
of a majority of the outstanding shares entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting;
provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date of which the meeting was originally noticed,
or if a new record date is fixed for the adjourned meeting, written notice of
the place, date and hour of the adjourned meeting shall be given in
conformity herewith. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted at the meeting as
originally noticed.
Section 9. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise provided by law or by the
Certificate of Incorporation. Where a separate vote by a class or classes
is required, a majority of the outstanding shares of such class or classes,
present in person or represented by proxy, shall constitute a quorum entitled
to take action with respect to the vote on that matter.
Section 10. When a quorum is present at any meeting, the affirmative
vote of the holders of a majority of the shares of stock having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which, by express
provision of law or of the Certificate of Incorporation, a different vote is
<PAGE>
required, in which case such express provision shall govern and control the
decision of such question.
Section 11. Each shareholder entitled to vote shall at every meeting of
the shareholders be entitled to vote in person or by proxy , but no proxy
shall be voted or acted upon after three (3) years from its date unless the
proxy provides for a longer period.
Section 12. Any action required to or which may be taken at any annual
or special meeting of the shareholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding
stock having not less than a minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action by the shareholders without a meeting by less than unanimous
written consent shall be given to those shareholders who have not consented
in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
Board shall not be less than one (1) nor more than seven (7). The initial
Board shall consist of five (5). Thereafter, within the limits above
specified, the number of directors shall be determined by resolution of the
Board of Directors or by the shareholders at the annual or a special meeting
of the shareholders. Except for the election held by the incorporator and
except as provided in Section 2 and in Section 14 of this Article III, the
directors shall be elected at the annual meeting of shareholders. Each
director elected shall hold office until such director's successor is elected
and qualified, or until such director's earlier resignation or removal.
Directors need not be shareholders.
Section 2. Except as provided in Section 14 of this Article III,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors by the directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and any director so chosen shall hold office until the
next annual election and until such director's successor is duly elected and
shall qualify, unless such director resigns or is removed.
Section 3. The business of the corporation shall be managed by its
Board of Directors which may exercise all such powers of the corporation and
do all such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these Bylaws directed or required to be exercised or done
by the shareholders.
Section 4. The Board of Directors of the corporation may
<PAGE>
hold meetings, both regular and special, either within or without the State
of Oklahoma.
Section 5. 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. Five (5) days' notice of all regular meetings shall be given, and such
notice shall state the place, date, hour and the business to be transacted at
and purpose of such meeting.
Section 6. Special meetings of the Board may be called by the President
on three (3) days' notice to each director either personally, by mail, by
telegram or by facsimile transmission. Special meetings shall be called by
the President or Secretary in like manner and on like notice on the written
request of two (2) directors unless the corporation has at that time less
than three (3) directors, in which latter event the request of only one (1)
director shall be required. Notice of any special meeting shall state the
place, date, hour and the business to be transacted at and the purpose of
such meeting.
Section 7. At all meetings of the Board, a majority of the directors
shall constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meetings at which there is a quorum
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, without
notice other than announcement at the meeting, until a quorum shall be
present.
Section 8. The Board of Directors may, by resolution, passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of one (1) or more of the directors of the corporation, which, to
the extent provided in the resolution and permitted by the Oklahoma General
Corporation Act, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers
which may require it. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the
Board of Directors.
Section 9. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.
Section 10. Members of the Board of Directors, or of any committee
thereof, may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment that enables all
persons participating in the meeting to hear each other. Such participation
shall
<PAGE>
constitute presence in person at such meeting.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting, if a written consent of such action is signed by all
members of the Board or of such committee as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.
Section 12. The directors may be paid their expenses, if any, of
attendance of such meeting of the Board of Directors and may be paid a fixed
sum for attendance at such meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefore.
Members of special or standing committees may be allowed like compensation
for attending committee meetings.
Section 13. The Board of Directors at any time may, by affirmative vote
of a majority of the members of the Board then in office, remove any officer
elected or appointed by the Board of Directors for cause or without cause.
Section 14. Any director may be removed, for cause or without cause, by
a majority vote of the shareholders entitled to vote for the election of such
director at any annual or special meeting of the shareholders. Upon such
removal of a director, the shareholders (and not the remaining directors)
shall elect a director to replace such removed director at the same
shareholders' meeting at which such removal took place or at a subsequent
shareholders' meeting.
ARTICLE IV
NOTICES
Section 1. Notices of directors and shareholders shall be in writing
and delivered personally or mailed to the directors or shareholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be deposited in the United
States mail, postage prepaid. Notice to directors may also be given by
telegram or facsimile transmission. Notice by telegram shall be deemed to be
given when delivered to the sending telegraph office. Notice by facsimile
transmission shall be deemed to be given when received.
Section 2. Whenever any notice is required to be given under the
provisions of law or of the Certificate of Incorporation or by these Bylaws,
a waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time
<PAGE>
stated therein, shall be deemed equivalent to notice.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board
of Directors and shall, at a minimum, consist of a President and a Secretary.
The Board of Directors may also choose additional officers, including a
Chairman, Vice-Chairman of the Board of Directors, one or more
Vice-Presidents who may be classified by their specific function, a
Secretary, a Treasurer and one or more Assistant Secretaries and Assistant
Treasurers. Two or more offices may be held by the same person, except the
offices of President and Secretary.
Section 2. The Board of Directors at its first meeting and after each
annual meeting of shareholders shall choose a Chairman of the Board of
Directors, a President and a Secretary, and may choose such other officers
and agents as it shall deem necessary.
Section 3. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 4. The officers of the corporation shall hold office until
their successors are chosen and qualify, until their earlier resignation or
removal. Any vacancy occurring in any office of the corporation shall be
filled by the Board of Directors.
Section 5. The Chairman, or, in the absence of the Chairman, a
Vice-Chairman of the Board of Directors, if chosen, shall preside at all
meetings of the Board of Directors, and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe. If the Board of Directors designates the Chairman of the Board to
act as Chief Executive Officer, such duties shall be performed by such
person.
Section 6. The President, shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and, unless a
Chairman or Vice-Chairman of the Board has been chosen, be at all meetings of
the Board of Directors, and shall have general and active management of the
business of the corporation and shall see that all orders and resolutions of
the Board of Directors, are carried into effect. If the Board of Directors
designates the Chairman of the Board to act as Chief Executive Officer, the
President shall serve as Chief Operating Officer of the corporation.
Section 7. The President shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
<PAGE>
Section 8. The Vice-President, or if there shall be more than one, the
Vice-Presidents in the order determined by the Board of Directors, shall, in
the absence or disability of the President, perform the duties and exercise
the powers of the President and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
Section 9. The Secretary shall attend the meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings
of the meetings of the corporation and the Board of Directors 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 regular and special meetings
of the Board of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, under whose supervision
the Secretary shall be. Additionally, the Secretary shall have custody of the
corporate seal of the corporation, and the Secretary or an Assistant
Secretary, shall have the authority to affix the same on any instrument
requiring it, and when so affixed, it may be attested by the Secretary's
signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal
of the corporation and to attest the affixing by the Secretary's signature.
Section 10. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the 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 and
have such other powers as the Board of Directors from time to time prescribe.
Section 11. The Treasurer, if one is chosen, or if not, the Secretary,
shall have the custody of the corporate funds and securities and shall keep
full and accurate accounts of receipts and disbursements in books belonging
to the corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the corporation in such depositories as may be
designated by the Board of Directors.
Section 12. The Treasurer, if one is chosen, or if not, the Secretary,
shall disburse the funds of the corporation as may be ordered by the Board of
Directors' taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at its regular meetings, or when
the Board of Directors so requires, an account of all transactions performed
by the Treasurer (or Secretary, as the case may be) and of the financial
condition of the corporation.
Section 13. If required by the Board of Directors, the Treasurer, if
one is chosen or, if not, the Secretary, shall give the corporation a bond
(which shall be renewed every six (6)
<PAGE>
years) in such sum and with such surety or sureties as shall be satisfactory
to the Board of Directors for the faithful performance of the duties of the
office of a treasurer and for the restoration to the corporation, in case of
the Treasurer's (or Secretary's, as the case may be) death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in the possession or under the control of the
Treasurer (or Secretary, as the case may be) belonging to the corporation.
Section 14. The Assistant Treasurer, or if there shall be more than
one, the Assistant Treasurers in the order determined by the Board of
Directors, 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 and have such other powers as the Board of Directors may from time to
time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFERS OF STOCK
CLOSING OF TRANSFER BOOKS AND
REGISTERED SHAREHOLDERS
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, or the President or a
Vice-President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the corporation, certifying the number
of shares owned by the shareholder in the corporation.
Section 2. Any or all of the signatures on the certificate may be a
facsimile. In case an officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same
effect as if the person who signed the certificate was such officer, transfer
agent or registrar at the date of issue.
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or such owner's legal representative, advertise the same in
such manner as the corporation shall require and/or to give the corporation a
bond in such sum as the corporation may direct as indemnity against any claim
that may be made against the corporation with respect to the
<PAGE>
certificate alleged to have been lost, stolen or destroyed.
Section 4. Subject to transfer restrictions permitted by Section 1055
of title 18 of the Oklahoma Statutes and to stop transfer orders directed in
good faith by the corporation to any transfer agent to prevent possible
violations of federal or state securities laws, rules or regulations, upon
surrender to the corporation or the transfer agent of corporation 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
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 5. The Board of Directors may fix a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of
any meeting of shareholders, nor more than sixty (60) days prior to the time
for the other action hereinafter described, as of which there shall be
determined the shareholders who are entitled: to notice of or to vote at any
meeting of shareholders or any adjournment thereof; to express consent to
corporate action in writing without a meeting; to receive payment of any
dividend or other distribution or allotment of any rights; or to exercise any
rights with respect to any other lawful action.
Section 6. The corporation shall be entitled to treat the person in
whose name any share of stock is registered on the books of the corporation
as the owner thereof for all purposes and shall not be bound to recognize any
equitable or other claim or other interest in such shares in the part of any
other person, whether or not the corporation shall have express or other
notice thereof.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting,
pursuant to law.
Section 2. There may be set apart out of any of the funds of the
corporation available for dividends such amounts as the Board of Directors
deems proper as a reserve or reserves for working capital, depreciation,
losses in value, or for any other proper corporate purpose, and the Board of
Directors may increase, decrease or abolish any such reserve in the manner in
which it was created.
Section 3. The Board of Directors shall present at each annual meeting
and at any special meeting of the shareholders, when called for by vote of
the shareholders, a full and clear statement of the business and condition of
the corporation.
<PAGE>
Section 4. All checks and demands for money and notes of the
corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 5. The fiscal year of the corporation shall be as fixed by the
Board of Directors.
Section 6. The Board of Directors may provide a suitable seal,
containing the name of the corporation, which seal shall be in the charge of
the Secretary. If and when so directed by the Board of Directors or a
committee thereof, duplicates of the seal may be kept and used by the
Treasurer or by the Assistant Secretary or Assistant Treasurer. The seal may
be used by causing it, or a facsimile thereof, to be impressed or affixed or
in any other manner reproduced.
Section 7. The books of account and other records of the corporation
may be kept (subject to any provisions of Oklahoma law) at the principal
place of business and chief executive office of the corporation.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS
To the extent and in the manner permitted by the laws of the State of
Oklahoma and specifically as is permitted under Section 1031 of Title 18 of
the Oklahoma Statutes, the corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, including an action by or in the right of the corporation,
by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement.
ARTICLE IX
AMENDMENTS
The Bylaws may be amended and repealed, or new bylaws may be adopted, by
the shareholders or by the Board of Directors at any annual or special
meeting of the shareholders or of the Board of Directors if notice of such
amendment, repeal, or adoption of new bylaws be contained in the notice of
such meeting.
<PAGE>
APPROVED AND RATIFIED as this 26th day of July, 1998, by the undersigned,
constituting all of the directors of the corporation.
/s/ Russell L. Dobson
-----------------------------------
Russell L. Dobson, Director
/s/ Everett R. Dobson
-----------------------------------
Everett R. Dobson, Director
/s/ Stephen T. Dobson
-----------------------------------
Stephen T. Dobson, Director
/s/ Justin L. Jaschke
-----------------------------------
Justin L. Jaschke, Director
/s/ Thadeus J. Mocarski
-----------------------------------
Thadeus J. Mocarski, Director
<PAGE>
===============================================================================
COLLATERAL PLEDGE AND SECURITY AGREEMENT
Dated as of December 23, 1998
Between
DOBSON/SYGNET COMMUNICATIONS COMPANY
and
UNITED STATES TRUST COMPANY OF NEW YORK
===============================================================================
<PAGE>
COLLATERAL PLEDGE AND SECURITY AGREEMENT
This COLLATERAL PLEDGE AND SECURITY AGREEMENT (this "PLEDGE
AGREEMENT") is made and entered into as of December 23, 1998 by DOBSON/SYGNET
COMMUNICATIONS COMPANY, an Oklahoma corporation (the "PLEDGOR"), having its
principal office at 13439 N. Broadway Extension, Suite 200, Oklahoma City,
Oklahoma 73114, in favor of UNITED STATES TRUST COMPANY OF NEW YORK, a bank and
trust company organized under the New York banking law, having an office at 114
W. 47th Street, New York, New York 10036, as trustee (the "TRUSTEE") for the
holders (the "HOLDERS") of the Notes (as defined herein) issued by the Pledgor
under the Indenture referred to below. Capitalized terms used herein and not
otherwise defined herein shall have the meanings given to such terms in the
Indenture.
W I T N E S S E T H
WHEREAS, the Pledgor and United States Trust Company of New York, as
Trustee, have entered into that certain indenture dated as of the date hereof
(as amended, restated, supplemented or otherwise modified from time to time, the
"INDENTURE"), pursuant to which the Pledgor is issuing on the date hereof
$200,000,000 in aggregate principal amount of 121/4% Senior Notes due 2008 (the
"NOTES"); and
WHEREAS, the Pledgor has agreed, pursuant to the Indenture, to
deposit on the date hereof (the "CLOSING DATE") $67,561,539 (the "FUNDS") with
the Trustee to be held by the Trustee for the benefit of the Holders of the
Notes; and
WHEREAS, the Pledgor has opened a non-interest bearing collateral
account (the "COLLATERAL ACCOUNT") with United States Trust Company of New York
at its office at 114 W. 47th Street, New York, New York 10036, Account No.
04140400 in the name of "DOBSON/SYGNET COLLATERAL" but under the sole dominion
and control of the Trustee and subject to the terms of this Pledge Agreement;
and
WHEREAS, to secure the obligations of the Pledgor under the
Indenture and the Notes to provide for payment in full of the first six
scheduled interest payments due on the Notes and (ii) secure repayment of the
principal, premium (if any) and interest on the Notes in the event that the
Notes become due and payable prior to such time as the first six scheduled
interest payments thereon shall have been paid in full (collectively, the
"OBLIGATIONS"), the Pledgor has agreed (a) to pledge to the Trustee for its
benefit and the ratable benefit of the Holders of the Notes, a security interest
in the Collateral (as defined herein) and (b) to execute and deliver this Pledge
Agreement in order to secure the payment and performance by the Pledgor of all
the Obligations; and
WHEREAS, it is a condition precedent to the initial purchase of the
Notes by the initial Holders thereof that the Pledgor shall have granted the
security interest and made the pledge
<PAGE>
contemplated by this Pledge Agreement; and
WHEREAS, unless otherwise defined herein or in the Indenture, terms
used in Articles 8 or 9 of the Uniform Commercial Code ("UCC") as in effect in
the State of New York are used herein as therein defined.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and in order to induce the Holders of the Notes to purchase the
Notes, the Pledgor hereby agrees with the Trustee, for the benefit of the
Trustee and for the ratable benefit of the Holders of the Notes, as follows:
SECTION 1. CERTAIN DEFINITIONS; APPOINTMENT OF THE TRUSTEE;
PLEDGE AND GRANT OF SECURITY INTEREST; DEPOSIT OF FUNDS
1.1 CERTAIN DEFINITIONS.
"CASH EQUIVALENTS" means, to the extent owned free and clear of all
liens other than liens created hereunder, Government Securities.
"GOVERNMENT BOOK-ENTRY SECURITY" means Government Securities
maintained in book-entry form through the United States Federal Reserve
Banks pursuant to (A) the United States Treasury Department regulations
codified at 31 C.F.R. Part 357, as modified by the amendments promulgated
at 61 Fed. Reg. 43, 626-43, 638 (Aug. 23, 1996), or (B) substantially
identical regulations promulgated by any other agency or instrumentality of
the United States whose securities qualify as "Government Securities"
hereunder.
"GOVERNMENT SECURITIES" means direct obligations of, obligations
fully guaranteed by, or participations in pools consisting of obligations
of or obligations guaranteed by, the United States of America for the
payment of which guarantee or obligations the full faith and credit of the
United States of America is pledged and which are not callable or
redeemable at the option of the issuer thereof.
1.2 APPOINTMENT OF THE TRUSTEE. The Pledgor hereby appoints
United States Trust Company of New York as Trustee in accordance with the terms
and conditions set forth herein and the Trustee hereby accepts such appointment.
1.3 PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby
pledges to the Trustee for its benefit and for the ratable benefit of the
Holders of the Notes, and hereby grants to the Trustee for its benefit and for
the ratable benefit of the Holders of the Notes, a continuing first priority
security interest in and to all of the Pledgor's right, title and interest in,
to and under the
-2-
<PAGE>
following (hereinafter collectively referred to as the "COLLATERAL"), whether
characterized as investment property, general intangibles or otherwise: (a)
the Collateral Account, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing the
Collateral Account, and all Collateral Investments (as hereinafter defined)
and all certificates and instruments, if any, representing or evidencing the
Collateral Investments, and any and all security entitlements to the
Collateral Investments, and any and all related securities accounts in which
security entitlements to the Collateral Investments are carried, (b) all
notes, certificates of deposit, deposit accounts, checks and other
instruments from time to time hereafter delivered to or otherwise possessed
by the Trustee for or on behalf of the Pledgor in substitution for or in
addition to any or all the then existing Collateral, (c) all interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of the then existing Collateral, and (d) all proceeds of any and all of
the foregoing Collateral (including, without limitation, proceeds that
constitute property of the types described in clauses (a) - (d) of this
Section 1) and, to the extent not otherwise included, all cash.
1.4 DEPOSIT OF FUNDS. On the Closing Date, the Pledgor shall
direct that the Funds be deposited into the Collateral Account.
SECTION 2. SECURITY FOR OBLIGATION. This Pledge Agreement and
the grant of a security interest in the Collateral hereunder secures the prompt
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of all the Obligations. Without limiting the generality of the
foregoing, this Pledge Agreement and the grant of a security interest in the
Collateral hereunder secures the payment of all amounts that constitute part of
the Obligations and would be owed by the Pledgor to the Trustee or the Holders
under the Notes or the Indenture but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Pledgor.
SECTION 3. DELIVERY OF COLLATERAL. (a) All certificates or
instruments representing or evidencing the Collateral, including, without
limitation, amounts invested as provided in Section 5, shall be delivered to (as
set forth in Section 6) and held by or on behalf of the Trustee pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance sufficient to establish and maintain in favor of the Trustee a valid
security interest in such Collateral, and shall be credited to the Collateral
Account. In addition, the Trustee shall have the right at any time to exchange
certificates or instruments representing or evidencing the Collateral for
certificates or instruments of smaller or larger denominations.
(b) Concurrently with the execution and delivery of this Pledge
Agreement, the Trustee is delivering to the Pledgor and NationsBanc
Montgomery Securities LLC a duly executed Notification and Control
Agreement ("CONTROL AGREEMENT"), substantially in the form of EXHIBIT A
hereto, confirming the Trustee's establishment and separate maintenance of
the Collateral Account, all in accordance with this Pledge Agreement.
-3-
<PAGE>
SECTION 4. MAINTAINING THE COLLATERAL ACCOUNT. (a) So long as any
Obligation shall remain unpaid, the Trustee will maintain separately the
Collateral Account with United States Trust Company of New York, which account
shall at all times be under the sole dominion and control of the Trustee and
subject to the terms and conditions of this Pledge Agreement.
(b) It shall be a term and condition of the Collateral Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to the Collateral Account, and except as otherwise
provided by the provisions of Section 7 and Section 14 hereof, that no
amount (including interest on Collateral Investments) shall be paid or
released to or for the account of, or withdrawn by or for the account of,
the Pledgor or any other Person from the Collateral Account.
The Collateral Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
SECTION 5. INVESTING OF AMOUNTS IN THE COLLATERAL ACCOUNT. If
directed by the Pledgor in writing, the Trustee will, subject to the provisions
of Section 7 and Section 14 hereof, from time to time (a) invest amounts on
deposit in the Collateral Account in such Cash Equivalents, each in the name of
or for the account of the Trustee, as the Pledgor may select and the Trustee may
approve and (b) invest interest paid on the Cash Equivalents referred to in
clause (a) above, and reinvest other proceeds of any such Cash Equivalents that
may mature or be sold, in each case in such Cash Equivalents, each in the name
of or for the account of the Trustee, as the Pledgor may select and the Trustee
may approve (the Cash Equivalents referred to in clauses (a) and (b) above being
collectively "COLLATERAL INVESTMENTS"). The amount on deposit in the Collateral
Account must include Government Securities sufficient, in the opinion of a
nationally recognized firm of independent public accountants selected by the
Pledgor, to provide for the payment in full of the first six scheduled interest
payments on all of the Notes then outstanding. Interest and proceeds that are
not invested or reinvested in Collateral Investments as provided above shall be
deposited and held in the Collateral Account. The Trustee shall in no event be
liable for any loss in the investment or reinvestment of amounts held in the
Collateral Account.
SECTION 6. DELIVERY OF COLLATERAL INVESTMENTS. (a) The Trustee
shall become the holder of the Collateral Investments (and any applicable
security entitlements thereto) through the following delivery procedures:
(i) in the case of Collateral Investments which are certificated securities in
registered form, delivery of the applicable certificate(s), specially endorsed
to the Trustee or registered in the name of the Trustee or accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Trustee, to the possession of (A) the Trustee,
(B) a securities intermediary or financial intermediary acting on behalf of the
Trustee, or (C) another person, other than a securities intermediary or
financial intermediary, which person acknowledges that it holds for the Trustee;
(ii) in the case of Collateral
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Investments which are uncertificated securities, registration of one of the
following as owner of such uncertificated securities: the Trustee or a person
designated by the Trustee, or person other than a securities intermediary or
financial intermediary, that becomes the registered owner of such
uncertificated securities and acknowledges that it holds the same for the
Trustee; and (iii) in the case of Collateral Investments in the form of
Government Book-Entry Securities, the making by a financial intermediary or
securities intermediary (other than a clearing corporation) to whose account
such Government Book-Entry Securities have been credited on the books of a
Federal Reserve Bank (or on the books of another such financial intermediary
or securities intermediary (other than a clearing corporation)), of book
entries indicating that such Government Book-Entry Securities have been
credited to an account of the Trustee, and the sending by such financial
intermediary or securities intermediary to the Trustee of confirmation of
such transfer to the Trustee's account.
(b) Upon delivery of any Collateral Investments to the Trustee
(or the Trustee's acquisition of a security entitlement thereto), the
Trustee shall make appropriate book entries indicating that such Collateral
Investment and/or such security entitlement has been credited to and is
held in the Collateral Account. Subject to the terms and conditions of
this Pledge Agreement, all Collateral Investments held by the Trustee
pursuant to this Pledge Agreement shall be held in the Collateral Account
under the exclusive dominion and control of the Trustee and for the benefit
of the Trustee and the ratable benefit of the Holders of the Notes and
segregated from all other funds or other property otherwise held by the
Trustee.
SECTION 7. DISBURSEMENTS. The Trustee shall hold the assets in
the Collateral Account and release the same, or a portion thereof, only as
follows:
(a) At least three Business Days prior to the due date of any of
the first six scheduled interest payments on the Notes, the Pledgor may,
pursuant to written instructions executed by the Pledgor (an "ISSUER
ORDER"), direct the Trustee to release from the Collateral Account, and if
necessary liquidate Collateral Investments in the Collateral Account and
pay to the Holders of the Notes funds sufficient to provide for payment in
full of such interest then due on the Notes. Upon receipt of an Issuer
Order, the Trustee will take any action necessary to provide for the
payment of the interest on the Notes in accordance with the payment
provisions of the Indenture to the Holders of the Notes from (and to the
extent of) funds available in the Collateral Account.
(b) If the Pledgor makes any interest payment or portion of an
interest payment for which the Collateral is security from a source of
funds other than the Collateral Account ("PLEDGOR FUNDS"), the Pledgor may,
after payment in full of such interest payment or portion thereof from
proceeds of the Collateral or such Pledgor Funds or both, direct the
Trustee to release to the Pledgor or to another party at the direction of
the Pledgor (a "PLEDGOR DESIGNEE") funds from the Collateral Account, and
if necessary liquidate
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Collateral Investments in the Collateral Account, in an amount less than
or equal to the amount of Pledgor Funds applied to such interest
payment. Upon receipt of an Issuer Order by the Trustee, the Trustee
shall pay over to the Pledgor or the Pledgor's Designee, as the case may
be, the requested amount from funds in the Collateral Account.
Concurrently with any release of funds to the Pledgor pursuant to this
Section 7(b), the Pledgor shall deliver to the Trustee a certificate
signed by an officer of the Pledgor stating that such release has been
duly authorized by the Pledgor and will not contravene any provision of
applicable law or the Certificate of Incorporation of the Pledgor or any
material agreement or other material instrument binding upon the Pledgor
or any of its subsidiaries or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Pledgor
or any of its subsidiaries or result in the creation or imposition of
any Lien on any assets of the Pledgor, except for the security interest
granted under this Pledge Agreement.
(c) Upon payment in full of the first six scheduled interest
payments on the Notes, the security interest in the Collateral evidenced by
this Pledge Agreement will automatically terminate and be of no further
force and effect and the Collateral shall promptly be paid over and
transferred to the Pledgor or a Pledgor Designee. In addition, upon the
release of any Collateral from the Collateral Account in accordance with
the terms of this Pledge Agreement, the security interest evidenced by this
Pledge Agreement in such released Collateral will automatically terminate
and be of no further force and effect.
(d) The Trustee shall not be required to liquidate any Collateral
Investment in order to make any payment hereunder unless instructed to do
so pursuant to an Issuer Order or pursuant to Section 14 hereof.
(e) Nothing contained in Section 1, Section 5, Section 6, this
Section 7 or any other provision of this Pledge Agreement shall (i) afford
the Pledgor any right to issue entitlement orders with respect to any
security entitlement to any of the Collateral Investments or any securities
account in which any such security entitlement may be carried, or otherwise
afford the Pledgor control of any such security entitlement or
(ii) otherwise give rise to any rights of the Pledgor with respect to any
of the Collateral Investments, any security entitlement thereto or any
securities account in which any such security entitlement may be carried,
other than the Pledgor's beneficial interest under this Pledge Agreement in
collateral pledged to and subject to the exclusive dominion and control
(consistent with this Pledge Agreement) of the Trustee in its capacity as
such (and not as a securities intermediary). The Pledgor acknowledges,
confirms and agrees that the Trustee holds a security entitlement to the
Collateral Investments solely as trustee for the Holders of the Notes and
not as a securities intermediary or financial intermediary.
(f) Nothing in this Section 7 shall affect the Trustee's rights
to apply the Collateral to the payments of amounts due on the Notes upon
acceleration thereof.
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(g) At least three Business Days prior to the due date of any of
the first six scheduled interest payments on the Notes, the Pledgor
covenants to give the Trustee (by Issuer Order) notice as to whether
payment of interest will be made pursuant to Section 7(a) or Section 7(b)
and as to the respective amounts of interest that will be paid pursuant to
Section 7(a) or Section 7(b). If no such notice is given, the Trustee will
act pursuant to Section 7(a) as if it had received an Issuer Order pursuant
thereto for the payment in full of the interest then due.
SECTION 8. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants that:
(a) The execution and delivery by the Pledgor of, and the
performance by the Pledgor of its obligations under, this Pledge Agreement
and the Control Agreement will not contravene any provision of applicable
law or the certificate of incorporation or by-laws of the Pledgor, or any
material agreement or other material instrument binding upon the Pledgor or
any of its subsidiaries or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Pledgor or
any of its subsidiaries, or result in the creation or imposition of any
Lien on any assets of the Pledgor, except for the security interests
granted under this Pledge Agreement.
(b) No consent of any other person and no approval,
authorization, order of, or filing, declaration or qualification with, any
governmental body or agency is required (i) for the execution, delivery or
performance by the Pledgor of its obligations under either this Pledge
Agreement or the Control Agreement, (ii) for the grant by the Pledgor of
the security interest created hereby or (ii) for the pledge by the Pledgor
of the Collateral pursuant to either this Pledge Agreement or the Control
Agreement, except for any such consents, approvals, authorizations or
orders required to be obtained by the Trustee (or the Holders) for reasons
other than the consummation of this transaction, for the exercise by the
Trustee of the rights provided for in either this Pledge Agreement or the
Control Agreement or the remedies in respect of the Collateral pursuant to
either this Pledge Agreement or the Control Agreement.
(c) The Pledgor is the beneficial owner of the Collateral, free
and clear of any Lien or claims of any person or entity (except for the
security interests created by this Pledge Agreement). No financing
statement or instrument similar in effect covering all or any part of the
Pledgor's interest in the Collateral is on file in any public or recording
office, other than the financing statements filed pursuant to this Pledge
Agreement. The Pledgor has no trade names.
(d) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and constitutes a valid and binding
agreement of the Pledgor, enforceable against the Pledgor in accordance
with its terms, except as (i) the enforceability
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hereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally, (ii) the availability of equitable remedies
may be limited by equitable principles of general applicability, (iii) the
exculpation provisions and rights to indemnification hereunder may be
limited by U.S. federal and state securities laws and public policy
considerations and (iv) the waiver of rights and defenses contained in
Section 14(d), Section 17.11 and Section 17.15 hereof may be limited by
applicable law.
(e) Upon the transfer to the Trustee of the Funds and the
acquisition by the Trustee of a security entitlement thereto, in accordance
with Section 3 above, the pledge and grant of a security interest in the
Collateral pursuant to this Pledge Agreement for the benefit of the Trustee
and the Holders of the Notes will constitute a valid and perfected first
priority security interest in such Collateral, securing the payment of the
Obligations enforceable as such against all creditors of the Pledgor (and
any persons purporting to purchase any of the Collateral from the Pledgor).
(f) There are no legal or governmental proceedings pending or, to
the best of the Pledgor's knowledge, threatened to which the Pledgor or any
of its subsidiaries is a party or to which any of the properties of the
Pledgor or any such subsidiary is subject that would materially adversely
affect the power or ability of the Pledgor to perform its obligations under
this Pledge Agreement or to consummate the transactions contemplated
hereby.
(g) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation (including,
without limitation, Regulations T, U and X of the Board of Governors of the
Federal Reserve System) applicable to the Pledgor.
(h) No Event of Default (as defined herein) exists.
SECTION 9. FILING; FURTHER ASSURANCES. (a) Concurrently with
the execution and delivery of this Pledge Agreement, the Pledgor is
delivering to the Trustee acknowledgment copies or stamped receipt copies of
proper financing statements, duly filed on or before the Closing Date in
accordance with the Uniform Commercial Code as in effect in the State of New
York and the State of Oklahoma, covering the categories of Collateral
described in this Pledge Agreement.
(b) The Pledgor agrees that from time to time, at the expense of
the Pledgor, the Pledgor will, promptly upon request by the Trustee (which
request the Trustee may submit at the direction of the holders of a
majority in principal amount of the Notes then outstanding), execute and
deliver or cause to be executed and delivered, or use its reasonable best
efforts to procure, all assignments, instruments and other documents, all
in form and substance satisfactory to the Trustee, deliver any instruments
to the Trustee and take any other actions that may be necessary or, in the
opinion of the Trustee, desirable to perfect, continue the perfection of,
or protect the first priority of the Trustee's security
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interest in and to the Collateral, including the filing of all necessary
financing and continuation statements, to protect the Collateral against
the rights, claims, or interests of third persons (other than any such
rights, claims or interests created by or arising through the Trustee) or
to effect the purposes of this Pledge Agreement.
(c) The Pledgor hereby authorizes the Trustee to file any
financing or continuation statements in the United States with respect to
the Collateral without the signature of the Pledgor (to the extent
permitted by applicable law). A photocopy or other reproduction of this
Pledge Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted
by law.
(d) The Pledgor will promptly pay all costs incurred in
connection with this Pledge Agreement within 45 days of receipt of an
invoice therefor.
SECTION 10. COVENANTS. The Pledgor covenants and agrees with
the Trustee and the Holders of the Notes that from and after the date of this
Pledge Agreement until payment in full of all of the Obligations:
(a) that (i) it will not (and will not purport to) sell or
otherwise dispose of, or grant any option or warrant with respect to, any
of the Collateral or its beneficial interest therein, and (ii) it will not
create or permit to exist any Lien or other adverse interest in or with
respect to its beneficial interest in any of the Collateral (except for the
security interests granted under this Pledge Agreement); and
(b) that it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to restrict or inhibit
the Trustee's rights or remedies hereunder, including, without limitation,
the Trustee's right to sell or otherwise dispose of the Collateral or (ii)
fail to pay or discharge any tax, assessment or levy of any nature with
respect to its beneficial interest in the Collateral not later than five
days prior to the date of any proposed sale under any judgment, writ or
warrant of attachment with respect to such beneficial interest.
SECTION 11. POWER OF ATTORNEY. In addition to all of the
powers granted to the Trustee pursuant to the Indenture, the Pledgor hereby
appoints and constitutes the Trustee as the Pledgor's attorney-in-fact (with
full power of substitution), with full authority in the place and stead of
the Pledgor and in the name of the Pledgor or otherwise, from time to time in
the Trustee's discretion to take any action and to execute any instrument
that the Trustee may deem necessary or advisable to accomplish the purposes
of this Pledge Agreement, including, without limitation:
(a) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
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(b) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above,
(c) to file any claims or take any action or institute any
proceedings that the Trustee may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Trustee with respect to any of the Collateral,
(d) to pay or discharge taxes or Liens levied or placed upon the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Trustee in its sole reasonable
discretion, and such payments made by the Trustee to become part of the
Obligations of the Pledgor to the Trustee, due and payable immediately upon
demand, and
(e) to convey any item of Collateral to any purchaser thereof and
give any notices or recordings of any Liens under Section 6 hereof;
PROVIDED, HOWEVER, that the Trustee shall have no obligation to perform any
of the foregoing actions. The Trustee's authority under this Section 11
shall include, without limitation, the authority to execute or endorse (a)
any checks or instruments representing proceeds of Collateral in the name of
the Pledgor, (b) any receipts for any certificate of ownership or any
document constituting Collateral or transferring title to any item of
Collateral, (c) any financing statements (to the extent permitted by
applicable law) or (d) any other documents deemed necessary or appropriate by
the Trustee to preserve, protect or perfect the security interest in the
Collateral and to file the same, prepare, file and sign the Pledgor's name on
any notice of Lien, and to take any other actions arising from or incident to
the powers granted to the Trustee in this Pledge Agreement. This power of
attorney is coupled with an interest and is irrevocable by the Pledgor.
SECTION 12. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The
rights and powers conferred on the Trustee hereunder are solely to preserve
and protect the security interest of the Trustee and the Holders of the Notes
in and to the Collateral granted hereby and shall not be interpreted to, and
shall not impose any duties on the Trustee in connection therewith other than
those expressly provided herein or imposed under applicable law. Except as
provided by applicable law or by the Indenture, the Trustee shall be deemed
to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Trustee accords similar property held
by the Trustee for its own account, it being understood that the Trustee in
its capacity as such shall not have any responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities or
other matters relative to any Collateral, whether or not the Trustee has or
is deemed to have knowledge of such matters, (b) taking any necessary steps
to preserve rights against any parties with respect to any Collateral or (c)
investing or reinvesting any of the Collateral or any loss on any investment.
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SECTION 13. INDEMNITY; TRUSTEE'S LIMITATION OF LIABILITY TO
PLEDGOR. (a) The Pledgor shall indemnify, reimburse, hold harmless and
defend the Trustee and its directors, officers, agents and employees, from
and against any and all claims, actions, obligations, liabilities and
expenses, including reasonable defense costs, reasonable investigative fees
and costs, and reasonable legal fees and damages arising from the Trustee's
performance or lack of performance as Trustee under this Pledge Agreement,
except to the extent that such claim, action, obligation, liability or
expense is directly attributable to the bad faith, gross negligence or wilful
misconduct of such indemnified person. This indemnity shall be a continuing
obligation of the Pledgor, its respective successors and assigns,
notwithstanding the termination of this Pledge Agreement.
(b) If at any time the Trustee is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects Collateral (including, but
not limited to, orders of attachment or garnishment or other forms of
levies or injunctions or stays relating to the transfer of Collateral), the
Trustee is authorized to comply therewith in any manner as it or its legal
counsel of its own choosing deems appropriate and if the Trustee complies
with any such judicial or administrative order, judgment, decree, writ or
other form of judicial or administrative process, the Trustee shall not be
liable to the Pledgor even though such order, judgment, decree, writ or
process may be subsequently modified or vacated or otherwise determined to
have been without legal force or effect.
(c) The Trustee shall not incur any liability to the Pledgor for
not performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of the Trustee
(including, but not limited to, any act or provision or any present or
future law or regulation or governmental authority, any act of God or war,
or the unavailability of the Federal Reserve Bank wire or telex or other
wire or communication facility).
(d) The Trustee shall not be responsible in any respect for the
form, execution, validity, value or genuineness of documents or securities
deposited hereunder, or for any description therein, or for the identity,
authority or rights of persons executing or delivering or purporting to
execute or deliver any such document, security or endorsement.
SECTION 14. REMEDIES UPON EVENT OF DEFAULT. If any Event of
Default under the Indenture or default hereunder (any such Event of Default
or default being referred to in this Pledge Agreement as an "EVENT OF
DEFAULT") shall have occurred and be continuing:
(a) The Trustee and the Holders of the Notes may exercise, in
addition to all other rights given by law or by this Pledge Agreement or
the Indenture, all of the rights and remedies with respect to the
Collateral of a secured party under the UCC in effect in the State of New
York at that time and also may (i) require the Pledgor to, and the Pledgor
hereby agrees that it will at its expense and upon request of the Trustee
forthwith, assemble
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all or part of the Collateral as directed by the Trustee and make it
available to the Trustee at a place to be designated by the Trustee that
is reasonably convenient to both parties and (ii) without notice except
as specified below, sell the Collateral or any part thereof in one or
more parcels at any broker's board or at public or private sale, in one
or more sales or lots, at any of the Trustee's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as
the Trustee may deem commercially reasonable. The Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten days'
notice to the Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Trustee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Trustee may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The purchaser
of any or all Collateral so sold shall thereafter hold the same absolutely,
free from any claim, encumbrance or right of any kind whatsoever created by
or through the Pledgor. Any sale of the Collateral conducted in conformity
with reasonable commercial practices of banks, insurance companies,
commercial finance companies, or other financial institutions disposing of
property similar to the Collateral shall be deemed to be commercially
reasonable. The Trustee or any Holder of Notes may, in its own name or in
the name of a designee or nominee, buy any of the Collateral at any public
sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys' fees, expenses
and disbursements) of, or incident to, the enforcement of any of the
provisions hereof shall be recoverable from the proceeds of the sale or
other disposition of the Collateral.
(b) All cash proceeds received by the Trustee in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Trustee, be held by the Trustee as
collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Trustee pursuant to Section 15) in
whole or in part by the Trustee for the ratable benefit of the Holders of
the Notes against, all or any part of the Obligations in such order as the
Trustee shall elect or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding shall request. Any surplus of such
cash or cash proceeds held by the Trustee and remaining after payment in
full of all the Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) The Pledgor further agrees to use its reasonable best efforts
to do or cause to be done all such other acts as may be necessary to make
such sale or sales of all or any portion of the Collateral pursuant to this
Section 14 valid and binding and in compliance with any and all other
applicable requirements of law. The Pledgor further agrees that a breach
of any of the covenants contained in this Section 14 will cause irreparable
injury to the Trustee and the Holders of the Notes, that the Trustee and
the Holders of the Notes have no adequate remedy at law in respect of such
breach and, as a consequence, that each and
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every covenant contained in this Section 14 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees
not to assert any defenses against an action for specific performance of
such covenants except for a defense that no Event of Default has occurred.
SECTION 15. EXPENSES. The Pledgor will upon demand pay to the
Trustee the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees, expenses and disbursements of its counsel,
experts and agents retained by the Trustee, that the Trustee may incur in
connection with (a) the review, negotiation and administration of this Pledge
Agreement, (b) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (c) the exercise or
enforcement of any of the rights of the Trustee and the Holders of the Notes
hereunder or (d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
SECTION 16. SECURITY INTEREST ABSOLUTE. All rights of the
Trustee and the Holders of the Notes and security interests hereunder, and
all obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or
Notes or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture;
(c) any taking, exchange, surrender, release or non-perfection of
any Liens on any other collateral for all or any of the Obligations;
(d) any manner of application of collateral, or proceeds thereof,
to all or any of the Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Obligations or any
other assets of the Pledgor;
(e) any change, restructuring or termination of the corporate
structure or existence of the Pledgor; or
(f) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Pledgor in respect of the Obligations or of this Pledge
Agreement.
SECTION 17. MISCELLANEOUS PROVISIONS.
Section 17.1. NOTICES. Any notice or communication given
hereunder and any deliveries made hereunder shall be sufficiently given if in
writing and delivered in person or mailed
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by first class mail, commercial courier service or telecopier communication,
addressed as follows:
IF TO THE PLEDGOR:
Dobson/Sygnet Communications Company
13439 N. Broadway Extension, Suite 200
Oklahoma City, Oklahoma 73114
Fax: (405) 391-8515
Attention: Bruce R. Knooihuizen
WITH A COPY TO:
McAfee & Taft
211 North Robinson
Suite 1000
Oklahoma City, Oklahoma 73102
Attention: Theodore M. Elam
IF TO THE TRUSTEE:
United States Trust Company of New York
114 W. 47th Street
New York, New York 10036
Fax: (212) 852-1626
Attention: Louis Young, Corporate Trust Administration
All such deliveries, notices and other communications shall be effective when
received.
Section 17.2. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Pledge Agreement may not be used to interpret another pledge, security
or debt agreement of the Pledgor or any subsidiary thereof. No such pledge,
security or debt agreement (other than the Indenture) may be used to
interpret this Pledge Agreement.
Section 17.3. SEVERABILITY. The provisions of this Pledge
Agreement are severable, and if any clause or provision shall be held
invalid, illegal or unenforceable in whole or in part in any jurisdiction,
then such invalidity or unenforceability shall affect in that jurisdiction
only such clause or provision, or part thereof, and shall not in any manner
affect such clause or provision in any other jurisdiction or any other clause
or provision of this Pledge Agreement in any jurisdiction.
Section 17.4. HEADINGS. The headings in this Pledge Agreement
have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
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Section 17.5. COUNTERPART ORIGINALS. This Pledge Agreement may
be signed in two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and the same
agreement.
Section 17.6. BENEFITS OF PLEDGE AGREEMENT. Nothing in this
Pledge Agreement, express or implied, shall give to any person, other than
the parties hereto and their successors hereunder, and the Holders of the
Notes, any benefit or any legal or equitable right, remedy or claim under
this Pledge Agreement.
Section 17.7. AMENDMENTS, WAIVERS AND CONSENTS. Any amendment
or waiver of any provision of this Pledge Agreement and any consent to any
departure by the Pledgor from any provision of this Pledge Agreement shall be
effective only if made or duly given in compliance with all of the terms and
provisions of the Indenture, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given. Neither the Trustee nor any Holder of Notes shall be deemed, by
any act, delay, indulgence, omission or otherwise, to have waived any right
or remedy hereunder or to have acquiesced in any Default or Event of Default
or in any breach of any of the terms and conditions hereof. Failure of the
Trustee or any Holder of Notes to exercise, or delay in exercising, any
right, power or privilege hereunder shall not preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Trustee or any Holder of Notes of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy
that the Trustee or such Holder of Notes would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
Section 17.8. INTERPRETATION OF AGREEMENT. As long as the
Trustee acts in good faith to the extent a term or provision of this Pledge
Agreement conflicts with the Indenture, the Indenture shall control with
respect to the subject matter of such term or provision. Notwithstanding the
foregoing and any other provision of this Pledge Agreement or the Indenture,
the Trustee shall have no fiduciary responsibility under this Pledge
Agreement.
Section 17.9. CONTINUING SECURITY INTEREST; TERMINATION. (a)
This Pledge Agreement shall create a continuing security interest in and to
the Collateral and shall, unless otherwise provided in this Pledge Agreement,
remain in full force and effect until the payment in full in cash of the
Obligations. This Pledge Agreement shall be binding upon the Pledgor, its
transferees, successors and assigns, and shall inure, together with the
rights and remedies of the Trustee hereunder, to the benefit of the Trustee,
the Holders of the Notes and their respective successors, transferees and
assigns.
(b) So long as no Event of Default shall have occurred and be
continuing, this Pledge Agreement (other than Pledgor's obligations under
Sections 13 and 15) shall terminate upon the payment in full in cash of the
Obligations. At such time, the Trustee shall, pursuant to an Issuer
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<PAGE>
Order, reassign and redeliver to the Pledgor all of the Collateral hereunder
that has not been sold, disposed of, retained or applied by the Trustee in
accordance with the terms of this Pledge Agreement and the Indenture and take
all actions requested by the Pledgor that are necessary to release the
security interest created by this Pledge Agreement in and to the Collateral,
including the execution and delivery of all termination statements necessary
to terminate any financing or continuation statements filed with respect to
the Collateral. Such reassignment and redelivery shall be without warranty
by or recourse to the Trustee in its capacity as such and shall be at the
reasonable expense of the Pledgor.
Section 17.10. SURVIVAL OF REPRESENTATIONS AND COVENANTS. All
representations, warranties and covenants of the Pledgor contained herein
shall survive the execution and delivery of this Pledge Agreement, and shall
terminate only upon the termination of this Pledge Agreement. The
obligations of the Pledgor under Sections 13 and 15 hereof shall survive the
termination of this Agreement.
Section 17.11. WAIVERS. The Pledgor waives presentment and
demand for payment of any of the Obligations, protest and notice of dishonor
or default with respect to any of the Obligations, and all other notices to
which the Pledgor might otherwise be entitled, except as otherwise expressly
provided herein or in the Indenture.
Section 17.12. AUTHORITY OF THE TRUSTEE. (a) The Trustee shall
have and be entitled to exercise all powers hereunder that are specifically
granted to the Trustee by the terms hereof, together with such powers as are
reasonably incident thereto. The Trustee may perform any of its duties
hereunder or in connection with the Collateral by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of counsel concerning all such matters. Except as otherwise
expressly provided in this Pledge Agreement or the Indenture, neither the
Trustee nor any director, officer, employee, attorney or agent of the Trustee
shall be liable to the Pledgor for any action taken or omitted to be taken by
the Trustee, in its capacity as Trustee, hereunder, except for its own bad
faith, gross negligence or willful misconduct, and the Trustee shall not be
responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. The Trustee and its
directors, officers, employees, attorneys and agents shall be entitled to
rely on any communication, instrument or document believed by it or them to
be genuine and correct and to have been signed or sent by the proper person
or persons.
(b) The Pledgor acknowledges that the rights and
responsibilities of the Trustee under this Pledge Agreement with respect to
any action taken by the Trustee or the exercise or non-exercise by the
Trustee of any option, right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Pledge Agreement
shall, as between the Trustee and the Holders of the Notes, be governed by
the Indenture and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Trustee and the Pledgor,
the Trustee shall be conclusively presumed to be acting as agent for the
Holders of the Notes with full and valid authority so to act or refrain from
acting, and the Pledgor shall not be obligated or
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<PAGE>
entitled to make any inquiry respecting such authority.
Section 17.13 FINAL EXPRESSION. This Pledge Agreement, together
with the Indenture and any other agreement executed in connection herewith,
is intended by the parties as a final expression of this Pledge Agreement and
is intended as a complete and exclusive statement of the terms and conditions
thereof.
Section 17.14. RIGHTS OF HOLDERS OF THE NOTES. No Holder of
Notes shall have any independent rights hereunder other than those rights
granted to individual Holders of the Notes pursuant to Section 6.07 of the
Indenture; PROVIDED that nothing in this subsection shall limit any rights
granted to the Trustee under the Notes or the Indenture.
Section 17.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL; WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY
DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THE PLEDGOR, THE TRUSTEE AND THE HOLDERS OF
THE NOTES IN CONNECTION WITH THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
(b) THE PLEDGOR HEREBY APPOINTS CT CORPORATION SYSTEM, 1633
BROADWAY, NEW YORK, NEW YORK 10019, AS ITS AGENT FOR SERVICE OF PROCESS IN
ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT AND FOR
ACTIONS BROUGHT UNDER U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN ANY
FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK AND AGREES TO SUBMIT
TO THE JURISDICTION OF ANY SUCH COURT.
(c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY
AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF NOTES, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
PLEDGOR OR THE COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR
THE COLLATERAL, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH
COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE TRUSTEE. THE PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS,
SETOFFS OR CROSSCLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON
SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
TRUSTEE, EXCEPT FOR SUCH
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<PAGE>
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE PLEDGOR WAIVES
ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN THE CITY OF
NEW YORK ONCE THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER OF NOTES NOR
(EXCEPT AS OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE
TRUSTEE IN ITS CAPACITY AS TRUSTEE SHALL HAVE ANY LIABILITY TO THE PLEDGOR
(WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT
IS BINDING ON THE TRUSTEE OR SUCH HOLDER OF NOTES, AS THE CASE MAY BE, THAT
SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE TRUSTEE
OR SUCH HOLDERS OF NOTES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR
WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY
HOLDER OF NOTES IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO
ENFORCE ANY JUDGMENT OR OTHER COURT ORDER PERTAINING TO THIS PLEDGE AGREEMENT
OR ANY RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF THE TRUSTEE OR ANY
HOLDER OF NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING
ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS PLEDGE AGREEMENT OR ANY
RELATED AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR ON THE ONE HAND AND THE
TRUSTEE AND/OR THE HOLDERS OF THE NOTES ON THE OTHER HAND.
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<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Trustee have each caused
this Pledge Agreement to be duly executed and delivered as of the date first
above written.
Pledgor:
DOBSON/SYGNET COMMUNICATIONS COMPANY
By: /s/ EVERETT R. DOBSON
--------------------------------------
Name: Everett R. Dobson
Title: Chief Executive Officer
Trustee:
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ LOUIS P. YOUNG
--------------------------------------
Name: Louis P. Young
Title: Vice President
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<PAGE>
EXHIBIT A
NOTIFICATION AND CONTROL AGREEMENT
THIS NOTIFICATION AND CONTROL AGREEMENT (the "AGREEMENT") dated
as of December 23, 1998 by and among Dobson/Sygnet Communications Company
(the "PLEDGOR") and the United States Trust Company of New York, a bank and
trust company organized under the new York banking law, in its capacity as
trustee (the "TRUSTEE") and in its capacity as a bank (the "BANK") at which
the Pledgor maintains the Collateral Account.
A. The Pledgor has granted to the Trustee a security interest
in the Collateral, pursuant to, and as more particularly described in, a
Collateral Pledge and Security Agreement dated as of December 23, 1998
between the Pledgor and the Trustee (as the same may hereafter be amended,
supplemented or otherwise modified from time to time, the "PLEDGE AGREEMENT";
terms defined in the Pledge Agreement and not otherwise defined herein are
used herein as therein defined).
B. Terms defined in Articles 8 or 9 of the Uniform Commercial
Code as in effect in the State of New York (the "UCC") are used in this
Agreement (including, without limitation, paragraph A above) as defined in
Articles 8 or 9, respectively, of the UCC.
C. Pursuant to the Pledge Agreement, the Trustee has required
the execution and delivery of this Agreement.
NOW, THEREFORE, for valuable consideration and intending to be
legally bound, the parties hereto agree and acknowledge as follows:
1. NOTICE OF SECURITY INTEREST. The Pledgor and Trustee are
entering into this Agreement to perfect, and confirm the first priority lien
of, the Trustee's security interest in the Collateral. The Bank agrees to
promptly make all necessary entries or notations in its books and records to
reflect the Trustee's security interest in the Collateral and to apply any
value distributed on account of any Collateral as provided in the Pledge
Agreement without further consent from the Pledgor. The Bank acknowledges
that the Trustee has control over the Collateral Account.
2. SEPARATE ACCOUNT; TRUSTEE REPRESENTATIONS AND WARRANTIES.
(a) The Trustee hereby instructs the Bank, and the Bank hereby confirms and
agrees that, unless the Trustee shall otherwise direct the Bank in writing,
the Collateral Account is to be maintained separately at all times.
(b) The Trustee hereby represents and warrants that it has
acquired its security interest in, and security entitlement to, the
Collateral for value and without notice of any adverse claim thereto.
Without limiting the generality of the foregoing, the Collateral is not, to
the Trustee's knowledge, subject to any Lien granted by the Trustee in favor
of any securities intermediary
<PAGE>
(including, without limitation, the Bank or the Federal Reserve Bank of New
York) and the Trustee has not knowingly or purposefully caused or permitted
the Collateral to become subject to any Lien created by or arising through
the Bank.
3. CONTROL. The Bank hereby agrees, upon written direction
from the Trustee and in accordance with the terms of the Pledge Agreement,
and without further consent from the Pledgor, (a) to comply with all
instructions, entitlement orders and directions of any kind originated by the
Trustee concerning the Collateral, to liquidate or otherwise dispose of the
Collateral as and to the extent directed by the Trustee and pay over to the
Trustee all proceeds and other value therefrom or otherwise distributed with
respect thereto without any set off or deduction, and (b) except as otherwise
directed by the Trustee, not to comply with the instructions or directions of
the Pledgor or any other person.
4. OTHER AGREEMENTS; TERMINATION; SUCCESSOR TRUSTEES. The
Bank shall simultaneously send to the Trustee and the Pledgor copies of all
notices given and statements rendered pursuant to the Collateral Account. So
long as the Pledge Agreement remains in effect, neither the Pledgor nor the
Bank shall terminate the Collateral Account without thirty (30) days' prior
written notice to the other party and the Trustee. In the event of any
conflict between the provisions of this Agreement and any other agreement
governing the Collateral Account, the provisions hereof shall control. In
the event the Trustee no longer serves as Trustee for the Collateral, the
Collateral Account shall be transferred to a successor trustee satisfactory
to the Trustee, provided that prior to such transfer, such successor trustee
executes an agreement that is in all material respects the same as this
Agreement or is otherwise in form and substance satisfactory to the Trustee.
5. INDEMNITY. The Pledgor shall indemnify and hold the
Trustee and the Bank harmless from any and all losses, claims, damages,
liabilities, expenses and fees, including reasonable counsel fees, resulting
from the execution of or performance under this Agreement and delivery by the
Trustee of all or any part of the Collateral to the Bank pursuant to this
Agreement, except claims, losses or liabilities resulting from the Trustee's
or the Bank's gross negligence, bad faith or willful misconduct as determined
by a final judgment of a court of competent jurisdiction. This
indemnification shall survive the termination of this Agreement.
6. PROTECTION OF BANK. Except as required by Paragraph 3
hereof, the Bank shall have no duty to determine that the amount and form of
assets constituting Collateral comply with any applicable requirements. The
Bank may rely and shall be protected in acting upon any notice, instruction,
or other communication which it reasonably believes to be genuine and
authorized.
7. TERMINATION/RELEASE OF COLLATERAL. This Agreement shall
terminate
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<PAGE>
automatically upon receipt by the Bank of written notice executed by two
officers of the Trustee holding titles of Vice President or higher that (a)
all of the obligations secured by the Collateral have been satisfied, or (b)
all of the Collateral has been released, whichever is sooner, and the Bank
shall thereafter be relieved of all duties and obligations hereunder.
8. WAIVER AND SUBORDINATION OF RIGHTS. The Bank hereby
waives its right to set off any obligations of the Pledgor to the Bank
against any or all assets held by the Trustee as Collateral, and hereby
agrees that any and all liens, encumbrances, claims or security interests
which the Bank may have against the Collateral, either now or in the future
are and shall be subordinate and junior to the prior payment in full of all
obligations of the Pledgor now or hereafter existing under the Indenture,
Notes and all other documents related thereto whether for principal, interest
(including, without limitation, interest, as provided in the Notes, whether
or not such interest accrues after the filing of such petition for purposes
of the Bankruptcy Code or is an allowed claim in such proceeding),
indemnities, fees, premiums, expenses or otherwise. The Bank will not agree
with any third party that the Bank will comply with any instructions or
directions of any kind concerning the Collateral originated by such third
party without the prior written consent of the Trustee. Except for the
claims and interests of the Trustee and the Pledgor in the Collateral, the
Bank does not know of any claim to or security interest or other interest in
the Collateral.
9. EXPENSES. The Pledgor shall pay upon demand all fees,
costs and expenses (including reasonable fees and expenses of counsel) of
enforcing the Bank's rights and remedies upon any breach (by the Trustee or
the Pledgor) of any of the provisions of this Agreement.
10. NOTICES. All notices, demands, requests, consents,
approvals and other communications required or permitted hereunder must be in
writing and will be effective upon receipt if delivered personally, or if
sent by facsimile transmission with confirmation of delivery, or by
nationally recognized overnight courier service with confirmation of
delivery, to the Pledgor's and the Trustee's addresses as set forth in the
Pledge Agreement, and to the Bank's address as set forth below, or to such
other address as any party may give to the others in writing for such purpose.
11. CHANGES IN WRITING. No modification, amendment or waiver
of any provision of this Agreement nor consent to any departure by any party
therefrom will be effective unless made in writing signed by the parties
hereto, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
12. ENTIRE AGREEMENT. This Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
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<PAGE>
13. COUNTERPARTS. This Agreement may be signed in any number
of counterpart copies and by the parties hereto on separate counterparts
(including by facsimile transmission), but all such copies shall constitute
one and the same instrument.
14. SUCCESSORS AND ASSIGNS. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
15. GOVERNING LAW AND JURISDICTION. This Agreement has been
delivered to and accepted by the Trustee and will be deemed to be made in the
State of New York. THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. Each of the parties hereby irrevocably submits for
itself and its property in any legal action or proceeding relating to this
Agreement, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction and venue of the courts of
the State of New York, the courts of the United States of America in New
York, and appellate courts from any thereof.
16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) OF
ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION
WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS.
EACH PARTY HERETO ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
PLEDGOR:
DOBSON/SYGNET COMMUNICATIONS COMPANY
By: /s/ Everett R. Dobson
----------------------------------------
Name: Everett R. Dobson
--------------------------------------
Title: Chief Executive Officer
-------------------------------------
TRUSTEE:
UNITED STATES TRUST COMPANY OF NEW YORK,
AS TRUSTEE
By: /s/ Louis P. Young
----------------------------------------
Name: Louis P. Young
--------------------------------------
Title: Vice President
-------------------------------------
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<PAGE>
BANK'S ADDRESS FOR BANK:
NOTICES:
UNITED STATES TRUST COMPANY OF NEW YORK
114 W. 47th Street By: /s/ Louis P. Young
New York, New York 10036 ------------------------------------
Attention: Louis Young Name: Louis P. Young
Facsimile Number: (212) 852-1626 ----------------------------------
Title: Vice President
---------------------------------
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<PAGE>
DOBSON/SYGNET COMMUNICATIONS COMPANY
$200,000,000
12 1/4% SENIOR NOTES DUE 2008
REGISTRATION RIGHTS AGREEMENT
December 23, 1998
NationsBanc Montgomery Securities LLC
As representative of the several Initial
Purchasers listed on Schedule I hereto
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255-0001
Ladies and Gentlemen:
Dobson/Sygnet Communications Company, an Oklahoma corporation (the
"Company"), proposes to issue and sell (the "Initial Placement") to NationsBanc
Montgomery Securities, Inc., Lehman Brothers Inc., First Union Capital Markets,
a division of Wheat First Securities, Inc., a division of Wheat First
Securities, Inc. and TD Securities (USA) Inc. (the "Initial Purchasers" and,
individually, each an "Initial Purchaser") upon terms set forth in a purchase
agreement dated as of December 16, 1998 (the "Purchase Agreement") among the
Company, Dobson Communications Corporation, an Oklahoma corporation ("DCC"), and
the Initial Purchasers, its 12 1/4% Senior Notes due 2008 (the "Notes"). As an
inducement to you to enter into the Purchase Agreement and purchase the Notes
and in satisfaction of a condition to your obligations under the Purchase
Agreement, the Company agrees with you for the benefit of the holders from time
to time of the Notes (including the Initial Purchasers) (each of the foregoing a
"Holder" and together the "Holders"), as follows:
1. DEFINITIONS. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"AFFILIATE" of any specified person means any other person that,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this
definition, control of a person means the power,
<PAGE>
direct or indirect, to direct or cause the direction of the management and
policies of such person whether by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"CLOSING DATE" has the meaning set forth in the Purchase Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" has the meaning set forth in the preamble hereto.
"DCC" has the meaning set forth in the preamble hereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"EXCHANGE NOTES" means debt securities issued by the Company,
identical in all material respects to the Notes (except that (i) interest
thereon shall accrue from the last date on which interest was paid on the
Notes or, if no such interest has been paid, from December 23, 1998 and
(ii) the liquidated damages provisions and the transfer restrictions
pertaining to the Notes will be modified or eliminated, as appropriate, in
the Exchange Notes), to be issued under the Indenture.
"EXCHANGE OFFER" means the proposed offer to the Holders to issue
and deliver to such Holders, in exchange for the Notes, a like principal
amount of Exchange Notes.
"EXCHANGE OFFER REGISTRATION PERIOD" means the longer of (A) the
period until the consummation of the Exchange Offer and (B) two years after
effectiveness of the Exchange Offer Registration Statement, exclusive of
any period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement; PROVIDED,
HOWEVER, that in the event that all resales of Exchange Notes (including,
subject to the time periods set forth herein, any resales by Exchanging
Dealers) covered by such Exchange Offer Registration Statement have been
made, the Exchange Offer Registration Statement need not remain
continuously effective for the period set forth in clause (B) above.
"EXCHANGE OFFER REGISTRATION STATEMENT" means a Registration
Statement of the Company on an appropriate form under the Securities Act
with respect to the Exchange Offer, all amendments and supplements to such
Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"EXCHANGING DEALER" means any Holder (which may include the Initial
Purchasers) that is a broker-dealer, electing to exchange Notes acquired
for its own
<PAGE>
account as a result of market-making activities or other trading activities
for Exchange Notes.
"FINAL MEMORANDUM" has the meaning set forth in the Purchase
Agreement.
"HOLDER" has the meaning set forth in the preamble hereto.
"INDENTURE" means the indenture relating to the Notes and the
Exchange Notes, to be dated as of the Closing Date, between the Company and
United States Trust Company of New York, as the same may be amended,
supplemented, waived or otherwise modified from time to time in accordance
with the terms thereof.
"INITIAL PLACEMENT" has the meaning set forth in the preamble
hereto.
"INITIAL PURCHASERS" has the meaning set forth in the preamble
hereto.
"LOSSES" has the meaning set forth in Section 6(d) hereto.
"MAJORITY HOLDERS" means the Holders of a majority of the aggregate
principal amount of Notes registered under a Registration Statement.
"MANAGING UNDERWRITERS" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten
offering under a Shelf Registration Statement.
"NOTES" has the meaning set forth in the preamble hereto.
"PROSPECTUS" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the
Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Notes or
the Exchange Notes covered by such Registration Statement, and all
amendments and supplements to the Prospectus, including post-effective
amendments.
"PURCHASE AGREEMENT" has the meaning set forth in the preamble
hereto.
"REGISTRATION STATEMENT" means any Exchange Offer Registration
Statement or Shelf Registration Statement pursuant to the provisions of
this Agreement, amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto, and all material incorporated by
reference therein.
<PAGE>
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"SHELF REGISTRATION" means a registration effected pursuant to
Section 3 hereof.
"SHELF REGISTRATION PERIOD" has the meaning set forth in Section
3(b) hereof.
"SHELF REGISTRATION STATEMENT" means a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof,
which covers some or all of the Notes or Exchange Notes, as applicable, on
an appropriate form under Rule 415 under the Securities Act, or any similar
rule that may be adopted by the Commission, amendments and supplements to
such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"TRUSTEE" means the trustee with respect to the Notes or Exchange
Notes, as applicable, under the Indenture.
"UNDERWRITER" means any underwriter of Notes in connection with an
offering thereof under a Shelf Registration Statement.
2. EXCHANGE OFFER; RESALES OF EXCHANGE NOTES BY EXCHANGING
DEALERS; PRIVATE EXCHANGE.
(a) The Company shall prepare and file with the Commission the
Exchange Offer Registration Statement with respect to the Exchange Offer. The
Company shall use its best efforts (i) to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act and remain effective
until the closing of the Exchange Offer and (ii) to consummate the Exchange
Offer on or prior to the 180th calendar day following the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Exchange Offer, it being the
objective of such Exchange Offer to enable each Holder electing to exchange
Notes for Exchange Notes (assuming that such Holder (x) is not an "affiliate" of
the Company within the meaning of the Securities Act, (y) is not a broker-dealer
that acquired the Notes in a transaction other than as a part of its
market-making or other trading activities and (z) if such Holder is not a
broker-dealer, acquires the Exchange Notes in the ordinary course of such
Holder's business, is not participating in the distribution of the Exchange
Notes and has no arrangements or understandings with any person to participate
in the distribution of the Exchange Notes) to resell such Exchange Notes from
and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of a
substantial proportion of the several states of the United States.
<PAGE>
(c) In connection with the Exchange Offer, the Company shall mail
to each Holder a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of transmittal and
related documents, stating, in addition to such other disclosures as are
required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Agreement and that all Notes validly tendered will be accepted for
exchange;
(ii) the dates of acceptance for exchange;
(iii) that any Note not tendered will remain outstanding and
continue to accrue interest, but will not retain any rights under this
Agreement;
(iv) that Holders electing to have a Note exchanged pursuant to
the Exchange Offer will be required to surrender such Note, together with
the enclosed letters of transmittal, to the institution and at the address
(located in the Borough of Manhattan, The City of New York) specified in
the notice prior to the close of business on the last day of acceptance for
exchange; and
(v) that Holders will be entitled to withdraw their election, not
later than the close of business on the last day of acceptance for
exchange, by sending to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Notes delivered for exchange and a
statement that such Holder is withdrawing his election to have such Notes
exchanged; and shall keep the Exchange Offer open for acceptance for not
less than 30 days and not more than 45 days (or longer if required by
applicable law) after the date notice thereof is mailed to the Holders;
utilize the services of a depositary for the Exchange Offer with an address
in the Borough of Manhattan, The City of New York; and comply in all
respects with all applicable laws relating to the Exchange Offer.
(d) As soon as practicable after the close of the Exchange Offer,
the Company shall:
(i) accept for exchange all Notes duly tendered and not validly
withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all Notes so accepted
for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver to
each Holder Exchange Notes equal in principal amount to the Notes of such
Holder so accepted for exchange.
<PAGE>
(e) The Initial Purchasers and the Company acknowledge that,
pursuant to interpretations by the staff of the Commission of Section 5 of the
Securities Act, and in the absence of an applicable exemption therefrom, each
Exchanging Dealer is required to deliver a Prospectus in connection with a sale
of any Exchange Notes received by such Exchanging Dealer pursuant to the
Exchange Offer in exchange for Notes acquired for its own account as a result of
market-making activities or other trading activities. Accordingly, the Company
shall:
(i) include the information set forth in Annex A hereto on the
cover of the Exchange Offer Registration Statement, in Annex B hereto in
the forepart of the Exchange Offer Registration Statement in a section
setting forth details of the Exchange Offer, in Annex C hereto in the
underwriting or plan of distribution section of the Prospectus forming a
part of the Exchange Offer Registration Statement, and in Annex D hereto in
the letter of transmittal delivered pursuant to the Exchange Offer; and
(ii) use its best efforts to keep the Exchange Offer Registration
Statement continuously effective under the Securities Act during the
Exchange Offer Registration Period for delivery of the prospectus included
therein by Exchanging Dealers in connection with sales of Exchange Notes
received pursuant to the Exchange Offer, as contemplated by Section 4(h)
below; PROVIDED, HOWEVER, that the Company shall not be required to
maintain the effectiveness of the Exchange Offer Registration Statement for
more than 30 days following the consummation of the Exchange Offer unless
the Company has been notified in writing on or prior to the 30th day
following the consummation of the Exchange Offer by one or more Exchanging
Dealers that such Holder has received Exchange Notes as to which it will be
required to deliver a prospectus upon resale.
(f) In the event that the Initial Purchasers determine that they
are not eligible to participate in the Exchange Offer with respect to the
exchange of Notes constituting any portion of an unsold allotment, upon the
effectiveness of the Shelf Registration Statement as contemplated by Section 3
hereof and at the request of the Initial Purchasers, the Company shall issue and
deliver to the Initial Purchasers, or to the party purchasing Notes registered
under the Shelf Registration Statement from the Initial Purchasers, in exchange
for such Notes, a like principal amount of Exchange Notes. The Company shall
use its best efforts to cause the CUSIP Service Bureau to issue the same CUSIP
number for such Exchange Notes as for Exchange Notes issued pursuant to the
Exchange Offer.
(g) The Company shall use its best efforts to complete the
Exchange Offer as provided above and shall comply with the applicable
requirements of the Securities Act, the Exchange Act and other applicable laws
and regulations in connection with the Exchange Offer. The Exchange Offer shall
not be subject to any conditions, other than that (i) the Exchange Offer does
not violate applicable law or any applicable interpretation of the staff of the
Commission, (ii) no action or proceeding shall have been instituted or
threatened in any court or by any governmental agency which might materially
impair the ability of the Company to
<PAGE>
proceed with the Exchange Offer, and no material adverse development shall have
occurred in any existing action or proceeding with respect to the Company and
(iii) all governmental approvals shall have been obtained, which approvals the
Company deems necessary for the consummation of the Exchange Offer. The Company
shall inform the Initial Purchasers, upon their request, of the names and
addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right, subject to applicable law, to contact such
Holders and otherwise facilitate the tender of Notes in the Exchange Offer.
3. SHELF REGISTRATION. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines upon advice of its outside counsel that it is not permitted to effect
the Exchange Offer as contemplated by Section 2 hereof, or (ii) for any reason
other than those specified in clause (i) above, the Exchange Offer is not
consummated within 180 days of the Closing Date, or (iii) the Initial Purchasers
so request with respect to Notes held by them within 90 days following
consummation of the Exchange Offer, or (iv) any Holder (other than an Initial
Purchaser) is not eligible to participate in the Exchange Offer or has
participated in the Exchange Offer and has received Exchange Notes that are not
freely tradeable or (v) in the case where the Initial Purchasers participate in
the Exchange Offer or acquire Exchange Notes pursuant to Section 2(f) hereof,
the Initial Purchasers do not receive freely tradeable Exchange Notes in
exchange for Notes constituting any portion of an unsold allotment (it being
understood that, for purposes of this Section 3, (x) the requirement that the
Initial Purchasers deliver a Prospectus containing the information required by
Items 507 and/or 508 of Regulation S-K under the Securities Act in connection
with sales of Exchange Notes acquired in exchange for such Notes shall result in
such Exchange Notes being not "freely tradeable" and (y) the requirement that an
Exchanging Dealer deliver a Prospectus in connection with sales of Exchange
Notes acquired in the Exchange Offer in exchange for Notes acquired as a result
of market-making activities or other trading activities shall not result in such
Exchange Notes being not "freely tradeable"), the following provisions shall
apply:
(a) The Company shall, as promptly as practicable, file with the
Commission a Shelf Registration Statement relating to the offer and sale of
the Notes or the Exchange Notes, as applicable, by the Holders from time to
time in accordance with the methods of distribution elected by such Holders
and set forth in such Shelf Registration Statement and Rule 415 under the
Securities Act, PROVIDED that, with respect to Exchange Notes received by
the Initial Purchasers in exchange for Notes constituting any portion of an
unsold allotment, the Company may, if permitted by current interpretations
by the Commission's staff, file a post-effective amendment to the Exchange
Offer Registration Statement containing the information required by
Regulation S-K Items 507 and/or 508, as applicable, in satisfaction of its
obligations under this paragraph (a) with respect thereto, and any such
Exchange Offer Registration Statement, as so amended, shall be referred to
herein as, and governed by the provisions herein applicable to, a Shelf
Registration Statement.
(b) The Company shall use its best efforts to cause the Shelf
Registration
<PAGE>
Statement to be declared effective under the Securities Act as promptly as
possible after filing such Shelf Registration Statement pursuant to this
Section 3 and to keep such Shelf Registration Statement continuously
effective in order to permit the Prospectus contained therein to be usable
by Holders for a period of two years from the date the Shelf Registration
Statement is declared effective by the Commission or such shorter period
that will terminate when all the Notes or Exchange Notes, as applicable,
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement (in any such case, such period being called
the "Shelf Registration Period"). The Company shall be deemed not to have
used its best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would
result in Holders of Notes covered thereby not being able to offer and sell
such Notes during that period, unless (i) such action is required by
applicable law, (ii) the Company complies with this Agreement or (iii) such
action is taken by the Company in good faith and for valid business reasons
(not including avoidance of the Company's obligations hereunder), including
the acquisition or divestiture of assets, so long as the Company promptly
thereafter complies with the requirements of Section 4(l) hereof, if
applicable.
4. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Company shall, within a reasonable time prior to the
filing of any Registration Statement, any Prospectus, any amendment to a
Registration Statement or amendment or supplement to a Prospectus or any
document which is to be incorporated by reference into a Registration
Statement or a Prospectus after initial filing of a Registration Statement,
provide copies of such document to the Initial Purchasers and their counsel
(and, in the case of a Shelf Registration Statement, the Holders and their
counsel, upon their request) and make such representatives of the Company
as shall be reasonably requested by the Initial Purchasers or their counsel
(and, in the case of a Shelf Registration Statement, the Majority Holders
or their counsel) available for discussion of such document, and shall not
at any time file or make any amendment to the Registration Statement, any
Prospectus or any amendment of or supplement to a Registration Statement or
a Prospectus or any document which is to be incorporated by reference into
a Registration Statement or a Prospectus, of which the Initial Purchasers
and their counsel (and, in the case of a Shelf Registration Statement, the
Holders and their counsel) shall not have previously been advised and
furnished a copy or to which the Initial Purchasers or their counsel (and,
in the case of a Shelf Registration Statement, the Holders or their
counsel) shall object, except for any amendment or supplement or document
(a copy of which has been previously furnished to the Initial Purchasers
and their counsel (and, in the case of a Shelf Registration Statement, the
Majority Holders and their counsel, upon their request)) which counsel to
the Company shall advise the Company, in the form of a written opinion, is
required in order to comply with
<PAGE>
applicable law; each of the Initial Purchasers agrees that, if it receives
timely notice and drafts under this clause (a), it will not take actions or
make objections pursuant to this clause (a) such that the Company is unable
to comply with its obligations under Section 2.
(b) The Company shall ensure that:
(i) any Registration Statement and any amendment thereto
and any Prospectus contained therein and any amendment or supplement
thereto complies in all material respects with the Securities Act
and the rules and regulations thereunder;
(ii) any Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and
(iii) any Prospectus forming part of any Registration
Statement, including any amendment or supplement to such Prospectus,
does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(c) (1) The Company shall advise the Initial Purchasers and, in
the case of a Shelf Registration Statement, the Holders of Notes covered
thereby, and, if requested by the Initial Purchasers or any such Holder,
confirm such advice in writing:
(i) when a Registration Statement and any amendment
thereto has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become
effective; and
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included
therein or for additional information.
(2) During the Shelf Registration Period or the Exchange Offer
Registration Period, as applicable, the Company shall advise the Initial
Purchasers and, in the case of a Shelf Registration Statement, the Holders
of Notes covered thereby, and, in the case of an Exchange Offer
Registration Statement, any Exchanging Dealer that has provided in writing
to the Company a telephone or facsimile number and address for notices,
and, if requested by the Initial Purchasers or any such Holder or
Exchanging Dealer, confirm such advice in writing:
(i) of the issuance by the Commission of any stop order
suspending
<PAGE>
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose;
(ii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes included
therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(iii) of the happening of any event that requires the making
of any changes in the Registration Statement or the Prospectus so
that, as of such date, the Registration Statement or the Prospectus
does not include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein (in
the case of the Prospectus, in light of the circumstances under
which they were made) not misleading (which advice shall be
accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made).
(d) The Company shall use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of Notes covered by
any Shelf Registration Statement that so requests, without charge, at least
one copy of such Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if
the Holder so requests in writing, all exhibits thereto.
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Notes covered by any Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and
any amendment or supplement thereto as such Holder may reasonably request;
and the Company consents to the use of the Prospectus or any amendment or
supplement thereto by each of the selling Holders of Notes in connection
with the offering and sale of the Notes covered by the Prospectus or any
amendment or supplement thereto.
(g) The Company shall furnish to each Exchanging Dealer that so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, any documents incorporated by reference
therein and, if the Exchanging Dealer so requests in writing, all exhibits
thereto.
(h) The Company shall, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer, without charge, as many
copies of the
<PAGE>
Prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer may reasonably
request for delivery by such Exchanging Dealer in connection with a sale of
Exchange Notes received by it pursuant to the Exchange Offer; and the
Company consents to the use of the Prospectus or any amendment or
supplement thereto by any such Exchanging Dealer, as provided in Section
2(e) above.
(i) Each Holder of Notes and each Exchange Dealer agrees by its
acquisition of such Notes or Exchange Notes to be sold by such Exchange
Dealer, as the case may be, that, upon actual receipt of any notice from
the Company of the happening of any event of the kind described in
paragraph (c)(2)(i), (c)(2)(ii), or (c)(2)(iii) of this Section 4, such
Holder will forthwith discontinue disposition of such Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such
Holder or Exchange Dealer, as the case may be, until such Holder's or
Exchange Dealer's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4(l) hereof, or until it is advised in
writing by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto.
In the event that the Company shall give any such notice, the Exchange
Offer Registration Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to
and including the date when each seller of the Exchange Notes covered by
such Registration Statement or Exchange Notes to be sold by such Exchange
Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 4(l) hereof or
(y) the advice in writing.
(j) Prior to the Exchange Offer or any other offering of Notes
pursuant to any Registration Statement, the Company shall register or
qualify or cooperate with the Holders of Notes included therein and their
respective counsel in connection with the registration or qualification of
such Notes for offer and sale under the securities or blue sky laws of such
states as any such Holders reasonably request in writing and do any and all
other acts or things necessary or advisable to enable the offer and sale in
such states of the Notes covered by such Registration Statement; PROVIDED,
HOWEVER, that the Company will not be required to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not then so qualified, to file any general consent to service of process or
to take any action that would subject it to general service of process in
any such jurisdiction where it is not then so subject or to subject itself
to taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject.
(k) The Company shall cooperate with the Holders to facilitate
the timely preparation and delivery of certificates representing Notes to
be sold pursuant to any Registration Statement free of any restrictive
legends and in denominations of $1,000 or an integral multiple thereof and
registered in such names as Holders may request prior to
<PAGE>
sales of Notes pursuant to such Registration Statement.
(l) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) of this Section 4, the Company shall promptly prepare and file
a post-effective amendment to any Registration Statement or an amendment or
supplement to the related Prospectus or any other required document so
that, as thereafter delivered to purchasers of the Notes included therein,
the Prospectus will not include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
and, in the case of a Shelf Registration Statement, notify the Holders to
suspend use of the Prospectus as promptly as practicable after the
occurrence of such an event. Notwithstanding the foregoing, the Company
shall not be required to amend or supplement a Shelf Registration
Statement, any related Prospectus or any document incorporated therein by
reference, for a period not to exceed an aggregate of 30 days in any
calendar year, if the Company determines in its good faith judgment that
the disclosure of such event at such time would have a material adverse
effect on the business, operations, or prospects of the Company or the
disclosure otherwise related to a pending material business transaction
that has not yet been publicly disclosed.
(m) Not later than the effective date of any such Registration
Statement hereunder, the Company shall provide a CUSIP number for the Notes
or Exchange Notes, as the case may be, registered under such Registration
Statement, and provide the Trustee with certificates for such Notes or
Exchange Notes, in a form eligible for deposit with The Depository Trust
Company.
(n) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the
effective date of the applicable Registration Statement an earnings
statement meeting the requirements of Rule 158 under the Securities Act.
(o) The Company shall cause the Indenture to be qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), in
a timely manner.
(p) The Company may require each Holder of Notes to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such Notes as the
Company may from time to time reasonably require for inclusion in such
Registration Statement.
(q) The Company shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters, if any, and
Majority Holders reasonably agree should be included therein, and shall
make all required filings of such Prospectus
<PAGE>
supplement or post-effective amendment promptly upon notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.
(r) In the case of any Shelf Registration Statement, the Company
shall enter into such agreements (including underwriting agreements) and
take all other appropriate actions in order to expedite or to facilitate
the registration or the disposition of any Notes included therein, and in
connection therewith, if an underwriting agreement is entered into, cause
the same to contain indemnification provisions and procedures no less
favorable than those set forth in Section 6 (or such other provisions and
procedures acceptable to the Majority Holders and the Managing
Underwriters, if any) with respect to all parties to be indemnified
pursuant to Section 6.
(s) In the case of any Shelf Registration Statement, the Company
shall:
(i) make reasonably available for inspection by the
Holders of Notes to be registered thereunder, any underwriter
participating in any disposition pursuant to such Shelf Registration
Statement, and any attorney, accountant or other agent retained by
the Holders or any such underwriter all relevant financial and other
records, pertinent corporate documents and properties of the Company
and any of its subsidiaries;
(ii) cause the Company's officers, directors and employees
to supply all relevant information reasonably requested by the
Holders or any such underwriter, attorney, accountant or agent in
connection with any such Registration Statement as is customary for
similar due diligence examinations and make such representatives of
the Company as shall be reasonably requested by the Initial
Purchasers or Managing Underwriters, if any, available for
discussion of any such Registration Statement; PROVIDED, HOWEVER,
that any non-public information that is designated in writing by the
Company, in good faith, as confidential at the time of delivery of
such information shall be kept confidential by the Holders or any
such underwriter, attorney, accountant or agent, unless such
disclosure is made in connection with a court proceeding or required
by law, or such information becomes available to the public
generally or through a third party without an accompanying
obligation of confidentiality other than as a result of a disclosure
of such information by any such Holder, underwriter, attorney,
accountant or agent;
(iii) make such representations and warranties to the
Holders of Notes registered thereunder and the underwriters, if any,
in form, substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings as may be reasonably
requested by them;
(iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably
<PAGE>
satisfactory to the Managing Underwriters, if any) addressed to each
selling Holder and the underwriters, if any, covering such matters
as are customarily covered in opinions requested in similar
underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;
(v) obtain "cold comfort" letters and updates thereof from
the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed
to the underwriters, if any, and use reasonable efforts to have such
letter addressed to the selling Holders of Notes registered
thereunder (to the extent consistent with Statement on Auditing
Standards No. 72 of the American Institute of Certified Public
Accountants (AICPA) ("SAS 72")), in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with similar underwritten offerings, or if the provision
of such "cold comfort" letters is not permitted by SAS 72 or if
requested by the Initial Purchasers or their counsel in lieu of a
"cold comfort" letter, an agreed-upon procedures letter under
Statement on Auditing Standards No. 75 of the AICPA, covering
matters requested by the Initial Purchasers or their counsel; and
(vi) deliver such documents and certificates as may be
reasonably requested by the Majority Holders and the Managing
Underwriters, if any, and customarily delivered in similar
offerings, including those to evidence compliance with Section 4(l)
and with any conditions contained in the underwriting agreement or
other agreement entered into by the Company.
The foregoing actions set forth in clauses (iii), (iv), (v) and (vi)
of this Section 4(s) shall be performed at (A) the effectiveness of such
Shelf Registration Statement and each post-effective amendment thereto and
(B) each closing under any underwriting or similar agreement as and to the
extent required thereunder.
(t) The Company shall, in the case of a Shelf Registration, use
their best efforts to cause all Notes to be listed on any securities
exchange or any automated quotation system on which similar securities
issued by the Company are then listed if requested by the Majority Holders,
to the extent such Notes satisfy applicable listing requirements.
(u) The Company shall use its best efforts to cause the Exchange
Notes or Notes, as the case may be, to be rated by two nationally
recognized statistical rating organizations (as such term is defined in
Rule 436(g)(2) under the 1933 Act).
<PAGE>
5. REGISTRATION EXPENSES; REMEDIES. (a) The Company shall bear
all expenses incurred in connection with the performance of its obligations
under Sections 2, 3 and 4 hereof, including without limitation: (i) all
Commission, stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses incurred in connection
with compliance with state securities or blue sky laws (including reasonable
fees and disbursements of counsel for any underwriters or Holders in connection
with blue sky qualification of any of the Exchange Notes or Notes), (iii) all
expenses of any persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all rating agency fees, if any, (v) all fees and
disbursements relating to the qualification of the Indenture under applicable
securities laws, (vi) the fees and disbursements of the Trustee and its counsel,
(vii) the fees and disbursements of counsel for the Company and, in the case of
a Shelf Registration Statement, the fees and disbursements of one counsel for
the Holders (which counsel shall be selected by the Majority Holders and which
counsel may also be counsel for the Initial Purchasers) and in the case of any
Exchange Offer Registration Statement, the fees and expenses of counsel to the
Initial Purchasers acting in connection therewith and (viii) the fees and
disbursements of the independent public accountants of the Company and Sygnet
Wireless, Inc., including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, but
excluding fees and expenses of counsel to the underwriters (other than fees and
expenses set forth in clause (ii) above) or the Holders and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Notes by a Holder.
(b) The Notes provide that if the Exchange Offer is not
consummated on or prior to the 180th calendar day following the Closing Date or
a Shelf Registration Statement is not declared effective when required, the
annual interest rate on the Notes will increase by 0.5% per annum until the
consummation of the Exchange Offer or the effectiveness of a Shelf Registration
Statement, as the case may be.
(c) Without limiting the remedies available to the Initial
Purchasers and the Holders, the Company acknowledges that any failure by the
Company to comply with its obligations under Sections 2 and 3 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Sections 2 and
3 hereof.
6. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with
any Registration Statement, the Company agrees to indemnify and hold harmless
each Holder of Notes covered thereby (including the Initial Purchasers and, with
respect to any Prospectus delivery as contemplated by Sections 2(e) and 4(h)
hereof, each Exchanging Dealer) the
<PAGE>
directors, officers, employees and agents of such Holder and each person who
controls such Holder within the meaning of either the Securities Act or the
Exchange Act, against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in such
Registration Statement as originally filed or in any amendment thereof, or in
any preliminary Prospectus or Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage or liability (or action in respect
thereof); PROVIDED, HOWEVER, that the Company will not be liable in any case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such indemnified
party specifically for inclusion therein; PROVIDED FURTHER, HOWEVER, that the
Company will not be liable in any case with respect to any untrue statement or
omission or alleged untrue statement or omission made in any preliminary
Prospectus or Prospectus, or in any amendment thereof or supplement thereto to
the extent that any such loss, claim, damage or liability (or action in respect
thereof) resulted from the fact that any indemnified party sold Notes or
Exchange Notes to a person to whom there was not sent or given, at or prior to
the written confirmation of such sale, a copy of the Prospectus as then amended
or supplemented, if the Company had previously complied with the provisions of
Section 4(c)(2) and 4(f) or 4(h) hereof and if the untrue statement contained in
or omission from such preliminary Prospectus or Prospectus was corrected in the
Prospectus as then amended or supplemented. This indemnity agreement will be in
addition to any liability that the Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses of, as
provided in Section 6(d) hereof, any underwriters of Notes registered under a
Shelf Registration Statement, their employees, officers, directors and agents
and each person who controls such underwriters on the same basis as that of the
indemnification of the Initial Purchasers and the selling Holders provided in
this Section 6(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 4(r)
hereof.
(b) Each Holder of Notes covered by a Registration Statement
(including the Initial Purchasers and, with respect to any Prospectus delivery
as contemplated by Sections 2(e) and 4(h) hereof, each Exchanging Dealer)
severally agrees to indemnify and hold harmless (i) the Company, (ii) each of
the directors of the Company, (iii) each of the officers of the Company who
signs such Registration Statement and (iv) each Person who controls the Company
within the meaning of either the Securities Act or the Exchange Act to the same
<PAGE>
extent as the foregoing indemnity from the Company to each such Holder, but only
with respect to written information furnished to the Company by or on behalf of
such Holder specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability that any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve the indemnifying party from liability under paragraph (a) or
(b) above unless and to the extent it did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of substantial
rights and defenses, and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel (including local
counsel) of the indemnifying party's choice at the indemnifying party's expense
to represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); PROVIDED, HOWEVER, that such
counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel (and local counsel) if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
<PAGE>
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending the same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement that resulted in such Losses; PROVIDED, HOWEVER, that in
no case shall any Initial Purchaser or any subsequent Holder of any Note or
Exchange Note be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Note, or in the case of an
Exchange Note, applicable to the Note that was exchangeable into such Exchange
Note, as set forth on the cover page of the Final Memorandum, nor shall any
underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the Notes purchased by such underwriter under the
Registration Statement that resulted in such Losses. If the allocation provided
by the immediately preceding sentence is unavailable for any reason, the
indemnifying party and the indemnified party shall contribute in such proportion
as is appropriate to reflect not only such relative benefits but also the
relative fault of such indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the Initial Placement (before deducting expenses) as set forth on
the cover page of the Final Memorandum. Benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions as set forth on the cover page of the Final Memorandum, and benefits
received by any other Holders shall be deemed to be equal to the value of
receiving Notes or Exchange Notes, as applicable, registered under the
Securities Act. Benefits received by any underwriter shall be deemed to be
equal to the total underwriting discounts and commissions, as set forth on the
cover page of the Prospectus forming a part of the Registration Statement that
resulted in such Losses. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the indemnifying party, on the one hand, or by the indemnified party, on the
other hand. The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation that did not take account of the equitable considerations referred to
above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person who controls a Holder within the meaning of either the Securities
Act or the Exchange Act and each director, officer, employee and agent of such
Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Securities Act
or the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the
<PAGE>
Company shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section 6 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder
or the Company or any of the officers, directors or controlling persons referred
to in Section 6 hereof, and will survive the sale by a Holder of Notes covered
by a Registration Statement.
7. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENT. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement that conflicts with the rights granted to the Holders herein
or otherwise conflicts with the provisions hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Holders of at least a majority of the then outstanding aggregate
principal amount of Notes (or, after the consummation of any Exchange Offer in
accordance with Section 2 hereof, of Exchange Notes); PROVIDED that, with
respect to any matter that directly or indirectly affects the rights of the
Initial Purchasers hereunder, the Company shall obtain the written consent of
the Initial Purchasers. Notwithstanding the foregoing (except the foregoing
proviso), a waiver or consent to departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
Notes are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by the
Majority Holders, determined on the basis of Notes being sold rather than
registered under such Registration Statement.
(c) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
7(c), which address initially is, with respect to each Holder, the address
of such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to NationsBanc Montgomery Securities LLC;
(ii) if to the Initial Purchasers, at NationsBanc Montgomery
Securities LLC, 767 Fifth Avenue, Floor 12A, New York, New York 10153,
Attention: Paul Jetter; and
(iii) if to the Company, Dobson/Sygnet Operating Company, 13439 N.
Broadway Extension, Suite 200, Oklahoma City, Oklahoma 73114, Attention:
Bruce R.
<PAGE>
Knoohuizen, with a copy to McAfee & Taft A Professional Corporation, 211
North Robinson, Suite 1000, Oklahoma City, Oklahoma 73102, Attention:
Theodore M. Elam and W. Christopher Coleman.
All such notices and communications shall be deemed to have been
duly given when received. The Initial Purchasers, on the one hand, or the
Company, on the other, by notice to the other party or parties may designate
additional or different addresses for subsequent notices or communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Notes and/or Exchange Notes. The
Company hereby agrees to extend the benefits of this Agreement to any Holder of
Notes and/or Exchange Notes and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Agreement.
(f) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) NOTES HELD BY THE COMPANY, ETC. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Notes or
Exchange Notes is required hereunder, Notes or Exchange Notes, as applicable,
held by the Company or its Affiliates (other than subsequent Holders of Notes or
Exchange Notes if such subsequent Holders are deemed to be Affiliates solely by
reason of their holdings of such Notes or Exchange Notes) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
DOBSON/SYGNET COMMUNICATIONS COMPANY
By: /s/ Everett R. Dobson
----------------------------
Name: Everett R. Dobson
Title: Chief Executive Officer
The foregoing Agreement is hereby
accepted as of the date first above written.
NATIONSBANC MONTGOMERY
SECURITIES LLC
As representative of the several Initial
Purchasers listed on Schedule I hereto
By:/s/ Paul D. Jetter
---------------------
Name: Paul D. Jetter
Title: Managing Director
<PAGE>
SCHEDULE I
INITIAL PURCHASERS
NationsBanc Montgomery Securities LLC
Lehman Brothers Inc.
First Union Securities, Inc.
a division of Wheat First Securities, Inc.
TD Securities (USA) Inc.
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Notes where such Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, starting on the
Expiration Date (as defined herein) and ending on the close of business one year
after the Expiration Date, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Notes, where such Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution."
<PAGE>
ANNEX C
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date and ending on the close of business one year after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until such date all dealers effecting transactions in the Exchange
Notes may be required to deliver a prospectus.
<PAGE>
ANNEX D
If the undersigned is a broker-dealer that will receive Exchange Notes for
its own account in exchange for Notes, it represents that the Notes to be
exchanged for the Exchange Notes were acquired by it as a result of
market-making activities or other trading activities and acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
<PAGE>
CREDIT AGREEMENT
among
DOBSON/SYGNET OPERATING COMPANY,
BORROWER
NATIONSBANC MONTGOMERY SECURITIES LLC,
LEAD ARRANGER
NATIONSBANK, N.A.,
ADMINISTRATIVE AGENT
LEHMAN COMMERCIAL PAPER INC. AND PNC BANK, NATIONAL ASSOCIATION,
CO-SYNDICATION AGENTS
and
TORONTO DOMINION (TEXAS), INC. AND FIRST UNION NATIONAL BANK,
CO-DOCUMENTATION AGENTS
and
THE LENDERS NAMED HEREIN,
LENDERS
$430,000,000
SENIOR SECURED CREDIT FACILITIES
DATED AS OF DECEMBER 23, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 DEFINITIONS AND TERMS. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Number and Gender of Words; Other References . . . . . . . . . . . . . 24
1.3 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2 BORROWING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.1 Revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2 Swing Line Subfacility . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3 Term Loan A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.4 Term Loan B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.5 Term Loan C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.6 Terminations or Reductions of Commitments. . . . . . . . . . . . . . . 26
2.7 Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.8 Borrowing Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3 TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.1 Loan Accounts, Notes, and Payments . . . . . . . . . . . . . . . . . . 32
3.2 Interest and Principal Payments. . . . . . . . . . . . . . . . . . . . 32
3.3 Interest Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.4 Quotation of Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.5 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.6 Interest Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.7 Interest Calculations. . . . . . . . . . . . . . . . . . . . . . . . . 36
3.8 Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.9 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.10 Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.11 Order of Application . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.12 Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . . . . . . 39
3.13 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.14 Booking Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4 CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . . . . . . . . . . . . . 39
4.1 Increased Cost and Reduced Return. . . . . . . . . . . . . . . . . . . 39
4.2 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . . . 40
4.3 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.4 Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . . . . 41
4.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1 Treatment of Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2 Fees of Administrative Agent and Arranger. . . . . . . . . . . . . . . 43
5.3 Revolver Facility Commitment Fees. . . . . . . . . . . . . . . . . . . 44
SECTION 6. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(i)
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
6.1 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.2 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.3 Future Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.4 Release of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . 45
6.5 Negative Pledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.6 Control; Limitation of Rights. . . . . . . . . . . . . . . . . . . . . 45
SECTION 7 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.1 Conditions Precedent to Closing. . . . . . . . . . . . . . . . . . . . 46
7.2 Conditions Precedent to a Permitted Acquisition. . . . . . . . . . . . 46
7.3 Conditions Precedent to Each Borrowing.. . . . . . . . . . . . . . . . 46
SECTION 8 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 47
8.1 Purpose of Credit Facilities . . . . . . . . . . . . . . . . . . . . . 47
8.2 Existence, Good Standing, Authority, and Authorizations. . . . . . . . 47
8.3 Subsidiaries; Capital Stock. . . . . . . . . . . . . . . . . . . . . . 47
8.4 Authorization and Contravention. . . . . . . . . . . . . . . . . . . . 48
8.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.7 Litigation, Claims, Investigations . . . . . . . . . . . . . . . . . . 48
8.8 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.9 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . 49
8.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 49
8.11 Properties; Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.12 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . 49
8.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . 49
8.14 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.15 Material Agreements; Management Agreements . . . . . . . . . . . . . . 50
8.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.17 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.18 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.19 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 50
8.20 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.21 The Sygnet Merger and Dobson Acquisition . . . . . . . . . . . . . . . 50
8.22 Permitted Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . 51
8.23 Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.24 Tradename. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.25 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.26 Sygnet Towers Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.27 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.28 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.1 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.2 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.3 Items to be Furnished. . . . . . . . . . . . . . . . . . . . . . . . . 53
9.4 Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.6 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . 55
(ii)
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
9.7 Maintenance of Existence, Assets, and Business . . . . . . . . . . . . 56
9.8 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.9 Preservation and Protection of Rights. . . . . . . . . . . . . . . . . 56
9.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 57
9.11 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.12 Debt and Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.13 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.14 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . 58
9.15 Compliance with Laws and Documents . . . . . . . . . . . . . . . . . . 58
9.16 Permitted Acquisitions, Subsidiary Guaranties, and Collateral
Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.17 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.18 Fiscal Year and Accounting Methods . . . . . . . . . . . . . . . . . . 59
9.19 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . 59
9.20 Loans, Advances, and Investments . . . . . . . . . . . . . . . . . . . 59
9.21 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.22 Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . . . . 61
9.23 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.24 Sale-Leaseback Financings. . . . . . . . . . . . . . . . . . . . . . . 61
9.25 Mergers and Dissolutions; Sale of Capital Stock. . . . . . . . . . . . 61
9.26 New Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.27 Financial Hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.28 Affiliate Subordination Agreements . . . . . . . . . . . . . . . . . . 62
9.29 Amendments to Documents. . . . . . . . . . . . . . . . . . . . . . . . 62
9.30 Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.31 Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10 DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.1 Payment of Obligation. . . . . . . . . . . . . . . . . . . . . . . . . 63
10.2 Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.3 Debtor Relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.4 Judgments and Attachments. . . . . . . . . . . . . . . . . . . . . . . 64
10.5 Government Action. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.6 Misrepresentation. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.7 Change of Management . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.8 Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.9 Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.10 Default Under Other Debt and Agreements. . . . . . . . . . . . . . . . 65
10.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 65
10.12 Validity and Enforceability of Loan Papers . . . . . . . . . . . . . . 66
10.13 Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . 66
10.14 Environmental Liability. . . . . . . . . . . . . . . . . . . . . . . . 66
10.15 Pledged Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.16 Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.17 Payment of Certain Other Agreements. . . . . . . . . . . . . . . . . . 66
10.18 Default or Acceleration under Certain Other Agreements . . . . . . . . 66
10.19 Redemption of Certain Other Debt or Obligation . . . . . . . . . . . . 67
SECTION 11 RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.1 Remedies Upon Default. . . . . . . . . . . . . . . . . . . . . . . . . 67
(iii)
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
11.2 Company Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.3 Performance by Administrative Agent. . . . . . . . . . . . . . . . . . 67
11.4 Delegation of Duties and Rights. . . . . . . . . . . . . . . . . . . . 68
11.5 Not in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.6 Course of Dealing. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.7 Cumulative Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.8 Application of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 68
11.9 Certain Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.10 Limitation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.11 Expenditures by Lenders. . . . . . . . . . . . . . . . . . . . . . . . 69
11.12 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 12 AGREEMENT AMONG LENDERS. . . . . . . . . . . . . . . . . . . . . . . . 70
12.1 Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.3 Proportionate Absorption of Losses . . . . . . . . . . . . . . . . . . 71
12.4 Delegation of Duties; Reliance . . . . . . . . . . . . . . . . . . . . 71
12.5 Limitation of Liability. . . . . . . . . . . . . . . . . . . . . . . . 72
12.6 Default; Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.7 Limitation of Liability. . . . . . . . . . . . . . . . . . . . . . . . 73
12.8 Relationship of Lenders. . . . . . . . . . . . . . . . . . . . . . . . 73
12.9 Benefits of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 73
12.10 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.11 Obligations Several. . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 13 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.1 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.2 Nonbusiness Days . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.4 Form and Number of Documents . . . . . . . . . . . . . . . . . . . . . 74
13.5 Exceptions to Covenants. . . . . . . . . . . . . . . . . . . . . . . . 74
13.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
13.8 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 75
13.9 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
13.10 Jurisdiction; Venue; Service of Process; Jury Trial. . . . . . . . . . 75
13.11 Amendments, Consents, Conflicts, and Waivers . . . . . . . . . . . . . 76
13.12 Multiple Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 76
13.13 Successors and Assigns; Assignments and Participations . . . . . . . . 77
13.14 Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
(iv)
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 2.1 - Lenders and Commitments
Schedule 7.1 - Conditions Precedent to Closing
Schedule 7.2 - Conditions Precedent to Permitted Acquisition
Schedule 8.2 - FCC and PUC Licenses
Schedule 8.3 - Subsidiary List
Schedule 8.15 - Material Agreements
Exhibit A-1 - Form of Revolver Note
Exhibit A-2 - Form of Swing Line Note
Exhibit A-3 - Form of Term Loan Facility A Note
Exhibit A-4 - Form of Term Loan Facility B Note
Exhibit A-5 - Form of Term Loan Facility C Note
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Conversion
Exhibit C - Form of Guaranty
Exhibit D - Form of Pledge, Assignment, and Security Agreement
Exhibit E-1 - Form of Compliance Certificate
Exhibit E-2 - Form of Permitted Acquisition Compliance Certificate
Exhibit E-3 - Form of Permitted Acquisition Loan Closing Certificate
Exhibit F - Form of Assignment and Acceptance Agreement
Exhibit G-1 - Form of Opinion of Counsel of Borrower
Exhibit G-2 - Form of Opinion of Special Regulatory Counsel
Exhibit G-3 - Form of Opinion of Local Counsel
Exhibit H - Form of Affiliate Subordination Agreements
(v)
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of December 23, 1998, among
DOBSON/SYGNET OPERATING COMPANY (including its successor by merger, Sygnet
Wireless, Inc.) (as more fully defined in SECTION 1, "BORROWER"), NATIONSBANC
MONTGOMERY SECURITIES LLC, as Arranger (hereinafter defined), Lenders
(hereinafter defined), LEHMAN COMMERCIAL PAPER INC. and PNC BANK, NATIONAL
ASSOCIATION, as Co-Syndication Agents (hereinafter defined), TORONTO
DOMINION (TEXAS), INC. and FIRST UNION NATIONAL BANK, as Co-Documentation
Agents (hereinafter defined), and NATIONSBANK, N.A., as Administrative Agent
(hereinafter defined), for itself and the other Lenders.
RECITALS
A. Dobson/Sygnet Operating Company (f/k/a Front Nine Operating
Company and SWI Acquisition Corp.), an Ohio corporation, will be acquired by
Dobson/Sygnet Communications Corporation ("PARENT"), a Wholly-owned
Subsidiary of Dobson Communications Corporation, in a stock acquisition from
Dobson Operating Company (the "DOBSON ACQUISITION").
B. Concurrently with the Dobson Acquisition, Dobson/Sygnet
Operating Company will merge with and into Sygnet Wireless, Inc. pursuant to
that certain Agreement and Plan of Merger dated as of July 28, 1998, between
Dobson/Sygnet and Sygnet Wireless, Inc. (the "SYGNET MERGER").
C. Borrower has requested that, in addition to other sources of
financing, Lenders extend credit to Borrower to enable, among other things,
the consummation of the Sygnet Merger.
D. Upon and subject to the terms and conditions of this
Agreement, Lenders are willing to extend credit to Borrower, providing for
four credit facilities totaling $430,000,000, in the form of a revolving loan
facility in the aggregate principal amount of $50,000,000 and three term loan
facilities in the aggregate principal amount of $125,000,000, $155,000,000,
and $100,000,000, respectively.
Accordingly, in consideration of the mutual covenants contained
herein, the parties hereto agree, as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 DEFINITIONS. As used herein:
ACQUISITION means any transaction or series of related transactions
for the purpose of, or resulting in, directly or indirectly, (a) the
acquisition by any Company of all or substantially all of the assets of a
Person or of any business or division of a Person, (b) the acquisition by any
Company of more than 50% of any class of Voting Stock (or similar ownership
interests) of any Person (PROVIDED THAT, formation or organization of any
entity shall not constitute an "ACQUISITION" to the extent that the amount of
the loan, advance, investment, or capital contribution in such entity
constitutes a permitted investment under SECTION 9.20); or (c) a merger,
consolidation, amalgamation, or other combination by any Company with another
Person if a Company is the surviving entity; PROVIDED THAT, in any merger
involving Borrower, Borrower must be the surviving entity.
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
ADJUSTED EURODOLLAR RATE means, for any Eurodollar Rate Borrowing for
any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Administrative Agent
to be equal to the quotient obtained by dividing (a) the Eurodollar Rate for
such Eurodollar Rate Borrowing for such Interest Period by (b) 1 minus the
Reserve Requirement for such Eurodollar Rate Borrowing for such Interest
Period.
ADMINISTRATIVE AGENT means NationsBank, N.A., and its permitted
successors or assigns as "ADMINISTRATIVE AGENT" for Lenders under this
Agreement.
AFFILIATE of any Person means any other individual or entity who
directly or indirectly controls, or is controlled by, or is under common
control with, such Person, and, for purposes of this definition only,
"CONTROL," "CONTROLLED BY," and "UNDER COMMON CONTROL WITH" mean possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract, or otherwise).
AGENTS means, collectively, the Administrative Agent, the
Co-Syndication Agents, and the Co-Documentation Agents.
AGREEMENT means this Credit Agreement (as the same may hereafter be
amended, modified, supplemented, or restated from time to time).
ANNUALIZED OPERATING CASH FLOW means (i) from the Closing Date
through December 30, 1998, the Operating Cash Flow of the Companies for the
period from July 1, 1998, through September 30, 1998, MULTIPLIED BY four;
(ii) for the fiscal quarter ending December 31, 1998, the Operating Cash Flow
of the Companies for the period from July 1, 1998, through December 31, 1998
MULTIPLIED BY two; and (iii) for the fiscal quarter ending March 31, 1999,
the Operating Cash Flow of the Companies for the period from July 1, 1998,
through March 31, 1999, MULTIPLIED BY 4/3.
APPLICABLE LENDING OFFICE means, for each Lender and for each Type
of Borrowing, the "LENDING OFFICE" of such Lender (or an affiliate of such
Lender) designated on SCHEDULE 2.1 attached hereto or such other office that
such Lender (or an affiliate of such Lender) may from time to time specify to
Administrative Agent and Borrower by written notice in accordance with the
terms hereof.
APPLICABLE MARGIN means:
(a) on any date of determination with respect to each Base Rate
Borrowing or Eurodollar Rate Borrowing under the Revolver Facility and Term
Loan A, respectively, the percentage per annum set forth in the appropriate
column below that corresponds to the Leverage Ratio at such date of
determination, as calculated based on the quarterly Compliance Certificate of
Borrower most recently delivered pursuant to SECTION 9.3 hereof:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Applicable Margin
-------------------------------------------
Leverage Ratio Eurodollar Rate
Base Rate Borrowings Borrowings
- -----------------------------------------------------------------------
<S> <C> <C>
Less than 2.00:1.0 0.750% 1.750%
- -----------------------------------------------------------------------
Greater than or equal to
2.00:1.0, 1.000% 2.000%
but less than 3.00:1.0
- -----------------------------------------------------------------------
</TABLE>
2
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Applicable Margin
-------------------------------------------
Leverage Ratio Eurodollar Rate
Base Rate Borrowings Borrowings
- -----------------------------------------------------------------------
<S> <C> <C>
Greater than or equal to
3.00:1.0, 1.250% 2.250%
but less than 4.00:1.0
- -----------------------------------------------------------------------
Greater than or equal to
4.00:1.0, 1.500% 2.500%
but less than 5.00:1.0
- -----------------------------------------------------------------------
Greater than or equal to
5.00:1.0, 1.750% 2.750%
but less than 6.0:1.0
- -----------------------------------------------------------------------
Greater than or equal to
6.0:1.0 2.000% 3.000%
- -----------------------------------------------------------------------
</TABLE>
; PROVIDED THAT, if after December 31, 2001, the ratio (based on the
quarterly Compliance Certificate of Borrower most-recently delivered pursuant
to SECTION 9.3 hereof) of (i) Debt of the Companies LESS the outstanding
principal amount of the Senior Reserve Notes to (ii) the Operating Cash Flow
of the Companies is less than 3.00:1.00, the Applicable Margin for the
Revolver Facility and Term Loan A will be reduced by 0.50%; however, in no
event, shall the Applicable Margin for the Revolver Facility or Term Loan A
be less than 0.750% for Base Rate Borrowings and 1.750% for Eurodollar Rate
Borrowings;
(b) on any date of determination with respect to each Base Rate
Borrowing or Eurodollar Rate Borrowing under Term Loan B, the percentage per
annum set forth in the appropriate column below that corresponds to the
Leverage Ratio at such date of determination, as calculated based on the
quarterly Compliance Certificate of Borrower most recently delivered pursuant
to SECTION 9.3 hereof:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Applicable Margin
-------------------------------------------
Leverage Ratio Eurodollar Rate
Base Rate Borrowings Borrowings
- -----------------------------------------------------------------------
<S> <C> <C>
Less than 4.00:1.0 1.750% 2.750%
- -----------------------------------------------------------------------
Greater than or equal to
4.00:1.0, 2.000% 3.000%
but less than 6.00:1.0
- -----------------------------------------------------------------------
Greater than or equal to
6.0:1.0 2.250% 3.250%
- -----------------------------------------------------------------------
</TABLE>
; PROVIDED THAT, if after December 31, 2001, the ratio (based on the
quarterly Compliance Certificate of Borrower most-recently delivered pursuant
to SECTION 9.3 hereof) of (i) Debt of the Companies LESS the outstanding
principal amount of the Senior Reserve Notes to (ii) the Operating Cash Flow
of the Companies is less than 3.00:1.00, the Applicable Margin for Term Loan
B will be reduced by 0.25%; however, in no event, shall the Applicable Margin
for Term Loan B be less than 1.750% for Base Rate Borrowings and 2.750% for
Eurodollar Rate Borrowings; and
(c) for Borrowings under Term Loan C, which shall be limited to
Eurodollar Rate Borrowings, a percentage per annum equal to 3.750%; PROVIDED
THAT, if Eurodollar Rate Borrowings are not available, Borrowings under Term
Loan C shall be Base Rate Borrowings with an Applicable Margin of 2.750%.
The provisions in items (a), (b), and (c) are further subject to, the
following:
3
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
(i) Until the second Business Day after the initial
Financial Statements and Compliance Certificate for the fiscal quarter
ending December 31, 1998, shall have been delivered hereunder, the
Applicable Margin for Base Rate Borrowings and Eurodollar Rate
Borrowings under the Revolver Facility, Term Loan A, and Term Loan B
shall be determined by reference to a Compliance Certificate delivered
by Borrower on the Closing Date. With respect to any adjustments in the
Applicable Margin as a result of changes in the Leverage Ratio, such
adjustment shall be effective commencing on the second Business Day
after the delivery of Financial Statements (and the related Compliance
Certificate) pursuant to SECTIONS 9.3(a) and 9.3(b) or the most recent
Permitted Acquisition Compliance Certificate for a Permitted
Acquisition, as the case may be; and
(ii) If Borrower fails to timely furnish to Lenders the
Financial Statements and related Compliance Certificates as required to
be delivered pursuant to SECTIONS 9.3(a) and 9.3(b), and such failure
shall not be remedied within five days after written notice thereof from
the Administrative Agent or any Lender, then the Applicable Margin for
the Revolver Facility, Term Loan A, and Term Loan B shall be the maximum
Applicable Margin for the respective Facility specified in the Tables
above.
APPLICABLE MARGIN FOR COMMITMENT FEES means, on any date of
determination, the percentage set forth in the table below which corresponds,
on any date of determination, with the Leverage Ratio at such date of
determination, as calculated based on the quarterly compliance certificates
of Borrower most recently delivered pursuant to SECTION 9.3 hereof.
<TABLE>
<CAPTION>
--------------------------------------------
Applicable Margin
Leverage Ratio for Commitment
Fees
--------------------------------------------
<S> <C>
Greater than or equal to 0.500%
4.00 to 1.0
--------------------------------------------
Less than 4.00 to 1.0 0.375%
--------------------------------------------
</TABLE>
(a) Until the second Business Day after the initial
Financial Statements and Compliance Certificate for the fiscal quarter
ending December 31, 1998, shall have been delivered hereunder, the
Applicable Margin for Commitment Fees shall be determined by reference
to a Compliance Certificate delivered by Borrower on the Closing Date.
With respect to any adjustments in the Applicable Margin for Commitment
Fees as a result of changes in the Leverage Ratio, such adjustment shall
be effective commencing on the second Business Day after the delivery of
Financial Statements (and related Compliance Certificate) pursuant to
SECTIONS 9.3(a) and 9.3(b) or the most recent Permitted Acquisition
Compliance Certificate for a Permitted Acquisition, as the case may be.
(b) If Borrower fails to timely furnish to Lenders the
Financial Statements and related Compliance Certificates as required to
be delivered pursuant to SECTIONS 9.3(a) and 9.3(b), and such failure
shall not be remedied within five days after written notice thereof from
the Administrative Agent or any Lender, then the Applicable Margin for
Commitment Fees shall be the maximum Applicable Margin specified in the
table above.
ARRANGER means NationsBanc Montgomery Securities LLC, and its successors
and assigns.
4
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
ASSUMED TAXES means, (a) with respect to any Equity Issuance, an
amount equal to such incremental annual increase in franchise Taxes as
Borrower estimates in good faith shall be payable as a result of such Equity
Issuance, (b) with respect to any Significant Sale, an amount equal to such
percentage as Borrower estimates in good faith to be its effective rate of
the taxable gain for federal and state income tax purposes with respect to
such Significant Sale, and (c) with respect to any Dobson Tower Resale, an
amount equal to such percentage as Dobson Tower estimates in good faith to be
its effective rate of the taxable gain for federal and state income tax
purposes with respect to such Dobson Tower Resale.
AUTHORIZATIONS means all filings, recordings, and registrations with,
and all validations or exemptions, approvals, orders, authorizations,
consents, franchises, licenses, certificates, and permits from, any
Governmental Authority (including, without limitation, the FCC and applicable
PUCs), including without limitation, any of the foregoing authorizing or
permitting the acquisition, construction, or operation of any System.
BASE RATE means, for any day, the rate per annum equal to the HIGHER
of (a) the Federal Funds Rate for such day PLUS one-half of one percent (.5%)
and (b) the Prime Rate for such day. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Rate.
BASE RATE BORROWING means a Borrowing bearing interest at the SUM of
the Base Rate PLUS the Applicable Margin for Base Rate Borrowings for the
relevant Facility.
BORROWER means Dobson/Sygnet and its successor by merger, Sygnet
Wireless, Inc., an Ohio corporation, together with any successor or assign of
Borrower permitted by the Loan Papers.
BORROWING means any amount disbursed (a) by one or more Lenders to
Borrower under the Loan Papers (under the Revolving Facility, the Swing Line
Subfacility, Term Loan A, Term Loan B, or Term Loan C), whether such amount
constitutes an original disbursement of funds or the continuation of an
amount outstanding, or (b) by any Lender in accordance with, and to satisfy
the obligations of any Company under, any Loan Paper.
BORROWING DATE is defined in SECTION 2.8(a).
BUDGET means the most recently delivered of the (a) annual financial
budget for the Companies delivered on the Closing Date as required in ITEM 23
on SCHEDULE 7.1 delivered pursuant to SECTION 7.1 or (b) the Budget
delivered pursuant to SECTION 9.3(d), together with any adjustments to any
Budget (whether described in CLAUSE (a) or (b)) made from time to time based
on projections delivered in connection with Permitted Acquisitions pursuant
to SECTION 7.2 and the requirements of a "PERMITTED ACQUISITION" as set forth
in this SECTION 1.1 SO LONG AS such projections have been approved by
Administrative Agent.
BUSINESS DAY means (a) for all purposes, any day OTHER THAN Saturday,
Sunday, and any other day on which commercial banking institutions are
required or authorized by Law to be closed in Dallas, Texas, and (b) in
addition to the foregoing, in respect of any Eurodollar Rate Borrowing, a day
on which dealings in United States dollars are conducted in the London
interbank market and commercial banks are open for international business in
London.
5
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
CAPITAL EXPENDITURES means an expenditure for any fixed asset having a
useful life of more than one (1) year, or any improvements or additions thereto,
including the direct or indirect acquisition of such assets, and including any
obligations to pay rent or other amounts under a Capital Lease; PROVIDED,
HOWEVER, that Capital Expenditures shall not include acquisitions of stock or
assets which are made in accordance with SECTION 9.20 hereof.
CAPITAL LEASE means any capital lease or sublease which should be
capitalized on a balance sheet in accordance with GAAP.
CASH EQUIVALENTS means:
(a) Readily marketable, direct, full faith and credit
obligations of the United States of America, or obligations guaranteed
by the full faith and credit of the United States of America, maturing
within not more than one year from the date of acquisition;
(b) Short term certificates of deposit and time deposits,
which mature within one year from the date of issuance and which are
fully insured by the Federal Deposit Insurance Corporation;
(c) Commercial paper maturing in 365 days or less from the
date of issuance and rated either "P-1" by Moody's Investors Service,
Inc. ("MOODY'S"), or "A-1" by Standard and Poor's Rating Group (a
division of McGraw-Hill, Inc., "S&P");
(d) Debt instruments of a domestic issuer which mature in
one year or less and which are rated "A" or better by Moody's or S&P on
the date of acquisition of such investment; and
(e) Demand deposit accounts which are maintained in the
ordinary course of business.
CELLULAR PARTNERSHIP means, as the case may be, any entity in which
any Company, Communications, or a Subsidiary of Communications (other than
Logix and its Subsidiaries) owns a partnership interest.
CLOSING DATE means the date upon which this Agreement has been
executed by Borrower, Lenders, and Administrative Agent and all conditions
precedent specified in SECTION 7.1 have been satisfied or waived.
CO-DOCUMENTATION AGENTS means Toronto Dominion (Texas), Inc. and
First Union National Bank and their permitted successors or assigns as
"CO-DOCUMENTATION AGENTS" under this Agreement.
CO-SYNDICATION AGENTS means Lehman Commercial Paper Inc. and PNC
Bank, National Association, and their respective permitted successors or
assigns as "CO-SYNDICATION AGENTS" under this Agreement.
CODE means the INTERNAL REVENUE CODE OF 1986, as amended, TOGETHER
WITH the rules and regulations promulgated thereunder.
COLLATERAL has the meaning set forth in SECTION 6.1.
6
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
COLLATERAL DOCUMENTS means all security agreements, pledge
agreements, assignments of partnership interests, and Guaranties at any time
delivered to Administrative Agent to create or evidence Liens securing the
Obligation, together with all reaffirmations, amendments, and modifications
thereof or supplements thereto.
COMMITTED SUM means, for any Lender for a particular Facility, at any
date of determination, as the case may be, the amount stated beside each
Lender's name under the heading for that Facility on the most-recently
amended SCHEDULE 2.1 to the Agreement (which amount is subject to increase,
reduction, or cancellation in accordance with this Agreement).
COMMUNICATIONS means Dobson Communications Corporation, an Oklahoma
corporation, which owns all of the issued and outstanding shares of capital
stock of Parent.
COMMUNICATIONS ACT means, collectively, The Federal Communications
Act of 1934, as amended from time to time, and the rules and regulations in
effect at any time thereunder.
COMMUNICATIONS BOND DEBT means the 11 3/4% Senior Notes due 2007,
issued by Communications pursuant to that certain Indenture dated as of
February 28, 1997, between Communications and United States Trust Company of
New York, in an aggregate original principal amount of $160,000,000, and the
documents and agreements evidencing and establishing such Debt, as the same
may be amended from time to time in accordance with the terms thereof and
hereof.
COMMUNICATIONS OPERATING CASH FLOW, as of any date of determination,
means the Operating Cash Flow of Communications and its Subsidiaries (other
than Logix and its Subsidiaries) on a consolidated basis for the four most
recently ended fiscal quarters, adjusted, as required, to take into account
any minority ownership in any Subsidiary or Cellular Partnership; PROVIDED,
HOWEVER, with respect to any Cellular Partnership of Communications or its
Subsidiaries (other than Logix and its Subsidiaries), which is indebted to
Communications or any Subsidiary of Communications (other than Logix and its
Subsidiaries) (the "CELLULAR PARTNERSHIP DEBT"), such adjustments for
minority interests shall be made only when either (i) such Cellular
Partnership Debt has been paid in full or (ii) Communications or any
Subsidiary of Communications (other than Logix and its Subsidiaries) does
not have a Lien upon and right to apply 100% of the Operating Cash Flow of
such Cellular Partnership to repayment of such Cellular Partnership Debt.
COMMUNICATIONS TOTAL DEBT means the aggregate Debt of Communications
and its Subsidiaries (other than Logix and its Subsidiaries); PROVIDED, THAT
the Debt of Communications and its Subsidiaries (other than Logix and its
Subsidiaries) (a) shall be reduced by amounts on deposit in the escrow
account funded with proceeds of the Communications Bond Debt, which escrow
account is to be used to pay any outstanding interest under the
Communications Bond Debt; and (b) shall be increased by the liquidation value
of any Preferred Stock on which cash dividends are being paid or are required
to be paid; and (c) shall be increased by the outstanding principal amount of
all issued and outstanding Debentures.
COMPANIES means, at any date of determination thereof, Borrower and
each of its Subsidiaries; and COMPANY means, on any date of determination,
Borrower or any of its Subsidiaries.
COMPLIANCE CERTIFICATE means a certificate signed by a Responsible
Officer, substantially in the form of EXHIBIT E-1.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
CONSEQUENTIAL LOSS means any loss, cost, or expense (including loss
of anticipated profit) which any Lender may reasonably incur in respect of a
Eurodollar Rate Borrowing as a consequence of any event described in SECTION
4.5.
CONSOLIDATED DEBT means on, any date of determination, (i) all Debt
of Parent and its Subsidiaries (including, without limitation, Borrower and
its Subsidiaries) LESS (ii) the value of the Pledged Government Securities
(using valuation methods for such assets consistent with those used in the
Companies' Financial Statements); PLUS (iii) in the event any Junior
Preferred Stock has been issued by Communications and cash dividends are
required to the paid thereon, the liquidation value of the Junior Preferred
Stock then issued and outstanding; PLUS (iv) in the event any Junior
Debentures have been exchanged for any Junior Preferred Stock, the
outstanding principal amount of such Junior Debentures.
CURRENT FINANCIALS means, at the time of any determination thereof,
the more recently delivered to Lenders of either (a)(i) the Financial
Statements for the fiscal year ended December 31, 1997, and the nine-month
period ended September 30, 1998, calculated on a consolidated basis for
Dobson/Sygnet Operating Company; (ii) the consolidated Financial Statements
of Sygnet Wireless, Inc. and its Subsidiaries for the fiscal year ended
December 31, 1997, and the nine-month period ended September 30, 1998; and
(iii) the PRO FORMA combined Financial Statements of Dobson/Sygnet Operating
Company, Sygnet Wireless, Inc., and their respective Subsidiaries prepared as
of the Closing Date after giving effect to the Sygnet Merger; or (b) the
Financial Statements required to be delivered under SECTIONS 9.3(a) or
9.3(b), as the case may be, calculated on a consolidated basis for the
Companies.
DEBENTURES means, collectively, the Junior Debentures and the Senior
Debentures.
DEBT means (without duplication), for any Person, the SUM of the
following: (a) all liabilities, obligations, and indebtedness of such Person
which in accordance with GAAP should be classified upon such Person's balance
sheet as liabilities in respect of (i) money borrowed, including, without
limitation, the Principal Debt, (ii) obligations of such Person under Capital
Leases, (iii) obligations of such Person under non-compete agreements, and
(iv) obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations, and obligations under
any title retention agreement (but excluding trade accounts payable arising
in the ordinary course of business not more than ninety (90) days past due);
(b) all obligations of the type referred to in CLAUSES (a)(i) through
(a)(iii) preceding of other Persons for the payment of which such Person is
responsible or liable as obligor, guarantor, or otherwise; (c) all
obligations of the type referred to in CLAUSES (a)(i) through CLAUSE (a)(iii)
and CLAUSE (b) preceding of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is assumed
by such Person), the amount of such obligation being deemed to be the lesser
of the value of such property or assets or the amount of the obligation so
secured; (d) the face amount of all letters of credit and banker's
acceptances issued for the account of such Person, and without duplication,
all drafts drawn and unpaid thereunder; and (e) net payments under Financial
Hedges.
DEBT ISSUANCE means Debt of any Company for borrowed money issued or
incurred after the Closing Date, other than Permitted Debt.
DEBTOR RELIEF LAWS means the BANKRUPTCY CODE OF THE UNITED STATES OF
AMERICA and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization,
fraudulent transfer or conveyance, suspension of payments, or similar Laws
from time to time in effect affecting the Rights of creditors generally.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
DEFAULT is defined in SECTION 10.
DEFAULT RATE means a per annum rate of interest equal from day to day
to the LESSER of (a)(i) for the Revolver, Term Loan A, and Term Loan B, the
sum of the Base Rate PLUS the highest Applicable Margin for Base Rate
Borrowings for the relevant Facility PLUS 2% or (ii) for Term Loan C, the sum
of the Base Rate PLUS the highest Applicable Margin for Base Rate Borrowings
under Term Loan B PLUS 2% AND (b) the Maximum Rate.
DISTRIBUTION for any Person means, with respect to any shares of any
capital stock or other equity securities issued by such Person, (a) the
retirement, redemption, purchase, or other acquisition for value of any such
securities, (b) the declaration or payment of any dividend on or with respect
to any such securities, and (c) any other payment by such Person with respect
to such securities.
DOBSON ACQUISITION means the acquisition of the stock of
Dobson/Sygnet by Parent from Dobson Operating Company pursuant to the Dobson
Acquisition Agreement.
DOBSON ACQUISITION AGREEMENT means the Stock Purchase Agreement dated
December 23, 1998, by and between Dobson Operating Company, as seller, and
Parent, as buyer.
DOBSON ACQUISITION DOCUMENTS means the Dobson Acquisition Agreement
and all documents or instruments executed pursuant thereto or in connection
therewith, together with all amendments, modifications, supplements, or
restatements thereof in form and upon terms satisfactory to Administrative
Agent.
DOBSON/SYGNET means Dobson/Sygnet Operating Company (formerly known
as Front Nine Operating Company and SWI Acquisition Corp.), an Ohio
corporation, which company, on and as of the Closing Date, was acquired by
Parent and was merged with and into Sygnet Wireless, Inc. pursuant to the
Sygnet Merger.
DOBSON TOWER means Dobson Tower Company, an Oklahoma corporation.
DOBSON TOWER RESALE means the sale of the Sygnet Towers by Dobson
Tower to a non-Affiliate either (i) for a cash purchase price equal to or
greater than $30,000,000 or (ii) on terms and conditions satisfactory to
Administrative Agent.
DOLLARS and the symbol $ means lawful money of the United States of
America.
ELIGIBLE ASSIGNEE means (a) a Lender; (b) an Affiliate of a Lender
(so long as such assignment is not made in conjunction with the sale of such
Affiliate); and (c) any other Person approved by Administrative Agent (which
approval will not be unreasonably withheld or delayed by Administrative
Agent) and, unless a Default or Potential Default has occurred and is
continuing at the time any assignment is effected in accordance with SECTION
13.13, Borrower, such approval not to be unreasonably withheld or delayed by
Borrower and such approval to be deemed given by Borrower if no objection is
received by the assigning Lender and the Administrative Agent from Borrower
within five Business Days after notice of such proposed assignment has been
provided by the assigning Lender to Borrower; PROVIDED, HOWEVER, that neither
Borrower nor any Affiliate of Borrower shall qualify as an Eligible Assignee.
EMPLOYEE PLAN means an employee pension benefit plan covered by TITLE
IV of ERISA and established or maintained by Borrower or any ERISA Affiliate,
but not including any Multiemployer Plan.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
ENVIRONMENTAL LAW means any applicable Law that relates to (a) the
condition or protection of air, groundwater, surface water, soil, or other
environmental media, (b) the environment, including natural resources or any
activity which affects the environment, (c) the regulation of any pollutants,
contaminants, wastes, substances, and Hazardous Substances, including,
without limitation, the Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. Section 9601 ET SEQ.) ("CERCLA"), the Clean Air
Act (42 U.S.C. Section 7401 ET SEQ.), the Federal Water Pollution Control
Act, as amended by the Clean Water Act (33 U.S.C. Section 1251 ET SEQ.), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 ET
SEQ.), the Emergency Planning and Community Right to Know Act of 1986 (42
U.S.C. Section 11001 ET SEQ.), the Hazardous Materials Transportation Act
(49 U.S.C. Section 1801 ET SEQ.), the National Environmental Policy Act of
1969 (42 U.S.C. Section 4321 ET SEQ.), the Oil Pollution Act (33 U.S.C.
Section 2701 ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 ET SEQ.), the Rivers and Harbors Act (33 U.S.C. Section 401 ET
SEQ.), the Safe Drinking Water Act (42 U.S.C. Section 201 and Section 300f
ET SEQ.), the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984 (42 U.S.C. Section 6901 ET SEQ.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 ET SEQ.), and analogous state and local
Laws, as any of the foregoing may have been and may be amended or
supplemented from time to time, and any analogous future enacted or adopted
Law, or (d) the Release or threatened Release of Hazardous Substances.
EQUITY ISSUANCE means the issuance on and after the Closing Date by
any Company of any shares of any class of stock, warrants, or other equity
interests, other than present and future shares of stock, options, or
warrants issued to employees, directors, or consultants of the Companies, or
stock issued upon their exercise.
ERISA means the EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, as
amended, and the regulations and rulings thereunder.
ERISA AFFILIATE means any company or trade or business (whether or
not incorporated) which, for purposes of TITLE IV of ERISA, is a member of
Borrower's controlled group or which is under common control with Borrower
within the meaning of SECTION 414(b), (c), (m), or (o) of the Code.
EURODOLLAR RATE means, for any Eurodollar Rate Borrowing for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Dow Jones Markets Page 3750 (or any
successor page) as the London interbank offered rate for deposits in Dollars
at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the term "EURODOLLAR
RATE" shall mean, for any Eurodollar Rate Borrowing for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period; PROVIDED, HOWEVER, if more than one
rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%).
EURODOLLAR RATE BORROWING means a Borrowing bearing interest at the
SUM of the Adjusted Eurodollar Rate PLUS the Applicable Margin for Eurodollar
Rate Borrowings for the relevant Facility.
EXCESS CASH FLOW means, on any date of determination with respect to
the fiscal year then most recently ended, Operating Cash Flow of the
Companies, PLUS any net decrease in Working Capital, LESS
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
the SUM of, without duplication, (a) Capital Expenditures made by the
Companies during such fiscal year which were permitted to be made under the
terms of the Loan Papers, (b) required payments of principal on Permitted
Debt of the Companies made during such fiscal year (other than payments made
pursuant to SECTIONS 2.7(b), 2.7(c), and 2.7(d)), (c) the aggregate Taxes
actually paid in cash by the Companies during such fiscal year, (d)
Distributions made by the Companies during such fiscal year to the extent
permitted by the Loan Papers; (e) Interest Expense paid by the Companies
during such fiscal year or accrued during such fiscal year in compliance with
the Loan Papers, SO LONG AS such accrued interest is actually paid by the
Companies during such fiscal year or the first two (2) calendar months of the
following fiscal year in compliance with the Loan Papers; and (f) any net
increase in Working Capital.
EXCESS TOWER PROCEEDS means with respect to any Dobson Tower Resale,
the amount payable to Borrower from Dobson Tower in accordance with the
Sygnet Towers Sale Agreement, which amount shall be no less than the amount
received by Dobson Tower, on or after the date of consummation of such Dobson
Tower Resale, after (i) deduction of Assumed Taxes, (ii) payment of all usual
and customary brokerage commissions and all other reasonable fees and
expenses incurred by Dobson Tower related to such Dobson Tower Resale
(including, without limitation, reasonable attorneys' fees and closing costs
incurred by Dobson Tower in connection with such Dobson Tower Resale), (iii)
deduction of appropriate amounts to be provided by Dobson Tower as a reserve,
in accordance with GAAP, against any liabilities retained by Dobson Tower
after such Dobson Tower Resale, which liabilities are associated with the
Sygnet Towers, (iv) deduction for the amount of any Debt (other than the
Obligation) secured by the respective asset or assets being sold, which Debt
is required to be repaid as a result of such Dobson Tower Resale; and (v)
deduction for the amount necessary to liquidate the outstanding amount of any
preferred stock of Dobson Tower which is required to be repaid as a result of
such Dobson Tower Resale.
EXECUTIVE MANAGEMENT TEAM means Everett Dobson, Bruce Knooihuizen,
and G. Edward Evans.
EXHIBIT means an exhibit to this Agreement unless otherwise specified.
FACILITIES means, collectively, the Revolver Facility and the Term
Loan Facilities; FACILITY means, any of the Revolver Facility, Term Loan A,
Term Loan B, or Term Loan C.
FCC means the Federal Communications Commission and any successor
regulatory body.
FEDERAL FUNDS RATE means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined (which
determination shall be conclusive and binding, absent manifest error) by
Administrative Agent to be equal to the weighted average of the rates on
overnight Federal funds transactions with member banks of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such
day; PROVIDED THAT (a) if such day is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Administrative Agent (in its individual capacity) on such day on such
transactions as determined by the Administrative Agent (which determination
shall be conclusive and binding, absent manifest error).
FINANCIAL HEDGE means a swap, collar, floor, cap, or other contract
which is intended to reduce or eliminate the risk of fluctuations in interest
rates, which Financial Hedge is entered into by any Company in accordance
with SECTION 9.27.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
FINANCIAL STATEMENTS means balance sheets, statements of operations,
statements of shareholders' equity, and statements of cash flows prepared in
accordance with GAAP, which statements of operations and statements of cash
flows shall be in comparative form to the corresponding period of the
preceding fiscal year, and which balance sheets and statements of
shareholders' equity shall be in comparative form to the prior fiscal
year-end figures.
FIXED CHARGE COVERAGE RATIO means, at any date of determination with
respect to the most recently ended Rolling Period, the ratio of: (a) the
Operating Cash Flow of the Companies to (b) the SUM of (i) all mandatory
prepayments and regularly-scheduled principal payments with respect to Debt
of the Companies required to be paid, (ii) the amount paid for Capital
Expenditures by the Companies, (iii) cash Interest Expense of the Companies,
(iv) cash Taxes of the Companies, to the extent allocable to such Companies
pursuant to the Tax Sharing Agreement, and (v) distributions and dividends
paid in cash by Borrower.
GAAP means generally accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board which are applicable
from time to time.
GOVERNMENTAL AUTHORITY means any (a) local, state, municipal, or
federal judicial, executive, or legislative instrumentality, (b) private
arbitration board or panel, or (c) central bank.
GUARANTOR means any Person, including, but not limited to, any
Subsidiary of Borrower, who undertakes to be liable for all or any part of
the Obligation by execution of a Guaranty or otherwise.
GUARANTY means (a) a Guaranty in substantially the form and upon the
terms of EXHIBIT C, executed and delivered by any Person pursuant to the
requirements of the Loan Papers; and (b) any amendments, modifications,
supplements, restatements, ratifications, or reaffirmations of any Guaranty
made in accordance with the Loan Papers.
HAZARDOUS SUBSTANCE means (a) any substance that is designated,
defined, or classified as a hazardous waste, hazardous material, pollutant,
contaminant, or toxic or hazardous substance under any Environmental Law,
including without limitation, any hazardous substance within the meaning of
SECTION 101(14) of CERCLA, (b) petroleum, oil, gasoline, natural gas, fuel
oil, motor oil, waste oil, diesel fuel, jet fuel, and other petroleum
hydrocarbons, (c) regulated asbestos and asbestos-containing materials in any
form, (d) polychlorinated biphenyls, or (e) urea formaldehyde foam.
INTEREST EXPENSE means, for any period of calculation thereof, for
any Person, the aggregate amount of all interest (including commitment fees)
on all Debt of such Person, whether paid in cash or accrued as a liability
and payable in cash during such period (including, without limitation,
imputed interest on Capital Lease obligations; the amortization of any
original issue discount on any Debt; the interest portion of any deferred
payment obligation; all commissions, discounts, and other fees and charges
owed with respect to letters of credit or bankers' acceptance financing; net
costs associated with Financial Hedges; the interest component of any Debt
that is guaranteed or secured by such Person), and all cash premiums or
penalties for the repayment, redemption, or repurchase of Debt. With respect
to the calculation of Interest Expense for Borrower and the Companies,
Interest Expense shall include the aggregate amount of cash interest paid on
the Senior Reserve Notes to the extent Borrower makes loans, advances,
investments, or Distributions to Parent to service regularly-scheduled cash
interest payments on such Senior Reserve Notes. With respect to the
calculation of Interest Expense for Parent, Interest Expense shall expressly
exclude any interest paid on the Senior Reserve Notes from the proceeds of
the Pledged Government Securities securing such Senior Reserve Notes.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
INTEREST PERIOD is determined in accordance with SECTION 3.9.
JUNIOR PREFERRED STOCK means shares of (i) the Junior Exchangeable
Preferred Stock issued by Communications, in form, upon terms, and in an
amount acceptable to Administrative Agent; (ii) any additional Junior
Preferred Stock (on substantially identical terms to the Junior Preferred
Stock described in ITEM (i) preceding) issued in lieu of dividends on the
Junior Preferred Stock described in ITEM (i); and (iii) additional Junior
Preferred Stock issued in connection with any permitted adjustment,
supplement, or restatement of the applicable Certificate of Designation for
such Junior Preferred Stock in form and upon terms acceptable to
Administrative Agent.
JUNIOR DEBENTURES means any junior exchangeable debentures issued in
exchange for all or any portion of the Junior Preferred Stock, in form and
upon terms acceptable to Administrative Agent.
LAWS means all applicable statutes, laws, treaties, ordinances,
tariff requirements, rules, regulations, orders, writs, injunctions, decrees,
judgments, opinions, or interpretations of any Governmental Authority.
LENDERS means, on any date of determination, the financial
institutions named on SCHEDULE 2.1 (as the same may be amended from time to
time by Administrative Agent to reflect the assignments made in accordance
with SECTION 13.13(c) of this Agreement), and subject to the terms and
conditions of this Agreement, and their respective successors and assigns.
LEVERAGE RATIO means, either (a) at any date of determination on or
prior to March 31, 1999, thereof, the ratio of Debt of the Companies to
Annualized Operating Cash Flow or (b) on any date of determination occurring
after April 1, 1999, the ratio of Debt of the Companies to Operating Cash
Flow, all calculated for the Companies on a consolidated basis; PROVIDED
THAT, solely for purposes of determining the "APPLICABLE MARGIN" and the
"APPLICABLE MARGIN FOR COMMITMENT FEES" after December 31, 2001, the Debt
component of the Leverage Ratio shall, on any date of determination, be equal
to the Debt of the Parent and its Subsidiaries on a consolidated basis;
PROVIDED, FURTHER, THAT if any Company acquires the Pennsylvania 2 Rural
Service Area within the first fiscal quarter of 1999, then any calculation of
Leverage Ratio for the fiscal quarter ending March 31, 1999, shall exclude
(i) any Debt incurred or recognized (up to a maximum of $6,000,000) with
respect to such Acquisition and (ii) to the extent any Debt is excluded, the
Operating Cash Flow attributable to such Acquisition.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind, and any other
Right of or arrangement with any creditor (other than under or relating to
subordination or other intercreditor arrangements) to have its claim
satisfied out of any property or assets, or the proceeds therefrom, prior to
the general creditors of the owner thereof.
LITIGATION means any action by or before any Governmental Authority.
LOAN PAPERS means (a) this Agreement, the Notes, and the Collateral
Documents, (b) all agreements, documents, or instruments in favor of Agents
or Lenders ever delivered pursuant to this Agreement or otherwise delivered
in connection with all or any part of the Obligation on and after the Closing
Date, (c) any Financial Hedge between any Company and any Lender or any
Affiliate of any Lender, and (d) any and all future renewals, extensions,
restatements, reaffirmations, or amendments of, or supplements to, all or any
part of the foregoing.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
LOGIX means Logix Communications Enterprises, Inc., a Wholly-owned
Subsidiary of Communications.
MATERIAL ADVERSE EVENT means any set of one or more circumstances or
events which, individually or collectively, could reasonably be expected to
result in any (a) material impairment of the ability of any Company to
perform any of its payment or other material obligations under the Loan
Papers or the ability of Administrative Agent or any Lender to enforce any
such obligations or any of their respective Rights under the Loan Papers, (b)
material and adverse effect on the business, properties, condition (financial
or otherwise) or results of operations of any Company, either singly or in
the aggregate, or (c) Default or Potential Default.
MATERIAL AGREEMENT means any contract material to the respective
business of the Companies (including with respect to the Systems), including
the Sygnet Towers Lease.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for each Lender,
the maximum non-usurious amount and the maximum non-usurious rate of interest
which, under applicable Law, such Lender is permitted to contract for,
charge, take, reserve, or receive on the Obligation.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in SECTIONS
3(37) or 4001(a)(3) of ERISA or SECTION 414(f) of the Code to which any
Company or any ERISA Affiliate is making, or has made, or is accruing, or has
accrued, an obligation to make contributions.
NATIONSBANK means NationsBank, N.A., in its individual capacity as a
Lender, and its successors and assigns.
NET CASH PROCEEDS means (a) with respect to any Significant Sale,
cash (freely convertible into Dollars) received, on or after the date of
consummation of such Significant Sale, by any Company from such Significant
Sale, after (i) deduction of Assumed Taxes, (ii) payment of all usual and
customary brokerage commissions and all other reasonable fees and expenses
related to such Significant Sale (including, without limitation, reasonable
attorneys' fees and closing costs incurred in connection with such
Significant Sale), (iii) deduction of appropriate amounts to be provided by
Borrower or any Company as a reserve, in accordance with GAAP, against any
liabilities retained by any Company after such Significant Sale, which
liabilities are associated with the asset or assets being sold, including,
without limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with such Significant Sale, and (iv) deduction for the
amount of any Debt (other than the Obligation) secured by the respective
asset or assets being sold, which Debt is required to be repaid as a result
of such Significant Sale; (b) with respect to any incurrence of Debt, cash
(freely convertible in to Dollars) received, on or after the date of
incurrence of such Debt, by any Company from the incurrence of such Debt
after (i) payment of all reasonable attorneys' fees and usual and customary
underwriting commissions, closing costs, and other reasonable expenses
associated with such incurrence of Debt, (ii) deduction of all deposits,
escrow amounts, or other reserves required to be maintained by any Company in
connection with such Debt, and (iii) deductions for the amount of any other
Debt (other than the Obligation) which is required to be repaid concurrently
with or otherwise as a result of the incurrence of such Debt; and (c) with
respect to any Equity Issuance, cash (freely convertible into Dollars)
(including any cash received by way of deferred payment pursuant to a
promissory note, or otherwise, but only as and when received) received, on or
after the date of such Equity Issuance, by the Borrower from such Equity
Issuance, net of usual and customary transaction costs and expenses and
Assumed Taxes.
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<PAGE>
NOTES means, at the time of any determination thereof, all
outstanding and unpaid Revolver Notes, the Swing Line Note, and Term Notes.
NOTICE OF BORROWING is defined in SECTION 2.8(a).
NOTICE OF CONVERSION is defined in SECTION 3.10.
OBLIGATION means all present and future indebtedness, liabilities,
and obligations, and all renewals and extensions thereof, or any part
thereof, now or hereafter owed to Administrative Agent, any other Agent, any
Lender, or any Affiliate of any Lender by any Company arising from, by virtue
of, or pursuant to any Loan Paper, TOGETHER WITH all interest accruing
thereon, fees, costs, and expenses (including, without limitation, all
attorneys' fees and expenses incurred in the enforcement or collection
thereof) payable under the Loan Papers.
OFFERING MEMORANDA (or individually, an OFFERING MEMORANDUM) means
(i) the Offering Memorandum issued January 5, 1998, by Communications
pursuant to which 175,000 shares of the Senior Preferred Stock were offered
for purchase; and (ii) the Offering Memorandum issued December 16, 1998,
pursuant to which 64,646 shares of the Senior Preferred Stock were offered
for purchase (as the same may hereafter be amended, modified, supplemented,
or restated from time to time with the prior written approval of
Administrative Agent).
OPERATING CASH FLOW means, for any Person, as calculated at any date
of determination with respect to the most recently ended Rolling Period
(unless otherwise indicated), the SUM (without duplication and without giving
effect to any extraordinary losses or gains during such period) of (a) net
income or deficit during such period, PLUS (b) to the extent already deducted
in computing such net income (i) income Tax expense, (ii) Interest Expense
during such period, and (iii) depreciation, amortization, and other
non-cash-expense items during such period, LESS (c) interest and dividend
income, LESS (d) other non-cash components of income, adjusted as required to
take into account any minority ownership interest; PROVIDED, HOWEVER, with
respect to any Cellular Partnership of Borrower or its Subsidiaries which is
indebted to any Company (the "CELLULAR PARTNERSHIP DEBT"), such adjustments
for minority interests shall be made only when either (i) such Cellular
Partnership Debt has been repaid in full or (ii) a Company does not have a
Lien upon and right to apply 100% of the Operating Cash Flow of such Cellular
Partnership to repayment of such Cellular Partnership Debt. In calculating
Operating Cash Flow for the Companies for the fiscal quarters ending
September 30, 1998, December 31, 1998, and March 31, 1999, such Operating
Cash Flow shall be increased (to the extent deducted from net income and not
already added back in calculating Operating Cash Flow) by pro forma
adjustments to expenses for the applicable quarter not to exceed $1,104,500
for the fiscal quarters ending September 30, 1998, and December 31, 1998, and
$380,500 for the fiscal quarter ending March 31, 1999. The provision for
income taxes and reductions in deferred taxes shall be adjusted in accordance
with the Tax Sharing Agreement. In determining Operating Cash Flow for any
Person, as the case may be, such amount shall be calculated after giving
effect to Acquisitions and divestitures of Person (to the extent permitted by
the Loan Papers in the case of the Companies) during such period as if such
transactions had occurred on the first day of such period, regardless of
whether the effect is positive or negative.
PARENT means Dobson/Sygnet Communications Company (formerly known as
Dobson/Sygnet Holding Company, and Front Nine Holding Company), an Oklahoma
corporation.
PARTICIPANT is defined in SECTION 13.13(e).
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established pursuant to ERISA.
PERMITTED ACQUISITION means:
(a) The Sygnet Merger, the Dobson Acquisition, and, if no
Default or Potential Default exists or arises as a result thereof, the
Acquisition of the Pennsylvania 2 Rural Service Area; PROVIDED, HOWEVER,
in the case of the Pennsylvania 2 Rural Service Area Acquisition, such
Acquisition shall not constitute a "PERMITTED ACQUISITION" hereunder
unless and until Borrower complies with CLAUSE (b)(iv) hereunder;
(b) Acquisitions by any Company of businesses which are
engaged in the domestic cellular industry, with respect to which each of
the following requirements shall have been satisfied:
(i) the purchase price for such Acquisition must be
less than or equal to $15,000,000 and when aggregated with the
purchase price of each other Acquisition consummated in such
calendar year, may not exceed $15,000,000 in the aggregate;
(ii) as of the closing of any Acquisition, the
Acquisition has been approved and recommended by the board of
directors of the Person to be acquired or from which such
business is to be acquired;
(iii) not less than 30 Business Days prior to the
closing of any Acquisition, Borrower shall have delivered to
Administrative Agent a Permitted Acquisition Compliance
Certificate, demonstrating pro forma compliance with the terms
and conditions of the Loan Papers, after giving effect to the
Acquisition, including (A) pro forma income and balance sheet
projections for the Companies (after giving effect to the
Acquisition), and (B) ten year cash flow projections for the
Acquisition demonstrating compliance with the Companies'
applicable financial covenants and debt amortization schedules;
(iv) each Authorization issued by the FCC or any PUC
to be acquired by any Company shall be valid, binding,
enforceable, and subsisting without any defaults thereunder or
enforceable adverse limitations thereon and shall not be subject
to any proceedings or claims opposing the issuance, development,
or use thereof or contesting the validity thereof UNLESS such
Company has entered into an agreement with the seller of such
Authorization protecting such Company from such adverse
limitations, proceedings, or claims, which agreement shall be on
terms and conditions satisfactory to Agents.
(iv) prior to consummation of any Acquisition,
Borrower shall have satisfied the conditions precedent set forth
in SECTION 7.2;
(v) as of the closing of any Acquisition, after
giving effect to such Acquisition, the acquiring party must be
Solvent and the Companies, on a consolidated basis, must be
Solvent;
(vi) as of the closing of any Acquisition, no Default
or Potential Default shall exist or occur as a result of, and
after giving effect to, such Acquisition; and
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
(vii) as of the closing of any Acquisition, (A) if
such Acquisition is structured as a merger, Borrower, (or if
such merger is with any Subsidiary of Borrower, then such
Subsidiary) must be the surviving entity after giving effect to
such merger; and (B) if such Acquisition is structured as a
stock/equity acquisition, the acquiring Company shall own not
less than a 75% interest in the entity being acquired; or
(b) any other Acquisition for which the prior written
consent of Required Lenders has been obtained.
PERMITTED ACQUISITION COMPLIANCE CERTIFICATE means a certificate
signed by a Responsible Officer of Borrower, substantially in the form of
EXHIBIT E-2.
PERMITTED ACQUISITION LOAN CLOSING CERTIFICATE means a certificate
signed by a Responsible Officer of Borrower, substantially in the form of
EXHIBIT E-3.
PERMITTED DEBT means Debt permitted under SECTION 9.12 as described
in such Section.
PERMITTED LIENS means Liens permitted under SECTION 9.13 as described
in such Section.
PERSON means any individual, entity, or Governmental Authority.
PLEDGED GOVERNMENT SECURITIES means the portfolio of United States
government securities that are purchased with proceeds of the Senior Reserve
Notes and which are pledged as security for the first six interest payments
on the Senior Reserve Notes.
POTENTIAL DEFAULT means the occurrence of any event or existence of
any circumstance which, with the giving of notice or lapse of time or both,
would become a Default.
PREFERRED STOCK means, collectively, the Senior Preferred Stock and
the Junior Preferred Stock.
PRIME RATE means the per annum rate of interest established from time
to time by NationsBank, N.A., as its prime rate, which rate may not be the
lowest rate of interest charged by NationsBank, N.A. to its customers.
PRINCIPAL DEBT means, at the time of any determination thereof, the
sum of the Revolver Principal Debt and the Term Principal Debt, or with
respect to a particular Facility, the aggregate unpaid principal balance of
all Borrowings under that Facility.
PRO FORMA DEBT SERVICE means, on any date of determination,
calculated for the Companies on a consolidated basis, the SUM of (a) Pro
Forma Interest Expense determined as of such date of determination, PLUS (b)
principal payments scheduled to be made on Debt for the twelve months
following the date of determination and with respect to the Revolver
Principal Debt, the difference between the outstanding Revolver Principal
Debt on any date of determination, and the amount to which the Revolver
Commitment is to be reduced within twelve months.
PRO FORMA INTEREST EXPENSE means, on any date of determination with
respect to the most recently ended Rolling Period (the "SUBJECT PERIOD"),
calculated for the Companies on a consolidated basis, the SUM of the results of
the following calculation made separately with respect to each Borrowing and
each other loan or other evidence of Debt of any Company (each a "SUBJECT LOAN"
for the purposes hereof) including,
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
without limitation, the Senior Reserve Notes to the extent Borrower makes or
anticipates making loans, advances, investments, or Distributions to Parent
to service regularly-scheduled cash interest payments on such Senior Reserve
Notes:
{[A + B] /2} x C
where:
A = The aggregate outstanding principal Debt under
the Subject Loan at the beginning of the Subject
Period.
B = The aggregate outstanding principal Debt under
the Subject Loan, at the end of the Subject
Period, taking into account all scheduled
principal payments and any required commitment
reductions within such Subject Period.
C = With respect to the Subject Loan, the applicable
interest rate thereon determined as the rate in
effect on the date of determination.
PRO RATA or PRO RATA PART, for each Lender, means (a) for purposes of
any commitment to fund in respect of a Facility, the percentage stated
opposite such Lender's name under the heading for that Facility as set forth
on SCHEDULE 2.1 or on the most recently amended SCHEDULE 2.1, if any,
prepared by Administrative Agent pursuant to SECTION 13.13, (b) for purposes
of sharing any amount or fee payable to any Lender in respect of a Facility,
the proportion which the portion of the Principal Debt for the applicable
Facility owed to such Lender bears to the Principal Debt under the applicable
Facility owed to all Lenders at the time in question, and (c) for all other
purposes, the proportion which the portion of the Principal Debt owed to such
Lender bears to the Principal Debt owed to all Lenders at the time in
question, or if no Principal Debt is outstanding, then the proportion that
the aggregate of such Lender's Committed Sums under the Revolver Facility
bears to the Total Commitment then in effect.
PUC means any state or local regulatory agency or governmental
authority that exercises jurisdiction over the rates or services or the
ownership, construction, or operation of network facilities or
telecommunications systems or over Persons who own, construct, or operate
network facilities or telecommunications systems.
REGISTER is defined in SECTION 13.13(c).
REGULATION D means Regulation D of the Board of Governors of the
Federal Reserve System, as amended.
REGULATION U means Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
RELEASE means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposal,
deposit, dispersal, migrating, or other movement into the air, ground, or
surface water, or soil.
REPORTABLE EVENT shall have the meaning specified in SECTION 4043 of
ERISA or the regulations issued thereunder in connection with an Employee
Plan, excluding events for which the notice requirement
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
is waived under applicable PBGC regulations other than those events described
in SECTIONS 2615.11, 2615.15 and 2615.19 of such regulations, including each
such provision as it may subsequently be renumbered.
REPRESENTATIVES means representatives, officers, directors,
employees, attorneys, and agents.
REQUIRED LENDERS means (a) on any date of determination prior to
funding the Term Facilities, those Lenders holding 50.1% or more of the sum
of the Total Commitment; (b) on any date of determination prior to the
Termination Date for the Revolver Facility, those Lenders holding 50.1% or
more of the sum of the Revolver Commitment and the Term Principal Debt; and
(c) on any date of determination on or after the Termination Date for the
Revolver Facility, those Lenders holding 50.1% of the Principal Debt,
PROVIDED THAT, in no event under CLAUSES (a), (b), and (c) shall Required
Lenders be less than two Lenders, unless there is only one Lender hereunder.
RESERVE REQUIREMENT means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental,
or emergency reserves) are required to be maintained under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) by member banks of the Federal Reserve System against, in the
case of Eurodollar Rate Borrowings, "EUROCURRENCY LIABILITIES" (as such term
is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (a) any category of
liabilities which includes deposits by reference to which the Adjusted
Eurodollar Rate is to be determined, or (b) any category of extensions of
credit or other assets which include Eurodollar Rate Borrowings. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
RESPONSIBLE OFFICER means the chairman, president, chief executive
officer, chief financial officer, senior vice president, or treasurer of
Borrower, or, for all purposes under the Loan Papers, any other officer
designated from time to time by the Board of Directors of Borrower, which
designated officer is acceptable to Administrative Agent.
REVOLVER COMMITMENT means an amount (subject to reduction or
cancellation as herein provided) equal to $50,000,000.
REVOLVER COMMITMENT USAGE means, at the time of any determination
thereof, the aggregate Revolver Principal Debt (whether under the Swing Line
Subfacility, or otherwise).
REVOLVER FACILITY means the credit facility as described in and
subject to the limitations set forth in SECTION 2.1 hereof and the Swing Line
Subfacility.
REVOLVER LENDERS means those Lenders set forth under the heading
"REVOLVER FACILITY" on the most-recently amended SCHEDULE 2.1 to the
Agreement.
REVOLVER NOTE means a promissory note in substantially the form of
EXHIBIT A-1, and all renewals and extensions of all or any part thereof.
REVOLVER PRINCIPAL DEBT means, on any date of determination, the
aggregate unpaid principal balance of all Borrowings under the Revolver
Facility.
RIGHTS means rights, remedies, powers, privileges, and benefits.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
ROLLING PERIOD means, on any date of determination, the most recent
four fiscal quarters ended on March 31, June 30, September 30, or December 31
(as the case may be); PROVIDED THAT, notwithstanding the foregoing, for any
calculation made with respect to the Companies as of any date of
determination occurring during the period from the Closing Date to (but not
including) June 30, 1999, the applicable Rolling Period shall be the fiscal
quarter(s) indicated below which correspond(s) to any applicable date of
determination as set forth below:
<TABLE>
<CAPTION>
DETERMINATION DATES CORRESPONDING ROLLING PERIOD
<S> <C>
Closing Date to (but not including) Fiscal Quarter ending September 30,
December 31, 1998 1998
December 31, 1998 to (but not Fiscal Quarters ending September 30,
including) March 31, 1999 and December 31, 1998
March 31, 1999 to (but not Fiscal Quarters ending September 30,
including) June 30, l999 1998, December 31, 1998, and
March 31, 1999
</TABLE>
SCHEDULE means, unless specified otherwise, a schedule attached to
this Agreement, as the same may be supplemented and modified from time to
time in accordance with the terms of the Loan Papers.
SENIOR DEBENTURES means any senior exchangeable debentures issued in
exchange for all or any portion of the Senior Preferred Stock (all as more
particularly described in the related Offering Memoranda), which shall be in
form and upon terms acceptable to Administrative Agent.
SENIOR PREFERRED STOCK means (i) 175,000 shares of Senior
Exchangeable Preferred Stock issued by Communications which is mandatorily
redeemable in 2008 and which was offered pursuant to the Offering Memorandum
dated January 5, 1998; (ii) 64,646 shares of Senior Exchangeable Preferred
Stock issued by Communications which is mandatorily redeemable in 2008, and
which was offered pursuant to the Offering Memorandum dated December 16,
1998; (iii) any additional Senior Preferred Stock (in substantially identical
terms as the Senior Preferred Stock with respect to which such stock is being
issued) issued in lieu of dividends on the Senior Preferred Stock described
in ITEMS (i) and (ii); and (iv) additional Senior Preferred Stock issued in
connection with any permitted adjustment, supplement, or restatement of the
applicable Certificate of Designation for such Senior Preferred Stock in form
and upon terms acceptable to Administrative Agent.
SENIOR RESERVE NOTES means the 12 1/4% Senior Reserve Notes due 2008,
issued by Parent pursuant to an Indenture dated December 23, 1998, between
Parent and United States Trust Company of New York, as Trustee for the
purchasers of such Senior Reserve Notes and all documents executed pursuant
thereto or in connection therewith, including all amendments, modifications,
supplements or restatements thereof in form and upon terms acceptable to
Administrative Agent.
SIGNIFICANT SALE means any sale, lease, transfer, or other
disposition of any property or assets (tangible or intangible) by any Company
to any other Person (other than any sale, lease, transfer, or other
disposition contemplated by SECTIONS 9.23(a) through (f)) with respect to
which the Net Cash Proceeds realized by the Companies for such asset
disposition (or when aggregated with the Net Cash Proceeds from all such
other asset dispositions occurring in the same calendar year) equals or
exceeds $3,000,000.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
SOLVENT means, as to a Person, that (a) the aggregate fair market
value of such Person's assets exceeds its liabilities (whether contingent,
subordinated, unmatured, unliquidated, or otherwise), (b) such Person has
sufficient cash flow to enable it to pay its Debts as they mature, and (c)
such Person does not have unreasonably small capital to conduct such Person's
businesses.
SUBSIDIARY of any Person means (a) any entity of which an aggregate
of more than 50% (in number of votes) of the stock is owned of record or
beneficially, directly or indirectly, by such Person, or (b) any partnership
(limited or general) of which such Person shall at any time be the general
partner or own fifty percent (50%) or more of the issued and outstanding
partnership interests.
SWING LINE BORROWING means any Borrowing under the Swing Line
Subfacility.
SWING LINE COMMITMENT means an amount (subject to reduction or
cancellation as herein provided) equal to $10,000,000.
SWING LINE MATURITY DATE means December 22, 1999, and successive one
year extensions thereof if agreed to in writing by NationsBank in its sole
discretion, BUT IN NO EVENT, a date later than the Termination Date of the
Revolver Facility.
SWING LINE NOTE means a promissory note in substantially the form of
EXHIBIT A-2, and all renewals and extensions of all or any part thereof.
SWING LINE PRINCIPAL DEBT means, on any date of determination, that
portion of the Principal Debt outstanding under the Swing Line Subfacility.
SWING LINE SUBFACILITY means the subfacility under the Revolver
Facility described in, and subject to the limitations of, SECTION 2.2.
SYGNET COMMUNICATIONS means Sygnet Communications, Inc., an Ohio
corporation, a Wholly-owned Subsidiary of Borrower after the consummation of
the Sygnet Merger.
SYGNET MERGER means the merger of Dobson/Sygnet with and into Sygnet
Wireless, Inc. on the Closing Date pursuant to the Sygnet Merger Agreement.
SYGNET MERGER AGREEMENT means the Agreement and Plan of Merger dated
as of July 28, 1998 between Dobson/Sygnet and Sygnet Wireless, Inc., together
with all amendments or modifications thereto in form and terms acceptable to
Administrative Agent.
SYGNET MERGER DOCUMENTS means the Sygnet Merger Agreement and all
documents or instruments executed pursuant thereto or in connection
therewith, together with all amendments, modifications, supplements, or
restatements thereof in form and upon terms satisfactory to Administrative
Agent.
SYGNET SENIOR NOTES means the $110,000,000 11.50% notes due 2006
issued by Sygnet Wireless, Inc., as the same may have been amended or
modified.
SYGNET TOWERS means all cellular transmission towers owned by Sygnet
Communications on the Closing Date.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
SYGNET TOWERS LEASE means the Master Site License Agreement, and
collectively, the Site Licenses, dated December 23, 1998, between Sygnet
Communications and Dobson Tower, whereby Sygnet Communications leases the
Sygnet Towers from Dobson Tower, which agreements are in form and upon terms
acceptable to Administrative Agent.
SYGNET TOWERS SALE means the sale of the Sygnet Towers by Sygnet
Communications to Dobson Tower on terms and conditions satisfactory to
Administrative Agent.
SYGNET TOWERS SALE AGREEMENT means the Asset Purchase Agreement
between Sygnet Communications and Dobson Tower dated December 23, 1998, in
which Sygnet Communications agrees to sell substantially all of the Sygnet
Towers to Dobson Tower, which agreement is in form and upon terms acceptable
to Administrative Agent.
SYGNET TOWERS SALE DOCUMENTS means the Sygnet Towers Sale Agreement,
the Sygnet Towers Lease, and all other documents delivered pursuant thereto
or in connection with the consummation of the Sygnet Towers Sale or execution
and performance of the Sygnet Towers Lease.
SYSTEM means individually, and SYSTEMS means collectively, the
wireless cellular communication systems and personal communication systems,
now or hereafter owned, operated, or managed by the Companies.
TAX SHARING AGREEMENT means that certain consolidated income tax
payment agreement dated February 28, 1997, entered into between
Communications and its Subsidiaries.
TAXES means, for any Person, taxes, assessments, or other
governmental charges or levies imposed upon such Person, its income, or any
of its properties, franchises, or assets.
TERM LENDERS means, collectively, the Term Loan A Lenders, the Term
Loan B Lenders, and the Term Loan C Lenders.
TERM LOAN A means the credit facility as described in and subject to
the limitations set forth in SECTION 2.3 hereof.
TERM LOAN A COMMITMENT means an amount (subject to reduction or
cancellation as herein provided) equal to $125,000,000.
TERM LOAN A LENDERS means those Lenders set forth under the heading
"TERM LOAN A" on the most-recently amended SCHEDULE 2.1 to the Agreement.
TERM LOAN A NOTE means a promissory note in substantially the form of
EXHIBIT A-3, and all renewals and extensions of all or any part thereof.
TERM LOAN A PRINCIPAL DEBT means, on any date of determination, the
aggregate unpaid principal balance of all Borrowings under Term Loan A.
TERM LOAN B means the credit facility as described in and subject to
the limitations set forth in SECTION 2.4 hereof.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
TERM LOAN B COMMITMENT means an amount (subject to reduction or
cancellation as herein provided) equal to $155,000,000.
TERM LOAN B LENDERS means those Lenders set forth under the heading
"TERM LOAN B" on the most-recently amended SCHEDULE 2.1 to the Agreement.
TERM LOAN B NOTE means a promissory note in substantially the form of
EXHIBIT A-4, and all renewals and extensions of all or any part thereof.
TERM LOAN B PRINCIPAL DEBT means, on any date of determination, the
aggregate unpaid principal balance of all Borrowings under Term Loan B.
TERM LOAN C means the credit facility as described in and subject to
the limitations set forth in SECTION 2.5 hereof.
TERM LOAN C COMMITMENT means an amount (subject to reduction or
cancellation as herein provided) equal to $100,000,000.
TERM LOAN C LENDERS means those Lenders set forth under the heading
"TERM LOAN C" on the most-recently amended SCHEDULE 2.1 to the Agreement.
TERM LOAN C NOTE means a promissory note in substantially the form of
EXHIBIT A-5, and all renewals and extensions of all or any part thereof.
TERM LOAN C PRINCIPAL DEBT means, on any date of determination, the
aggregate unpaid principal balance of all Borrowings under Term Loan C.
TERM LOAN FACILITIES means, collectively, Term Loan A, Term Loan B,
and Term Loan C, and TERM LOAN FACILITY means, any of Term Loan A, Term Loan
B, or Term Loan C.
TERM NOTES means collectively, the Term Loan A Notes, the Term Loan B
Notes, and the Term Loan C Notes.
TERM PRINCIPAL DEBT means, on any date of determination, the SUM of
the Term Loan A Principal Debt, the Term Loan B Principal Debt, and the Term
Loan C Principal Debt.
TERMINATION DATE means (a) for purposes of the Revolver Facility, the
EARLIER of (x) September 23, 2006, and (y) the effective date of any other
termination, cancellation, or acceleration of Lenders' commitments to lend
under, and in accordance with, this Agreement; (b) for purposes of the Term
Loan A, the EARLIER of (x) September 23, 2006, and (y) the effective date of
any other termination, cancellation, or acceleration of Term Loan A in
accordance with this Agreement; (c) for purposes of the Term Loan B, the
EARLIER of (x) March 23, 2007, and (y) the effective date of any other
termination, cancellation, or acceleration of Term Loan B in accordance with
this Agreement; and (d) for purposes of the Term Loan C, the EARLIER of (x)
December 23, 2007, and (y) the effective date of any other termination,
cancellation, or acceleration of Term Loan C in accordance with this
Agreement, HOWEVER in no event shall the Termination Date be less than (i) 12
months prior to the maturity of the Sygnet Senior Notes or the Communications
Bond Debt with respect to the Revolver Facility and Term Loan A; (ii) 9
months prior to the maturity of the Sygnet Senior Notes or the Communications
Bond Debt with respect to Term Loan
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
B; and (iii) 6 months prior to the maturity of the Sygnet Senior Notes or the
Communications Bond Debt with respect to Term Loan C.
TOTAL COMMITMENT means, on any date of determination, the sum of all
Committed Sums for all Lenders in respect of the Revolver Facility and the
Term Loan Facilities (as the same may have been reduced or canceled as
provided in the Loan Papers) then in effect.
TYPE means any type of Borrowing determined with respect to the
interest option applicable thereto.
VOTING STOCK means securities (as such term is defined in SECTION
2(1) of the Securities Act of 1933, as amended) of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
WHOLLY-OWNED when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (EXCEPT
shares required as directors' qualifying shares) shall be owned by Borrower
or one or more of its Wholly-owned Subsidiaries.
WORKING CAPITAL means the SUM of all current assets other than cash,
LESS the SUM of all current liabilities other than the current portion of
long term Debt, all as determined in accordance with GAAP.
1.2 NUMBER AND GENDER OF WORDS; OTHER REFERENCES. Unless
otherwise specified in the Loan Papers, (a) where appropriate, the singular
includes the plural and VICE VERSA, and words of any gender include each
other gender, (b) heading and caption references may not be construed in
interpreting provisions, (c) monetary references are to currency of the
United States of America, (d) section, paragraph, annex, schedule, exhibit,
and similar references are to the particular Loan Paper in which they are
used, (e) references to "TELECOPY," "FACSIMILE," "FAX," or similar terms are
to facsimile or telecopy transmissions, (f) references to "INCLUDING" mean
including without limiting the generality of any description preceding that
word, (g) the rule of construction that references to general items that
follow references to specific items are limited to the same type or character
of those specific items is not applicable in the Loan Papers, (h) references
to any Person include that Person's heirs, personal representatives,
successors, trustees, receivers, and permitted assigns, (i) references to any
Law include every amendment or supplement to it, rule and regulation adopted
under it, and successor or replacement for it, and (j) references to any Loan
Paper or other document include every renewal and extension of it, amendment
and supplement to it, and replacement or substitution for it.
1.3 ACCOUNTING PRINCIPLES. All accounting and financial terms
used in the Loan Papers and the compliance with each financial covenant
therein shall be determined in accordance with GAAP, and, all accounting
principles shall be applied on a consistent basis so that the accounting
principles in a current period are comparable in all material respects to
those applied during the preceding comparable period. If Borrower or any
Lender determines that a change in GAAP from that in effect on the date
hereof has altered the treatment of certain financial data to its detriment
under this Agreement, such party may, by written notice to the others and
Administrative Agent not later than ten (10) days after the effective date of
such change in GAAP, request renegotiation of the financial covenants
affected by such change. If the Borrower and Required Lenders have not
agreed on revised covenants within thirty (30) days after delivery of such
notice, then, for purposes of this Agreement, GAAP will mean generally
accepted accounting principles on the date just prior to the date on which
the change that gave rise to the renegotiation occurred.
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
SECTION 2 BORROWING PROVISIONS.
2.1 REVOLVER FACILITY. Subject to and in reliance upon the
terms, conditions, representations, and warranties in the Loan Papers, each
Revolver Lender severally and not jointly agrees to lend to Borrower such
Revolver Lender's Pro Rata Part of one or more Borrowings under the Revolver
Facility not to exceed such Revolver Lender's Committed Sum under the
Revolver Facility, which, may be repaid and reborrowed from time to time in
accordance with the terms and provisions of the Loan Papers; PROVIDED THAT,
(a) each such Borrowing must occur on a Business Day and no later than the
Business Day immediately preceding the Termination Date for the Revolver
Facility; (b) each such Borrowing shall be in an amount not less than (A)
$5,000,000 or a greater integral multiple of $1,000,000 (if a Base Rate
Borrowing or Eurodollar Rate Borrowing) or (B) $250,000 or a greater integral
multiple thereof (if a Swing Line Borrowing); and (c) on any date of
determination, the Revolver Commitment Usage shall never exceed the Revolver
Commitment.
2.2 SWING LINE SUBFACILITY.
(a) For the convenience of the parties and as an integral
part of the transactions contemplated by the Loan Papers, NationsBank,
solely for its own account, may make any requested Borrowing of $250,000
or a greater integral multiple thereof, subject to those terms and
conditions applicable to Borrowings set forth in SECTION 7.3(b), (c),
(d), and (e), directly to Borrower as a Swing Line Borrowing without
requiring any other Lender to fund its Pro Rata Part thereof unless and
until SECTION 2.2(b) is applicable; PROVIDED THAT: (i) each such
Borrowing must occur on a Business Day prior to, and not on or after,
the Swing Line Maturity Date; (ii) the aggregate Swing Line Principal
Debt outstanding on any date of determination shall not exceed the Swing
Line Commitment; (iii) on any date of determination, the Revolver
Commitment Usage shall never exceed the Revolver Commitment; (iv) at the
time of such Swing Line Borrowing, no Default or Potential Default shall
have occurred and be continuing; (v) each Swing Line Borrowing shall
bear interest at a rate per annum equal to the LESSER OF (a) the Base
Rate plus the Applicable Margin for Base Rate Borrowings under the
Revolver Facility, AND (b) the Maximum Rate; PROVIDED THAT at any time
after Revolver Lenders are deemed to have purchased pursuant to
SECTION 2.2(b) a participation in any Swing Line Borrowing, such
Borrowing shall bear interest at the Default Rate; and (vi) no
additional Swing Line Borrowing shall be made at any time after any
Revolver Lender has refused, notwithstanding the requirements of
SECTION 2.2(b), to purchase a participation in any Swing Line Borrowing
as provided in such Section, and until such purchase shall occur or
until the Swing Line Borrowing has been repaid. Each Borrowing under
the Swing Line Subfacility shall be available and may be prepaid on same
day telephonic notice from Borrower to NationsBank, SO LONG AS such
notice is received by NationsBank prior to 12:00 noon (Dallas, Texas
time). Interest on Swing Line Borrowings shall be paid monthly in
arrears on the last Business Day of each month. Principal on each Swing
Line Borrowing shall be repaid on the last Business Day of the month
following such Swing Line Borrowing.
(b) If Borrower fails to repay any Swing Line Borrowing as
provided herein (and in any event upon the earlier to occur of a Default
or the Swing Line Maturity Date), Administrative Agent shall timely
notify each Revolver Lender of such failure and of the date and amount
not paid. No later than the close of business on the date such notice
is given (if such notice was given prior to 12:00 noon Dallas time on
any Business Day, or, if made at any other time, on the next Business
Day following the date of such notice), each Revolver Lender shall be
deemed to have irrevocably and unconditionally purchased and received
from NationsBank an undivided interest
25
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
and participation in such Swing Line Borrowing to the extent of such
Revolver Lender's Pro Rata Part (with respect to the Revolver Facility)
thereof, and each Revolver Lender shall make available to NationsBank
in immediately available funds such Revolver Lender's Pro Rata Part
(with respect to the Revolver Facility) of such unpaid amount. All
such amounts payable by any Revolver Lender shall include interest
thereon from the date on which such payment is payable by such Revolver
Lender to, but not including, the date such amount is paid by such
Revolver Lender to Administrative Agent, at the Federal Funds Rate. If
such Lender does not promptly pay such amount upon Administrative
Agent's demand therefor, and until such time as such Revolver Lender
makes the required payment, NationsBank shall be deemed to continue to
have outstanding a Swing Line Borrowing in the amount of such unpaid
obligation. Each payment by Borrower of all or any part of any Swing
Line Borrowing shall be paid to Administrative Agent for the ratable
benefit of NationsBank and those Revolver Lenders who have funded their
participations in such Swing Line Principal Debt under this SECTION
2.2(b); PROVIDED THAT, with respect to any such participation, all
interest accruing on the Swing Line Principal Debt to which such
participation relates prior to the date of funding such participation
shall be payable solely to NationsBank for its own account.
2.3 TERM LOAN A. Subject to and in reliance upon the terms,
conditions, representations, and warranties in the Loan Papers, each Term
Loan A Lender severally and not jointly agrees to lend to Borrower in a
single Borrowing on the Closing Date an amount up to such Lender's Committed
Sum under Term Loan A; PROVIDED THAT (a) the aggregate Borrowings under Term
Loan A from all Term Loan A Lenders shall never exceed the Term Loan A
Commitment, and (b) Term Loan A Borrowings may not be repaid and reborrowed.
2.4 TERM LOAN B. Subject to and in reliance upon the terms,
conditions, representations, and warranties in the Loan Papers, each Term
Loan B Lender severally and not jointly agrees to lend to Borrower in a
single Borrowing on the Closing Date an amount up to such Lender's Committed
Sum under Term Loan B; PROVIDED THAT (a) the aggregate Borrowings under Term
Loan B from all Term Loan B Lenders shall never exceed the Term Loan B
Commitment, and (b) Term Loan B Borrowings may not be repaid and reborrowed.
2.5 TERM LOAN C. Subject to and in reliance upon the terms,
conditions, representations, and warranties in the Loan Papers, each Term
Loan C Lender severally and not jointly agrees to lend to Borrower in a
single Borrowing on the Closing Date an amount up to such Lender's Committed
Sum under Term Loan C; PROVIDED THAT (a) the aggregate Borrowings under Term
Loan C from all Term Loan C Lenders shall never exceed the Term Loan C
Commitment, and (b) Term Loan C Borrowings may not be repaid and reborrowed.
2.6 TERMINATIONS OR REDUCTIONS OF COMMITMENTS.
(a) VOLUNTARY COMMITMENT REDUCTIONS. Without premium or
penalty, and upon giving not less than ten (10) Business Days prior
written and irrevocable notice to Administrative Agent, Borrower may
terminate in whole or in part the unused portion of the Revolver
Commitment; PROVIDED THAT: (i) each partial termination shall be in an
amount of not less than $5,000,000 or a greater integral multiple of
$1,000,000; (ii) the amount of the Revolver Commitment may not be
reduced below the Revolver Commitment Usage; and (iii) each reduction
shall be allocated ratably among the Revolver Lenders in accordance with
their respective Committed Sums under the Revolver Facility. Promptly
after receipt of such notice of termination or reduction,
26
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
Administrative Agent shall notify Revolver Lenders of the proposed
cancellation or reduction. Such termination or partial reduction of
the Revolver Commitment shall be effective on the Business Day specified
in Borrower's notice (which date must be at least ten Business Days
after Borrower's delivery of such notice). In the event that the Total
Commitment is reduced to zero at a time when there shall be no Principal
Debt outstanding, this Agreement shall be terminated to the extent
specified in SECTION 13.14, and all commitment fees and other fees then
earned and unpaid hereunder and all other amounts of the Obligation then
due and owing shall be immediately due and payable, without notice or
demand by Administrative Agent or any Lender.
(b) MANDATORY REVOLVING COMMITMENT REDUCTION. The Revolver
Commitment shall be automatically and permanently reduced on each date
on which reductions of the Revolver Commitment are required to be made
pursuant to SECTION 3.2(c).
(c) SWING LINE FACILITY COMMITMENT REDUCTION. The Swing
Line Facility shall be automatically and permanently reduced from time
to time on the date of each reduction in the Revolver Commitment by the
amount, if any, by which the Swing Line Commitment exceeds the Revolver
Commitment then in effect.
(d) TERM FACILITY COMMITMENT REDUCTION. As of the date of
any principal payment or prepayment of any Term Principal Debt, the Term
Loan A Commitment, the Term Loan B Commitment, and the Term Loan C
Commitment, as the case may be, shall be reduced by the amount of each
such principal payment or prepayment made with respect to such Facility,
and the Committed Sum of each Lender under the respective Facility shall
be ratably reduced by the amount of each such principal payment or
prepayment made with respect to such Facility.
2.7 PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS.
(i) Except as set forth herein, after giving
Administrative Agent advance written notice of the intent to
prepay, Borrower may voluntarily prepay all or any part of the
Revolver Principal Debt, the Swing Line Principal Debt, the Term
Loan A Principal Debt, and the Term Loan B Principal Debt from
time to time and at any time, in whole or in part, without
premium or penalty; PROVIDED THAT: (i) such notice must be
received by Administrative Agent by 12:00 noon Dallas, Texas
time on the third Business Day preceding the date of prepayment
of any Borrowing, (ii) each such partial prepayment must be in a
minimum amount of at least $3,000,000 (other than prepayment of
Swing Line Borrowings which may be in integral multiples of
$250,000) or a greater integral multiple of $1,000,000 thereof;
(iii) any Eurodollar Rate Borrowing may only be prepaid at the
end of an applicable Interest Period; and (iv) Borrower shall
pay any related Consequential Loss within ten (10) days after
demand therefor. Each notice of prepayment shall specify the
prepayment date, the Facility hereunder being prepaid, and the
Type of Borrowing(s) and amount(s) of such Borrowing(s) to be
prepaid and shall constitute a binding obligation of Borrower to
make a prepayment on the date stated therein, together with
(unless such prepayment is made with respect to a Base Rate
Borrowing under the Revolver Facility or the Swing Line
Subfacility) accrued and unpaid interest to the date of such
payment on the aggregate principal amount prepaid. Unless a
Default or Potential Default has occurred and is continuing (or
would arise as a result thereof), any payment
27
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
or prepayment of the Revolver Principal Debt or Swing Line
Principal Debt may be reborrowed by Borrower, subject to the
terms and conditions hereof.
(ii) After giving Administrative Agent advance
written notice of the intent to prepay, Borrower may voluntarily
prepay all or any part of the Term Loan C Principal Debt from
time to time; PROVIDED THAT: (i) such notice must be received by
Administrative Agent by 12:00 noon Dallas, Texas time on the
third Business Day preceding the date of prepayment; (ii) each
such partial prepayment must be in a minimum amount of at least
$5,000,000 or a greater integral multiple of $1,000,000 thereof;
(iii) any Borrowing under Term Loan C may only be prepaid at the
end of an applicable Interest Period; (iv) Borrower shall pay
any related Consequential Loss within ten (10) days after demand
therefor; and (v) with respect to Term Loan C prepayments made
prior to December 31, 2000, Borrower shall pay a redemption
premium on such date of repayment equal to (A) 2% of the
principal amount of the Term Loan C Principal Debt being prepaid
for prepayments made from the Closing Date to December 31, 1999;
and (B) 1% of the principal amount of the Term Loan C Principal
Debt being prepaid for prepayments being made on or after
January 1, 1999 through December 31, 2000. Each notice of
prepayment shall specify the prepayment date, and the amount to
be prepaid and shall constitute a binding obligation of Borrower
to make a prepayment on the date stated therein, together with
the applicable redemption premium and all accrued and unpaid
interest to the date of such prepayment on the aggregate
principal amount prepaid.
(b) MANDATORY PREPAYMENTS FROM NET CASH PROCEEDS. Until
such time as the Principal Debt has been repaid in full, the Revolver
Commitment and the Principal Debt shall be permanently reduced or
prepaid, as the case may be, in the amounts and upon the occurrence of
the following events:
(i) Concurrently with any Debt Issuance by Borrower,
the Revolver Commitment and the Principal Debt shall be
permanently reduced or prepaid, as the case may be, by an amount
equal to 100% of the Net Cash Proceeds realized by Borrower from
such Debt Issuance;
(ii) Concurrently with the consummation of any
Significant Sale by any Company (which Significant Sale must be
otherwise permitted under the Loan Papers or shall have been
consented to by Required Lenders), the Revolver Commitment and
the Principal Debt shall be permanently reduced or prepaid, as
the case may be, in the order and manner specified herein, by an
amount equal to 100% of the Net Cash Proceeds in excess of
$3,000,000 realized by any Company from such Significant Sale
(or if such disposition is a Significant Sale as a result of
aggregation with other asset dispositions in the same fiscal
year, 100% of the aggregate Net Cash Proceeds received from all
such asset dispositions in the calendar year in excess of
$3,000,000), if such Net Cash Proceeds or any portion thereof
have not been reinvested in similar assets of the Companies
within eleven (11) months from the date of consummation of such
Significant Sale or other asset disposition, as the case may be;
(iii) Concurrently with any Equity Issuance by
Borrower, the Revolver Commitment and the Principal Debt shall
be permanently reduced or prepaid, as the case
28
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
may be, in the order and manner specified herein, by an amount
equal to 100% of the Net Cash Proceeds realized by Borrower from
such Equity Issuance;
Each commitment reduction or prepayment under this SECTION 2.7(b) shall
be applied ratably to the Revolver Commitment and the Term Principal
Debt (for purposes hereof, "RATABLY", for each Facility, on any date of
determination, shall mean the proportion that either the Revolver
Commitment or the Term Principal Debt under the applicable Term Loan
Facility, as the case may be, bears to the SUM of the Revolver
Commitment and the Term Principal Debt).
(c) MANDATORY PREPAYMENTS FROM EXCESS CASH FLOW. Borrower
shall, no later than the thirtieth (30th) day following the date on
which it delivers the Financial Statements required under SECTION 9.3(a)
for fiscal year 1999 and each fiscal year thereafter, (but in any event
within 120 days after the end of Borrower's fiscal year), prepay an
aggregate principal amount equal to either (i) 75% of Excess Cash Flow
for the fiscal year covered by such Financial Statements, if the
Leverage Ratio of the Companies is greater than 4.0:1.0 or (ii) 50% of
Excess Cash Flow for the fiscal year covered by such Financial
Statements, if the Leverage Ratio of the Companies is less than or equal
to 4.0:1.0. Each reduction or prepayment under this SECTION 2.7(c)
shall be applied ratably to the Revolver Commitment, the Term Loan A
Principal Debt, and the Term Loan B Principal Debt, or if no Term Loan A
Principal Debt or Term Loan B Principal Debt remains outstanding, then
to the Term Loan C Principal Debt (for purposes hereof, "RATABLY," for
each Facility, on any date of determination, shall mean the proportion
that the Revolver Commitment or the Term Principal Debt under the
applicable Term Loan Facility, as the case may be, bears to the SUM of
the Revolver Commitment and the aggregate Term Principal Debt under the
applicable Term Facilities being prepaid). Amounts prepaid pursuant to
this SECTION 2.7(c), shall not reduce the Revolver Commitment unless (i)
a Default or Potential Default then exists, or (ii) no Term Loan
Principal Debt is then outstanding.
(d) MANDATORY PREPAYMENTS FROM EXCESS TOWER PROCEEDS. Upon
consummation of the Dobson Tower Resale, Borrower shall, concurrently
with its receipt of any Excess Tower Proceeds, ratably prepay the Term
Loan A Principal Debt and the Term Loan B Principal Debt, in an amount
equal to 100% of the Excess Tower Proceeds. Each reduction or
prepayment under this SECTION 2.7(d) shall be applied ratably to the
Term Loan A Principal Debt and the Term Loan B Principal Debt (for
purposes of this CLAUSE (d), "RATABLY," on any date of determination,
shall mean the proportion that either the Term Loan A Principal Debt or
the Term Loan B Principal Debt bears to the SUM of the Term Loan A
Principal Debt and the Term Loan B Principal Debt).
(e) MANDATORY PREPAYMENTS FROM COMMITMENT REDUCTION. On any
Business Day that either (i) the Revolver Commitment Usage exceeds the
Revolver Commitment or (ii) the Swing Line Principal Debt exceeds the
Swing Line Commitment, Borrower shall prepay the Revolving Principal
Debt or the Swing Line Principal Debt, as the case may be, in an amount
equal to such excess.
(f) TERM LOAN OPT-OUTS.
(i) TERM LOAN B. To the extent there is any
Revolver Commitment or Term Loan A Principal Debt outstanding,
any Term Loan B Lender, at its option, may elect not to accept
such partial prepayment under this SECTION 2.7 (other than
SECTION 2.7(d)) (such Lender being a "DECLINING B LENDER"), in
which event the provisions of the next sentence shall apply. On
the prepayment date, an amount equal to that portion of the
prepayment
29
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
amount available to prepay Term Loan B Lenders (less any amounts
that would otherwise be payable to Declining B Lenders) shall
be applied ratably to prepay Term Loan B Principal Debt owed
to Term Loan B Lenders other than Declining B Lenders and any
amounts that would otherwise have been applied to prepay Term
Loan B Principal Debt owing to Declining B Lenders shall
instead be applied ratably to prepay the remaining Term Loan A
Principal Debt and reduce the Revolver Commitment as provided
in SECTIONS 2.7(b) through 2.7(f); PROVIDED FURTHER, that upon
prepayment in full of the Term Loan B Principal Debt owing to
Term Loan B Lenders other than Declining B Lenders the remainder
of any prepayment amount that is to be applied to Term Loan B
Principal Debt shall be applied ratably to prepay Term Loan B
Principal Debt owing to Declining B Lenders. Any Term Loan B
Lender may elect not to accept its ratable share of a partial
prepayment by giving written notice to the Administrative Agent
not later than 11:00 a.m. Dallas, Texas time on the Business
Day immediately preceding the scheduled prepayment date.
(ii) TERM LOAN C. To the extent there is any
Revolver Commitment, Term Loan A Principal Debt, or Term Loan B
Principal Debt outstanding, any Term Loan C Lender, at its
option, may elect not to accept such partial prepayment under
this SECTION 2.7 (other than SECTION 2.7(d)) (such Lender being
a "DECLINING C LENDER"), in which event the provisions of the
next sentence shall apply. On the prepayment date, an amount
equal to that portion of the prepayment amount available to
prepay Term Loan C Lenders (less any amounts that would
otherwise be payable to Declining C Lenders) shall be applied
ratably to prepay Term Loan C Principal Debt owed to Term Loan C
Lenders other than Declining C Lenders and any amounts that
would otherwise have been applied to prepay Term Loan C
Principal Debt owing to Declining C Lenders shall instead be
applied ratably to prepay the remaining Term Loan A Principal
Debt and Term Loan B Principal Debt, and reduce the Revolver
Commitment as provided in SECTIONS 2.7(b) through 2.7(f);
PROVIDED FURTHER, that upon prepayment in full of Term Loan C
Principal Debt owing to Term Loan C Lenders other than Declining
C Lenders the remainder of any prepayment amount that is to be
applied to Term Loan C Principal Debt shall be applied ratably
to prepay Term Loan C Principal Debt owing to Declining C
Lenders. Any Term Loan C Lender may elect not to accept its
ratable share of a partial prepayment by giving written notice
to the Administrative Agent not later than 11:00 a.m. Dallas,
Texas time on the Business Day immediately preceding the
scheduled prepayment date.
(g) MANDATORY PREPAYMENTS OF INTEREST/CONSEQUENTIAL LOSS.
All prepayments under this SECTION 2.7 shall be made, together with
accrued interest to the date of such prepayment on the principal amount
prepaid, together with any Consequential Loss arising as a result
thereof.
(h) APPLICATION OF REVOLVER COMMITMENT REDUCTION. All
Revolver Commitment reductions hereunder shall be applied ratably to
each Revolver Lender's Committed Sum under the Revolver Facility and
shall be applied to the regularly scheduled Revolver Commitment
reductions under SECTION 3.2(c) in inverse order of maturities; PROVIDED
THAT, (i) if there is no Default or Potential Default, no mandatory
commitment reduction under SECTION 2.7(b) (including any amount of
reduction from a prepayment under SECTION 2.7(b) that is applied to the
Revolver Commitment as a result of the opt-out provisions in
SECTION 2.7(f)) shall reduce the Revolver Commitment to an amount equal
to the lesser of $10,000,000 or the Revolver Commitment then outstanding
except in the event of the repayment in full of the Obligation; (ii) if
any Revolver Commitment reductions
30
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
are not made as a result of CLAUSE (i) preceding, then the amount of
such mandatory prepayment not applied as a Revolver Commitment reduction
shall be applied to the Term Loan A Principal Debt until paid in full,
then to the Term Loan B Principal Debt until paid in full, and then to
the Term Loan C Principal Debt until paid in full; and (iii) if required
pursuant to SECTION 2.7(e) Borrower shall also make a mandatory
prepayment of the Revolver Principal Debt, TOGETHER WITH (x) all
accrued and unpaid interest on the principal amount so prepaid and (y)
any Consequential Loss arising as a result thereof.
(i) APPLICATION OF MANDATORY PREPAYMENTS OF TERM PRINCIPAL
DEBT. All mandatory prepayments of the term Principal Debt under any
Term Facility shall be applied ratably to each Term Lender's Committed
Sum under such Term Facility and shall be applied to the
regularly-scheduled Term Principal Debt reductions for such Term
Facility as set forth in SECTION 3.2(d), (e), or (f) (as the case
may be) in inverse order of maturities.
2.8 BORROWING PROCEDURE. The following procedures apply to all
Borrowings (other than a Swing Line Borrowing):
(a) Each Borrowing shall be made on Borrower's notice (a
"NOTICE OF BORROWING," substantially in the form of EXHIBIT B-1) to
Administrative Agent requesting that Lenders fund a Borrowing on a
certain date (the "BORROWING DATE"), which notice (i) shall be
irrevocable and binding on Borrower, (ii) shall specify if it is for a
Borrowing under the Revolver Facility, Term Loan A, Term Loan B, or Term
Loan C, (iii) shall specify the Borrowing Date, amount, Type, and (for a
Borrowing comprised of Eurodollar Rate Borrowings) Interest Period, and
(iv) must be received by Administrative Agent no later than 10:00 a.m.
Dallas, Texas time on the third Business Day preceding the Borrowing
Date for any Eurodollar Rate Borrowing or on the Business Day
immediately preceding the Borrowing Date for any Base Rate Borrowing.
Administrative Agent shall timely notify each Lender with respect to
each Notice of Borrowing.
(b) Each Lender shall remit its Pro Rata Part for the
relevant Facility of each requested Borrowing to Administrative Agent's
principal office in Dallas, in funds which are or will be available for
immediate use by Administrative Agent by 1:00 p.m. Dallas time on the
Borrowing Date therefor. Subject to receipt of such funds,
Administrative Agent shall (unless to its actual knowledge any of the
conditions precedent therefor have not been satisfied by Borrower or
waived by Required Lenders) make such funds available to Borrower by
causing such funds to be deposited to Borrower's account as designated
to Administrative Agent by Borrower. Notwithstanding the foregoing,
unless Administrative Agent shall have been notified by a Lender prior
to a Borrowing Date that such Lender does not intend to make available
to Administrative Agent such Lender's Pro Rata Part of the applicable
Borrowing, Administrative Agent may assume that such Lender has made
such proceeds available to Administrative Agent on such date, as
required herein, and Administrative Agent may (unless to its actual
knowledge any of the conditions precedent therefor have not been
satisfied by Borrower or waived by Required Lenders), in reliance upon
such assumption (but shall not be required to), make available to
Borrower a corresponding amount in accordance with the foregoing terms,
but, if such corresponding amount is not in fact made available to
Administrative Agent by such Lender on such Borrowing Date,
Administrative Agent shall be entitled to recover such corresponding
amount on demand (i) from such Lender, together with interest at the
Federal Funds Rate during the period commencing on the date such
corresponding amount was made available to Borrower and ending on (but
excluding) the date Administrative Agent recovers such corresponding
amount from such
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
Lender, or (ii) if such Lender fails to pay such corresponding amount
forthwith upon such demand, then from Borrower, TOGETHER WITH interest
at a rate per annum equal to the applicable rate for such Borrowing
during the period commencing on such Borrowing Date and ending on
(but excluding) the date Administrative Agent recovers such
corresponding amount from Borrower. No Lender shall be responsible
for the failure of any other Lender to make its Pro Rata Part of any
Borrowing.
SECTION 3 TERMS OF PAYMENT.
3.1 LOAN ACCOUNTS, NOTES, AND PAYMENTS.
(a) The Revolver Principal Debt (other than Swing Line
Principal Debt) owed to each Revolver Lender shall be evidenced by the
Revolver Notes, one payable to each Revolver Lender in the maximum
stated principal amount of its Committed Sum under the Revolver Facility
as of the Closing Date. The Swing Line Principal Debt shall be
evidenced by a Swing Line Note payable to NationsBank in the stated
principal amount of the Swing Line Commitment.
(b) The Term Loan A Principal Debt owed to each Term Loan A
Lender shall be evidenced by a Term Loan A Note, payable to each Term
Loan A Lender in an amount equal to the principal amount advanced by
such Lender on the Closing Date under Term Loan A, not to exceed such
Term Loan A Lender's Committed Sum under Term Loan A.
(c) The Term Loan B Principal Debt owed to each Term Loan B
Lender shall be evidenced by a Term Loan B Note, payable to each Term
Loan B Lender in an amount equal to the principal amount advanced by
such Lender on the Closing Date under Term Loan B, not to exceed such
Term Loan B Lender's Committed Sum under Term Loan B.
(d) The Term Loan C Principal Debt owed to each Term Loan C
Lender shall be evidenced by a Term Loan C Note, payable to each Term
Loan C Lender in an amount equal to the principal amount advanced by
such Lender on the Closing Date under Term Loan C, not to exceed such
Term Loan C Lender's Committed Sum under Term Loan C.
(e) Each payment or prepayment on the Obligation is due and
must be paid at Administrative Agent's principal office in Dallas in
funds which are or will be available for immediate use by Administrative
Agent by 12:00 noon Dallas, Texas time on the day due. Payments made
after 12:00 noon, Dallas, Texas, time shall be deemed made on the
Business Day next following. Administrative Agent shall pay to each
Lender any payment or prepayment to which such Lender is entitled
hereunder on the same day Administrative Agent shall have received the
same from Borrower; PROVIDED such payment or prepayment is received by
Administrative Agent prior to 12:00 noon Dallas, Texas time, and
otherwise before 12:00 noon Dallas time on the Business Day next
following. If and to the extent Administrative Agent shall not make
such payments to Lenders when due as set forth in the preceding
sentence, such unpaid amounts shall accrue interest, payable by
Administrative Agent, at the Federal Funds Rate from the due date until
(but not including) the date on which Administrative Agent makes such
payments to Lenders.
3.2 INTEREST AND PRINCIPAL PAYMENTS.
(a) Interest on each Eurodollar Rate Borrowing shall be due
and payable as it accrues on the last day of its respective Interest
Period and on the Termination Date for the applicable
32
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
Facility; PROVIDED THAT, (i) with respect to Eurodollar Rate Borrowings
having an Interest Period in excess of three (3) months, Borrower shall
pay interest quarterly in arrears on the last Business Day of each
March, June, September, and December, commencing on the first such date
after the date on which such Interest Period commences and continuing
on the last Business Day of each March, June, September, and December
thereafter and on the expiration of each Interest Period. Interest on
each Base Rate Borrowing shall be due and payable as it accrues on each
March 31, June 30, September 30, and December 31, and on the Termination
Date for the applicable Facility.
(b) The aggregate Principal Debt under each Facility on the
Termination Date applicable to such Facility shall be due and payable on
the Termination Date for that Facility.
(c) The Revolver Commitment in effect on the Closing Date,
shall be permanently reduced for the ratable account of the Revolver
Lenders by the percentages specified below on the corresponding
reduction dates set forth as follows (which amount shall be reduced as a
result of the application of commitment reductions and prepayments in
accordance with SECTIONS 2.7 and 3.11):
<TABLE>
<CAPTION>
Reduction Date Percentage Reduction
-------------- --------------------
<S> <C>
December 31, 2000 5.000%
March 31, 2001 1.875%
June 30, 2001 1.875%
September 30, 2001 1.875%
December 31, 2001 1.875%
March 31, 2002 1.875%
June 30, 2002 1.875%
September 30, 2002 1.875%
December 31, 2002 1.875%
March 31, 2003 3.125%
June 30, 2003 3.125%
September 30, 2003 3.125%
December 31, 2003 3.125%
March 31, 2004 3.750%
June 30, 2004 3.750%
September 30, 2004 3.750%
December 31, 2004 3.750%
March 31, 2005 6.250%
June 30, 2005 6.250%
September 30, 2005 6.250%
December 31, 2005 6.250%
March 31, 2006 9.166%
June 30, 2006 9.167%
September 30, 2006 9.167%
</TABLE>
(d) The Term Loan A Principal Debt shall be repaid for the
ratable account of the Term Loan A Lenders on the following dates in the
amounts indicated, determined as a percentage of the Term Loan A
Principal Debt outstanding on the Closing Date (which amount shall be
33
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
reduced as a result of the application of prepayments in accordance with
the order of priority set forth in SECTIONS 2.7 and 3.11):
<TABLE>
<CAPTION>
Percentage of Term Loan A
Payment Date Principal Debt
------------ --------------
<S> <C>
December 31, 2000 5.000%
March 31, 2001 1.875%
June 30, 2001 1.875%
September 30, 2001 1.875%
December 31, 2001 1.875%
March 31, 2002 1.875%
June 30, 2002 1.875%
September 30, 2002 1.875%
December 31, 2002 1.875%
March 31, 2003 3.125%
June 30, 2003 3.125%
September 30, 2003 3.125%
December 31, 2003 3.125%
March 31, 2004 3.750%
June 30, 2004 3.750%
September 30, 2004 3.750%
December 31, 2004 3.750%
March 31, 2005 6.250%
June 30, 2005 6.250%
September 30, 2005 6.250%
December 31, 2005 6.250%
March 31, 2006 9.166%
June 30, 2006 9.167%
September 30, 2006 9.167%
</TABLE>
(e) The Term Loan B Principal Debt shall be repaid for the
ratable account of the Term Loan B Lenders on the following dates in the
amounts indicated, determined as a percentage of the Term Loan B
Principal Debt outstanding on the Closing Date (which amount shall be
reduced as a result of the application of prepayments in accordance with
the order of priority set forth in SECTIONS 2.7 and 3.11):
<TABLE>
<CAPTION>
Percentage of Term Loan B
Payment Date Principal Debt
------------ --------------
<S> <C>
December 31, 2000 2.500%
March 31, 2001 .625%
June 30, 2001 .625%
September 30, 2001 .625%
December 31, 2001 .625%
March 31, 2002 .625%
June 30, 2002 .625%
</TABLE>
34
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
<TABLE>
<CAPTION>
Percentage of Term Loan B
Payment Date Principal Debt
------------ --------------
<S> <C>
September 30, 2002 .625%
December 31, 2002 .625%
March 31, 2003 1.875%
June 30, 2003 1.875%
September 30, 2003 1.875%
December 31, 2003 1.875%
March 31, 2004 3.750%
June 30, 2004 3.750%
September 30, 2004 3.750%
December 31, 2004 3.750%
March 31, 2005 6.250%
June 30, 2005 6.250%
September 30, 2005 6.250%
December 31, 2005 6.250%
March 31, 2006 6.875%
June 30, 2006 6.875%
September 30, 2006 6.875%
December 31, 2006 6.875%
March 31, 2007 17.500%
</TABLE>
(f) The Term Loan C Principal Debt shall be repaid for the
ratable account of the Term Loan C Lenders on the following dates in the
amounts indicated, determined as a percentage of the Term Loan C
Principal Debt advanced on the Closing Date (which amount shall be
reduced as a result of the application of prepayments in accordance with
the order of priority set forth in SECTIONS 2.7 and 3.11):
<TABLE>
<CAPTION>
Percentage of Term Loan C
Payment Date Principal Debt
------------ --------------
<S> <C>
December 31, 1999 1.000%
Each March 31, June 30, 0.250%
September 30,
and December 31,
commencing March 31,
2000, through and
including December 31,
2006
March 31, 2007 23.000%
June 30, 2007 23.000%
September 30, 2007 23.000%
December 23, 2007 23.000%
</TABLE>
35
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
(g) On any date of determination if the Revolver Commitment
Usage exceeds the Revolver Commitment or the Swing Line Principal Debt
exceeds the Swing Line Commitment then in effect, then Borrower shall
make a mandatory prepayment of the Principal Debt under the Revolver
Facility or the Swing Line Subfacility, respectively, in at least the
amount of such excess, TOGETHER WITH (x) all accrued and unpaid interest
on the principal amount so prepaid and (y) any Consequential Loss
arising as a result thereof. All mandatory prepayments hereunder shall
be applied Pro Rata to each Revolver Lender's Committed Sum and shall be
applied to the regularly-scheduled Commitment reductions hereunder in
inverse order of maturity.
3.3 INTEREST OPTIONS. Except where specifically otherwise
provided, Borrowings shall bear interest at a rate per annum equal to the
LESSER OF (a) as to the respective Type of Borrowing (as designated by
Borrower in accordance with this Agreement), the Base Rate plus the
Applicable Margin for Base Rate Borrowings or the Adjusted Eurodollar Rate
plus the Applicable Margin for Eurodollar Rate Borrowings, AND (b) the
Maximum Rate. Each change in the Base Rate or the Maximum Rate, subject to
the terms of this Agreement, will become effective, without notice to
Borrower or any other Person, upon the effective date of such change.
3.4 QUOTATION OF RATES. It is hereby acknowledged that a
Responsible Officer or other appropriately designated officer of Borrower may
call Administrative Agent on or before the date on which a Notice of
Borrowing is to be delivered by Borrower in order to receive an indication of
the rates then in effect, but such indicated rates shall neither be binding
upon Administrative Agent or Lenders nor affect the rate of interest which
thereafter is actually in effect when the Notice of Borrowing is given.
3.5 DEFAULT RATE. At the option of Required Lenders and to the
extent permitted by Law, all past-due Principal Debt and accrued interest
thereon shall bear interest from maturity (stated or by acceleration) at the
Default Rate until paid, regardless whether such payment is made before or
after entry of a judgment.
3.6 INTEREST RECAPTURE. If the designated rate applicable to any
Borrowing exceeds the Maximum Rate, the rate of interest on such Borrowing
shall be limited to the Maximum Rate, but any subsequent reductions in such
designated rate shall not reduce the rate of interest thereon below the
Maximum Rate until the total amount of interest accrued thereon equals the
amount of interest which would have accrued thereon if such designated rate
had at all times been in effect. In the event that at maturity (stated or by
acceleration), or at final payment of the Principal Debt, the total amount of
interest paid or accrued is less than the amount of interest which would have
accrued if such designated rates had at all times been in effect, then, at
such time and to the extent permitted by Law, Borrower shall pay an amount
equal to the difference between (a) the LESSER OF the amount of interest
which would have accrued if such designated rates had at all times been in
effect AND the amount of interest which would have accrued if the Maximum
Rate had at all times been in effect, and (b) the amount of interest actually
paid or accrued on the Principal Debt.
3.7 INTEREST CALCULATIONS.
(a) All payments of interest shall be calculated on the
basis of actual number of days (including the first day but excluding
the last day) elapsed but computed as if each calendar year consisted of
360 days in the case of a Eurodollar Rate Borrowing (unless such
calculation would result in the interest on the Borrowings exceeding the
Maximum Rate, in which event such interest shall be calculated on the
basis of a year of 365 or 366 days, as the case may be), and 365 or
36
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
366 days, as the case may be, in the case of a Base Rate Borrowing.
All interest rate determinations and calculations by Administrative
Agent shall be conclusive and binding absent manifest error.
(b) The provisions of this Agreement relating to the
calculation of the Base Rate and the Adjusted Eurodollar Rate are
included only for the purpose of determining the rate of interest or
other amounts to be paid hereunder that are based upon such rate.
3.8 MAXIMUM RATE. Regardless of any provision contained in any
Loan Paper, neither Administrative Agent nor any Lender shall ever be
entitled to contract for, charge, take, reserve, receive, or apply, as
interest on the Obligation, or any part thereof, any amount in excess of the
Maximum Rate, and, if Lenders ever do so, then such excess shall be deemed a
partial prepayment of principal and treated hereunder as such and any
remaining excess shall be refunded to Borrower. In determining if the
interest paid or payable exceeds the Maximum Rate, Borrower and Lenders
shall, to the maximum extent permitted under applicable Law, (a) treat all
Borrowings as but a single extension of credit (and Lenders and Borrower
agree that such is the case and that provision herein for multiple Borrowings
is for convenience only), (b) characterize any nonprincipal payment as an
expense, fee, or premium rather than as interest, (c) exclude voluntary
prepayments and the effects thereof, and (d) amortize, prorate, allocate, and
spread the total amount of interest throughout the entire contemplated term
of the Obligation; PROVIDED THAT, if the Obligation is paid and performed in
full prior to the end of the full contemplated term thereof, and if the
interest received for the actual period of existence thereof exceeds the
Maximum Amount, Lenders shall refund such excess, and, in such event, Lenders
shall not, to the extent permitted by Law, be subject to any penalties
provided by any Laws for contracting for, charging, taking, reserving, or
receiving interest in excess of the Maximum Amount.
3.9 INTEREST PERIODS. When Borrower requests any Eurodollar Rate
Borrowing, Borrower may elect the interest period (each an "INTEREST PERIOD")
applicable thereto, which shall be, at Borrower's option, one, two, three, or
six months (or other periods, if requested by Borrower and available from the
Lenders); PROVIDED, HOWEVER, that: (a) the initial Interest Period for a
Eurodollar Rate Borrowing shall commence on the date of such Borrowing
(including the date of any conversion thereto), and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day
on which the next preceding Interest Period applicable thereto expires; (b)
if any Interest Period for a Eurodollar Rate Borrowing begins on a day for
which there is no numerically corresponding Business Day in the calendar
month at the end of such Interest Period, such Interest Period shall end on
the next Business Day immediately following what otherwise would have been
such numerically corresponding day in the calendar month at the end of such
Interest Period (UNLESS such date would be in a different calendar month from
what would have been the month at the end of such Interest Period, or UNLESS
there is no numerically corresponding day in the calendar month at the end of
the Interest Period; whereupon, such Interest Period shall end on the last
Business Day in the calendar month at the end of such Interest Period); (c)
no Interest Period may be chosen with respect to any portion of the Principal
Debt which would extend beyond the scheduled repayment date (including any
dates on which mandatory prepayments are required to be made) for such
portion of the Principal Debt; and (d) no more than an aggregate of eight (8)
Interest Periods shall be in effect at one time.
3.10 CONVERSIONS. For Borrowings under the Revolver Facility,
Term Loan A, or Term Loan B, Borrower may (a) convert a Eurodollar Rate
Borrowing on the last day of an Interest Period to a Base Rate Borrowing, (b)
convert a Base Rate Borrowing at any time to a Eurodollar Rate Borrowing, and
(c) elect a new Interest Period (in the case of a Eurodollar Rate Borrowing),
by giving notice (a "NOTICE OF CONVERSION," substantially in the form of
EXHIBIT B-2) of such intent no later than 10:00 a.m. Dallas,
37
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
Texas time on the third Business Day prior to the date of conversion or the
last day of the Interest Period, as the case may be (in the case of a
conversion to a Eurodollar Rate Borrowing or an election of a new Interest
Period), and no later than 10:00 a.m. Dallas, Texas time one Business Day
prior to the last day of the Interest Period (in the case of a conversion to
a Base Rate Borrowing); PROVIDED THAT, the principal amount converted to, or
continued as, a Eurodollar Rate Borrowing shall be in an amount not less than
$5,000,000 or a greater integral multiple of $1,000,000. Administrative Agent
shall timely notify each Lender with respect to each Notice of Conversion.
Absent Borrower's Notice of Conversion or election of a new Interest Period,
a Eurodollar Rate Borrowing shall be deemed converted to a Base Rate
Borrowing effective as of the expiration of the Interest Period applicable
thereto. No Eurodollar Rate Borrowing may be either made or continued as a
Eurodollar Rate Borrowing, and no Base Rate Borrowing may be converted to a
Eurodollar Rate Borrowing, if the interest rate for such Eurodollar Rate
Borrowing would exceed the Maximum Rate. The right to convert from a Base
Rate Borrowing to a Eurodollar Rate Borrowing, or to continue as a Eurodollar
Rate Borrowing, shall not be available during the occurrence of a Default or
a Potential Default.
3.11 ORDER OF APPLICATION.
(a) Payments and prepayments of the Obligation shall be
applied in the order and manner specified in this Agreement; PROVIDED,
HOWEVER, if no order is otherwise specified and no Default or Potential
Default has occurred and is continuing, payments and prepayments of the
Obligation shall be applied first to fees, second to accrued interest
then due and payable on the Principal Debt, and then to the remaining
Obligation in the order and manner as Borrower may direct.
(b) If a Default or Potential Default has occurred and is
continuing (or if Borrower fails to give directions as permitted under
SECTION 3.11(a)), any payment or prepayment (including proceeds from the
exercise of any Rights) shall be applied to the Obligation in the
following order: (i) to the ratable payment of all fees, expenses, and
indemnities for which Agents or Lenders have not been paid or reimbursed
in accordance with the Loan Papers (as used in this SECTION 3.11(b)(i),
a "RATABLE PAYMENT" for any Lender or any Agent shall be, on any date of
determination, that proportion which the portion of the total fees,
expenses, and indemnities owed to such Lender or such Agent bears to the
total aggregate fees and indemnities owed to all Lenders and Agents on
such date of determination); (ii) to the ratable payment of accrued and
unpaid interest on the Revolver Principal Debt and the Term Principal
Debt (as used in this SECTION 3.11(b)(ii), "RATABLE PAYMENT" means, for
any Revolver Lender or Term Lender, on any date of determination, that
proportion which the accrued and unpaid interest on the Revolver
Principal Debt or the Term Principal Debt (as the case may be) owed to
such Revolver Lender or Term Lender bears to the total accrued and
unpaid interest under the Loan Papers owed to all Revolver Lenders and
all Term Lenders); (iii) to the ratable payment of the Revolver
Principal Debt and the Term Principal Debt (as used in this
SECTION 3.11(b)(iii), "RATABLE PAYMENT" means for any Revolver Lender or
any Term Lender, on any date of determination, that proportion which the
Revolver Principal Debt or the Term Principal Debt (as the case may be)
owed to such Revolver Lender or Term Lender bears to the sum of the
Principal Debt and the Term Principal Debt owed to all Revolver Lenders
and all Term Lenders; and (iv) to the payment of the remaining
Obligation in the order and manner Required Lenders deem appropriate.
Subject to the provisions of SECTION 12 and provided that Administrative Agent
shall not in any event be bound to inquire into or to determine the validity,
scope, or priority of any interest or entitlement of any
38
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
Revolver Lender or Term Lender and may suspend all payments or seek
appropriate relief (including, without limitation, instructions from Required
Lenders or an action in the nature of interpleader) in the event of any doubt
or dispute as to any apportionment or distribution contemplated hereby,
Administrative Agent shall promptly distribute such amounts to each Lender in
accordance with the Agreement and the related Loan Papers.
3.12 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment (whether voluntary, involuntary, or otherwise, including, without
limitation, as a result of exercising its Rights under SECTION 3.13) which is
in excess of its ratable share of any such payment (except as provided herein
with respect to the Term Facility opt-outs in SECTION 2.7(f)), such Lender
shall purchase from the other Revolver Lenders and the Term Lenders such
participations as shall be necessary to cause such purchasing Lender to share
the excess payment ratably with each of them; PROVIDED, HOWEVER, that if all
or any portion of such excess payment is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery. Borrower agrees that any Lender so
purchasing a participation from another Revolver Lender or Term Lender
pursuant to this Section may, to the fullest extent permitted by Law,
exercise all of its Rights of payment (including the Right of offset) with
respect to such participation as fully as if such Revolver Lender or Term
Lender were the direct creditor of Borrower in the amount of such
participation.
3.13 OFFSET. Upon the occurrence and during the continuance of a
Default, each Lender shall be entitled to exercise (for the benefit of all
Revolver Lenders and Term Lenders in accordance with SECTION 3.12) the Rights
of offset and/or banker's Lien against each and every account and other
property, or any interest therein, which any Company may now or hereafter
have with, or which is now or hereafter in the possession of, such Lender to
the extent of the full amount of the Obligation.
3.14 BOOKING BORROWINGS. To the extent permitted by Law, any
Lender may make, carry, or transfer its Borrowings at, to, or for the account
of any of its branch offices or the office of any of its Affiliates; PROVIDED
THAT, no Affiliate shall be entitled to receive any greater payment under
SECTION 4 than the transferor Lender would have been entitled to receive with
respect to such Borrowings.
SECTION 4 CHANGE IN CIRCUMSTANCES.
4.1 INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any
applicable Law or any change in any applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority,
or compliance by any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any
such Governmental Authority:
(i) shall subject such Lender (or its Applicable
Lending Office) to any Tax or other charge with respect to any
Eurodollar Rate Borrowing, its Notes, or its obligation to loan
Eurodollar Rate Borrowings, or change the basis of taxation of
any amounts payable to such Lender (or its Applicable Lending
Office) under this Agreement or its Notes in respect of any
Eurodollar Rate Borrowings (other than taxes imposed on the
overall net income of such Lender by the jurisdiction in which
such Lender has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than the Reserve Requirement utilized in the
39
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
determination of the Adjusted Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with or
other liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the commitment of such
Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or the London interbank market any other
condition affecting this Agreement or its Notes or any of such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending Office) of making, converting into,
continuing, or maintaining any Eurodollar Rate Borrowings or to reduce
any sum received or receivable by such Lender (or its Applicable Lending
Office) under this Agreement or its Notes with respect to any Eurodollar
Rate Borrowing, then Borrower shall pay to such Lender on demand such
amount or amounts as will compensate such Lender for such increased cost
or reduction. If any Lender requests compensation by Borrower under
this SECTION 4.1(a), Borrower may, by notice to such Lender (with a copy
to Administrative Agent), suspend the obligation of such Lender to loan
or continue Borrowings of the Type with respect to which such
compensation is requested, or to convert Borrowings of any other Type
into Borrowings of such Type, until the event or condition giving rise
to such request ceases to be in effect (in which case the provisions of
SECTION 4.4 shall be applicable); PROVIDED, THAT such suspension shall
not affect the right of such Lender to receive the compensation so
requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable Law regarding capital
adequacy or any change therein or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority has or would have the effect of reducing
the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such corporation
could have achieved but for such adoption, change, request, or directive
(taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender
for such reduction.
(c) Each Lender shall promptly notify Borrower and
Administrative Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Lender to compensation
pursuant to this Section and will designate a different Applicable
Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such
Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section shall furnish to Borrower and
Administrative Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the
absence of manifest error. In determining such amount, such Lender may
use any reasonable averaging and attribution methods.
4.2 LIMITATION ON TYPES OF LOANS. If on or prior to the first
day of any Interest Period for any Eurodollar Rate Borrowing:
(a) Administrative Agent determines (which determination
shall be conclusive) that by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period; or
40
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
(b) Required Lenders determine (which determination shall be
conclusive) and notify Administrative Agent that the Adjusted Eurodollar
Rate will not adequately and fairly reflect the cost to the Lenders of
funding Eurodollar Rate Borrowings for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof
specifying the relevant amounts or periods, and so long as such condition
remains in effect, the Lenders shall be under no obligation to fund
additional Eurodollar Rate Borrowings, continue Eurodollar Rate Borrowings,
or to convert Base Rate Borrowings into Eurodollar Rate Borrowings, and
Borrower shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Eurodollar Rate Borrowings, either prepay such Borrowings or
convert such Borrowings into Base Rate Borrowings in accordance with the
terms of this Agreement.
4.3 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate
Borrowings hereunder, then such Lender shall promptly notify Borrower thereof
and such Lender's obligation to make or continue Eurodollar Rate Borrowings
and to convert other Base Rate Borrowings into Eurodollar Rate Borrowings
shall be suspended until such time as such Lender may again make, maintain,
and fund Eurodollar Rate Borrowings (in which case the provisions of SECTION
4.4 shall be applicable).
4.4 TREATMENT OF AFFECTED LOANS. If the obligation of any Lender
to fund Eurodollar Rate Borrowings or to continue, or to convert Base Rate
Borrowings into Eurodollar Rate Borrowings, shall be suspended pursuant to
SECTIONS 4.1, 4.2, or 4.3 hereof, such Lender's Eurodollar Rate Borrowings
shall be automatically converted into Base Rate Borrowings on the last day(s)
of the then current Interest Period(s) for Eurodollar Rate Borrowings (or, in
the case of a conversion required by SECTION 4.3 hereof, on such earlier date
as such Lender may specify to Borrower with a copy to Administrative Agent)
and, unless and until such Lender gives notice as provided below that the
circumstances specified in SECTIONS 4.1, 4.2, or 4.3 hereof that gave rise to
such conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Rate
Borrowings have been so converted, all payments and prepayments of
principal that would otherwise be applied to such Lender's Eurodollar
Rate Borrowings shall be applied instead to its Base Rate Borrowings;
and
(b) all Borrowings that would otherwise be made or continued
by such Lender as Eurodollar Rate Borrowings shall be made or continued
instead as Base Rate Borrowings, and all Borrowings of such Lender that
would otherwise be converted into Eurodollar Rate Borrowings shall be
converted instead into (or shall remain as) Base Rate Borrowings.
If such Lender gives notice to Borrower (with a copy to Administrative Agent)
that the circumstances specified in SECTIONS 4.1, 4.2, or 4.3 hereof that
gave rise to the conversion of such Lender's Eurodollar Rate Borrowings
pursuant to this SECTION 4.4 no longer exist (which such Lender agrees to do
promptly upon such circumstances ceasing to exist) at a time when Eurodollar
Rate Borrowings made by other Lenders are outstanding, such Lender's Base
Rate Borrowings shall be automatically converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Eurodollar Rate
Borrowings, to the extent necessary so that, after giving effect thereto, all
Eurodollar Rate Borrowings held by the Lenders and by such Lender are held
pro rata (as to principal amounts, Types, and Interest Periods) in accordance
with their respective Commitments.
4.5 COMPENSATION. Upon the request of any Lender, Borrower shall
pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
41
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
(a) any payment, prepayment, or conversion of a Eurodollar
Rate Borrowing for any reason (including, without limitation, the
acceleration of the loan pursuant to SECTION 11.1) on a date other than
the last day of the Interest Period for such Borrowing; or
(b) any failure by Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
SECTION 7.3 to be satisfied) to borrow, convert, continue, or prepay a
Eurodollar Rate Borrowing on the date for such borrowing, conversion,
continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, continuation, or conversion under this Agreement.
4.6 TAXES.
(a) Any and all payments by Borrower to or for the account
of any Lender or Administrative Agent hereunder or under any other Loan
Paper shall be made free and clear of and without deduction for any and
all present or future Taxes, EXCLUDING, in the case of each Lender and
Administrative Agent, Taxes imposed on its income and franchise Taxes
imposed on it by the jurisdiction under the Laws of which such Lender
(or its Applicable Lending Office) or Administrative Agent (as the case
may be) is organized, or any political subdivision thereof. If Borrower
shall be required by Law to deduct any Taxes from or in respect of any
sum payable under this Agreement or any other Loan Paper to any Lender
or Administrative Agent, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this SECTION 4.6)
such Lender or Administrative Agent receives an amount equal to the sum
it would have received had no such deductions been made, (ii) Borrower
shall make such deductions, (iii) Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable Law, and (iv) Borrower shall furnish to
Administrative Agent, at its address listed in SCHEDULE 2.1, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present
or future stamp or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made
under this Agreement or any other Loan Paper or from the execution or
delivery of, or otherwise with respect to, this Agreement or any other
Loan Paper (hereinafter referred to as "OTHER TAXES").
(c) Borrower agrees to indemnify each Lender and
Administrative Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or other Taxes imposed or
asserted by any jurisdiction on amounts payable under this SECTION 4.6)
paid by such Lender or Administrative Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto.
(d) Each Lender organized under the Laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, and from time to time
thereafter if requested in writing by Borrower or Administrative Agent
(but only so long as such Lender remains lawfully able to do so), shall
provide Borrower and Administrative Agent with (i) INTERNAL REVENUE
SERVICE FORM 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender
is entitled to benefits under an income tax treaty to which the United
States is a party
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
which reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the
United States, (ii) INTERNAL REVENUE SERVICE FORM W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, and (iii) any other form or certificate required by any
taxing authority (including any certificate required by SECTIONS 871(h)
and 881(c) of the Internal Revenue Code), certifying that such Lender is
entitled to an exemption from or a reduced rate of tax on payments
pursuant to this Agreement or any of the other Loan Papers.
(e) For any period with respect to which a Lender has failed
to provide Borrower and Administrative Agent with the appropriate form
pursuant to SECTION 4.6(d) (unless such failure is due to a change in
Law occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to
indemnification under SECTION 4.6(a) or 4.6(b) with respect to Taxes
imposed by the United States; PROVIDED, HOWEVER, that should a Lender,
which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, Borrower shall take such steps as
such Lender shall reasonably request to assist such Lender to recover
such Taxes.
(f) If Borrower is required to pay additional amounts to or
for the account of any Lender pursuant to this SECTION 4.6, then such
Lender will agree to use reasonable efforts to change the jurisdiction
of its Applicable Lending Office so as to eliminate or reduce any such
additional payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to such
Lender.
(g) Within thirty (30) days after the date of any payment of
Taxes, Borrower shall furnish to Administrative Agent the original or a
certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement
of Borrower hereunder, the agreements and obligations of Borrower
contained in this SECTION 4.6 shall survive the termination of the Total
Commitment and the payment in full of the Obligation.
SECTION 5 FEES.
5.1 TREATMENT OF FEES. Except as otherwise provided by Law, the
fees described in this SECTION 5: (a) do not constitute compensation for the
use, detention, or forbearance of money, (b) are in addition to, and not in
lieu of, interest and expenses otherwise described in this Agreement, (c)
shall be payable in accordance with SECTION 3.1, (d) shall be non-refundable,
(e) shall, to the fullest extent permitted by Law, bear interest, if not paid
when due, at the Default Rate, and (f) shall be calculated on the basis of
actual number of days (including the first day but excluding the last day)
elapsed, but computed as if each calendar year consisted of 360 days, unless
such computation would result in interest being computed in excess of the
Maximum Rate in which event such computation shall be made on the basis of a
year of 365 or 366 days, as the case may be.
5.2 FEES OF ADMINISTRATIVE AGENT AND ARRANGER. Borrower shall
pay to (a) Administrative Agent, Lenders, and Arranger, as the case may be,
solely for their respective accounts, the fees described in that certain
separate letter agreement dated as of December 3, 1998, between Borrower,
Administrative Agent, and Arranger, and (b) each of the Agents, all the fees
specified in the letter dated December 9,
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1998, addressed to Borrower from the Agents, which payments shall be made on
the dates specified, and in amounts calculated in accordance with, such
letter agreements.
5.3 REVOLVER FACILITY COMMITMENT FEES. Following the Closing
Date, Borrower shall pay to Administrative Agent, for the ratable account of
Revolver Lenders, a commitment fee, payable in installments in arrears, on
each March 31, June 30, September 30, and December 31 and on the Termination
Date for the Revolver Facility, commencing December 31, 1998. Each
installment shall be, in an amount equal to the Applicable Margin for
Commitment Fees MULTIPLIED BY the amount by which (a) the average daily
Revolver Commitment exceeds (b) the average daily Revolver Commitment Usage,
in each case during the period from and including the last payment date to
and excluding the payment date for such installment; PROVIDED THAT, each such
installment shall be calculated in accordance with SECTION 5.1(f). Solely
for the purposes of this SECTION 5.3, (i) determinations of the average daily
Revolver Commitment Usage shall exclude the Revolver Principal Debt of all
Swing Line Borrowings (provided that, solely for NationsBank in its capacity
as the Lender under the Swing Line Subfacility [and any successor Lender
thereunder, "SWING LINE LENDER"], Borrowings under the Swing Line Subfacility
will be included in determining the Revolver Commitment Usage for such Swing
Line Lender up to, but not in excess of, the amount which causes the Revolver
Commitment Usage of such Swing Line Lender to equal the Committed Sum in
respect of the Revolver Facility of such Lender); and (ii) "RATABLE" shall
mean, for any period of calculation, with respect to any Revolver Lender, that
proportion which (x) the average daily unused Revolver Committed Sum of such
Revolver Lender during such period bears to (y) the amount of the average daily
unused Revolver Commitment during such period.
SECTION 6. SECURITY; GUARANTIES.
6.1 COLLATERAL. To secure full and complete payment and
performance of the Obligation, the Companies hereby jointly and severally
grant and convey to, and create in favor of Administrative Agent for the
ratable benefit of the Lenders, first priority Liens in, to, and on all
assets of the Companies as more particularly described in the Collateral
Documents (the "COLLATERAL"); PROVIDED THAT, no Agent or any Lender hereby
assumes or is made the transferee of any obligations of any Company regarding
any of the Collateral.
6.2 GUARANTIES. As an inducement to Agents and Lenders to enter
into this Agreement, Borrower shall cause Sygnet Communications and each
other Subsidiary to execute and deliver to Administrative Agent a Guaranty
substantially in the form and upon the terms of EXHIBIT C, providing for the
guarantee of payment and performance of the Obligation.
6.3 FUTURE LIENS. Promptly after (a) the acquisition of any
assets (real, personal, tangible, or intangible) by any Company, (b) the
removal, termination, or expiration of any prohibitions upon the granting of
a Lien in any asset (real, personal, tangible, or intangible) of any Company,
or (c) upon the designation, formation, or acquisition of any new Subsidiary
(the assets and stock of such new Subsidiary and the assets described in
CLAUSES (a) and (b) hereof are referred to herein as the "ADDITIONAL
ASSETS"), Borrower shall (or shall cause such other Company to) execute and
deliver to Administrative Agent all further instruments and documents
(including, without limitation, Collateral Documents and all certificates and
instruments representing shares of stock or evidencing Debt and any realty
appraisals as Administrative Agent may require with respect to any such
Additional Assets), and shall take all further action that may be necessary
or desirable, or that Administrative Agent may reasonably request, to grant,
perfect, and protect Liens in favor of Administrative Agent for the benefit
of the Lenders in such Additional Assets, as security for the Obligation; IT
BEING EXPRESSLY UNDERSTOOD that the granting of such additional security
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for the Obligation is a material inducement to the execution and delivery of
this Agreement by each Lender. Upon satisfying the terms and conditions
hereof, such Additional Assets shall be included in the "COLLATERAL" for all
purposes under the Loan Papers, and all references to the "COLLATERAL" in the
Loan Papers shall include the Additional Assets.
6.4 RELEASE OF COLLATERAL. Upon any sale, transfer, or
disposition of Collateral which is expressly permitted pursuant to the Loan
Papers (or is otherwise authorized by Required Lenders or Lenders, as the
case may be), and upon ten (10) Business Days' prior written request by
Borrower (which request must be accompanied by true and correct copies of (a)
all documents of transfer or disposition, including any contract of sale, (b)
a preliminary closing statement and instructions to the title company, if
any, and (c) all requested release instruments), Administrative Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of Liens granted to
Administrative Agent for the benefit of Lenders pursuant hereto in such
Collateral; PROVIDED THAT, (i) no such release of Lien shall be granted if
any Default or Potential Default has occurred and is continuing, including,
without limitation, the failure to make certain mandatory prepayments in
accordance with SECTIONS 2.7(b)(ii) in conjunction with the sale or transfer
of such Collateral; (ii) Administrative Agent shall not be required to
execute any such document on terms which, in Administrative Agent's opinion,
would expose Administrative Agent to liability or create any obligation or
entail any consequence OTHER THAN the release of such Liens without recourse
or warranty; and (iii) such release shall not in any manner discharge,
affect, or impair the Obligation, or Liens upon (or obligations of any
Company in respect of) all interests retained by the Companies, including
(without limitation) the proceeds of any sale, all of which shall continue to
constitute Collateral.
6.5 NEGATIVE PLEDGE. Notwithstanding the provisions of SECTION
6.1 hereof, until such time as Administrative Agent or Required Lenders
otherwise require, the Companies shall not be required to: (i) perfect Liens
on certain assets constituting interests in assigned leases (other than the
Sygnet Towers Lease), vehicles, fixtures, or real estate, SO LONG AS the
aggregate value of such assets does not exceed $5,000,000, or (ii) to grant
specific assignments of easements, licenses, permits, certificates of
compliance, and certificates of approval issued by regulatory authorities,
franchises, or like grants of authority or service agreements, To the extent
Administrative Agent and Required Lenders agree to delay the perfection or
attachment of any Lien granted pursuant to SECTION 6.1 hereof, for whatever
reason, the Companies hereby covenant and agree not to directly create,
incur, grant, suffer, or permit to be created or incurred any Lien on any
such assets, OTHER THAN Permitted Liens. Furthermore, within thirty (30)
days of the request of Administrative Agent, Borrower shall (or shall cause
each Company to) execute and deliver to Administrative Agent all instruments
and documents (including, without limitation, certificates and instruments
and documents representing shares of stock or evidencing Debt) and shall take
all further action that may be necessary or desirable, or that Administrative
Agent may reasonably request, to grant, perfect, and protect Liens in favor
of Administrative Agent for the benefit of Lenders, in such assets, as
security for the Obligation; IT BEING EXPRESSLY UNDERSTOOD that the
provisions of this negative pledge are a material inducement to the execution
and delivery of this Agreement by each Lender.
6.6 CONTROL; LIMITATION OF RIGHTS. Notwithstanding anything
herein or in any other Loan Paper to the contrary, (a) the transactions
contemplated hereby (i) do not and will not constitute, create, or have the
effect of constituting or creating, directly or indirectly, actual or
practical ownership of the Companies by Agents or Lenders, or control,
affirmative or negative, direct or indirect, by Agents or Lenders over the
management or any other aspect of the operation of the Companies, which
ownership or control remains exclusively and at all times in the Companies,
and (ii) do not and will not constitute the transfer, assignment, or
disposition in any manner, voluntary or involuntary, directly or indirectly,
of any
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Authorization at any time issued by the FCC or any PUC to the Companies, or
the transfer of control of the Companies within the meaning of SECTION 310(d)
of the Communications Act; and (b) Administrative Agent shall not, without
first obtaining the approval of the FCC or any applicable PUC, take any
action pursuant to this Agreement or any other Loan Paper that would
constitute or result in any assignment of any Authorization or any change of
control of the Companies, if such assignment or change of control would
require, under then existing Law (including the written rules and regulations
promulgated by the FCC or any such PUC), the prior approval of the FCC or any
such PUC.
SECTION 7 CONDITIONS PRECEDENT.
7.1 CONDITIONS PRECEDENT TO CLOSING. This Agreement shall not
become effective, and Lenders shall not be obligated to advance any
Borrowing, unless Administrative Agent has received all of the agreements,
documents, instruments, and other items described on SCHEDULE 7.1.
7.2 CONDITIONS PRECEDENT TO A PERMITTED ACQUISITION. On or prior
to the consummation of any Acquisition (whether or not the purchase price for
such Acquisition is funded by Borrowings), Borrower shall have satisfied the
conditions and delivered, or caused to be delivered, to Administrative Agent,
all documents and certificates set forth on SCHEDULE 7.2 by no later than the
dates specified for satisfaction of such conditions on SCHEDULE 7.2.
Promptly upon receipt of each Permitted Acquisition Compliance Certificate
and each Permitted Acquisition Loan Closing Certificate, Administrative Agent
shall provide copies of such certificates to Lenders. All documentation
delivered and satisfaction of conditions pursuant to the requirements of
SECTION 7.2 must be satisfactory to Administrative Agent. To the extent any
Borrowing is being requested in connection with the consummation of the
Acquisition, the conditions set forth in SECTIONS 7.2 and 7.3 hereof must be
satisfied prior to the making of any such Borrowing.
7.3 CONDITIONS PRECEDENT TO EACH BORROWING. In addition to the
conditions stated in SECTIONS 7.1 and 7.2, Lenders will not be obligated to
fund (as opposed to continue or convert) any Borrowing, unless on the date of
such Borrowing (and after giving effect thereto): (a) Administrative Agent
shall have timely received therefor a Notice of Borrowing; (b) all of the
representations and warranties of any Company set forth in the Loan Papers
are true and correct in all material respects (except to the extent that (i)
the representations and warranties speak to a specific date or (ii) the facts
on which such representations and warranties are based have been changed by
transactions contemplated or permitted by the Loan Papers); (c) no change in
the financial condition or business of any Company which could be a Material
Adverse Event shall have occurred; (d) no Default or Potential Default shall
have occurred and be continuing; (e) the funding of such Borrowings is
permitted by Law; (f) in the event all or any part of the proceeds of the
Borrowing will be used to finance a Distribution to the extent permitted by
SECTION 9.21, Administrative Agent shall have received all such
certifications, financial information, and projections as Administrative
Agent may reasonably request; and (g) all matters related to such Borrowing
must be satisfactory to Required Lenders and their respective counsel in
their reasonable determination, and upon the reasonable request of
Administrative Agent, Borrower shall deliver to Administrative Agent evidence
substantiating any of the matters in the Loan Papers which are necessary to
enable Borrower to qualify for such Borrowing. Each Notice of Borrowing
delivered to Administrative Agent shall constitute the representation and
warranty by Borrower to Administrative Agent that the statements above are
true and correct in all respects. Each condition precedent in this Agreement
is material to the transactions contemplated in this Agreement, and time is
of the essence in respect of each thereof. Subject to the prior approval of
Required Lenders, Lenders may fund any Borrowing without all conditions being
satisfied, but, to the extent permitted by Law, the same shall not be deemed
to be a waiver of the requirement that each
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such condition precedent be satisfied as a prerequisite for any subsequent
funding or issuance, unless Required Lenders specifically waive each such
item in writing.
SECTION 8 REPRESENTATIONS AND WARRANTIES. Borrower and each other
Company represent and warrant to Administrative Agent and Lenders as follows:
8.1 PURPOSE OF CREDIT FACILITIES. Borrower will use (or will
loan such proceeds to its Companies to so use) all proceeds of Borrowings for
one or more of the following: (a) to finance all or a portion of the Sygnet
Merger and the related costs and expenses; (b) to finance other Permitted
Acquisitions; (c) to refinance certain indebtedness of Sygnet Wireless, Inc.
existing as of the Closing Date, including the Sygnet Senior Notes; (d) to
finance Capital Expenditures; (e) to finance certain investments permitted by
the Loan Papers; (f) to finance certain permitted Distributions; (g) for
working capital of Borrower and its Subsidiaries; and (h) for general
corporate purposes. No Company is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any "MARGIN STOCK" within the meaning of REGULATION U.
No part of the proceeds of any Borrowing will be used, directly or
indirectly, for a purpose which violates any Law, including, without
limitation, the provisions of REGULATIONS T, U, or X (as enacted by the Board
of Governors of the Federal Reserve System, as amended).
8.2 EXISTENCE, GOOD STANDING, AUTHORITY, AND AUTHORIZATIONS.
Each Company is duly organized, validly existing, and in good standing under
the Laws of its jurisdiction of organization (such jurisdictions being
identified on SCHEDULE 8.3, as supplemented and modified in writing from time
to time to reflect any changes to such Schedule as a result of transactions
permitted by the Loan Papers). Each Company is duly qualified to transact
business and is in good standing in each jurisdiction where the nature and
extent of its business and properties require the same. Each of the
Companies possesses all Authorizations, franchises, permits, licenses,
certificates of compliance, and approvals and grants of authority necessary,
including, without limitation, any Authorization issued by the FCC, all of
which are described on SCHEDULE 8.2 hereto, necessary or required in the
conduct of its respective business(es), and the same are valid, binding,
enforceable, and subsisting without any defaults thereunder or enforceable
adverse limitations thereon and are not subject to any proceedings or claims
opposing the issuance, development, or use thereof or contesting the validity
thereof. No authorization, consent, approval, waiver, license, or formal
exemptions from, nor any filing, declaration, or registration with, any
Governmental Authority (federal, state, or local), or non-governmental
entity, under the terms of contracts or otherwise, is required by reason of
or in connection with the execution and performance of the Loan Papers by the
Companies or consummation of the Sygnet Merger, except as shall have been
obtained on or prior to the Closing Date.
8.3 SUBSIDIARIES; CAPITAL STOCK. The Companies have no
Subsidiaries except as disclosed on SCHEDULE 8.3 (as supplemented and
modified in writing from time to time to reflect any changes to such Schedule
as a result of transactions permitted by the Loan Papers). All of the
outstanding shares of capital stock (or similar voting interests) of each
Subsidiary are duly authorized, validly issued, fully paid, and nonassessable
and are owned of record and beneficially as set forth on SCHEDULE 8.3 (as
supplemented and modified in writing from time to time to reflect any changes
to such Schedule as a result of transactions permitted by the Loan Papers),
free and clear of any Liens, restrictions, claims, or rights of another
Person, other than Permitted Liens, and none of such shares owned by any
Company is subject to any restriction on transfer thereof except for
restrictions imposed by securities Laws and general corporate Laws. No
Company has outstanding any warrant, option, or other right of any Person to
acquire any of its capital stock or similar equity interests.
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8.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery
by each Company of each Loan Paper to which it is a party and the performance
by such Company of its obligations thereunder (a) are within the corporate
power of such Company, (b) will have been duly authorized by all necessary
corporate or partnership action on the part of such Company when such Loan
Paper is executed and delivered, (c) require no action by or in respect of,
or filing with, any Governmental Authority, which action or filing has not
been taken or made on or prior to the Closing Date (or if later, the date of
execution and delivery of such Loan Paper), (d) will not violate any
provision of the charter, bylaws, or partnership agreement of such Company,
(e) will not violate any provision of Law applicable to it, other than such
violations which individually or collectively could not be a Material Adverse
Event, (f) will not violate any material written or oral agreements,
contracts, commitments, or understandings to which it is a party, other than
such violations which could not be a Material Adverse Event, or (g) will not
result in the creation or imposition of any Lien on any asset of any Company.
The Companies have (or will have upon consummation thereof) all necessary
consents and approvals of any Person or Governmental Authority required to be
obtained in order to effect the Sygnet Merger and any other any asset
transfer, change of control, merger, or consolidation permitted by the Loan
Papers.
8.5 BINDING EFFECT. Upon execution and delivery by all parties
thereto, each Loan Paper will constitute a legal, valid, and binding
obligation of each Company party thereto, enforceable against each such
Company in accordance with its terms, except as enforceability may be limited
by applicable Debtor Relief Laws and general principles of equity.
8.6 FINANCIAL STATEMENTS. The Current Financials were prepared
in accordance with GAAP and present fairly, in all material respects, the
consolidated financial condition, results of operations, and cash flows of
the Companies as of and for the portion of the fiscal year ending on the date
or dates thereof (subject only to normal year-end audit adjustments). There
were no material liabilities, direct or indirect, fixed or contingent, of the
Companies as of the date or dates of the Current Financials which are
required under GAAP to be reflected therein or in the notes thereto, and are
not so reflected. Except for transactions directly related to, or
specifically contemplated by, the Loan Papers, there have been no changes in
the consolidated financial condition of the Companies from that shown in the
Current Financials after such date which could be a Material Adverse Event,
nor has Borrower or any Company incurred any liability (including, without
limitation, any liability under any Environmental Law), direct or indirect,
fixed or contingent, after such date which could be a Material Adverse Event.
8.7 LITIGATION, CLAIMS, INVESTIGATIONS. No Company is subject
to, or aware of the threat of, any Litigation which is reasonably likely to
be determined adversely to any Company, and, if so adversely determined,
could (individually or collectively with other Litigation) be a Material
Adverse Event. There are no outstanding orders or judgments for the payment
of money in excess of $1,000,000 (individually or collectively) or any
warrant of attachment, sequestration, or similar proceeding against the
assets of any Company having a value (individually or collectively) of
$1,000,000 or more which is not either (a) stayed on appeal or (b) being
diligently contested in good faith by appropriate proceedings and adequate
reserves have been set aside on the books of such Company in accordance with
GAAP. There are no formal complaints, suits, claims, investigations, or
proceedings initiated at or by any Governmental Authority pending or
threatened by or against any Company relating to the Sygnet Merger, the
transactions evidenced by the Loan Papers, or which could be a Material
Adverse Event, nor any judgments, decrees, or orders of any Governmental
Authority outstanding against any Company that could be a Material Adverse
Event.
8.8 TAXES. All Tax returns of each Company required to be filed
have been filed (or extensions have been granted) prior to delinquency,
except for any such returns for which the failure to
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so file could not be a Material Adverse Event, and all Taxes imposed upon
each Company which are due and payable have been paid prior to delinquency,
OTHER THAN Taxes for which the criteria for Permitted Liens (as specified in
SECTION 9.13(b)(vi)) have been satisfied or for which nonpayment thereof
could not constitute a Material Adverse Event.
8.9 ENVIRONMENTAL MATTERS. No Company (a) knows of any
environmental condition or circumstance, such as the presence or Release of
any Hazardous Substance, on any property presently or previously owned by any
Company that could be a Material Adverse Event, (b) knows of any violation by
any Company of any Environmental Law, except for such violations that could
not be a Material Adverse Event, or (c) knows that any Company is under any
obligation to remedy any violation of any Environmental Law, except for such
obligations that could not be a Material Adverse Event; PROVIDED, HOWEVER,
that each Company (x) to the best of its knowledge, has in full force and
effect all environmental permits, licenses, and approvals required to conduct
its operations and is operating in substantial compliance thereunder, and (y)
has taken prudent steps to determine that its properties and operations are
not in violation of any Environmental Law.
8.10 EMPLOYEE BENEFIT PLANS. (a) No Employee Plan has incurred an
accumulated funding deficiency, as defined in SECTION 302 of ERISA and
SECTION 412 of the Code, (b) neither Borrower nor any ERISA Affiliate has
incurred material liability which is currently due and remains unpaid under
TITLE IV of ERISA to the PBGC or to an Employee Plan in connection with any
such Employee Plan, (c) neither Borrower nor any ERISA Affiliate has
withdrawn in whole or in part from participation in a Multiemployer Plan, (d)
Borrower has not engaged in any "PROHIBITED TRANSACTION" (as defined in
SECTION 406 of ERISA or SECTION 4975 of the Code) which would be a Material
Adverse Event, and (e) no Reportable Event has occurred which is likely to
result in the termination of an Employee Plan. The present value of all
benefit liabilities within the meaning of TITLE IV of ERISA under each
Employee Plan (based on those actuarial assumptions used to fund such
Employee Plan) did not, as of the last annual valuation date for the 1997
plan year of such Plan, exceed the value of the assets of such Employee Plan,
and the total present values of all benefit liabilities within the meaning of
TITLE IV of ERISA of all Employee Plans (based on the actuarial assumptions
used to fund each such Plan) did not, as of the respective annual valuation
dates for the 1997 plan year of each such Plan, exceed the value of the
assets of all such plans.
8.11 PROPERTIES; LIENS. Each Company has good and marketable
title to all its property reflected on the Current Financials, EXCEPT (a) for
(i) property that is obsolete, (ii) property that has been disposed of in the
ordinary course of business, or (iii) property with title defects or failures
in title which, when considered in the aggregate, would not be a Material
Adverse Event, or (b) as otherwise permitted by the Loan Papers. Except for
Permitted Liens, there is no Lien on any property of any Company, and the
execution, delivery, performance, or observance of the Loan Papers will not
require or result in the creation of any Lien on such property.
8.12 GOVERNMENT REGULATIONS. No Company is subject to regulation
under the INVESTMENT COMPANY ACT OF 1940, as amended, the PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, as amended, or any other Law (other than
REGULATIONS T, U, and X of the Board of Governors of the Federal Reserve
System and the requirements of any PUC or public service commission) which
regulates the incurrence of Debt.
8.13 TRANSACTIONS WITH AFFILIATES. Except as permitted in SECTION
9.14, no Company is a party to a material transaction with any of its
Affiliates (excluding transactions between or among Companies), other than
transactions in the ordinary course of business and upon fair and reasonable
terms not materially
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less favorable than such Company could obtain or could become entitled to in
an arm's-length transaction with a Person that was not its Affiliate.
8.14 DEBT. No Company is an obligor on any Debt other than
Permitted Debt.
8.15 MATERIAL AGREEMENTS; MANAGEMENT AGREEMENTS. SCHEDULE 8.15
hereto sets forth a list of all Material Agreements, and there exists no
material default under any of such contracts. There are no failures of any
material written or oral agreements, contracts, commitments, or
understandings to which any Company is a party to be in full force and effect
which could be a Material Adverse Event, and no default or potential default
exists on the part of any Company thereunder which could be a Material
Adverse Event. No Company is a party to any management or consulting
agreement for the provision of services to it, except as described in
SCHEDULE 8.15 hereto.
8.16 INSURANCE. Each Company maintains, with financially sound,
responsible, and reputable insurance companies or associations, insurance
concerning its properties and businesses against such casualties and
contingencies and of such types and in such amounts (and with co-insurance
and deductibles) as is customary in the case of same or similar businesses.
8.17 LABOR MATTERS. There are no actual or threatened strikes,
labor disputes, slow downs, walkouts, or other concerted interruptions of
operations by the employees of any Company that could be a Material Adverse
Event. Hours worked by and payment made to employees of the Companies have
not been in violation of the FAIR LABOR STANDARDS ACT or any other applicable
Law dealing with such matters, other than any such violations, individually
or collectively, which could not constitute a Material Adverse Event. All
payments due from any Company on account of employee health and welfare
insurance have been paid or accrued as a liability on its books, other than
any such nonpayments which could not, individually or collectively,
constitute a Material Adverse Event.
8.18 SOLVENCY. At the time of each Borrowing hereunder, and on
the dates of the Sygnet Merger, the Sygnet Towers Sale, and each Permitted
Acquisition, each Company is (and after giving effect to the transactions
contemplated by the Loan Papers, the Sygnet Merger, any Permitted
Acquisition, and any incurrence of additional Debt, will be) Solvent.
8.19 INTELLECTUAL PROPERTY. Each Company owns or has sufficient
and legally enforceable rights to use all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
and trade names necessary to continue to conduct its businesses as heretofore
conducted by it, now conducted by it, and now proposed to be conducted by it.
Each Company is conducting its business without infringement or claim of
infringement of any license, patent, copyright, service mark, trademark,
trade name, trade secret, or other intellectual property right of others,
other than any such infringements or claims which, if successfully asserted
against or determined adversely to any Company, could not, individually or
collectively, constitute a Material Adverse Event.
8.20 COMPLIANCE WITH LAWS. No Company is in violation of any Laws
(including, without limitation, the Communications Act, Environmental Laws,
and those Laws administered by the FCC and any PUC), other than such
violations which could not, individually or collectively, be a Material
Adverse Event. No Company has received notice alleging any noncompliance
with any Laws, except for such noncompliance which no longer exists, or which
could not constitute a Material Adverse Event.
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8.21 THE SYGNET MERGER AND DOBSON ACQUISITION. The Sygnet Merger
Agreement and the Dobson Acquisition Agreement have been executed and
delivered by all parties thereto and represents the valid and binding
agreement of the parties thereto, enforceable in all material respects in
accordance with its terms (EXCEPT as enforceability may be limited by
applicable Debtor Relief Laws and general principles of equity). On and as
of the Closing Date, the execution and delivery by Borrower (or its
predecessors in interest) of the Sygnet Merger Documents, the Dobson
Acquisition Documents, and the performance by Borrower and each Company (or
their respective predecessors in interest) of its obligations thereunder (a)
are within the corporate power of such Company (or its predecessors in
interest), (b) have been duly authorized by all necessary corporate action on
the part of such Company (or its predecessors in interest), (c) require no
action by or in respect of, or filing with any Governmental Authority, which
action or filing has not been taken or made on or prior to the Closing Date,
(d) do not violate any provision of the charter or bylaws of such Company (or
its predecessors in interest), (e) do not violate any provision of Law
applicable to it, other than such violations which individually or
collectively could not be a Material Adverse Event, (f) do not violate any
Material Agreements to which it is (or its predecessors in interest are) a
party, other than such violations which could not be a Material Adverse
Event, (g) do not result in the creation or imposition of any Lien on any
asset of any Company or their predecessors in interest (other than Permitted
Liens), and (h) immediately prior to, and after giving pro forma effect
thereto, no Default or Potential Default exists or arises under the Loan
Papers. On and as of the Closing Date, the Companies (or their predecessors
in interest) have obtained all necessary consents and approvals of any Person
or Governmental Authority required to be obtained in order for such Company
to effectuate the Sygnet Merger and the Dobson Acquisition and the
transactions contemplated by the Sygnet Merger Agreement and the Dobson
Acquisition Agreement, EXCEPT to the extent any such failure could not be a
Material Adverse Event and would not reasonably be expected to materially
impair the value to the Companies of, or the benefits to be derived by the
Companies or their predecessors in interest from, the Sygnet Merger and the
Dobson Acquisition. On the Closing Date, all conditions precedent under the
Sygnet Merger Agreement and the Dobson Acquisition Agreement, to the parties'
obligations to consummate such Sygnet Merger and Acquisitions have been
satisfied in all material respects, and concurrently with the Closing Date,
the Sygnet Merger and the Dobson Acquisition shall have been consummated.
8.22 PERMITTED ACQUISITIONS.
(a) VALIDITY. With respect to any Permitted Acquisitions,
each Company party thereto has the power and authority under the Laws of
its state of incorporation and under its articles of incorporation and
bylaws or Partnership Agreement, as applicable, to enter into and
perform the related Acquisition agreement to which it is a party and all
other agreements, documents, and actions required thereunder; and all
actions (corporate or otherwise) necessary or appropriate by such
Companies (as the case may be) for the execution and performance of said
Acquisition agreements, and all other documents, agreements, and actions
required thereunder, have been taken, and, upon their execution, such
Acquisition agreements will constitute the valid and binding obligation
of the Companies party thereto, enforceable in accordance with their
respective terms.
(b) NO VIOLATIONS. With respect to any Permitted
Acquisition, the making and performance of the related Acquisition
agreements, and all other agreements, documents, and actions required
thereunder, will not violate any provision of any Law, including,
without limitation, all state corporate Laws and judicial precedents of
the states of incorporation or formation of the Companies, and will not
violate any provisions of the articles of incorporation and bylaws or
Partnership Agreements of the Companies, or constitute a default under
any agreement by which any Company or its respective property may be
bound.
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8.23 REGULATION U. "MARGIN STOCK" (as defined in REGULATION U)
constitutes less than 25% of those assets of any Company which is subject to any
limitation on sale, pledge, or other restrictions hereunder.
8.24 TRADENAME. No Company has used or transacted business under any
other corporate or trade name in the five-year period preceding the date hereof.
8.25 YEAR 2000 COMPLIANCE. The Companies have (i) initiated a review
and assessment of all areas within their business and operations that could be
adversely affected by the "YEAR 2000 PROBLEM" (that is, the risk that computer
applications used by the Companies may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and time line for addressing the
Year 2000 Problem on a timely basis, and (iii) to date, implemented in all
material respects that plan in accordance with that timetable.
8.26 SYGNET TOWERS SALE. The Sygnet Towers Sale Agreement and
related Sygnet Towers Lease have been executed and delivered by all parties
thereto and represent the valid and binding agreements of the parties thereto,
enforceable in all material respects in accordance with their terms (EXCEPT as
enforceability may be limited by applicable Debtor Relief Laws and general
principles of equity). On and as of the Closing Date, the execution and
delivery by Sygnet Communications of the Sygnet Towers Sale Documents and the
performance by Sygnet Communications and each other Company of its obligations
thereunder (a) are within the corporate power of such Company, (b) have been
duly authorized by all necessary corporate action on the part of such Company,
(c) require no action by or in respect of, or filing with any Governmental
Authority, which action or filing has not been taken or made on or prior to the
Closing Date, (d) do not violate any provision of the charter or bylaws of such
Company, (e) do not violate any provision of Law applicable to it, other than
such violations which individually or collectively could not be a Material
Adverse Event, (f) do not violate any Material Agreements to which it is a
party, other than such violations which could not be a Material Adverse Event,
(g) do not result in the creation or imposition of any Lien on any asset of any
Company (other than Permitted Liens), and (h) immediately prior to, and after
giving pro forma effect thereto, no Default or Potential Default exists or
arises under the Loan Papers. On and as of the Closing Date, the Companies have
obtained all necessary consents and approvals of any Person or Governmental
Authority required to be obtained in order for such Company to effectuate the
Sygnet Towers Sale and the transactions contemplated by the Sygnet Towers Sale
Agreement, EXCEPT to the extent any such failure could not be a Material Adverse
Event and would not reasonably be expected to materially impair the value to the
Companies of, or the benefits to be derived by the Companies from the Sygnet
Towers Sale. On the Closing Date, all conditions precedent under the Sygnet
Towers Sale Agreement to the parties' obligations to consummate the Sygnet
Towers Sale have been satisfied in all material respects, and concurrently with
the Closing Date, the Sygnet Towers Sale shall have been consummated.
8.27 NO DEFAULT. No Default or Potential Default exists or will
arise as a result of any Borrowing hereunder, or after giving effect to
consummation of the Sygnet Merger, the Sygnet Towers Sale, or the Sygnet Towers
Lease.
8.28 FULL DISCLOSURE. There is no material fact or condition
relating to the Loan Papers or the financial condition, business, or property of
any Company (or, with respect to events prior to the Closing Date, Sygnet
Wireless, Inc., Dobson/Sygnet Operating Company, and their respective
Subsidiaries) which could be a Material Adverse Event and which has not been
related, in writing, to Administrative Agent. All information heretofore
furnished by any Company to any Lender or Administrative Agent in connection
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<PAGE>
with the Loan Papers was, and all such information hereafter furnished by any
Company to any Lender or Administrative Agent will be, true and accurate in all
material respects or based on reasonable estimates on the date as of which such
information is stated or certified.
SECTION 9 COVENANTS. Borrower and each other Company covenant and agree
(and agree to cause their ERISA Affiliates with respect to SECTION 9.10) to
perform, observe, and comply with each of the following covenants, from the
Closing Date and SO LONG THEREAFTER AS Lenders are committed to fund Borrowings
under this Agreement and thereafter until the payment in full of the Principal
Debt and payment in full of all other interest, fees, and other amounts of the
Obligation then due and owing, UNLESS Borrower receives a prior written consent
to the contrary by Administrative Agent as authorized by Required Lenders:
9.1 USE OF PROCEEDS. Borrower shall use the proceeds of Borrowings
only for the purposes represented herein.
9.2 BOOKS AND RECORDS. The Companies shall maintain books, records,
and accounts necessary to prepare financial statements in accordance with GAAP.
9.3 ITEMS TO BE FURNISHED. Borrower shall cause the following to be
furnished to Administrative Agent for delivery to Lenders:
(a) Promptly after preparation, and no later than 120 days
after the last day of each fiscal year of each of Parent and
Communications, Financial Statements showing the consolidated and
consolidating financial condition and results of operations calculated
separately for each of (x) Parent and its Subsidiaries and
(y) Communications and its Subsidiaries (other than Logix and its
Subsidiaries), as of, and for the year ended on, such day, each
accompanied by:
(i) with respect to the consolidated Financial
Statements of Parent and its Subsidiaries and the consolidated
and consolidating Financial Statements of Communications and its
Subsidiaries, the unqualified opinion of a firm of
nationally-recognized independent certified public accountants,
based on an audit using generally accepted auditing standards,
that such Financial Statements (calculated with respect to
Parent and its Subsidiaries or Communications and its
Subsidiaries (other than Logix and its Subsidiaries), as the
case may be) were prepared in accordance with GAAP and present
fairly the consolidated financial condition and results of
operations of Parent and its Subsidiaries or Communications and
its Subsidiaries (other than Logix and its Subsidiaries), as the
case may be;
(ii) any management letter prepared by such
accounting firm;
(iii) with respect to the Financial Statements of the
Parent and its Subsidiaries, a certificate from such accounting
firm to Administrative Agent indicating that during its audit it
obtained no knowledge of any Default or Potential Default or, if
it obtained such knowledge, the nature and period of existence
thereof;
(iv) a letter from such accounting firm addressed to
Parent or Communications (as the case may be), with a copy to
Administrative Agent, acknowledging that (A) Parent or
Communications, as the case may be, plans to provide
Administrative Agent with such
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<PAGE>
audited Financial Statements and accompanying audit report,
(B) Administrative Agent has informed Parent or Communications,
as the case may be, that Administrative Agent and Lenders intend
to rely on such firm's audit report accompanying such Financial
Statements, and (C) Parent or Communications, as the case may
be, intends for Administrative Agent and Lenders to so rely; and
(v) with respect to the consolidated and
consolidating Financial Statements of the Parent, a Compliance
Certificate.
(b) Promptly after preparation, and no later than 60 days
after the last day of each fiscal quarter of Parent and Borrower,
Financial Statements showing the consolidated financial condition and
results of operations calculated for the Parent and its Subsidiaries and
the Companies for such fiscal quarter and for the period from the
beginning of the then-current fiscal year to, such last day, accompanied
by a Compliance Certificate with respect to such Financial Statements.
(c) Within 60 days after the end of each fiscal quarter of
Borrower, a management report, showing for each System results of
operations and subscriber counts, discussing the financial results and
comparing actual performance results to the Budget for such period, and
outlining principal factors affecting performances of each market, all
in form and substance satisfactory to Administrative Agent.
(d) On or prior to March 31 of each fiscal year of Borrower,
the financial Budget for such fiscal year, accompanied by a certificate
executed by a Responsible Officer, certifying that such Budget was
prepared by Borrower based on assumptions which, in light of the
historical performance of the Companies and their prospects for the
future, are realistic and achievable.
(e) Promptly upon receipt thereof, copies of all auditor's
annual management letters delivered to Borrower.
(f) Notice, promptly after Borrower knows or has reason to
know of (i) the existence and status of any Litigation which could be a
Material Adverse Event, or of any order or judgment for the payment of
money which (individually or collectively) is in excess of $1,000,000,
or any warrant of attachment, sequestration, or similar proceeding
against the assets of any Company having a value (individually or
collectively) of $1,000,000, (ii) any material change in any material
fact or circumstance represented or warranted in any Loan Paper, (iii) a
Default or Potential Default specifying the nature thereof and what
action Borrower or any other Company has taken, is taking, or proposes
to take with respect thereto, (iv) the receipt by any Company of any
notice from any Governmental Authority of the expiration without
renewal, termination, material modification, or suspension of, or
institution of any proceedings to terminate, materially modify, or
suspend, any Authorization granted by the FCC or any applicable PUC, or
any other Authorization which any Company is required to hold in order
to operate its business in compliance with all applicable Laws, other
than such expirations, terminations, suspensions, or modifications which
individually or in the aggregate would not constitute a Material Adverse
Event, (v) any federal, state, or local statute, regulation, or
ordinance or judicial or administrative order limiting or controlling
the operations of any Company which has been issued or adopted hereafter
and which is of material adverse importance or effect in relation to the
operation of any Company, (vi) the receipt by any Company of notice of
any violation or alleged violation of any Environmental Law, which
violation or alleged violation could individually or collectively with
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
other such violations or allegations, constitute a Material Adverse
Event, or (vii) (A) the occurrence of a Reportable Event that, alone or
TOGETHER WITH any other Reportable Event, could reasonably be expected
to result in liability of Borrower or any Company to the PBGC in an
aggregate amount exceeding $1,000,000; (B) any expressed statement in
writing on the part of the PBGC of its intention to terminate any
Employee Plan or Plans; (C) Borrower's or an ERISA Affiliate's becoming
obligated to file with the PBGC a notice of failure to make a required
installment or other payment with respect to an Employee Plan; or
(D) the receipt by Borrower or an ERISA Affiliate from the sponsor of a
Multiemployer Plan of either a notice concerning the imposition of
withdrawal liability in an aggregate amount exceeding $1,000,000 or of
the impending termination or reorganization of such Multiemployer Plan.
(g) Promptly after any of the information or disclosures
provided on any of the Schedules delivered pursuant to this Agreement or
any annexes to any of the Collateral Documents becomes outdated or
incorrect in any material respect, such revised or updated Schedule(s)
or annexes as may be necessary or appropriate to update or correct such
information or disclosures; PROVIDED THAT, no deletions may be made to
any annexes describing Collateral in any of the Collateral Documents
unless approved by Required Lenders.
(h) Promptly after preparation, true, correct, and complete
copies of all material reports or filings filed by or on behalf of any
Company with any Governmental Authority (including the FCC and the
Securities and Exchange Commission).
(i) Promptly after the filing thereof, a true, correct, and
complete copy of each FORM 10-K, FORM 10-Q, and FORM 8-K filed by or on
behalf of Communications, Parent, or any Company with the Securities and
Exchange Commission.
(j) Promptly upon request therefor by Administrative Agent
or Lenders, such information (not otherwise required to be furnished
under the Loan Papers) respecting the business affairs, assets, and
liabilities of the Companies, and such opinions, certifications, and
documents, in addition to those mentioned in this Agreement, as
reasonably requested.
9.4 INSPECTIONS. Upon reasonable notice, the Companies shall allow
Administrative Agent or any Lender (or their respective Representatives) to
inspect any of their properties, to review reports, files, and other records and
to make and take away copies thereof, to conduct tests or investigations, and to
discuss any of their affairs, conditions, and finances with other creditors,
directors, officers, employees, other representatives, and independent
accountants of the Companies, from time to time, during reasonable business
hours.
9.5 TAXES. Each Company (a) shall promptly pay when due any and all
Taxes OTHER THAN Taxes the applicability, amount, or validity of which is being
contested in good faith by lawful proceedings diligently conducted, and against
which reserve or other provision required by GAAP has been made, and in respect
of which levy and execution of any Lien securing same have been and continue to
be stayed, (b) shall not, directly or indirectly, use any portion of the
proceeds of any Borrowing to pay the wages of employees unless a timely payment
to or deposit with the appropriate Governmental Authorities of all amounts of
Tax required to be deducted and withheld with respect to such wages is also
made, and (c) notify Lenders immediately if the Internal Revenue Service or any
other taxing authority commences or notifies any Company of its intention to
commence an audit or investigation with respect to any taxes of any kind due or
alleged to be due from any Company.
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<PAGE>
9.6 PAYMENT OF OBLIGATIONS. Borrower shall pay the Obligation in
accordance with the terms and provisions of the Loan Papers. Each Company
(a) shall promptly pay (or renew and extend) all of its material obligations as
the same become due (unless such obligations [other than the Obligation] are
being contested in good faith by appropriate proceedings), and (b) shall not
make any voluntary prepayment of principal of, or interest on, any other Debt
(other than the Obligation), whether subordinate to the Obligation or not or
(ii) use proceeds from the Facilities to make any payment or prepayment of
principal of, or interest on, or sinking fund payment in respect of any other
Debt of any Company.
9.7 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as
otherwise permitted by SECTION 9.25, each Company shall at all times:
(a) maintain its existence and good standing in the jurisdiction of its
organization and its authority to transact business in all other jurisdictions
where the failure to so maintain its authority to transact business could be a
Material Adverse Event; (b) maintain all licenses, permits, and franchises
necessary for its business where the failure to so maintain could be a Material
Adverse Event; (c) keep all of its assets which are useful in and necessary to
its business in good working order and condition (ordinary wear and tear
excepted) and make all necessary repairs thereto and replacements thereof; and
(d) do all things necessary to obtain, renew, extend, and continue in effect all
Authorizations issued by the FCC or any applicable PUC which may at any time and
from time to time be necessary for the Companies to operate their businesses in
compliance with applicable Law, where the failure to so renew, extend, or
continue in effect could be a Material Adverse Event.
9.8 INSURANCE. The Companies shall, at their sole cost and expense,
keep and maintain the Collateral owned by such Company insured for its actual
cash value against loss or damage by fire, theft, explosion, flood, and all
other hazards and risks ordinarily insured against by other owners or users of
such properties in similar businesses of comparable size and notify
Administrative Agent promptly of any occurrence causing a material loss or
decline in value of the Collateral and the estimated (or actual, if available)
amount of such loss or decline. All policies of insurance on the Collateral
shall be in a form, with such deductibles, and with insurers recognized as
adequate by prudent business Persons in the same businesses as the Companies and
acceptable to Administrative Agent, and all such policies shall be in such
amount as may be satisfactory to Administrative Agent. On the Closing Date and
thereafter as each policy is renewed and extended, the Companies shall deliver
to Administrative Agent a certificate of insurance for each policy of insurance
and evidence of payment of all premiums therefor. Such policies of insurance
and the certificates evidencing the same shall contain an endorsement, in form
and substance acceptable to Administrative Agent, showing loss payable to
Administrative Agent for the benefit of Lenders. Such endorsement, or an
independent instrument furnished to Administrative Agent, shall provide that the
insurance companies will give Administrative Agent at least thirty (30) days
prior written notice before any such policy or policies of insurance shall be
altered or canceled and that no act or default of any Company or any other
Person shall affect the Right of Administrative Agent to recover under such
policy or policies of insurance in case of loss or damage. Upon the payment by
the insurer of the proceeds of any such policy of insurance and if no Default
has occurred and is continuing, the Company so insured may retain such insurance
if such proceeds are used to repair or replace the property the damage or
destruction of which gave rise to the payment of such insurance proceeds;
PROVIDED, HOWEVER, that any insurance proceeds not used for repair or
replacement in accordance herewith, UNLESS paid as reimbursement of expenses
incurred and business losses suffered in connection with the loss or damage to
the Collateral, shall be paid to or retained by Administrative Agent for
application as a mandatory prepayment on the Obligation.
9.9 PRESERVATION AND PROTECTION OF RIGHTS. Each Company shall
perform such acts and duly authorize, execute, acknowledge, deliver, file, and
record any additional agreements, documents, instruments, and certificates as
Administrative Agent or Required Lenders may reasonably deem necessary
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
or appropriate in order to preserve and protect the Rights of Administrative
Agent and Lenders under any Loan Paper.
9.10 EMPLOYEE BENEFIT PLANS. Borrower shall not, directly or
indirectly, engage in any "PROHIBITED TRANSACTION" (as defined in SECTION 406
of ERISA or SECTION 4975 of the Code), and the Companies, and their
respective ERISA Affiliates shall not, directly or indirectly, (a) incur any
"ACCUMULATED FUNDING DEFICIENCY" as such term is defined in SECTION 302 of
ERISA with respect to any Employee Plan, (b) permit any Employee Plan to be
subject to involuntary termination proceedings pursuant to TITLE IV of ERISA,
or (c) fully or partially withdraw from any Multiemployer Plan, if such
prohibited transaction, accumulated funding deficiency, termination
proceeding, or withdrawal would result in liability on the part of any
Company (individually or collectively) in excess of $1,000,000.
9.11 ENVIRONMENTAL LAWS. Each Company shall (a) conduct its business
so as to comply with all applicable Environmental Laws and shall promptly take
corrective action to remedy any non-compliance with any Environmental Law,
(b) promptly investigate and remediate any known Release or threatened Release
of any Hazardous Substance on any property owned by any Company or at any
facility operated by any Company to the extent and degree necessary to comply
with Law and to assure that any Release or threatened Release does not result in
a substantial endangerment to human health or the environment, and (c) establish
and maintain a management system designed to ensure compliance with applicable
Environmental Laws and minimize financial and other risks to each Company
arising under applicable Environmental Laws or as a result of
environmentally-related injuries to Persons or property.
9.12 DEBT AND GUARANTIES.
(a) No Company shall, directly or indirectly, create, incur,
or suffer to exist any direct, indirect, fixed, or contingent liability
for any Debt, OTHER THAN:
(i) The Obligation;
(ii) Debt incurred by Borrower under any Financial
Hedge;
(iii) Trade accounts payable which are for goods
furnished or services rendered in the ordinary course of
business and are payable in accordance with customary trade
terms that are not more than ninety (90) days past due;
(iv) Debt between Companies;
(v) Other Debt arising not to exceed $5,000,000 in
the aggregate on any date of determination; and
(vi) The Sygnet Senior Notes that were not tendered
to Sygnet Wireless, Inc. pursuant to the tender offer for such
notes in an aggregate principal amount not in excess of
$1,250,000.
(b) No Company shall guarantee or assume or agree to become
liable in any way, either directly or indirectly, for any Debt of
others, except (i) endorsements of checks or drafts in the ordinary
course of business, and (ii) the obligations of the Companies under the
Guaranties.
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9.13 LIENS. No Company will, directly or indirectly, (a) enter into
or permit to exist any arrangement or agreement which directly or indirectly
prohibits any Company from creating or incurring any Lien on any of its assets,
other than the Loan Papers, or (b) create, incur, or suffer or permit to be
created or incurred or to exist any Lien upon any of its assets, EXCEPT:
(i) Liens securing the Obligations;
(ii) Pledges or deposits made to secure payment of worker's
compensation, or to participate in any fund in connection with worker's
compensation, unemployment insurance, pensions, or other social security
programs;
(iii) Good-faith pledges or deposits made to secure
performance of bids, tenders, insurance or other contracts (OTHER THAN
for the repayment of borrowed money), or leases, or to secure statutory
obligations, surety or appeal bonds, or indemnity, performance, or other
similar bonds as all such Liens arise in the ordinary course of business
of the Companies;
(iv) Encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property, none of
which impair in any material respect the use of such property by the
Person in question in the operation of its business, and none of which
is violated by existing or proposed structures or land use;
(v) Liens of landlords or of mortgagees of landlords,
arising solely by operation of law, on fixtures and movable property
located on premises leased in the ordinary course of business;
(vi) The following, SO LONG AS the validity or amount thereof
is being contested in good faith and by appropriate and lawful
proceedings diligently conducted, reserve or other appropriate
provisions (if any) required by GAAP shall have been made, levy and
execution thereon have been stayed and continue to be stayed, and they
do not in the aggregate materially detract from the value of the
property of the Person in question, or materially impair the use thereof
in the operation of its business: (i) claims and Liens for Taxes (other
than Liens relating to Environmental Laws or ERISA); (ii) claims and
Liens upon, and defects of title to, real or personal property,
including any attachment of personal or real property or other legal
process prior to adjudication of a dispute of the merits; and
(iii) claims and Liens of mechanics, materialmen, warehousemen,
carriers, landlords, or other like Liens; and
(vii) Liens on the Pledged Government Securities, securing the
first six interest payments on the Senior Reserve Notes.
9.14 TRANSACTIONS WITH AFFILIATES. No Company shall enter into any
material transaction with any of its Affiliates (excluding transactions among or
between Companies), OTHER THAN (i) transactions in the ordinary course of
business and upon fair and reasonable terms not materially less favorable than
such Company could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate, or (ii) transactions
between the Companies and Communications or its Subsidiaries (other than Logix
and its Subsidiaries) on terms of the kind customarily employed to allocated
charges among members of a consolidated group of entities, in each such case,
that are fair and reasonable to the Companies, PROVIDED THAT, with respect to
such transactions permitted in CLAUSE (ii), the aggregate consideration for such
transactions does not exceed $3,000,000 in any calendar year.
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9.15 COMPLIANCE WITH LAWS AND DOCUMENTS. No Company shall violate
the provisions of any Laws applicable to it, including, without limitation, all
rules and regulations promulgated by the FCC or any applicable PUC, or any
material written or oral agreement, contract, commitment, or understanding to
which it is a party, if such violation alone, or when aggregated with all other
such violations, could be a Material Adverse Event; no Company shall violate the
provisions of its charter, bylaws, or partnership agreement, or modify, repeal,
replace, or amend any provision of its charter, bylaws, or partnership
agreement, if such action could adversely affect the Rights of Lenders.
9.16 PERMITTED ACQUISITIONS, SUBSIDIARY GUARANTIES, AND COLLATERAL
DOCUMENTS. In connection with each Permitted Acquisition, Borrower shall
deliver, or cause to be delivered to, Administrative Agent each of the items
described on SCHEDULE 7.2, on or before the date specified on such Schedule for
each such item. Borrower shall cause each Subsidiary that becomes a Subsidiary
of any Company after the Closing Date (whether as a result of acquisition,
merger, creation, or otherwise), (a) to execute a Guaranty on the date such
entity becomes a Subsidiary of a Company and promptly deliver (but in no event
later than 10 days following consummation of such creation, acquisition, or
merger) such Guaranty to Administrative Agent and (b) to execute and deliver to
Administrative Agent all required Collateral Documents creating Liens in favor
of Administrative Agent on all the assets of such Subsidiary.
9.17 ASSIGNMENT. No Company shall assign or transfer any of its
Rights, duties, or obligations under any of the Loan Papers.
9.18 FISCAL YEAR AND ACCOUNTING METHODS. No Company will change its
fiscal year for book accounting purposes or its method of accounting, OTHER THAN
(a) immaterial changes in methods or as required by GAAP, or (b) in connection
with a Permitted Acquisition, such changes to the newly-acquired entity so as to
conform its fiscal year and its method of accounting to those of the Companies.
9.19 GOVERNMENT REGULATIONS. No Company will conduct its business in
such a way that it will become subject to regulation under the INVESTMENT
COMPANY ACT OF 1940, as amended, the PUBLIC UTILITY HOLDING COMPANY ACT OF 1935,
as amended, or any other Law (other than Regulations T, U, and X of the Board of
Governors of the Federal Reserve System and the requirements of any PUC or
public service commission) which regulates the incurrence of Debt.
9.20 LOANS, ADVANCES, AND INVESTMENTS. No Company shall make any
loan, advance, extension of credit, or capital contribution to, make any
investment in, or purchase or commit to purchase any stock or other securities
or evidences of Debt of, or interests in, any other Person, OTHER THAN:
(a) Cash Equivalents;
(b) Loans, advances, extensions of credit, capital
contributions, and other investments between Companies;
(c) Permitted Acquisitions;
(d) Trade accounts receivable which are for goods furnished
or services rendered in the ordinary course of business and are payable
in accordance with customary trade terms;
(e) At any time when Distributions may be made pursuant to
SECTION 9.21(c), loans, advances, and investments to Parent in amounts
which (when aggregated with the Distributions
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made pursuant to SECTION 9.21(c)) do not exceed the amount required to
pay regularly-scheduled cash interest payments on the Senior Reserve
Notes; and
(f) Loans, advances, and investments to Communications to be
used solely to pay regularly-scheduled cash dividends on the Preferred
Stock in an amount which (when aggregated with the Distributions made
pursuant to SECTION 9.21(d)) does not exceed the limitation on
Distributions set forth in SECTION 9.21(d); PROVIDED THAT, to the extent
Required Lenders have consented to the exchange of any Junior Preferred
Stock to Junior Debentures, any loans, advances, and investments to
Communications permitted with respect to Preferred Stock under this
SECTION 9.20(f) may be used (in lieu of making such dividends) for the
purpose of paying the regularly-scheduled interest payments on the
Junior Debentures.
9.21 DISTRIBUTIONS. No Company may directly or indirectly declare,
make, or pay any Distribution, other than:
(a) Distributions declared, made, or paid by Borrower wholly
in the form of its capital stock;
(b) Distributions by any Company to Borrower or any other
Company;
(c) Distributions made on or after June 15, 2002 (or such
earlier date as interest payments on the Senior Reserve Notes are not
fully funded by proceeds of the Pledged Government Securities) by
Borrower to Parent in an amount which (when aggregated with the loans,
advances, and investments made pursuant to SECTION 9.20(e)) does not
exceed the amount required to pay regularly-scheduled cash interest
payments on the Senior Reserve Notes; PROVIDED THAT, no Distributions
under this SECTION 9.21(c) nor any loans, advances, or investments under
SECTION 9.20(e) may be made if (i) a Default (other than a Default
resulting solely from the breach of a representation or warranty) then
exists or arises as a result thereof; or (ii) if the Obligation or any
part thereof has been accelerated; PROVIDED, HOWEVER, in the event that
any Default has occurred and is continuing, Borrower may, after June 15,
2002, declare and pay cash dividends to Parent pursuant to this SECTION
9.21(c), or make loans or advances to Parent pursuant to SECTION 9.20(e)
in an amount which (when aggregated with the amounts of all other loans,
advances, or dividends for such purposes from all other Subsidiaries of
Parent) shall not exceed (A) amounts then required to make any cash
interest payments on the Senior Reserve Notes, and (B) the next
regularly scheduled cash interest payment on the Senior Reserve Notes
if, but only if, (1) such Default (from the date of notice of the
existence of the earliest such Default if more than one exists) has
continued for 180 days and has not been cured or waived; (2) such
Default is not an Event of Default set forth in SECTIONS 10.1, 10.3, or
10.9 of this Agreement; and (3) Lenders have not demanded payment in
full of all obligations due and owing by Borrower under this Agreement
and the Loan Papers; and
(d) After April 14, 2003 (the "SUBJECT DATE"), SO LONG AS no
Default exists or arises as a result thereof, Distributions made by
Borrower directly (or indirectly through Parent) to Communications to be
used solely to pay regularly-scheduled cash dividends on any Preferred
Stock in an amount which (when aggregated with any loans, advances, or
investments made pursuant to SECTION 9.20(f)) does not exceed an
aggregate amount of regularly-scheduled cash dividends which are due and
payable on up to $120,000,000 of Preferred Stock (valued at liquidation
value as determined on the date of such payment); PROVIDED THAT, to the
extent Required
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Lenders have consented to the exchange of any Junior Preferred Stock
to Junior Debentures, any Distributions to Communications permitted
with respect to Preferred Stock under this SECTION 9.21(d) may be used
(in lieu of making such dividends) for the purpose of paying
regularly-scheduled interest payments on the Junior Debentures.
Notwithstanding the foregoing, Distributions are permitted hereunder only to the
extent such Distribution is made in accordance with applicable Law and
constitutes a valid, non-voidable transaction.
9.22 RESTRICTIONS ON SUBSIDIARIES. No Subsidiary of Borrower nor any
Guarantor shall enter into or permit to exist any material arrangement or
agreement (other than the Loan Papers) which directly or indirectly prohibits
any such Subsidiary from (a) declaring, making, or paying, directly or
indirectly, any Distribution to Borrower or any other Company, (b) paying any
Debt owed to Borrower or any other Company, (c) making loans, advances, or
investments to Borrower or any other Company, or (d) transferring any of its
property or assets to Borrower or any other Company.
9.23 SALE OF ASSETS. No Company shall sell, assign, transfer, or
otherwise dispose of any of its assets, OTHER THAN (a) sales of inventory in the
ordinary course of business, (b) the sale, discount, or transfer of delinquent
accounts receivable in the ordinary course of business for purposes of
collection, (c) occasional sales of immaterial assets for consideration not less
than the fair market value thereof, (d) dispositions of obsolete assets,
(e) sale, leases, or other disposition among Companies to a Company; (f) the
Sygnet Towers Sale, and (g) if no Default or Potential Default then exists or
arises as a result thereof, sales of other assets in the ordinary course of
business; PROVIDED THAT, the fair market value of all assets sold (other than
the Sygnet Towers) (x) in any calendar year does not exceed $7,500,000 in the
aggregate, and (y) prior to the Termination Date of the applicable Facility does
not exceed, in the aggregate, more than 49% of the fair market value of the
Companies' assets as determined on the Closing Date.
9.24 SALE-LEASEBACK FINANCINGS. No Company will enter into any
sale-leaseback arrangement (other than the Sygnet Towers Sale and the related
Sygnet Towers Lease) with any Person pursuant to which such Company shall
lease any asset (whether now owned or hereafter acquired) if such asset has
been or is to be sold or transferred by any Company to any other Person.
9.25 MERGERS AND DISSOLUTIONS; SALE OF CAPITAL STOCK. No Company
will, directly or indirectly, merge or consolidate with any other Person, other
than (a) as a result of the Sygnet Merger; (b) as a result of a Permitted
Acquisition, (c) mergers or consolidations involving Borrower if Borrower is the
surviving entity, (c) mergers among Wholly-owned Companies; PROVIDED THAT, in
any merger involving Borrower (including a Permitted Acquisition effected as a
merger, other than the Sygnet Merger), Borrower must be the surviving entity,
and, in any merger involving any other Company (including a Permitted
Acquisition effected as a merger), a Company must be the surviving entity. No
Company shall liquidate, wind up, or dissolve (or suffer any liquidation or
dissolution), other than liquidations, wind ups, or dissolutions incident to
mergers permitted under this SECTION 9.25. No Company may sell, assign, lease,
transfer, or otherwise dispose of the capital stock (or other ownership
interests) of any other Company, EXCEPT for sales, leases, transfers, or other
such distributions to another Company.
9.26 NEW BUSINESS. No Company will, directly or indirectly, permit
or suffer to exist any material change in the type of businesses in which it is
engaged from the businesses of the Companies as conducted on the Closing Date.
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<PAGE>
9.27 FINANCIAL HEDGES. Borrower shall, within 60 days from the date
hereof, enter into Financial Hedges in a form and upon terms acceptable to
Administrative Agent, issued by one or more Lenders or an institution acceptable
to Administrative Agent with a duration of a period of at least two years, with
respect to at least fifty percent (50%) of the Debt of the Companies and Parent
outstanding on the Closing Date; PROVIDED, HOWEVER, that (a) the protected rate
shall be no greater than 2.0% above the all-in rate on the Closing Date hereof;
(b) to the extent any Lender issues a Financial Hedge in compliance with the
requirements of this SECTION 9.27, such Lender may be granted a Lien in the
Collateral to the extent of such Lender's credit exposure under such Financial
Hedge which is PARI PASSU with that of Administrative Agent on behalf of
Lenders; (c) each such Lender issuing a Financial Hedge shall calculate its
credit exposure in a reasonable and customary manner; and (d) all documentation
for such Financial Hedge shall conform to ISDA standards and must be acceptable
to Administrative Agent with respect to intercreditor issues. If Borrower
enters into a Financial Hedge which meets or exceeds the minimum qualifications
in this SECTION 9.27 and does not result in a Default or Potential Default under
the Loan Papers, the consent of Administrative Agent to such terms shall not be
unreasonably withheld.
9.28 AFFILIATE SUBORDINATION AGREEMENTS. The Companies shall,
simultaneously with the creation of any and all future Debt of any Company to
any one or more Affiliates, cause the appropriate Affiliate or Affiliates to
execute and deliver to Administrative Agent an agreement, substantially in the
form of EXHIBIT H, subordinating the payment of such Debt to the payment of the
Obligation.
9.29 AMENDMENTS TO DOCUMENTS. No Company shall (a) amend or permit
any amendments to any Company's Articles of Incorporation or Bylaws, or any
Partnership Agreement of any Company that is a Cellular Partnership as in effect
on the date of this Agreement, if such action could adversely affect the Rights
of Lenders; (b) amend any existing credit arrangement or enter into any new
credit arrangement (to the extent permitted by the Loan Papers), if such amended
or new credit arrangements contain any provisions which are materially more
restrictive (as reasonably determined by Administrative Agent) than the
provisions of the Loan Papers; (c) without the prior written consent of Required
Lenders, amend, modify, or waive any provision of the Sygnet Merger Documents,
the Sygnet Towers Sale Documents, or the Dobson Acquisition Documents.
9.30 FINANCIAL COVENANTS. As calculated on a consolidated basis for
the Companies (unless otherwise indicated):
(a) LEVERAGE RATIO. Borrower shall never permit the
Leverage Ratio of the Companies to be greater than the ratio shown in
the table below which corresponds to the applicable period of
determination:
<TABLE>
<CAPTION>
----------------------------------------------------------
PERIOD RATIO
----------------------------------------------------------
<S> <C>
From Closing Date to 6/30/99 7.60 to 1
----------------------------------------------------------
From 7/1/99 to 12/31/99 7.25 to 1
----------------------------------------------------------
From 1/1/00 to 6/30/00 6.75 to 1
----------------------------------------------------------
From 7/1/00 to 12/31/00 6.00 to 1
----------------------------------------------------------
From 1/1/01 to 12/31/01 5.50 to 1
----------------------------------------------------------
From 1/1/02 to 12/31/02 4.50 to 1
----------------------------------------------------------
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
----------------------------------------------------------
PERIOD RATIO
----------------------------------------------------------
From 1/1/03 and thereafter 3.50 to 1
----------------------------------------------------------
</TABLE>
(b) PRO FORMA DEBT SERVICE COVERAGE. Borrower shall never
permit the ratio of its Operating Cash Flow to its Pro Forma Debt
Service determined on a quarterly basis at the end of each fiscal
quarter to be less than or equal to 1.10 to 1.0.
(c) INTEREST COVERAGE. Borrower shall never permit the
ratio (determined, on March 31, 1999, for the fiscal quarter period
then-ending; on June 30, 1999, for the two-fiscal quarter period
then-ending; on September 30, 1999, for the three-fiscal quarter
period then-ending; and thereafter, on a quarterly basis for the
Rolling Period then-ending) of (i) its Operating Cash Flow to (ii) its
Interest Expense, to be less than (A) 1.25 to 1.0, from January 1,
1999 through December 31, 1999, (B) 1.50 to 1.0, from January 1, 2000
through December 31, 2000, and (C) 1.75 to 1.0 after December 31, 2000.
(d) FIXED CHARGE COVERAGE RATIO. Borrower shall never
permit its Fixed Charge Coverage Ratio, determined on a quarterly basis
on the last day of each fiscal quarter, to be less than or equal to 1.00
to 1.0.
(e) CONSOLIDATED LEVERAGE RATIO. On and after January 1,
2002, Borrower shall never permit the ratio of (a) Consolidated Debt to
(b) the Operating Cash Flow of Parent and its Subsidiaries to be greater
than the ratio shown in the table below which corresponds to the
applicable period of determination:
<TABLE>
<CAPTION>
----------------------------------------------------------
PERIOD RATIO
----------------------------------------------------------
<S> <C>
3/31/02 to 6/30/02 6.25 to 1
----------------------------------------------------------
7/1/02 to 12/31/02 5.75 to 1
----------------------------------------------------------
1/1/03 to 6/30/03 5.25 to 1
----------------------------------------------------------
7/1/03 to 12/31/03 4.75 to 1
----------------------------------------------------------
1/1/04 and thereafter 4.25 to 1
----------------------------------------------------------
</TABLE>
(f) COMMUNICATIONS LEVERAGE RATIO. Borrower shall never
permit the ratio of (a) Communications Total Debt to (b) Communications
Operating Cash Flow to be greater than (A) 9.50 to 1.0 from the Closing
Date through December 31, 1999, and (B) 8.50 to 1.00 thereafter.
9.31 YEAR 2000. All of the material computer software, computer
firmware, computer hardware (whether general or special purpose), and other
similar or related items of automated, computerized, and/or software systems
that are used or relied on by the Companies in the conduct of their respective
businesses will not malfunction, will not cease to function, will not generate
incorrect data, and will not produce incorrect results when processing,
providing, and/or receiving (a) date-related data into and between the twentieth
and twenty-first centuries and (b) date-related data in connection with any
valid date in the twentieth and twenty-first centuries.
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<PAGE>
SECTION 10 DEFAULT. The term "DEFAULT" means the occurrence of any one or
more of the following events:
10.1 PAYMENT OF OBLIGATION. The failure or refusal of any Company to
pay (a) the Obligation when the same becomes due (whether by its terms, by
acceleration, or as otherwise provided in the Loan Papers); and (b) the
indemnifications and reimbursement obligations provided for in the Loan Papers
after demand therefor.
10.2 COVENANTS. The failure or refusal of Borrower (and, if
applicable, any other) to punctually and properly perform, observe, and comply
with:
(a) Any covenant, agreement, or condition contained in
SECTIONS 9.1, 9.3, 9.6, 9.12, 9.13, 9.14, 9.16, 9.17, 9.20 through 9.25,
9.29, 9.30 and 9.31]; and
(b) Any other covenant, agreement, or condition contained in
any Loan Paper (OTHER THAN the covenants to pay the Obligation set forth
in SECTION 10.1 and the covenants in SECTION 10.2(a)), and such failure
or refusal continues for 20 days.
10.3 DEBTOR RELIEF. Borrower, Parent, Communications, Sygnet
Wireless, or any other Company, or any Subsidiary of Communications (other than
Logix and its Subsidiaries) (a) shall not be Solvent, (b) fails to pay its Debts
generally as they become due, (c) voluntarily seeks, consents to, or acquiesces
in the benefit of any Debtor Relief Law, OTHER THAN as a creditor or claimant,
or (d) becomes a party to or is made the subject of any proceeding provided for
by any Debtor Relief Law, OTHER THAN as a creditor or claimant, that could
suspend or otherwise adversely affect the Rights of Administrative Agent or any
Lender granted in the Loan Papers (UNLESS, in the event such proceeding is
involuntary, the petition instituting same is dismissed within 30 days after its
filing).
10.4 JUDGMENTS AND ATTACHMENTS. Any Company fails, within 60 days
after entry, to pay, bond, or otherwise discharge any judgment or order for the
payment of money in excess of $1,000,000 (individually or collectively) or any
warrant of attachment, sequestration, or similar proceeding against any
Company's assets having a value (individually or collectively) of $1,000,000
which is not stayed on appeal.
10.5 GOVERNMENT ACTION. (a) A final non-appealable order is issued
by any Governmental Authority, including, but not limited to, the FCC or the
United States Justice Department, seeking to cause any Company to divest a
significant portion of its assets pursuant to any antitrust, restraint of trade,
unfair competition, industry regulation, or similar Laws, or (b) any
Governmental Authority shall condemn, seize, or otherwise appropriate, or take
custody or control of all or any substantial portion of the assets of any
Company.
10.6 MISREPRESENTATION. Any representation or warranty made by any
Company contained in any Loan Paper shall at any time prove to have been
incorrect in any material respect when made.
10.7 CHANGE OF MANAGEMENT. Less than two-thirds of the Executive
Management Team of Communications on the Closing Date continue to hold positions
on the Executive Management Team of Communications.
10.8 CHANGE OF CONTROL. If (i) Communications ceases to own 100% of
the voting control of Parent and its Subsidiaries, (ii) Parent ceases to own
100% of the voting control of Borrower and its
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<PAGE>
Subsidiaries, or (iii) Borrower ceases to own 100% of its Subsidiaries as
determined on the Closing Date or if thereafter acquired, on the date of the
Acquisition.
10.9 AUTHORIZATIONS. (a) Any Authorization necessary for the
ownership or operations of any Company shall expire, and on or prior to such
expiration, the same shall not have been renewed or replaced by another
Authorization authorizing substantially the same operations by such Company; or
(b) any Authorization necessary for the ownership or operations of any Company
shall be canceled, revoked, terminated, rescinded, annulled, suspended, or
modified in a materially adverse respect, or shall no longer be in full force
and effect, or the grant or the effectiveness thereof shall have been stayed,
vacated, reversed, or set aside, (c) Borrower or any other Company is required
by any Governmental Authority to halt construction or operations under any
Authorization and such action shall continue uncorrected for thirty (30) days
after the applicable entity has received notice thereof; or (d) if any
Governmental Authority shall make any other final non-appealable determination
the effect of which would be to affect materially and adversely the operations
of Borrower, or any other Company as now conducted.
10.10 DEFAULT UNDER OTHER DEBT AND AGREEMENTS. (a) Communications,
Parent, any Company, or any other Subsidiary of Communications or Parent (other
than Logix and its Subsidiaries) fails to pay when due (after lapse of any
applicable grace periods) any Debt of such Company (other than the Obligation)
in excess (individually or collectively) of $1,000,000; (b) any default exists
under any material written or oral agreement, contract, commitment, or
understanding to which Communications, Parent, any Company, or their
Subsidiaries is a party; (c) the occurrence of an "EVENT OF DEFAULT" under the
Third Amended and Restated Credit Agreement dated of March 25, 1998, among
Dobson Operating Company, as Borrower, First Union National Bank (as successor
to CoreStates Bank, N.A.), as Administrative Agent, and certain Lenders party
thereto (as the same may be amended, modified, restated, or supplemented from
time to time); (d) the occurrence of an "EVENT OF DEFAULT" under the Revolving
Credit Agreement dated as of March 25, 1998, among Dobson Cellular Operations
Company, as Borrower, NationsBank, N.A. (as successor to NationsBank of Texas,
N.A.), as Administrative Agent, and certain Lenders party thereto (as the same
may be amended, modified, restated, or supplemented from time to time); (e) the
occurrence of an "EVENT OF DEFAULT" under the 364-Day Revolving Credit and Term
Loan Agreement dated as of March 25, 1998, among Dobson Cellular Operations
Company, as Borrower, NationsBank, N.A. (as successor to NationsBank of Texas,
N.A.), as Administrative Agent, and certain Lenders party thereto (as the same
may be amended, modified, restated, or supplemented from time to time); or (f)
the occurrence of a default under any Sygnet Towers Lease, which individually or
collectively could be a Material Adverse Event; PROVIDED THAT, with respect to
CLAUSES (c), (d), and (e), an "EVENT OF DEFAULT" under any such identified
credit facility shall not be a Default hereunder if such "EVENT OF DEFAULT" has
been waived by the requisite lenders under the applicable facility or is
otherwise consented to under the terms of such agreement.
10.11 EMPLOYEE BENEFIT PLANS. (a) A "REPORTABLE EVENT" or "REPORTABLE
EVENTS," or a failure to make a required installment or other payment (within
the meaning of SECTION 412(n)(1) of the Code), shall have occurred with respect
to any Employee Plan or Plans that is expected to result in liability of
Borrower to the PBGC or to a Plan in an aggregate amount exceeding $1,000,000
and, within 30 days after the reporting of any such Reportable Event to
Administrative Agent or after the receipt by Administrative Agent of a statement
required pursuant to SECTION 9.3(f) hereof, Administrative Agent shall have
notified Borrower in writing that (i) Required Lenders have made a reasonable
determination that, on the basis of such Reportable Event or Reportable Events
or the failure to make a required payment, there are grounds under TITLE IV of
ERISA for the termination of such Employee Plan or Plans by the PBGC, or the
appointment by the appropriate United States district court of a trustee to
administer such Employee Plan
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DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
or Plans or the imposition of a lien pursuant to SECTION 412(n) of the Code
in favor of an Employee Plan and (ii) as a result thereof a Default exists
hereunder; or (b) Borrower or any ERISA Affiliate has provided to any
affected party a 60-day notice of intent to terminate an Employee Plan
pursuant to a distress termination in accordance with SECTION 4041(c) of
ERISA if the liability expected to be incurred as a result of such
termination will exceed $1,000,000; or (c) a trustee shall be appointed by a
United States district court to administer any such Employee Plan; or (d) the
PBGC shall institute proceedings (including giving notice of intent thereof)
to terminate any such Employee Plan; or (e)(i) Borrower or any ERISA
Affiliate shall have been notified by the sponsor of a Multiemployer Plan
that it has incurred withdrawal liability (within the meaning of SECTION 4201
of ERISA) to such Multiemployer Plan, (ii) Borrower or such ERISA Affiliate
does not have reasonable grounds for contesting such withdrawal liability or
is not contesting such withdrawal liability in a timely and appropriate
manner and (iii) the amount of such withdrawal liability specified in such
notice, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with withdrawal liabilities (determined as
of the date or dates of such notification), exceeds $1,000,000; or (f)
Borrower or any ERISA Affiliate shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or is
being terminated, within the meaning of TITLE IV of ERISA, if solely as a
result of such reorganization or termination the aggregate annual
contributions of Borrower and its ERISA Affiliates to all Multiemployer Plans
that are then in reorganization or have been or are being terminated have
been or will be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an amount
exceeding $1,000,000.
10.12 VALIDITY AND ENFORCEABILITY OF LOAN PAPERS. Any Loan Paper
shall, at any time after its execution and delivery and for any reason, cease to
be in full force and effect in any material respect or be declared to be null
and void (other than in accordance with the terms hereof or thereof) or the
validity or enforceability thereof be contested by any Company party thereto or
any Company shall deny in writing that it has any or any further liability or
obligations under any Loan Paper to which it is a party.
10.13 MATERIAL ADVERSE EFFECT. If any event or condition shall exist
which could reasonably be expected to be a Material Adverse Event with respect
to the business, operations, properties, or financial positions of the Borrower,
Communications, or any of their respective Subsidiaries.
10.14 ENVIRONMENTAL LIABILITY. If any event or condition shall occur
or exist with respect to any activity or substance regulated under the
Environmental Law and as a result of such event or condition, any Company shall
have incurred or in the opinion of the banks be reasonably likely to incur a
liability in excess of $3,000,000 liability during any consecutive twelve (12)
month period.
10.15 PLEDGED STOCK. If the Administrative Agent ceases to hold (for
the benefit of Lenders) 100% of the issued and outstanding shares of common
stock of the Companies as Collateral.
10.16 DISSOLUTION. Borrower, Parent, Communications or any of its
Subsidiaries (other than Logix and its Subsidiaries), or any other Company shall
dissolve, liquidate, or otherwise terminate their existence.
10.17 PAYMENT OF CERTAIN OTHER AGREEMENTS. The payment directly or
indirectly (including, without limitation, any payment in respect of any sinking
fund, defeasance, redemption, or payment of any dividend or distribution) by any
Company of the Senior Reserve Notes, the Preferred Stock, or the Debentures in a
manner or at a time during which such payment is not permitted under the terms
of the
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<PAGE>
Loan Papers, or under any instrument or document evidencing or creating the
Senior Reserve Notes, any Preferred Stock, and any Debentures.
10.18 DEFAULT OR ACCELERATION UNDER CERTAIN OTHER AGREEMENTS. (i) The
occurrence of any "DEFAULT" or "EVENT OF DEFAULT" or other breach which remains
uncured on any date of determination under or with respect to any agreement
creating or evidencing any Senior Reserve Notes, any Junior Preferred Stock, or
any Junior Debentures; (ii) the trustee with respect to, or any holder of, any
Senior Reserve Notes, any Junior Preferred Stock, or any Junior Debentures shall
effectively declare all or any portion of that Debt or obligation thereunder due
and payable prior to the stated maturity thereof; or (iii) the Debt or
obligations under the Senior Reserve Notes, any Junior Preferred Stock, or any
Junior Debenture becomes due before its stated maturity by acceleration of the
maturity thereof.
10.19 REDEMPTION OF CERTAIN OTHER DEBT OR OBLIGATION. If an event
shall occur, including, without limitation, a "CHANGE IN CONTROL" as defined in
any documents evidencing or creating the Senior Reserve Notes, any Preferred
Stock, or any Debenture, and the trustee or the holders of any such Debt or
obligation shall initiate notice to request or require (or any Company shall
automatically be so required) to redeem or repurchase such Debt or obligation.
SECTION 11 RIGHTS AND REMEDIES.
11.1 REMEDIES UPON DEFAULT.
(a) If a Default exists under SECTIONS 10.3(c) or 10.3(d),
the commitment to extend credit hereunder shall automatically terminate
and the entire unpaid balance of the Obligation shall automatically
become due and payable without any action or notice of any kind
whatsoever.
(b) If any Default exists, Administrative Agent shall, upon
the request of Required Lenders (subject to the terms of SECTION 12) or
Required Lenders may, do any one or more of the following: (i) if the
maturity of the Obligation has not already been accelerated under
SECTION 11.1(a), declare the entire unpaid balance of the Obligation, or
any part thereof, immediately due and payable, whereupon it shall be due
and payable; (ii) terminate the commitments of Lenders to extend credit
hereunder; (iii) reduce any claim to judgment; (iv) to the extent
permitted by Law, exercise (or request each Lender to, and each Lender
shall be entitled to, exercise) the Rights of offset or banker's Lien
against the interest of each Company in and to every account and other
property of each Company which are in the possession of Administrative
Agent or any Lender to the extent of the full amount of the Obligation
(to the extent permitted by Law, each Company being deemed directly
obligated to each Lender in the full amount of the Obligation for such
purposes); and (v) exercise any and all other legal or equitable Rights
afforded by the Loan Papers, the Laws of the State of Texas, or any
other applicable jurisdiction as Administrative Agent shall deem
appropriate, or otherwise, including, but not limited to, the Right to
bring suit or other proceedings before any Governmental Authority either
for specific performance of any covenant or condition contained in any
of the Loan Papers or in aid of the exercise of any Right granted to
Administrative Agent or any Lender in any of the Loan Papers.
11.2 COMPANY WAIVERS. To the extent permitted by Law, the Companies
hereby waive presentment and demand for payment, protest, notice of intention to
accelerate, notice of acceleration, and notice of protest and nonpayment, and
agree that their respective liability with respect to the Obligation (or any
part thereof) shall not be affected by any renewal or extension in the time of
payment of the
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<PAGE>
Obligation (or any part thereof), by any indulgence, or by any release or
change in any security for the payment of the Obligation (or any part
thereof).
11.3 PERFORMANCE BY ADMINISTRATIVE AGENT. If any covenant, duty, or
agreement of any Company is not performed in accordance with the terms of the
Loan Papers, after the occurrence and during the continuance of a Default,
Administrative Agent may, at its option (but subject to the approval of Required
Lenders), perform or attempt to perform such covenant, duty, or agreement on
behalf of such Company. In such event, any amount expended by Administrative
Agent in such performance or attempted performance shall be payable by the
Companies, jointly and severally, to Administrative Agent on demand, shall
become part of the Obligation, and shall bear interest at the Default Rate from
the date of such expenditure by Administrative Agent until paid.
Notwithstanding the foregoing, it is expressly understood that Administrative
Agent does not assume, and shall never have, except by its express written
consent, any liability or responsibility for the performance of any covenant,
duty, or agreement of any Company.
11.4 DELEGATION OF DUTIES AND RIGHTS. Lenders may perform any of
their duties or exercise any of their Rights under the Loan Papers by or through
their respective Representatives.
11.5 NOT IN CONTROL. Nothing in any Loan Paper shall, or shall be
deemed to (a) give any Agent or any Lender the Right to exercise control over
the assets (including real property), affairs, or management of any Company, (b)
preclude or interfere with compliance by any Company with any Law, or (c)
require any act or omission by any Company that may be harmful to Persons or
property. Any "MATERIAL ADVERSE EVENT" or other materiality qualifier in any
representation, warranty, covenant, or other provision of any Loan Paper is
included for credit documentation purposes only and shall not, and shall not be
deemed to, mean that any Agent or any Lender acquiesces in any non-compliance by
any Company with any Law or document, or that any Agent or any Lender does not
expect the Companies to promptly, diligently, and continuously carry out all
appropriate removal, remediation, and termination activities required or
appropriate in accordance with all Environmental Laws. The Agents and the
Lenders have no fiduciary relationship with or fiduciary duty to Borrower or any
Company arising out of or in connection with the Loan Papers, and the
relationship between the Agents and the Lenders, on the one hand, and Borrower
and the Companies, on the other hand, in connection with the Loan Papers is
solely that of debtor and creditor. The power of the Agents and Lenders under
the Loan Papers is limited to the Rights provided in the Loan Papers, which
Rights exist solely to assure payment and performance of the Obligation and may
be exercised in a manner calculated by the Agents and Lenders in their
respective good faith business judgment.
11.6 COURSE OF DEALING. The acceptance by Administrative Agent or
Lenders at any time and from time to time of partial payment on the Obligation
shall not be deemed to be a waiver of any Default then existing. No waiver by
Administrative Agent, Required Lenders, or Lenders of any Default shall be
deemed to be a waiver of any other then-existing or subsequent Default. No
delay or omission by Administrative Agent, Required Lenders, or Lenders in
exercising any Right under the Loan Papers shall impair such Right or be
construed as a waiver thereof or any acquiescence therein, nor shall any single
or partial exercise of any such Right preclude other or further exercise
thereof, or the exercise of any other Right under the Loan Papers or otherwise.
11.7 CUMULATIVE RIGHTS. All Rights available to Administrative Agent
and Lenders under the Loan Papers are cumulative of and in addition to all other
Rights granted to Administrative Agent and Lenders at law or in equity, whether
or not the Obligation is due and payable and whether or not
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Administrative Agent or Lenders have instituted any suit for collection,
foreclosure, or other action in connection with the Loan Papers.
11.8 APPLICATION OF PROCEEDS. Any and all proceeds ever received by
Administrative Agent or Lenders from the exercise of any Rights pertaining to
the Obligation shall be applied to the Obligation in the order and manner set
forth in SECTION 3.11.
11.9 CERTAIN PROCEEDINGS. Each Company will promptly execute and
deliver, or cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers
Administrative Agent or Lenders may reasonably request in connection with the
obtaining of any consent, approval, registration, qualification, permit,
license, or Authorization of any Governmental Authority or other Person
necessary or appropriate for the effective exercise of any Rights under the Loan
Papers. Because the Companies agree that Administrative Agent's and Lenders'
remedies at Law for failure of the Companies to comply with the provisions of
this Section would be inadequate and that such failure would not be adequately
compensable in damages, the Companies agree that the covenants of this Section
may be specifically enforced.
11.10 LIMITATION OF RIGHTS. Notwithstanding any other provision of
this Agreement or any other Loan Paper, any action taken or proposed to be taken
by Administrative Agent, any Agent, or any Lender under any Loan Paper which
would affect the operational, voting, or other control of any Company, shall be
pursuant to SECTION 310(d) of the COMMUNICATIONS ACT OF 1934 (as amended), any
applicable state Law, and the applicable rules and regulations thereunder and,
if and to the extent required thereby, subject to the prior consent of the FCC
or any applicable PUC.
11.11 EXPENDITURES BY LENDERS. Borrower shall promptly pay within
fifteen (15) Business Days after request therefor (a) all reasonable costs,
fees, and expenses paid or incurred by Administrative Agent and Arranger,
incident to any Loan Paper (including, but not limited to, the reasonable fees
and expenses of counsel to Administrative Agent and Arranger and the allocated
cost of internal counsel in connection with the negotiation, preparation,
delivery, execution, coordination and administration of the Loan Papers and any
related amendment, waiver, or consent) and (b) all reasonable costs and expenses
of Lenders and Administrative Agent incurred by Administrative Agent or any
Lender in connection with the enforcement of the obligations of any Company
arising under the Loan Papers (including, without limitation, costs and expenses
incurred in connection with any workout or bankruptcy) or the exercise of any
Rights arising under the Loan Papers (including, but not limited to, reasonable
attorneys' fees including allocated cost of internal counsel, court costs and
other costs of collection), all of which shall be a part of the Obligation and
shall bear interest at the Default Rate from the date due until the date repaid.
11.12 INDEMNIFICATION. BORROWER AND EACH COMPANY AGREE TO INDEMNIFY
AND HOLD HARMLESS EACH AGENT, ARRANGER, AND EACH LENDER AND EACH OF THEIR
RESPECTIVE AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, ATTORNEYS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST
ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY BE INCURRED
BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING
OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN
CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION OF
DEFENSE IN CONNECTION THEREWITH) THE LOAN PAPERS, ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE
BORROWINGS (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE
INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE,
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LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH
INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE CASE OF
AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN
THIS SECTION 11.12 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT
SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY THE BORROWER, ITS
DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER
PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR
NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. BORROWER AND EACH
COMPANY AGREE NOT TO ASSERT ANY CLAIM AGAINST ANY INDEMNIFIED PARTY ON ANY
THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE
DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN PAPERS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE
PROCEEDS OF THE BORROWINGS. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER
AGREEMENT OF THE BORROWER HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF THE
BORROWER CONTAINED IN THIS SECTION 11.12 SHALL SURVIVE THE PAYMENT IN FULL OF
THE BORROWINGS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
SECTION 12 AGREEMENT AMONG LENDERS.
12.1 ADMINISTRATIVE AGENT.
(a) Each Lender hereby appoints NationsBank, N.A. (and
NationsBank, N.A. hereby accepts such appointment) as its nominee and
agent, in its name and on its behalf: (i) to act as nominee for and on
behalf of such Lender in and under all Loan Papers; (ii) to arrange the
means whereby the funds of Lenders are to be made available to Borrower
under the Loan Papers; (iii) to take such action as may be requested by
any Lender under the Loan Papers (when such Lender is entitled to make
such request under the Loan Papers and after such requesting Lender has
obtained the concurrence of such other Lenders as may be required under
the Loan Papers); (iv) to receive all documents and items to be
furnished to Lenders under the Loan Papers; (v) to timely distribute,
and Administrative Agent agrees to so distribute, to each Lender all
material information, requests, documents, and items received from
Borrower under the Loan Papers; (vi) to promptly distribute to each
Lender its ratable part of each payment or prepayment (whether
voluntary, as proceeds of collateral upon or after foreclosure, as
proceeds of insurance thereon, or otherwise) in accordance with the
terms of the Loan Papers; (vii) to deliver to the appropriate Persons
requests, demands, approvals, and consents received from Lenders; and
(viii) to execute, on behalf of Lenders, such releases or other
documents or instruments as are permitted by the Loan Papers or as
directed by Lenders from time to time; PROVIDED, HOWEVER, Administrative
Agent shall not be required to take any action which exposes
Administrative Agent to personal liability or which is contrary to the
Loan Papers or applicable Law.
(b) Administrative Agent may resign at any time as
Administrative Agent under the Loan Papers by giving written notice
thereof to Lenders and may be removed as Administrative Agent under the
Loan Papers at any time with cause by Required Lenders. Should the
initial or any successor Administrative Agent ever cease to be a party
hereto or should the initial or any successor Administrative Agent ever
resign or be removed as Administrative Agent, then Required Lenders
shall elect the successor Administrative Agent from among the Lenders
(other than the resigning Administrative Agent). If no successor
Administrative Agent shall have been so appointed by Required Lenders,
within 30 days after the retiring Administrative Agent's giving of
notice of resignation or Required Lenders' removal of the retiring
Administrative Agent, then
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the retiring Administrative Agent may, on behalf of Lenders, appoint
a successor Administrative Agent, which shall be a commercial bank
having a combined capital and surplus of at least $1,000,000,000.
Upon the acceptance of any appointment as Administrative Agent under
the Loan Papers by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested
with all the Rights of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations of Administrative Agent under the Loan Papers, and each
Lender shall execute such documents as any Lender may reasonably
request to reflect such change in and under the Loan Papers. After
any retiring Administrative Agent's resignation or removal as
Administrative Agent under the Loan Papers, the provisions of this
SECTION 12 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under the
Loan Papers.
(c) Administrative Agent, in its capacity as a Lender, shall
have the same Rights under the Loan Papers as any other Lender and may
exercise the same as though it were not acting as Administrative Agent;
the term "LENDER" shall, unless the context otherwise indicates, include
Administrative Agent; and any resignation, or removal of by
Administrative Agent hereunder shall not impair or otherwise affect any
Rights which it has or may have in its capacity as an individual Lender.
Each Lender and Borrower agree that Administrative Agent is not a
fiduciary for Lenders or for Borrower but simply is acting in the
capacity described herein to alleviate administrative burdens for both
Borrower and Lenders, that Administrative Agent has no duties or
responsibilities to Lenders or Borrower except those expressly set forth
herein, and that Administrative Agent in its capacity as a Lender has
all Rights of any other Lender.
(d) Administrative Agent and its Affiliates may now or
hereafter be engaged in one or more loan, letter of credit, leasing, or
other financing transactions with Borrower, act as trustee or depositary
for Borrower, or otherwise be engaged in other transactions with
Borrower (collectively, the "OTHER ACTIVITIES") not the subject of the
Loan Papers. Without limiting the Rights of Lenders specifically set
forth in the Loan Papers, Administrative Agent and its Affiliates shall
not be responsible to account to Lenders for such other activities, and
no Lender shall have any interest in any other activities, any present
or future guaranties by or for the account of Borrower which are not
contemplated or included in the Loan Papers, any present or future
offset exercised by Administrative Agent and its Affiliates in respect
of such other activities, any present or future property taken as
security for any such other activities, or any property now or hereafter
in the possession or control of Administrative Agent or its Affiliates
which may be or become security for the obligations of Borrower arising
under the Loan Papers by reason of the general description of
indebtedness secured or of property contained in any other agreements,
documents or instruments related to any such other activities; PROVIDED
THAT, if any payments in respect of such guaranties or such property or
the proceeds thereof shall be applied to reduction of the obligations of
Borrower arising under the Loan Papers, then each Lender shall be
entitled to share in such application ratably.
12.2 EXPENSES. Upon demand by Administrative Agent, each Lender
shall pay its Pro Rata Part of any reasonable expenses (including, without
limitation, court costs, reasonable attorneys' fees, and other costs of
collection) incurred by Administrative Agent in connection with any of the Loan
Papers if and to the extent Administrative Agent does not receive reimbursement
therefor from other sources within 60 days after incurred; PROVIDED THAT, each
Lender shall be entitled to receive its Pro Rata Part of any reimbursement for
such expenses, or part thereof, which Administrative Agent subsequently receives
from such other sources.
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12.3 PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise
provided in the Loan Papers, nothing in the Loan Papers shall be deemed to give
any Lender any advantage over any other Lender insofar as the Obligation arising
under the Loan Papers is concerned, or to relieve any Lender from absorbing its
Pro Rata Part of any losses sustained with respect to the Obligation (except to
the extent such losses result from unilateral actions or inactions of any Lender
that are not made in accordance with the terms and provisions of the Loan
Papers).
12.4 DELEGATION OF DUTIES; RELIANCE. Administrative Agent may
perform any of its duties or exercise any of its Rights under the Loan Papers by
or through its Representatives. Administrative Agent and its Representatives
shall (a) be entitled to rely upon (and shall be protected in relying upon) any
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telecopy, telegram, telex or teletype message, statement, order, or other
documents or conversation believed by it or them to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon opinion of counsel selected by Administrative Agent, (b) be
entitled to deem and treat each Lender as the owner and holder of the Principal
Debt owed to such Lender for all purposes until, subject to SECTION 13.13,
written notice of the assignment or transfer thereof shall have been given to
and received by Administrative Agent (and any request, authorization, consent,
or approval of any Lender shall be conclusive and binding on each subsequent
holder, assignee, or transferee of the Principal Debt owed to such Lender or
portion thereof until such notice is given and received), (c) not be deemed to
have notice of the occurrence of a Default unless a responsible officer of
Administrative Agent, who handles matters associated with the Loan Papers and
transactions thereunder, has received written notice from a Lender or Borrower
and stating that such notice is a "NOTICE OF DEFAULT," and (d) be entitled to
consult with legal counsel (including counsel for Borrower), independent
accountants, and other experts selected by Administrative Agent and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts.
12.5 LIMITATION OF LIABILITY.
(a) None of the Agents or any of their respective
Representatives shall be liable for any action taken or omitted to be
taken by it or them under the Loan Papers in good faith and reasonably
believed by it or them to be within the discretion or power conferred
upon it or them by the Loan Papers or be responsible for the
consequences of any error of judgment, except for fraud, gross
negligence, or willful misconduct; and none of the Agents or any of
their respective Representatives has a fiduciary relationship with any
Lender by virtue of the Loan Papers (PROVIDED THAT, nothing herein shall
negate the obligation of Administrative Agent or Administrative Agent to
account for funds received by it for the account of any Lender).
(b) Unless indemnified to its satisfaction against loss,
cost, liability, and expense, neither Administrative Agent nor any other
Agent shall be compelled to do any act under the Loan Papers or to take
any action toward the execution or enforcement of the powers thereby
created or to prosecute or defend any suit in respect of the Loan
Papers. If Administrative Agent requests instructions from Lenders or
Required Lenders, as the case may be, with respect to any act or action
(including, but not limited to, any failure to act) in connection with
any Loan Paper, Administrative Agent shall be entitled (but shall not be
required) to refrain (without incurring any liability to any Person by
so refraining) from such act or action unless and until it has received
such instructions. Except where action of Required Lenders or all
Lenders is required in the Loan Papers, Administrative Agent may act
hereunder in its own discretion without requesting instructions. In no
event, however, shall Administrative Agent or any of its respective
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Representatives be required to take any action which it or they
determine could incur for it or them criminal or onerous civil
liability. Without limiting the generality of the foregoing, no Lender
shall have any right of action against Administrative Agent as a result
of Administrative Agent's acting or refraining from acting hereunder in
accordance with the instructions of Required Lenders (or all Lenders if
required in the Loan Papers).
(c) Administrative Agent nor any other Agent shall be
responsible in any manner to any Lender or any Participant for, and each
Lender represents and warrants that it has not relied upon
Administrative Agent or any other Agent in respect of, (i) the
creditworthiness of any Company and the risks involved to such Lender,
(ii) the effectiveness, enforceability, genuineness, validity, or the
due execution of any Loan Paper, (iii) any representation, warranty,
document, certificate, report, or statement made therein or furnished
thereunder or in connection therewith, (iv) the existence, priority, or
perfection of any Lien hereafter granted or purported to be granted
under any Loan Paper, or (v) observation of or compliance with any of
the terms, covenants, or conditions of any Loan Paper on the part of any
Company. Each Lender agrees to indemnify Administrative Agent and its
respective Representatives and hold them harmless from and against (but
limited to such Lender's Pro Rata Part of) any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses, and reasonable disbursements of any kind or
nature whatsoever which may be imposed on, asserted against, or incurred
by them in any way relating to or arising out of the Loan Papers or any
action taken or omitted by them under the Loan Papers (INCLUDING ANY OF
THE FOREGOING ARISING FROM THE NEGLIGENCE OF ADMINISTRATIVE AGENT OR ITS
REPRESENTATIVES), to the extent Administrative Agent and its respective
Representatives are not reimbursed for such amounts by any Company
(PROVIDED THAT, Administrative Agent, and its respective Representatives
shall not have the right to be indemnified hereunder for its or their
own fraud, gross negligence, or willful misconduct).
12.6 DEFAULT; COLLATERAL. Upon the occurrence and continuance of a
Default, Lenders agree to promptly confer in order that Required Lenders or
Lenders, as the case may be, may agree upon a course of action for the
enforcement of the Rights of Lenders; and Administrative Agent shall be entitled
to refrain from taking any action (without incurring any liability to any Person
for so refraining) unless and until Administrative Agent shall have received
instructions from Required Lenders. All rights of action under this Agreement
and under the Notes and all rights to the Collateral, if any, hereunder may be
enforced by Administrative Agent and any suit or proceeding instituted by
Administrative Agent in furtherance of such enforcement shall be brought in its
name as Administrative Agent without the necessity of joining as plaintiffs or
defendants any other Lender, and the recovery of any judgment shall be for the
benefit of Lenders subject to the expenses of Administrative Agent. In actions
with respect to any property of Borrower, Administrative Agent is acting for the
ratable benefit of each Lender. Any and all agreements to subordinate (whether
made heretofore or hereafter) other indebtedness or obligations of Borrower to
the Obligation shall be construed as being for the ratable benefit of each
Lender.
12.7 LIMITATION OF LIABILITY. To the extent permitted by Law,
(a) neither Administrative Agent nor any other Agent (acting in their respective
agent capacities) shall incur any liability to any other Lender, Agent, or
Participant except for acts or omissions resulting from its own fraud, gross
negligence or wilful misconduct, and (b) neither Administrative Agent nor any
other Agent, Lender, or Participant shall incur any liability to any other
Person for any act or omission of any other Lender, Agent, or Participant.
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12.8 RELATIONSHIP OF LENDERS. Nothing herein shall be construed as
creating a partnership or joint venture among Agents and Lenders.
12.9 BENEFITS OF AGREEMENT. Except for the representations and
covenants in SECTION 12.1(c) in favor of Borrower, none of the provisions of
this SECTION 12 shall inure to the benefit of any Company or any other Person
other than Lenders; consequently, no Company or any other Person shall be
entitled to rely upon, or to raise as a defense, in any manner whatsoever, the
failure of any Agent or any Lender to comply with such provisions.
12.10 AGENTS. None of the Lenders identified in this Agreement as
"CO-SYNDICATION AGENTS" or "CO-DOCUMENTATION AGENTS" shall have any rights,
powers, obligations, liabilities, responsibilities, or duties under this
Agreement other than those applicable to all Lenders as such. Without limiting
the foregoing, none of the Lenders so identified as a "CO-SYNDICATION AGENTS" or
"CO-DOCUMENTATION AGENTS" shall have or be deemed to have any fiduciary
relationship with any Lender.
12.11 OBLIGATIONS SEVERAL. The obligations of Lenders hereunder are
several, and each Lender hereunder shall not be responsible for the obligations
of the other Lenders hereunder, nor will the failure of one Lender to perform
any of its obligations hereunder relieve the other Lenders from the performance
of their respective obligations hereunder.
SECTION 13 MISCELLANEOUS.
13.1 HEADINGS. The headings, captions, and arrangements used in any
of the Loan Papers are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify, or modify the terms of the Loan Papers,
nor affect the meaning thereof.
13.2 NONBUSINESS DAYS. In any case where any payment or action is
due under any Loan Paper on a day which is not a Business Day, such payment or
action may be delayed until the next-succeeding Business Day, but interest and
fees shall continue to accrue in respect of any payment to which it is
applicable until such payment is in fact made; PROVIDED THAT, if, in the case of
any such payment in respect of a Eurodollar Rate Borrowing, the next-succeeding
Business Day is in the next calendar month, then such payment shall be made on
the next-preceding Business Day.
13.3 NOTICES. Unless specifically otherwise provided, whenever any
Loan Paper requires or permits any consent, approval, notice, request, or demand
from one party to another, such communication must be in writing (which may be
by telex or telecopy) to be effective and shall be deemed to have been given
(a) if by telex, when transmitted to the telex number, if any, for such party,
and the appropriate answer back is received, (b) if by telecopy, when
transmitted to the telecopy number for such party (and all such communications
sent by telecopy shall be confirmed promptly thereafter by personal delivery or
mailing in accordance with the provisions of this section; PROVIDED, THAT any
requirement in this parenthetical shall not affect the date on which such
telecopy shall be deemed to have been delivered), (c) if by mail, on the third
Business Day after it is enclosed in an envelope, properly addressed to such
party, properly stamped, sealed, and deposited in the appropriate official
postal service, or (d) if by any other means, when actually delivered to such
party. Until changed by notice pursuant hereto, the address (and telex and
telecopy numbers, if any) for Administrative Agent and each Lender,
Administrative Agent, and other Agents is set forth on SCHEDULE 2.1, and for
Borrower and each Company is the address set forth by Borrower's signature on
the signature page of this Agreement and for each Guarantor is the address set
forth by such Guarantor's signature on the signature page of its Guaranty. A
copy of each communication
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to Administrative Agent shall also be sent to Haynes and Boone, LLP, 901 Main
Street, Dallas, Texas 75202, Fax: 214/651-5940, Attn: Karen S. Nelson.
13.4 FORM AND NUMBER OF DOCUMENTS. Each agreement, document,
instrument, or other writing to be furnished under any provision of this
Agreement must be in form and substance and in such number of counterparts as
may be reasonably satisfactory to Administrative Agent and its counsel.
13.5 EXCEPTIONS TO COVENANTS. No Company shall take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained in any Loan Paper if such action or omission would result in
the breach of any other covenant contained in any of the Loan Papers.
13.6 SURVIVAL. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Papers shall survive all
closings under the Loan Papers and, except as otherwise indicated, shall not be
affected by any investigation made by any party. All rights of, and provisions
relating to, reimbursement and indemnification of Administrative Agent, any
Agent, or any Lender shall survive termination of this Agreement and payment in
full of the Obligation.
13.7 GOVERNING LAW. THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED
STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF THE PARTIES TO THE LOAN
PAPERS AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THE
LOAN PAPERS.
13.8 INVALID PROVISIONS. If any provision in any Loan Paper is held
to be illegal, invalid, or unenforceable, such provision shall be fully
severable; the appropriate Loan Paper shall be construed and enforced as if such
provision had never comprised a part thereof; and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by such
provision or by its severance therefrom. Administrative Agent, Lenders, and
each Company party to such Loan Paper agree to negotiate, in good faith, the
terms of a replacement provision as similar to the severed provision as may be
possible and be legal, valid, and enforceable.
13.9 ENTIRETY. THE RIGHTS AND OBLIGATIONS OF THE COMPANIES,
GUARANTORS, LENDERS, AND AGENTS SHALL BE DETERMINED SOLELY FROM WRITTEN
AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN
SUCH PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AGREEMENT
(AS AMENDED IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN PAPERS
EXECUTED BY ANY COMPANY, ANY GUARANTOR, ANY LENDER, AND/OR ANY AGENT, (TOGETHER
WITH ALL COMMITMENT LETTERS AND FEE LETTERS ONLY AS THEY RELATE TO THE PAYMENT
OF FEES AFTER THE CLOSING DATE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
COMPANIES, THE GUARANTORS, LENDERS, AND AGENTS, AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH PARTIES.
13.10 JURISDICTION; VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY
HERETO, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY
(A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN TEXAS, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS
MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH
THE LOAN PAPERS AND THE OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY TEXAS
LAW, (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS AND THE
OBLIGATION BROUGHT IN ANY SUCH COURT, (C) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY
LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN
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BROUGHT IN AN INCONVENIENT FORUM, (D) AGREES TO DESIGNATE AND MAINTAIN AN
AGENT FOR SERVICE OF PROCESS IN TEXAS IN CONNECTION WITH ANY SUCH LITIGATION
AND TO DELIVER TO ADMINISTRATIVE AGENT EVIDENCE THEREOF, IF REQUESTED, (E)
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES THEREOF
BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS
SET FORTH HEREIN, (F) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING AGAINST
ANY PARTY HERETO ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS OR THE
OBLIGATION SHALL BE BROUGHT IN ONE OF THE AFOREMENTIONED COURTS, AND (G)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF ANY LOAN PAPER OR THE TRANSACTIONS CONTEMPLATED THEREBY. The scope of
each of the foregoing waivers is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims,
tort claims, breach of duty claims, and all other common law and statutory
claims. The Companies, Guarantors, and each other party to this Agreement
acknowledge that this waiver is a material inducement to the agreement of
each party hereto to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and each will
continue to rely on each of such waivers in related future dealings. The
Companies, Guarantors, and each other party to this Agreement warrant and
represent that they have reviewed these waivers with their legal counsel, and
that they knowingly and voluntarily agree to each such waiver following
consultation with legal counsel. THE WAIVERS IN THIS SECTION 13.10 ARE
IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN PAPER. In the
event of Litigation, this Agreement may be filed as a written consent to a
trial by the court.
13.11 AMENDMENTS, CONSENTS, CONFLICTS, AND WAIVERS.
(a) Except as otherwise specifically provided, (i) this
Agreement may only be amended, modified or waived by an instrument in
writing executed jointly by Borrower and Required Lenders, and, in the
case of any matter affecting Administrative Agent (EXCEPT removal of
Administrative Agent as provided in SECTION 12) by Administrative Agent,
and may only be supplemented by documents delivered or to be delivered
in accordance with the express terms hereof, and (ii) the other Loan
Papers may only be the subject of an amendment, modification, or waiver
if Borrower and Required Lenders, and, in the case of any matter
affecting Administrative Agent (EXCEPT as set forth above),
Administrative Agent, have approved same.
(b) Any amendment to or consent or waiver under this
Agreement or any Loan Paper which purports to accomplish any of the
following must be by an instrument in writing executed by Borrower and
executed (or approved, as the case may be) by each Lender affected
thereby, and, in the case of any matter affecting Administrative Agent,
by Administrative Agent: (i) extends the due date or reduces the amount
of any scheduled payment of the Obligation or any scheduled reduction of
the Revolver Commitment beyond the date specified in the Loan Papers;
(ii) reduces the interest rate or decreases the amount of interest,
fees, or other sums payable to Administrative Agent or Lenders hereunder
(except such reductions as are contemplated by this Agreement); (iii)
change the percentage of the Total Commitment or Revolver Commitment, or
of the Principal Debt which shall be required for the Lenders or any of
them to take any action under this SECTION 13.11 or any other provision
of this Agreement or any Loan Paper; or (iv) except as otherwise
permitted by any Loan Paper, waives compliance with, amends, or releases
(in whole or in part) any material
76
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
Guaranty or releases (in whole or in part) any material Collateral for
the Obligation; or (v) changes this CLAUSE (b) or any other matter
specifically requiring the consent of all Lenders hereunder. Without
the consent of such Lender, no Lender's "COMMITTED SUM" may be
increased.
(c) Any conflict or ambiguity between the terms and
provisions herein and terms and provisions in any other Loan Paper shall
be controlled by the terms and provisions herein.
(d) No course of dealing nor any failure or delay by
Administrative Agent, any Lender, or any of their respective
Representatives with respect to exercising any Right of Administrative
Agent or any Lender hereunder shall operate as a waiver thereof. A
waiver must be in writing and signed by Administrative Agent and
Required Lenders (or by all Lenders, if required hereunder) to be
effective, and such waiver will be effective only in the specific
instance and for the specific purpose for which it is given.
13.12 MULTIPLE COUNTERPARTS. This Agreement may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart. It is not necessary that each Lender
execute the same counterpart so long as identical counterparts are executed by
Borrower, each Lender, and Administrative Agent. This Agreement shall become
effective when counterparts hereof shall have been executed and delivered to
Administrative Agent by each Lender, Administrative Agent, and Borrower, or,
when Administrative Agent shall have received telecopied, telexed, or other
evidence satisfactory to it that such party has executed and is delivering to
Administrative Agent a counterpart hereof.
13.13 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS.
(a) This Agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and
assigns, EXCEPT THAT (i) Borrower may not, directly or indirectly,
assign or transfer, or attempt to assign or transfer, any of its Rights,
duties or obligations under any Loan Papers without the express written
consent of all Lenders, and (ii) EXCEPT as permitted under this Section,
no Lender may transfer, pledge, assign, sell any participation in, or
otherwise encumber its portion of the Obligation.
(b) Each Lender may assign to one or more Eligible Assignees
all or a portion of its Rights and obligations under this Agreement and
the other Loan Papers (including, without limitation, all or a portion
of its Borrowings and its Notes); PROVIDED, HOWEVER, that:
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another
Lender or an assignment of all of a Lender's Rights and
obligations under this Agreement and the other Loan Papers, any
such partial assignment shall be in an amount at least equal to
$5,000,000 in the aggregate for all Facilities being assigned;
PROVIDED THAT, no partial assignment for any Facility may be
less than $1,000,000.
(iii) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its Rights and
obligations under this Agreement and the Notes;
77
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
(iv) the parties to such assignment shall execute and
deliver to the Administrative Agent for its acceptance an
Assignment and Acceptance Agreement in the form of EXHIBIT F
hereto, together with any Notes subject to such assignment and a
processing fee of $3,500, PROVIDED HOWEVER, that with respect to
an assignment to an Affiliate of Lender, the processing fee
shall be $1,500.
Upon execution, delivery, and acceptance of such Assignment and
Acceptance Agreement, the assignee thereunder shall be a party hereto
and, to the extent of such assignment, have the obligations, Rights, and
benefits of a Lender under the Loan Papers and the assigning Lender
shall, to the extent of such assignment, relinquish its rights and be
released from its obligations under the Loan Papers. Upon the
consummation of any assignment pursuant to this Section, but only upon
the request of the assignor or assignee made through Administrative
Agent, Borrower shall issue appropriate Notes to the assignor and the
assignee, reflecting such Assignment and Acceptance. If the assignee is
not incorporated under the laws of the United States of America or a
state thereof, it shall deliver to Borrower and Administrative Agent
certification as to exemption from deduction or withholding of Taxes in
accordance with SECTION 4.6.
(c) Administrative Agent shall maintain at its address
referred to in SECTION 13.3 a copy of each Assignment and Acceptance
Agreement delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the
Commitment, and principal amount of the Borrowings owing to, each Lender
from time to time (the "REGISTER"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and
Borrower, Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all
purposes of the Loan Papers. The Register shall be available for
inspection by Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice. Upon the consummation of any
assignment in accordance with this SECTION 13.13, SCHEDULE 2.1 shall
automatically be deemed amended (to the extent required) by
Administrative Agent to reflect the name, address, and respective
Committed Sums under the Facilities of the assignor and assignee.
(d) Upon its receipt of an Assignment and Acceptance
Agreement executed by the parties thereto, together with any Notes
subject to such assignment and payment of the processing fee, the
Administrative Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT F hereto, (i)
accept such Assignment and Acceptance Agreement, (ii) record the
information contained therein in the Register and (iii) give prompt
notice thereof to the parties thereto.
(e) Subject to the provisions of this Section and in
accordance with applicable Law, any Lender may, in the ordinary course
of its business and in accordance with applicable Law, at any time sell
to one or more Persons (each a "PARTICIPANT") participating interests in
its portion of the Obligation. In the event of any such sale to a
Participant, (i) such Lender shall remain a "LENDER" under this
Agreement and the Participant shall not constitute a "LENDER" hereunder,
(ii) such Lender's obligations under this Agreement shall remain
unchanged, (iii) such Lender shall remain solely responsible for the
performance thereof, (iv) such Lender shall remain the holder of its
share of the Principal Debt for all purposes under this Agreement,
(v) Borrower and Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's Rights and
obligations under the Loan Papers, and (vi) such Lender shall be solely
responsible for any withholding taxes or any filing or reporting
requirements relating to such participation and shall hold Borrower and
Administrative Agent and their respective successors,
78
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
permitted assigns, officers, directors, employees, agents, and
representatives harmless against the same. Participants shall have
no Rights under the Loan Papers, other than certain voting Rights as
provided below. Subject to the following, each Lender shall be
entitled to obtain (on behalf of its Participants) the benefits of
SECTION 4 with respect to all participations in its part of the
Obligation outstanding from time to time SO LONG AS Borrower shall
not be obligated to pay any amount in excess of the amount that would
be due to such Lender under SECTION 4 calculated as though no
participations have been made. No Lender shall sell any
participating interest under which the Participant shall have any
Rights to approve any amendment, modification, or waiver of any Loan
Paper, except to the extent such amendment, modification, or waiver
extends the due date for payment of any amount in respect of
principal (OTHER THAN mandatory prepayments), interest, or fees due
under the Loan Papers, reduces the interest rate or the amount of
principal or fees applicable to the Obligation (EXCEPT such
reductions as are contemplated by this Agreement), or releases any
material Guaranty or all or any substantial portion of the Collateral
for the Obligation under the Loan Papers (EXCEPT such releases as are
contemplated by this Agreement); PROVIDED THAT, in those cases where
a Participant is entitled to the benefits of SECTION 4 or a Lender
grants Rights to its Participants to approve amendments to or waivers
of the Loan Papers respecting the matters previously described in
this sentence, such Lender must include a voting mechanism in the
relevant participation agreement or agreements, as the case may be,
whereby a majority of such Lender's portion of the Obligation
(whether held by such Lender or Participant) shall control the vote
for all of such Lender's portion of the Obligation. Except in the
case of the sale of a participating interest to another Lender, the
relevant participation agreement shall not permit the Participant to
transfer, pledge, assign, sell participations in, or otherwise
encumber its portion of the Obligation, unless the consent of the
transferring Lender (which consent will not be unreasonably withheld)
has been obtained.
(f) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any
portion of its Borrowings and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank without notice to, or the consent of
Borrower or Administrative Agent and, with the consent of Borrower and
Administrative Agent, after the Closing Date any Term Loan B Lender or
any Term Loan C Lender which is a fund may pledge all or any portion of
its Borrowings and its Notes to its trustee in support of its
obligations to its trustee. No such assignment shall release the
assigning Lender from its obligations hereunder.
(g) Any Lender may furnish any information concerning the
Companies in the possession of such Lender from time to time to Eligible
Assignees and Participants (including prospective Eligible Assignees and
Participants).
13.14 DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. The obligations of each Company under the Loan Papers shall
remain in full force and effect until termination of the Total Commitment and
payment in full of the Principal Debt and of all interest, fees, and other
amounts of the Obligation then due and owing, EXCEPT that SECTIONS 4, 11, and
13, and any other provisions under the Loan Papers expressly intended to survive
by the terms hereof or by the terms of the applicable Loan Papers, shall survive
such termination. If at any time any payment of the principal of or interest on
any Note or any other amount payable by any Company under any Loan Paper is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy, or reorganization of such Company or otherwise, the obligations of
each Company under the Loan Papers with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
79
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
[REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.]
80
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
Signature Page to that certain Credit Agreement dated as of December 23,
1998, among Dobson/Sygnet Operating Company, as Borrower, NationsBank, N.A., as
Administrative Agent, and certain other Agents and Lenders named therein.
EXECUTED as of the 23rd day of December, 1998, but effective as of the
Closing Date.
Attest: DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger,
SYGNET WIRELESS, INC.)
By: /s/ TRENT LEFORCE By: /s/ G. EDWARD EVANS
---------------------------- ------------------------------
Name: Trent LeForce Name: G. Edward Evans
Title: Assistant Secretary Title: President
Mailing Address:
13439 North Broadway Extension
Oklahoma City, OK 73114
SYGNET COMMUNICATIONS, INC.
By: /s/ G. EDWARD EVANS
------------------------------
Name: G. Edward Evans
Title: President
Mailing Address:
13439 North Broadway Extension
Oklahoma City, OK 73114
NATIONSBANK, N.A., PNC BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT AND AS A AS A LENDER
LENDER
By: /s/ JULIE A. SCHELL By: /s/ THOMAS A. COATES
---------------------------- ------------------------------
Name: Julie A. Schell Name: Thomas A. Coates
Title: Vice President Title: Vice President
FIRST UNION NATIONAL BANK, TORONTO DOMINION (TEXAS), INC.
AS A LENDER AS A LENDER
By: /s/ STEVEN C. LILLY By: /s/ JIMMY SIMIEN
---------------------------- ------------------------------
Name: Steven C. Lilly Name: Jimmy Simien
Title: Vice President Title: Vice President
LEHMAN COMMERCIAL PAPER INC.,
AS A LENDER
By: /s/ WILLIAM J. GALLAGHER
----------------------------
Name: William J. Gallagher
Title: Authorized Signatory
81
DOBSON/SYGNET OPERATING CREDIT AGREEMENT
<PAGE>
EXHIBIT A-1
FORM OF REVOLVER NOTE
$_____________ ____________ __, ____
FOR VALUE RECEIVED, the undersigned, DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.) ("BORROWER"), hereby
promises to pay to the order of ______________________ ("LENDER"), at the
offices of NATIONSBANK, N.A., as Administrative Agent for Lender and others as
hereinafter described, on the Termination Date, the LESSER of
(a) $_______________ and (b) the aggregate Revolver Principal Debt disbursed by
Lender to Borrower and outstanding and unpaid on the Termination Date (TOGETHER
WITH accrued and unpaid interest thereon).
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement, dated as of December 23, 1998 (as amended,
modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"),
among Borrower, Administrative Agent, Lehman Commercial Paper Inc. and PNC Bank,
National Association, as Co-Syndication Agents, Toronto Dominion (Texas), Inc.
and First Union National Bank, as Co-Documentation Agents, and Lender and other
lenders party thereto, and is one of the "REVOLVER NOTES" referred to therein.
Unless defined herein, capitalized terms used herein that are defined in the
Credit Agreement have the meaning given to such terms in the Credit Agreement.
Reference is made to the Credit Agreement for provisions affecting this note
regarding applicable interest rates, principal and interest payment dates, final
maturity, voluntary and mandatory prepayments, acceleration of maturity,
exercise of Rights, payment of attorneys' fees, court costs, and other costs of
collection, certain waivers by Borrower and others now or hereafter obligated
for payment of any sums due hereunder and security for the payment hereof.
Without limiting the immediately preceding sentence, reference is made to
SECTION 3.8 of the Credit Agreement for usury savings provisions.
THE LAWS (OTHER THAN CONFLICT-OF-LAWS PROVISIONS THEREOF) OF THE STATE
OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES
OF BORROWER AND LENDER AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND
INTERPRETATION HEREOF.
DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.)
By:
Name:
Title:
82 EXHBIIT A-1
<PAGE>
EXHIBIT A-2
FORM OF SWING LINE NOTE
$10,000,000 ____________ __, ____
FOR VALUE RECEIVED, the undersigned, DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.) ("BORROWER"), hereby
promises to pay to the order of NATIONSBANK, N.A. ("LENDER"), on the Swing Line
Maturity Date, the LESSER of (i) $10,000,000 and (ii) the aggregate principal
amount of Borrowings under the Swing Line Subfacility disbursed by Lender to
Borrower and outstanding and unpaid on the Swing Line Maturity Date (TOGETHER
WITH accrued and unpaid interest thereon).
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement, dated as of December 23, 1998 (as amended,
modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"),
among Borrower, Administrative Agent, Lehman Commercial Paper Inc. and PNC Bank,
National Association, as Co-Syndication Agents, Toronto Dominion (Texas), Inc.
and First Union National Bank, as Co-Documentation Agents, and Lender and other
lenders party thereto, and is the "SWING LINE NOTE" referred to therein. Unless
defined herein, capitalized terms used herein that are defined in the Credit
Agreement have the meaning given to such terms in the Credit Agreement.
Reference is made to the Credit Agreement for provisions affecting this note
regarding applicable interest rates, principal and interest payment dates, final
maturity, voluntary and mandatory prepayments, acceleration of maturity,
exercise of Rights, payment of attorneys' fees, court costs and other costs of
collection, certain waivers by Borrower and others now or hereafter obligated
for payment of any sums due hereunder and security for the payment hereof.
Without limiting the immediately preceding sentence, reference is made to
SECTION 3.8 of the Credit Agreement for usury savings provisions.
THE LAWS (OTHER THAN CONFLICT-OF-LAWS PROVISIONS THEREOF) OF THE STATE
OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES
OF BORROWER AND LENDER AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND
INTERPRETATION HEREOF.
DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.)
By:
Name:
Title:
83 EXHBIIT A-2
<PAGE>
EXHIBIT A-3
FORM OF TERM LOAN A NOTE
$_________________ ____________ __, ____
FOR VALUE RECEIVED, the undersigned, DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.) ("BORROWER"), hereby
promises to pay to the order of ______________________ ("LENDER"), at the
offices of NATIONSBANK, N.A., as Administrative Agent for Lender and others as
hereinafter described, on the Termination Date, the LESSER of
(a) $_______________ and (b) the aggregate Term Loan A Principal Debt disbursed
by Lender to Borrower and outstanding and unpaid on the Termination Date
(TOGETHER WITH accrued and unpaid interest thereon).
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement, dated as of December 23, 1998 (as amended,
modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"),
among Borrower, Administrative Agent, Lehman Commercial Paper Inc. and PNC Bank,
National Association, as Co-Syndication Agents, Toronto Dominion (Texas), Inc.
and First Union National Bank, as Co-Documentation Agents, and Lender and other
lenders party thereto, and is one of the "TERM LOAN A NOTES" referred to
therein. Unless defined herein, capitalized terms used herein that are defined
in the Credit Agreement have the meaning given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions affecting
this note regarding applicable interest rates, principal and interest payment
dates, final maturity, voluntary and mandatory prepayments, acceleration of
maturity, exercise of Rights, payment of attorneys' fees, court costs, and other
costs of collection, certain waivers by Borrower and others now or hereafter
obligated for payment of any sums due hereunder and security for the payment
hereof. Without limiting the immediately preceding sentence, reference is made
to SECTION 3.8 of the Credit Agreement for usury savings provisions.
THE LAWS (OTHER THAN CONFLICT-OF-LAWS PROVISIONS THEREOF) OF THE STATE
OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES
OF BORROWER AND LENDER AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND
INTERPRETATION HEREOF.
DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.)
By:
Name:
Title:
1 EXHBIIT A-3
<PAGE>
EXHIBIT A-4
FORM OF TERM LOAN B NOTE
$_________________ ____________ __, ____
FOR VALUE RECEIVED, the undersigned, DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.) ("BORROWER"), hereby
promises to pay to the order of ______________________ ("LENDER"), at the
offices of NATIONSBANK, N.A., as Administrative Agent for Lender and others as
hereinafter described, on the Termination Date, the LESSER of
(a) $_______________ and (b) the aggregate Term Loan B Principal Debt disbursed
by Lender to Borrower and outstanding and unpaid on the Termination Date
(TOGETHER WITH accrued and unpaid interest thereon).
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement, dated as of December 23, 1998 (as amended,
modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"),
among Borrower, Administrative Agent, Lehman Commercial Paper Inc. and PNC Bank,
National Association, as Co-Syndication Agents, Toronto Dominion (Texas), Inc.
and First Union National Bank, as Co-Documentation Agents, and Lender and other
lenders party thereto, and is one of the "TERM LOAN B NOTES" referred to
therein. Unless defined herein, capitalized terms used herein that are defined
in the Credit Agreement have the meaning given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions affecting
this note regarding applicable interest rates, principal and interest payment
dates, final maturity, voluntary and mandatory prepayments, acceleration of
maturity, exercise of Rights, payment of attorneys' fees, court costs, and other
costs of collection, certain waivers by Borrower and others now or hereafter
obligated for payment of any sums due hereunder and security for the payment
hereof. Without limiting the immediately preceding sentence, reference is made
to SECTION 3.8 of the Credit Agreement for usury savings provisions.
THE LAWS (OTHER THAN CONFLICT-OF-LAWS PROVISIONS THEREOF) OF THE STATE
OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES
OF BORROWER AND LENDER AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND
INTERPRETATION HEREOF.
DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.)
By:
Name:
Title:
2 EXHBIIT A-4
<PAGE>
EXHIBIT A-5
FORM OF TERM LOAN C NOTE
$_________________ ____________ __, ____
FOR VALUE RECEIVED, the undersigned, DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.) ("BORROWER"), hereby
promises to pay to the order of ______________________ ("LENDER"), at the
offices of NATIONSBANK, N.A., as Administrative Agent for Lender and others as
hereinafter described, on the Termination Date, the LESSER of
(a) $_______________ and (b) the aggregate Term Loan C Principal Debt disbursed
by Lender to Borrower and outstanding and unpaid on the Termination Date
(TOGETHER WITH accrued and unpaid interest thereon).
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement, dated as of December 23, 1998 (as amended,
modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"),
among Borrower, Administrative Agent, Lehman Commercial Paper Inc. and PNC Bank,
National Association, as Co-Syndication Agents, Toronto Dominion (Texas), Inc.
and First Union National Bank, as Co-Documentation Agents, and Lender and other
lenders party thereto, and is one of the "TERM LOAN C NOTES" referred to
therein. Unless defined herein, capitalized terms used herein that are defined
in the Credit Agreement have the meaning given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions affecting
this note regarding applicable interest rates, principal and interest payment
dates, final maturity, voluntary and mandatory prepayments, acceleration of
maturity, exercise of Rights, payment of attorneys' fees, court costs, and other
costs of collection, certain waivers by Borrower and others now or hereafter
obligated for payment of any sums due hereunder and security for the payment
hereof. Without limiting the immediately preceding sentence, reference is made
to SECTION 3.8 of the Credit Agreement for usury savings provisions.
THE LAWS (OTHER THAN CONFLICT-OF-LAWS PROVISIONS THEREOF) OF THE STATE
OF TEXAS AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES
OF BORROWER AND LENDER AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND
INTERPRETATION HEREOF.
DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet Wireless, Inc.)
By:
Name:
Title:
3 EXHBIIT A-5
<PAGE>
EXHIBIT B-1
FORM OF NOTICE OF BORROWING
(Dobson/Sygnet Operating Company)
(Dated: ______________ __, ____)
NationsBank, N.A.
as Administrative Agent for the
Lenders as defined in the Credit
Agreement referred to below
NationsBank Plaza, 13th Floor
901 Main Street
Dallas, TX 75202
Attn: Mickey McLean
Fax: (214) 508-2515
Reference is made to the Credit Agreement, dated as of December 23,
1998 (as amended, modified, supplemented, or restated from time to time, the
"CREDIT AGREEMENT"), among the undersigned, Administrative Agent, Lehman
Commercial Paper Inc. and PNC Bank, National Association, as Co-Syndication
Agents, Toronto Dominion (Texas), Inc. and First Union National Bank, as
Co-Documentation Agents, and Lenders party thereto. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The undersigned hereby gives you notice
pursuant to the Credit Agreement that it requests a Borrowing under the
Credit Agreement, and in that connection sets forth below the terms on which
such Borrowing is requested to be made:
<TABLE>
<CAPTION>
-------------------------------------------
Term Term Term
Revolver Loan A Loan B Loan C
Facility Facility Facility Facility
-------------------------------------------
<S> <C> <C> <C> <C> <C>
(A) Specify if Borrowing is
under Revolver Facility,
Term Loan A Facility,
Term Loan B Facility, or
Term Loan C Facility. (A)
EXHIBIT B-1
<PAGE>
(B) Borrowing Date of
Borrowing (1) (B)
(C) Amount of Borrowing (2) (C)
(D) Type of Borrowing (3) (D)
(E) For a Eurodollar Rate
Borrowing, the Interest
Period and the last day
thereof (4) (E)
-------------------------------------------
</TABLE>
Borrower hereby certifies that the following statements are true and
correct on the date hereof, and will be true and correct on the Borrowing
Date specified herein after giving effect to such Borrowing:
(a) The requested Borrowing will not cause the Principal
Debt to exceed the Total Commitment; if the Borrowing is a Borrowing
under the Revolver Facility, the Borrowing will not cause the Revolver
Commitment Usage to exceed the Revolver Commitment; if the Borrowing is
a Borrowing under the Term Loan Facilities, such Borrowing will not (i)
cause the Term Principal Debt to exceed the sum of the aggregate
commitments for the Term Loan Facilities, or (ii) cause the Term
Principal Debt under the applicable Term Loan Facility to exceed the
aggregate commitments of Lenders for such Term Loan Facility;
(b) All of the representations and warranties of any Company
set forth in the Loan Papers are true and correct in all material
respects (EXCEPT to the extent that (i) the representations and
warranties speak to a specific date or (ii) the facts on which such
representations and warranties are based have been changed by
transactions contemplated or permitted by the Loan Papers and, if
applicable, supplemental Schedules have been delivered with respect
thereto and, when necessary, approved by Required Lenders);
(c) $ of the requested Borrowings is to be
used for ; $ is to be used
for ; and $ is to be used for
;
(d) No material adverse change in the financial conditions,
operations, or businesses of Communications and its Restricted
Subsidiaries or the Companies or Guarantors has occurred since the date
of the quarterly and audited annual financial statements most recently
delivered by Borrower to Lenders pursuant to SECTIONS 7.1 and 9.3(a) and
(b) of the Credit Agreement;
(e) If all or part of the requested Borrowing will be used
to finance a Distribution, Borrower has complied with and delivered (or
shall comply with and delivery on or prior to the date of the requested
Borrowing) the items required by SECTION 7.3(f).
(f) No Default or Potential Default has occurred and is
continuing or will arise after giving effect to the requested Borrowing;
and
2 EXHIBIT B-1
<PAGE>
(f) If the requested Borrowing will be used to finance a
Permitted Acquisition, Borrower has complied with and delivered (or
shall comply with and deliver on or prior to the date of the requested
Borrowing) the items required by SECTION 7.2 and SCHEDULE 7.2.
Very truly yours,
DOBSON/SYGNET OPERATING COMPANY
(including its successor by
merger, Sygnet Wireless, Inc.)
By:
Name:
Title:
Rate:
-------------------
Confirmed by:
-------------------------
(1) For any Borrowing under the Revolver Facility, must be a Business Day
occurring prior to the Termination Date and be at least (a) three
Business Days following receipt by Administrative Agent of this Notice
of Borrowing for any Eurodollar Rate Borrowing, and (b) one Business Day
following receipt by Administrative Agent of this Notice of Borrowing
for any Base Rate Borrowing.
(2) Not less than $5,000,000 or an integral multiple of $1,000,000.
(3) Eurodollar Rate Borrowing or Base Rate Borrowing.
(4) 1, 2, 3, or 6 months, or other periods requested by Borrower to the
extent available from Lenders -- in no event may the Interest Period end
after the Termination Date.
3 EXHIBIT B-1
<PAGE>
EXHIBIT B-2
FORM OF NOTICE OF CONVERSION
(Dobson/Sygnet Operating Company)
(Dated: ______________ __, ____)
NationsBank, N.A.
as Administrative Agent for the
Lenders as defined in the Credit
Agreement referred to below
NationsBank Plaza, 13th Floor
901 Main Street
Dallas, TX 75202
Attn: Mickey McLean
Fax: (214) 508-2515
Reference is made to the Credit Agreement, dated as of December 23,
1998 (as amended, modified, supplemented, or restated from time to time, the
"CREDIT AGREEMENT"), among the undersigned, Administrative Agent, Lehman
Commercial Paper Inc. and PNC Bank, National Association, as Co-Syndication
Agents, Toronto Dominion (Texas), Inc. and First Union National Bank, as
Co-Documentation Agents, and Lenders party thereto. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The undersigned hereby gives you notice
pursuant to SECTION 3.10 of the Credit Agreement that it elects to convert a
Borrowing under the Credit Agreement from one Type to another Type or elects
a new Interest Period for a Eurodollar Rate Borrowing, and in that connection
sets forth below the terms on which such election is requested to be made:
<TABLE>
<CAPTION>
---------------------------------------------
Term Term Term
Revolver Loan A Loan B Loan C
Facility Facility Facility Facility
---------------------------------------------
<S> <C> <C> <C> <C> <C>
(A) Specify if Borrowing is
under Revolver
Facility, Term Loan A
Facility, Term Loan B
Facility, or Term Loan
C Facility. (A)
(B) Date of conversion or
last day of applicable
Interest Period(1) (B)
(C) Principal amount of
existing Borrowing
being converted or
continued(2) (C)
(D) Net Type of Borrowing
selected (or Type of
Borrowing continued)(3) (D)
(E) For conversion to, or
continuation of, a
Eurodollar Rate
Borrowing, Interest
Period and the last day
thereof(4) (E)
---------------------------------------------
</TABLE>
EXHIBIT B-2
<PAGE>
On the date the rate is set, please confirm the interest rate below
and return by facsimile transmission to _________________________.
Very truly yours,
DOBSON/SYGNET OPERATING COMPANY
(including its successor by
merger, Sygnet Wireless, Inc.)
By:
Name:
Title:
Rate:
--------
Confirmed by:
-------------------------
(1) For any Borrowing under the Revolver Facility, must be a Business Day at
least (a) three Business Days following receipt by Administrative Agent
of this Notice of Conversion from a Base Rate Borrowing to a Eurodollar
Rate Borrowing or a continuation of a Eurodollar Rate Borrowing for an
additional Interest Period, and (b) one Business Day following receipt
by Administrative Agent of this Notice of Conversion for a conversion
from a Eurodollar Rate Borrowing to a Base Rate Borrowing.
(2) Not less than $5,000,000 or a greater integral multiple of $1,000,000
(if a Eurodollar Rate Borrowing).
(3) Eurodollar Rate Borrowing or Base Rate Borrowing.
(4) 1, 2, 3, or 6 months, or other periods requested by Borrower to the
extent available from Lenders -- in no event may the Interest Period end
after the Termination Date.
2 EXHIBIT B-2
<PAGE>
EXHIBIT C
FORM OF GUARANTY
THIS GUARANTY is executed as of December , 1998, by
___________________, a _________ corporation [partnership] ("GUARANTOR"), for
the benefit of NATIONSBANK, N.A., a national banking association (in its
capacity as Administrative Agent for Lenders).
WHEREAS, Dobson/Sygnet Operating Company, (including its successor by
merger, Sygnet Wireless, Inc.) ("BORROWER"), NationsBank, N.A., as
Administrative Agent (including its permitted successors and assigns in such
capacity, "ADMINISTRATIVE AGENT"), Lehman Commercial Paper Inc. and PNC Bank,
National Association, as Co-Syndication Agents (including their permitted
successors and assigns in such capacity, "SYNDICATION AGENT"), Toronto
Dominion (Texas), Inc. and First Union National Bank, as Co-Documentation
Agents (including their permitted successors and assigns in such capacity,
"DOCUMENTATION AGENT"), and Lenders now or hereafter party to the Credit
Agreement (including their respective permitted successors and assigns,
"LENDERS") have entered into a Credit Agreement, dated as of December 23,
1998 (as amended, modified, supplemented, or restated from time to time, the
"CREDIT AGREEMENT");
WHEREAS, provisions of the Credit Agreement permit Guarantor to
directly or indirectly receive proceeds of Borrowings made pursuant thereto;
and
WHEREAS, this Guaranty is integral to the transactions contemplated
by the Loan Papers and is a condition precedent to Lenders' obligations to
extend credit under the Loan Papers.
ACCORDINGLY, for adequate and sufficient consideration, the receipt
and adequacy of which are hereby acknowledged, Guarantor guarantees to
Administrative Agent and Lenders the prompt payment of the Guaranteed Debt
(defined below) as follows:
15. DEFINITIONS. Terms defined in the Credit Agreement have the
same meanings when used, unless otherwise defined, in this Guaranty. As used
in this Guaranty:
BORROWER means Borrower, Borrower as a debtor-in-possession, and any
receiver, trustee, liquidator, conservator, custodian, or similar party
appointed for Borrower or for all or substantially all of Borrower's assets
under any Debtor Relief Law.
CREDIT AGREEMENT is defined in the recitals to this Guaranty.
GUARANTEED DEBT means, collectively, (a) the Obligation and (b) all
present and future costs, attorneys' fees, and expenses reasonably incurred
by Administrative Agent or any Lender to enforce Borrower's, Guarantor's, or
any other obligor's payment of any of the Guaranteed Debt, including, without
limitation (to the extent lawful), all present and future amounts that would
become due but for the operation of Sections 502 or 506 or any other
provision of TITLE 11 of the UNITED STATES CODE and all present and future
accrued and unpaid interest (including, without limitation, all post-maturity
interest and any post-petition interest in any proceeding under Debtor Relief
Laws to which Borrower or Guarantor becomes subject).
GUARANTOR is defined in the preamble to this Guaranty.
EXHIBIT C
<PAGE>
LENDER means, individually, or LENDERS means, collectively, on any
date of determination, Administrative Agent, Syndication Agent, Documentation
Agent, and the Lenders.
SUBORDINATED DEBT means all present and future obligations of any
Company to Guarantor, whether those obligations are (a) direct, indirect,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, (b) due or to become due to Guarantor, (c) held by or are to be held
by Guarantor, (d) created directly or acquired by assignment or otherwise, or
(e) evidenced in writing.
16. GUARANTY. This is an absolute, irrevocable, and continuing
guaranty, and the circumstance that at any time or from time to time the
Guaranteed Debt may be paid in full does not affect the obligation of
Guarantor with respect to the Guaranteed Debt incurred after that. This
Guaranty remains in effect until the Guaranteed Debt is fully paid and
performed, all commitments to extend any credit under the Loan Papers have
terminated, and all Financial Hedges with any Lender have expired. Guarantor
may not rescind or revoke its obligations with respect to the Guaranteed
Debt. Notwithstanding any contrary provision, it is the intention of
Guarantor, Lenders, and Administrative Agent that the amount of the
Guaranteed Debt guaranteed by Guarantor by this Guaranty shall be in, but not
in excess of, the maximum amount permitted by fraudulent conveyance,
fraudulent transfer, or similar Laws applicable to Guarantor. Accordingly,
notwithstanding anything to the contrary contained in this Guaranty or any
other agreement or instrument executed in connection with the payment of any
of the Guaranteed Debt, the amount of the Guaranteed Debt guaranteed by
Guarantor by this Guaranty shall be limited to an aggregate amount equal to
the largest amount that would not render Guarantor's obligations hereunder
subject to avoidance under SECTION 548 of the UNITED STATES BANKRUPTCY CODE
or any comparable provision of any applicable state law.
17. CONSIDERATION. Guarantor represents and warrants that its
liability under this Guaranty may reasonably be expected to directly or
indirectly benefit it.
18. CUMULATIVE RIGHTS. If Guarantor becomes liable for any
indebtedness owing by Borrower to Administrative Agent or any Lender, OTHER
THAN under this Guaranty, that liability may not be in any manner impaired or
affected by this Guaranty. The Rights of Administrative Agent or Lenders
under this Guaranty are cumulative of any and all other Rights that
Administrative Agent or Lenders may ever have against Guarantor. The
exercise by Administrative Agent or Lenders of any Right under this Guaranty
or otherwise does not preclude the concurrent or subsequent exercise of any
other Right.
19. PAYMENT UPON DEMAND. If a Default exists, Guarantor shall,
on demand and without further notice of dishonor and without any notice
having been given to any Guarantor previous to that demand of either the
acceptance by Administrative Agent or Lenders of this Guaranty or the
creation or incurrence of any Guaranteed Debt, pay the amount of the
Guaranteed Debt then due and payable to Administrative Agent and Lenders. It
is not necessary for Administrative Agent or Lenders, in order to enforce
that payment by any Guarantor, first or contemporaneously to institute suit
or exhaust remedies against Borrower or others liable on any Guaranteed Debt
or to enforce Rights against any Collateral securing any Guaranteed Debt.
20. SUBORDINATION. The Subordinated Debt is expressly
subordinated to the full and final payment of the Guaranteed Debt. Guarantor
agrees not to accept any payment of any Subordinated Debt from any Company if
a Default exists. If Guarantor receives any payment of any Subordinated Debt
in violation of the foregoing, Guarantor shall hold that payment in trust for
Administrative Agent and Lenders and promptly turn it over to Administrative
Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
2 EXHIBIT C
<PAGE>
21. SUBROGATION AND CONTRIBUTION. Until payment in full of the
Guaranteed Debt, the termination of the Obligation of Lenders to extend
credit under the Loan Papers, and expiration of all Financial Hedges, (a)
Guarantor may not assert, enforce, or otherwise exercise any Right of
subrogation to any of the Rights or Liens of Administrative Agent or Lenders
or any other beneficiary against Borrower or any other obligor on the
Guaranteed Debt or any collateral or other security or any Right of recourse,
reimbursement, subrogation, contribution, indemnification, or similar Right
against Borrower or any other obligor on any Guaranteed Debt or any guarantor
of it, (b) Guarantor defers all of the foregoing Rights (whether they arise
in equity, under contract, by statute, under common law, or otherwise), and
(c) Guarantor defers the benefit of, and subordinates any Right to
participate in, any Collateral or other security given to Administrative
Agent or Lenders or any other beneficiary to secure payment of any Guaranteed
Debt.
22. NO RELEASE. Guarantor's obligations under this Guaranty may
not be released, diminished, or affected by the occurrence of any one or more
of the following events: (a) Any taking or accepting of any other security
or assurance for any Guaranteed Debt; (b) any release, surrender, exchange,
subordination, impairment, or loss of any Collateral securing any Guaranteed
Debt; (c) any full or partial release of the liability of any other obligor
on the Obligation, EXCEPT for any final release resulting from payment in
full of such Obligation; (d) the modification of, or waiver of compliance
with, any terms of any other Loan Paper; (e) the insolvency, bankruptcy, or
lack of corporate or partnership power of any other obligor at any time
liable for any Guaranteed Debt, whether now existing or occurring in the
future; (f) any renewal, extension, or rearrangement of any Guaranteed Debt
or any adjustment, indulgence, forbearance, or compromise that may be granted
or given by Administrative Agent or any Lender to any other obligor on the
Obligation; (g) any neglect, delay, omission, failure, or refusal of
Administrative Agent or any Lender to take or prosecute any action in
connection with the Guaranteed Debt or to foreclose, take, or prosecute any
action in connection with any Loan Paper; (h) any failure of Administrative
Agent or any Lender to notify Guarantor of any renewal, extension, or
assignment of any Guaranteed Debt, or the release of any security or of any
other action taken or refrained from being taken by Administrative Agent or
any Lender against Borrower or any new agreement between Administrative
Agent, any Lender, and Borrower; IT BEING UNDERSTOOD THAT neither
Administrative Agent nor any Lender is required to give Guarantor any notice
of any kind under any circumstances whatsoever with respect to or in
connection with any Guaranteed Debt, OTHER THAN any notice required to be
given to Guarantor by Law or elsewhere in this Guaranty; (i) the
unenforceability of any Guaranteed Debt against any other obligor or any
security securing same because it exceeds the amount permitted by Law, the
act of creating it is ULTRA VIRES, the officers creating it exceeded their
authority or violated their fiduciary duties in connection with it, or
otherwise; or (j) any payment of the Obligation to Administrative Agent or
any Lender is held to constitute a preference under any Debtor Relief Law or
for any other reason Administrative Agent or any Lender is required to refund
that payment or make payment to someone else (and in each such instance this
Guaranty will be reinstated in an amount equal to that payment).
23. WAIVERS. To the maximum extent lawful, Guarantor waives all
Rights by which it might be entitled to require suit on an accrued right of
action in respect of any Guaranteed Debt or require suit against Borrower or
others, whether arising under Section 34.02 of the TEXAS BUSINESS AND
COMMERCE CODE, as amended (regarding its Right to require Administrative
Agent or Lenders to sue Borrower on accrued right of action following its
written notice to Administrative Agent or Lenders), Section 17.001 of the
TEXAS CIVIL PRACTICE AND REMEDIES CODE, as amended (allowing suit against it
without suit against Borrower, but precluding entry of judgment against it
before entry of judgment against Borrower), RULE 31 of the TEXAS RULES OF
CIVIL PROCEDURE, as amended (requiring Administrative Agent or Lenders to
join Borrower in any suit against it unless judgment has been previously
entered against Borrower), or otherwise.
3 EXHIBIT C
<PAGE>
24. LOAN PAPERS. By execution hereof, Guarantor covenants and
agrees that certain representations, warranties, terms, covenants, and
conditions set forth in the Loan Papers are applicable to Guarantor and shall
be imposed upon Guarantor, and Guarantor reaffirms that each such
representation and warranty is true and correct and covenants and agrees to
promptly and properly perform, observe, and comply with each such term,
covenant, or condition. Moreover, Guarantor acknowledges and agrees that
this Guaranty is subject to the offset provisions of the Loan Papers in favor
of Administrative Agent and Lenders. In the event the Credit Agreement shall
cease to remain in effect for any reason whatsoever during any period when
any part of the Guaranteed Debt remains unpaid, the terms, covenants, and
agreements incorporated herein by reference shall nevertheless continue in
full force and effect as obligations of Guarantor under this Guaranty.
25. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms
that it has executed and delivered this Guaranty after reviewing the terms
and conditions of the Loan Papers and such other information as it has deemed
appropriate in order to make its own credit analysis and decision to execute
and deliver this Guaranty. Guarantor confirms that it has made its own
independent investigation with respect to Borrower's creditworthiness and is
not executing and delivering this Guaranty in reliance on any representation
or warranty by Administrative Agent or any Lender as to that
creditworthiness. Guarantor expressly assumes all responsibilities to remain
informed of the financial condition of Borrower and any circumstances
affecting Borrower's ability to perform under the Loan Papers to which it is
a party or any collateral securing any Guaranteed Debt.
26. NO REDUCTION. The Guaranteed Debt may not be reduced,
discharged, or released because or by reason of any existing or future
offset, claim, or defense (EXCEPT for the defense of complete and final
payment of the Guaranteed Debt) of Borrower or any other obligor against
Administrative Agent or any Lender or against payment of the Guaranteed Debt,
whether that offset, claim, or defense arises in connection with the
Guaranteed Debt or otherwise. Those claims and defenses include, without
limitation, failure of consideration, breach of warranty, fraud, bankruptcy,
incapacity/infancy, statute of limitations, lender liability, accord and
satisfaction, usury, forged signatures, mistake, impossibility, frustration
of purpose, and unconscionability.
27. COMMUNICATIONS ACT. Notwithstanding any other provision of
this Guaranty, any action taken or proposed to be taken by Administrative
Agent or any Lender under this Guaranty which would affect the operational,
voting, or other control of Borrower or Guarantor, shall be pursuant to
SECTION 310(d) of the COMMUNICATIONS ACT OF 1934 (as amended), applicable
state Law, and the applicable rules and regulations thereunder, and, if and
to the extent required thereby, subject to the prior consent of the FCC or
any applicable PUC.
28. INSOLVENCY OF GUARANTOR. Should Guarantor become insolvent,
or fail to pay Guarantor's debts generally as they become due, or voluntarily
seek, consent to, or acquiesce in, the benefit or benefits of any Debtor
Relief Law (OTHER THAN as a creditor or claimant), or become a party to (or
be made the subject of) any proceeding provided for by any Debtor Relief Law
(OTHER THAN as a creditor or claimant) that could suspend or otherwise
adversely affect the Rights of Administrative Agent or any Lender granted
hereunder, then, in any such event, the Guaranteed Debt shall be, as among
Guarantor, Administrative Agent and Lenders, a fully matured, due, and
payable obligation of Guarantor to Administrative Agent and Lenders (without
regard to whether Borrower is then in default under the Loan Papers or
whether the Obligation, or any part thereof, is then due and owing by
Borrower to any Lender), payable in full by Guarantor to Lenders upon demand,
and the amount thereof so payable shall be the estimated amount owing in
respect of the contingent claim created hereunder.
4 EXHIBIT C
<PAGE>
29. LOAN PAPER. This Guaranty is a Loan Paper and is subject to
the applicable provisions of SECTIONS 1 and 13 of the Credit Agreement,
including, without limitation, the provisions relating to GOVERNING LAW,
JURISDICTION, VENUE, SERVICE OF PROCESS, AND WAIVER OF JURY TRIAL, all of
which are incorporated into this Guaranty by reference the same as if set
forth in this Guaranty verbatim.
30. NOTICES. For purposes of SECTIONS 13.3 of the Credit
Agreement, Guarantor's address and telecopy number are as set forth next to
Guarantor's signature on the signature page hereof.
31. AMENDMENTS, ETC. No amendment, waiver, or discharge to or
under this Guaranty is valid unless it is in writing and is signed by the
party against whom it is sought to be enforced and is otherwise in conformity
with the requirements of SECTION 13.11 of the Credit Agreement.
32. ADMINISTRATIVE AGENT AND LENDERS. Administrative Agent is
Administrative Agent for each Lender under the Credit Agreement. All Rights
granted to Administrative Agent under or in connection with this Guaranty are
for each Lender's ratable benefit. Administrative Agent may, without the
joinder of any Lender, exercise any Rights in Administrative Agent's or
Lenders' favor under or in connection with this Guaranty. Administrative
Agent's and each Lender's Rights and obligations VIS-A-VIS each other may be
subject to one or more separate agreements between those parties. However,
Guarantor is not required to inquire about any such agreement or is subject
to any terms of it unless Guarantor specifically joins it. Therefore,
neither Guarantor nor its successors or assigns is entitled to any benefits
or provisions of any such separate agreement or is entitled to rely upon or
raise as a defense any party's failure or refusal to comply with the
provisions of it.
33. PARTIES. This Guaranty benefits Administrative Agent,
Lenders, and their respective successors and assigns and binds Guarantor and
its successors and assigns. Upon appointment of any successor Administrative
Agent under the Credit Agreement, all of the Rights of Administrative Agent
under this Guaranty automatically vests in that new Administrative Agent as
successor Administrative Agent on behalf of Lenders without any further act,
deed, conveyance, or other formality OTHER THAN that appointment. The Rights
of Administrative Agent and Lenders under this Guaranty may be transferred
with any assignment of the Guaranteed Debt. The Credit Agreement contains
provisions governing assignments of the Guaranteed Debt and of Rights and
obligations under this Guaranty.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE TO FOLLOW.
5 EXHIBIT C
<PAGE>
EXECUTED as of the date first stated in this Guaranty.
GUARANTOR:
Address:
By:
Name:
Telephone: Title:
Facsimile:
GUARANTY
SIGNATURE PAGE
<PAGE>
EXHIBIT D
[THIS PLEDGE, ASSIGNMENT, AND SECURITY AGREEMENT IS INTENDED TO
QUALIFY AS A MORTGAGE OF PROPERTY UNDER THE TERMS AND PROVISIONS
OF OHIO REVISED CODE, XVII, CHAPTER 1701, SECTION 1701.66
AND AS A SECURITY AGREEMENT UNDER THE TERMS AND PROVISIONS
OF OHIO REVISED CODE SECTION 1309.21]
[TO BE USED IN OHIO JURISDICTION ONLY]
FORM OF PLEDGE, ASSIGNMENT, AND SECURITY AGREEMENT
THIS PLEDGE, ASSIGNMENT, AND SECURITY AGREEMENT (the "SECURITY
AGREEMENT") is executed as of December ___, 1998, by , a
[corporation/partnership] (whether doing business
in its own name or in one or more of the tradenames listed on ANNEX A hereto,
"DEBTOR"), whose address is , and
NATIONSBANK, N.A., a national banking association, (in its capacity as
"ADMINISTRATIVE AGENT" for Lenders (hereafter defined)), as "SECURED PARTY,"
whose address is 901 Main Street, Suite 3100, Dallas, Texas 75202.
WHEREAS, Dobson/Sygnet Operating Company, (including its successor by
merger, Sygnet Wireless, Inc.) ("BORROWER"), NationsBank, N.A., as
Administrative Agent (including its permitted successors and assigns in such
capacity, "ADMINISTRATIVE AGENT"), Lehman Commercial Paper Inc. and PNC Bank,
National Association, as Co-Syndication Agents (including their permitted
successors and assigns in such capacity, "SYNDICATION AGENT"), Toronto
Dominion (Texas), Inc. and First Union National Bank, as Co-Documentation
Agents (including their permitted successors and assigns in such capacity,
"DOCUMENTATION AGENT"), and Lenders now or hereafter party to the Credit
Agreement have entered into a Credit Agreement, dated as of December 23, 1998
(as amended, modified, supplemented, or restated from time to time, the
"CREDIT AGREEMENT");
WHEREAS, this Security Agreement is integral to the transactions
contemplated by the Loan Papers, and the execution and delivery thereof is a
condition precedent to Lenders' obligations to extend credit under the Loan
Papers.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Debtor and Secured Party hereby agree as
follows:
14. REFERENCE TO CREDIT AGREEMENT. The terms, conditions, and
provisions of the Credit Agreement are incorporated herein by reference, the
same as if set forth herein verbatim, which terms, conditions, and provisions
shall continue to be in full force and effect hereunder so long as Lenders
are obligated to lend under the Credit Agreement and thereafter until the
Obligation is paid and performed in full.
- -------------------------------------------------------------------------------
THIS DOCUMENT Haynes and Boone, LLP
PREPARED BY AND WHEN 901 Main Street, Suite 3100
FILED, RETURN TO: Dallas, Texas 75202
Attention: Sue P. Murphy
15. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the
context hereof
EXHIBIT D
<PAGE>
otherwise requires, each term defined in either of the Credit Agreement or in
the UCC is used in this Security Agreement with the same meaning; PROVIDED
THAT, if the definition given to such term in the Credit Agreement conflicts
with the definition given to such term in the UCC, the Credit Agreement
definition shall control to the extent legally allowable; and (c) if any
definition given to such term in CHAPTER 9 of the UCC conflicts with the
definition given to such term in any other chapter of the UCC, the CHAPTER 9
definition shall prevail. As used herein, the following terms have the
meanings indicated:
COLLATERAL has the meaning set forth in PARAGRAPH 4 hereof.
FCC LICENSES means all Authorizations, licenses, and permits
issued by the FCC to Debtor.
LENDER means, individually, or LENDERS means, collectively, on
any date of determination, Administrative Agent, Syndication Agent,
Documentation Agent, and Lenders and their permitted successors and
assigns.
OBLIGATION means, collectively, (a) the "OBLIGATION" as defined
in the Credit Agreement, and (b) all indebtedness, liabilities, and
obligations of Debtor arising under this Security Agreement; it being
the intention and contemplation of Debtor and Secured Party that future
advances will be made by Secured Party or one or more Lenders to Debtor
for a variety of purposes, that Debtor may guarantee (or otherwise
become directly or contingently obligated with respect to) the
obligations of others to Secured Party or to one or more Lenders, that
from time to time overdrafts of Debtor's accounts with Secured Party or
with other Lenders may occur, and that Secured Party or one or more
Lenders may from time to time acquire from others obligations of Debtor
to such others, and that payment and repayment of all of the foregoing
are intended to and shall be part of the Obligation secured hereby. The
Obligation shall include, without limitation, future, AS WELL AS
existing, advances, indebtedness, liabilities, and obligations owed by
Debtor to Secured Party or to any Lender arising under the Loan Papers
or otherwise.
OBLIGOR means any Person obligated with respect to any of the
Collateral, whether as an account debtor, obligor on an instrument,
issuer of securities, or otherwise.
PARTNERSHIP means any partnership issuing a Partnership
Interest.
PLEDGED SECURITIES means, collectively, the Pledged Shares, the
Partnership Interests (whether or not a security), and any other
Collateral constituting securities.
SECURITY INTEREST means the security interest granted and the
pledge and assignment made under PARAGRAPH 3 hereof.
UCC means the Uniform Commercial Code as enacted in the State of
Texas or other applicable jurisdiction, as amended at the time in
question.
16. SECURITY INTEREST. In order to secure the full and complete
payment and performance of the Obligation when due, Debtor hereby grants to
Secured Party a Security Interest in all of Debtor's Rights, titles, and
interests in and to the Collateral and pledges, collaterally transfers, and
assigns the Collateral to Secured Party, all upon and subject to the terms
and conditions of this Security Agreement. Such Security Interest is granted
and pledge and assignment are made as security only and shall not subject
Secured Party to, or transfer or in any way affect or modify, any obligation
of Debtor with respect to any of the Collateral or any transaction involving
or giving rise thereto. The grant contained herein is intended to
2 EXHIBIT D
<PAGE>
confer upon Secured Party all Rights that a secured creditor may obtain and
that may be granted in the FCC Licenses under applicable Law as from time to
time in effect. If the Law is subsequently changed or clarified, or if the
FCC's interpretation of existing Law is changed, to permit or further permit
the granting of such security interests in FCC Licenses, then Debtor's FCC
Licenses, whether now held or hereinafter acquired, shall automatically
become subject to the Secured Party's Security Interest to the maximum extent
permitted by the Law as then in effect. In the meantime, the value of the
Systems' and Debtor's cellular telephone communication businesses as a going
concern depends upon the holder of Debtor's FCC Licenses also being the owner
of the assets used or useful in the operation of the Systems and, if
ownership of those assets is separated from the FCC Licenses, the FCC might,
under currently applicable Law, cancel the FCC Licenses. Accordingly, Debtor
and Secured Party, in recognition of the unique nature of the FCC Licenses
and the fact that the separation of the FCC Licenses from Debtor's operating
assets may prevent Lenders from adequately realizing the value of their
Security Interests, have provided in PARAGRAPH 9(b) hereof for the
appointment of a receiver upon a Default or Potential Default and for the
assignment of the FCC Licenses in the event of the foreclosure hereunder,
with the specific intention in each case that the physical assets used in
connection with the Systems not be separated from the FCC Licenses. If the
grant, pledge, or collateral transfer or assignment of any specific item of
the Collateral is expressly prohibited by any contract, then the Security
Interest created hereby nonetheless remains effective to the extent allowed
by UCC Section 9.318 or other applicable Law, but is otherwise limited by
that prohibition.
17. COLLATERAL. As used herein, the term "COLLATERAL" means the
following items and types of property now owned or in the future acquired by
Debtor:
(a) All present and future accounts, contract Rights,
general intangibles, chattel paper, documents, instruments, inventory,
investment property, equipment, fixtures, other goods, minerals, money,
and deposit accounts, wherever located, now owned or hereafter acquired
by such Debtor, and any and all present and future Tax refunds of any
kind whatsoever to which any Debtor is now or shall hereafter become
entitled.
(b) All present and future issued and outstanding shares of
capital stock or other equity or investment securities now owned or
hereafter acquired by such Debtor, including, without limitation, all
capital stock of the Subsidiaries of such Debtor as more particularly
listed on ANNEX B hereto, TOGETHER WITH all distributions thereon, all
cash and noncash proceeds thereof, and any securities issued in
substitution or replacement thereof (collectively, the "PLEDGED
SHARES").
(c) All Rights, titles, and interests of such Debtor in and
to all promissory notes and other instruments payable to such Debtor,
now or hereafter existing, including, without limitation, the inter-
company notes or notes from Cellular Partnership as listed on ANNEX B
(collectively, the "COLLATERAL NOTES"), all Rights titles, interests,
and Liens Debtor may have, be or become entitled to under all present
and future security agreements, pledge agreements, deeds of trust,
mortgages, guarantees, or other documents assuring or securing payment
of the Collateral Notes (the "COLLATERAL NOTE SECURITY") in, to, and
under all other loan and collateral documents relating to such
instruments.
(d) All present and future Rights, titles, interests, and
Liens (but none of the obligations) now owned or hereafter acquired by
such Debtor in any partnership or joint venture, including, without
limitation, any Cellular Partnership and the partnerships listed on
ANNEX B hereof (collectively, the "PARTNERSHIP INTERESTS").
(e) All present and future Rights, titles, interests, and
Liens (but none of the obligations) now owned or hereafter acquired by
such Debtor, as lessee or landlord, in and to each lease covering
3 EXHIBIT D
<PAGE>
real property or any interest therein, and equipment or other personal
property or any interest therein (each such lease herein called an
"ASSIGNED LEASE").
(f) Substantially all of the real estate now owned or
hereafter acquired by such Debtor, TOGETHER WITH all improvements
thereon and fixtures attached thereto.
(g) The balance of every deposit account of such Debtor and
any other claim of such Debtor against any depository, now or hereafter
existing, whether liquidated or unliquidated, including, without
limitation, certificates of deposit, other deposit instruments, and the
[ESCROW DEPOSIT UNDER THE SYGNET PURCHASE AGREEMENT] (collectively, the
"DEPOSIT ACCOUNTS").
(h) All present and future automobiles, trucks, truck
tractors, trailers, semi-trailers, or other motor vehicles or rolling
stock, now owned or hereafter acquired by such Debtor (collectively,
the "VEHICLES").
(i) All present and future Rights, awards, and judgments to
which such Debtor is entitled under any Litigation (whether arising in
equity, contract, or tort) now existing or hereafter arising.
(j) All present and future Rights (including, without
limitation, the Right to sue for past, present, or future
infringements), titles, and interests of such Debtor in and to all
trademark applications, trademarks, corporate names, company names,
tradenames, business names, fictitious business names, tradestyles,
service marks, logos, other source of business identifiers, copyrights,
designs, Rights or licenses to use any trademarks, and all registrations
and recordings thereof, including, without limitation, such Debtor's
trademarks listed on ANNEX B hereto (collectively, the "TRADEMARKS"),
and the goodwill of each business to which each Trademark relates.
(k) All present and future Rights (including, without
limitation, the Right to sue for past, present, and future
infringements), titles, and interests of such Debtor in and to all
patents, patent applications, utility models, industrial models,
designs, and any other forms of industrial intellectual property,
including all grants, applications, reissues, continuations, and
divisions with respect thereto and any Rights to use, manufacture, or
sell any patent, including, without limitation, the patents listed on
ANNEX B hereto (collectively, the "PATENTS").
(l) All Authorizations, licenses, and permits issued by the
FCC or any PUC, to the extent that the grant of a security interest in
any such license or permit does not result in the forfeiture of, or
default under, any such license or permit, and the right of Debtor to
apply to the FCC for approval of transfers of licenses issued by the
FCC.
(m) All proceeds of any sale or other disposition of any
Authorization, license, or permit issued by the FCC or any PUC, whether
or not any such license or permit may lawfully be included as Collateral
and whether or not the grant of a security interest in any such
Authorization, license, or permit is otherwise prohibited.
(n) All present and future increases, profits, combinations,
reclassifications, improvements, and products of, accessions,
attachments, and other additions to, tools, parts, and equipment used in
connection with, and substitutes and replacements for, all or part of
the Collateral heretofore described.
4 EXHIBIT D
<PAGE>
(o) All present and future accounts, contract rights,
general intangibles, chattel paper, documents, instruments, cash and
noncash proceeds, and other Rights arising from or by virtue of, or from
the voluntary or involuntary sale or other disposition of, or
collections with respect to, or insurance proceeds payable with respect
to, or proceeds payable by virtue of warranty or other claims against
the manufacturer of, or claims against any other Person with respect to,
all or any part of the Collateral heretofore described in this clause or
otherwise.
(p) All present and future security for the payment to any
Company of any of the Collateral heretofore described and goods which
gave or will give rise to any of such Collateral or are evidenced,
identified, or represented therein or thereby.
[The description of the Collateral contained in this PARAGRAPH 4 shall not be
deemed to permit any action prohibited by this Security Agreement or by the
terms incorporated in this Security Agreement. Furthermore, notwithstanding any
contrary provision, Debtor agrees that, if, but for the application of this
paragraph, granting a Security Interest in the Collateral would constitute a
fraudulent conveyance under 11 U.S.C. Section 548 or a fraudulent conveyance or
transfer under any state fraudulent conveyance, fraudulent transfer, or similar
Law in effect from time to time (each a "FRAUDULENT CONVEYANCE"), then the
Security Interest remains enforceable to the maximum extent possible without
causing such Security Interest to be a fraudulent conveyance, and this Security
Agreement is automatically amended to carry out the intent of this paragraph.]
[BRACKETED LANGUAGE TO BE INCLUDE ALL SECURITY AGREEMENTS OTHER THAN THE
SECURITY AGREEMENT FOR BORROWER.]
18. REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants to Secured Party that:
(a) CREDIT AGREEMENT. Certain representations and
warranties in the Credit Agreement are applicable to it or its assets or
operations, and each such representation and warranty is true and
correct.
(b) BINDING OBLIGATION. This Security Agreement creates a
legal, valid, and binding Lien in and to the Collateral in favor of
Secured Party and enforceable against Debtor. For Collateral in which
the Security Interest may be perfected by the filing of Financing
Statements, once those Financing Statements have been properly filed in
the jurisdictions described on ANNEX A hereto, the Security Interest in
that Collateral will be fully perfected. Once perfected and, in the
case of investment property or instruments, upon possession or "CONTROL"
(within the meaning of SECTIONS 8-106 and 9-115 of the UCC) by Secured
Party, the Security Interest will constitute a first-priority Lien on
the Collateral, subject only to Permitted Liens. The creation of the
Security Interest does not require the consent of any Person that has
not been obtained.
(c) LOCATION. Debtor's place of business and chief
executive office is where Debtor is entitled to receive notices
hereunder; the present and foreseeable location of Debtor's books and
records concerning any of the Collateral that is accounts is as set
forth on ANNEX A hereto, and the location of all other Collateral,
including, without limitation, Debtor's inventory and equipment, is as
set forth on ANNEX A hereto (but the failure of such description to be
accurate or complete shall not impair the Security Interest in such
Collateral); and, EXCEPT as noted on ANNEX A hereto, all such books,
records, and Collateral are in Debtor's possession.
(d) FIXTURES. The Collateral that is or may be fixtures is
located on or affixed to the real property described on ANNEX A hereto
(but the failure of such description to be accurate or complete shall
not impair the Security Interest in such Collateral).
5 EXHIBIT D
<PAGE>
(e) SECURITIES. All Collateral that is Pledged Securities
is duly authorized, validly issued, fully paid, and non-assessable, and
the transfer thereof is not subject to any restrictions, other than
restrictions imposed by applicable securities and corporate Laws. The
Pledged Shares issued by the Subsidiaries to Debtor constitute 100% of
the issued and outstanding common stock or other equity interests of
such Subsidiaries. Debtor has good title to the securities, free and
clear of all Liens and encumbrances thereon (EXCEPT for the Security
Interest created hereby), and has delivered to Secured Party all stock
certificates, promissory notes, bonds, debentures, or other instruments
or documents representing or evidencing the securities, TOGETHER WITH
corresponding assignment or transfer powers duly executed in blank by
Debtor, and such powers have been duly and validly executed and are
binding and enforceable against Debtor in accordance with their terms;
and the pledge of the securities in accordance with the terms hereof
creates a valid and perfected first priority security interest in the
securities securing payment of the Obligation.
(f) PARTNERSHIPS AND PARTNERSHIP INTERESTS. Each
Partnership issuing a Partnership Interest, including, without
limitation, any Cellular Partnership, is duly organized, currently
existing, and in good standing under all applicable Laws; there have
been no amendments, modifications, or supplements to any agreement or
certificate creating any Partnership or any material contract relating
to the Partnerships, of which Secured Party has not been advised in
writing; no default or potential default has occurred under the terms of
any material contract relating to any Partnership; and no approval or
consent of the partners of any Partnership is required as a condition to
the validity and enforceability of the Security Interest created hereby
or the consummation of the transactions contemplated hereby which has
not been duly obtained by Debtor. Debtor has good title to the
Partnership Interests free and clear of all Liens and encumbrances
(EXCEPT for the Security Interest granted hereby). The Partnership
Interests are validly issued, fully paid, and nonassessable and are not
subject to statutory, contractual, or other restrictions governing their
transfer, ownership, or control, EXCEPT as set forth in the partnership
agreements of the Cellular Partnerships or applicable securities Laws.
(g) GOVERNMENTAL AUTHORITY. No authorization, approval, or
other action by, and no notice to or filing with, any Governmental
Authority is required either (i) for the pledge by Debtor of the Pledged
Securities pursuant to this Security Agreement or for the execution,
delivery, or performance of this Security Agreement by Debtor, or
(ii) for the exercise by Secured Party of the voting or other Rights
provided for in this Security Agreement or the remedies in respect of
the Collateral pursuant to this Security Agreement (EXCEPT as may be
required in connection with the disposition of the Pledged Securities by
Laws affecting the offering and sale of securities generally and in
connection with the transfer of control of FCC Licenses).
(h) ACCOUNTS. All Collateral that is accounts, contract
Rights, chattel paper, instruments, or general intangibles is free from
any claim for credit, deduction, or allowance of an Obligor and free
from any defense, dispute, setoff, or counterclaim, and there is no
extension or indulgence with respect thereto.
(i) INSTRUMENTS, CHATTEL PAPER, COLLATERAL NOTES, AND
COLLATERAL NOTE SECURITY. All instruments and chattel paper,
including, without limitation, the Collateral Notes, have been delivered
to Secured Party, TOGETHER WITH corresponding endorsements duly executed
by Debtor in favor of Secured Party, and such endorsements have been
duly and validly executed and are binding and enforceable against Debtor
in accordance with their terms. Each Collateral Note and the documents
evidencing the Collateral Note Security are in full force and effect;
there have been no renewals or extensions of, or amendments,
modifications, or supplements to, any thereof about which the Secured
6 EXHIBIT D
<PAGE>
Party has not been advised in writing; and no default or potential
default has occurred and is continuing under any such Collateral Note or
documents evidencing the Collateral Note Security, EXCEPT as disclosed
on ANNEX C hereto.
(j) ASSIGNED LEASES. All Collateral that is an Assigned
Lease is in full force and effect; Debtor is in possession of the
property covered by each such Assigned Lease; and no default or
potential default exists under any such Assigned Lease.
(k) MAINTENANCE OF COLLATERAL. All tangible Collateral is
in good repair and condition, ordinary wear and tear excepted, and none
thereof is a fixture EXCEPT as specifically referred to herein in
PARAGRAPH 5(d) hereof.
(l) LIENS. Debtor owns all presently existing Collateral,
and will acquire all hereafter-acquired Collateral, free and clear of
all Liens, EXCEPT Permitted Liens.
(m) DEPOSIT ACCOUNTS. With respect to the Deposit Accounts,
(i) Debtor maintains each such Deposit Account with the banks listed on
ANNEX D hereto, (ii) Debtor shall use its best efforts to, within thirty
(30) days of the Closing Date, cause each such bank to acknowledge to
Secured Party that such Deposit Accounts are subject to the Security
Interest and Liens herein created, (iii) Debtor has the legal right to
pledge and assign to Secured Party the funds deposited and to be
deposited in the Deposit Accounts; and (iv) the Deposit Accounts listed
on ANNEX D represent all material bank accounts of Debtor, including
without limitation, all material operating accounts of Debtor, and all
certificates of deposit or other deposit instruments of Debtor.
The foregoing representations and warranties will be true and correct in all
respects with respect to any additional Collateral or additional specific
descriptions of certain Collateral delivered to Secured Party in the future
by Debtor.
The failure of any of these representations or warranties to be
accurate and complete does not impair the Security Interest in any Collateral.
19. COVENANTS. So long as Lenders are committed to extend credit
to Debtor under the Credit Agreement and until the Obligation is paid and
performed in full, Debtor covenants and agrees with Secured Party that Debtor
will:
(a) CREDIT AGREEMENT. (i) Comply with, perform, and be
bound by all covenants and agreements in the Credit Agreement that are
applicable to it, its assets, or its operations, each of which is hereby
ratified and confirmed (INCLUDING, WITHOUT LIMITATION, THE
INDEMNIFICATION AND RELATED PROVISIONS IN SECTIONS 11.12 OF THE CREDIT
AGREEMENT); AND (ii) CONSENT TO AND APPROVE THE VENUE, SERVICE OF
PROCESS, AND WAIVER OF JURY TRIAL PROVISIONS OF SECTIONS 13.10 OF THE
CREDIT AGREEMENT.
(b) RECORD OF COLLATERAL. Maintain, at the place where
Debtor is entitled to receive notices under the Loan Papers, a current
record of where all Collateral is located, permit representatives of
Secured Party at any time during normal business hours to inspect and
make abstracts from such records, and furnish to Secured Party, at such
intervals as Secured Party may request, such documents, lists,
descriptions, certificates, and other information as may be necessary
7 EXHIBIT D
<PAGE>
or proper to keep Secured Party informed with respect to the identity,
location, status, condition, and value of the Collateral.
(c) PERFORM OBLIGATIONS. Fully perform all of Debtor's
duties under and in connection with each transaction to which the
Collateral, or any part thereof, relates, so that the amounts thereof
shall actually become payable in their entirety to Secured Party.
(d) NOTICES. (i) Promptly notify Secured Party of (A) any
change in any fact or circumstances represented or warranted by Debtor
with respect to any of the Collateral or Obligation, and (B) any claim,
action, or proceeding affecting title to all or any of the Collateral or
the Security Interest and, at the request of Secured Party, appear in
and defend, at Debtor's expense, any such action or proceeding; and
(ii) give Secured Party thirty (30) days written notice before any
proposed (A) relocation of its principal place of business or chief
executive office, (B) change of its name, identity, or corporate
structure, (C) relocation of the place where its books and records
concerning its accounts are kept, and (D) relocation of any Collateral
(OTHER THAN delivery of inventory in the ordinary course of business to
third party contractors for processing and sales of inventory in the
ordinary course of business or as permitted by the Credit Agreement) to
a location not described on the attached ANNEX A. Prior to making any
of the changes contemplated in CLAUSE (ii) preceding, Debtor shall
execute and deliver all such additional documents and perform all
additional acts as Secured Party, in its sole discretion, may request in
order to continue or maintain the existence and priority of the Security
Interests in all of the Collateral.
(e) COLLATERAL IN TRUST. Hold in trust (and not commingle
with other assets of Debtor) for Secured Party all Collateral that is
chattel paper, instruments, Collateral Notes, Pledged Securities, or
documents at any time received by Debtor, and promptly deliver same to
Secured Party, unless Secured Party at its option (which may be
evidenced only by a writing signed by Secured Party stating that Secured
Party elects to permit Debtor to so retain) permits Debtor to retain the
same, but any chattel paper, instruments, Collateral Notes, or documents
so retained shall be marked to state that they are assigned to Secured
Party; each such instrument shall be endorsed to the order of Secured
Party (but the failure of same to be so marked or endorsed shall not
impair the Security Interest thereon).
(f) FURTHER ASSURANCES. At Debtor's expense and Secured
Party's request, before or after a Default or Potential Default,
(i) file or cause to be filed such applications and take such other
actions as Secured Party may request to obtain the consent or approval
of any Governmental Authority to Secured Party's Rights hereunder,
including, without limitation, the Right to sell all the Collateral upon
a Default or Potential Default without additional consent or approval
from such Governmental Authority (and, because Debtor agrees that
Secured Party's remedies at Law for failure of Debtor to comply with
this provision would be inadequate and that such failure would not be
adequately compensable in damages, Debtor agrees that its covenants in
this provision may be specifically enforced); (ii) from time to time
promptly execute and deliver to Secured Party all such other
assignments, certificates, supplemental documents, and financing
statements, and do all other acts or things as Secured Party may
reasonably request in order to more fully create, evidence, perfect,
continue, and preserve the priority of the Security Interest; and
(iii) pay all filing fees in connection with any financing,
continuation, or termination statement or other instrument with respect
to the Security Interests, including, without limitation, any filing fee
required in connection with any procedure hereafter developed for the
recordation or registration of Liens or security interests in FCC
Licenses.
8 EXHIBIT D
<PAGE>
(g) FIXTURES. For any Collateral that is a fixture or an
accession which has been attached to real estate or other goods prior to
the perfection of the Security Interest, furnish Secured Party, upon
demand, a disclaimer of interest in each such fixture or accession and a
consent in writing to the Security Interest of Secured Party therein,
signed by all Persons having any interest in such fixture or accession
by virtue of any interest in the real estate or other goods to which
such fixture or accession has been attached.
(h) ESTOPPEL AND OTHER AGREEMENTS AND MATTERS. Either
(unless waived by Secured Party in its sole judgment without requiring
approval of any other Lender) (i) use commercially reasonable efforts to
cause the landlord or lessor for each location where any of its
inventory or equipment is maintained to execute and deliver to Secured
Party an estoppel and subordination agreement in such form as may be
reasonably acceptable to Secured Party and its counsel, OR (ii) deliver
to Secured Party a legal opinion or other evidence (in each case that is
reasonably satisfactory to Secured Party and it counsel) that neither
the applicable lease nor the Laws of the jurisdiction in which that
location is situated provide for contractual, common law, or statutory
landlord's Liens that is senior to or PARI PASSU with the Security
Interest.
(i) CERTIFICATES OF TITLE. Upon the request of Secured
Party, if certificates of title are issued or outstanding with respect
to any of the Vehicles or other Collateral, cause the Security Interest
to be properly noted thereon.
(j) IMPAIRMENT OF COLLATERAL. Not use any of the
Collateral, or permit the same to be used, for any unlawful purpose, in
any manner that is reasonably likely to adversely impair the value or
usefulness of the Collateral, or in any manner inconsistent with the
provisions or requirements of any policy of insurance thereon nor affix
or install any accessories, equipment, or device on the Collateral or on
any component thereof if such addition will impair the original intended
function or use of the Collateral or such component.
(k) MODIFICATIONS TO AGREEMENTS. Not modify or substitute,
or permit the modification or substitution of, any Collateral Note or
any document evidencing the Collateral Note Security or contract to
which any of the Collateral which is accounts relates, nor extend or
grant indulgences regarding any account which is Collateral, other than
such modifications or indulgences as are reasonable and customary in the
industry in which Debtor is engaged.
(l) SECURITIES. Not sell, exchange, or otherwise dispose
of, or grant any option, warrant, or other Right with respect to, any of
the Pledged Shares; cause each Subsidiary not to issue any stock or
other securities in addition to or in substitution for the Pledged
Shares issued by the Subsidiaries, EXCEPT to Debtor; pledge hereunder,
immediately upon Debtor's acquisition (directly or indirectly) thereof,
any and all additional shares of stock or other securities of the
Subsidiaries or any other issuer of Securities issued to Debtor; and
take any action necessary, required, or requested by Secured Party to
allow Secured Party to fully enforce its Security Interest in the
Pledged Shares, including, without limitation, the filing of any claims
with any court, liquidator, trustee, custodian, receiver, or other like
person or party.
(m) PARTNERSHIPS AND PARTNERSHIP INTERESTS. (i) Promptly
perform, observe, and otherwise comply with each and every covenant,
agreement, requirement, and condition set forth in the contracts and
agreements creating or relating to any Partnership; (ii) do or cause to
be done all things necessary or appropriate to keep the Partnerships in
full force and effect and the Rights of Debtor and Secured Party
thereunder unimpaired; (iii) not consent to any Partnership selling,
leasing, or
9 EXHIBIT D
<PAGE>
disposing of substantially all of its assets in a single transaction
or a series of transactions; (iv) notify Secured Party of the occurrence
of any default under any contract or agreement creating or relating to
the Partnerships; and not consent to the amendment, modification,
surrender, impairment, forfeiture, cancellation, dissolution, or
termination of any Partnership, or material agreement relating
thereto; (v) not transfer, sell, or assign any of the Partnership
Interests or any part thereof; (vi) cause each Partnership to refrain
from granting any partnership interests in addition to or in
substitution for the Partnership Interests granted by the Partnerships,
EXCEPT to Debtor; (vii) pledge hereunder, immediately upon Debtor's
acquisition (directly or indirectly) thereof, any and all additional
Partnership Interests of any Partnership granted to Debtor; and
(viii) take any action necessary, required, or requested by Secured
Party to allow Secured Party to fully enforce its Security Interest in
the Partnership Interests, including, without limitation, the filing of
any claims with any court, liquidator, trustee, custodian, receiver, or
other like person or party.
(n) DEPOSITORY BANK. With respect to Deposit Accounts,
(i) maintain the Deposit Accounts at the banks (a "DEPOSITORY BANK")
described on ANNEX D or such additional depository banks as have
complied with ITEM (iv) hereof; (ii) within thirty (30) days of the
Closing Date, deliver to each depository bank a letter in the form of
ANNEX E hereto with respect to Secured Party's rights in such Deposit
Account and use its best efforts to obtain the execution of such letter
by each depository bank; (iii) deliver to Secured Party all certificates
or instruments, if any, now or hereafter representing or evidencing the
Deposit Accounts, accompanied by duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to
Secured Party; and (iv) notify Secured Party prior to establishing any
additional Deposit Accounts and, at the request of Secured Party, obtain
from such depository bank an executed letter substantially in the form
of ANNEX E and deliver the same to Secured Party.
20. DEFAULT; REMEDIES. If a Default or a Potential Default
exists, Secured Party may, at its election (but subject to the terms and
conditions of the Credit Agreement), exercise any and all Rights available to
a secured party under the UCC, in addition to any and all other Rights
afforded by the Loan Papers, at Law, in equity, or otherwise, including,
without limitation, (a) requiring Debtor to assemble all or part of the
Collateral and make it available to Secured Party at a place to be designated
by Secured Party which is reasonably convenient to Debtor and Secured Party,
(b) surrendering any policies of insurance on all or part of the Collateral
and receiving and applying the unearned premiums as a credit on the
Obligation, (c) applying by appropriate judicial proceedings for appointment
of a receiver for all or part of the Collateral (and Debtor hereby consents
to any such appointment), and (d) applying to the Obligation any cash held by
Secured Party under this Security Agreement, including, without limitation,
any cash in the Cash Collateral Account (defined in SECTION 8(g)).
Notwithstanding the foregoing, Secured Party will not exercise any remedies
against the assets of Debtor unless it has given at least ten days written
notification to Debtor and to the FCC, to the extent such notice is required
under 47 C.F.R. 22.937(f).
(a) NOTICE. Reasonable notification of the time and place
of any public sale of the Collateral, or reasonable notification of the
time after which any private sale or other intended disposition of the
Collateral is to be made, shall be sent to Debtor and to any other
Person entitled to notice under the UCC; PROVIDED THAT, if any of the
Collateral threatens to decline speedily in value or is of the type
customarily sold on a recognized market, Secured Party may sell or
otherwise dispose of the Collateral without notification, advertisement,
or other notice of any kind. It is agreed that notice sent or given not
less than ten Business Days prior to the taking of the action to which
the notice relates is reasonable notification and notice for the
purposes of this subparagraph.
(b) SALES OF PLEDGED SECURITIES.
10 EXHIBIT D
<PAGE>
(i) Debtor agrees that, because of the Securities
Act of 1933, as amended, or the rules and regulations
promulgated thereunder (collectively, the "SECURITIES ACT"), or
any other Laws or regulations, and for other reasons, there may
be legal or practical restrictions or limitations affecting
Secured Party in any attempts to dispose of certain portions of
the Pledged Securities and for the enforcement of its Rights.
For these reasons, Secured Party is hereby authorized by Debtor,
but not obligated, upon the occurrence and during the
continuation of a Default or Potential Default, to sell all or
any part of the Pledged Securities at private sale, subject to
investment letter or in any other manner which will not require
the Pledged Securities, or any part thereof, to be registered in
accordance with the Securities Act or any other Laws or
regulations, at a reasonable price at such private sale or other
distribution in the manner mentioned above. Debtor understands
that Secured Party may in its discretion approach a limited
number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Pledged
Securities, or any part thereof, than would otherwise be
obtainable if such Collateral were either afforded to a larger
number or potential purchasers, registered under the Securities
Act, or sold in the open market. Debtor agrees that any such
private sale made under this PARAGRAPH 7(b) shall be deemed to
have been made in a commercially reasonable manner, and that
Secured Party has no obligation to delay the sale of any Pledged
Securities to permit the issuer thereof to register it for
public sale under any applicable federal or state securities
Laws.
(ii) Secured Party is authorized, in connection with
any such sale, (A) to restrict the prospective bidders on or
purchasers of any of the Pledged Securities to a limited number
of sophisticated investors who will represent and agree that
they are purchasing for their own account for investment and not
with a view to the distribution or sale of any of such Pledged
Securities, and (B) to impose such other limitations or
conditions in connection with any such sale as Secured Party
reasonably deems necessary in order to comply with applicable
Law. Debtor covenants and agrees that it will execute and
deliver such documents and take such other action as Secured
Party reasonably deems necessary in order that any such sale may
be made in compliance with applicable Law. Upon any such sale
Secured Party shall have the right to deliver, assign, and
transfer to the purchaser thereof the Pledged Securities so
sold. Each purchaser at any such sale shall hold the Pledged
Securities so sold absolutely free from any claim or Right of
Debtor of whatsoever kind, including any equity or right of
redemption of Debtor. Debtor, to the extent permitted by
applicable Law, hereby specifically waives all rights of
redemption, stay, or appraisal which it has or may have under
any Law now existing or hereafter enacted.
(iii) Debtor agrees that five days' written notice
from Secured Party to Debtor of Secured Party's intention to
make any such public or private sale or sale at a broker's board
or on a securities exchange shall constitute "REASONABLE
NOTIFICATION" within the meaning of SECTION 9-504(c) of the UCC.
Such notice shall (A) in case of a public sale, state the time
and place fixed for such sale, (B) in case of sale at a broker's
board or on a securities exchange, state the board or exchange
at which such a sale is to be made and the day on which the
Pledged Securities, or the portion thereof so being sold, will
first be offered to sale at such board or exchange, and (C) in
the case of a private sale, state the day after which such sale
may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place
or places as Secured Party may fix in the notice of such sale.
At any such sale, the Pledged Securities may be sold in one lot
as an entirety or in separate parcels, as Secured Party may
reasonably determine. Secured
11 EXHIBIT D
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Party shall not be obligated to make any such sale pursuant to
any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at
any time or place to which the same may be so adjourned.
(iv) In case of any sale of all or any part of the
Pledged Securities on credit or for future delivery, the Pledged
Securities so sold may be retained by Secured Party until the
selling price is paid by the purchaser thereof, but Secured
Party shall not incur any liability in case of the failure of
such purchaser to take up and pay for the Pledged Securities so
sold and in case of any such failure, such Pledged Securities
may again be sold upon like notice. Secured Party, instead of
exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the
Security Interests and sell the Pledged Securities, or any
portion thereof, under a judgment or decree of a court or courts
of competent jurisdiction.
(v) Without limiting the foregoing, or imposing upon
Secured Party any obligations or duties not required by
applicable Law, Debtor acknowledges and agrees that, in
foreclosing upon any of the Pledged Securities, or exercising
any other Rights or remedies provided Secured Party hereunder or
under applicable Law, Secured Party may, but shall not be
required to, (A) qualify or restrict prospective purchasers of
the Pledged Securities by requiring evidence of sophistication
or creditworthiness, and requiring the execution and delivery of
confidentiality agreements or other documents and agreements as
a condition to such prospective purchasers' receipt of
information regarding the Pledged Securities or participation in
any public or private foreclosure sale process, (B) provide to
prospective purchasers business and financial information
regarding the Companies available in the files of Secured Party
at the time of commencing the foreclosure process, without the
requirement that Secured Party obtain, or seek to obtain, any
updated business or financial information or verify, or certify
to prospective purchasers, the accuracy of any such business or
financial information, or (C) offer for sale and sell the
Pledged Securities with, or without, first employing an
appraiser, investment banker, or broker with respect to the
evaluation of the Pledged Securities, the solicitation of
purchasers for Pledged Securities, or the manner of sale of
Pledged Securities.
(c) APPLICATION OF PROCEEDS. Secured Party shall apply the
proceeds of any sale or other disposition of the Collateral under this
PARAGRAPH 7 in the following order: FIRST, to the payment of all
expenses incurred in retaking, holding, and preparing any of the
Collateral for sale(s) or other disposition, in arranging for such
sale(s) or other disposition, and in actually selling or disposing of
the same (all of which are part of the Obligation); SECOND, toward
repayment of amounts expended by Secured Party under PARAGRAPH 8; THIRD,
toward payment of the balance of the Obligation in the order and manner
specified in the Credit Agreement. Any surplus remaining shall be
delivered to Debtor or as a court of competent jurisdiction may direct.
If the proceeds are insufficient to pay the Obligation in full, Debtor
shall remain liable for any deficiency.
21. OTHER RIGHTS OF SECURED PARTY.
(a) PERFORMANCE. If Debtor fails to keep the Collateral in
good repair, working order, and condition, as required in this Security
Agreement, or fails to pay when due all Taxes on any of the Collateral
in the manner required by the Loan Papers, or fails to preserve the
priority of the Security Interest in any of the Collateral, or fails to
keep the Collateral insured as required by this
12 EXHIBIT D
<PAGE>
Security Agreement, or otherwise fails to perform any of its obligations
under the Loan Papers with respect to the Collateral, then Secured Party
may, at its option, but without being required to do so, make such
repairs, pay such Taxes, prosecute or defend any suits in relation to
the Collateral, or insure and keep insured the Collateral in any amount
deemed appropriate by Secured Party, or take all other action which
Debtor is required, but has failed or refused, to take under the Loan
Papers. Any sum which may be expended or paid by Secured Party under
this subparagraph (including, without limitation, court costs and
attorneys' fees) shall bear interest from the dates of expenditure or
payment at the Default Rate until paid and, TOGETHER WITH such interest,
shall be payable by Debtor to Secured Party upon demand and shall be
part of the Obligation.
(b) COLLECTION. If a Default or Potential Default exists
and upon notice from Secured Party, each Obligor with respect to any
payments on any of the Collateral (including, without limitation,
dividends and other distributions with respect to securities, payments
on Collateral Notes, insurance proceeds payable by reason of loss or
damage to any of the Collateral, or Deposit Accounts) is hereby
authorized and directed by Debtor to make payment directly to Secured
Party, regardless of whether Debtor was previously making collections
thereon. Subject to PARAGRAPH 8(e) hereof, until such notice is given,
Debtor is authorized to retain and expend all payments made on
Collateral. If a Default or Potential Default exists, Secured Party
shall have the Right in its own name or in the name of Debtor to
compromise or extend time of payment with respect to all or any portion
of the Collateral for such amounts and upon such terms as Secured Party
may determine; to demand, collect, receive, receipt for, sue for,
compound, and give acquittances for any and all amounts due or to become
due with respect to Collateral; to take control of cash and other
proceeds of any Collateral; to endorse the name of Debtor on any notes,
acceptances, checks, drafts, money orders, or other evidences of payment
on Collateral that may come into the possession of Secured Party; to
sign the name of Debtor on any invoice or bill of lading relating to any
Collateral, on any drafts against Obligors or other Persons making
payment with respect to Collateral, on assignments and verifications of
accounts or other Collateral and on notices to Obligors making payment
with respect to Collateral; to send requests for verification of
obligations to any Obligor; and to do all other acts and things
necessary to carry out the intent of this Security Agreement. If a
Default or Potential Default exists and any Obligor fails or refuses to
make payment on any Collateral when due, Secured Party is authorized, in
its sole discretion, either in its own name or in the name of Debtor, to
take such action as Secured Party shall deem appropriate for the
collection of any amounts owed with respect to Collateral or upon which
a delinquency exists. Regardless of any other provision hereof,
however, Secured Party shall never be liable for its failure to collect,
or for its failure to exercise diligence in the collection of, any
amounts owed with respect to Collateral, nor shall it be under any duty
whatsoever to anyone EXCEPT Debtor to account for funds that it shall
actually receive hereunder. Without limiting the generality of the
foregoing, Secured Party shall have no responsibility for ascertaining
any maturities, calls, conversions, exchanges, offers, tenders, or
similar matters relating to any Collateral, or for informing Debtor with
respect to any of such matters (irrespective of whether Secured Party
actually has, or may be deemed to have, knowledge thereof). The receipt
of Secured Party to any Obligor shall be a full and complete release,
discharge, and acquittance to such Obligor, to the extent of any amount
so paid to Secured Party.
(c) RECORD OWNERSHIP OF SECURITIES. If a Default or
Potential Default exists, Secured Party at any time may have any
Collateral that is Pledged Securities and that is in the possession of
Secured Party, or its nominee or nominees, registered in its name, or in
the name of its nominee or nominees, as pledgee; and, as to any Pledged
Securities so registered, Debtor shall execute and deliver (or cause to
be executed and delivered) to Secured Party all such proxies, powers of
attorney, dividend coupons or orders, and other documents as Secured
Party may reasonably request for the purpose of enabling Secured Party
to exercise the voting Rights and powers which it is entitled to
13 EXHIBIT D
<PAGE>
exercise under this Security Agreement or to receive the dividends and
other payments in respect of such Collateral that is Pledged Securities
which it is authorized to receive and retain under this Security
Agreement.
(d) VOTING OF SECURITIES. As long as neither a Default nor
Potential Default exists, Debtor is entitled to exercise all voting
Rights pertaining to any Collateral that is Pledged Securities. If a
Default or Potential Default exists and if Secured Party elects to
exercise such Right, the Right to vote any Collateral that is Pledged
Securities shall be vested exclusively in Secured Party. To this end,
Debtor hereby irrevocably constitutes and appoints Secured Party the
proxy and attorney-in-fact of Debtor, with full power of substitution,
to vote, and to act with respect to, any and all Collateral that is
Pledged Securities standing in the name of Debtor or with respect to
which Debtor is entitled to vote and act, subject to the understanding
that such proxy may not be exercised unless a Default exists. The proxy
herein granted is coupled with an interest, is irrevocable, and shall
continue until the Obligation has been paid and performed in full.
(e) CERTAIN PROCEEDS. Notwithstanding any contrary
provision herein, any and all stock dividends or distributions in
property made on or in respect of any Pledged Securities, and any
proceeds of any Pledged Securities, whether such dividends,
distributions, or proceeds result from a subdivision, combination, or
reclassification of the outstanding capital stock of any issuer thereof
or as a result of any merger, consolidation, acquisition, or other
exchange of assets to which any issuer may be a party, or otherwise,
shall be part of the Collateral hereunder, shall, if received by Debtor,
be held in trust for the benefit of Secured Party, and shall forthwith
be delivered to Secured Party (accompanied by proper instruments of
assignment and/or stock and/or bond powers executed by Debtor in
accordance with Secured Party's instructions) to be held subject to the
terms of this Security Agreement. Any cash proceeds of Collateral which
come into the possession of Secured Party (including, without
limitation, insurance proceeds) may, at Secured Party's option, be
applied in whole or in part to the Obligation (to the extent then due),
be released in whole or in part to or on the written instructions of
Debtor for any general or specific purpose, or be retained in whole or
in part by Secured Party as additional Collateral. Any cash Collateral
in the possession of Secured Party may be invested by Secured Party in
certificates of deposit issued by Secured Party (if Secured Party issues
such certificates) or by any state or national bank having combined
capital and surplus greater than $100,000,000 with a rating from Moody's
and S&P of P-1 and A-1+, respectively, or in securities issued or
guaranteed by the United States of America or any agency thereof.
Secured Party shall never be obligated to make any such investment and
shall never have any liability to Debtor for any loss which may result
therefrom. All interest and other amounts earned from any investment of
Collateral may be dealt with by Secured Party in the same manner as
other cash Collateral. The provisions of this subparagraph are
applicable whether or not a Default or Potential Default exists.
(f) USE AND OPERATION OF COLLATERAL. Should any Collateral
come into the possession of Secured Party, Secured Party may use or
operate such Collateral for the purpose of preserving it or its value
pursuant to the order of a court of appropriate jurisdiction or in
accordance with any other Rights held by Secured Party in respect of
such Collateral. Debtor covenants to promptly reimburse and pay to
Secured Party, at Secured Party's request, the amount of all reasonable
expenses (including, without limitation, the cost of any insurance and
payment of Taxes or other charges) incurred by Secured Party in
connection with its custody and preservation of Collateral, and all such
expenses, costs, Taxes, and other charges shall bear interest at the
Default Rate until repaid and, TOGETHER WITH such interest, shall be
payable by Debtor to Secured Party upon demand and shall become part of
the Obligation. However, the risk of accidental loss or damage to, or
diminution in
14 EXHIBIT D
<PAGE>
value of, Collateral is on Debtor, and Secured Party shall have no
liability whatever for failure to obtain or maintain insurance, nor to
determine whether any insurance ever in force is adequate as to amount
or as to the risks insured. With respect to Collateral that is in the
possession of Secured Party, Secured Party shall have no duty to fix
or preserve Rights against prior parties to such Collateral and shall
never be liable for any failure to use diligence to collect any amount
payable in respect of such Collateral, but shall be liable only to
account to Debtor for what it may actually collect or receive thereon.
The provisions of this subparagraph are applicable whether or not a
Default exists.
(g) CASH COLLATERAL ACCOUNT. If a Default exists, Secured
Party shall have, and Debtor hereby grants to Secured Party, the Right
and authority to transfer all funds on deposit in the Deposit Accounts
to a CASH COLLATERAL ACCOUNT (herein so called) maintained with a
depository institution acceptable to Secured Party and subject to the
exclusive direction, domain, and control of Secured Party, and no
disbursements or withdrawals shall be permitted to be made by Debtor
from such Cash Collateral Account. Such Cash Collateral Account shall
be subject to the Security Interest and Liens in favor of Secured Party
herein created, and Debtor hereby grants a security interest to Secured
Party on behalf of Lenders in and to, such Cash Collateral Account and
all checks, drafts, and other items ever received by Debtor for deposit
therein. Furthermore, if a Default exists, Secured Party shall have the
Right, at any time in its discretion without notice to Debtor, (i) to
transfer to or to register in the name of Secured Party or any Lender or
nominee any certificates of deposit or deposit instruments constituting
Deposit Accounts and shall have the Right to exchange such certificates
or instruments representing Deposit Accounts for certificates or
instruments of smaller or larger denominations and (ii) to take and
apply against the Obligation any and all funds then or thereafter on
deposit in the Cash Collateral Account or otherwise constituting Deposit
Accounts.
(h) POWER OF ATTORNEY. Debtor hereby irrevocably constitutes
and appoints Secured Party as Debtor's attorney-in-fact, with full
irrevocable power and authority in the place and stead of Debtor and in
the name of Debtor, Secured Party, Lenders, or otherwise, from time to
time in Secured Party's discretion, for the sole purpose of carrying out
the terms of this Security Agreement and, to the extent permitted by
applicable Law, to take any action and to execute any document and
instrument which Secured Party may deem necessary or advisable to
accomplish the following when a Default exists:
(i) to transfer any and all funds on deposit in the
Deposit Accounts to the Cash Collateral Account as set forth in
herein;
(ii) to receive, endorse, and collect any drafts or
other instruments or documents in connection with CLAUSE (b)
above and this CLAUSE (g);
(iii) to use the Patents and Trademarks or to grant or
issue any exclusive or non-exclusive license under the Patents
and Trademarks to anyone else, and to perform any act necessary
for the Secured Party to assign, pledge, convey, or otherwise
transfer title in or dispose of the Patents and Trademarks to
any other Person; and
(iv) to execute on behalf of Debtor any continuation
statement with respect to the Security Interests created hereby,
and to do any and all acts and things to protect and preserve
the Collateral, including, without limitation, the protection
and prosecution of all Rights included in the Collateral.
(i) PURCHASE MONEY COLLATERAL. To the extent that Secured
Party or any Lender has advanced or will advance funds to or for the
account of Debtor to enable Debtor to purchase or
15 EXHIBIT D
<PAGE>
otherwise acquire Rights in Collateral, Secured Party or such Lender,
at its option, may pay such funds (i) directly to the Person from whom
Debtor will make such purchase or acquire such Rights, or (ii) to
Debtor, in which case Debtor covenants to promptly pay the same to such
Person, and forthwith furnish to Secured Party evidence satisfactory to
Secured Party that such payment has been made from the funds so
provided.
(j) SUBROGATION. If any of the Obligation is given in
renewal or extension or applied toward the payment of indebtedness
secured by any Lien, Secured Party shall be, and is hereby, subrogated
to all of the Rights, titles, interests, and Liens securing the
indebtedness so renewed, extended, or paid.
(k) INDEMNIFICATION. Debtor hereby assumes all liability
for the Collateral, for the Security Interest, and for any use,
possession, maintenance, and management of, all or any of the
Collateral, including, without limitation, any Taxes arising as a result
of, or in connection with, the transactions contemplated herein, and
agrees to assume liability for, and to indemnify and hold Secured Party
and each Lender harmless from and against, any and all claims, causes of
action, or liability, for injuries to or deaths of Persons and damage to
property, howsoever arising from or incident to such use, possession,
maintenance, and management, whether such Persons be agents or employees
of Debtor or of third parties, or such damage be to property of Debtor
or of others. Debtor agrees to indemnify, save, and hold Secured Party
and each Lender harmless from and against, and covenants to defend
Secured Party and each Lender against, any and all losses, damages,
claims, costs, penalties, liabilities, and expenses (collectively,
"CLAIMS"), including, without limitation, court costs and attorneys'
fees, AND ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF SECURED
PARTY OR ANY LENDER, OR ANY OF THEIR RESPECTIVE OFFICERS, EMPLOYEES,
AGENTS, ADVISORS, EMPLOYEES, OR REPRESENTATIVES, howsoever arising or
incurred because of, incident to, or with respect to Collateral or any
use, possession, maintenance, or management thereof; PROVIDED, HOWEVER,
that the indemnity set forth in this PARAGRAPH 8(K) will not apply to
Claims caused by the gross negligence or willful misconduct of Secured
Party or any Lender.
22. ACKNOWLEDGMENT OF REGULATORY CONSIDERATIONS
(a) NO PROHIBITED TRANSFERS. It is hereby acknowledged that
assignment or transfer of control of the FCC Licenses without the prior
approval of the FCC may constitute a prohibited transfer in violation of
FCC rules and regulations. Secured Party agrees that exercise of its
Rights hereunder, including transfer of FCC Licenses upon the occurrence
of a Default or Potential Default, shall be effected only after the
obtaining of any necessary approvals for such exercise.
(b) ACTIONS BY DEBTOR. If counsel to Secured Party
reasonably determines that the consent of the FCC is required in
connection with any of the actions which may be taken by Secured Party
on behalf of Lenders in the exercise of their Rights hereunder or under
the Loan Papers, then Debtor, at its sole cost and expense, agrees to
use its best efforts to secure such consent and to cooperate with
Secured Party and Lenders in any action commenced by Secured Party to
secure such consent and in such case Debtor shall retain control of its
respective FCC Licenses until the FCC shall have granted its consent to
the transfer of the FCC Licenses and related permits. Upon the
occurrence and during the continuation of a Default or Potential
Default, Debtor shall promptly execute or cause the execution of all
applications, certificates, instruments, and other documents and papers
that the Secured Party may be required to file in order to obtain any
necessary governmental consent, approval, or authorization, and if
Debtor fails or refuses to execute such documents, then, on the order of
any court of competent jurisdiction, the Clerk of the Court with
jurisdiction may
16 EXHIBIT D
<PAGE>
execute such documents on behalf of Debtor. In addition, Debtor shall
execute such applications and other documents and will take such other
action as may be required in order for Secured Party to obtain from the
FCC consent to operate the System, through a receiver or otherwise,
during the time the Secured Party seeks to obtain a purchaser for the
System and to submit any sale of the Systems to the FCC for approval.
Debtor recognizes that FCC Licenses, franchises, and other similar
agreements or authorizations are unique assets which (or the control of
which) may have to be transferred in order for Lenders adequately to
realize the value of their Security Interests. Debtor further
recognizes that a violation of this covenant would result in
irreparable harm to Lenders for which monetary damages are not readily
ascertainable and which might not fully compensate such Lenders.
Therefore, in addition to any other remedy which may be available to
Lenders, at Law or in equity, Secured Party on behalf of Lenders shall
have the remedy of specific performance of the provisions of this
subsection.
(c) FCC APPROVAL. Notwithstanding anything to the contrary
contained in this Security Agreement, Secured Party will not take any
action pursuant to this Security Agreement or any of the documents
executed pursuant hereto which would constitute an assignment of an FCC
License or any transfer of control of an FCC License if such assignment
of license or transfer of control would require under then-existing Law
(including the written rules and regulations promulgated by the FCC or
such other regulatory authority with jurisdiction) the prior approval of
the FCC or such other regulatory authority with jurisdiction, without
first obtaining such approval. Debtor agrees to take, or cause to be
taken, any action which Secured Party may reasonably request in order to
obtain and enjoy the full Rights and benefits granted to Secured Party
by this Security Agreement and any other instruments or agreements
executed pursuant hereto, including, without limitation, at Debtor's
cost and expense, the exercise of its best efforts to cooperate in
obtaining FCC approval of any action or transaction contemplated by this
Security Agreement or any other instrument or agreement executed
pursuant hereto which is then required by Law.
(d) SUBSEQUENT ACTIONS BY DEBTOR. Debtor agrees that if,
for any reason, the FCC or any such other regulatory authority with
jurisdiction does not approve within a reasonable period of time the
initial application for approval of the transfer of the FCC Licenses,
then PARAGRAPHS 9(b) and (c) above hereof shall be applicable to any
subsequent application for transfer of the FCC Licenses pursuant to
action taken by Secured Party in the exercise of its Rights hereunder or
under the Loan Papers. With respect to each subsequent proposed
purchaser(s), Debtor agrees to execute all such applications and other
documents and take all such other action as may be reasonably requested
by Secured Party at any time and from time to time in order to obtain
the approval by the FCC or any other regulatory authorities. Exercise
by Secured Party of the Right to such cooperation shall not be exhausted
by the initial or any subsequent exercise thereof.
23. MISCELLANEOUS.
(a) CONTINUING SECURITY INTEREST. This Security Agreement
creates a continuing security interest in the Collateral and shall (i)
remain in full force and effect until the termination of the obligations
of Lenders to advance Borrowings under the Credit Agreement, the payment
in full of the Obligation, and the expiration of all Financial Hedges;
(ii) be binding upon Debtor, its successors, and assigns; and (iii)
inure to the benefit of and be enforceable by the Secured Party,
Lenders, and their respective successors, transferees, and assigns.
Without limiting the generality of the foregoing CLAUSE (iii), the
Secured Party and Lenders may assign or otherwise transfer any of their
respective Rights under this agreement to any other Person in accordance
with the terms and provisions of SECTION 13.13 of the Credit Agreement,
and to the extent of such assignment or transfer such Person shall
thereupon become vested with all the Rights and benefits in respect
thereof granted herein or
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otherwise to the Secured Party or Lenders, as the case may be. Upon
payment in full of the Obligation, the termination of the commitment
of Lenders to extend credit, and the expiration of all Financial
Hedges, Debtor shall be entitled to the return, upon its request and
at its expense, of such of the Collateral as shall not have been sold
or otherwise applied pursuant to the terms hereof.
(b) REFERENCE TO MISCELLANEOUS PROVISIONS. This Security
Agreement is one of the "LOAN PAPERS" referred to in the Credit
Agreement, and all provisions relating to Loan Papers set forth in
SECTIONS 13 of the Credit Agreement, other than the provisions set forth
in SECTIONS 13.7, are incorporated herein by reference, the same as if
set forth herein verbatim.
(c) TERM. Upon full and final payment and performance of
the Obligation, this agreement shall thereafter terminate upon receipt
by Secured Party of Debtor's written notice of such termination;
PROVIDED THAT no Obligor, if any, on any of the Collateral shall ever be
obligated to make inquiry as to the termination of this agreement, but
shall be fully protected in making payment directly to Secured Party
until actual notice of such total payment of the Obligation is received
by such Obligor.
(d) ACTIONS NOT RELEASES. The Security Interest and
Debtor's obligations and Secured Party's Rights hereunder shall not be
released, diminished, impaired, or adversely affected by the occurrence
of any one or more of the following events: (i) the taking or accepting
of any other security or assurance for any or all of the Obligation;
(ii) any release, surrender, exchange, subordination, or loss of any
security or assurance at any time existing in connection with any or all
of the Obligation; (iii) the modification of, amendment to, or waiver of
compliance with any terms of any of the other Loan Papers without the
notification or consent of Debtor, EXCEPT as required therein (the Right
to such notification or consent being herein specifically waived by
Debtor); (iv) the insolvency, bankruptcy, or lack of corporate or trust
power of any party at any time liable for the payment of any or all of
the Obligation, whether now existing or hereafter occurring; (v) any
renewal, extension, or rearrangement of the payment of any or all of the
Obligation, either with or without notice to or consent of Debtor, or
any adjustment, indulgence, forbearance, or compromise that may be
granted or given by Secured Party or any Lender to Debtor; (vi) any
neglect, delay, omission, failure, or refusal of Secured Party or any
Lender to take or prosecute any action in connection with any other
agreement, document, guaranty, or instrument evidencing, securing, or
assuring the payment of all or any of the Obligation; (vii) any failure
of Secured Party or any Lender to notify Debtor of any renewal,
extension, or assignment of the Obligation or any part thereof, or the
release of any security, or of any other action taken or refrained from
being taken by Secured Party or any Lender against Debtor or any new
agreement between or among Secured Party or one or more Lenders and
Debtor, IT BEING UNDERSTOOD THAT neither Secured Party nor any Lender
shall be required to give Debtor any notice of any kind under any
circumstances whatsoever with respect to or in connection with the
Obligation, including, without limitation, notice of acceptance of this
Security Agreement or any Collateral ever delivered to or for the
account of Secured Party hereunder; (viii) the illegality, invalidity,
or unenforceability of all or any part of the Obligation against any
party obligated with respect thereto by reason of the fact that the
Obligation, or the interest paid or payable with respect thereto,
exceeds the amount permitted by Law, the act of creating the Obligation,
or any part thereof, is ULTRA VIRES, or the officers, partners, or
trustees creating same acted in excess of their authority, or for any
other reason; or (ix) if any payment by any party obligated with respect
thereto is held to constitute a preference under applicable Laws or for
any other reason Secured Party or any Lender is required to refund such
payment or pay the amount thereof to someone else.
18 EXHIBIT D
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(e) WAIVERS. EXCEPT to the extent expressly otherwise
provided herein or in other Loan Papers and to the fullest extent
permitted by applicable Law, Debtor waives (i) any Right to require
Secured Party or any Lender to proceed against any other Person, to
exhaust its Rights in Collateral, or to pursue any other Right which
Secured Party or any Lender may have; (ii) with respect to the
Obligation, presentment and demand for payment, protest, notice of
protest and nonpayment, and notice of the intention to accelerate; and
(iii) all Rights of marshaling in respect of any and all of the
Collateral.
(f) FINANCING STATEMENT. Secured Party shall be entitled at
any time to file this agreement or a carbon, photographic, or other
reproduction of this agreement, as a financing statement, but the
failure of Secured Party to do so shall not impair the validity or
enforceability of this agreement.
(g) AMENDMENTS. This instrument may be amended only by an
instrument in writing executed jointly by Debtor and Secured Party, and
supplemented only by documents delivered or to be delivered in
accordance with the express terms hereof.
(h) MULTIPLE COUNTERPARTS. This Security Agreement has been
executed in a number of identical counterparts, each of which shall be
deemed an original for all purposes and all of which constitute,
collectively, one agreement; but, in making proof of this Security
Agreement, it shall not be necessary to produce or account for more than
one such counterpart.
(i) PARTIES BOUND; ASSIGNMENT. This Security Agreement
shall be binding on Debtor and Debtor's heirs, legal representatives,
successors, and assigns and shall inure to the benefit of Secured Party
and Secured Party's successors and assigns.
(i) Secured Party is the agent for each Lender under
the Credit Agreement, the Security Interest and all Rights
granted to Secured Party hereunder or in connection herewith are
for the ratable benefit of each Lender, and Secured Party may,
without the joinder of any Lender, exercise any and all Rights
in favor of Secured Party or Lenders hereunder, including,
without limitation, conducting any foreclosure sales hereunder,
and executing full or partial releases hereof, amendments or
modifications hereto, or consents or waivers hereunder. The
Rights of each Lender VIS-A-VIS Secured Party and each other
Lender may be subject to one or more separate agreements between
or among such parties, but Debtor need not inquire about any
such agreement or be subject to any terms thereof unless Debtor
specifically joins therein; and consequently, neither Debtor nor
Debtor's heirs, personal representatives, successors, and
assigns shall be entitled to any benefits or provisions of any
such separate agreements or be entitled to rely upon or raise as
a defense, in any manner whatsoever, the failure or refusal of
any party thereto to comply with the provisions thereof.
(ii) Debtor may not, without the prior written
consent of Secured Party, assign any Rights, duties, or
obligations hereunder.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AS TO
ITS VALIDITY, INTERPRETATION, AND EFFECT IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT IF THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
19 EXHIBIT D
<PAGE>
STATE OF TEXAS. UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL TERMS USED
HEREIN WHICH ARE DEFINED IN THE UNIFORM COMMERCIAL CODE AS ENACTED IN
THE STATE OF TEXAS SHALL HAVE THE MEANINGS THEREIN STATED.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE TO FOLLOW.
20 EXHIBIT D
<PAGE>
EXECUTED as of the date first stated in this Pledge, Assignment, and
Security Agreement.
, ATTEST: (Seal)
as Debtor
By:
Name: Secretary/Assistant Secretary
Title: of Debtor
Printed Name
WITNESSED:
Name:
Name:
[ACKNOWLEDGMENT]
[TO BE USED IN SYGNET COMMUNICATIONS, INC. PLEDGE AGREEMENT ONLY]
PLEDGE, ASSIGNMENT, AND SECURITY AGREEMENT
SIGNATURE PAGE
<PAGE>
EXECUTED as of the date first stated in this Pledge, Assignment, and
Security Agreement.
NATIONSBANK, N.A., WITNESSED:
as Secured Party
By:
Name: Name:
Title:
Name:
ACKNOWLEDGMENT
[TO BE USED IN SYGNET COMMUNICATIONS, INC. PLEDGE AGREEMENT ONLY]
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on ,
1998, by , of
NATIONSBANK, N.A., a national banking association, on behalf of said banking
association, as Secured Party and as Administrative Agent for the Lenders party
to the Credit Agreement, dated as of December 23, 1998 (as amended, modified,
supplemented, or restated from time to time) among Borrower, Administrative
Agent, Lehman Commercial Paper Inc. and PNC Bank, National Association, as
Co-Syndication Agents, Toronto Dominion (Texas), Inc. and First Union National
Bank, as Co-Documentation Agents, and lenders party thereto.
---------------------------------------
(SEAL) Printed Name:
--------------------------
My Commission Expires:
-----------------
PLEDGE, ASSIGNMENT, AND SECURITY AGREEMENT
SIGNATURE PAGE
<PAGE>
ANNEX A TO SECURITY AGREEMENT
(TO BE PROVIDED BY BORROWER)
A. DEBTOR'S TRADENAMES
B. LOCATION OF BOOKS AND RECORDS
C. LOCATION OF COLLATERAL
D. LOCATION OF REAL PROPERTY
E. JURISDICTION(S) FOR FILING FINANCING STATEMENTS
23 EXHIBIT D
<PAGE>
ANNEX B TO SECURITY AGREEMENT
(TO BE PROVIDED BY BORROWER)
A. PLEDGED SHARES
B. INTER-COMPANY AND CELLULAR PARTNERSHIP PROMISSORY NOTES
C. PARTNERSHIP INTERESTS
D. TRADEMARKS
E. PATENTS
24 EXHIBIT D
<PAGE>
ANNEX C TO SECURITY AGREEMENT
DEFAULTS OR POTENTIAL DEFAULTS UNDER ANY COLLATERAL NOTE OR DOCUMENTS
EVIDENCING THE COLLATERAL NOTE SECURITY
(TO BE PROVIDED BY BORROWER)
25 EXHIBIT D
<PAGE>
ANNEX D TO SECURITY AGREEMENT
MATERIAL DEPOSIT ACCOUNTS
(TO BE PROVIDED BY BORROWER)
NAME OF BANK ADDRESS ACCOUNT NUMBER
------------ ------- --------------
26 EXHIBIT D
<PAGE>
ANNEX E TO SECURITY AGREEMENT
FORM OF LETTER FROM DEPOSITORY BANKS
TO: NationsBank, N.A., in its capacity as Administrative Agent for Certain
Lenders and as Secured Party under that certain Pledge, Assignment, and
Security Agreement dated as of December , 1998
901 Main Street, 64th Floor
Dallas, Texas 75202
Attn: Debra S. Wood
RE: DEPOSIT ACCOUNTS (THE "ACCOUNTS") MAINTAINED WITH _________ (THE
"DEPOSIT BANK"), INCLUDING WITHOUT LIMITATION THE DEPOSIT
ACCOUNTS LISTED ON ADDENDUM 1
This will confirm that (the "COMPANY") and the
undersigned Deposit Bank have agreed as follows with respect to the Accounts:
1. The Company and the Deposit Bank acknowledge and confirm that
all funds now or at any time hereafter deposited to the Accounts and all of
the Company's rights regarding such Accounts constitute part of the
"COLLATERAL" granted to Administrative Agent by the Company to secure the
Company's obligations under the Credit Agreement and/or related Loan Papers
and that Administrative Agent holds a security interest and collateral
assignment therein.
2. The Deposit Bank (excluding any Deposit Bank which is a
Lender under the Credit Agreement) will not exercise, and hereby releases,
any banker's lien upon, and any right of setoff against, the Accounts or any
funds at any time deposited to the Accounts EXCEPT with respect to the
Deposit Bank's normal fees and charges for operating the Accounts.
3. The Deposit Bank will take the following actions upon written
demand by Administrative Agent:
A. The Deposit Bank will (and in the event of such demand
the Company hereby irrevocably authorizes and instructs the Deposit Bank
to) cease honoring all drafts, demands, withdrawal requests, or
remittance instructions by the Company, whether made before or after the
demand.
B. The Deposit Bank will hold solely for account of
Administrative Agent all funds which may be on deposit in the Accounts
at the time of the demand and all funds thereafter deposited to the
Accounts, and, upon instructions from Administrative Agent, the Deposit
Bank will remit all such funds (subject to PARAGRAPH 2 above) to
Administrative Agent in such manner as Administrative Agent may from
time to time instruct the Deposit Bank in writing.
After such a demand is made, Administrative Agent shall have sole
control over the Accounts and the sole right to exercise and enforce all
rights and remedies with respect thereto. The demand shall be effective when
it is received by the Deposit Bank in writing at the address and to the
attention of the person set forth below (or at such other address or to the
attention of such other person as the Deposit Bank may specify by written
notice received by Administrative Agent and the Company) and when the Deposit
Bank has had a reasonable time, based on the same standards as those
applicable to payment and stop payment instructions generally, to act thereon.
27 EXHIBIT D
<PAGE>
4. Upon request of Administrative Agent, Deposit Bank will send
to Administrative Agent, at its above address, a copy of each periodic
statement for the Account, as and when the statement is sent to the Company.
5. This letter agreement is binding upon the Deposit Bank and
the Company and their successors and assigns and is enforceable by
Administrative Agent and its successors and assigns. It supersedes all prior
agreements relating to the Deposit Bank, and it may not be modified or
terminated EXCEPT upon Administrative Agent's written consent. The Deposit
Bank and the Company waive notice of acceptance hereof and of any action
taken or omitted in reliance hereon.
DATED AS OF: , 19 .
[COMPANY]
By:
Name:
Title:
[DEPOSIT BANK]
By:
Name:
Title:
[Address]
Attention:
Telex:
Telecopier:
NATIONSBANK, N.A.,
as Administrative Agent
By:
Name:
Title:
28 EXHIBIT D
<PAGE>
ADDENDUM 1
DEPOSIT ACCOUNTS
29 EXHIBIT D
<PAGE>
ANNEX F TO SECURITY AGREEMENT
PLEDGE INSTRUCTION
PARTNERSHIP:
INTEREST OWNER:
BY THIS PLEDGE INSTRUCTION, dated as of ___________ , 1998,
("INTEREST OWNER"), hereby instructs
(the "PARTNERSHIP") to register a pledge in favor of NationsBank, N.A.
("PLEDGEE"), in its capacity as Administrative Agent for certain Lenders and as
Secured Party under that certain Pledge, Assignment, and Security Agreement
dated as of December , 1998 (the "SECURITY AGREEMENT), against, and a security
interest in favor of Pledgee in, all of the Interest Owner's Rights in
connection with any partnership interest in the Partnership now and hereafter
owned by the Interest Owner ("PARTNERSHIP INTEREST").
A. PLEDGE INSTRUCTIONS. The Partnership is hereby
instructed by the Interest Owner to register all of the Interest Owner's
Right, title, and interest in and to all of the Interest Owner's Partnership
Interest as subject to a pledge and security interest in favor of Pledgee
who, upon such registration of pledge, shall become the registered pledgee of
the Partnership Interest with all Rights incident thereto.
B. INITIAL TRANSACTION STATEMENT. The Partnership is
further instructed by the Interest Owner to promptly inform Pledgee of the
registration of the pledge by sending the initial transaction statement, in
the form attached hereto as ANNEX A, to Pledgee at its office located at
, with a copy to Interest Owner.
C. PARTNERSHIP DISTRIBUTIONS, ACCOUNTS, AND
CORRESPONDENCE. The Partnership is further instructed by the Interest Owner
to promptly (i) cause the Partnership to pay and remit to the Pledgee all
proceeds, distributions, and other amounts payable to the Interest Owner upon
demand or otherwise, including, without limitation, upon the termination,
liquidation, and dissolution of the Partnership, (ii) cause the Partnership
to hold all funds in deposit accounts for the benefit of Pledgee, and (iii)
cause the Partnership to provide to the Pledgee all future correspondence,
accountings of distributions, and tax returns of the Partnership.
D. WARRANTIES OF THE INTEREST OWNER. The Interest Owner
hereby warrants that (i) the Interest Owner is an appropriate person to
originate this instruction; (ii) the Interest Owner is entitled to effect the
instruction here given; and (iii) the Interest Owner's taxpayer
identification number is .
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE TO FOLLOW.
EXECUTED as of the date first stated in this Pledge Instruction.
---------------------------------------
By:
Name:
Title:
30 EXHIBIT D
<PAGE>
CONSENT OF THE GENERAL PARTNER
The undersigned, , in its
capacity as general partner of the Partnership (in such capacity, the
"GENERAL PARTNER") hereby acknowledges and consents to, and agrees to cause
to be registered on the books and records of the Partnership, the Pledge of
Partnership Interests, and further agrees that upon receipt of written notice
from the Pledgee, the General Partner shall (i) cause the Partnership to pay
and remit to the Pledgee all distributions and other amounts payable to the
Interest Owner upon demand or otherwise, including, without limitation, upon
the termination, liquidation, and dissolution of the Partnership, (ii) cause
the Partnership to hold all funds in deposit accounts for the benefit of
Pledgee, and (iii) cause the Partnership to provide to the Pledgee all future
correspondence, accountings of distributions, and tax returns of the
Partnership.
,
as General Partner
By:
Name:
Title:
PLEDGE INSTRUCTION
SIGNATURE PAGE
<PAGE>
EXHIBIT A TO PLEDGE INSTRUCTION
FORM OF INITIAL TRANSACTION STATEMENT
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE
AS OF THE TIME OF ISSUANCE. DELIVERY OF THIS STATEMENT, OF
ITSELF, CONFERS NO RIGHTS ON THE RECIPIENT. THIS STATEMENT IS
NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.
NAME OF PLEDGOR:
ADDRESS OF PLEDGOR:
Tax ID or Social Security Number:
NationsBank, N.A.
[ADDRESS]
[Tax ID Number: ]
On December , 1998, the undersigned, ,
in its capacity as managing general partner of (in
such capacity, the "MANAGING GENERAL PARTNER") caused the pledge of ( %)
of the outstanding partnership interests in ("PARTNERSHIP
INTEREST") by (the "PLEDGOR"), in favor of NationsBank,
N.A. (the "PLEDGEE") to be registered on the books and records of the
Partnership. EXCEPT for the pledge in favor of the Pledgee, to the knowledge
of the undersigned (including, without limitation, any information which may
appear on the undersigned's books and records) there are no liens,
restrictions, or adverse claims to which the Partnership Interest is, or may
be, subject as of the date hereof.
By:
Name:
Title:
PLEDGE INSTRUCTION
SIGNATURE PAGE
<PAGE>
EXHIBIT E-1
FORM OF COMPLIANCE CERTIFICATE
FOR ENDED ,
DATE: ,
ADMINISTRATIVE AGENT: NationsBank, N.A.
BORROWER: DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger,
SYGNET WIRELESS, INC.)
This certificate is delivered under the Credit Agreement, dated as of
December 23, 1998 (as amended, modified, supplemented, or restated from time to
time, the "CREDIT AGREEMENT"), among Borrower, Administrative Agent, Lehman
Commercial Paper Inc. and PNC Bank, National Association, as Co-Syndication
Agents, Toronto Dominion (Texas), Inc. and First Union National Bank, as
Co-Documentation Agents, and Lenders party thereto. Capitalized terms used
herein and not otherwise defined herein shall have the meaning given to such
terms in the Credit Agreement.
I certify to Lenders that:
(a) I am a Responsible Officer of the Companies in the position(s)
set forth under my signature below;
(b) the Financial Statements of the Companies attached to this
certificate were prepared in accordance with GAAP, and present fairly in all
material respects the consolidated financial condition and results of operations
of those companies as of, and for the (three, six, or nine months, or fiscal
year) ended on, , (the "SUBJECT PERIOD")
[(subject only to normal year-end audit adjustments)];
(c) a review of the activities of the Companies during the Subject
Period has been made under my supervision with a view to determining whether,
during the Subject Period, the Companies have kept, observed, performed, and
fulfilled all of their respective obligations under the Loan Papers, and during
the Subject Period, to my knowledge (i) the Companies kept, observed, performed,
and fulfilled each and every covenant and condition of the Loan Papers (EXCEPT
for the deviations, if any, set forth on ANNEX A to this certificate) in all
material respects, and (ii) no Default (nor any Potential Default) has occurred
which has not been cured or waived (EXCEPT the Defaults or Potential Defaults,
if any, described on ANNEX A to this Certificate);
(d) to my knowledge, the status of compliance by the Companies with
SECTIONS 9.12, 9.20, 9.21, 9.23, and 9.30(a), (b), (c), (d), (e), and (f) of the
Credit Agreement at the end of the Subject Period is as set forth on ANNEX B to
this certificate; and
EXHIBIT E-1
<PAGE>
(e) except for the deviations described on ANNEX A, all Net Cash
Proceeds from the disposition of assets required to be reinvested in property or
assets of the Companies during the Subject Period have been reinvested, and no
mandatory prepayment is required to be paid by Borrower to Lenders pursuant to
SECTION 2.7(b)(ii) of the Credit Agreement.
By:
Name:
Title:
2 EXHIBIT E-1
<PAGE>
ANNEX A TO COMPLIANCE CERTIFICATE
DEVIATIONS FROM LOAN PAPERS/
DEFAULTS OR POTENTIAL DEFAULTS
(IF NONE, SO STATE.)
3 EXHIBIT E-1
<PAGE>
ANNEX B TO COMPLIANCE CERTIFICATE
Status of Compliance with SECTIONS 9.12, 9.20, 9.21, 9.23,
and 9.30(a), (b), (C), (d), (e), and (f)
of the Credit Agreement (1)
[(UNLESS OTHERWISE INDICATED, ALL CALCULATIONS ARE MADE ON A CONSOLIDATED
BASIS FOR THE COMPANIES AT THE DATE OF DETERMINATION WITH RESPECT TO THE
MOST RECENTLY-ENDED ROLLING PERIOD)]
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 9.12 DEBT AND GUARANTIES
a. The Obligation $
b. Debt incurred by Borrower under any Financial Hedge
(only with Lenders) $
c. Trade Debt incurred in ordinary course of business (7) $
d. Inter-Company Debt $
e. Other Debt (not to exceed $5,000,000 in the aggregate) $
f. Guaranties of Debt (not included in (a) - (e) above $
SECTION 9.20 LOANS, ADVANCES, AND INVESTMENTS
a. Loans, advances, or investments in or to any Company $
b. Permitted Acquisitions during Subject Period
[List each Acquisition during Subject Period and Purchase
Price thereof] $
c. Trade accounts receivable $
RESTRICTED PAYMENTS UNDER SECTIONS 9.20(d) AND 9.21(c)
a. Regularly-scheduled interest payments on Senior
Reserve Notes during Subject Period (on or after
June 15, 2002) $
b. Loans, advances, or investments to Parent to pay
regularly-scheduled interest payments on Senior
Reserve Note during Subject Period (2) $
c. Distributions to Parent to pay regularly-scheduled
interest payments on Senior Reserve Notes during
Subject Period (2) $
d. Sum of ITEM b and ITEM c $
e. ITEM d is less than or equal to ITEM a YES/NO/NA
DISTRIBUTIONS UNDER SECTIONS 9.20(e) AND 9.21(d) (Applicable on and after April 15, 2003)
a. Regularly-scheduled cash dividends on up to
$120,000,000 (aggregate liquidation value) of
Preferred Stock during Subject Period $
b. Loans, advances, or investments to Parent to pay
regularly-scheduled cash dividends on the Preferred
Stock during the Subject Period $
c. Loans, advances, or investments to Parent to pay
4 EXHIBIT E-1
<PAGE>
regularly-scheduled interest payments on Junior Debentures $
d. Distributions to pay regularly-scheduled cash
dividends on the Preferred Stock during the Subject
Period $
e. Distributions to pay regularly-scheduled cash interest
payments on the Junior Debentures during the Subject
Period $
f. The SUM of ITEMS (a), (b), (c), and (d) $
g. ITEM (f) is less than or equal to ITEM (a) YES/NO/NA
SECTION 9.23 SALE OF ASSETS
The fair market value of assets sold by any Company (other than as permitted in
SECTIONS 9.23(a) through (f)) in the ordinary course of business:
a. During the Subject Period (not to exceed $7,500,000) $
b. From the Closing Date to the end of the Subject Period $
c. Fair market value of Companies' assets on Closing Date $
d. Amount in ITEM (b) preceding is less than or equal
to 49% of ITEM (c) preceding YES/NO/NA
SECTION 9.30(a) - LEVERAGE RATIO OF THE COMPANIES
a. Debt of the Companies at end of Subject Period $
b. For calculation for the fiscal quarter ending March 31, 1998,
Debt incurred in connection with the Pennsylvania 2 RSA
Acquisition, if any $
c. Adjusted Debt (LINE a minus LINE b) $
d. Net income (3) $
e. Interest Expense (to the extent deducted in calculating
LINE d) (3) $
f. Depreciation expense (to the extent deducted in calculating
LINE d) (3) $
g. Amortization expense (to the extent deducted in calculating
LINE d) (3) $
h. Other non-cash charges (to the extent deducted in
calculating LINE d) (3) $
i. Income Tax expense (to the extent deducted in calculating
LINE d) (3) $
j. Pro Forma adjustments to expenses (10) $
k. Interest and dividend income (3) $
l. Other non-cash components of income (3) $
m. Extraordinary gains/losses (3) $
n. Operating Cash Flow (3) (the sum of LINES d through j
minus LINES k and l plus or minus LINE m, as appropriate) $
o. Adjustments to Operating Cash Flow to reflect minority
interests(3) $
p. For calculations for fiscal quarter ending March 31, 1998,
5 EXHIBIT E-1
<PAGE>
adjustment to Operating Cash Flow to subtract Operating
Cash Flow attributable to the Pennsylvania RSA, if
acquired by the Companies during such period $
q. For calculations prior to June 30, 1999, Annualized
Operating Cash Flow (LINE n adjusted by LINES o and p
multiplied by applicable factor) $
r. For calculations on and after June 30, 1999, Operating
Cash Flow (adjusted) (LINE n adjusted by LINES o and p
calculated for Rolling Period) $
s. Leverage Ratio (the ratio of LINE c to LINE q, if for
calculations prior to June 30, 1999; or ITEM c to LINE r
for calculations on or after June 30, 1999) :
t. Maximum Ratio for Subject Period : 1.00
SECTION 9.30(b) - PRO FORMA DEBT SERVICE COVERAGE
a. Operating Cash Flow of the Companies (see calculation
under LINE M of SECTION 9.30(a) calculation above) (4) $
b. Aggregate outstanding Principal Debt at the beginning
of the Subject Period (5) $
c. Aggregate outstanding Principal Debt at end of the Subject
Period, considering all scheduled principal payments and any
required commitment reductions within such Subject Period (5) $
d. LINE b plus LINE c $
e. LINE d divided by (2) $
f. Interest rate on outstanding Debt as of the date of
determination (5)
g. Pro Forma Interest Expense (LINE e multiplied by LINE f) (5) $
h. Principal payments scheduled to be made on Debt for the
twelve months following the date of determination $
i. Outstanding Principal Debt under the Revolver Facility (6) $
j. Amount of Principal Debt to be reduced within twelve months
from date of determination as a result of reductions in
the Total Commitment under the Revolver Facility $
k. LINE i minus LINE j $
l. Pro Forma Debt Service (the sum of LINES g, h, and k) $
m. Pro Forma Debt Service Coverage Ratio (the ratio of
LINE a to LINE l)
n. Minimum Ratio for Subject Period _____ : 1.00
SECTION 9.30(c) - INTEREST COVERAGE
a. Net Income (8) $
b. Interest Expense (to the extent deducted in calculating
LINE a) (8) $
c. Depreciation expense (to the extent deducted in calculating
LINE a) (8) $
d. Amortization expense (to the extent deducted in calculating
LINE a) (8) $
e. Other non-cash charges (to the extent deducted in
6 EXHIBIT E-1
<PAGE>
calculating LINE a) (8) $
f. Income Tax expense (to the extent deducted in calculating
LINE a) (8) $
g. Interest and dividend income (8) $
h. Other non-cash components of income (8) $
i. Extraordinary gains/losses (8) $
j. Operating Cash Flow (the sum of LINES a through f
minus LINES g and h plus or minus LINE i, as appropriate) (8) $
k. Adjustments to Operating Cash Flow to reflect minority
interests (8) $
l. Operating Cash Flow adjusted for minority interests
(LINE j adjusted by LINE k) (8) $
m. Interest Expense (8/9) $
n. Interest Coverage Ratio (the ratio of LINE l to LINE m) (8) :
o. Minimum Ratio for Subject Period _____ : 1:00
SECTION 9.30(d) - FIXED CHARGE COVERAGE RATIO (4)
a. Operating Cash Flow of the Companies (see calculation
under LINE m of SECTION 9.30(a) calculation above) $
b. Mandatory and regularly-scheduled principal
payments on Debt $
c. Amount paid for Capital Expenditures $
d. Cash Interest Expense $
e. Cash Taxes (to the extent allocable to the Companies pursuant
to the Tax Sharing Agreement) $
f. Distributions and dividends paid by Borrower $
g. The sum of LINES b through f $
h. Fixed Charge Coverage Ratio (the ratio of LINE a to LINE g)
i. Minimum Ratio 1.00:1.00
SECTION 9.30(e) - CONSOLIDATED LEVERAGE RATIO ON AND AFTER JANUARY 1, 2002 (4)
a. All Debt of Parent and its Subsidiaries at the end of the
Subject Period $
b. The value of the Pledged Government Securities at the end
of the Subject Period $
c. The liquidation value of any Junior Preferred Stock (if cash
dividends are payable) at the end of the Subject Period $
d. The outstanding principal amount of any Junior Debentures
at the end of the Subject Period $
e. Consolidated Debt (the sum of LINES a through d above) $
f. Net income of Parent and its Subsidiaries (4) $
g. Interest Expense of Parent and its Subsidiaries (to the extent
deducted in calculating LINE f) (4) $
h. Depreciation expense of Parent and its Subsidiaries (to the
extent deducted in calculating LINE f) (4) $
i. Amortization expense of Parent and its Subsidiaries (to the
extent deducted in calculating LINE f) (4) $
j. Other non-cash charges of Parent and its Subsidiaries (to
7 EXHIBIT E-1
<PAGE>
the extent deducted in LINE f) (4) $
k. Income Tax expense of Parent and its Subsidiaries (4) $
l. Interest and dividend income of Parent and its Subsidiaries (4) $
m. Other non-cash components of income of Parent and its
Subsidiaries (4) $
n. Extraordinary gains/losses (4) $
o. Operating Cash Flow of Parent and its Subsidiaries (4) (the
sum of LINES f through k minus LINES l through m plus or
minus LINE n, as appropriate) $
p. Adjustments to Operating Cash Flow of Parent and its
Subsidiaries to reflect minority interests (4) $
q. Operating Cash Flow of Parent and its Subsidiaries (adjusted)
(LINE o adjusted by LINE p) (4) $
r. Consolidated Leverage Ratio (the ratio of LINE e to LINE q) :
s. Maximum Ratio for Subject Period : 1.00
SECTION 9.30(f) - COMMUNICATIONS LEVERAGE RATIO
a. All Debt of Communications and its Subsidiaries at end
of Subject Period $
b. Debt of Logix and Subsidiaries at end of Subject Period $
c. Amounts on deposit in escrow account for Communications
Bond Debt $
d. Liquidation value of any Preferred Stock (if cash dividends
are payable) at the end of the Subject Period $
e. The outstanding principal amount of all Debentures at the
end of the Subject Period $
f. Communications Total Debt (the sum of LINES a, d, and e
minus LINES b and c) $
g. Net income of Communications and its Subsidiaries
(other than Logix) (4) $
h. Interest Expense of Communications and its Subsidiaries
(other than Logix) (to the extent deducted in calculating
LINE g) (4) $
i. Depreciation expense of Communications and its Subsidiaries
(other than Logix) (to the extent deducted in calculating
LINE g) (4) $
j. Amortization expense of Communications and its Subsidiaries
(other than Logix) (to the extent deducted in calculating
LINE g) (4) $
k. Other non-cash charges of Communications and its Subsidiaries
(other than Logix) (to the extent deducted in LINE d) (4) $
l. Income tax expense of Communications and its Subsidiaries
(other than Logix) (4) $
m. Interest and dividend income of Communications and its
Subsidiaries (other than Logix) (4) $
n. Other non-cash components of income of Communications
and its Subsidiaries (other than Logix) (4) $
o. Extraordinary gains/losses (4) $
p. Operating Cash Flow of Communications and its Subsidiaries
8 EXHIBIT E-1
<PAGE>
(other than Logix)(4) (the sum of LINES g through l minus
LINES m through o plus or minus LINE o, as appropriate) $
q. Adjustments to Operating Cash Flow of Communications and
its Subsidiaries (other than Logix) to reflect minority
interests (4) $
r. Operating Cash Flow of Communications and its Subsidiaries
(other than Logix) (adjusted) (LINE p adjusted by LINE q) for
Rolling Period (4) $
s. Communications Leverage Ratio (the ratio of LINE f to LINE r) :
t. Maximum Ratio for the Subject Period _____ : 1.00
</TABLE>
- ----------------
(1) All as more particularly determined in accordance with the terms of the
Credit Agreement, which control in the event of conflicts with this form.
(2) May only be made on or after June 15, 2002.
(3) Calculated for the Rolling Period on and after June 30, 1999; prior to
June 30, 1999, calculated for applicable period for determination of
Annualized Operating Cash Flow, as set forth in definitions in SECTION 1.1
of the Credit Agreement.
(4) Calculated for the applicable Rolling Period.
(5) Calculated for each Subject Loan (as such term is used in the definition of
Pro Forma Interest expense).
(6) As of the date of determination.
(7) Not outstanding more than 90 days.
(8) Calculated on March 31, 1999, for the fiscal quarter then-ending; on June
30, 1999, for the two-quarter period then-ending; on September 30, 1999,
for the three-quarter period then-ending; and thereafter quarterly for the
Rolling Period then-ending.
(9) Include any loans, advances, dividends, or other investments from the
Companies to Parent, the proceeds of which were used to pay interest on the
Senior Reserve Notes.
(10) Applicable only to calculations made for fiscal quarters ending
December 31, 1998, March 31, 1999, and June 30, 1999.
9 EXHIBIT E-1
<PAGE>
EXHIBIT E-2
FORM OF PERMITTED ACQUISITION COMPLIANCE CERTIFICATE
DATE: ,
ADMINISTRATIVE AGENT: NationsBank, N.A.
BORROWER: Dobson/Sygnet Operating Company,
(including its successor by merger,
Sygnet Wireless, Inc.)
- -------------------------------------------------------------------------------
This Permitted Acquisition Compliance Certificate (the "CERTIFICATE") is
delivered under the Credit Agreement, dated as of December 23, 1998 (as amended,
modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"),
among Borrower, Administrative Agent, Lehman Commercial Paper Inc. and PNC Bank,
National Association, as Co-Syndication Agents, Toronto Dominion (Texas), Inc.
and First Union National Bank, as Co-Documentation Agents, and Lenders party
thereto. Capitalized terms used herein and not otherwise defined herein shall
have the meanings given to such terms in the Credit Agreement.
1. NOTIFICATION OF PROPOSED ACQUISITION.
Borrower hereby notifies Administrative Agent that
[BORROWER OR ANY SUBSIDIARY OF BORROWER] intends
to acquire the [stock/assets] of
(the "SUBJECT ACQUISITION"), on , 19 (the "ACQUISITION
DATE"). In connection with the Subject Acquisition and in satisfaction of
certain conditions precedent to the qualification of the Subject Acquisition as
a "PERMITTED ACQUISITION" under the Loan Papers, the following is attached
hereto:
ANNEX A: which sets forth calculations demonstrating pro forma compliance
with the covenants in SECTIONS 9.12, 9.20, 9.21, 9.23, and 9.30
of the Credit Agreement, after giving effect to the Subject
Acquisition;
ANNEX B: which sets forth pro forma income and balance sheet projections
for the Companies, after giving effect to the Subject
Acquisition;
ANNEX C: which sets forth ten year cash flow projections for the Subject
Acquisition; and
ANNEX D: which is a true and correct copy of the Purchase Agreement.
2. CERTIFICATIONS.
On and as of the date of this Certificate, Borrower certifies to
Administrative Agent and Lenders that the following statements are true and
correct on the date hereof and will be true and correct on the closing date of
the Subject Acquisition:
(a) All of the representations and warranties in the Credit Agreement are
true and correct;
(b) No Default or Potential Default exists nor will occur as a result of,
and after giving effect to, the Subject Acquisition;
EXHIBIT E-2
<PAGE>
(c) The company(ies) being acquired is (are) engaged in, or the assets
being acquired are used in, the domestic cellular business;
(d) To the extent the Subject Acquisition is structured as a merger,
Borrower (or if such merger is with another Company, such Company) is
the survivor;
(e) To the extent that the Subject Acquisition is structured as a stock
acquisition, the acquiring Company will own not less than 75% of the
entity being acquired after giving effect to the Subject Acquisition;
and
(f) Attached hereto as ANNEX D is a true and correct copy of the Purchase
Agreement and all amendments, exhibits, and schedules thereto.
(g) The purchase price for the Subject Acquisition, when aggregated with
the purchase prices of all other Acquisitions consummated during the
calendar year, does not exceed $15,000,000.
3. ACKNOWLEDGMENTS AND CONFIRMATION.
Borrower acknowledges that this Certificate and the attached documents are
being delivered in partial satisfaction of the requirements for a "PERMITTED
ACQUISITION," and further confirms its understanding that the Subject
Acquisition will not be a "PERMITTED ACQUISITION" until satisfaction of each of
the criteria specified in the definition of "PERMITTED ACQUISITION" in SECTION
1.1 of the Credit Agreement, including, without limitation, satisfaction of the
conditions precedent set forth in SECTION 7.2 and on SCHEDULE 7.2.
4. FURTHER ASSURANCES.
Borrower shall timely deliver to Administrative Agent, upon reasonable
request by Administrative Agent, any documents, certificates, or information
relating to the Subject Acquisition (including, without limitation, all
information necessary to enable Administrative Agent to complete any due
diligence related to the Company(ies) or the assets being acquired), which
documents or certificates shall be in form and substance acceptable to
Administrative Agent.
DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger,
Sygnet Wireless, Inc.)
By:
Name:
Title:
2 EXHIBIT E-2
<PAGE>
ANNEX A
TO PERMITTED ACQUISITION COMPLIANCE CERTIFICATE
FINANCIAL COVENANTS
Status of Compliance with SECTIONS 9.12, 9.20, 9.21, 9.23, and 9.30(a), (b),
(c), (d), (e), and (f) of the Credit Agreement(1)
(UNLESS OTHERWISE INDICATED, ALL CALCULATIONS ARE MADE ON A CONSOLIDATED PRO
FORMA BASIS FOR THE COMPANIES (AFTER GIVING EFFECT TO THE SUBJECT
ACQUISITION) WITH RESPECT TO THE MOST RECENTLY-ENDED ROLLING PERIOD)
(TO BE PROVIDED)
- --------------------
(1) All as more particularly determined in accordance with the terms of the
Credit Agreement, which control in the event of conflicts with this form.
3 EXHIBIT E-2
<PAGE>
ANNEX B
TO PERMITTED ACQUISITION COMPLIANCE CERTIFICATE
Date:
Subject Acquisition:
PRO FORMA INCOME AND BALANCE SHEET PROJECTIONS
(TO BE PROVIDED BY BORROWER)
4 EXHIBIT E-2
<PAGE>
ANNEX C
TO PERMITTED ACQUISITION COMPLIANCE CERTIFICATE
Date:
Subject Acquisition:
CASH FLOW PROJECTIONS
(TO BE PROVIDED BY BORROWER)
5 EXHIBIT E-2
<PAGE>
ANNEX D
TO PERMITTED ACQUISITION COMPLIANCE CERTIFICATE
Date:
Subject Acquisition:
PURCHASE AGREEMENT
(TO BE PROVIDED BY BORROWER)
6 EXHIBIT E-2
<PAGE>
EXHIBIT E-3
FORM OF PERMITTED ACQUISITION LOAN
CLOSING CERTIFICATE
(___________, 19__)
This certificate is delivered pursuant to SECTION 7.2 of the Credit
Agreement, dated as of December 23, 1998 (as amended, modified, supplemented, or
restated from time to time, the "CREDIT AGREEMENT"), among Borrower,
Administrative Agent, Lehman Commercial Paper Inc. and PNC Bank, National
Association, as Co-Syndication Agents, Toronto Dominion (Texas), Inc. and First
Union National Bank, as Co-Documentation Agents, and Lenders party thereto.
Capitalized terms used herein and not otherwise defined herein shall have the
meaning given to such terms in the Credit Agreement.
1. SUBJECT ACQUISITION. This certificate relates to the Acquisition by
[BORROWER OR ANY SUBSIDIARY OF BORROWER] of the
[stock/assets] of (the "SUBJECT
ACQUISITION"), on , 19 (the "ACQUISITION DATE").
2. CERTIFICATION REGARDING SUBJECT ACQUISITION. In connection with Subject
Acquisition, Borrower hereby represents and warrants the following:
- All of the representations and warranties in the Credit Agreement are
true and correct immediately prior to and after giving effect to the
Subject Acquisition (EXCEPT to the extent that (i) the representations
and warranties speak to a specific date or (ii) the facts on which
such representations and warranties are based have been changed by
transactions contemplated or permitted by the Loan Papers and, if
applicable, supplemental Schedules have been delivered with respect
thereto and, when necessary, approved by Required Lenders);
- Immediately prior to and after giving effect to the Subject
Acquisition, no Default or Potential Default exists;
- Not less than 30 days prior to the Acquisition Date, Borrower
delivered to Administrative Agent a Permitted Acquisition Compliance
Certificate with respect to the Subject Acquisition, TOGETHER WITH all
financial projections, reports, and certifications required thereby,
which certifications and representations continue to be true and
correct on the Acquisition Date and which projections continue to be
accurate and complete on and as of the Acquisition Date;
- The Subject Acquisition meets all of the requirements to qualify as a
"PERMITTED ACQUISITION" under the Credit Agreement, including, without
limitation, the following conditions: (i) the purchase price for the
Subject Acquisition (when aggregated with the purchase price of each
other Acquisition consummated in the same calendar year as the Subject
Acquisition) is less than or equal to $15,000,000; (ii) as of the
Acquisition Date, the Subject Acquisition has been approved and
recommended by the board of directors of the Person to be acquired or
from which such business is to be acquired; (iii) each condition
precedent to a Permitted Acquisition set forth in SECTION 7.2 and
SCHEDULE 7.2 of the Credit Agreement has been satisfied; (iv) after
giving effect to the Subject Acquisition, the acquiring party is
Solvent and the Companies, on a consolidated basis, are Solvent; (v)
if the Subject Acquisition is structured as a merger, Borrower (or if
such merger is with any Company other than
EXHIBIT E-3
<PAGE>
Borrower, then such Company) is the surviving entity after giving
effect to such merger; and (vi) if the Subject Acquisition is
structured as a stock/equity acquisition, the acquiring Company owns
not less than a 75% interest in the entity being acquired
- All acquisition documents related to the Subject Acquisition (the
"ACQUISITION DOCUMENTS") have been duly and validly executed and
delivered by each of the parties thereto and constitute the legal,
valid, and binding obligations of the parties thereto, enforceable
against such parties in accordance with their respective terms (EXCEPT
as may be limited by applicable Debtor Relief Laws);
- All representations and warranties made by Borrower in the Permitted
Acquisition Compliance Certificate and related Notice of Borrowing (if
any) delivered with respect to the Subject Acquisition, and by any
Company or other Person in the Acquisition Documents, are true and
correct in all material respects on and as of the date made or deemed
made, as of the Acquisition Date, and as of the date(s) of funding of
the Borrowing (if any) and the delivery of this certificate; and the
Acquisition Documents set forth the entire agreement and understanding
of the parties thereto relating to the subject matter thereof, and
there are no other agreements, arrangements, or understandings,
written or oral, relating to the matters covered thereby; and
- The Subject Acquisition has been consummated contemporaneously with
the making of the related Borrowing (if any) and the delivery of this
certificate, and in compliance, in all material respects, with all
conditions and requirements contained in the Acquisition Documents; no
breach of any material term or condition contained in such Acquisition
Documents has occurred; after giving effect to the Subject
Acquisition, Borrower or its Subsidiary, as applicable, has acquired
and become the owner(s) of all of the property or assets to be
acquired thereby free and clear of any Liens, EXCEPT Permitted Liens;
in connection with the Subject Acquisition, no Company has assumed any
liabilities other than those reflected or reserved against in the
applicable pro forma financial statements delivered to Administrative
Agent, or contingent liabilities under the Acquisition Documents which
are not required to be reflected or reserved against in accordance
with GAAP.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE TO FOLLOW.
2 EXHIBIT E-3
<PAGE>
EXECUTED on the date first written on this Permitted Acquisition Loan
Closing Certificate.
DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger,
Sygnet Wireless, Inc.)
By:
Name:
Title:
3 EXHIBIT E-3
<PAGE>
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
Reference is made to the Credit Agreement dated as of December 23, 1998 (as
amended, modified, supplemented, or restated from time to time, the "CREDIT
AGREEMENT") among Dobson/Sygnet Operating Company, (including its successor by
merger, Sygnet Wireless, Inc.) ("BORROWER"), NationsBank, N.A., as
Administrative Agent for Lenders ("ADMINISTRATIVE AGENT"), Lehman Commercial
Paper Inc. and PNC Bank, National Association, as Co-Syndication Agents, Toronto
Dominion (Texas), Inc. and First Union National Bank, as Co-Documentation
Agents, and Lenders party thereto. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
"ASSIGNOR" and "ASSIGNEE" referred to on SCHEDULE 1 agree as follows:
1. Assignor hereby sells and assigns to Assignee, without recourse and
without representation or warranty EXCEPT as expressly set forth herein, and
Assignee hereby purchases and assumes from Assignor, an interest in and to
Assignor's Rights and obligations under the Credit Agreement and the related
Loan Papers as of the date hereof equal to the percentage interest specified on
SCHEDULE 1. After giving effect to such sale and assignment, Assignor's and
Assignee's Committed Sums and the amount of the Borrowings under the Credit
Agreement owing to each of them will be as set forth on SCHEDULE 1.
2. Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with the Loan Papers or
the execution, legality, validity, enforceability, genuineness, sufficiency, or
value of the Loan Papers or any other instrument or document furnished pursuant
thereto; (c) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any party to any Loan Paper or the
performance or observance by any such party of any of its obligations under the
Loan Papers or any other instrument or document furnished pursuant thereto; and
(d) attaches the Notes held by Assignor and requests that Administrative Agent
exchange such Notes for new Notes. Such new Notes shall be prepared in
accordance with the provisions of SECTION 3.1(a) or SECTION 3.1(b) of the Credit
Agreement, as applicable, and will reflect the respective Committed Sums (for
each Facility, as appropriate) of Assignee and Assignor after giving effect to
this Assignment and Acceptance Agreement.
3. Assignee (a) confirms that it has received a copy of the Credit
Agreement, TOGETHER WITH copies of the current Financial Statements and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance
Agreement; (b) agrees that it will, independently and without reliance upon
Administrative Agent, Assignor, or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Credit Agreement;
(c) confirms that it is an Eligible Assignee; (d) appoints and authorizes
Administrative Agent to take such action as ADMINISTRATIVE AGENT on its behalf
and to exercise such powers and discretion under the Credit Agreement as are
delegated to Administrative Agent by the terms thereof, TOGETHER WITH such
powers and discretion as are reasonably incidental thereto; (e) agrees that it
will perform in accordance with their terms all of the obligations that by the
terms of the Credit Agreement are required to be performed by it as a Lender;
and (f) attaches any U.S. Internal Revenue Service or other forms required under
SECTION 4.6(d) of the Credit Agreement.
4. Following the execution of this Assignment and Acceptance Agreement by
Assignor, Assignee, and Borrower (to the extent required hereunder), it will be
delivered to Administrative Agent for
Exhibit F
<PAGE>
acceptance and recording by Administrative Agent. The effective date for
this Assignment and Acceptance Agreement (the "EFFECTIVE DATE") shall be the
date of acceptance hereof by Administrative Agent, unless otherwise specified
on SCHEDULE 1.
5. Upon such acceptance and recording by Administrative Agent, as of the
Effective Date, (a) Assignee shall be a party to the Credit Agreement and, to
the extent provided in this Assignment and Acceptance Agreement, have the Rights
and obligations of a Lender thereunder, and (b) Assignor shall, to the extent
provided in this Assignment and Acceptance Agreement, relinquish its Rights and
be released from its obligations under the Agreement.
6. Upon such acceptance and recording by Administrative Agent, from and
after the Effective Date, Administrative Agent shall make all payments under the
Credit Agreement, the Notes, and loan accounts in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest, and commitment fees and other fees with respect thereto) to Assignee.
Assignor and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement and the other Loan Papers for periods prior to the
Effective Date directly between themselves.
7. Unless Assignee is a Lender or an Affiliate of a Lender or unless a
Default or Potential Default then exists, this Assignment and Acceptance
Agreement is conditioned upon the consent of Borrower and Administrative Agent
pursuant to the definition of "ELIGIBLE ASSIGNEE" in the Credit Agreement. The
execution and delivery of this Assignment and Acceptance Agreement by Borrower
and Administrative Agent is evidence of this consent.
8. As contemplated by SECTION 13.13(b)(v) of the Credit Agreement,
Assignor or Assignee (as determined between Assignor and Assignee) agrees to pay
to Administrative Agent for its account on the Effective Date in federal funds a
processing fee of $3,500.
9. THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
10. This Assignment and Acceptance Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of SCHEDULE 1 to this Assignment and Acceptance Agreement
by telecopier shall be effective as delivery of a manually executed counterpart
of this Assignment and Acceptance Agreement.
IN WITNESS WHEREOF, Assignor and Assignee have caused SCHEDULE 1 to this
Assignment and Acceptance Agreement to be executed by their officers thereunto
duly authorized as of the date specified thereon.
2 EXHIBIT F
<PAGE>
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE AGREEMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. ASSIGNED INTEREST
UNDER THE REVOLVER FACILITY:
(a) Assignor's Committed Sum prior to giving effect to
the Assignment to Assignee $
(b) Aggregate Borrowings owed to Assignor, immediately
prior to giving effect to the assignment to Assignee $
(c) Percentage Interest in Committed Sum and Borrowings
being assigned to Assignee by Assignor %
UNDER TERM LOAN A:
(a) Assignor's aggregate Committed Sum with respect to Term
Loan A Facility, prior to giving effect to the
assignment to Assignee $
(b) Aggregate Borrowings owed to Assignor under Term Loan A,
prior to giving effect to the assignment to Assignee $
(c) Percentage Interest in Committed Sum and Borrowings being
assigned to Assignee by Assignor %
UNDER TERM LOAN B:
(a) Assignor's aggregate Committed Sum with respect to Term
Loan B Facility, prior to giving effect to the
assignment to Assignee $
(b) Aggregate Borrowings owed to Assignor under Term Loan B,
prior to giving effect to the assignment to Assignee $
(c) Percentage Interest in Committed Sum and Borrowings being
assigned to Assignee by Assignor %
UNDER TERM LOAN C:
(a) Assignor's aggregate Committed Sum with respect to Term
Loan C Facility, prior to giving effect to the
assignment to Assignee $
(b) Aggregate Borrowings owed to Assignor under Term Loan C,
prior to giving effect to the assignment to Assignee $
(c) Percentage Interest in Committed Sum and Borrowings being
assigned to Assignee by Assignor %
2. ADJUSTMENTS AFTER GIVING EFFECT TO ASSIGNMENT BETWEEN ASSIGNOR AND ASSIGNEE
(a) Assignor's Committed Sum under:
(i) the Revolver Facility $
(ii) the Term Loan Facilities $
TERM LOAN A $
TERM LOAN B $
3 EXHIBIT F
<PAGE>
TERM LOAN C $
(b) Assignee's Committed Sum acquired from Assignor
pursuant to this Assignment under:
(i) the Revolver Facility $
(ii) the Term Loan Facilities $
TERM LOAN A $
TERM LOAN B $
TERM LOAN C $
(c) Assignor's aggregate Borrowings under the Revolver
Facility: $
(d) Assignee's aggregate Borrowings under the Revolver
Facility acquired from Assignor pursuant
to this assignment: $
(e) Assignor's aggregate Borrowings under the
the Term Loan Facilities $
TERM LOAN A $
TERM LOAN B $
TERM LOAN C $
(f) Assignee's aggregate Borrowings under the
Term Loan Facilities: $
TERM LOAN A $
TERM LOAN B $
TERM LOAN C $
</TABLE>
4 EXHIBIT F
<PAGE>
3. EFFECTIVE DATE (if other than date of acceptance by
Administrative Agent): *___________ ___, ____
[NAME OF ASSIGNOR], as ASSIGNOR
By:
Name:
Title:
Date:
Address for Notice:
Attn:
Telephone:
Telecopier:
[NAME OF ASSIGNOR], as ASSIGNOR
By:
Name:
Title:
Date:
Address for Notice:
Attn:
Telephone:
Telecopier:
If SECTION 13.13(b) and CLAUSE (c) of the definition of "ELIGIBLE ASSIGNEE" of
the Credit Agreement so require, Borrower and Administrative Agent consent to
this Assignment and Acceptance Agreement.
DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger,
Sygnet Wireless, Inc.),
as BORROWER
By:
Name:
Title:
Date:
NATIONSBANK, N.A.,
as ADMINISTRATIVE AGENT
By:
Name:
Title:
Dated:
* This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance Agreement to Administrative Agent.
5 EXHIBIT F
<PAGE>
ASSIGNMENT AND ACCEPTANCE AGREEMENT
SIGNATURE PAGE
<PAGE>
EXHIBIT G-1
FORM OF OPINION OF COUNSEL OF BORROWER
(DOBSON/SYGNET)
[Firm Letterhead]
December ___, 1998
NationsBank, N.A., as Administrative Agent
Lehman Commercial Paper Inc., as Co-Syndication Agent
PNC Bank, National Association, as Co-Syndication Agent
Toronto Dominion (Texas), Inc., as Co-Documentation Agent
First Union National Bank, as Co-Documentation Agent
Each Lender named in SCHEDULE 2.1 to the Credit Agreement referred to below
RE: CREDIT AGREEMENT FOR DOBSON/SYGNET OPERATING COMPANY
Ladies and Gentlemen:
We have acted as counsel to Dobson/Sygnet Operating Company (together with
its successor by merger Sygnet Wireless, Inc., "BORROWER"), and its Subsidiaries
(collectively with Borrower, the "COMPANIES") in connection with the Credit
Agreement, dated as of December 23, 1998 (as amended, modified, supplemented, or
restated from time to time, the "CREDIT AGREEMENT"), among Borrower,
NationsBank, N.A., as Administrative Agent, Lehman Commercial Paper Inc. and PNC
Bank, National Association, as Co-Syndication Agents, Toronto Dominion (Texas),
Inc. and First Union National Bank, as Co-Documentation Agents, and Lenders
named on SCHEDULE 2.1 to the Credit Agreement ("LENDERS"). In addition, we have
also acted as counsel to Dobson Operating Company ("DOC") and Dobson/Sygnet
Communications Company ("D/S COMPANY") in connection with D/S Company's
acquisition of Borrower's stock from DOC (the "DOBSON ACQUISITION").
This opinion is delivered pursuant to SECTION 7.1 of the Credit Agreement
and PARAGRAPH 11 of SCHEDULE 7.1 to the Credit Agreement. Except as otherwise
defined herein, each capitalized term used herein has the meaning given to such
term in the Credit Agreement.
In arriving at the opinions expressed below, we have examined such
corporate documents and records of the Companies and such certificates of public
officials and of officers of the Companies, other documents, and matters of law
as we deemed necessary or appropriate, including, without limitation, originals
or copies of (a) the Credit Agreement, (b) the Notes, (c) the Guaranty executed
by Sygnet Communications, Inc., (d) the Pledge, Assignment, and Security
Agreement executed by Borrower in favor of Lender, (e) the Pledge, Assignment,
and Security Agreement executed by Sygnet Communications, Inc. in favor of
Lender (collectively with (d) above, the "SECURITY AGREEMENTS"), (f) Financing
Statements showing Borrower, as Debtor, and Administrative Agent, as Secured
Party, to be filed in appropriate jurisdictions; (g) Financing Statements
(collectively with (e) above, the "FINANCING STATEMENTS") showing Sygnet
Communications, Inc., as Debtor, and Administrative Agent, as Secured Party, to
be filed in appropriate jurisdictions; and (h) other Collateral Documents (all
of the foregoing are collectively, the "TRANSACTION DOCUMENTS"); additionally,
we have examined [describe documents evidencing the Dobson Acquisition] (the
"DOBSON ACQUISITION DOCUMENTS") .
EXHIBIT G-1
<PAGE>
Based upon the foregoing, we are of the opinion that:
1. Each Company, DOC, and D/S Company (a) is a corporation validly
existing and in good standing under the Laws of its state of incorporation, (b)
is duly qualified to transact business as a foreign corporation in each
jurisdiction where the nature and extent of its business and properties require
the same, and (c) possesses all requisite corporate authority and power to
conduct its business and execute, deliver, and comply with the terms of each of
the Transaction Documents, the Dobson Acquisition Documents, and the Sygnet
Merger Documents to which such Company is a party, which have been duly
authorized and approved by all necessary corporate action and for which no
approval or consent of any Person or Governmental Authority is required which
has not been obtained.
2. Each Company has duly executed and delivered each Transaction Document
and each Sygnet Merger Document, to which such Company is a party.
3. Each Transaction Document and Sygnet Merger Document to which any
Company is party evidence the valid and legally binding obligations of such
Company, enforceable against such Company in accordance with their terms, EXCEPT
as the enforcement may be limited by Debtor Relief Laws and EXCEPT that the
remedies available with respect thereto may be subject to general principles of
equity (regardless of whether such remedies are sought in a proceeding in equity
or at law).
4. The execution, delivery, and performance of and compliance with the
terms of the Transaction Documents and the Sygnet Merger Documents will not
cause any Company to be in violation of its respective Articles or Certificates
of Incorporation or Bylaws.
5. The execution, delivery, and performance of and compliance with the
terms of the Transaction Documents and the Sygnet Merger Documents will not
cause any Company to be in violation of any Laws other than such violations
which will not, individually or collectively, be a Material Adverse Event.
6. The execution, delivery, and performance of and compliance with the
terms of the Transaction Documents and the Sygnet Merger Documents will not
cause any Company to be in default under any material, written, or oral
agreements, contracts, commitments, or understandings to which any Company is a
party.
7. Each Company is in compliance in all material respects with all
applicable Laws, federal, state, and local (including without limitation,
Environmental Laws and those statutes administered each state public utility
commission that, on the date of this opinion, exercises jurisdiction over the
Companies (collectively, the "LOCAL AUTHORITIES")), material to the conduct of
its business and operations. Except as have been obtained, no authorization,
consent, approval, waiver, licenses, or formal exemptions from, nor any filing,
declaration, or registration with, any Governmental Authority or
non-governmental entity, under the terms of the contracts or otherwise, is
required by reason of or in connection with the execution and performance of the
Transaction Documents and the Sygnet Merger Documents.
8. No Company is involved in, nor are we aware of the threat of, any
Litigation which is reasonably likely to be determined adversely to any Company.
There are no outstanding orders or judgments for the payment of money in excess
of $1,000,000 (individually or collectively) or any warrant of attachment,
acquisition, or similar proceeding against any Company's assets having a value
(individually or collectively) of $1,000,000 or more.
2 EXHIBIT G-1
<PAGE>
9. The extent of the ownership of the capital stock of or equity interest
in, and jurisdiction of organization of, each Company is as set forth on ANNEX A
attached hereto, and, to the best of our knowledge, after reasonable
investigation, EXCEPT as set forth on such schedule, no Company (a) has any
other Subsidiaries or (b) has transacted business under any other corporate or
trade name in the five-year period preceding the date hereof.
10. No Company, and no Affiliate of any Company, is (a) subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940 (as any of the preceding acts have
been amended), or any other Law (other than regulations issued by the FCC and
REGULATION X of the Board of Governors of the Federal Reserve System) which
regulates the incurring by any Company of Debt, including, but not limited to,
Laws relating to common or contract carriers or the sale of electricity, gas,
steam, water, or other public utility services, or (b) EXCEPT as listed on
ANNEX B attached hereto, a "UTILITY" defined in the Laws of the jurisdictions in
which such Company or such Affiliate maintains assets or conducts business.
11. The proceeds of the Borrowings are not to be used directly or
indirectly for the purpose of purchasing or carrying, or for the purpose of
extending credit to others for the purpose of purchasing or carrying, any
"MARGIN STOCK" as that term is defined in REGULATION U of the Board of Governors
of the Federal Reserve System.
12. (a) No Employee Plan has incurred an accumulated funding deficiency
(as defined in the Code and ERISA), (b) no Company, and no ERISA Affiliate of
any Company, has incurred material liability which is currently due and remains
unpaid to the PBGC or to an Employee Plan in connection with any such Employee
Plan, (c) no Company, and no ERISA Affiliate of any Company, has withdrawn in
whole or in part from participation in a Multiemployer Plan, (d) no Company has
engaged in any prohibited transaction (as such term is defined in ERISA or the
Code) which would be a Material Adverse Event, and (e) to the best of our
knowledge, after reasonable investigation, no Reportable Event has occurred
which is likely to result in the termination of any Employee Plan.
13. The interest payable by Borrower pursuant to the Notes and Credit
Agreement is not in violation of the usury Laws of the State of Texas or the
United States of America.
14. The conditions precedent to the initial Borrowing have been waived in
writing or satisfied in accordance with the Loan Papers.
15. Borrower is the beneficial and record owner of all shares of Sygnet
Communications, Inc., free and clear of any Liens or transfer restrictions.
16. The Financing Statements are in sufficient form for recordation. When
the Financing Statements have been filed and recorded in the jurisdictions
listed on ANNEX A hereto, the Transaction Documents shall create and perfect
valid and continuing security interests in favor of Administrative Agent, for
the benefit of Lenders in the Collateral, to the extent that the filing of
financing statements is effective to perfect security interests in the
Collateral, subject to the qualifications set forth in the Security Agreements
with respect to licenses issued by the FCC. No further action, including any
filing or recording of any document, is necessary in order to establish,
perfect, and maintain Lenders' security interests in the assets and the stock
created by the Security Agreements, EXCEPT for the periodic filing of
continuation statements with respect to financing statements filed under the
Uniform Commercial Code of the applicable jurisdiction.
3 EXHIBIT G-1
<PAGE>
17. The Dobson Acquisition Documents have been duly executed and delivered
by DOC and D/S Company, and constitute the valid and legally binding obligations
of DOC and D/S Company, enforceable in accordance with their terms, EXCEPT as
the enforcement may be limited by Debtor Relief Laws and EXCEPT that the
remedies available with respect thereto may be subject to general principles of
equity (regardless of whether such remedies are sought in a proceeding in equity
or at law). The Dobson Acquisition has been consummated in accordance with the
Dobson Acquisition Documents and applicable Law.
This opinion is addressed to you solely for your use in connection with the
transactions contemplated by the Transaction Documents, and no person other than
Administrative Agent, Syndication Agent, Documentation Agent, each Lender, each
assignee that hereafter becomes a Lender as permitted by the Credit Agreement,
and the law firm of Haynes and Boone, LLP, is entitled to rely hereon without
our prior written consent. This opinion is given as of the date hereof, and we
have no obligation to revise or update this opinion subsequent to the date
hereof or to advise you or any other person of any matter subsequent to the date
hereof which would cause us to modify this opinion in whole or in part.
Very truly yours,
4 EXHIBIT G-1
<PAGE>
ANNEX A
TO OPINION OF COUNSEL OF BORROWER
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
JURISDICTION OF PERCENTAGE INTEREST
COMPANY ORGANIZATION OWNED BY BORROWER
- -------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------
</TABLE>
5 EXHIBIT G-1
<PAGE>
ANNEX B
TO OPINION OF COUNSEL OF BORROWER
JURISDICTION(S) FOR UTILITY FILINGS
(TO BE PROVIDED BY BORROWER)
6 EXHIBIT G-1
<PAGE>
EXHIBIT G-2
FORM OF OPINION OF SPECIAL REGULATORY COUNSEL
(DOBSON/SYGNET)
[Firm Letterhead]
December ___, 1998
NationsBank, N.A., as Administrative Agent
Lehman Commercial Paper Inc., as Co-Syndication Agent
PNC Bank, National Association, as Co-Syndication Agent
Toronto Dominion (Texas), Inc., as Co-Documentation Agent
First Union National Bank, as Co-Documentation Agent
Each Lender named in SCHEDULE 2.1 to the Credit Agreement referred to below
RE: CREDIT AGREEMENT FOR DOBSON/SYGNET OPERATING COMPANY
Ladies and Gentlemen:
We have acted as special communications regulatory counsel to
Dobson/Sygnet Operating Company (together with is its successor by merger,
Sygnet Wireless, Inc., "BORROWER"), and its Subsidiaries (collectively with
Borrower, the "COMPANIES") in connection with the Credit Agreement, dated as
of December 23, 1998 (as amended, modified, supplemented, or restated from
time to time, the "CREDIT AGREEMENT"), among Borrower, NationsBank, N.A., as
Administrative Agent, Lehman Commercial Paper Inc. and PNC Bank, National
Association, as Co-Syndication Agents, Toronto Dominion (Texas), Inc. and
First Union National Bank, as Co-Documentation Agents, and Lenders named on
SCHEDULE 2.1 to the Credit Agreement ("LENDERS").
This opinion is delivered pursuant to SECTION 7.1 of the Credit
Agreement and PARAGRAPH 12 of SCHEDULE 7.1 to the Credit Agreement. Except
as otherwise defined herein, each capitalized term used herein has the
meaning given to such term in the Credit Agreement.
We have examined the articles of incorporation, bylaws, and partnership
agreements, as applicable, of the Companies, the Loan Papers, the
certificates of public convenience and necessity and similar authorizations
issued to the Companies by the Federal Communications Commission ("FCC") and
each state public utility commission ("PUC") that, on the date of this
opinion, exercises jurisdiction over the Companies (each such PUC, an
"APPLICABLE PUC"). See SCHEDULE I for the list of Applicable PUCs as of the
date of this opinion. Our opinion is limited to the provisions of the
Communications Act of 1934, as amended, 47 U.S.C. Section 151 ET SEQ. (the
"COMMUNICATIONS ACT"), and all laws administered by, and all rules,
regulations, and published policies of, the FCC and Applicable PUCs, and we
express no opinion and assume no responsibility as to the applicability of
any other laws.
Based upon the foregoing, we are of the opinion that:
1. The consummation of the Sygnet Merger and the execution and
delivery of the Credit Agreement and the Loan Papers by Borrower and the
performance by the Companies of the Obligation will not violate any law,
rule, regulation, or policy of the FCC or any Applicable PUC.
EXHIBIT G-2
<PAGE>
2. The execution and delivery of a Guaranty by the Subsidiaries party
thereto and the performance by such Subsidiaries of their respective
obligations thereunder will not violate any law, rule, regulation, or policy
of the FCC or any Applicable PUC.
3. Each Company holds all licenses required by the FCC and all other
certificates or licenses required by any Applicable PUC for the construction
and operation, in accordance with the Communications Act and the PUC Laws, of
each of the cellular systems owned or leased by the Companies (collectively,
the "CELLULAR SYSTEMS"). All of the certificates and licenses are duly and
validly held by the applicable Company, and all such certificates and
licenses are in full force and effect without conditions, other than such
conditions that are generally applicable to such licenses and other
certificates.
4. The Companies' execution and delivery, and performance and
compliance with the terms and provisions of the Credit Agreement and the
other Loan Papers and the Sygnet Merger Documents: (a) will not result in a
violation of the Communications Act or any PUC Laws: (b) will not cause any
cancellation, termination, revocation, forfeiture, or material impairment of
any FCC or PUC authorization, certificate, or license; and (c) will not
require further notice to or the approval of the FCC or any Applicable PUC
[, EXCEPT in the states where applications for authority are currently pending]
.
5. The ownership and operation by the Companies of their Systems and
other business operations are in compliance in all material respects with the
Communications Act (including, without limitation, all FCC filing, reporting,
prior approval, and similar requirements).
6. No approval, authorization, consent, adjudication, or order of the
FCC or any Applicable PUC which has not been obtained by the Companies as of
this date is required to be obtained by the Companies in connection with the
consummation of the Sygnet Merger, the execution and delivery of the Loan
Papers, the borrowing under the Credit Agreement, the payment or performance
of the Obligations by the Companies or the creations of the Liens in favor of
Lenders under the Loan Papers.
7. To the best of our knowledge: (a) there is no outstanding decree or
order that has been issued by the FCC or any Applicable PUC against any
Company and no pending or threatened litigation, proceedings, notice of
violation, order to show cause, complaint, inquiry, or investigation before
the FCC or any Applicable PUC (i) relating to any Company or relating to its
Cellular Systems or business operations that might result in the
cancellation, termination, revocation, forfeiture, or material impairment of
any FCC or PUC authorizations, certificates, or licenses, or have any
material adverse effect upon, or cause material disruption to, any Company or
the ownership or operation of such Cellular Systems or business operations or
(ii) seeking to prohibit, restrict, or delay consummation of the transactions
contemplated by the Loan Papers, the Sygnet Merger Documents, or fulfillments
of any conditions under the Loan Papers of the Sygnet Merger Documents; and
(b) no action has been taken by the FCC or any Applicable PUC which might
now, or after notice or lapse of time, or both, result in the cancellation,
termination, revocation, forfeiture, or material impairment of any FCC or PUC
authorizations, certificates, or licenses, or have any material adverse
effect upon, or material disruption to, any Company or the ownership or
operation of their Cellular Systems or business operations.
This opinion letter is provided to Administrative Agent, Syndication
Agent, Documentation Agent, each Lender, and Haynes and Boone, LLP, and their
respective participants, assignees, or other transferees, by us in our
capacity as special communications regulatory counsel to the Companies.
Very truly yours,
2 EXHIBIT G-2
<PAGE>
SCHEDULE I
TO OPINION OF SPECIAL COMMUNICATIONS COUNSEL TO BORROWER
LIST OF APPLICABLE PUC'S
(TO BE PROVIDED BY BORROWER)
4 EXHIBIT G-2
<PAGE>
EXHIBIT G-3
FORM OF OPINION OF OHIO COUNSEL
(DOBSON/SYGNET)
[Firm Letterhead]
December ___, 1998
NationsBank, N.A., as Administrative Agent
Lehman Commercial Paper Inc., as Co-Syndication Agent
PNC Bank, National Association, as Co-Syndication Agent
Toronto Dominion (Texas), Inc., as Co-Documentation Agent
First Union National Bank, as Co-Documentation Agent
Each Lender named in SCHEDULE 2.1 to the Credit Agreement referred to below
RE: CREDIT AGREEMENT FOR DOBSON/SYGNET OPERATING COMPANY
Ladies and Gentlemen:
We have acted as special [ ] counsel to
Dobson/Sygnet Operating Company (together with its successor by merger,
Sygnet Wireless, Inc., "BORROWER"), and its Subsidiaries (collectively with
Borrower, the "COMPANIES") in connection with the Credit Agreement, dated as
of December 23, 1998 (as amended, modified, supplemented, or restated from
time to time, the "CREDIT AGREEMENT"), between Borrower, NationsBank, N.A.,
as Administrative Agent, Lehman Commercial Paper Inc. and PNC Bank, National
Association, as Co-Syndication Agents, Toronto Dominion (Texas), Inc. and
First Union National Bank, as Co-Documentation Agents, and Lenders named on
SCHEDULE 2.1 to the Credit Agreement ("LENDERS").
This opinion is delivered pursuant to SECTION 7.1 of the Credit
Agreement and PARAGRAPH 13 of SCHEDULE 7.1 to the Credit Agreement. Except
as otherwise defined herein, each capitalized term used herein has the
meaning given to such term in the Credit Agreement.
As to matters of law in the State of Ohio (the "SUBJECT JURISDICTION"),
we have acted as your special counsel in connection with the preparation of
the Credit Agreement and related Loan Papers. In that connection, we have
examined such certificates of public officials and of officers of Borrower,
other documents, and matters of law as we deemed necessary or appropriate,
including, without limitation, originals or copies of the Loan Papers and the
opinions hereinafter stated, and counterparts of the following documents
(collectively, the "TRANSACTION DOCUMENTS"):
(a) Credit Agreement;
(b) Guaranty executed by Sygnet Communications, Inc.;
(c) Pledge, Assignment, and Security Agreement naming Borrower, as
Debtor, and Administrative Agent, as Secured Party;
EXHIBIT G-3
<PAGE>
(d) Pledge, Assignment, and Security Agreement (collectively with
(c) above, the "SECURITY AGREEMENTS") naming Sygnet Communications, Inc.,
as Debtor, and Administrative Agent, as Secured Party;
(e) Financing Statements showing Borrower, as Debtor, and
Administrative Agent, as Secured Party, to be filed in appropriate
jurisdictions in the State of Ohio;
(f) Financing Statements (collectively with (e) above, the
"FINANCING STATEMENTS") showing Sygnet Communications, Inc., as Debtor, and
Administrative Agent, as Secured Party, to be filed in appropriate
jurisdictions in the State of Ohio;
(g) The Sygnet Merger Documents.
Based on the foregoing, subject to the comments and exceptions
hereinafter stated, and limited in all respects to the laws of the Subject
Jurisdiction and the United States of America, it is our opinion that:
1. Each Company (a) is a corporation validly existing and in good
standing under the Laws of its state of incorporation, (b) is duly qualified
to transact business as a foreign corporation in each jurisdiction where the
nature and extent of its business and properties require the same, and (c)
possesses all requisite corporate authority and power to conduct its business
and execute, deliver, and comply with the terms of the Transaction Documents
and the Sygnet Merger Documents to which such Company is a party, which have
been duly authorized and approved by all necessary corporate action and for
which no approval or consent of any Person or Governmental Authority is
required which has not been obtained.
2. The Loan Papers and the Sygnet Merger Documents to which any
Company is a party evidence the valid and legally binding obligations of such
Company, enforceable in accordance with their respective terms, EXCEPT as the
enforcement may be limited by Debtor Relief Laws and EXCEPT that the remedies
available with respect thereto may be subject to general principles of equity
(regardless of whether such remedies are sought in a proceeding in equity or
at law).
3. Each Company has duly executed and delivered each Loan Paper and each
Sygnet Merger Document, to which such Company is a party.
4. The execution, delivery, and performance of and compliance with the
terms of the Loan Papers and the Sygnet Merger Documents will not cause any
Company to be in violation of its respective Articles or Certificates of
Incorporation or Bylaws.
5. To the best of our knowledge, after reasonable investigation, no
Company is, nor will the execution, delivery, the performance of, and
compliance with the terms of the Loan Papers and the Sygnet Merger Documents
(and the Sygnet merger contemplated thereby) cause any Company to be, in
violation of any Laws other than such violations which will not, individually
or collectively, be a Material Adverse Event.
6. The Security Agreements and Financing Statements are in proper
recordable form, and constitute valid and binding obligations of the Companies
executing the same enforceable in accordance with their terms, EXCEPT as the
enforcement thereof may be limited by applicable bankruptcy, rearrangement,
receivership, reorganization, or similar Debtor Relief Laws from time to time in
effect and affecting the rights of creditors generally, and EXCEPT that the
remedies available with respect thereto may be subject to general principles of
equity (regardless of whether such remedies are sought in a proceeding in equity
or at law). The Financing Statements are legally sufficient under the laws of
the Subject Jurisdiction to perfect any security
2 EXHIBIT G-3
<PAGE>
interests in favor of Administrative Agent, for the benefit of Lenders,
which may have attached to the Collateral therein described.
7. Under the laws of the Subject Jurisdiction, no mortgage,
documentary, stamp, or similar taxes, other than nominal recording fees, will
be payable in connection with the execution, delivery, or recording of the
Transaction Documents or any of the transactions contemplated thereby.
8. The Financing Statements should be filed with the Secretary of
State of and with at
the addresses set forth on SCHEDULE 1 hereto. When so filed and recorded,
the Transaction Documents shall create and perfect a valid and continuing
security interest in the Collateral described in the Transaction Documents,
to the extent that the filing of a financing statement in the Subject
Jurisdiction is effective to perfect the security interests granted in the
Collateral in favor of Administrative Agent, for the benefit of Lenders. No
further or subsequent filing, recording, or registration of the Transaction
Documents or any other instrument will be necessary in order to create,
perfect, or maintain the liens and security interests created an perfected by
the Transaction Documents, EXCEPT that within six months next prior to the
expiration of five years from the filing of the Financing Statements (and
each five years thereafter), Continuation Statements must be filed with the
Secretary of State of , all pursuant to the Uniform
Commercial Code as enacted in the Subject Jurisdiction.
9. You are not required, as a result of the transactions contemplated
in the Transaction Documents to qualify to do business in the Subject
Jurisdiction in order to receive the benefits of, or to exercise rights under
or in connection with, the Transaction Documents.
10. EXCEPT for the filing of the Financing Statements, no other
declarations or filings with, and no consents, waivers, approvals,
authorizations, or other actions by, any governmental or regulatory body of
the Subject Jurisdiction, including, without limitation, any environmental
protection agency or regulatory authority, are necessary in connection with
the execution and delivery by any Company of, and the performance of such
Company's obligations under or in connection with, the Transaction Documents,
or in connection with the granting of the security interests in the
Collateral and the exercise of Rights under the Transaction Documents.
11. The Sygnet Merger has been consummated in accordance with the
Sygnet Merger Documents and applicable Ohio Law. The Certificate of Merger
has been filed with the Secretary of State of Ohio and is in full force and
effect. The execution, delivery, and performance of the Sygnet Merger
Documents by the Companies party thereto were duly authorized and approved by
the respective shareholders of such Companies, and no other consents or
approvals of any Person or Governmental Authority and no other corporate
proceedings on the part of any such Company is necessary to authorize the
Sygnet Merger and the consummation of the transactions contemplated thereby,
other than such consent, approvals, or proceedings which have been previously
obtained or conducted, as the case may be. The Sygnet Merger Documents were
duly executed and delivered by the Companies party thereto and constitute the
legal, valid, and binding obligation of each such Company, enforceable in
accordance with its terms.
This opinion letter is provided to Lender, each assignee and participant
under the Credit Agreement, and Haynes and Boone, LLP.
Respectfully submitted,
3 EXHIBIT G-3
<PAGE>
EXHIBIT H
FORM OF AFFILIATE SUBORDINATION AGREEMENT
THIS AFFILIATE SUBORDINATION AGREEMENT is entered into among NationsBank,
N.A., in its capacity as Administrative Agent for Lenders (defined below), and
________________, a __________________ corporation ("SUBORDINATED CREDITOR"),
and Dobson/Sygnet Operating Company (including its successor by merger, Sygnet
Wireless, Inc.) ("BORROWER").
WHEREAS, Borrower, NationsBank, N.A., as Administrative Agent, Lehman
Commercial Paper Inc. and PNC Bank, National Association, as Co-Syndication
Agents, Toronto Dominion (Texas), Inc. and First Union National Bank, as
Co-Documentation Agents, and certain Lenders have entered into a Credit
Agreement, dated as of December 23, 1998 (as amended, modified, supplemented, or
restated from time to time, the "CREDIT AGREEMENT");
WHEREAS, this Agreement is integral to the transactions contemplated by the
Loan Papers, and the execution and delivery thereof is a condition precedent to
Lenders' obligations to extend credit under the Loan Papers;
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Administrative Agent, Subordinated Creditor, and
Borrower agree as follows:
1. Unless otherwise defined herein, or the context hereof otherwise
requires, each term defined in either of the Credit Agreements is used in this
Agreement with the same meaning. As used herein, the following terms have the
meanings indicated:
SENIOR DEBT means, whether now or hereafter arising, the Obligation,
including, without limitation, interest thereon after the commencement of
any proceedings under any Debtor Relief Law.
SUBORDINATED DEBT means the principal of and interest on all Debt of
Borrower or any other Company, whether direct, indirect, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several, now or
hereafter existing, due, or to become due to Subordinated Creditor, or held
or to be held by Subordinated Creditor, whether created directly or
acquired by assignment or otherwise, and whether evidenced by written
instrument or not.
2. The payment of any and all Subordinated Debt is hereby expressly
subordinated to all Senior Debt to the extent and in the manner set forth in
this Agreement.
3. Subordinated Creditor shall not accelerate, demand, sue for, commence
any collection or enforcement action or proceeding, take, receive, accept, or
retain any payment or distribution of any character, whether in cash,
securities, or other property, in respect of the principal of, premium on, or
interest on, the Subordinated Debt, or any Collateral therefor, until all Senior
Debt shall have been paid in full with interest, including, without limitation,
interest during any bankruptcy or similar proceeding involving Borrower from the
date of the filing thereof to the date of distribution (notwithstanding any
statute, including without limitation the Federal Bankruptcy Code, any rule of
Law, or bankruptcy procedures to the contrary).
EXHIBIT H
<PAGE>
4. In the event of the institution of and in connection with any
proceeding against Borrower pursuant to any Debtor Relief Law, and unless or
until the Senior Debt is paid in full:
(a) All Senior Debt shall first be paid in full before any payment or
distribution of any character, whether in cash, securities, or other
property, shall be made in respect of any Subordinated Debt;
(b) Any payment or distribution of any character, whether in cash,
securities, or other property, which would otherwise (but for the terms
hereof) be payable or deliverable in respect of any Subordinated Debt,
shall be paid or delivered directly to Administrative Agent, for the
benefit of Lenders, until all Senior Debt shall have been paid in full, and
Subordinated Creditor irrevocably authorizes, empowers, and directs all
receivers, trustees, liquidators, conservators, and others having authority
to effect all such payments and deliveries;
(c) Administrative Agent, on behalf of Lenders, may, as
attorney-in-fact for Subordinated Creditor, take such action on behalf of
Subordinated Creditor, and Subordinated Creditor hereby appoint
Administrative Agent, on behalf of Lenders, as its attorney-in-fact, to
demand, sue for, collect, and receive any and all such moneys, dividends,
or other assets and give acquittance therefor and to file any claim, proof
of claim, or other instrument of similar character and to take such other
proceedings in the name of Subordinated Creditor as Administrative Agent
may deem necessary or advisable for the enforcement of the Agreement; and
(d) Each Subordinated Creditor shall execute and deliver to
Administrative Agent, for the benefit of Lenders, all such further
instruments confirming the authorization referred to in the foregoing
CLAUSES (B) and (C) and all such proofs of claim, assignments of claim, and
other instruments and shall take all such other actions as may be requested
by Administrative Agent in order to enable Administrative Agent to enforce
all Rights of Lenders and Administrative Agent hereunder and all claims of
Administrative Agent or any Lender upon or in respect of the Subordinated
Debt, and failing execution of such instruments or taking of such actions
by Subordinated Creditor, Administrative Agent, for the benefit of Lenders,
is hereby authorized and empowered to execute and perform the same on
behalf of such Subordinated Creditor.
5. In the event any payment or distribution of any character, whether in
cash, securities, or other property, is received by Subordinated Creditor in
contravention of the terms of this Agreement, and before all Senior Debt shall
have been paid in full, such payment or distribution shall be held by such
Subordinated Creditor, as trustee of an express trust, in trust for the benefit
of, and shall be paid over or delivered and transferred to Administrative Agent
for application to all Senior Debt remaining unpaid until such Senior Debt shall
have been paid in full. Each Subordinated Creditor hereby assigns to
Administrative Agent, for the benefit of Lenders, all its rights to any such
payments or distributions, which Administrative Agent may exercise in
Administrative Agent's name or in the name of such Subordinated Creditor, and
agrees to execute such instruments as may be required by Administrative Agent to
enable Administrative Agent, for the benefit of Lenders, to enforce such claims.
Any payments or distributions received in excess of the amount sufficient to pay
all Senior Debt in full shall be returned by Administrative Agent to such
Subordinated Creditor.
EXHIBIT H
<PAGE>
6. Administrative Agent or Lenders may, at any time and from time to
time, without the consent of or notice to Subordinated Creditor, without
incurring responsibility to Subordinated Creditor, and without impairing or
releasing any of Administrative Agent's Rights, or any of the obligations of
Subordinated Creditor hereunder, (a) change the amount, manner, place, or terms
of payment, or change or extend the time of payment of or renew or alter all or
any part of the Senior Debt or amend, modify, supplement, or restate, any of the
Loan Papers in any manner whatsoever; (b) sell, exchange, release, or otherwise
deal with all or any part of any property by whomsoever at any time pledged or
mortgaged to secure, or howsoever securing, all or any part of the Senior Debt;
(c) hold all or any Property as additional Collateral under the Loan Papers to
secure all or any part of the Senior Debt; (d) release anyone liable in any
manner for the payment or collection of all or any part of the Senior Debt;
(e) exercise or refrain from exercising any Rights against Borrower and others
(including the undersigned); and (f) apply any sums, by whomsoever paid or
however realized, to the Senior Debt.
7. Notwithstanding anything to the contrary contained in any other
instrument or document delivered in connection with the Subordinated Debt or
otherwise, including, without limitation, any prior perfection of a security
interest or Lien, any security interests and Liens now or hereafter held by
Subordinated Creditor in any Collateral for the Subordinated Debt shall be
junior and subordinate to any security interests and Liens now or hereafter held
by Administrative Agent, for the benefit of Lenders, in the same Collateral. So
long as the Senior Debt shall remain unpaid, Administrative Agent may at all
times in its sole discretion exercise any and all powers and Rights which it now
has or may hereafter acquire with respect to any of the Collateral securing the
Senior Debt, all without the necessity of obtaining any consent or approval of
Subordinated Creditor.
8. Each Subordinated Creditor represents and warrants that it is duly
organized, validly existing, and in good standing under the laws of its state of
organization and has the power and authority under the laws of such state and
under its articles of incorporation and by-laws or other organizational
documents to enter into this Agreement; all actions necessary or appropriate for
its execution and performance of this Agreement have been taken and upon its
execution, this Agreement will constitute its valid and binding obligation
enforceable in accordance with its terms; and the making and performance of this
Agreement will not violate any law or its articles of incorporation or by-laws
or other organizational documents, or result in any violation of or constitute a
default under any agreement by which it or any of its property is bound.
9. This Agreement is a continuing agreement of subordination and Lenders
may continue to make loans to or otherwise accept the obligations of Borrower in
reliance hereon, without notice to Subordinated Creditor.
10. While this Agreement remains in effect, each Subordinated Creditor
covenants and agrees that it will not modify or amend or permit modification or
amendment of the terms and conditions of the Subordinated Debt, without
obtaining the prior written consent of Administrative Agent.
11. No waiver of Administrative Agent's Rights hereunder shall be
effective unless in a writing signed by Administrative Agent, and each waiver
shall extend only to the specific instance involved and shall not impair or
affect Administrative Agent's Rights in any other respect at any other time.
Each Subordinated Creditor hereby waives all notices with respect
EXHIBIT H
<PAGE>
to the subject matter hereof, including, but not limited to, notice of
acceptance of this Agreement, of the making of loans or advances to the Borrower
or any extensions, renewals, or modifications thereof, releases of collateral
security or guarantors or other indulgences of any character, or of the
occurrence or declaration of any default or the taking of any collection or
enforcement action. THIS AGREEMENT SHALL BE CONSTRUED ACCORDING TO THE LAWS OF
THE STATE OF TEXAS.
12. This Agreement inures to the benefit of Administrative Agent, Lenders,
and their respective successors and assigns, and the Rights under this Agreement
may be assigned in whole or in part in connection with any partial or complete
assignment or transfer of the Senior Debt. Administrative Agent is
Administrative Agent for each Lender, and Administrative Agent may, without the
joinder of any Lender, exercise any and all Rights in favor of Lenders
hereunder. The Rights of each Lender VIS-A-VIS Administrative Agent and each
other Lender may be subject to one or more separate agreements between or among
such parties, but Subordinated Creditor need not inquire about any such
agreement or be subject to any terms thereof unless Subordinated Creditor
specifically joins therein; and, consequently, neither Subordinated Creditor nor
its heirs, personal representatives, successors, or assigns are entitled to any
benefits or provisions of any such separate agreements or are entitled to rely
upon or raise as a defense, in any manner whatsoever, the failure or refusal of
any party thereto to comply with the provisions thereof. This Agreement binds
Subordinated Creditor and its successors and assigns, and Subordinated Creditor
will advise each future holder of all or any part of the Subordinated Debt that
the Subordinated Debt is subordinated to the Senior Debt in the manner and to
the extent set forth in this Agreement.
13. This Agreement may be executed in a number of identical counterparts,
each of which is deemed an original for all purposes and all of which
constitute, collectively, one agreement; but, in making proof of this Agreement,
it is not necessary to produce or account for more than one counterpart.
14. Subject to the provisions of this Agreement and the Rights of
Administrative Agent hereunder, as between Borrower and Subordinated Creditor,
nothing herein contained shall impair the obligation of Borrower, which is
absolute and unconditional to pay the Subordinated Debt as and when the same
shall become due and payable in accordance with the terms thereof, or prevent
Subordinated Creditor upon default with respect to the Subordinated Debt, from
exercising all rights, powers, and remedies otherwise provided therein or by
applicable Law.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE TO FOLLOW.
EXHIBIT H
<PAGE>
EXECUTED on the date first stated in this Affiliate Subordination Agreement.
[SUBORDINATED CREDITOR]
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
NATIONSBANK, N.A.,
as Administrative Agent
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
BORROWER (a) acknowledges and confirms that it has received an executed copy of
this Affiliate Subordination Agreement and approves of and consents to it in all
respects; and (b) agrees to be bound by and to observe all of the terms and
conditions of this Affiliate Subordination Agreement.
DOBSON/SYGNET OPERATING COMPANY
(including its successor by merger, Sygnet
Wireless, Inc.)
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
AFFILIATE SUBORDINATION AGREEMENT
SIGNATURE PAGE
EXHIBIT H
<PAGE>
SCHEDULE 2.1
LENDERS AND APPLICABLE LENDING OFFICES
(Dobson/Sygnet Operating Company)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
LENDER AND APPLICABLE LENDING OFFICE FACILITIES
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
<S> <C>
First Union National Bank Revolver Facility
Attn: Tony Parisi Term Loan A
F.C. 1-8-11-28 Term Loan B
1339 Chestnut Street Term Loan C
Philadelphia, PA 19107
215-786-8216
215-786-7721 (fax)
- -------------------------------------------------------------------------------------
Lehman Commercial Paper Inc. Revolver Facility
Attn: Kevin Lockhart Term Loan A
3 World Financial Center Term Loan B
New York, NY 10285 Term Loan C
212-526-7144
212-526-4911 (fax)
- -------------------------------------------------------------------------------------
NationsBank, N.A. Revolver Facility
Communications Finance Division Term Loan A
Attn: Thomas E. Carter Term Loan B
901 Main Street, 64th Floor Term Loan C
Dallas, Texas 75202
214-508-2576
214-508-9390 (fax)
- -------------------------------------------------------------------------------------
PNC Bank, National Association Revolver Facility
Attn: Tom Coates Term Loan A
1600 Market Street Term Loan B
21st Floor Term Loan C
Philadelphia, PA 19103
215-585-6466
215-585-6680 (fax)
- -------------------------------------------------------------------------------------
Toronto Dominion (Texas), Inc. Revolver Facility
Attn: Nancy Sheridan Term Loan A
31 West 52nd Street Term Loan B
New York, NY 10019 Term Loan C
212-827-7582
212-262-1928 (fax)
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 2.1
<PAGE>
COMMITMENTS
REVOLVER FACILITY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
NAME AND ADDRESS OF REVOLVER REVOLVER REVOLVER
LENDERS COMMITTED SUMS COMMITMENT PERCENTAGE
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
First Union National Bank $8,720,930.23 17.441860460000001%
Attn: Tony Parisi
F.C. 1-8-11-28
1339 Chestnut Street
Philadelphia, PA 19107
215-786-8216
215-786-7721 (fax)
- ---------------------------------------------------------------------------------------------
Lehman Commercial Paper Inc. $11,627,906.98 23.255813960000001%
Attn: Kevin Lockhart
3 World Financial Center
New York, NY 10285
212-526-7144
212-526-4911 (fax)
- ---------------------------------------------------------------------------------------------
NationsBank, N.A. $12,209,302.33 24.418604660000000%
Communications Finance Division
Attn: Thomas E. Carter
901 Main Street, 64th Floor
Dallas, Texas 75202
214-508-2576
214-508-9390 (fax)
- ---------------------------------------------------------------------------------------------
PNC Bank, National Association $8,720,930.23 17.441860460000001%
Attn: Tom Coates
1600 Market Street
21st Floor
Philadelphia, PA 19103
215-585-6466
215-585-6680 (fax)
- ---------------------------------------------------------------------------------------------
Toronto Dominion (Texas), Inc. $8,720,930.23 17.441860460000001%
Attn: Nancy Sheridan
31 West 52nd Street
New York, NY 10019
212-827-7582
212-262-1928 (fax)
- ---------------------------------------------------------------------------------------------
Totals $50,000,000.00 100.00%
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
3 SCHEDULE 2.1
<PAGE>
TERM LOAN A FACILITY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
NAME AND ADDRESS TERM LOAN A TERM LOAN A
OF COMMITTED SUMS COMMITMENT PERCENTAGE
TERM LOAN A LENDERS
- ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
First Union National Bank $21,802,325.58 17.441860463999998%
Attn: Tony Parisi
F.C. 1-8-11-28
1339 Chestnut Street
Philadelphia, PA 19107
215-786-8216
215-786-7721 (fax)
- ---------------------------------------------------------------------------------------------
Lehman Commercial Paper Inc. $29,069,767.44 23.255813952000000%
Attn: Kevin Lockhart
3 World Financial Center
New York, NY 10285
212-526-7144
212-526-4911 (fax)
- ---------------------------------------------------------------------------------------------
NationsBank, N.A. $30,523,255.82 24.418604655999999%
Communications Finance Division
Attn: Thomas E. Carter
901 Main Street, 64th Floor
Dallas, Texas 75202
214-508-2576
214-508-9390 (fax)
- ---------------------------------------------------------------------------------------------
PNC Bank, National Association $21,802,325.58 17.441860463999998%
Attn: Tom Coates
1600 Market Street
21st Floor
Philadelphia, PA 19103
215-585-6466
215-585-6680 (fax)
- ---------------------------------------------------------------------------------------------
Toronto Dominion (Texas), Inc. $21,802,325.58 17.441860463999998%
Attn: Nancy Sheridan
31 West 52nd Street
New York, NY 10019
212-827-7582
212-262-1928 (fax)
- ---------------------------------------------------------------------------------------------
Totals $125,000,000.00 100.00%
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
4 SCHEDULE 2.1
<PAGE>
TERM LOAN B FACILITY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
NAME AND ADDRESS TERM LOAN B TERM LOAN B
OF COMMITTED SUMS COMMITMENT PERCENTAGE
TERM LOAN B LENDERS
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
First Union National Bank $27,034,883.72 17.441860464516129%
Attn: Tony Parisi
F.C. 1-8-11-28
1339 Chestnut Street
Philadelphia, PA 19107
215-786-8216
215-786-7721 (fax)
- ----------------------------------------------------------------------------------------------
Lehman Commercial Paper Inc. $36,046,511.63 23.255813954838711%
Attn: Kevin Lockhart
3 World Financial Center
New York, NY 10285
212-526-7144
212-526-4911 (fax)
- ----------------------------------------------------------------------------------------------
NationsBank, N.A. $37,848,837.21 24.418604651612906%
Communications Finance Division
Attn: Thomas E. Carter
901 Main Street, 64th Floor
Dallas, Texas 75202
214-508-2576
214-508-9390 (fax)
- ----------------------------------------------------------------------------------------------
PNC Bank, National Association $27,034,883.72 17.441860464516129%
Attn: Tom Coates
1600 Market Street
21st Floor
Philadelphia, PA 19103
215-585-6466
215-585-6680 (fax)
- ----------------------------------------------------------------------------------------------
Toronto Dominion (Texas), Inc. $27,034,883.72 17.441860464516129%
Attn: Nancy Sheridan
31 West 52nd Street
New York, NY 10019
212-827-7582
212-262-1928 (fax)
- ----------------------------------------------------------------------------------------------
Totals $155,000,000.00 100.00%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
5 SCHEDULE 2.1
<PAGE>
TERM LOAN C FACILITY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
NAME AND ADDRESS TERM LOAN C TERM LOAN C
OF COMMITTED SUMS COMMITMENT PERCENTAGE
TERM LOAN C LENDERS
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
First Union National Bank $17,441,860.47 17.441860469999998%
Attn: Tony Parisi
F.C. 1-8-11-28
1339 Chestnut Street
Philadelphia, PA 19107
215-786-8216
215-786-7721 (fax)
- ----------------------------------------------------------------------------------------------
Lehman Commercial Paper Inc. $23,255,813.95 23.255813949999997%
Attn: Kevin Lockhart
3 World Financial Center
New York, NY 10285
212-526-7144
212-526-4911 (fax)
- ----------------------------------------------------------------------------------------------
NationsBank, N.A. $24,418,604.64 24.418604639999998%
Communications Finance Division
Attn: Thomas E. Carter
901 Main Street, 64th Floor
Dallas, Texas 75202
214-508-2576
214-508-9390 (fax)
- ----------------------------------------------------------------------------------------------
PNC Bank, National Association $17,441,860.47 17.441860469999998%
Attn: Tom Coates
1600 Market Street
21st Floor
Philadelphia, PA 19103
215-585-6466
215-585-6680 (fax)
- ----------------------------------------------------------------------------------------------
Toronto Dominion (Texas), Inc. $17,441,860.47 17.441860469999998%
Attn: Nancy Sheridan
31 West 52nd Street
New York, NY 10019
212-827-7582
212-262-1928 (fax)
- ----------------------------------------------------------------------------------------------
Totals $100,000,000.00 100.00%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
6 SCHEDULE 2.1
<PAGE>
SCHEDULE 7.1
CONDITIONS PRECEDENT TO CLOSING
(Dobson/Sygnet Operating Company)
The Agreement and related Loan Papers shall not become effective
unless Administrative Agent has received all of the following (unless
otherwise indicated, all documents shall be dated as of December 23, 1998,
and all terms used with their initial letters capitalized are used herein
with their meanings as defined in the Agreement):
2. THE AGREEMENT. The Agreement (together with all Schedules and Exhibits
thereto) executed by Borrower, each Lender, and Administrative Agent.
3. NOTES. For each Lender, the Notes for such Lender in the forms of
EXHIBITS A-1, A-2, A-3, A-4 or A-5, as applicable, payable to the order
of each applicable Lender, as contemplated in SECTION 3.1.
4. GUARANTY. A Guaranty, in the form of EXHIBIT C, executed by each Person
which first becomes a Subsidiary of Borrower upon consummation of the
Sygnet Merger (each such Person, a "NEW SUBSIDIARY").
5. ARTICLES OF INCORPORATION. A copy of the Articles of Incorporation or
Certificate of Incorporation, and all amendments thereto, of Borrower
and each New Subsidiary (other than any Company that is a partnership),
each accompanied by a certificate that such copy is correct and
complete, one dated a Current Date (as used herein, the term "CURRENT
DATE" means any date not more than 30 days prior to the Closing Date),
issued by the appropriate Governmental Authority of the jurisdiction of
incorporation of each such Company, and one dated the Closing Date,
executed by the President or Vice President and the Secretary or
Assistant Secretary of each such Company.
6. BYLAWS. A copy of the Bylaws, and all amendments thereto, of Borrower
and each New Subsidiary (other than any Company that is a partnership),
accompanied by a certificate that such copy is correct and complete,
dated the Closing Date, and executed by the President or Vice President
and the Secretary or Assistant Secretary of each such Company.
7. PARTNERSHIP AGREEMENTS. Copies of the currently-effective Partnership
Agreement for each New Subsidiary that is a partnership, and all
amendments thereto, accompanied by a certificate of the General Partner
or other appropriate managing partner dated as of the Closing Date that
such copies are correct and complete; a certified copy of the
Partnership Agreement for each New Subsidiary that is a partnership,
each dated a Current Date, issued by the appropriate Governmental
Authority of the jurisdiction in which such partnership is organized.
8. GOOD STANDING AND AUTHORITY. Certificates of the appropriate
Governmental Authorities of such jurisdictions as Administrative Agent
may designate, each dated a Current Date, to the effect that Borrower
and each New Subsidiary is in good standing with respect to the payment
of franchise and similar Taxes (to the extent such information is
available) and is duly qualified to transact business in such
jurisdiction.
9. INCUMBENCY. Certificates of incumbency dated as of the Closing Date
with respect to all officers or partners of each Company who will be
authorized to execute or attest to any of the Loan Papers on behalf of
such Company, executed by the President or a Vice President, and the
Secretary or an
SCHEDULE 7.1
<PAGE>
Assistant Secretary, of each such Company (or General Partner or other
appropriate managing partner for any Company that is a partnership).
10. RESOLUTIONS. Copies of resolutions duly adopted by the Board of
Directors of each Company that will be executing any Loan Paper as of
the Closing Date, approving this Agreement and the other Loan Papers and
authorizing the transactions contemplated in such Loan Papers,
ACCOMPANIED BY a certificate of the Secretary or an Assistant Secretary
of each such Company, dated as of the Closing Date, certifying that such
copy is a true and correct copy of resolutions duly adopted at a meeting
of (which may be held by conference telephone or similar communications
equipment by means of which all Persons participating in a meeting can
hear each other if permitted by applicable Law and, if required by such
Law, by its Bylaws), or by the unanimous written consent of (if
permitted by applicable Law and, if required by such Law, by its
Bylaws), the Board of Directors of each such Company, and that such
resolutions constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any
respect, and are in full force and effect as of the Closing Date.
11. PARTNERSHIP AUTHORIZATION. For each Company that will be executing any
Loan Paper as of the Closing Date that is a partnership, evidence of
authorization by the applicable partners, in each case authorizing the
execution and full performance of the Loan Papers, and all other
documents and actions required pursuant thereto, accompanied by a
certificate from the general partner or other appropriate managing
partner, dated as of the Closing Date, certifying that such copy is a
true and correct copy of the authorizations adopted by the partnership
and that such authorizations constitute all authorizations adopted with
respect to such transactions, have not been amended, modified, or
revoked in any respect, and are in full force and effect as of the
Closing Date.
12. OPINION OF COUNSEL TO THE COMPANIES. The opinion of counsel to the
Companies, addressed to Administrative Agent and Lenders, substantially
in the form of EXHIBIT G-1.
13. OPINION OF SPECIAL REGULATORY COUNSEL TO THE COMPANIES. The opinion of
special regulatory counsel to the Companies, addressed to Administrative
Agent and Lenders, substantially in the form of EXHIBIT G-2.
14. LOCAL COUNSEL OPINION. Such other written opinions of local counsel,
addressed to Administrative Agent and Lenders, as Administrative Agent
may request, substantially in the form of EXHIBIT G-3.
15. RELIANCE LETTERS. Letters from counsel to parties to the Sygnet Merger
Documents permitting Administrative Agent and Lenders to rely on
opinions delivered pursuant thereto, the same as if Administrative Agent
and Lenders were addressees.
16. PLEDGE, ASSIGNMENT, AND SECURITY AGREEMENTS. A Pledge, Assignment, and
Security Agreement, substantially in the form and upon the terms of
EXHIBIT D, executed by Borrower and each New Subsidiary, as debtor, and
delivered to Administrative Agent, as secured party on behalf of
Lenders, granting and creating Liens in favor of Lenders in and to all
of the Collateral, TOGETHER WITH (a) one or more Financing Statements,
executed and delivered by Borrower and each New Subsidiary, as debtor,
in favor of Administrative Agent, as secured party on behalf of Lenders,
covering all such Collateral, and (b) delivery to Administrative Agent
of all Pledged Shares and Collateral Notes (as such terms are defined in
the Pledge, Assignment, and Security Agreement), together with executed
blank stock powers for each Pledged Share certificate delivered and
executed allonge endorsements for each Collateral Note delivered, all in
form acceptable to Administrative Agent.
2 SCHEDULE 7.1
<PAGE>
17. LIEN SEARCHES. Lien searches in the name of Borrower, each New
Subsidiary, and any other name(s) as Administrative Agent may deem
appropriate in each state where Borrower and each New Subsidiary
maintains an office or has real property, showing no financing
statements or other Lien instruments of record except for Permitted
Liens or Liens being released concurrently with the Sygnet Merger or
Dobson Acquisition.
18. LIEN RELEASES. Payoff letters in form and substance reasonably
acceptable to Administrative Agent relating to the payoff of all Debt of
Borrower and any New Subsidiary (other than Permitted Debt) or duly
executed releases or assignments of Liens and financing statements in
recordable form as may be necessary to reflect that the Liens created by
the Collateral Documents are first priority Liens (except for Permitted
Liens).
19. CONSENTS, FILINGS, ETC. Evidence satisfactory to Administrative Agent
and its counsel that the Companies have received all approvals,
authorizations, consents, and waivers of any Governmental Authority or
other Person necessary or appropriate for the execution, delivery, and
performance by Borrower or any New Subsidiary of the Loan Papers and all
documents relating to the Dobson Acquisition, Sygnet Merger, Sygnet
Tower Sale, and Sygnet Tower Lease, to which it is a party, including,
without limitation, (a) all such approvals, authorizations, consents,
and waivers disclosed in the Loan Papers or the documents relating to
the Dobson Acquisition, Sygnet Merger, Sygnet Tower Sale, or Sygnet
Tower Lease (including those required in connection with the assignment
of material contracts), (b) any such approvals, authorizations,
consents, or waivers reasonably required by Administrative Agent in
connection with the granting of a security interest to Administrative
Agent in each material contract acquired or assumed by any Company, and
(c) all filings, consents, or approvals with or of Governmental
Authorities necessary to enter into the Loan Papers or consummate the
Dobson Acquisition, Sygnet Merger, Sygnet Tower Sale, Sygnet Tower
Lease, or any other transactions contemplated by the Loan Papers, as
applicable, including, without limitation, all filings (if any) required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the
lapse of all waiting periods with respect thereto.
20. INSURANCE. Evidence that the Collateral is insured (including flood
insurance) in such amounts, against such risks, with such deductibles,
and with such insurers as may be satisfactory to Administrative Agent
with loss payable to Administrative Agent, on behalf of Lenders, as
their interests may appear, together with certificates evidencing such
insurance (containing a standard mortgagee clause) with appropriate
endorsements to satisfy SECTION 9.8 of the Agreement.
21. UNRESTRICTED SUBSIDIARY DESIGNATION. Evidence that Communications
(a) has designated Parent, Borrower and each New Subsidiary as
"UNRESTRICTED SUBSIDIARIES" in compliance with the requirements of: (i)
the Communications Bond Debt, (ii) the Certificate of Designation for
the Senior Preferred Stock, (iii) the Credit Agreement dated as of
March 25, 1998, among Dobson Operating Company (as "BORROWER"),
Communications (as "GUARANTOR"), and First Union National Bank (as
successor by merger to CoreStates Bank, N.A., as "ADMINISTRATIVE
AGENT"), (iv) the Revolving Credit Agreement dated as of March 25, 1998,
among Dobson Cellular Operations Company (as "BORROWER"), and
NationsBank, N.A. (as successor by merger to NationsBank of Texas, N.A.,
as "ADMINISTRATIVE AGENT"), and (v) the 364-Day Revolving Credit and
Term Loan Agreement dated as of March 25, 1998, among Dobson Cellular
Operations Company (as "BORROWER"), and NationsBank, N.A. (as successor
by merger to NationsBank of Texas, N.A., as "ADMINISTRATIVE AGENT"), and
(b) has provided all required notices, certifications, and resolutions
to the Trustee under the Communications Bond Debt or other parties, as
required by the Communications Bond Debt.
3 SCHEDULE 7.1
<PAGE>
22. NOTICE OF BORROWING. A duly completed Notice of Borrowing for the
initial Borrowing, delivered to Administrative Agent, together with
calculations demonstrating compliance with SECTION 9.30 on the Closing
Date after giving effect to any Borrowings made on such date.
23. CURRENT FINANCIALS AND COMPLIANCE CERTIFICATE. True and correct copies
of the Current Financials of the Companies, together with a Compliance
Certificate prepared as of the Closing Date, on a pro forma basis after
giving effect to the closing of the Loan Papers and all related
transactions, Sygnet Merger, Dobson Acquisition, Sygnet Tower Sale, and
Sygnet Tower Lease.
24. BUDGET. A Budget showing the projected income and expenses of the
Companies for fiscal year 1999.
25. PAYMENT OF FEES AND CLOSING FEES. Payment of all fees payable on or
prior to the Closing Date to Administrative Agent, Arranger, or any
Lender as provided for in SECTION 5 of the Agreement, together with
reimbursements to Administrative Agent and Arranger for all fees and
expenses incurred in connection with the negotiation, preparation, and
closing of the transactions evidenced by the Loan Papers (including,
without limitation, attorneys' fees and expenses).
26. SYGNET TOWER SALE. Evidence that the Sygnet Tower Sale has been
consummated and delivery to Administrative Agent of true and correct
copies of the Sygnet Tower Sale Agreement and the Sygnet Tower Lease,
certified as true and correct as of the Closing Date by a Responsible
Officer of Borrower.
27. APPOINTMENT OF AGENT. Evidence satisfactory to Administrative Agent
that Borrower has appointed an agent for service of process pursuant to
SECTION 13.10.
28. TAX SHARING AGREEMENT. An acknowledgment executed by Parent and the
Companies that they are subject to the Tax Sharing Agreement.
29. COMPLIANCE WITH OTHER DEBT DOCUMENTS. An opinion from securities
counsel to the Companies addressed to Administrative Agent and Lenders,
stating that the Debt incurred under the Agreement and related Loan
Papers, the capital contributions made by Communications and Parent, the
Sygnet Merger, the Dobson Acquisition, the Sygnet Tower Sale, and the
Sygnet Tower Lease are in compliance with the terms of the
Communications Bond Debt, the Indenture for the Senior Reserve Notes,
and the Certificates of Designation for the Senior Preferred Stock.
30. DOBSON ACQUISITION AND SYGNET MERGER. (i) A fully-executed copy of the
Agreement and Plan of Merger by and among Sygnet Wireless and Borrower,
dated as of July 28, 1998, together with all material amendments,
schedules and exhibits thereto, certified as true, correct, and complete
by a Responsible Officer of Borrower; (ii) evidence satisfactory to
Administrative Agent and its counsel that the Sygnet Merger has been
consummated in accordance with the terms of the agreement described in
clause (i) preceding, and that all material conditions stated therein
have been satisfied without waiver; (iii) evidence of filing of the
Certificate of Merger of Sygnet Wireless and Borrower; and (iv) evidence
satisfactory to Administrative Agent that the Dobson Acquisition has
been consummated.
31. SOLVENCY OPINION. Evidence satisfactory to Administrative Agent in the
form of a solvency opinion that, as of the closing, after giving effect
to the Dobson Acquisition, the Sygnet Merger, the Sygnet Tower Sale, and
the Sygnet Tower Lease, Borrower is Solvent and the Companies, on a
consolidated basis, are Solvent.
4 SCHEDULE 7.1
<PAGE>
32. SYGNET SENIOR NOTES. To the extent any Sygnet Senior Notes are
outstanding as of the Closing Date, evidence satisfactory to
Administrative Agent that there has been no "DEFAULT" or "EVENT OF
DEFAULT" thereunder, and after giving pro form effect to the
transactions contemplated by the Agreement and the related Loan Papers,
there will be no default or event of default, under the Sygnet Senior
Notes.
33. EQUITY CONTRIBUTIONS. Evidence satisfactory to Administrative Agent
that capital contributions in an amount greater than or equal to
$145,000,000 have been made from Communications to Parent and from
Parent to Borrower.
34. SENIOR RESERVE NOTES. Evidence satisfactory to Administrative Agent
that Parent has received a minimum of $125,000,000 in net proceeds (less
the value of any Pledged Government Securities securing interest
payments on the Senior Reserve Notes) from the issuance of the Senior
Reserve Notes, and that Parent has contributed such proceeds as a
capital contribution to Borrower.
35. DEPOSIT ESCROW AGREEMENT. Evidence satisfactory to Administrative Agent
that the Escrow Agreement (as defined in the Sygnet Merger Agreement)
contains terms evidencing Lenders' Rights in the Deposit (as defined in
the Sygnet Merger Agreement).
36. OTHER DOCUMENTS. Such other agreements, documents, instruments,
opinions, certificates, and evidences as Administrative Agent may
reasonably request.
5 SCHEDULE 7.1
<PAGE>
SCHEDULE 7.2
CONDITIONS PRECEDENT TO PERMITTED ACQUISITION
(Dobson/Sygnet Operating Company)
Borrower shall deliver, or cause to be delivered, to Administrative
Agent all of the following items, on or before than the dates indicated below
(all terms used with their initial letters capitalized are used herein with
their meanings as defined in the Credit Agreement):
A. 5 DAYS PRIOR TO THE EXECUTION BY ANY COMPANY OF ANY PURCHASE AGREEMENT
FOR ANY PROPOSED PERMITTED ACQUISITION:
A copy of the proposed purchase agreement and all related schedules and
exhibits thereto for the Subject Acquisition.
B. THIRTY DAYS PRIOR TO THE CONSUMMATION DATE OF ANY PROPOSED PERMITTED
ACQUISITION:
PERMITTED ACQUISITION COMPLIANCE CERTIFICATE. A Permitted
Acquisition Compliance Certificate, substantially in the form of EXHIBIT E-2
to the Credit Agreement, executed and delivered by Borrower, together with
the following attached thereto:
ANNEX A: which sets forth calculations demonstrating pro forma
compliance with the financial covenants in SECTION 9.30
and additional covenants in SECTIONS 9.20 and 9.21 of
the Credit Agreement, after giving effect to the Subject
Acquisition;
ANNEX B: which sets forth pro forma income and balance sheet
projections for the Companies, after giving effect to
the Subject Acquisition;
ANNEX C: which sets forth ten-year cash flow projections for the
Subject Acquisition; and
ANNEX D: which is a true and correct copy of the Purchase
Agreement and all amendments, exhibits, and schedules
thereto.
B. ON OR PRIOR TO THE CONSUMMATION DATE OF ANY PERMITTED ACQUISITION:
1. PERMITTED ACQUISITION LOAN CLOSING CERTIFICATE. A Permitted Acquisition
Loan Closing Certificate, substantially in the form of EXHIBIT E-3 to
the Credit Agreement, executed and delivered by Borrower on the
consummation date of the Subject Acquisition.
2. SCHEDULES. If the information on any Schedule to any Loan Paper changes
or is incomplete as a result of the Subject Acquisition, revised or
supplemental Schedules to such Loan Papers which are required to make
the disclosures in such Schedules accurate after giving effect to the
Subject Acquisition.
3. GUARANTIES. A Guaranty, substantially in the form of EXHIBIT C to the
Credit Agreement, executed by each Person which first becomes a
Subsidiary of Borrower upon consummation of the Subject Acquisition
(each such Person, a "NEW SUBSIDIARY").
1 SCHEDULE 7.2
<PAGE>
4. SECURITY DOCUMENTS. A Pledge, Assignment, and Security Agreement
substantially in the form of EXHIBIT D to the Credit Agreement, together
with all corresponding financing statements, assignments, or other
related instruments or documents, executed by each New Subsidiary.
5. ARTICLES OF INCORPORATION. Copies of the Articles or Certificate of
Incorporation, and all amendments thereto, of each New Subsidiary (or,
in the case of any New Subsidiary that is a limited partnership, of the
corporate general partner of such New Subsidiary, if any), and, in the
case of any New Subsidiary that is a limited partnership, copies of its
Limited Partnership Agreement and all amendments thereto, accompanied by
certificates that such copies are correct and complete, one dated a date
not more than 60 days prior to the date of the Subject Acquisition,
issued by the appropriate Governmental Authority of the jurisdiction of
incorporation of such New Subsidiary (OTHER THAN any such New Subsidiary
that is a limited partnership) or any corporate general partner thereof,
and one dated as of the date of consummation of the Subject Acquisition,
executed by the President, a Vice President, the Secretary or an
Assistant Secretary of each such New Subsidiary, or of its general
partner, as applicable.
6. BYLAWS. Copies of the Bylaws, and all amendments thereto, of each New
Subsidiary (or, in the case of any New Subsidiary that is a limited
partnership, of the corporate general partner of such New Subsidiary, if
any), accompanied by a certificate that such copy is correct and
complete, executed by the President, a Vice President, the Secretary or
an Assistant Secretary of each such New Subsidiary, or of its general
partner, as applicable.
7. RESOLUTIONS. Copies of resolutions duly adopted by the Board of
Directors of each New Subsidiary or, in the case of any New Subsidiary
that is a limited partnership, by the Board of Directors of the general
partner of such New Subsidiary, and that will be executing any Loan
Paper as of the date of the Subject Acquisition, approving such Loan
Papers to which it is a party and authorizing the transactions
contemplated in the Loan Papers, accompanied by a certificate of the
Secretary or an Assistant Secretary of each such New Subsidiary or of
its general partner, as applicable, that such copy is a true and correct
copy of resolutions duly adopted at a meeting of (which may be held by
conference telephone or similar communications equipment by means of
which all New Subsidiary participating in a meeting can hear each other
if permitted by applicable Law and, if required by such Law, by the
Bylaws of such New Subsidiary or of its general partner, as applicable),
or by the unanimous written consent of (if permitted by applicable Law
and, if required by such Law, by the Bylaws of such New Subsidiary or of
its general partner, as applicable), the Board of Directors of such New
Subsidiary or of its general partner, as applicable, and that such
resolutions constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any respect
(EXCEPT as any such resolution may be modified by any such other
resolution), and are in full force and effect as of the date of
consummation of the Subject Acquisition.
8. INCUMBENCY. Certificates of incumbency of all officers of each New
Subsidiary (or, in the case of any New Subsidiary that is a limited
partnership, of the general partner of such New Subsidiary) who will be
authorized to execute a Guaranty or any other Loan Paper on behalf of
any such New Subsidiary, executed by the President, a Vice President,
the Secretary or an Assistant Secretary of each such New Subsidiary, or
of its general partner, as applicable.
9. EXISTENCE AND GOOD STANDING. Copies of any certificates of existence
and good standing and any filing officer certificates (or commercial
reports similar thereto) obtained by or delivered to Borrower in
connection with the Subject Acquisition.
2 SCHEDULE 7.2
<PAGE>
10. LIEN SEARCHES. Lien searches in the name of each New Subsidiary being
acquired (in the case of a merger) or in the name of each New Subsidiary
transferring any assets being acquired (in the case of an asset
acquisition) pursuant to the Subject Acquisition in each state where
such New Subsidiary maintains an office or has real property, showing no
financing statements or other Lien instruments of record except for
Permitted Liens or Liens being released concurrently with the Subject
Acquisition.
11. LIEN RELEASES. Payoff letters in form and substance reasonably
acceptable to Administrative Agent or duly executed releases or
assignments of Liens and financing statements in recordable form as may
be necessary to reflect that the Liens created by the Loan Papers
affecting the assets acquired in connection with the Subject Acquisition
are first priority Liens (except for Permitted Liens).
12. CONSENTS, FILINGS, ETC. All approvals, authorizations, consents, and
waivers of any Governmental Authority or other Person necessary or
appropriate for the execution, delivery, and performance by any New
Subsidiary of all documents relating to the Subject Acquisition or the
Loan Papers to which it is a party, including, without limitation, (a)
all such approvals, authorizations, consents, and waivers disclosed in
the documents relating to the Subject Acquisition (including those
required in connection with the assignment of material contracts), (b)
any such approvals, authorizations, consents, or waivers reasonably
required by Administrative Agent in connection with the granting of a
security interest to Administrative Agent in each material contract
acquired or assumed by any Company in connection with the Subject
Acquisition, and (c) all filings, consents, or approvals with or of
Governmental Authorities necessary to consummate the Subject
Acquisition, as applicable, including, without limitation, all filings
(if any) required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 and the lapse of all waiting periods with respect thereto.
13. INSURANCE. With respect to each New Subsidiary or additional assets
acquired, certificates of insurance for each policy of insurance
maintained by such New Subsidiary or covering such additional assets and
evidence that such policies are in full force and effect, which
insurance coverage and related certificates of insurance shall satisfy
the requirements of SECTION 9.8 of the Credit Agreement.
14. NOTICE OF BORROWING. To the extent Borrower uses Borrowings to fund the
Subject Acquisition, a Notice of Borrowing, substantially in the form of
EXHIBIT B-1 to the Credit Agreement, executed by Borrower.
15. LEGAL OPINIONS. To the extent requested by Administrative Agent,
favorable opinions of (i) counsel for the Companies, in form and
substance satisfactory to Administrative Agent, with respect to the
Subject Acquisition and the Loan Papers to be executed and/or delivered
in connection therewith, and (ii) such other counsel as may be
acceptable to Administrative Agent, regarding the form and
enforceability of the Collateral Documents in the states where any
property acquired in connection with the Subject Acquisition is located.
16. ACQUISITION DOCUMENTS. A certified copy of the executed purchase
agreement (together with all schedules and exhibits thereto) and copies
of all other documents relating to the Subject Acquisition.
17. OTHER DOCUMENTS. Such other agreements, documents, instruments,
opinions, certificates, and evidences as Administrative Agent may
reasonably request. Administrative Agent shall, upon request of
Borrower, confirm to Borrower that it has received all such items so
requested and that all matters required to be satisfactory to the
Administrative Agent are satisfactory.
3 SCHEDULE 7.2
<PAGE>
SCHEDULE 8.2
FCC AND PUC LICENSES
(Dobson/Sygnet Operating Company and Subsidiaries)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
CALL SIGN USE STATION LOCATION CALL SIGN USE STATION LOCATION
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
WNGC333 SMR Youngstown, OH WPJD307 Microwave Corning, NY
- -----------------------------------------------------------------------------
KNRT240 SMR Youngstown, OH WMS263 Microwave S. Dansville, NY
- -----------------------------------------------------------------------------
KLF512 Paging Various WPJD305 Microwave Savona, NY
- -----------------------------------------------------------------------------
KEK302 Paging Youngstown, OH WMJ738 Microwave Attica, NY
- -----------------------------------------------------------------------------
KNKA318 Cellular Youngstown, OH WPNG888 Microwave Sheldon, NY
- -----------------------------------------------------------------------------
KNKA555 Cellular Sharon, PA WMJ415 Microwave Freeport, PA
- -----------------------------------------------------------------------------
KNKN660 Cellular Columbiana, OH WPNH775 Microwave Worthington, PA
- -----------------------------------------------------------------------------
KNKA743 Cellular Erie, PA WPNH774 Microwave Boyers, PA
- -----------------------------------------------------------------------------
WLT235 TFA Various WMR486 Microwave Cranberry, PA
- -----------------------------------------------------------------------------
WPNH426 Microwave Damascus, OH WMR259 Microwave Clarion, PA
- -----------------------------------------------------------------------------
WMM409 Microwave Salem, OH (Old) WHD223 Microwave Clearfield, PA
- -----------------------------------------------------------------------------
WMR482 Microwave Edinboro, PA WPNH427 Microwave Meadville, PA
- -----------------------------------------------------------------------------
WPNH428 Microwave Summit, PA WHD221 Microwave Punxsutawney, PA
- -----------------------------------------------------------------------------
WLN230 Microwave Austintown, OH WHD222 Microwave Reynoldsville, PA
- -----------------------------------------------------------------------------
WLW476 Microwave Greenford, OH WPNA580 Microwave Warren, PA
- -----------------------------------------------------------------------------
WLL292 Microwave North Lima, OH WHD220 Microwave Indiana, PA
- -----------------------------------------------------------------------------
WML722 Microwave Poland, OH WMJ410 Microwave New Castle, PA
- -----------------------------------------------------------------------------
WLN229 Microwave Youngstown, OH WMJ412 Microwave Butler, PA
- -----------------------------------------------------------------------------
WPNH430 Microwave Youngstown, OH WMJ673 Microwave Westfield, NY
(downtown)
- -----------------------------------------------------------------------------
WLN778 Microwave Charleston, PA WMM463 Microwave Ellicottville, NY
- -----------------------------------------------------------------------------
WLL936 Microwave Mercer, PA WMM465 Microwave Olean, NY
- -----------------------------------------------------------------------------
WPNH429 Microwave Sharpsville, PA WMR257 Microwave Butler, PA
- -----------------------------------------------------------------------------
WLC636 Microwave Warren, OH WMJ411 Microwave Butler, PA
- -----------------------------------------------------------------------------
WLC637 Microwave Warren, OH WMJ414 Microwave Springdale, PA
- -----------------------------------------------------------------------------
WLA974 Microwave Warren, OH WMJ416 Microwave Kittanning, PA
- -----------------------------------------------------------------------------
WMW725 Microwave Warren, OH WMJ674 Microwave Buffalo, NY
- -----------------------------------------------------------------------------
WLA975 Microwave Berlin Center, OH WMK455 Microwave Falconner, NY
- -----------------------------------------------------------------------------
WLL890 Microwave Greenville, PA WMM464 Microwave Salamanca, NY
- -----------------------------------------------------------------------------
</TABLE>
SCHEDULE 8.2
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
CALL SIGN USE STATION LOCATION CALL SIGN USE STATION LOCATION
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
WHF611 Microwave Lisbon, OH WMM909 Microwave Leroy, NY
- -----------------------------------------------------------------------------
WMK795 Microwave Briston, OH WMR258 Microwave Emlenton, PA
- -----------------------------------------------------------------------------
WMM408 Microwave Youngstown, OH WMR260 Microwave Oil City, PA
- -----------------------------------------------------------------------------
WMN588 Microwave Calcutta, OH WMR483 Microwave Meadville, PA
- -----------------------------------------------------------------------------
WMR484 Microwave Mercer, PA WMR485 Microwave Porterville, PA
- -----------------------------------------------------------------------------
KNKN865 Cellular Chautauqua, NY WMR487 Microwave Pittsburgh, PA
- -----------------------------------------------------------------------------
KNKN937 Cellular Crawford, PA WPNH770 Microwave Worthington, PA
- -----------------------------------------------------------------------------
*KNKP984 Cellular McKean, PA WMS264 Microwave Hornell, NY
- -----------------------------------------------------------------------------
KNKN625 Cellular Lawrence, PA WMS260 Microwave Colden, NY
- -----------------------------------------------------------------------------
KNKN562 Cellular Jefferson, PA WMS265 Microwave Avoca, NY
- -----------------------------------------------------------------------------
WMS262 Microwave Angelica, NY WMS261 Microwave Freedom, NY
- -----------------------------------------------------------------------------
WPNG887 Microwave Rushford, NY WPJD306 Microwave Wellsville, NY
- -----------------------------------------------------------------------------
WPNG886 Microwave West Valley, NY WMK453 Microwave Arkwright, NY
(Plato)
- -----------------------------------------------------------------------------
WPNG885 Microwave Cherry Creek, NY WMK454 Microwave Ellery Center, NY
- -----------------------------------------------------------------------------
WPNH777 Microwave Sherman, NY WMS259 Microwave Buffalo, NY
- -----------------------------------------------------------------------------
WMK452 Microwave New Oregon, NY WMJ737 Microwave Alexander, NY
- -----------------------------------------------------------------------------
</TABLE>
* Effective June 29, 1998, SCI discontinued its provision of cellular
service in the McKean, PA, RSA in accordance with the terms of its
Interim Operating Authority. SCI continues to provide cellular service
in the McKean, PA, RSA pursuant to a Management Agreement with the
permanent license holder, Pinellas Communications, pending its
acquisition of the permanent license from Pinellas. An application to
assign the permanent license to SCI was filed with the FCC on July 8,
1996.
Public Utilities Commission of Ohio Certificate of Public Convenience and
Necessity, Certificate No. 90-5321, dated December 12, 1994.
2 SCHEDULE 8.2
<PAGE>
PENDING MICROWAVE STATION APPLICATIONS
<TABLE>
<CAPTION>
Call Sign Location Purpose Date Filed
--------- -------- ------- ----------
<S> <C> <C> <C>
WMK 454 Ellery, NY Minor Modification 5/12/98
WPNH 777 Sherman, NY Minor Modification 5/12/98
WMS 262 Angelica, NY Minor Modification 6/22/98
WPNG 887 Rushford, NY Minor Modification 6/22/98
</TABLE>
PENDING APPLICATIONS
I. MICROWAVE STATIONS
<TABLE>
<CAPTION>
Call Sign Location Purpose Date Filed
--------- -------- ------- ----------
<S> <C> <C> <C>
WPNH777 Sherman, NY Minor Modification 10/21/98
(File No. 9708726)
New Saegertown, PA New Station 10/21/98
(File No. 9708727)
WPNH774 Boyers, PA Minor Modification 12/7/98
WLL936 Mercer, PA Minor Modification 12/7/98
WMR484 Mercer, PA Minor Modification 12/14/98
WMR485 Porterville, PA Minor Modification 12/14/98
WMR486 Cranberry, PA Minor Modification 12/14/98
</TABLE>
II. PAGING STATIONS
<TABLE>
<CAPTION>
Call Sign Location Purpose Date Filed
--------- -------- ------- ----------
<S> <C> <C> <C>
KLF512 Youngstown, NY Modification 9/2/98
</TABLE>
3 SCHEDULE 8.2
<PAGE>
SCHEDULE 8.3
CORPORATE STOCK AND PARTNERSHIP INTERESTS
(Dobson/Sygnet Operating Company)
CORPORATIONS
Sygnet Communications, Inc.
Jurisdiction of Incorporation: Ohio
FOREIGN QUALIFICATIONS: New York and Pennsylvania
CAPITAL STOCK: 100% owned by Dobson/Sygnet Operating Company (including
its successor by merger, Sygnet Wireless, Inc.)
SCHEDULE 8.3
<PAGE>
SCHEDULE 8.15
MATERIAL AGREEMENTS
(Dobson/Sygnet Operating Company and Subsidiaries)
(a)(i) The following are material contracts of the Company and SCI, currently
required to be filed pursuant to Item 601(b)(10) of Regulation S-K
promulgated by the Securities and Exchange Commission, and which have
been entered into since the Company Balance Sheet Date. (Please refer
to the Company Filings for a list of agreements filed as exhibits to
the Company Filings):
None.
(a)(ii) The following are employment, severance, termination, consulting and
retirement agreements not otherwise disclosed in this Agreement:
None.
(a)(iii) The following is a list of each loan agreement, indenture, letter of
credit, lease required to be capitalized under GAAP, mortgage, note
and other debt instrument evidencing, individually, indebtedness or an
annual obligation to pay in excess of $250,000:
Interest Rate Swap Agreements with Corestates Bank, N.A. and PNC Bank,
National Association.
Indenture dated as of September 26, 1996, between Sygnet Wireless,
Inc. and Fleet National Bank, as Trustee.
Unsecured Subordinated Revolving Credit Note dated as of October 9,
1996, executed and delivered by Sygnet Communications, Inc. in favor
of Sygnet Wireless, Inc.
Credit Agreement dated as of October 9, 1996, among the Company and
The Toronto-Dominion Bank and PNC Bank, National Association, as
amended by that certain Consent, Waiver and Amendment dated March 28,
1997, between Sygnet Communications, Inc. and PNC Bank, National
Association, as further amended by that certain Second Amendment to
Credit Agreement dated as of April 18, 1998.
(a)(iv) The following are agreements that require annual payments of more than
$250,000 (other than purchase orders and advertising sales contracts
entered into in the ordinary course of business):
Cellular One License Agreement effective December 1, 1996, between
Cellular One Group and Erie Cellular Telephone Company (upon a change
of control, requires notice, submission of financial information and
payment of a transfer fee).
Cellular One License Agreement, effective as of December 17, 1996,
between Cellular One Group and Sygnet Communications, Inc. (PA-1)
(upon a change of control, requires notice, submission of financial
information and payment of a transfer fee).
Cellular One License Agreement, effective as of November 7, 1996,
between Cellular One Group and Sygnet Communications, Inc. (PA-6)
(upon a change of control, requires notice, submission of financial
information and payment of a transfer fee).
SCHEDULE 8.15
<PAGE>
Cellular One License Agreement, effective as of January 30, 1997,
between Cellular One Group and Sygnet Communications, Inc. (PA-7)
(upon a change of control, requires notice, submission of financial
information and payment of a transfer fee).
Cellular One License Agreement, effective as of January 1, 1997,
between Cellular One Group and Sygnet Communications, Inc. (NY-3)
(upon a change of control, requires notice, submission of financial
information and payment of a transfer fee).
Northern Telecom, Inc. DMS-MTX Cellular Supply Agreement dated June 1,
1996 between Youngstown Cellular Telephone Company and Northern
Telecom, Inc. with Amendment No. 1 dated April 15, 1998 (need prior
written consent to transfer or assign).
Software License Agreement dated April 20, 1995, between International
Telecommunication Data Systems, Inc. ("ITDS") and Youngstown Cellular
Telephone Company and Wilson Cellular, with Addendum dated January 19,
1996, and Addendum dated September 20, 1997 (may not be assigned
without prior written consent of ITDS).
Interconnection Agreement for a Wireless System under Sections 251 and
252 of the Telecommunications Act of 1996 dated as of March 27, 1998,
by and between Ameritech Information Industry Services, a division of
Ameritech Services, Inc. on behalf of Ameritech Ohio and Sygnet
Communications (may assign to an entity acquiring all or substantially
all assets or equity by providing prior written notice).
Dealer Agreement dated April 15, 1996, between Clarion Cellular (d/b/a
Butler Car Audio) and Horizon Cellular Telephone Company of Lawrence.
Type 2 A-B Interconnection and Traffic Interchange Agreement for
F.C.C. Part 22 Cellular Carriers between The Bell Telephone Company of
Pennsylvania and Youngstown Cellular Telephone Company dated August
27, 1991, with Amendments dated June 1, 1996, January 24, 1997, August
19, 1996, and Rider dated October 18, 1996 (need prior written consent
to assign).
Intercarrier Services Agreement dated April 25, 1995, between
Youngstown Cellular Telephone Company and EDS Personal Communications
Corporation, with Amendments dated April 10, 1996, and August 1, 1997
(need prior written consent to assign).
Connection and Traffic Interchange Agreement dated December 19, 1985,
between Sprint (f/k/a United Telephone Company of Ohio) and Youngstown
Cellular Telephone Company of Ohio and Youngstown Cellular Telephone
Company (need prior consent to assign or in any way transfer).
Wholesale Service Agreement between Frontier Communications of the
West, Inc. and Sygnet Communications dated April 24, 1996, with
amendment dated July 11, 1997 (need prior written consent to
transfer).
Dealer Agreement signed January 3, 1994, between Horizon Cellular
Telephone Company of Lawrence and Cell Mart.
Standard Agency Agreement - Cellular Service dated February 19, 1996,
between Auto Club Cellular and Erie Cellular Telephone Company.
2 SCHEDULE 8.15
<PAGE>
EXHIBIT 5
[LETTERHEAD]
January 22, 1999
Dobson/Sygnet Communications Company
13439 N. Broadway Extension
Suite 200
Oklahoma City, Oklahoma 73114
Re: 12 1/4% Senior Notes due 2008
Ladies and Gentlemen:
We have acted as special counsel to Dobson/Sygnet Communications Company
(the "Company") in connection with the issuance and sale of $200,000,000
aggregate principal amount of the Company's 12 1/4% Senior Notes due 2008
(which are referred to herein as the "Old Notes") and the registration under
the Securities act of 1933 of $200,000,000 aggregate principal amount of the
Company's 12 1/4% Senior Notes due 2008 (the "New Notes"). The New Notes are to
be offered in exchange for all outstanding Old Notes (the "Exchange Offer") as
more fully set forth in the prospectus which forms are a part of the Company's
Registration Statement on Form S-4 (the "Registration Statement") with which
this opinion is being filed.
In this connection we have examined the Company's Certificate of
Incorporation and Bylaws, minutes of certain meetings of the Company's Board
of Directors and the Indenture dated as of December 23, 1998 between the
Company and United States Trust Company of New York, as Trustee, governing
the Old Notes and the New Notes, and have made such other investigations of
fact and law as we deem necessary to render the opinions set forth herein.
Based on the foregoing, we are of the opinion that the New Notes to be
exchanged for the Old Notes in the Exchange Offer, when issued in accordance
therewith, will be legally issued, fully paid and non-assessable and will be
binding obligations of the Company.
The opinion expressed herein as to the New Notes constituting binding
obligations of the Company is subject to the exceptions that (1) enforcement
may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors rights generally, and (2)
<PAGE>
enforcement is subject to general principles of equity (regardless of whether
enforcement is considered a proceeding in equity or at law).
We hereby consent to the reference to our firm in the Prospectus under
the caption "Legal Matters".
Very truly yours,
/s/ McAFEE & TAFT
A Professional Corporation
-2-
<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 23rd day of December, 1998,
(the "Effective Date"), by and between SYGNET COMMUNICATIONS, INC., an Ohio
corporation, (hereinafter referred to as "Seller"), and DOBSON TOWER COMPANY,
an Oklahoma Corporation, (hereinafter referred to as "Buyer").
WHEREAS, Seller has agreed to grant, bargain, sell, assign, transfer and
deliver to Buyer all the cellular towers, cellular tower sites, equipment,
fixtures, cellular tower leases, ground leases, real estate owned, personal
property, and fixtures associated therewith (herein the "Assets"), identified
and summarized in the attached Exhibit "A"; and Buyer has agreed to purchase
all the Assets in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and in consideration
of the mutual covenants herein contained, the parties hereto agree as follows:
1. SALE OF ASSETS. Seller hereby sells, grants, bargains, assigns,
transfers and delivers to Buyer all the Assets, both tangible and intangible,
wherever located, such Assets identified and summarized in the attached
Exhibit "A", and Buyer hereby purchases such Assets for the sum of $25
Million Dollars. Seller acknowledges receipt of the purchase price.
2. ASSIGNMENT. Seller shall take all necessary actions to consummate
the terms of this Agreement, including, but not limited to, execution of a
Bill of Sale, Assignment and Assumption Agreement, execution of other
instruments as necessary, including, but not limited to, assignments of
leases and conveyance of real property, and to take such action as Buyer may
reasonably deem necessary or appropriate to enable Buyer to exercise fully
its rights hereunder.
3. CLOSING DATE. Seller and Buyer agree that the closing with respect
to this Agreement shall take place simultaneous with the closing of that
certain Agreement and Plan of Merger dated as of July 28, 1998, among Sygnet
Wireless, Inc., and Dobson/Sygnet Operating Company, f/k/a Front Nine
Operating Company (the "Sygnet Merger).
4. EFFECTIVE TIME AND DATE. The terms and provisions of this
Agreement are effective as of the Effective Date set forth above, and
immediately prior to the effective time of the Sygnet Merger.
5. REPRESENTATIONS OF SELLER. Seller represents and warrants to Buyer
that (a) Seller has full power, authority and capacity to execute this
Agreement, perform the transactions
<PAGE>
required of it to consummate the transaction, and that to the extent consents
of third parties are required in order to consummate the transactions
contemplated by this Agreement, such consents have been obtained or will to
the best of Seller's ability be obtained; (b) Seller's execution, delivery
and performance of this Agreement, and the execution and delivery of the
documents delivered and transactions effected by it at the closing violate no
contract, agreement, order, judgment or the like that is binding on Seller or
the enforcement of which is threatened by any pending or anticipated
litigation, hearing or investigation; (c) the Assets identified in the
attached Exhibit "A" will be transferred to Buyer free and clear of all
liens, encumbrances, security interests and claims of third parties, other
than those liens, encumbrances, security interests or claims of third parties
which are specifically assumed by Buyer, if any. To the extent Seller cannot
obtain any required consent of a third party within sixty (60) days of the
Closing Date, the Buyer may, in its sole election, re-convey to Seller any of
the Assets subject to a lien, encumbrance, security interest or claim of
third parties for a credit equal to the fair market value of the returned
Asset, such value to be determined by Seller and Buyer.
6. REPRESENTATIONS OF BUYER. Buyer represents and warrants to Seller
that (a) Buyer has full power, authority and capacity to execute this
Agreement and perform the transactions required of it to consummate the
transaction; (b) Buyer's execution, delivery and performance of this
Agreement, and the execution and delivery of the documents delivered and
transactions effected by it at the closing violate no contract, agreement,
order, judgment or the like that is binding on Buyer or the enforcement of
which is threatened by any pending or anticipated litigation, hearing or
investigation.
7. ACKNOWLEDGMENT WITH RESPECT TO SUBSEQUENT SALES. Seller and Buyer
acknowledge and agree that should any of the Assets be re-sold by Buyer to a
non-affiliated third party after consummation of this Agreement, any Excess
Tower Proceeds received by Seller and Buyer in connection with such resale
shall be applied in accordance with the terms and provisions of that certain
Credit Agreement dated as of December 23, 1998, by and between Dobson/Sygnet
Operating Company, as Borrower, and NationsBank, N.A., as Administrative
Agent (the "Credit Agreement"). For purposes of this paragraph, "Excess
Tower Proceeds" shall have the meaning as defined in the Credit Agreement.
The terms of this paragraph shall survive the Closing.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of each party shall survive the Closing.
9. INDEMNIFICATION. Each of Seller and Buyer agrees to
2
<PAGE>
defend, indemnify and hold harmless the other from and against any breach of
the respective party's warranties and representations set forth above.
10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
11. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the substantive laws of the State of Oklahoma.
12. MODIFICATION. This Agreement may be amended only by a writing
signed by all the parties hereto.
13. BINDING EFFECT. This Agreement shall inure to the benefit of, and
shall be binding on, the parties hereto and their respective successors and
assigns.
14. INVALIDITY. If any one or more of the provisions of this Agreement
shall for any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect
the remaining provisions of this Agreement, and this document shall be
construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
15. ENTIRE CONTRACT. This Agreement constitutes the entire Agreement
among the parties hereto and supersedes any and all prior and contemporaneous
negotiations, agreements, and understandings among the parties hereto
pertaining to the subject matter hereof.
16. HEADINGS AND CONSTRUCTION. The headings contained in this
Agreement are inserted for convenience only, and shall not constitute a part
hereof.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the Effective Date first above written.
"SELLER"
SYGNET COMMUNICATIONS, INC.
/s/ G. Edward Evans
--------------------------------
By: G. Edward Evans
-----------------------------
Title: President
-----------------------------
"BUYER"
DOBSON TOWER COMPANY
/s/ G. Edward Evans
--------------------------------
By: G. Edward Evans
-----------------------------
Title: President
-----------------------------
3
<PAGE>
EXHIBIT "A"
IDENTIFICATION AND SUMMARY OF ASSETS
TRANSFERRED BY SELLER TO BUYER
<TABLE>
<CAPTION>
Number SITE NAME HUB MKT COUNTY STATE ADDRESS LAND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Calcutta (St. Clair) COLUM Columbiana OH 16067 Maple St. Calcutta, OH 43920 R
2 Columbiana (Fairfield Twp) COLUM Columbiana OH State Rt.# 344 Columbianna, OH R
3 Damascus (Butler Twp) COLUM Columbiana OH 690 Valley Rd. Damascus, OH R
4 East Liverpool COLUM Columbiana OH 1000 Pope St. East Liverpool, OH 43920 R
5 East Palestine COLUM Columbiana OH 1415 Brookdale Ave. East Palestine, OH 44413 R
6 Hanoverton (Hanover Twp) COLUM Columbiana OH 30546 Speidel Rd. Hanoverton, OH 44423 R
7 Salem (Downtown) COLUM Columbiana OH 231 South Broadway Ave. Salem, OH 44460 R
8 Fairview ERIE Erie PA 4701 Franklin Ave. Fairview, PA 16415 R
9 Girard, PA ERIE Erie PA Mill Rd. Girard, PA 16417 R
10 Harborcreek ERIE Erie PA 4463 Iroquois Ave. Erie, PA 16511 R
11 Millcreek 1 ERIE Erie PA 2212 Fillmore Ave. Erie, PA 16506 R
12 Millcreek 2 ERIE Erie PA 5709 Wattsburg, Rd. Erie, PA 16509 R
13 Northeast ERIE Erie PA 8168 Dougan Rd. North East, PA 16428 R
14 Union City FH ERIE Erie PA RD #1 Old Wattsburg Rd. Union City, PA 16438 R
15 Waterford ERIE Erie PA 11730 Route 19 Waterford, PA 16509 R
16 West Springfield ERIE Erie PA 13825 Ridge Road and Rt.#20 W.Springfield, PA 16443 R
17 Addison NY3 Steuben NY Box 290 RD #3 Derby Hill Rd. Addison, NY R
18 Alexander NY3 Genesee NY 3242 Stannard Rd. Alexander, NY 14005 R
19 Arkwright NY3 Chautauqua NY RD #1 9565 Center Rd. Fredonia, NY 14063 R
20 Bath 2 NY3 Steuben NY Rumsey Rd. Bath, NY, Steuben County R
21 Bolivar NY3 Allegany NY Route 5A Salt Rising Rd. Bolivar, NY R
22 Caneadea (Houghton) NY3 Allegany NY Dutch Hill Rd. Caneadea, NY R
23 Carrolton FH NY3 Cattaraugus NY Allegany, NY R
24 Dunkirk (Perm) NY3 Chautauqua NY 1089 Central Ave. Dunkirk, NY R
25 Ellicottville 2 NY3 Cattaraugus NY 6152 Sugartown Rd., Ellicottville, NY R
26 Findley (French Creek) NY3 Chautauqua NY Gilmore Rd. Clymer, NY R
27 Hornell NY3 Steuben NY Bald Hill Rd. Hornellsville, NY 13843 R
28 Jasper NY3 Steuben NY 2499 Timmeran Rd. Greenwood, NY 14839 R
29 Keuka Lake #2 NY3 Steuben NY 9540 Grove Spring Rd. Hammondsport, NY 14840 R
30 LeRoy NY3 Genesee NY 8132 W. Bergen Rd. Leroy, NY 14482 R
31 Little Valley NY3 Cattaraugus NY Forth St.Little Valley, NY R
32 Olean 2 NY3 Cattaraugus NY Buffalo St. Ext., Olean, NY 14760 R
33 Pembroke NY3 Genesee NY 2064 Indian Falls Rd. Corfu, NY R
34 Poland, NY FH NY3 Chautauqua NY RD #1 Mee Rd. Poland, NY R
35 Portville NY3 Cattaraugus NY W. River Rd. Portville, NY R
36 Silver Creek NY3 Chautauqua NY 12592 Beebe Rd. Irving, NY R
37 Steamburg NY3 Cattaraugus NY Oldro Hill Rd., Coolspring, NY R
38 Warsaw NY3 Wyoming NY 3130 Merchant Rd. Warsaw, NY R
39 Westfield NY3 Chautauqua NY Douglas Rd. Westfield, NY R
40 Blooming Valley PA1 Crawford PA 28361 Highway 77, Cambridge Springs, PA 16403 R
41 Carlton PA1 Venango PA County Line Road Carlton, PA R
42 Dicksonburg PA1 Crawford PA Agnew Rd. Crawford County, PA R
43 Oil City 2 (Permanent) FH PA1 Venango PA 840 Orange Rd. Ext. Oil City, PA Cranberry Twp. R
44 Pittsfield PA1 Warren PA Abraham Hollow Pittsfield Twp. PA R
45 Pymatuning PA1 Crawford PA TW Route 307 Snake Rd.,Jamestown, PA 16134 R
46 Sheffield Twp. PA1 Warren PA Bull Hill Sheffield, PA R
47 Tidioute PA1 Warren PA Cambell Hill Rd., Tidioute, PA R
48 Warren, PA FH PA1 Trumbull PA East Fifth Ave. Ext. Warren, PA R
49 St. Mary's PA2 Elk PA Burkes True Value Route #255 St. Marys, PA R
50 Butler 3 PA6 Butler PA Heinz Rd. Butler, PA R
51 Cranberry 2 PA6 Butler PA 60 Progress Ave. Cranberry, PA 16066 R
52 East Brady PA6 Clarion PA Ferry St., East Brady (Bourgh), PA R
53 Elderton FH PA6 Armstrong PA West Saltwork Rd. Elderton, PA R
54 Ellwood City PA6 Lawrence PA Ellwood City, PA R
55 Emlenton H PA6 Clarion PA Hays Rd. Richland Twp. R
56 Freeport FH PA6 Armstrong PA 150 Striker Rd. Freeport, PA 16229 R
57 Muddy Creek PA6 Butler PA 2627 William Flynn Hwy. Slippery Rock, PA 16057 R
58 New Bethlehem PA6 Clarion PA 1/4 mile N. of the end of Conrail Rd. New Bethlehem, PA 16242 R
59 Prospect (Perm) PA6 Butler PA Monroe St. Prospect, PA R
60 Pulaski PA6 Lawrence PA Cotton School Rd. Volant, PA 16156 R
61 Slippery Rock PA6 Butler PA 284 Miller Rd. Slippery Rock, PA 16047 R
62 South Lawrence (L Beaver) PA6 Lawrence PA RD #1 Cosgrove Rd. New Galilee, PA 16141 R
63 Worth PA6 Lawrence PA 1810 Perry Hwy, Portersville, PA 16051 R
64 Worthington H PA6 Armstrong PA Rt. 422 East, approx. 3 miles west of Worthington, PA R
65 Brockway PA7 Jefferson PA Cemetery Hill Rd.(SR #1025) Brockway, PA R
66 Brookville PA7 Jefferson PA RR #4 W322 Brookville, PA R
67 Clarksburg PA7 Indiana PA RD#1 Box 625 Clarksburg, PA R
68 Curwensville (Lumber City) PA7 Clearfield PA Ann St. Ext. Curwensville, PA 16833 R
69 Dubois PA7 Clearfield PA RD #3 Box 254 Juniata St. Ext. DuBois, PA 15801 R
70 Indiana East H PA7 Indiana PA Black Hawk Rd. Chestnut Ridge Penn Run, PA R
71 Marion Center PA7 Indiana PA Keslar Rd.Twp Rt. 557,E. Mahoning Twp. Indianna County, PA R
72 Morrisdale PA7 Clearfield PA Oak Grove Rd. Morrisdale, PA 16821 R
73 Charleston MERCER Mercer PA W. Big Bend Rd. Mercer, PA 16137 R
74 Greenfield MERCER Mercer PA 25 Jellison Lane Mercer, PA 16137 R
75 Greenville H MERCER Mercer PA 107 Mc Cracken Rd. Greenville, PA 16125 R
76 Grove City MERCER Mercer PA 522 East Main St. Grove City, PA 16127 R
77 Hermitage 2 MERCER Mercer PA N. Buhl Farm Dr. R
78 New Vernon MERCER Mercer PA 513 Boyd-Steckler Rd. New Vernon, PA R
79 W.Middlesex (Shenango Twp) MERCER Mercer PA 100 Farkas Rd. West Middlesex, PA R
80 Alliance (Smith Twp) YGTN Mahoning OH Mahoning Ave. Alliance, OH R
81 Austintown 1 H YGTN Mahoning OH 5549 Dunlap Rd. Austintown, OH 44515 O
82 Austintown 2 YGTN Mahoning OH 1401 Raccoon Rd. Austintown, OH 44515 R
83 Berlin Center YGTN Mahoning OH 6370 Duck Creek Rd. Berlin Center, OH 44401 R
84 Boardman 1 YGTN Mahoning OH 1393 Boardman Canfield Rd. Boardman, OH 44512 R
85 Boardman 2 (McClurg) YGTN Mahoning OH 388 Mc Clurg Rd. Boardman, OH 44512 R
86 Boardman 3 YGTN Mahoning OH 7330 Market St. Boardman, OH 44512 R
87 Boardman 4 YGTN Mahoning OH 1209 Boardman Canfield Rd. Boardman, OH 44512 R
88 Bristol YGTN Trumbull OH 2560 Hyde Oakfield Rd. Bristolville, OH 44402 R
89 Brookfield YGTN Trumbull OH 6873 Warren Sharon Rd. Brookfield, OH 44403 R
90 Canfield 1 YGTN Mahoning OH 519 North Broad St. Canfield, OH 44406 R
91 Canfield 2 YGTN Mahoning OH 6155 State Route 446 Canfield, OH 44406 R
92 Coitsville YGTN Mahoning OH 65 Coitsville-Hubbard Rd. Youngstown, OH R
93 Cortland (Fowler Twp.) YGTN Trumbull OH 3263 Everett Hull Rd. Cortland, OH 44410 R
94 Girard, OH YGTN Trumbull OH 1 Petro Plaza Girard, OH 44420 R
95 Gustavus YGTN Trumbull OH 8088 State Route 193 Farmdale, OH 44417 R
96 Hartford YGTN Trumbull OH 2944 State Rt. 7 Youngstown-Conneaut Rd. Fowler, OH 44418 R
97 Howland YGTN Trumbull OH 9139 East Market St. Warren, OH R
98 Liberty Twp. YGTN Trumbull OH Goodwill Industries, 2747 Belmont Ave. Youngstown, OH 44505 R
99 Lordstown YGTN Trumbull OH 3293 Bailey Rd. Lordstown, OH R
100 McKinley (Niles) YGTN Trumbull OH 937 Youngstown-Warren Rd. Niles, OH 44446 R
101 New Springfield(Springfield Twp) YGTN Mahoning OH 3475 East South Range Rd. New Springfield, OH 44443 R
102 Newton Falls FH YGTN Trumbull OH 3384 Newton Falls-Bailey Rd. Warren, OH 44481 R
103 North Jackson (Jackson Twp.) YGTN Mahoning OH 1621 Duckcreek Rd. North Jackson, OH 44451 R
104 North Lima (A) YGTN Mahoning OH 10400 1/2 South Ave. Ext. North Lima, OH 44514 R
105 Vienna YGTN Trumbull OH 4308 Seminole Dr. Vienna, OH R
108 Warren 4 YGTN Trumbull OH 4664 Parkman Rd. Warren, OH R
Totals
Annual Totals
<CAPTION>
IN LEASE MO. REPLACE.
Number LESSOR SERVICE EXP. INCOME FEE COST
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Alfred C. Gloeckner 2/1/92 1/31/02 171 90,000
2 Novak Ohio Auto Sales & Salvage 8/30/96 8/30/21 300 90,000
3 Larry Shreve 7/26/95 7/25/20 200 65,000
4 City of East Liverpool 6/1/97 5/31/22 417 90,000
5 Catherine J. Grimm 2/1/96 1/31/21 275 90,000
6 Morrell Foor 11/15/96 11/15/21 425 65,000
7 City of Salem 6/20/95 6/19/45 160 77,000
8 Fairview Borough 9/1/94 8/31/99 259 500 90,000
9 Richard or Mary Margaret Gloskey 11/1/89 11/1/99 550 345 65,000
10 Gregory L. Savoia 4/9/97 4/8/22 400 90,000
11 William E. Walker 3/1/96 2/28/01 500 77,000
12 C & M Realty 6/6/96 6/30/21 450 90,000
13 Wesley H. & Teresa McGarvey 11/1/91 10/31/01 406 65,000
14 Lyle L. Bisbee 3/16/93 3/15/03 360 65,000
15 Peter A. Damiano 8/1/95 7/31/00 500 65,000
16 Edward Gehr dba/EJ's Motel 3/21/97 3/20/22 375 90,000
17 Daniel J. & Saloma S. Byler 12/1/94 12/1/99 250 65,000
18 Rosemary Bartz 7/1/91 7/30/01 288 90,000
19 Albert H. & Betty Ann Gaus 7/26/91 7/25/01 288 90,000
20 Robert D. Fullmer 6/15/98 6/14/23 400 90,000
21 Richard G. Smith 2/15/97 2/14/22 400 65,000
22 Earl C. & Dorothy E. Findlay 4/1/97 3/31/22 400 90,000
23 Robert Donald Benson, Jr. 4/1/98 3/31/23 150 90,000
24 Chautauqua County AG and Fair Association, Inc. 3/1/97 2/28/22 400 90,000
25 Calvin F. Mercer 12/1/96 11/30/21 400 90,000
26 Peak-n-Peak Recreation, Inc. 9/1/96 8/31/01 882 90,000
27 John D & Nancy L. Nisbet 6/15/94 6/30/99 325 90,000
28 Alfred N. & Belva M. Chace, Sr. 6/1/97 5/31/22 350 65,000
29 John & Patricia Mann, Sr. 12/8/94 12/7/99 250 90,000
30 Robert & Elizabeth Gath 6/1/92 6/1/02 287 90,000
31 Mario Fabbro & Gloria A. Fabbro 6/15/97 6/14/22 1,076 400 65,000
32 James G. & Barbara P. Maynard 1/1/98 12/31/22 400 65,000
33 Loren & Lois Falker 2/1/97 1/31/22 400 90,000
34 Mee Brothers Farms 9/1/91 8/31/01 259 90,000
35 Charles J. and Betty J. Safe 5/15/97 5/14/22 400 90,000
36 Laura L. Robinson 12/1/96 11/30/21 360 400 65,000
37 Walter E. Hornburg, Jr. 4/1/98 3/31/23 400 65,000
38 William E. Clark 3/6/96 3/6/01 351 65,000
39 Albert Riedesel C/O Phil Riedesel 10/1/91 9/31/01 259 65,000
40 Leigh E. Bowes & Janet R. Bowes 8/1/97 7/31/22 300 90,000
41 Lestor J. & Nancy A. Wright 3/17/95 3/17/00 350 65,000
42 Anna H. Henning C/O Joseph Hruska 9/1/94 9/30/99 200 65,000
43 Michael E. & Joyce B. Morgan 10/8/96 10/7/21 275 65,000
44 Harold W. Cornish 3/1/96 2/28/01 250 65,000
45 John M. & Sherry Kay Krygowski 5/1/98 4/30/23 300 90,000
46 JJRG 4/16/97 4/15/22 267 65,000
47 Jack D. Moore & Janet A. Moore 7/1/97 6/30/22 275 90,000
48 David E.& Sara K. Hunter 7/22/93 7/21/03 480 65,000
49 Burke Brothers, Inc. 5/15/97 5/14/22 350 90,000
50 Paul Schneider 2/2/98 2/2/18 500 90,000
51 GPX, Inc. 3/1/97 2/28/22 300 90,000
52 Michael & Frances Dobrancin 9/1/97 8/31/02 500 65,000
53 Anthony J & Lillian Canale 6/1/95 6/1/00 500 65,000
54 James L. Gardner, Sr. 9/29/97 9/29/27 1,000 90,000
55 Wayne E. & Kathleen J. Dittman, Sr. 12/15/93 12/31/98 300 65,000
56 Shirley Westendorf Cassel 7/18/91 7/31/01 345 65,000
57 Joseph M. & Joan M. Timko 10/24/97 10/24/22 425 90,000
58 Norma S. Reichard 2/1/97 1/31/07 350 65,000
59 Prospect Borough 12/1/97 11/30/02 667 90,000
60 Laird M. & Joyce M. Whiting 8/1/95 7/31/00 500 65,000
61 Howard C & Janet L. Taylor 4/1/94 4/30/99 300 65,000
62 Paul M. Dodds 4/1/93 4/30/03 360 65,000
63 Richard V. Fisher and Louise Fisher 3/1/98 2/28/23 350 90,000
64 Michael W. & Marjorie G. Johns 2/1/96 1/31/01 400 65,000
65 Deborah Fye 4/1/97 3/31/22 726 350 90,000
66 Betty L. Wright 5/23/93 5/23/03 282 65,000
67 David N., Michael T., Thomas J., Nicholas J., & James R. Okopal 10/23/97 10/23/22 500 90,000
68 Michael Husak, Donald Husak, & William Husak 4/23/97 4/23/22 425 65,000
69 Eleanor L. Fairman 1/25/96 1/31/01 400 90,000
70 Kenneth Mentch 11/3/90 11/30/00 345 65,000
71 Andy & Lillian Lazeration 5/1/97 4/30/07 500 65,000
72 Morris Township 12/1/95 12/31/00 300 65,000
73 Leona Locke 5/11/87 5/31/12 75 65,000
74 Timothy & Joan Jellison 3/1/97 2/28/22 350 90,000
75 John David Wible 8/1/87 7/31/12 174 100 90,000
76 John F. Collar 4/6/94 4/5/19 125 77,000
77 D & M Development 12/15/97 12/14/22 833 90,000
78 James & Renee Bates 7/1/97 6/30/00 150 65,000
79 Edward Farkas 10/1/96 9/30/21 300 90,000
80 Janice Harvis 10/1/96 9/30/21 500 518 90,000
81 Land Purchased Own Land Own Land 560 - 65,000
82 John Kozak 12/21/94 12/20/19 275 77,000
83 James R. Brown 5/1/85 4/30/00 150 65,000
84 Anthony Pannozzo (included in office lease article 24) 11/1/93 11/1/01 500 77,000
85 A & B Warehouse (Amendment to Lease) 1/16/98 2/28/01 199 500 77,000
86 Achilles Partnership 3/1/96 2/29/16 - 77,000
87 ASI Partnership 4/1/97 3/31/02 400 90,000
88 James W. & Gerladine I. Payne 6/1/90 6/1/15 180 150 65,000
89 James & Darlene Ghizzoni 8/1/95 7/31/20 250 77,000
90 City of Canfield 6/15/93 6/14/18 169 77,000
91 Russell A. Morrison & James S. Paris 10/1/96 9/30/21 415 90,000
92 John Zidian 12/1/96 11/30/21 350 90,000
93 Cortland Masonic Lodge #592 F&AM 9/1/96 8/31/21 250 90,000
94 Petro Stopping Centers, L.P. 10/1/96 9/30/21 450 77,000
95 F.H. & R.L. Miller 4/1/90 3/31/15 229 176 65,000
96 Leon C. & Veda C. Kepner 6/1/86 5/31/01 396 250 65,000
97 Michael & Alan Lahey 2/1/95 1/31/00 1,280 425 77,000
98 Youngstown Area Goodwill Industries, Inc. 7/1/93 6/30/18 169 77,000
99 Imperial Trailer Park, Inc. 9/15/97 9/30/12 199 525 90,000
100 Ohio Motorists Association 1/28/91 12/31/15 180 431 65,000
101 City of Springfield 12/15/94 12/14/44 158 77,000
102 William A. & Joy Noelle Sloan 5/9/90 5/9/15 606 50 65,000
103 William Matsouris 4/5/95 4/4/20 167 65,000
104 Poling & Bacon 9/1/88 8/31/13 50 90,000
105 Orval Bragg and Vicki L. Bragg 5/1/97 4/30/22 375 90,000
108 Russell Howard 8/12/96 8/12/16 300 90,000
Totals 7,474 36,454 8,246,000
Annual 89,688 437,448
<CAPTION>
ADDITIONAL
Number RENTERS NOTES SITE NAME Mkt. CELL NAD83 LAT NAD83 LON
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1-2 additional renters 40DEG.40' 05.2" 80DEG.35' 23.3
2 2-4 additional renters 40DEG.53' 09.0" 80DEG.42' 23.3"
3 1-2 additional renters 40DEG.53' 28.0" 80DEG.57' 03.0"
4 2-4 additional renters E. Liver. Colum, OH 59 40DEG.37' 37.2" 80DEG.34' 11.3"
5 1-2 additional renters E. Palest. Colum, OH 56 40DEG.51' 06.9" 80DEG.33' 37.9"
6 2-4 additional renters Hanover. Colum, OH 58 40DEG.46' 43.4" 80DEG.55' 29.8"
7 1-2 additional renters Salem DT Colum, OH 53 40DEG.53' 58.0" 80DEG.51' 20.0"
8 2-4 additional renters Fairview Erie, PA 77 42DEG.01' 27.2" 80DEG.15' 21.2"
9 2-4 additional renters Girard PA Erie, PA 73 41DEG.57' 41.2" 80DEG.19' 14.2"
10 2-4 additional renters Harbor Crk Erie, PA 86 42DEG.09' 05.2" 80DEG.00' 16.2"
11 2-4 additional renters 42DEG.05' 33.0" 80DEG.08 15.0"
12 1-2 additional renters Millcrk 2 Erie, PA 82 42DEG.05' 51.7" 80DEG.00' 35.2"
13 2-4 additional renters 42DEG.09' 20.2" 79DEG.53' 07.2"
14 2-4 additional renters Union City Erie, PA 76 41DEG.55' 25.0" 79DEG.49' 37.0"
15 2-4 additional renters Waterfrd Erie, PA 79 41DEG.57' 37.2" 80DEG.00' 10.2"
16 2-4 additional renters 41DEG.56' 37.4" 80DEG.28' 27.6"
17 2-4+ additional renters Addison NY-3 318 42DEG.05' 54.4" 77DEG.17' 39.2"
18 2-4 additional renters Alexander NY-3 301 42DEG.55' 09.2" 78DEG.16' 02.1"
19 2-4 additional renters Arkwright NY-3 302 42DEG.24' 56.2" 79DEG.14' 18.2"
20 2-4 additional renters Bath 2 NY-3 42DEG.21' 24" 77DEG.19' 16"
21 sygnet only Bolivar NY-3 338 42DEG.04' 18.2" 78DEG.11' 11.0"
22 2-4 additional renters 42DEG.25' 22.2" 78DEG.06' 26.0"
23 2-4 additional renters Carrollton NY-3 350 42DEG.04' 22.2" 78DEG.33' 43.1
24 2-4 additional renters Dunkirk NY-3 334 42DEG.27' 44.2" 79DEG.20' 20.2"
25 2-4 additional renters 42DEG.16' 34.2" 78DEG.39' 31.1"
26 2-4 additional renters 42DEG.03' 19.8" 79DEG.44' 48.9"
27 2-4 additional renters Hornell NY-3 315 42DEG.21' 02.2" 77DEG.41' 25.0"
28 2-4 additional renters Jasper NY-3 347 42DEG.06' 45.3" 77DEG.34' 13"
29 sygnet only Keuka Lake NY-3 320 42DEG.27' 44.3" 77DEG.09' 05.3"
30 2-4 additional renters Le Roy NY-3 306 43DEG.01' 07.2" 78DEG.00' 35.0"
31 2-4 additional renters Little Val. NY-3 348 42DEG.13' 58.2" 78DEG.47' 46.1"
32 2-4 additional renters 42DEG.05' 55.23" 78DEG.27' 43.07"
33 2-4 additional renters Pembroke NY-3 337 43DEG.00 53.2" 78DEG.20' 30.1"
34 2-4 additional renters Poland NY NY-3 305 42DEG.09' 00.2" 79DEG.09' 29.2"
35 2-4 additional renters Portville NY-3 346 42DEG.02' 02.2" 78DEG.20' 57.1"
36 2-4 additional renters Silver Crk NY-3 336 42DEG.33' 15.3" 79DEG.06' 49.8"
37 2-4 additional renters Steamburg NY-3 352 42DEG.05' 52.2" 78DEG.55' 44.1"
38 2-4 additional renters Warsaw NY-3 329 42DEG.43' 57.8" 78DEG.06' 38.4"
39 2-4 additional renters Westfld NY-3 303 42DEG.16' 24.2" 79DEG.37' 23.2"
40 2-4 additional renters Blooming Val PA-1 165 41DEG.42' 30.2" 79DEG.58' 39.2"
41 1-2 additional renters Carlton PA-1 116 41DEG.29' 26.3 79DEG.59' 47.1"
42 1-2 additional renters Dicksonburg PA-1 113 41DEG.41' 10.2" 80DEG.21' 27.2"
43 2-4 additional renters 41DEG.24' 40.7" 79DEG.42' 55.3"
44 2-4 additional renters Pittsfield PA-1 323 41DEG.52' 19.5" 79DEG.23' 15.5"
45 2-4 additional renters Pymatuning PA-1 171 41DEG.29' 56.8" 80DEG.25' 43.4"
46 sygnet only Sheffield PA-1 151 41DEG.41' 58.2" 79DEG.02' 32.1"
47 sygnet only Tidioute PA-1 163 41DEG.41' 10.2" 79DEG.25' 08.2"
48 2-4 additional renters Warren PA-1 330 41DEG.51' 44.2" 79DEG.07' 50.2"
49 2-4 additional renters St. Mary's PA-2 152 41DEG.23' 37.2" 78DEG.33' 12.1"
50 2-4 additional renters But. 3 PA-6 170 40DEG.53' 21.0" 79DEG.58' 01.0"
51 sygnet only Cranbry 2 PA-6 158 40DEG.42' 31.2" 80DEG.06' 39.3"
52 sygnet only E. Brady PA-6 150 40DEG.59' 08.2" 79DEG.36' 08.2"
53 2-4 additional renters Elderton PA-6 135 40DEG.42' 02.2" 79DEG.22' 19.1"
54 2-4 additional renters Ellwood Cty PA-6 154 40DEG.52' 26.4" 80DEG.15' 27.3"
55 2-4 additional renters Emlenton PA-6 123 41DEG.10' 34" 79DEG.38' 23"
56 2-4 additional renters 40DEG.42' 48.2" 79DEG.40' 31.2"
57 2-4 additional renters Muddy Crk PA-6 164 40DEG.59' 19.2" 79DEG.58' 41.2"
58 2-4 additional renters New Bethlehe PA-6 125 41DEG.00' 51.6" 79DEG.20' 13.4"
59 2-4 additional renters Prospect PA-6 127 40DEG.54' 30.7" 80DEG.02' 29.7"
60 2-4 additional renters Pulaski PA-6 115 41DEG.05' 44.2" 80DEG.23' 06.2"
61 2-4 additional renters Slippery Roc PA-6 118 41DEG.03' 59" 80DEG.05' 46"
62 2-4 additional renters 40DEG.52' 34.6" 80DEG.22' 40.4"
63 2-4 additional renters Worth PA-6 172 40DEG.58' 09" 80DEG.09' 53"
64 2-4 additional renters Worthington PA-6 145 40DEG.50' 52.2" 79DEG.41' 14.2"
65 2-4 additional renters Brockway PA-7 130 41DEG.15' 26.2" 78DEG.47' 09.1"
66 2-4 additional renters Brookville PA-7 143 41DEG.10' 23.2" 79DEG.06' 52.1"
67 2-4 additional renters Clarksburg PA-7 160 40DEG.31' 26.6" 79DEG.23' 23.3"
68 2-4 additional renters Curwensville PA-7 148 40DEG.58' 17.2" 78DEG.31' 52.1"
69 2-4 additional renters Dubois PA-7 137 41DEG.08' 23.0" 78DEG.46' 05.0"
70 2-4 additional renters 40DEG.35' 59.2" 79DEG.03' 14.1"
71 sygnet only Marion Cente PA-7 149 40DEG.45' 21.2" 79DEG.03' 08.1"
72 2-4 additional renters Morrisdale PA-7 144 40DEG.57' 01" 78DEG.12' 31"
73 1-2 additional renters Charlstn Sharon, PA 102 41DEG.13' 41.2" 80DEG.20' 40.2"
74 2-4 additional renters Greenfld Sharon, PA 109 41DEG.11' 23.3" 80DEG.21' 02.0"
75 2-4 additional renters Greenville Sharon, PA 101 41DEG.22' 46.2" 80DEG.24' 39.2"
76 1-2 additional renters 41DEG.09' 03.2" 80DEG.04' 25.2"
77 2-4 additional renters Hermit. 2 Sharon, PA 173 41DEG.14' 11.2" 80DEG.28' 08.3"
78 sygnet only New Vern. Sharon, PA 104 41DEG.23' 07.2" 80DEG.07' 38.2"
79 2-4 additional renters 41DEG.09' 21.1" 80DEG.27' 36.0"
80 2-4 additional renters 40DEG.54' 10.2" 81DEG.05' 09.3"
81 2-4+ additional renters 3 acres @10k acre =$30k Aust. 1 Ygn, OH 4 41DEG.06' 42.2" 80DEG.46' 13.3"
82 1-2 additional renters Aust. 2 Ygn, OH 17 41DEG.05' 12.0" 80DEG.43' 54.0"
83 2-4+ additional renters Berlin Ygn, OH 3 41DEG.01' 32.2" 80DEG.54' 31.3"
84 1-2 additional renters Land lease included in combined lease Board. 1 Ygn, OH 15 41DEG.01' 27.2" 80DEG.42' 19.3"
85 Land lease included in combined lease Board. 2 Ygn, OH 6 40DEG.59' 45.0" 80DEG.38' 52.0"
86 1-2 additional renters Board. 3 Ygn, OH 24 41DEG.01' 24.9" 80DEG.39' 48.8"
87 2-4 additional renters Board. 4 Ygn, OH 28 41DEG.01' 19.2" 80DEG.37' 55.6"
88 2-4 additional renters Bristol Ygn, OH 9 41DEG.24' 35.2" 80DEG.53' 36.3"
89 2-4 additional renters Brookfld Ygn, OH 23 41DEG.14' 04.3" 80DEG.34' 15.7"
90 1-2 additional renters Canfld 1 Ygn, OH 14 41DEG.02' 24.2" 80DEG.45' 30.3"
91 2-4 additional renters Canfld 2 Ygn, OH 32 41DEG.00' 53.8" 80DEG.46' 04.2"
92 2-4 additional renters Coitsvil. Ygn, OH 31 41DEG.05' 32.3" 80DEG.33' 57.9"
93 2-4 additional renters 41DEG.20' 09.7" 80DEG.42' 05.3"
94 1-2 additional renters Girard OH Ygn, OH 25 41DEG.08' 30.9" 80DEG.42' 59.9"
95 2-4 additional renters Gustav. Ygn, OH 10 41DEG.26' 29.2" 80DEG.39' 52.3"
96 1 new renter Hartfrd Ygn, OH NA 41DEG.18' 05.2" 80DEG.33' 51.3"
97 1-2 additional renters Howlnd Ygn, OH 21 41DEG.14' 18.4" 80DEG.43' 30.4"
98 1-2 additional renters Liberty Ygn, OH 16 41DEG.08' 05.2" 80DEG.39' 45.3"
99 2-4 additional renters Lordstn Ygn, OH 33 41DEG.08' 44.2" 80DEG.53' 08.5"
100 2-4 additional renters McKin. Ygn, OH 11 41DEG.11' 56.2" 80DEG.43' 45.3"
101 1-2 additional renters 40DEG.56' 35.2" 80DEG.35' 10.3"
102 2-4 additional renters Newton Falls Ygn, OH 7 41DEG.11' 17.2" 80DEG.55' 17.3"
103 2-4 additional renters 41DEG.06' 51.2" 80DEG.53' 57.3"
104 2-4 additional renters 40DEG.58' 01.2" 80DEG.38' 08.3"
105 2-4 additional renters Vienna Ygn, OH 27 41DEG.14' 03.5" 80DEG.39' 53.5"
108 2-4 additional renters 41DEG.15' 55.5" 80DEG.52' 41.3"
Totals
Annual
<CAPTION>
CPI
Number GRD TWR STR TWR PHASE 1 POWER CPI INCREASE RESPONSIBILITY EXTENDED TERM
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1207' 185' 199' Self Support N BAT 2/1/02 3 periods/5 years each
2 1090' 180' 190' Self Support N BAT 8/30/01 2 periods/25 years each
3 1280' 160' 175' Guyed N BAT 7/26/00 4 periods/25 years
4 1218' 180' 199' Self Support N BAT 6/1/99 3 periods/5 years each
5 1227' 180' 190' Self Support N BAT 2/1/01 4 periods/25 years each
6 1287' 300' 320' Guyed N GEN 11/15/01 2 periods/25 years each
7 1225' 160' 180' Monopole N BAT None None
8 800' 180' 190' Self Support N BAT 9/1/99 5 periods/5 years each
9 890' 280' 293' Guyed N BAT 11/1/99 15% 4 periods/5 years each
10 684' 180' 199' Self Support N BAT 4/9/02 1 period/25 years each
11 724' 120' 130' Monopole N BAT 3/1/01 7 periods/5 years each
12 1121' 180' 190' Self Support N BAT 6/6/01 1 period/25 years each
13 1258' 280' 295' Guyed N BAT 11/1/01 25% 4 periods/5 years each
14 1599' 280' 295' Guyed N BAT 3/16/03 20% at renewal 4 periods/5 years each
15 1373' 277' 295' Guyed N BAT 7/31/00 15% 5 periods/5 years each
16 721' 180' 199' Self Support N BAT 3/21/02 1 period/25 years each
17 1692' 290' 299' Guyed N BAT 12/1/99 20% Landlord 5 periods/ 5 years each
18 1087' 185' 199' Self Support N GEN 7/1/01 2 periods/5 years each
19 1725' 185' 199' Self Support N BAT 7/26/01 2 periods/5 years each
20 1578' 180' 199' Self Support N BAT 6/14/03 1 period/24 years each
21 2231' 110' 120' Guyed N BAT 2/15/02 1 period/25 years each
22 1790' 180' 199' Self Support N BAT 4/1/03 Landlord (CPI) 1 period/24 years
23 2300' 180' 199' Self Support N BAT 4/1/03 Landlord (CPI) 1 period/24 years
24 657' 180' 199' Self Support N BAT 3/1/02 1 period/25 years each
25 2052' 180' 195' Self Support N BAT 12/1/01 1 period/25 years each
26 1828' 180' 195' Self Support N BAT 1/1/99 Landlord/yearly 3 periods/5 years each
27 1875' 185' 199' Self Support N GEN 6/30/99 5 periods/5 years each
28 2359' 300' 320' Guyed N BAT 6/1/02 1 period/25 years each
29 1030' 110' 120' Self Support N BAT 12/8/99 Landlord (20%) 5 periods/5 years each
30 870' 185' 199' Self Support N BAT 6/1/02 2 periods/5 years each
31 2178' 300' 320' Guyed N BAT 6/15/02 1 period/25 years each
32 1979' 300' 320' Guyed N BAT 1/1/03 Sygnet/Every 5 Yrs. 1 period/24 years each
33 903' 180' 199' Self Support N BAT 2/1/02 1 period/25 years each
34 1641' 185' 199' Self Support N BAT 9/1/01 2 periods/5 years each
35 1812' 180' 199' Self Support N BAT 5/14/02 1 period/25 years each
36 664' 300' 320' Guyed N BAT 12/1/01 1 period/25 years each
37 2192' 300' 320' Guyed N BAT 4/1/03 Landlord/CPI 1 period/24 years each
38 1606' 280' 299' Guyed Y BAT 3/6/99 Yearly (5%) 5 periods/5 years each
39 1458' 185' 199' Guyed N BAT 10/1/01 2 periods/5 years each
40 1601' 180' 199' Self Support N BAT 8/1/02 1 period/25 years each
41 1527' 180 * ? Guyed N GEN 3/17/00 20% 5 periods/5 years each
42 1275' 180' ? Guyed N GEN 9/1/99 5 periods/5 years each
43 1394' 300' 320' Guyed N BAT 10/8/01 1 period/25 years each
44 1765' 400' 410' Guyed Y GEN 3/1/01 5 periods/5 years each
45 1241' 180' 199' Self Support N BAT 5/1/99 Yearly/(4%) 1 period/25 years each
46 1871' 190' 199' Guyed N BAT 4/16/02 1 period/25 years each
47 1652' 190' 199' Self Support N BAT 7/1/02 2 periods/25 years each
48 1750' 270' 299' Guyed N BAT 7/21/03 20% 4 periods/5 years each
49 1911' 190' 199' Self Support N BAT 5/15/02 1 period/25 years each
50 1268' 180' 199' Self Support N BAT 2/2/03 2 periods/20 years each
51 1124' 60' 70' Self Support N BAT 3/1/02 See specifications in lease None
52 1361' ? ? Guyed N BAT 9/1/02 Increase to $720/5 yr. 5 periods/5 years each
53 1492' 180' 190 * Guyed N GEN 6/1/00 5 periods/5 years each
54 1180' 180' 199' Self Support N BAT 9/29/27 6 periods/5 years each
55 1479' 390 * 399' Guyed N GEN 12/31/98 Landlord (20%) 5 periods/5 years each
56 1365' 280' 300' Guyed N BAT 8/1/01 15% 4 periods/5 years each
57 1442' 180' 199" Self Support N BAT 10/24/02 1 period/25 years each
58 1437' 301' 320' Guyed N BAT 2/1/02 3 periods/10 years each
59 1367' 180' 199' Self Support N BAT 12/1/02 Sygnet 5 periods/5 years
60 1138' 180' 190' Guyed N GEN 8/1/00 20% 5 periods/5 years each
61 1296' 162' 172' Guyed N GEN 4/30/99 Landlord/(20%) 5 periods/5 years each
62 1270' 180' 190' Guyed N GEN 4/30/03 Landlord/20% 4 periods/5 years each
63 1273' 180' 199' Self Support N BAT 3/1/03 5 Years/20% 1 period/25 years each
64 1424' 290' 300' Guyed Y BAT 2/1/01 15% 5 periods/5 years each
65 1755' 180' 199' Self Support N BAT 4/1/02 1 period/25 years each
66 1640' 140' 156 * Guyed Y BAT 5/24/03 Landlord 3 periods/5 years each
67 1279' 180' 199' Self Support N BAT 10/23/02 1 period/25 years each
68 1318' 300' 320' Guyed N BAT 4/23/02 2 periods/25 years each
69 1636' 280' 299' Self Support Y BAT 1/25/01 5 periods/5 years each
70 1860' 288' 302 * Guyed Y BAT 12/1/00 3 periods/5 years each
71 1542' 190' 199' Guyed N BAT 5/1/02 3 periods/5 years each
72 1594' 280' 300' Guyed Y BAT 12/1/00 5 periods/5 years each
73 1300' 186.5' 199.5' Guyed N GEN 6/1/12 4 periods/25 years each
74 1282' 180' 199' Self Support N BAT 3/1/02 1 period/25 years each
75 1240' 286' 299' Self Support N BAT 8/1/12 4 periods/25 years each
76 1330' 143' 156' Monopole N BAT 4/6/99 3 periods/25 years each
77 1151' 180' 199' Self Support N BAT 12/15/02 1 period/25 years each
78 1470' 180' 193' Guyed N BAT None None
79 1148' 180' 195' Self Support Y BAT 10/1/01 2 periods/25 years each
80 1118' 180' 190' Self Support N BAT 10/1/00 3 periods/5 years each
81 1140' 190' 199' Guyed Y GEN
82 1125' 140' 148' Monopole N BAT 12/21/99 1 period/25 years each
83 1165' 287' 299' Guyed N GEN 5/1/00 2 periods/5 years each
84 1010' 120' 128 * Monopole N BAT 11/1/01 Contact Rich 2 periods/3 years each
85 1180' 140' 150' Monopole N BAT 3/1/01 2 periods/5 years each
86 1110' 120' 130' Monopole N BAT None 3 periods/20 years each
87 1047' 180' 199' Self Support N BAT 4/1/02 4 periods/5 years each
88 840' 190' 199' Guyed N BAT 6/1/00 4 periods/25 years each
89 1155' 160' 170' Monopole N BAT 8/1/00 4 periods/25 years each
90 1160' 140' 152' Monopole N BAT 6/15/03 1 period/25 years each
91 1154' 180' 190' Self Support N BAT 10/1/00 3 periods/5 years each
92 1095' 180' 195' Self Support N BAT 12/1/01 2 periods/25 years each
93 1079' 180' 190' Self Support N BAT 9/1/01 3 periods/25 years each
94 985' 120' 130' Monopole N BAT 10/1/01 3 periods/5 years each
95 1080' 260' 274 * Guyed N BAT 4/1/00 4 periods/25 years each
96 1163' 180' 188' Guyed N BAT None 3 periods/5 years each
97 1070' 140' 150' Monopole N BAT 2/1/00 5 periods/5 years each
98 1085' 140' 160' Monopole N BAT 7/1/03 1 period/25 years each
99 990' 180' 199' Self Support N BAT 9/15/99 Annually/5% None
100 1055' 190' 199' Guyed N BAT 1/1/01 2 periods/25 years each
101 1230' 140' 148 * Monopole N BAT 5/9/00 4 periods/25 years each
102 915' 287' 299' Guyed N BAT 9/1/13 4 periods/25 years each
103 1060' 160' 175' Guyed N BAT 4/5/00 4 periods/25 years each
104 1190' 160' 175' Self Support N BAT 9/1/13 4 periods/25 years each
105 1142' 180' 187' Self Support N BAT 5/1/99 5 periods/5 years each
108 908' 180' 190' Self Support N BAT 8/12/01 2 periods/20 years each
Totals
Annual
<CAPTION>
Number NOTICE TO EXTEND OPTION TO PURCHASE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 No more than 12 months prior to expiration SEND: 12/1/2001 First right of refusal
2 No more than 12 months prior SEND: 1/1/2021 N/A
3 60 Day notice SEND: 4/1/2019 N/A
4 No more than 12 months prior SEND: 1/1/2022 N/A
5 No more than 12 months SEND: 9/1/2020 N/A
6 No more than 12 months SEND: 5/1/2021 N/A
7 None N/A
8 Automatically renewed unless notified 10 days in advance N/A
9 Automatically renewed unless notified 10 days in advance N/A
10 No more than 12 months SEND: 3/1/2022 N/A
11 No more than 12 months SEND: 10/1/2000 N/A
12 No more than 12 months SEND: 1/1/2021 N/A
13 Automatically renewed unless notified 10 days SEND: 10/1/2001 N/A
14 Automatically renewed unless notified 10 days in advance N/A
15 Automatic renewal unless termination notice is sent 90 days prior N/A
16 No more than 12 months prior to the expiration SEND: 9/1/2021 N/A
17 Automatic renewal unless notified 10 days prior SEND: 09/1/1999 N/A
18 Automatic renewal unless notified 60 days prior SEND: 6/1/2001 Right of first refusal
19 Automatic renewal unless notified 60 days prior SEND: 7/1/2001 N/A
20 No more than 12 months prior SEND: 2/1/2023
21 No more than 12 months SEND: 9/1/2021 N/A
22 No more than 12 months prior SEND: 3/1/2023 N/A
23 No more than 12 months prior SEND: 3/1/2023 N/A
24 No more than 12 months no less than 6 months prior to expiration SEND: 8/1/2021 N/A
25 No more than 12 months prior to expiration SEND: 7/1/2021 Right of first refusal
26 Automatic renewal unless notified 60 days prior SEND: 8/1/1999 N/A
27 Automatic renewal unless notified 30 days prior SEND: 6/1/1999 N/A
28 No more than 12 months SEND: 11/1/2021 N/A
29 Automatically renewed unless notified 10 days prior SEND: 11/1/1999 N/A
30 Automatic renewal unless notified 60 days prior SEND: 5/1/2002 First right of refusal
31 No more than 12 months SEND: 12/1/2021 N/A
32 No more than 12 months prior SEND: 6/1/2021 N/A
33 No more than 12 months prior to expiration SEND: 10/1/2022 First right of refusal
34 Automatic renewal unless terminated 60 days prior SEND: 8/1/2001 First right of refusal
35 No more than 12 months prior to expiration SEND: 10/1/2021 N/A
36 No more than 12 months prior to expiration SEND: 5/1/2021 N/A
37 No more than 12 months prior to expiration SEND: 3/31/2022 N/A
38 Automatic renewal unless notified 30 days prior SEND: 12/1/2000 N/A
39 Automatic renewal unless notified 60 days prior SEND: 9/15/2001 N/A
40 No more than 12 months prior SEND: 1/1/2022 N/A
41 Automatically renewed unless notified 30 days prior SEND: 2/1/2000 N/A
42 Automatic renewal unless notified 30 days prior SEND: 6/1/1999 First right of refusal
43 No more than 12 months prior to expiration SEND: 7/1/2021 N/A
44 Automatically renewed unless notified 30 days prior SEND: 11/1/2000 N/A
45 No more than 12 months prior to expiration SEND: 5/1/2022 N/A
46 No more than 12 months prior prior SEND: 1/1/2022 N/A
47 No more than 12 months prior to expiration SEND: 1/1/2022 N/A
48 Automatically renewed unless notified 30 days in advance SEND: 7/1/2003 N/A
49 No more than 12 months prior to expiration SEND: 10/1/2021 N/A
50 No more than 12 months prior to expiration SEND: 8/1/2017 N/A
51 N/A
52 No more than 12 months no less than 60 days SEND: 1/1/2002 N/A
53 Automatically renewed unless notified 30 days prior SEND: 5/1/2000 N/A
54 No more than 12 months prior to expiration SEND: 3/1/2027 N/A
55 Automatically renewed unless notified 10 days prior SEND: 12/1/98 N/A
56 Automatic renewal unless notified 10 days prior SEND: 7/1/2001 Right of first refusal
57 No more than 12 months prior to expiration: SEND 4/1/2022 N/A
58 No more than 12 months SEND: 6/1/2006 N/A
59 No more than 12 months prior to expiration SEND: 5/1/2002 N/A
60 Automatic renewal unless notified 30 days prior SEND: 7/1/2000 N/A
61 Automatically renewed unless notified 10 days prior SEND: 4/1/99 N/A
62 Automatically renewed unless notified 10 days prior SEND: 4/1/2003 N/A
63 No more than 12 months prior to the expiration SEND: 8/1/2022 N/A
64 Automatic renewal unless notified 30 days prior SEND: 12/25/2000 N/A
65 No more than 12 months prior to expiration SEND: 10/1/2022 N/A
66 Automatically renewed unless notified 30 days prior SEND: 4/15/2003 N/A
67 No more than 12 months prior SEND 4/1/2022 N/A
68 No more than 12 months prior to expiration SEND: 3/1/2022 N/A
69 Automatic renewal unless notified 30 days prior SEND: 1/1/2001 First right of refusal
70 Automatically renewed unless notified 30 days prior to expiration N/A
71 No more than 12 months SEND: 10/1/2006 N/A
72 Automatically renewed unless notified 30 days prior to expiration N/A
73 No more than 12 months/No less than 2 months SEND: 2/15/2012 First right of refusal
74 No more than 12 months SEND: 10/1/2021 N/A
75 No more than 12 months/No less than 2 months SEND: 4/15/2012 N/A
76 No more than 12 months SEND: 12/15/2018 First right of refusal
77 No more than 12 months prior to expiration SEND: 8/15/2022 N/A
78 None N/A
79 No more than 12 months prior SEND: 5/1/2021 N/A
80 No more than 12 months prior SEND: 3/1/2021 N/A
81
82 No more than 12 months SEND: 9/1/2019 N/A
83 No more than 12 months/No less than 2 months SEND: 1/15/2000 N/A
84 No more than 3 months prior to existing term SEND: 8/1/2001 N/A
85 No more than 3 months SEND: 11/25/2000 N/A
86 No more than 12 months SEND: 8/30/2015 N/A
87 No more than 12 months prior SEND: 12/1/2001 N/A
88 No more than 12 months No less than 2 months SEND: 2/15/2015 First right of refusal
89 No more than 12 months SEND: 9/1/2019 N/A
90 No more than 12 months SEND: 2/1/2018 N/A
91 No more than 12 months prior to expiration SEND: 1/1/2021 N/A
92 No more than 12 months prior SEND: 5/1/2021 N/A
93 No more than 12 months SEND: 1/1/2021 N/A
94 Automatically renewed unless notified 30 days in advance N/A
95 No more than 12 months SEND: 1/1/2015 First right of refusal
96 No time frame given SEND: 4/1/2001 N/A
97 At least 12 months prior SEND: 12/31/1998 N/A
98 No more than 12 months SEND: 1/1/2018 N/A
99 None N/A
100 No more than 12 months/No less than 6 months SEND: 4/1/2015 N/A
101 No more than 12 months SEND: 1/1/2015 First right of refusal
102 No more than 12 months/No less than 2 months SEND: 4/15/2013 First right of refusal
103 No more than 12 months SEND: 1/15/2020 N/A
104 No more than 12 months/No less than 2 months SEND: 4/15/2013 First right of refusal
105 No more than 12 months SEND: 1/1/2022 N/A
108 No more than 12 months prior SEND: 3/1/2016 N/A
Totals
Annual
</TABLE>
<PAGE>
MASTER SITE LICENSE AGREEMENT
This Master Site License Agreement ("Agreement") is entered into as of
the 23rd day of December , 1998, by and between Dobson Tower Company, an
Oklahoma corporation (referred to herein as "Licensor") and Sygnet
Communications, Inc., an Ohio corporation (referred to herein as "Tenant").
R-1. Tenant is licensed by the Federal Communications Commission
("FCC") to construct and operate communications systems throughout the United
States.
R-2. Licensor owns, leases, operates and/or manages real estate,
buildings, towers, tanks and/or other improvements ("Improvements") on real
property (each a "Property") in the United States and wishes to License
portions of a number of the Properties to Tenant for the purpose of locating
and operating communications facilities' and services thereon.
R-3. Tenant desires to license from Licensor portions of such
Properties for such purpose.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. MASTER LICENSE.
(A) This Agreement sets forth the basic terms and conditions upon which
each such Property or portion thereof is licensed by Licensor to Tenant.
Upon the parties' agreement as to the particular terms of any such license,
the parties shall execute and attach hereto a completed site license ("Site
License") for each such site, in the form attached hereto as Exhibit A, which
is incorporated herein by this reference. The terms and conditions of any
Site License shall govern and control in the event of a discrepancy or
inconsistency with the terms and conditions of this Agreement. This
Agreement shall govern Licensor's existing Properties only, and shall not
apply to raw land or new construction of towers on such Properties.
(B) Upon execution hereof, Licensor agrees to provide Tenant with such
information regarding each Property which it operates as may be necessary for
Tenant to evaluate the usefulness of such Property for its purposes as may be
readily available to Licensor. Licensor agrees to use reasonable efforts to
cause each of its subsidiaries and managers at each such Property to
cooperate fully with Tenant and its agents for the purpose of determining
suitability of the Property and installing and constructing the Tenant's
facilities, including providing Tenant and such agents with access to such
Properties and the opportunity to conduct limited testing at any such
Property, subject to reasonable limitations imposed by Licensor and/or any of
such managers.
<PAGE>
2. DESCRIPTION OF PROPERTY AND LICENSED PREMISES. Licensor either
owns or leases the Property. If Licensor leases the Property, Licensor shall
provide Tenant with a copy of its lease (the "Prime Lease"), which will be
attached to each affected Site License as Exhibit 6. Upon reasonable request
of Tenant, Licensor shall exercise its best commercially reasonable efforts
to obtain the written consent of the prime landlord to the Site License and
any renewals or extensions thereof. The part of the Property to be licensed
by Licensor to Tenant shall include ground and/or rack space and such other
space for the mounting of antennas for the operation of certain
telecommunications equipment to be located within, atop, adjacent to or on
the Property, and such space across the Property that might be required for
providing Tenant access and necessary utilities. All floor space, rack
space, ground space, tower space and associated real property licensed by
Licensor to Tenant shall collectively be referred to hereinafter as "the
Premises," as more fully described in Exhibit 2 to the Site License. A more
complete description of the equipment to be placed on the Premises by Tenant,
including all transmit and/or receive frequencies, dimensions, and more
specific positions of such equipment as it will be installed on the Premises
shall be attached to each Site License at Exhibit 1. Tenant shall prepare and
present to Licensor an accurate and complete Exhibit 1 prior to execution of
the Site License for the subject Property. If, during the term of the Site
License, Tenant requests to add or remove equipment to or from the Premises,
which additional equipment is not listed on Exhibit 1, Licensor shall use all
reasonable efforts to accommodate Tenant's request, provided that the
Property has sufficient space and capacity to support the requested
additional equipment. In the event of such an agreed upon increase or
decrease in the equipment at the Premises, Licensor and Tenant shall mutually
agree to a reasonable rental adjustment as consideration for such additional
or reduced equipment.
To the extent any rights herein are subject to any existing Prime Lease
or license granted or existing in favor of Licensor from a third party
("third party license"), the rights herein are expressly made subject to such
third party license. In the event any such Prime Lease or other third party
license terminates or expires by its terms prior to the times for termination
or expiration or the Term herein, or the two additional optional renewal
terms herein, within ninety (90) days after execution of this Master Site
License Agreement, Licensor agrees to begin exercising its best commercially
reasonable efforts to obtain such renewals or extensions thereof, and options
for renewal or extensions thereof, as Licensor is reasonably able, and on as
nearly similar terms and rental sums as are now in existence, in order for
Licensor to be able to fulfill the terms of this Agreement, for the entire
duration envisioned herein. In the event Licensor is able to negotiate such
renewals or replacements thereof, but any of the material terms will be
different (including
2
<PAGE>
but not limited to rental sums), Licensor shall present same to Tenant for
its review and approval, before Licensor executes same.
Licensor shall also be responsible, at its expense, for the cost of
obtaining any approvals which may be required by any local, state or federal
authority, in conjunction with the granting of any License created herein,
its ownership of the Property and Improvements, or the operation of the
License granted herein, except insofar as same is specifically required of
Tenant by law in order for Tenant to carry out its intended use on the
Premises.
3. TERM AND TERMINATION. Each Site License shall become effective
upon installation of Tenant's equipment at the subject Property or 120 days
following the date the Site License for such Property is fully executed,
whichever is sooner ("the Commencement Date"), and shall continue in effect
for a term of five (5) years. Tenant warrants that it shall employ
reasonable efforts to obtain all required local permits for construction and
operation of its facilities installed by or owned by Tenant, and shall inform
Licensor immediately of its receipt of those permits. Tenant shall provide
Licensor with prior notice of the date upon which Tenant shall commence the
installation of Tenant's equipment. It is expressly understood that all
rights granted to Licensee for each Property hereunder are irrevocable until
the Site License for such Property expires or sooner terminates in accordance
with the terms and conditions herein set forth.
If, at any time during the Term hereof, (including any renewal or
extension of the Term herein), Tenant shall lose its F.C.C. license needed
for it to use the Premises for the intended use under the License granted
herein (as distinguished from any transfer, sale or assignment of such F.C.C.
license), this lease shall immediately terminate upon the termination of
Tenant's F.C.C. license, and at that point, no further obligation shall be
owed by either party hereto to the other under this Agreement, except as to
obligations which had already accrued prior to the time of the loss of such
Tenant F.C.C. license.
(A) Following an uncured material breach by a party, the non-breaching
party may terminate the applicable Site License, provided, however, the
non-breaching party must first provide to the breaching party all reasonable
opportunity provided hereunder to cure any such breach, including providing
to the breaching party at least thirty (30) days prior written notice of the
non-breaching party's intent to terminate the Site License. Upon termination
or expiration of a Site License, Tenant shall immediately remove its
equipment from Licensor's Premises. Tenant's failure to remove its equipment
within thirty (30) days following the expiration or termination of the Site
License shall entitle Licensor to receive from Tenant storage fees in an
amount equal to one hundred dollars ($100) per day beyond such thirty (30)
day period. Licensor hereby
3
<PAGE>
waives any and all landlord liens or similar claims to Tenant's equipment,
which equipment may be removed by Tenant at any time, provided, however, such
removal shall not create any termination of the applicable Site License or
reduction in any amount due Licensor.
(B) Any of Tenant's equipment which is deemed stored by Licensor in
accord with the terms herein shall not be entitled to receive electrical
power during such period of storage and Licensor shall have the right to
discontinue power to all stored equipment. Such equipment may also be
removed from the Premises by Licensor and stored at Licensor's main
facilities, but at all times remain the property of Tenant.
(C) In the event that the Premises are damaged or destroyed such that
Tenant is unable to operate its equipment thereon, Licensor shall make an
election within ten (10) days following such event as to whether Licensor
shall make repairs or reconstruct the damaged portion of the Premises to
enable Tenant to operate upon the Premises in substantially the same manner
as Tenant enjoyed prior to the event of destruction. Such election shall
only be effective if Licensor is willing and able to make such repair or
reconstruction within ninety (90) days following the making of the election.
If Licensor elects not to repair or reconstruct the Premises within the
aforementioned ten (10) day period; or if Licensor is unable to make such
repairs or reconstruct the Premises during that ninety (90) day period, then
Tenant shall have the option to: 1) terminate the Site License, without
further liability to either party, or 2) require Licensor to immediately pay
over, or assign its right to payment of all insurance proceeds payable to
Licensor arising from the loss or damage to the Premises, and Tenant may use
such proceeds to make such repairs or reconstruction. If Licensor elects to
repair or reconstruct the Premises within the aforementioned ninety (90) day
period, or if Tenant elects to use the insurance proceeds to repair or
restore said damage, the Site License shall continue to bind the parties,
providing, however, Licensor shall not be entitled to receive rents during
the period commencing on the date of destruction and extending to the date of
completion of the repairs or reconstruction. In the event that Tenant
terminates the applicable Site License under this Paragraph 3(C), Licensor
shall return to Tenant all prepaid rents collected by Licensor which
represents that period commencing upon the date of destruction of the
Premises and continues to the date of termination. Licensor's failure to
make an election during the ten (10) day period following damage or
destruction of the Premises shall be deemed an election by Licensor not to
repair or reconstruct the Premises. Nothing contained herein shall be deemed
an election by Licensor not to repair or reconstruct the Premises. Nothing
contained herein shall be deemed a guarantee by Licensor to repair or
reconstruct the Premises following destruction.
4
<PAGE>
4. MAINTENANCE OF EQUIPMENT. Tenant shall, at its own expense,
maintain its equipment on or attached to the Premises in a safe condition and
in good repair, and in a manner reasonably suitable to Licensor so as not to
conflict with the use of the Property by Licensor or by any other tenant
lawfully using the Property, subject to Paragraph 19 below. All repair and
maintenance of Tenant's equipment shall be performed by qualified
technicians, authorized to enter the Premises as Tenant's agents, contractors
or employees.
To the extent any of the Improvements or the Premises are required to be
repaired or maintained under any laws or regulations of the F.C.C., or the
F.A.A. (including but not limited to tower signage, painting and lighting
requirements), such maintenance and repairs shall be promptly addressed by
Licensor at its sole expense, and in accordance with any such legal
requirements.
(A) Any and all machinery, equipment and trade fixtures, except the
electrical service, installed by Tenant, shall remain Tenant's
notwithstanding the fact that it may be affixed or attached to the realty or
the Premises, and shall, during the term of the Site License or any extension
or renewal thereof, and upon termination thereof, belong to and be removable
by Tenant. Tenant agrees that the Premises and associated realty shall not
be damaged by Tenant's occupancy and that Tenant shall, upon termination of
occupancy, make any repairs necessitated by Tenant's occupancy or removal of
Tenant's equipment, less ordinary wear and tear and loss by casualty or other
causes beyond Tenant's control.
(B) All transmitters operated by Tenant upon the Premises shall include
the use of, for example, a single stage isolator or a single bandpass cavity
or such other devices which may reasonably prevent or deter the creation of
harmful electrical interference. Licensor may determine, from time to time
and as is reasonable and necessary, other similar requirements for safe,
interference free operation of Tenant's equipment upon the Premises and
Tenant shall comply with all such requests.
5. ACCESS. Licensor agrees to give Tenant free and unrestricted
ingress and egress to the Premises during the term of the Site License and
any extension or renewals thereof for the purpose of installing, maintaining,
operating, replacing, upgrading and removing Tenant's equipment. Licensor's
promise does not extend to real property which is not under Licensor's
authority or control. Licensor's promise will not be interpreted as a
guarantee of Tenant's ability to enter or exit the Premises when weather
conditions, road conditions and other elements outside of Licensor's control
might affect Tenant's ability to enter the
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Premises.
6. MAINTENANCE AND OPERATION OF PREMISES. Licensor reserves to itself
and its successors, and assigns, the right to maintain the Property and to
operate telecommunications facilities thereon in such manner as will best
enable each to fulfill its own requirements, but in accord with the covenants
contained herein, including Licensor's promise to maintain the Property in
merchantable condition. In such event, Licensor shall not act, or permit
others to act, under such reserved rights in such a manner as to cause any
interruption of or interference with Tenant's operation of Tenant's
equipment, or the rights granted under this Agreement, or Tenant's service,
including but not limited to electrical interference and interference created
by intermodulation. Under no circumstances shall Licensor be liable for
consequential damages to any party, including but not limited to third
parties, arising out of interruption of Tenant's service, except as a result
of acts or omissions by Licensor, or those acting under authorization from
Licensor.
(A) Licensor shall be solely responsible at its expense for compliance
with ally local, state and federal laws, regulations and rules, involving
painting, signage and lighting requirements arising out of owning,
maintaining, or operating of the Improvements or the Property, in accord with
the existing laws, rules and regulations adopted, or which might be adopted,
including those by the Federal Aviation Administration or the Federal
Communications Commission; and shall indemnify Tenant for all fines levied
against Tenant for Licensor's failure to comply with such laws, rules and
regulations.
(B) Tenant promises to cooperate fully in Licensor's efforts to
maintain the peaceful occupation of the structure of which the Premises are a
portion, including, without limitation, Tenant's agreement to cooperate in
maintaining the cleanliness of the Premises; in constructing its equipment in
a safe, reasonably quiet, and non-disruptive manner; in assisting in
maintaining the security of the Premises by reasonably limiting the number of
persons with access to the Premises; and in directing its employees to treat
all other tenants with civility and courtesy.
(C) In the event that Licensor deems it reasonable and necessary,
Licensor may, at Licensor's expense, require that an intermodulation study be
performed by Tenant, to determine the effect of Tenant's use of the Premises
as it might effect existing users of the Property; provided that Licensor may
only require Tenant to do such study one (1) time during the term of a Site
License. Licensor may require that Tenant present to Licensor such study as a
condition to Tenant's occupation.
(D) Licensor hereby warrants that the Premises have been
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constructed and will be operated and maintained in accord with all laws,
rules, statutes, and regulations adopted or to be adopted by all applicable
and relevant fora or governmental bodies. Subject to the terms and
conditions contained herein, Licensor hereby agrees to indemnify and hold
Tenant harmless for all violations of any law, rule, statute, or regulation
for which Licensor is responsible, including the payment of all fines,
forfeitures, or similar penalties levied against Tenant for Licensor's
violation of its duties hereunder, provided, however, Licensor's obligation
to indemnify and hold Tenant harmless in accord with this Paragraph 6(D)
shall be limited by those expressed conditions and limitations contained
herein, including, without limitation, Tenant's compliance with all of its
duties created hereunder.
7. RENTAL OF PREMISES. Tenant shall pay Licensor monthly rent in the
amount set forth in the Site License for the subject Property (plus
applicable taxes), payable in advance commencing on the Commencement Date of
the License as provided for in Paragraph 3 and on the first day of each month
thereafter during the term of the Site License or any renewal period. All
rental payments will be made to Licensor, at the following address:
Dobson Tower Company
13439 N. Broadway Extension, Suite 200
Oklahoma City, OK 73114
Tenant agrees to pay a late fee for all rent payments not timely made (ten
(10) days past due) in an amount equal to five percent (5%) of the overdue
amount.
(A) If, following ten (10) days prior written notification to Tenant by
Licensor of Tenant's failure to make current its account, Tenant fails to
make timely rent payments such that the account is greater than sixty (60)
days past due, Tenant shall be deemed to have materially breached this
agreement. Notwithstanding all other remedies available at law or equity or
contained herein, Tenant's breach under this Paragraph 7(A) shall entitle
Licensor to demand and collect from Tenant a penalty amount in the amount set
forth in the Site License, in addition to all amounts due hereunder.
(B) Upon each anniversary date of the Commencement Date as defined by
Paragraph 3 herein, the annual charge for rental of the Premises shall be
automatically increased by an amount equal to four percent (4%) of the
previous annual rate. Such increases shall be automatic and will not require
Tenant's prior approval and by its execution of this agreement, Tenant agrees
to pay each such increase as a portion of its rent. Such increases shall
apply to the entire term of this agreement and any extension or renewal
period.
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(C) All rental payments made to Licensor shall be deemed the sole and
exclusive property of Licensor and shall not be subject to delay, offset,
refund or placement in escrow for any reason or purpose, except such refunds
as are expressed herein.
8. INDEMNIFICATION AND INSURANCE. Tenant shall indemnify Licensor
against any and all claims and demands for damages to property and injury or
death to persons, arising out of or caused by the installation, maintenance,
presence, use or removal of Tenant's equipment on the Premises, unless such
damage or injury shall be due to the willful acts or negligence of Licensor,
its employees, agents or invitees. Licensor shall indemnify Tenant against
any and all claims and demands for damages to property and injury or death to
persons, arising out of or caused by the acts or omissions of Licensor or
Licensor's employees, agents, or invitees, or the installation, maintenance,
presence, use or removal of third party's equipment on the Property, unless
such damage or injury shall be due to the negligence of Tenant, its
employees, agents or invitees. Licensor and Tenant shall each obtain and
maintain public liability insurance in an amount equal to Two Million Dollars
($2,000,000) during the term of the Site License and any renewal period,
respectively covering Licensor's and Tenant's use and ownership of rights in
the Premises. Tenant shall cause Licensor to be named as an additionally
insured person on its casualty and public liability policy(ies), and Licensor
shall cause Tenant, and any Tenant lender or lenders, to each be named as
additionally insured persons on Licensor's casualty and public liability
policy(ies). Tenant shall also carry worker's compensation insurance
covering all of Tenant's employees and automobile insurance covering all of
Tenant's vehicles in such amounts as are required by law. Certificates of
required insurance shall be periodically furnished to Licensor by Tenant, and
to Tenant by Licensor upon reasonable demand by the requesting party.
(A) Tenant and Licensor shall each be responsible for maintaining any
insurance covering their own equipment on the Property, in commercially
reasonable amounts sufficient to assure the ability to repair, reconstruct or
replace same if destroyed; the lives and health of their respective agents,
employees and invitees; damage or injury to other persons or other persons'
property caused by the acts or omissions of their own agents, employees, or
invitees; and any other business or liability insurance which each may deem
necessary to protect their own interests.
While not required to do so under this Agreement, in the event Tenant
obtains business interruption insurance, Licensor shall have no claim of
right, title or interest in or to any benefits paid under such coverage for
any reason.
(B) Licensor and Tenant each hereby waive any and all rights
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of recovery, claim, action, or causes of action, against the other, its
agents, officers or employees, for any loss or damage that may occur to the
Premises, or any improvements thereto, or any personal property of such party
therein, or to any person by reason of fire, the elements or any other cause
which could be insured against under the terms of standard property,
liability, fire and extended coverage insurance policies, regardless of cause
or origin, including negligence of other party hereto, its agents, officers
or employees and each party covenants that no insurer shall hold any right of
subrogation against such other party.
(C) Hold Harmless: Tenant hereby agrees to hold harmless the owner of
the real property and associated structures and all persons from whom
Licensor has taken authority for the purposes of Licensor's entrance into and
performance hereunder (if such person(s) are third parties), for any and all
injury or damages arising out of Tenant's occupation, use or employment for
commercial purposes of the Premises, including, without limitation, all
injury, loss or damages to Tenant and its agents, assigns, successors,
employees, invitees, and Tenant agrees that Licensor is the only other party
to this agreement and that no other party shall be deemed to have any
liability, duty or obligation to Tenant arising hereunder.
9. RENEWAL OPTIONS. Tenant shall have the option to renew and extend
the term of any Site License upon the same terms and conditions as set forth
herein for two (2) successive period(s) of five (5) years each (the "Renewal
Periods"). Tenant shall be deemed to have exercised its option to renew a
Site License and such Site License shall automatically renew on each fifth
year anniversary following commencement unless written notification of intent
to terminate the Site License is received by Licensor from Tenant on a date
which is at least ninety (90) days, but less than one hundred eighty (180)
days prior to the date of expiration. The word "term" as used in this
Agreement shall include the above-mentioned Renewal Period(s) as might be
exercised by Tenant.
10. DEFAULT. Neither party shall be deemed in default under a Site
License until the other party has given the defaulting party at least thirty
(30) days written notice of any default hereunder and the defaulting party
has failed to cure the same within thirty (30) days after receipt of such
notice; provided, however, that where such default cannot reasonably be cured
in such thirty (30) day period and if the defaulting party shall proceed
promptly to cure the same and prosecute such curing with due diligence, the
time for curing such default shall be extended for such period of time as may
be deemed necessary by the other party in its reasonable discretion to
complete such curing. Tenant's right to cure a default provided in this
Paragraph 10 shall not apply to the timely payment of rents.
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(A) Licensor will not, except in an emergency as shall be interpreted
in Licensor's sole discretion, cure any alleged default by Tenant until after
the expiration of thirty (30) days following Tenant's receipt of notice
provided for herein and then only if Tenant has failed, during such period,
to cure such default or perform such act.
(B) Licensor reserves the right to disconnect the electrical power to
Tenant's equipment if, following notification by another user of the
Property, or Tenant's agents or employees, or by notification by officials of
the Federal Government, it is determined that operation of Tenant's equipment
is causing injury or damage to other persons or users, subject to Paragraph
19 below, or is in violation of law. Such disconnection by Licensor shall
not be performed without informing Tenant prior to Licensor's taking such
action and without providing Tenant with an opportunity within seventy-two
(72) hours following such notification (which notification shall be by
telephone and followed immediately by written notice pursuant to the
Paragraph 13 herein below), to cure immediately such problems or answer such
allegations. If, following notification to Tenant by Licensor, Tenant does
not repair or disconnect Tenant's equipment within the aforementioned
seventy-two (72) hour period, to discontinue continuing injury and/or damage
to other persons or tenants, and Licensor reasonably deems such repair or
disconnection necessary to protect Licensor or other persons, Licensor may
disconnect the electrical power to Tenant's equipment, which act shall be
without liability to Licensor and Licensor shall not be liable for any
damages, loss of revenue, claims, or injuries caused by Licensor arising out
of disconnection of Tenant's equipment, except such injury or damages caused
by Licensor's negligence or willful actions, and only to the extent provided
for herein. Licensor warrants that the terms contained within this Paragraph
10(B) are substantially similar and reflected within all other licenses
entered into by Licensor for third parties' occupation and use of all or any
part of the Property and shall be included in substantially similar form
within future licenses entered into by Licensor for future tenants' use of
all or any part of the Property.
(C) Tenant shall be deemed to be in default if Tenant causes to be
placed upon its equipment or the Premises any unbonded mechanics' or
materialmen's lien or encumbrance, which placement delays, prevents or
impedes Licensor's or third parties' use of the Premises. Notwithstanding
the foregoing, Licensor acknowledges that Tenant has entered into a financing
arrangement, including promissory notes and financial and security
agreements, for the financing of Tenant's telecommunications facilities and
the operation thereof. Accordingly, Licensor hereby consents to Tenant's
installation and operation of Tenant's equipment, which is deemed collateral
under the aforementioned financing agreement(s), and Licensor agrees that (i)
it disclaims any interest in the
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collateral, as fixtures or otherwise; and (ii) it shall hold as exempt such
collateral from execution, foreclosure, sale, levy, attachment, or distress
for any rent due or to become due and that such collateral may be removed by
Tenant or pursuant to the terms of such financial arrangement(s) at any time
without recourse to legal proceedings. Licensor's consent provided under
this Paragraph 10(C) shall not be employed for the purpose of reducing any
obligation of Tenant's created hereunder for the timely payment of rents.
11. ASSIGNMENT OF LICENSE. Tenant shall not assign or sub-license this
Agreement or any Site License without the prior written consent of Licensor,
EXCEPT that no prior written consent shall be required from Licensor for any
such assignment or sub-license to (i) party who owns or acquires a
controlling ownership interest in Tenant (whether by purchase of fifty-one
percent (51%) or greater of the voting stock of Tenant, or substantially all
of the assets of Tenant, or otherwise); (ii) Tenant's parent corporation or
an affiliate of Tenant (For purposes of this paragraph, an affiliate is an
entity in which there is a common owner owning at least a ten percent (10 %)
ownership interest in both Tenant and the other affiliated entity, and shall
include but not be limited to parent and subsidiary entities to Tenant, as
well as partnerships in which Dobson Communications Corporation, or any of
its subsidiary entities, is a general partner.); or (iii) a successor to
Tenant's FCC license to operate Tenant's equipment. In the event of a
permitted assignment or sub-license which does not require Licensor's prior
consent, Tenant shall provide Licensor written notice of the assignment or
sub-license, and the name and address of the assignee or sub-licensee before
same shall be binding on Licensor. With regard to any assignment or
sub-license which does require prior consent from Licensor, Licensor
covenants and agrees that it will not unreasonably withhold, delay or
condition its consent to any such assignment or sub-license. Under no
circumstances shall a Site License be assigned by Tenant to any party which
does not agree to be bound by all terms and conditions contained herein.
Licensor may assign its rights under this Agreement only upon sale of
the underlying Property or Premises, and Licensor's Improvements, without
prior approval from Tenant, PROVIDED that before the assignment may be made
binding on Licensor or Tenant, Licensor's transferee shall furnish Tenant
with the written adoption of this Agreement, and assumption of Licensor's
obligations under this agreement. Otherwise, no such assignment of the
Licensor's rights under this Agreement shall be made without Tenant's prior
written approval, which shall not be unreasonably withheld.
(A) As a condition precedent to Tenant's and Licensor's right to assign or
sub-license this Agreement and/or any Site
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License to any third party, Tenant and Licensor each covenant that they will
notify the other in writing of their intent to make such assignment or
sub-license and, in the event that Licensor's or Tenant's consent is not
required or is deemed given hereunder, the transferring party shall provide
to the other all documents reasonably required by the non-transferring party
to assure that the assignee or sub-licensee agrees to be bound by all terms
and conditions contained herein which bind the transferring party.
(B) Notwithstanding anything in this agreement to the contrary,
Licensor hereby agrees to Tenant's assignment of this Agreement and any Site
License to any financing entity, or agent on behalf of any financing entity,
to whom Tenant (i) has obligations for borrowing money or in respect to
guarantee thereof; (ii) has obligations evidenced by bonds, debentures, notes
or similar instruments; or (iii) has obligations under or with respect to
letters of credit, bankers acceptances and similar facilities or in respect
of guarantees thereof. Further, Licensor agrees to execute such estoppel
affidavits and other documents relating to this Agreement and the Site
Licenses as may be reasonably requested by Tenant or Tenant's lender(s).
12. ATTORNEYS FEES. In the event that either party brings a law suit
to compel the performance of the other party hereunder, the substantially
prevailing party in such suit shall be entitled, in addition to all other
remedies at law or equity, to reimbursement for all reasonable attorney's
fees and costs paid to bring or defend such suit.
13. MANNER OF GIVING NOTICE. Any written notice to be given under this
Agreement or any Site License shall be mailed to each party at the address
shown below. All notice shall be sent by registered or certified mail,
postage prepaid, return receipt requested, or by a reputable express carrier
which provides overnight delivery service following receipt of a signature
from the receiver, and shall be deemed given when so mailed or sent.
Licensor: Dobson Tower Company
Attn: President
13439 N. Broadway Extension, Suite 200
Oklahoma City, OK 73114
Tenant: [As designated in each Site License]
Sygnet Communications, Inc.
Attn: President
13439 N. Broadway Extension, Suite 200
Oklahoma City, OK 73114
With copy to: Dobson Communications Corporation
Attn: Mr. Ronald L. Ripley
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Vice President and Senior General Counsel
13439 N. Broadway Extension, Suite 200
Oklahoma City, OK 73114
14. QUIET ENJOYMENT. Licensor covenants and agrees that upon Tenant's
paying the rent and other applicable charges and performing in accord with
the terms and conditions stated herein, Tenant may peacefully and quietly
enjoy the Premises, subject to the terms and conditions of this Agreement and
the Site License.
15. COMPLIANCE WITH STATUTES AND REGULATIONS. Antennas, wires and
appliances of Tenant shall be erected and maintained in accord with the
requirements and specifications of the safety codes of the State where the
Premises are located or any applicable jurisdiction or any amendments or
revisions thereof, and in compliance with any rules or orders now in effect,
or that hereafter may be issued by the Federal Communications Commission.
16. AUTOMATIC TERMINATION. Licensor may terminate this Agreement
immediately and the parties shall deem Tenant to be in default if any of the
following occurs: (i) Tenant is declared bankrupt or files for bankruptcy
protection; (ii) Tenant is adjudged insolvent, and such judgment is not
reversed within thirty (30) days of entry; (iii) a receiver is appointed to
manage Tenant and/or its assets, and such appointment is not overturned
within thirty (30) days; or, (iv) Tenant is found by a court of competent
jurisdiction to have engaged in felonious activity in the operation of
equipment at the Premises. Termination by Licensor for the causes listed
above shall not create a reduction, offset, or relief from liability of all
charges due and owing Licensor which have accrued up to the time when
termination is elected.
17. PASS THROUGHS. In addition to the annual rental payments to be
made by Tenant, Tenant agrees to pay its reasonable pro rata or
representative portion of any increase in taxes, excluding income taxes; any
road assessments levied for the provision of ingress and egress to the
Premises; or increase in per unit rate of necessary utilities which occur
following the commencement of the site License and which are billed to either
party for operation of the Premises. Charges for increased utility rates
will not be passed through to tenants which are billed separately by the
utility company for power and/or telephone service and Tenant agrees to
separate metering of its electrical power at Tenant's sole expense. Charges
to Tenant for such increases may be commenced immediately following
Licensor's receipt of a demand for higher costs from the applicable
government agency, supplier, utility company or road maintenance company,
without prior notification to or approval from tenant, however, Licensor
shall provide to Tenant all documentation necessary to demonstrate the source
and amount of any increase directly attributable to Tenant's equipment on the
Premises. Under no circumstances shall
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Licensor charge Tenant for such increases in a manner that might result in a
profit to Licensor. Tenant's failure to pay any such charges upon demand by
Licensor shall be deemed to be a failure to pay rents as required herein.
18. COMPLIANCE WITH LAW REGARDING AUTHORITY TO OPERATE. Except as
specifically provided herein, the parties shall be responsible for compliance
with all laws, statutes and regulations for which their authority to operate
radio equipment, or operate the Premises or Property as the case may be, is
dependent. No party shall indemnify the other or be made liable in any way
for any other party's failure to act in compliance with any rule or law,
including violations which result in criminal prosecution or punitive action
against a party, no matter what the source or cause of the violation of law
might be except as provided for in Paragraph 6(D) above. Accordingly, each
party shall be solely responsible for its actions and its defense of such
actions before any official agency or relevant court, with the sole
responsibility party(ies) being those named in such action.
19. INTERFERENCE. Tenant shall have full and complete responsibility
to correct, within seventy-two (72) hours, any electrical interference caused
to other communications equipment at the Property by operation of Tenant's
equipment, which cause is a result of a defect in Tenant's equipment. The
term "defect" shall include any operating of Tenant's equipment which is not
in accord with the technical parameters of any license issued by the Federal
Communications Commission for operation of Tenant's facilities; any operation
in variance with any equipment authorization granted by the Federal
Communications Commission for operation of Tenant's facilities; any operation
in variance with any equipment authorization granted by the Federal
Communications Commission for sale, marketing and use of Tenant's equipment;
any circumstance or condition which causes Tenant's equipment to operate in
variance with any Exhibit attached to the subject Site License hereto; and
any operation of tenant's equipment which does not conform with generally
accepted practices of telecommunications engineering, including, but not
limited to, applicable ANSI standards which exist or come to exist. Licensor
warrants that the terms contained within this Paragraph 19 are substantially
similar to and reflected within all other licenses entered into by Licensor
for third parties' occupation and use of all or part of the Property and
shall be included in substantially similar form within future licenses
entered into by Licensor for future tenants' use of all or part of the
Property.
(A) Licensor hereby agrees to cooperate reasonably with Tenant in
relieving any harmful electrical interference to Tenant's equipment caused by
the operation of other telecommunications facilities on the Premises,
including directing the interfering operator to discontinue the creation of
such harmful interference
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or exercising Licensor's right to disconnect the operation of offending
facilities until such time as the harmful interference can be resolved. In
the event that the parties' cooperation cannot relieve the receipt of harmful
electrical interference to Tenant's equipment within thirty (30) days
following Tenant's providing to Licensor notification of the existence of the
harmful interference, and said interference is not caused by any defect or
unreasonable condition in Tenant's equipment or operation, Tenant may
terminate this License and/or seek any other remedies available to Tenant at
law or in equity, including an injunction against the interfering party;
providing, however, such termination or remedies shall be without liability
to Licensor, except for acts or omissions of Licensor in violation of this
Agreement.
20. SUITABILITY. Tenant warrants that prior to the Commencement Date,
it will examine the Premises to its satisfaction and that if Tenant does not
send Licensor written notification to the contrary, Tenant's election not to
notify Licensor otherwise shall be deemed to be Tenant's acceptance of the
Premises as suitable for occupation by Tenant for the purposes described
herein. In the event that Tenant determines that the Premises are unsuitable
for Tenant's occupation and use, Tenant may terminate the Site License for
said Premises without further liability to either party. Tenant further
acknowledges that Licensor does not warrant, in any way, the quality, range,
or propagation characteristics of any radio signal to be transmitted by
operation of Tenant's equipment.
21. ENVIRONMENTAL LAWS. Tenant represents, warrants and agrees that it
will conduct its activities on the Premises in compliance with all applicable
Environmental Laws. Licensor represents, warrants and agrees that it has in
the past and will in the future, conduct its activities on the Property in
compliance with all applicable Environmental Laws and that the Property is
free of hazardous substances as of the date of this License.
Licensor shall be responsible for, and promptly cause to be performed,
any investigation and remediation as required by any environmental laws or
common law, of all spills or other release of hazardous substances, not
caused solely by Tenant, that have occurred or which may occur on the
Property.
Tenant agrees to defend, indemnify and hold Licensor harmless from and
against any and all claims, causes of action, demands, and liability
including, but not limited to, damages, costs, expenses, assessments,
penalties, fines, losses, judgments and attorney's fees that Licensor may
suffer due to the existence or discovery of any hazardous substance on the
Premises or the migration of any hazardous substance to other properties or
release into the environment, arising solely from Tenant's activities on the
Premises.
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Licensor agrees to defend, indemnify and hold Tenant harmless from and
against any and all claims, causes of action, demands and liability
including, but not limited to, damages, costs, expenses, assessments,
penalties, fines, losses, judgments and attorney's fees that Tenant may
suffer due to the existence or discovery of any hazardous substance, except
radio frequency emissions on the Property, or the migration of any hazardous
substance to other properties or released into the environment, that relate
to or arise from Licensor's activities during the term of this License (or
the activities of third parties acting under the authority of Licensor) and
from all conditions and activities on the Property prior to the commencement
of this License.
The indemnification in this Paragraph specifically includes costs
incurred in connection with any investigation of site conditions or any
cleanup, remedial, removal or restoration work required by any governmental
authority.
Notwithstanding the foregoing, Tenant agrees to cooperate with Licensor
and other users of the Property to resolve any violations of RF emission
standards created by the operation, collocation, and use of the Property by
Tenant and all other users, which standards are promulgated by the FCC,
including, if necessary, the provision of shielding devices or hardware or
other such remedies which are reasonably required to assure compliance with
all such regulations. Licensor agrees to cooperate with Tenant to assist in
assuring compliance with all FCC promulgated RF exposure limitations,
including providing to Tenant upon request, all relevant information which
Licensor has in its possession regarding the equipment employed by collocated
systems operating upon the Property.
Each party warrants that they shall provide immediate notification to
the other party of any investigation or lawsuit commenced by any agency,
governmental body, person, or forum regarding any alleged violation of any
environmental protection law. A party's failure to provide such notification
will not, however, be deemed a waiver of a party's obligation to provide
indemnification required hereunder.
This Paragraph 21 shall survive the expiration or earlier termination of
this Agreement or the Site License.
22. CONDEMNATION. In the event that the Premises or any portion
thereof are taken pursuant to a condemnation proceeding or by eminent domain,
such that Tenant can no longer operate its telecommunications equipment on
the premises, the Site License shall terminate without liability to either
party and Tenant shall not only be entitled to any portion of any award
arising out of such proceedings which are attributable to any of Tenant's
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property, improvements or property rights under this Agreement or any of the
Site Licenses.
23. ENTIRE AGREEMENT SEVERABILITY. This Agreement, together with each
Site License, entered into pursuant to the terms hereof constitutes the
entire agreement and understanding between the parties, and supersedes all
offers, negotiations and other agreements concerning the subject matter
contained herein. Neither this Agreement nor any Site License may be
modified or terminated except as provided herein or by other written
agreements between the parties. If any provision of this Agreement or any
Site License is held by a court of competent jurisdiction to be invalid, it
shall be considered deleted from this Agreement or the Site License, however,
the remainder of this Agreement or the Site License shall survive and be
deemed enforceable.
24. PARTIES BOUND BY AGREEMENT. Subject to the provisions hereof, this
Agreement and each Site License shall extend to and bind the parties and
their heirs, executors, administrators, successors and assigns.
25. GOVERNING LAW. Each Site License and this Agreement as applied to
that Site License shall be construed in accordance with the laws of the of
Ohio.
26. HEADINGS. The headings included herein are merely a matter of
convenience and shall not be employed for the purpose of interpretation of
the language contained herein.
27. WARRANTY OF SIGNATORIES. The persons signing below and the persons
signing each Site License executed hereunder warrant that they possess all
actual and apparent authority to bind legally the party which they claim to
represent, for all purposes related to performance in accord with the terms
contained herein. The signing persons agree that they possess all authority,
both actual and implied, to cause the party they represent to enter into and
perform under this agreement for all purposes.
28. COUNTERPARTS. This Agreement and any Site License may be executed
in counterpart originals and each shall be deemed fully binding on the
parties in all respects.
29. ABILITY TO PERFORM. Licensor warrants that: (i) that it owns the
tower or other Improvements at the Property, on which part of the Premises is
located; (ii) it has good title to or a valid leasehold interest in the
Property pursuant to a valid lease with the owner of the land (on which the
Property is located); (iii) it is a corporation in good standing, authorized
to do business within the state where the Premises are located; (iv) it has
authority to enter into this Agreement and each Site License pursuant to its
interest in the property; and (v) it knows of no reason why it
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<PAGE>
cannot enter into this Agreement and each Site License and perform hereunder,
including reasons arising under any statute, law, rule, regulation,
contractual obligation, decision of any applicable government agency or
forum, articles of incorporation, by-law, or pending or threatened litigation.
30. RECORDING. Licensor acknowledges that a Memorandum of Agreement,
in the form annexed hereto as Exhibit C, will be recorded by Tenant in the
official records of the County where the Property is located, and Licensor
agrees to cooperate reasonably with Tenant's effort to record such Memorandum
of Agreement. In the event the Property is encumbered by a mortgage or deed
of trust, Licensor agrees to employ reasonable efforts to obtain and furnish
to Tenant a non-disturbance and attornment instrument for each such mortgage
or deed of trust.
WHEREFORE, the parties have executed this agreement on the day and year
first above written, intending to be legally bound to the terms and
conditions contained herein.
Licensor: Tenant:
Dobson Tower Company, Sygnet Communications, Inc.
an Oklahoma corporation an Ohio corporation
By: /s/ G. Edward Evans By: /s/ G. Edward Evans
-------------------------------- --------------------------------
Its: President Its: President
-------------------------------- --------------------------------
Date: 12-23-98 Date: 12-23-98
-------------------------------- --------------------------------
18
<PAGE>
License No._____________
Structure No.___________
EXHIBIT A
Site License
to the Master Site License Agreement between Sygnet Communications,
Inc., an Ohio corporation, together with its communications affiliates
collectively ("Tenant"), and Dobson Tower Company ("Licensor").
1. Site No./Name:
2. Name of Licensor:
3. Name of Tenant:
4. Site Address: (street address and legal description - attach)
5. Site Latitude and Longitude:
6. Commencement Date:
7. Monthly Rent: Penalty Amount:
8. Term: See paragraphs 3 and 9 of the Master Site License
Agreement
9. Site Licensor-Owned:_____________ or Licensor-Licensed:_____________
If Licensed, Term of Underlying License:
10. Special Access Requirements:
11. Existing Mortgages, etc.:
12. Licensor Contact for Access for Emergency:
13. Tenant Contact for Emergency:
19
<PAGE>
14. Tenant's Address for Notice Purposes:
LICENSOR:
By:
-------------------------------------
Title:
-------------------------------------
TENANT:
By:
-------------------------------------
Title:
-------------------------------------
Date:
--------------------------------
Attachments: Exhibit 1: Description of Tenant's Equipment
Exhibit 2: Description or Depiction of Premises (Field
Drawing of Equipment Shelter/Room/Cabinet
Location(s) and right-of-way to the Premises)
Exhibit 3: Engineering/Architectural Plans and Specifications
Exhibit 4: Existing Liens, Rights of Way and Easements
Exhibit 5: Current Wireless Communications Uses of Site
(including frequencies and radiated power
densities)
Exhibit 6: Prime License (if applicable)
20
<PAGE>
EXHIBIT 1
DESCRIPTION OF TENANT'S EQUIPMENT
The equipment Tenant shall place on the Premises is as follows:
INITIAL INSTALLATION:
One (1) Equipment shelter (10'x 12') to house Tenant's communications
equipment, constructed on a concrete pad.
Six (6) Panel antennas, approximately 1'x 4' in size.
Six (6) Coaxial runs, 7/8" in diameter.
Grounding equipment necessary to tie into Licensor's grounding ring, as
applicable.
Waveguide bridge, associated supports and connectors, utility lines and
transmission lines
Sectors:
-------------------------------------
Azimuths:
-------------------------------------
Frequencies:
-------------------------------------
Positions: (See Exhibit B)
FUTURE INSTALLATION
Three (3) Panel antennas, approximately 1'x 4' in size
Three (3) Coaxial runs, 7/8" in diameter.
Grounding equipment necessary to tie into Licensor's grounding ring, as
applicable.
Waveguide bridge; associated supports and connectors, utility lines and
transmission lines
Sectors:
-------------------------------------
Azimuths:
-------------------------------------
Frequencies:
-------------------------------------
Positions: (See Exhibit B)
<PAGE>
EXHIBIT B
DESCRIPTION OF PREMISES
The Premises are described and/or depicted as follows:
<PAGE>
EXHIBIT C
WHEN RECORDED SEND TO:
______________________________________
______________________________________
______________________________________
______________________________________
MEMORANDUM OF AGREEMENT
This Memorandum of License is entered into on this __________________
day of ___________________, 199 ____, by and between __________________________
___________________, a ___________________ corporation, with an office at
______________________________________, (hereinafter referred to as "Licensor")
and ______________________________________, a ___________________ corporation,
with an office at ______________________________________, (hereinafter referred
to as "Tenant").
1. Licensor and Tenant entered into a Site License ("Agreement') on
___________________, 199____, for the purpose of installing, operating
and maintaining a radio communications facility and other
improvements. All of the foregoing are set forth in the Agreement.
2. The term of the Agreement is for five (5) years, commencing on
___________________, 199____, ("Commencement Date") and terminating on
the fifth (5th) anniversary of the Commencement Date, with two (2)
successive five (5) year options to renew.
3. The Land which is the subject of the Agreement is described in Exhibit
A annexed hereto. The portion of the Land being licensed to Tenant
(the "Premises") is described in Exhibit B annexed hereto.
IN WITNESS WHEREOF, the parties have executed this Memorandum of
Agreement as of the day and year first written above.
LICENSOR: TENANT:
By:________________________________ By:_____________________________________
Title:_____________________________ Title:__________________________________
Date:______________________________ Date:___________________________________
<PAGE>
STATE OF___________________________
COUNTY OF__________________________
On ___________________, before me, _____________________________________, Notary
Public, personally appeared ______________________________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity, and that by his signature
on the instrument, the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
______________________________________ [SEAL]
Notary Public
My commission expires:___________________
<PAGE>
7/31/97
PROPRIETARY & CONFIDENTIAL
AMENDMENT NUMBER TWO
TO
INTEROPERATOR SERVICES AGREEMENT
THIS AMENDMENT NUMBER TWO, dated as of 8/1/97, 1997, (the "Effective
Date") is between EDS Personal Communications Corporation ("EDS PCC") and
SYGNET Communications, successor in interest to Youngstown Cellular Telephone
Company Partnership ("CUSTOMER"), and is an amendment of that certain
Interoperator Services Agreement between EDS PCC and CUSTOMER, effective as
of April 25, 1995 (the "Agreement").
W I T N E S S E T H:
WHEREAS, CUSTOMER and EDS PCC have entered into the Agreement whereby
EDS provides CUSTOMER with certain interoperator services; and
WHEREAS, CUSTOMER and EDS PCC desire to amend the Agreement in the
manner set forth below.
NOW, THEREFORE, CUSTOMER and EDS PCC agree as follows:
1. SECTION 2. Term that describes the Term for PRV Services is modified as
follows:
"The Term of PRV Services is hereby extended on a month-to-month basis
after the appropriate Service termination date unless either of the
parties notifies the other party in writing at least sixty (60) days prior
to the last month that this Agreement will not be extended further."
2. The following is hereby added to the Agreement as SECTION 22:
"22. YEAR 2000. EDS PCC and CUSTOMER acknowledge and agree that as of
the Effective Date the EDS PCC Software utilized for the Services set
forth in SECTION 1 of the Agreement are not Year 2000 compliant.
However, as part of the Services, EDS PCC will, prior to December 31,
1999, use commercially reasonable effort to include changes,
modifications, updates or enhancements which may be necessary so that
the EDS PCC Software will maintain the functionality existing as of the
Effective Date and either (a) operate and produce data on or after
January 1, 2000 (including taking into effect that such year is a leap
year), accurately and without delay, interruption or error relating to
the fact that the time at which and the on which such is operating is
on or after 12:00 a.m. on January 1, 2000 (including taking into effect
that such year is a leap year) or (b) accept, calculate, process,
maintain, write and output, accurately and without delay, interruption
or error, all times or dates, or both, whether before, on or after
12:00 a.m., January 1, 2000 (including taking into effect that such
year is a leap year), and any time periods determined or to be
determined based on any such time or dates, or both. CUSTOMER also
acknowledges and agrees that EDS PCC will not be responsible for (i)
changes, modifications, updates or enhancements to any other software
or systems or to interfaces between any such other software or systems,
of (ii) any inaccuracies, delays, interruptions or errors occurring as
a result of incorrect data or data from other systems, software,
processes or third parties provided in a format that is inconsistent
with the format and protocols established for the EDS PCC Software,
even if such data is
<PAGE>
required for the operation of the EDS PCC Software and (iii) any
inaccuracies, delays, interruptions or errors occurring as a result of
incorrect data or data from telecommunications hardware or systems."
3. ATTACHMENT I TO EXHIBIT PRV - SECTION A. Monthly Transaction Charge
that describes minimum monthly charges for SIDS/BIDS is deleted in its
entirety and replaced with the following:
<TABLE>
<S> <C>
"The monthly combined minimum charge for existing five SIDS: $2,500
Any SIDs added to the agreement after the date of this amendment: $500 per SID"
</TABLE>
4. AGREEMENT IN FORCE. Except as modified by this Amendment Number Two, the
Agreement is unchanged and remain in full force and effect.
IN WITNESS WHEREOF, EDS and CUSTOMER have caused this Amendment Number
Two to be signed and delivered by its duly authorized officer, all as of the
date first set forth above.
ELECTRONIC DATA SYGNET COMMUNICATIONS
SYSTEMS CORPORATION
By: /s/ GLENN BARLOW By: /s/ WILLIAM ZLOTNICK
----------------------------- -----------------------------
Printed Printed
Name: Glenn Barlow Name: William Zlotnick
--------------------------- ---------------------------
Date: 7/30/97 Date: 8/1/97
--------------------------- ---------------------------
<PAGE>
AMENDMENT NO. 1
TO
DMS-MTX CELLULAR SUPPLY AGREEMENT
BETWEEN
YOUNGSTOWN CELLULAR TELEPHONE COMPANY
AND
NORTHERN TELECOM INC.
Made as of this 15th day of April, 1998 ("Amendment Effective Date") by and
between Northern Telecom Inc. ("Seller") and Youngstown Cellular Telephone
Company ("Buyer").
WHEREAS, Youngstown Cellular Telephone Company and Seller entered into an
agreement dated June 1, 1996 for the sale and purchase of Seller's equipment
and services ("Agreement"); and
WHEREAS, Buyer and Seller now wish to amend the Agreement to reflect the
change in name from Youngstown Cellular Telephone Company to Sygnet
Communications, Inc., revisions to the discount structure, and addition of
fixed prices for the EDSP transcoder and TRU III Radio(s) all as hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
Buyer and Seller hereby agree to amend the Agreement as follows:
1. As of the Amendment Effective Date, all references to "Youngstown
Cellular Telephone Company" in the Agreement shall be deemed to be
"Sygnet Communications, Inc.".
2. Amend Annex 1, "Equipment/Pricing," Subsection 1.1, "Volume Discount and
New Switch Discount Schedule," by deleting the AMPS/TDMA Volume Discount
Structure in its entirety and replacing it with the following discount
structure;
A-1
<PAGE>
<TABLE>
<CAPTION>
Radio and
Expansion New Switch Transcoder
Discount Discount Fixed Prices
-------- -------- ------------
<S> <C> <C> <C>
Switch Equipment 45% 60%
NT800 DR Cells W/ATC 42%
Other RF Intrastructure 40%
Software 50% 65%
TRU II, TRU III Radios (fixed $ 4,850
price per unit, not subject to further
discount)
EDSP Transcoder (NTEX93AA) $15,000
(fixed price per unit, not subject
to further discount)
</TABLE>
3. Sygnet Communications, Inc. hereby adopts, notifies and confirms the
agreement, as amended.
4. Except as specifically modified by this Amendment No. 1, the Agreement
shall in all other respects continue in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be
excuted by their duly authorized representatives.
SYGNET COMMUNICATIONS, INC. NORTHERN TELECOM INC.
as the successor to Youngstown ("Seller")
Cellular Telephone Company ("Buyer")
By: /s/ Gregory T. Pauley By: /s/ Charles Drayton
--------------------------------- --------------------------------
Name: Gregory T. Pauley Name: Charles Drayton
------------------------------- ------------------------------
(Type/Print) (Type/Print)
Title: Vice President- Title: VP-Marketing, Sales &
Technical Operations Business Development
------------------------------ -----------------------------
Date: 4-16-98 Date: 5/28/98
------------------------------ -----------------------------
A-2
<PAGE>
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") by and between DOBSON
COMMUNICATIONS CORPORATION, an Oklahoma corporation (the "Company"), and
Albert H. Pharis, Jr., an individual (the "Consultant"), dated as of the 21st
day of December, 1998 (the "Effective Date").
W I T N E S S E T H:
WHEREAS, Sygnet Wireless, Inc. and its subsidiary, Sygnet
Communications, Inc. (together, "Sygnet") are engaged in providing full
service mobile telecommunications including cellular telecommunications (the
"Business"); and
WHEREAS, pursuant to an Agreement and Plan of Merger dated as of July
28, 1998, the Company, through an indirect subsidiary, has agreed to acquire
Sygnet (the "Sygnet Acquisition"); and
WHEREAS, Consultant is a director and is President and Chief Executive
Officer of Sygnet; and
WHEREAS, Consultant, in his capacity as President and Chief Executive
Officer of Sygnet, has been instrumental in developing the goodwill of the
Business by virtue of his intimate knowledge of all aspects of the Business
and his personal relationships with the employees and certain customers of
the Business; and
WHEREAS, the Company desires to preserve and protect the value of the
Business and goodwill to be acquired by the Company, and the value of any
goodwill developed following the Company's acquisition of Sygnet as a result
of Consultant's services rendered pursuant to this Agreement; and
WHEREAS, the Consultant has agreed to assist the Company in the
transition of ownership, and the operation, of the Business, to maintain the
confidentiality of certain information concerning the Business, and to
refrain from competing with the Company and Sygnet for a reasonable period of
time;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties agree as follows:
1. ENGAGEMENT. The Company hereby engages the Consultant as a
consultant and advisor, and Consultant agrees to accept such engagement, on
the terms and conditions set forth herein. Consultant further agrees to
serve faithfully and to the best of his ability and to devote such of his
time, energy and
<PAGE>
skill to the service of the Company and Sygnet, all as set forth in this
Agreement; provided, however, nothing herein contained shall prevent
Consultant from engaging in other endeavors not in conflict with the business
of the Company or its subsidiaries or his duties and responsibilities under
this Agreement.
2. DUTIES. During the term of this Agreement, Consultant shall render
such services of an advisory or consultive nature and promote the name and
good will of the Company and Sygnet as the Company, through its Chief
Executive Officer, may reasonably request so that the Company may have the
benefit of Consultant's experience and knowledge of the business and affairs
of Sygnet and of his reputation and contacts in the Business. In this
regard, Consultant will (i) use his best efforts (which shall not require an
unusual or burdensome amount of time nor shall Consultant be required to
incur out-of-pocket costs or expenses without reimbursement) to assist the
Company in maintaining good business relations with the principal suppliers
to and customers of the Business, and (ii) not take any action that would
detract from or impair the business relationship of those parties.
Consultant agrees that he will be available for advice and counsel to the
officers and directors of the Company at all reasonable times by telephone,
letter, or in person. Consultant agrees that he will serve faithfully and to
the best of his ability, and devote such of his time, energy and skill to the
service of the Company, as the Company through its Chief Executive Officer
may reasonably request.
3. INDEPENDENT CONTRACTOR. During the term of this Agreement,
Consultant shall be retained by the Company as and Consultant shall hold
himself out as, an independent contractor, and not as an "associate" or
"employee" of the Company. Accordingly, the Company shall not withhold
amounts of applicable federal and state income, withholding and employment
taxes from the fees to be paid Consultant hereunder unless otherwise required
by applicable law and regulations. Consultant shall be solely responsible
for and shall pay all of such taxes.
4. TERM. The initial term of this Agreement shall be for a period of
five years commencing on the Effective Date and ending on the earlier to
occur of (i) the fifth anniversary of the Closing Date of the Sygnet
Acquisition or (ii) the last day of the month coinciding with the date on
which a termination event (death, Disability, Cause or Voluntary Termination)
shall have occurred as provided in paragraph 6 hereof. Such period is
hereafter referred to as the "Consulting Period".
5. COMPENSATION.
5.1. TRANSITIONAL PERIOD FEE. The parties have agreed that
for consultive services provided by Consultant under
-2-
<PAGE>
this Agreement for a transition period of 90 days next following the
consummation of the Sygnet Acquisition (the "Transition Period"), the
Consultant shall receive a fee of $40,000, payable in full, within ten days
next following the last day of the Transition Period.
5.2. CONSULTING FEE. Commencing on the first day next
following the expiration of the Transition Period and for the remainder of
the Consulting Period, and in consideration of the Consultant faithfully
performing consulting services under this Agreement, and in consideration of
the Consultant being reasonably available to render to the Company the
services provided in paragraph 2 hereof, the Consultant shall receive an
annual fee of Sixty Thousand Dollars ($60,000) (the "Consulting Fee"),
payable in monthly installments in advance of $5,000.00 each commencing on
the first day of the Consulting Period and continuing until the earlier of
the expiration of the Consulting Period or termination of this Agreement
pursuant to, and subject to the provisions of, Section 6.
5.3. EXPENSES. During the Consulting Period, the Consultant
shall be entitled to receive reimbursement for all reasonable business and
travel expenses incurred by the Consultant while performing consulting
services for and at the request of the Company, all under and in accordance
with the policies, practices and procedures of the Company with respect to
key management associates of the Company and recognized by the Internal
Revenue Code of 1986, as amended (the "Code"), and rules and regulations of
the Internal Revenue Service promulgated thereunder, as approved and
interpreted by the Chief Financial Officer of the Company.
5.4. HEALTH, DISABILITY AND LIFE BENEFITS. In addition to
the consulting fee and the reimbursement expenses provided for above,
commencing with the first day of the Transition Period and for the remainder
of the Consulting Period, Consultant shall be entitled to receive such
health, disability and life insurance coverage as is provided to employees
whose annual compensation is comparable to the consulting fee to be paid to
Consultant under the terms of this Agreement.
5.5. OFFICE AND SUPPORT STAFF. During the Consulting Period
and if determined to be reasonably necessary for the Consultant to perform
his duties hereunder by the Chief Financial Officer of the Company, the
Consultant shall be provided with a suitable office in Youngstown, Ohio, of a
size and with furnishings and other appointments and secretarial and other
assistants as are provided to key management associates of the Company.
6. TERMINATION.
-3-
<PAGE>
6.1. DEATH OR DISABILITY. Except as provided in paragraph
7.1 hereof, this Agreement shall terminate automatically upon the
Consultant's death or "Disability." For purposes of this Agreement
"Disability" means disability which, at least twelve weeks after its
commencement, is determined to be total and permanent by a physician selected
by the Company and acceptable to the Consultant or Consultant's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
6.2. CAUSE. The Company may terminate this Agreement for
"Cause." For purposes of this Agreement "Cause" means (i) an act or acts of
personal dishonesty taken by the Consultant and intended to result in
personal enrichment of the Consultant at the expense of the Company, (ii) the
continued failure of Consultant to perform his duties and obligations under
this Agreement, which failure is not remedied at a reasonable period of time
after receipt of written notice from the Company, or (iii) the conviction of
the Consultant of a felony. Further, for purposes of this paragraph 6.2:
(a) No act, or failure to act, on the Consultant's
part shall be deemed "willful" unless done, or omitted to be done, by the
Consultant not in good faith and without reasonable belief that the
Consultant's action or omission was in the best interest of the Company.
(b) The Consultant shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Consultant a copy of a resolution duly adopted by the affirmative vote of a
majority of the entire membership of the Board of Directors of the Company
(excluding the Consultant) at a meeting of the Board called and held for such
purpose (after reasonable notice to the Consultant and an opportunity for the
Consultant, together with the Consultant's counsel, to be heard before the
Board), finding that in the good faith opinion of the Board the Consultant
was guilty of conduct set forth in clauses (i), (ii) or (iii) above and
specifying the particulars thereof in reasonable detail. The determination
of the Board shall be binding upon the Company and the Consultant.
6.3. VOLUNTARY TERMINATION. The Consultant may voluntarily
terminate this Agreement ("Voluntary Termination") at any time during the
Consulting Period. A Voluntary Termination is any termination of this
Agreement by the Consultant during the Consulting Period other than
termination due to death, Cause or Disability.
6.4. NOTICE OF TERMINATION. Any termination by the Company
for Cause or Disability or by the Consultant by reason of his death or
Voluntary Termination shall be communicated a
-4-
<PAGE>
Notice of Termination to the other party hereto in accordance with the terms
of this Agreement. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Consultant's engagement under the provisions so indicated, (iii) if
applicable, a copy of the resolution of the Board required by paragraph 6.2
hereof, and (iv) specifies a date of termination, which date shall be the
last day of the month of such notice.
7. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
7.1. DEATH OR DISABILITY. If this Agreement is terminated
by reason of the Consultant's death or Disability, it shall terminate without
further obligations of the Consultant or his legal representative, as the
case may be, or the Company; provided, however, (i) in the event of the death
of the Consultant, the Company shall continue to pay the Consulting Fee
during the Consulting Period to the legal representative of Consultant or
Consultant's designee or (ii) in the event of the Disability of the
Consultant, the Company shall continue to pay the Consulting Fee during the
Consulting Period to the Consultant or his legal representative, as the case
may be, and (iii) in either event, any approved sums due under paragraphs 5.3
and 5.4 which have been accrued and have been expended by the Consultant and
which have not been reimbursed by the Company shall be paid to the Consultant
or his legal representative, as the case may be. In either of such events,
with the exception of the Consulting Fee the Company shall have no further
obligations to Consultant, Consultant's designee or his legal representative
under or pursuant to this Agreement.
7.2. CAUSE OR VOLUNTARY TERMINATION. If this Agreement is
terminated for Cause or by reason of a Voluntary Termination, the Company
shall have no further obligations to the Consultant from and after the
termination date and Consultant shall not be entitled to any severance
payment. If on the date of termination for cause, Consultant holds any
unexercised options to purchase capital stock of the Company, such options
shall be deemed surrendered and cancelled as of the date of termination,
without exercise.
7.3. INVOLUNTARY TERMINATION. If this Agreement is
terminated by the Company without cause and not by reason of the Consultant's
death or Disability, the Company shall be obligated to pay to Consultant an
amount equal to two monthly installments of the Consulting Fee described in
Section 5.2 hereof for the two calendar months next following the date of
such termination. In addition, in the event of an Involuntary Termination by
the Company, and if at the date of such termination
-5-
<PAGE>
the Consultant shall hold unexercised options to purchase capital stock of
the Company, the Consultant shall be entitled to exercise any and all options
to purchase stock which, in accordance with the terms of such options, could
be exercised within 12 months next following the date of termination. Any
additional unexercised options then held by Consultant shall be deemed
surrendered and canceled as of the date of termination, without exercise.
8. FULL SETTLEMENT. Except for termination of this Agreement by
the Company for Cause or as provided for in paragraph 10, the Company's
obligations to make the payments provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Consultant or others. In no event shall the
Consultant be obligated to seek employment or take any other action by way of
mitigation of the amounts payable to the Consultant under any of the
provisions of this Agreement.
9. INDEMNIFICATION. During the Consulting Period, the Company
shall indemnify the Consultant for his acts under this Agreement to the same
extent and manner it provides indemnification for its officers and directors.
10. CERTAIN REDUCTIONS OF PAYMENTS BY THE COMPANY. In the event
that any payment made by the Company to the Consultant pursuant to the terms
of this Agreement shall be determined by the Internal Revenue Service as
nondeductible for federal income tax purposes by the Company, such amount
shall be repaid by the Consultant to the Company within 45 days after
notification by the Company. In the event at the end of said period,
Consultant has not reimbursed the Company for such sum, the Company shall
have the right of offset as against the Consulting Fee with respect to any
payments then due and owing, together with interest at the applicable federal
rates provided for in Section 7872(f)(2) of the Code.
11. DISCLOSURE OF INFORMATION. Consultant agrees that during the
term of this Agreement and for a period of three (3) years next following the
termination hereof, Consultant will not, without the prior written consent of
the Board of Directors of the Company, directly or indirectly, in any
individual, corporate or representative capacity whatsoever, reveal, divulge,
disclose or communicate to any person, firm, association, corporation or
other entity in any manner whatsoever information of any kind, nature or
description concerning any matters affecting or relating to the Business
which are not already in the public domain, including without limitation:
(i) the names of any of the prior or present customers or accounts of the
Business, (ii) the prices for which Buyer obtains or has obtained, or at
which it sells, or has sold,
-6-
<PAGE>
products of the Business, (iii) the names of the personnel involved in the
Business, (iv) the Company's financial affairs as they relate to the
Business, (v) the Company's or Sygnet's methods and manner of operating the
Business or (vi) the Company's plans, trade secrets, or other data of any
kind, nature or description whatsoever relating to the Business. Without
regard to whether any or all of the foregoing matters would be deemed
confidential, material or important, the parties hereto stipulate that as
between them, the same are important, material and confidential and
materially affect Buyer's effective and successful conduct of the Business
and its goodwill.
12. COVENANT NOT TO COMPETE. Consultant agrees that during the
term of this Agreement and for a period of three (3) years next following the
termination hereof, without the prior written consent of the Board of
Directors of the Buyer, Consultant will not, directly or indirectly, (i)
through any corporation, partnership or other entity (a) with respect to
which Sygnet, the Company or any Affiliate of Sygnet or the Company is now or
may hereafter be a director, executive officer or general partner, (b) which
is now or may hereafter be otherwise owned or controlled by Sygnet, the
Company or any Affiliate, or (ii) as principal, agent, employee, employer,
consultant, director, stockholder or holder of any equity security, partner
or in any other individual or representative capacity whatsoever:
12.1. Call upon, solicit, divert, take away or attempt to
call upon, solicit, divert or take away any then existing customers,
suppliers, businesses, or accounts of the Business, or of Sygnet or the
Company in connection with any business competitive with the Business in any
State where Sygnet or the Company is presently conducting the Business
(collectively, the "Restricted States"), nor interfere or compete with the
Business, or any portion thereof or the Buyer in connection with such
customers, suppliers, businesses, and accounts in the Restricted States;
12.2. Knowingly hire, attempt to hire, contact or solicit
with respect to hiring any present employee or future employee or consultant
of the Business or any portion thereof, or of Sygnet or the Company;
provided, that the foregoing prohibition shall not extend to (a) a former
employee of Sygnet whose employment by Sygnet or the Company was not
continued following consummation of the Merger, or (b) a former employee of
Sygnet or the Company whose employment by Sygnet or the Company, as the case
may be, ceased more than twelve (12) months prior to contact by Consultant;
12.3. Knowingly engage in, or give any advice to, any person,
firm, partnership, association, corporation or other entity engaged in a
business competitive with the Business or any
-7-
<PAGE>
portion thereof in the Restricted States;
12.4. Lend credit, money or reputation for the purpose of
establishing or operating a business competitive with the Business or any
portion thereof in the Restricted States; or provided, however, that the
foregoing provisions of this Section 12 shall not apply to the Consultant's
investment in or employment by the communications tower business controlled
by Gregory T. Pauley, nor employment by or the ownership of less than a 5%
investment interest in a significantly active regional wireless provider who
may be in competition with Sygnet, such as Western Wireless or Nextel, or a
nationally active wireless provider who may be in competition with Sygnet,
such as AT&T Wireless.
These covenants are intended to restrict Consultant and his
Affiliates, agents and representatives from competing in any manner with the
Business, any portion thereof or Sygnet or the Company in the activities
which have heretofore been carried on by Sygnet or the Company in connection
with the Business or any portion thereof. The parties hereto agree that
prohibitions set forth in this Section 12 shall be liberally interpreted in
order to carry out the intents and purposes of this Agreement. As used in
this Agreement, the term "Affiliate" shall mean a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the person specified; and, when used to
indicate a relationship with any person, shall include (i) a corporation or
organization of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of equity
securities, (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee
or in a similar capacity, and (iii) any relative or spouse of such person, or
any relative of such spouse, who has the same home as such person or who is a
director or officer of the person or any of its parents or subsidiaries.
13. ENFORCEMENT OF COVENANTS. Consultant acknowledges that a
violation or attempted violation on its part of any agreement in Sections 11
or 12 above will cause such damage to the Company and the Business which will
be irreparable, and accordingly, Consultant agrees that the Company shall be
entitled as a matter of right to an injunction from any court of competent
jurisdiction, restraining any further violation of such agreements by
Consultant and his Affiliates, their respective employees, agents or
representatives, either individually or collectively. Consultant further
agrees that the three (3) year period of restriction set forth in Sections 11
and 12 above shall be tolled during any period of violation thereof by
Consultant or any of his Affiliates. Any exercise by the Company of its
rights pursuant to this Section 13 shall be cumulative and in addition to any
other
-8-
<PAGE>
remedies to which the Company may be entitled.
14. BOARD OF DIRECTORS. Upon (a) execution of this Agreement by
Consultant, and (b) consummation of the Sygnet Acquisition, it is intended
that Consultant will be elected to the office of, and become a director of
the Company. Consultant agrees that so long as he is a member of the
Company's Board of Directors, Consultant will attend all meetings of the
Board of Directors and, on an annual basis, at least two (2) company strategy
sessions, wherever held, unless Consultant is unable to attend by reason of
illness, physical infirmity or family emergency. Upon Consultant becoming a
member of the Company's Board of Directors, the Company agrees that it will
grant to Consultant options, under the Company's 1996 Stock Option Plan, as
amended (the "Plan"), options to purchase an aggregate of 833 shares of the
Company's Class B Common Stock at an option exercise price per share equal to
the fair market value of the Company's Class B Common Stock as determined by
a majority of the members of the Company's Board of Directors, subject to the
terms of such Plan and the other provisions contained in this Agreement.
15. ASSIGNMENT, BINDING EFFECT AND SUCCESSORS.
15.1. ASSIGNMENT. This Agreement is personal to the
Consultant and without the prior written consent of the Company shall not be
assignable by the Consultant otherwise than by will or the laws of descent
and distribution.
15.2. BINDING EFFECT. This Agreement shall inure to the
benefit of and be binding upon the Company, the Consultant, their respective
heirs, successors, assigns or legal representatives, as the case may be.
16. MISCELLANEOUS.
16.1. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma, without
reference to principles of conflict of laws.
16.2. INDEPENDENT CONTRACTOR. Consultant is and at all times
shall be an independent contractor. Nothing herein shall be construed as
creating a partnership, joint venture, the relationship of employer and
employee or of principal and agent or any other relationship between the
Company and Consultant.
16.3. HEADINGS. The captions of this Agreement are not part
of the provisions hereof and shall have no force and effect.
16.4. AMENDMENT. This Agreement may not be amended or
modified otherwise than by a written agreement executed
-9-
<PAGE>
by the parties hereto or their respective heirs, successors, assigns or the
legal representatives, as the case may be.
16.5. NOTICES. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
-10-
<PAGE>
IF TO THE CONSULTANT:
Mr. Albert H. Pharis, Jr.
7130 Raccoon Road
Canfield, Ohio 44406
IF TO THE COMPANY:
Dobson Communications Corporation
13439 N. Broadway Extension, Suite 200
Oklahoma City, Oklahoma 73114
Attention: Mr. Everett R. Dobson
President and Chief Executive Officer
Copy to:
McAfee & Taft A Professional Corporation
10th Floor, Two Leadership Square
Oklahoma City, Oklahoma 73102
Attention: Theodore M. Elam, Esq.
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be
effective when actually received by the addressee.
16.6. SEVERABILITY. The invalidity or enforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
16.7. NO WAIVER. The Consultant's failure to insist upon
strict compliance with any provision hereof shall not be deemed to be a
waiver of such provision or any other provision hereof.
16.8. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the Company and the Consultant with respect to the subject
matter hereof, and replaces in full the terms and conditions of all prior
negotiations, agreements and understanding between the parties hereto with
respect to the matters encompassed by this Agreement.
-11-
<PAGE>
IN WITNESS WHEREOF, the Consultant has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Albert H. Pharis,
----------------------------------------
Albert H. Pharis, Jr.
"CONSULTANT"
DOBSON COMMUNICATIONS CORPORATION,
an Oklahoma corporation
By /s/ Everett R. Dobson
-------------------------------------
Everett R. Dobson, President
"COMPANY"
-12-
<PAGE>
Exhibit 12
Sygnet Wireless, Inc.
Computation of Ratio of Earnings to Fixed Charges
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------ ------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss) $1,523 $1,722 $1,950 $(5,288) $(20,616) $(14,051) $(6,879)
Extraordinary (gain) loss - - - 1,420 - - -
Income tax provision 137 73 65 19 17 8 232
------ ------ ------ ------- -------- -------- -------
1,660 1,795 2,015 (3,848) (20,599) (14,043) (6,647)
Fixed Charges:
Interest expense, net 702 988 2,660 11,174 29,902 22,558 21,613
Amortization of deferred financing 14 61 197 437 1,141 855 855
Interest portion of rentals 69 75 153 299 686 507 607
------ ------ ------ ------- -------- -------- -------
Fixed Charges 785 1,124 3,010 11,910 31,729 23,920 23,075
Preferred Stock Dividends - - - 718 2,122 2,122 -
------ ------ ------ ------- -------- -------- -------
Combined Fixed Charges and
Preferred Stock Dividends $ 785 $1,124 $3,010 $12,628 $ 33,851 $ 26,042 $23,075
------ ------ ------ ------- -------- -------- -------
------ ------ ------ ------- -------- -------- -------
Earnings $2,445 $2,919 $5,025 $ 8,062 $ 11,130 $ 9,877 $16,439
------ ------ ------ ------- -------- -------- -------
------ ------ ------ ------- -------- -------- -------
Combined Ratio of Earnings to
Fixed Charges and Preferred
Stock Dividends 3.11 2.60 1.67 (1) (2) (3) (4)
------ ------ ------ ------- -------- -------- -------
------ ------ ------ ------- -------- -------- -------
</TABLE>
(1) Earnings were insufficient to cover fixed charges by $4,566,000.
(2) Earnings were insufficient to cover fixed charges by $22,721,000.
(3) Earnings were insufficient to cover fixed charges by $16,165,000.
(4) Earnings were insufficient to cover fixed charges by $6,636,000.
<PAGE>
DOBSON/SYGNET COMMUNICATIONS COMPANY SUBSIDIARIES
1. SYGNET WIRELESS, INC., an Ohio corporation
2. SYGNET COMMUNICATIONS, INC., an Ohio corporation
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports as they relate to Dobson/Sygnet Communications Company and
Dobson/Sygnet Operating Company (and to all references to our Firm) included
in or made a part of this registration statement.
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
January 21, 1999
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated on February 6, 1998, with respect to the
consolidated financial statements of Sygnet Wireless, Inc. included in the
registration statement (Form S-4 No. 333-xxxxx) and related prospectus of
Dobson/Sygnet Communications Company for the registration of $200,000,000 of
its Senior Notes due 2008.
ERNST & YOUNG LLP
Cleveland, Ohio
January 20, 1999
<PAGE>
POWER OF ATTORNEY
DOBSON/SYGNET COMMUNICATIONS COMPANY
We, the undersigned officers and directors of Dobson/Sygnet Communications
Company (hereinafter, the "Company"), hereby severally constitute Everett R.
Dobson, Stephen T. Dobson and Bruce R. Knooihuizen and each of them, severally,
our true and lawful attorneys-in-fact with full power to them and each of
them to sign for us, and in our names as officers or directors, or both, of
the Company, one or more Registration Statements on Form S-4, and any amendments
thereto (including post-effective amendments), for the purpose of registering
under the Securities Act of 1933 shares of the Company's 12-1/4% Senior Notes
due 2008, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and to perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
DATED this ____ day of January, 1999.
DOBSON/SYGNET COMMUNICATIONS COMPANY
By: /s/ Everett R. Dobson
-----------------------------------------
Everett R. Dobson
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the _____ day of January, 1999.
NAME TITLE
- ------------------------------ ----------------------------------------
/s/ Everett R. Dobson Chairman of the Board, Chief Executive
- ------------------------------ Officer (Principal Executive Officer)
Everett R. Dobson
/s/ Bruce R. Knooihuizen Vice President and Chief Financial
- ------------------------------ Officer (Principal Financial Officer)
Bruce R. Knooihuizen
/s/ Trent LeForce Corporate Controller (Principal
- ------------------------------ Accounting Officer)
Trent LeForce
/s/ Stephen T. Dobson Director
- ------------------------------
Stephen T. Dobson
/s/ Russell L. Dobson Director
- ------------------------------
Russell L. Dobson
/s/ Justin L. Jaschke Director
- ------------------------------
Justin L. Jaschke
/s/ Albert H. Pharis, Jr. Director
- ------------------------------
Albert H. Pharis, Jr.
/s/ Dana L. Schmaltz Director
- ------------------------------
Dana L. Schmaltz
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> JAN-01-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 SEP-30-1998
<CASH> 860,086 467,124
<SECURITIES> 0 0
<RECEIVABLES> 11,521,427 14,072,631
<ALLOWANCES> 809,800 565,862
<INVENTORY> 1,867,445 1,539,169
<CURRENT-ASSETS> 13,748,618 16,442,977
<PP&E> 53,007,015 52,137,706
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 340,986,385 333,296,240
<CURRENT-LIABILITIES> 16,268,257 18,313,560
<BONDS> 305,500,000 302,644,000
0 0
0 0
<COMMON> 91,706 91,706
<OTHER-SE> 19,126,422 12,246,974
<TOTAL-LIABILITY-AND-EQUITY> 340,986,385 333,296,240
<SALES> 85,633,760 76,934,059
<TOTAL-REVENUES> 85,633,760 76,934,059
<CGS> 19,711,667 16,794,890
<TOTAL-COSTS> 19,711,667 16,794,890
<OTHER-EXPENSES> 56,535,588 45,064,724
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 29,901,678 21,612,673
<INCOME-PRETAX> (20,616,394) (6,879,448)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (20,616,394) (6,879,448)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (20,616,394) (6,879,448)
<EPS-PRIMARY> (2.65) (.75)
<EPS-DILUTED> 0 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
TENDER OF ALL OUTSTANDING
12 1/4% SENIOR NOTES DUE 2008
IN EXCHANGE FOR
12 1/4% SENIOR NOTES DUE 2008
OF
DOBSON/SYGNET COMMUNICATIONS COMPANY
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999 (THE "EXPIRATION DATE"),
UNLESS EXTENDED BY DOBSON/SYGNET COMMUNICATIONS COMPANY
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND: BY FACSIMILE:
United States Trust United States Trust United States Trust (212) 420-6152
Company of New York Company of New York Company of New York (For Eligible
P.O. Box 844 Corporate Trust 111 Broadway Institutions Only)
Cooper Station Operations Department Lower Level CONFIRM BY TELEPHONE:
New York, NY 10276-0844 770 Broadway-13th New York, NY 10006 (800) 548-6565
Attention: Corporate Floor Attention: Corporate
Trust Services New York, NY 10003 Trust Services
(registered or certified
mail recommended)
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated ,
1997 (the "Prospectus") of Dobson/Sygnet Communications Company
("Dobson/Sygnet") which, together with this Letter of Transmittal (the "Letter
of Transmittal"), constitutes Dobson's offer (the "Exchange Offer") to exchange
$1,000 in principal amount of a new series of 12 1/4% Senior Notes Due 2008 (the
"New Notes") of Dobson for each $1,000 in principal amount of outstanding
12 1/4% Senior Notes Due 2008 (the "Old Notes") of Dobson. The terms of the New
Notes are identical in all material respects (including principal amount,
interest rate and maturity) to the terms of the Old Notes for which they may be
exchanged pursuant to the Exchange Offer, except that the New Notes will have
been registered under the Securities Act of 1933, as amended, and, therefore,
will not bear legends restricting the transfer thereof.
The Exchange Offer is being made pursuant to the Registration Rights
Agreement dated as of December 23, 1998 (the "Registration Rights Agreement"),
and all Old Notes validly tendered will be accepted for exchange. Any Old Notes
not tendered will remain outstanding and continue to accrue interest, but will
not retain any rights under the Registration Rights Agreement. Holders electing
to have Old Notes exchanged pursuant to the Exchange Offer will be required to
surrender such Old Notes, together with the Letter of Transmittal, to the
Exchange Agent at the address specified herein prior to the close of business on
the Expiration Date. Holders will be entitled to withdraw their election, at any
time prior to 5:00 p.m., New York City time on the Expiration Date, by sending
to the Exchange Agent at the address specified herein a facsimile transmission
or letter setting forth the name of such Holder, the principal amount of Old
Notes delivered for exchange and a statement that such Holder is withdrawing
this election to have such Old Notes exchanged.
<PAGE>
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED HEREWITH
----------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) AMOUNT PRINCIPAL
OF REGISTERED HOLDER(S) CERTIFICATE REPRESENTED BY AMOUNT
(PLEASE FILL IN) NUMBER(S) NOTES TENDERED*
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by Old Notes. See Instruction 2.
This Letter of Transmittal is to be used if certificates for Old Notes are
to be forwarded herewith.
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name Old Notes are
registered or any other person who has obtained a properly completed bond power
from the registered holder.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent on
or prior to the Expiration Date may tender their Old Notes according to the
guaranteed delivery procedure set forth in the Prospectus under the captions
"The Exchange Offer-- Terms of the Exchange Offer--Procedures for Tendering Old
Notes" and "The Exchange Offer--Terms of the Exchange Offer--Guaranteed Delivery
Procedures."
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s): ______________________________________________
Name of Eligible Institution that Guaranteed Delivery: _____________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to Dobson/ Sygnet the above-described principal
amount of Old Notes. Subject to, and effective upon, the acceptance for exchange
of the Old Notes tendered herewith, the undersigned hereby exchanges, assigns
and transfers to, or upon the order of, Dobson/Sygnet all right, title and
interest in and to such Old Notes. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that said Exchange
Agent acts as the agent of the undersigned in connection with the Exchange
Offer) to cause the Old Notes to be assigned, transferred and exchanged. The
undersigned represents and warrants that it has full power and authority to
tender, exchange, assign and transfer the Old Notes and to acquire New Notes
issuable upon the exchange of such tendered Old Notes, and that, when the same
are accepted for exchange, Dobson/ Sygnet will acquire good and unencumbered
title to the tendered Old Notes, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim. The undersigned
also warrants that it will, upon request, execute and deliver any additional
documents deemed by Dobson to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Old Notes or to transfer ownership
of such Old Notes on the account books maintained by The Depository Trust
Company.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer--Conditions of the Exchange
Offer." The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, by Dobson/Sygnet) as more particularly set
forth in the Prospectus, Dobson/Sygnet may not be required to exchange any of
the Old Notes tendered hereby and, in such event, the Old Notes not exchanged
will be returned to the undersigned at the address shown below the signature of
the undersigned.
By tendering, each Holder of Old Notes represents to Dobson/Sygnet that (i)
the New Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such New Notes, whether or
not such person is such Holder, (ii) neither the Holder of Old Notes nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, (iii) if the Holder is not a
broker-dealer or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the Holder nor any such other person
is engaged in or intends to participate in a distribution of the New Notes and
(iv) neither the Holder nor any such other person is an "affiliate" of
Dobson/Sygnet within the meaning of Rule 405 under the Securities Act of 1933,
as amended (the "Securities Act") or, if such Holder is an "affiliate," that
such Holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable. If the tendering
Holder is a bro-ker-dealer (whether or not it is also an "affiliate" of
Dobson/Sygnet within the meaning of Rule 405 under the Securities Act) that will
receive New Notes for its own account in exchange for Old Notes, it acknowledges
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such New Notes. By acknowledging that it will
deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes, the undersigned
is not deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
<PAGE>
All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
executors, administrators, successors, assigns, trustees in bankruptcy and other
legal representatives of the undersigned. Tendered Old Notes may be withdrawn at
any time prior to 5:00 p.m., New York City Time on the Expiration Date.
Certificates for all New Notes delivered in exchange for tendered Old Notes
and any Old Notes delivered herewith but not exchanged, in each case registered
in the name of the undersigned, shall be delivered to the undersigned at the
address shown below the signature of the undersigned.
- --------------------------------------------------------------------------------
TENDERING HOLDER(S) SIGN HERE
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE(S) OF HOLDER(S)
Date: ______________, 1999
(Must be signed by registered Holder(s) exactly as name(s) appear(s) on
certifi-cate(s) for Old Notes or by any person(s) authorized to become
registered Holder(s) by endorsements and documents transmitted herewith. If
signature by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, please set forth the full title of such person.)
See Instruction 3.
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone No.: _______________________________________________
Tax Identification No.: ____________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTION 3)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
Title: _____________________________________________________________________
Address: ___________________________________________________________________
Name of Firm: ______________________________________________________________
Area Code and Telephone No.: _______________________________________________
Dated: _____________, 1997
- --------------------------------------------------------------------------------
<PAGE>
PAYOR'S NAME: DOBSON/SYGNET COMMUNICATIONS COMPANY
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------
SUBSTITUTE Name (If joint names, list first and circle the name of the
FORM W-9 person or entity whose number you enter in Part I below.)
Department of the Treasury -----------------------------------------------------------------
Internal Revenue Service Address
-----------------------------------------------------------------
City, state and Zip Code
----------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Payor's Request for Taxpayer Part I--PLEASE PROVIDE YOUR Social Security number
Identification Number ("TIN") TAXPAYER IDENTIFICATION NUMBER or ----------------------
and Certification ("TIN") IN THE BOX AT RIGHT AND Employer Identification Number
CERTIFY BY SIGNING AND DATING
BELOW
-----------------------------------------------------------------
Part II--If exempt from backup withholding, check the box to the
right. / /
Also provide your TIN in Part I and sign and date this form in
Part III.
- ---------------------------------------------------------------------------------------------------
Part III--Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number (or I am waiting for
a number to be issued to me), AND
2. I am not subject to backup withholding: (a) I am exempt from backup withholding; or (b) I have
not been notified by the Internal Revenue Service that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS has notified me that I
am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS. You must cross out item 2 above if you have been notified by the IRS
that you are currently subject to backup withholding because of underreporting interest or
dividends on your tax return.
Signature ---------------------------------------------------------------- Date ------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
Note: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates
for all physically delivered Old Notes, as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile thereof, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date.
THE METHOD OF DELIVERY OF OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY
MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other required documents to the Exchange Agent on or
prior to the Expiration Date may tender their Old Notes pursuant to the
guaranteed delivery procedure set forth in the Prospectus under "The Exchange
Offer--Terms of the Exchange Offer--Guaranteed Delivery Procedures." Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution (as defined in the Prospectus); (ii) on or prior to the Expiration
Date, the Exchange Agent must have received from such Eligible Institution a
letter, telegram or facsimile transmission setting forth the name and address of
the tendering Holder, the name(s) in which such Old Notes are registered, and
the certificate number(s) of the Old Notes to be tendered; and (iii) all
tendered Old Notes as well as this Letter of Transmittal and all other documents
required by this Letter of Transmittal must be received by the Exchange Agent
within three New York Stock Exchange trading days after the date of execution of
such letter, telex, telegram or facsimile transmission, all as provided in the
Prospectus under the caption "The Exchange Offer--Terms of the Exchange
Offer--Guaranteed Delivery Procedures."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Old Notes for exchange.
2. PARTIAL TENDERS; WITHDRAWALS. Tenders of Old Notes will be accepted in
denominations of $1,000 and integral multiples in excess thereof. If less than
the entire principal amount of Old Notes evidenced by a submitted certificate is
tendered, the tendering Holder must fill in the principal amount tendered in the
column entitled "Principal Amount Tendered." A newly issued certificate for the
principal amount of Old Notes submitted but not tendered will be sent to such
Holder as soon as practicable after the Expiration Date. All Old Notes delivered
to the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) contain a statement that
such holder is withdrawing its election to have such Old Notes exchanged, (iv)
be signed by the Holder in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Old Notes register the
transfer of such Old Notes in the name of the person withdrawing the tender and
(v) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. If Old Notes have been tendered pursuant
to the procedure for book-entry transfer, any notice of withdrawal must specify
the name and number of the account at the book-entry transfer facility. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by Dobson, whose determination shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed not to
have been validly tendered for purposes of the Exchange Offer and no New Notes
will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Any Old Notes which have been tendered but which are not
accepted for exchange will be returned to the Holder thereof without cost to
such Holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described herein at any time prior
to the business day prior to the Expiration Date.
<PAGE>
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered Holder(s) of the Old Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of certificates without
alteration, enlargement or any change whatsoever.
If tendered Old Notes are registered in the name of the signer of the Letter
of Transmittal and the New Notes to be issued in exchange therefor are to be
issued (and any untendered Old Notes are to be reissued) in the name of the
registered holder (including any participant in The Depository Trust Company
(also referred to as a book-entry facility) whose name appears on a security
listing as the owner of Old Notes), the signature of such signer need not be
guaranteed. In any other case, the tendered Old Notes must be endorsed or
accompanied by written instruments of transfer in form satisfactory to
Dobson/Sygnet and duly executed by the registered holder and the signature on
the endorsement or instrument of transfer must be guaranteed by an eligible
guarantor institution which is a member of one of the following recognized
signature guarantee programs (an "Eligible Institution"): (i) The Securities
Transfer Agents Medallion Program (STAMP), (ii) The New York Stock Exchange
Medallion Signature Program (MSF), or (iii) The Stock Exchange Medallion Program
(SEMP).
If the New Notes or Old Notes not exchanged are to be delivered to an
address other than that of the registered holder appearing on the note register
for the Old Notes, the signature in the Letter of Transmittal must be guaranteed
by an Eligible Institution.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by an
Eligible Institution.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it will
be necessary to complete, sign and submit as many separate copies of this Letter
of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered Holder or
Holders of Old Notes listed and tendered hereby, no endorsements of certificates
or separate written instruments of transfer or exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered Holder or Holders of the Old Notes listed, such Old Notes must be
endorsed or accompanied by separate written instruments of transfer or exchange
in form satisfactory to Dobson/Sygnet and duly executed by the registered Holder
or Holders, in either case signed exactly as the name or names of the registered
Holder or Holders appear(s) on the Old Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by Dobson, proper evidence
satisfactory to Dobson/Sygnet of their authority so to act must be submitted.
4. TRANSFER TAXES. Dobson/Sygnet shall pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes, or Old Notes for principal amounts
not tendered or accepted for exchange, are to be delivered to, or are to be
issued in the name of, any person other than the registered Holder of the Old
Notes tendered hereby, or if a transfer tax is imposed for any reason other than
the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the registered Holder or any other
person) will be payable by the tendering Holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering Holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
5. WAIVER OF CONDITIONS. Dobson/Sygnet reserves the absolute right to
waive, in whole or in part, any of the conditions to the Exchange Offer set
forth in the Prospectus.
6. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose Old Notes
have been mutilated, lost, stolen or destroyed should contact the Exchange Agent
at the address indicated above for further instructions.
7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering and other questions relating to the Exchange Offer, as
well as requests for assistance or additional copies of the Prospectus and this
Letter of Transmittal, may be directed to the Exchange Agent at the address and
telephone number set forth above and in the Prospectus.
<PAGE>
8. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or Old
Notes will be resolved by Dobson/Sygnet, whose determination will be final and
binding. Dobson/Sygnet reserves the absolute right to reject any or all Letters
of Transmittal or tenders that are not in proper form or the acceptance of which
would, in the opinion of Dobson/Sygnet's counsel, be unlawful. Dobson/Sygnet
also reserves the right to waive any irregularities or conditions of tender as
to the particular Old Notes covered by any Letter of Transmittal or tendered
pursuant to such Letter of Transmittal. None of Dobson/Sygnet, the Exchange
Agent or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification. Dobson/Sygnet's interpretation of the terms and
conditions of the Exchange Offer shall be final and binding.
9. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and
not otherwise defined have the meanings given in the Prospectus.
10. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
holder of any Old Notes which are accepted for exchange must provide
Dobson/Sygnet (as payor) with its correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If Dobson/Sygnet is not provided with the correct TIN,
the holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. (If withholding results in an over-payment of taxes, a refund may be
obtained.) Certain holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements; however, these holders still must submit the Substitute
Form W-9. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
The Form must be signed, even if the holder is exempt from backup withholding.
If the Old Notes are registered in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for information on which TIN to
report.
Dobson/Sygnet reserves the right in its sole discretion to take whatever
steps are necessary to comply with its obligation regarding backup withholding.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
CERTIFICATES FOR OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
12 1/4% SENIOR NOTES DUE 2008
IN EXCHANGE FOR
12 1/4% SENIOR NOTES DUE 2008
OF
DOBSON/SYGNET COMMUNICATIONS COMPANY
Registered holders of outstanding 12 1/4% Senior Notes Due 2008 (the "Old
Notes") of Dobson/Sygnet Communications Company ("Dobson/Sygnet") who wish to
tender their Old Notes in exchange for a like principal amount of 12 1/4% Senior
Notes Due 2008 (the "New Notes") of Dobson/Sygnet and, in each case, whose Old
Notes are not immediately available or who cannot deliver their Old Notes and
Letter of Transmittal (and any other documents required by the Letter of
Transmittal) to United States Trust Company of New York (the "Exchange Agent"),
prior to the Expiration Date, may use this Notice of Guaranteed Delivery or one
substantially equivalent hereto. This Notice of Guaranteed Delivery may be
delivered by hand or sent by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight delivery) or mail to
the Exchange Agent. See "The Exchange Offer-- Terms of the Exchange Offer--
Guaranteed Delivery Procedures" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT COURIER: BY HAND: BY FACSIMILE:
<S> <C> <C> <C>
United States Trust United States Trust United States Trust (212) 420-6152
Company of New York Company of New York Company of New York (For Eligible Institutions
P.O. Box 844 Corporate Trust 111 Broadway Only)
Cooper Station Operations Lower Level
New York, NY 10276-0844 Department New York, NY 10006 CONFIRM BY TELEPHONE:
Attention: Corporate 770 Broadway-13th Floor Attention: Corporate (800) 548-6565
Trust Services New York, NY 10003 Trust Services
(registered or certified
mail recommended)
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution, such signature guarantee must appear in
the applicable space provided on the Letter of Transmittal for Guarantee of
Signatures.
<PAGE>
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Old Notes exactly as its (their) name(s) appear on certificates
for Old Notes or on a security position listing the owners of Old Notes, or
by person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted with this Notice of Guaranteed Delivery. If signature
is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer or other person acting in a fiduciary or representative capacity,
such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
<TABLE>
<S> <C>
Name(s): --------------------------------------------------------------------------
Capacity: --------------------------------------------------------------------------
Address(es): --------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
DO NOT SEND OLD NOTES WITH THIS FORM. OLD NOTES SHOULD BE SENT TO THE
EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL.
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an eligible guarantor institution which is a member of one
of the following signature guarantee programs (an "Eligible Institution"): (i)
The Securities Transfer Agents Medallion Program (STAMP), (ii) The New York
Stock Exchange Medallion Signature Program (MSF), or (iii) The Stock Exchange
Medallion Program (SEMP), hereby (a) represents that each holder of Old Notes on
whose behalf this tender is being made "own(s)" the Old Notes covered hereby
within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as
amended, (b) represents that such tender of Old Notes complies with such Rule
14e-4, and (c) guarantees that, within three New York Stock Exchange trading
days from the date of this Notice of Guaranteed Delivery, a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof), together with
certificates representing the Old Notes covered hereby in proper form for
transfer and required documents will be deposited by the undersigned with the
Exchange Agent.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF TRANSMITTAL
AND OLD NOTES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE TIME SET FORTH
ABOVE AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS TO THE
UNDERSIGNED.
Name of
Firm: -------------------------------------------------------------------------
Address: ----------------------------------------------------------------------
Area Code and Telephone
No.: --------------------------------------------------------------------------
- --------------------------------------------
Authorized Signature:
Name: ---------------------------------------
Title: --------------------------------------
Date: ---------------------------------------
<PAGE>
EXHIBIT 99.3
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
GIVE THE GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
FOR THIS TYPE OF ACCOUNT NUMBER OF-- FOR THIS TYPE OF ACCOUNT NUMBER OF--
- ----------------------------------- ------------------------ ----------------------------------- ------------------------
<S> <C> <C> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate, The legal entity (Do not
or pension trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(5)
2. Two or more individuals The actual owner of the 10. Corporate account The corporation
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the 11. Religious, charitable, The organization
account) account or, if joint or educational
funds, either person(1) organization account
4. Custodian account of a The minor(2) 12. Partnership account held The partnership
minor (Uniform Gift to in the name of the
Minors Act) business
5. Adult and minor (joint The adult or, if the 13. Association, club or The organization
account) minor is the only other tax-exempt
contributor, the organization
minor(1)
6. Account in the name of The ward, minor, or 14. A broker or registered The broker or nominee
guardian or committee incompetent person(3) nominee
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee(1) 15. Account with the The public entity
savings trust Department of
account (grantor is Agriculture in the name
also trustee) of a public entity (such
b. So-called trust The actual owner(1) as a State or local
account that is not government, school
a legal or valid district, or prison)
trust under State that receives
law agricultural program
payments
8. Sole proprietorship The owner(4)
account
</TABLE>
- ------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
Note: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for A Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A dealer in securities or commodities required to register in the U.S. or
a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount renewed is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
2
<PAGE>
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above must still complete the Substitute Form W-9
enclosed herewith to avoid possible erroneous backup withholding. FILE THIS FORM
WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE EXEMPT ON THE
FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST,
DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments, other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6042, 6044, 6045, 6049, 6050A and 6050N.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes and to help verify the accuracy of the recipient's tax return. Payers
must be given the numbers whether or not recipients are required to file tax
returns. Payers must generally withhold 31% of taxable interest, dividend, and
certain other payments to a payee who does not furnish a taxpayer identification
number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure which is due to reasonable cause and
not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
3
<PAGE>
EXHIBIT 99.4
DOBSON/SYGNET COMMUNICATIONS COMPANY
OFFER TO EXCHANGE
ITS
12 1/4% SENIOR NOTES DUE 2008
FOR ANY AND ALL OF ITS OUTSTANDING
12 1/4% SENIOR NOTES DUE 2008
TO: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
Dobson/Sygnet Communications Company (the "Company") is offering to exchange
the ("Exchange Offer"), upon and subject to the terms and conditions set forth
in the Prospectus, dated , 1999 (the "Prospectus"), and the enclosed
Letter of Transmittal (the "Letter of Transmittal"), its registered 12 1/4%
Senior Notes Due 2008 (the "New Notes") for any and all of its outstanding
12 1/4% Senior Notes Due 2008 (the "Old Notes"). The Exchange Offer is being
made in order to satisfy certain obligations of the Company contained in the
Registration Rights Agreement dated as of December 23, 1998, between the Company
and the other signatories thereto.
We are requesting that you contact your clients for whom you hold Old Notes
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Old Notes registered in your name or in the name of
your nominee, or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated , 1999;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer if
certificates for Old Notes are not immediately available or time will not
permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account you
hold Old Notes registered in your name or the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9; and
6. Return envelopes addressed to United States Trust Company Of New York, the
Exchange Agent for the Old Notes.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1999 (THE "EXPIRATION DATE"), UNLESS
EXTENDED BY THE COMPANY. THE OLD NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER
MAY BE WITHDRAWN AT ANY TIME BEFORE 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
<PAGE>
EXHIBIT 99.5
DOBSON/SYGNET COMMUNICATIONS COMPANY
OFFER TO EXCHANGE
ITS
12 1/4% SENIOR NOTES DUE 2008
FOR ANY AND ALL OF ITS OUTSTANDING
12 1/4% SENIOR NOTES DUE 2008
To Our Clients:
Enclosed for your consideration are the Prospectus, dated , 1999
(the "Prospectus") and the related Letter of Transmittal (which together with
the Prospectus constitute the "Exchange Offer") in connection with the offer by
Dobson/Sygnet Communications Company, an Oklahoma corporation (the "Company"),
to exchange its 12 1/4% Senior Notes due 2008 (the "New Notes") for any and all
of its outstanding 12 1/4% Senior Notes due 2008 (the "Old Notes"), upon the
terms and subject to the conditions set forth in the Exchange offer.
We are the Registered Holder of Old Notes held for your account. An exchange
of the Old Notes can be made only by us as the Registered Holder and pursuant to
your instructions. The Letter of Transmittal is furnished to you for your
information only and cannot be used by you to exchange the Old Notes held by us
for your account. The Exchange Offer provides a procedure for holders to tender
by means of guaranteed delivery.
We request information as to whether you wish us to exchange any or all of
the Old Notes held by us for your account upon the terms and subject to the
conditions of the Exchange Offer.
Your attention is directed to the following:
1. The New Notes will be exchanged for the Old Notes at the rate of
$1,000 principal amount of New Notes for each $1,000 principal amount of Old
Notes. The New Notes will bear interest (as do the Old Notes) at a rate
equal to 12 1/4% per annum from their date of issuance. Interest on the New
Notes is payable semi-annually on June 15 and December 15, commencing June
15, 1999. Holders of Old Notes that are accepted for exchange will receive,
in cash, accrued interest thereon to, but not including, the date of
issuance of the New Notes. Such interest will be paid with the first
interest payment on the New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue on the day prior to the issuance of the New
Notes. The form and terms of the New Notes are the same in all material
respects as the form and terms of the Old Notes (which they replace) except
that the New Notes have been registered under the Securities Act of 1933, as
amended (the "Securities Act").
2. Based on the interpretation by the staff of the Securities and
Exchange Commission (the "SEC"), New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or a "broker" or "dealer" registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) without compliance
with the registration and prospectus delivery provisions of the Securities
Act provided that such New Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such New Notes.
<PAGE>
EXHIBIT 99.6
DOBSON/SYGNET COMMUNICATIONS COMPANY
OFFER TO EXCHANGE
ITS
12 1/4% SENIOR NOTES DUE 2008
FOR ANY AND ALL OF ITS OUTSTANDING
12 1/4% SENIOR NOTES DUE 2008
INSTRUCTION TO REGISTERED HOLDER FROM BENEFICIAL OWNER
The undersigned acknowledge(s) receipt of your letter and the enclosed
Prospectus and the related Letter of Transmittal, in connection with the
Exchange Offer by the Company to exchange New Notes for Old Notes.
This will instruct you to tender the principal amount of Old Notes indicated
below held by you for the account of the undersigned, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal.
The undersigned represents that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of its business, (ii)
it is not participating, does not intend to participate, and has no arrangement
or understanding with any person to participate, in the distribution of such New
Notes, and (iii) it is not an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company or, if it is an affiliate, that it will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable.
If the undersigned is a "broker" or "dealer" registered under the Exchange
Act that acquired Old Notes for its own account pursuant to its market-making or
other trading activities (other than Old Notes acquired directly from the
Company), the undersigned understands and acknowledges that it may be deemed to
be an "underwriter" within the meaning of the Securities Act and, therefore,
must deliver a prospectus relating to the New Notes meeting the requirements of
the Securities Act in connection with any resales by it of New Notes acquired
for its own account in the Exchange Offer. Notwithstanding the foregoing, the
undersigned does not thereby admit that it is an "underwriter" within the
meaning of the Securities Act.
You are hereby instructed to tender all Old Notes held for the account of
the undersigned unless otherwise indicated below:
/ / Do not tender any Old Notes
/ / Tender Old Notes in the principal amount of
SIGNATURE:
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Name of Beneficial Owner (please print)
By ---------------------------------------------
Signature
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Address
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Zip Code
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Area Code and Telephone Number
Dated: , 1999
