<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1996
REGISTRATION NO. 333-10161
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SYGNET WIRELESS, INC.
(Exact name of registrant as specified in its charter)
------------------------
<TABLE>
<S> <C> <C>
Ohio 4812 34-1689165
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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6550-B Seville Drive
Canfield, Ohio 44406
(330) 565-1000
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
------------------------
Albert H. Pharis, Jr.
President and Chief Executive Officer
Sygnet Wireless, Inc.
6550-B Seville Drive
Canfield, Ohio 44406
(330) 565-1000
(Name, address, including zip code and telephone number, including area code, of
agent for service)
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Copies to:
<TABLE>
<S> <C>
THOMAS F. DOWD, ESQ. BRYANT B. EDWARDS, ESQ.
Bryan Cave LLP Latham & Watkins
700 Thirteenth Street, N.W. 633 W. Fifth Street, Suite 4000
Washington, D.C. 20005-3960 Los Angeles, California 90071
(202) 508-6000 (213) 485-1234
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended (the "Securities Act"), 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, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
% Senior Notes due 2006............. $110,000,000 $1,000 $110,000,000 *
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</TABLE>
* Previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 30, 1996
PROSPECTUS
, 1996
$110,000,000
[LOGO]
% SENIOR NOTES DUE 2006
The % Senior Notes due 2006 (the "Notes") are being offered (the
"Offering") by Sygnet Wireless, Inc. (the "Company"). The net proceeds of the
Offering will be used to finance the acquisition (the "Horizon Acquisition") of
certain cellular telephone systems. See "Use of Proceeds."
Interest on the Notes will be payable semi-annually on and
of each year, commencing on , 1997. The Notes will be
redeemable, in whole or in part, at the option of the Company, at any time on or
after , 2001 at the redemption prices set forth herein plus accrued
and unpaid interest, if any, to the date of redemption. In addition, at any time
during the first 36 months after the date of the original issuance of Notes, the
Company may redeem up to an aggregate of $38.5 million in principal amount of
Notes at a redemption price of % of the principal amount thereof, plus
accrued and unpaid interest thereon, with the net proceeds of an offering of
Qualified Capital Stock (as defined) of the Company; provided that at least
$71.5 million in aggregate principal amount of Notes remain outstanding
immediately after the occurrence of such redemption. See "Description of Notes."
The Notes will be general unsecured obligations of the Company and will rank
pari passu in right of payment with all future senior indebtedness of the
Company, if any, and senior in right of payment to all future subordinated
indebtedness of the Company, if any. However, the Company is a holding company
with no direct operations or assets other than the stock of Sygnet
Communications, Inc. (the "Subsidiary"). As a result, all indebtedness of the
Subsidiary, including the Subsidiary's secured borrowings under the Bank Credit
Facility (as defined below), will be structurally senior to the Notes. The Notes
will not be guaranteed by the Subsidiary. As of June 30, 1996, after giving
effect to the Horizon Acquisition and the related financing, the Subsidiary
would have had $211.8 million of total outstanding liabilities which would have
been structurally senior to the Notes. See "Risk Factors -- Holding Company
Structure; Structural Subordination."
SEE "RISK FACTORS" BEGINNING ON PAGE 10 HEREOF FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
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<S> <C> <C> <C>
Per Note...................................... % % %
Total......................................... $ $ $
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</TABLE>
(1) Plus interest, if any, from the date of issuance.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting" for the indemnification arrangement with the
Underwriters.
(3) Before deducting expenses of the Offering payable by the Company, estimated
at $ .
The Notes are offered by the several Underwriters subject to prior sale,
when, as and if delivered to and accepted by them, and subject to various prior
conditions, including the right to reject any order in whole or in part. It is
expected that delivery of the Notes will be made against payment therefor in New
York, New York on or about , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
TORONTO DOMINION SECURITIES
<PAGE> 3
CERTAIN TERMS
For regulatory purposes, the FCC has designated regions of the United
States as either a Metropolitan Statistical Area ("MSA") or 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." The number of Pops (or "Net Pops") owned is not the same
as the number of subscribers, or even potential subscribers. As used in this
Prospectus, unless otherwise indicated, the term "Pops" means the estimate of
the population of an MSA or RSA, as derived from the Rand McNally Commercial
Atlas and Marketing Guide population estimates. The term "Net Pops" means the
estimated population with respect to a given service area multiplied by the
percentage interest that the Company owns in the entity licensed in such service
area (except in the case of the PA-2 RSA which the Company does not own, but
operates under an FCC grant of Interim Operating Authority). Because the Company
owns 100% of the interest in each of its MSAs and RSAs, at this point in time,
Net Pops equal Pops. Except for historical financial information and unless
otherwise indicated, all references herein to Pops, Net Pops and the Company's
systems give effect to consummation of the Horizon Acquisition, which will occur
simultaneously with the closing of the Offering. The term "non-wireline" license
refers to the license for any market that was initially awarded to a company,
individual or group, not affiliated with any landline carrier providing service
in the market. The term "wireline" license refers to the license for any market
that was initially awarded to a company, individual or group, affiliated with a
landline carrier providing service in the market. There is, however, no
technical distinction between a wireline and a non-wireline license. The term
"system" means an FCC-licensed cellular telephone system. The term "CTIA" means
the Cellular Telecommunications Industry Association. The term "NACN" means the
North American Cellular Network.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form S-1 (the "Registration Statement") under
the Securities Act with respect to the Notes offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain items of which
are contained in schedules and exhibits to the Registration Statement as
permitted by the rules and regulations of the SEC. Any statements contained
herein concerning the provisions of any document filed as an Exhibit to the
Registration Statement or otherwise filed with the SEC are not necessarily
complete and, in each instance, reference is made to the copy of such document
so filed. Each such statement is qualified in its entirety by such reference.
The Company intends to furnish holders of the Notes annual reports
containing audited financial statements and quarterly reports for the first
three quarters of the fiscal year containing unaudited financial statements.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information (including the Company's combined financial statements and notes
thereto) contained elsewhere in this Prospectus. Unless the context otherwise
requires, references to the "Company" are to Sygnet Wireless, Inc., an Ohio
corporation, its wholly-owned subsidiary, Sygnet Communications, Inc., and their
respective predecessors prior to the corporate restructuring described elsewhere
in this Prospectus and include the operations to be acquired in part with the
proceeds of the Offering. The term "Horizon Acquisition" refers to the
acquisition under the agreement to purchase five RSAs in western Pennsylvania
and New York (PA-1, PA-2, PA-6, PA-7 and NY-3) from three Horizon Cellular
Telephone Company affiliates, as described more fully below under "Business --
The Horizon Acquisition."
THE COMPANY
Upon consummation of the Horizon Acquisition, the Company will own and
operate cellular telephone systems serving one large cluster with approximately
2.4 million Pops in northeastern Ohio, western Pennsylvania and western New
York. The Horizon Acquisition will add five RSAs (the "Horizon Systems") to the
three MSAs and one RSA currently operated by the Company (the "Existing
Systems"), providing the Company with over 89,000 subscribers. The Company's
cellular systems are located in Youngstown, Ohio and Erie, Pennsylvania and in
primarily suburban and rural areas between the Cleveland, Akron-Canton,
Pittsburgh, Buffalo and Rochester metropolitan areas. The Company believes that
its mix of suburban and rural locations provides it with advantages over
cellular operators in predominately urban areas, including greater roaming
revenue opportunities, lower distribution costs and higher costs of entry for
new competitors. The Company has converted all of its Existing Systems to time
division multiple access ("TDMA") digital technology and will selectively
convert the more densely populated portions of the Horizon Systems to digital
technology in early 1997.
The Company began operating cellular systems in 1985 in Youngstown, Ohio
and has expanded to cover nine contiguous markets through a series of
acquisitions. The Company is owned and controlled by the Williamson family,
which has owned and operated broadcast and other communications companies in
northeastern Ohio and western Pennsylvania since 1926. The following table
summarizes the Existing Systems and the Horizon Systems.
<TABLE>
<CAPTION>
DATE OF
TOTAL POPS OWNERSHIP NET POPS ACQUISITION
<S> <C> <C> <C> <C>
EXISTING SYSTEMS(1)
Youngstown, OH MSA............................... 491,900 100% 491,900 1985
Sharon, PA MSA................................... 122,100 100% 122,100 1987
Erie, PA MSA..................................... 280,600 100% 280,600 1995
Columbiana, OH, OH-11 RSA........................ 111,700 100% 111,700 1991
HORIZON SYSTEMS(1)(2)
Chautauqua, NY, NY-3 RSA......................... 485,200 100% 485,200 1996
Crawford, PA, PA-1 RSA........................... 197,200 100% 197,200 1996
Lawrence, PA, PA-6 RSA........................... 376,400 100% 376,400 1996
Indiana, PA, PA-7 RSA............................ 217,100 100% 217,100 1996
McKean, PA, PA-2 RSA(3).......................... 89,400 100% 89,400 1996
---------- ---------
Total.................................... 2,371,600 2,371,600
</TABLE>
- -----------------------------
(1) All of the Existing Systems and Horizon Systems licenses are non-wireline
licenses.
(2) To be acquired as described under "Business -- The Horizon Acquisition." The
consummation of the Offering is conditioned upon the consummation of the
Horizon Acquisition and the closing of the Preferred Stock Investment (as
defined).
(3) The Horizon Acquisition includes the Pops in the PA-2 RSA where the Company
has Interim Operating Authority ("IOA") pending the Federal Communications
Commission's (the "FCC") final determination of the qualifications of the
initial lottery winner to hold the permanent license for the PA-2 RSA. The
Company's IOA from the FCC will expire upon selection of the new licensee
and the commencement of operations by that licensee. Until the expiration of
the IOA, however, the Company is entitled to all revenue and income
generated by the PA-2 RSA. The Company believes that the expiration of such
authority will not have a material adverse effect on its results of
operations, financial position or cash flows.
3
<PAGE> 5
BUSINESS STRATEGY
The Company's goal is to become the leading full service provider of mobile
telecommunications services in its cluster by offering technically advanced
cellular service, superior coverage and a high level of customer service at
competitive prices. Specifically, the Company's business objectives are to
increase penetration and improve profitability in both the Horizon Systems and
its Existing Systems by taking advantage of its ability to operate in a much
larger regional footprint. In addition, the Company may in the future acquire
additional systems that provide the Company with the ability to further its
strategic objectives.
- Developing the Horizon Systems. The Company believes that the Horizon
Systems are underdeveloped and underpenetrated compared to its Existing
Systems and represent a substantial growth opportunity for the Company.
By taking advantage of marketing, operating and engineering synergies
arising from the Horizon Acquisition, the Company believes that it will
be able to decrease overall per subscriber operating costs and rapidly
increase penetration in the Horizon Systems to levels comparable to those
achieved in its Existing Systems. Immediately upon consummation of the
Horizon Acquisition, the Company will apply its business strategy to the
Horizon Systems, which strategy has generated significant subscriber and
revenue growth in its Existing Systems, including the Erie, PA MSA
acquired in September 1995 (the "Erie Acquisition").
- Aggressive Marketing and Promotion of Cellular Services. The Company
plans to implement the aggressive marketing programs that it has been
using in its Existing Systems to increase subscriber activations in the
Horizon Systems. These include competitive rate plans which provide low
priced regional roaming rates tailored for individual markets and
attractive equipment prices. In addition, the Company will use a mix of
advertising media such as television, radio and outdoor advertising to
reach potential new subscribers.
- Local Retail Outlets and Superior Customer Service. The Company strives
to provide a high level of customer service and the Company's use of
local retail stores is a key element of this local subscriber service
strategy. The Company's stores are staffed with sales and customer
service representatives who provide a more direct, specifically targeted
level of customer service than is ordinarily offered by larger
competitors relying on centralized customer service operations. By having
a permanent local retail presence, the sales staff can cultivate local
market knowledge that allows them to focus their efforts on the specific
demands of the market or markets in which they operate. This improves
their ability to establish relationships with customers, to understand
the customer's needs and to reduce churn. The sales team's ability to
promote the Company's services both inside and outside of its cluster is
enhanced by its license to market under the CELLULAR ONE(R) brand name
and its continuing participation in the North American Cellular Network
("NACN"), a national cellular network comprised principally of
non-wireline carriers whose goal is to make cellular service "seamless"
throughout North America by facilitating automatic roaming to and from
member systems.
- Advanced Systems Design. The Company's system design and the TDMA
digital technology it employs provide the foundation for technically
superior cellular service. The Company has deployed a large number of
cell sites in each service area. Consequently, subscribers in the
Existing Systems enjoy a high level of local and regional coverage,
resulting in high quality hand-held coverage throughout most of its
population centers, minimal call blocking, seamless call delivery through
NACN and the availability of digital voice and data services. All of the
Company's existing cells have already been upgraded to offer TDMA digital
services and the Company intends to selectively improve the technology
being used in the Horizon Systems to match this high quality level. The
Company believes it is well positioned to address new technologies that
might become available in its markets.
- Decentralized Marketing Management. The Company has assembled
management, sales and operating staff with extensive experience and
relationships within each market. The decentralized market management
structure adopted by the Company allows it to tailor its service to meet
the needs of each market. This local approach to marketing is coordinated
with senior management of the Company and allows each market to benefit
from shared corporate resources.
4
<PAGE> 6
- Acquisition Strategy. The Company's primary external growth strategy has
been to develop its cellular system by pursuing acquisitions that expand
its regional footprint, can be operated efficiently, enhance its
reciprocal relationships with other cellular telephone carriers and
provide an opportunity to gain significant competitive advantages. As it
has done successfully in the past, the Company intends to pursue
acquisition opportunities which permit the Company to achieve these
strategic objectives either with respect to its current cluster or
elsewhere.
- Future Competition. The Company is preparing for what is expected to be
an increasingly competitive telecommunications environment by
aggressively working to attract new subscribers. The Company believes it
is prepared for this competition because it is not dependent on high
roaming or local rates. In addition, the Company believes that it can
effectively face this competition from its position as an incumbent in
the cellular field with a high quality network that is not capacity
constrained. The Company also has an extensive footprint, strong
distribution channels, superior customer service capabilities and an
experienced management team. Because the Company operates in medium to
small markets, the new personal communications services ("PCS") licensees
may be unable or unwilling to offer commercially viable wireless service
in much of the Company's area in the near term. The Company believes the
extensive capital expenditures required to deploy the infrastructure for
PCS is more readily justifiable from an economic standpoint in larger,
more densely populated urban areas. This constraint of PCS may position
the Company to offer roaming services to PCS customers, as well as to
provide bulk lines of service for resale to certain PCS companies. For
example, the Company's existing Youngstown and Erie systems are equipped
to provide TDMA digital roaming to AT&T Wireless PCS subscribers when
AT&T Wireless introduces dual band TDMA phones in the adjacent Cleveland
and Buffalo-Rochester MTAs.
THE HORIZON ACQUISITION
On July 11, 1996, the Company signed an agreement with 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. (the
"Horizon Companies") to purchase for $250.0 million in cash (subject to net
working capital adjustment) the Horizon Systems, which consist of the PA-1,
PA-2, PA-6, PA-7 and NY-3 RSAs. Under the agreement, the Company is to become
the cellular licensee serving contiguous markets representing approximately 1.3
million Pops and covering over 16,125 square miles in western Pennsylvania and
New York. The PA-2 RSA, which represents 89,400 Pops, currently operates under
IOA pending the FCC's final determination of the qualifications of the initial
lottery winner to hold the permanent license for the PA-2 RSA. While the Company
is not acquiring a permanent license for the PA-2 RSA, it is entitled to all
revenue and income generated by the cellular system until the FCC resolves the
dispute. The Company is unable to predict when or how the FCC will resolve this
matter.
Simultaneously with the closing of the Horizon Acquisition, the Subsidiary
will obtain secured financing from a number of commercial lenders (the
"Lenders") under a $300.0 million revolving line of credit (the "Bank Credit
Facility"). In addition, the Company will issue (the "Preferred Stock
Investment") $20.0 million liquidation amount of Cumulative Preferred Stock (the
"Preferred Stock") to an affiliate of one of the Lenders. Dividends on the
Preferred Stock will be payable solely through the issuance of additional
Preferred Stock. In addition, the holder of Preferred Stock is entitled to
warrants to purchase Class A Common Stock (as defined) of the Company unless the
Preferred Stock is redeemed with the proceeds of an initial public offering of
Class A Common Stock or from other permitted sources within nine months of the
date of the Preferred Stock Investment. See "Description of Capital
Stock -- Preferred Stock."
The proceeds of the Offering and the Preferred Stock Investment, together
with up to approximately $133.0 million of the proceeds of the borrowings under
the Bank Credit Facility, will be used to pay the purchase price in the Horizon
Acquisition and the related fees and expenses. See "Use of Proceeds." The
remainder of availability under the Bank Credit Agreement will be used for
working capital purposes, to refinance $71.5 million in existing debt and for
system expansion. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Description of Bank Credit Facility."
5
<PAGE> 7
THE OFFERING
The following summary description of the Notes is qualified in its entirety
by the more detailed information set forth under the caption "Description of
Notes" contained elsewhere in this Prospectus.
Notes Offered...................... $110,000,000 aggregate principal amount
of % Senior Notes due 2006.
Maturity Date...................... , 2006.
Interest Payment Dates............. and
of each year,
commencing , 1997.
Mandatory Redemption............... None.
Optional Redemption................ The Notes will be redeemable, in whole or
in part, at the option of the Company at
any time on or after , 2001 at the
redemption prices set forth herein, plus
accrued and unpaid interest, if any, to
the date of redemption. In addition, at
any time during the first 36 months after
the date of the original issuance of
Notes, the Company may redeem up to an
aggregate of $38.5 million in principal
amount of Notes at a redemption price of
% of the principal amount thereof,
plus accrued and unpaid interest thereon,
with the net proceeds of an offering of
Qualified Capital Stock (as defined) of
the Company; provided that at least $71.5
million in aggregate principal amount of
Notes remain outstanding immediately
after the occurrence of such redemption.
See "Description of Notes -- Optional
Redemption."
Ranking............................ The Notes will be general unsecured
obligations of the Company and will rank
pari passu with all senior indebtedness
of the Company, if any, and senior in
right of payment to all subordinated
indebtedness of the Company, if any. The
Company is a holding company with no
direct operations and assets other than
the stock of the Subsidiary. The Notes
will not be guaranteed by the Subsidiary,
therefore the Notes will be structurally
subordinated to all liabilities of the
Subsidiary. After giving effect to the
Horizon Acquisition and the other
transactions described under "Unaudited
Pro Forma Condensed Consolidated
Financial Data" (the "Related
Transactions") as if such transactions
had occurred on June 30, 1996, the
Subsidiary would have had $211.8 million
of total outstanding indebtedness
(including $204.4 million of secured
borrowings under the Bank Credit
Facility), all of which is structurally
senior in right of payment to the Notes.
The indenture governing the Notes (the
"Indenture") will allow the Company and
the Subsidiary to incur additional
indebtedness. See "Description of
Notes -- Certain Covenants."
Certain Covenants.................. The Indenture imposes certain limitations
on the ability of the Company and its
Restricted Subsidiaries (as defined) to,
among other things, incur Indebtedness
(as defined), make Restricted Payments
(as defined), effect certain Asset Sales
(as defined), enter into certain
transactions
6
<PAGE> 8
with Related Persons (as defined), merge
or consolidate with any other person or
transfer all or substantially all of
their properties and assets. See
"Description of Notes -- Certain
Covenants."
Change of Control.................. Upon the occurrence of a Change of
Control (as defined), each holder of
Notes will have the right to require the
Company to repurchase such holder's Notes
at 101% of the principal amount thereof
plus accrued and unpaid interest thereon,
if any, to the repurchase date. The Bank
Credit Facility may restrict the ability
of the Company to obtain the funds
necessary to repurchase the Notes in the
event of a Change of Control and the
Company may not have sufficient funds or
financing available to satisfy its
obligations to repurchase the Notes and
other debt that may come due upon a
Change of Control.
Events of Default.................. Events of Default under the Indenture
include failure to pay principal or
interest on the Notes, failure to make
payments on other indebtedness, breach of
certain covenants, certain events of
bankruptcy and insolvency and other
customary events. See "Description of
Notes -- Events of Default and Remedies."
Use of Proceeds.................... The Company intends to use the net
proceeds of the Offering to finance a
portion of the Horizon Acquisition. See
"Use of Proceeds" and "Business -- The
Horizon Acquisition."
RISK FACTORS
Certain factors should be considered in connection with an investment in
the Notes. See "Risk Factors."
7
<PAGE> 9
SUMMARY FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT OPERATING DATA)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------- PRO FORMA(1)
---------------------------------
YEAR ENDED DECEMBER 31, AS ADJUSTED
SIX MONTHS SIX MONTHS
--------------------------- ENDED YEAR ENDED ENDED
1993 1994 1995 JUNE 30, 1996 DECEMBER 31, 1995 JUNE 30, 1996
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue....................... $14,474 $18,048 $24,577 $17,227 $56,572 $ 32,804
Cost of services.................... 2,515 3,452 3,366 2,331 8,144 4,369
Cost of equipment sales............. 930 1,624 4,164 2,003 7,688 3,446
General and administrative
expense........................... 4,412 4,467 5,141 3,613 10,393 6,366
Selling and marketing expense....... 2,166 2,555 3,505 2,356 9,083 4,542
Depreciation and amortization....... 1,951 2,639 3,487 2,483 14,456 7,505
Operating income.................... 2,500 3,311 4,914 4,441 6,809 6,576
Interest expense, net............... 652 964 2,613 2,633 28,397 14,213
Other expense....................... 188 553 286 229 351 348
Net income (loss)................... 1,523 1,722 1,950 1,460 (21,939) (7,985)
Ratio of earnings to fixed
charges(2)........................ 3.11 2.60 1.67 1.56
OTHER FINANCIAL DATA:
EBITDA(3)........................... $ 4,451 $ 5,950 $ 8,401 $ 6,924 $21,265 $ 14,081
<CAPTION>
PRO FORMA(1)
HISTORICAL AS ADJUSTED
AS OF AS OF
JUNE 30, 1996 JUNE 30, 1996
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................... $ 3,484 $ 6,265
Property and equipment, net......... 22,430 43,267
Cellular licenses, net.............. 48,824 277,987
Total assets........................ 80,181 344,539
Long-term debt...................... 70,500 313,393
Total liabilities................... 74,695 321,834
Preferred stock..................... 19,000
Shareholders' equity................ 5,485 3,705
SELECTED OPERATING DATA:
Existing Systems(4)
Ending subscribers................ 18,037 24,124 44,665 50,797
Penetration(5).................... 2.5% 3.3% 4.4% 5.0%
Churn(6).......................... 1.3% 1.5% 1.4% 1.3%
Subscriber revenue per average
subscriber...................... $ 50 $ 45 $ 46 $ 45
Selling & marketing costs (all in)
per gross additional
subscriber(7)................... $ 416 $ 418 $ 396 $ 391
Horizon Systems(4)
Ending subscribers................ 9,530 17,188 33,226 38,371
Penetration(5).................... 0.9% 1.6% 2.4% 2.8%
Churn(6).......................... n/a 1.0% 1.1% 1.5%
Subscriber revenue per average
subscriber...................... n/a $ 38 $ 36 $ 36
Selling & market costs (all in)
per gross additional
subscriber(7)................... n/a $ 337 $ 328 $ 350
</TABLE>
- -----------------------------
n/a -- Information not available
(1) The unaudited pro forma statement of operations data and EBITDA for the year
ended December 31, 1995 and the six months ended June 30, 1996 include the
historical operations of the Company and give effect to the following as if
they occurred as of January 1, 1995, (i) the Erie Acquisition, (ii) the
Horizon Acquisition, (iii) the Offering, (iv) the repayment of existing
debt, (v) the borrowings under the Bank
8
<PAGE> 10
Credit Facility, (vi) the Preferred Stock Investment and (vii) the corporate
restructuring of the Company. The unaudited pro forma balance sheet data as
of June 30, 1996 includes the historical accounts of the Company and gives
effect to the following as if they occurred as of June 30, 1996, (i) the
Horizon Acquisition, (ii) the Offering, (iii) the repayment of existing
debt, (iv) the borrowings under the Bank Credit Facility, (v) the Preferred
Stock Investment, (vi) the corporate restructuring of the Company and (vii)
the termination of Subchapter S status of the predecessor corporations for
federal and state income tax purposes. The unaudited pro forma condensed
consolidated financial information gives effect to the Erie and Horizon
Acquisitions under the purchase method of accounting.
(2) For the purposes of computing the ratio of earnings to fixed charges and pro
forma deficiency of earnings to fixed charges, "earnings" are defined as
earnings before extraordinary items and accounting changes, interest
expense, amortization of deferred financing costs, taxes and a portion of
rent expense representative of interest. Fixed charges consist of interest
expense, amortization of deferred financing costs and a portion of rent
expense representative of interest. On a pro forma basis, the Company would
include preferred stock dividend requirements in computing its ratio of
earnings to combined fixed charges and preferred stock dividends. The pro
forma deficiency of earnings to combined fixed charges and preferred stock
dividends was $29.5 million for the year ended December 31, 1995 and $12.3
million for the six months ended June 30, 1996.
(3) EBITDA means income before interest expense, income tax expense,
depreciation and amortization expense, minority interest and other non-cash
expenses. EBITDA is not intended to represent cash flows from operating
activities, as determined in accordance with generally accepted accounting
principles, nor has it been presented as an alternative to operating income
as an indicator of operating performance and should not be considered as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles.
(4) Existing Systems, which include the Company on a historical basis and Erie
Cellular Telephone Company for the period from September 30, 1993 through
December 31, 1995, represent certain operating data for the years ended
December 31, 1993, 1994 and 1995. Horizon Systems include certain operating
data for the Horizon Companies for the years ended December 31, 1993, 1994
and 1995.
(5) Represents the ratio of ending subscribers to total Pops of system.
(6) Represents the average of the monthly churn rates during the periods
presented. Churn equals the ratio of disconnected monthly subscribers to
average monthly subscribers.
(7) Includes selling and marketing expense, cost of equipment sales (net of
revenue) and cost of equipment rentals.
9
<PAGE> 11
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered in evaluating the Company
and its business before purchasing the Notes offered hereby.
LEVERAGE AND ABILITY TO MEET REQUIRED DEBT SERVICE
The Company considers itself highly leveraged. On a pro forma basis, after
giving effect to the Horizon Acquisition and the debt incurred to finance such
acquisition, including the Notes, the Company's ratio of EBITDA to total
interest expense would have been 0.8 and 1.0, for the year ended December 31,
1995 and the six months ended June 30, 1996, respectively, and the Company's net
loss and deficiency of earnings to combined fixed charges and preferred stock
dividends would have been $29.5 million and $12.3 million. The Company's high
degree of leverage could significantly limit its ability to make acquisitions,
withstand competitive pressures, weather adverse economic conditions, finance
its operations or take advantage of business opportunities that may arise.
The Company's ability to service its debt will require significant and
sustained growth in the Company's cash flow. There can be no assurance that the
Company will be successful in improving its cash flow by a sufficient magnitude
or in a timely manner or in raising additional equity or debt financing to
enable the Company to meet its debt service requirements.
HOLDING COMPANY STRUCTURE; STRUCTURAL SUBORDINATION
The Company is a holding company with no direct operations and no
significant assets other than the stock of the Subsidiary. The Notes will be
general unsecured obligations of the Company and will rank pari passu in right
of payment with all future senior indebtedness of the Company, if any, and
senior in right of payment to all future subordinated indebtedness of the
Company, if any. The Company does not currently have any other existing debt
other than debt of the Subsidiary. The Notes will not be guaranteed by the
Subsidiary. As a result, all indebtedness of the Subsidiary, including the
Subsidiary's borrowings under the Bank Credit Facility, will be structurally
senior to the Notes. In addition, the Company will pledge the stock of the
Subsidiary to secure the borrowings under the Bank Credit Facility and the
Subsidiary and any other subsidiaries will grant liens on substantially all of
their assets as security for the obligations under the Bank Credit Facility.
Because the Notes are not secured by any assets, in the event of a dissolution,
bankruptcy, liquidation or reorganization of the Subsidiary, holders of the
Notes may receive less ratably than the secured creditors under the Bank Credit
Facility. As of June 30, 1996, after giving effect to the Horizon Acquisition
and the Related Transactions, the Subsidiary would have had $211.8 million of
total outstanding liabilities (including $204.4 million of secured borrowings
under the Bank Credit Facility), all of which is structurally senior in right of
payment to the Notes. See "Capitalization" and "Unaudited Pro Forma Condensed
Consolidated Financial Statements." The Company is dependent on the cash flow of
the Subsidiary to meet its obligations, including the payment of interest and
principal obligations on the Notes when due. Accordingly, the Company's ability
to make principal, interest and other payments to holders of the Notes when due
is dependent on the receipt of sufficient funds from the Subsidiary. Receipt of
such funds will be restricted by the terms of existing and future indebtedness
of the Subsidiary, including the Bank Credit Facility. See "Description of Bank
Credit Facility."
BUSINESS RISKS ASSOCIATED WITH THE HORIZON ACQUISITION
The Company will be subject to risks that the Horizon Systems will not
perform as expected and that the returns from such systems will not support the
indebtedness incurred to acquire, or the capital expenditures needed to develop,
such systems. See "Business -- The Horizon Acquisition."
The Company has filed applications seeking FCC approval to assign each of
the licenses to be acquired by the Company as part of the Horizon Acquisition.
The Company may consummate such acquisition after the FCC grants the
applications, but prior to the time the FCC grants are no longer subject to
reconsideration or review. If the Company consummates such acquisition prior to
the time the grants become final orders, there can be no assurance that any or
all such grants will not be reconsidered, reviewed or revoked. In the event any
such grant is revoked, the Company could be required to refile its applications,
rescind the acquisition or otherwise dispose of the licenses acquired pursuant
to the Horizon Acquisition.
10
<PAGE> 12
COMPETITION
In each of its markets, the Company competes with one other cellular
licensee, most of which are larger and have greater financial resources than the
Company. The Company also competes, although to a lesser extent, with paging
companies and landline telephone service providers. Many of the Company's
current and potential competitors have financial, personnel and other resources
substantially greater than those of the Company, as well as other competitive
advantages over the Company. See "Business -- Competition" for more detailed
information on the competitive environment faced by the Company. Current
policies of the FCC authorize only two cellular licensees to operate in each
license area and the Company expects there will continue to be competition from
the other licensee authorized to serve each cellular market in which the Company
operates. Competition for subscribers between cellular licensees in a given
license area is based principally upon the services and enhancements offered,
the technical quality of the cellular system, customer service, system coverage
and capacity and price.
As a result of recent regulatory and legislative initiatives, the Company's
cellular operations may face increased competition from entities using or
proposing to use other comparable communications technologies. The Company is
unable to predict whether such competing technologies will be successful and as
a result will provide significant competition for the Company. While some of
these technologies and services using them are currently operational, most are
still in the process of development and commercialization. For example, the
Company's cellular operations are expected to face additional competition from
new market entrants once systems designed to provide PCS have been constructed
and become operational and may face competition from other technologies
developed in the future including, but not limited to, satellite systems. The
Company believes the likelihood of near-term competition from such services is
reduced because the areas in which it operates are less densely populated. There
can be no assurance, however, that one or more of the technologies currently
utilized by the Company in its business will not become inferior or obsolete at
some time in the future. See "Business -- Competition."
RAPID TECHNOLOGICAL CHANGES
The telecommunications industry is subject to rapid and significant changes
in technology, including advancements protected by intellectual property laws.
While the Company believes that for the foreseeable future these changes will
not materially hinder the Company's ability to acquire necessary technologies,
the effect of technological changes on the businesses of the Company cannot be
predicted. Thus, there can be no assurance that technological developments will
not have a material adverse effect on the Company.
DEPENDENCE ON KEY PERSONNEL
The Company's businesses are managed by a small number of management and
operating personnel, the loss of certain of whom could have a material adverse
effect on the Company. The Company believes that its ability to manage its
planned growth successfully will depend in large part on its continued ability
to attract and retain highly skilled and qualified personnel. Each of the
Company's key executives will enter into written employment agreements with the
Company. See "Management."
RELIANCE ON USE OF THIRD-PARTY SERVICE MARK
The Company intends to continue to use the registered service mark CELLULAR
ONE(R) to promote the services it offers in all of its license areas, including
the Horizon Systems. The Company's use of this service mark is governed by
five-year contracts between the Company and Cellular One Group, the owner of the
service mark. Such contracts expire on various dates and each is renewable at
the option of the Company for three additional five-year terms, subject to the
attainment of certain customer satisfaction ratings. See "Business -- Service
Marks." Under these agreements, the Company must meet a consistent set of
operating and service quality standards for its systems. If these agreements are
not renewed upon expiration or if the Company fails to meet the applicable
operating or service quality standards, the Company's ability both to attract
new subscribers and retain existing subscribers could be impaired. The Company
does not anticipate any difficulty in obtaining renewal of its agreements with
Cellular One Group or in continuing to meet such standards. Recently, McCaw/AT&T
Wireless, which had been the single largest user of the CELLULAR ONE(R) name,
has significantly reduced its use of the brand name as a primary service mark.
If for this or some
11
<PAGE> 13
other reason beyond the Company's control, the name CELLULAR ONE(R) were to
suffer diminished marketing appeal, the Company's ability both to attract new
subscribers and retain existing subscribers could be materially impaired.
ABSENCE OF A PUBLIC MARKET FOR THE NOTES; POSSIBLE VOLATILITY OF NOTE PRICE
The Notes are new securities for which there is currently no market.
Although the Company has been advised by the Underwriters that, following
completion of the Offering, they currently 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, there can be no assurance
as to the development or liquidity of any market for the Notes. If a market for
the Notes were to develop, the Notes could trade at prices that may be higher or
lower than their initial offering price depending upon many factors, including
prevailing interest rates, the Company's operating results and the markets for
similar securities. Historically, the market for non-investment grade debt has
been subject to disruptions that have caused substantial volatility in the
prices of securities similar to the Notes. There can be no assurance that if a
market for the Notes were to develop, such a market would not be subject to
similar disruptions.
FRAUDULENT CONVEYANCE STATUTES
Various laws enacted for the protection of creditors may apply to the
Company's incurrence of indebtedness and other obligations in connection with
the Horizon Acquisition, including the issuance of the Notes. If a court were to
find in a lawsuit by an unpaid creditor or representative of creditors of the
Company that the Company did not receive fair consideration or reasonably
equivalent value for incurring such indebtedness or obligation and, at the time
of such incurrence, the Company: (i) was insolvent; (ii) was rendered insolvent
by reason of such incurrence; (iii) was engaged in a business or transaction for
which the assets remaining in the Company constituted unreasonably small
capital; or (iv) intended to incur or believed it would incur obligations beyond
its ability to pay such obligations as they mature, such court, subject to
applicable statutes of limitation, could determine to invalidate, in whole or in
part, such indebtedness and obligations as fraudulent conveyances or subordinate
such indebtedness and obligations to existing or future creditors of the
Company.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction which is being applied. Generally, however, the
Company would be considered insolvent at a particular time if the sum of its
debts was then greater than all of its property at a fair valuation or if the
present fair saleable value of its assets was then less than the amount that
would be required to pay its probable liabilities on its existing debts as they
became absolute and matured. On the basis of its historical financial
information, its recent operating history as discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
other factors, the Company's management believes that, after giving effect to
indebtedness incurred in connection with the Horizon Acquisition and other
related financings, the Company will not be rendered insolvent, will have
sufficient capital for the business in which it will be engaged and will be able
to pay its debts as they mature; however, management has not obtained any
independent opinion regarding such issues. In addition, there can be no
assurance as to what standard a court would apply in making such determinations.
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
cellular activities and other wireless carriers or the loss of any license could
have a material adverse effect on the Company's operations. In addition, all
cellular licenses in the United States are subject to renewal upon expiration of
their initial 10-year term. The Company's Youngstown, OH MSA cellular license
expired in 1995 and was renewed by the FCC in due course. The Company's Sharon,
PA MSA, Erie, PA MSA and OH-11 RSA initial licenses expire in 1996, 1998 and
2001, respectively. The licenses for PA-6 and PA-7 both expire on October 1,
2000 and the licenses for PA-1 and NY-3 expire one year later. In each case the
Company will apply for renewal of its license, and while the Company believes
that each of these licenses will be renewed based upon FCC rules establishing a
presumption in favor of licensees that have complied
12
<PAGE> 14
with their regulatory obligations during the initial license period, there can
be no assurance that all of the Company's licenses will be renewed. See
"Business -- Regulatory Overview."
FLUCTUATIONS IN MARKET VALUE OF LICENSES
A substantial portion of the Company's assets are intangible and primarily
consist of the Subsidiary's interests in cellular licenses. The future value of
the Company's interest in its cellular licenses will depend significantly upon
the success of the Company's business. While there is a current market for the
licenses, such market may not exist in the future or the values obtainable may
be significantly lower than at present. The transfer of interests in such
licenses is also subject to prior FCC approval. As a consequence, there can be
no assurance that the proceeds from the liquidation or sale of the Company's
assets would be sufficient to pay the Company's obligations and a significant
reduction in the value of the licenses could require a charge to the Company's
results of operations.
EQUIPMENT FAILURE AND NATURAL DISASTER
Although the Company carries "business interruption" insurance, a major
equipment failure or a natural disaster affecting the Company's central
switching office, its microwave links or certain of its cell sites could have a
material adverse effect on the Company's operations.
RADIO FREQUENCY EMISSION CONCERNS
Media reports have suggested that certain radio frequency ("RF") emissions
from portable cellular telephones may be linked to cancer. Concerns over RF
emissions may have the effect of discouraging the use of cellular telephones,
which could have a material adverse effect on the Company's business. On August
1, 1996, the FCC released a report and order that updates the guidelines and
methods it uses for evaluating RF emissions from radio equipment, including
cellular telephones. While the FCC's new rules impose more restrictive standards
on RF emissions from low power devices such as portable cellular telephones, the
Company believes that all cellular telephones currently provided by the Company
to its customers comply with the proposed new standards.
13
<PAGE> 15
USE OF PROCEEDS
The net proceeds to be received by the Company from the issuance and sale
of the Notes are estimated to be approximately $105.0 million (after estimated
fees and expenses of approximately $5.0 million). The Company intends to use
such net proceeds, borrowings under the Bank Credit Facility and the net
proceeds from the Preferred Stock Investment, to finance the Horizon
Acquisition. See "Business -- The Horizon Acquisition" and "Description of
Capital Stock -- Preferred Stock."
SOURCES AND USES OF FUNDS
(IN THOUSANDS)
<TABLE>
<S> <C>
SOURCES:
Bank Credit Facility................................................. $204,393
Senior Notes due 2006................................................ 110,000
Preferred Stock Investment........................................... 20,000
--------
Total sources................................................... $334,393
========
USES:
Acquisition of Horizon Systems....................................... $250,000
Purchase of Horizon net current assets............................... 2,468(1)
Repayment of long-term bank debt..................................... 71,500(2)
Estimated fees and expenses.......................................... 10,425(3)
--------
Total uses...................................................... $334,393
========
</TABLE>
- -----------------------------
(1) Represents estimated net current assets of the Horizon Companies (exclusive
of cash), based upon historical June 30, 1996 amounts.
(2) Includes additional amounts borrowed subsequent to June 30, 1996 totaling
$1,000.
(3) Represents estimates of $4,975 for underwriting and other expenses related
to the Offering, $4,450 for fees related to the Bank Credit Facility and
$1,000 for fees related to the Preferred Stock Investment.
14
<PAGE> 16
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
as of June 30, 1996 on (i) an actual basis and (ii) on a pro forma basis after
giving effect to the Horizon Acquisition and the Related Transactions. This
table should be read in conjunction with the combined financial statements of
the Company, including the notes thereto, and the "Unaudited Pro Forma Condensed
Consolidated Financial Data" and notes thereto, included elsewhere herein.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
----------------------
(IN THOUSANDS)
PRO FORMA
ACTUAL AS ADJUSTED
<S> <C> <C>
Long-term debt.................................................. $70,500 $ --
Bank Credit Facility............................................ -- 204,393
Senior Notes due 2006........................................... -- 110,000
------- -----------
Total long-term debt.................................. 70,500 314,393
Preferred Stock(1).............................................. -- 19,000
Shareholders' equity:(2)
Common stock(3)............................................ 1,331 62
Additional paid-in capital................................. 3,920 5,291
Treasury stock............................................. (1,719) --
Retained earnings (deficit)................................ 1,953 (1,647)
------- -----------
Total shareholders' equity............................ 5,485 3,706
------- -----------
Total capitalization.................................. $75,985 $ 337,099
======= =========
</TABLE>
- -----------------------------
(1) Net of issuance fees of $1,000.
(2) Excludes options to purchase 579,000 shares of Class A Common Stock granted
under the Company's 1996 Stock Option Plan ("SOP"), none of which are
presently exercisable and contingent warrants related to the Preferred Stock
Investment.
(3) Consists of Class A Common Stock, $0.01 par value per share: 60,000,000
shares authorized; none of which are issued or outstanding; Class B Common
Stock, $0.01 par value per share: 10,000,000 shares authorized; 6,170,630
shares issued and outstanding.
15
<PAGE> 17
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated statement of
operations of the Company for the year ended December 31, 1995 and the six
months ended June 30, 1996 include the historical operations of the Company and
give effect to the following as if they occurred as of January 1, 1995, (i) the
Erie Acquisition, (ii) the Horizon Acquisition, (iii) the Offering, (iv) the
repayment of existing debt, (v) the borrowings under the Bank Credit Facility,
(vi) the Preferred Stock Investment and (vii) the corporate restructuring of the
Company.
The following unaudited pro forma condensed consolidated balance sheet as
of June 30, 1996 includes the historical accounts of the Company and gives
effect to the following as if they occurred as of June 30, 1996, (i) the Horizon
Acquisition, (ii) the Offering, (iii) the repayment of existing debt, (iv) the
borrowings under the Bank Credit Facility, (v) the Preferred Stock Investment,
(vi) the corporate restructuring of the Company and (vii) the termination of
Subchapter S status of the predecessor corporations for federal and state income
tax purposes. The unaudited pro forma condensed consolidated financial
information gives effect to the Erie and Horizon Acquisitions under the purchase
method of accounting and to the assumptions in the accompanying notes to the
unaudited pro forma condensed consolidated financial data.
The unaudited pro forma condensed consolidated balance sheet at June 30,
1996 and statements of operations for the year ended December 31, 1995 and six
months ended June 30, 1996 have been prepared by the Company based in part on
information provided by (i) AT&T Wireless (former majority owner of the Erie, PA
MSA) for periods prior to the consummation of the Erie Acquisition in September
1995 with respect to the historical results of operations of Erie (as a whole)
and (ii) the Horizon Companies for periods prior to the consummation of the
Horizon Acquisition with respect to the historical results of the operations and
balance sheet of the Horizon Companies. The related pro forma adjustments have
been prepared by the Company's management based on its assumptions and using the
best available information provided by AT&T Wireless and the Horizon Companies.
The unaudited pro forma condensed consolidated financial data has been
prepared by the Company's management. The unaudited pro forma data is not
designed to represent and does not represent what the Company's financial
position or results of operations actually would have been had the
aforementioned transactions been completed as of the date or the beginning of
the periods indicated, or to project the Company's results of operations at any
future date or for any future period. The unaudited pro forma condensed
consolidated financial information should be read in conjunction with the 1995
combined financial statements and notes of the Company and the Horizon Systems
and the financial statements of Erie Cellular Telephone Company for the period
from January 1, 1995 to September 29, 1995, contained elsewhere in this
Prospectus.
16
<PAGE> 18
SYGNET WIRELESS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ERIE ADJUSTMENTS
ACQUISITION FOR ERIE PRO FORMA
HISTORICAL HISTORICAL(a) ACQUISITION COMBINED
<S> <C> <C> <C> <C>
Revenue:
Cellular services................... $21,367 $4,638 $26,005
Equipment sales..................... 1,529 916 2,445
Other............................... 1,681 -- 1,681
------- ------ -------
Total revenue................... 24,577 5,554 30,131
Costs and expenses:
Cost of cellular services........... 3,366 1,367 4,733
Cost of equipment sold.............. 4,164 887 5,051
General and administrative.......... 5,141 1,273 $ (772)(b) 5,642
Selling and marketing............... 3,505 1,634 (161)(c) 4,978
Depreciation and amortization....... 3,487 362 1,054 (d) 4,903
------- ------ ------ -------
Total costs and expenses........ 19,663 5,523 121 25,307
Income from operations.................. 4,914 31 (121) 4,824
Other:
Interest expense, net............... 2,613 2,613
Other............................... 351 351
------- ------ ------ -------
Total other..................... 2,964 2,964
------- ------ ------ -------
Net income (loss)(1).................... $ 1,950 $ 31 $ (121) $ 1,860
======= ====== ====== =======
Preferred stock dividend requirements
and accretion.........................
Net loss applicable to common
shareholders..........................
Pro forma net loss per share applicable
to common shareholders................
Number of shares used to compute pro
forma per share data..................
<CAPTION>
PRO FORMA
AND BANK HORIZON FOR
CREDIT COMPANIES HORIZON PRO FORMA
FACILITY HISTORICAL(g) ACQUISITION AS ADJUSTED
<S> <C> <C> <C> <C>
Revenue:
Cellular services................... $24,348 $ 50,353
Equipment sales..................... 1,664 4,109
Other............................... 429 2,110
------- ---------
Total revenue................... 26,441 56,572
Costs and expenses:
Cost of cellular services........... 3,411 8,144
Cost of equipment sold.............. 2,637 7,688
General and administrative.......... 4,901 $ (150)(h) 10,393
Selling and marketing............... 4,104 9,082
Depreciation and amortization....... $ 872 (e) 6,816 1,865 (i) 14,456
-------- ------- ------- ---------
Total costs and expenses........ 872 21,869 1,715 49,763
Income from operations.................. (872) 4,572 (1,715) 6,809
Other:
Interest expense, net............... 25,784 (f) 3,996 (3,996)(j) 28,397
Other............................... 351
-------- ------- ------- ---------
Total other..................... 25,784 3,996 (3,996) 28,748
-------- ------- ------- ---------
Net income (loss)(1).................... $(26,656) $ 576 $ 2,281 (21,939)
======== ======= =======
Preferred stock dividend requirements
and accretion......................... (4,642)(2)
---------
Net loss applicable to common
shareholders.......................... $ (26,581)
=========
Pro forma net loss per share applicable
to common shareholders................ $ (4.31)
=========
Number of shares used to compute pro
forma per share data.................. 6,170,630
=========
</TABLE>
- -----------------------------
(1) The pro forma statement of operations for the year ended December 31, 1995
does not include a tax benefit related to the pro forma losses. Such losses
would be carried forward and their realization would be dependent upon
future taxable income.
(2) The Preferred Stock dividend, which is payable solely through the issuance
of additional shares of Preferred Stock, represents the effective annual
dividend rate compounded quarterly on the $20,000 Preferred Stock
Investment. The accretion related to issuance fees is $100 per annum and
represents the amount required to accrete the Preferred Stock Investment to
its redemption value (including dividends) upon the tenth anniversary of the
issuance of the stock.
17
<PAGE> 19
SYGNET WIRELESS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS FOR PRO FORMA
THE OFFERING HORIZON ADJUSTMENTS FOR
AND BANK CREDIT COMPANIES HORIZON PRO FORMA
HISTORICAL FACILITY HISTORICAL(g) ACQUISITION AS ADJUSTED
<S> <C> <C> <C> <C> <C>
Revenue:
Cellular services.............. $ 15,728 $14,504 $ 30,232
Equipment sales................ 743 893 1,636
Other.......................... 756 180 936
---------- ------------- ----------
Total revenue............. 17,227 15,577 32,804
Costs and expenses:
Cost of cellular services...... 2,331 2,038 4,369
Cost of equipment sold......... 2,003 1,443 3,446
General and administrative..... 3,613 2,828 $ (75)(h) 6,366
Selling and marketing.......... 2,356 2,186 4,542
Depreciation and
amortization................. 2,483 $ 425(e) 3,918 679(i) 7,505
---------- --------------- ------------- --------------- ----------
Total costs and
expenses................ 12,786 425 12,413 604 26,228
Income from operations............. 4,441 (425) 3,164 (604) 6,576
Other:
Interest expense, net.......... 2,633 11,580(f) 1,796 (1,796)(j) 14,213
Other.......................... 348 348
---------- --------------- ------------- --------------- ----------
Total..................... 2,981 11,580 1,796 (1,796) 14,561
---------- --------------- ------------- --------------- ----------
Net income (loss)(1)............... 1$,460.... $ (12,005) $ 1,368 $ 1,192 (7,985)
========= ============== ============ ==============
Preferred stock dividend
requirements and accretion....... (2,695)(2)
----------
Net loss applicable to common
shareholders..................... $ (10,680)
==========
Pro forma net loss per share
applicable to common
shareholders..................... $ (1.73)
==========
Number of shares used to compute
pro forma per share data......... 6,170,630
==========
</TABLE>
- -----------------------------
(1) The pro forma statement of operations for the six months ended June 30, 1996
does not include a tax benefit related to the pro forma losses. Such losses
would be carried forward and their realization would be dependent upon
future taxable income.
(2) The Preferred Stock dividend, which is payable solely through the issuance
of additional shares of Preferred Stock, represents the effective annual
dividend rate compounded quarterly on the $20,000 Preferred Stock
Investment. The accretion related to issuance fees is $100 per annum and
represents the amount required to accrete the Preferred Stock Investment to
its redemption value (including dividends) upon the tenth anniversary of
the issuance of the shares.
18
<PAGE> 20
SYGNET WIRELESS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE
OFFERING,
BANK CREDIT
FACILITY, AND PRO
HORIZON PREFERRED FORMA
COMPANIES STOCK AS
HISTORICAL HISTORICAL(m) INVESTMENT ADJUSTED
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............ $ 1,661 $ 1,019 $ (1,019)(n) $ 1,661
Accounts receivable.................. 4,755 5,574 10,329
Inventory............................ 738 397 1,135
Prepaid expenses and deferred
taxes.............................. 550(k) 185 735
--------- --------- --------- -------
Total current assets............ 7,704 7,175 (1,019) 13,860
Property and equipment -- net............. 22,430 20,837 43,267
Cellular licenses -- net.................. 48,824 90,289 138,874(m)(o) 277,987
Deferred financing costs.................. 1,537 7,888(p) 9,425
--------- --------- --------- -------
Total assets.................... $ 80,495 $ 118,301 $ 145,743 $344,539
======= ========= ========= =======
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable..................... $ 913 $ 1,446 $ 2,359
Other current liabilities............ 822 694 1,516
Accrued expenses..................... 2,172 1,548 3,720
--------- --------- -------
Total current liabilities....... 3,907 3,688 7,595
Deferred tax liability.................... 557(l) 557
Long-term debt............................ 70,500 31,981 $ 210,912(q) 313,393
Other long-term liabilities............... 289 289
--------- --------- ----------- -------
Total liabilities............... 75,253 35,669 210,912 321,834
Preferred stock........................... 19,000(r) 19,000
Shareholders' equity...................... 5,242 82,632 (84,169)(s) 3,705
--------- --------- --------- -------
Total liabilities &
shareholders' equity.......... $ 80,495 $ 118,301 $ 145,743 $344,539
======= ========= ========= =======
</TABLE>
19
<PAGE> 21
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions described
in the previous pages on the Company's Unaudited Pro Forma Condensed
Consolidated Statements of Operations for the year ended December 31, 1995 and
the six months ended June 30, 1996, the following adjustments have been made:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
<S> <C> <C> <C>
(a) Represents the results of operations of Erie Cellular
Telephone Company ("Erie") for the period from January
1, 1995 through September 29, 1995. Erie was acquired by
the Company from AT&T Wireless on September 29, 1995.
(b) General and administrative expenses have been adjusted
to eliminate certain corporate costs charged by AT&T
Wireless to Erie during the period from January 1, 1995
through September 29, 1995 that were not incurred
subsequent to the Erie Acquisition. .................... $ (772)
========
(c) Selling and marketing expenses have been adjusted to
eliminate certain corporate costs charged by AT&T
Wireless to Erie during the period from January 1, 1995
through September 29, 1995 that were not incurred
subsequent to the Erie Acquisition. .................... $ (161)
========
(d) Represents incremental amortization and depreciation for
the period from January 1, 1995 through September 29,
1995 due to (i) the application of purchase accounting
resulting from increases in the basis of intangible
assets and (ii) the upgrade of certain property and
equipment in the Erie Acquisition. Intangible assets
include cellular licenses that are amortized over 40
years. Property and equipment includes cell site
equipment that is depreciated over 5 to 12 years.
Elimination of historical amortization expense
related to cellular licenses....................... $ (171)
Amortization of cellular licenses.................. 755
Depreciation of new cell site equipment............ 470
--------
$ 1,054
========
(e) Represents the amortization of estimated deferred
financing costs resulting from the (i) sale of the
Notes, (ii) borrowings under the Bank Credit Facility
and (iii) elimination of historical amortization
relating to the repayment of existing debt. Deferred
financing costs are amortized over the life of the
related debt.
Amortization of deferred financing costs related to
the sale of the Notes.............................. $ 498 $ 249
Amortization of deferred financing costs related to
borrowings under the Bank Credit Facility.......... 557 279
Elimination of amortization of deferred financing
costs related to existing debt..................... (183) (103)
-------- ----------
$ 872 $ 425
======== ==========
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
<S> <C> <C> <C>
(f) Represents the net effect on interest expense resulting
from (i) the sale of the Notes assuming an interest rate
of 11% per annum, (ii) borrowings of $204.4 million
under the Bank Credit Facility with a variable interest
rate (assumed to be 8% per annum) and (iii) elimination
of historical interest expense relating to the repayment
of existing debt.
Interest expense related to the sale of the
Notes.............................................. $12,100 $ 6,050
Interest expense related to borrowings under the
Bank Credit Facility............................... 16,344 8,172
Elimination of historical interest expense on
existing debt...................................... (2,660) (2,642)
-------- ----------
$25,784 $ 11,580
======== ==========
If the interest rate on the variable rate Bank Credit
Facility were to change by 1/8 of one percent, interest
expense would change by approximately $255 for the year
ended December 31, 1995 and $128 for the six months
ended June 30, 1996.
(g) Represents the results of operations of the Horizon
Companies for the year ended December 31, 1995 and six
months ended June 30, 1996 plus the results of
operations of AMC Cellular Associates (Indiana, PA-7
RSA) for the period from January 1, 1995 through June
15, 1995 (AMC Cellular Associates had total revenues of
$1,448, income from operations of $458 and net income of
$292 for such period). The Horizon Companies acquired
the operating license and certain operating assets and
liabilities of PA-7 on June 15, 1995.
(h) General and administrative expenses have been adjusted
to eliminate certain corporate costs charged to the
Horizon Companies that will not be incurred subsequent
to the Horizon Acquisition. ............................ $ (150) $ (75)
======== ==========
(i) Represents the incremental amortization due to the
application of purchase accounting resulting from an
increase in the basis of intangible assets in the
Horizon Acquisition. Intangible assets include cellular
licenses and customer lists that are amortized over 40
and 5 years, respectively.
Elimination of historical amortization expense
related to cellular licenses and customer lists.... $(3,860) $ (2,184)
Amortization of cellular licenses and customer
lists.............................................. 5,725 2,863
-------- ----------
$ 1,865 $ 679
======== ==========
(j) Represents the elimination of historical interest
expense as a result of debt not assumed as part of the
Horizon Acquisition. ................................... $(3,996) $ (1,796)
======== ==========
</TABLE>
21
<PAGE> 23
For the purposes of determining the pro forma effect of the transactions
described in the previous pages on the Company's Unaudited Pro Forma Condensed
Consolidated Balance Sheet as of June 30, 1996, the following adjustments have
been made:
<TABLE>
<CAPTION>
AS OF
JUNE 30, 1996
<S> <C> <C> <C>
(k) Prepaid expenses and deferred taxes include a pro forma
adjustment for a deferred tax asset to be recorded as a
result of the termination of Subchapter S status for
federal and state income tax purposes assuming it
occurred as of June 30, 1996. Before this adjustment,
prepaid expenses and deferred taxes totaled $236.
Deferred tax assets are primarily attributable to
certain accrued expenses. .............................. $ 314
==========
(l) Represents the deferred tax liability to be recorded as
a result of the pro forma adjustment for a termination
of Subchapter S status for federal and state income tax
purposes assuming it occurred as of June 30, 1996. The
deferred tax liability is primarily attributable to
accelerated methods of depreciation for income tax
purposes. .............................................. $ 557
==========
(m) Reflects adjustments to assets acquired and liabilities
assumed of the Horizon Companies based on their
estimated fair values under the purchase method of
accounting. The allocation of the aggregate purchase
cost below is preliminary and assumes the historic net
book value of tangible assets approximates their fair
value. The actual allocation will be based on
management's final evaluation of such assets and
liabilities. Some portion of the excess of purchase cost
over the historical cost of the net assets acquired may
ultimately be allocated to specific tangible and
intangible assets and liabilities. The final allocation
of purchase cost and the resulting effect on net income
may differ significantly from the pro forma amounts
included herein.
(n) Represents the net adjustment to cash and cash
equivalents as a result of the following:
Proceeds from sale of the Notes.................... $ 110,000
Proceeds from borrowings under the Bank Credit
Facility........................................... 204,393
Purchase of net current assets of the Horizon
Companies (exclusive of cash), based upon
historical June 30, 1996 amounts................... (2,468)
Acquisition of the Horizon Companies............... (250,000)
Proceeds of the Preferred Stock Investment net of
issuance fees of $1,000............................ 19,000
Payment of deferred financing costs related to the
sale of the Notes, borrowings under the Bank Credit
Facility........................................... (9,425)
Repayment of existing debt including additional
amounts borrowed subsequent to June 30, 1996
totaling $1,000.................................... (71,500)
Cash as of June 30, 1996 not acquired in connection
with the Horizon Acquisition....................... (1,019)
----------
$ (1,019)
==========
(o) Represents the net increase in cellular licenses and
customer lists due to the application of purchase price
accounting for assets to be acquired in the Horizon
Acquisition.
Elimination of historical cellular licenses and
customer
lists.............................................. $ (90,289)
Fair value of cellular licenses and customer lists
to be acquired as a result of the Horizon
Acquisition........................................ 229,163
----------
$ 138,874
==========
</TABLE>
22
<PAGE> 24
<TABLE>
<CAPTION>
AS OF
JUNE 30, 1996
<S> <C> <C> <C>
(p) Represents the net adjustment to deferred financing
costs as a result of:
Deferred financing costs related to the sale of the
Notes.............................................. $ 4,975
Deferred financing costs related to borrowings
under the Bank Credit Facility..................... 4,450
Estimated write-off of deferred financing costs as
of June 30, 1996 as a result of the early
extinguishment of existing
debt............................................... (1,537)
----------
$ 7,888
==========
(q) Represents the net effect on long-term debt resulting
from:
Sale of the Notes.................................. $ 110,000
Borrowings under the Bank Credit Facility.......... 204,393
Repayment of existing debt including additional
amounts borrowed subsequent to June 30, 1996
totaling $1,000.................................... (71,500)
Elimination of Horizon Companies debt not assumed
as part of the Horizon Acquisition................. (31,981)
----------
$ 210,912
==========
(r) Proceeds of the Preferred Stock Investment net of
issuance fees of $1,000................................. $ 19,000
==========
(s) Represents the net adjustment to shareholders' equity as
a result of:
Elimination of net equity in connection with
pending Horizon Acquisition........................ $ (82,632)
Represents the effect on shareholders' equity of
the write-off of deferred financing costs
associated with the early extinguishment of
existing debt...................................... (1,537)
----------
$ (84,169)
==========
</TABLE>
23
<PAGE> 25
SELECTED FINANCIAL DATA
THE COMPANY
The following selected financial data are derived from the historical
financial statements of the Company. The combined financial statements for the
three years ended December 31, 1995 have been audited by Ernst & Young LLP,
independent auditors. Prior to December 31, 1992, the Company's Selected
Financial Data does not include the selected financial data of Wilcom
Corporation, which consists of paging operations. Prior to such date, the
operations of Wilcom Corporation were not significant and would not impact
comparability of the financial data. The financial statements for the two years
ended December 31, 1992 have been audited by other independent auditors. The
financial data for the six month periods ended June 30, 1996 and 1995 are
derived from unaudited financial statements. The unaudited financial statements
include all adjustments, consisting of normal recurring accruals, which the
Company considers necessary for a fair presentation of the financial position
and the results of operations for these periods. Operating results for the six
months ended June 30, 1996 are not necessarily indicative of the results that
may be expected for the entire year ending December 31, 1996. The data should be
read in conjunction with the combined financial statements, related notes and
other financial information included herein.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue.............. $ 2,098 $11,487 $14,474 $18,048 $24,577 $10,719 $17,227
Cost of services........... 204 1,270 2,515 3,452 3,366 1,505 2,331
Cost of equipment sales.... 262 1,207 930 1,624 4,164 1,676 2,003
General and administrative
expense................. 825 3,612 4,412 4,467 5,141 2,411 3,613
Selling and marketing
expense................. 436 2,089 2,166 2,555 3,505 1,415 2,356
Depreciation and
amortization............ 289 1,441 1,951 2,639 3,487 1,387 2,483
Operating income........... 82 1,868 2,500 3,311 4,914 2,325 4,441
Interest expense, net...... 192 888 652 964 2,613 829 2,633
Other expense, net......... (6) (114) (325) (625) (351) (111) (348)
Net income (loss).......... (116) 866 1,523 1,722 1,950 1,385 1,460
Ratio of earnings to fixed
charges(1).............. 1.84 3.11 2.60 1.67 2.52 1.56
BALANCE SHEET DATA:
Working capital
(deficit)............... $ 4,285 $ 1,756 $ 4 $ (331) $ 1,880 $ 778 $ 3,484
Net fixed assets........... 8,355 9,276 11,127 14,084 21,049 16,448 22,430
Total assets............... 20,488 20,431 20,553 27,418 79,618 29,783 80,181
Long-term debt............. 13,774 12,064 10,928 18,264 69,500 22,414 70,500
Total liabilities.......... 15,618 15,024 15,224 22,649 75,332 25,609 74,695
Shareholders' equity....... 4,869 5,407 5,329 4,769 4,286 4,174 5,485
</TABLE>
- -----------------------------
(1) The ratio of earnings to fixed charges is determined by dividing the sum of
earnings before extraordinary items and accounting changes, interest
expense, amortization of deferred financing costs, taxes and a portion of
rent expense representative of interest, by the sum of interest expense,
amortization of deferred financing costs and a portion of rent expense
representative of interest. The ratio of earnings to fixed charges is not
meaningful for periods that result in a deficit. For the year ended December
31, 1991, the deficiency of earnings to fixed charges was $116.
24
<PAGE> 26
HORIZON COMPANIES
The following selected financial data are derived from the combined
Statements of Operations, included elsewhere herein, of the Horizon Systems
which consist of selected systems of Horizon Cellular Telephone Company, L.P.
The Statements of Operations for each of the three years in the period ended
December 31, 1995 have been audited by Ernst & Young LLP, independent auditors.
The financial data for the six month periods ended June 30, 1996 and 1995 are
derived from unaudited financial statements. Operating results for the six
months ended June 30, 1996 are not necessarily indicative of the results that
may be expected for the entire year ending December 31, 1996. The data should be
read in conjunction with the combined financial statements, related notes, and
other financial information included herein.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------- -----------------
1993 1994 1995 1995 1996
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue.................................. $6,584 $14,908 $24,473 $9,758 $15,109
Cost of services............................... 1,567 2,807 3,572 1,569 2,121
Cost of equipment sales........................ 717 1,690 2,544 918 1,443
General and administrative..................... 848 2,097 3,577 1,476 2,278
Selling........................................ 1,344 2,550 4,016 1,635 2,186
Depreciation and amortization.................. 2,294 4,484 6,650 2,788 3,918
Operating income (loss)........................ (186) 1,280 4,114 1,372 3,163
</TABLE>
25
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's and Horizon Systems' audited combined financial statements and the
notes thereto appearing elsewhere in this Prospectus. As a result of the Erie
Acquisition and the Horizon Acquisition, the Company's operating results for the
periods discussed may not be indicative of future performance. The Horizon
Systems' operating results exclude all corporate charges and corporate overhead.
THE COMPANY'S HISTORICAL RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
For the six months ended June 30, 1996, revenues totalled $17.2 million, a
60.7% increase over total revenue of $10.7 million for the comparable period in
1995. Net income for the six months ended June 30, 1996 was $1.5 million, a 7.1%
increase over net income of $1.4 million for the first half of 1995. Earnings
before interest, taxes, depreciation and amortization, minority interest and
other non-cash expenses ("EBITDA") grew to $6.9 million (40.1% of total revenue)
in the six months ended June 30, 1996 from $3.7 million (34.6% of total revenue)
in the comparable 1995 period. Subscriber revenue grew by 80.6% to $13.0 million
in the six months ended June 30, 1996 compared to $7.2 million in the first six
months of 1995 as a result of continued subscriber growth in the Company's
markets and from the inclusion of results from the Erie Acquisition for all of
1996. Consistent with industry trends, the Company's subscribers continue to
increase and at June 30, 1996 ending subscribers had grown 13.7% since December
31, 1995. However, on a per subscriber basis revenue is down slightly, due in
part to competitive market pressures and the mix of subscribers reflecting
safety and security subscribers, who typically have fewer minutes of use per
month. Roamer revenue grew by 47.4% to $2.8 million during the six months ended
June 30, 1996 compared to $1.9 million during the same period in 1995. This
increase was a result of greater volume of roaming traffic in the Existing
Systems versus the comparable 1995 period and the inclusion of the results for
Erie for 1996 after the Erie Acquisition. Roamer rates during the first half of
1996 have remained flat in comparison to the first half of 1995. Equipment sales
were flat period to period at approximately $0.7 million as retail prices of
equipment continued to decline but were offset by increased accessory sales.
Throughout the industry, to attract subscribers cellular telephone equipment is
frequently provided to subscribers at no cost as part of promotions to sell
access, airtime and cellular service. Consistent with this industry practice the
Company is selling fewer telephones, however, sales of accessories continue to
grow. Other revenue declined to $756,000 in the first six months of 1996 from
$839,000 in the comparable 1995 period as equipment rental revenue continued to
decrease as rental programs continued to be phased out.
Cost of services increased to $2.3 million during the six months ended June
30, 1996 from $1.5 million in the comparable 1995 period. Although cost of
services has increased 53.3%, subscriber revenue grew 80.6% during the same
period, which was the result of additional usage generated from a larger
subscriber base, primarily Erie, and operating efficiencies gained from the Erie
Acquisition. Cost of equipment sales increased by 17.6% to $2.0 million in the
first half of 1996 from $1.7 million in the comparable 1995 period. The primary
reasons for the rise in cost include an increased number of telephones
distributed as new subscriber acquisitions increased, the higher level of swaps
and upgrades of telephones by existing customers and the inclusion of the Erie
Acquisition. The increased cost of equipment sold resulting from the rise in
gross activations is somewhat offset by the declining cost to acquire new
telephones. General and administrative costs increased by 50.0% to $3.6 million
in the first half of 1996 from $2.4 million in the first half of 1995. This
increase is due primarily to the Erie Acquisition. Other operating costs also
generally increased as the Company grew. Selling and marketing costs grew by
over 71.4% to $2.4 million in the first six months of 1996 from $1.4 million in
the comparable 1995 period. This increase is due to a higher level of new
subscribers added period to period and the Erie Acquisition. Selling and
marketing cost (all in) per gross new subscriber decreased to $391 in the first
half of 1996 from $422 in the comparable 1995 period. Depreciation and
amortization increased to $2.5 million in the first six months of 1996 from $1.4
million in the comparable 1995 period due to the higher levels of fixed assets
purchased for system growth and the Erie Acquisition. The Company continues to
expand its systems by adding cell sites and in the first half of 1996 four new
cell sites
26
<PAGE> 28
were constructed at a cost of $0.9 million. The amortization of the Erie
cellular license also contributed $0.8 million to this increased cost.
Interest expense more than tripled to $2.6 million for the first six months
of 1996 from $0.8 million in the comparable 1995 period. This increase was
primarily a result of increased borrowings associated with the Erie Acquisition.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
For the year ended December 31, 1995, the Company's total revenue increased
to $24.6 million, which was 36.7% higher than 1994 total revenue of $18.0
million. Net income for the year ended December 31, 1995 was $2.0 million, which
was 17.6% higher than the prior year's net income of $1.7 million. EBITDA grew
to $8.4 million or 34.1% of total revenue in 1995 from $6.0 million or 33.3% of
total revenue in 1994. Subscriber revenue grew by 52.2% to $17.2 million in the
year ended December 31, 1995 from $11.3 million in the prior year as a result of
continued growth in the number of subscribers in the Existing Systems and from
the Erie Acquisition. Roamer revenue was flat year to year at $4.1 million.
During 1995, the Company reduced roaming rates in certain key areas to be more
competitive which increased its roaming traffic volume. However, the decrease in
rates was offset by the increased roaming traffic volume that occurred.
Equipment sales grew by 25.0% to $1.5 million in 1995 from $1.2 million in 1994
as the Company's retail stores continued to emphasize accessory sales and
because of increased subscriber acquisition levels somewhat offset by continued
cellular telephone promotion programs. Other revenue grew by 21.4% to $1.7
million in 1995 from $1.4 million in 1994, as the paging subscriber base
continued to increase.
Cost of services decreased by 2.9% to $3.4 million during the year ended
December 31, 1995 from $3.5 million in the prior year. This was a result of the
Company's ability to negotiate reduced roaming rates charged by its key roaming
partners. This rate reduction more than offset the additional costs associated
with increased traffic from internal growth and the Erie Acquisition. Cost of
equipment sales more than doubled to $4.2 million in 1995 from $1.6 million in
1994. The primary reasons for the rise in cost include an increased number of
phones distributed on a promotional basis to new activations, a higher level of
swaps and upgrades of phones by existing customers, the continued phase-out of
phone rental programs and the Erie Acquisition. General and administrative costs
increased 13.3% to $5.1 million in 1995 from $4.5 million in 1994. This increase
was primarily due to the Erie Acquisition, partially offset by a decrease in
personal property tax rates for public utilities.
Selling and marketing costs grew by 34.6% to $3.5 million in the year ended
December 31, 1995 from $2.6 million in the comparable 1994 period. This increase
is due to the growth of new subscribers added to the system in 1995 compared to
1994, the Erie Acquisition and increased advertising levels. Selling and
marketing cost (all in) per gross new subscriber decreased to $396 in 1995 from
$418 in 1994. Depreciation and amortization increased to $3.5 million in 1995
from $2.6 million in 1994 due to the increased fixed assets purchased for system
growth and the Erie Acquisition. In 1995, the Company spent approximately $9.1
million in capital expenditures, primarily for additional cell sites which will
enable it to further penetrate its Existing Markets and $3.0 million to convert
the acquired Erie equipment to conform with the Company's technology. The Erie
cellular license was acquired at a cost of $42.5 million resulting in $0.3
million of additional amortization expense in 1995.
Interest expense, net more than doubled to $2.6 million for the year ended
December 31, 1995 from $1.0 million in the year ended December 31, 1994. During
1995 the Company borrowed approximately $52.0 million primarily associated with
the Erie Acquisition, which resulted in additional interest expense.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
For the year ended December 31, 1994, the Company's revenue totalled $18.0
million, a 24.1% increase over 1993 total revenue of $14.5 million. Net income
for the year ended December 31, 1994 was $1.7 million, which was 13.3% higher
than the prior year net income of $1.5 million. EBITDA grew to $6.0 million or
33.3% of total revenue in 1994 from $4.5 million or 31.0% of total revenue in
1993. Subscriber revenue grew by 27.0% to $11.3 million in 1994 from $8.9
million in the prior year due primarily to the growth in the number of
subscribers. Roamer revenue increased by 32.3% to $4.1 million during 1994 from
$3.1 million in 1993 due to
27
<PAGE> 29
higher levels of roaming traffic volume, partially offset by slight reductions
in roaming rates. Throughout the industry, there was competitive pressure on
roaming rates. Equipment sales grew slightly to $1.2 million in 1994 from $1.1
million in 1993 as the Company opened two retail stores, which stimulated
accessory sales and increased subscriber acquisition levels.
Cost of services increased by 40.0% to $3.5 million during the year ended
December 31, 1994 from $2.5 million in 1993. This was a result of increased
usage levels associated with the continually growing subscriber base. Cost of
equipment sales increased by 77.8% to $1.6 million in 1994 from $0.9 million in
fiscal 1993. This was largely due to the increase in subscriber activation
levels, equipment purchases and increased accessory sales. Selling and marketing
costs grew by 18.2% to $2.6 million in the year ended December 31, 1994 from
$2.2 million in the prior year. This increase was due to a higher level of new
subscribers added in 1995 compared to 1994, despite reductions in dealer and
agent per unit costs. Selling and marketing cost (all in) per gross new
subscriber decreased to $396 in 1994 from $418 in 1993.
Depreciation and amortization increased to $2.6 million in 1994 from $2.0
million in 1993 due to the depreciation on higher levels of fixed assets
purchased for system growth. Interest expense, net increased by 42.9% to $1.0
million for the year ended December 31, 1994 from $0.7 million in 1993 primarily
associated with the purchase of a partnership interest as well as borrowings for
additional system expansion.
Other expense increased to $0.6 million in 1994 from $0.2 million in 1993
due to the write-off of obsolete subscriber equipment.
HORIZON SYSTEMS HISTORICAL RESULTS OF OPERATIONS
The following discussion and analysis is based upon information obtained
from the Horizon Companies and reflects management's current understanding of
the Horizon Systems, which the Company has not yet acquired.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Total revenues and sales increased 54.1% to $15.1 million for the six
months ended June 30, 1996 from $9.8 million for the comparable period in 1995.
Of this increase, $3.0 million was due to an increase in subscriber revenues,
$2.1 million was due to an increase in roaming revenues and $0.3 million was due
to an increase in equipment sales. The growth in subscriber revenues was due
primarily to the growth in the number of subscribers associated with continued
internal expansion as well as the acquisition of PA-2 and PA-7. The growth in
roaming revenues was due primarily to increased coverage of the licensed service
area through the construction of additional cell sites. The growth in equipment
sales was due primarily to the increase in the number of subscriber additions,
somewhat offset by continued decreases in cellular telephone equipment prices.
Consistent with industry practices, the Horizon Companies frequently sold
cellular equipment at significant discounts, resulting in a negative gross
margin. Such practices are designed to attract and retain subscribers to allow
the Horizon Companies to focus on its primary business of selling airtime,
access and other cellular services.
Cost of services increased 31.3%, to $2.1 million (13.9% of total revenues
and sales) for the six months ended June 30, 1996 from $1.6 million (16.3% of
total revenues and sales) for the comparable period in 1995. The growth in the
Horizon Companies' subscriber base and the expansion of its cellular coverage
areas led to greater cost of services, primarily in the areas of system network,
billing and administration. The decrease in cost of services as a percentage of
total revenues excluding equipment sales resulted from continued operational
efficiencies as well as the fact that certain costs are fixed in nature and are
spread over an increasing revenue base. Cost of equipment sales increased 55.6%,
to $1.4 million for the six months ended June 30, 1996 from $0.9 million for the
comparable period in 1995. The increase was due primarily to the increase in the
number of subscriber additions and their associated equipment purchases.
General and administrative expenses increased 53.3%, to $2.3 million (15.2%
of total revenues and sales) for the six months ended June 30, 1996 from $1.5
million (15.3% of total revenues and sales) for the comparable period in 1995.
The increase was due primarily to the overall growth of the Horizon Companies as
well as the acquisition of PA-2 and PA-7. The decrease in general and
administrative expenses as a percentage of total revenues and sales resulted
from efficiencies in the Horizon Companies' operations. Selling expenses
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<PAGE> 30
increased 37.5%, to $2.2 million (14.6% of total revenues and sales) for the
three months ended June 30, 1996 from $1.6 million (16.3% of total revenues and
sales) for the comparable period in 1995. The increase was due primarily to the
increase in the number of subscribers added.
EBITDA increased 69.0% to $7.1 million (47.0% of total revenues and sales)
for the six months ended June 30, 1996 from $4.2 million (42.9% of total
revenues and sales) for the comparable period in 1995, primarily as a result of
increased subscriber and roaming revenue and efficiencies in cost of services
and general and administrative expenses, as previously discussed.
Depreciation and amortization increased approximately 39.3%, to $3.9
million for the six months ended June 30, 1996 from $2.8 million for the
comparable period in 1995. The increase was primarily the result of amortization
of license costs associated with the acquisition in 1995 of PA-2 and PA-7, as
well as an increase in depreciation related to additional cellular equipment
placed into service throughout 1995 and the first quarter of 1996.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Total revenues and sales increased 64.4% to $24.5 million for the year
ended December 31, 1995 from $14.9 million in 1994. Of this increase, $5.2
million was due to an increase in subscriber revenues, $3.9 million was due to
an increase in roaming revenues and $0.5 million was due to an increase in
equipment sales. The growth in subscriber revenues was due primarily to the
growth in number of subscribers associated with continued internal expansion as
well as the acquisition of PA-2 and PA-7. The growth in roaming revenues was due
primarily to increased coverage of the licensed service area through the
addition of cell sites as well as the acquisition of PA-2 and PA-7. The growth
in equipment sales was due primarily to the increase in the number of
subscribers as noted above, somewhat offset by continued decreases in cellular
telephone equipment prices.
Cost of services increased 28.6%, to $3.6 million (14.7% of total revenues
and sales) for the year ended December 31, 1995 from $2.8 million (18.8% of
total revenues and sales) in 1994. The growth in the Horizon Companies'
subscriber base and the expansion of its cellular coverage areas has led to
greater cost of services, primarily in the areas of system network, billing and
administration. Cost of equipment sales increased 47.1%, to $2.5 million for the
year ended December 31, 1995 from $1.7 million in 1994. The increase was due
primarily to the increase in the number of subscribers and their associated
equipment purchases, as noted above.
General and administrative expenses increased 71.4% to $3.6 million (14.7%
of total revenues and sales) for the year ended December 31, 1995 from $2.1
million (14.1% of total revenues and sales) in 1994. The increase was due
primarily to the increase in the number of subscribers as well as the
acquisition of PA-2 and PA-7. The decrease in general and administrative
expenses as a percentage of total revenues and sales resulted from efficiencies
in the Horizon Companies' operations. Selling expenses increased 53.8%, to $4.0
million (16.3% of total revenues and sales) for the year ended December 31, 1995
from $2.6 million (17.4% of total revenues and sales) in 1994. The increase was
due primarily to the growth in the number of subscribers added.
EBITDA increased 86.2% to $10.8 million (44.1% of total revenues and sales)
for the year ended December 31, 1995 from $5.8 million (38.9% of total revenues
and sales) in 1994, primarily as a result of increased subscriber and roaming
revenue as noted above. Cost efficiencies, particularly in general and
administrative expenses, also contributed to the increase.
Depreciation and amortization increased 46.7%, to $6.6 million for the year
ended December 31, 1995 from $4.5 million in 1994. The increase was primarily
the result of amortization of license costs associated with the acquisition of
PA-2 and PA-7 during 1995, a full year's amortization of license cost associated
with NY-3, which was acquired during 1994, as well as an increase in
depreciation related to additional cellular equipment placed into service
throughout 1995 and 1994.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
Total revenues and sales increased 125.8% to $14.9 million for the year
ended December 31, 1994 from $6.6 million in 1993. Of this increase, $4.1
million was due to an increase in subscriber revenues, $3.6 million was due to
an increase in roaming revenues and $0.6 million was due to an increase in
equipment sales.
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<PAGE> 31
Subscriber revenues increased 151.9% to $6.8 million for the year ended December
31, 1994 from $2.7 million in 1993. The growth in subscriber revenues was due
primarily to the growth in the number of subscribers associated with continued
internal expansion as well as the acquisition of new systems. Roaming revenues
increased 109.1% to $6.9 million for the year ended December 31, 1994 from $3.3
million in 1993. The growth in roaming revenues was due primarily to an increase
in the number of systems as well as increased cell site coverage of the licensed
service area. Equipment sales increased 83.3% to $1.1 million for the year ended
December 31, 1994 from $0.6 million in 1993. The growth in equipment sales was
due primarily to the increase in the number of subscribers as noted above,
somewhat offset by continued decreases in cellular telephone equipment prices.
The Horizon Companies' frequently sold cellular equipment at significant
discounts, resulting in a negative gross margin. Such practices were designed to
attract and retain subscribers and to allow the Horizon Companies to focus on
its primary business of selling airtime, access and other cellular services.
Cost of services increased 75.0%, to $2.8 million (18.8% of total revenues
and sales) for the year ended December 31, 1994 from $1.6 million (24.2% of
total revenues and sales) in 1993. The growth in the Horizon Companies'
subscriber base and the expansion of its cellular coverage areas led to greater
cost of services, primarily in the areas of system network, billing and
administration. Cost of equipment sales increased, to $1.7 million for the year
ended December 31, 1994 from $0.7 million in 1993. The increase was due
primarily to the increase in the number of subscribers and their associated
equipment purchases, as noted above.
General and administrative expenses more than doubled to $2.1 million
(14.1% of total revenues and sales) for the year ended December 31, 1994 from
$0.8 million (12.1% of total revenues and sales) in 1993. The increase was due
primarily to the increase in the number of systems in operation throughout 1994.
Selling expenses doubled to $2.6 million (17.4% of total revenues and
sales) for the year ended December 31, 1994 from $1.3 million (19.7% of total
revenues and sales) in 1993. The increase was due primarily to the increase in
the number of systems in operation as well as the growth in number of
subscribers added.
EBITDA more than doubled to $5.8 million (38.9% of total revenues and
sales) for the year ended December 31, 1994 from $2.1 million (31.8% of total
revenues and sales) in 1993, primarily as a result of increased subscriber and
roaming revenue as noted above. Cost efficiencies, particularly in general and
administrative expenses, also contributed to the increase.
Depreciation and amortization increased to $4.5 million for the year ended
December 31, 1994 from $2.3 million in 1993. The increase was primarily the
result of amortization of license costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically relied on internally generated funds to fund
debt service and a substantial portion of its capital expenditures. Bank credit
facilities have been used for additional support of capital expenditure programs
and to fund acquisitions. The Company plans to use the $110.0 million of
proceeds of the Offering, the $20.0 million of proceeds of the Preferred Stock
Investment and approximately $133.0 million of borrowings under the Bank Credit
Facility to fund the $250.0 million Horizon Acquisition to pay the fees
associated with the above transactions and to refinance $71.5 million of
existing bank debt.
The Company projects a rapid buildout of the Horizon Systems in order to
improve coverage and increase usage. During the first 15 month period through
December 31, 1997, the Company expects to add 35 to 40 new cell sites to the
Horizon Systems, which is approximately a 50% increase over the existing 70 cell
sites. The Company also plans to continue to add cell sites in its Existing
Systems and to convert cell sites from Ericsson to Northern Telecom equipment to
more efficiently serve communities of interest that expand the existing Northern
Telecom systems in Youngstown and Erie. In addition, the Company will continue
to upgrade switches and other network equipment. Aggregate capital expenditure
levels are expected to range from approximately $25 to $30 million from the date
of the Offering through December 31, 1997.
The Company plans to use internally generated funds plus funds available
under the Bank Credit Facility to finance this capital expenditure program.
After completion of the Offering and the Horizon Acquisition, the
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<PAGE> 32
Company expects to have approximately $95.6 million in remaining revolver
availability under the Bank Credit Facility, subject to meeting certain
financial tests. See "Description of Bank Credit Facility." The Company expects
that these resources will be sufficient to meets its needs.
EFFECT OF NEW ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, which will require the Company to review
for the impairment of long-lived assets and certain identifiable intangibles to
be held and used by the Company when events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The Company adopted
the provisions of SFAS No. 121 effective January 1, 1996. The impact of adopting
SFAS No. 121 did not have a material effect on the Company's combined financial
position or results of operations.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation, which establishes a fair value based method of accounting for
stock-based employee compensation plans, including stock option plans. However,
the new standard allows compensation to continue to be measured as prescribed by
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees, but requires expanded disclosures. At this time, management
expects to account for stock options in accordance with APB Opinion No. 25. The
disclosure requirements of SFAS No. 123, which are required if an entity elects
to continue to use the accounting method in APB Opinion No. 25, will be adopted
as required for the financial statements of the Company for the year ending
December 31, 1996.
INFLATION
The Company does not believe that inflation has had a significant impact on
the Company's consolidated operations.
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<PAGE> 33
BUSINESS
GENERAL
Upon consummation of the Horizon Acquisition, the Company will own and
operate cellular telephone systems serving one large cluster with approximately
2.4 million Pops in northeastern Ohio, western Pennsylvania and western New
York. The Horizon Acquisition will add the five Horizon System RSAs to the
Existing Systems (three MSAs and one RSA), providing the Company with over
89,000 subscribers. The Company's cellular systems are located in Youngstown,
Ohio and Erie, Pennsylvania and in primarily suburban and rural areas between
the Cleveland, Akron-Canton, Pittsburgh, Buffalo and Rochester metropolitan
areas. The Company believes that its mix of suburban and rural locations
provides it with advantages over cellular operators in predominately urban
areas, including greater roaming revenue opportunities, lower distribution costs
and higher costs of entry for new competitors. The Company has converted all of
its Existing Systems to TDMA digital technology and will selectively convert the
more densely populated portions of the Horizon Systems to digital technology in
early 1997.
The Company was incorporated under the laws of the State of Ohio in August
1991. Youngstown Cellular Telephone Company, which is one of the Company's
predecessor partnerships, has operated the Youngstown system since 1985 with
substantially the same management that operates the Company today. The principal
executive offices of the Company are located at 6550-B Seville Drive, Canfield,
Ohio 44406 and its telephone number is (330) 565-1000.
CORPORATE RESTRUCTURING
To facilitate implementation of its business strategy, the Company is in
the process of being restructured, which restructuring will be completed prior
to consummation of the Offering (the "Restructuring"). Prior to the
Restructuring, SYGNET Communications, Inc., has been operating as a Close
Corporation with S corporation tax status. Its cellular business has been
operated through three partnerships: Youngstown Cellular Telephone Company, Erie
Cellular Telephone Company and Wilcom Cellular, each of which has two other
corporate partners -- Wilcom Corporation and Sharon-Youngstown Cellular, Inc. As
a result of the Restructuring, Wilcom has been merged into SYGNET
Communications, Inc. which has been renamed Sygnet Wireless, Inc. and now is a
holding company with Sharon-Youngstown, renamed Sygnet Communications, Inc., now
its wholly-owned subsidiary and the operating company. The existence of the
Youngstown Cellular Telephone Company, Erie Cellular Telephone Company and
Wilcom Cellular will automatically terminate once all partnership interests are
transferred to the Subsidiary, which will occur prior to the Offering.
Completion of the restructuring is contingent upon FCC approval of the transfer
of the FCC microwave licenses held by the partnerships.
THE HORIZON ACQUISITION
On July 11, 1996, the Company signed an agreement with the Horizon
Companies to purchase for $250.0 million in cash (subject to net working capital
adjustment) the Horizon Systems, which consist of the PA-1, PA-2, PA-6, PA-7 and
NY-3 RSAs. Under the agreement, the Company is to become the cellular licensee
serving contiguous markets representing approximately 1.3 million Pops and
covering over 16,125 square miles in western Pennsylvania and New York. The PA-2
RSA, which represents 89,400 Pops, currently operates under IOA pending the
FCC's final determination of the qualifications of the initial lottery winner to
hold the permanent license for the PA-2 RSA. While the Company is not acquiring
a permanent license for the PA-2 RSA, it is entitled to all revenue and income
generated by the cellular system until the FCC resolves the dispute. The Company
is unable to predict when or how the FCC will resolve this matter.
The four contiguous Pennsylvania RSAs to be acquired from the Horizon
Companies include 880,100 Pops and cover over 10,243 square miles in western
Pennsylvania. The New York system represents 485,200 Pops and covers over 5,882
square miles in the western portion of the state. When combined with the
Existing Systems, the Company will serve one large cluster representing
approximately 2.4 million Pops and covering 19,164 square miles. Pittsburgh and
Erie, Pennsylvania; Buffalo, Elmira and Rochester, New York; and
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<PAGE> 34
Cleveland, Akron, Canton and Youngstown, Ohio are the major urban centers
encompassed by or bordering on the Company's service area.
BUSINESS STRATEGY
The Company's goal is to become the leading full service provider of mobile
telecommunications services in its cluster by offering technically advanced
cellular service, superior coverage and a high level of customer service at
competitive prices. Specifically, the Company's business objectives are to
increase penetration and improve profitability in both the Horizon Systems and
its Existing Systems by taking advantage of its ability to operate in a much
larger regional footprint. In addition, the Company may in the future acquire
additional systems that provide the Company with the ability to further its
strategic objectives.
- Developing the Horizon Systems. The Company believes that the Horizon
Systems are underdeveloped and underpenetrated compared to its Existing
Systems and represent a substantial growth opportunity for the Company. By
taking advantage of marketing, operating and engineering synergies arising
from the Horizon Acquisition, the Company believes that it will be able to
decrease overall per subscriber operating costs and rapidly increase
penetration in the Horizon Systems to levels comparable to those achieved
in its Existing Systems. Immediately upon consummation of the Horizon
Acquisition, the Company will apply its business strategy to the Horizon
Systems, which strategy has generated significant subscriber and revenue
growth in its Existing Systems, including the Erie Acquisition in
September 1995.
- Aggressive Marketing and Promotion of Cellular Services. The Company
plans to implement aggressive marketing programs that it has been using in
its Existing Systems to increase subscriber activations in the Horizon
Systems. These include competitive rate plans which include low priced
regional roaming rates tailored for individual markets and attractive
equipment prices. In addition, the Company will use a mix of advertising
media such as television, radio and outdoor advertising to reach potential
new subscribers.
- Local Retail Outlets and Superior Customer Service. The Company strives
to provide a high level of customer service and the Company's use of local
retail stores is a key element of this local subscriber service strategy.
The Company's stores are staffed with sales and customer service
representatives who provide a more direct, specifically targeted level of
customer service than is ordinarily offered by larger competitors relying
on centralized customer service operations. By having a permanent local
retail presence, the sales staff can cultivate local market knowledge that
allows them to focus their efforts on the specific demands of the market
or markets in which they operate. This improves their ability to establish
relationships with customers, to understand the customer's needs and to
reduce churn. The sales team's ability to promote the Company's services
both inside and outside of its cluster is enhanced by its license to
market under the CELLULAR ONE(R) brand name and its continuing
participation in the NACN, a national cellular network comprised
principally of non-wireline carriers whose goal is to make cellular
service "seamless" throughout North America by facilitating automatic
roaming to and from member systems.
- Advanced Systems Design. The Company's system design and the TDMA
digital technology it employs provide the foundation for technically
superior cellular service. The Company has deployed a large number of cell
sites in each service area. Consequently, subscribers in the Existing
Systems enjoy a high level of local and regional coverage, resulting in
high quality hand-held coverage throughout most of its population centers,
minimal call blocking, seamless call delivery through NACN and the
availability of digital voice and data services. All of the Company's
existing cells have already been upgraded to offer TDMA digital services
and the Company intends to selectively improve the technology being used
in the Horizon Systems to match this high quality level. The Company
believes it is well positioned to address new technologies that might
become available in its markets.
- Decentralized Marketing Management. The Company has assembled
management, sales and operating staff with extensive experience and
relationships within each market. The decentralized market management
structure adopted by the Company allows it to tailor its service to meet
the needs of each
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market. This local approach to marketing is coordinated with senior
management of the Company and allows each market to benefit from shared
corporate resources.
- Acquisition Strategy. The Company's primary external growth strategy has
been to develop its cellular system by pursuing acquisitions that expand
its regional footprint, can be operated efficiently, enhance its
reciprocal relationships with other cellular telephone carriers and
provide an opportunity to gain significant competitive advantages. As it
has done successfully in the past, the Company intends to pursue
acquisition opportunities which permit the Company to achieve these
strategic objectives either with respect to its current cluster or
elsewhere.
- Future Competition. The Company is preparing for what is expected to be
an increasingly competitive telecommunications environment by aggressively
working to attract new subscribers. The Company believes it is prepared
for this competition because it is not dependent on high roaming or local
rates. In addition, the Company believes that it can effectively face this
competition from its position as an incumbent in the cellular field with a
high quality network that is not capacity constrained. The Company also
has an extensive footprint, strong distribution channels, superior
customer service capabilities and an experienced management team. Because
the Company operates in medium to small markets, the new PCS licensees may
be unable or unwilling to offer commercially viable wireless service in
much of the Company's area in the near term. The Company believes the
extensive capital expenditures required to deploy the infrastructure for
PCS is more readily justifiable from an economic standpoint in larger,
more densely populated urban areas. This constraint of PCS may position
the Company to offer roaming services to PCS customers, as well as to
provide bulk lines of service for resale to certain PCS companies. For
example, the Company's existing Youngstown and Erie systems are equipped
to provide TDMA digital roaming to AT&T Wireless PCS subscribers when AT&T
Wireless introduces dual band TDMA phones in the adjacent Cleveland and
Buffalo-Rochester MTAs.
CELLULAR MARKETS AND SYSTEMS
After giving effect to the Horizon Acquisition, the Company will operate in
eight license areas in northeastern Ohio and western New York and Pennsylvania.
This does not include the PA-2 IOA. The following table summarizes the Existing
Systems and the Horizon Systems. See "-- The Horizon Acquisition."
<TABLE>
<CAPTION>
DATE OF
TOTAL POPS OWNERSHIP NET POPS ACQUISITION
<S> <C> <C> <C> <C>
EXISTING SYSTEMS(1)
Youngstown, OH MSA........................... 491,900 100% 491,900 1985
Sharon, PA MSA............................... 122,100 100% 122,100 1987
Erie, PA MSA................................. 280,600 100% 280,600 1995
Columbiana, OH, OH-11 RSA.................... 111,700 100% 111,700 1991
HORIZON SYSTEMS(1)(2)
Chautauqua, NY, NY-3 RSA..................... 485,200 100% 485,200 1996
Crawford, PA, PA-1 RSA....................... 197,200 100% 197,200 1996
Lawrence, PA, PA-6 RSA....................... 376,400 100% 376,400 1996
Indiana, PA, PA-7 RSA........................ 217,100 100% 217,100 1996
McKean, PA, PA-2 RSA(3)...................... 89,400 100% 89,400 1996
--------- ---------
Total................................ 2,371,600 2,371,600
</TABLE>
- -----------------------------
(1) All of the Existing Systems and Horizon Systems licenses are non-wireline
licenses.
(2) To be acquired as described under "-- The Horizon Acquisition." The
consummation of the Offering is conditioned upon the consummation of the
Horizon Acquisition and the closing of the Preferred Stock Investment.
(3) The Horizon Acquisition includes the Pops in the PA-2 RSA where the Company
has IOA pending the FCC's final determination of the qualifications of the
initial lottery winner to hold the permanent license
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for the PA-2 RSA. The Company's IOA from the FCC will expire upon selection
of the new licensee and the commencement of operations by that licensee.
Until the expiration of the IOA, however, the Company is entitled to all
revenue and income generated by the PA-2 RSA. The Company believes that the
expiration of such authority will not have a material adverse effect on its
results of operations.
The Company's operations are conducted in a single large cluster
representing approximately 2.4 million contiguous Pops in Ohio, Pennsylvania and
New York. It spans three MSAs and six RSAs and over 19,164 square miles. The
area includes 25 counties and 479 total interstate highway miles. Eight
airports, Cleveland, Pittsburgh, Youngstown, Akron, Erie, Corning, Rochester and
Buffalo, provide access to the systems.
YOUNGSTOWN-WARREN OHIO, COLUMBIANA, OHIO AND SHARON, PENNSYLVANIA
The Youngstown, Ohio area is an important economic area for eastern Ohio
and western Pennsylvania. Located at a midway point approximately 50 miles from
both Pittsburgh and Cleveland along the Ohio Turnpike and Interstate 76, the
Youngstown market is a key roaming corridor between these two cities. Interstate
80, a major transportation access route from the Midwest to New York City, is
also a source of roaming traffic.
The median household income for the Youngstown MSA is $29,982, with 22.8%
of the population with household income in excess of $50,000. Selected major
employers in the area include Delphi Packard Electric Systems, General
Motors-Lordstown Assembly, St. Elizabeth Health Center, WCI Steel, Youngstown
State University and Youngstown Air Reserve Base. The area is also served by
Youngstown State University and Pennsylvania State University Sharon Campus. The
population of the Youngstown-Warren Metro Area has increased throughout the
1990's.
Notable cultural and recreation attractions include the Youngstown
Symphony, Butler Institute of American Art and the Youngstown-Warren LPGA
Classic. The area's proximity to Cleveland and Pittsburgh also allows residents
to enjoy the attractions of these cities, including professional sports and
additional cultural activities.
ERIE, PENNSYLVANIA
Located on Lake Erie, Erie County is noted for manufacturing,
transportation and recreation. The Port of Erie handles imports and exports
through the St. Lawrence Seaway and is supported by excellent rail service. Erie
County exports more per capita than any other Pennsylvania county. Included in
Erie County is Interstate 90, which connects Buffalo and Cleveland. Interstate
79 connects Erie and Interstate 90 directly to Pittsburgh. Both of the routes
are important roaming corridors. There are 66 total interstate highway miles in
a market comprised of 802 square miles.
The Erie County median household income is $32,363 with 24.8% of the
population having household incomes in excess of $50,000. Major Erie County
employers include General Electric, Hamot Health Foundation, St. Vincent Health
Center, Plastek Industries and Erie Insurance Group. Pennsylvania State
University at Erie, Mercyhurst College, Edinboro University of Pennsylvania and
Gannon University are located in the license area.
Travel and tourism is Erie's second largest industry with millions of
vacationers attracted annually to Presque Isle State Park and other recreational
and historical sites. Residents and visitors enjoy the Erie Philharmonic,
professional baseball and hockey and a number of zoos and museums.
PENNSYLVANIA 1
PA-1 is located between the Company's existing Erie and Sharon MSAs. The
primary population center is Meadville which is located along the 42 miles of
Interstate 79 that runs through the market. Interstate 80 also crosses the RSA,
extending east from Sharon. The market's median household income in $28,593 with
18.8% of households having income over $50,000.
Major employers include Quaker State, Penzoil and Joy Technologies.
Allegheny College is located in the region and Conneaut Lake and the Allegheny
National Forest serve as key recreation areas.
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PENNSYLVANIA 6 AND 7
The license areas of the PA-6 and PA-7 RSAs are located in the western part
of Pennsylvania just north of Pittsburgh to approximately the middle of the
state. The market is characterized by substantial levels of roaming, as it
includes significant traffic flow between its market areas and surrounding major
cities such as Pittsburgh, Pennsylvania, Youngstown, Ohio and Erie,
Pennsylvania. In particular, Butler County (located in PA-6) has a strong
community of interest with nearby Pittsburgh. Butler County contains 43% of the
RSA's total population, of which 50,000 people commute out of the county to
Pittsburgh. The population in all counties comprising both RSAs has grown during
the 1990-1995 timeframe. Butler County population experienced the greatest
growth at 7.2%. Median household income for PA-6 is $30,172 and for PA-7 is
$25,930, with 21.9% and 15.8% of households in each RSA above $50,000.
Pennsylvania State University DuBois, Clarion University of Pennsylvania and
Indiana University of Pennsylvania are examples of the educational institutions
in the area.
The major highways serving these RSAs are Interstate 79 and Interstate 80
that link the major population centers in north-central Pennsylvania. In
addition, Route 60, a recently completed toll road, serves as an expressway to
Pittsburgh International Airport. Indiana County, located in PA-7, also contains
several well-traveled state highways (Routes 119, 22 and 422) that are major
regional commuting routes for the Pittsburgh region. The are 145 combined
interstate highway miles within these RSAs.
NEW YORK 3
The NY-3 RSA is located in the western part of New York State and includes
six counties in an area that covers 5,882 square miles that represents 22.5% of
the area of New York State. It is the largest geographic RSA in the United
States. The system borders Buffalo and Rochester to the north, Erie,
Pennsylvania to the west and Binghamton/Elmira to the east. This large area
includes bedroom communities for Buffalo and Rochester, primarily in Genesee
County (61,300 Pops), strong core communities along Lake Erie and in Jamestown
in Chautauqua County (142,100 Pops) and the growing economic region of Corning
and Bath in Steuben County (100,700 Pops). Population growth statistics for the
period of 1990-1995 show that each county comprising the RSA grew, with Wyoming
County experiencing the highest growth rate of 4.0%.
Major employers include Corning, Inc., Dresser Rand and Morrison Knudsen.
The area is also home to many recreational destinations, including various lakes
such as the Finger Lakes region, portions of New York's wine country and certain
of New York's ski areas. The State University of New York at Fredonia and St.
Bonaventure are two of the colleges and universities located in the license
area. Health care services are available through WCA Hospital and Brooks
Memorial Hospital.
NY-3 is also a strong roaming market, containing 1.7 million interstate
vehicle miles and 3.6 million total highway vehicle miles. The primary
interstates are Interstate 90 (the New York Thruway) which connects Buffalo,
Rochester and Erie and yields traffic counts averaging over 21,000 cars per day
and Interstate 390 which connects Rochester, Corning and Binghamton/Elmira and
yields traffic counts averaging 9,600 cars per day (including over 15,000 cars
per day across Steuben County). Route 17, known as the Southern Tier Expressway,
is a four lane U.S. highway that traverses the entire RSA from Corning to the
Pennsylvania state line. There are 94 interstate highway miles within the area.
COMPETITORS AND ADJOINING SYSTEMS
The Company competes with various companies in each of its markets.
Management believes that the integrated network of its contiguous cellular
systems operating as CELLULAR ONE(R) affords it significant advantages over many
of its competitors. Overall, the Company competes against four distinct cellular
system operators.
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The following chart lists the Company's cellular competitors in each of its
communities of interest.
<TABLE>
<CAPTION>
MARKETS COMPETITORS
<S> <C>
Youngstown, OH MSA....................... 360 degrees Communications
Erie, PA MSA............................. GTE Mobilnet
Columbiana, OH (OH-11 RSA)............... 360 degrees Communications
Sharon, PA MSA........................... 360 degrees Communications
Crawford, PA (PA-1 RSA).................. 360 degrees Communications
Lawrence, PA (PA-6 RSA).................. Bell Atlantic/NYNEX and 360 degrees Communications
Indiana, PA (PA-7 RSA)................... Bell Atlantic/NYNEX
Chautauqua, NY (NY-3 RSA)................ Frontier
McKean, PA (PA-2 RSA).................... Bell Atlantic/NYNEX
</TABLE>
MARKETING
The systems acquired from the Horizon Companies promote their respective
cellular products and services under the name CELLULAR ONE(R), as does the
Company for its operations in the Erie vicinity. See "-- Service Marks."
CELLULAR ONE(R), the first national brand name in the cellular industry is
currently utilized in over 400 service areas throughout the United States.
CELLULAR ONE(R) ranks as the nation's most recognized cellular service provider.
The national advertising campaign conducted by the Cellular One Group enhances
the Company's advertising exposure. The Company also obtains substantial
marketing benefits from the name recognition associated with this widely used
service mark, both with existing subscribers traveling outside the Company's
service areas and with potential new subscribers moving into the Company's
service areas. In addition, travelers who subscribe to CELLULAR ONE(R) service
in other markets may be more likely to use the Company's service when they
travel in the Company's service areas. This is primarily due to the technical
operation of the cellular telephone. Cellular telephones of non-wireline
subscribers are programmed to select the non-wireline carrier (such as the
Company) when roaming, unless the subscriber either dials a special code or has
a cellular telephone equipped with an "A/B" (non-wireline/ wireline) switch and
selects the wireline carrier.
As part of its growth strategy, the Company expects to expand its use of
the CELLULAR ONE(R) name to include Youngstown, Ohio, where it currently
operates under the name "Wilcom Cellular." Several competing systems bordering
the Youngstown market historically operated under the CELLULAR ONE(R) name, thus
creating the opportunity for customer confusion. With the Horizon Acquisition,
almost all of the bordering systems using the CELLULAR ONE(R) name will be owned
by the Company, thus the need for differentiation will be eliminated. By
adopting the CELLULAR ONE(R) name, the Company will be able to leverage the
brand recognition for the mark in the sale of all its own services.
Management has also implemented its marketing strategy by training and
compensating its sales force in a manner designed to stress the importance of
customer service and high penetration levels. The Company's sales staff has a
two-tier structure. A retail sales force handles walk-in traffic and a targeted
sales staff solicits certain corporate and government subscribers. The Company's
management believes that its internal 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. As a result, the
Company's use of an internal sales force keeps marketing costs low both directly
because commissions are lower and indirectly because subscriber retention is
higher than when using independent agents.
The Company's sales force works principally out of its own retail stores in
which the Company offers a full line of cellular products and services. As of
June 30, 1996, the Company maintained four retail stores in the Youngstown area
and three in the Erie area. Horizon has 10 retail stores supporting the Horizon
Systems.
ROAMING
Roaming is an important service component for many subscribers. The Company
believes that attractively priced regional roaming is important to the
development of customers for all regional non-wireline cellular carriers.
Accordingly, where possible, the Company attempts to arrange reciprocal roaming
rates that allow customers to roam at competitive prices. The Company believes
this increases usage on all non-wireline
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systems, including the Company's. Roaming revenue is a substantial source of
incremental revenue for the Company due, in part, to the fact that a number of
the Company's cellular systems are located along major travel and commuting
corridors and because certain of the Horizon Systems are in the early stages of
their growth cycle. While there is an industry trend to reduce roaming rates,
the Company is addressing this trend through its roaming agreements which are
usually reciprocal in nature and are at or near home rates. Roaming yield for
the six months ended June 30, 1996 was $0.54 per minute, including long distance
toll charges.
The Company is also a member of NACN. NACN is the largest wireless
telephone network system in the world, linking non-wireline 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. By dialing a subscriber's cellular telephone number, the caller can
reach the subscriber without knowing his or her location or having to dial
additional roaming access numbers. In addition, special services such as call
forwarding and call waiting automatically follow subscribers as they travel.
Through its membership in NACN, the Company provides extended regional and
national service to subscribers, thereby allowing them to easily make and
receive calls while in other cellular service areas. This service distinguishes
the Company's service and call delivery features from those of some of its
competitors.
PRODUCTS AND SERVICES
In addition to providing high-quality cellular telephone service in each of
its markets, the Company also offers various custom-calling features such as
voicemail, call forwarding, call waiting, three-way conference calling and no
answer and busy transfer. The Company also sells cellular equipment at no cost
or at discount prices as a way to encourage use of its mobile services.
Several rate plans are presented to prospective customers so that they may
choose the plan that will best fit their expected calling needs. Unlike some of
its competitors, the Company designs rate plans on a market-by-market basis. The
Company's local market managers are given the ability to market from a wide
variety of existing rate plans and are encouraged to propose to the Company new
rate plans that respond to market and competitive conditions. These rate plans
include a high user plan, a medium user plan, a basic plan and an economy plan.
Most rate plans combine a fixed monthly access fee, per minute usage charges and
additional charges for custom-calling features in a package which offers value
to the customer while enhancing airtime use and revenues for the Company. In
general, rate plans that include a higher monthly access fee typically include a
lower usage rate per minute. An on-going review of equipment and service pricing
is conducted to ensure the Company's competitiveness. As appropriate, revisions
to the pricing of service plans and equipment are made to meet the demands of
the local marketplace.
CUSTOMER SERVICE
Customer service is an essential element of the Company's marketing and
operating philosophy. The Company is committed to attracting significant numbers
of new subscribers and retaining existing subscribers by providing consistently
high quality customer service and coverage. In each of its cellular service
areas, the Company maintains a local staff, including a market manager, to serve
as customer service representatives. Local offices and installation and repair
facilities enable the Company to service customers better and schedule
installations and make repairs on a timely basis.
SYSTEM DEVELOPMENT AND EXPANSION
The Company has 47 cell sites in operation in the Company's Existing
Systems and expects to add 35 to 40 new cell sites to the Horizon Systems. The
Company develops or builds out its cellular service areas by adding channels to
existing cell sites and by building new cell sites. Such development is done for
the purpose of increasing capacity and improving coverage in direct response to
projected subscriber demand and in response to actions taken by the Company's
competitors. Projected subscriber demand is calculated for each cellular service
area on a cell-by-cell basis. These projections involve a traffic analysis of
usage by existing subscribers, coverage quality analysis and an estimate of the
number of additional subscribers in each such area. In calculating projected
subscriber demand, the Company builds into its design assumptions an
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extremely low call "blockage" rate (percentage of calls that are not connected
on first attempt at peak usage time during the day). After calculating projected
subscriber demand, the Company determines the most cost-efficient manner of
meeting such projected demand. The Company has historically met such demand
through a combination of augmenting channel capacity in existing cell sites and
building new cell sites.
Cell site expansion is expected to enable the Company to continue to add
subscribers, enhance use of the systems by existing subscribers, 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 high level of coverage provided by its Existing Systems and the increased
cellular coverage it intends to attain will have a positive impact on market
penetration and subscriber usage.
In addition to its cellular operations, the Company also operates two small
paging systems in the Youngstown Area with 9,559 subscribers. Paging revenue for
the first six months of 1996 was approximately $453,000. The Company does not
view ownership of its paging systems as a significant element of its business
and does not have any plans to expand such ownership to include additional
paging systems.
DIGITAL TECHNOLOGY
The Company has selected TDMA digital for its Existing Systems. All cell
sites in the Existing Systems were converted to digital in early 1996. Each cell
site handles analog service as well. The Company's systems are also equipped to
provide cellular digital packet data ("CDPD"). Additionally, TDMA ensures the
services provided by the Company will be compatible with the cellular systems
operated by AT&T Wireless in Pittsburgh, Pennsylvania and Southwestern Bell
Mobile in Buffalo and Rochester, New York, as well as the PCS systems being
developed by AT&T Wireless in Cleveland, Ohio and Buffalo and Rochester, New
York.
The Company expects to install digital cells in the more densely populated
areas of the Horizon Systems beginning in early 1997. Horizon's existing
analog-only equipment will be redeployed when replaced with digital to improve
coverage in the more rural portions of these systems. Digital can be added to
these areas when demand for digital services or capacity warrants the added
capital costs.
SERVICE MARKS
CELLULAR ONE(R) is a federally registered service mark, owned by Cellular
One Group, a Delaware general partnership of Cellular One Marketing, Inc., a
subsidiary of Southwestern Bell Mobile Systems, Inc., together with Cellular One
Development, Inc., a subsidiary of AT&T Wireless Services, Inc. and Vanguard
Cellular Systems, Inc. The Company currently uses the CELLULAR ONE(R) service
mark to identify and promote its cellular telephone service for the Erie system
pursuant to a licensing agreement with Cellular One Group (the "Licensor").
Licensing and advertising fees are determined based upon the population of the
licensed areas. The licensing agreements require the Company 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 the Company has entered into are for
original five-year terms expiring on various dates. These agreements may be
renewed at the Company's option for three additional five-year terms. The
Company's use of the CELLULAR ONE(R) service mark will be expanded to include
the NY-3, PA-1, PA-2, PA-6 and PA-7 RSAs under licensing agreements assumed by
the Company as part of the Horizon Acquisition.
COMPANY PATENT
The Company is the owner of U.S. Patent No. 5,235,633 (the "Dennison
Patent") relating to a cellular telephone system that uses the position of a
mobile unit to make call management decisions. The Company's policy is to apply
for and obtain U.S. patents with respect to technology it has developed when
management determines that it is competitively advantageous and cost effective
to do so. The Company is currently prosecuting continuations and
continuations-in-part of the application which matured into the Dennison Patent.
The Company is unable to value the Dennison Patent or the continuations filed
with regard thereto and there is no assurance that it will ever prove to be of
any significant value.
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<PAGE> 41
EMPLOYEES AND AGENTS
As of June 30, 1996, the Company had approximately 175 employees. In
addition, as of such date the Company had agreements with numerous independent
sales agents, including car dealerships, electronics stores, paging services
companies and independent contractors. None of the Company's employees are
represented by a labor organization and the Company's management considers its
employee relations to be good.
PROPERTIES
The Company maintains its corporate headquarters in Canfield, Ohio. The
Company leases this space, which is approximately 6,000 square feet. As of June
30, 1996, the Company's cellular operations lease eight and own one 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.
LEGAL PROCEEDINGS
The Company is not currently involved in any pending legal proceedings that
individually or in the aggregate are material to the Company.
OVERVIEW OF THE CELLULAR TELEPHONE INDUSTRY
The following table sets forth information published by CTIA with respect
to the number of subscribers served by cellular telephone systems in the United
States and the combined penetration rate of such wireline and non-wireline
systems as of the dates indicated:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Subscribers (in thousands)..................... 7,500 11,000 16,000 24,000 35,000
Ending penetration(1).......................... 2.8% 4.2% 6.2% 9.2% 13.5%
</TABLE>
- -----------------------------
(1) Determined by dividing the aggregate number of subscribers by estimated
population. Rates reflect combined penetration of both wireline and
non-wireline cellular operators. CTIA estimates that the total number of
subscribers will surpass 40 million in 1996, thus yielding a penetration
rate of at least 15.4%.
Cellular telephone service is a form of telecommunications capable of
providing high quality, high capacity voice and data communications to and from
vehicle-mounted and hand-held radio telephones. Cellular telephone systems
generally offer customers the features offered by the most technologically
advanced landline telephone services. Two significant features of cellular
telephone systems are frequency reuse, which enables the simultaneous use of the
same frequency in two adequately separated cells and call handoff. A cellular
telephone system's frequency reuse and call handoff features result in highly
efficient use of available frequencies and enable cellular telephone systems to
process more simultaneous calls and service more users over a greater area than
conventional mobile telephone systems.
Cellular telephone technology is based upon the division of a given market
area into a number of smaller geographic areas or "cells." Each cell has a "base
station" or "cell site" that is equipped with a relatively low power
transmitter, a receiver and other equipment that communicates by radio signal
with cellular telephones located within range of the cell. Cells generally have
a maximum operating range of up to 25 miles, while the standard cell size is
four to ten miles in radius. Cells are typically designed on a grid, although
terrain factors, including natural and man-made obstructions, signal coverage
patterns and capacity constraints may result in irregularly shaped cells and
overlaps or gaps in coverage.
Each cell site is connected by microwave link or telephone line to a mobile
telephone switching office ("MTSO"), which, in turn, is connected to the local
landline telephone network. Because cellular communications systems are fully
interconnected with the landline telephone network and long distance systems,
customers can receive and originate both local and long-distance calls from
their cellular telephones on a worldwide basis. When a customer in a particular
cell dials a number, the cellular telephone sends the call by radio signal to
the cell's transmitter-receiver, which in turn transmits it to the MTSO. The
MTSO then
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completes the call by connecting it with the landline telephone network or
another cellular telephone unit. Incoming calls are received by the MTSO from
the landline telephone office, which instructs the appropriate cell to complete
the communications link by radio signal between the cell's transmitter-receiver
and the cellular telephone.
The MTSO and the base stations periodically monitor the signal strength of
calls in progress. The signal strength of the transmission between a subscriber
and the base station in any cell declines as the unit moves away from the base
station. When the signal strength of a call declines to a predetermined level,
the MTSO automatically determines if the signal strength is greater in an
adjacent cell and, if so, hands off the call in a fraction of a second to the
base station of the other cell. This handoff is virtually unnoticeable to the
user. If the subscriber leaves the service area of the cellular system, the call
is disconnected unless an appropriate technical interface and roaming
arrangement has been established with an adjacent system.
Cellular telephone systems operate under interconnection agreements with
various local exchange carriers ("LECs") and interexchange (long distance)
carriers. The interconnection agreements establish the manner in which the
cellular telephone system integrates with other telecommunications systems. The
cellular operator and the local landline telephone company must cooperate in the
interconnection between the cellular and landline telephone systems to permit
cellular customers to call landline customers and vice versa. The technical and
financial details of such interconnection arrangements are subject to
negotiation, vary from system to system and to the present time, generally have
not been subject to FCC regulation or oversight. However, the implementation of
the Telecommunications Act of 1996 (the "1996 Act") by the FCC is expected to
result in arrangements between cellular carriers and local exchange 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 1996 Act. While it is too soon to predict the actual effect of the FCC's
order, the Company believes that the new rules are likely to reduce the
interconnection expenses incurred by the Company.
FCC rules require that all cellular telephones be functionally compatible
with cellular telephone systems in all markets within the United States and with
all frequencies allocated for cellular use, allowing a cellular telephone to be
used wherever a customer is located, subject to appropriate arrangements for
service charges. Changes to cellular telephone numbers or other technical
adjustments to cellular telephones by the manufacturer or local cellular
telephone service businesses may be required, however, to enable the customer to
change from one cellular service provider to another within a service area.
However, the FCC recently announced that it will require LECs to implement
"number portability" in the top 100 MSAs by December 31, 1998. Number
portability allows customers to retain their telephone numbers, including
cellular telephone numbers, when they switch to another service provider. See
"-- Regulatory Overview." Cellular system operators may provide service to
roamers temporarily located in, or travelling through, their service area. The
cellular system providing service to the roamer generally receives 100% of the
revenues from such service and such roaming charges are billed to the roamer's
local service provider.
The rapid growth of the cellular customer base has begun to strain the
call-processing capacity of many existing analog systems, especially in densely
populated urban areas. Each cellular network is designed to meet a certain level
of customer density and traffic demand. Once these traffic levels are exceeded,
the operator must take steps to increase the network capacity. Capacity can be
increased initially by using techniques such as sectorization and cell
splitting. Network operators and infrastructure manufacturers are developing a
number of additional solutions which are expected to increase network capacity
and coverage.
Within certain limitations, increasing demand may be met by simply adding
available frequency capacity to cells as required, or by using directional
antennae to divide a cell into discrete multiple sectors or coverage areas (also
known as sectorization), thereby reducing the required distance between cells
using the same frequency. Furthermore, an area within a cellular telephone
system may be served by more than one cell through procedures that utilize
available channels in adjacent cells. When all possible channels are in use,
further growth can be accomplished through a process called "cell splitting."
Cell splitting entails dividing a single cell into a number of smaller cells
served by lower-power transmitters, thereby increasing the reuse factor and the
number of calls that can be handled in a given area.
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Network capacity can also be enhanced through the development of newer
network technologies like N-AMPS analog technology (which triples call carrying
capacity over conventional analog technology) and TDMA or code division multiple
access ("CDMA") digital technology (which increases call carrying capacity by an
estimated factor of 10). In each case, these advanced technologies allow
cellular carriers to add customers without degrading service quality. Digital
technology offers advantages including improved voice quality, larger system
capacity and perhaps lower incremental costs for additional customers. The
conversion from analog to digital radio technology is expected to be an
industry-wide process that will take a number of years. The Company has
installed TDMA digital technology throughout its Existing Systems and intends to
deploy it selectively in the Horizon Systems. The Company believes that its
Existing Systems have sufficient capacity to handle the Company's customer
growth rate in the near term.
COMPETITION
CELLULAR CARRIERS
Cellular carriers compete primarily against the other facilities-based
cellular carrier in each MSA and RSA market. Competition for customers between
cellular licensees is based principally upon the services and enhancements
offered, the quality of the cellular system, customer service, system coverage,
capacity and price. 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 who may be able to offer
consumers certain network advantages.
Cellular carriers also face to a lesser extent competition from Personal
Communications Service ("PCS"), Enhanced Specialized Mobile Radio ("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 expected to become more
intense.
The FCC requires that all cellular system operators must 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,
a competitor of that licensee, or both. Recently, several well-known
telecommunications companies have begun reselling cellular service as a
complement to their long distance, local telephone, paging, cable television or
Internet offerings.
NEW TECHNOLOGIES
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. PCS customers have dedicated personal telephone
numbers and communicate using small digital radio handsets that could be carried
in a pocket or purse. Many PCS licensees who 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 to this new marketplace.
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 may compete with cellular service by providing higher quality digital
communication technology, lower rates, enhanced privacy and additional features
such as electronic mail and built-in paging. ESMR handsets
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<PAGE> 44
are likely to be more expensive than cellular telephones and there may be other
differences between cellular and ESMR.
A consortium of telecommunications providers known as American Mobile
Satellite Corporation has been licensed by the FCC to provide mobile satellite
service. In addition, Motorola filed for a license from the FCC for a low-orbit
satellite system, called "Iridium," that would provide mobile communications to
subscribers throughout the world. 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 mobile
satellite systems and services. Mobile satellite systems could augment or
replace communications within land-based cellular systems.
The Company is preparing for this new competitive environment by
aggressively working to attract new subscribers, expanding its footprint and
reducing its dependency on high roaming and local rates. The Company believes
that by leveraging the above actions, it can effectively face this competition
from its position as an incumbent in the cellular field with a high quality
network and 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
PCS licensees may be unable to offer viable wireless service in many of the
Company's properties in the near term because the extensive capital expenditure
required to deploy the infrastructure for PCS are more readily justifiable from
an economic standpoint in larger, more densely populated urban areas. This may
position the Company to offer roaming services to PCS customers, as well as to
provide bulk lines of service for resale to certain PCS companies. The Company's
existing Youngstown and Erie systems are equipped to provide TDMA digital
roaming to AT&T Wireless PCS subscribers when AT&T Wireless introduces dual band
TDMA phones in the adjacent Cleveland and Buffalo-Rochester MTAs.
REGULATORY OVERVIEW
The cellular telephone 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 recently been impacted by the enactment of the
1996 Act and are currently the subject of administrative rulemakings that are
significant to the Company. Neither the outcome of these rulemakings nor their
impact upon the cellular telephone industry or the Company can be predicted at
this time. The following is a summary of the federal laws and regulations that
currently materially affect the cellular communications industry and a
description of certain state laws. This "Regulatory Overview" 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 comprised of 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. Block A licenses
initially were reserved for non-wireline entities, such as the Company, while
wireline licenses initially were reserved for entities affiliated with a
wireline telephone company. 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. Under
current FCC rules, with FCC approval, wireline and non-wireline licenses may be
transferred without restriction as to wireline affiliation, but generally, no
entity may own a substantial interest in both systems in any one MSA or RSA. The
FCC may prohibit or impose conditions on transfers of licenses.
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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 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 outside the licensee's CGSA. The five year build-out period has
expired for some licensees and the FCC has granted several "unserved area"
applications filed by parties. The Company's five year build-out period has
expired in all markets. With respect to the Youngstown and Erie systems, 100% of
the geographical area was covered by the Company prior to the expiration of the
five year build-out period. The Horizon Systems have one area that was not
covered prior to the expiration of the five year build-out period. It consists
of a portion of Forest County, Pennsylvania that has a total population of less
than 5,000. The Company does not believe the potential for a fill-in application
for this property to be significant.
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.
The Company also regularly applies for FCC authority to use additional
frequencies, to modify the technical parameters of existing licenses, to expand
its service territory and to provide new services. The Communications Act
requires prior FCC approval for transfers to or from the Company of a
controlling interest in any license or construction permit, or any rights
thereunder. 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. Under the new FCC
policy, all resale obligations for cellular, broadband PCS and ESMR operators
will terminate five years after the date that the last group of initial PCS
licenses are granted. The FCC will issue a public notice announcing commencement
of the five year sunset period. Another FCC requirement that cellular operators
provide "manual" roaming where technically possible also was recently extended
to broadband PCS and ESMR licensees. Further, the FCC recently proposed that
cellular, broadband PCS and ESMR licensees be required to offer "automatic"
roaming agreements on a nondiscriminatory basis. The FCC has also proposed that
these roaming obligations sunset five years after the last group of initial
licenses for currently allocated broadband PCS spectrum is awarded.
In addition, the FCC regulates the ancillary service offerings that
cellular licensees can provide and recently revised its rules to permit
cellular, PCS, paging and SMR licensees to offer fixed services on a 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 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 LECs, 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 to offer number portability and roaming to ported numbers by June 30,
1999. These requirements may result in added capital expenditures for the
Company to make necessary system changes.
Initial cellular licenses are generally granted for terms of up to 10
years, beginning on the date of the grant of the initial operating authority and
are renewable upon application to the FCC. 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
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<PAGE> 46
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 (i) has provided "substantial" service during its
past license term and (ii) 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 1995, the Company filed for renewal of its Youngstown license which was
originally granted by the FCC in 1985. In its application for renewal, the
Company demonstrated not only its compliance with FCC regulations, but also its
service in the public interest. That license was renewed without challenge. The
Company is confident that it has met and will continue to meet all requirements
necessary to secure renewal of its cellular licenses, including those licenses
being acquired from the Horizon Companies. The first Horizon licenses subject to
renewal will be those for PA-6 and PA-7, which expire on October 1, 2000. The
licenses for PA-1 and NY-3 expire one year later.
CHARACTER AND CITIZENSHIP REQUIREMENTS
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. The FCC also
requires licensees to comply with statutory restrictions regarding the direct or
indirect ownership or control of FCC licenses by non-U.S. persons or entities.
TELECOMMUNICATIONS ACT OF 1996
The 1996 Act, which makes significant changes to the Communications Act and
the antitrust consent decree applicable to the Regional Bell Operating Companies
("RBOCs"), affects the cellular 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 by the RBOCs' wireless systems.
The 1996 Act requires state public utilities commissions and/or the FCC to
implement policies that mandate reciprocal compensation between local exchange
carriers, a category that may, 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 1996 Act. While it is too soon to predict the actual effect of the FCC's
order, the Company believes that the new rules are likely to reduce the
interconnection expenses incurred by the Company.
The 1996 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. The 1996 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.
The 1996 Act specifically exempts all cellular carriers from the obligation
to provide equal access to interstate long distance carriers. However, the 1996
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.
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<PAGE> 47
The overall impact of the 1996 Act on the business of the Company is
unclear and will likely remain so for the foreseeable future. The Company may
benefit from reduced costs in acquiring required communications services and
facilities, such as LEC interconnection, resulting from the pro-competitive
policies of the 1996 Act. Similarly, 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 new statute relating to interconnection, telephone number
portability, equal access 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. Two of the Company's three states of
operation, Ohio and New York, still maintain nominal oversight jurisdiction,
primarily focusing upon prior approval of acquisitions and transfers and
resolution of customer complaints.
The Public Utilities Commission of Ohio (the "PUCO") has decreased
significantly its regulatory oversight of cellular companies. In accordance with
the Communications Act, cellular prices no longer require state regulatory
approval, nor will the filing of prices for cellular services be required
(detariffing), leaving the Company free to respond to market forces. The PUCO
has waived various other regulatory approval requirements and most of the
remaining regulatory filing requirements typically can be accomplished either on
a same day notice basis, or automatically after thirty days, although some
procedures still require specific regulatory approval and are not subject to any
time limits for action.
The New York Public Service Commission requires advance approvals of
acquisition and transfers of cellular companies. The Company has filed for all
necessary approvals in connection with the acquisition of the Horizon Systems
and expects to have these approvals prior to closing.
The location and construction of cellular transmitter towers and antennas
are subject to Federal Aviation Administration ("FAA") 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 MTSO
locations and must secure state certification and tariff approvals, 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. There can be 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.
Zoning and planning regulation may become more restrictive in the future as
many broadband PCS carriers are now seeking sites for network construction. The
1996 Act may provide some 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 1996 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. The FCC is required to adopt rules concerning emission standards by
early August 1996. In addition, localities are prohibited from adopting zoning
requirements that simply prohibit or have the effect of prohibiting personal
wireless services, or that discriminate between "functionally equivalent"
services. Notwithstanding these new requirements, the effectiveness of the new
law has not yet been tested 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 regulation.
FUTURE REGULATION
From time to time, legislation that potentially could affect the Company,
either beneficially or adversely, is proposed by federal or state legislators.
There can be no assurance that legislation will not be enacted by the federal or
state governments, or that regulations will not be adopted or actions taken by
the FCC or state
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<PAGE> 48
regulatory authorities that might adversely affect the business of the Company.
Changes such as the allocation by the FCC of radio spectrum for services that
compete with the Company's business could adversely affect the Company's
operating results.
RADIO FREQUENCY EMISSION CONCERNS
Media reports have suggested that certain RF emissions from cellular
telephones may be linked to cancer. Litigation concerning this issue is pending
against several other cellular operators generally alleging that the death by
cancer of a cellular system subscriber was related to such emissions. The
Company is not aware of any credible evidence linking the usage of cellular
telephones with cancer. On August 1, 1996, the FCC released a report and order
that updates the guidelines and methods it uses for evaluation on RF emissions
of radio equipment, including cellular telephones. While the FCC's new rules
impose more restrictive standards for determining acceptable levels of RF
emissions from low power devices such as portable cellular telephones, the
Company believes that all cellular telephones currently provided by the Company
to its customers already comply with the new standards.
OTHER WIRELESS OPERATIONS
In addition to its cellular operations, the Company also operates two small
paging systems in the Youngstown area. The Company also resells paging in areas
where it does not provide such services directly. These paging operations
account for less 3% of the Company's revenues. However, like its cellular
operations, the Company also provides paging services pursuant to licenses
issued by the FCC. Commercial paging systems are also deemed to be CMRS
providers. Consequently, many of the regulations applicable to the cellular
systems are also applicable to the Company's paging operations, including the
requirement to renew system licenses on a periodic basis.
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MANAGEMENT
<TABLE>
<CAPTION>
NAME AGE OFFICE
<S> <C> <C>
Warren P. Williamson, III........... 66 Director and Chairman
Albert H. Pharis, Jr................ 46 Director, President and Chief Executive Officer
Craig T. Sheetz..................... 36 Vice President, Chief Financial Officer and
Treasurer
William Zlotnick.................... 41 Vice President and Chief Operating Officer
Gregory T. Pauley................... 34 Vice President and Chief Technical Officer
Joseph D. Williamson, II............ 51 Director
Lowry A. Stewart.................... 41 Director
Raymond S. Tittle, Jr............... 66 Director
Philip N. Winkelstern............... 66 Director
</TABLE>
WARREN P. WILLIAMSON, III is the founder of the Company and has served as
Chairman and Director since the Company's inception. Prior to founding the
Company, Mr. Williamson held the positions of President and Chief Executive
Officer for WKBN Broadcasting Corporation. He presently serves as Vice Chairman
of WKBN Broadcasting Corporation. In addition to his positions with the Company,
Mr. Williamson serves as Director and as Chairman of the Executive Committee of
the Mahoning National Bank. Mr. Williamson is also Director and Chairman of the
Board of the Youngstown State University Foundation. Finally, he serves as
Director of the Association of Maximum Service Television, Inc., a trade
association representing more than 300 U.S. television stations. Mr. Williamson
is the brother of Joseph D. Williamson, II and uncle of Lowry A. Stewart.
ALBERT H. PHARIS, JR. has served as President, Chief Executive Officer and
Director of the Company since the Company's inception in 1985. During that
period, Mr. Pharis has been involved in all aspects of the Company's
development. 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.
CRAIG T. SHEETZ has served since 1990 as Vice President, Chief Financial
Officer and Treasurer of the Company. Prior to 1990, Mr. Sheetz served as
Assistant Vice President at PNC Bank and Mellon Bank where he specialized in the
media and telecommunications industries and in middle market lending.
WILLIAM ZLOTNICK is expected to be named Vice President and Chief Operating
Officer of the Company immediately following consummation of the Horizon
Acquisition. Mr. Zlotnick currently serves as Regional General Manager for
Horizon Cellular Telephone Company in Western Pennsylvania, a position he has
held since 1991. From 1986 to 1991, Mr. Zlotnick was Regional General Manager
for McCaw Cellular Communications in Pittsburgh, Pennsylvania.
GREGORY T. PAULEY is Vice President and Chief Technical Officer. Mr. Pauley
joined the Company in 1987. He served as Technical Operations Manager for the
Company from May 1990 until his promotion to Vice President in January 1995.
JOSEPH D. WILLIAMSON, II has been a Director of the Company and its
predecessor company since its inception. In 1994, after serving as Executive
Vice President of WKBN Broadcasting Corporation, Mr. Williamson became President
of WKBN Broadcasting Corporation and has continued in that position. Mr.
Williamson is the brother of Warren P. Williamson, III and the uncle of Lowry A.
Stewart.
LOWRY A. STEWART has been a Director of the Company and its predecessor
company since its inception. Since 1993, Mr. Stewart has served as Treasurer and
Director of WKBN Broadcasting Corporation, where he also has been employed as
the Production Manager since 1991. Mr. Stewart is the nephew of Warren P.
Williamson, III and Joseph D. Williamson, II.
RAYMOND S. TITTLE, JR. has been a Director of the Company since 1991. Mr.
Tittle served as President of Northwest Indiana Markets until it was sold in
1993. Mr. Tittle is currently President of Joe Tittle, Inc. and Joe Tittle &
Sons, Inc. which administer real estate and investment assets formerly owned by
Northwest Indiana Markets.
PHILIP N. WINKELSTERN has been nominated to become a Director upon
consummation of the Offering and the Horizon Acquisition. Mr. Winkelstern served
as Senior Vice President and Chief Financial Officer of
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<PAGE> 50
Commercial Intertech Corporation, a publicly held manufacturer ("CIC") prior to
his retirement in August 1995. Mr. Winkelstern also served as a Director of CIC
from July 1975 to August 1995 and is currently a Director of McDonald Steel
Corporation and Mahoning National Bank.
The Company expects to add two additional independent directors prior to or
shortly after consummation of the Offering.
COMMITTEES OF THE BOARD
The Board of Directors has established a Compensation Committee comprised
of Joseph D. Williamson, II, Lowry A. Stewart and, upon his appointment to the
Board of Directors, Philip N. Winkelstern. The Company will establish Audit and
Nomination Committees shortly after consummation of the Offering.
DIRECTOR COMPENSATION
Directors are currently not paid fees or other compensation for services
rendered as Directors of the Company. However, the Board is actively considering
plans to compensate its outside Directors and expects to institute a plan prior
to the consummation of the Offering.
EXECUTIVE COMPENSATION
The following table presents summary information concerning compensation
received by the Chief Executive Officer and each of the other executive officers
for the year ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER ANNUAL
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
<S> <C> <C> <C>
Warren P. Williamson, III................................ $223,587(1)
Chairman
Albert H. Pharis, Jr..................................... 171,990 $50,000 $2,400
President and Chief Executive Officer
Craig T. Sheetz.......................................... 85,885 25,000 4,800
Vice President, Chief Financial Officer and Treasurer
Greg T. Pauley........................................... 78,000 25,000 4,800
Vice President and Chief Technical Officer
</TABLE>
- -----------------------------
(1) Does not include salary and bonus paid by the Company for services rendered
to WKBN Broadcasting Corporation, which amount was reimbursed to the
Company by WKBN Broadcasting Corporation.
1996 STOCK OPTION PLAN
The Company has adopted a 1996 Stock Option Plan. Under the SOP, options to
purchase up to an aggregate of 1,000,000 shares of Class A Common Stock are
available for grants to employees of the Company. The SOP provides for issuance
of incentive stock options, intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended, and also nonqualified stock options.
The SOP will terminate by its terms in 2006 or earlier if so determined by the
Board of Directors.
The following tables present certain information concerning stock options
granted in 1996 to the executive officers of the Company.
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<PAGE> 51
OPTIONS GRANTED
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% TOTAL OF VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO PER PRICE APPRECIATION FOR
EMPLOYEES SHARE OPTION TERM(4)
OPTIONS IN FISCAL EXERCISE EXPIRATION -----------------------
NAME GRANTED(1)(2) YEAR(3) PRICE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Albert H. Pharis, Jr................. 225,000 38.86% $ 2006
Warren P. Williamson, III............ 100,000 17.27 2006
Craig T. Sheetz...................... 53,600 9.26 2006
Gregory T. Pauley.................... 46,800 8.08 2006
All Others........................... 153,600 26.53 2006
------------- -------
Total Options................... 579,000 100.00%
</TABLE>
- -----------------------------
(1) Options granted by Sygnet Communications, Inc. in fiscal 1995 have been
terminated in conjunction with the Restructuring. All options granted prior
to the Restructuring are not reflected in this table. No options were
exercised in fiscal 1995.
(2) Options have been granted in conjunction with the Restructuring pursuant to
the Company's SOP. All the options become exercisable on January 1, 1997
and remain exercisable in full so long as the holder thereof remains an
employee of the Company. The options further vest at the rate of twenty
percent (20%) on each anniversary thereafter, and unvested options
terminate if the holder's employment with the Company terminates.
(3) The Company has granted options representing Class A Common Stock to
employees in fiscal 1996.
(4) The amounts shown under these columns are the result of calculations at 5%
and 10% rates as required by the SEC are not intended to forecast future
appreciation of the stock price of the Class A Common Stock.
EMPLOYMENT AGREEMENTS
The Company will enter into employment agreements with Messrs. Pharis and
Williamson for an initial term of three years and with Messrs. Sheetz and Pauley
for an initial term of two years. All agreements will have automatic one-year
renewals after the initial terms expire. The executives will have initial annual
base salaries of $240,000, $240,000, $135,000 and $120,000, respectively. Each
agreement provides that if the executive officer is terminated without good
cause, as defined therein, or resigns with good cause, as defined therein, the
executive officer will be entitled to receive when due his or her base salary
and benefits for the remaining term of the agreement.
Each agreement will also provide that during the term of the agreement and
for one year thereafter, the executive officer will not, in any state in which
the Company does business or intends to do business, compete with the Company in
any way in the wireless communication business as employee, officer, director,
agent, representative, stockholder, partner, member, owner, or have any direct
or indirect financial interest in any enterprise engaged in the wireless
communications business. Provided, however, that ownership of less than 5% of
the outstanding stock of any corporation listed on a national securities
exchange and engaged in the wireless communications business is not deemed a
violation of the non-competition provision.
BONUS PLAN
The Board of Directors of the Company has instituted a cash bonus program
for executive officers for 1997 that will pay between 25% to 50% of base
salaries if certain targets are met. The criteria to be used and the specific
targets to be met by each officer will be set by the Board.
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<PAGE> 52
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Class B Common Stock as of August 30, 1996 by (i)
each director of the Company, (ii) each named executive officer of the Company,
(iii) all officers and directors as a group and (iv) each person known to the
Company to beneficially own 5% or more of any class of the Company's securities.
<TABLE>
<CAPTION>
NUMBER OF SHARES % SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
<S> <C> <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS
J.D. Williamson, II....................................... 1,867,150 30.26
Warren P. Williamson, III(2).............................. 1,487,215 24.10
Lowry A. Stewart(3)....................................... 337,720 5.47
Raymond Tittle, Jr........................................ 329,835 5.35
Albert H. Pharis.......................................... 40,275 0.65
All directors and officers as a group (7 persons)(4)...... 4,062,195 65.83
Others.................................................... -- --
OTHER 5% OWNERS
Mahoning National Bank of Youngstown(5)................... 652,135 10.57
P.O. Box 479
Trust Department
Youngstown, OH 44501
Martha J. Stewart(6)...................................... 408,400 6.62
15 Mill Trace Road
Youngstown, Ohio 44511
</TABLE>
- -----------------------------
(1) As used in this table, "beneficial ownership" means the sole or shared power
to vote or direct the voting or to dispose or direct the disposition of any
security. The Company's total issued and outstanding stock immediately
prior to the Offering is 6,170,630 shares of which all are Class B Common
Stock. Class B Common Stock is automatically converted to Class A Common
Stock upon transfer. Class A Common Stock is entitled to one vote per share
and Class B Common Stock is entitled to 10 votes per share. See
"Description of Capital Stock -- Common Stock."
(2) Includes 10,410 shares of Class B Common Stock with respect to which Warren
P. Williamson, III shares voting and investment power with his spouse,
Carol Williamson.
(3) Includes 5,845 shares of Class B Common Stock held by Lowry A. Stewart as
custodian for his daughter Kathryn A. Stewart.
(4) May include stock jointly or separately owned with or by a spouse.
(5) Represents Class B Common Stock beneficially owned by Mahoning National Bank
of Youngstown as trustee under certain Williamson family trusts.
(6) Includes 13,430 shares of Class B Common Stock held by Martha J. Stewart as
successor trustee for her niece Kathryn A. Stewart; 13,430 shares of Class
B Common Stock held by Martha J. Stewart as successor trustee for her niece
Cristina Marie Sparks-Stewart; and 12,850 shares of Class B Common Stock
held by Martha J. Stewart as successor trustee for her nephew David E.
Stewart. Ms. Stewart disclaims beneficial ownership of these shares.
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<PAGE> 53
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 5, 1995, the Company repurchased 48,197 shares of common stock
for $1.7 million in cash from W.P. Williamson, Jr. in a redemption transaction.
W.P. Williamson, Jr. was the father of Warren P. Williamson, III and Joseph D.
Williamson, II.
On December 29, 1994, the Company loaned $249,952 to Albert H. Pharis, Jr.,
the President, Chief Executive Officer and a Director of the Company to permit
Mr. Pharis to purchase stock of the Company from another shareholder. The
interest rate on the loan is 8.23% per year and the loan is to be repaid over
seven years.
The Company provided cellular telephone service during 1995 for $69,845 to
WKBN Broadcasting Corporation, a company owned by the Williamson family. Warren
P. Williamson, III, a Director and Chairman of the Company, provided consulting
services to WKBN Broadcasting Corporation and was paid $66,896 in 1995 for such
services. In 1995, Wilcom Cellular and Youngstown Cellular Telephone Company
purchased advertising services and facilities from WKBN Broadcasting Corporation
for $218,404. Warren P. Williamson, III is the Vice Chairman of WKBN
Broadcasting Corporation. Joseph D. Williamson, II, a Director of the Company,
is the President of WKBN Broadcasting Corporation. Lowry A. Stewart, a Director
of the Company, is the Treasurer and a Director of WKBN Broadcasting
Corporation.
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<PAGE> 54
DESCRIPTION OF BANK CREDIT FACILITY
The Bank Credit Facility, which will be entered into concurrently with the
Horizon Acquisition, is a senior secured reducing revolver that provides the
Subsidiary the ability to borrow up to $300.0 million from time to time.
Interest under the Bank Credit Facility accrues at a variable rate using (at the
Subsidiary's election) either a prime rate or a rate based upon the London
Interbank Offered Rate ("LIBOR"), plus in each instance a margin. The margin
ranges from 0.25% to 1.75% for the prime rate and from 1.25% to 2.75% for the
LIBOR depending upon the ratio of consolidated total indebtedness of the Company
(including the Notes) to annualized operating cash flow of the Subsidiary (with
the ratios used ranging from 4-to-1 to 10-to-1, respectively).
Until June 30, 1999, the Subsidiary is only required to make quarterly
payments of interest; on and after that date, the Subsidiary must also make
quarterly payments of principal ranging from 2% up to 7% of the amount of the
initial outstanding balance under the Bank Credit Facility. In addition, on an
annual basis beginning March 31, 2000, the Subsidiary must also make payments of
principal equal to 50% of excess cash flow for the immediately preceding fiscal
year. Each such quarterly and annual payment of principal permanently reduces
the amount of credit available for borrowing under the Bank Credit Facility, and
the final maturity date of the facility is eight and one-half years from the
closing.
The Bank Credit Facility is secured by all of the assets of the Subsidiary,
as well as by a pledge of the stock of the Subsidiary.
The Bank Credit Facility contains various financial covenants that must be
satisfied by the Subsidiary, including, without limitation, (a) a ratio of
senior indebtedness to annualized operating cash flow, (b) a ratio of
consolidated total indebtedness for the Company (including the Notes) to
annualized operating cash flow for the Subsidiary, (c) a ratio of annualized
operating cash flow to fixed charges, (d) a ratio of annualized operating cash
flow to interest expense and (e) a ratio of annualized operating cash flow to
pro forma debt service.
The Bank Credit Facility also contains certain restrictive covenants,
including, without limitation, restrictions on the ability of the Subsidiary (a)
to declare and pay dividends to the Company (for servicing the Notes and
otherwise), (b) to incur additional indebtedness, (c) to make loans and
advances, (d) to engage in transactions with the Company, (e) to transfer and
sell assets and (f) to acquire and purchase assets. The definitive credit
agreement prohibits certain changes of control of both the Company and the
Subsidiary. An Event of Default under and as defined in the Indenture will also
constitute one of the events of default under the Bank Credit Facility.
The Bank Credit Facility permits the Subsidiary to declare and pay
dividends or distributions to the Company if such dividends are used to service
the semi-annual interest payments due on the Notes, and at the time of such
dividend no material default exists under the Bank Credit Facility or would be
caused by making such dividend. If there is an Event of Default other than a
payment default, the Lenders may suspend dividends for a period not to exceed
180 days in each year. If there is a payment default, the Lenders may suspend
dividends by the Subsidiary for as long as such default exists. The stock pledge
agreement by the Company in favor of the Lenders will permit the Company to
continue making the semi-annual interest payment, notwithstanding the occurrence
of any default under the Bank Credit Facility, if funds other than funds
received from the Subsidiary are used. The stock pledge agreement will permit
the Company to make principal payments, prepayments and redemptions on the Notes
only if funds other than funds from the Subsidiary are used and no material
default then exists under the Bank Credit Facility or would be caused thereby.
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<PAGE> 55
DESCRIPTION OF NOTES
GENERAL
The Notes will be issued under the Indenture by and between the Company and
Fleet National Bank, as trustee (the "Trustee"), which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (the "Trust
Indenture Act"). The Notes are subject to all such terms, and holders of Notes
are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summaries of certain provisions of the Indenture are
summaries only, do not purport to be complete and are qualified in their
entirety by reference to all of the provisions of those documents. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Indenture. When used in this section, the term "Company" means
Sygnet Wireless, Inc. and not Sygnet Communications, Inc. or any other
subsidiary. See "-- Certain Definitions." Wherever particular provisions of the
Indenture are referred to in this summary, such provisions are incorporated by
reference as a part of the statements made and such statements are qualified in
their entirety by such reference.
RANKING
The Notes will be general unsecured obligations of the Company ranking pari
passu with all future Indebtedness of the Company, if any, that is not
subordinated to the Notes and senior to all future Indebtedness of the Company,
if any, that is subordinated to the Notes. The Notes will not be guaranteed by
the Subsidiary or any future Subsidiaries.
STRUCTURAL SUBORDINATION
The Company's operations are conducted entirely through the Subsidiary. The
Company has no assets other than the stock of the Subsidiary and has no direct
operations of any kind. As a holding company, the Company has no independent
operations and, therefore, is dependent on dividends and distributions from the
Subsidiary to meet its own obligations, including the obligations under the
Notes. Because the Subsidiary will not guarantee the payment of principal of or
interest on the Notes, holders of Notes will have no claim with respect to the
assets of the Subsidiary. As a result, the claims of holders of Notes will be
structurally subordinated to the claims of creditors of the Subsidiary,
including the lenders under the Bank Credit Facility. In addition, the Company
will pledge the stock of the Subsidiary to secure the borrowings under the Bank
Credit Facility and the Subsidiary and any other Subsidiaries will grant liens
on substantially all of their assets as security for the obligations under the
Bank Credit Facility. Because the Notes are not secured by any assets, in the
event of a dissolution, bankruptcy, liquidation or reorganization of the
Subsidiary, and holders of the Notes may receive less ratably than the secured
creditors under the Bank Credit Facility. As of June 30, 1996, after giving
effect to the Horizon Acquisition and the Related Transactions, the Subsidiary
would have had approximately $211.8 million in total outstanding liabilities
(including $204.4 million of Indebtedness under the Bank Credit Facility and
$7.4 million of trade payables and other obligations) that would be structurally
senior to the Notes. The Company is dependent upon the cash flows of the
Subsidiary to meet its obligations, including the payment of interest and
principal on the Notes. The Company's ability to receive distributions and
dividends from the Subsidiary will be limited by the provisions of the Bank
Credit Facility. See "Description of Bank Credit Facility."
PRINCIPAL, MATURITY AND INTEREST
The Notes will be unsecured, general obligations of the Company, limited in
aggregate principal amount to $110,000,000. The Notes will be issued only in
fully registered form, without coupons, in denominations of $1,000 and integral
multiples thereof.
The Notes will mature on , 2006. Interest on the Notes will accrue
at the rate of % per annum and will be payable semi-annually in arrears
on and , commencing on , 1997, to Holders of record on the
immediately preceding and . Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance.
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<PAGE> 56
The Indenture does not contain provisions which would afford Holders of the
Notes protection in the event of a decline in the Company's credit quality
resulting from highly leveraged or other similar transaction involving the
Company.
Principal of, premium, if any, and interest on the Notes will be payable,
and, subject to the following provisions, the Notes may be presented for
registration of transfer or exchange, at the office or agency of the Company
maintained for such purpose, which office or agency shall be maintained in the
Borough of Manhattan of the City of New York. At the option of the Company,
payment of interest may be made by check mailed to the Holders of the Notes at
the addresses set forth upon the registry books of the Company. No service
charge will be made for any registration of transfer or exchange of Notes, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Until otherwise designated
by the Company, the Company's office or agency will be the corporate trust
office of the Trustee presently located at 777 Main Street, Hartford,
Connecticut 06115.
OPTIONAL REDEMPTION
The Notes will not be redeemable at the Company's option prior to ,
2001. Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on
in the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2001...................................................................... %
2002...................................................................... %
2003...................................................................... %
2004...................................................................... %
2005 and thereafter....................................................... 100%
</TABLE>
Notwithstanding the foregoing, during the first 36 months after the date of
the original issuance of Notes, the Company may redeem up to an aggregate of
$38.5 million in principal amount of Notes at a redemption price of % of
the principal amount thereof, in each case plus accrued and unpaid interest
thereon to the redemption date, with the net proceeds of an offering of
Qualified Capital Stock of the Company; provided that at least $71.5 million in
aggregate principal amount of Notes remain outstanding immediately after the
occurrence of such redemption; and provided, further, that such redemption shall
occur within 30 days of the date of the closing of such offering.
If less than all of the Notes are to be redeemed at any time, selection of
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 so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates 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. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
CERTAIN COVENANTS
CHANGE OF CONTROL
The Indenture will provide that upon the occurrence of a Change of Control,
each Holder of Notes will have the right to require the Company to repurchase
all or any part (equal to $1,000 or an integral multiple
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<PAGE> 57
thereof) of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest thereon to
the date of purchase (the "Change of Control Payment").
Within 10 days following any Change of Control, the Company will mail a
notice to each Holder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase Notes pursuant to the
procedures required by the Indenture and described in such notice. The Company
will comply with the requirements of 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 connection with the repurchase of the Notes as a
result of a Change of Control.
The Change of Control Offer will remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Change of Control Offer
Period"). No later than five Business Days after the termination of the Change
of Control Offer Period (the "Change of Control Purchase Date"), the Company
will purchase all Notes tendered in response to the Change of Control Offer.
Payment for any Notes so purchased will be made in the same manner as interest
payments are made.
If the Change of Control Purchase Date is on or after an interest record
date and on or before the related interest payment date, any accrued and unpaid
interest will be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest will be
payable to Holders who tender Notes pursuant to the Change of Control Offer.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (a) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (b) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (c) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or other restructuring.
The Bank Credit Facility provides that certain change of control events
with respect to the Company and the Subsidiary would constitute a default
thereunder. Any future credit agreements or other agreements relating to which
the Company or the Subsidiary becomes a party may contain similar restrictions
and provisions. In the event a Change of Control occurs at a time when the
Company is prohibited from purchasing Notes or the Subsidiary is prohibited from
making a distribution or paying a dividend to the Company to permit such
purchase, the Company could seek the consent of its lenders or the Subsidiary
could obtain the consent of its lenders to such purchase of Notes or to such
distribution or dividend, respectively, or either company could attempt to
refinance the borrowings that contain such prohibition. If the Company or the
Subsidiary do not obtain such consents or repay such borrowings, the Company
will not be able to purchase the Notes. In such case, the Company's failure to
purchase tendered Notes would constitute an Event of Default under the
Indenture.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS
The Indenture will provide that after the Issue Date the Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, issue, create, incur, assume, guarantee or otherwise directly or
indirectly become liable for (including as a result of an acquisition), or
otherwise become responsible for, contingently or otherwise (individually or
collectively, to "Incur" or, as appropriate, an "Incurrence"), any Indebtedness.
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<PAGE> 58
Notwithstanding the foregoing, if there exists no Default or Event of
Default immediately prior and subsequent thereto, the Company may incur
Indebtedness if, after giving effect thereto, the Company's Annualized Operating
Cash Flow Ratio on a pro forma basis calculated on the assumption that such
Indebtedness had been incurred on the first day of the applicable Reference
Period, would have been less than the ratios set forth below for the calendar
year periods indicated:
<TABLE>
<CAPTION>
FOR THE PERIOD RATIO
<S> <C>
1996-1998..................................................................... 8.0x
1999 and after................................................................ 7.0x
</TABLE>
In addition, if there exists no Default or Event of Default immediately
prior and subsequent thereto, the foregoing limitations will not apply to the
Incurrence of (i) Indebtedness incurred under the Bank Credit Facility in an
aggregate amount not to exceed $300.0 million in aggregate principal amount at
any time, (ii) Indebtedness by the Company or any of its Restricted Subsidiaries
constituting Existing Indebtedness, reduced by permanent repayments of and
reductions thereof (and in commitments with respect thereto) in satisfaction of
the Net Cash Proceeds application requirement set forth in the covenant
described in "-- Limitation on Asset Sales and Sales of Subsidiary Stock" and by
repayments and permanent reductions in amounts outstanding pursuant to scheduled
amortizations and mandatory prepayments in accordance with the terms thereof,
(iii) Indebtedness by the Company evidenced by the Notes, (iv) Permitted
Acquisition Indebtedness, (v) Indebtedness between the Company and any
Restricted Subsidiary of the Company or between Restricted Subsidiaries of the
Company, provided that, in the case of Indebtedness incurred by the Company,
such obligations shall be unsecured and subordinated in all respects to the
Holders' rights pursuant to the Notes, (vi) Capitalized Lease Obligations and
Purchase Money Indebtedness in an aggregate amount or aggregate principal
amount, as the case may be, outstanding at any time not to exceed in the
aggregate $15.0 million, and (vii) Refinancing Indebtedness Incurred to extend,
renew, replace or refund Indebtedness permitted under clauses (ii) (as so
reduced in amount) and (iii) of this paragraph.
Indebtedness of any Person that is not a Restricted Subsidiary of the
Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company.
LIMITATION ON RESTRICTED PAYMENTS
The Indenture will provide that after the Issue Date the Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment, if, immediately prior or after giving
effect thereto on a pro forma basis, (a) a Default or an Event of Default would
occur or be continuing, (b) the Company's Annualized Operating Cash Flow Ratio
for the Reference Period would have exceeded 6 to 1, or (c) the aggregate amount
of all Restricted Payments made by the Company and its Restricted Subsidiaries,
including such proposed Restricted Payment (if not made in cash, then the fair
market value of any property used therefor) from and after the Issue Date and on
or prior to the date of such Restricted Payment, shall exceed the sum of (i) the
amount determined by subtracting (x) 2.0 times the aggregate Consolidated
Interest Expense of the Company for the period (taken as one accounting period)
from the Issue Date to the last day of the last full fiscal quarter prior to the
date of the proposed Restricted Payment (the "Computation Period") from (y)
Operating Cash Flow of the Company for the Computation Period, plus (ii) the
aggregate Net Proceeds received by the Company from the sale (other than to a
Subsidiary of the Company) of its Qualified Capital Stock after the Issue Date
and on or prior to the date of such Restricted Payment.
Notwithstanding the foregoing, the provisions set forth in clause (b) or
(c) of the immediately preceding paragraph will not prohibit (i) the use of an
aggregate of $10.0 million to be used solely for Investments in Unrestricted
Subsidiaries or Non-Recourse Restricted Subsidiaries, (ii) the payment of any
dividend within 60 days after the date of its declaration if such dividend could
have been made on the date of its declaration in
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<PAGE> 59
compliance with the foregoing provisions, (iii) the redemption, defeasance,
repurchase or other acquisition or retirement of any Indebtedness or Capital
Stock of the Company or its Restricted Subsidiaries either in exchange for or
out of the Net Proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of Qualified Capital Stock of the Company or (iv) the
redemption, repurchase or other acquisition or retirement of the Preferred Stock
for an aggregate price not to exceed $25.0 million if, after giving effect
thereto on a pro forma basis, the Company's Annualized Operating Cash Flow Ratio
for the Reference Period would have been less than 7.5 to 1.
LIMITATION ON RESTRICTED SUBSIDIARY DIVIDENDS
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, assume or
suffer to exist any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company to pay dividends or make other
distributions on the Capital Stock of any Restricted Subsidiary of the Company
or pay or satisfy any obligation to the Company or any of its Restricted
Subsidiaries or otherwise transfer assets or make or pay loans or advances to
the Company or any of its Restricted Subsidiaries, except encumbrances and
restrictions existing under (i) the Indenture and the Notes or Refinancing
Indebtedness incurred to refinance the Notes; provided, that such encumbrances
and restrictions are no more restrictive than those contained in the Indenture
as in effect on the Issue Date, (ii) the Bank Credit Facility as in effect on
the Issue Date, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof;
provided that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more restrictive
with respect to such dividend and other payment restrictions than those
contained in the Bank Credit Facility as in effect on the Issue Date, (iii) any
agreement of a Person acquired by the Company or a Restricted Subsidiary of the
Company, which restrictions existed at the time of acquisition, were not put in
place in anticipation of such acquisition and are not applicable to any person
or property, other than the Person or any property of the Person so acquired.
Notwithstanding the foregoing, customary provisions restricting subletting or
assignment of any lease entered into the ordinary course of business, consistent
with past practices shall not in and of themselves be considered a restriction
on the ability of the applicable Restricted Subsidiary to transfer such
agreement or assets, as the case may be.
LIMITATION ON TRANSACTIONS WITH RELATED PERSONS
The Indenture will provide that, after the Issue Date, the Company will
not, and will not permit any of its Restricted Subsidiaries or Unrestricted
Subsidiaries to, enter into any contract, agreement, arrangement or transaction
with any Related Person (each a "Related Person Transaction"), or any series of
Related Person Transactions, except for transactions made in good faith, the
terms of which are (i) fair and reasonable to the Company or such Subsidiary, as
the case may be, and (ii) are at least as favorable as the terms which could be
obtained by the Company or such Subsidiary, as the case may be, in a comparable
transaction made on an arm's length basis with Persons who are not Related
Persons.
Without limiting the foregoing, (a) any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of $1.0
million must first be approved by a majority of the Board of Directors of the
Company who are disinterested in the subject matter of the transaction pursuant
to a Board Resolution, and (b) with respect to any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of $5.0
million, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
Notwithstanding the foregoing, any contract, agreement, arrangement or
transaction solely between or among the Company and any of its Wholly Owned
Restricted Subsidiaries or between or among Wholly Owned Restricted Subsidiaries
of the Company is not a Related Person Transaction.
LIMITATION ON ASSET SALES AND SALES OF SUBSIDIARY STOCK
The Indenture will provide that after the Issue Date the Company will not,
and will not permit any of its Restricted Subsidiaries to, in one transaction or
a series of related transactions, convey, sell, transfer, assign or
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<PAGE> 60
otherwise dispose of, directly or indirectly, any of its property, business or
assets, including any sale or other transfer or issuance of any Capital Stock of
any Restricted Subsidiary of the Company, whether owned on the Issue Date or
thereafter acquired (an "Asset Sale") unless (a) such Asset Sale is for fair
market value as determined by the Board of Directors of the Company acting
reasonably and in good faith, (b) at least 80% of the value of the consideration
for such Asset Sale consists of (i) cash, (ii) the assumption by the transferee
of pari passu Indebtedness or (iii) notes, obligations or other marketable
securities (collectively "Marketable Securities") that are immediately converted
into cash and (c) the Net Cash Proceeds therefrom are applied on or prior to 360
days after the date of such Asset Sale (i) to the permanent repayment of
Indebtedness under the Bank Credit Facility (which payment reduces the
commitment thereunder) or (ii) to the repurchase of the Notes pursuant to an
offer to purchase (an "Asset Sale Offer") described below or (iii) to an
investment in a Related Business.
Notwithstanding the foregoing provisions of the prior paragraph:
(i) any Restricted Subsidiary of the Company may convey, sell, lease,
transfer or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or a Restricted Subsidiary of the
Company;
(ii) the Company and its Restricted Subsidiaries may, in the ordinary
course of business, (A) convey, sell, lease, transfer, assign or otherwise
dispose of assets in the ordinary course of business and (B) exchange
assets for assets in Related Businesses;
(iii) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with the covenant described in "-- Limitation on Mergers, Sales
or Consolidations";
(iv) the Company and its Restricted Subsidiaries may (a) sell damaged,
worn out or other obsolete property in the ordinary course of business or
other property no longer necessary for the proper conduct of the business
of the Company or any of its Restricted Subsidiaries, or (b) abandon such
property if it cannot, through reasonable efforts, be sold; and
(v) the Company may transfer the assets that it acquires in the
Horizon Acquisition to the Subsidiary after the Issue Date.
The Indenture will provide that an Asset Sale Offer may be deferred until
the accumulated Net Cash Proceeds not applied to the uses set forth in
subsections (c)(i) or (c)(iii) in the first paragraph exceeds $5.0 million. An
Asset Sale Offer will remain open for a period of 20 Business Days following its
commencement and no longer, except to the extent that a longer period is
required by applicable law (the "Asset Sale Offer Period"). No later than five
Business Days after the termination of the Asset Sale Offer Period (the "Asset
Sale Purchase Date"), the Company will purchase the principal amount of Notes
required to be purchased pursuant to this covenant (the "Asset Sale Offer
Amount") or, if less than the Asset Sale Offer Amount has been tendered, all
Notes tendered in response to the Asset Sale Offer. Payment for any Notes so
purchased will be made in the same manner as interest payments are made.
If the Asset Sale Purchase Date is on or after an interest record date and
on or before the related interest payment date, any accrued and unpaid interest
will be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest will be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
On or before the Asset Sale Purchase Date, the Company will, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Asset Sale Offer Amount of Notes or portions thereof tendered pursuant to the
Asset Sale Offer, or if less than the Asset Sale Offer Amount has been tendered,
all Notes tendered, and will deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this covenant. The Company, the
Depository or the Paying Agent, as the case may be, will promptly (but in any
case not later than five days after the Asset Sale Purchase Date) mail or
deliver to each tendering Holder an amount equal to the purchase price of the
Notes tendered by such Holder and accepted by the Company for purchase, and the
Company will promptly issue a new Note, and the Trustee, upon written request
from the Company will authenticate and mail or deliver such new Note to such
Holder, in a principal amount equal to any unpurchased portion of the
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<PAGE> 61
Note surrendered. Any Note not so accepted will be promptly mailed or delivered
by the Company to the Holder thereof. The Company will publicly announce the
results of the Asset Sale Offer on the Asset Sale Purchase Date.
LIMITATIONS ON LIENS
The Indenture will provide that the Company will not and will not permit
any Restricted Subsidiary, directly or indirectly, to Incur or suffer to exist
any Lien (other than Permitted Liens) upon any of its property or assets,
whether now owned or hereafter acquired.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture will provide that the Company will not consolidate with or
merge with or into another Person, or sell, lease, convey, transfer or otherwise
dispose of all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another Person or group of affiliated Persons, unless: (i) immediately after
giving effect to such transaction on a pro forma basis, the consolidated
resulting surviving or transferee entity would immediately thereafter be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Annualized Operating Cash Flow Ratio provision set forth in the second paragraph
of the covenant described in "-- Limitation on Incurrence of Additional
Indebtedness;" (ii) immediately thereafter, no Event of Default (and no event
which, after notice or lapse of time or both, would become an Event of Default)
shall have occurred and be continuing; (iii) either (a) the Company is the
surviving entity or (b) the resulting, surviving or transferee entity (if other
than the Company) is a corporation organized under the laws of the United
States, any state thereof or the District of Columbia and expressly assumes by
supplemental indenture all of the obligations of the Company in connection with
the Notes and the Indenture, including the punctual payment of the principal of,
and premium, if any, and interest on the Notes and the performance and
observance of every covenant of the Indenture on the part of the Company to be
performed; and (iv) the Company shall have delivered to the Trustee an Officers'
Certificate confirming compliance with the requirements of this covenant.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under the Indenture with the
same effect as if such successor corporation had been named therein as the
Company.
REPORTS
The Indenture will provide that whether or not the Company is subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act of 1934,
as amended (the "Exchange Act"), the Company shall deliver to the Trustee and to
each Holder, within 15 days after it is or would have been required to file such
with the SEC, annual and quarterly financial statements substantially equivalent
to financial statements that would have been included in reports filed with the
SEC, if the Company were subject to the requirements of Section 13 or 15(d) of
the Exchange Act, including, with respect to annual information only, a report
thereon by the Company's certified independent public accountants as such would
be required in such reports to the SEC, and in each case, together with a
management's discussion and analysis of financial condition and results of
operations which would be so required.
EVENTS OF DEFAULT AND REMEDIES
The Indenture will provide that each of the following constitutes an Event
of Default: (i) default for 30 days in the payment when due of interest on the
Notes; (ii) default in payment when due of the principal of or premium, if any,
on the Notes; (iii) failure by the Company to comply with the provisions
described under the captions "-- Change of Control," "-- Asset Sales,"
"-- Limitation on Restricted Payments" or "-- Limitation on Incurrence of
Additional Indebtedness"; (iv) failure by the Company for 30 days after notice
to comply with any of its other agreements in the Indenture or the Notes; (v)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Subsidiaries (or the payment of which is
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<PAGE> 62
guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness
or guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
provided such Event of Default shall not occur until 90 days after such Payment
Default, or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (vi) failure by the Company or
any of its Subsidiaries to pay final judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a period of 60
days; and (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
, 2001 by reason of any willful action (or inaction) taken (or not taken)
by or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to , 2001, then the premium
specified in the Indenture for optional redemptions shall also become
immediately due and payable to the extent permitted by law upon the acceleration
of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
on such Notes when such payments are due from the trust referred to below, (ii)
the Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee, and the Company's obligations in connection therewith and (iv) the
Legal Defeasance provisions of the Indenture. In addition, the Company may, at
its option and at any time, elect to have the obligations of the Company
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Notes. In
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the event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance: (i)
the Company must irrevocably deposit with the Trustee, in trust for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on the outstanding Notes
on the stated maturity or on the applicable redemption date, as the case may be,
and the Company must specify whether the Notes are being defeased to maturity or
to a particular redemption date; (ii) in the case of Legal Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred; (iii) in the
case of Covenant Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the date
of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under any material agreement
or instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company must have delivered to the Trustee an opinion of counsel
to the effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; (vii) the
Company must deliver to the Trustee an Officers' Certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders of
Notes over the other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others; and (viii)
the Company must deliver to the Trustee an Officers' Certificate and an opinion
of counsel, each stating that all conditions precedent provided for relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
AMENDMENTS AND SUPPLEMENTS
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver; (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the optional redemption of the Notes;
(iii) reduce the rate of or change the time for payment of interest on any Note;
(iv) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the
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payment default that resulted from such acceleration); (v) make any Note payable
in money other than that stated in the Notes; (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of Holders of Notes to receive payments of principal of or premium, if any, or
interest on the Notes; (vii) waive a redemption payment with respect to any Note
(other than a payment required by one of the covenants described above under the
caption "-- Change of Control;" or "-- Asset Sales"); or (viii) make any change
in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture will provide that no direct or indirect stockholder,
employee, officer or director, as such, past, present or future of the Company
or any successor entity shall have any personal liability in respect of the
obligations of the Company under the Indenture or the Notes by reason of his or
its status as such stockholder, employee, officer or director.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms to be contained in
the Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms and herein for which no definition is
provided.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer,
director, or controlling stockholder of such other Person. For purposes of this
definition, the term "control" means (a) the power to direct the management and
policies of a Person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract, or otherwise, or (b)
without limiting the foregoing, the beneficial ownership of 10% or more of the
voting power of the voting common equity of such Person (on a fully diluted
basis) or of warrants or other rights to acquire such equity (whether or not
presently exercisable).
"Annualized Operating Cash Flow" on any date, means with respect to any
Person the Operating Cash Flow for the Reference Period multiplied by four.
"Annualized Operating Cash Flow Ratio" on any date (the "Transaction Date")
means, with respect to any Person and it Subsidiaries, the ratio of (i)
consolidated Indebtedness of such Person and its Subsidiaries on the Transaction
Date (after giving pro forma effect to the Incurrence of such Indebtedness)
divided by (ii) the aggregate amount of Annualized Operating Cash Flow of such
Person (determined on a pro forma basis after giving effect to all dispositions
of businesses made by such Person and its Subsidiaries from the beginning of the
Reference Period through the Transaction Date as if such disposition has
occurred at the beginning of such Reference Period); provided, that for purposes
of such computation, in calculating Annualized Operating Cash Flow and
consolidated Indebtedness: (a) the transaction giving rise to the need to
calculate the Annualized Operating Cash Flow Ratio will be assumed to have
occurred (on a pro forma basis) on the first day of the Reference Period; (b)
the incurrence of any Indebtedness during the Reference Period or subsequent
thereto and on or prior to the Transaction Date (and the application of the
proceeds therefrom to the extent used to retire Indebtedness) will be assumed to
have occurred (on a pro forma basis) on the first day of such Reference Period;
(c) Consolidated Interest Expense attributable to any Indebtedness (whether
existing or being incurred) bearing a floating interest rate shall be computed
as if the rate in effect on the Transaction Date had been the applicable rate
for the entire period; and (d) all members of the consolidated group of such
Person on the Transaction Date that were acquired during the Reference Period
shall be deemed to be members of the consolidated group of such Person for the
entire Reference Period. When the
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foregoing definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Bank Credit Facility" means, so long as there is Indebtedness under, or
the borrower has the ability to borrow thereunder, the Credit Agreement dated as
of , 1996, among Sygnet Communications, Inc., as the borrower, the
financial institutions which are parties thereto as lenders, PNC Bank, National
Association and The Toronto-Dominion Bank as managing agents and syndication
agents, The Toronto-Dominion Bank as the administrative agent, and PNC Bank,
National Association, as the documentation agent and the collateral agent, or
any other credit facility or loan agreement designated by the Company to be the
"Bank Credit Facility," as such Credit Agreement or other credit facility or
loan agreement may be amended, modified, restated, renewed, increased,
supplemented, refunded, replaced or refinanced from time to time. There can be
only one such credit facility or loan agreement designated to be the "Bank
Credit Facility" at any one time.
"Business Day" means any day other than a Legal Holiday.
"Capitalized Lease Obligations" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Capital Stock" means, with respect to any Person, any capital stock of
such Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights (other than debt securities
convertible into capital stock), warrants and options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
"Cash Equivalents" means (i) Securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within one year after the date of acquisition and (iii) investments in money
market funds substantially all of whose assets comprise securities of the types
described in clauses (i) and (ii) above.
"Change of Control" means (i) any sale, transfer or other conveyance,
whether direct or indirect, of a majority of the fair market value of the assets
of the Company, on a consolidated basis, in one transaction or a series of
related transactions, if, immediately after giving effect to such transaction,
any "person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable), other than an
Excluded Person or Excluded Group, is or becomes the "beneficial owner" (as such
term is used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly
or indirectly, of more than 50% of the total voting power in the aggregate
normally entitled to vote in the election of directors, managers, or trustees,
as applicable, of the transferee, (ii) any "person" or "group" (as such terms
are used for purposes of Section 13(d) and 14(d) of the Exchange Act, whether or
not applicable), other than an Excluded Person or Excluded Group, is or becomes
the "beneficial owner" (as such term is used in Rule 13d-3 promulgated pursuant
to the Exchange Act), directly or indirectly, of more than 50% of the total
voting power in the aggregate of all classes of Capital Stock of the Company
then outstanding normally entitled to vote in elections of directors, or (iii)
during any period of 12 consecutive months after the Issue Date, individuals who
at the beginning of any such 12-month period constituted the Board of Directors
of the Company (together with any new directors whose election by such Board or
whose nomination for election by the shareholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
"Consolidated Interest Expense" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized,
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paid, accrued, or scheduled to be paid or accrued (including, in accordance with
the following sentence, interest attributable to Capitalized Lease Obligations)
of such Person and its consolidated Subsidiaries during such period, including
(i) original issue discount and non-cash interest payments or accruals on any
Indebtedness, (ii) the interest portion of all deferred payment obligations, and
(iii) all commissions, discounts and other fees and charges owed with respect to
bankers' acceptances and letters of credit financings and currency and Interest
Swap and Hedging Obligations, in each case to the extent attributable to such
period, and (b) the amount of dividends accrued or payable by such Person or any
of its consolidated Subsidiaries in respect of Preferred Stock (other than by
Restricted Subsidiaries of such Person to such Person or such Person's Wholly
Owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed. When the
foregoing definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Consolidated Net Income" of any Person for any period means the net income
(or loss) of such Person and its consolidated Subsidiaries for such period,
determined (on a consolidated basis) in accordance with GAAP, adjusted to
exclude (only to the extent included in computing such net income (or loss), and
without duplication (i) all extraordinary gains and losses and gains and losses
that are nonrecurring (including as a result of Asset Sales outside the ordinary
course of business), (ii) the net income, if positive, of any Person, that is
not a Subsidiary in which such Person or any of its Subsidiaries has an
interest, except to the extent of the amount of dividends or distributions
actually paid to such Person or a Subsidiary of such Person that both (x) are
actually paid in cash to such Person or a Subsidiary of such Person during such
period and (y) when taken together will all other dividends and distributions
paid during such period in cash to such Person or a Subsidiary of such Person,
are not in excess of such Person's pro rata share of such other Person's
aggregate net income earned during such period, (iii), except as provided in the
definition of "Annualized Operating Cash Flow Ratio," the net income (or loss)
of any Subsidiary acquired in a pooling of interests transaction for any period
prior to the date of such acquisition and (iv) the net income, if positive, of
any Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation of
the terms of its charter or any agreement or instrument applicable to such
Subsidiary. When the foregoing definition is used in connection with the Company
and its Restricted Subsidiaries, references to a Person and its Subsidiaries in
the foregoing definition shall be deemed to refer to the Company and its
Restricted Subsidiaries.
"Default" means any event or condition that is, or after notice or passage
of time or both would be, an "Event of Default."
"Disqualified Capital Stock" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of any event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated Maturity
of the Notes; provided that Capital Stock will not be deemed to be Disqualified
Capital Stock if it may only be redeemed or repurchased solely in consideration
of Qualified Capital Stock of the Company.
"Excluded Group" means a "group" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) that includes one or more Excluded Persons;
provided that the voting power of the Capital Stock of the Company "beneficially
owned" (as such term is used in Rule 13d-3 promulgated under the Exchange Act)
by such Excluded Persons (without attribution to such Excluded Persons of the
ownership by other members of the "group") represents a majority of the voting
power of the Capital Stock "beneficially owned" (as such term is used in Rule
13d-3 promulgated under the Exchange Act) by such group.
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"Excluded Person" means the members of the Williamson family who owned
Capital Stock of the Company on the Issue Date and any wholly owned Affiliate of
any of the foregoing that is wholly owned by one of the foregoing.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or in such other statements by
such other entity as approved by a significant segment of the accounting
profession which are in effect in the United States; provided, however, that for
purposes of determining compliance with covenants in the Indenture, "GAAP" means
such generally accepted accounting principles as in effect as of the Issue Date.
"Holder" means a Person in whose name a Note is registered. The Holder of a
Note will be treated as the owner of such Note for all purposes.
"Horizon Acquisition" means the acquisition of assets made pursuant to the
Asset Acquisition Agreement, dated July 11, 1996, among the Company, 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.
"Indebtedness" of any Person means, without duplication: (a) all
liabilities and obligations, contingent or otherwise, of such Person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors
which have remained unpaid for greater than 90 days past their original due date
or to financial institutions, which obligations are not being contested in good
faith and for which appropriate reserves have been established) those incurred
in the ordinary course of its business that would constitute ordinarily a trade
payable to trade creditors, (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) for the payment of money relating
to a Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(b) all obligations of such Person under Interest Swap and Hedging Obligations;
(c) all liabilities of others of the kind described in the preceding clauses (a)
or (b) that such Person has guaranteed or that is otherwise its legal liability
or which are secured by any assets or property of such Person and all
obligations to purchase, redeem or acquire any Capital Stock; (d) all
Disqualified Capital Stock of such Person and all Preferred Stock of such
Person's Subsidiaries; and (e) any and all deferrals, renewals, extensions,
refinancing and refundings (whether direct or indirect) of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (a), (b), (c), or (d) or this clause (e), whether or not
between or among the same parties; provided that the outstanding principal
amount at any date of any Indebtedness issued with original issue discount is
the face amount of such Indebtedness less the remaining unamortized portion of
the original issue discount of such Indebtedness at such date.
"Interest Swap and Hedging Obligations" means any obligations of any Person
pursuant to any interest rate swaps, caps, collars and similar arrangements
providing protection against fluctuations in interest rates. For purposes of the
Indenture, the amount of such obligations shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such obligation had terminated at the
end of such fiscal quarter, and in making such determination, if any agreement
relating to such obligation provides for the netting of amounts payable by and
to such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount of
such obligations shall be the net amount so determined, plus any premium due
upon default by such Person.
"Investment" by any Person in any other Person means (without duplication):
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such Person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
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interests or other securities of such other Person or any agreement to make any
such acquisition; (b) the making by such Person of any deposit with, or advance,
loan or other extension of credit to, such other Person (including the purchase
of property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such other Person) or any
commitment to make any such advance, loan or extension; (c) the entering into by
such Person of any guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of such other Person; (d) the making of any
capital contribution by such Person to such other Person; and (e) the
designation by the Board of Directors of the Company of any Person to be an
Unrestricted Subsidiary. For purposes of the covenant described in
"-- Limitation on Restricted Payments," (i) "Investment" shall include and be
valued at the fair market value of the net assets of any Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary and shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary and (ii) the amount of any Investment shall
be the fair market value of such Investment plus the fair market value of all
additional Investments by the Company or any of its Restricted Subsidiaries at
the time any such Investment is made; provided that, for purposes of this
sentence, the fair market value of net assets in excess of $5,000,000 shall be
as determined by an independent appraiser of national reputation.
"Issue Date" means the time and date of the first issuance of the Notes
under the Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest and
any option or other agreement to give any security interest).
"Maturity Date" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of the Indenture regarding acceleration of
Indebtedness or any Change of Control Offer or Asset Sale Offer).
"Net Cash Proceeds" means the aggregate amount of cash and Cash Equivalents
received by the Company and its Restricted Subsidiaries in respect of an Asset
Sale (including upon the conversion to cash and Cash Equivalents of (a) any note
or installment receivable at any time, or (b) any other property as and when any
cash and Cash Equivalents are received in respect of any property received in an
Asset Sale but only to the extent such cash and Cash Equivalents are received
within one year after such Asset Sale), less the sum of (i) all reasonable
out-of-pocket fees, commissions and other expenses incurred in connection with
such Asset Sale, including the amount (estimated in good faith by the Board of
Directors of the Company) of income, franchise, sales and other applicable taxes
required to be paid by the Company or any Restricted Subsidiary of the Company
in connection with such Asset Sale and (ii) the aggregate amount of cash so
received which is used to retire any existing Indebtedness of its Restricted
Subsidiaries, as the case may be, which is required to be repaid in connection
with such Asset Sale or is secured by a Lien on the property or assets of the
Company or any of its Restricted Subsidiaries, as the case may be.
"Net Pops" of any Person with respect to any System means the Pops of the
MSA or RSA served by such System multiplied by the direct and/or indirect
percentage interest of such Person in the entity licensed or designated to
receive an authorization by the Federal Communications Commission to construct
or operate a system in that MSA or RSA.
"Net Proceeds" means the aggregate net proceeds (including the fair market
value of non-cash proceeds constituting equipment or other assets of a type
generally used in a Related Business in an amount reasonably determined by the
Board of Directors of the Company for amounts under $5,000,000 and by a
financial advisor or appraiser of national reputation for equal or greater
amounts) received by a Person from the sale of
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Qualified Capital Stock (other than to a Subsidiary of such Person) after
payment of out-of-pocket expenses, commissions and discounts incurred in
connection therewith.
"Obligation" means any principal, premium, interest (including interest
accruing subsequent to a bankruptcy or other similar proceeding whether or not
such interest is an allowed claim enforceable against the Company in a
bankruptcy case under Federal bankruptcy law), penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable pursuant
to the terms of the documentation governing any Indebtedness.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Operating Cash Flow" for any Person for any period means (a) the
Consolidated Net Income of such Person for such period, plus (b) the sum,
without duplication (and only to the extent such amounts are deducted from net
revenues in determining such Consolidated Net Income), of (i) the provisions for
income taxes for such period for such Person and its consolidated Subsidiaries,
(ii) depreciation, amortization and other non-cash charges of such Person and
its consolidated Subsidiaries and (iii) Consolidated Interest Expense of such
Person for such period, determined, in each case, on a consolidated basis for
such Person and its consolidated Subsidiaries in accordance with GAAP, less (c)
the sum, without duplication (and only to the extent such amounts are included
in such Consolidated Net Income) of (i) all extraordinary gains of such Person
and its consolidated Subsidiaries during such period and (ii) the amount of all
cash payments made during such period by such Person and its Subsidiaries to the
extent such payments relate to non-cash charges that were added back in
determining Operating Cash Flow for such period or for any prior period. When
the foregoing definition is used in connection with the Company and its
Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Permitted Acquisition Indebtedness" means, with respect to any Person,
Indebtedness Incurred in connection with the acquisition of property, businesses
or assets which, or Capital Stock of a Person all or substantially all of whose
assets, are of a type generally used in a Related Business; provided that, in
the case of the Company or its Restricted Subsidiaries, as applicable, (x)(i)
the Company's Annualized Operating Cash Flow Ratio, after giving effect to such
acquisition and such Incurrence on a pro forma basis, is no greater than such
ratio prior to giving pro forma effect to such acquisition and such Incurrence,
(ii) the Company's consolidated Indebtedness under the Bank Credit Facility,
divided by the Net Pops of the Company and its Restricted Subsidiaries, in each
case giving pro forma effect to the acquisition and such Incurrence, does not
exceed $60, (iii) the Company's consolidated Indebtedness divided by the Net
Pops of the Company and its Restricted Subsidiaries does not increase as a
result of the acquisition and such Incurrence and (iv) after giving effect to
such acquisition and such Incurrence the acquired property, businesses or assets
or such Capital Stock is owned directly by the Company or a Wholly Owned
Restricted Subsidiary of the Company or (y)(i) under the terms of such
Indebtedness and pursuant to applicable law, no recourse could be had for the
payment of principal, interest or premium with respect to such Indebtedness or
for any claim based thereon against the Company or any Person that constituted a
Restricted Subsidiary immediately prior to the consummation of such acquisition
or any of their property or assets, (ii) the obligor of such Indebtedness shall
have, immediately after giving effect to such acquisition and such Incurrence on
a pro forma basis, a ratio of Annualized Operating Cash Flow as of the date of
the acquisition to the product of Consolidated Interest Expense for the
Reference Period multiplied by four (but excluding from Consolidated Interest
Expense all amounts that are not required to be paid in cash on a current basis)
of at least 1 to 1 and (iii) immediately subsequent to the Incurrence of such
Indebtedness, the obligor thereof shall be a Restricted Subsidiary and shall
have been designated by the Company (as evidenced by an Officers' Certificate
delivered promptly to the Trustee) to be a "Non-Recourse Restricted Subsidiary."
"Permitted Investment" means: (i) Investments in Cash Equivalents; (ii)
Investments in the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary); (iii) Investments in a Person substantially all of whose
assets are of a type generally used in a Related Business (an "Acquired Person")
if, as a result of such Investments, (A) the Acquired Person immediately
thereupon becomes a Restricted Subsidiary (other than a Non-Recourse Restricted
Subsidiary) or (B) the Acquired Person immediately
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<PAGE> 70
thereupon either (1) is merged or consolidated with or into the Company or any
of its Restricted Subsidiaries (other than a Non-Recourse Restricted Subsidiary)
or (2) transfers or conveys all or substantially all of its assets to, or is
liquidated into, the Company or any of its Restricted Subsidiaries (other than a
Non-Recourse Restricted Subsidiary); (iv) Investments in accounts and notes
receivable acquired in the ordinary course of business; (v) any securities
received in connection with an Asset Sale (other than those of a Non-Recourse
Restricted Subsidiary) and any investment with the Net Cash Proceeds from any
Asset Sale in Capital Stock of a Person, all or substantially all of whose
assets are of a type used in a Related Business, that complies with the
"Limitation on Asset Sales and Sales of Subsidiary Stock" covenant; (vi) any
Investment pursuant to the terms of the agreements described in or referred to
under the caption "Certain Relationships and Related Transactions," as such
agreements were in effect on the Issue Date; (vii) advances and prepayments for
asset purchases in the ordinary course of business in a Related Business of the
Company or a Restricted Subsidiary; and (viii) customary loans or advances made
in the ordinary course of business to officers, directors or employees of the
Company or any of its Restricted Subsidiaries for travel, entertainment, and
moving and other relocation expenses.
"Permitted Liens" means: (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days, and (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as such
property used by the Company or any of its Restricted Subsidiaries) or interfere
with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries; (f) Liens arising by operation of law in connection
with judgments, only to the extent, for an amount and for a period not resulting
in an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with worker's compensation,
unemployment insurance and other types of social security legislation; (h) Liens
in favor of the Trustee arising under the Indenture; (i) Liens securing
Permitted Acquisition Indebtedness, which either (A) were not incurred or issued
in anticipation of such acquisition or (B) secure Permitted Acquisition
Indebtedness meeting the requirements set forth in clause (y) of the definition
thereof; (j) Liens securing Indebtedness under the Bank Credit Facility that was
incurred in accordance with the covenant described in "-- Limitation on
Incurrence of Additional Indebtedness;" (k) Liens securing Indebtedness of a
Person existing at the time such Person becomes a Restricted Subsidiary or is
merged with or into the Company or a Restricted Subsidiary, provided that such
Liens were in existence prior to the date of such acquisition, merger or
consolidation, were not incurred in anticipation thereof, and do not extend to
any other assets; (l) Liens arising from Purchase Money Indebtedness permitted
under the Indenture; (m) Liens securing Refinancing Indebtedness Incurred to
refinance any Indebtedness that was previously so secured in a manner no more
adverse to the Holders of the Notes than the terms of the Liens securing such
refinanced Indebtedness; and (n) Liens in favor of the Company or a Wholly Owned
Restricted Subsidiary.
"Person" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.
"Pops" means the estimate of the population of a Metropolitan Statistical
Area ("MSA") or Rural Service Area ("RSA") as derived from the most recent Rand
McNally Commercial Atlas and Marketing Guide or if such statistics are no longer
printed in the Rand McNally Commercial Atlas and Marketing Guide or the Rand
McNally Commercial Atlas and Marketing Guide is no longer published, such other
nationally recognized source of such information.
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<PAGE> 71
"Purchase Money Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiaries Incurred in connection with the purchase of property or
assets for the business of the Company or its Restricted Subsidiaries, provided,
that the recourse of the lenders with respect to such Indebtedness is limited
solely to the property or assets so purchased without further recourse to either
the Company or any of its Restricted Subsidiaries.
"Qualified Capital Stock" means any Capital Stock of a Person that is not
Disqualified Capital Stock.
"Reference Period" with regard to any Person means the last full fiscal
quarter of such Person for which financial information (which the Company shall
use its best efforts to compile in a timely manner) in respect thereof is
available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference (or if such Indebtedness
or Disqualified Capital Stock does not require cash payments prior to maturity
or is otherwise issued at a discount, the original issue price of such
Indebtedness or Disqualified Capital Stock), not to exceed the sum of (x) the
lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock
so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing, (y) the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
such Indebtedness and (z) all other customary fees and expenses of the Company
or such Restricted Subsidiary reasonably incurred in connection with such
refinancing; provided, that (A) Refinancing Indebtedness issued by any
Restricted Subsidiary of the Company shall only be used to Refinance outstanding
Indebtedness or Disqualified Capital Stock of such Restricted Subsidiary, (B)
Refinancing Indebtedness shall (x) not have a Weighted Average Life shorter than
the Indebtedness or Disqualified Capital Stock to be so refinanced at the time
of such Refinancing and (y) in all respects, be no less subordinated or junior,
if applicable, to the rights of Holders of the Notes than was the Indebtedness
or Disqualified Capital Stock to be refinanced and (C) such Refinancing
Indebtedness shall have no installments or principal (or redemption payment)
scheduled to come due earlier than the scheduled maturity of any installment of
principal (or redemption payment) of the Indebtedness or Disqualified Capital
Stock to be so refinanced which was scheduled to come due prior to the Stated
Maturity of the Notes.
"Related Business" means any business directly related to the ownership,
development, operation, and acquisition of wireless cellular communications
systems.
"Related Person" means, with respect to any Person, (i) any Affiliate of
such Person or any spouse, immediate family member, or other relative who has
the same principal residence of any Affiliate of such Person and (ii) any trust
in which any Person described in clause (i) above, has a beneficial interest.
"Restricted Payment" means, with respect to any Person, (i) any dividend or
other distribution on shares of Capital Stock of such Person or any Subsidiary
of such Person, (ii) any payment on account of the purchase, redemption or other
acquisition or retirement for value, or any payment in respect of any amendment
(in anticipation of or in connection with any such retirement, acquisition or
defeasance) in whole or in part, of any shares of Capital Stock of such Person
or any Subsidiary of such Person held by Persons other than such Person or any
of its Restricted Subsidiaries, (iii) any defeasance, redemption, repurchase or
other acquisition or retirement for value, or any payment in respect of any
amendment (in anticipation of or in connection with any such retirement,
acquisition or defeasance) in whole or in part, of any Indebtedness of the
Company by such Person or a Subsidiary of such Person that is subordinate in
right of payment to, or ranks pari passu (other than the Notes) with, the Notes
and (iv) any Investment (other than a Permitted Investment); provided, however,
that the term "Restricted Payment" does not include (i) any dividend,
distribution or other payment on shares of Capital Stock of the Company or any
Restricted Subsidiary solely in shares of Qualified Capital Stock, (ii) any
dividend, distribution or other payment to the Company, or any
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<PAGE> 72
dividend to any of its Restricted Subsidiaries, by any of its Subsidiaries, or
(iii) any defeasance, redemption, repurchase or other acquisition or retirement
for value, in whole or in part, of Indebtedness of such person payable solely in
shares of Qualified Capital Stock of such Person.
"Restricted Subsidiary" means (i) Sygnet Communications, Inc. and (ii) any
Subsidiary of the Company which at the time of determination is not an
Unrestricted Subsidiary. The Board of Directors of the Company may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary only if, immediately
before and after giving effect to such designation, there would exist no Default
or Event of Default and the Company could incur at least $1.00 of Indebtedness
pursuant to the Annualized Operating Cash Flow Ratio test of in the covenant
described in "-- Limitation of Incurrence of Additional Indebtedness," on a pro
forma basis taking into account such designation.
"Stated Maturity" means the date fixed for the payment of any principal or
premium pursuant to the Indenture and the Notes, including the Maturity Date,
upon redemption, acceleration, Asset Sale Offer, Change of Control Offer or
otherwise.
"Subsidiary" with respect to any Person, means (i) a corporation at least
fifty percent of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of such
partnership, or (iii) any Person in which such Person, one or more Subsidiaries
of such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has (x) at least a
fifty percent ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Company that, at
the time of determination, shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below). The Board of
Directors of the Company may designate any Subsidiary of the Company other than
Sygnet Communications, Inc. (including any newly acquired or newly formed
Subsidiary at or prior to the time it is so formed or acquired) to be an
Unrestricted Subsidiary if (a) no Default or Event of Default is existing or
will occur as a consequence thereof, (b) such Subsidiary does not own any
Capital Stock of, or own or hold any Lien on any property or asset of, the
Company or any Restricted Subsidiary that is not a Subsidiary of the Subsidiary
to be so designated, and (c) such Subsidiary and each of its Subsidiaries has
not at the time of designation, and does not thereafter, create, incur, issue,
assume, guarantee, or otherwise become directly or indirectly liable with
respect to any Indebtedness pursuant to which the lender has recourse to any
property or assets of the Company or any of its Restricted Subsidiaries (except
that such Subsidiary and its Subsidiaries may guarantee the Notes); provided
that either (A) the Subsidiary to be so designated has total assets of $1,000 or
less or (B) if such Subsidiary has assets greater than $1,000, that such
designation would be permitted under the covenant described in "-- Limitation on
Restricted Payments." Each such designation shall be evidenced by filing with
the Trustee a certified copy of the resolution giving effect to such designation
and Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"Voting Stock" means Capital Stock of the Company having generally the
right to vote in the election of a majority of the directors of the Company or
having generally the right to vote with respect to the organizational matters of
the Company.
"Weighted Average Life" means, as of the date of determination, with
respect to any debt instrument, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such debt instrument
multiplied by the amount of each such respective principal payment by (ii) the
sum of all such principal payments.
"Wholly Owned" means, with respect to a Subsidiary of the Company, (i) a
Subsidiary that is a corporation, of which not less than 99% of the Capital
Stock (except for directors' qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one stockholder, but which interest is not in excess of what is required
for such purpose) is owned directly by such Person or through one or more other
Wholly Owned Subsidiaries of such Person, or (ii) any entity other than a
corporation in which such Person, directly or indirectly, owns not less than 99%
of the Capital Stock of such entity.
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<PAGE> 73
DESCRIPTION OF CAPITAL STOCK
The following description of the Company's capital stock does not purport
to be complete and is subject in all respects to applicable Ohio law and to the
provisions of the Company's Amended Articles of Incorporation (the "Articles of
Incorporation") a copy of which has been filed as an exhibit to the Registration
Statement on Form S-1 of which this Prospectus is a part. When used in this
section, the term "Company" means Sygnet Wireless, Inc. and not Sygnet
Communications, Inc. or any other subsidiary.
The authorized capital stock of the Company consists of 60,000,000 shares
of Class A Common Stock, $0.01 par value per share, 10,000,000 shares of Class B
Common Stock, $0.01 par value per share, 10,000,000 shares of voting preferred
stock, $0.01 par value per share and 5,000,000 shares of nonvoting preferred
stock, $0.01 par value per share (including the Preferred Stock).
PREFERRED STOCK
Concurrent with and conditioned upon the consummation of the Offering, the
Company will issue 200,000 shares of Preferred Stock for an aggregate purchase
price of $20.0 million to Toronto Dominion Investments, Inc., an affiliate of
one of the Lenders.
VOTING RIGHTS TO DESIGNATE DIRECTORS
At any time after the first anniversary of the issuance of the Preferred
Stock, holders of the Preferred Stock will have the right to receive notice of
and to designate a representative to attend all meetings of the Board of
Directors of the Company. At any time after the third anniversary of such
issuance, the holders of Preferred Stock will have the right to designate
Directors constituting 15% of the total number of Directors.
LIQUIDATION PREFERENCE AND DIVIDEND RIGHTS
Each share of Preferred Stock has a liquidation preference of $100 (or an
aggregate liquidation preference of $20.0 million as of the date of the
Preferred Stock Investment).
Subject to the Default Rate (as defined), dividends on the Preferred Stock
will accrue quarterly in arrears and will be payable in additional shares of
Preferred Stock at the following rates (expressed as percentages of the
liquidation preference of Preferred Stock outstanding) during the respective
12-month periods ending on the anniversaries of the issuance of the Preferred
Stock in the following years:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
1997...................................................................... 15%
1998...................................................................... 17%
1999...................................................................... 19%
2000 and thereafter....................................................... 21%
</TABLE>
WARRANTS
Warrants to purchase shares of the Company's Class A Common Stock
representing 1% of the Common Stock outstanding, on a fully diluted basis, will
be issued to the holder or holders of the Preferred Stock on a pro rata basis at
the end of the nine-month period following the closing of the Offering if the
Preferred Stock is outstanding at such time (subject to pro rata reduction in
the event of a partial redemption of the Preferred Stock during the first six
months it is outstanding). At the end of each quarter thereafter for so long as
any of the Preferred Stock continues to remain outstanding, warrants to purchase
shares of the Class A Common Stock representing 3/8% of the Common Stock then
outstanding, on a fully diluted basis, will be issued to the holders of the
Preferred Stock on a pro rata basis. The exercise price of the warrants will be
$0.01 per share of Class A Common Stock.
MANDATORY AND OPTIONAL REDEMPTION; PUT OPTION
The Company will be required to redeem the Preferred Stock at its
liquidation amount, plus all accrued and unpaid dividends to the date of
redemption, upon the earlier of (i) the tenth anniversary of the Preferred Stock
Investment, (ii) a Change of Control (defined below), (iii) the issuance of any
equity by the Company
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at the holding company level (to the extent of the proceeds thereof) or (iv) the
exercise of the Put Option (defined below) (each a "Mandatory Redemption
Event").
At any time after the fourth anniversary, holders of the Preferred Stock
have the right to require the Company to redeem the Preferred Stock (the "Put
Option") in whole or in part within 90 days from the receipt of written notice
of the exercise of the Put Option. In the event the Preferred Stock is not
redeemed within such 90-day period, the holders of the Preferred Stock, upon
written notice to the Company, will have the right to require the Company to
effect a sale or liquidation of the Company to be completed within a period of
twelve months following such notice.
The Preferred Stock will be subject to redemption at the option of the
Company at any time in minimum increments of $1.0 million in whole or in part
upon three business days' notice.
EVENTS OF DEFAULT; CERTAIN COVENANTS
Each of the following constitutes an event of default under the terms of
the Preferred Stock: (i) a Change of Control; (ii) default in the payment of or
the acceleration of any Indebtedness of the Company in excess of $5,000,000,
which default shall remain uncured for a period of more than 90 days; (iii)
failure to redeem the Preferred Stock after the occurrence of a Mandatory
Redemption Event; and (iv) the breach of any covenant in the Preferred Stock.
See "-- Liquidation Preference and Dividend Rights."
If any event of default under the terms of the Preferred Stock occurs and
is continuing or if the Company's Annualized Operating Cash Flow Ratio (using
substantially the same definition as that used in the Indenture) exceeds 12.0x,
the remedy will be an increase in the dividend rate to 5% in excess of the
otherwise applicable rate (the "Default Rate"). See "-- Events of Default;
Certain Covenants."
The terms of the Preferred Stock also prohibit the issuance of Indebtedness
by the Company or any Subsidiary other than substantially the same as that
permitted in the Indenture.
CERTAIN DEFINITIONS
"Change of Control" means a transaction or occurrence (or a series of them)
which results in the current shareholders of the Company owning directly or
indirectly in the aggregate less than 51% (on a fully diluted basis) of the
voting securities entitled to vote in an election of directors of the Company or
the Company owning, directly or indirectly, less than 100% of the voting
securities of the Subsidiary.
"Indebtedness" has substantially the same meaning as the definition of such
term used in the Indenture. See "Description of Notes -- Certain Terms."
COMMON STOCK
The rights of holders of Class A and Class B Common Stock are identical
except for voting and conversion rights. Holders of shares of Common Stock are
entitled to receive such dividends as may be declared by the Company's Board of
Directors out of funds legally available for such purpose. The Board of
Directors may not declare any cash dividends on shares of Class B Common Stock
unless it also declares at the same time (and payable on the same date as the
payment date for such dividends on Class B Common Stock) a cash dividend on
shares of Class A Common Stock in an amount per share that is at least equal to
the amount of dividends then being declared per share on the Class B Common
Stock. Each share of Class A Common Stock and each share of Class B Common Stock
shall be equal in respect of rights to dividends and distributions, when and as
declared in the form of stock or other property of the Company. The Company does
not anticipate paying cash dividends in the foreseeable future.
With respect to all matters upon which stockholders are entitled to vote or
to which stockholders are entitled to give consent, the holders of the
outstanding shares of Class A Common Stock and the holders of any outstanding
shares of Class B Common Stock shall vote (together with the holders of any
outstanding shares of preferred stock entitled to vote with the Class A Common
Stock and the Class B Common Stock) without regard to class and every holder of
Class A Common Stock shall be entitled to one vote for each share
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<PAGE> 75
of Class A Common Stock held in his name and every holder of Class B Common
Stock shall be entitled to 10 votes for each share of Class B Common Stock held
in his name.
In addition to any other votes as may be required by law, the approval of
the holders of a majority of the Class A Common Stock voting separately as a
class, will be required to approve (i) the authorization of any new class of
capital stock which is entitled to more than one vote per share, (ii) any
increase in the votes per share of Class B Common Stock or the number of shares
of Class A Common Stock into which the shares of Class B Common Stock are
convertible, or (iii) any proposed amendment to the Articles of Incorporation
that would adversely affect the dividends or other distributions with respect to
shares of Class A Common Stock or the voting rights or other rights of the Class
A Common Stock. Holders of Class A Common Stock will have no cumulative voting
rights and no preemptive, subscription, sinking fund or conversion rights.
Holders of Class B Common Stock will have no cumulative voting rights and no
preemptive, subscription or sinking fund rights.
Each share of Class B Common Stock is convertible at any time, at the
option of its holder, into one share of Class A Common Stock. The Class B Common
Stock will convert automatically into Class A Common Stock and thereby lose its
special voting rights, if such Class B Common Stock is sold or otherwise
transferred to any person or entity other than certain current Holders of the
Class B Common Stock or their descendants or any trusts for their benefit.
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UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters") have agreed, severally, to
purchase from the Company and the Company has agreed to sell to the
Underwriters, all of the Notes offered hereby. The respective principal amounts
of the Notes that each Underwriter has agreed to purchase is set forth opposite
its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.................. $
Lehman Brothers Inc. ................................................
Toronto Dominion Securities (USA) Inc. ..............................
----------------
Total........................................................... $110,000,000
=============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to certain conditions precedent. The
Underwriting Agreement also provides that the Company will indemnify the
Underwriters and their controlling persons against certain liabilities and
expenses, including liabilities under the Securities Act. The nature of the
Underwriters' obligations under the Underwriting Agreement is such that they are
required to purchase all of the Notes if the Underwriters purchase any of the
Notes.
The Underwriters propose to offer the Notes directly to the public at the
respective public offering prices set forth on the cover page of this Prospectus
and to certain dealers at such prices less a concession not in excess of
% of the principal amount of the Notes. The Underwriters may allow and
such dealers may reallow, a concession not in excess of % of the
principal amount of the Notes. After the initial public offering of the Notes,
the offering prices and other selling terms may be changed by the Underwriters.
The Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.
The Notes will not be listed on a national securities exchange or admitted
to trading in the National Association of Securities Dealers Automated Quotation
system. The Underwriters have advised the Company that they currently intend to
make a market in the Notes, but are not obligated to do so and may discontinue
any such market making at any time without notice. Accordingly, there can be no
assurance that an active trading market will develop for, or as to the liquidity
of, the Notes.
Toronto Dominion Securities (USA) Inc. is an affiliate of Toronto Dominion
Capital and Toronto-Dominion Bank. The Toronto-Dominion Bank is a lender under
the proposed Bank Credit Facility. The lenders under the Bank Credit Facility
will receive customary fees and other compensation.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the ownership of Notes as of the date hereof. Except where
noted, it deals only with Notes held as capital assets by United States Holders
and does not deal with special situations, such as those of dealers in
securities or currencies, financial institutions, life insurance companies,
persons holding Notes as part of a hedging or conversion transaction or a
straddle or United States Holders whose "functional currency" is not the U.S.
dollar. Furthermore, the discussion below is based on the provisions of the
Internal Revenue Code of 1986, as amended, and regulations, rulings and judicial
decisions thereunder as of the date hereof and such authorities may be repealed,
revoked, or modified so as to result in federal income tax consequences
different from those discussed below. The discussion below is also based on
there not being original issue discount with respect to the original issuance of
the Notes. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
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PAYMENTS OF INTEREST
Interest on a Note will generally be taxable to a United States Holder as
ordinary income from domestic sources at the time it is paid or accrued in
accordance with the United States Holder's method of accounting for tax
purposes. As used herein, a "United States Holder" of a Note means a holder that
is a citizen or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the United States or
any political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source.
MARKET DISCOUNT
If a United States Holder purchases a Note for an amount that is less than
its principal amount (generally other than at its original issue), the amount of
the difference will be treated as "market discount" for federal income tax
purposes, unless such difference is less than a specified de minimis amount.
Under the market discount rules, a United States Holder will be required to
treat any principal payment on, or any gain on the sale, exchange, retirement or
other disposition of, a Note as ordinary income to the extent of the market
discount which has not previously been included in income and is treated as
having accrued on such Note at the time of such payment or disposition. In
addition, the United States Holder may be required to defer, until the maturity
of the Note or its earlier disposition in a taxable transaction incurred or
continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue the market discount on a constant interest
method. A United States Holder of a Note may elect to include market discount in
income currently as it accrues (on either a ratable or constant interest method)
in which case the rule described above regarding deferral of interest deductions
will not apply. This election to include market discount in income currently,
once made, applies to all market discount obligations acquired on or after the
first taxable year to which the election applies and may not be revoked without
the consent of the Internal Revenue Service.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A United States Holder's tax basis in a Note will, in general, be the
United States Holder's cost thereof, increased by market discount previously
included in income by the United States Holder and reduced by any amortized
premium and any cash payments on the Note other than qualified stated interest.
Upon the sale, exchange or retirement of a Note, a United States Holder will
recognize gain or loss equal to the difference between the amount realized upon
the sale, exchange or retirement (less any accrued qualified stated interest,
which will be taxable as such) and the adjusted tax basis of the Note. Except
with respect to market discount, such gain or loss will be capital gain or loss
and will be long-term capital gain or loss if at the time of the sale, exchange
or retirement the Note has been held for more than one year. Under current law,
net capital gains of individuals are, under certain circumstances, taxed at
lower rates than items of ordinary income. The deductibility of capital losses
is subject to limitations.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to certain
payments of principal, interest and premium paid on Notes and to the proceeds of
sale of a Note made to United States Holders other than certain exempt
recipients (such as corporations). A 31% backup withholding tax will apply to
such payments if the United States Holder fails to provide a taxpayer
identification number or certification of foreign or other exempt status or
fails to report in full dividend and interest income.
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Bryan Cave
LLP, Washington D.C. Certain legal matters related to the Offering will be
passed upon for the Underwriters by Latham & Watkins, Los Angeles, California.
76
<PAGE> 78
EXPERTS
The combined financial statements of SYGNET Communications, Inc. and Wilcom
Corporation as of December 31, 1994 and 1995, and for each of the three years in
the period ended December 31, 1995, 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 accounting and auditing.
The combined financial statements of Selected Systems of Horizon Cellular
Telephone Company, L.P., representing certain majority-owned subsidiaries of
Horizon Cellular Telephone Company, L.P., as of December 31, 1994 and 1995, and
for each of the three years in the period ended December 31, 1995, 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 accounting and auditing.
The statements of operations and changes in partners' capital and cash
flows of Erie Cellular Telephone Company for the period from January 1, 1995
through September 29, 1995, appearing in this Prospectus and Registration
Statement have been audited by Coopers & Lybrand L.L.P., independent
accountants, 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 accounting and auditing.
The financial statements of Erie Cellular Telephone Company as of December
31, 1994 and 1993 and for the years then ended, appearing in this Prospectus and
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, 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 accounting and auditing.
The statements of operations, partners' capital (deficiency) and cash flows
of DICOMM Cellular Limited Partnership for the year ended December 31, 1993,
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 accounting and auditing.
77
<PAGE> 79
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SYGNET COMMUNICATIONS, INC.
WILCOM CORPORATION
Report of Independent Auditors....................................................... F-2
Combined Balance Sheets as of December 31, 1994 and 1995 and June 30, 1996........... F-3
Combined Statements of Income for the years ended December 31, 1993, 1994 and 1995
and
for the six months ended June 30, 1995 and 1996.................................... F-4
Combined Statements of Shareholders' Equity for the years ended December 31, 1993,
1994 and 1995 and the six months ended June 30, 1996............................... F-5
Combined Statements of Cash Flows for the years ended December 31, 1993, 1994, and
1995 and for the six months ended June 30, 1995 and 1996........................... F-6
Notes to Financial Statements........................................................ F-7
SELECTED SYSTEMS OF HORIZON CELLULAR TELEPHONE COMPANY, L.P.
Report of Independent Auditors....................................................... F-14
Combined Balance Sheets as of December 31, 1994 and 1995............................. F-15
Combined Statements of Operations for the years ended December 31, 1993, 1994 and
1995............................................................................... F-16
Combined Statements of Partners' Equity for the years ended December 31, 1993, 1994
and 1995........................................................................... F-17
Combined Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995............................................................................... F-18
Notes to Combined Financial Statements............................................... F-19
Combined Balance Sheet as of June 30, 1996........................................... F-25
Combined Statements of Operations for the six months ended June 30, 1995 and 1996.... F-26
Combined Statements of Cash Flows for the six months ended June 30, 1995 and 1996.... F-27
Notes to the Combined Financial Statements for the Six Months Ended June 30, 1996.... F-28
ERIE CELLULAR TELEPHONE COMPANY
Report of Independent Accountants.................................................... F-30
Statement of Operations and Changes in Partners' Capital for the period January 1,
1995 to September 29, 1995......................................................... F-31
Statement of Cash Flows for the period January 1, 1995 to September 29, 1995......... F-32
Notes to Financial Statements........................................................ F-33
ERIE CELLULAR TELEPHONE COMPANY
Report of Independent Public Accountants............................................. F-36
Balance Sheets as of December 31, 1993 and 1994...................................... F-37
Statements of Operations and Changes in Partners' Capital for the years ended
December 31, 1993 and 1994......................................................... F-38
Statements of Cash Flows for the years ended December 31, 1993 and 1994.............. F-39
Notes to Financial Statements........................................................ F-40
DICOMM CELLULAR LIMITED PARTNERSHIP
Report of Independent Auditors....................................................... F-44
Statement of Operations for the year ended December 31, 1993......................... F-45
Statement of Partners' Capital (Deficiency) for the year ended December 31, 1993..... F-46
Statement of Cash Flows for the year ended December 31, 1993......................... F-47
Notes to Financial Statements........................................................ F-48
</TABLE>
F-1
<PAGE> 80
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
SYGNET Communications, Inc.
Wilcom Corporation
We have audited the accompanying combined balance sheets of SYGNET
Communications, Inc. and Wilcom Corporation as of December 31, 1994 and 1995,
and the related combined statements of income, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Companies' 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 combined financial statements referred to above present
fairly, in all material respects, the combined financial position of SYGNET
Communications, Inc. and Wilcom Corporation at December 31, 1994 and 1995 and
the combined results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Cleveland, Ohio
August 8, 1996, except as to Note 12, as to
which the date is , 1996
The foregoing report is in the form that will be signed upon the completion
of the corporate restructuring described in Note 12 to the financial statements.
Ernst & Young LLP
Cleveland, Ohio
August 30, 1996
F-2
<PAGE> 81
SYGNET COMMUNICATIONS, INC.
AND WILCOM CORPORATION
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 PRO FORMA
-------------------------- JUNE 30 JUNE 30
1994 1995 1996 1996
(UNAUDITED)
(NOTE 12)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $ 436,790 $ 448,292 $ 1,661,363
Accounts receivable, less allowance for doubtful
accounts of $163,400 at December 31, 1994, $402,800 at
December 31, 1995, and $389,100 at June 30, 1996...... 2,076,231 5,654,208 4,755,063
Inventory............................................... 727,920 1,096,961 737,905
Prepaid expenses and deferred income taxes.............. 271,673 263,722 235,732 $ 549,732
----------- ----------- ----------- ----------
Total current assets................................ 3,512,614 7,463,183 7,390,063
Other assets:
Intangible assets -- net................................ 9,690,422 49,456,397 48,823,747
Deferred financing costs -- net......................... 130,737 1,649,997 1,536,842
----------- ----------- ----------- ----------
Total other assets.................................. 9,821,159 51,106,394 50,360,589
Property and equipment -- net............................... 14,084,371 21,048,896 22,429,951
----------- ----------- ----------- ----------
Total assets........................................ $27,418,144 $79,618,473 $80,180,603
=========== =========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................ $ 1,618,507 $ 998,368 $ 912,948
Amount payable -- Erie Acquisition...................... -- 1,920,190 --
Deferred revenue........................................ 449,045 742,811 821,695
Utility property tax payable............................ 409,000 135,000 189,797
Accrued expenses and other liabilities.................. 921,132 1,786,965 1,981,834
Dividends payable....................................... 445,461 -- --
----------- ----------- ----------- ----------
Total current liabilities........................... 3,843,145 5,583,334 3,906,274
Long-term liabilities:
Deferred liability -- utility property tax.............. 542,450 248,876 289,212
Deferred income taxes................................... -- -- -- 557,000
Long-term debt.......................................... 18,263,812 69,500,000 70,500,000
----------- ----------- ----------- ----------
Total long-term liabilities......................... 18,806,262 69,748,876 70,789,212
Shareholders' equity:
Wilcom Corporation:
Common shares, no par, Type A, voting, stated value
$25; 1,000 shares authorized, 500 shares issued
and outstanding................................... 12,500 12,500 12,500 --
Common shares, no par, Type B, non-voting, stated
value $25; 5,000 shares authorized, 2,500 shares
issued and outstanding............................ 62,500 62,500 62,500 --
SYGNET Communications, Inc.:
Common shares, no par, Type A, voting, stated value
$1; 250,000 shares authorized, 209,362 shares
issued and outstanding............................ 209,362 209,362 209,362 --
Common shares, no par, Type B, non-voting, stated
value $1; 1,250,000 shares authorized, 1,046,801
shares issued and outstanding..................... 1,046,801 1,046,801 1,046,801 --
Sygnet Wireless, Inc.:
Common shares, $.01 par, Class B, voting; 10,000,000
shares authorized, 6,170,630 pro forma shares
issued and outstanding............................ 61,706
Additional paid-in capital.......................... 4,170,368 4,170,368 4,170,368 5,538,533
Retained earnings (deficit)......................... (482,842) 753,675 1,952,529 (108,170)
Note receivable from officer/shareholder............ (249,952) (249,952) (249,952) (249,952)
Treasury stock, at cost............................. -- (1,718,991) (1,718,991) --
----------- ----------- ----------- ----------
Total shareholders' equity.......................... 4,768,737 4,286,263 5,485,117 5,242,117
----------- ----------- ----------- ----------
Total liabilities and shareholders' equity.......... $27,418,144 $79,618,473 $80,180,603
=========== =========== =========== ==========
</TABLE>
See accompanying notes.
F-3
<PAGE> 82
SYGNET COMMUNICATIONS, INC.
AND WILCOM CORPORATION
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Subscriber revenue....... $ 8,877,744 $11,311,782 $17,191,291 $ 7,230,714 $12,968,212
Roamer revenue........... 3,107,035 4,144,532 4,175,809 1,904,409 2,759,586
Equipment sales.......... 1,098,271 1,172,126 1,529,284 744,081 742,779
Other revenue............ 1,391,205 1,419,501 1,680,544 839,632 756,088
----------- ----------- ----------- ----------- -----------
Total revenue................. 14,474,255 18,047,941 24,576,928 10,718,836 17,226,665
Costs and expenses:
Cost of services......... 2,514,411 3,452,103 3,365,954 1,504,883 2,330,531
Cost of equipment
sales.................. 930,430 1,623,996 4,163,890 1,675,674 2,003,169
General and
administrative......... 4,411,838 4,466,568 5,140,727 2,410,636 3,613,467
Selling and marketing.... 2,166,243 2,555,320 3,505,652 1,414,916 2,355,861
Depreciation and
amortization........... 1,951,209 2,638,577 3,486,554 1,387,061 2,482,516
----------- ----------- ----------- ----------- -----------
Total costs and expenses...... 11,974,131 14,736,564 19,662,777 8,393,170 12,785,544
----------- ----------- ----------- ----------- -----------
Income from operations........ 2,500,124 3,311,377 4,914,151 2,325,666 4,441,121
Other:
Interest expense, net.... 652,174 964,046 2,612,699 829,469 2,632,728
Other expense............ 188,070 552,762 286,016 86,749 228,916
----------- ----------- ----------- ----------- -----------
Income before income taxes.... 1,659,880 1,794,569 2,015,436 1,409,448 1,579,477
Income tax (benefit)
expense..................... -- (40,700) 65,400 24,115 119,000
----------- ----------- ----------- ----------- -----------
Income before minority partner
interest.................... 1,659,880 1,835,269 1,950,036 1,385,333 1,460,477
Minority interest............. 136,836 113,545 -- -- --
----------- ----------- ----------- ----------- -----------
Net income.................... $ 1,523,044 $ 1,721,724 $ 1,950,036 $ 1,385,333 $ 1,460,477
========== ========== ========== ========== ==========
Unaudited pro forma
information (Note 12):
Historical income before
income taxes........... $ 2,015,000 $ 1,579,000
Pro forma income taxes... 968,000 758,000
----------- -----------
Pro forma net income..... $ 1,047,000 $ 821,000
========== ==========
Pro forma net income per
share.................. $ .17 $ .13
========== ==========
Weighted average shares
outstanding............ 6,170,630 6,170,630
========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE> 83
SYGNET COMMUNICATIONS, INC.
AND WILCOM CORPORATION
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
WILCOM CORPORATION COMMON STOCK SYGNET COMMUNICATIONS, INC. COMMON STOCK
----------------------------------- -------------------------------------------
TYPE A TYPE B TYPE A TYPE B ADDITIONAL
---------------- ---------------- ------------------ ---------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993.......... 500 $12,500 2,500 $62,500 209,362 $209,362 1,046,801 $1,046,801 $4,170,368
Net income......................
Dividends declared..............
--- ------- ----- ------- ------- -------- --------- ---------- ----------
Balance at December 31, 1993........ 500 12,500 2,500 62,500 209,362 209,362 1,046,801 1,046,801 4,170,368
Net income......................
Dividends declared..............
Officer/shareholder stock
purchase......................
--- ------- ----- ------- ------- -------- --------- ---------- ----------
Balance at December 31, 1994........ 500 12,500 2,500 62,500 209,362 209,362 1,046,801 1,046,801 4,170,368
Net income......................
Dividends declared..............
Type A common stock
repurchased...................
Type B common stock
repurchased...................
--- ------- ----- ------- ------- -------- --------- ---------- ----------
Balance at December 31, 1995........ 500 12,500 2,500 62,500 209,362 209,362 1,046,801 1,046,801 4,170,368
Net income (unaudited)..........
Dividends declared
(unaudited)...................
--- ------- ----- ------- ------- -------- --------- ---------- ----------
Balance at June 30, 1996
(unaudited)....................... 500 $12,500 2,500 $62,500 209,362 $209,362 1,046,801 $1,046,801 $4,170,368
=== ======= ===== ======= ======= ======== ========= ========== ==========
<CAPTION>
RETAINED RECEIVABLE TREASURY STOCK
EARNINGS FROM OFFICER/ --------------------
(DEFICIT) SHAREHOLDER SHARES AMOUNT
<S> <C> <C> <C> <C>
Balance at January 1, 1993.......... $ (602,990)
Net income...................... 1,523,044
Dividends declared.............. (996,305)
----------- --------- ------ -----------
Balance at December 31, 1993........ (76,251)
Net income...................... 1,721,724
Dividends declared.............. (2,128,315)
Officer/shareholder stock
purchase...................... $(249,952)
----------- --------- ------ -----------
Balance at December 31, 1994........ (482,842) (249,952)
Net income...................... 1,950,036
Dividends declared.............. (713,519)
Type A common stock
repurchased................... 8,024 $ (312,936)
Type B common stock
repurchased................... 40,173 (1,406,055)
----------- --------- ------ -----------
Balance at December 31, 1995........ 753,675 (249,952) 48,197 (1,718,991)
Net income (unaudited).......... 1,460,477
Dividends declared
(unaudited)................... (261,623)
----------- --------- ------ -----------
Balance at June 30, 1996
(unaudited)....................... $1,952,529 $(249,952) 48,197 $(1,718,991)
=========== ========= ====== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE> 84
SYGNET COMMUNICATIONS, INC.
AND WILCOM CORPORATION
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
------------------------------------------- --------------------------
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating Activities
Net income............................ $ 1,523,044 $ 1,721,724 $ 1,950,036 $ 1,385,333 $ 1,460,477
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation...................... 1,762,831 2,365,848 2,765,816 1,234,402 1,732,635
Amortization...................... 188,378 272,729 720,738 152,659 749,881
Loss on disposal of equipment..... 37,870 461,333 161,222 23,270 153,151
Minority interest................. 136,836 113,545
Changes in operating assets and
liabilities:
Accounts receivable........... (404,067) (320,520) (2,838,833) (342,357) 899,145
Inventory..................... (31,002) (382,335) (184,951) 168,389 359,056
Prepaid and deferred
expenses.................... 34,744 (97,296) 7,951 (9,650) 27,990
Accounts payable and accrued
expenses.................... 604,188 1,161,191 (136,992) (744,463) 279,390
----------- ------------ ------------ ----------- -----------
Net cash provided by operating
activities...................... 3,852,822 5,296,219 2,444,987 1,867,583 5,661,725
Investing Activities
Acquisitions of Sharon and Erie (Note
3).................................. -- (4,500,000) (40,533,104) -- (1,920,190)
Issuance of note receivable........... -- (249,952) -- -- --
Purchases of property and equipment... (3,630,390) (5,793,053) (9,056,098) (3,621,030) (3,266,841)
Proceeds from sale of equipment....... 102,181 8,701 513,730 -- --
----------- ------------ ------------ ----------- -----------
Net cash used in investing
activities...................... (3,528,209) (10,534,304) (49,075,472) (3,621,030) (5,187,031)
Financing Activities
Dividends paid........................ (1,120,044) (1,856,089) (1,158,980) (980,600) (261,623)
Proceeds from long-term debt.......... -- 9,733,812 51,986,188 4,900,000 2,000,000
Principal payments on long-term
debt................................ (816,500) (3,534,000) (750,000) (750,000) (1,000,000)
Increase in financing costs........... (15,778) (127,546) (1,716,230) (45,522) --
Purchase of treasury stock............ -- -- (1,718,991) (1,718,991) --
----------- ------------ ------------ ----------- -----------
Net cash (used in) provided by
financing activities............ (1,952,322) 4,216,177 46,641,987 1,404,887 738,377
(Decrease) increase in cash and cash
equivalents............................. (1,627,709) (1,021,908) 11,502 (348,560) 1,213,071
Cash and cash equivalents at beginning of
period.................................. 3,086,407 1,458,698 436,790 436,790 448,292
----------- ------------ ------------ ----------- -----------
Cash and cash equivalents at end of
period.................................. $ 1,458,698 $ 436,790 $ 448,292 $ 88,230 $ 1,661,363
=========== ============ ============ =========== ===========
</TABLE>
See accompanying notes.
F-6
<PAGE> 85
SYGNET COMMUNICATIONS, INC.
AND WILCOM CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND THE
UNAUDITED PERIODS ENDED JUNE 30, 1995 AND 1996
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
The combined financial statements include the accounts of SYGNET
Communications, Inc. and its subsidiaries (SYGNET) combined with Wilcom
Corporation and its affiliates (Wilcom) (collectively, the Company). The Company
owns and operates cellular telephone systems in metropolitan statistical areas
(MSA) and rural service areas (RSA) located in northeastern Ohio and western
Pennsylvania representing a population of approximately one million, under three
partnerships, Wilcom Cellular, Youngstown Cellular Telephone Company ("YCTC")
and Erie Cellular Telephone Company (Erie). All significant intercompany
balances and transactions have been eliminated in the combined financial
statements.
2. SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
The Company considers all liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
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, as amended. 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, and will continue to meet all requirements
necessary to secure renewal of its cellular licenses.
The Company has acquired cellular licenses through its acquisition of
interests in various cellular systems. The cost of licenses acquired was
$4,194,100 and $40,282,490 in 1994 and 1995, respectively. The Company uses a 40
year useful life to amortize its licenses under the straight-line method.
Purchased 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>
1994 1995
<S> <C> <C>
Cellular licenses.......................................... $10,256,527 $50,546,270
Paging license and customer lists.......................... 119,792 119,792
----------- -----------
10,376,319 50,666,062
Accumulated amortization................................... (685,897) (1,209,665)
----------- -----------
$ 9,690,422 $49,456,397
=========== ===========
</TABLE>
Amortization expense was $174,355, $211,921 and $523,768 in 1993, 1994 and
1995, respectively.
F-7
<PAGE> 86
The ongoing value and remaining useful life of intangible 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 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.
Deferred Financing Costs
Deferred financing costs are being amortized over the term of the notes.
Accumulated amortization was $12,987 and $58,834 at December 31, 1994 and 1995,
respectively. Amortization expense was $14,023, $60,808 and $196,970 in 1993,
1994 and 1995, respectively.
Advertising Costs
Advertising costs are recorded as expense when incurred. Advertising
expense was $569,692, $625,255 and $933,498 in 1993, 1994 and 1995,
respectively.
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
75%, 74% and 62% of the Company's Roamer Revenue was earned from two cellular
carriers in 1993, 1994 and 1995, respectively. In addition, approximately 30% of
Roamer Revenue in the markets to be acquired (see Note 11) is earned from a
single cellular carrier.
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. Premiums paid for interest
rate cap agreements are being amortized as adjustments to interest expense over
the term of the agreements.
The Company may be exposed to credit loss in the event of nonperformance by
the counterparty to its interest rate swap agreements and interest rate cap
agreements. The Company anticipates the counterparty
F-8
<PAGE> 87
will be able to fully satisfy its obligations under the agreements as the
counterparty is the primary lender under the financing agreement which the
interest rate swap and cap agreements hedge.
Fair Value of Financial Instruments
At December 31, 1994 and 1995, the carrying value of cash equivalents,
accounts receivable, the interest rate swap and cap and long-term debt
approximated the fair value.
Recently Issued Accounting Pronouncements
In March of 1995, SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of, was issued. SFAS No. 121
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. The Company adopted SFAS No. 121 effective January 1, 1996. The
impact resulting from the adoption of SFAS No. 121 did not have a material
effect on the Company's combined financial position or results of operations.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation. Statement No. 123 defines a fair value based method of accounting
for stock-based employee compensation plans (including stock option plans).
Statement No. 123 allows an entity to continue to measure compensation costs for
its plans as prescribed by APB Opinion No. 25, Accounting for Stock Issued to
Employees. Management expects to account for stock options in accordance with
APB Opinion No. 25. The disclosure requirements of Statement No. 123, which are
required if an entity elects to continue to use the accounting method in APB
Opinion No. 25, will be adopted as required for financial statements beginning
in 1996 for the Stock Option Plan to be adopted in 1996 as described in Note 12.
Unaudited Interim Financial Information
The accompanying unaudited combined financial statements at June 30, 1996
and for the six months ended June 30, 1995 and 1996 have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Article 10 of Regulation S-X. 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 six-month
period ended June 30, 1996 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996.
3. ACQUISITIONS
On August 11, 1994, SYGNET purchased 75% and Wilcom purchased 25% of the
outstanding shares of common stock of Sharron Youngstown Cellular, Inc. (Sharon)
for $4.5 million. Sharon owns a 7.26% interest in Wilcom Cellular and Youngstown
Cellular Telephone Company.
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
combined financial statements since the dates of acquisition.
The pro forma unaudited condensed combined results of operations for the
year ended December 31, 1994 and December 31, 1995 as if the purchases occurred
on January 1, 1994 are as follows:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Revenue.................................................... $23,148,000 $30,374,000
=========== ===========
Net income................................................. $ 311,000 $ 1,860,000
=========== ===========
</TABLE>
F-9
<PAGE> 88
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
USEFUL LIFE 1994 1995
<S> <C> <C> <C>
Land, building and improvements................ 10-19 years $ 2,392,162 $ 3,340,331
Cellular system and equipment.................. 5-19 years 11,043,087 19,556,464
Customer premise equipment..................... 3 years 2,548,036 1,695,605
Office furniture and equipment................. 3-10 years 1,954,899 2,498,057
Cell site construction in progress............. 950,700 379,813
----------- -----------
18,888,884 27,470,270
Accumulated depreciation....................... (4,804,513) (6,421,374)
----------- -----------
$14,084,371 $21,048,896
========== ==========
</TABLE>
At December 31, 1995, the Company had purchase commitments of approximately
$3.75 million for equipment.
5. CREDIT AGREEMENT
On September 29, 1995, the Company entered into a financing agreement with
a commercial bank group to borrow up to $75 million at any time through
September 30, 2003. The credit agreement provides for various borrowing rate
options based on either a fixed spread over the London Interbank Offered Rate
("LIBOR") or the prime rate.
Among other things, the credit agreement contains financial covenants
requiring the maintenance of debt service ratios, hedging of interest rate
exposure, limitations on distributions to shareholders and sales of assets. The
credit facility is secured by a pledge of the partnership interests in YCTC,
Wilcom Cellular and Erie. Interest rates at December 31, 1995 ranged from 7.48%
to 7.82%.
In connection with covenant requirements described above, the Company
entered into a three year interest rate swap and a two year interest rate cap
agreement on November 29, 1995 with a total underlying notional amount of $40
million. The swap agreement converted the interest rate on $20 million notional
amount of the credit facility from a variable rate based upon LIBOR (5.87% at
December 31, 1995) to a fixed rate of 5.79%. Amounts paid or received under this
agreement are recognized as adjustments to interest expense. The interest rate
cap agreement entitled the Company to receive from a counterparty on a quarterly
basis the amounts, if any, by which the Company's interest payments on its $20
million notional amount exceed 8.25%. The interest rate under the credit
facility did not exceed 8.25% during the period from November 29, 1995 to
December 31, 1995.
Minimum future payments based upon the borrowing levels at December 31,
1995 for the next five years are:
<TABLE>
<S> <C>
1996........................................................... $ --
1997........................................................... --
1998........................................................... 500,000
1999........................................................... 9,000,000
2000........................................................... 12,000,000
</TABLE>
Interest paid was $753,754, $810,303 and $2,202,345 in 1993, 1994 and 1995,
respectively.
6. 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-10
<PAGE> 89
Minimum future rental payments under operating leases having remaining
terms in excess of one year as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
<S> <C>
1996......................................................... $ 572,239
1997......................................................... 526,308
1998......................................................... 470,262
1999......................................................... 329,636
2000......................................................... 253,222
Thereafter................................................... 1,024,410
----------
Total........................................................ $3,176,077
==========
</TABLE>
Rent expense was approximately $230,000, $296,000 and $460,800 in 1993,
1994 and 1995, respectively.
7. 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 $64,000, $113,000 and $114,000 in 1993, 1994 and 1995, respectively.
8. SHAREHOLDERS' EQUITY
Each share of SYGNET and Wilcom Type A common stock is entitled to one
vote. SYGNET and Wilcom Type B common stock have no voting rights. Both types of
common stock are identical in all other respects.
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 are accounted for at cost and held as
treasury stock.
Under the most restrictive of the covenants discussed in Note 5, the
Company could not declare any additional dividends at December 31, 1995.
9. INCOME TAXES
SYGNET's shareholders have elected under Subchapter S of the Internal
Revenue Code to include SYGNET's taxable income and losses in the shareholders'
federal and Ohio returns.
Sharon is subject to federal and state taxes, and accordingly has provided
for deferred income taxes for the temporary differences between financial and
tax reporting. The principal differences relate to partnership income and
alternative minimum tax (AMT) credit carryforwards. Amounts for deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------
DEFERRED TAX ASSETS: 1994 1995
------------------------------------------------------------------
<S> <C> <C>
AMT credit carryforward........................................... $48,200 $63,400
Investment in partnerships........................................ 33,900 --
Other............................................................. 7,600 8,200
------- -------
Total deferred tax assets......................................... 89,700 71,600
Deferred tax liability -- investment in partnerships.............. -- 26,600
------- -------
Net deferred tax assets........................................... $89,700 $45,000
======= =======
</TABLE>
Sharon had an AMT credit carryforward at December 31, 1995 of approximately
$63,000 which will be available to reduce future federal income tax over an
indefinite period. Deferred tax assets are included in
F-11
<PAGE> 90
prepaid expenses and deferred income taxes; deferred tax liabilities are
included in accrued expenses and other liabilities.
The components of the income tax provision (benefit), in the combined
statement of income for the years ended December 31, 1994 and 1995 are as
follows:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Current income tax expense....................................... $ 49,000 $20,700
Deferred income tax (benefit).................................... (89,700) 44,700
-------- --------
Total provision for income tax (benefit)......................... $(40,700) $65,400
======== ========
</TABLE>
Income taxes paid were $49,000 and $60,514 in 1994 and 1995, respectively.
10. RELATED PARTY TRANSACTIONS
Certain shareholders of SYGNET and Wilcom Corporation own a majority of the
outstanding shares of WKBN. SYGNET purchases advertising, production, tower
rental and other services from WKBN. WKBN purchases cellular telephone, paging
and other services from SYGNET. The following is a summary of material
transactions and balances with WKBN:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1993 1994 1995
<S> <C> <C> <C>
Services and facilities provided by WKBN.............. $233,385 $214,518 $218,404
Services provided to WKBN............................. 73,268 67,717 136,741
Property purchased from WKBN.......................... 700,000 -- --
Amounts payable to WKBN............................... 25,379 26,076 18,797
</TABLE>
On December 29, 1994, the Company received a promissory note from an
officer/shareholder for $249,952 for the purchase of Type A and Type B common
shares from a shareholder. The interest rate is 8.23% and the note is to be
repaid over 7 years.
11. PENDING ACQUISITION OF SELECTED CELLULAR SYSTEMS
On July 11, 1996, the Company signed an agreement to purchase various
cellular licenses, property and equipment and the net current assets of selected
systems of Horizon Cellular Telephone Company, L.P. The aggregate proposed
purchase price is $250 million plus the net current assets of the selected
systems. The Company intends to finance the acquisition through the issuance of
$110 million of senior notes, issuance of redeemed preferred stock and
additional bank credit facilities. Subsequent to the purchase, the Company
intends to extinguish its existing credit facility and expects to incur a loss
of approximately $1.5 million on the refinancing of its credit facility.
12. SUBSEQUENT EVENTS AND PRO FORMA INFORMATION (UNAUDITED)
Merger Between Sygnet Communications, Inc. and Wilcom Corporation
In connection with the transactions described in Note 11, the Company is in
the process of effecting a corporate restructuring as follows. First, the SYGNET
and Wilcom shareholders terminated the Close Corporation Agreement and
Subchapter S corporation tax status and merged Wilcom into SYGNET whereby
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. Effective August 31, 1996, the 500 shares of Wilcom Type A converted
into 4,360 shares of SYGNET Type A and the 2,500 shares of Wilcom Type B
converted into 21,800 shares of SYGNET Type B. The SYGNET common stock Type A
205,698 shares and Type B 1,028,428 shares will be converted into 6,170,630
shares of Sygnet Wireless, Inc. (Wireless) Class B common stock. The corporate
restructuring is contingent upon FCC approval of the transfer of the FCC
microwave licenses.
F-12
<PAGE> 91
As a result of the corporate restructuring described above, Wireless will
have a capital structure as follows:
Class A Common Stock -- Wireless will authorize 60 million shares of
$.01 par value Class A common stock. These shares will have one vote per
share.
Class B Common Stock -- Wireless will authorize 10 million shares of
$.01 par value Class B common stock. 6,170,360 shares will be issued and
outstanding as a result of the corporate restructuring described above.
These shares will have ten votes per share.
Preferred Stock -- Wireless will authorize 10 million shares of voting
$.01 par value preferred stock and 5 million shares of non-voting $.01 par
value preferred stock. The Board of Directors will have the authority to
determine the rights conferred to shareholders when the Board causes either
type of preferred stock to be issued. The Company expects to issue 200,000
shares of nonvoting redeemable cumulative preferred stock (Preferred Stock)
as a result of the transactions described in Note 11.
The net proceeds from the Preferred Stock are expected to total $19.0
million. Dividends will accrue quarterly in arrears and will be payable in
shares of Preferred Stock. The dividend rates increase annually from 15% in 1997
to 19% in 1999 and are 21% in year 2000 and thereafter. Warrants to purchase
shares of the Company's Class A Common Stock representing 1% of the Common Stock
outstanding, on a fully diluted basis, will be issued to holders of the
Preferred Stock at the end of the nine-month period following the closing of the
issuance of the shares if the Preferred Stock is outstanding at such time. At
the end of each quarter thereafter for so long as any of the Preferred Stock
continues to remain outstanding, warrants to purchase shares of Class A Common
Stock representing 3/8%, on a fully diluted basis, will be issued to the
holders of the Preferred Stock. The exercise price of the warrants will be $0.01
per share of Class A Common Stock.
The Company will be required to redeem the Preferred Stock at its
liquidation amount thereof, plus all accrued and unpaid dividends to the date of
redemption, upon the earlier of (i) 2006, (ii) a Change of Control as
defined, (iii) the issuance of any Indebtedness as defined or equity by the
Company or (iv) the exercise of the Put Option (defined below).
At any time after the fourth anniversary, holders of the Preferred Stock
have the right to require the Company to redeem the Preferred Stock (the "Put
Option") in whole or in part within 90 days from the receipt of written notice
of the exercise of the Put Option. In the event the Preferred Stock is not
redeemed within such 90-day period, the holders of the Preferred Stock, upon
written notice to the Company, will have the right to require the Company to
effect a sale or liquidation of the Company to be completed within a period of
12 months following such notice.
The Preferred Stock will be subject to redemption at the option of the
Company at any time in whole or in part upon three business days' notice.
Stock Option Plan
The Company has adopted a Stock Option Plan ("SOP"). The SOP will provide
for the grant of incentive and nonqualified stock options. Under the SOP,
options to purchase up to an aggregate of one million shares of Sygnet Wireless,
Inc. Class A Common Stock are available for grants to employees of the Company.
In August, 1996, the Board of Directors granted a total of 579,000 ten
year, non qualified stock options at the estimated fair value as determined by
the Board of Directors.
Tax Status
As a Subchapter S Corporation, SYGNET recorded no provision for income
taxes. SYGNET's taxable income and losses are included in its shareholders'
federal and state returns. As a result of the termination of the Subchapter S
Corporation status, application of the provisions of SFAS 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, principally, depreciable property and certain
F-13
<PAGE> 92
accrued liabilities. A tax provision and a net deferred income tax liability of
approximately $243,000 (deferred income tax liability of $557,000 net of
deferred income tax assets of $314,000) would have been recorded at June 30,
1996 had the termination of the Subchapter S Corporation occurred at that date.
Pro Forma Net Income Per Share Information
As described above, SYGNET and Wilcom terminated their status as Subchapter
S Corporations. A pro forma adjustment has been made to the historical financial
statements for the year ended December 31, 1995 and for the six months ended
June 30, 1996 to reflect a provision for federal and certain state income taxes
at an effective rate of 48%. The effective rate is in excess of the statutory
rate primarily due to non-deductible amortization.
Pro forma net income per share is based on the weighted average number of
shares of common stock of 6,170,630 outstanding assuming the corporate
restructuring described above had occurred. Historical earnings per share data
is not presented because such data is not meaningful.
F-14
<PAGE> 93
REPORT OF INDEPENDENT AUDITORS
The Board of Horizon G.P., Inc.
We have audited the accompanying combined balance sheets of Selected
Systems of Horizon Cellular Telephone Company, L.P., representing certain
majority-owned subsidiaries of Horizon Cellular Telephone Company, L.P., as of
December 31, 1994 and 1995, and the related combined statements of operations,
partners' equity, and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of Horizon
Cellular Telephone Company, L.P.'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 combined financial position of Selected Systems of
Horizon Cellular Telephone Company, L.P. at December 31, 1994 and 1995, and the
combined results of their operations and their cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
July 26, 1996
F-15
<PAGE> 94
SELECTED SYSTEMS OF
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1994 1995
<S> <C> <C>
ASSETS
Current assets:
Cash....................................................... $ 611,829 $ 629,874
Accounts receivable, net of allowance for doubtful accounts
of $173,671 and $218,218................................. 2,977,901 5,123,833
Inventory.................................................. 240,066 373,623
Prepaid expenses........................................... 100,068 147,206
----------- ------------
Total current assets.................................. 3,929,864 6,274,586
Property and equipment:
Cellular system............................................ 16,258,547 23,305,472
Other...................................................... 1,122,286 2,035,273
----------- ------------
17,380,833 25,340,745
Accumulated depreciation........................................ (2,714,488) (5,504,261)
----------- ------------
14,666,345 19,836,484
Licenses, net of accumulated amortization of $3,185,738
and $5,266,096................................................ 67,614,553 86,976,933
Other assets, net of accumulated amortization of $3,099,830
and $4,879,099................................................ 3,985,252 5,498,139
----------- ------------
Total assets.......................................... $90,196,014 $118,586,142
=========== ============
LIABILITIES AND COMBINED PARTNERS' EQUITY
Current liabilities:
Accounts payable........................................... $ 867,180 $ 1,864,160
Accrued expenses........................................... 995,211 1,781,994
Deferred revenue........................................... 279,332 588,649
----------- ------------
Total current liabilities............................. 2,141,723 4,234,803
Advances from affiliates........................................ 34,914,840 33,087,671
Combined partners' equity:
Partners' contributions.................................... 61,376,007 89,215,915
Cumulative net loss........................................ (8,236,556) (7,952,247)
----------- ------------
Total combined partners' equity....................... 53,139,451 81,263,668
----------- ------------
Total liabilities and combined partners' equity....... $90,196,014 $118,586,142
=========== ============
</TABLE>
See accompanying notes.
F-16
<PAGE> 95
SELECTED SYSTEMS OF
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1993 1994 1995
<S> <C> <C> <C>
Revenues and sales:
Subscriber revenues.............................. $ 2,701,900 $ 6,848,485 $12,069,274
Roaming revenues................................. 3,312,659 6,909,821 10,801,818
Equipment sales.................................. 569,919 1,149,996 1,602,339
----------- ----------- -----------
Total revenues and sales.............................. 6,584,478 14,908,302 24,473,431
Costs and expenses:
Cost of services................................. 1,567,551 2,807,611 3,572,445
Cost of equipment sales.......................... 717,081 1,689,616 2,544,039
General and administrative expenses.............. 848,459 2,096,844 3,576,817
Selling.......................................... 1,343,854 2,550,325 4,016,438
Depreciation and amortization.................... 2,293,908 4,483,784 6,649,659
----------- ----------- -----------
6,770,853 13,628,180 20,359,398
----------- ----------- -----------
(Loss) income from operations......................... (186,375) 1,280,122 4,114,033
Interest expense...................................... 2,731,076 3,662,815 3,829,724
----------- ----------- -----------
(Loss) income before extraordinary item............... (2,917,451) (2,382,693) 284,309
Extraordinary item -- gain on early extinguishment of
debt................................................ 873,638 -- --
----------- ----------- -----------
Net (loss) income..................................... $(2,043,813) $(2,382,693) $ 284,309
========== ========== ==========
</TABLE>
See accompanying notes.
F-17
<PAGE> 96
SELECTED SYSTEMS OF
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
COMBINED STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
HORIZON
CELLULAR
TELEPHONE KCCGP,
COMPANY, L.P. L.P. TOTAL
------------- ------------- -------------
<S> <C> <C> <C>
Combined partners' equity at December 31, 1992......... $11,332,355 $ 29,543 $ 11,361,898
Partners' contributions........................... 1,243,160 1,244 1,244,404
Net loss.......................................... (2,032,392) (11,421) (2,043,813)
------------- ------------- -------------
Combined partners' equity at December 31, 1993......... 10,543,123 19,366 10,562,489
Partners' contributions........................... 44,510,058 449,597 44,959,655
Net loss.......................................... (2,361,001) (21,692) (2,382,693)
------------- ------------- -------------
Combined partners' equity at December 31, 1994......... 52,692,180 447,271 53,139,451
Partners' contributions........................... 27,000,000 839,908 27,839,908
Net income........................................ 281,465 2,844 284,309
------------- ------------- -------------
Combined partners' equity at December 31, 1995......... $79,973,645 $ 1,290,023 $ 81,263,668
=========== ========= ==========
</TABLE>
See accompanying notes.
F-18
<PAGE> 97
SELECTED SYSTEMS OF
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1993 1994 1995
<S> <C> <C> <C>
Operating Activities
Net (loss) income............................. $ (2,043,813) $ (2,382,693) $ 284,309
Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating
activities:
Depreciation and amortization............ 2,293,908 4,483,784 6,649,659
Provision for bad debts.................. 69,936 197,431 182,770
Accrued interest expense-affiliate....... 840,644 3,662,815 3,829,724
Gain on early extinguishment of debt..... (873,638) -- --
Changes in operating assets and
liabilities (net of effect of companies
acquired):
Accounts receivable................. (629,924) (1,296,819) (2,043,359)
Inventory........................... (6,238) (152,139) (83,995)
Prepaid expenses.................... (2,695) (56,996) (35,273)
Accounts payable and accrued
expenses.......................... 101,018 243,185 1,610,340
Deferred revenue.................... 67,849 122,379 262,900
------------ ------------ ------------
Net cash (used in) provided by operating
activities....................................... (182,953) 4,820,947 10,657,075
Investing Activities
Purchases of property and equipment, net of
$105,200 and $220,900 purchased on account
in 1994 and 1995, respectively.............. (2,089,923) (7,071,504) (5,244,548)
License and systems acquisitions.............. -- (41,951,228) (27,662,557)
Other......................................... (4,614) (109,101) 85,060
------------ ------------ ------------
Net cash used in investing activities.............. (2,094,537) (49,131,833) (32,822,045)
Financing Activities
Partners' contributions....................... 1,244,404 41,959,655 27,272,727
Advances from (to) affiliates, net of $567,181
noncash partner contributions in 1995....... 28,941,193 991,167 (5,089,712)
Repayment of subordinated notes payable and
other long-term debt........................ (26,723,726) -- --
------------ ------------ ------------
Net cash provided by financing activities.......... 3,461,871 42,950,822 22,183,015
------------ ------------ ------------
Net increase (decrease) in cash.................... 1,184,381 (1,360,064) 18,045
Cash at beginning of period........................ 787,512 1,971,893 611,829
------------ ------------ ------------
Cash at end of period.............................. $ 1,971,893 $ 611,829 $ 629,874
=========== =========== ===========
</TABLE>
See accompanying notes.
F-19
<PAGE> 98
SELECTED SYSTEMS OF
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
The accompanying combined financial statements reflect the combined
financial position, combined results of operations and combined cash flows of
Horizon Cellular Telephone Company of Lawrence, L.P. ("Lawrence"), Horizon
Cellular Telephone Company of Crawford, L.P. ("Crawford"), Horizon Cellular
Telephone Company of Chautauqua, L.P. ("Chautauqua"), and Horizon Cellular
Telephone Company of Indiana, L.P. ("Indiana") (collectively referred to as
"Selected Systems" or "the Company") as of December 31, 1994 and 1995 and for
each of the three years in the period ended December 31, 1995. The combined
financial statements include only the operating results since the Selected
Systems were acquired by Horizon Cellular Telephone Company L.P. Each of the
operating systems is a limited partnership in which KCCGP, L.P. ("KCCGP") is the
managing and sole general partner, and Horizon Cellular Telephone Company, L.P.
("HCTC") is the sole limited partner.
The Selected Systems own, design, develop, and operate cellular
communications systems. KCCGP performs certain administrative functions for the
Selected Systems and, accordingly, certain expenses of KCCGP (see Note 5) have
been allocated to the Selected Systems on a basis which, in the opinion of
management, is reasonable. However, such expenditures are not necessarily
indicative of, and it is not practicable for management to estimate, the nature
and level of expenses which might have been incurred had the systems been
operating as separate independent companies.
2. ACQUISITIONS
Crawford
In August 1991, HCTC acquired the Federal Communications Commission ("FCC")
PA-6 Construction Permit for $7 million in cash and a $16.6 million subordinated
note payable to the seller. In December 1992, HCTC contributed the Construction
Permit to Lawrence in exchange for a 99.9% interest in the Company and
Lawrence's assumption of the related debt. KCCGP contributed approximately
$13,000 to Lawrence for a 0.1% interest in the Company. Lawrence became
operational in September 1991.
In December 1992, HCTC acquired the FCC PA-1 Operating License and certain
operating assets and liabilities for $2.2 million in cash and $7.7 million of
notes payable. Also, in December 1992, HCTC contributed the Operating License to
Crawford in exchange for a 99.0% interest in the Company and Crawford's
assumption of the related debt. KCCGP contributed approximately $20,000 to
Crawford for a 1.0% interest in the Company. The PA-1 system became operational
in April 1992.
Effective January 1, 1995, the operations of Lawrence were merged into
Crawford. As part of the market consolidation, the general partner interests
were reorganized. KCCGP acquired an additional .9% (serving as general partner
with a 1% ownership), reducing HCTC's Limited Partnership interest to 99%.
Chautauqua
In March 1994, the Company acquired the FCC NY-3 Operating License and
certain operating assets and liabilities for $41.5 million in cash, and the
issuance of 30 HCTC limited partnership units with a stated value of $3 million.
Also in March 1994, HCTC contributed cash to fund the acquisition in exchange
for a 99.0% interest in the Company. KCCGP contributed approximately $450,000 to
Chautauqua for a 1.0% interest in the Company. The NY-3 system became
operational in October 1991.
Indiana
In June 1995, the Company acquired the FCC PA-7 Operating License
("Indiana") and certain operating assets and liabilities for $27 million in
cash. As part of the acquisition, the Company also acquired the right to operate
the FCC PA-2 system under an Interim Operating Authority, which permits the
Company
F-20
<PAGE> 99
to temporarily provide cellular service in an otherwise unserved area. Also in
June 1995, HCTC contributed cash to fund the acquisition in exchange for a 99.0%
interest in the Company. KCCGP contributed approximately $273,000 to Indiana for
a 1.0% interest in the Company. The PA-7 system became operational in July 1991.
Pursuant to the partnership agreements, the Selected Systems' net profits
and losses are allocated proportionately to the partners based upon their
respective ownership interests. The partnerships shall terminate on the
respective tenth anniversary dates of formation of the partnerships; however,
the partners may extend the term of the partnership at their discretion.
All of the Company's acquisitions were accounted for under the purchase
method of accounting; accordingly, assets acquired and liabilities assumed have
been recorded at HCTC's basis in such amounts which represents their estimated
fair values at the dates of acquisition by HCTC and their results of operations
are included in the accompanying combined statements of operations since the
date of acquisition. The excess of purchase price over the fair market value of
identifiable net tangible assets acquired has been allocated to customer lists
and licenses.
Pro Forma Results of Operations
The following unaudited pro forma information presents the revenues and
sales, and (loss) income before extraordinary item, as if the acquisitions of
Chautauqua and Indiana had occurred at the beginning of 1993 and 1994,
respectively. The pro forma information includes the revenues and sales, and
(loss) income before extraordinary item for the Selected Systems for the
indicated periods less increased amortization of license costs and other
intangible assets, and increased general and administrative expenses for
management fee allocations. Pro forma revenues and sales and (loss) income
before extraordinary item are not necessarily indicative of the revenues and
sales and (loss) income before extraordinary item that would have occurred had
the purchases been made at the beginning of the respective years or the results
which may occur in the future.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1993 1994 1995
(UNAUDITED)
<S> <C> <C> <C>
Revenues and sales............................ $ 9,375,000 $19,040,000 $26,171,000
(Loss) income before extraordinary item....... (5,002,000) (3,488,000) 24,000
</TABLE>
3. ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Inventories
Inventories are carried at the lower of cost (using the first-in, first-out
method) or market.
Property and Equipment
Property and equipment are stated at cost and are depreciated over their
estimated useful lives (three to twelve years) using the straight-line method.
Depreciation expense amounted to approximately $667,900 in 1993, $1,573,900
in 1994, and $2,790,100 in 1995.
Licenses
Licenses primarily represent the acquisition costs of the Operating
Licenses. Such costs are being amortized over a period of 40 years using the
straight-line method.
The Selected Systems periodically review the carrying value of their
licenses to determine whether such amounts are recoverable based on undiscounted
future cash flows and whether a reduction to fair value is necessary. There have
been no such reductions through December 31, 1995.
F-21
<PAGE> 100
Other Assets
Other assets primarily represent the acquisition cost of the customer lists
which is being amortized over a period of 5 years using the straight-line
method.
Advances from Affiliates
Advances from affiliates primarily represent cash advances from HCTC and
KCCGP which provided funds for investing and operating activities, and have no
specific repayment terms. Commencing in October 1993, upon the transaction
described below, interest expense is charged monthly at a rate of 11-3/8% of the
ending balances payable to HCTC.
In October 1993, HCTC advanced the Company a portion of the proceeds it
generated from the issuance of $235 million senior subordinated discount notes.
The Company utilized the funds advanced to repay all of its indebtedness,
resulting in an extraordinary gain of approximately $874,000, net of the
write-off of unamortized deferred financing fees of approximately $53,000.
Revenue and Expense Recognition
Cellular airtime revenue and access charges are recognized as service is
provided. Cellular airtime is billed in arrears and a majority of access charges
are billed in advance. Subscriber acquisition costs (mainly commissions and loss
on equipment sales) are expensed when incurred. Accounts receivable consist
mainly of amounts due from subscribers and other cellular companies whose
subscribers use the Selected Systems' cellular service.
Approximately 30% of the Company's 1995 roaming revenues were generated
from subscribers of a cellular company serving an adjacent market when such
subscribers place or receive calls on the Company's systems.
Advertising Expenses
Advertising expenses are charged to operations as incurred and amounted to
approximately $107,100 in 1993, $263,300 in 1994, and $336,400 in 1995.
Accrued Expenses
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1995
<S> <C> <C>
Property, sales and excise taxes.............................. $331,700 $ 617,600
Interconnection and other billing costs....................... 200,700 220,600
Salaries and bonuses.......................................... 180,400 364,700
Other......................................................... 282,400 579,100
-------- ----------
$995,200 $1,782,000
======== ==========
</TABLE>
Income Taxes
The Selected Systems are limited partnerships organized under the laws of
Delaware. Accordingly, federal and state income taxes are not paid at the
partnership level but by the ultimate partners of the Selected Systems. The tax
basis of the Selected Systems' assets amounted to approximately $74.7 million
and $93.7 million at December 31, 1994 and 1995, respectively.
New Accounting Standards
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of, which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. The
Selected Systems will adopt SFAS
F-22
<PAGE> 101
121 in the first quarter of 1996 and, based upon current circumstances,
management does not believe the effect of the adoption will be material.
SFAS No. 123, Accounting for Stock-Based Compensation, is effective for
fiscal years beginning after December 15, 1995. SFAS 123 provides companies with
a choice to follow the provisions of SFAS 123 in determining stock-based
compensation expense or to continue with the provisions of APB 25, Accounting
for Stock Issued to Employees. The Selected Systems expect to continue to follow
APB 25 with respect to the LPAR Plan (see Note 6) and will provide disclosures
as required by SFAS 123 in the December 31, 1996 notes to the financial
statements.
4. COMMITMENTS AND CONTINGENCIES
The Selected Systems lease office space, office equipment and cellular
sites and facilities under operating leases with initial terms ranging from 1 to
20 years. Most cellular sites contain renewal options ranging up to 25 years.
Future minimum payments under noncancelable operating leases with initial
terms of one year or more consisted of the following at December 31, 1995,
assuming cellular site leases are renewed through the year 2000:
<TABLE>
<CAPTION>
CELLULAR
SITES OTHER
-------- ----------
<S> <C> <C>
1996.................................................. $516,000 $ 326,000
1997.................................................. 526,000 287,000
1998.................................................. 533,000 279,000
1999.................................................. 537,000 279,000
2000.................................................. 529,000 266,000
Thereafter............................................ 508,000
----------
Total minimum lease payments.......................... $1,945,000
==========
</TABLE>
The minimum lease payments for cellular sites in the year 2000 are expected
to approximate the minimum payments thereafter, subject to contractual increases
and payments for additional sites.
Rental expense amounted to approximately $224,900 in 1993, $395,800 in
1994, and $669,600 in 1995.
The Selected Systems have guaranteed and pledged substantially all of its
assets as collateral for certain debt of HCTC.
5. RELATED PARTY TRANSACTIONS
KCCGP provides various administrative services to the Selected Systems,
including accounting, engineering, and marketing and advertising services, in
addition to funding working capital requirements and capital expenditures as
necessary. These expenses are charged, first on the basis of direct usage when
identifiable, with the remainder allocated equally among its operating systems.
Allocated expenses amounted to $80,000 in 1993, $120,000 in 1994, and $150,000
in 1995, respectively.
6. BENEFIT PLANS
HCTC has granted certain officers of the Selected Systems limited
partnership appreciation rights in HCTC pursuant to a Limited Partnership Unit
Appreciation Rights Plan ("LPAR Plan") that was adopted September 1, 1994, to be
effective January 1, 1993. Upon the occurrence of certain events as specified
therein ("Termination Events"), participants are entitled to share in the
amounts, if any, of distributions to HCTC's partners after all capital
contributions made by HCTC's partners have been repaid, together with a fixed
return on such contributions. Such rights vest over a period of five years,
however vesting is automatically accelerated upon the occurrence of a
Termination Event. Compensation expense will be recognized when distributions
become probable under the LPAR Plan.
Effective July 1, 1994, KCCGP established an employee savings plan (the
"Plan") that qualifies as a deferred salary arrangement under Section 401(k) of
the Internal Revenue Code. Under the Plan, which
F-23
<PAGE> 102
covers employees of the Selected Systems who have met certain eligibility
requirements, participating employees may defer up to 15% of their pretax
earnings, up to the Internal Revenue Service annual contribution limit ($9,240
for calendar year 1995). The Company matches up to 50% of the employee's
contributions, up to a maximum of 3% of the employee's earnings. Employees who
participate in the LPAR Plan are excluded from matching contributions. Matching
Plan contributions, which vest equally over five years, amounted to
approximately $16,000 in 1994, and $31,500 in 1995, respectively.
7. SUBSEQUENT EVENTS
On July 11, 1996, the Company entered into a definitive agreement to sell
the FCC Operating Licenses of Selected Systems, together with certain operating
assets and liabilities, to SYGNET Communications Inc. for approximately $250
million. The combined financial statements do not reflect either the estimated
gain, or any expenses incurred or expected to be incurred related to the sale of
the systems. The sale is expected to close during the third quarter of 1996, and
is subject to certain regulatory and other approvals.
F-24
<PAGE> 103
SELECTED SYSTEMS OF
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
----------------------------
(NOTE) (UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash........................................................ $ 629,874 $ 1,019,087
Accounts receivable, net of allowance for doubtful accounts
of $218,218 and $235,607.................................. 5,123,883 5,573,573
Inventory................................................... 373,623 396,990
Prepaid expenses............................................ 147,206 185,554
------------ ------------
Total current assets................................... 6,274,586 7,175,204
Property and equipment:
Cellular system............................................. 23,305,472 25,318,244
Other....................................................... 2,035,273 2,757,307
------------ ------------
25,340,745 28,075,551
Accumulated depreciation......................................... (5,504,261) (7,238,549)
------------ ------------
19,836,484 20,837,002
Licenses, net of accumulated amortization of $5,266,096 and
$6,422,861..................................................... 86,976,933 85,822,040
Other assets, net of accumulated amortization of $4,879,009 and
$5,906,099..................................................... 5,498,139 4,466,927
------------ ------------
Total assets........................................... $118,586,142 $118,301,173
=========== ===========
LIABILITIES AND COMBINED PARTNERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 1,864,160 $ 1,445,574
Accrued expenses............................................ 1,781,994 1,548,522
Deferred revenue............................................ 588,649 694,322
------------ ------------
Total current liabilities.............................. 4,234,803 3,688,418
Advances from affiliates......................................... 33,087,671 31,980,938
Combined partners' equity:
Partners' contributions..................................... 89,215,915 89,215,915
Cumulative net loss......................................... (7,952,247) (6,584,098)
------------ ------------
Total combined partners' equity........................ 81,263,668 82,631,817
------------ ------------
Total liabilities and combined partners' equity........ $118,586,142 $118,301,173
=========== ===========
</TABLE>
Note: The combined balance sheet at December 31, 1995 has been derived from the
audited combined 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.
See accompanying notes.
F-25
<PAGE> 104
SELECTED SYSTEMS OF
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1995 1996
<S> <C> <C>
Revenues and sales:
Subscriber revenues............................................ $4,902,903 $ 7,858,344
Roaming revenues............................................... 4,233,107 6,357,961
Equipment sales................................................ 621,915 892,999
---------- -----------
Total revenues and sales.................................. 9,757,925 15,109,304
Costs and expenses:
Cost of services............................................... 1,569,118 2,121,106
Cost of equipment sales........................................ 918,238 1,442,640
General and administrative expenses............................ 1,475,669 2,278,009
Selling........................................................ 1,635,311 2,185,689
Depreciation and amortization.................................. 2,787,585 3,918,141
---------- -----------
8,385,921 11,945,585
---------- -----------
Income from operations.............................................. 1,372,004 3,163,719
Interest expense-affiliate.......................................... 1,925,084 1,795,570
---------- -----------
Net (loss) income......................................... $ (553,080) $ 1,368,149
========== ===========
</TABLE>
See accompanying notes.
F-26
<PAGE> 105
SELECTED SYSTEMS OF
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
1995 1996
<S> <C> <C>
Operating Activities
Net (loss) income............................................ $ (553,080) $ 1,368,149
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization........................... 2,787,585 3,918,141
Provision for bad debts................................. 68,534 140,069
Accrued interest expense-affiliate...................... 1,925,084 1,795,570
Changes in operating assets and liabilities (net of
effect of companies acquired):
Accounts receivable................................ (445,560) (589,759)
Inventory.......................................... (13,292) (23,367)
Prepaid expenses................................... (68,891) (38,348)
Accounts payable and accrued expenses.............. 365,927 (494,294)
Deferred revenue................................... 147,971 105,673
------------ -----------
Net cash provided by operating activities......................... 4,214,278 6,181,834
Investing Activities
Purchases of property and equipment, net of $166,200 and
$63,100 purchased on account in 1995 and 1996,
respectively................................................ (2,489,647) (2,894,440)
License and systems acquisitions............................. (27,662,557) --
Other........................................................ (22,675) 4,122
------------ -----------
Net cash used in investing activities............................. (30,174,879) (2,890,318)
Financing Activities
Partners' contributions...................................... 27,272,727 --
Advances to affiliates, net of $567,181 noncash partner
contributions in 1995....................................... (1,085,344) (2,902,303)
------------ -----------
Net cash provided by (used in) financing activities............... 26,187,383 (2,902,303)
------------ -----------
Net increase in cash.............................................. 226,782 389,213
Cash at beginning of period....................................... 611,829 629,874
------------ -----------
Cash at end of period............................................. $ 838,611 $ 1,019,087
============ ===========
</TABLE>
See accompanying notes.
F-27
<PAGE> 106
SELECTED SYSTEMS OF
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1996
1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
The accompanying unaudited combined financial statements reflect the
combined financial position, combined results of operations and combined cash
flows of Horizon Cellular Telephone Company of Lawrence, L.P. ("Lawrence"),
Horizon Cellular Telephone Company of Crawford, L.P. ("Crawford"), Horizon
Cellular Telephone Company of Chautauqua, L.P. ("Chautauqua"), and Horizon
Cellular Telephone Company of Indiana, L.P. ("Indiana") (collectively referred
to as "Selected Systems" or "the Company") for the periods presented. Each of
the operating systems is a limited partnership in which KCCGP, L.P. ("KCCGP") is
the managing and sole general partner, and Horizon Cellular Telephone Company,
L.P. ("HCTC") is the sole limited partner.
The Selected Systems own, design, develop, and operate cellular
communications systems. KCCGP performs certain administrative functions for the
Selected Systems and, accordingly, certain expenses of KCCGP (see Note 6) have
been allocated to the Selected Systems on a basis which, in the opinion of
management, is reasonable. However, such expenditures are not necessarily
indicative of, and it is not practicable for management to estimate, the nature
and level of expenses which might have been incurred had the systems been
operating as separate independent companies.
The accompanying unaudited combined financial statements of the Selected
Systems 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 only of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the six-month
period ended June 30, 1996, are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996.
2. ACQUISITIONS
In June 1995, the Company acquired the FCC PA-7 Operating License
("Indiana") and certain operating assets and liabilities for $27 million in
cash. As part of the acquisition, the Company also acquired the right to operate
the FCC PA-2 system under an Interim Operating Authority, which permits the
Company to temporarily provide cellular service in an otherwise unserved area.
Also in June 1995, HCTC contributed cash to fund the acquisition in exchange for
a 99.0% interest in the Company. KCCGP contributed approximately $273,000 to
Indiana for a 1.0% interest in the Company. The PA-7 system became operational
in July 1991.
The acquisition was accounted for under the purchase method of accounting;
accordingly, assets acquired and liabilities assumed have been recorded at
HCTC's basis in such amounts which represent their estimated fair values at the
date of acquisition by HCTC and the results of operations are included in the
accompanying combined statements of operations since the date of acquisition.
The excess of purchase price over the fair market value of identifiable net
tangible assets acquired has been allocated to customer list and license.
Pro Forma Results of Operations
The following unaudited pro forma information presents the revenues and
sales, and net loss, as if the acquisition had occurred at the beginning of
1995. The pro forma information includes the revenues and sales, and net loss
for the Selected Systems for the indicated period less increased amortization of
license costs and other intangible assets, and increased general and
administrative expenses for management fee allocations. Pro forma revenues and
sales and net loss are not necessarily indicative of the revenues and sales and
net loss that
F-28
<PAGE> 107
would have occurred had the acquisition been made at the beginning of the period
presented or the results which may occur in the future.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1995
-------------
<S> <C>
Revenues and sales............................................. $ 11,456,000
Net loss....................................................... (839,000)
</TABLE>
3. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
4. NEW ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of, which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. The
Company adopted SFAS 121 in the first quarter of 1996 and the effect of the
adoption was not material.
SFAS No. 123, Accounting for Stock-Based Compensation, is effective for
fiscal years beginning after December 15, 1995. SFAS 123 provides companies with
a choice to follow the provisions of SFAS 123 in determining stock-based
compensation expense or to continue with the provisions of APB 25, Accounting
for Stock Issued to Employees. The Company expects to continue to follow APB 25
with respect to the LPAR Plan and will provide disclosures as required by SFAS
123 in the December 31, 1996 notes to the financial statements.
5. ADVANCES FROM AFFILIATES
Advances from affiliates primarily represent cash advances from HCTC and
KCCGP which provided funds for investing and operating activities, and have no
specific repayment terms. Interest expense is charged monthly at a rate of
11 3/8% of the ending balance payable to HCTC.
6. RELATED PARTY TRANSACTIONS
KCCGP provides various administrative services to the Company, including
accounting, engineering, and marketing and advertising services, in addition to
funding working capital requirements and capital expenditures as necessary.
These expenses are charged, first on the basis of direct usage when
identifiable, with the remainder allocated equally among its operating systems.
Allocated expenses amounted to $50,000 and $75,000 for the six months ended June
30, 1995 and 1996, respectively.
7. RECENT DEVELOPMENTS
On July 11, 1996, the Company entered into a definitive agreement to sell
the FCC operating Licenses, together with certain operating assets and
liabilities, to SYGNET Communications Inc. for approximately $250 million. The
combined financial statements do not reflect either the estimated gain, or any
expenses incurred or expected to be incurred related to the sale of the systems.
The sale is expected to close during the third quarter of 1996, and is subject
to certain regulatory and other approvals.
F-29
<PAGE> 108
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Erie Cellular Telephone Company:
We have audited the statements of operations and changes in partners'
capital and cash flows of Erie Cellular Telephone Company (a Delaware general
partnership) for the period from January 1, 1995 to September 29, 1995. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the statements of operations and changes in
partners' capital and cash flows provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Erie
Cellular Telephone Company for the period from January 1, 1995 to September 29,
1995, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Seattle, Washington,
August 12, 1996
F-30
<PAGE> 109
ERIE CELLULAR TELEPHONE COMPANY
(A DELAWARE GENERAL PARTNERSHIP)
STATEMENT OF OPERATIONS AND CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD JANUARY 1, 1995 TO SEPTEMBER 29, 1995
<TABLE>
<S> <C>
Revenues:
Service.................................................................... $4,638,200
Equipment sales and installations.......................................... 915,600
----------
5,553,800
----------
Expenses:
Cost of service............................................................ 1,367,200
Cost of equipment sales and installations.................................. 887,000
General and administrative................................................. 1,272,600
Marketing.................................................................. 1,634,100
Depreciation and amortization.............................................. 362,000
----------
5,522,900
----------
Net Income...................................................................... 30,900
Partners' Capital, beginning of period.......................................... 9,106,000
Increase in cellular licensing costs from acquisitions made by majority
partner....................................................................... 182,300
----------
Partners' Capital, end of period................................................ $9,319,200
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-31
<PAGE> 110
ERIE CELLULAR TELEPHONE COMPANY
A DELAWARE GENERAL PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 1995 TO SEPTEMBER 29, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net Income.................................................................. $ 30,900
---------
Adjustments to reconcile net income to net cash provided by operating
activities --
Depreciation and amortization.......................................... 362,000
Changes in current assets and liabilities:
Trade accounts receivable......................................... (80,000)
Cellular telephone inventory...................................... (106,100)
Other current assets.............................................. 13,800
Accounts payable.................................................. 12,300
Accrued expenses.................................................. 53,700
Customer deposits................................................. 20,800
---------
276,500
---------
Net cash provided by operating activities........................................ 307,400
---------
Cash flows from investing activities:
Purchase of property, equipment and other assets............................ (512,500)
---------
Net cash used in investing activities............................................ (512,500)
---------
Cash flows from financing activities:
Net advances from affiliates................................................ 202,300
---------
Net cash provided by financing activities........................................ 202,300
---------
Change in cash................................................................... (2,800)
Cash, beginning of period........................................................ 41,000
---------
Cash, end of period.............................................................. $ 38,200
=========
Supplemental disclosure of noncash investing activities:
Increase in cellular licensing costs from acquisitions made by majority
partner.................................................................... $ 182,300
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-32
<PAGE> 111
ERIE CELLULAR TELEPHONE COMPANY
A DELAWARE GENERAL PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND PARTNERS' INTEREST:
Organization
Erie Cellular Telephone Company (the Partnership), was organized in July
1987 by various applicants for the A Block cellular license in the metropolitan
statistical area (MSA) of Erie, Pennsylvania (the Market). The Partnership was
formed pursuant to an agreement between competing applicants in the lottery held
by the Federal Communications Commission to determine the recipient of the A
Block cellular license in the Market. Erie Cellular Systems, Inc. (Erie
Cellular), formerly McCaw Communications of Erie, Inc., a wholly owned
subsidiary of AT&T Wireless Services, Inc. (AWS) (formerly McCaw Cellular
Communications, Inc.), acquired controlling interest in the Partnership in June
1988. Effective September 29, 1995, Erie Cellular sold its interest in the
Partnership to SYGNET Communications, Inc. (SYGNET).
Allocation of Profits and Losses
Net income or loss is allocated to the partners in proportion to their
respective percentage interest during the period. The partners' percentage
interests at September 29, 1995, prior to the sale of Erie Cellular's interest
in the Partnership to SYGNET, were as follows:
<TABLE>
<S> <C>
Erie Cellular......................................................... 95.5%
Minority partners..................................................... 4.5
</TABLE>
In 1995, Erie Cellular purchased an additional 0.6% interest from a
minority partner for $182,300 in cash. The acquisition cost incurred by Erie
Cellular was capitalized as cellular licensing costs by the Partnership.
Subject to a majority vote of the partners, contributions to capital are
made to fund the Partnership's capital expenditures and operating losses. Should
a partner not make all or a portion of a required contribution, that partner's
interest is subject to dilution as determined by the partnership agreement.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenue Recognition
Cellular air time and cellular access charges are recorded as revenue as
earned. Sales of equipment and related services are recorded as revenue when the
goods and services are delivered.
The Partnership's cell sites are operated as part of a larger local calling
area managed by subsidiaries of AWS. Cellular air time revenue is recorded by
the Partnership based on the usage of its cell sites in relation to total usage
of all cell sites within the local calling area.
Depreciation and Amortization
Depreciation of property and equipment is computed using the straight-line
method over the estimated useful lives of the assets, which are generally twelve
years for cellular equipment and three to five years for other property and
equipment. Leasehold improvements are amortized using the straight-line method
over the term of the lease.
The costs of normal maintenance and repairs are charged to expense as
incurred and expenditures for major improvements are capitalized at cost. Gains
or losses on the disposition of assets are reflected in the determination of net
income or loss at the time of disposition.
Cellular licensing costs primarily represent amounts incurred by Erie
Cellular to acquire interests in the A Block cellular license in the Market.
Amortization of these costs is provided for using the straight-line method over
a period of 40 years.
F-33
<PAGE> 112
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH RELATED PARTIES:
Due to Affiliates
Certain expenditures are made out of a cash concentration account
maintained on behalf of the Partnership by a subsidiary of AWS to meet certain
capital expenditure and working capital requirements. Cash collections and the
above mentioned expenditures related to partnership operations are recorded in
this concentration account. Such activities are reflected as net advances from
affiliates in the accompanying statement of cash flows.
Technical, Administrative and Marketing Services
AWS has entered into an agreement with the Partnership by which the
Partnership shares technical, administrative and marketing services. Shared
service support is provided at three different levels: Corporate, Region and
District. The costs incurred by AWS and its subsidiaries, as agent, in
connection with these shared services, are recorded as follows: Technical
operating shared services are recorded based on the Partnership's cell sites in
relation to the total cell sites in markets served by AWS and its subsidiaries.
Administrative shared services are recorded based on the Partnership's
subscribers in relation to the total subscribers in markets served by AWS and
its subsidiaries. Marketing shared services are recorded based on the
Partnership's gross subscriber additions during the period in relation to the
total gross subscribers added in the markets served by AWS and its subsidiaries
during the period. The total number of cell sites, subscribers or gross
subscriber additions used in the calculation varies depending on the level at
which the shared service is provided. Prior to 1995, administrative and
marketing shared services were recorded based on the prior year's population in
the Partnership's market in relation to the total prior year's population in all
the markets served by AWS and its subsidiaries. Expenses for technical,
administrative and marketing shared services were approximately $724,400 for the
period January 1, 1995 to September 29, 1995.
Management Fees
The Partnership is charged a management fee by a subsidiary of AWS based
upon a specified percentage between 3% and 5% of gross monthly revenues not to
exceed $30,000 per month for its service in managing the system. Prior to 1995,
the management fee charged to the Partnership was 6% of gross revenues.
Management fee expense was approximately $209,000 for the period January 1, 1995
to September 29, 1995.
Switch Sharing
The Partnership shares the facilities and maintenance of an AWS
subsidiary's mobile switching center. The AWS subsidiary charges the Partnership
between $.015 and $.04 per minute of usage for the sharing of the switch. Prior
to 1995, the Partnership was charged $.04 per minute of usage for the sharing of
the switch. Expenses for switch sharing were approximately $287,000 for the
period January 1, 1995 to September 29, 1995.
Other Direct Expenses
Certain other direct expenses charged by AWS' subsidiaries to the
Partnership totalled approximately $8,700 for the period January 1, 1995 to
September 29, 1995. Such expenses included, among others, after-hours customer
care calls, security monitoring and roaming services.
Transactions with AT&T Corp.
The Partnership purchases certain cellular telephone inventory and long
distance services from AT&T Corp. (AT&T), parent of AWS. For the period January
1, 1995 to September 29, 1995, the Partnership expensed cellular telephone
inventory purchased from AT&T of approximately $33,000, and purchased long
distance services from AT&T reflected as cost of service of approximately
$110,800.
F-34
<PAGE> 113
4. INCOME TAXES:
Income taxes have not been recorded in the accompanying financial
statements because they are obligations of the partners. The tax returns, the
qualification of the Partnership as such for tax purposes and the amount of
distributable Partnership income or loss are subject to examination by taxing
authorities. If such examinations result in changes with respect to the
Partnership qualification or in changes with respect to the income or loss, the
tax liability of the partners would be changed accordingly.
The Partnership provides depreciation for financial reporting purposes
using the straight-line method whereas for income tax purposes accelerated
methods are used. In addition, the allowance method for bad debts is used for
financial reporting purposes, while the direct write-off method is used for
income tax purposes.
5. COMMITMENTS:
The Partnership is committed under operating leases and agreements,
principally for facilities, office space and cell sites, with remaining terms
ranging from one to five years. Certain cell site leases include options for
additional periods. Certain leases provide for payment by the lessee of taxes,
maintenance and insurance.
Future minimum payments, required under operating leases and agreements,
that have an initial or remaining noncancelable lease term in excess of one year
at September 29, 1995 are summarized below:
<TABLE>
<CAPTION>
PERIOD ENDING SEPTEMBER 29,
<S> <C>
1996.................................................... $124,800
1997.................................................... 121,200
1998.................................................... 119,600
1999.................................................... 104,200
2000.................................................... 44,600
--------
$514,400
========
</TABLE>
Total rent expense for the period January 1, 1995 to September 29, 1995 was
approximately $103,900.
F-35
<PAGE> 114
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Erie Cellular Telephone Company:
We have audited the accompanying balance sheets of Erie Cellular Telephone
Company (a Delaware general partnership) as of December 31, 1993 and 1994, and
the related statements of operations and changes in partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Erie Cellular Telephone
Company as of December 31, 1993 and 1994, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Seattle, Washington,
January 27, 1995 (except with
respect to the matter discussed
in Note 9, as to which the date
is August 2, 1996)
F-36
<PAGE> 115
ERIE CELLULAR TELEPHONE COMPANY
BALANCE SHEETS -- DECEMBER 31, 1993 AND 1994
<TABLE>
<CAPTION>
1993 1994
(RESTATED)
<S> <C> <C>
ASSETS
Current assets:
Cash........................................................... $ 3,200 $ 41,000
Trade accounts receivable, net of allowance for doubtful
accounts (1993, $34,800; 1994, $50,000)....................... 458,000 730,500
Cellular telephone inventory................................... 49,400 93,100
Other.......................................................... 13,300 14,600
---------- -----------
Total current assets...................................... 523,900 879,200
Property and equipment, net of accumulated depreciation and
amortization (1993, $548,800; 1994, $752,600)..................... 1,491,500 1,900,900
Cellular licensing costs, net of accumulated amortization (1993,
$1,311,600; 1994, $1,534,300)..................................... 7,604,400 7,552,400
Other, net.......................................................... 5,800 --
---------- -----------
$9,625,600 $10,332,500
========= ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable............................................... $ 33,500 $ 10,100
Accrued expenses............................................... 211,100 279,300
Due to affiliates.............................................. 7,600 936,500
Unearned revenues and customer deposits........................ 88,200 600
---------- -----------
Total current liabilities................................. 340,400 1,226,500
Commitments
Partners' capital................................................... 9,285,200 9,106,000
---------- -----------
$9,625,600 $10,332,500
========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE> 116
ERIE CELLULAR TELEPHONE COMPANY
STATEMENTS OF OPERATIONS AND CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1993 AND 1994
<TABLE>
<CAPTION>
1993 1994
(RESTATED)
<S> <C> <C>
Revenues:
Service......................................................... $2,901,800 $4,303,400
Equipment sales and installations............................... 453,300 730,600
---------- ----------
3,355,100 5,034,000
---------- ----------
Expenses:
Cost of service................................................. 563,800 800,300
Cost of equipment sales and installations....................... 515,100 774,900
General and administrative...................................... 1,103,400 1,726,700
Marketing....................................................... 1,309,200 1,649,600
Depreciation and amortization................................... 350,200 432,400
---------- ----------
3,841,700 5,383,900
---------- ----------
Net loss............................................................. (486,600) (349,900)
Partners' capital, beginning of year................................. 8,507,400 9,285,200
Increase in cellular licensing costs from acquisitions made by
parent............................................................. 1,264,400 170,700
---------- ----------
Partners' capital, end of year....................................... $9,285,200 $9,106,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-38
<PAGE> 117
ERIE CELLULAR TELEPHONE COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993 AND 1994
<TABLE>
<CAPTION>
1993 1994
(RESTATED)
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................ $ (486,600) $(349,900)
---------- ---------
Adjustments to reconcile net loss to net cash used in operating
activities --
Depreciation and amortization.............................. 350,200 432,400
Changes in current assets and liabilities:
Trade accounts receivable, net........................ (201,600) (272,500)
Cellular telephone inventory.......................... (49,400) (43,700)
Other current assets.................................. 41,700 (1,300)
Accounts payable...................................... 21,700 (23,400)
Accrued expenses...................................... 119,100 68,200
Unearned revenues and customer deposits............... 42,300 (87,600)
---------- ---------
Total adjustments.......................................... 324,000 72,100
---------- ---------
Net cash used in operating activities................................ (162,600) (277,800)
---------- ---------
Cash flows from investing activities:
Purchase of property and equipment.............................. (472,000) (613,300)
---------- ---------
Net cash used in investing activities................................ (472,000) (613,300)
---------- ---------
Cash flows from financing activities:
Net advances from affiliates.................................... 619,200 928,900
---------- ---------
Net cash provided by financing activities............................ 619,200 928,900
---------- ---------
Change in cash....................................................... (15,400) 37,800
---------- ---------
Cash, beginning of year.............................................. 18,600 3,200
---------- ---------
Cash, end of year.................................................... $ 3,200 $ 41,000
========== =========
Supplemental disclosure of noncash investing and financing
activities:
Increase in cellular licensing costs from acquisitions made by
parent......................................................... $1,264,400 $ 170,700
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-39
<PAGE> 118
ERIE CELLULAR TELEPHONE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. ORGANIZATION AND PARTNERS' INTEREST:
Organization
Erie Cellular Telephone Company (the Partnership), a Delaware general
partnership, was originally organized in July 1987 by various applicants for the
A Block cellular license in the metropolitan statistical area (MSA) of Erie,
Pennsylvania (the Market). The Partnership was formed pursuant to an agreement
between competing applicants in the lottery held by the Federal Communications
Commission (FCC) to determine the recipient of the A Block cellular license in
the Market. McCaw Communications of Erie, Inc. (McCaw), a wholly owned
subsidiary of McCaw Cellular Communications, Inc. (MCCI), acquired controlling
interest in the Partnership in June 1988. On September 19, 1994, AT&T Corp.
(AT&T) merged with MCCI. During 1995, MCCI changed its name to AT&T Wireless
Services, Inc.
Allocation of Profits and Losses
Net loss is allocated to the partners in proportion to their respective
percentage interest during the period. The partners' percentage interests at
December 31, 1993 and 1994, were as follows:
<TABLE>
<CAPTION>
1993 1994
<S> <C> <C>
McCaw................................................................. 93.8% 94.9%
Minority partners..................................................... 6.2 5.1
</TABLE>
Subject to a majority vote of the partners, contributions to capital are
made to fund the Partnership's capital expenditures and operating losses. Should
a partner not make all or a portion of a required contribution, that partner's
interest is subject to dilution as determined by the partnership agreement.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenue Recognition
Cellular air time and cellular access charges are recorded as revenue as
earned. Sales of equipment and related services are recorded as revenue when the
goods and services are delivered. Prior to 1994, cellular access charges were
billed in advance.
Cellular Telephone Inventory
Cellular telephone inventory is stated at the lower of cost or market. Cost
is determined by using the specific identification method.
Property and Equipment
Property and equipment is stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets, which
are generally 12 years for cellular equipment and three to five years for other
property and equipment. Leasehold improvements are amortized using the
straight-line method over the term of the lease.
Cellular Licensing Costs
Cellular licensing costs primarily represent amounts incurred to secure the
A Block cellular license in the Market. Amortization of these costs is provided
for using the straight-line method over a period of 40 years.
F-40
<PAGE> 119
3. PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1993 1994
<S> <C> <C>
Cellular equipment........................................... $1,855,800 $2,452,900
Leasehold improvements....................................... 93,500 105,200
Other........................................................ 91,000 95,400
---------- ----------
2,040,300 2,653,500
========= =========
Less -- Accumulated depreciation and amortization............ 548,800 752,600
---------- ----------
$1,491,500 $1,900,900
========= =========
</TABLE>
4. ACCRUED EXPENSES:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
<S> <C> <C>
Wages, vacations and bonuses.................................... $ 70,400 $ 86,500
Sales, excise and other taxes................................... 25,300 47,100
Commissions..................................................... 47,900 85,300
Other........................................................... 67,500 60,400
-------- --------
$211,100 $279,300
======== ========
</TABLE>
5. TRANSACTIONS WITH RELATED PARTIES:
Due to Affiliates
Certain expenditures are made out of a cash concentration account,
maintained on behalf of the Partnership by an affiliate, to meet certain capital
expenditure and working capital requirements. Cash collections and the above
mentioned expenditures related to partnership operations are recorded in this
concentration account. The resulting cash balance for the Partnership related to
the above activities is reflected as due to affiliates in the accompanying
financial statements.
Technical, Administrative and Marketing Services
Costs incurred by MCCI and its subsidiaries, as agents, in association with
certain shared services, are recorded as follows: Technical operating shared
expenses are recorded based on the Partnership's cell sites in relation to the
total cell sites serviced by MCCI and its subsidiaries. Administrative and
marketing shared expenses are recorded based on the prior year's population in
the Partnership's MSA in relation to the total prior year's population in all
the MSAs serviced by MCCI or its subsidiaries.
In addition, a management fee of 6% of gross revenues is charged to the
Partnership from a subsidiary of MCCI for its service in managing the system.
Switch Sharing
The Partnership shares the facilities and maintenance of an affiliate's
mobile switching center. The affiliate charges the Partnership $.04 per billable
minute of usage for the sharing of the switch.
Expenses for technical, administrative and marketing services and switch
sharing were $1,281,400 and $1,903,900 for the years ended December 31, 1993 and
1994, respectively.
Certain other direct expenses allocated to the Partnership equaled $24,100
and $26,400 for the years ended December 31, 1993 and 1994, respectively. Such
expenses included, among others, after-hours customer care calls, security
monitoring, network services and roaming services.
A proposal has been made to the Partners by McCaw to modify management
fees, switch sharing and shared administrative and marketing expenses charged to
the Partnership effective January 1, 1995. The proposed changes are as follows:
The management fee charges will be the lesser of $30,000 per month or a
specified sliding scale percentage of gross revenue, switch sharing charges will
be on a sliding scale ranging
F-41
<PAGE> 120
from $.04 to $.015 per minute based on the market's monthly minutes of use, and
shared administrative and marketing expenses will be changing from
population-based to subscriber-based allocations.
Transactions with AT&T
The Partnership purchases certain cellular telephone inventory and long
distance services from AT&T. These goods and services were purchased under
contractual arrangements with AT&T which existed prior to the AT&T/MCCI merger
date. For the year ended December 31, 1994, approximately $113,000 of cellular
telephone inventory sold and reflected as cost of equipment sales and
approximately $122,000 of cellular long distance services reflected as cost of
service in the accompanying financial statements were purchased from AT&T.
6. INCOME TAXES:
Income taxes have not been recorded in the accompanying financial
statements because they are obligations of the partners. The tax returns, the
qualification of the Partnership as such for tax purposes and the amount of
distributable Partnership income or loss are subject to examination by taxing
authorities. If such examinations result in changes with respect to the
Partnership qualification or in changes with respect to the income or loss, the
tax liability of the partners would likely be changed accordingly.
The Partnership provides depreciation for financial reporting purposes
using the straight-line method whereas for income tax purposes accelerated
methods are used. In addition, the allowance method for bad debts is used for
financial reporting purposes, while the direct write-off method is used for
income tax purposes.
7. COMMITMENTS:
The Partnership is committed under operating leases and agreements,
principally for facilities, office space and cell sites, with remaining terms
ranging from one to five years. Certain cell site leases include options for
additional periods. Certain leases provide for payment by the lessee of taxes,
maintenance and insurance.
Future minimum payments, required under operating leases and agreements,
that have an initial or remaining noncancelable lease term in excess of one year
at December 31, 1994, are summarized below:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------------------------------------------------
<S> <C>
1995..................................................... $40,500
1996..................................................... 19,200
1997..................................................... 19,200
1998..................................................... 17,400
1999..................................................... 3,200
-------
$99,500
=======
</TABLE>
Total rent expense for the years ended December 31, 1993 and 1994, was
approximately $103,800 and $113,300, respectively.
8. MERGER OF MCCI AND AT&T:
In connection with the merger of MCCI and AT&T, both parties entered into a
Consent Decree with the Department of Justice. Under the Consent Decree, MCCI
and its affiliates are required to offer their customers equal access to long
distance carriers. The planned completion of this conversion for the Partnership
is August 1995. The Partnership has served and will continue to serve as the
provider for its customers' InterLATA and international calling services until
the conversion date. Subsequent to the conversion, all revenues and expenses
associated with providing InterLATA and international calling service will be
recorded by the long distance carrier providing the service. InterLATA and
international calling services reduced the net loss of the Partnership by
approximately $239,000 for the year ended December 31, 1994.
F-42
<PAGE> 121
9. SUBSEQUENT EVENT:
Effective September 29, 1995, McCaw sold all of its interests in the
Partnership to SYGNET Communications, Inc. (SYGNET). In connection with a
proposed offering of securities by SYGNET, adjustments have been made to the
previously issued financial statements of the Partnership to reflect the cost of
the cellular license originally purchased by McCaw. McCaw's basis in the
cellular license acquired and the related accumulated amortization have been
pushed down to the Partnership's financial statements for the years presented,
resulting in an increase to the provision for depreciation and amortization of
$180,700 and $222,700 for the years ended December 31, 1993 and 1994,
respectively, compared to the amounts previously reported.
F-43
<PAGE> 122
REPORT OF INDEPENDENT AUDITORS
General and Limited Partners
DICOMM Cellular Limited Partnership
We have audited the accompanying statements of operations, partners'
capital (deficiency), and cash flows of DICOMM Cellular Limited Partnership for
the year ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of DICOMM
Cellular Limited Partnership for the year ended December 31, 1993 in conformity
with generally accepted accounting principles.
Ernst & Young LLP
March 25, 1994
Boston, Massachusetts
F-44
<PAGE> 123
DICOMM CELLULAR LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<S> <C>
Revenues
Subscriber revenue......................................................... $1,161,720
Roamer revenue............................................................. 1,628,654
----------
Total revenues........................................................ 2,790,374
Costs and Expenses
Costs of services.......................................................... 1,042,689
General and administrative................................................. 787,564
Selling and marketing...................................................... 566,505
Depreciation and amortization.............................................. 475,196
----------
2,871,954
Loss from operations............................................................ (81,580)
Interest expense................................................................ 530,239
----------
Net loss........................................................................ $ (611,819)
==========
</TABLE>
See accompanying notes.
F-45
<PAGE> 124
DICOMM CELLULAR LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' CAPITAL (DEFICIENCY)
<TABLE>
<CAPTION>
TOTAL
PARTNERS'
GENERAL LIMITED CAPITAL
PARTNER PARTNERS (DEFICIENCY)
<S> <C> <C> <C>
Balance at December 31, 1992............................. $(20,215) $(2,001,314) $ (2,021,529)
Partners' capital contributions.......................... 1,616 160,000 161,616
Net loss................................................. (6,118) (605,701) (611,819)
-------- ----------- ------------
Balance at December 31, 1993............................. $(24,717) $(2,447,015) $ (2,471,732)
======== ========== ==========
</TABLE>
See accompanying notes.
F-46
<PAGE> 125
DICOMM CELLULAR LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<S> <C>
Operating Activities
Net loss.................................................................... $(611,819)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation........................................................... 460,090
Amortization........................................................... 15,106
Deferred rent.......................................................... (2,994)
Changes in operating assets and liabilities:
Accounts receivable............................................... (282,871)
Inventories....................................................... (19,495)
Prepaid expenses.................................................. (7,833)
Other assets...................................................... 1,898
Accounts payable.................................................. 77,178
Accrued expenses.................................................. 85,628
---------
Net cash used in operating activities............................................ (285,112)
Investing Activities
Purchases of property and equipment......................................... (483,509)
---------
Net cash used in investing activities............................................ (483,509)
Financing Activities
Proceeds from capital contributions......................................... 161,616
Proceeds from loans from supplier........................................... 23,389
Bank overdraft.............................................................. 51,616
Proceeds from notes payable to related parties.............................. 532,000
---------
Net cash provided by financing activities........................................ 768,621
---------
Net decrease in cash and cash equivalents........................................ --
Cash and cash equivalents at December 31, 1992................................... --
---------
Cash and cash equivalents at December 31, 1993................................... $ --
=========
</TABLE>
See accompanying notes.
F-47
<PAGE> 126
DICOMM CELLULAR LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1993
1. BASIS OF PRESENTATION
DICOMM Cellular Limited Partnership (the Company) was formed as a Delaware
limited partnership on February 7, 1991. The Company provides cellular portable
telephone service in the Genessee, Wyoming, Chautauqua, Cattaraugus, Alleghany
and Steuben Counties in New York State.
The General Partner is DICOMM Cellular Inc. The General Partner has a 1%
interest in the Company and has sole operating responsibility and control.
Limited Partners have no operating control or responsibility and
collectively hold a 99% share of the Company.
On March 8, 1994, the partners sold all of their general and limited
partnership interests in the Company, with the exception of certain liabilities,
primarily litigation relating to the period prior to March 8, 1994. See Note 6
for further discussion.
2. SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
The Company considers highly liquid investments with maturities of three
months or less at date of purchase to be cash equivalents.
Property and Equipment
Property and equipment is stated at cost, including expenses related to
engineering services. Depreciation is calculated on a straight-line basis over
the estimated useful lives of the assets, ranging from 5 to 40 years.
License Costs
License costs relate to organization and development costs, legal and
professional fees, salaries and related expenses associated with technical
development of the cellular system and obtaining related regulatory approvals.
The costs are being amortized on a straight-line basis over 40 years.
Other Assets
Other assets relate to organization costs, deferred financing costs and
capitalized lease costs which are being amortized on a straight-line basis over
terms of 5 to 10 years.
Income Taxes
The Company is a partnership and, as such, no provision is made for income
taxes as income or loss is included in the tax returns of the partners. Each
partner accounts for its related share of applicable tax credits.
3. NOTES PAYABLE TO SUPPLIER
The Company entered into a loan agreement on July 1, 1991 with its major
equipment supplier. The agreement related to the issuance of two promissory
notes, an equipment note and a working capital note aggregating $6,000,000.
Interest accrues on principal balances at the rate of the Morgan Guaranty Trust
Company of New York base rate plus 3%, adjusted periodically. Advances under the
notes are secured by substantially all of the Company's assets. The notes are
payable in 48 equal monthly principal payments of $125,000 beginning July 1,
1994.
The notes include restrictive financial covenants relating to working
capital, tangible net worth and other items. The Company was in violation of
certain of these covenants at December 31, 1993. However, the notes were paid in
full on March 8, 1994 in conjunction with the sale of the general and limited
partnership interests discussed in Note 6. Accordingly, the notes are classified
as current at December 31, 1993. Interest paid in 1993 was $497,251.
F-48
<PAGE> 127
4. LEASES
The Company has noncancellable operating lease commitments for office
space, land, tower space and vehicles. Terms of the leases range from one to ten
years and include various renewal options. Rent expense incurred during the year
ended December 31, 1993 amounted to $150,792. Minimum future rental commitments
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31:
<S> <C>
1994........................................................... $133,676
1995........................................................... 126,491
1996........................................................... 145,686
1997........................................................... 29,203
1998........................................................... 10,200
Thereafter..................................................... 37,994
--------
$483,250
========
</TABLE>
5. RELATED-PARTY TRANSACTIONS
The Company pays a monthly management fee to an affiliated company owned by
the limited partners for administrative and office services provided. The
Company incurred management fees of $119,874.
The notes payable to related parties on December 31, 1993 consist of
$542,000 unsecured demand promissory note from the general partner, of which
$462,000 is outstanding and $70,000 of unsecured demand notes payable to the
limited partners. The notes are noninterest bearing.
6. SUBSEQUENT EVENTS
On March 8, 1994, the General and Limited Partners sold their partnership
interests in the Company to Horizon Cellular Telephone Company, L.P. and Horizon
Cellular Telephone Company of Chautauqua L.P. (the Purchaser) for $43,750,000. A
portion of the purchase price was advanced to satisfy the Company's notes
payable to suppliers. Under the terms of the purchase and sale agreement,
certain liabilities of the Company remain with the general partner, including
notes payable and any litigation that may arise relating to the period prior to
March 8, 1994.
F-49
<PAGE> 128
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL TO, OR THE SOLICITATION OF ANY
OFFER TO BUY FROM ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
CERTAIN TERMS..........................
ADDITIONAL INFORMATION.................
PROSPECTUS SUMMARY..................... 3
RISK FACTORS........................... 10
USE OF PROCEEDS........................ 14
CAPITALIZATION......................... 15
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL DATA.......... 16
SELECTED FINANCIAL DATA................ 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS........................... 26
BUSINESS............................... 32
MANAGEMENT............................. 48
PRINCIPAL STOCKHOLDERS................. 51
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS......................... 52
DESCRIPTION OF BANK CREDIT FACILITY.... 53
DESCRIPTION OF NOTES................... 54
DESCRIPTION OF CAPITAL STOCK........... 72
UNDERWRITING........................... 75
CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES..................... 75
LEGAL MATTERS.......................... 76
EXPERTS................................ 77
INDEX TO FINANCIAL STATEMENTS.......... F-1
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
$110,000,000
[LOGO]
% SENIOR NOTES
DUE 2006
--------------------
PROSPECTUS
--------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
TORONTO DOMINION SECURITIES
------------------------------------------------------
------------------------------------------------------
<PAGE> 129
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of fees and
expenses (other than underwriting discounts and commissions) payable by the
Registrant in connection with the issuance and distribution of the securities
registered hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $53,448.65
Printing and engraving.......................................... $
Accountants' fees and expenses.................................. $
Blue sky fees and expenses...................................... $
Counsel fees and expenses....................................... $
Miscellaneous................................................... $
----------
Total................................................. $
=========
</TABLE>
- ---------------
* Estimate
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 1701.13(E) of the Ohio General Corporation Law (the "Ohio
Law"), a corporation may indemnify its directors, officers, employees and agents
and its former directors, officers, employees and agents and those who serve, at
the corporation's request, in such capacity with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The Ohio Law
provides, however, that such person must have acted in good faith and in a
manner such person reasonably believed to be in (or not opposed to) the best
interests of the corporation and, in the case of a criminal action, such person
must have had no reasonable cause to believe his or her conduct was unlawful. In
addition, the Ohio Law does not permit indemnification in an action or suit by
or in the right of the corporation, where (i) such person has been adjudged
liable to the corporation, unless and only to the extent that, a court
determines that such person fairly and reasonably is entitled to indemnity for
costs the court deems proper in light of liability adjudication or, (ii) the
only liability asserted against a director is for unlawful loans, dividends or
distribution of assets. Indemnity is mandatory to the extent a claim, issue or
matter has been successfully defended.
The Company's Articles of Incorporation and Code of Regulations provide
that the Board of Directors may, by majority vote, authorize the Company to
indemnify directors, officers or employees of the Company on generally the same
terms as permitted by the Ohio Law.
The Underwriting Agreement provides for indemnification by the Underwriters
severally of the Company, its directors, its officers who sign the Registration
Statement and controlling persons of the Company against certain liabilities,
including liabilities under the Securities Act, under certain circumstances.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement for Notes Offering by and among Sygnet Wireless, Inc.
and Donaldson, Lufkin & Jenrette Securities Corporation, Lehman Brothers, and
Toronto Dominion Securities (USA) Inc. as Underwriters.*
2.1 Amended and Restated Agreement and Plan of Merger dated August 19, 1996.
2.2 Amended and Restated Agreement and Plan of Transfer of Assets dated August 28, 1996.
</TABLE>
II-1
<PAGE> 130
<TABLE>
<S> <C>
2.3 Agreement and Plan of Recapitalization of Sygnet Wireless, Inc. dated August 28,
1996.
3.1 Form of Amended and Restated Articles of Incorporation of Sygnet Wireless, Inc.
dated , 1996.
3.2 Code of Regulations of Sygnet Wireless, Inc.
4.1 Form of Indenture (including form of Note) between Sygnet Wireless, Inc. and Fleet
National Bank, as Trustee, relating to the Senior Notes due 2006 of Sygnet Wireless,
Inc.
5.1 Opinion of Bryan Cave LLP, counsel to the Registrant, as to the legality of the
Notes being registered.*
8.1 Opinion of Bryan Cave LLP, with respect to certain tax matters (included in the
legal opinion filed as Exhibit 5.1 hereto).*
10.1 Employment Agreement dated August 26, 1996 between the Registrant and Albert H.
Pharis, Jr.
10.2 Employment Agreement dated August 26, 1996 between the Registrant and Warren P.
Williamson, III.
10.3 Employment Agreement dated August 26, 1996 between the Registrant and Craig T.
Sheetz.
10.4 Employment Agreement dated August 26, 1996 between the Registrant and Gregory T.
Pauley.
10.5 Sygnet Wireless, Inc. 1996 Stock Option Plan (including form of Stock Option
Agreement).
10.6 Office Lease Agreement dated September 16, 1994 by and between K&T Realty and SYGNET
Communications Inc. for the premises located at 6550 Seville Drive, Canfield, Ohio.
10.7 Site Lease Agreement dated March 29, 1990 between Milan John Vanco and Alice C.
Vanco and Erie Cellular Telephone Company.
10.8 Lease Agreement dated June 1, 1990 between Bert D. and Margaret A. Schaefer and
Wilcom/Cellular One.
10.9 Site Lease Agreement dated June 27, 1988 between John G. Virostek and MCI
Telecommunications Corporation with Assignment and Assumption of Lease dated
December 6, 1991 between MCI Telecommunications Corporation and Wilcom/Cellular One.
10.10 Lease Agreement with Real Estate Purchase Option Agreement dated July 21, 1987
between George A. Law and Agnes Law, George C. Law and Judith Law, August Thalman,
Jr. and Betty Thalman and Wilcom Corporation.
10.11 Ground Lease Agreement dated December 15, 1987 between WKBN Broadcasting Corporation
and Youngstown Cellular Telephone Company.
10.12 DMS-MTX Cellular Supply Agreement dated June 1, 1996 between Youngstown Cellular
Telephone Company and Northern Telecom, Inc.
10.13 Intercarrier Services Agreement dated April 25, 1995 between Youngstown Cellular
Telephone Company and EDS Personal Communications Corporation.
10.14 Software License Agreement dated April 20, 1995 between Youngstown Cellular
Telephone Company and International Telecommunication Data Systems, Inc.
10.15 License Agreement between JSJ Software, Inc. and Youngstown Cellular Telephone
Company.
10.16 Product Service Agreement dated February 1, 1995 between Glenayre Care and Wilcom
Cellular.
10.17 Asset Acquisition Agreement dated July 11, 1996 between Horizon Cellular Telephone
Company of Chautauqua, L.P., Horizon Cellular Telephone Company of Crawford, L.P.,
Horizon Cellular Telephone Company of Indiana, L.P., and SYGNET Communications, Inc.
10.18 Agreement for Purchase of Partnership Interest dated September 15, 1995 between
SYGNET Communications, Inc. and Erie Cellular Systems, Inc.
10.19 Stock Purchase Agreement between SYGNET Communications, Inc., Wilcom Corporation,
and Advent IV Capital Liquidating Trust, TA Associates IV, TA Venture Investors
Limited Partnership, Elden J. Heinz, Security Investment Management & Trust Company,
The Planned Giving Foundation, Inc., and Erma Heinz.
10.20 Credit Agreement dated , 1996 among the Registrant and The
Toronto-Dominion Bank and PNC Bank, National Association.*
10.21 Commitment Letter dated August 21, 1996 executed and delivered by The
Toronto-Dominion Bank and PNC Bank, National Association in favor of the Registrant.
10.22 Promissory Note dated December 29, 1994 executed and delivered by Albert H. Pharis,
Jr. in favor of the Registrant.
</TABLE>
II-2
<PAGE> 131
<TABLE>
<S> <C>
12.1 Statement regarding Computation of Ratio of Earnings to Fixed Charges.
21.1 Subsidiary of Sygnet Wireless, Inc.
23.1 Consent of Ernst & Young LLP, Cleveland, Ohio.
23.2 Consent of Ernst & Young LLP, Boston, Massachusetts.
23.3 Consent of Ernst & Young LLP, Philadelphia, Pennsylvania.
23.4 Consent of Arthur Andersen LLP
23.5 Consent of Coopers & Lybrand L.L.P.
23.6 Consent of Bryan Cave, LLP (included in the legal opinion filed as Exhibit 5.1
hereto).*
24.1 Powers of Attorney (included on the signature page to the Registration Statement).**
25.1 Statement of Eligibility of Trustee on Form T-1.**
27.1 Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
(b) Financial Statement Schedules. All schedules have been omitted since
the required information is not present in amounts sufficient to require
submission of the schedules or because the information required is included in
the financial statements.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is 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 to 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.
The undersigned Registrant hereby undertakes that,
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 132
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Canfield, State of Ohio,
on August 30, 1996.
SYGNET WIRELESS, INC.
By: /s/ WARREN P. WILLIAMSON, III
------------------------------------
WARREN P. WILLIAMSON, III
DIRECTOR AND CHAIRMAN
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ WARREN P. WILLIAMSON, III* Director and Chairman August 30, 1996
- ---------------------------------------------
WARREN P. WILLIAMSON, III
/s/ ALBERT H. PHARIS, JR.* Director, President and August 30, 1996
- --------------------------------------------- Chief Executive Officer
ALBERT H. PHARIS, JR.
/s/ CRAIG T. SHEETZ* Vice President, Chief August 30, 1996
- --------------------------------------------- Financial Officer,
CRAIG T. SHEETZ Treasurer
/s/ GREGORY T. PAULEY* Vice President of August 30, 1996
- --------------------------------------------- Technical Operations
GREGORY T. PAULEY
/s/ JOSEPH D. WILLIAMSON, II* Director August 30, 1996
- ---------------------------------------------
JOSEPH D. WILLIAMSON, II
/s/ LOWRY A. STEWART* Director August 30, 1996
- ---------------------------------------------
LOWRY A. STEWART
/s/ RAYMOND S. TITTLE, JR.* Director August 30, 1996
- ---------------------------------------------
RAYMOND S. TITTLE, JR.
*By: /s/ CRAIG T. SHEETZ
- ---------------------------------------------
CRAIG T. SHEETZ
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE> 133
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
1.1 Form of Underwriting Agreement for Notes Offering by and among Sygnet
Wireless, Inc. and Donaldson, Lufkin & Jenrette Securities Corporation,
Lehman Brothers, and Toronto Dominion Securities (USA) Inc. as
Underwriters.*...........................................................
2.1 Amended and Restated Agreement and Plan of Merger dated August 19,
1996.....................................................................
2.2 Amended and Restated Agreement and Plan of Transfer of Assets dated
August 28, 1996..........................................................
2.3 Agreement and Plan of Recapitalization of Sygnet Wireless, Inc. dated
August 28, 1996..........................................................
3.1 Form of Amended and Restated Articles of Incorporation of Sygnet
Wireless, Inc. dated , 1996..........................
3.2 Code of Regulations of Sygnet Wireless, Inc..............................
4.1 Form of Indenture (including form of Note) between Sygnet Wireless, Inc.
and Fleet National Bank, as Trustee, relating to the Senior Notes due
2006 of Sygnet Wireless, Inc.............................................
5.1 Opinion of Bryan Cave LLP, counsel to the Registrant, as to the legality
of the Notes being registered.*..........................................
8.1 Opinion of Bryan Cave LLP, with respect to certain tax matters (included
in the legal opinion filed as Exhibit 5.1 hereto).*......................
10.1 Employment Agreement dated August 26, 1996 between the Registrant and
Albert H. Pharis, Jr.....................................................
10.2 Employment Agreement dated August 26, 1996 between the Registrant and
Warren P. Williamson, III................................................
10.3 Employment Agreement dated August 26, 1996 between the Registrant and
Craig T. Sheetz..........................................................
10.4 Employment Agreement dated August 26, 1996 between the Registrant and
Gregory T. Pauley........................................................
10.5 Sygnet Wireless, Inc. 1996 Stock Option Plan (including form of Stock
Option Agreement)........................................................
10.6 Office Lease Agreement dated September 16, 1994 by and between K&T Realty
and SYGNET Communications Inc. for the premises located at 6550 Seville
Drive, Canfield, Ohio. ..................................................
10.7 Site Lease Agreement dated March 29, 1990 between Milan John Vanco and
Alice C. Vanco and Erie Cellular Telephone Company. .....................
10.8 Lease Agreement dated June 1, 1990 between Bert D. and Margaret A.
Schaefer and Wilcom/Cellular One. .......................................
10.9 Site Lease Agreement dated June 27, 1988 between John G. Virostek and MCI
Telecommunications Corporation with Assignment and Assumption of Lease
dated December 6, 1991 between MCI Telecommunications Corporation and
Wilcom/Cellular One. ....................................................
10.10 Lease Agreement with Real Estate Purchase Option Agreement dated July 21,
1987 between George A. Law and Agnes Law, George C. Law and Judith Law,
August Thalman, Jr. and Betty Thalman and Wilcom Corporation. ...........
10.11 Ground Lease Agreement dated December 15, 1987 between WKBN Broadcasting
Corporation and Youngstown Cellular Telephone Company. ..................
10.12 DMS-MTX Cellular Supply Agreement dated June 1, 1996 between Youngstown
Cellular Telephone Company and Northern Telecom, Inc. ...................
10.13 Intercarrier Services Agreement dated April 25, 1995 between Youngstown
Cellular Telephone Company and EDS Personal Communications
Corporation. ............................................................
10.14 Software License Agreement dated April 20, 1995 between Youngstown
Cellular Telephone Company and International Telecommunication Data
Systems, Inc. ...........................................................
</TABLE>
<PAGE> 134
<TABLE>
<C> <S> <C>
10.15 License Agreement between JSJ Software, Inc. and Youngstown Cellular
Telephone Company. ......................................................
10.16 Product Service Agreement dated February 1, 1995 between Glenayre Care
and Wilcom Cellular. ....................................................
10.17 Asset Acquisition Agreement dated July 11, 1996 between Horizon Cellular
Telephone Company of Chautauqua, L.P., Horizon Cellular Telephone Company
of Crawford, L.P., Horizon Cellular Telephone Company of Indiana, L.P.,
and SYGNET Communications, Inc. .........................................
10.18 Agreement for Purchase of Partnership Interest dated September 15, 1995
between SYGNET Communications, Inc. and Erie Cellular Systems, Inc. .....
10.19 Stock Purchase Agreement between SYGNET Communications, Inc., Wilcom
Corporation, and Advent IV Capital Liquidating Trust, TA Associates IV,
TA Venture Investors Limited Partnership, Elden J. Heinz, Security
Investment Management & Trust Company, The Planned Giving Foundation,
Inc., and Erma Heinz. ...................................................
10.20 Credit Agreement dated , 1996 among the Registrant
and The Toronto-Dominion Bank and PNC Bank, National Association.*.......
10.21 Commitment Letter dated August 21, 1996 executed and delivered by The
Toronto-Dominion Bank and PNC Bank, National Association in favor of the
Registrant...............................................................
10.22 Promissory Note dated December 29, 1994 executed and delivered by Albert
H. Pharis, Jr. in favor of the Registrant. ..............................
12.1 Statement regarding Computation of Ratio of Earnings to Fixed Charges....
21.1 Subsidiary of Sygnet Wireless, Inc.......................................
23.1 Consent of Ernst & Young LLP, Cleveland, Ohio............................
23.2 Consent of Ernst & Young LLP, Boston, Massachusetts......................
23.3 Consent of Ernst & Young LLP, Philadelphia, Pennsylvania.................
23.4 Consent of Arthur Andersen LLP...........................................
23.5 Consent of Coopers & Lybrand L.L.P.......................................
23.6 Consent of Bryan Cave, LLP (included in the legal opinion filed as
Exhibit 5.1 hereto)*.....................................................
24.1 Powers of Attorney (included on the signature page to the Registration
Statement).**............................................................
25.1 Statement of Eligibility of Trustee on Form T-1.**.......................
27.1 Financial Data Schedule..................................................
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
<PAGE> 135
EDGAR APPENDIX
<TABLE>
<CAPTION>
PAGE # DESCRIPTION
- ------ -----------
<S> <C>
INSIDE FRONT COVER SPREAD The map depicts an enlargement of the Company's
cellular telephone service areas, which include
The Youngstown, OH MSA, Sharon, PA MSA, Erie,
PA MSA, OH-11 RSA, NY-3 RSA, PA-6 RSA, PA-7 RSA
and PA-2 RSA.
The map differentiates the properties The
Company currently owns from those it intends to
acquire pursuant to the Horizon Acquisition.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER OF
WILCOM CORPORATION
WITH AND INTO SYGNET COMMUNICATIONS, INC.
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER is made and
entered into on August 19, 1996, by and between Wilcom Corporation ("Wilcom"),
a corporation organized and existing under the laws of the State of Ohio,
(Wilcom being hereinafter sometimes referred to as the "Merging Corporation")
and SYGNET Communications, Inc. ("Sygnet"), a corporation organized and
existing under the laws of the State of Ohio (Sygnet being hereinafter
sometimes referred to as the "Surviving Corporation"), said two corporations
being hereinafter sometimes referred to collectively as the "Constituent
Corporations"; and
WHEREAS, this Amended and Restated Agreement and Plan of Merger
restates the Agreement and Plan of Merger between the parties dated July 17,
1996; and
WHEREAS, the Board of Directors and Shareholders of each of the
Constituent Corporations believe that a simplified corporate structure will be
required to facilitate future expansion; reduce management, tax, audit, and
legal expenses; and allow for more efficient management of the Constituent
Corporations and their affiliated entities; and
WHEREAS, the Board of Directors and Shareholders of each of the
Constituent Corporations deem it advisable and in the best interests of the
Constituent Corporations that Wilcom be merged with and into Sygnet, with
Sygnet being the Surviving Corporation, under and pursuant to the laws of the
State of Ohio and on the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
MERGER
1.1 Wilcom shall be merged with and into Sygnet in accordance with
the laws of the State of Ohio. The separate corporate existence of Wilcom
shall thereby cease, and Sygnet shall be the Surviving Corporation.
1.2 The name that the Surviving Corporation is to have after the
merger shall be "Sygnet Wireless, Inc."
1.3 At the Effective Time (as defined in Section 2.1 below), the
separate existence of the Merging Corporation shall cease. Except as herein
otherwise specifically set forth, from and after the Effective Time the
Surviving Corporation shall possess all of the rights, privileges, immunities
and franchises, to the extent consistent with its Articles of Incorporation, of
the Constituent Corporations. All the rights, privileges, powers and
franchises of the Merging Corporation, of a public as well as of a private
nature, and all property, real, personal and mixed of the Merging Corporation,
and all debts due on whatever account to them, including all choses in action
and all and every other interest of or belonging to them, shall be taken by and
deemed to be transferred to and vested in the Surviving Corporation without
further act or deed; and all such property, rights, privileges,
1
<PAGE> 2
immunities and franchises, of a public as well as of a private nature, and all
and every other interest of the Merging Corporation shall be thereafter as
effectually the property of the Surviving Corporation as they were of the
Merging Corporation.
1.4 From and after the Effective Time, the Surviving Corporation
shall be subject to all the duties and liabilities of a corporation organized
under the General Corporation Law of the State of Ohio and shall be liable and
responsible for all the liabilities and obligations of the Constituent
Corporations. The rights of the creditors of the Constituent Corporations, or
of any person dealing with such corporations, or any liens upon the property of
such corporations, shall not be impaired by this merger, and any claim existing
or action or proceeding pending by or against either of such corporations may
be prosecuted to judgment as if this merger had not taken place, or the
Surviving Corporation may be proceeded against or substituted in place of the
Merging Corporation. Except as otherwise specifically provided to the contrary
herein, the identity, existence, purposes, powers, franchises, rights
immunities and liabilities of the Surviving Corporation shall continue
unaffected and unimpaired by the merger.
ARTICLE II
TERMS AND CONDITIONS OF THE MERGER
The terms and conditions of the merger shall be as follows:
2.1 The merger shall become effective, pursuant to Section 1701.78
of the General Corporation Law of the State of Ohio, at the close of business
August 31, 1996 or when the Agreement and any other necessary documents are
filed with the Ohio Secretary of State, whichever is later. The time and date
of such effectiveness is referred to in this Agreement as the "Effective Time."
2.2 Prior to the Effective Time, the Constituent Corporations
shall take all such action as shall be necessary or appropriate in order to
effect the merger. If at any time after the Effective Time, the Surviving
Corporation shall determine that any further conveyance, assignment or other
documents or any further action is necessary or desirable in order to vest in,
or confirm to, the Surviving Corporation full title to all of the property,
assets, rights, privileges and franchises of the Constituent Corporations, or
any of them, the officers and directors of the Constituent Corporations shall
execute and deliver all such instruments and take all such further actions as
the Surviving Corporation may determine to be necessary or desirable in order
to vest in and confirm to the Surviving Corporation title to and possession of
all such property, assets, rights, privileges, immunities and franchises, and
otherwise to carry out the purposes of this Agreement and Plan.
ARTICLE III
CHARTER AND BYLAWS; DIRECTORS AND OFFICERS
3.1 Except as provided otherwise in Section 1.2, the Articles of
Incorporation of Sygnet, as in effect immediately prior to the Effective Time,
shall, after the merger, continue to be the Articles of Incorporation of the
Surviving Corporation, and are not amended by this Agreement.
3.2 The Code of Regulations of Sygnet, as in effect immediately
prior to the Effective Time, shall, after the merger, continue to be the Code
of Regulations of the Surviving Corporation. The Code of Regulations of Sygnet
is not amended by this Agreement.
3.3 The persons who are the Directors and officers of Sygnet
immediately prior to the Effective Time shall, after the merger, continue as
the Directors and officers of the Surviving Corporation without change, to
serve, subject to the provisions of the Code of Regulations of the Surviving
Corporation, until their successors have been duly elected and qualified in
accordance with the laws of the State of Ohio and the Articles of Incorporation
and Code of Regulations of the Surviving Corporation.
2
<PAGE> 3
ARTICLE IV
CONVERSION OF SHARES
4.1 The Surviving Corporation presently has issued and outstanding
187,782 shares of no par value Type A common stock ("Sygnet Type A Common"),
987,857 shares of no par value Type B common stock ("Sygnet Type B Common"),
and 62,556 shares of no par value Type C common stock ("Sygnet Type C Common");
which shares of Sygnet Type A Common, Sygnet Type B Common, and Sygnet Type C
Common are the only outstanding shares of the Surviving Corporation.
4.2 Wilcom presently has issued and outstanding 500 shares of no
par value Type A common stock ("Wilcom Type A Common") and 2,500 shares of no
par value Type B common stock ("Wilcom Type B Common").
4.3 At the Effective Time, each issued and outstanding share of
Wilcom Type A Common shall be converted into approximately 8.72 shares of
Sygnet Type A Common and each such issued and outstanding share of Wilcom Type
B Common shall be converted into approximately 8.72 shares of Sygnet Type B
Common. After the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of Wilcom Type A Common or Wilcom
Type B Common may, but shall not be required to, surrender the same to the
Surviving Corporation for cancellation or transfer, and each such holder or
transferee will be entitled to receive, respectively, certificates representing
approximately 8.72 shares of Sygnet Type A Common or approximately 8.72 shares
of Sygnet Type B Common for every one (1) share of Wilcom Type A Common or
Wilcom Type B Common previously represented by the stock certificates
surrendered. Until so surrendered or presented for transfer, each outstanding
certificate which prior to the Effective Time represented Wilcom Type A Common
or Wilcom Type B Common, respectively, shall be deemed and treated for all
corporate purposes to represent the ownership of approximately 8.72 shares of
Sygnet Type A Common or approximately 8.72 shares of Sygnet Type B Common.
The exact results of this conversion are set forth in the chart below.
<TABLE>
<CAPTION>
=======================================================================================================
WILCOM SHAREHOLDERS CURRENT WILCOM SHARES ISSUED SYGNET SHARES
-------------------------------------------------------------
A B A B
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lowry Stewart 10 0 87 0
- -------------------------------------------------------------------------------------------------------
Albert H. Pharis, Jr. 20 100 175 872
- -------------------------------------------------------------------------------------------------------
J.D. Williamson, II 235 0 2,049 0
- -------------------------------------------------------------------------------------------------------
W.P. Williamson, III 235 1,175 2,049 10,246
- -------------------------------------------------------------------------------------------------------
David Stewart 0 50 0 436
- -------------------------------------------------------------------------------------------------------
John Boydston 0 1,175 0 10,246
- -------------------------------------------------------------------------------------------------------
TOTAL 500 2,500 4,360 21,800
=======================================================================================================
</TABLE>
ARTICLE V
MISCELLANEOUS
5.1 Notwithstanding anything herein to the contrary, the Board of
Directors of any of the Constituent Corporations may, in their sole discretion
and at any time prior to the filing with the Secretary of State of Ohio of the
necessary Articles of Merger giving effect to the merger, by resolution duly
adopted, abandon the merger if it shall deem such action necessary, desirable
and in the best interests of the respective Constituent
3
<PAGE> 4
Corporation. In the event of such determination and abandonment of this
Agreement and Plan pursuant to the provisions of this Paragraph 5.1, the same
shall become null and void and shall have no further effect. Such termination
shall not give rise to any liability on the part of any of the Constituent
Corporations or its Directors, officers or shareholders in respect of this
Agreement and Plan.
5.2 The Shareholders of Wilcom and Sygnet dissenting to the
Agreement and Plan shall be entitled, pursuant to Sections 1701.84 and 1701.85
of the General Corporation Law of the State of Ohio, to be paid the fair value
of their shares upon compliance with such statutory sections.
5.3 This Agreement and Plan embodies the entire agreement between
the parties hereto and there are no agreements, understandings, restrictions or
warranties between the parties hereto other than those set forth herein or
herein provided for.
IN WITNESS WHEREOF, this Amended and Restated Agreement and Plan of
Merger has been signed by the duly authorized officers of the Constituent
Corporations pursuant to the authorization by the Board of Directors and
Shareholders of the Constituent Corporations, all as of the day and year first
above written.
WILCOM CORPORATION
By: /s/ W.P. WILLIAMSON, III
------------------------------------------
ATTEST: Title: Chairman
------------------------------------------
/s/ LYNN WILLIAMSON
- --------------------
Secretary
SYGNET COMMUNICATIONS, INC.
By: /s/ ALBERT H. PHARIS, JR.
------------------------------------------
ATTEST: Title: President
------------------------------------------
/s/ LYNN WILLIAMSON
- --------------------
Secretary
4
<PAGE> 1
EXHIBIT 2.2
AMENDED AND RESTATED
AGREEMENT AND PLAN OF TRANSFER OF ASSETS
This AMENDED AND RESTATED AGREEMENT AND PLAN OF TRANSFER OF ASSETS
("the Agreement") is made and entered into on August 28, 1996 by and between
SYGNET Communications, Inc. ("SYGNET"), an Ohio corporation, and
Sharron-Youngstown Cellular, Inc. ("Sharron"), an Ohio corporation;
WHEREAS, SYGNET desires to transfer substantially all of its assets
and business to Sharron solely for Common Shares of Sharron and the
assumption by Sharron of all liabilities and obligations of SYGNET;
and Sharron desires to acquire the assets and business of SYGNET, all
as provided in this Agreement; and
WHEREAS, SYGNET and Sharron desire to adopt a plan whereby SYGNET
transfers all of its assets and liabilities to Sharron solely in
exchange for Common Shares of Sharron so that pursuant to the
provisions of Section 351 of the Internal Revenue Code of 1986, as
amended, the transaction is free from taxation; and
WHEREAS, this Amended and Restated Agreement restates the Agreement
and Plan of Transfer of Assets between the parties dated July 17,
1996; and
NOW, THEREFORE, in order to consummate the Agreement and in
consideration of the mutual benefits to be derived from that
consummation and the mutual agreements set forth below, the parties
agree as follows:
ARTICLE I
ORGANIZATION OF SYGNET
SYGNET is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Ohio, with full corporate power to
carry on its business as now conducted, and is entitled to own, lease, and
operate the property now owned, leased, or operated by it. SYGNET is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the character of its property makes qualification
necessary.
ARTICLE II
AUTHORITY OF SYGNET
The execution of this Agreement by SYGNET, and all transactions
contemplated by this Agreement, have been duly authorized by SYGNET's directors
and shareholders. The execution of this Agreement by SYGNET and the
consummation of the transactions contemplated by this Agreement do not and
will not violate the provisions of SYGNET's Articles of Incorporation, Code of
Regulations, or the provisions of any note of which SYGNET is the maker or of
any indenture, agreement, or other instrument to which SYGNET is a party or by
which SYGNET or its property is bound.
1
<PAGE> 2
ARTICLE III
COMMON SHARES OF SHARRON
On the Closing Date, Sharron shall deliver to SYGNET a certificate or
certificates registered in the name of SYGNET for 100 Common Shares, no par
value, of Sharron.
Sharron's Common Shares to be delivered pursuant to this Agreement,
when delivered, will have been duly and validly authorized and issued by
Sharron and will be fully paid and nonassessable.
ARTICLE IV
ACQUISITION OF SYGNET ASSETS BY SHARRON
Upon the terms and subject to all of the conditions in this Agreement,
SYGNET agrees to contribute to Sharron and Sharron agrees to receive from
SYGNET as provided in this Agreement, on the Closing Date, all of the assets,
property, and business of SYGNET as a going concern, owned by SYGNET on the
Closing Date, of whatever kind and character, real and personal, tangible and
intangible, known and unknown, and wherever located, and whether or not
recorded on SYGNET's books, and including without limitation, its goodwill, its
right to the use of its name, and all of its books and records (except its
general ledgers and journals) relating to its business, but not including,
however, the rights of SYGNET in, to, and under this Agreement, all capital
stock of Sharron, Five Hundred Thousand Dollars ($500,000.00) in cash on
deposit or such lesser sum as determined by the Board of Directors, SYGNET's
charter to be a corporation, its stock record books, its corporate minute
books, its corporate seal, and other corporate records having exclusively to do
with its corporate organization and capitalization. All books and records
retained by SYGNET shall be open for inspection by Sharron at any time during
regular business hours after the Closing Date and Sharron may, at its own
expense, make copies and excerpts from the books and records.
ARTICLE V
ASSUMPTION OF SYGNET LIABILITIES AND OBLIGATIONS BY SHARRON
Sharron assumes and agrees to discharge all of the liabilities and
obligations of SYGNET incurred prior to the Closing Date.
ARTICLE VI
INSTRUMENTS OF CONVEYANCE AND TRANSFER
The sale of the assets and properties of SYGNET as provided in this
Agreement shall be effected by general warranty deeds, quit claim deeds, bills
of sale, endorsements, assignments, drafts, checks, and other instruments of
transfer and conveyance in a form that shall be effective to transfer SYGNET's
business, properties, and assets, as contemplated by this Agreement, with all
necessary documentary stamps (federal, state, and local) purchased, affixed and
canceled, and as shall reasonably be required by Sharron or its counsel.
ARTICLE VII
FURTHER ASSURANCES
SYGNET agrees that it will, at any time and from time to time after
the Closing Date, upon request of Sharron, do any further acts and execute,
acknowledge, and deliver any further instruments that may in Sharron's
reasonable opinion be necessary or advisable to confirm Sharron's title to and
interest in, or to enable it to deal with and dispose of, any of the business,
assets, and property to be sold under this Agreement.
2
<PAGE> 3
ARTICLE VIII
CLOSING
The Closing, as that term is used in this Agreement, shall be the
close of business September 30, 1996; or another date on which the parties
shall mutually agree in writing, but in no event shall this Agreement Close
prior to the Effective Time of the Amended and Restated Agreement and Plan of
Merger of Wilcom Corporation With and Into SYGNET Communications, Inc. The
place of Closing shall be the offices of SYGNET, in Canfield, Ohio. The time
and date of the Closing are referred to in this Agreement as the Closing Date.
ARTICLE IX
CONSTRUCTION
This Agreement shall be construed and enforced in accordance with the
laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have duly executed this Agreement and
Plan of Transfer of Assets on August 28, 1996.
SYGNET Communications, Inc.
By: /s/ W.P. WILLIAMSON, III
------------------------------------------
ATTEST: Title: Chairman
------------------------------------------
/s/ LYNN WILLIAMSON
- --------------------
Secretary Sharron-Youngstown Cellular, Inc.
By: /s/ ALBERT H. PHARIS, JR.
------------------------------------------
ATTEST: Title: President
------------------------------------------
/s/ LYNN WILLIAMSON
- --------------------
Secretary
3
<PAGE> 1
EXHIBIT 2.3
AGREEMENT AND PLAN OF RECAPITALIZATION
OF SYGNET WIRELESS, INC.
THIS AGREEMENT AND PLAN OF RECAPITALIZATION is made and entered into
on August 28, 1996, by and between Sygnet Wireless, Inc. ("Sygnet"), a
corporation organized and existing under the laws of the State of Ohio, and the
Shareholders of Sygnet.
WHEREAS, the Board of Directors and Shareholders of Sygnet deem it
advisable and in the best interests of Sygnet and the Shareholders of Sygnet
that the capital structure of Sygnet be reorganized; and
WHEREAS, the Board of Directors and Shareholders of Sygnet believe
that a recapitalization would simplify Sygnet's capital structure, strengthen
Sygnet's financial condition, and allow for the expansion of Sygnet through
outside investment; and
WHEREAS, the Board of Directors and Shareholders of Sygnet desire to
structure any recapitalization so as to be exempt from federal taxation
pursuant to Section 365(a)(1)(E) of the Internal Revenue Code;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE ONE
CURRENT CAPITAL STRUCTURE
After the Effective Date of the Amended and Restated Agreement and
Plan of Merger between Sygnet and Wilcom Corporation, Sygnet will have issued
and outstanding 192,142 shares of no par value Type A Common Stock ("Type A
Common"), 960,657 shares of no par value Type B Common Stock ("Type B Common"),
and 62,556 shares of no par value Type C Common Stock ("Type C Common"), which
shares of Type A Common, Type B Common, and Type C Common will be the only
outstanding shares of the Corporation.
ARTICLE TWO
PLANNED CAPITAL STRUCTURE
Sygnet will file Amended Articles of Incorporation to become effective
upon the filing thereof, that will authorize the Corporation to issue up to 85
million shares. The classes and the aggregate number of shares of stock of
each class that the Corporation shall have authority to issue are as follows:
* 60 million shares of Class A Common Stock, par value
one cent (1 cent) per share (the "Class A Common
Stock"); and
* 10 million shares of Class B Common Stock, par value
one cent (1 cent) per share (the "Class B Common
Stock"); and
1
<PAGE> 2
* 10 million shares of Voting Preferred Stock, par
value one cent (1 cent) per share (the "Voting
Preferred Stock"); and
* 5 million shares of Non-Voting Preferred Stock, par
value one cent (1 cent) per share (the "Non-Voting
Preferred Stock").
ARTICLE THREE
RECAPITALIZATION
3.1 Also at the Effective Time, all issued and outstanding shares
of Type C Common shall be converted into shares of Class B Common Stock. Each
holder of an outstanding certificate or certificates theretofore representing
shares of Type C Common may, but shall not be required to, surrender the same
to the Corporation for cancellation or transfer, and each such holder or
transferee (1) will be entitled to receive certificates representing 31,255
shares of Class B Common Stock for every 4,808 shares of Type C Common
previously represented by the stock certificates surrendered or (2) will be
entitled to receive certificates representing 187,850 shares of Class B Common
Stock for every 28,900 shares of Type C Common previously represented by the
stock certificates surrendered. Until so surrendered or presented for
transfer, each outstanding certificate, which prior to the time of the
conversion of shares of Type C Common into shares of Class B Common Stock,
shall be deemed and treated for all corporate purposes to represent the
ownership of Class B Common Stock in the amounts indicated. The results of
this conversion are set forth in the chart below.
<TABLE>
<CAPTION>
===========================================================================================
TYPE C CLASS B
SHAREHOLDER SHARES SHARES
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
E.P. Boyle 4,808 31,255
- -------------------------------------------------------------------------------------------
Y.T. Chiu 4,808 31,255
- -------------------------------------------------------------------------------------------
The Maureen T. Gibbs Trust 4,808 31,255
- -------------------------------------------------------------------------------------------
A.D. MacDonell, Jr. 4,808 31,255
- -------------------------------------------------------------------------------------------
John W. MacDonell 4,808 31,255
- -------------------------------------------------------------------------------------------
Alex Shashaty 4,808 31,255
- -------------------------------------------------------------------------------------------
Northern Trust Bank of 4,808 31,255
Florida, TUA Paul J. Thomas
- -------------------------------------------------------------------------------------------
Ray S. Tittle, Jr. 28,900 187,850
- -------------------------------------------------------------------------------------------
TOTALS 62,556 406,635
===========================================================================================
</TABLE>
3.2 Also at the Effective Time, each issued and outstanding share
of Type A Common shall be converted into five (5) shares of Class B Common
Stock and each such issued and outstanding share of Type B Common shall be
converted into five (5) shares of Class B Common Stock. Each holder of an
outstanding certificate or certificates theretofore representing shares of Type
A Common or Type B Common may, but shall not be required to, surrender the same
to the Corporation for cancellation or
2
<PAGE> 3
transfer, and each such holder or transferee will be entitled to receive
certificates representing, respectively, five (5) shares of Class B Common
Stock for every one (1) share of Type A Common or Type B Common previously
represented by the stock certificates surrendered. Until so surrendered or
presented for transfer, each outstanding certificate, which prior to the time
of the conversion of Type A Common and Type B Common represented one (1) share
of Type A Common or Type B Common, respectively, shall be deemed and treated
for all corporate purposes to represent the ownership of five (5) shares of
Class B Common Stock.
ARTICLE FOUR
EFFECTIVE TIME
This Agreement and Plan of Recapitalization shall be effective only if
and upon the consummation of a public stock offering or upon further action of
the Board of Directors, if and when so determined, but in any case not after
August 31, 1997.
The Effective Date shall also be the date of record for determining
stock ownership for purposes of this Agreement and Plan of Recapitalization.
All shares newly issued as a result of this Agreement and Plan of
Recapitalization shall be issued in the name of the shareholder of record as of
the Effective Date.
IN WITNESS WHEREOF, this Agreement and Plan of Recapitalization has
been signed by the duly authorized officers of Sygnet pursuant to the
authorization of the Board of Directors and Shareholders of Sygnet, all as of
the day and year first above written.
SYGNET WIRELESS, INC.
By: /s/ W.P. WILLIAMSON, III
------------------------------------
Title: Chairman
------------------------------------
ATTEST:
/s/ LYNN WILLIAMSON
---------------------------------
Secretary
3
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
SYGNET WIRELESS, INC.
ARTICLE ONE
NAME OF THE CORPORATION
The name of the Corporation shall be Sygnet Wireless, Inc.
ARTICLE TWO
LOCATION
The place in Ohio where the Corporation's principal office is located is
6550 Seville Drive, Suite B, Canfield, Mahoning County, Ohio.
ARTICLE THREE
PURPOSE
The purpose for which the Corporation is formed is to engage in any kind
of business, trade, or other activity for which a corporation, for profit, may
be lawfully organized under the corporation laws of the State of Ohio.
ARTICLE FOUR
STRUCTURE OF CAPITAL STOCK
A. CLASSES AND NUMBER OF SHARES. The total number of shares of all
classes of stock which the Corporation shall have authority to issue is
85,000,000 shares. The classes and the aggregate number of shares of stock of
each type which the Corporation shall have authority to issue are as follows:
- 60,000,000 shares of Class A Common Stock, par value one
cent (1 cent) (the "Class A Common Stock"); and
- 10,000,000 shares of Class B Common Stock, par value
one cent (1 cent) (the "Class B Common Stock"); and
- 10,000,000 shares of Voting Preferred Stock, par value one
cent (1 cent) (the "Voting Preferred Stock"); and
- 5,000,000 shares of Nonvoting Preferred Stock, par value
one cent (1 cent) (the "Nonvoting Preferred Stock").
1
<PAGE> 1
Exhibit 3.2
SYGNET WIRELESS, INC.
CODE OF REGULATIONS
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the
corporation shall be at such place in Ohio as may be designated from time to
time by the Board of Directors. The present principal office of the
Corporation is at 6550 Seville Drive, Suite B, Canfield, Ohio.
SECTION 2. OTHER OFFICES. The corporation may also have offices at
such other places without, as well as within, the State of Ohio as the Board
of Directors may from time to time determine.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS. The annual meeting of the shareholders
of this corporation for the purpose of electing directors and transacting such
other business as may come before the meeting, shall be held on the second
Wednesday in June of each year, if not a legal holiday, but if a legal
holiday, then on the next business day following or at such other date and
time as the Board of Directors may determine.
SECTION 2. PLACE OF MEETINGS. Meetings of shareholders shall be held
at the principal office of the corporation unless the Board of Directors
decides that a meeting shall be held at some other place within or without the
State of Ohio and causes the notice thereof to so state.
SECTION 3. NOTICE OF MEETINGS. Unless waived, a written, printed or
typewritten notice of each annual or special meeting, stating the day, hour,
place and the purpose or purposes thereof, shall be served upon or mailed to
each shareholder of record entitled to vote or entitled to notice, not more
than sixty (60) days nor less than seven (7) days before any such meeting. If
mailed, it shall be directed to a shareholder at his or her address as the
same appears upon the records of the corporation.
SECTION 4. QUORUM. At any meeting of the shareholders, the holders
of Class A Common Stock, Class B Common Stock and Voting Preferred Stock
entitling them to exercise a majority of the voting power of the corporation,
present in person or represented by proxy, shall constitute a quorum.
1
<PAGE> 1
EXHIBIT 4.1
SYGNET WIRELESS, INC.
$110,000,000
% SENIOR NOTES DUE , 2006
-------------
INDENTURE
DATED AS OF , 1996
-------------
FLEET NATIONAL BANK
TRUSTEE
<PAGE> 2
INDENTURE, dated as of , 1996, between Sygnet Wireless, Inc., an
Ohio corporation (the "Company"), and Fleet National Bank, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of each other and for the
equal and ratable benefit of the Holders of the % Senior Notes due 2006 (the
"Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01 DEFINITIONS
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer,
director, or controlling stockholder of such other Person. For purposes of this
definition, the term "control" means (a) the power to direct the management and
policies of a Person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract, or otherwise, or (b)
without limiting the foregoing, the beneficial ownership of 10% or more of the
voting power of the voting common equity of such Person (on a fully diluted
basis) or of warrants or other rights to acquire such equity (whether or not
presently exercisable).
"Annualized Operating Cash Flow" on any date, means with respect to
any Person the Operating Cash Flow for the Reference Period multiplied by four.
"Annualized Operating Cash Flow Ratio" on any date (the "Transaction
Date") means, with respect to any Person and it Subsidiaries, the ratio of (i)
consolidated Indebtedness of such Person and its Subsidiaries on the
Transaction Date (after giving pro forma effect to the Incurrence of such
Indebtedness) divided by (ii) the aggregate amount of Annualized Operating Cash
Flow of such Person (determined on a pro forma basis after giving effect to all
dispositions of businesses made by such Person and its Subsidiaries from the
beginning of the Reference Period through the Transaction Date as if such
disposition has occurred at the beginning of such Reference Period); provided,
that for purposes of such computation, in calculating Annualized Operating Cash
Flow and consolidated Indebtedness: (a) the transaction giving rise to the need
to calculate the Annualized Operating Cash Flow Ratio will be assumed to have
occurred (on a pro forma basis) on the first day of the Reference Period; (b)
the incurrence of any Indebtedness during the Reference Period or subsequent
thereto and on or prior to the Transaction Date (and the application of the
proceeds therefrom to the extent used to retire Indebtedness) will be assumed
to have occurred (on a pro forma basis) on the first day of such Reference
Period; (c) Consolidated Interest Expense attributable to any Indebtedness
(whether existing or being incurred) bearing a floating interest rate shall be
computed as if the rate in effect on the Transaction Date had been the
applicable rate for
<PAGE> 3
2
the entire period; and (d) all members of the consolidated group of such Person
on the Transaction Date that were acquired during the Reference Period shall be
deemed to be members of the consolidated group of such Person for the entire
Reference Period. When the foregoing definition is used in connection with the
Company and its Restricted Subsidiaries, references to a Person and its
Subsidiaries in the foregoing definition shall be deemed to refer to the
Company and its Restricted Subsidiaries.
"Bank Credit Facility" means, so long as there is Indebtedness under,
or the borrower has the ability to borrow thereunder, the Credit Agreement
dated as of , 1996, among Sygnet Communications, Inc., as the borrower, the
financial institutions which are parties thereto as lenders, PNC Bank, National
Association and The Toronto-Dominion Bank as managing agents and syndication
agents, The Toronto-Dominion Bank as the administrative agent, and PNC Bank,
National Association, as the documentation agent and the collateral agent, or
any other credit facility or loan agreement designated by the Company to be the
"Bank Credit Facility," as such Credit Agreement or other credit facility or
loan agreement may be amended, modified, restated, renewed, increased,
supplemented, refunded, replaced or refinanced from time to time. There can be
only one such credit facility or loan agreement designated to be the "Bank
Credit Facility" at any one time.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capitalized Lease Obligations" means obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Capital Stock" means, with respect to any Person, any capital stock
of such Person and shares, interests, participations or other ownership
interests (however designated) of any Person and any rights (other than debt
securities convertible into capital stock), warrants and options to purchase
any of the foregoing, including (without limitation) each class of common stock
and preferred stock of such Person if such Person is a corporation and each
general and limited partnership interest of such Person if such Person is a
partnership.
"Cash Equivalents" means (i) Securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii)
<PAGE> 4
3
time deposits and certificates of deposit and commercial paper issued by the
parent corporation of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500 million and commercial paper
issued by others rated at least A-2 or the equivalent thereof by Standard &
Poor's Corporation or at least P-2 or the equivalent thereof by Moody's
Investors Service, Inc. and in each case maturing within one year after the
date of acquisition and (iii) investments in money market funds substantially
all of whose assets comprise securities of the types described in clauses (i)
and (ii) above.
"Change of Control" means (i) any sale, transfer or other conveyance,
whether direct or indirect, of a majority of the fair market value of the
assets of the Company, on a consolidated basis, in one transaction or a series
of related transactions, if, immediately after giving effect to such
transaction, any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than an Excluded Person or Excluded Group, is or becomes the "beneficial owner"
(as such term is used in Rule 13d-3 promulgated pursuant to the Exchange Act),
directly or indirectly, of more than 50% of the total voting power in the
aggregate normally entitled to vote in the election of directors, managers, or
trustees, as applicable, of the transferee, (ii) any "person" or "group" (as
such terms are used for purposes of Section 13(d) and 14(d) of the Exchange
Act, whether or not applicable), other than an Excluded Person or Excluded
Group, is or becomes the "beneficial owner" (as such term is used in Rule 13d-3
promulgated pursuant to the Exchange Act), directly or indirectly, of more than
50% of the total voting power in the aggregate of all classes of Capital Stock
of the Company then outstanding normally entitled to vote in elections of
directors, or (iii) during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then
in office.
"Consolidated Interest Expense" of any Person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued,
or scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capitalized Lease Obligations) of such
Person and its consolidated Subsidiaries during such period, including (i)
original issue discount and non-cash interest payments or accruals on any
Indebtedness, (ii) the interest portion of all deferred payment obligations,
and (iii) all commissions, discounts and other fees and charges owed with
respect to bankers' acceptances and letters of credit financings and currency
and Interest Swap and
<PAGE> 5
4
Hedging Obligations, in each case to the extent attributable to such period,
and (b) the amount of dividends accrued or payable by such Person or any of its
consolidated Subsidiaries in respect of preferred stock (other than by
Restricted Subsidiaries of such Person to such Person or such Person's Wholly
Owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP and (y) interest
expense attributable to any Indebtedness represented by the guaranty by such
Person or a Subsidiary of such Person of an obligation of another Person shall
be deemed to be the interest expense attributable to the Indebtedness
guaranteed. When the foregoing definition is used in connection with the
Company and its Restricted Subsidiaries, references to a Person and its
Subsidiaries in the foregoing definition shall be deemed to refer to the
Company and its Restricted Subsidiaries.
"Consolidated Net Income" of any Person for any period means the net
income (or loss) of such Person and its consolidated Subsidiaries for such
period, determined (on a consolidated basis) in accordance with GAAP, adjusted
to exclude (only to the extent included in computing such net income (or loss),
and without duplication (i) all extraordinary gains and losses and gains and
losses that are nonrecurring (including as a result of Asset Sales outside the
ordinary course of business), (ii) the net income, if positive, of any Person,
that is not a Subsidiary in which such Person or any of its Subsidiaries has an
interest, except to the extent of the amount of dividends or distributions
actually paid to such Person or a Subsidiary of such Person that both (x) are
actually paid in cash to such Person or a Subsidiary of such Person during such
period and (y) when taken together will all other dividends and distributions
paid during such period in cash to such Person or a Subsidiary of such Person,
are not in excess of such Person's pro rata share of such other Person's
aggregate net income earned during such period, (iii), except as provided in
the definition of "Annualized Operating Cash Flow Ratio," the net income (or
loss) of any Subsidiary acquired in a pooling of interests transaction for any
period prior to the date of such acquisition and (iv) the net income, if
positive, of any Subsidiary of such Person to the extent that the declaration
or payment of dividends or similar distributions is not at the time permitted
by operation of the terms of its charter or any agreement or instrument
applicable to such Subsidiary. When the foregoing definition is used in
connection with the Company and its Restricted Subsidiaries, references to a
Person and its Subsidiaries in the foregoing definition shall be deemed to
refer to the Company and its Restricted Subsidiaries.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.02 hereof or such other address as to which the
Trustee may give notice to the Company.
<PAGE> 6
5
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an "Event of Default."
"Disqualified Capital Stock" means, with respect to any Person,
Capital Stock of such Person that, by its terms or by the terms of any security
into which it is convertible, exercisable or exchangeable, is, or upon the
happening of any event or the passage of time would be, required to be redeemed
or repurchased (including at the option of the holder thereof) by such Person
or any of its Subsidiaries, in whole or in part, on or prior to the Stated
Maturity of the Notes; provided that Capital Stock will not be deemed to be
Disqualified Capital Stock if it may only be redeemed or repurchased solely in
consideration of Qualified Capital Stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Group" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that includes one or more Excluded
Persons; provided that the voting power of the Capital Stock of the Company
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such Excluded Persons (without attribution to such Excluded
Persons of the ownership by other members of the "group") represents a majority
of the voting power of the Capital Stock "beneficially owned" (as such term is
used in Rule 13d-3 promulgated under the Exchange Act) by such group.
"Excluded Person" means the members of the Williamson family who owned
Capital Stock of the Company on the Issue Date and any wholly owned Affiliate
of any of the foregoing that is wholly owned by one of the foregoing.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or in such other statements
by such other entity as approved by a significant segment of the accounting
profession which are in effect in the United States; provided, however, that
for purposes of determining compliance with covenants in the Indenture, "GAAP"
means such generally accepted accounting principles as in effect as of the
Issue Date.
"Holder" means a Person in whose name a Note is registered. The Holder
of a Note will be treated as the owner of such Note for all purposes.
<PAGE> 7
6
"Horizon Acquisition" means the acquisition of assets made pursuant to
the Asset Acquisition Agreement, dated July 11, 1996, among the Company,
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.
"Indebtedness" of any Person means, without duplication: (a) all
liabilities and obligations, contingent or otherwise, of such Person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii)
evidenced by bonds, notes, debentures or similar instruments, (iii)
representing the balance deferred and unpaid of the purchase price of any
property or services, except (other than accounts payable or other obligations
to trade creditors which have remained unpaid for greater than 90 days past
their original due date or to financial institutions, which obligations are not
being contested in good faith and for which appropriate reserves have been
established) those incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors, (iv) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (v)
for the payment of money relating to a Capitalized Lease Obligation, or (vi)
evidenced by a letter of credit or a reimbursement obligation of such Person
with respect to any letter of credit; (b) all obligations of such Person under
Interest Swap and Hedging Obligations; (c) all liabilities of others of the
kind described in the preceding clauses (a) or (b) that such Person has
guaranteed or that is otherwise its legal liability or which are secured by any
assets or property of such Person and all obligations to purchase, redeem or
acquire any Capital Stock; (d) all Disqualified Capital Stock of such Person
and all preferred stock of such Person's Subsidiaries; and (e) any and all
deferrals, renewals, extensions, refinancing and refundings (whether direct or
indirect) of, or amendments, modifications or supplements to, any liability of
the kind described in any of the preceding clauses (a), (b), (c), or (d) or
this clause (e), whether or not between or among the same parties; provided
that the outstanding principal amount at any date of any Indebtedness issued
with original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such date.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Interest Swap and Hedging Obligations" means any obligations of any
Person pursuant to any interest rate swaps, caps, collars and similar
arrangements providing protection against fluctuations in interest rates. For
purposes of the Indenture, the amount of such obligations shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such obligation had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such obligation provides for the netting of
<PAGE> 8
7
amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligations shall be the net amount so
determined, plus any premium due upon default by such Person.
"Investment" by any Person in any other Person means (without
duplication): (a) the acquisition (whether by purchase, merger, consolidation
or otherwise) by such Person (whether for cash, property, services, securities
or otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities of such other Person or any agreement
to make any such acquisition; (b) the making by such Person of any deposit
with, or advance, loan or other extension of credit to, such other Person
(including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to
such other Person) or any commitment to make any such advance, loan or
extension; (c) the entering into by such Person of any guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of such
other Person; (d) the making of any capital contribution by such Person to such
other Person; and (e) the designation by the Board of Directors of the Company
of any Person to be an Unrestricted Subsidiary. For purposes of Section 4.09,
(i) "Investment" shall include and be valued at the fair market value of the
net assets of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair
market value of the net assets of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the
amount of any Investment shall be the fair market value of such Investment plus
the fair market value of all additional Investments by the Company or any of
its Restricted Subsidiaries at the time any such Investment is made; provided
that, for purposes of this sentence, the fair market value of net assets in
excess of $ shall be as determined by an independent appraiser of
national reputation.
"Issue Date" means the time and date of the first issuance of the
Notes under the Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any
<PAGE> 9
8
lease deemed to constitute a security interest and any option or other
agreement to give any security interest).
"Maturity Date" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of the Indenture regarding acceleration of
Indebtedness or any Change of Control Offer or Asset Sale Offer).
"Net Cash Proceeds" means the aggregate amount of cash and Cash
Equivalents received by the Company and its Restricted Subsidiaries in respect
of an Asset Sale (including upon the conversion to cash and Cash Equivalents
of (a) any note or installment receivable at any time, or (b) any other
property as and when any cash and Cash Equivalents are received in respect of
any property received in an Asset Sale but only to the extent such cash and
Cash Equivalents are received within one year after such Asset Sale), less the
sum of (i) all reasonable out-of-pocket fees, commissions and other expenses
incurred in connection with such Asset Sale, including the amount (estimated in
good faith by the Board of Directors of the Company) of income, franchise,
sales and other applicable taxes required to be paid by the Company or any
Restricted Subsidiary of the Company in connection with such Asset Sale and
(ii) the aggregate amount of cash so received which is used to retire any
existing Indebtedness of its Restricted Subsidiaries, as the case may be, which
is required to be repaid in connection with such Asset Sale or is secured by a
Lien on the property or assets of the Company or any of its Restricted
Subsidiaries, as the case may be.
"Net Pops" of any Person with respect to any System means the Pops of
the MSA or RSA served by such System multiplied by the direct and/or indirect
percentage interest of such Person in the entity licensed or designated to
receive an authorization by the Federal Communications Commission to construct
or operate a system in that MSA or RSA.
"Net Proceeds" means the aggregate net proceeds (including the fair
market value of non-cash proceeds constituting equipment or other assets of a
type generally used in a Related Business in an amount reasonably determined by
the Board of Directors of the Company for amounts under $ and by a
financial advisor or appraiser of national reputation for equal or greater
amounts) received by a Person from the sale of Qualified Capital Stock (other
than to a Subsidiary of such Person) after payment of out-of-pocket expenses,
commissions and discounts incurred in connection therewith.
"Obligation" means any principal, premium, interest (including
interest accruing subsequent to a bankruptcy or other similar proceeding
whether or not such interest is an allowed claim enforceable against the
Company in a bankruptcy case under Federal
<PAGE> 10
9
bankruptcy law), penalties, fees, indemnifications, reimbursements, damages and
other liabilities payable pursuant to the terms of the documentation governing
any Indebtedness.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 10.05 hereof.
"Operating Cash Flow" for any Person for any period means (a) the
Consolidated Net Income of such Person for such period, plus (b) the sum,
without duplication (and only to the extent such amounts are deducted from net
revenues in determining such Consolidated Net Income), of (i) the provisions
for income taxes for such period for such Person and its consolidated
Subsidiaries, (ii) depreciation, amortization and other non-cash charges of
such Person and its consolidated Subsidiaries and (iii) Consolidated Interest
Expense of such Person for such period, determined, in each case, on a
consolidated basis for such Person and its consolidated Subsidiaries in
accordance with GAAP, less (c) the sum, without duplication (and only to the
extent such amounts are included in such Consolidated Net Income) of (i) all
extraordinary gains of such Person and its consolidated Subsidiaries during
such period and (ii) the amount of all cash payments made during such period by
such Person and its Subsidiaries to the extent such payments relate to non-cash
charges that were added back in determining Operating Cash Flow for such period
or for any prior period. When the foregoing definition is used in connection
with the Company and its Restricted Subsidiaries, references to a Person and
its Subsidiaries in the foregoing definition shall be deemed to refer to the
Company and its Restricted Subsidiaries.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
<PAGE> 11
10
"Permitted Acquisition Indebtedness" means, with respect to any
Person, Indebtedness Incurred in connection with the acquisition of property,
businesses or assets which, or Capital Stock of a Person all or substantially
all of whose assets, are of a type generally used in a Related Business;
provided that, in the case of the Company or its Restricted Subsidiaries, as
applicable, (x)(i) the Company's Annualized Operating Cash Flow Ratio, after
giving effect to such acquisition and such Incurrence on a pro forma basis, is
no greater than such ratio prior to giving pro forma effect to such acquisition
and such Incurrence, (ii) the Company's consolidated Indebtedness under the
Bank Credit Facility, divided by the Net Pops of the Company and its Restricted
Subsidiaries, in each case giving pro forma effect to the acquisition and such
Incurrence, does not exceed $60, (iii) the Company's consolidated Indebtedness
divided by the Net Pops of the Company and its Restricted Subsidiaries does not
increase as a result of the acquisition and such Incurrence and (iv) after
giving effect to such acquisition and such Incurrence the acquired property,
businesses or assets or such Capital Stock is owned directly by the Company or
a Wholly Owned Restricted Subsidiary of the Company or (y)(i) under the terms
of such Indebtedness and pursuant to applicable law, no recourse could be had
for the payment of principal, interest or premium with respect to such
Indebtedness or for any claim based thereon against the Company or any Person
that constituted a Restricted Subsidiary immediately prior to the consummation
of such acquisition or any of their property or assets, (ii) the obligor of
such Indebtedness shall have, immediately after giving effect to such
acquisition and such Incurrence on a pro forma basis, a ratio of Annualized
Operating Cash Flow as of the date of the acquisition to the product of
Consolidated Interest Expense for the Reference Period multiplied by four (but
excluding from Consolidated Interest Expense all amounts that are not required
to be paid in cash on a current basis) of at least 1 to 1 and (iii) immediately
subsequent to the Incurrence of such Indebtedness, the obligor thereof shall be
a Restricted Subsidiary and shall have been designated by the Company (as
evidenced by an Officers' Certificate delivered promptly to the Trustee) to be
a "Non-Recourse Restricted Subsidiary."
"Permitted Investment" means: (i) Investments in Cash Equivalents;
(ii) Investments in the Company or a Restricted Subsidiary (other than a
Non-Recourse Restricted Subsidiary); (iii) Investments in a Person
substantially all of whose assets are of a type generally used in a Related
Business (an "Acquired Person") if, as a result of such Investments, (A) the
Acquired Person immediately thereupon becomes a Restricted Subsidiary (other
than a Non-Recourse Restricted Subsidiary) or (B) the Acquired Person
immediately thereupon either (1) is merged or consolidated with or into the
Company or any of its Restricted Subsidiaries (other than a Non-Recourse
Restricted Subsidiary) or (2) transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary); (iv)
Investments in accounts and notes receivable acquired in the ordinary course of
business; (v) any securities received in connection with an Asset Sale (other
than those of a Non-Recourse Restricted Subsidiary) and any investment with the
Net
<PAGE> 12
11
Cash Proceeds from any Asset Sale in Capital Stock of a Person, all or
substantially all of whose assets are of a type used in a Related Business,
that complies with the "Limitation on Asset Sales and Sales of Subsidiary
Stock" covenant; (vi) any Investment pursuant to the terms of the agreements
described in or referred to under the caption "Certain Relationships and
Related Transactions," as such agreements were in effect on the Issue Date;
(vii) advances and prepayments for asset purchases in the ordinary course of
business in a Related Business of the Company or a Restricted Subsidiary; and
(viii) customary loans or advances made in the ordinary course of business to
officers, directors or employees of the Company or any of its Restricted
Subsidiaries for travel, entertainment, and moving and other relocation
expenses.
"Permitted Liens" means: (a) Liens existing on the Issue Date; (b)
Liens imposed by governmental authorities for taxes, assessments or other
charges not yet subject to penalty or which are being contested in good faith
and by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen
or other like Liens arising by operation of law in the ordinary course of
business provided that (i) the underlying obligations are not overdue for a
period of more than 30 days, and (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as
such property used by the Company or any of its Restricted Subsidiaries) or
interfere with the ordinary conduct of the business of the Company or any of
its Restricted Subsidiaries; (f) Liens arising by operation of law in
connection with judgments, only to the extent, for an amount and for a period
not resulting in an Event of Default with respect thereto; (g) pledges or
deposits made in the ordinary course of business in connection with worker's
compensation, unemployment insurance and other types of social security
legislation; (h) Liens in favor of the Trustee arising under the Indenture; (i)
Liens securing Permitted Acquisition Indebtedness, which either (A) were not
incurred or issued in anticipation of such acquisition or (B) secure Permitted
Acquisition Indebtedness meeting the requirements set forth in clause (y) of
the definition thereof; (j) Liens securing Indebtedness under the Bank Credit
Facility that was incurred in accordance with Section 4.08; (k) Liens securing
Indebtedness of a Person existing at the time such Person becomes a Restricted
Subsidiary or is merged with or into the Company or a Restricted Subsidiary,
provided that such Liens were in existence prior to the date of such
acquisition, merger or consolidation, were not incurred in anticipation
thereof, and do not extend to any other assets; (l) Liens arising from Purchase
Money
<PAGE> 13
12
Indebtedness permitted under the Indenture; (m) Liens securing Refinancing
Indebtedness Incurred to refinance any Indebtedness that was previously so
secured in a manner no more adverse to the Holders of the Notes than the terms
of the Liens securing such refinanced Indebtedness; and (n) Liens in favor of
the Company or a Wholly Owned Restricted Subsidiary.
"Person" means any corporation, individual, joint stock company,
joint venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.
"Pops" means the estimate of the population of a Metropolitan
Statistical Area ("MSA") or Rural Service Area ("RSA") as derived from the most
recent Rand McNally Commercial Atlas and Marketing Guide or if such statistics
are no longer printed in the Rand McNally Commercial Atlas and Marketing Guide
or the Rand McNally Commercial Atlas and Marketing Guide is no longer
published, such other nationally recognized source of such information.
"Preferred Stock" means the $20,000,000 aggregate liquidation amount
of Cumulative Preferred Stock, par value $.01 per share, of the Company to be
issued on or prior to the Issue Date.
"Purchase Money Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiaries Incurred in connection with the purchase of property or
assets for the business of the Company or its Restricted Subsidiaries,
provided, that the recourse of the lenders with respect to such Indebtedness is
limited solely to the property or assets so purchased without further recourse
to either the Company or any of its Restricted Subsidiaries.
"Qualified Capital Stock" means any Capital Stock of a Person that is
not Disqualified Capital Stock.
"Reference Period" with regard to any Person means the last full
fiscal quarter of such Person for which financial information (which the
Company shall use its best efforts to compile in a timely manner) in respect
thereof is available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Notes or the
Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are,
<PAGE> 14
13
collectively, a "Refinancing", any Indebtedness or Disqualified Capital Stock
in a principal amount or, in the case of Disqualified Capital Stock,
liquidation preference (or if such Indebtedness or Disqualified Capital Stock
does not require cash payments prior to maturity or is otherwise issued at a
discount, the original issue price of such Indebtedness or Disqualified Capital
Stock), not to exceed the sum of (x) the lesser of (i) the principal amount or,
in the case of Disqualified Capital Stock, liquidation preference, of the
Indebtedness or Disqualified Capital Stock so Refinanced and (ii) if such
Indebtedness being Refinanced was issued with an original issue discount, the
accreted value thereof (as determined in accordance with GAAP) at the time of
such Refinancing, (y) the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of such Indebtedness and
(z) all other customary fees and expenses of the Company or such Restricted
Subsidiary reasonably incurred in connection with such refinancing; provided,
that (A) Refinancing Indebtedness issued by any Restricted Subsidiary of the
Company shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Restricted Subsidiary, (B) Refinancing
Indebtedness shall (x) not have a Weighted Average Life shorter than the
Indebtedness or Disqualified Capital Stock to be so refinanced at the time of
such Refinancing and (y) in all respects, be no less subordinated or junior, if
applicable, to the rights of Holders of the Notes than was the Indebtedness or
Disqualified Capital Stock to be refinanced and (C) such Refinancing
Indebtedness shall have no installments or principal (or redemption payment)
scheduled to come due earlier than the scheduled maturity of any installment of
principal (or redemption payment) of the Indebtedness or Disqualified Capital
Stock to be so refinanced which was scheduled to come due prior to the Stated
Maturity of the Notes.
"Related Business" means any business directly related to the
ownership, development, operation, and acquisition of wireless cellular
communications systems.
"Related Person" means, with respect to any Person, (i) any Affiliate
of such Person or any spouse, immediate family member, or other relative who
has the same principal residence of any Affiliate of such Person and (ii) any
trust in which any Person described in clause (i) above, has a beneficial
interest.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Payment" means, with respect to any Person, (i) any
dividend or other distribution on shares of Capital Stock of such Person or any
Subsidiary of such Person, (ii) any payment on account of the purchase,
redemption or other acquisition or
<PAGE> 15
14
retirement for value, or any payment in respect of any amendment (in
anticipation of or in connection with any such retirement, acquisition or
defeasance) in whole or in part, of any shares of Capital Stock of such Person
or any Subsidiary of such Person held by Persons other than such Person or any
of its Restricted Subsidiaries, (iii) any defeasance, redemption, repurchase or
other acquisition or retirement for value, or any payment in respect of any
amendment (in anticipation of or in connection with any such retirement,
acquisition or defeasance) in whole or in part, of any Indebtedness of the
Company by such Person or a Subsidiary of such Person that is subordinate in
right of payment to, or ranks pari passu (other than the Notes) with, the Notes
and (iv) any Investment (other than a Permitted Investment); provided, however,
that the term "Restricted Payment" does not include (i) any dividend,
distribution or other payment on shares of Capital Stock of the Company or any
Restricted Subsidiary solely in shares of Qualified Capital Stock, (ii) any
dividend, distribution or other payment to the Company, or any dividend to any
of its Restricted Subsidiaries, by any of its Subsidiaries, or (iii) any
defeasance, redemption, repurchase or other acquisition or retirement for
value, in whole or in part, of Indebtedness of such person payable solely in
shares of Qualified Capital Stock of such Person.
"Restricted Subsidiary" means (i) Sygnet Communications, Inc. and (ii)
any Subsidiary of the Company which at the time of determination is not an
Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary only if, immediately
before and after giving effect to such designation, there would exist no
Default or Event of Default and the Company could incur at least $1.00 of
Indebtedness pursuant to the Annualized Operating Cash Flow Ratio test in
Section 4.08, on a pro forma basis taking into account such designation.
"SEC" means the Securities and Exchange Commission.
"Stated Maturity" means the date fixed for the payment of any
principal or premium pursuant to the Indenture and the Notes, including the
Maturity Date, upon redemption, acceleration, Asset Sale Offer, Change of
Control Offer or otherwise.
"Subsidiary" with respect to any Person, means (i) a corporation at
least fifty percent of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or
by one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of
such partnership, or (iii) any Person in which such Person, one or more
Subsidiaries of such Person, or such Person and one or more Subsidiaries of
such Person, directly or indirectly, at the date of determination thereof has
(x) at least a fifty
<PAGE> 16
15
percent ownership interest or (y) the power to elect or direct the election of
the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section Section
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Company
that, at the time of determination, shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below). The
Board of Directors of the Company may designate any Subsidiary of the Company
other than Sygnet Communications, Inc. (including any newly acquired or newly
formed Subsidiary at or prior to the time it is so formed or acquired) to be an
Unrestricted Subsidiary if (a) no Default or Event of Default is existing or
will occur as a consequence thereof, (b) such Subsidiary does not own any
Capital Stock of, or own or hold any Lien on any property or asset of, the
Company or any Restricted Subsidiary that is not a Subsidiary of the Subsidiary
to be so designated, and (c) such Subsidiary and each of its Subsidiaries has
not at the time of designation, and does not thereafter, create, incur, issue,
assume, guarantee, or otherwise become directly or indirectly liable with
respect to any Indebtedness pursuant to which the lender has recourse to any
property or assets of the Company or any of its Restricted Subsidiaries (except
that such Subsidiary and its Subsidiaries may guarantee the Notes); provided
that either (A) the Subsidiary to be so designated has total assets of $1,000
or less or (B) if such Subsidiary has assets greater than $1,000, that such
designation would be permitted under Section 4.09. Each such designation shall
be evidenced by filing with the Trustee a certified copy of the resolution
giving effect to such designation and Officers' Certificate certifying that
such designation complied with the foregoing conditions.
"Voting Stock" means Capital Stock of the Company having generally the
right to vote in the election of a majority of the directors of the Company or
having generally the right to vote with respect to the organizational matters
of the Company.
"Weighted Average Life" means, as of the date of determination, with
respect to any debt instrument, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such debt instrument
multiplied by the amount of each such respective principal payment by (ii) the
sum of all such principal payments.
<PAGE> 17
16
"Wholly Owned" means, with respect to a Subsidiary of the Company, (i)
a Subsidiary that is a corporation, of which not less than 99% of the Capital
Stock (except for directors' qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one stockholder, but which interest is not in excess of what is required
for such purpose) is owned directly by such Person or through one or more other
Wholly Owned Subsidiaries of such Person, or (ii) any entity other than a
corporation in which such Person, directly or indirectly, owns not less than
99% of the Capital Stock of such entity.
SECTION 1.02 OTHER DEFINITIONS
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Asset Sale Offer" 4.12
"Asset Sale Offer Period" 4.12
"Asset Sale Offer Amount" 4.12
"Asset Sale Purchase Date" 4.12
"Bankruptcy Law" 6.01
"Change of Control Offer" 4.07
"Change of Control Offer Period" 4.07
"Change of Control Payment" 4.07
"Change of Control Purchase Date" 4.07
"Computation Period" 4.09
"Covenant Defeasance" 8.03
"Custodian" 6.01
"Legal Defeasance" 8.02
"Marketable Securities" 4.12
"Paying Agent" 2.03
"Payment Default" 6.01
"Registrar" 2.03
"Related Person Transaction" 4.11
</TABLE>
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
<PAGE> 18
17
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Company and any successor
obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
SECTION 1.04 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement of
successor sections or rules adopted by the SEC from time to time.
<PAGE> 19
18
ARTICLE 2
THE NOTES
SECTION 2.01 FORM AND DATING
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each
Note shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
SECTION 2.02 EXECUTION AND AUTHENTICATION
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and
may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate of the Company.
<PAGE> 20
19
SECTION 2.03 REGISTRAR AND PAYING AGENT
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05 HOLDER LISTS
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes, and the Company shall otherwise comply with TIA Section 312(a).
<PAGE> 21
20
SECTION 2.06 TRANSFER AND EXCHANGE
Where Notes are presented to the Registrar with a request to register
the transfer of such Notes or to exchange such Notes for an equal principal
amount of Notes of other denominations, the Registrar shall register for
transfer or make the exchange if its requirements for such transactions are
met; provided, however, that any Note presented or surrendered for registration
of transfer or exchange shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar and the Trustee,
duly executed by the Holder thereof or his or her attorney duly authorized in
writing. To permit registrations of transfer and exchanges, the Company shall
issue and the Trustee shall authenticate Notes at the Registrar's request.
The Registrar shall not be required to issue, register the transfer of
or exchange Notes during the period beginning at the opening of business on a
Business Day 15 days before the date of any selection of Notes for redemption
under Section 3.07 and ending at the close of business on the day of selection,
(ii) to register the transfer of or exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part or (iii) to register the transfer or or exchange of a
Note between the record date and the next succeeding interest payment date.
No service charge shall be made for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith.
SECTION 2.07 REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate
a replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that
is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
<PAGE> 22
21
SECTION 2.08 OUTSTANDING NOTES
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section as not outstanding. Except
as set forth in Section 2.09 hereof, a Note does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09 TREASURY NOTES
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Trustee knows are so owned
shall be so disregarded.
SECTION 2.10 TEMPORARY NOTES
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive Notes in exchange for
temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
<PAGE> 23
22
SECTION 2.11 CANCELLATION
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered to the Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12 DEFAULTED INTEREST
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01 NOTICES TO TRUSTEE
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, an Officers' Certificate setting
forth (i) the clause of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
<PAGE> 24
23
SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed among the Holders of the Notes 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 so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or integral multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not an integral
multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
SECTION 3.03 NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
<PAGE> 25
24
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent immediately available funds
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. The Trustee or the Paying Agent shall promptly
return to the Company any money deposited with the Trustee or the Paying Agent
by the Company in excess of the amounts necessary to pay the redemption price
of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to
the Person in whose name such Note was registered at the close of business on
such record date. If any Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.01 hereof.
<PAGE> 26
25
SECTION 3.06 NOTES REDEEMED IN PART
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07 OPTIONAL REDEMPTION
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to , 2001. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest to the applicable redemption date, if redeemed during the twelve-month
period beginning on of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . %
2002 . . . . . . . . . . . . . . . . . . . . . . . . %
2003 . . . . . . . . . . . . . . . . . . . . . . . . %
2004 . . . . . . . . . . . . . . . . . . . . . . . . %
2005 and thereafter . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section
3.07, during the first 36 months after the Issue Date, the Company may redeem
up to an aggregate of $38,500,000 in principal amount of Notes at a redemption
price of % of the principal amount thereof, in each case plus accrued and
unpaid interest thereon to the redemption date, with the net proceeds of an
offering of Qualified Capital Stock of the Company; provided that at least
$71,500,000 in aggregate principal amount of Notes remain outstanding
immediately after the occurrence of such redemption; and provided, further,
that such redemption shall occur within 30 days of the date of the closing of
such offering.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08 NO MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
<PAGE> 27
26
ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF NOTES
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in
the Notes. Principal, premium, if any, and interest shall be considered paid on
the date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
<PAGE> 28
27
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
SECTION 4.03 REPORTS
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder, within 15 days after it is or would have been
required to file such with the SEC, annual and quarterly financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the SEC, if the Company were subject to the requirements
of Section 13 or 15(d) of the Exchange Act, including, with respect to annual
information only, a report thereon by the Company's certified independent
public accountants as such would be required in such reports to the SEC, and in
each case, together with a management's discussion and analysis of financial
condition and results of operations which would be so required.
SECTION 4.04 COMPLIANCE CERTIFICATE
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained
in this Indenture and is not in default in the performance or observance of any
of the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) hereof shall be accompanied by
a written statement of the Company's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or,
<PAGE> 29
28
if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.
SECTION 4.05 TAXES
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.
SECTION 4.06 STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
has been enacted.
SECTION 4.07 CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon to the date of purchase (the "Change of Control Payment").
Within 10 days following any Change of Control, the Company shall mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by the Indenture and described in such notice. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations
<PAGE> 30
29
thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of the Notes as a result of a Change of Control.
The Change of Control Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Change of Control
Offer Period"). No later than five Business Days after the termination of the
Change of Control Offer Period (the "Change of Control Purchase Date"), the
Company shall purchase all Notes tendered in response to the Change of Control
Offer. Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.
If the Change of Control Purchase Date is on or after an interest
record date and on or before the related interest payment date, any accrued and
unpaid interest shall be paid to the Person in whose name a Note is registered
at the close of business on such record date, and no additional interest shall
be payable to Holders who tender Notes pursuant to the Change of Control Offer.
On the Change of Control Payment Date, the Company shall, to the
extent lawful, (a) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (b) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (c) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 4.08 LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, issue, create, incur, assume,
guarantee or otherwise directly or indirectly become liable for (including as a
result of an acquisition), or otherwise become responsible for, contingently or
otherwise (individually or collectively, to "Incur" or, as appropriate, an
"Incurrence"), any Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event of
Default immediately prior and subsequent thereto, the Company may incur
Indebtedness if, after
<PAGE> 31
30
giving effect thereto, the Company's Annualized Operating Cash Flow Ratio on a
pro forma basis calculated on the assumption that such Indebtedness had been
incurred on the first day of the applicable Reference Period, would have been
less than the ratios set forth below for the calendar year periods indicated:
<TABLE>
<CAPTION>
FOR THE PERIOD RATIO
-------------- -----
<S> <C>
1996-1998 8.0x
1999 and after 7.0x
</TABLE>
In addition, if there exists no Default or Event of Default
immediately prior and subsequent thereto, the foregoing limitations will not
apply to the Incurrence of (i) Indebtedness incurred under the Bank Credit
Facility in an aggregate amount not to exceed $300,000,000 in aggregate
principal amount at any time, (ii) Indebtedness by the Company or any of its
Restricted Subsidiaries constituting Existing Indebtedness, reduced by
permanent repayments of and reductions thereof (and in commitments with respect
thereto) in satisfaction of the Net Cash Proceeds application requirement set
forth in Section 4.12 and by repayments and permanent reductions in amounts
outstanding pursuant to scheduled amortizations and mandatory prepayments in
accordance with the terms thereof, (iii) Indebtedness by the Company evidenced
by the Notes, (iv) Permitted Acquisition Indebtedness, (v) Indebtedness between
the Company and any Restricted Subsidiary of the Company or between Restricted
Subsidiaries of the Company, provided that, in the case of Indebtedness
incurred by the Company, such obligations shall be unsecured and subordinated
in all respects to the Holders' rights pursuant to the Notes, (vi) Capitalized
Lease Obligations and Purchase Money Indebtedness in an aggregate amount or
aggregate principal amount, as the case may be, outstanding at any time not to
exceed in the aggregate $15,000,000, and (vii) Refinancing Indebtedness
Incurred to extend, renew, replace or refund Indebtedness permitted under
clauses (ii) (as so reduced in amount) and (iii) of this paragraph.
Indebtedness of any Person that is not a Restricted Subsidiary of the
Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company.
SECTION 4.09 LIMITATION ON RESTRICTED PAYMENTS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, if,
immediately prior or after
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giving effect thereto on a pro forma basis, (a) a Default or an Event of
Default would occur or be continuing, (b) the Company's Annualized Operating
Cash Flow Ratio for the Reference Period would have exceeded 6 to 1, or (c) the
aggregate amount of all Restricted Payments made by the Company and its
Restricted Subsidiaries, including such proposed Restricted Payment (if not
made in cash, then the fair market value of any property used therefor) from
and after the Issue Date and on or prior to the date of such Restricted
Payment, shall exceed the sum of (i) the amount determined by subtracting (x)
2.0 times the aggregate Consolidated Interest Expense of the Company for the
period (taken as one accounting period) from the Issue Date to the last day of
the last full fiscal quarter prior to the date of the proposed Restricted
Payment (the "Computation Period") from (y) Operating Cash Flow of the Company
for the Computation Period, plus (ii) the aggregate Net Proceeds received by
the Company from the sale (other than to a Subsidiary of the Company) of its
Qualified Capital Stock after the Issue Date and on or prior to the date of
such Restricted Payment.
Notwithstanding the foregoing, the provisions set forth in clause (b)
or (c) of the immediately preceding paragraph shall not prohibit (i) the use of
an aggregate of $10,000,000 to be used solely for Investments in Unrestricted
Subsidiaries or Non-Recourse Restricted Subsidiaries, (ii) the payment of any
dividend within 60 days after the date of its declaration if such dividend
could have been made on the date of its declaration in compliance with the
foregoing provisions, (iii) the redemption, defeasance, repurchase or other
acquisition or retirement of any Indebtedness or Capital Stock of the Company
or its Restricted Subsidiaries either in exchange for or out of the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of
the Company) of Qualified Capital Stock of the Company or (iv) the redemption,
repurchase or other acquisition or retirement of the Preferred Stock for an
aggregate price not to exceed $25,000,000 if, after giving effect thereto on a
pro forma basis, the Company's Annualized Operating Cash Flow Ratio for the
Reference Period would have been less than 7.5 to 1.
SECTION 4.10 LIMITATION ON RESTRICTING SUBSIDIARY DIVIDENDS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, assume or suffer to exist any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary of the Company to pay dividends or make other distributions on the
Capital Stock of any Restricted Subsidiary of the Company or pay or satisfy any
obligation to the Company or any of its Restricted Subsidiaries or otherwise
transfer assets or make or pay loans or advances to the Company or any of its
Restricted Subsidiaries, except encumbrances and restrictions existing under
(i) the Indenture and the Notes or Refinancing Indebtedness incurred to
refinance the Notes; provided, that such encumbrances and restrictions are no
more restrictive than those contained in the Indenture as in effect on the
Issue Date, (ii) the
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Bank Credit Facility as in effect on the Issue Date, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the Bank Credit
Facility as in effect on the Issue Date, (iii) any agreement of a Person
acquired by the Company or a Restricted Subsidiary of the Company, which
restrictions existed at the time of acquisition, were not put in place in
anticipation of such acquisition and are not applicable to any person or
property, other than the Person or any property of the Person so acquired.
Notwithstanding the foregoing, customary provisions restricting subletting or
assignment of any lease entered into the ordinary course of business,
consistent with past practices shall not in and of themselves be considered a
restriction on the ability of the applicable Restricted Subsidiary to transfer
such agreement or assets, as the case may be.
SECTION 4.11 LIMITATION ON TRANSACTIONS WITH RELATED PERSONS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries or Unrestricted Subsidiaries to, enter into any contract,
agreement, arrangement or transaction with any Related Person (each a "Related
Person Transaction"), or any series of Related Person Transactions, except for
transactions made in good faith, the terms of which are (i) fair and reasonable
to the Company or such Subsidiary, as the case may be, and (ii) are at least as
favorable as the terms which could be obtained by the Company or such
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis with Persons who are not Related Persons.
Without limiting the foregoing, (a) any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$1,000,000 must first be approved by a majority of the Board of Directors of
the Company who are disinterested in the subject matter of the transaction
pursuant to a Board Resolution, and (b) with respect to any Related Person
Transaction or series of Related Person Transactions with an aggregate value in
excess of $5,000,000, the Company must first obtain a favorable written opinion
from an independent financial advisor of national reputation as to the fairness
from a financial point of view of such transaction to the Company or such
Subsidiary, as the case may be.
Notwithstanding the foregoing, any contract, agreement, arrangement or
transaction solely between or among the Company and any of its Wholly Owned
Restricted Subsidiaries or between or among Wholly Owned Restricted
Subsidiaries of the Company is not a Related Person Transaction.
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SECTION 4.12 LIMITATION ON ASSET SALES AND SALES OF SUBSIDIARY STOCK
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, in one transaction or a series of related transactions,
convey, sell, transfer, assign or otherwise dispose of, directly or indirectly,
any of its property, business or assets, including any sale or other transfer
or issuance of any Capital Stock of any Restricted Subsidiary of the Company,
whether owned on the Issue Date or thereafter acquired (an "Asset Sale") unless
(a) such Asset Sale is for fair market value as determined by the Board of
Directors of the Company acting reasonably and in good faith, (b) at least 80%
of the value of the consideration for such Asset Sale consists of (i) cash,
(ii) the assumption by the transferee of pari passu Indebtedness or (iii)
notes, obligations or other marketable securities (collectively "Marketable
Securities") that are immediately converted into cash and (c) the Net Cash
Proceeds therefrom are applied on or prior to 360 days after the date of such
Asset Sale (i) to the permanent repayment of Indebtedness under the Bank Credit
Facility (which payment reduces the commitment thereunder) or (ii) to the
repurchase of the Notes pursuant to an offer to purchase (an "Asset Sale
Offer") described below or (iii) to an investment in a Related Business.
Notwithstanding the foregoing provisions of the prior paragraph:
(i) any Restricted Subsidiary of the Company may convey,
sell, lease, transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Company or a Restricted Subsidiary
of the Company;
(ii) the Company and its Restricted Subsidiaries may, in the
ordinary course of business, (A) convey, sell, lease, transfer, assign or
otherwise dispose of assets in the ordinary course of business and (B) exchange
assets for assets in Related Businesses; (iii) the Company and its Restricted
Subsidiaries may convey, sell, lease, transfer, assign or otherwise dispose of
assets pursuant to and in accordance with Section 5.01; (iv) the Company and
its Restricted Subsidiaries may (a) sell damaged, worn out or other obsolete
property in the ordinary course of business or other property no longer
necessary for the proper conduct of the business of the Company or any of its
Restricted Subsidiaries, or (b) abandon such property if it cannot, through
reasonable efforts, be sold; and (v) the Company may transfer the assets that
it acquires in the Horizon Acquisition to the Subsidiary after the Issue Date.
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds not applied to the uses set forth in subsections (c)(i) or (c)(iii) in
the first paragraph exceeds $5,000,000. An Asset Sale Offer shall remain open
for a period of 20 Business Days following its commencement and no longer,
except to the extent that a longer period is required by applicable law (the
"Asset Sale Offer Period"). No later than five Business Days after the
termination of the Asset Sale Offer Period (the "Asset Sale
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Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to this Section (the "Asset Sale Offer
Amount") or, if less than the Asset Sale Offer Amount has been tendered, all
Notes tendered in response to the Asset Sale Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments are made.
If the Asset Sale Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
On or before the Asset Sale Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Asset Sale Offer Amount of Notes or portions thereof tendered pursuant to
the Asset Sale Offer, or if less than the Asset Sale Offer Amount has been
tendered, all Notes tendered, and shall deliver to the Trustee an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section. The
Company, the Depository or the Paying Agent, as the case may be, shall promptly
(but in any case not later than five days after the Asset Sale Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Notes tendered by such Holder and accepted by the Company for purchase,
and the Company shall promptly issue a new Note, and the Trustee, upon written
request from the Company shall authenticate and mail or deliver such new Note
to such Holder, in a principal amount equal to any unpurchased portion of the
Note surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Asset Sale Offer on the Asset Sale Purchase Date.
SECTION 4.13 LIMITATIONS ON LIENS
The Company shall not and shall not permit any Restricted Subsidiary,
directly or indirectly, to Incur or suffer to exist any Lien (other than
Permitted Liens) upon any of its property or assets, whether now owned or
hereafter acquired.
SECTION 4.14 CORPORATE EXISTENCE
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses
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and franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Subsidiaries, if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
ARTICLE 5
SUCCESSORS
SECTION 5.01 MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company shall not consolidate with or merge with or into another
Person, or sell, lease, convey, transfer or otherwise dispose of all or
substantially all of its assets (computed on a consolidated basis), whether in
a single transaction or a series of related transactions, to another Person or
group of affiliated Persons, unless: (i) immediately after giving effect to
such transaction on a pro forma basis, the consolidated resulting surviving or
transferee entity would immediately thereafter be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Annualized Operating Cash Flow
Ratio provision set forth in the second paragraph of Section 4.08, (ii)
immediately thereafter, no Event of Default (and no event which, after notice
or lapse of time or both, would become an Event of Default) shall have occurred
and be continuing; (iii) either (a) the Company is the surviving entity or (b)
the resulting, surviving or transferee entity (if other than the Company) is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company in connection with the Notes and the Indenture,
including the punctual payment of the principal of, and premium, if any, and
interest on the Notes and the performance and observance of every covenant of
the Indenture on the part of the Company to be performed; and (iv) the Company
shall have delivered to the Trustee an Officers' Certificate confirming
compliance with the requirements of this Section.
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with the
foregoing, the successor corporation formed by such consolidation or into which
the Company is merged or to which such transfer is made, shall succeed to, and
be substituted for, and may exercise every right and power of, the Company
under the Indenture with the same effect as if such successor corporation had
been named therein as the Company; provided, however, that the predecessor of
the Company shall not be relieved from the obligation to pay the principal
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of and interest on the Notes except in the case of a sale of all of the
Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on
any Note when the same becomes due and payable and the Default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal
of or premium, if any, on any Note when the same becomes due and
payable at maturity, upon redemption or otherwise;
(3) the Company fails to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or
performed pursuant to Sections 4.07, 4.08, 4.09, 4.12 or 5.01 hereof;
(4) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Notes or this
Indenture and the Default continues for the period and after the
notice specified below;
(5) default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of
the Indenture, which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default");
provided such Event of Default shall not occur until 90 days after
such Payment Default, or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated,
aggregates $5,000,000 or more;
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(6) a final judgment or final judgments for the payment
of money (not fully covered by insurance) are entered by a court or
courts of competent jurisdiction against the Company or any of its
Subsidiaries and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60
days, provided that the aggregate of all such undischarged judgments
exceeds $5,000,000;
(7) the Company or any of its Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a Custodian of
it or for all or substantially all of its property,
(d) makes a general assignment for the benefit of
its creditors, or
(e) generally is not paying its debts as they
become due; or
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company or any
Subsidiary in an involuntary case,
(b) appoints a Custodian of the Company or any
Subsidiary or for all or substantially all of the property of
the Company or any Subsidiary, or
(c) orders the liquidation of the Company or any
Subsidiary,
and the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
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An Event of Default shall not be deemed to have occurred under clause
(3), (5) or (6) until the Trustee shall have received written notice from the
Company or any of the Holders or unless a Responsible Officer shall have
knowledge of such Event of Default. A Default under clause (4) is not an Event
of Default until the Trustee notifies the Company, or the Holders of at least
25% in principal amount of the then outstanding Notes notify the Company and
the Trustee, of the Default and the Company does not cure the Default within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
SECTION 6.02 ACCELERATION
If an Event of Default (other than an Event of Default specified in
clauses (7) and (8) of Section 6.01 relating to the Company or any Subsidiary
occurs and is continuing, the Trustee by notice to the Company, or the Holders
of at least 25% in principal amount of the then outstanding Notes by written
notice to the Company and the Trustee may declare the unpaid principal of and
any accrued interest on all the Notes to be due and payable. Upon such
declaration the principal and interest shall be due and payable immediately
(together with the premium referred to in Section 6.01, if applicable). If an
Event of Default specified in clause (7) or (8) of Section 6.01 relating to the
Company or any Subsidiary occurs, such an amount 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. The Holders of a majority in principal amount of
the then outstanding Notes by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal or interest that has become due solely because of the acceleration)
have been cured or waived.
SECTION 6.03 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision
of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
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SECTION 6.04 WAIVER OF PAST DEFAULTS
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that
the Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05 CONTROL BY MAJORITY
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06 LIMITATION ON SUITS
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested,
the provision of indemnity; and
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(e) during such 60-day period the Holders of a majority
in principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.08 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To the extent that
the payment of any such compensation, expenses,
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disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 6.10 PRIORITIES
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
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ARTICLE 7
TRUSTEE
SECTION 7.01 DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee
need perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine
the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.05 hereof.
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(d) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02 RIGHTS OF TRUSTEE
(a) The Trustee may conclusively rely upon any document believed
by it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity
<PAGE> 45
44
against the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction.
(g) Except with respect to Section 4.01 hereof, the Trustee shall
have no duty to inquire as to the performance of the Company's covenants in
Article 4 hereof. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 6.01(1), 6.01(2) and 4.01 or (ii) any Default or
Event of Default of which the Trustee shall have received written notification
or obtained actual knowledge.
(h) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee may, in its discretion, make such further inquiry or investigation
into such facts or matters as it may see fit and if the Trustee shall determine
to make such further inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Company personally or by agent or
attorney.
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest (as defined in the TIA) it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
SECTION 7.04 TRUSTEE'S DISCLAIMER
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
<PAGE> 46
45
SECTION 7.05 NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07 COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses (including reasonable attorneys' fees) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company or any Holder or any
other Person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder, except to the extent any such loss,
liability or expense may be attributable to its negligence or bad faith. The
<PAGE> 47
46
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve
the Company of its obligations hereunder. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Sections 6.01(8) or 6.01(9) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.08 REPLACEMENT OF TRUSTEE
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of
a majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
<PAGE> 48
47
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital
<PAGE> 49
48
and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
on the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due, (b) the Company's obligations with respect to such Notes
under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties
and
<PAGE> 50
49
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article Eight. Subject to compliance with this Article
Eight, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03 COVENANT DEFEASANCE
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12 and 5.01 hereof with respect to the outstanding Notes on and after
the date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for
the purposes of any direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such covenants, but
shall continue to be deemed "outstanding" for all other purposes hereunder (it
being understood that such Notes shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(5) through 6.01(7) hereof shall not
constitute Events of Default.
SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders, cash in
United States dollars, non-callable Government Securities, or
a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium and
Liquidated Damages, if any, and interest on the outstanding
Notes
<PAGE> 51
50
on the stated date for payment thereof or on the applicable
redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to
a particular redemption date;
(b) in the case of an election under Section 8.02
hereof, the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that (A) the Company has received
from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture,
there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of an election under Section 8.03
hereof, the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that the Holders of the outstanding
Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other
than a Default or Event of Default resulting from the
incurrence of Indebtedness all or a portion of the proceeds of
which will be used to defease the Notes pursuant to this
Article Eight concurrently with such incurrence) or insofar as
Sections 6.01(8) or 6.01(9) hereof is concerned, at any time
in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a
default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the
Trustee an Opinion of Counsel to the effect that on the 91st
day following the
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51
deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the
Trustee an Officers' Certificate stating that the deposit was
not made by the Company with the intent of preferring the
Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any
other creditors of the Company; and
(h) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance
have been complied with.
SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
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SECTION 8.06 REPAYMENT TO COMPANY
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
Liquidated Damages or interest on any Note and remaining unclaimed for two
years after such principal, and premium, if any, Liquidated Damages, if any, or
interest has become due and payable shall be paid to the Company on its request
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall thereafter, as a creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and
The Wall Street Journal (national edition), notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 8.07 REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if
the Company makes any payment of principal of, premium, if any, or interest on
any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01 WITHOUT CONSENT OF HOLDERS OF NOTES
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
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53
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(c) to provide for the assumption of the Company's
obligations to the Holders of the Notes in the case of a merger or
consolidation pursuant to Article Five hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Note;
or
(f) to comply with requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02 WITH CONSENT OF HOLDERS OF NOTES
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Sections 4.07 and
4.12 hereof) and the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and
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54
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee
of the documents described in Section 7.02 hereof, the Trustee shall join with
the Company in the execution of such amended or supplemental Indenture unless
such amended or supplemental Indenture affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of
a majority in aggregate principal amount of the Notes then outstanding may
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Notes. However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed
maturity of any Note or alter or waive any of the provisions
with respect to the redemption of the Notes, except as
provided above with respect to Sections 4.07 and 4.12 hereof;
(c) reduce the rate of or change the time for
payment of interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the
Holders of at least a majority in aggregate principal amount
of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than
that stated in the Notes;
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55
(f) make any change in the provisions of this
Indenture relating to waivers of past Defaults or the rights
of Holders of Notes to receive payments of principal of,
premium or Liquidated Damages, if any, or interest on the
Notes;
(g) waive a redemption payment with respect to
any Note (other than a payment required by Sections 4.07 or
4.12 hereof); or
(h) make any change in Section 6.04 or 6.07
hereof or in the foregoing amendment and waiver provisions.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment
becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Company may not sign
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56
an amendment or supplemental Indenture until the Board of Directors approves
it. In executing any amended or supplemental indenture, the Trustee shall be
entitled to receive indemnity reasonably satisfactory to it and to receive and
(subject to Section 7.01) shall be fully protected in relying upon, an
Officer's Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture.
ARTICLE 12
MISCELLANEOUS
SECTION 10.01 TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 10.02 NOTICES
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
Sygnet Wireless, Inc.
6550-B Seville Drive
Canfield, Ohio 44406
Attention: Chief Financial Officer
Telephone No.: (330) 565-1000
Telecopier No.: (330)
If to the Trustee:
Fleet National Bank
Telephone No.:
Telecopier No.:
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
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All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection
of TIA Section 312(c).
SECTION 10.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 10.05 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if
any, provided for in this Indenture relating to the proposed action
have been satisfied; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 10.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been satisfied.
<PAGE> 59
58
SECTION 10.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied.
SECTION 10.06 RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
SECTION 10.08 GOVERNING LAW
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
<PAGE> 60
59
SECTION 10.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 10.10 SUCCESSORS
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 10.11 SEVERABILITY
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.12 COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following pages]
<PAGE> 61
60
SIGNATURES
Dated as of , 1996 SYGNET WIRELESS, INC.
By:
-----------------------
Name:
Title: Officer
Attest:
- ---------------------------------- (SEAL)
Name:
Title: Chief Financial Officer
Dated as of , 1996 FLEET NATIONAL BANK
By:
-----------------------
Name:
Title:
Attest:
- --------------------------- (SEAL)
Name:
Title:
<PAGE> 62
Exhibit A
(Face of Note)
% Senior Notes due 2006
No. $__________
SYGNET WIRELESS, INC.
promises to pay to or registered assigns,
the principal sum of Dollars on 2006.
Interest Payment Dates: and
Record Dates: and
Dated:
SYGNET WIRELESS, INC.
By:
-------------------
Name:
Title:
By:
-------------------
Name:
Title:
(SEAL)
Certificate of Authentication:
This is one of the Notes
referred to in the within-mentioned Indenture:
Fleet National Bank
By:
-------------------------------
Authorized Signatory
Dated:
A-1
<PAGE> 63
(Back of Note)
% Senior Notes due 2006
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Sygnet Wireless, Inc., an Ohio corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
% per annum from , 1996 until maturity. The Company will pay interest
semi-annually on and of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be , 1997. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time
to time on demand at a rate that is 1% per annum in excess of the rate then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of
a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the or next preceding the
Interest Payment Date, even if such Notes are cancelled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. The Notes will be payable
as to principal, interest and premium, if any, at the office or agency of the
Company maintained for such purpose within or without the City and State of New
York, or, at the option of the Company, payment of interest may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders. Such payment shall be in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts.
3. Paying Agent and Registrar. Initially, Fleet National Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
as of , 1996 ("Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code Section Section 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement
of such terms. The Notes are unsecured obligations of the Company limited to
$110,000,000 in aggregate principal amount.
A-2
<PAGE> 64
5. Optional Redemption.
(a) Except as set forth in clause (b) of this Note, the
Company shall not have the option to redeem the Notes pursuant to this
paragraph 5 prior to , 2001. Thereafter, the Company shall have the
option to redeem the Notes, in whole or in part, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest to the applicable redemption date, if redeemed during the
twelve-month period beginning on of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . %
2002 . . . . . . . . . . . . . . . . . . . . . %
2003 . . . . . . . . . . . . . . . . . . . . . %
2004 . . . . . . . . . . . . . . . . . . . . . %
2005 and thereafter . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this
paragraph 5, during the first 36 months after the Issue Date, the Company may
redeem up to an aggregate of $38,500,000 in principal amount of Notes at a
redemption price of % of the principal amount thereof, in each case plus
accrued and unpaid interest thereon to the redemption date, with the net
proceeds of an offering of Qualified Capital Stock of the Company; provided
that at least $71,500,000 in aggregate principal amount of Notes remain
outstanding immediately after the occurrence of such redemption; and provided,
further, that such redemption shall occur within 30 days of the date of the
closing of such offering.
(c) Notice of redemption will be mailed at least 30 days but
not more than 60 days before the redemption date to each Holder whose Notes are
to be redeemed at its registered address. Notes in denominations larger than
$1,000 may be redeemed in part but only in integral multiples of $1,000, unless
all of the Notes held by a Holder are to be redeemed. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
6. Mandatory Redemption.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
7. Change of Control.
Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon to the date of purchase (the "Change of Control Payment").
Within 10 days following any Change of Control, the Company shall mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by the
A-3
<PAGE> 65
Indenture and described in such notice. The Company shall comply with the
requirements of 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 connection with the repurchase of the Notes as a result of a
Change of Control.
The Change of Control Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Change of Control
Offer Period"). No later than five Business Days after the termination of the
Change of Control Offer Period (the "Change of Control Purchase Date"), the
Company shall purchase all Notes tendered in response to the Change of Control
Offer. Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.
8. Limitation on Asset Sales and Sales of Subsidiary Stock.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, in one transaction or a series of related transactions,
convey, sell, transfer, assign or otherwise dispose of, directly or indirectly,
any of its property, business or assets, including any sale or other transfer
or issuance of any Capital Stock of any Restricted Subsidiary of the Company,
whether owned on the Issue Date or thereafter acquired (an "Asset Sale") unless
(a) such Asset Sale is for fair market value as determined by the Board of
Directors of the Company acting reasonably and in good faith, (b) at least 80%
of the value of the consideration for such Asset Sale consists of (i) cash,
(ii) the assumption by the transferee of pari passu Indebtedness or (iii)
notes, obligations or other marketable securities (collectively "Marketable
Securities") that are immediately converted into cash and (c) the Net Cash
Proceeds therefrom are applied on or prior to 360 days after the date of such
Asset Sale (i) to the permanent repayment of Indebtedness under the Bank Credit
Facility (which payment reduces the commitment thereunder) or (ii) to the
repurchase of the Notes pursuant to an offer to purchase (an "Asset Sale
Offer") described below or (iii) to an investment in a Related Business.
Notwithstanding the foregoing provisions of the prior paragraph:
(i) any Restricted Subsidiary of the Company may convey,
sell, lease, transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Company or a Restricted Subsidiary
of the Company;
(ii) the Company and its Restricted Subsidiaries may, in the
ordinary course of business, (A) convey, sell, lease, transfer, assign or
otherwise dispose of assets in the ordinary course of business and (B) exchange
assets for assets in Related Businesses; (iii) the Company and its Restricted
Subsidiaries may convey, sell, lease, transfer, assign or otherwise dispose of
assets pursuant to and in accordance with Section 5.01; (iv) the Company and
its Restricted Subsidiaries may (a) sell damaged, worn out or other obsolete
property in the ordinary course of business or other property no longer
necessary for the proper conduct of the business of the Company or any of its
Restricted Subsidiaries, or (b) abandon such property if it cannot, through
reasonable efforts, be sold; and (v) the Company may transfer the assets that
it acquires in the Horizon Acquisition to the Subsidiary after the Issue Date.
A-4
<PAGE> 66
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds not applied to the uses set forth in subsections (c)(i) or (c)(iii) in
the first paragraph exceeds $5,000,000. An Asset Sale Offer shall remain open
for a period of 20 Business Days following its commencement and no longer,
except to the extent that a longer period is required by applicable law (the
"Asset Sale Offer Period"). No later than five Business Days after the
termination of the Asset Sale Offer Period (the "Asset Sale Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to this Section (the "Asset Sale Offer Amount") or, if less
than the Asset Sale Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Asset Sale Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange
or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) a default
in the payment of interest on any Note when the same becomes due and payable
and the Default continues for a period of 30 days; (ii) a default in the
payment of the principal of or
A-5
<PAGE> 67
premium, if any, on any Note when the same becomes due and payable at maturity,
upon redemption or otherwise; (iii) failure to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or performed
pursuant to Sections 4.07, 4.08, 4.09, 4.12 or 5.01 of the Indenture; (iv)
failure by the Company to comply with any of its other agreements or covenants
in, or provisions of, the Notes or the Indenture and the Default continues for
the period and after the notice specified below; (v) a default occurs under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Subsidiaries (or the payment of which is guaranteed by
the Company or any of its Subsidiaries) whether such Indebtedness or guarantee
now exists, or is created after the date of the Indenture, which default (a) is
caused by a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default"); provided such
Event of Default shall not occur until 90 days after such Payment Default, or
(b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $5,000,000 or more; (vii) a declaration that any of the
Subsidiary Guarantees is unenforceable; or (viii) certain events of bankruptcy
or insolvency with respect to the Company or any of its Subsidiaries. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice
of any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Notes. The Company is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Company
is required upon becoming aware of any Default or Event of Default, to deliver
to the Trustee a statement specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note
A-6
<PAGE> 68
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Sygnet Wireless, Inc.
6550-B Seville Drive
Canfield, Ohio 44406
Attention: Chief Financial Officer
Telephone No.: (330) 565-1000
Telecopier No.: (330)
A-7
<PAGE> 69
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- -------------- -----------------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 10.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09; 10.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02; 10.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(2)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(1)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(3)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
</TABLE>
- ---------------------
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 70
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
<S> <C> <C>
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . 16
Section 1.03 Incorporation by Reference of Trust Indenture Act . . . . . . . 16
Section 1.04 Rules of Construction . . . . . . . . . . . . . . . . . . . . . 17
<CAPTION>
ARTICLE 2
THE NOTES
<S> <C> <C>
Section 2.01 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.02 Execution and Authentication . . . . . . . . . . . . . . . . . 18
Section 2.03 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . 19
Section 2.04 Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . 19
Section 2.05 Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.06 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . 20
Section 2.07 Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.08 Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.09 Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.10 Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 22
<CAPTION>
ARTICLE 3
REDEMPTION AND PREPAYMENT
<S> <C> <C>
Section 3.01 Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.02 Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . 23
Section 3.03 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 23
Section 3.04 Effect of Notice of Redemption . . . . . . . . . . . . . . . . 24
Section 3.05 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . 24
Section 3.06 Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . 25
Section 3.07 Optional Redemption . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.08 No Mandatory Redemption . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
i
<PAGE> 71
<TABLE>
<CAPTION>
Page
----
ARTICLE 4
COVENANTS
<S> <C> <C>
Section 4.01 Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.02 Maintenance of Office or Agency . . . . . . . . . . . . . . . . 26
Section 4.03 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.04 Compliance Certificate . . . . . . . . . . . . . . . . . . . . 27
Section 4.05 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.06 Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . 28
Section 4.07 Change of Control . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.08 Limitation on Incurrence of Additional Indebtedness . . . . . . 29
Section 4.09 Limitation on Restricted Payments . . . . . . . . . . . . . . . 30
Section 4.10 Limitation on Restricting Subsidiary Dividends . . . . . . . . 31
Section 4.11 Limitation on Transactions with Related Persons . . . . . . . . 32
Section 4.12 Limitation on Asset Sales and Sales of Subsidiary Stock . . . . 33
Section 4.13 Limitations on Liens . . . . . . . . . . . . . . . . . . . . . 34
Section 4.14 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . 34
<CAPTION>
ARTICLE 5
SUCCESSORS
<S> <C> <C>
Section 5.01 Merger, Consolidation or Sale of Assets . . . . . . . . . . . . 35
Section 5.02 Successor Corporation Substituted . . . . . . . . . . . . . . . 35
<CAPTION>
ARTICLE 6
DEFAULTS AND REMEDIES
<S> <C> <C>
Section 6.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.02 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.03 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.04 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . 39
Section 6.05 Control by Majority . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.06 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.07 Rights of Holders of Notes to Receive Payment . . . . . . . . . 40
Section 6.08 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . 40
Section 6.09 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . 40
Section 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
ii
<PAGE> 72
<TABLE>
<CAPTION>
Page
----
ARTICLE 7
TRUSTEE
<S> <C> <C>
Section 7.01 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.02 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . 43
Section 7.03 Individual Rights of Trustee . . . . . . . . . . . . . . . . . 44
Section 7.04 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . 44
Section 7.05 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.06 Reports by Trustee to Holders of the Notes . . . . . . . . . . 45
Section 7.07 Compensation and Indemnity . . . . . . . . . . . . . . . . . . 45
Section 7.08 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . 46
Section 7.09 Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . 47
Section 7.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . 47
Section 7.11 Preferential Collection of Claims Against Company . . . . . . . 48
<CAPTION>
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
<S> <C> <C>
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance . . . 48
Section 8.02 Legal Defeasance and Discharge . . . . . . . . . . . . . . . . 48
Section 8.03 Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.04 Conditions to Legal or Covenant Defeasance . . . . . . . . . . 49
Section 8.05 Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions . . . . . . . . . . . 51
Section 8.06 Repayment to Company . . . . . . . . . . . . . . . . . . . . . 52
Section 8.07 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . 52
<CAPTION>
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
<S> <C> <C>
Section 9.01 Without Consent of Holders of Notes . . . . . . . . . . . . . . 52
Section 9.02 With Consent of Holders of Notes . . . . . . . . . . . . . . . 53
Section 9.03 Compliance with Trust Indenture Act . . . . . . . . . . . . . . 55
Section 9.04 Revocation and Effect of Consents . . . . . . . . . . . . . . 55
Section 9.05 Notation on or Exchange of Notes . . . . . . . . . . . . . . . 55
Section 9.06 Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . 55
</TABLE>
iii
<PAGE> 73
<TABLE>
<CAPTION>
Page
----
ARTICLE 12
MISCELLANEOUS
<S> <C> <C>
Section 10.01 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . 56
Section 10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.03 Communication by Holders of Notes with Other Holders
of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.04 Certificate and Opinion as to Conditions Precedent . . . . . . 57
Section 10.05 Statements Required in Certificate or Opinion . . . . . . . . . 58
Section 10.06 Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . 58
Section 10.07 No Personal Liability of Directors, Officers, Employees
and Stockholders . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.09 No Adverse Interpretation of Other Agreements . . . . . . . . . 59
Section 10.10 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.12 Counterpart Originals . . . . . . . . . . . . . . . . . . . . . 59
Section 10.13 Table of Contents, Headings, etc. . . . . . . . . . . . . . . . 59
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A FORM OF NOTE
</TABLE>
iv
<PAGE> 1
EXHIBIT 10.1
CONDITIONAL EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of this 26th day of August 1996, between
Sygnet Communications, Inc., an Ohio corporation (the "Company") and Albert H.
Pharis, Jr. ("Executive").
R E C I T A L S :
A. Executive is the President and Chief Executive Officer of the Company.
B. The Company wishes to assure both itself and the Executive of
continuity of management.
C. The Company expects to close about September 30, 1996 on an agreement
to purchase certain cellular telephone business assets, including various FCC
non-wireline cellular telephone licenses for RSAs in Pennsylvania and New York
("Horizon Purchase").
D. The Company has filed a Registration Statement with the SEC, whereby
the Company will seek to finance in part the Horizon Purchase through issuing
securities to the public, including approximately $110 million in high yield
debt, and $35 million in equity (the "IPO").
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
contained herein, it is hereby agreed by and between the parties as follows:
1. DEFINITIONS. The following words and terms shall have the
following meanings unless the context otherwise indicates:
* "CAUSE" means any act or omission that is materially injurious
to the Employer and that constitutes on the part of Executive
(i) common law fraud, (ii) a felony, (iii) dishonesty, or (iv)
continuing neglect (other than as a result of permanent
disability, as defined in Section 4.1 hereof) by Executive in
connection with the performance of his duties hereunder;
provided that there shall be no "Cause" based upon Executive's
neglect until (a) Employer shall have given written notice to
Executive setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for asserting the
existence of "Cause" and (b) Executive shall not have remedied
the situation giving rise to such facts and circumstances
within twenty (20) days after receipt of the foregoing notice
or taking all reasonable steps to that end during such 20-day
period and thereafter.
1
<PAGE> 2
* "EFFECTIVE DATE" means the earlier of the date the IPO is
consummated or the closing date of the Horizon Purchase.
* "EMPLOYER" has the meaning assigned thereto in Section 2.1(a)
below.
* "TERM OF EMPLOYMENT" means the period commencing on the
Effective Date and expiring on the earliest to occur of (i)
the later of the third anniversary of the Effective Date or,
if applicable, the expiration of the final renewal period
under Section 2.2 of this Agreement, and (ii) the date at
which the Executive ceases for any reason to be an employee
and is entitled to the benefits, if any, provided in Section 4
below.
2. EMPLOYMENT.
2.1 POSITION AND DUTIES. Through the Term of Employment,
Executive shall be employed as President and Chief Executive Officer of the
Company and: (a) Executive shall devote his full business time and efforts to
the business and affairs of the Company or the successor to the Company by
which Executive has been employed pursuant to this Agreement and its parent,
Sygnet Wireless, Inc. (the Company, the parent, and/or such successor, as the
case may be, being herein sometimes referred to as the "Employer"), except for
reasonable vacations and for illness; provided, however, this provision shall
not preclude Executive from serving as a director or member of a board or
committee of any other corporation or other organization involving no conflict
of interests with the interests of Employer, or from managing his personal
investments, so long as such activities do not materially interfere with the
regular performance of his duties under this Agreement.
2.2 RENEWAL. This Agreement may be renewed for additional
periods, as mutually agreed by the Company and Executive, at a rate of
compensation to be agreed upon by Executive and the Company. Unless one party
submits to the other a notice that it does not wish to renew this Agreement (a
"Non Renewal Notice") at least ninety (90) days prior to the end of the then
current Term, the parties shall begin discussions regarding Executive's
compensation for the applicable renewal period. In the event the parties have
not completed such discussions at the end of the then current Term of this
Agreement, and the parties desire to continue good faith discussions of
Executive's compensation, then the Term of this Agreement shall be extended
until the expiration of thirty (30) days after one party submits a Non Renewal
Notice to the other and, during such extended Term, Executive agrees to
continue his employment with the Company and the Company agrees to continue
paying and providing benefits to Executive at the then current rates under this
Agreement. In the event that the Company, at any time, submits a Non Renewal
Notice to Executive, the Company agrees to retain Executive as a consultant to
the Company for a period of one (1) year following the expiration of the then
current Term of this Agreement and Executive shall be compensated for such
consulting as provided in Section 4.4 hereof.
3. COMPENSATION.
3.1 COMPENSATION DURING TERM. Executive shall be entitled
to the following compensation for services as an employee or consultant
hereunder:
2
<PAGE> 3
(a) Initial base compensation of $240,000.00 per year,
payable in convenient installments not less
frequently than monthly.
(b) Continuing participation in all other employee
benefit plans and practices of the Company in effect
as of the Effective Date, as the same may be
modified, supplemented or replaced, as well as to
reimbursement, upon proper accounting, of reasonable
expenses and disbursements incurred by Executive in
the course of Executive's duties; and
(c) Participation in the Company's Executive Bonus Plan
and Stock Option Plan.
Nothing contained in the foregoing shall preclude improvement of
compensation, reward opportunities or benefits available to Executive.
3.2 INDEMNIFICATION AND INSURANCE. Executive shall be entitled
to all applicable indemnification and director's and officer's liability
insurance provided by Employer to its directors and officers.
4. TERMINATION.
4.1 UPON DEATH OR DISABILITY. Except for the obligations
of the Company set forth in this Section 4.1, this Agreement shall
automatically terminate upon Executive's death or permanent disability, as
defined in the Company's long-term disability program. In the event of such
termination, the Employer shall promptly pay to Executive's estate all benefits
and compensation accrued hereunder through the end of the month in which
occurred Executive's death or permanent disability, as the case may be.
4.2 FOR CAUSE. Employer may not terminate Executive's
employment hereunder except for Cause. If Executive's employment is terminated
for Cause, Employer shall promptly pay Executive his full accrued Base
Compensation, and all other vested benefits, through the date of such
termination at the rate in effect at the time of such Termination, and Employer
shall have no further obligations to Executive under this Agreement.
Notwithstanding the foregoing, termination for Cause under this Section 4.2
shall not relieve Executive of his obligations under Section 5 below.
4.3 CONSTRUCTIVE TERMINATION. Executive may, by written
notice to the Company, convert his status from that of an employee to that of a
consultant to the Company within sixty (60) days after the occurrence, without
the express written consent of Executive, of any of the following:
(a) the assignment to Executive of duties not materially
comparable to Executive's duties provided for herein.
(b) any failure by Employer to comply with any of the
provisions of Sections 2 or 3 above, other than an
immaterial or inadvertent failure remedied by
Employer promptly after receipt of notice thereof
given by Executive.
As a result of Executive's conversion of his status from that
of an employee to that of a
3
<PAGE> 4
consultant under this Section 4.3, for a period of one (1) year after the date
of such conversion (i) Employer shall continue to make all payments required to
be made by it under Section 3 of this Agreement, and (ii) Executive shall
continue to be treated as an employee under the provisions of the benefit
plans, programs and practices referred to in Section 3.1 above; provided that,
if despite the foregoing, benefits under any such plan, program or practice may
not be provided thereunder to Executive because he is no longer an employee,
Employer shall provide, pay or provide for payment of such benefits to
Executive.
4.4 TERMINATION WITHOUT CAUSE. In the event of termination
of employment hereunder by Employer without Cause, Executive's status shall
automatically convert to that of a consultant to the Company and for a period
of one (1) year thereafter (i) Employer shall continue to make all payments
required to be made by it under Section 3 of this Agreement, and (ii) Executive
shall continue to be treated as an employee under the provisions of the benefit
plans, programs and practices referred to in Section 3.1 above; provided that,
if despite the foregoing, benefits under any such plan, program or practice may
not be provided thereunder to Executive because he is no longer an employee,
Employer shall provide, pay or provide for payment of such benefits to
Executive.
4.5 TERMINATION BY EXECUTIVE. In the event of termination
of employment hereunder by Executive other than pursuant to Section 4.3 above,
Employer shall pay to Executive all benefits and compensation accrued hereunder
through the date of termination, and Employer shall have no further obligations
to Executive under this Agreement.
5. CONFIDENTIALITY AND NON-COMPETE.
5.1 NONDISCLOSURE AND INDEMNIFICATION. Executive
acknowledges that the Company's Proprietary Information (as defined below),
which was designed and developed by the Company with considerable effort and
at great expense, is unique, secret and confidential, and constitutes the
exclusive property and trade secrets of the Company. Executive further
acknowledges that an integral part of the Company's business involves the
receipt of confidential Customer Information (as defined below). Executive
further acknowledges that any unauthorized use of the Proprietary Information
or the Customer Information by Executive, or any disclosure of the same to any
third parties, would be wrongful and would cause irreparable injury to the
Company, its customers and customer's employees and/or clients.
Accordingly, Executive covenants and agrees that, for the
period of his employment and thereafter, he will (i) hold the Proprietary
Information and the Customer Information in strictest confidence, (ii) not
disclose such information to any person, firm, corporation or other entity, and
(iii) not use such information for any purpose not expressly authorized by the
Company. Executive also agrees that upon request he shall return all business
records in his possession or control in any way relating to the Company, its
Proprietary Information, or the Customer Information. Executive agrees to
indemnify and hold the Company harmless from any loss, claims or damages,
including attorneys' fees and costs, arising out of or relating to the
unauthorized disclosure or use of the Company's Proprietary Information or the
Customer Information by Executive.
For the purposes of this Agreement, the term "Customer
Information" shall mean, whether verbal or written, (i) the identity of any
employee or other individual for whom claims, payroll, enrollment or similar
data or other information are or have been submitted by or on behalf of
4
<PAGE> 5
the Customer to the Company; (ii) confidential information regarding the
business of the Customer or its clients learned in the course of providing
service and/or products to the Customer; (iii) other confidential information
submitted from time to time by the Customer to the Company; and (iv) the
identity of the Customer or its clients as the source of such data or
information.
For the purposes of this Agreement, the term "Proprietary
Information" shall mean, whether verbal or written, all customer lists,
prospective customer lists, trade secrets, databases, processes, computer
programs, object codes, course codes, passwords, entry codes, inventions,
improvements, manufacturing or systems techniques formulas, development or
experimental work, work in process, business data disclosed to the Company by
or for the benefit of the Company's customers, information relating to the
Company's business contracts (including, without limitation, contracts with
customers, service providers, medical insurers and claims administrators),
marketing strategies, any other secret or confidential matter relating or
pertaining to the products, services, sales or other business of the Company,
and shall include Customer Information that was developed or enhanced by the
Company including data furnished by or on behalf of the Customer.
Neither Proprietary Information nor Customer Information shall
include information which (a) is or becomes generally available to the public
other than as a result of Executive's disclosure, or (b) becomes available to
Executive on a non-confidential basis from a source other than the Company or
the Customer. Notwithstanding the foregoing, such information shall carry the
presumption that it is either Proprietary Information or Customer Information
and Executive shall treat such information as confidential.
5.2 AGREEMENT NOT TO COMPETE. Executive agrees that during
the period the Company is making payments under Sections 3.1, 4.3 or 4.4 of
this Agreement and for a period of one (1) year thereafter, Executive shall
not, directly or indirectly, individually or on behalf of any other person or
entity, engage in any activities that are competitive with the business of the
Company in any state in which the Company does business or was considering
doing business while Executive was employed as an employee or as a consultant.
Specifically, Executive agrees that Executive shall not:
(a) call upon, solicit, sell or attempt to sell any
products or services similar to or in competition
with those offered by the Company to any person or
entity that was a customer of the Company at any time
during Executive's employment with the Company or was
actively solicited by the Company during the six (6)
month period preceding the termination of Executive's
employment with the Company;
(b) engage in any business (or provide any managerial,
sales or other employment or contract services to a
business or activity which is similar to the services
performed by Executive for the Company) that is in
competition with the business of the Company or any
state the Company does business or is considering
doing business; or
(c) encourage, solicit or otherwise attempt to persuade
any employee of the Company to violate any
confidentiality, non-competition or employment
agreements with the Company, or policies of the
Company.
Executive agrees that the restrictions contained in this
Section 5.2 are reasonable in all
5
<PAGE> 6
respects and are to be interpreted in light of all the facts and circumstances
existing at the time enforcement is sought. However, should any court or other
body of competent jurisdiction determine that all or any portion of the
agreements set forth herein is invalid or unenforceable for any reason, such
agreement (or portion thereof) shall be restricted and deemed amended to the
minimum extent necessary so as to preserve and establish its validity and
enforceability.
5.3 In the event of a breach of this Section 5 by Executive, in
addition to obtaining an injunction, the Company shall be entitled to terminate
any further payment of benefits to Executive and the Company shall be relieved
of all future obligations to Executive under this Agreement.
5.4 In the event the Company fails to make any payment required of
it under this Agreement or breaches any stock option agreement or benefit plan
relating to Executive, Executive shall be relieved of all further obligations
under Section 5.2 of this Agreement.
6. CONDITION PRECEDENT. This Agreement and the attached Stock Option
Agreement, are subject to the condition of either the consummation of the IPO
or the closing of the Horizon Purchase before December 31, 1996. If neither
the IPO is consummated nor the Horizon purchase has closed by December 31,
1996, then this Agreement and the Stock Option Agreement are both void.
7. MISCELLANEOUS PROVISIONS.
7.1 WITHHOLDING. Notwithstanding anything to the contrary
contained in this Agreement, all payments required to be made by Employer
hereunder to Executive or his estate or beneficiaries shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll
deductions as Employer may reasonably determine it is required to withhold
pursuant to any applicable law, regulation or benefit plan.
7.2 ENTIRE AGREEMENT; CAPTIONS. This Agreement contains the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes all earlier agreements, whether oral or written, between
Executive and the Company without extinguishing or diminishing any rights
heretofore acquired by the Company under such agreements. The captions and
section headings of this Agreement are solely for convenience of reference and
shall not affect the interpretation of any provision hereof.
7.3 NOTICES. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail or by overnight delivery service to
Executive at his last address he has filed in writing with Employer or, in the
case of Employer, at its principal executive offices.
7.4 NON-ALIENATION. Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien or security interest upon
any amounts provided under this Agreement; and no benefits payable hereunder
shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or the laws of descent
and distribution.
7.5 GOVERNING LAW. The provisions of this Agreement shall be
construed in
6
<PAGE> 7
accordance with the laws of the State of Ohio.
7.6 AMENDMENT. This Agreement may be amended or cancelled
only by mutual agreement of the parties, or their respective successors, in
writing.
7.7 SUCCESSOR TO THE COMPANY. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company.
7.8 SEVERABILITY. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect in such jurisdiction, and any such
invalid or unenforceable provision shall not be considered invalid or
unenforceable in any other jurisdiction.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
on the date and year first above written.
COMPANY: Sygnet Communications, Inc.
By: /s/ W.P. WILLIAMSON, III
Title: Chairman
EXECUTIVE
/s/ ALBERT H. PHARIS, JR.
Albert H. Pharis, Jr.
7
<PAGE> 1
EXHIBIT 10.2
CONDITIONAL EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of this 26th day of August 1996,
between Sygnet Communications, Inc., an Ohio corporation (the "Company") and
Warren P. Williamson, III ("Executive").
R E C I T A L S :
A. Executive is the Chairman of the Board of the Company.
B. The Company wishes to assure both itself and the Executive of
continuity of management.
C. The Company expects to close about September 30, 1996 on an
agreement to purchase certain cellular telephone business assets, including
various FCC non-wireline cellular telephone licenses for RSAs in Pennsylvania
and New York ("Horizon Purchase").
D. The Company has filed a Registration Statement with the SEC,
whereby the Company will seek to finance in part the Horizon Purchase through
issuing securities to the public, including approximately $110 million in high
yield debt, and $35 million in equity (the "IPO").
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, it is hereby agreed by and between the parties as
follows:
1. DEFINITIONS. The following words and terms shall have the
following meanings unless the context otherwise indicates:
* "CAUSE" means any act or omission that is materially injurious
to the Employer and that constitutes on the part of Executive
(i) common law fraud, (ii) a felony, (iii) dishonesty, or (iv)
continuing neglect (other than as a result of permanent
disability, as defined in Section 4.1 hereof) by Executive in
connection with the performance of his duties hereunder;
provided that there shall be no "Cause" based upon Executive's
neglect until (a) Employer shall have given written notice to
Executive setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for asserting the
existence of "Cause" and (b) Executive shall not have remedied
the situation giving rise to such facts and circumstances
within twenty (20) days after receipt of the foregoing notice
or taking all reasonable steps to that end during such 20-day
period and thereafter.
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* "EFFECTIVE DATE" means the earlier of the date the IPO is
consummated or the closing date of the Horizon Purchase.
* "EMPLOYER" has the meaning assigned thereto in Section 2.1(a)
below.
* "TERM OF EMPLOYMENT" means the period commencing on the
Effective Date and expiring on the earliest to occur of (i)
the later of the third anniversary of the Effective Date or,
if applicable, the expiration of the final renewal period
under Section 2.2 of this Agreement, and (ii) the date at
which the Executive ceases for any reason to be an employee
and is entitled to the benefits, if any, provided in Section 4
below.
2. EMPLOYMENT.
2.1 POSITION AND DUTIES. Through the Term of Employment,
Executive shall be employed as Chairman of the Board of the Company and: (a)
Executive shall devote his full business time and efforts to the business and
affairs of the Company or the successor to the Company by which Executive has
been employed pursuant to this Agreement and its parent, Sygnet Wireless, Inc.
(the Company, the parent, and/or such successor, as the case may be, being
herein sometimes referred to as the "Employer"), except for reasonable
vacations and for illness; provided, however, this provision shall not preclude
Executive from serving as Chairman of the Board and Director of WKBN
Broadcasting Corporation and also as a director or member of a board or
committee of any other corporation or other organization involving no conflict
of interests with the interests of Employer, or from managing his personal
investments, so long as such activities do not materially interfere with the
regular performance of his duties under this Agreement.
2.2 RENEWAL. This Agreement may be renewed for additional
periods, as mutually agreed by the Company and Executive, at a rate of
compensation to be agreed upon by Executive and the Company. Unless one party
submits to the other a notice that it does not wish to renew this Agreement (a
"Non Renewal Notice") at least ninety (90) days prior to the end of the then
current Term, the parties shall begin discussions regarding Executive's
compensation for the applicable renewal period. In the event the parties have
not completed such discussions at the end of the then current Term of this
Agreement, and the parties desire to continue good faith discussions of
Executive's compensation, then the Term of this Agreement shall be extended
until the expiration of thirty (30) days after one party submits a Non Renewal
Notice to the other and, during such extended Term, Executive agrees to
continue his employment with the Company and the Company agrees to continue
paying and providing benefits to Executive at the then current rates under this
Agreement. In the event that the Company, at any time, submits a Non Renewal
Notice to Executive, the Company agrees to retain Executive as a consultant to
the Company for a period of one (1) year following the expiration of the then
current Term of this Agreement and Executive shall be compensated for such
consulting as provided in Section 4.4 hereof.
3. COMPENSATION.
3.1 COMPENSATION DURING TERM. Executive shall be entitled
to the following compensation for services as an employee or consultant
hereunder:
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(a) Initial base compensation of $240,000.00 per year,
payable in convenient installments not less
frequently than monthly.
(b) Continuing participation in all other employee
benefit plans and practices of the Company in effect
as of the Effective Date, as the same may be
modified, supplemented or replaced, as well as to
reimbursement, upon proper accounting, of reasonable
expenses and disbursements incurred by Executive in
the course of Executive's duties; and
(c) Participation in the Company's Executive Bonus Plan
and Stock Option Plan.
Nothing contained in the foregoing shall preclude improvement of
compensation, reward opportunities or benefits available to Executive.
3.2 INDEMNIFICATION AND INSURANCE. Executive shall be entitled
to all applicable indemnification and director's and officer's liability
insurance provided by Employer to its directors and officers.
4. TERMINATION.
4.1 UPON DEATH OR DISABILITY. Except for the obligations
of the Company set forth in this Section 4.1, this Agreement shall
automatically terminate upon Executive's death or permanent disability, as
defined in the Company's long-term disability program. In the event of such
termination, the Employer shall promptly pay to Executive's estate all benefits
and compensation accrued hereunder through the end of the month in which
occurred Executive's death or permanent disability, as the case may be.
4.2 FOR CAUSE. Employer may not terminate Executive's
employment hereunder except for Cause. If Executive's employment is terminated
for Cause, Employer shall promptly pay Executive his full accrued Base
Compensation, and all other vested benefits, through the date of such
termination at the rate in effect at the time of such Termination, and Employer
shall have no further obligations to Executive under this Agreement.
Notwithstanding the foregoing, termination for Cause under this Section 4.2
shall not relieve Executive of his obligations under Section 5 below.
4.3 CONSTRUCTIVE TERMINATION. Executive may, by written
notice to the Company, convert his status from that of an employee to that of a
consultant to the Company within sixty (60) days after the occurrence, without
the express written consent of Executive, of any of the following:
(a) the assignment to Executive of duties not materially
comparable to Executive's duties provided for herein.
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(b) any failure by Employer to comply with any of the
provisions of Sections 2 or 3 above, other than an
immaterial or inadvertent failure remedied by
Employer promptly after receipt of notice thereof
given by Executive.
As a result of Executive's conversion of his status from that
of an employee to that of a consultant under this Section 4.3, for a period of
one (1) year after the date of such conversion (i) Employer shall continue to
make all payments required to be made by it under Section 3 of this Agreement,
and (ii) Executive shall continue to be treated as an employee under the
provisions of the benefit plans, programs and practices referred to in Section
3.1 above; provided that, if despite the foregoing, benefits under any such
plan, program or practice may not be provided thereunder to Executive because
he is no longer an employee, Employer shall provide, pay or provide for payment
of such benefits to Executive.
4.4 TERMINATION WITHOUT CAUSE. In the event of termination
of employment hereunder by Employer without Cause, Executive's status shall
automatically convert to that of a consultant to the Company and for a period
of one (1) year thereafter (i) Employer shall continue to make all payments
required to be made by it under Section 3 of this Agreement, and (ii) Executive
shall continue to be treated as an employee under the provisions of the benefit
plans, programs and practices referred to in Section 3.1 above; provided that,
if despite the foregoing, benefits under any such plan, program or practice may
not be provided thereunder to Executive because he is no longer an employee,
Employer shall provide, pay or provide for payment of such benefits to
Executive.
4.5 TERMINATION BY EXECUTIVE. In the event of termination
of employment hereunder by Executive other than pursuant to Section 4.3 above,
Employer shall pay to Executive all benefits and compensation accrued hereunder
through the date of termination, and Employer shall have no further obligations
to Executive under this Agreement.
5. CONFIDENTIALITY AND NON-COMPETE.
5.1 NONDISCLOSURE AND INDEMNIFICATION. Executive
acknowledges that the Company's Proprietary Information (as defined below),
which was designed and developed by the Company with considerable effort and
at great expense, is unique, secret and confidential, and constitutes the
exclusive property and trade secrets of the Company. Executive further
acknowledges that an integral part of the Company's business involves the
receipt of confidential Customer Information (as defined below). Executive
further acknowledges that any unauthorized use of the Proprietary Information
or the Customer Information by Executive, or any disclosure of the same to any
third parties, would be wrongful and would cause irreparable injury to the
Company, its customers and customer's employees and/or clients.
Accordingly, Executive covenants and agrees that, for the
period of his employment and thereafter, he will (i) hold the Proprietary
Information and the Customer Information in strictest confidence, (ii) not
disclose such information to any person, firm, corporation or other entity, and
(iii) not use such information for any purpose not expressly authorized by the
Company. Executive also agrees that upon request he shall return all business
records in his possession or control in any way relating to the Company, its
Proprietary Information, or the Customer Information. Executive agrees to
indemnify and hold the Company harmless from any loss, claims or damages,
including attorneys'
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<PAGE> 5
fees and costs, arising out of or relating to the unauthorized disclosure or
use of the Company's Proprietary Information or the Customer Information by
Executive.
For the purposes of this Agreement, the term "Customer
Information" shall mean, whether verbal or written, (i) the identity of any
employee or other individual for whom claims, payroll, enrollment or similar
data or other information are or have been submitted by or on behalf of the
Customer to the Company; (ii) confidential information regarding the business
of the Customer or its clients learned in the course of providing service
and/or products to the Customer; (iii) other confidential information submitted
from time to time by the Customer to the Company; and (iv) the identity of the
Customer or its clients as the source of such data or information.
For the purposes of this Agreement, the term "Proprietary
Information" shall mean, whether verbal or written, all customer lists,
prospective customer lists, trade secrets, databases, processes, computer
programs, object codes, course codes, passwords, entry codes, inventions,
improvements, manufacturing or systems techniques formulas, development or
experimental work, work in process, business data disclosed to the Company by
or for the benefit of the Company's customers, information relating to the
Company's business contracts (including, without limitation, contracts with
customers, service providers, medical insurers and claims administrators),
marketing strategies, any other secret or confidential matter relating or
pertaining to the products, services, sales or other business of the Company,
and shall include Customer Information that was developed or enhanced by the
Company including data furnished by or on behalf of the Customer.
Neither Proprietary Information nor Customer Information shall
include information which (a) is or becomes generally available to the public
other than as a result of Executive's disclosure, or (b) becomes available to
Executive on a non-confidential basis from a source other than the Company or
the Customer. Notwithstanding the foregoing, such information shall carry the
presumption that it is either Proprietary Information or Customer Information
and Executive shall treat such information as confidential.
5.2 AGREEMENT NOT TO COMPETE. Executive agrees that during
the period the Company is making payments under Sections 3.1, 4.3 or 4.4 of
this Agreement and for a period of one (1) year thereafter, Executive shall
not, directly or indirectly, individually or on behalf of any other person or
entity, engage in any activities that are competitive with the business of the
Company in any state in which the Company does business or was considering
doing business while Executive was employed as an employee or as a consultant.
Specifically, Executive agrees that Executive shall not:
(a) call upon, solicit, sell or attempt to sell any
products or services similar to or in competition
with those offered by the Company to any person or
entity that was a customer of the Company at any time
during Executive's employment with the Company or was
actively solicited by the Company during the six (6)
month period preceding the termination of Executive's
employment with the Company;
(b) engage in any business (or provide any managerial,
sales or other employment or contract services to a
business or activity which is similar to the services
performed by Executive for the Company) that is in
competition with the business of the Company or any
state the Company does business or is considering
doing business; or
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<PAGE> 6
(c) encourage, solicit or otherwise attempt to persuade
any employee of the Company to violate any
confidentiality, non-competition or employment
agreements with the Company, or policies of the
Company.
Executive agrees that the restrictions contained in
this Section 5.2 are reasonable in all respects and are to be interpreted in
light of all the facts and circumstances existing at the time enforcement is
sought. However, should any court or other body of competent jurisdiction
determine that all or any portion of the agreements set forth herein is invalid
or unenforceable for any reason, such agreement (or portion thereof) shall be
restricted and deemed amended to the minimum extent necessary so as to preserve
and establish its validity and enforceability.
5.3 In the event of a breach of this Section 5 by Executive, in
addition to obtaining an injunction, the Company shall be entitled to terminate
any further payment of benefits to Executive and the Company shall be relieved
of all future obligations to Executive under this Agreement.
5.4 In the event the Company fails to make any payment required of
it under this Agreement or breaches any stock option agreement or benefit plan
relating to Executive, Executive shall be relieved of all further obligations
under Section 5.2 of this Agreement.
6. CONDITION PRECEDENT. This Agreement and the attached Stock Option
Agreement, are subject to the condition of either the consummation of the IPO
or the closing of the Horizon Purchase before December 31, 1996. If neither
the IPO is consummated nor the Horizon purchase has closed by December 31,
1996, then this Agreement and the Stock Option Agreement are both void.
7. MISCELLANEOUS PROVISIONS.
7.1 WITHHOLDING. Notwithstanding anything to the contrary
contained in this Agreement, all payments required to be made by Employer
hereunder to Executive or his estate or beneficiaries shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll
deductions as Employer may reasonably determine it is required to withhold
pursuant to any applicable law, regulation or benefit plan.
7.2 ENTIRE AGREEMENT; CAPTIONS. This Agreement contains
the entire understanding of the parties hereto with respect to the subject
matter hereof and supersedes all earlier agreements, whether oral or written,
between Executive and the Company without extinguishing or diminishing any
rights heretofore acquired by the Company under such agreements. The captions
and section headings of this Agreement are solely for convenience of reference
and shall not affect the interpretation of any provision hereof.
7.3 NOTICES. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail or by overnight delivery service to
Executive at his last address he has filed in writing with Employer or, in the
case of Employer, at its principal executive offices.
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<PAGE> 7
7.4 NON-ALIENATION. Executive shall not have any right to
pledge, hypothecate, anticipate or in any way create a lien or security
interest upon any amounts provided under this Agreement; and no benefits
payable hereunder shall be assignable in anticipation of payment either by
voluntary or involuntary acts, or by operation of law, except by will or the
laws of descent and distribution.
7.5 GOVERNING LAW. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Ohio.
7.6 AMENDMENT. This Agreement may be amended or cancelled
only by mutual agreement of the parties, or their respective successors, in
writing.
7.7 SUCCESSOR TO THE COMPANY. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company.
7.8 SEVERABILITY. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect in such jurisdiction, and any such
invalid or unenforceable provision shall not be considered invalid or
unenforceable in any other jurisdiction.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
on the date and year first above written.
COMPANY: Sygnet Communications, Inc.
By: /s/ ALBERT H. PHARIS, JR.
Title: President
EXECUTIVE
/s/ W.P. WILLIAMSON, III
Warren P. Williamson, III
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EXHIBIT 10.3
CONDITIONAL EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of this 26th day of August 1996,
between Sygnet Communications, Inc., an Ohio corporation (the "Company") and
Craig T. Sheetz ("Executive").
R E C I T A L S :
A. Executive is the Vice President and Chief Financial Officer of
the Company.
B. The Company wishes to assure both itself and the Executive of
continuity of management.
C. The Company expects to close about September 30, 1996 on an
agreement to purchase certain cellular telephone business assets, including
various FCC non-wireline cellular telephone licenses for RSAs in Pennsylvania
and New York ("Horizon Purchase").
D. The Company has filed a Registration Statement with the SEC,
whereby the Company will seek to finance in part the Horizon Purchase through
issuing securities to the public, including approximately $110 million in high
yield debt, and $35 million in equity (the "IPO").
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, it is hereby agreed by and between the parties as
follows:
1. DEFINITIONS. The following words and terms shall have the
following meanings unless the context otherwise indicates:
* "CAUSE" means any act or omission that is materially injurious
to the Employer and that constitutes on the part of Executive
(i) common law fraud, (ii) a felony, (iii) dishonesty, or (iv)
continuing neglect (other than as a result of permanent
disability, as defined in Section 4.1 hereof) by Executive in
connection with the performance of his duties hereunder;
provided that there shall be no "Cause" based upon Executive's
neglect until (a) Employer shall have given written notice to
Executive setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for asserting the
existence of "Cause" and (b) Executive shall not have remedied
the situation giving rise to such facts and circumstances
within twenty (20) days after receipt of the foregoing notice
or taking all reasonable steps to that end during such 20-day
period and thereafter.
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<PAGE> 2
* "EFFECTIVE DATE" means the earlier of the date the IPO is
consummated or the closing date of the Horizon Purchase.
* "EMPLOYER" has the meaning assigned thereto in Section 2.1(a)
below.
* "TERM OF EMPLOYMENT" means the period commencing on the
Effective Date and expiring on the earliest to occur of (i)
the later of the second anniversary of the Effective Date or,
if applicable, the expiration of the final renewal period
under Section 2.2 of this Agreement, and (ii) the date at
which the Executive ceases for any reason to be an employee
and is entitled to the benefits, if any, provided in Section 4
below.
2. EMPLOYMENT.
2.1 POSITION AND DUTIES. Through the Term of Employment,
Executive shall be employed as Vice President and Chief Financial Officer of
the Company and: (a) Executive shall devote his full business time and efforts
to the business and affairs of the Company or the successor to the Company by
which Executive has been employed pursuant to this Agreement and its parent,
Sygnet Wireless, Inc. (the Company, the parent, and/or such successor, as the
case may be, being herein sometimes referred to as the "Employer"), except for
reasonable vacations and for illness; provided, however, this provision shall
not preclude Executive from serving as a director or member of a board or
committee of any other corporation or other organization involving no conflict
of interests with the interests of Employer, or from managing his personal
investments, so long as such activities do not materially interfere with the
regular performance of his duties under this Agreement.
2.2 RENEWAL. This Agreement may be renewed for additional
periods, as mutually agreed by the Company and Executive, at a rate of
compensation to be agreed upon by Executive and the Company. Unless one party
submits to the other a notice that it does not wish to renew this Agreement (a
"Non Renewal Notice") at least ninety (90) days prior to the end of the then
current Term, the parties shall begin discussions regarding Executive's
compensation for the applicable renewal period. In the event the parties have
not completed such discussions at the end of the then current Term of this
Agreement, and the parties desire to continue good faith discussions of
Executive's compensation, then the Term of this Agreement shall be extended
until the expiration of thirty (30) days after one party submits a Non Renewal
Notice to the other and, during such extended Term, Executive agrees to
continue his employment with the Company and the Company agrees to continue
paying and providing benefits to Executive at the then current rates under this
Agreement. In the event that the Company, at any time, submits a Non Renewal
Notice to Executive, the Company agrees to retain Executive as a consultant to
the Company for a period of one (1) year following the expiration of the then
current Term of this Agreement and Executive shall be compensated for such
consulting as provided in Section 4.4 hereof.
3. COMPENSATION.
3.1 COMPENSATION DURING TERM. Executive shall be entitled
to the following compensation for services as an employee or consultant
hereunder:
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(a) Initial base compensation of $135,000.00 per year,
payable in convenient installments not less
frequently than monthly.
(b) Continuing participation in all other employee
benefit plans and practices of the Company in effect
as of the Effective Date, as the same may be
modified, supplemented or replaced, as well as to
reimbursement, upon proper accounting, of reasonable
expenses and disbursements incurred by Executive in
the course of Executive's duties; and
(c) Participation in the Company's Executive Bonus Plan
and Stock Option Plan.
Nothing contained in the foregoing shall preclude improvement of
compensation, reward opportunities or benefits available to Executive.
3.2 INDEMNIFICATION AND INSURANCE. Executive shall be entitled
to all applicable indemnification and director's and officer's liability
insurance provided by Employer to its directors and officers.
4. TERMINATION.
4.1 UPON DEATH OR DISABILITY. Except for the obligations
of the Company set forth in this Section 4.1, this Agreement shall
automatically terminate upon Executive's death or permanent disability, as
defined in the Company's long-term disability program. In the event of such
termination, the Employer shall promptly pay to Executive's estate all benefits
and compensation accrued hereunder through the end of the month in which
occurred Executive's death or permanent disability, as the case may be.
4.2 FOR CAUSE. Employer may not terminate Executive's
employment hereunder except for Cause. If Executive's employment is terminated
for Cause, Employer shall promptly pay Executive his full accrued Base
Compensation, and all other vested benefits, through the date of such
termination at the rate in effect at the time of such Termination, and Employer
shall have no further obligations to Executive under this Agreement.
Notwithstanding the foregoing, termination for Cause under this Section 4.2
shall not relieve Executive of his obligations under Section 5 below.
4.3 CONSTRUCTIVE TERMINATION. Executive may, by written
notice to the Company, convert his status from that of an employee to that of a
consultant to the Company within sixty (60) days after the occurrence, without
the express written consent of Executive, of any of the following:
(a) the assignment to Executive of duties not materially
comparable to Executive's duties provided for herein.
(b) any failure by Employer to comply with any of the
provisions of Sections 2 or 3 above, other than an
immaterial or inadvertent failure remedied by
Employer promptly after receipt of notice thereof
given by Executive.
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<PAGE> 4
As a result of Executive's conversion of his status from that
of an employee to that of a consultant under this Section 4.3, for a period of
one (1) year after the date of such conversion (i) Employer shall continue to
make all payments required to be made by it under Section 3 of this Agreement,
and (ii) Executive shall continue to be treated as an employee under the
provisions of the benefit plans, programs and practices referred to in Section
3.1 above; provided that, if despite the foregoing, benefits under any such
plan, program or practice may not be provided thereunder to Executive because
he is no longer an employee, Employer shall provide, pay or provide for payment
of such benefits to Executive.
4.4 TERMINATION WITHOUT CAUSE. In the event of termination
of employment hereunder by Employer without Cause, Executive's status shall
automatically convert to that of a consultant to the Company and for a period
of one (1) year thereafter (i) Employer shall continue to make all payments
required to be made by it under Section 3 of this Agreement, and (ii) Executive
shall continue to be treated as an employee under the provisions of the benefit
plans, programs and practices referred to in Section 3.1 above; provided that,
if despite the foregoing, benefits under any such plan, program or practice may
not be provided thereunder to Executive because he is no longer an employee,
Employer shall provide, pay or provide for payment of such benefits to
Executive.
4.5 TERMINATION BY EXECUTIVE. In the event of
termination of employment hereunder by Executive other than pursuant to Section
4.3 above, Employer shall pay to Executive all benefits and compensation
accrued hereunder through the date of termination, and Employer shall have no
further obligations to Executive under this Agreement.
5. CONFIDENTIALITY AND NON-COMPETE.
5.1 NONDISCLOSURE AND INDEMNIFICATION. Executive
acknowledges that the Company's Proprietary Information (as defined below),
which was designed and developed by the Company with considerable effort and
at great expense, is unique, secret and confidential, and constitutes the
exclusive property and trade secrets of the Company. Executive further
acknowledges that an integral part of the Company's business involves the
receipt of confidential Customer Information (as defined below). Executive
further acknowledges that any unauthorized use of the Proprietary Information
or the Customer Information by Executive, or any disclosure of the same to any
third parties, would be wrongful and would cause irreparable injury to the
Company, its customers and customer's employees and/or clients.
Accordingly, Executive covenants and agrees that, for the
period of his employment and thereafter, he will (i) hold the Proprietary
Information and the Customer Information in strictest confidence, (ii) not
disclose such information to any person, firm, corporation or other entity, and
(iii) not use such information for any purpose not expressly authorized by the
Company. Executive also agrees that upon request he shall return all business
records in his possession or control in any way relating to the Company, its
Proprietary Information, or the Customer Information. Executive agrees to
indemnify and hold the Company harmless from any loss, claims or damages,
including attorneys' fees and costs, arising out of or relating to the
unauthorized disclosure or use of the Company's Proprietary Information or the
Customer Information by Executive.
For the purposes of this Agreement, the term "Customer
Information" shall mean, whether verbal or written, (i) the identity of any
employee or other individual for whom claims,
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payroll, enrollment or similar data or other information are or have been
submitted by or on behalf of the Customer to the Company; (ii) confidential
information regarding the business of the Customer or its clients learned in
the course of providing service and/or products to the Customer; (iii) other
confidential information submitted from time to time by the Customer to the
Company; and (iv) the identity of the Customer or its clients as the source of
such data or information.
For the purposes of this Agreement, the term "Proprietary
Information" shall mean, whether verbal or written, all customer lists,
prospective customer lists, trade secrets, databases, processes, computer
programs, object codes, course codes, passwords, entry codes, inventions,
improvements, manufacturing or systems techniques formulas, development or
experimental work, work in process, business data disclosed to the Company by
or for the benefit of the Company's customers, information relating to the
Company's business contracts (including, without limitation, contracts with
customers, service providers, medical insurers and claims administrators),
marketing strategies, any other secret or confidential matter relating or
pertaining to the products, services, sales or other business of the Company,
and shall include Customer Information that was developed or enhanced by the
Company including data furnished by or on behalf of the Customer.
Neither Proprietary Information nor Customer Information shall
include information which (a) is or becomes generally available to the public
other than as a result of Executive's disclosure, or (b) becomes available to
Executive on a non-confidential basis from a source other than the Company or
the Customer. Notwithstanding the foregoing, such information shall carry the
presumption that it is either Proprietary Information or Customer Information
and Executive shall treat such information as confidential.
5.2 AGREEMENT NOT TO COMPETE. Executive agrees that during
the period the Company is making payments under Sections 3.1, 4.3 or 4.4 of
this Agreement and for a period of one (1) year thereafter, Executive shall
not, directly or indirectly, individually or on behalf of any other person or
entity, engage in any activities that are competitive with the business of the
Company in any state in which the Company does business or was considering
doing business while Executive was employed as an employee or as a consultant.
Specifically, Executive agrees that Executive shall not:
(a) call upon, solicit, sell or attempt to sell any
products or services similar to or in competition
with those offered by the Company to any person or
entity that was a customer of the Company at any time
during Executive's employment with the Company or was
actively solicited by the Company during the six (6)
month period preceding the termination of Executive's
employment with the Company;
(b) engage in any business (or provide any managerial,
sales or other employment or contract services to a
business or activity which is similar to the services
performed by Executive for the Company) that is in
competition with the business of the Company or any
state the Company does business or is considering
doing business; or
(c) encourage, solicit or otherwise attempt to persuade
any employee of the Company to violate any
confidentiality, non-competition or employment
agreements with the Company, or policies of the
Company.
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Executive agrees that the restrictions contained in this
Section 5.2 are reasonable in all respects and are to be interpreted in light
of all the facts and circumstances existing at the time enforcement is sought.
However, should any court or other body of competent jurisdiction determine
that all or any portion of the agreements set forth herein is invalid or
unenforceable for any reason, such agreement (or portion thereof) shall be
restricted and deemed amended to the minimum extent necessary so as to preserve
and establish its validity and enforceability.
5.3 In the event of a breach of this Section 5 by Executive, in
addition to obtaining an injunction, the Company shall be entitled to terminate
any further payment of benefits to Executive and the Company shall be relieved
of all future obligations to Executive under this Agreement.
5.4 In the event the Company fails to make any payment required of
it under this Agreement or breaches any stock option agreement or benefit plan
relating to Executive, Executive shall be relieved of all further obligations
under Section 5.2 of this Agreement.
6. CONDITION PRECEDENT. This Agreement and the attached Stock Option
Agreement, are subject to the condition of either the consummation of the IPO
or the closing of the Horizon Purchase before December 31, 1996. If neither
the IPO is consummated nor the Horizon purchase has closed by December 31,
1996, then this Agreement and the Stock Option Agreement are both void.
7. MISCELLANEOUS PROVISIONS.
7.1 WITHHOLDING. Notwithstanding anything to the contrary
contained in this Agreement, all payments required to be made by Employer
hereunder to Executive or his estate or beneficiaries shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll
deductions as Employer may reasonably determine it is required to withhold
pursuant to any applicable law, regulation or benefit plan.
7.2 ENTIRE AGREEMENT; CAPTIONS. This Agreement contains the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes all earlier agreements, whether oral or written, between
Executive and the Company without extinguishing or diminishing any rights
heretofore acquired by the Company under such agreements. The captions and
section headings of this Agreement are solely for convenience of reference and
shall not affect the interpretation of any provision hereof.
7.3 NOTICES. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail or by overnight delivery service to
Executive at his last address he has filed in writing with Employer or, in the
case of Employer, at its principal executive offices.
7.4 NON-ALIENATION. Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien or security interest upon
any amounts provided under this Agreement; and no benefits payable hereunder
shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or the laws of descent
and distribution.
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7.5 GOVERNING LAW. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Ohio.
7.6 AMENDMENT. This Agreement may be amended or cancelled
only by mutual agreement of the parties, or their respective successors, in
writing.
7.7 SUCCESSOR TO THE COMPANY. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company.
7.8 SEVERABILITY. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect in such jurisdiction, and any such
invalid or unenforceable provision shall not be considered invalid or
unenforceable in any other jurisdiction.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
on the date and year first above written.
COMPANY: Sygnet Communications, Inc.
By: /s/ ALBERT H. PHARIS, JR.
Title: President
EXECUTIVE
/s/ CRAIG T. SHEETZ
Craig T. Sheetz
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EXHIBIT 10.4
CONDITIONAL EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of this 26th day of August
1996, between Sygnet Communications, Inc., an Ohio corporation (the "Company")
and Gregory T. Pauley ("Executive").
R E C I T A L S :
A. Executive is the Vice President and Chief Technical Officer of
the Company.
B. The Company wishes to assure both itself and the Executive of
continuity of management.
C. The Company expects to close about September 30, 1996 on an
agreement to purchase certain cellular telephone business assets, including
various FCC non-wireline cellular telephone licenses for RSAs in Pennsylvania
and New York ("Horizon Purchase").
D. The Company has filed a Registration Statement with the SEC,
whereby the Company will seek to finance in part the Horizon Purchase through
issuing securities to the public, including approximately $110 million in high
yield debt, and $35 million in equity (the "IPO").
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, it is hereby agreed by and between the parties as
follows:
1. DEFINITIONS. The following words and terms shall have the
following meanings unless the context otherwise indicates:
* "CAUSE" means any act or omission that is materially injurious
to the Employer and that constitutes on the part of Executive
(i) common law fraud, (ii) a felony, (iii) dishonesty, or (iv)
continuing neglect (other than as a result of permanent
disability, as defined in Section 4.1 hereof) by Executive in
connection with the performance of his duties hereunder;
provided that there shall be no "Cause" based upon Executive's
neglect until (a) Employer shall have given written notice to
Executive setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for asserting the
existence of "Cause" and (b) Executive shall not have remedied
the situation giving rise to such facts and circumstances
within twenty (20) days after receipt of the foregoing notice
or taking all reasonable steps to that end during such 20-day
period and thereafter.
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* "EFFECTIVE DATE" means the earlier of the date the IPO is
consummated or the closing date of the Horizon Purchase.
* "EMPLOYER" has the meaning assigned thereto in Section 2.1(a)
below.
* "TERM OF EMPLOYMENT" means the period commencing on the
Effective Date and expiring on the earliest to occur of (i)
the later of the second anniversary of the Effective Date or,
if applicable, the expiration of the final renewal period
under Section 2.2 of this Agreement, and (ii) the date at
which the Executive ceases for any reason to be an employee
and is entitled to the benefits, if any, provided in Section 4
below.
2. EMPLOYMENT.
2.1 POSITION AND DUTIES. Through the Term of Employment,
Executive shall be employed as Vice President and Chief Technical Officer of
the Company and: (a) Executive shall devote his full business time and efforts
to the business and affairs of the Company or the successor to the Company by
which Executive has been employed pursuant to this Agreement and its parent,
Sygnet Wireless, Inc. (the Company, the parent, and/or such successor, as the
case may be, being herein sometimes referred to as the "Employer"), except for
reasonable vacations and for illness; provided, however, this provision shall
not preclude Executive from serving as a director or member of a board or
committee of any other corporation or other organization involving no conflict
of interests with the interests of Employer, or from managing his personal
investments, so long as such activities do not materially interfere with the
regular performance of his duties under this Agreement.
2.2 RENEWAL. This Agreement may be renewed for additional
periods, as mutually agreed by the Company and Executive, at a rate of
compensation to be agreed upon by Executive and the Company. Unless one party
submits to the other a notice that it does not wish to renew this Agreement (a
"Non Renewal Notice") at least ninety (90) days prior to the end of the then
current Term, the parties shall begin discussions regarding Executive's
compensation for the applicable renewal period. In the event the parties have
not completed such discussions at the end of the then current Term of this
Agreement, and the parties desire to continue good faith discussions of
Executive's compensation, then the Term of this Agreement shall be extended
until the expiration of thirty (30) days after one party submits a Non Renewal
Notice to the other and, during such extended Term, Executive agrees to
continue his employment with the Company and the Company agrees to continue
paying and providing benefits to Executive at the then current rates under this
Agreement. In the event that the Company, at any time, submits a Non Renewal
Notice to Executive, the Company agrees to retain Executive as a consultant to
the Company for a period of one (1) year following the expiration of the then
current Term of this Agreement and Executive shall be compensated for such
consulting as provided in Section 4.4 hereof.
3. COMPENSATION.
3.1 COMPENSATION DURING TERM. Executive shall be entitled
to the following compensation for services as an employee or consultant
hereunder:
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(a) Initial base compensation of $120,000.00 per year,
payable in convenient installments not less
frequently than monthly.
(b) Continuing participation in all other employee
benefit plans and practices of the Company in effect
as of the Effective Date, as the same may be
modified, supplemented or replaced, as well as to
reimbursement, upon proper accounting, of reasonable
expenses and disbursements incurred by Executive in
the course of Executive's duties; and
(c) Participation in the Company's Executive Bonus Plan
and Stock Option Plan.
Nothing contained in the foregoing shall preclude improvement of
compensation, reward opportunities or benefits available to Executive.
3.2 INDEMNIFICATION AND INSURANCE. Executive shall be entitled
to all applicable indemnification and director's and officer's liability
insurance provided by Employer to its directors and officers.
4. TERMINATION.
4.1 UPON DEATH OR DISABILITY. Except for the obligations
of the Company set forth in this Section 4.1, this Agreement shall
automatically terminate upon Executive's death or permanent disability, as
defined in the Company's long-term disability program. In the event of such
termination, the Employer shall promptly pay to Executive's estate all benefits
and compensation accrued hereunder through the end of the month in which
occurred Executive's death or permanent disability, as the case may be.
4.2 FOR CAUSE. Employer may not terminate Executive's
employment hereunder except for Cause. If Executive's employment is terminated
for Cause, Employer shall promptly pay Executive his full accrued Base
Compensation, and all other vested benefits, through the date of such
termination at the rate in effect at the time of such Termination, and Employer
shall have no further obligations to Executive under this Agreement.
Notwithstanding the foregoing, termination for Cause under this Section 4.2
shall not relieve Executive of his obligations under Section 5 below.
4.3 CONSTRUCTIVE TERMINATION. Executive may, by written
notice to the Company, convert his status from that of an employee to that of a
consultant to the Company within sixty (60) days after the occurrence, without
the express written consent of Executive, of any of the following:
(a) the assignment to Executive of duties not materially
comparable to Executive's duties provided for herein.
(b) any failure by Employer to comply with any of the
provisions of Sections 2 or 3 above, other than an
immaterial or inadvertent failure remedied by
Employer promptly after receipt of notice thereof
given by Executive.
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As a result of Executive's conversion of his status from that
of an employee to that of a consultant under this Section 4.3, for a period of
one (1) year after the date of such conversion (i) Employer shall continue to
make all payments required to be made by it under Section 3 of this Agreement,
and (ii) Executive shall continue to be treated as an employee under the
provisions of the benefit plans, programs and practices referred to in Section
3.1 above; provided that, if despite the foregoing, benefits under any such
plan, program or practice may not be provided thereunder to Executive because
he is no longer an employee, Employer shall provide, pay or provide for payment
of such benefits to Executive.
4.4 TERMINATION WITHOUT CAUSE. In the event of termination
of employment hereunder by Employer without Cause, Executive's status shall
automatically convert to that of a consultant to the Company and for a period
of one (1) year thereafter (i) Employer shall continue to make all payments
required to be made by it under Section 3 of this Agreement, and (ii) Executive
shall continue to be treated as an employee under the provisions of the benefit
plans, programs and practices referred to in Section 3.1 above; provided that,
if despite the foregoing, benefits under any such plan, program or practice may
not be provided thereunder to Executive because he is no longer an employee,
Employer shall provide, pay or provide for payment of such benefits to
Executive.
4.5 TERMINATION BY EXECUTIVE. In the event of termination
of employment hereunder by Executive other than pursuant to Section 4.3 above,
Employer shall pay to Executive all benefits and compensation accrued hereunder
through the date of termination, and Employer shall have no further obligations
to Executive under this Agreement.
5. CONFIDENTIALITY AND NON-COMPETE.
5.1 NONDISCLOSURE AND INDEMNIFICATION. Executive
acknowledges that the Company's Proprietary Information (as defined below),
which was designed and developed by the Company with considerable effort and
at great expense, is unique, secret and confidential, and constitutes the
exclusive property and trade secrets of the Company. Executive further
acknowledges that an integral part of the Company's business involves the
receipt of confidential Customer Information (as defined below). Executive
further acknowledges that any unauthorized use of the Proprietary Information
or the Customer Information by Executive, or any disclosure of the same to any
third parties, would be wrongful and would cause irreparable injury to the
Company, its customers and customer's employees and/or clients.
Accordingly, Executive covenants and agrees that, for the
period of his employment and thereafter, he will (i) hold the Proprietary
Information and the Customer Information in strictest confidence, (ii) not
disclose such information to any person, firm, corporation or other entity, and
(iii) not use such information for any purpose not expressly authorized by the
Company. Executive also agrees that upon request he shall return all business
records in his possession or control in any way relating to the Company, its
Proprietary Information, or the Customer Information. Executive agrees to
indemnify and hold the Company harmless from any loss, claims or damages,
including attorneys' fees and costs, arising out of or relating to the
unauthorized disclosure or use of the Company's Proprietary Information or the
Customer Information by Executive.
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For the purposes of this Agreement, the term "Customer
Information" shall mean, whether verbal or written, (i) the identity of any
employee or other individual for whom claims, payroll, enrollment or similar
data or other information are or have been submitted by or on behalf of the
Customer to the Company; (ii) confidential information regarding the business
of the Customer or its clients learned in the course of providing service
and/or products to the Customer; (iii) other confidential information submitted
from time to time by the Customer to the Company; and (iv) the identity of the
Customer or its clients as the source of such data or information.
For the purposes of this Agreement, the term "Proprietary
Information" shall mean, whether verbal or written, all customer lists,
prospective customer lists, trade secrets, databases, processes, computer
programs, object codes, course codes, passwords, entry codes, inventions,
improvements, manufacturing or systems techniques formulas, development or
experimental work, work in process, business data disclosed to the Company by
or for the benefit of the Company's customers, information relating to the
Company's business contracts (including, without limitation, contracts with
customers, service providers, medical insurers and claims administrators),
marketing strategies, any other secret or confidential matter relating or
pertaining to the products, services, sales or other business of the Company,
and shall include Customer Information that was developed or enhanced by the
Company including data furnished by or on behalf of the Customer.
Neither Proprietary Information nor Customer Information shall
include information which (a) is or becomes generally available to the public
other than as a result of Executive's disclosure, or (b) becomes available to
Executive on a non-confidential basis from a source other than the Company or
the Customer. Notwithstanding the foregoing, such information shall carry the
presumption that it is either Proprietary Information or Customer Information
and Executive shall treat such information as confidential.
5.2 AGREEMENT NOT TO COMPETE. Executive agrees that during
the period the Company is making payments under Sections 3.1, 4.3 or 4.4 of
this Agreement and for a period of one (1) year thereafter, Executive shall
not, directly or indirectly, individually or on behalf of any other person or
entity, engage in any activities that are competitive with the business of the
Company in any state in which the Company does business or was considering
doing business while Executive was employed as an employee or as a consultant.
Specifically, Executive agrees that Executive shall not:
(a) call upon, solicit, sell or attempt to sell any
products or services similar to or in competition
with those offered by the Company to any person or
entity that was a customer of the Company at any time
during Executive's employment with the Company or was
actively solicited by the Company during the six (6)
month period preceding the termination of Executive's
employment with the Company;
(b) engage in any business (or provide any managerial,
sales or other employment or contract services to a
business or activity which is similar to the services
performed by Executive for the Company) that is in
competition with the business of the Company or any
state the Company does business or is considering
doing business; or
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(c) encourage, solicit or otherwise attempt to persuade
any employee of the Company to violate any
confidentiality, non-competition or employment
agreements with the Company, or policies of the
Company.
Executive agrees that the restrictions contained in this
Section 5.2 are reasonable in all respects and are to be interpreted in light
of all the facts and circumstances existing at the time enforcement is sought.
However, should any court or other body of competent jurisdiction determine
that all or any portion of the agreements set forth herein is invalid or
unenforceable for any reason, such agreement (or portion thereof) shall be
restricted and deemed amended to the minimum extent necessary so as to preserve
and establish its validity and enforceability.
5.3 In the event of a breach of this Section 5 by Executive, in
addition to obtaining an injunction, the Company shall be entitled to terminate
any further payment of benefits to Executive and the Company shall be relieved
of all future obligations to Executive under this Agreement.
5.4 In the event the Company fails to make any payment required of
it under this Agreement or breaches any stock option agreement or benefit plan
relating to Executive, Executive shall be relieved of all further obligations
under Section 5.2 of this Agreement.
6. CONDITION PRECEDENT. This Agreement and the attached Stock Option
Agreement, are subject to the condition of either the consummation of the IPO
or the closing of the Horizon Purchase before December 31, 1996. If neither
the IPO is consummated nor the Horizon purchase has closed by December 31,
1996, then this Agreement and the Stock Option Agreement are both void.
7. MISCELLANEOUS PROVISIONS.
7.1 WITHHOLDING. Notwithstanding anything to the contrary
contained in this Agreement, all payments required to be made by Employer
hereunder to Executive or his estate or beneficiaries shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll
deductions as Employer may reasonably determine it is required to withhold
pursuant to any applicable law, regulation or benefit plan.
7.2 ENTIRE AGREEMENT; CAPTIONS. This Agreement contains the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes all earlier agreements, whether oral or written, between
Executive and the Company without extinguishing or diminishing any rights
heretofore acquired by the Company under such agreements. The captions and
section headings of this Agreement are solely for convenience of reference and
shall not affect the interpretation of any provision hereof.
7.3 NOTICES. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail or by overnight delivery service to
Executive at his last address he has filed in writing with Employer or, in the
case of Employer, at its principal executive offices.
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7.4 NON-ALIENATION. Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien or security interest upon
any amounts provided under this Agreement; and no benefits payable hereunder
shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or the laws of descent
and distribution.
7.5 GOVERNING LAW. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Ohio.
7.6 AMENDMENT. This Agreement may be amended or cancelled
only by mutual agreement of the parties, or their respective successors, in
writing.
7.7 SUCCESSOR TO THE COMPANY. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company.
7.8 SEVERABILITY. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect in such jurisdiction, and any such
invalid or unenforceable provision shall not be considered invalid or
unenforceable in any other jurisdiction.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
on the date and year first above written.
COMPANY: Sygnet Communications, Inc.
By: /s/ ALBERT H. PHARIS, JR.
Title: President
EXECUTIVE
/s/ GREGORY T. PAULEY
Gregory T. Pauley
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Exhibit 10.5
SYGNET WIRELESS, INC.
1996 STOCK OPTION PLAN
ARTICLE I
NAME AND PURPOSE
1.1 NAME. The name of this Plan is the "Sygnet Wireless, Inc. 1996
Stock Option Plan."
1.2 PURPOSE. The Company has established this Plan to attract, retain,
motivate and reward Employees and other individuals and to encourage ownership
of the Company's Common Stock by them.
ARTICLE II
DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION
2.1 GENERAL DEFINITIONS. The following words and phrases, when used
in the Plan, unless otherwise specifically defined or unless the context
clearly otherwise requires, shall have the following respective meanings:
(a) AFFILIATE. A Parent or Subsidiary of the Company.
(b) AGREEMENT. The document which evidences the grant of an
Option under the Plan and which sets forth the terms, conditions and
provisions of, and restrictions relating to, such Option.
(c) BOARD. The Board of Directors of the Company.
(d) CHANGE OF CONTROL. The acquisition, without the approval of
the Board, by any person or entity, other than the Company or a Related
Entity, of more than 20% of the outstanding shares of the Company's voting
common stock through a tender offer, exchange offer, or otherwise; the
liquidation or dissolution of the Company following a sale or other
disposition of all or substantially all of its assets; a merger or
consolidation involving the Company which results in the Company not being the
surviving parent corporation; or any time during any two-year period in which
individuals who constituted the Board at the start of such period (or whose
election was approved by at least two-thirds of the then members of the Board
who were members at the start of the two-year period) do not constitute at
least 50% of the Board for any reason. A related Entity is the Parent, a
Subsidiary or any employee benefit plan (including a trust forming a part of
such plan) maintained by the Parent, the Company, or a Subsidiary.
(e) CODE. The Internal Revenue Code of 1986, as amended. Any
reference to the Code includes the regulations promulgated pursuant to the
Code.
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(f) COMPANY. Sygnet Wireless, Inc.
(g) COMMITTEE. The Committee described in Section 5.1.
(h) COMMON STOCK. The Company's Class A common stock which
presently has a par value of 1 cent per share.
(i) EFFECTIVE DATE. The date that the Plan is approved by the
shareholders of the Company. Any grants of Options prior to the approval by
the shareholders of the Company shall be void if such approval is not
obtained.
(j) EMPLOYEE. Any person employed by the Employer.
(k) EMPLOYER. The Company and all Affiliates.
(l) EXCHANGE ACT. The Securities Exchange Act of 1934, as amended.
(m) FAIR MARKET VALUE. The closing price of the Shares on the
NASDAQ on a given date, or, in the absence of sales on a given date, the
closing price on the NASDAQ on the last day on which a sale occurred prior to
such date; or, if the Shares are not included on the NASDAQ, such price as the
Board shall determine to be the fair market value of the Shares.
(n) FISCAL YEAR. The taxable year of the Company which is the
calendar year.
(o) ISO. An Incentive Stock Option as defined in Section 422 of the
Code.
(p) NQSO. A Non-Qualified Stock Option, which is an Option that
does not qualify as an ISO.
(q) OPTION. An option to purchase Shares granted under the Plan,
whether an ISO or an NQSO.
(r) PARENT. Any corporation (other than the Company or a
Subsidiary) in an unbroken chain of corporations ending with the Company, if,
at the time of the grant of an Option, each of the corporations (other than
the Company or a Subsidiary) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(s) PARTICIPANT. An individual who is granted an Option under the
Plan.
(t) PLAN. The Sygnet Wireless, Inc. 1996 Stock Option Plan and
all amendments and supplements to it.
(u) RULE 16b-3. Rule 16b-3 promulgated by the SEC, as amended,
or any successor rule in effect from time to time.
(v) SEC. The Securities and Exchange Commission.
(w) SHARE. A share of Common Stock.
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(x) SUBSIDIARY. Any corporation, other than the Company, in an
unbroken chain of corporations beginning with the Company if, at the time of
grant of an Option, each of the corporations, other than the last corporation
in the unbroken chain, owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
2.2 OTHER DEFINITIONS. In addition to the above definitions, certain
words and phrases used in the Plan and any Agreement may be defined in other
portions of the Plan or in such Agreement.
2.3 CONFLICTS IN PLAN. In the case of any conflict in the terms of the
Plan relating to an Option, the provisions in the Article of the Plan which
specifically grants such Option shall control those in a different Article.
ARTICLE III
SHARES SUBJECT TO THE PLAN
3.1 NUMBER OF SHARES. The number of Shares for which Options may be
granted under the Plan shall initially be one million Shares. Such number of
Shares shall increase annually, effective as of the first day of each Fiscal
Year, commencing with the Fiscal Year beginning in 1997, by the number of
Shares equal to 1% of the outstanding Shares as of such first day of the
Fiscal Year. Such Shares may be authorized but unissued Shares, Shares held
in the treasury, or both.
3.2 REUSAGE. If an Option expires or is terminated, surrendered,
forfeited, or cancelled without having been fully exercised, the Shares with
respect to which such Option has not been exercised at the time of
termination, surrender, forfeiture, or cancellation shall again be available
for use under the Plan.
3.3 ADJUSTMENTS. If there is any change in the Common Stock of the
Company by reason of any stock dividend, spin-off, split-up, spin-out,
recapitalization, merger, consolidation, reorganization, combination or
exchange of Shares, number and class of shares available for Options and the
number of Shares subject to outstanding Options, and the price thereof, as
applicable, shall be appropriately adjusted by the Committee.
ARTICLE IV
ELIGIBILITY
Options may be granted only to Employees, employees and owners of
entities which are not Affiliates but which have a direct or indirect
ownership interest in an Employer or in which an Employer has a direct or
indirect ownership interest, individuals who, and employees and owners of
entities which, are customers and suppliers of an Employer, individuals who,
and employees and owners of entities which, have ownership or business
affiliations with any individual or entity previously described. The
Participants and the Options they receive under the Plan shall be determined
solely by the Committee. In making its determinations, the Committee shall
consider past, present and expected future contributions of Participants and
potential Participants to the Employer, including, without limitation, the
performance of, or the refraining from the performance of, services.
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ARTICLE V
ADMINISTRATION
5.1 COMMITTEE. The Plan shall be administered by the Committee. The
Committee shall consist of two or more members of the Board who are
"Non-Employee Directors" as defined in Rule 16b-3 and "outside directors" as
defined by Section 162(m)(4)(C)(i) of the Code. The members of the Committee
shall be appointed by and shall serve at the pleasure of the Board, which may
from time to time appoint members in substitution for members previously
appointed and fill vacancies, however caused, in the Committee. The Committee
may select one of its members as its Chairman and shall hold its meetings at
such times and places as it may determine. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote at a meeting duly called and held.
5.2 AUTHORITY. Subject to the terms of the Plan, the Committee shall
have discretionary authority to:
(a) determine the individuals to whom Options are granted, the
type and amounts of Options to be granted and the time of
all such grants;
(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Option granted;
(c) interpret and construe the Plan and all Agreements;
(d) prescribe, amend and rescind rules and regulations
relating to the Plan;
(e) determine the content and form of all Agreements;
(f) determine all questions relating to Options under the
Plan;
(g) maintain accounts, records and ledgers relating to
Options;
(h) maintain records concerning its decisions and proceedings;
(i) employ agents, attorneys, accountants or other persons for
such purposes as the Committee considers necessary or
desirable;
(j) take, at any time, any action permitted by Section 9.6
irrespective of whether any Change of Control has occurred
or is imminent; and
(k) do and perform all acts which it may deem necessary or
appropriate for the administration of the Plan and carry
out the purposes of the Plan.
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5.3 DELEGATION. Except as required by Rule 16b-3 with respect to
grants of Options to individuals who are subject to Section 16 of the Exchange
Act or as otherwise required for compliance with Rule 16b-3 or other
applicable law, the Committee may delegate all or any part of its authority
under the Plan to any Employee, Employees or committee.
5.4 ADJUDICATION OF CLAIMS. The Committee shall have discretionary
authority to make all determinations as to the right to benefits under the
Plan. In the event that a Participant believes he has not received the
benefits to which he is entitled under the Plan, a claim shall be made in
writing to the Committee. The claim shall be reviewed by the Committee. If
the claim is approved or denied, in full or in part, the Committee shall
provide a written notice of approval or denial within ninety (90) days with,
in the case of a denial, the specific reasons for the denial and specific
reference to the provisions of the Plan and/or Agreement upon which the denial
is based. A claim shall be deemed denied if the Committee does not take any
action within the aforesaid 90-day period. If a claim is denied or deemed
denied and a review is desired, the Participant shall notify the Committee in
writing within sixty (60) days of the receipt of notice of denial or the date
on which the claim is deemed to be denied, as the case may be. In requesting
a review, the Participant may review the Plan or any document relating to it
and submit any written issues and comments he may deem appropriate. The
Committee shall then review the claim and provide a written decision within
sixty (60) days. This decision, if adverse to the Participant, shall state
the specific reasons for the decision and shall include reference to specific
provisions of the Plan and/or Agreement on which the decision is based. The
Committee's decision on review shall be final.
ARTICLE VI
OPTIONS
6.1 TYPES OF OPTIONS. The Committee shall have authority to grant both
ISOs and NQSOs under the Plan.
6.2 GRANT OF ISOS AND OPTION PRICE. Each ISO must be granted to an
Employee and granted within ten (10) years from the date of adoption of the
Plan by the Board. The purchase price for Shares under any ISO shall be no
less than the Fair Market Value of the Shares at the time the Option is
granted.
6.3 OTHER ISO TERMS. In addition to the requirements of Section 6.2:
(a) Each ISO, by its terms, cannot be exercisable after the
expiration of ten (10) years from the date such ISO is granted;
(b) Each ISO, by its terms, cannot be transferable by the optionee
otherwise than by will or the laws of descent and distribution, and must be
excisable, during his lifetime, only by him; and
(c) The optionee, at the time the ISO is granted, cannot own stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or its Affiliates unless, at the time the
Option is granted, the purchase price is at least one hundred and ten percent
(110%) of the Fair Market Value of the Shares subject to the Option and such
Option, by its terms, is not exercisable after the expiration of five (5)
years from the date such Option is granted.
5
<PAGE> 6
6.4 $100,000 PER YEAR LIMITATION FOR ISOS. To the extent that the
aggregate Fair Market Value of Shares with respect to which ISOs (determined
without regard to this Section 6.4) are exercisable for the first time by any
individual during any calendar year (under all plans of the Company and its
Affiliates) exceeds $100,000.00, such Options shall be treated as options
which are not ISOs. The foregoing sentence shall be applied by taking Options
into account in the order in which they were granted, and the Fair Market
Value of any Shares shall be determined as of the time the Option with respect
to such Shares is granted.
6.5 NQSOS. The terms of each NQSO shall provide that such Option will
not be treated as an ISO. The purchase price for Shares under any NQSO shall
be no less than the Fair Market Value of the Shares at the time the Option is
granted.
6.6 DETERMINATION BY COMMITTEE. Except as otherwise provided in
Section 6.2 through Section 6.5, the terms of all Options shall be determined
by the Committee.
ARTICLE VII
AGREEMENTS AND CERTAIN OPTIONS
7.1 GRANT EVIDENCED BY AGREEMENT. The grant of any Option under the Plan
shall be evidenced by an Agreement which shall describe the specific Option
granted and the terms and conditions of the Option. The granting of any
Option shall be subject to, and conditioned upon, the recipient's execution of
any Agreement required by the Committee. Except as otherwise provided in an
Agreement, all capitalized terms used in the Agreement shall have the same
meaning as in the Plan. The Agreement shall be subject to all of the terms of
the Plan.
7.2 PROVISIONS OF AGREEMENT. Each Agreement shall contain such
provisions that the Committee shall determine to be necessary, desirable and
appropriate for the Option granted which may include, but need not be limited
to, the following with respect to any Option:
- Description of the type of Option;
- The Option's duration;
- Its transferability;
- Its exercise price, the exercise period, and the person or
persons who may exercise the Option;
- The effect upon such Option at the Participant's death or
termination of employment;
- The Option's conditions;
- When, if, and how any Option may be forfeited, converted
into another Option, modified, exchanged for another
Option, or replaced; and
- The restrictions on any Shares purchased under the Option.
7.3 CERTAIN OPTIONS. Any Option granted to an individual who is
subject to Section 16 of the Exchange Act shall not be transferable other than
by will or the laws of descent and distribution and shall be exercisable
during his lifetime only by him, his guardian or his legal representative.
6
<PAGE> 7
ARTICLE VIII
PAYMENT, DIVIDENDS, AND WITHHOLDING
8.1 PAYMENT. Upon the exercise of an Option, the amount due the Company
shall be paid:
(a) in cash;
(b) by the tender to the Company of Shares owned by the
optionee and registered in his name having a Fair Market
Value equal to the amount due to the Company;
(c) in cash, but by means of a so-called "cashless exercise"
of an Option; and/or
(d) by any combination of the payment methods specified in
(a), (b) and (c) above.
Notwithstanding the foregoing, any method of payment other than (a) may be
used only with the consent of the Committee or if and to the extent so
provided in an Agreement. The proceeds of the sale of Common Stock purchased
pursuant to an Option shall be added to the general funds of the Company or to
the Shares held in treasury, as the case may be, and used for the corporate
purposes of the Company as the Board shall determine.
8.2 DIVIDEND EQUIVALENTS. Grants of Options may include dividend
equivalent payments or dividend credit rights.
8.3 WITHHOLDING. Unless otherwise provided in an Agreement, the
Company shall, at the time any Option is exercised, withhold from the Shares
issuable upon the exercise of an Option, any amount necessary to satisfy
federal, state and local income and/or other tax withholding requirements with
respect to the exercise of such Option.
ARTICLE IX
AMENDMENT, TERMINATION AND CHANGE OF CONTROL
9.1 AMENDMENT. The Board shall have the sole right and power to
amend the Plan at any time and from time to time, provided, however, that the
Board may not amend the Plan without approval of the shareholders of the
Company:
(a) in a manner which would cause Options which are intended
to qualify as ISOs to fail to qualify;
(b) in a manner which would cause the Plan to fail to meet the
requirements of Rule 16b-3; or
(c) in a manner which would violate applicable law.
7
<PAGE> 8
9.2 TERM. The Plan shall commence as of the Effective Date and,
subject to the terms of the Plan, including those requiring approval by the
shareholders of the Company and those limiting the period over which ISOs may
be granted, shall continue in full force and effect until terminated.
9.3 TERMINATION. The Plan may be terminated at any time by the Board.
9.4 EFFECT OF AMENDMENT OR TERMINATION. Subject to the provisions of
Section 9.5, the amendment or termination of the Plan shall not adversely
affect a Participant's right to any Option granted prior to such amendment or
termination.
9.5 COMMITTEE'S RIGHT. Any Option granted may be converted, modified,
forfeited or cancelled, in whole or in part, by the Committee if and to the
extent permitted in the Plan or applicable Agreement or with the consent of
the Participant to whom such Option was granted.
9.6 CHANGE OF CONTROL. In order to maintain a Participant's rights in
the event of a Change in Control, the Committee, in its sole discretion, may,
in any Agreement evidencing an Option, or at any time prior to, or
simultaneously with or after a Change in Control, provide such protection as
it may deem necessary. Without, in any way, limiting the generality of the
foregoing sentence or requiring any specific protection, the Committee may:
(a) provide for the acceleration of any time periods relating
to the exercise of such Option so that such Option may be
exercised in full on or before the date fixed by the
Committee;
(b) provide for the purchase of such Option, upon the
Participant's request, for an amount of cash equal to the
amount which could have been attained upon the exercise of
such Option had such Option been currently exercisable;
(c) make such adjustment to the Option then outstanding as the
Committee deems appropriate to reflect such transaction or
change; and/or
(d) cause the Options then outstanding to be assumed, or new
Options substituted therefor, by the surviving corporation
in such change.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 HEADINGS AND CAPTIONS. The headings and captions to the several
Articles and Sections contained in the Plan are included only for convenience
and shall not be construed as a part of the Plan or in any respect affect or
modify its provisions.
10.2 NUMBER AND GENDER. The masculine and neuter, wherever used in the
Plan, shall refer to either the masculine, neuter or feminine; and, unless the
context otherwise requires, the singular shall include the plural and the
plural the singular.
8
<PAGE> 9
10.3 GOVERNING LAW. This Plan shall be construed and administered in
accordance with the laws of the State of Ohio.
10.4 PURCHASE FOR INVESTMENT. The Committee may require each person
purchasing Shares pursuant to an Option to represent to and agree with the
Company in writing that such person is acquiring the Shares for investment and
without a view to distribution or resale. The certificates for such Shares
may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer. All certificates for Shares delivered under the
Plan shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under all applicable laws, rules and
regulations, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate references to such restrictions.
10.5 NO EMPLOYMENT CONTRACT. The adoption of the Plan shall not confer
upon any Employee any right to continued employment nor shall it interfere in
any way with the right of the Employer to terminate the employment of any of
its Employees at any time.
10.6 NO EFFECT ON OTHER BENEFITS. The grant of Options under the Plan
shall have no effect on any benefits to which a Participant may be entitled
from the Employer, under another plan or otherwise, or preclude a Participant
from receiving any such benefits.
10.7 SECTION 16 FAIL-SAFE PROVISION. With respect to Participants
subject to Section 16 of the Exchange Act, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3. If and to
the extent any provision of the Plan or action by the Board, Committee, or the
Committee's designee fails to so comply, it shall be deemed null and void.
10.8 SECTION 162(M) FAIL-SAFE PROVISION. If Code Section 162(m) is
applicable to the Company and to a Participant, ISOs and NQSOs are intended to
meet the requirements of "other performance-based compensation" under Code
Section 162(m)(4)(C), so that any remuneration resulting from the grant or
exercise of any such Option will not be considered "applicable employee
remuneration" within the meaning of Code Section 162(m)(4). If and to the
extent any provision of the Plan or action by the Board, Committee, or the
Committee's designee is contrary to such intention, it shall be deemed null
and void.
9
<PAGE> 10
CONDITIONAL
STOCK OPTION AGREEMENT
THIS AGREEMENT, made this ________ day of ____________________________,
1996 (hereinafter the "Grant Date"), by and between Sygnet Wireless, Inc., an
Ohio corporation with its principal office at 6550 Seville Drive, Canfield,
Ohio (hereinafter the "Company"), and __________________________________,
an employee of the Company or Subsidiary, (hereinafter the "Employee").
WHEREAS, the Board of Directors of the Company is of the opinion that
the interest of the Company will be advanced by granting an incentive to
key employees upon whose judgment, initiative and efforts the Company is
largely dependent for the successful conduct of its business, and encouraging
and enabling such employee to acquire stock ownership of the Company; and
WHEREAS, the Company has established a Stock Option Plan for key
employees (hereinafter the "Plan") to advance that purpose; and
WHEREAS, the Employee is regarded by the Board of Directors as a key
employee of the Company.
WHEREAS, the Company expects to close about September 30, 1996 on an
agreement to purchase certain cellular telephone business assets, including
various FCC non-wireline cellular telephone licenses for RSA's in Pennsylvania
and New York ("Horizon Purchase").
WHEREAS, the Company has filed a Registration Statement with the SEC,
whereby the Company will seek to finance in part the Horizon Purchase through
issuing securities to the public, including approximately $110 million in high
yield debt, and $35 million in equity (the "IPO").
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth and other good and valuable consideration, the
parties hereto hereby agree as follows:
1. CONDITION PRECEDENT. This Stock Option Agreement is subject to the
condition of either the consummation of the IPO or the closing of the Horizon
Purchase before December 31, 1996. If neither the IPO is consummated nor the
Horizon Purchase has closed by December 31, 1996, then this Stock Option
Agreement is void.
2. GRANT OF OPTION. Subject to the condition precedent contained in
Paragraph 1 and also subject and pursuant to the terms and conditions
of the Plan, a copy of which is attached hereto, and this Agreement, the
Company hereby grants to the Employee the right and option to purchase all
or any part of an aggregate of ______________ shares of Class A Common Stock
of the Company (the "Shares"). The option granted hereby is not intended
to qualify as an incentive stock option within the meaning of Section 422A of
the Internal Revenue Code of 1990 (the "Code"), and shall be so construed.
3. PURCHASE PRICE. The price at which the Employee shall be
entitled to purchase each Share shall be the price of the Company's Class
A Stock to the public at the initial public offering of the stock on
______________________________________, 1996. If there is no IPO, then the
price shall be the strike price determined by specific, express action of the
Board of Directors subsequent to the date hereof.
4. DURATION OF OPTION. This Option shall be exercisable to the extent
and in the manner provided herein for a period of ten (10) years from the
Grant Date unless sooner terminated as provided herein or in the Plan.
10
<PAGE> 11
5. EXERCISABILITY OF OPTION. This Option shall be exercisable
beginning on January 1, 1997. In no event may the Option be exercised after
the tenth anniversary of the Grant Date. This Option may not be exercised
while the Employee is on disciplinary leave, and upon the resignation or
dismissal of Employee, the non-vested portion will become void. This stock
option will vest over a five (5) year period in equal twenty percent (20%)
increments on the anniversary date of this Agreement.
6. BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and any successors to the
business of the Corporation; this Option shall not be transferable by the
Employee other than by will or the laws of descent and distribution.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CORPORATION
By: _________________________________
Title: _________________________________
EMPLOYEE
_________________________________________
11
<PAGE> 1
EXHIBIT 10.6
LEASE AGREEMENT
THIS LEASE made by and between K & T REALTY, a partnership,
(hereinafter called "Lessor"), and SYGNET COMMUNICATIONS, INC. (hereinafter
called "Lessee").
1. LEASED PREMISES: Lessor, in consideration of the covenants
hereinafter contained does hereby demise and lease to Lessee the second floor
of the building located at 6550 Seville Drive, Canfield, Ohio, containing
approximately 6,200 sq. ft.
The use and occupation by the Lessee of the leased premises shall
include the use in common with Lessor of customer and employees' parking areas,
service roads, and sidewalks. Lessor agrees that at all times during the term
of this Lease there will be free and adequate access between the public street
and the entrance of the leased premises for pedestrians and motor vehicles.
2. TERM: To have and to hold for and during the full term of ten (10)
years, commencing on the "commencement date", as defined below and ending ten
(10) years thereafter.
The term "commencement date" shall mean the date determined as set
forth in paragraph 6 hereof.
Lessee shall have the option to extend this Lease for two successive
terms of five (5) years each. Each option to extend this Lease shall be
exercised by Lessee or its successors by sending written notice by United
States Certified Mail addressed to Lessor at the address contained in this
Lease, no less than six (6) months prior to the end of the initial or renewal
term of the Lease.
The annual rent for the first renewal term shall be the annual rent
set forth in paragraph 3. plus fifteen per cent (15%), and the annual rent for
the second renewal term shall be the annual rent for the first renewal term
plus seven and one-half per cent (7 1/2%).
The annual rent due with respect to any extended term of this Lease
shall be payable in equal monthly installments as set forth in paragraph 3.
3. RENT: Lessee will pay Lessor as rent for the leased premises during
the initial term SIXTY THOUSAND FOUR HUNDRED FIFTY AND 00/100 DOLLARS
($60,450.00) "Annual Rent", payable in equal monthly installments of FIVE
THOUSAND THIRTY-SEVEN AND 50/100 DOLLARS ($5,037.50) each, in advance on the
first day of each month. The rent for the first and last month of the term
hereof shall be on a pro rata basis if the term hereof shall commence on a day
of the month other than the first day thereof. Rent will be payable at the
place designated in this Lease for service of notice upon Lessor, or at such
other place as Lessor may hereafter designate in writing.
<PAGE> 2
LEASE AGREEMENT
PAGE 2
4. UTILITIES: Lessee shall pay, as and when the same become due and
payable, all charges for electric, gas, heat, hot water, telephone, refuse
removal, and any other utility supplied to or used or consumed by Lessee,
except for all water and sewer rents and charges which shall be paid by Lessor.
5. TAXES: Lessee shall pay its pro rata share of all real estate taxes
assessed upon Lot No. 53 and the building and improvements thereon. "Pro rata"
shall mean the square footage of the second floor leased premises as it bears
to the total square footage of all buildings on said Lot No. 53. Lessee shall
pay to Lessor its pro rata share of taxes within twenty (20) days after receipt
of the bill therefor.
6. COMPLETION OF CONSTRUCTION: Lessor is constructing a two story
building on said Lot No. 53 in accordance with the plans and specifications
approved by the parties and made a part hereof as fully and completely as if
rewritten herein. Lessor shall rough finish only the second floor of said
building which is to be leased to Lessee, and Lessee shall complete the
interior thereof as to ceilings, floor coverings, and wall coverings; and shall
install all of the mechanicals including plumbing, heating, cooling, and
electrical, which shall thereupon become the property of Lessor. Lessee will
secure Lessor's prior approval of its plans, which shall not be unreasonably
delayed or withheld. Lessor and Lessee agree that the commencement date shall
be the date that Lessee completes the premises suitable for its occupancy or
sixty (60) days after the first floor of the building in which the leased
premises are located is occupied by Entre' Computer Center, whichever occurs
first.
7. COMPLIANCE WITH LAWS AND ORDINANCES: Lessee shall comply with all
federal, state, county, township, and city laws and ordinances, and all rules
and regulations of any duly constituted authority, affecting or respecting the
leased premises, or the use of the same, including the business at any time
transacted thereon by Lessee. Lessee shall be solely responsible for compliance
with any and all laws, regulations, and ordinances, both present and future,
including, but not limited to, those dealing with health, sanitation and signs,
with respect to the premises. Notwithstanding the foregoing, Lessor shall be
responsible for compliance with all laws, regulations, etc. with respect to
those duties imposed upon it, by virtue of this Lease or otherwise.
8. MAINTENANCE: Lessee, at its expense, shall keep and maintain in
good order and repair the interior of the leased premises including all
heating, cooling, plumbing, and electrical equipment and will make any required
replacements thereto. Lessor will maintain and repair the exterior of the
building including the parking and other common areas. Lessor shall keep and
maintain said parking lot and common areas free of dirt, rubbish, snow, and
ice.
9. INDEMNITY: Lessee shall defend, indemnify, save and hold Lessor
harmless from any claim, action, cause of action, loss, damage, liability, cost
and expense, arising out of any
<PAGE> 3
LEASE AGREEMENT
PAGE 3
failure of Lessee, in any respect, to comply with and perform any of the
requirements and provisions of this Lease, or arising out of any use, non-use,
possession, occupation, operation, maintenance, or management of the leased
premises by Lessee, or arising out of any work or thing required by Lessee to
be done in, on, or about the premises, or arising out of any negligence, or
intentional or willful misconduct of Lessee, its agents, employees, independent
contractors or invitees, in, or about the leased premises, and this obligation
shall survive the expiration of this Lease or any earlier termination.
10. LIABILITY INSURANCE: Lessee, at all times during the term of this
Lease, or any renewal or extension hereof, and at its sole expense, shall
procure, maintain and keep in force general public liability insurance for
claims for personal injury, death, or property damage, occurring in, on or
about the premises, with limits of not less than One Million Dollars
($1,000,000.00) in respect to death or injury of a single person or in respect
to any one accident, and not less than Five Hundred Thousand Dollars
($500,000.00) in respect to property damage, insuring Lessee's liability, if
any, as provided in paragraph 9.
11. FIRE AND CASUALTY INSURANCE: Lessor agrees to keep in force, at
its expense, during the original or any renewal term of this Lease, a policy of
fire, extended coverage, vandalism and malicious mischief, and burglary
insurance to cover damage to the premises, written by a responsible insurance
company authorized to do business within this state, in an amount equal to the
replacement cost of the premises. Such policy of insurance shall provide
protection against the losses so insured against for the benefit of the Lessor,
Lessee, and any mortgagee as their interest may appear under the terms of this
Lease and any mortgage agreement.
12. TIRE OR OTHER CASUALTY: If the premises shall be rendered
untenantable by fire or other casualty, and such damage or destruction cannot
reasonably be repaired or replaced within one hundred fifty (150) working days
from such fire or other casualty so that the premises are susceptible to the
same use as that which was in effect immediately prior to such fire or other
casualty at a cost not to exceed the insurance proceeds received by Lessor for
such fire or other casualty, then this Lease shall terminate upon the surrender
thereof to Lessor. If such restoration or repairs can be made within such one
hundred fifty (150) working days then this Lease shall continue in full force
and effect and Lessor will make the necessary alterations and repairs to the
premises with all reasonable speed; provided, however, in no event shall Lessor
be required to expend a sum in excess of the amount of insurance proceeds
received by reason of such fire or other casualty. Lessee shall be entitled to
a proportionate abatement of rent hereunder during any period of total or
partial untenantability.
13. LESSEE'S FIXTURES AND OTHER PERSONAL PROPERTY: Any and all
furnishings and other personal property of Lessee in or on the leased premises
shall be at the sole risk of Lessee; and Lessee shall be responsible for the
prompt replacement of any and all
<PAGE> 4
LEASE AGREEMENT
PAGE 4
such furnishings and personal property which may be damaged or destroyed by any
cause whatsoever.
14. WAIVER OF SUBROGATION: Any insurance policy carried by either
party insuring all or any part of the premises, including improvements and
alterations thereto and Lessee's furnishings and equipment therein, shall be
written in a manner to provide that the insurance company waives all right of
recovery by way of subrogation against Lessor or Lessee, as the case may be, in
connection with any loss or damage to the premises, property or business caused
by any of the perils covered by fire and extended coverage, building and
contents, and business interruption insurance, or for which either party may be
reimbursed as a result of insurance coverage affecting any loss suffered by it;
provided, however, that the foregoing waivers shall apply only to the extent of
any recovery made by the parties under any policy of insurance now or hereafter
issued. So long as the policies involved can be so written and maintained in
effect, neither party shall be liable to the other for any such loss or damage
as aforesaid.
15. ALTERATIONS OR REMODELING: Lessee, at its expense, may remodel and
make any alterations and improvements not requiring structural changes it deems
necessary or desirable provided it complies with all applicable laws and
regulations with respect thereto. Lessee will indemnify and save and hold
Lessor harmless from any and all mechanic's liens that may be filed against the
leased premises by reason thereof. Lessee shall have the right to contest the
validity of any such lien or claim filed or asserted against the leased
premises, if Lessee shall first give Lessor assurance that, by posting a bond,
upon final determination of the validity of such lien or claim, Lessee will
forthwith pay any final judgment rendered against it and will have such lien
released without cost to Lessor.
16. SIGNS: Lessee shall have the right to install its signs on the
common area with the written consent of Lessor, which shall not be unreasonably
withheld, providing such signs conform to governmental requirements and
regulations and to Lessor's signs.
17. SUBORDINATION: Lessee shall, upon notice from Lessor, subordinate
this Lease to the lien of any first mortgage upon the premises, provided that
the holder of any such mortgage shall enter into a recordable agreement with
Lessee specifying that in the event of foreclosure or other action taken under
the mortgage by said holder, this Lease and the rights of Lessee hereunder
shall not be disturbed, but shall continue in full force and effect so long as
Lessee shall not be in default hereunder; and, that said holder shall permit
insurance or condemnation proceeds to be used for any restoration, replacement
or repair of the premises as required by the provisions of this Lease. Lessee
shall have the right to require Lessor to obtain such an agreement from the
holder of the present mortgages upon the premises.
18. ESTOPPEL CERTIFICATES: Each party agrees, upon the request of the
other,
<PAGE> 5
LEASE AGREEMENT
PAGE 5
to execute and deliver to the requesting party a written statement certifying
that this Lease is unmodified and in full force and effect, or, if there have
been modifications, that this Lease is in full force and effect as modified and
stating the modifications; the dates to which all rents and charges hereunder
have been paid in advance, if any; and, that there are then existing no setoffs
or defenses against the enforcement of the agreements of this Lease on the part
of the requesting party to be performed, or, if any, specifying same.
19. CONDEMNATION: If in any condemnation proceedings or proposal it is
agreed or ordered that the premises or any part thereof, or rights of way
adjoining or approaches to the premises, or any part thereof, be condemned,
closed, or taken for public use and such condemnation causes material
interference with the conduct of Lessee's business, then and in that event upon
the closing or the taking of same for such public use, this Lease shall, at the
option of the Lessee, upon Lessee's giving written notice thereof to Lessor
within ninety (90) days after said closing or taking, terminate as of the date
stated in said notice, anything herein contained to the contrary
notwithstanding. Whether or not this Lease is terminated, however, the Lessee
shall share in the condemnation award to the extent that the award includes
compensation for Lessee's leasehold interest and for Lessee's moving and
relocation expenses, if any. The Lessee shall have the burden of proving
"material interference with the conduct of Lessee's business". Nothing herein
contained shall preclude Lessee from intervening from Lessee's own interest in
any proceeding for such condemnation, closing or taking, or for negotiations
associated therewith, to claim or receive compensation to which Lessee may be
lawfully entitled in such proceedings. If such proceedings result in the taking
of any part of the premises, including, without limitation, any part of the
parking areas or any access to public streets, but not a sufficient part
thereof to cause material interference with the conduct of Lessee's business,
then an equitable apportionment of the rent shall be made, and such new rent
based on this apportionment shall be paid for the balance of the term of this
Lease and any renewal term, subject to the increase provided for in paragraph
2. Lessor shall, at its own expense, make all necessary repairs, alterations
and reconstruction to the remaining portion of the premises so the premises are
in substantially the same condition as before such taking, and are in good and
sufficient condition for Lessee's use; provided that the cost shall not exceed
the net proceeds of any award received and retained by Lessor.
20. DEFAULT BY LESSEE: In the event Lessee should fail to pay any of
the monthly installments of rent hereunder or if Lessee shall fail to keep or
shall violate any other condition, stipulation or agreement herein contained on
the part of Lessee to be kept and performed, and if such failure or violation
shall have continued for a period of fifteen (15) days after notice from Lessor
as to nonpayment of rent or thirty (30) days after notice from Lessor as to any
other violation, then, in any such event, Lessor, at its option, may (a)
terminate this Lease; or (b) re-enter the premises by summary proceedings or
otherwise expel Lessee and remove all of Lessee's property therefrom and relet
the premises at the best rent obtainable making reasonable efforts therefor and
receive the rent therefrom; but Lessee shall remain liable for any deficiency
<PAGE> 6
LEASE AGREEMENT
PAGE 6
between Lessee's rent hereunder and the rent obtained by Lessor on reletting;
or (c) if the default is nonmonetary in nature, cure such default for the
account of Lessee, and any amount paid or any contractual liability incurred by
Lessor in so doing shall be deemed paid or incurred for the account of Lessee,
and Lessee agrees to promptly therefor reimburse Lessor and save Lessor
harmless therefrom. A default, except as to payment of rent, shall be deemed
cured if Lessee in good faith commences performance necessary to cure the same
within thirty (30) days after receipt of such notice and continuously and with
reasonable diligence proceeds to complete the performance required to cure such
default. Lessor's rights and remedies hereunder shall be in addition to all
other rights and remedies now or hereafter available to Lessor.
21. NO WAIVER: Any demand for rent, made after the same shall fall
due, shall have the same effect in law as if made on the date and the time same
was due, any law to the contrary notwithstanding; and the failure of Lessor to
give any notice or to enforce any right or remedy upon any default of Lessee in
the performance of any of Lessee's obligations hereunder shall not be deemed a
waiver of such rights or remedies by reason of such default, nor shall it
prejudice nor affect any rights or remedies of Lessor with reference to any
subsequent default or breach by Lessee. Further, if at any time Lessor should
expressly waive any right or remedy upon any default of Lessee in the
performance of Lessee's obligations hereunder, such waiver shall not be deemed
a waiver of subsequent default or breach by Lessee.
22. ASSIGNMENT AND SUBLETTING: Lessee may not assign or sublet this
Lease without the written consent of Lessor, which consent may not be
unreasonably withheld or delayed. Notwithstanding the foregoing, Lessee may
assign and/or sublet this Lease to a third party which is affiliated with
Lessee by reason of an element of common ownership or control, or (if such
third party is an individual) if such person has an equity interest in Lessee
or Lessee's affiliates.
23. ACCESS BY LESSOR: Lessor, and any agents, employees, officers and
independent contractors of Lessor, shall have access to the leased premises at
all reasonable times, for the purposes of inspecting and examining the same or
for exhibiting the same to prospective tenants or purchasers, and, if Lessee
shall be in default hereunder, or if an emergency shall exist, making such
repairs as it deems necessary for the protection or preservation of the
premises.
24. CONVEYANCE BY LESSOR: If Lessor shall convey title to the leased
premises pursuant to a sale or exchange of property, the Lessor shall not be
liable to Lessee or any immediate or remote assignee or successor of Lessee as
to any act or omission from and after such conveyance.
25. HOLDING OVER: If Lessee shall hold over or otherwise remain in
possession of the premises after the expiration of the term or any renewal
thereof, then Lessee shall be
<PAGE> 7
LEASE AGREEMENT
PAGE 7
deemed a tenant of the premises from month to month, notwithstanding any law to
the contrary, subject to all of the terms and provisions hereof, except only as
to the term which shall have terminated.
26. LEGAL INTERPRETATION: This lease shall be construed in accordance
with the applicable laws of the State of Ohio. In interpreting this Lease,
there shall be no inference, by operation of law or otherwise, that any
provision of this Lease shall be construed against either party. In the event
any provision of this Lease conflicts with any applicable law, such conflict
shall not affect other provisions of this Lease which can be given effect
without such conflicting provision. If any provision of this Lease shall be
subject to two constructions, one of which would render such provision invalid,
then such provision shall be given that construction which would render it
valid. The paragraph numbers and captions are inserted only as a matter of
convenience and in no way define or limit the scope or intent of such
paragraphs or this Lease.
27. FORCE MAJEURE: If either party shall be delayed or prevented from
the performance of any act required by this Lease by reason of strikes, utility
failures, restrictive laws, labor disputes, riots, acts of God or other similar
reasons not the fault of the nonperforming party, then the performance time for
such act shall be extended for a period equivalent to the period of such delay.
28. NOTICE: Any and all notices, demands or communications required to
be given hereunder shall be in writing and sent by certified mail:
(a) If intended for Lessor: K & T REALTY, 6570 Seville Drive,
Canfield, OH 44406, with a copy to ATTORNEY EARL R. MILLER, P. O. Box 419,
Salem, OH 44460; and
(b) If intended for Lessee: SYGNET COMMUNICATIONS, INC., 6550 Seville
Drive, Cornfield, OH 44406, with a copy to HARRINGTON HUXLEY SMITH MITCHELL &
REED, 1200 Mahoning Bank Building, Youngstown, OH 44503, or to such other place
as either Lessor or Lessee may hereafter designate in writing and give notice
thereof to the other as herein prescribed. Any such notice shall be deemed to
have been given as of the time same is deposited in the United States mail.
29. QUIET ENJOYMENT: Lessor warrants that it has lawful title to
execute this Lease and that there are no covenants, restrictions, easements,
reservations, zoning ordinances or any other encumbrances affecting the
premises that may be adverse to the operation of Lessee's business therein or
in any way restricting Lessee's intended use of the leased premises, or
limiting vehicle and pedestrian access and egress between the premises and the
public ways adjacent thereto; and Lessor agrees that if Lessee shall perform
all of Lessee's agreements herein specified, Lessee shall have the peaceable
and quiet enjoyment and possession of the leased
<PAGE> 8
LEASE AGREEMENT
PAGE 8
premises and other rights herein granted to lessee without any manner or
hindrance from Lessor or any parties claiming by or through Lessor.
30. ENTIRE AGREEMENT: This Lease and any incorporated attachments
contains all the agreements between the parties and cannot be modified in any
manner except by written amendment executed by the parties.
31. LEASE MEMORANDUM: The parties agree to execute a memorandum of
this Lease in recordable form including the term commencement and expiration
dates, renewal options and any other provisions required, but not including any
of the rental provisions or other charges to be paid by Lessee under this
Lease. This Lease shall not be recorded, but said memorandum shall be recorded
by Lessor.
32. SUCCESSORS AND ASSIGNS: All warranties, covenants and agreements
herein shall inure to the benefit of and be binding upon the successors and
assigns of Lessor and Lessee.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease
effective as of Sept. 16, 1994, each acknowledging receipt of an executed copy
hereof.
In the presence of: LESSOR:
K & T REALTY, a partnership
/s/ ELIZABETH FINNEY By: /s/ KELBY D. KNOEDLER
- ------------------------- ----------------------------------
KELBY D. KNOEDLER, Partner
/s/ KENNETH D. KENST By: /s/ ANTHONY T. DECROW, JR.
- ------------------------- ----------------------------------
ANTHONY T. DeCROW, JR., Partner
LESSEE:
SYGNET COMMUNICATIONS, INC.
/s/ ELIZABETH FINNEY BY: /s/ ALBERT H. PHARIS, JR.
- ------------------------- ----------------------------------
ALBERT H. PHARIS, JR., President
/s/ KENNETH D. KENST
- -------------------------
STATE OF OHIO, COUNTY OF MAHONING, SS:
Before me, a notary public in and for said county and state,
personally appeared the above named K & T REALTY, a partnership, by KELBY D.
KNOEDLER, Partner, and
<PAGE> 9
LEASE AGREEMENT
PAGE 9
ANTHONY T. DeCROW, JR., Partner, as Lessor in the foregoing Lease, who
acknowledged that they did sign the foregoing instrument and that the same is
their free act and deed individually and on behalf of said partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Canfield, Ohio, this 16 day of Sept., 1994.
KENNETH D. KENST, Notary Public /s/ KENNETH D. KENST
STATE OF OHIO ---------------------------------
My Commission Expires 3/7/97 Notary Public
STATE OF OHIO, COUNTY OF MAHONING, SS:
Before me, a notary public in and for said county and state,
personally appeared the above named SYGNET COMMUNICATIONS, INC., an Ohio
corporation, by ALBERT H. PHARIS, JR., President, as Lessee in the foregoing
Lease, who acknowledged that he did sign the foregoing instrument and that the
same is his free act and deed individually and on behalf of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Canfield, Ohio, this 16 day of Sept., 1994.
KENNETH D. KENST, Notary Public /s/ KENNETH D. KENST
STATE OF OHIO -----------------------------------
My Commission Expires 3/7/97 Notary Public
THIS INSTRUMENT PREPARED BY:
ATTORNEY EARL R. MILLER
P. O. BOX 419
SALEM, OH 44460
LEASES/K & T.SYG (BB)
<PAGE> 10
CARDINAL JOINT FIRE DISTRICT
__4 LISBON STREET - CANFIELD, OHIO 44406
BUSINESS PHONE (216) 333-4316
ROBERT J. TIECHE
Chief
W. MICHAEL FERRANDO
Deputy Chief
APPLICATION FOR OCCUPANT
Date June 7, 1995
-------------
Name of Business or Occupant Sygnet Communications,
--------------------------------------------------
Address of Business or Occupant 6550 Seville Drive
------------------------------------------------
Home Telephone of Occupant n/a Business Telephone No.
------
Owner of Property or Building K & T Realty
--------------------------------------------------
Address of Owner 6570 Seville Dr., Canfield, Oh. 44406
---------------------------------------------------------------
Telephone of Owner 533-8163
-------------------------------------------------------------
Type of Business or Use Corporate office
--------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Any Special Information
--------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date Occupancy to Start 6-1-95 Term of Lease 10 years
------------ --------------------------
/s/ ALBERT H. PHARIS, JR., President 6-8-95
- ------------------------------------ ----------
Signature of Occupant Date
Permit Fee for Groups A-B-E-F-H-I-M-R-S and U $10.00. Multi-Family $ 2.00
per Unit
payable to the Cardinal Joint Fire District
================================================================================
FOR OFFICE USE
DATE OF INSPECTION BY
---------------- ------------------------------------------
WAS A NOTICE OF HAZARD ISSUED IF SO DATE OF RE-INSPECTION
------------ -----------
RE-INSPECTION BY DATE
-------------------------------------------------- ---------
DATE PERMIT ISSUED BY
---------------- -------------------------------------------
PERMIT NUMBER
---------------------
Revised December 30, 19__
<PAGE> 11
MEMORANDUM OF LEASE
On the 16th day of September, 1994, a Lease Agreement was entered into
between K & T REALTY, a partnership, as "LESSOR", SYGNET COMMUNICATIONS, INC.,
as "LESSEE". This Memorandum of that Lease is presented for recording:
1. NAME OF LESSEE IN THE LEASE: SYGNET COMMUNICATIONS, INC.
2. NAME OF LESSOR THEREIN: K & T REALTY.
3. ADDRESS SET FORTH IN LEASE AS ADDRESSES OF LESSEE AND LESSOR:
Lessee: Lessor:
------- -------
6550 Seville Drive 6570 Seville Drive
Canfield, OH 44406 Canfield, OH 44406
4. The instruments under which the Lessor claims an interest in the
lease premises are recorded in Volume 1171, Page 316, and Volume
2189, Page 244, of the official records in the office of the County
Recorder of Mahoning County, Ohio.
5. DATE OF LEASE: September 16, 1994
6. DESCRIPTION OF LEASED PREMISES AS SET FORTH IN LEASE: 6,200 square
feet on second floor of the building located at 6550 Seville Drive,
Canfield, Mahoning County, Ohio.
7. The date on which the term of the Lease commences is June 1, 1995,
or earlier, if occupancy by Lessee occurs.
8. The Lease shall continue for ten (10) years or until the end of the
day of May 31, 2005, whichever is later. Lessee shall have the
option to extend the lease for two (2) successive periods of five
(5) years each.
9. DATE OF EXPIRATION OF FINAL PERIOD FOR WHICH THE LEASE MAY BE
EXTENDED: May 31, 2015.
10. The Lease provides Lessee with a first right of refusal with
respect to any potential sale of the property.
Signed and acknowledged K & T REALTY, a Partnership
in the presence of:
/s ELIZABETH FINNEY By: /s/ KELBY D. KNOEDLER
- ----------------------- ---------------------------------------
Kelby D. Knoedler, Partner
/s/ KENNETH D. KENST By: /s/ ANTHONY T. DECROW, JR.
- ----------------------- ---------------------------------------
Anthony T. DeCrow, Jr., Partner
<PAGE> 12
MEMORANDUM OF LEASE
PAGE 2
SYGNET COMMUNICATIONS, INC.
/s/ ELIZABETH FINNEY By: /s/ ALBERT H. PHARIS, JR.
- ----------------------- ---------------------------------------
Albert H. Pharis, Jr., President
/s/ KENNETH D. KENST
- -----------------------
LESSOR'S ACKNOWLEDGEMENT
STATE OF OHIO )
COUNTY OF MAHONING )SS:
The foregoing Memorandum of Lease was acknowledged before me, a Notary
Public in and for said County and State, this 15 day of FEB, 1995, by Kelby D.
Knoedler and Anthony T. DeCrow, Jr., who are Partners of K & T REALTY.
SEAL /s/ KENNETH D. KENST
--------------------------
Notary Public
KENNETH D. KENST
STATE OF OHIO
My Commission Expires 3/7/97
LESSEE'S ACKNOWLEDGEMENT
STATE OF OHIO )
COUNTY OF MAHONING )SS:
The foregoing Memorandum of Lease was acknowledged before me, a Notary
Public in and for said County and State, this 15 day of FEB, 1995, by ALBERT H.
PHARIS, JR., who is President of SYGNET COMMUNICATIONS, INC.
SEAL /s/ KENNETH D. KENST
--------------------------
Notary Public
KENNETH D. KENST
STATE OF OHIO
My Commission Expires 3/7/97
THIS INSTRUMENT PREPARED BY:
ATTORNEY EARL R. MILLER
P. O. BOX 419
SALEM, OH 44460
<PAGE> 13
ADDENDUM
THIS ADDENDUM is made by and between K & T REALTY, a partnership,
(hereinafter referred to as "LESSOR"), and SYGNET COMMUNICATIONS, INC.
(hereinafter referred to as "LESSEE"), on this 31 day of January, 1995.
WHEREAS, on September 16, 1994, the parties entered into a Lease
Agreement for approximately 6,200 square feet of the office space in a building
located at 6550 Seville Drive, Canfield, Ohio, (hereinafter referred to as the
"LEASE AGREEMENT"); and,
WHEREAS, the parties desire to modify such Lease Agreement, in certain
respects;
NOW, THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
(1) The term "commencement date", as set forth in the Lease
Agreement, shall mean, for all purposes therein, the earlier
of (a) occupancy of the premises by Lessee; or (b) June 1,
1995.
(2) The initial term shall continue for ten (10) years or until
the end of the day of May 31, 2005, whichever is later.
(3) Rent for the first month of the lease shall be $7,301.50.
Thereafter, rent shall be paid in accordance with paragraph 3
of the Lease Agreement.
(4) In the event that the Lessor intends to sell Lot No. 53 in
High Point Plat No. 1, together with the buildings and
improvements thereon located at 6550 and 6570 Seville Drive,
Canfield, Ohio, Lessor shall provide Lessee with at least
thirty (30) days advance written notice of such pending sale.
The written notice shall include a signed copy of the
operative outstanding offer to purchase the real estate along
with the name and address of the proposed purchaser. Upon
receiving notice as specified above, Lessee shall have thirty
(30) days in which to exercise its right of first refusal,
under which Lessee shall have the right to purchase the real
estate for the same price and upon the same terms as contained
in the pending offer. Should such offer include the exchange
of any real or personal property, Lessee herein may substitute
cash equal to the appraised value of such real or personal
property. Should Lessee not give notice of its intention to
exercise the right of first refusal within the aforementioned
thirty (30) day period, the Lease Agreement and all of its
terms and conditions shall nevertheless remain in full force
and effect and Lessor and any purchaser or purchasers of the
premises, shall be bound
<PAGE> 14
ADDENDUM
PAGE 2
thereby. In the event that the premises set forth in the offer
are not sold for any reason, Lessee shall have, upon the same
conditions and notice, the continuing right of further refusal
to purchase the premises or any part thereof, upon the terms
of any subsequent offer or offers to purchase.
The term "sale" as used herein shall not be deemed to include
a sale or transfer of said premises or any part thereof
between the partners of K & T REALTY, to a partnership in
which the partners or a partner of K & T REALTY are the
general partners or partner, to a corporation in which the
partners or a partner of K & T REALTY are the controlling
stockholders or stockholder, or to a spouse or a child of
either of the partners of K & T REALTY.
(5) Lessor shall upon request of Lessee execute a memorandum of
lease, setting forth the pertinent terms hereof.
(6) All other terms and conditions set forth in the Lease
Agreement shall remain in full force and effect.
In the presence of: LESSOR:
K & T REALTY, a Partnership,
/s/ ELIZABETH FINNEY By: /s/ KELBY D. KNOEDLER
- ---------------------- -------------------------------------
Kelby D. Knoedler, Partner
/s/ KENNETH D. KENST By: /s/ ANTHONY T. DECROW, JR.
- ---------------------- -------------------------------------
Anthony T. DeCrow, Jr., Partner
LESSEE:
SYGNET COMMUNICATIONS, INC.
/s/ ELIZABETH FINNEY BY: /s/ ALBERT H. PHARIS, JR.
- ---------------------- -------------------------------------
Albert H. Pharis, Jr., President
/s/ KENNETH D. KENST
- ----------------------
STATE OF OHIO, COUNTY OF MAHONING, SS:
Before me, a notary public in and for said county and state,
personally appeared the above named K & T REALTY, a partnership, by KELBY D.
KNOEDLER, Partner, and
<PAGE> 15
ADDENDUM
PAGE 3
ANTHONY T. DeCROW, JR., Partner, as Lessor in the foregoing Addendum, who
acknowledged that they did sign the foregoing instrument and that the same is
their free act and deed individually and on behalf of said partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Canfield, Ohio, this 15 day of FEB, 1995.
/s/ KENNETH D. KENST
-----------------------------
Notary Public
KENNETH D. KENST
STATE OF OHIO
My Commission Expires 3/7/97
STATE OF OHIO, COUNTY OF MAHONING, SS:
Before me, a notary public in and for said county and state,
personally appeared the above named SYGNET COMMUNICATIONS, INC., an Ohio
corporation, by ALBERT H. PHARIS, JR., President, as Lessee in the foregoing
Addendum, who acknowledged that he did sign the foregoing instrument and that
the same is his free act and deed individually and on behalf of said
corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Canfield, Ohio, this 15 day of FEB, 1995.
/s/ KENNETH D. KENST
-----------------------------
Notary Public
KENNETH D. KENST
STATE OF OHIO
My Commission Expires 3/7/97
<PAGE> 1
EXHIBIT 10.7
State Pennsylvania
MSA Erie
Cell I.D. Edinboro (ED-01)
THIS LEASE IS THE PROPERTY OF: McCaw Cellular Communications, Inc.
Legal Department
5400 Carillon Point
Kirkland, Washington 98033
Attention:_________________________
SITE LEASE AGREEMENT
THIS SITE LEASE AGREEMENT (this "Lease") is entered into this 29 day
of March, 1990 between Milan John Vanco and Alice C. Vanco, a husband and wife
("Landlord") and Erie Cellular Telephone Company, a Pennsylvania General
Partnership ("Tenant").
For good and valuable consideration, the parties agree as follows:
1. Premises. Subject to the following terms and conditions,
Landlord leases to Tenant use of a portion of the real property (the
"Property") described in Exhibit A attached hereto. Tenant's use of the
Property shall be limited to that portion of the Property described and
depicted in Exhibit B attached hereto, together with easements for access and
utilities as provided herein (collectively, the "Premises"). The Premises,
located at 12210 Silverthorn Road, Edinboro, Pennsylvania shall comprise at
least 10,000 square feet.
TOGETHER WITH 1) any improvements that may be located thereon 2)
such rights of way and easements on, over, under, across, and through the
adjoining lands of Landlord, extending from the Premises to the nearest
convenient public road and of standard vehicular width a shall be necessary
for ingress and egress to and from the Premises. 3) such other rights of way
and easements on, over, under, across, and through the adjoining lands of
Landlord as may be required by Tenant for the purpose of bringing electricity,
gas, water, telephone, and any and all other utilities to the Premises. 4)
the right to park vehicles on or about the Premises, the lands immediately
adjacent thereto during periods of construction, site inspection, and at times
of necessary repair work and 5) the right to run guy spires from the tower to
be constructed on the Premises on, over, across, and through the adjoining
lands of Landlord to such points on said lands as shall be necessary for the
proper support of the aforementioned tower, including at such points the right
to install anchors of such size and material as shall be necessary to secure
the aforementioned guy wires.
<PAGE> 2
2. Use. The Premises may be used by Tenant for the transmission
and reception of radio communication signals in any and all frequencies, for
the construction and maintenance of related facilities, towers, antennas, or
buildings and for related activities. Landlord agrees to cooperate with
Tenant in obtaining, at Tenant's expense, all licenses and permits required
for Tenant's use of the Premises ("the Governmental Approvals") and to allow
Tenant to perform surveys, soils testing and other engineering procedures on,
over and under the Property necessary to determine that Tenant's use of the
Property will be compatible with Tenant's engineering specifications, system
design, and Governmental Approvals. If after testing Tenant does not lease
the Premises, it will repair the grounds relative to the testing.
3. Term. The term of this Lease shall be five years, commencing
upon the sooner or (a) written notification by Tenant to Landlord of Tenant's
receipt of all Governmental Approvals, or (b) June 1, 1990 (the "Commencement
Date") and terminating at Midnight on the last day of the month in which the
fifth anniversary of the Commencement Date shall have occurred. Tenant shall
have the right to extend this Lease for five additional five-year terms
("Renewal Terms"). Each Renewal Term shall be on the same terms and
conditions as set forth herein except that Rent shall be increased as of the
first day of each Renewal Term (the "Adjustment Date") by fifteen percent
(15%) of the rent currently in effect for the previous term. The annual
rental for the first (1st) five (5) year extension term shall be increased to
Four thousand eight hundred thirty Dollars ($4830); the second (2nd) five (5)
year extension term shall be increased to Five thousand five hundred
fifty-five Dollars ($5555); the third (3rd) five (5) year extension term shall
be increased to Six thousand three hundred eighty-eight Dollars ($6388); the
fourth (4th) five (5) year extension term shall be increased to Seven thousand
three hundred forty-six Dollars ($7346); the fifth (5th) five (5) year
extension term shall be increased to Eight thousand four hundred forty-eight
Dollars ($8448). Each Renewal Term shall be on the same terms and conditions
as set forth herein. This Lease shall automatically be renewed, or each
successive renewal Term unless Tenant shall notify Landlord of Tenant's
intention not to renew this Lease at lease ten (10) days prior to the
expiration of the term or any Renewal Term.
4. Rent.
a. Upon the Commencement Date, Tenant shall pay Landlord, as
rent, the sum of Three hundred fifty Dollars ($350) per month ("Rent"). Rent
shall be payable on the first day of each month in advance to Milan John Vanco
and Alice C. Vanco at Landlord's address specified in Paragraph 14 below.
b. If this Lease is terminated at a time other than on the
last day of a month, Rent shall be prorated as of the date or termination,
and, in the event of termination for any reason other than nonpayment of Rent,
all prepaid Rents shall be refunded to Tenant.
5. Interference. Landlord shall not use, nor shall Landlord
permit its tenants, licensees, invitees or agents to use, any portion of the
Landlord's properties in any way which interferes (Interference shall be
- 2 -
<PAGE> 3
construed as any disruption or disturbance of Tenant's transmission of radio
communication signals at any and all frequencies, construction, installation,
maintenance, or operation of the antenna facilities) with the operations of
Tenant. Such interference shall be deemed a material breach by Landlord, and
Landlord shall have the responsibility to terminate said interference. In the
event any such interference does not cease promptly, the parties acknowledge
that continuing interference will cause irreparable injury to Tenant, and
therefore Tenant shall have the right, in addition to any other rights that it
may have at law or in equity, to bring action to enjoin such interference or
terminate this Lease immediately upon notice to Landlord. Normal operation of
Landlord's farm will not be construed as interference.
6. Improvements: Utilities: Access.
a. Tenant shall have the right, at its expense, to erect and
maintain on the Premises improvements, personal property and facilities,
including without limitation an antenna tower and base, radio transmitting and
receiving antennas, and an electronic equipment shelter (collectively the
"Antenna Facilities"). The Antenna Facilities shall remain the exclusive
property of Tenant, and Tenant shall have the right to remove the Antenna
Facilities following any termination of this Lease.
b. Tenant shall have the right to install utilities, at
Tenant's expense, and to improve the present utilities on the Premises
(including, but not limited to the installation of emergency power
generators). Tenant shall have the right to permanently place utilities on
(or to bring utilities across) the Property in order to service the Premises
and the Antenna Facilities. Landlord shall execute an easement evidencing
this right upon Tenant's request.
c. Landlord represents and warrants to Tenant that Tenant
shall enjoy ingress, egress, and access from an open and improved public road
to the Premises adequate to service the Premises and the Antenna Facilities at
all times during the term of this Lease or any renewal thereof at no
additional charge to Tenant. To the degree such access is across the
Property, Landlord shall execute an easement evidencing this right upon
Tenant's request.
7. Termination. Except as otherwise provided herein, this Lease
may be terminated, without any penalty or further liability, on ninety (90)
days' written notice as follows: (a) by either party upon a default of any
covenant or term hereof by the other party, which default is not cured within
sixty (60) days of receipt of written notice of default (without, however,
limiting any other rights available to the parties pursuant to any other
provisions hereof); (b) by Tenant if it is unable to obtain or maintain any
license, permit or other Governmental Approval necessary to the construction
and/or operation of the Antenna Facilities or Tenant's business; or (c) by
Tenant if the Premises are or become unacceptable under Tenant's design or
engineering specifications for its Antenna Facilities or the communications
system to which the Antenna Facilities belong. Upon termination Tenant will
return the Premises to its original condition - normal wear and tear and
casualty accepted. Additionally, Tenant will not be responsible for any trees
and shrubs or for the reduction of any foundation to a depth greater than one
foot below grade.
- 3 -
<PAGE> 4
8. Taxes. Tenant shall pay any personal property taxes assessed
on, or any portion of such taxes attributable to, the Antenna Facilities.
Landlord shall pay when due all real property taxes and all other fees and
assessments attributable to the Premises. However, Tenant shall pay, as
additional Rent each year, any increase in real property taxes levied against
the Premises which is directly attributable to Tenant's use of the Premises,
and Landlord agrees to furnish proof of such increase to Tenant.
9. Insurance.
a. Tenant will provide Comprehensive General Liability
Insurance in an aggregate amount of $1,000,000, and name Landlord as an
additional insured on the policy or policies. Tenant may satisfy this
requirement by obtaining appropriate endorsement to any umbrella policy of
liability insurance Tenant may maintain.
b. Neither party shall be liable to the other (or to the
other's successors or assigns) for any loss or damage caused by fire or any of
the risks enumerated in a standard "All Risk" insurance policy.
10. Destruction of Premises. If the Premises or the Antenna
Facilities are destroyed or damaged so as, in Tenant's Judgment to hinder the
effective use of the Antenna Facilities, Tenant may elect to terminate this
Lease as of the date of the damage or destruction by so notifying Landlord not
more than 45 days following the date of damage. In such event, all rights and
obligations of the parties shall cease as of the date or the damage or
destruction and Tenant shall be entitled to the reimbursement of any Rent
prepaid by Tenant.
11. Condemnation. If a condemning authority takes all of the
Property, or a portion sufficient, in Tenant's determination, to render the
Premises unsuitable for the use which Tenant was then making of the Premises,
this Lease shall terminate as of the date the title vests in the condemning
authority. The parties shall be entitled to share in the condemnation
proceeds in proportion to the values of their respective interests in the
Premises (which for Tenant shall include, where applicable, the value of its
Antenna Facilities, moving expenses, prepaid rent, and business dislocation
expenses). Sale of all or part of the Premises to a purchaser with the power
of eminent domain in the face of the exercise of the power, shall be treated
as a taking by condemnation.
12. Hold Harmless. Tenant agrees to hold Landlord harmless from
any and all claims arising from the installation, use, maintenance, repair or
removal of Tenant's Antenna Facilities, except for claims arising from the
negligence or intentional acts of Landlord, its agents or independent
contractors.
13. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given if
personally delivered or mailed, certified mail, return receipt requested, or
sent by overnight carrier to the following addresses:
- 4 -
<PAGE> 5
If to Landlord, to: Milan John and Alice C. Vanco
12210 Silverthorn Road
Edinboro, Pennsylvania 16412
If to Tenant, to: Erie Cellular Telephone Company
2630 Liberty Avenue
Pittsburgh, Pennsylvania 15222
Attention: William Zlotnick
with a copy to: Erie Cellular Telephone Company
4823 Peach Street
Erie, Pennsylvania 16509
with a copy to: McCaw Cellular Communications, Inc.
Legal Department
5400 Carillon Point
Kirkland, Washington 98033
Attention:___________________________
14. Title and Quiet Enjoyment
a. Landlord warrants that (i) it has full right, power, and
authority to execute this Lease; (ii) it has good and unencumbered title to
the Premises free and clear of any liens or mortgages; and (iii) the Premises
constitute a legal lot that may be leased without the need for any subdivision
or platting approval. Landlord further warrants that Tenant shall have the
quiet enjoyment of the Premises during the term of this Lease or any renewal
thereof.
b. Tenant has the right to obtain a title report or
commitment for a leasehold title policy from a title insurance company of its
choice. If, in the opinion of Tenant, such title report shows any defects of
title or any liens or encumbrances which may adversely affect Tenant's use of
the Premises or the Tower or Tenant's ability to obtain leasehold financing,
Tenant shall have the right to terminate this Lease immediately upon written
notice to Landlord.
c. Tennant shall also have the right to have the Property
surveyed, and, in the event that any defects are shown by the survey which, in
the opinion of Tenant, may adversely affect Tenant's use of the Premises or
the Tower or Tenant's ability to obtain leasehold financing, Tenant shall have
the right to terminate this Lease immediately upon written notice to Landlord.
d. Landlord represents and warrants to Tenant that hazardous
substances have not been generated, stored or disposed of on the Premises nor
have the same been transported to or over the Premises. "Hazardous substance"
shall be interpreted broadly to mean any substance or material defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic or radioactive substance, or other similar term by any federal, state
or local environmental law, regulation or rule presently in effect or
promulgated
- 5 -
<PAGE> 6
in the future, as such laws, regulations or rules may be amended from time to
time; and it shall be interpreted to include, but not be limited to, any
substance which after release into the environment will or may reasonably be
anticipated to cause sickness, death or disease. Landlord will hold Tenant
harmless from and indemnify Tenant against and from any damage, loss, expenses
or liability resulting from any breach of this representation and warranty
including all attorneys' fees and costs incurred as a result thereof.
15. Assignment. Tenant may assign or sublet this Lease upon notice
to Landlord any sublease that is entered into by Tenant shall be subject to
the provisions of this Lease. Additionally, Tenant may, upon notice to
Landlord, mortgage or grant a security interest in this Lease and the Antenna
Facilities, and may assign this Lease and the Antenna Facilities to any such
mortgagees or holders of security interests including their successors or
assigns (hereinafter collectively referred to as "Mortgagees"). In such
event, Landlord shall execute such consent to leasehold financing as may
reasonably be required by Mortgagees. Landlord agrees to notify Tenant and
Tenant's Mortgagees simultaneously of any default by Tenant and to give
Mortgagees the same right to cure any default as Tenant except that the cure
period for any Mortgagee shall not be less than ten (10) days after receipt of
the default notice.
16. Successors and Assigns. This Lease shall run with the Property
described in Exhibit A. This Lease shall be binding upon and inure to the
benefit of the parties, their respective successors, personal representatives
and assigns.
17. Waiver of Landlord's Lien. Landlord hereby waives any and all
lien rights it may have, statutory or otherwise, concerning the Antenna
Facilities or any portion thereof which shall be deemed personal property for
the purposes of this Lease, regardless of whether or not same is deemed real
or personal property under applicable laws, and Landlord gives Tenant the
right to remove all or any portion of same from time to time in Tenant's sole
discretion and without Landlord's consent.
18. Miscellaneous.
a. In the event there is any litigation between the parties
to the lease, the one who prevails will be entitled to reasonable attorneys'
fees and court costs, etc.
b. Each party agrees to furnish to the other, within ten (10)
days after request, such truthful estoppel information as the other may
reasonably request.
c. This Lease constitutes the entire agreement and
understanding of the parties, and supersedes all offers, negotiations and
other agreements. There are no representations or understanding of any kind
not set forth herein. Any amendments to this Lease must be in writing and
executed by both parties.
d. Landlord agrees to cooperate with Tenant in executing any
documents (including a Memorandum of Lease) necessary to protect Tenant's
rights hereunder or Tenant's use of the Premises.
- 6 -
<PAGE> 7
e. This Lease shall be construed in accordance with the laws
of the Commonwealth of Pennsylvania. state in which the Property is located.
f. If any term of this Lease is found to be void or invalid,
such invalidity shall not affect the remaining terms of this Lease, which
shall continue in full force and effect.
DATED as of the date first set forth above.
LANDLORD: MILAN JOHN VANCO AND ALICE C. VANCO
/s/ MILAN JOHN VANCO
-----------------------------------
Milan John Vanco
/s/ ALICE C. VANCO
-----------------------------------
Alice C. Vanco
TENANT: ERIE CELLULAR TELEPHONE COMPANY
A Pennsylvania General Partnership
/s/ WILLIAM ZLOTNICK
------------------------------------
By William Zlotnick
Its General Manager
- 7 -
<PAGE> 8
COMMONWEALTH OF Pennsylvania )
) ss:
County of Erie )
On this 29 day of March, 1990, before me, a Notary Public in and for
the Commonwealth of Pennsylvania, personally appeared Milan John Vanco and
Alice C. Vanco, known to me to be the individuals of who executed the within
and foregoing instrument, and acknowledged the said instrument to be the free
and voluntary act and deed of said individuals for the uses and purposes
therein mentioned, and on oath stated that they were authorized to execute
said instrument.
WITNESS my hand and the official seal affixed the day and year first
above written.
/s/ RALPH W. MYERS
----------------------------------
NOTARY PUBLIC in and for the
Commonwealth of Pennsylvania
My commission expires_____________
NOTARIAL SEAL
Ralph W. Myers, Notary Public
Edinboro, Erie Co., Pa.
My Commission Expires Jan. 17, 1994
- 8 -
<PAGE> 9
COMMONWEALTH OF Pennsylvania )
) ss:
County of Allegheny )
On this 2nd day of April, 1990, before me, a Notary Public in and
for the Commonwealth of Pennsylvania, personally appeared William Zlotnick,
known to me to be the General Manager of Erie Cellular Telephone Company, the
Pennsylvania Partnership that executed the within and foregoing instrument,
and acknowledged the said instrument to be the free and voluntary act and deed
of said General Manager for the uses and purposes therein mentioned, and on
oath stated that he was authorized to execute said instrument.
WITNESS my hand and the official seal affixed the day and year first
above written.
/s/ RICHARD H. HALL
----------------------------------
NOTARY PUBLIC in and for the
Commonwealth of Pennsylvania
My commission expires Dec 20, 1993
NOTARIAL SEAL
Richard H. Hall, Notary Public
Plum Borough, Allegheny County
My Commission Expires Dec. 20, 1993
Member, Pennsylvania Association of Notaries
- 8A -
<PAGE> 10
EXHIBIT A
LEGAL DESCRIPTION
to the Site Lease Agreement dated March 29, 1990
between Milan Cohn Vanco and Alice C. Vanco, as Landlord,
and Erie Cellular Telephone Company, as Tenant
Legal description will be substituted with
legal description from deed - referenced as
Index #45-19-40-1
- 9 -
<PAGE> 11
EXHIBIT B
to the Site Lease Agreement dated March 29 , 1990
between Milan John Vanco and Alice C. Vanco, as Landlord,
and Erie Cellular Telephone Company, as Tenant
The location of the Premises within the Property is more
particularly described or depicted as follows:
[SITE LOCATION MAP OF PREMISES
AT 12210 SILVERTHORN RD.,
EDINBORO, PENNSYLVANIA]
- 10 -
<PAGE> 12
After recording please return to:
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 98033
Attn:_______________________________
MEMORANDUM OF LEASE BETWEEN
Milan John Vanco and Alice C. Vance ("LANDLORD") AND
Erie Cellular Telephone Company ("TENANT")
A Lease between Milan John Vance and Alice C. Vanco ("Landlord") and Erie
Cellular Telephone Company ("Tenant") was made regarding the following
premises:
12210 Silverthorn Road
Edinboro, Pennsylvania
See Attached Exhibit A (Property)
and Exhibit 3 (Premises)
The date of execution of the Lease was March 29, 1990.
Subject Lease is for a term of ____ years and shall commence on the ____ day
of ________________, 19__, and shall terminate on the _______ day __________
__________, 19__.
IN WITNESS WHEREOF, the parties hereto have respectively executed this
memorandum this 2 day of April, 1990.
/s/ WILLIAM ZLOTNICK
-----------------------------------
By William Zlotnick
Its General Manager
/s/ DAVID B. WILEY
CLERK OF RECORDS /s/ MILAN JOHN VANCO
ERIE, CO. PA ------------------------------------
Milan John Vanco
/s/ ALICE C. VANCO
------------------------------------
Alice C. Vanco
<PAGE> 13
COMMONWEALTH OF Pennsylvania )
) ss:
County or Erie )
On this 29 day of March, 1990, before me, a Notary Public in and for
the Commonwealth of Pennsylvania, personally appeared Milan John Vanco and
Alice C. Vanco, known to me to be the individuals of who executed the within
and foregoing instrument, and acknowledged the said instrument to be the free
and voluntary act and deed of said individuals for the uses and purposes
therein mentioned, and on oath stated that they were authorized to execute
said instrument.
WITNESS my hand and the official seal affixed the day and year first
above written.
/s/ RALPH W. MYERS
----------------------------------
NOTARY PUBLIC in and for the
Commonwealth of Pennsylvania
My commission expires ____________
NOTARIAL SEAL
Ralph W. Myers, Notary Public
Edinboro, Erie Co., Pa.
My Commission Expires Jan. 17, 1994
COMMONWEALTH OF Pennsylvania )
) ss:
County of Erie )
On this 29 day of March, 1990, before me, a Notary Public in and for
the Commonwealth of Pennsylvania, personally appeared William Zlotnick, known
to me to be the General Manager of Erie Cellular Telephone Company, the
Pennsylvania Partnership that executed the within and foregoing instrument,
and acknowledged the said instrument to be the free and voluntary act and deed
of said General Manager for the uses and purposes therein mentioned, and on
oath, stated that he was authorized to execute said instrument.
WITNESS my hand and the official seal affixed the day and year first
above written.
/s/ RALPH W. MYERS
----------------------------------
NOTARY PUBLIC in and for the
Commonwealth of Pennsylvania
My commission expires ____________
NOTARIAL SEAL
Ralph W. Myers, Notary Public
Edinboro, Erie Co., Pa.
My Commission Expires Jan. 17, 1994
<PAGE> 14
COMMONWEALTH OF Pennsylvania )
) ss:
County of Allegheny )
On this 2nd day of April, 1990, before me, a Notary Public in and
for the Commonwealth of Pennsylvania, personally appeared William Zlotnick,
known to me to be the General Manager of Erie Cellular Telephone Company, the
Pennsylvania Partnership that executed the within and foregoing instrument,
and acknowledged the said instrument to be the free and voluntary act and deed
of said General Manager for the uses and purposes therein mentioned, and on
oath stated that he was authorized to execute said instrument.
WITNESS my hand and the official seal affixed the day and year first
above written.
/s/ RICHARD H. HALL
----------------------------------
NOTARY PUBLIC in and for the
Commonwealth of Pennsylvania
My commission expires Dec 20, 1993
NOTARIAL SEAL
Richard H. Hall, Notary Public
Plum Borough, Allegheny County
My Commission Expires Dec. 20, 1993
Member, Pennsylvania Association of Notaries
<PAGE> 15
EXHIBIT A
LEGAL DESCRIPTION
to the Site Lease Agreement dated March 29, 1990
between Milan John Vanco and Alice C. Vanco, as Landlord,
and Erie Cellular Telephone Company, as Tenant
Legal description will be substituted with
legal description from deed - referenced as
Index #45-19-40-1
<PAGE> 16
EXHIBIT B
to the Site Lease Agreement dated March 29 , 1990
between Milan John Vanco and Alice C. Vanco, as Landlord,
and Erie Cellular Telephone Company, as Tenant
The location of the Premises within the Property is more
particularly described or depicted as follows:
[SITE LOCATION MAP OF PREMISES
AT 12210 SILVERTHORN RD.,
EDINBORO, PENNSYLVANIA]
<PAGE> 1
EXHIBIT 10.8
WILCOM/CELLULAR ONE
STANDARD LEASE AGREEMENT
A. LEASE
This Lease Agreement made at Mahoning County, Ohio on this 1st day of
June, 1990 by and between Bert D. and Margaret A. Schaefer, whose address is
7782 West South Range, Salem, Ohio 44460, and Wilcom/Cellular One, an Ohio
partnership, having its principal place of business at 3910 South Avenue,
Youngstown, Ohio 44512, Lessee;
WITNESSETH:
1. That, Lessor in consideration of the rents and covenants hereinafter
stipulated to be paid and performed by the said Lessee, does hereby lease unto
the said Lessee the premises located on 7600 West View Drive, Greenford, Ohio
and further described in "Exhibit A", attached hereto.
2. It is understood that Lessee intends to construct, operate,
maintain, repair, use and have the right to remove a radio and radio-telephone
transmission and receiving tower upon said premises and construct, use,
repair, operate, maintain and have the right to remove a building to be
located adjacent to the base of said tower. In addition, Lessee may construct
anchors, fences, and guy wires on such land. Lessor further leases to the
Lessee sufficient land at the point where said guy wires reach the ground for
Lessee to install anchors for said guy wires, and to install fences enclosing
said guy wire anchors.
3. Lessor further grants to Lessee an easement to use a reasonable
amount of land surrounding the leased premises in connection with ingress and
egress, construction, maintenance, repair, and removal of said tower,
building, anchors, guy wires, and fences.
4. Lessee shall pay all costs involved in the construction,
maintenance, repair, use and removal of said tower, guy wires, building,
anchors and fences. Lessee may at its own cost make such improvements as it
may deem necessary in and to any road or path used for access to and egress
from the area which is the subject of this Lease.
<PAGE> 2
5. Lessee shall also have the right from time to time to trim and cut
down and clear away any trash and brush adjacent to said tower, building, guy
wires, anchors or fences that in the opinion of Lessee may be a hazard,
encumbrance or interference thereto; provided, however, that all cut branches
and refuse wood shall be removed by Lessee.
6. Lessor shall have the right to use the lands subject to the
easements granted herein for purposes not inconsistent with Lessee's full
enjoyment of the rights granted to it. Lessor shall indemnify Lessee against
any claims which may be made arising out of the use by Lessor or his agents,
invitees or licensees of any of the premises over which Lessee is granted an
easement over a leasehold interest by this document.
7. Lessee shall pay all personal property taxes which may be assessed
and become due and payable upon such tower, guy wires, building, anchors and
fences. It is the intention of the parties hereto that all such towers,
building, guy wires, anchors and fences shall be deemed between the parties to
be personal property; and upon the expiration of this Lease as the same may
have been extended, Lessee may remove all of such property.
8. The Lease granted by this instrument shall commence on the 1st day
of June, 1990, and shall continue for twenty-five (25) years, until the end of
the day of May 31, 2015. Lessee shall have the option to extend this Lease
for four (4) successive periods of twenty-five (25) years each.
9. Each option to extend this Lease may be exercised by the Lessee or
its successor by sending written notice by United States Certified mail
addressed to the Lessor at the address written above, no more than twelve (12)
months prior to the expiration of the then existing term of this Lease.
10. The Lessee hereby agrees to pay to the Lessor in consideration for
the Lease and Easements hereby granted, during the initial term of this Lease,
the sum of one hundred sixty-seven dollars ($167.00) per month (hereinafter
sometimes referred to as the "basic periodic rent"), due and payable on the
first of each month. Lessee is granted a ten (10) day grace period during the
term of the lease in which to pay the lease payment. If Lessee fails to pay
the lease payment past said due date, a two percent (2%) late fee penalty will
be assessed against said late payment. In the event that Lessee fails to pay
the lease payment for three (3) consecutive months, the Lessor, at his option,
may terminate the lease by sending thirty (30) days written notice by United
States Certified
<PAGE> 3
mail addressed to the Lessee at its address set forth above and permit Lessee
to remove any of Lessee's property placed on said premises, within a
reasonable period of time, whereupon the parties shall be under no further
obligation to each other, except for unpaid rent accrued to the date of
termination.
Five (5) years from the commencement of this Lease, and each five (5)
years thereafter, (during the term of this Lease and any renewal periods), the
basic periodic rent set forth above shall be increased for the ensuing five
(5) year period in the same proportion that the Consumer Price Index (CPI),
for the last full month of the just expired five (5) year period shall have
increased over the CPI for the fifth preceding year; provided however, that in
no event shall such increase exceed an amount equal to twenty percent (20%) of
the basic periodic rent specified above. For purposes of this agreement "CPI"
means that Consumer Price Index for all urban consumers (United States city
average, all items) prepared by the United States Department of Labor, Bureau
of Labor Statistics, or any index prepared by the United States government in
substitution thereof.
11. It is understood that Lessee intends to use the leased premises and
the easement granted hereunder for the purpose of installing and operating a
tower, antennas and related equipment for the transmission and receipt of
radio-telephone and other electrical signals. If by August 15, 1990, Lessee
has been unable to obtain all necessary permits and authorizations to
construct and operate such facilities, Lessee may, by sending written notice
by United States Certified mail addressed to the Lessor at his address set
forth above, terminate this Lease and remove any property Lessee has placed on
said premises, whereupon the parties shall be under no further obligation to
each other.
12. If Lessee shall at any time be in breach of any of its obligations
under this Agreement, Lessor shall give fifteen (15) days written notice to
the Lessee mailed by United States Certified mail addressed to the Lessee at
3910 South Avenue, Youngstown, Ohio 44512 before commencing any legal action
upon such default.
13. Lessee shall have the right to terminate this lease or any extension
thereof at any time upon giving Lessor sixty (60) days notice by Registered
United States mail, at Lessor's address written above. Lessee shall have all
of its property removed, and return the land to its original state, within the
sixty (60) day period.
14. Should Lessor, its heirs, successors, or assigns, during the term of
this Lease, or any extension thereof, elect to sell all or any portion of the
leased premises, whether separately or as a part of the larger parcel of which
the leased premises are a part,
<PAGE> 4
Lessee shall have the right of first refusal to meet any bona fide offer of
sale on the same terms and conditions of such offer. Upon the Lessee's
failure to meet such a bona fide offer within thirty (30) days after written
notice thereof from the Lessor, Lessor shall be free to sell the premises or
portion thereof to such third person in accordance with the terms and
conditions of his offer.
15. This Lease, and the Easements and Options referred to herein, shall
run with the land, and shall be binding on and inure to the benefit of the
parties, their heirs, successors and assigns.
16. This instrument contains the entire Agreement between the parties,
and no representations, promises, provision, terms warranties, condition, or
obligations whatsoever, expressed or implied, other than herein set forth
shall be binding upon the Lessor and Lessee.
The parties have signed this instrument on this 13th day of June, 1990.
Signed and Acknowledged in the Presence Of:
LESSOR(S):
/s/ EDWARD J. SCHAEFER /s/ BERT D. SCHAEFER
- -------------------------- ------------------------------
/s/ DEERLA M. SCHAEFER /s/ MARGARET A. SCHAEFER
- -------------------------- ------------------------------
LESSEE:
Wilcom/Cellular One
/s/ GAIL L. HASS By: /s/ ALBERT H. PHARIS JR.
- -------------------------- ---------------------------
/s/ EVERETT OENVESON TITLE: President
- --------------------------
The rent free use of two mobile radio antenna positions on the tower shall be
available to the Lessor for as long as this Lease is in effect.
This instrument prepared by:
Patrick C. Coady, of
Harrington, Huxley & Smith
1200 Mahoning Bank Building
Youngstown, Ohio 44503
<PAGE> 5
STATE OF OHIO )
)SS
COUNTY OF MAHONING )
The foregoing instrument was acknowledged before me, a Notary Public in
and for the said County and State, this 13th day of June, 1990, by Bert D. and
Margaret A. Schaefer.
SEAL /s/ CYNTHIA L. LASKY
-------------------------------------
NOTARY PUBLIC
Cynthia L. Lasky, Notary Public
State of Ohio
My Commission Expires Oct. 30, 1990
STATE OF OHIO )
)SS
COUNTY OF MAHONING )
The foregoing instrument was acknowledged before me, a Notary Public in
and for the said County and State, this 14th day of June, 1990 by Albert H.
Pharis, Jr., who is President of the Wilcom Cellular One.
SEAL /s/ CONSTANCE E. THOMPSON
------------------------------------------
NOTARY PUBLIC
Constance E. Thompson, Notary Public
State of Ohio
My Commission Expires February 17, 1994
<PAGE> 6
[SITE LOCATION MAP OF PREMISES AT
7600 WEST VIEW DRIVE, GREENFORD, OHIO]
<PAGE> 7
[PLAT OF SURVEY PROPOSED TOWER SITE
B.D. & M.A. SCHAEFER PROPERTY
S.W. 1/4 SECTION 15 GREEN TWP.
MAHONING CO. O.]
<PAGE> 8
RECEIVED FOR RECORD
AT 3:10 O'CLOCK PM
DEC 28 1993
$44.00
BRUCE E. PAPALIA
Recorder, Mahoning County, Ohio
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE is made and entered into as of
the 15th day of December, 1993, by and between BERT D. SCHAEFER and MARGARET
A. SCHAEFER, (hereinafter referred to jointly as the "Assignor"), and EDWARD
J. SCHAEFER, SR. and DeERLA M. SCHAEFER (hereinafter referred to as
"Assignee").
WITNESSETH:
WHEREAS, Assignor (as landlord) entered into a certain Lease Agreement
with Wilcom Cellular, dated June 1, 1990, a copy of which is attached hereto
as Exhibit "A", and
WHEREAS, Assignor desires to assign all of their right, title and
interest in and to the Lease, and Assignee desires to assume all of Assignor's
obligations and duties under the Lease.
NOW, THEREFORE, the parties agree as follows:
(1) Assignor hereby assigns to Assignee all of its right, title and
interest in and to the Lease.
(2) Assignee hereby assumes and agrees to perform all of its
obligations, duties and covenants of Assignor, under the Lease,
arising and to be performed and observed hereunder pursuant to the
Lease, including, but not limited to, observance of the right of
first refusal contained in paragraph 14 of the Lease.
(3) This Assignment shall be binding upon the heirs, legal
representatives, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereby have executed this Assignment as
of the day and year first written above.
WITNESSES: ASSIGNORS:
/s/ EDWARD J. SCHAEFER, JR. By: /s/ MARGARET A. SCHAEFER
- ------------------------------ ---------------------------------
Edward J. Schaefer, Jr. Margaret A. Schaefer
/s/ EVERETT DENNISON By: /s/ BERT D. SCHAEFER
- ------------------------------ ---------------------------------
Everett Dennison Bert D. Schaefer
<PAGE> 9
WITNESSES: ASSIGNEE:
/s/ EDWARD J. SCHAEFER, JR. /s/ EDWARD J. SCHAEFER, SR.
- ----------------------------------- -----------------------------------
Edward J. Schaefer, Jr. Edward J. Schaefer, Sr.
/s/ EVERETT DENNISON /s/ DEERLA M. SCHAEFER
- ----------------------------------- -----------------------------------
Everett Dennison DeErla M. Schaefer
STATE OF OHIO )
)
COUNTY OF MAHONING )
Before me, a Notary Public, in and for said County and State personally
appeared Bert D. Schaefer and Margaret Schaefer, who executed the foregoing
instrument for the purposes therein contained and who acknowledged that the
same was their free act and deed.
In Witness Whereof, I hereunto set my hand and official seal.
/s/ CHARLENE L. COSSLER
---------------------------------
Notary Public
My Commission Expires:
CHARLENE L. COSSLER, Notary Public
State of Ohio
STATE OF OHIO )
)SS
COUNTY OF MAHONING )
Before me, a Notary Public, in and for said County and State personally
appeared Edward J. Schaefer and DeErla M. Schaefer, who executed the foregoing
instrument for the purposes therein contained, and who acknowledged that the
same was their free act and deed.
In Witness Whereof, I hereunto set my hand and official seal.
/s/ CHARLENE L. COSSLER
---------------------------------
Notary Public
My Commission Expires:
CHARLENE L. COSSLER, Notary Public
State of Ohio
<PAGE> 10
The undersigned, Wilcom Cellular, by and through its duly authorized
officers, hereby accept and consent to the Assignment referenced above.
WITNESSES: WILCOM CELLULAR
/s/ CHARLENE L. COSSLER By: /s/ ALBERT H. PHARIS JR.
- ---------------------------- ----------------------------------
Charlene L. Cossler Title:
/s/ LORRAINE TEPSICK
- ----------------------------
Lorraine Tepsick
This Instrument Prepared by:
Patrick J. Coady, Esq.
Harrington Huxley Smith Mitchell & Reed
1200 Mahoning Bank Bldg. Youngstown, OH 44503
(216) 744-1111
<PAGE> 11
EXHIBIT A
WILCOM/CELLULAR ONE
STANDARD LEASE AGREEMENT
A. LEASE
This Lease Agreement made at Mahoning County, Ohio on this 1st day of
June, 1990 by and between Bert D. and Margaret A. Schaefer, whose address is
7782 West South Range, Salem, Ohio 44460, and Wilcom/Cellular One, an Ohio
partnership, having its principal place of business at 3910 South Avenue,
Youngstown, Ohio 44512, Lessee;
WITNESSETH:
1. That, Lessor in consideration of the rents and covenants hereinafter
stipulated to be paid and performed by the said Lessee, does hereby lease unto
the said Lessee the premises located on 7600 West View Drive, Greenford, Ohio
and further described in "Exhibit A", attached hereto.
2. It is understood that Lessee intends to construct, operate,
maintain, repair, use and have the right to remove a radio and radio-telephone
transmission and receiving tower upon said premises and construct, use,
repair, operate, maintain and have the right to remove a building to be
located adjacent to the base of said tower. In addition, Lessee may construct
anchors, fences, and guy wires on such land. Lessor further leases to the
Lessee sufficient land at the point where said guy wires reach the ground for
Lessee to install anchors for said guy wires, and to install fences enclosing
said guy wire anchors.
3. Lessor further grants to Lessee an easement to use a reasonable
amount of land surrounding the leased premises in connection with ingress and
egress, construction, maintenance, repair, and removal of said tower,
building, anchors, guy wires, and fences.
4. Lessee shall pay all costs involved in the construction,
maintenance, repair, use and removal of said tower, guy wires, building,
anchors and fences. Lessee may at its own cost make such improvements as it
may deem necessary in and to any road or path used for access to and egress
from the area which is the subject of this Lease.
<PAGE> 12
5. Lessee shall also have the right from time to time to trim and cut
down and clear away any trash and brush adjacent to said tower, building, guy
wires, anchors or fences that in the opinion of Lessee may be a hazard,
encumbrance or interference thereto; provided, however, that all cut branches
and refuse wood shall be removed by Lessee.
6. Lessor shall have the right to use the lands subject to the
easements granted herein for purposes not inconsistent with Lessee's full
enjoyment of the rights granted to it. Lessor shall indemnify Lessee against
any claims which may be made arising out of the use by Lessor or his agents,
invitees or licensees of any of the premises over which Lessee is granted an
easement over a leasehold interest by this document.
7. Lessee shall pay all personal property taxes which may be assessed
and become due and payable upon such tower, guy wires, building, anchors and
fences. It is the intention of the parties hereto that all such towers,
building, guy wires, anchors and fences shall be deemed between the parties to
be personal property; and upon the expiration of this Lease as the same may
have been extended, Lessee may remove all of such property.
8. The Lease granted by this instrument shall commence on the 1st day
of June, 1990, and shall continue for twenty-five (25) years, until the end of
the day of May 31, 2015. Lessee shall have the option to extend this Lease
for four (4) successive periods of twenty-five (25) years each.
9. Each option to extend this Lease may be exercised by the Lessee or
its successor by sending written notice by United States Certified mail
addressed to the Lessor at the address written above, no more than twelve (12)
months prior to the expiration of the then existing term of this Lease.
10. The Lessee hereby agrees to pay to the Lessor in consideration for
the Lease and Easements hereby granted, during the initial term of this Lease,
the sum of one hundred sixty-seven dollars ($167.00) per month (hereinafter
sometimes referred to as the "basic periodic rent"), due and payable on the
first of each month. Lessee is granted a ten (10) day grace period during the
term of the lease in which to pay the lease payment. If Lessee fails to pay
the lease payment past said due date, a two percent (2%) late fee penalty will
be assessed against said late payment. In the event that Lessee fails to pay
the lease payment for three (3) consecutive months, the Lessor, at his option,
may terminate the lease by sending thirty (30) days written notice by United
States Certified
<PAGE> 13
mail addressed to the Lessee at its address set forth above and permit Lessee
to remove any of Lessee's property placed on said premises, within a
reasonable period of time, whereupon the parties shall be under no further
obligation to each other, except for unpaid rent accrued to the date of
termination.
Five (5) years from the commencement of this Lease, and each five (5)
years thereafter, (during the term of this Lease and any renewal periods), the
basic periodic rent set forth above shall be increased for the ensuing five
(5) year period in the same proportion that the Consumer Price Index (CPI),
for the last full month of the just expired five (5) year period shall have
increased over the CPI for the fifth preceding year; provided however, that in
no event shall such increase exceed an amount equal to twenty percent (20%) of
the basic periodic rent specified above. For purposes of this agreement "CPI"
means that Consumer Price Index for all urban consumers (United States city
average, all items) prepared by the United States Department of Labor, Bureau
of Labor Statistics, or any index prepared by the United States government in
substitution thereof.
11. It is understood that Lessee intends to use the leased premises and
the easement granted hereunder for the purpose of installing and operating a
tower, antennas and related equipment for the transmission and receipt of
radio-telephone and other electrical signals. If by August 15, 1990, Lessee
has been unable to obtain all necessary permits and authorizations to
construct and operate such facilities, Lessee may, by sending written notice
by United States Certified mail addressed to the Lessor at his address set
forth above, terminate this Lease and remove any property Lessee has placed on
said premises, whereupon the parties shall be under no further obligation to
each other.
12. If Lessee shall at any time be in breach of any of its obligations
under this Agreement, Lessor shall give fifteen (15) days written notice to
the Lessee mailed by United States Certified mail addressed to the Lessee at
3910 South Avenue, Youngstown, Ohio 44512 before commencing any legal action
upon such default.
13. Lessee shall have the right to terminate this lease or any extension
thereof at any time upon giving Lessor sixty (60) days notice by Registered
United States mail, at Lessor's address written above. Lessee shall have all
of its property removed, and return the land to its original state, within the
sixty (60) day period.
14. Should Lessor, its heirs, successors, or assigns, during the term of
this Lease, or any extension thereof, elect to sell all or any portion of the
leased premises, whether separately or as a part of the larger parcel of which
the leased premises are a part,
<PAGE> 14
Lessee shall have the right of first refusal to meet any bona fide offer of
sale on the same terms and conditions of such offer. Upon the Lessee's
failure to meet such a bona fide offer within thirty (30) days after written
notice thereof from the Lessor, Lessor shall be free to sell the premises or
portion thereof to such third person in accordance with the terms and
conditions of his offer.
15. This Lease, and the Easements and Options referred to herein, shall
run with the land, and shall be binding on and inure to the benefit of the
parties, their heirs, successors and assigns.
16. This instrument contains the entire Agreement between the parties
and no representations, promises, provision, terms warranties, condition, or
obligations whatsoever, expressed or implied, other than herein set forth
shall be binding upon the Lessor and Lessee.
The parties have signed this instrument on this 13th day of June, 1990.
Signed and Acknowledged in the Presence Of:
LESSOR(S):
/s/ EDWARD J. SCHAEFER /s/ BERT D. SCHAEFER
- --------------------------- ------------------------------
/s/ DEERLA M. SCHAEFER /s/ MARGARET A. SCHAEFER
- --------------------------- ------------------------------
LESSEE:
/s/ GAIL L. HASS Wilcom/Cellular One
- ---------------------------
/s/ EVERETT G. DENNISON By: /s/ ALBERT H. PHARIS JR.
- --------------------------- --------------------------------
TITLE: PRESIDENT
The rent free use of two mobile radio antenna positions on the tower shall be
available to the Lessor for as long as this Lease is in effect.
This instrument prepared by:
Patrick C. Coady, of
Harrington, Huxley & Smith
1200 Mahoning Bank Building
Youngstown, Ohio 44503
<PAGE> 15
STATE OF OHIO )
)SS
COUNTY OF MAHONING )
The foregoing instrument was acknowledged before me, a Notary Public in
and for the said County and State, this 13th day of June, 1990, by Bert D. and
Margaret A. Schaefer.
SEAL /s/ CYNTHIA L. LASKY
-----------------------------------
NOTARY PUBLIC
Cynthia L. Lasky, Notary Public
State of Ohio
My Commission Expires Oct. 30, 1990
STATE OF OHIO )
)SS
COUNTY OF MAHONING )
The foregoing instrument was acknowledged before me, a Notary Public in
and for the said County and State, this 14th day of June, 1990 by Albert H.
Pharis, Jr., who is President of the Wilcom Cellular One.
SEAL /s/ CONSTANCE E. THOMPSON
-----------------------------------------
NOTARY PUBLIC
Constance E. Thompson, Notary Public
State of Ohio
My Commission Expires February 17, 1994
<PAGE> 16
[SITE LOCATION MAP OF PREMISES AT
7600 WEST VIEW DRIVE, GREENFORD, OHIO]
<PAGE> 17
<PAGE> 1
EXHIBIT 10.9
35301 Poland
OFF REC 1729 PAGE 173
RECEIVED FOR RECORD
AT 9:55 O'CLOCK AM
NOV. 3 1992
BRUCE E. PAPALIA
Recorder, Mahoning County, Ohio
$35.00 Site: Poland Center, OH
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE is made and entered into as of
the 6th day of December, 1991, by and between MCI TELECOMMUNICATIONS
CORPORATION, a Delaware corporation (herein "Assignor") and WILCOM CELLULAR
ONE, an Ohio general partnership (herein '"Assignee").
W I T N E S S E T H:
WHEREAS, Assignor (as tenant) entered into that certain lease with John
G. Virostek as landlord, dated June 27, 1988 (herein the "Lease"), a copy of
which is attached hereto as Exhibit A. The Lease replaces and supersedes that
certain Lease dated September 20, 1971, recorded in Volume 161, Page 477 in
the recorder's office of Mahoning County, Ohio;
WHEREAS, Assignor desires to assign all of its right, title and interest
in and to the Lease, and Assignee desires to assume all of Assignor's
obligations and duties under the Lease.
NOW, THEREFORE, for and in consideration of One Dollar ($1.00) and other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
1. Assignor hereby assigns to Assignee all of its right, title and
interest in and to the Lease.
2. Assignee hereby assumes and agrees to perform all of the
obligations, duties and covenants of Assignor under the Lease, arising and to
be performed and observed hereunder pursuant to the Lease.
3. This Assignment shall be binding upon the heirs, legal
representatives, successors and assigns of the parties hereto.
Mail Enc: PLEASE RETURN TO:
COMMONWEALTH LAND TITLE CO.
1700 PACIFIC AVE. SUITE 4740
DALLAS TEXAS 75201
ATTN: Melanie Bacon
001220/693 ASSN/ASSUM 06/13/91
1
<PAGE> 2
OFF REC 1729 PAGE 174
IN WITNESS WHEREOF, the parties hereby have executed this Assignment as
of the day and year first written above, by the proper officers duly
authorized hereunto.
ASSIGNOR:
MCI TELECOMMUNICATIONS
CORPORATION
/s/ RICHARD STROM By: /s/ SUSAN C. FRARY
- -------------------------- -------------------------------
Richard Strom Susan C. Frary
Assistant Secretary Vice President
WITNESSES:
/s/ MARY STEIGMAN
- --------------------------
Mary Steigman
/s/ ROBERT HEARNSBERGER
- --------------------------
Robert Hearnsberger
ATTEST: ASSIGNEE:
WILCOM CELLULAR ONE
By: /s/ CRAIG T. SHEETZ By: /s/ ALBERT H. PHARIS, JR.
- -------------------------- -------------------------------
Title: VP Craig T. Sheetz Albert H. Pharis, Jr.
President
WITNESSES:
/s/ DENNEY J. DUFFY
- --------------------------
Denney J. Duffy
/s/ LORRAINE K. TEPSICK
- --------------------------
Lorraine K. Tepsick
This instrument was prepared by Mary Steigman, Office of the General Counsel
MCI Telecommunications Corporation
2400 Glenville Drive
Richardson, TX 75081
001220/693 ASSN/ASSUM 06/13/91
2
<PAGE> 3
OFF REC 1729 PAGE 175
STATE OF TEXAS
COUNTY OF DALLAS
Before me, a notary pubic, in and for said county and state, personally
appeared Susan C. Frary and RICHARD STROM, known to me to be the persons who,
as Vice President and Assistant Secretary, respectively, of MCI
TELECOMMUNICATIONS CORPORATION, the corporation which executed the foregoing
instrument, signed the same, and acknowledged to me that they did so sign said
instrument in the name and upon behalf of said corporation as such officers,
respectively; that the same is their free act and deed as such officers,
respectively; and the free and corporate act and deed of said corporation;
that they were duly authorized thereunto by its board of directors; and that
the seal affixed to said instrument is the corporate seal of said corporation.
In testimony whereof, I have hereunto subscribed my name and affixed my
official seal at Richardson, Texas, this 6th day of December, 1991.
/s/ MARY E. ANDERSON
------------------------
Notary Public in and for
the State of Texas
My commission expires:
05-22-93
001220/693 ASSN/ASSUM 06/13/91
3
<PAGE> 4
OFF REC 1729 PAGE 176
THE STATE OF OHIO
COUNTY OF MAHONING
On this the 9th day of December, 1991, before me, Constance E. Thompson,
the undersigned officer, personally appeared ALBERT H. PHARIS, JR., who
acknowledged himself to be the President of WILCOM CELLULAR ONE, an Ohio
general partnership and that he, as such President, being authorized so to do,
executed the foregoing instrument for the purposes therein contained, by
signing the name of the partnership by himself as President.
In witness whereof I hereunto set my hand and official seal.
/s/ CONSTANCE E. THOMPSON
-----------------------------------------
Notary Public
My commission expires: CONSTANCE E. THOMPSON, NOTARY PUBLIC
2-17-94 State of Ohio
My Commission Expires February 17, 1994
001220/693 ASSN/ASSUM 06/13/91
4
<PAGE> 5
OFF REC 1729 PAGE 177
Site Name: Poland Center, Ohio
MCI TELECOMMUNICATIONS CORPORATION SITE LEASE
SITE LEASE
THIS LEASE AGREEMENT made this 27th day of June, 1988, by and between
John G. Virostek, single whose address is 4925 Cowden Road, Poland, Ohio 44514
(hereinafter called "Landlord") and MCI Telecommunications Corporation, a
Delaware corporation, having an office at 1133 19th Street, N.W., Washington,
D.C. 20036 (hereinafter called "Tenant").
This Lease is made in consideration of the sum of One Thousand and no/100
Dollars ($1,000.00), the receipt of which is hereby acknowledged by Landlord.
Such sum shall not be applied toward the yearly lease payments provided for
herein.
1. Landlord hereby leases unto Tenant, and Tenant hereby hires from
Landlord, for all purposes which Tenant may desire, the parcel of land
(hereinafter called the "Premises") measuring approximately 100' x 140' as
shown on the plan annexed hereto as Exhibit A and specifically incorporated
herein by reference.
TOGETHER WITH 1) any improvements that may now or hereafter be located
thereon, 2) such rights of way and easements on, over, under and through the
adjoining lands of Landlord, extending from the Premises to the nearest
convenient public road, and of standard vehicular width, as shall be necessary
for ingress and egress to and from the Premises, 3) such other rights of way
and easements on, over, under and through the adjoining lands of Landlord as
may be required by Tenant for the purpose of electricity, gas, water, septic
system, well and drainage field, telephone, and any and all other utilities,
4) the right to park vehicles on or about the Premises and the lands
immediately adjacent thereto during periods of construction, site inspection
and at times of necessary repair work, and 5) the right to run guy wires from
the tower to be constructed on the Premises on, over and across the adjoining
lands of Landlord to such points on said lands as shall be necessary for the
proper support of the aforementioned tower, including at such points the right
to install anchors of such size and material as shall be necessary to secure
the aforementioned guy wires.
EXHIBIT A
Being the same premises conveyed by Frank . DeNormandi, Sheriff to the said
Silas S. Huffman, et al., by deed of January 31, 1906, which deed is recorded
in Volume 127, Page 469, et. seq. Mahoning County Records of Deeds.
5661c JS/I 05/01/88
<PAGE> 6
OFF REC 1729 PAGE 178
IT IS UNDERSTOOD and agreed that Tenant shall have the right to
construct, maintain and repair a roadway over the aforementioned rights of way
and easements, including such work as may be necessary for slope and drainage,
and to install such poles, wires, pipes, cables, conduits and related
appurtenances as shall be necessary for the proper conduct of Tenant's
business and for bringing electricity, water, telephone and gas to the
Premises, and for the storage of such fuel as Tenant shall deem necessary in
its sole discretion for an emergency/auxiliary power supply for Tenant's
business. It is also understood and agreed that the aforementioned guy wires
and anchors shall be located as shown on the plan annexed hereto as Exhibit A,
but that Tenant shall have the right to relocate said guy wires and anchors in
the event Tenant desires to increase or decrease the height of the
aforementioned tower or relocate the same within the boundaries of the
Premises.
All of the foregoing lying within the property described in Exhibit B
annexed hereto and specifically incorporated herein by reference, said
property being located in the County of Mahoning, State of Ohio.
2. This Lease shall be for a term of five (5) years and shall commence
on July 1, 1988.
3. Tenant shall pay Landlord an annual rental of Six Thousand and
no/100 Dollars ($6,000.00), payable in equal yearly installments of Six
Thousand and no/100 Dollars ($6,000.00) each, in advance, commencing on the
commencement date of the Lease as provided in Paragraph 2 and each and every
anniversary date of the commencement date thereafter during the term of this
Lease and any renewals thereof. The rental payments shall be made to John G.
Virostek.
4. The term of this Lease shall be automatically renewed and extended
upon the same terms and conditions, except as otherwise specifically stated
herein, for six (6) successive periods of five (5) years each unless
terminated by Tenant at least ninety (90) days prior to the expiration of the
then current five (5) year term in accordance with Article 11 hereinbelow. In
addition, it is agreed by the parties that the rental payments shall increase
by twenty percent (20%) at the commencement of each successive five (5) year
renewal period provided for herein.
5. Tenant shall have the right to fence the Premises, but Tenant agrees
not to fence the rights of way, guy anchor locations and easements provided
for hereinabove. Tenant may enter upon the Premises and adjacent lands of
Landlord from and after the date of execution of this Lease by Landlord for
the purpose of making surveys and conducting soil, engineering and other tests
and may cut or trim the trees on the Premises or any adjacent lands of
Landlord in connection therewith. Tenant shall have the right to clear and
thereafter to keep clear the Premises, the rights of way, guy anchor locations
and any utility easements of trees, bushes, rocks and crops, and to install
upon any adjacent lands of Landlord temporary anchors and guys in connection
with the construction of the tower on the Premises. If the construction or
maintenance of any of Tenant's facilities constructed or to be constructed
within the Premises, the rights of way and easements results in damage to any
adjacent lands of Landlord (other than as set forth herein) Tenant shall pay
Landlord the cost to repair or correct such damage.
2
<PAGE> 7
OFF REC 1729 PAGE 179
6. Landlord agrees to pay promptly when due all taxes and assessments
levied or imposed against the lands of Landlord and make all payments under
any mortgage affecting the same and in the event Landlord fails so to do,
Tenant shall have the right (but not the obligation) to protect its interest
hereunder by paying said taxes and assessments or by making such mortgage
payments and to deduct any amount so paid from the payments of rent due
hereunder.
7. Tenant shall have the right at any time and from time to time during
the term of this Lease (or any renewal or extension hereof) to assign this
Lease or sublet the Premises, in whole or in part.
8. Landlord agrees that Tenant may peacefully and quietly enjoy the
Premises, the rights of way and easements granted hereunder subject, however,
to the terms, covenants and conditions contained in this Lease. All of the
terms, covenants and conditions hereof shall inure to the benefit of and shall
be binding upon the heirs, executors, administrators, successors and assigns
of the respective parties hereto and shall be deemed to run with the land.
9. Tenant shall not be deemed in default under this Lease until
Landlord has given Tenant at least thirty (30) days prior written notice of
any default hereunder and Tenant has failed to cure the same within thirty
(30) days after receipt of such notice. Notwithstanding any provisions of
this Lease or this Paragraph 9 to the contrary, in the event any such default
cannot reasonably be cured within such thirty (30) day period, if Tenant shall
proceed promptly after receipt of such notice to cure the same and shall
prosecute such curing with due diligence, the time for curing such default
shall be extended for such period of time as may be necessary to complete such
curing.
10. All correspondence relating to this Lease shall be sent to Landlord
at 4925 Cowden Road, Poland, Ohio 44514 and to Tenant at 1133 19th Street,
N.W., Washington, D.C. 20036, Attn: Office of the General Counsel, Real Estate
Administrator.
11. Tenant shall have the right, at any time, to cancel this Lease upon
ninety (90) days written notice to Landlord. Upon the exercise of such right
by Tenant this Lease shall become null and void and neither party shall have
any further obligation to the other.
12. All buildings, fixtures, towers, appurtenances, improvements and
equipment erected, located, placed or constructed by Tenant, its successors or
assigns upon the Premises and the rights of way, guy anchor locations and
easements granted herein shall remain the personal property of Tenant, its
successors or assigns regardless of the manner or mode of attachment and may
be removed by Tenant, its successors or assigns at its or their sole option at
any time during the term of this Lease (including any renewal or extension
term) or within sixty (60) days thereafter. Landlord hereby expressly waives
any and all Landlord's liens or claim of such on said buildings, fixtures,
towers, appurtenances, improvements and equipment.
3
<PAGE> 8
OFF REC 1729 PAGE 180
13. Tenant shall pay within thirty (30) days of its receipt of written
notice thereof from Landlord all increases in real estate taxes affecting the
Premises resulting from improvements constructed thereon by Tenant.
Notwithstanding any provision of this Lease or this Paragraph 13 to the
contrary, Tenant shall not be obligated to pay such increases in real estate
taxes unless and until it shall have received from Landlord evidence
satisfactory to Tenant in its sole discretion that such increases in fact
result from improvements constructed on the Premises by Tenant.
14. Tenant agrees to indemnify and save harmless Landlord from and
against any and all claims, liability, damage or loss to persons, including
loss of life, or to property which may arise out of Tenant's use or occupancy
of the Premises or out of any act of Tenant, its employees, agents and
invitees.
15. Landlord represents and warrants to Tenant that Landlord is the sole
fee simple owner of the land described in Exhibit B, subject only to liens and
encumbrances now of record in the said Mahoning County, that such liens and
encumbrances do not interfere with Tenant's use and operation of the Premises,
and that Landlord has the lawful right and authority to execute this Lease and
grant such easements and rights of way as provided for hereinabove. Tenant
may, after the execution of this Lease by Tenant, obtain an abstract or
preliminary title report from a title insurance company of its choice. If the
state of title as indicated by said abstract or preliminary title report shall
show any defects of title or any liens or encumbrances which interfere with
Tenant's use and operation of the Premises, Tenant shall have the right to
either (a) cure such defects of title, discharge such liens or encumbrances of
record, if possible, and/or obtain appropriate non-disturbance agreements with
respect to such encumbrances, and deduct the cost thereof from the payments of
rent to become due hereunder, or (b) cancel this Lease upon written notice to
Landlord. Landlord agrees to cooperate with Tenant with respect to any
actions which Tenant undertakes pursuant to (a) above.
16. Landlord agrees, upon the request of Tenant, to execute and deliver
a memorandum of this Lease in recordable form and to execute and deliver such
other documents, amendments and agreements, such as, but not limited to,
easements, licenses and zoning and building applications, as Tenant shall
require for the proper conduct of its business and in order to carry out the
purpose and intent of this Lease, so long as such documents, amendments and
agreements are not inconsistent with and do not materially change the general
intent of this Lease.
17. This Lease supersedes and cancels that certain Lease between
Landlord and MCI New York - West, Inc., as Tenant, dated September 20, 1971,
and recorded in the Clerk's Office for Mahoning County, State of Ohio in
Volume 161, page 477, as amended by two (2) Amendments of Lease both dated
August 18, 1983 and recorded in the Clerk's Office for Mahoning County, State
of Ohio in Volume 212, page 62 and Volume 212, page 66, respectively.
4
<PAGE> 9
OFF REC 1729 PAGE 181
IN WITNESS WHEREOF, this Lease has been executed as of the day and year
first above written.
WITNESS: LANDLORD:
/s/ UNCLEAR SIGNATURE /s/ JOHN G. VIROSTEK
- ------------------------- ------------------------------------
/s/ UNCLEAR SIGNATURE
- ------------------------- ------------------------------------
ATTEST: TENANT:
MCI TELECOMMUNICATIONS CORPORATION
/s/ LYNN DARROW CARSON By: /s/ A. R. ROBERTS
- ------------------------- ---------------------------------
Lynn Darrow Carson A. R. Roberts
Assistant Secretary Vice President, Operations
Technical Support
(Corporate Seal)
WITNESS
/c/ LINDSEY J. SWEATT /s/ CAROL A. HOHMAN
- ------------------------- ------------------------------------
(Acknowledgements Attached)
5
<PAGE> 10
OFF REC 1729 PAGE 182
EXHIBIT "A" SHEET 1 OF 3
SITE DATA PROPERTY DATA
MCI Carrier: Owners Name: John G. Virostek
Site Name: Poland Center, Ohio General Location: Poland
Township
Ref.Quad.Map Campbell, Ohio PA County: Mahoning County
Lat.: 41 degrees 00'45" Long.: 80 degrees 33'20" State: Ohio
(as per MCI original Exhibit A dwg. 9/20/71) Prepared by: Olsen,
Zarnick & Seybert, Inc.
Date: 10/07/83
Tower Height:__ ft., Type Guyed and
number of guys 3 (as per MCI orig. See Exhibit "B" for
Ground Elev. at Exhibit A dwg description of
Tower Base: 1222 9/20/71) of owner's property
[MAP OF POLAND CENTER, OHIO]
GENERAL LOCATION
MCI TELECOMMUNICATIONS CORPORATION
WASHINGTON D.C.
<PAGE> 11
OFF REC 1729 PAGE 183
EXHIBIT "A" SHEET 2 OF 3
MCI Carrier:
Site Name: Poland Center, Ohio
NOTE: Subject to any and all existing
rights of way and easement of record.
TOTAL SITE AREA AFTER EXPANSION 0.32
ACRE (excluding access road right-of-way
[MAP OF POLAND CENTER, OHIO]
SITE PLAN
/s/ NORMAN C. SHARP Scale: 1" = 100' /s/ JACK A. RINGEISEN
Owner's Signature: /s/ JOHN G. VIROSTEK Date: July 22 - 1988
-----------------------
[LEGEND]
MCI TELECOMMUNICATIONS CORPORATION
<PAGE> 12
OF REC 1739 PAGE 184
Suggested Land Description
To Be Leased By
MCI Telecommunications Corp.
From
John G. Virostek
All that certain piece, parcel or tract of land situate in the Township of
Poland, County of Mahoning and State of Ohio, and being a part of G. Lot No.
51 and 44 of said Township being bounded and described as follows:
Beginning at a point where the section line between G.L. 44 and
G.L. 51 intersects the existing centerline of Cowden Road; thence
along the centerline of Cowden Road, South 83 degrees 45'46" East a
distance of 8.71 feet to the existing centerline of access cartway;
thence along the existing centerline of said access cartway and
across lands of the Grantor, South 2 degrees 36'46" East a distance
of 776.18 feet to a point; thence along the proposed site lease area
and across lands of the Grantor, North 87 degrees 55'36" East a
distance of 65.25 feet to a point; thence by same, South 2 degrees
04'24" East a distance of 140.00 feet to a point; thence by same,
South 87 degrees 55'36" West a distance of 100.00 feet to a point;
thence by same, North 2 degrees 04'24" West a distance of 140.00 feet
to a point; thence by same, North 87 degrees 55'36" East a distance
of 34.75 feet to a point where the centerline of said existing access
cartway intersects the proposed site lease area.
Said parcel containing 0.32 acre (excluding access road right-of-way) as per
survey of Olsen, Zarnick & Seybert, Inc. dated October 7, 1983.
Subject to any and all existing rights-of-way and easements of record.
<PAGE> 13
OFF REC 1729 PAGE 185
EXHIBIT B
All that tract or parcel of land, to-wit:
SITUATED in the Township Of Poland, County of Mahoning and State of Ohio:
and known as being a part of Great Lots 44-51 and 52 of said Township And
being more particularly bounded and described as follows:
BEGINNING at an iron pin in the center line of the Struthers Road at the
intersection of the north line of Great Lot 44; thence S. 86 degrees 08' E.
along the north line of Great Lot 44, a distance of 3032.2 feet to the
northwest corner of Great Lot 51; thence S. 86 degrees 18' E. along the
north line of Great Lot 51, a distance of 924.6 feet to the northwesterly
corner of lands now or formerly owned by M.A. Campbell; thence S. 4 degrees
55' W. along the westerly line of Campbell lands, a distance of 2646.2 feet
to a point in the south line of Great Lot 51; thence N. 85 degrees 16' W.
along the south line of Great Lot 51, a distance of 86.6 feet; thence S. 2
degrees 46' W. along the westerly line of Campbell land, a distance of
685.1 feet to the northerly line of lands now or formerly owned by E.J.
Wilkeson; thence N. 85 degrees 15' W. along the northerly line of Wilkeson
land, a distance of 748.4 feet to the easterly line of lands now or
formerly owned by L. & V. Pondoff; thence N. 2 degrees 46' E. along the
easterly line of Pondoff land, a distance of 685.1 feet to the
southeasterly corner of Great Lot 44; thence N. 86 degrees 22' W. along the
north line of Pondoff land, a distance of 1697.7 feet to the southeasterly
corner of lands now or formerly owned by J.M. & M.E. Stacy: thence N. 3
degrees 02' W. along the easterly line of J.M. & M.E. Stacy & Ben
Defendeifer, a distance of 701.62 feet; thence N. 86 degrees 22' W. along
the northerly line of Defendeifer land, a distance of 500 feet to the
center line of Struthers Road; thence N. 3 degrees 02' W. along the center
line of Struthers Road, a distance of 902.84 feet to a point; thence N. 13
degrees 02' W. continuing along the center line of Struthers Road, a
distance of 85 feet to the southwesterly corner of lands now or formerly
owned by M. Holly; thence N. 86 degrees 26' E. along the southerly line of
Holly land and the southerly line of G. & E. Pekkonen land, a distance of
777.41 feet to a point; thence N. 3 degrees 34' W. along the easterly line
of Pekkonen land, a distance of 242.92 feet to the center line of Cowden
Road; thence S. 86 degrees 26' W. along the center line of Cowden Road, a
distance of 836.47 feet to the center line of Struthers Road; thence N. 13
degrees 02' W. along the center line of Struthers Road, a distance of 45.8
feet to a point; thence continuing along the center line of Struthers Road,
N. 36 degrees 02'; a distance of 888.2 feet to the place of beginning, be
the same more or less, but subject to all legal highways.
Excepting from the above caption of land Lot No. 1 of the J. Virostek Plat No.
1, recorded in Volume 68, Page 290, Mahoning County Record of Plats. Also Lot
No. 2 of the J. Virostex Plat No. 2, recorded in Volume 73, Page 85, Mahoning
County Record of Plats.
5812c
<PAGE> 14
OFF REC 1729 PAGE 186
ACKNOWLEDGEMENT
STATE OF OHIO )
)SS:
COUNTY OF MAHONING )
Before me, a Notary Public in and for said county, personally
appeared the above-named John S. Virostek who acknowledged that he did sign
the foregoing instrument, and that the same is his free act and deed.
In testimony whereof, I have hereunto subscribed my name at Poland,
Ohio this 22nd day of July, 1988.
[Notarial Seal] /s/ MICHAEL J. KIRILA
----------------------------
Notary Public
My Commission Expires:
MICHAEL J. KIRILA, Notary Public
State of Ohio
My Commission Expires Feb. 2, 1992
ACKNOWLEDGEMENT
STATE OF TEXAS )
)SS:
COUNTY OF DALLAS )
Before me, a Notary Public in and for said State of Texas,
personally appeared A.R. Roberts and Lynn Darrow Carson, known to me to be the
persons who, as Vice President and Assistant Secretary, respectively, of MCI
Telecommunications Corporation, the corporation which executed the foregoing
instrument, signed the same, and acknowledged to me that they did so sign said
instrument in the name and upon behalf of said corporation as such persons,
respectively; that the same is their free act and deed as such officers,
respectively, and the free and corporate act and deed of said corporation;
that they were duly authorized thereunto by its Board of Directors; and that
the seal affixed to said instrument is the corporate seal of said corporation.
In testimony whereof, I have hereunto subscribed my name and affixed
my official seal at Richardson, County of Dallas, State of Texas, this 27th
day of June, 1988.
[Notarial Seal] /s/ CHARLENE A. GOSSETT
-----------------------------------------
Notary Public
My Commission Expires:
Charlene A. Gossett
Notary Public
STATE OF TEXAS
My Commission Exp. 2-17-92
<PAGE> 15
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSUMPTION OF LEASE is made and entered into as of the 28th day of
August, 1993, by and between the Estate of John G. Virostek, by and through
the Executors of the Estate, Charles D. Virostek and Edward D. Virostek,
(hereinafter referred to as the "Assignor"), and Charles D Virostek and Edward
D. Virostek (hereinafter referred to jointly as "Assignee").
WITNESSETH:
WHEREAS, Assignor (as landlord) entered into a certain Lease Agreement
with MCI Telecommunications Corporation, dated June 27, 1988, a copy of which
is attached hereto as Exhibit "A", and,
WHEREAS, the above-referenced Lease has been assigned on December 6,
1991, by MCI Telecommunications Corporation to Wilcom Cellular, and,
WHEREAS, Assignor desires to assign all of its right, title and interest
in and to the Lease, and Assignee desires to assume all of Assignor's
obligations and duties under the Lease.
NOW, THEREFORE, the parties agree as follows:
(1) Assignor hereby assigns to Assignee all of its right, title and
interest in and to the Lease.
(2) Assignee hereby assumes and agrees to perform all of its
obligations, duties and covenants of Assignor, under the Lease,
arising and to be performed and observed hereunder pursuant to the
Lease.
(3) This Assignment shall be binding upon the heirs, legal
representatives, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereby have executed this Assignment as
of the day and year first written above.
WITNESSES: ASSIGNOR:
The Estate of John G. Virostek
/s/ JOHN P. ALMASY By: /s/ CHARLES D. VIROSTEK
- -------------------------- -----------------------------------
John P. Almasy Executor, Charles D. Virostek
/s/ EVELYN SCHEPKA By: /s/ EDWARD D. VIROSTEK
- -------------------------- -----------------------------------
Evelyn Schepka Executor Edward D. Virostek
<PAGE> 16
WITNESSES: ASSIGNEE:
/s/ JOHN P. ALMASY By: /s/ CHARLES D. VIROSTEK
- --------------------------- ---------------------------------
John P. Almasy Charles D. Virostek
/s/ EVELYN SCHEPKA By: /s/ EDWARD D. VIROSTEK
- --------------------------- ---------------------------------
Evelyn Schepka Edward D. Virostek
STATE OF OHIO )
)SS
COUNTY OF MAHONING )
Before me, a Notary Public, in and for said County and State personally
appeared Charles D. Virostek and Edward D. Virostek, as Executors for the
Estate of John G. Virostek who executed the foregoing instrument for the
purposes therein contained on behalf of the Estate, being authorized to so do,
and who acknowledged that the same was their free act and deed.
In Witness Whereof, I hereunto set my hand and official seal.
/s/ JOHN P. ALMASY
--------------------------------
Notary Public
My Commission Expires: ___________ John P. Almasy, Attorney at law
Notary Public - State of Ohio
My Commission Has No Expiration Date
Section 147.03 R.C.
STATE OF OHIO )
) SS
COUNTY OF MAHONING )
Before me, a Notary Public, in and for said County and State personally
appeared Charles D. Virostek and Edward D. Virostek who executed the foregoing
instrument for the purposes therein contained, and who acknowledged that the
same was their free act and deed.
In Witness Whereof, I hereunto set my hand and official seal.
/s/ JOHN P. ALMASY
-------------------------------------
Notary Public
My Commission Expires: __________ John P. Almasy, Attorney at law
Notary Public - State of Ohio
My Commission Has No Expiration Date
Section 147.03 R.C.
<PAGE> 17
The undersigned, Wilcom Cellular, by and through its duly authorized
officers, hereby accept and consent to the Assignment referenced above.
WITNESSES: WILCOM CELLULAR
/s/ CHARLENE L. COSSLOR By: /s/ ALBERT H. PLAINS, JR.
- -------------------------- ------------------------------
Charlene L. Cosslor Title - President
/s/ TIMOTHY J. DUFFY
- --------------------------
Timothy J. Duffy
This Instrument Prepared by:
Patrick J. Coady, Esq.
Harrington Huxley Smith Mitchell & Reed
1200 Mahoning Bank Bldg.
Youngstown, OH 44503
(216) 744-1111
<PAGE> 1
EXHIBIT 10.10
AUG 21 2 26 PH1987 87 DR 08912
Mercer
LEASE AGREEMENT WITH
REAL ESTATE PURCHASE OPTION AGREEMENT
A. LEASE
This Lease and Real Estate Purchase Option Agreement made at Mercer
County, Pennsylvania on this 21st day of July, 1987, by and between GEORGE A.
LAW and AGNES LAW, husband and wife; GEORGE C. LAW and JUDITH A. LAW, husband
and wife; and AUGUST THALMAN, JR. and BETTY THALMAN, husband and wife, R.D.#5,
Mercer, Pennsylvania 16137, (Lessors); and WILCOM CORPORATION, an Ohio
Corporation, having its principal place of business at 3930 Sunset Boulevard,
Youngstown, Ohio 44501, (Lessee);
WITNESSETH:
1. That Lessors, in consideration of the rents and covenants
hereinafter stipulated to be paid and performed by Lessee, does hereby lease
to the Lessee the premises located at R.D. #5, Mercer, Findley Township,
County of Mercer and Commonwealth of Pennsylvania and consisting of
approximately 6.9 acres, as more particularly described in "Exhibit A"
attached hereto (the "Land"). Lessors represent to Lessee that Lessors are
the owners of merchantable title to the premises described in "Exhibit A".
The Lessee may extend one set of guy wires and associated anchors, fences or
necessary accessories beyond the described premises in a location to be
mutually agreed upon.
2. It is understood that Lessee intends to construct, operate,
maintain, repair, use and have the right to remove a radio and radio-telephone
transmission and receiving tower and guy wires upon said premises and to
construct, use, repair, operate, maintain and have the right to remove a
building to be located on the leased premises.
3. Lessee shall pay all costs involved in the construction,
maintenance, repair, use and removal of the tower, guy wires, building,
anchors and fences.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
28 0952
<PAGE> 2
87 08912
4. Lessee shall also have the right from time to time to trim and cut
down and clear away any trash and brush adjacent to the tower, building, guy
wires, anchors or fences that in the opinion of the Lessee may be a hazard
thereto.
5. Lessee shall pay all personal property taxes which may be assessed
and become due and payable upon such tower, guy wires, building, anchors and
fences. It is the intention of the parties hereto that all of such towers,
buildings, guy wires, anchors and fences shall be deemed between the parties
to be personal property; and upon the expiration of this Lease as the same may
have been extended, Lessee may remove all of such property.
6. The Lease granted by this instrument shall commence on the date this
instrument is executed by Lessors, and shall continue through the last day of
July, 2012. Lessee shall have the option to extend this Lease for four (4)
successive periods of twenty-five (25) years each, each such period being
herein sometimes referred to as an extended term, as follows:
First extended term - August 1, 2012 through July 31, 2037
Second extended term - August 1, 2037 through July 31, 2062
Third extended term - August 1, 2062 through July 31, 2087
Fourth extended term - August 1, 2087 through July 31, 2112
7. Each option to extend this Lease may be exercised by the Lessee or
its successors by sending written notice by United States mail addressed to
the
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0953
<PAGE> 3
87 08912
Lessors at R.D. #5, Mercer, Pennsylvania 16137, or at such other address for
the sending of such notices as may have been delivered in writing to Lessee,
no more than twelve (12) months nor less that two (2) months prior to the
expiration of the then existing term of this Lease.
8. The Lessee hereby agrees to pay to the Lessors in consideration for
the Lease and Easements hereby granted, during the initial term of this Lease,
the sum of One Hundred ($100.00) Dollars prior to the 1st day of each month
during such term. Lessee is granted a ten (10) day grace period each month
during the term of the lease in which to pay the lease payment. Lessee may
prepay any lease payments up to one year in advance of the appropriate due
date. If Lessee fails to pay the lease payment past said due date, a two (2%)
percent late fee penalty will be assessed against said late payment. In the
event that Lessee fails to pay the lease payment for three (3) consecutive
months, the Lesser, at his option, may terminate the lease by sending a thirty
(30) day written notice by United States mail addressed to the Lessee at its
address set forth above and permit Lessee to remove any of Lessee's property
placed on said premises, whereupon the parties shall be under no further
obligation to each other, except for unpaid rent accrued to the date of
termination. Lessors acknowledge receipt of the One Hundred ($100.00) Dollar
payment due for the period ending August 31, 1987. If this Lease is extended
for one or more extended terms by Lessee exercising any of the options granted
to it herein, upon the 1st day of each such extension of the term of this
Lease, such monthly payments shall be increased by an amount equal to that
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0954
<PAGE> 4
87 08912
87 08912
percentage of the rent in effect during the previous term multiplied by the
ratio by which the CPI for the month of January in the calendar year during
which this Lease is being extended bears to the CPI for the month of January
of the twenty-fifth (25th) preceding year; provided, however, that in no event
shall such increase exceed One Hundred (100%) percent of the payment rate
being made hereunder during the previous term. For purposes of this
Agreement, "CPI means that Consumer Price Index for all urban consumers
(United States City average, all items) prepared by the United States
Department of Labor, Bureau of Labor Statistics, or any Index prepared by the
United States Government in substitution therefor.
9. It is understood that Lessee intends to use the leased premises for
the purpose of installing and operating a tower, antennas and related
equipment for the transmission and receipt of radio-telephone and other
electrical signals. If by December 1, 1987, Lessee has been unable to obtain
all necessary permits and authorizations to construct and operate such
facilities, Lessee may, by sending written notice by United States mail
addressed to Lessors at their address set forth above, terminate this Lease
and remove any property Lessee has placed on said premises, whereupon the
parties shall be under no further obligation to each other.
10. If Lessee shall at any time be in breach of any of its obligations
under this Agreement, Lessors shall give fifteen (15) days written notice to
the Lessee mailed by United States mail addressed to the Lessee at 3930 Sunset
Boulevard, Youngstown, Ohio 44501, before commencing any legal action upon
such default.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0955
<PAGE> 5
87 08912
87 08912
11. This Lease and Options referred to herein, shall run with the land,
and shall be binding on and inure to the benefit of the parties, their heirs,
successors and assigns except as herein provided. Lessee may at any time
assign its interest and delegate its obligation hereunder by written
notification to Lessors or their successors, following which the assignee
referred to in such notice shall be substituted for Lessee under this
agreement, and Lessee shall have no further obligations hereunder.
12. Any real estate transfer taxes due upon the recording of this
instrument shall be paid by Sellers.
B. REAL ESTATE PURCHASE OPTION
In consideration of the payment of Two Hundred ($200.00) Dollars to
George A. Law and Agnes Law, husband and wife; George C. Law and Judith A.
Law, husband and wife; and August Thalman, Jr. and Betty Thalman, husband and
wife, (hereinafter referred to as "Owners" or "Optionors"), the receipt and
sufficiency whereof is hereby acknowledged, the Owners hereby grant to Lessee,
Wilcom Corporation, (hereinafter referred to as "Purchaser" or "Optionee"),
the sole and exclusive right and option to purchase the premises described in
"Exhibit A", attached hereto and made a part hereof. The option shall remain
in effect through August 31, 1992. Said consideration shall be (100%)
refundable if Option is terminated within one (1) year from the date of
execution of this Agreement. Optionee may terminate by sending written notice
by United States mail addressed to the Optionors at their address set forth
above. If the Option is at any time exercised, the consideration for the
Option shall be applied to the purchase price.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0956
<PAGE> 6
87 08912
87 08912
1. This Option may be exercised by the Purchaser giving notice as set
forth below at any time on or before 6:00 p.m. on August 31, 1992. Deposit of
written notice in the United States mail on or before 6:00 p.m. on the
aforesaid date shall constitute sufficient notice of the exercise of this
Option and shall result in a binding contract of purchase and sale between the
parties hereto. All notices sent by mail shall be sent by certified mail,
return receipt requested. In the alternative, Purchaser may deliver written
notice of the exercise of this Option to the Owners at their address
hereinafter set forth on or before 6:00 p.m. on the foregoing date.
2. In the event of the exercise of this Option by the Lessee as
aforesaid, all funds and documents necessary to complete this transaction
shall be deposited with the law firm of Fruit, Dill, Goodwin & Scholl, Sharon,
Pennsylvania, hereinafter referred to as "Escrow Agent", on or before thirty
(30) days after the date of the receipt of the aforesaid notice of the
exercise of this Option. The purchase price for the premises shall be Ten
Thousand ($10,000.00) Dollars.
3. The Premises shall be conveyed to the Purchaser, or its nominee, by
general warranty deed with full release of dower, free and clear of all liens
and encumbrances whatsoever, except for real estate taxes and general and
special assessments not then due and payable, zoning ordinances and such
easements, reservations, limitations, and restrictions as the Purchaser, or
its nominee, shall approve in its sole discretion. Sellers represent that
they are the owners of said real estate except only for the liens and
encumbrances permitted by this paragraph and further represent that at the
time this Option may be exercised, they will be such owners subject only to
such liens and encumbrances permitted by this paragraph.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0957
<PAGE> 7
87 08912
87 08912
4. On receipt of the funds and documents necessary to complete this
transaction, the Escrow Agent shall order a title search to the Premises from
a title guarantee company, and shall notify the parties of the results of the
search, after which the Purchaser shall notify the Owners and the Escrow Agent
of any title defects to which Purchaser objects and at such time as the title
insurance company is in a position to issue its standard form of title
guarantee in the full amount of the purchase price, guaranteeing title to be
in the name of the Purchaser, or his nominee, subject only to taxes and
assessments not then due and payable, zoning ordinances, easements,
restrictions, reservations, limitations, easements or record, and conditions
of record, the Escrow Agent shall file the warranty deed for record and make
distribution to the respective parties entitled to the same of the funds and
documents on deposit. The expenses of closing shall be paid in the following
manner:
(a) The full cost of securing the title search and the title
guarantee shall be paid by Buyers.
(b) The cost of preparing, executing, and acknowledging any deeds
or other instruments required to convey title to Buyer or its
nominees in the manner described in this Agreement shall be
paid by Sellers.
(c) The cost of preparing, executing, and acknowledging any
promissory note and the instruments securing the debt, if
needed, shall be paid by Buyer.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0958
<PAGE> 8
87 08912
87 08912
(d) Any costs of transfer and recordation of title shall be paid by
Buyer.
(e) Any tax impose on the conveyance of title to said property to Buyer
or his nominee shall be paid by Sellers.
(f) Any fee charged by the Escrow Agent required by this Agreement shall
be paid by the Seller and the buyer in equal portions.
(g) Real property taxes levied or assessed against said property as
shown on the latest available tax bills shall be prorated.
(h) Any costs for the subdivision of the Seller's property to permit the
sale of the demised premises shall be paid by the Seller, including
but not limited to surveying expenses and expenses to secure all
necessary permits and approvals.
5. Possession of the Premises shall be delivered to the Purchaser, or
its nominee, upon the record date of transfer of title.
6. All notices provided for herein shall be sent by United States
certified mail, return receipt requested, to the Purchaser at 3930 Sunset
Boulevard, Youngstown, Ohio 44501, and to the Owner at R.D. #5, Mercer,
Pennsylvania 16137. Any party or its successors in interest shall have the
right to designate a new address for the receipt of said notices by written
notice given as aforesaid.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0959
<PAGE> 9
87 08912
87 08912
IN WITNESS WHEREOF, said grantors have hereunto set their hands and
seals, the date first above written.
Sealed and delivered in the presence of:
/s/ CHESTER B. SCHOLL, JR. /s/ GEORGE A. LAW (SEAL)
- -------------------------------- -----------------------------------
GEORGE A. LAW
LESSOR - OWNER
COMMONWEALTH OF PENNSYLVANIA /s/ AGNES LAW (SEAL)
DEPARTMENT OF REVENUE ------------------------------------
REALTY TRANSFER TAX Aug. 21 '87 11.40 By George A. Law, Attorney-in-Fact
LESSOR - OWNER
MERCER AREA SCHOOL DISTRICT /s/ GEORGE C. LAW (SEAL)
MERCER COUNTY, PENNSYLVANIA ------------------------------------
Realty Transfer Tax By George A. Law, Attorney-in-Fact
$5.70 LESSOR - OWNER
- --------------------------------
Recorder of Mercer County, Agent
/s/ JUDITH A. LAW (SEAL)
------------------------------------
By George A. Law, Attorney-in-Fact
LESSOR - OWNER
FINDLEY /s/ AUGUST THALMAN, JR. (SEAL)
MERCER COUNTY, PENNSYLVANIA ------------------------------------
REALTY TRANSFER TAX By George A. Law, Attorney-in-Fact
$5.70 LESSOR - OWNER
- --------------------------------
MERCER COUNTY RECORDER/AGENT
/s/ BETTY THALMAN (SEAL)
------------------------------------
By George A. Law, Attorney-in-Fact
LESSOR - OWNER
/s/ CHESTER B. SCHOLL, JR. /s/ GEORGE A. LAW (SEAL)
- -------------------------------- ------------------------------------
for the above parties.
LESSOR - OWNER
/s/ W.R. WILLIAMSON III WILCOM CORPORATION
- -------------------------------- LESSEE - PURCHASER
- -------------------------------- By: President (SEAL)
---------------------------------
(Title)
I do hereby certify that the precise residence and complete post office
address of the within name lessee is 3930 Sunset Boulevard, Youngstown, Ohio.
/s/ CHESTER B. SCHOLL, JR.
-----------------------------------------
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0960
<PAGE> 10
87 08912
87 08912
7. Owners and Purchaser hereby warrant and represent to each other that
no real estate broker has participated in or pursued this transaction. Each
of the parties shall indemnify and hold the other harmless with respect to any
loss, cost, claim, or liability, including reasonable attorneys' fees, arising
by reason of default of the warranties and representations contained herein.
The warranties and representations contained herein shall survive the closing
of this transaction.
8. This Option Contract shall bind and inure to the benefit of all the
respective heirs, personal representatives, successors, and assigns of the
parties hereto and the obligations of the Lessors shall run with this land.
Lessee may assign its rights hereunder by giving written notice thereof to
Lessors or their successors. This instrument contains the entire agreement
between the parties and no representation, promises, provisions, terms,
warranties, conditions, or obligations whatsoever, expressed or implied, other
than herein set forth, shall be binding upon the Optionors and Optionee.
9. This instrument is being executed by George A. Law, Attorney in
Fact, for Agnes Law, his wife; George C. Law and Judith A. Law, husband and
wife; and August Thalman, Jr. and Betty Thalman, husband and wife, by the
authority of a Power of Attorney recorded in the records of Mercer County,
Pennsylvania at 1979 POA 87.
State of Penna. Recorded in Recorder's Office
County of Mercer of said County in 1987
87 DR 08912
---------------------------------
[SEAL] Witness my hand and Official Seal
this 21st day of AUGUST A.D. 1987
/s/ MARILYN L. [signature illegible]
------------------------------------
Recorder
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0961
<PAGE> 11
87 08912
87 08912
STATE OF PENNSYLVANIA :
: ss:
COUNTY OF MERCER :
On this 21st day of July, 1987, before me, the undersigned officer, personally
appeared GEORGE A. LAW, individually, and as, Attorney-in-Fact for Agnes Law,
George C. Law, Judith A. Law, August Thalman, Jr. and Betty Thalman, by the
authority of a Power of Attorney recorded in Mercer County, Pennsylvania at
1979 POA 87, known to me (or satisfactorily proven) to be the person whose
name is subscribed to the within instruments and acknowledge that executed the
same of the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
[SEAL] /s/ KATHY J. ZOLNIER
----------------------------
Notary Public
My Commission Expires:
Kathy J. Zolnier, Notary Public
Sharon, Mercer County, Pa.
March 26, 1990
STATE OF PENNSYLVANIA :
: ss:
COUNTY OF MERCER :
Before me, a Notary Public in and for said County and State, personally
appeared WILCOM CORPORATION, by W.P. Williamson III, its attorney-in-fact, who
acknowledged that he did sign the foregoing instrument, and that he same is
his free act and deed and the free act and deed of WILCOM CORPORATION.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal, at
Sharon, Mercer County, PA, this 21st day of July, 1987.
[SEAL] /s/ KATHY J. ZOLNIER
----------------------------
Notary Public
My Commission Expires:
Kathy J. Zolnier, Notary Public
Sharon, Mercer County, Pa.
March 26, 1990
This instrument was prepared by:
Chester B. Scholl, Jr., Esquire
FRUIT, DILL, GOODWIN & SCHOLL
Attorneys at Law
P.O. Box 673
Sharon, Pennsylvania 16146
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
28 0962
<PAGE> 12
87 08912
87 08912
Exhibit A
[SITE LOCATION MAP OF PREMISES AT
R.D. #5, MERCER, FINDLEY TOWNSHIP,
COUNTY OF MERCER AND
COMMONWEALTH OF PENNSYLVANIA]
28 0963
<PAGE> 13
AUG 21 27 PM1987
REV. 183 EX (9-86)
REALTY TRANSFER TAX
STATEMENT OF VALUE
See Reverse for Instructions
COMMONWEALTH OF PENNSYLVANIA RECORDER'S USE ONLY
DEPARTMENT OF REVENUE State Tax Paid 11.40
BUREAU OF INDIVIDUAL TAXES Book Number
POST OFFICE BOX 8910 Page Number
HARRISBURG, PA 17105-8910 Date Recorded
Complete each section and file in duplicate with Recorder of Deeds when (1)
the full value/consideration is not set forth in the deed, (2) when the deed
is without consideration, or by gift, or (3) a tax exemption is claimed. A
Statement of Value is not required if the transfer is wholly exempt from tax
based on: (1) family relationship or (2) public utility easement. If more
space is needed, attach additional sheet(s).
A. CORRESPONDENT - All inquiries may be directed to the following person:
Name Chester B. Scholl, Jr., Esquire Telephone Number: (412) 981-4800
City State Zip Code
Street Address 32 Shenango Avenue, Sharon, Pennsylvania 16146
B. TRANSFER DATA Date of Acceptance of Document
Grantor(s)/Lessor(s) George A. Law et al. Grantee(s)/Lessee(s)
Wilcom Corporation
Street Address Street Address 3930 Sunset Boulevard
R.D. #5
City State Zip Code City State Zip Code
Mercer, Pennsylvania 16150 Youngstown, Ohio 44501
C. PROPERTY LOCATION
Street Address City, Township, Borough
R.D. #5 (6.82 ACRES OUT OF 248.6 ACRES) Mercer
County School District Tax Parcel Number
Mercer
D. VALUATION DATA
1. Actual Cash Consideration 2. Other Consideration 3. Total Consideration
+ = XXXXXXXX
4. County Assessed Value 5. Common Level Ratio Factor 6. Fair Market Value
8,100,000 X 5.1 = 41310
E. EXEMPTION DATA
1a. Amount of Exemption Claimed 1b. Percentage of Interest Conveyed
401.70 2.74%
2. Check Appropriate Box Below for Exemption Claimed
/ / Will or interstate succession _____________________________________________
(Name of Decedent) (Estate File Number)
/ / Transfer to Industrial Development Agency.
/ / Transfer to agent or straw party. (Attach copy of agency/straw party
agreement).
/ / Transfer between principal and agent. (Attach copy of agency/straw trust
agreement). Tax paid prior deed $_________.
/ / Transfers to the Commonwealth, the United States, and Instrumentalities
by gift, dedication, condemnation or in lieu of condemnation. (Attach
copy of resolution).
/ / Transfer from mortgagor to a holder of a mortgage in default. Mortgage
Book Number ______, Page Number _________.
/ / Corrective deed (Attach copy of the prior deed).
/ / Statutory corporate consolidation, merger or division. (Attach copy of
articles)
/X/ Other (Please explain exemption claimed, if other than listed above.)
The lease is a lease for more than 30 years Covering 6.82 acres out of
----------------------------------------------------------------------
248.6 acres interest in the property.
----------------------------------------------------------------------
Under penalties of law, I declare that I have examined this Statement,
including accompanying information, and to the best of my knowledge and
belief, it is true, correct and complete.
Signature of Correspondent or Responsible Party Date
/s/ CHESTER B. SCHOLL, JR. 8/21/87
------------------------------------ ------------
(See Reverse)
28 0964
<PAGE> 14
89 DR 06230
MERCER
THIS LEASE is made and executed on the 31st day of March, 1989, by and
between:
WILCOM/CELLULAR ONE, an Ohio Partnership, having its principal place
of business at 3910 South Avenue, Youngstown, Mahoning County, Ohio
44512, hereinafter referred to as "LESSOR";
Party of the first part;
and
GEORGE A. LAW; GEORGE C. LAW and JUDITH A. LAW, husband and wife;
AUGUST THALMAN, JR. and BETTY THALMAN, husband and wife, of the
Borough of Mercer, County of Mercer and Commonwealth of
Pennsylvania, hereinafter referred to as "LESSEE";
Parties of the second part;
LESSOR desires to lease the land which it owns in Findley Township,
Mercer County, Pennsylvania to the LESSEE to allow LESSEE to farm said
property. In consideration of mutual covenants herein contained, the parties
agree as follows:
1. LESSEE agrees to pay in the manner hereinafter specified to LESSOR,
its heirs and assigns, without demand, rent for the demised premises in the
amount of ONE ($1.00) DOLLAR, per year except as otherwise limited in this
lease.
2. LESSEE covenants that in case of LESSOR, by reason of the failure of
LESSEE to perform any of the provisions hereof, shall be compelled to pay or
shall pay any sum of money, or shall be compelled to do or shall do any act
which requires the payment of money, then the sum or sums so paid or required
to be paid, together with all interest, costs, and damages, shall be added to
the next installment of rent due or to any subsequent installment of rent and
shall be collectible as additional rent in the same manner and with the same
remedies as if at had been originally reserved.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON PENNSYLVANIA 16146
0060 0298
<PAGE> 15
3. All payments of rent or other sums due LESSOR hereunder shall be
made at 3910 South Avenue, Youngstown, Ohio 44512, or at such other place as
LESSOR shall designate from time to time.
4. In the event of flood or overflow of water on the demised premises
or other natural disaster, so that only a portion of the demised premises may
be farmed, LESSEE shall be released from paying any rental for such portion of
the demised premises on which no crop or crops may be raised by reason of such
flood or overflow of water or other natural disaster, at the rate of rentals
hereinbefore specified; provided, however, that if any crop of any kind or
character can be or is raised on such demised premises, lessee shall pay full
rental therefor as herein provided.
5. The term of this lease shall be for one year to commence on the 31st
day of March, 1989, and terminate on the 30th day of March, 1990 unless sooner
terminated by the breach of the terms and conditions of this lease by LESSEE
or by an abandonment of the premises by LESSEE. LESSEE shall surrender the
premises to LESSOR immediately upon the termination of the lease term.
6. LESSEE shall use the demised premises for the purpose of conducting
the following and only the following purposes: the growing of crops for either
resale or for use as feed for the LESSEE'S farm.
7. LESSEE shall neither commit nor permit waste of the demised premises
and shall use with care, and shall not destroy, damage or remove without the
consent of LESSOR, any of the buildings, structure, fences, or other fixtures
and improvements on the premises at the beginning of or put on the premises by
LESSOR during the term hereof.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0299
<PAGE> 16
89 06230
8. LESSEE shall maintain said demised premises to the extent of keeping
vegetation cut to normal heights, removing any debris which might accumulate
on the said premises and maintaining proper drainage of surface water from
said premises.
9. LESSOR reserves the right from time to time at its own expense to
make such improvements, alterations, renovations, changes, and repairs in and
about the demised premises, other than those hereinbefore provided for LESSEE
to do, as to LESSOR shall seem desirable, and LESSEE shall make no claim
against LESSOR for interference with LESSEE'S leasehold interest or for loss
or damage to its business during such improvements, alterations, renovations,
changes, and repairs. LESSOR shall at all times have the right to erect such
building or other structure on adjoining or neighboring premises as it shall
see fit or deem proper, without any liability to LESSEE therefor in any event
or for any cause.
10. LESSEE shall not improve or alter the demised premises in any manner
without the prior written consent of LESSOR but shall, before making any
improvements or alterations, submit plans and designs therefor to lessor for
his approval. In the event that the plans and designs are disapproved, such
improvements or alterations shall be made only with such changes as may be
required by LESSOR. All improvements or alterations erected or made on the
demised premises shall on expiration or sooner termination of this lease
belong to LESSOR without compensation to LESSEE, provided, however, that
LESSOR shall have the option, to be exercised on expiration or sooner
termination of this lease, to require LESSEE to remove any or all such
improvements or alterations.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0300
<PAGE> 17
89 06230
11. If, during the term of this lease, any law, regulations or rule
requires that an alteration, addition, or other change or improvement be made
to the demised premises, the parties agree as follows:
(a) If the alterations, additions, or other changes or improvements
are required as a result of LESSEE'S use of the premises, LESSEE shall make
them and bear all expenses connected therewith.
(b) If the alterations, additions, or other changes or improvements
are required as a result of the condition or nature of the premises at the
time of execution of this lease, not caused by LESSEE'S use of the premises,
and related to a portion of the premises that LESSOR has agreed to maintain
and repair, LESSOR shall make them and bear all expenses connected therewith.
12. LESSEE, at his own expense, shall maintain the demised premises and
appurtenances thereto in good repair, and in at least as good condition as
that in which they were delivered, allowing for ordinary wear and tear.
13. LESSEE shall pay any increase in taxes and assessments on the
demised premises covered by this lease caused by the LESSEE'S use of said
demised premises in the future. Provided, however, that the LESSEE shall have
the right to contest all such taxes and, pending any such contest and during
its continuance in good faith, LESSEE may delay or defray the payment thereof,
but not so as to lose the right of redemption from any sale under any tax,
assessment, or governmental change.
14. As additional rental for the demised premises, LESSEE shall insure
and keep insured the property of LESSOR covered by this lease, with insurance
companies acceptable to LESSOR, and shall procure, pay for, and deliver to
LESSOR the policies of insurance covering the following:
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0301
<PAGE> 18
89 06230
(a) LESSEE shall during the full term of this lease, at the expense
of the LESSEE, carry public liability insurance providing for a minimum of
$100,000 per person, $500,000 per accident, and $500.000 for property damage.
15. LESSEE shall not do or permit sublessees or other persons to do
anything on the demised premises, or any part thereof, or bring or permit
anything to be brought on the premises or to be kept therein, nor permit the
use of the premises for any business or purpose, that would cause an increase
in the rate of any insurance on the demised premises.
16. LESSEE shall permit LESSOR, its agents, and other employees, to have
access to and to enter the leased premises at all reasonable and necessary
times to inspect the premises for any purpose connected with the repair,
improvement, care, and management of the premises or for any other purpose
reasonably connected with LESSOR'S interest in the premises and to perform any
work or other act found necessary on such inspection. This includes the
maintenance and removal, installation, construction or inspection or all
equipment owned by LESSOR located on the demised premises.
17. LESSEE shall not assign his interest under this lease, or any part
thereof, without the prior written consent of LESSOR, his heirs, executors,
administrators, or assigns. Any assignment by LESSEE without such consent
shall be voidable at the option of LESSOR, who may, on such breach,
immediately reenter and take possession of the demised premises, or any part
thereof, without giving any notice.
18. This lease shall renew itself from year to year unless either party
notifies the other in writing at least sixty (60) days prior to the end of the
current term of this lease.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0302
<PAGE> 19
89 06230
19. All crops or plantings planted or placed on or in the demised
premises shall be the property of LESSOR upon termination of this lease even
though they were planted prior to the termination of this lease.
20. This lease may be canceled and terminated by either party hereto,
without penalty, on giving a notice of the intent to terminate to the other
party three months prior to the date of the intended termination, by sending
the required notice to the party to be notified, postage prepaid, by
registered mail, at the address specified for that party in this lease, or by
personal delivery to that party. This provision for termination shall not
operatenor become effective until LESSEE has been in possession of the demised
premises under this lease for at least six months. The giving of the notice
required herein shall not release either LESSOR or LESSEE from full and
faithful performance of all terms and conditions of this lease during the
continuing occupancy of LESSEE after the notice of termination but before
LESSEE actually vacates the premises.
21. LESSEE shall release LESSOR, or the representatives, agents, and
employees of LESSOR, from liability for any injury to LESSEE, or the agents,
employees, or guests of LESSEE, resulting from any cause whatsoever, except
injury or damage resulting from the wilful acts of LESSOR, or the
representatives, agents, and employees or LESSOR.
22. The demised premises are described as follows:
Being Lot No. 29 in the GEORGE LAW SUBDIVISION SECTION "D" recorded in the
Records of Mercer County on January _____, 1989, located in Findley Township,
Mercer County, Pennsylvania, being more particularly bounded and described as
follows:
Commencing at the southwest corner of the land in caption and the centerline of
Buckley Road 15 feet East from the centerline of a private lane; THENCE North 0
degrees 22' East, 500 feet along lands of George Law to an iron pin; THENCE
North 82 degrees 32' East, 600 feet along lands of George Law to an iron pin;
THENCE South 0 degrees 22' West, 500 feet along lands of George Law to a point;
THENCE South 82 degrees 32' West, along the centerline of the Clintonville Road,
600 feet to a point, the place of beginning. Containing 6.82 acres.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0303
<PAGE> 20
89 06230
IN WITNESS WHEREOF, the parties have executed this lease at Mercer
County, Pennsylvania the day and year first above written.
/s/ GEORGE A. LAW
-------------------------------
GEORGE A. LAW
/s/ GEORGE C. LAW
-------------------------------
GEORGE C. LAW
/s/ JUDITH A. LAW
-------------------------------
JUDITH A. LAW
/s/ AUGUST THALMAN, JR.
-------------------------------
AUGUST THALMAN, JR.
/s/ BETTY THALMAN
-------------------------------
BETTY THALMAN
WILCOM/CELLULAR ONE
BY /s/ ALBERT H. PHARIS, JR.
----------------------------------
/s/ ALBERT H. PHARIS, JR., PRESIDENT
------------------------------------
I hereby certify that the precise
residence and complete mailing address
of the grantee is RD #5 Mercer PA
--------------------
16137
--------------------------------------
/s/ CHESTER B. SCHOLL JR.
--------------------------------------
--------------------------------------
State of Penna. ) Recorded in Recorder's Office
County of Mercer ) of said County in 1989
89 DR 06230
------------------------------------------------------
Witness my hand and Official Seal
this 23rd day of June A.D. 1989
[SEAL] /s/ MARILYN L. [SIGNATURE ILLEGIBLE]
------------------------------------
Recorder
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0304 26.50 SCHOLL 95060
89 06230
<PAGE> 21
ACKNOWLEDGEMENT
STATE OF Ohio :
: ss
COUNTY OF Mahoning :
ON THIS, this 13th day of June, 1989, before me, a Notary Public, the
undersigned officer, personally appeared Albert H. Pharis, Jr. who
acknowledged himself to be the President of Wilcom/Cellular One an Ohio
Partnership, and that he as such President, being authorized to do so,
executed the foregoing instruments for the purposes therein contained by
signing the name of the Partnership by himself as President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------------------
Notary Public
MY COMMISSION EXPIRES: [SEAL]
/s/ CONSTANCE E. THOMPSON
CONSTANCE E. THOMPSON, NOTARY PUBLIC
State of Ohio
My Commission Expires February 17, 1994
89 06230
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0305
<PAGE> 22
89 06230
COMMONWEALTH OF PENNSYLVANIA :
: ss.
COUNTY OF ARMSTRONG :
ON THIS, the 3rd day of May, 1989, before me, the undersigned officer,
personally appeared GEORGE A. LAW, known to me (or satisfactorily proven) to
be the person whose name is subscribed to the within instrument, and
acknowledged that he executed same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ CANDICE L. FOLTA (SEAL)
---------------------
Notary Public
MY COMMISSION EXPIRES:
Notarial Seal [SEAL]
Candice L. Folta, Notary Public
Ford City Borough, Armstrong County
My Commission Expires July 31, 1989
Member, Pennsylvania Association of Notaries
STATE OF :
: ss
COUNTY OF :
ON THIS, this 17th day of May, 1989, before me, a Notary Public, the
undersigned officer, personally appeared GEORGE C. LAW and JUDITH A. LAW,
known to me (or satisfactorily proven) to be the persons whose names are
subscribed to the within instrument, and acknowledge that they executed same
for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ PAUL STROUSE, JR. (SEAL)
----------------------
Notary Public
MY COMMISSION EXPIRES: [SEAL]
NOTARIAL SEAL
PAUL STROUSE, JR., Notary Public
City of Philadelphia, Phila. County
My Commission Expires April 24th, 1993
STATE OF PENNSYLVANIA :
: ss
COUNTY OF ARMSTRONG :
ON THIS, this 3rd day of May, 1989, before me, a Notary Public, the
undersigned officer, personally appeared AUGUST THALMAN, JR. and BETTY
THALMAN, known to me (or satisfactorily proven) to be the persons whose names
are subscribed to the within instrument, and acknowledge that they executed
same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ CANDICE L. FOLTA (SEAL)
---------------------
Notary Public
MY COMMISSION EXPIRES: [SEAL]
Notarial Seal
Candice L. Folta, Notary Public
Ford City Borough, Armstrong County
My Commission Expires July 31, 1989
Member, Pennsylvania Association of Notaries
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0306
<PAGE> 23
REV 183 EX (9.86)
COMMONWEALTH OF REALTY TRANSFER TAX RECORDER'S USE ONLY
PENNSYLVANIA STATEMENT OF VALUE
DEPARTMENT OF REVENUE State Tax Paid -0-
BUREAU OF INDIVIDUAL See Reverse for
TAXES Instructions Book Number 89 06230
POST OFFICE BOX 8910
HARRISBURG, PA Page Number
17105-8910
Date Recorded
Complete each section and file in duplicate with Recorder of Deeds when (1)
the full value/consideration is not set forth in the deed, (2) when the deed
is without consideration, or by gift, or (3) a tax exemption is claimed. A
Statement of Value is not required if the transfer is wholly exempt from tax
based on: (1) family relationship or (2) public utility easement. If more
space is needed, attach additional sheet(s).
A. CORRESPONDENT - All inquiries may be directed to the following person:
Name Telephone Number:
Chester B. Scholl, Jr. Area Code (412) 981-4800
Street Address City State Zip code
32 Shenango Ave. Sharon PA 16146
B. TRANSFER DATA Date of Acceptance of
Document
Grantor(s)/Lessor(s) Grantee(s)/Lessee(s)
Wilcom/Cellular One George A. Law, et al.
Street Address Street Address
3910 S. Ave. RD #5
City State Zip Code City State Zip Code
Youngstown OH 44512 Mercer PA 16137
C. PROPERTY LOCATION
Street Address City, Township, Borough
RD #5 Mercer 6.9 Acres Findley Township
County School District Tax Parcel Number
Mercer Mercer
D. VALUATION DATA
1. Actual Cash 2. Other Consideration 3. Total Consideration
Consideration
1.00 + =
4. County Assessed 5. Common Level Ratio 6. Fair Market Value
Value Factor
X =
E. EXEMPTION DATA
1a. Amount of 1b. Percentage of
Exemption Claimed Interest Conveyed
100%
2. Check Appropriate Box Below for Exemption Claimed
/ / Will or intestate succession _____________________________________
(Name of Decedent) (Estate File Number)
/ / Transfer to Industrial Development Agency.
/ / Transfer to agent or straw party. (Attach copy of agency/straw party
agreement).
/ / Transfer between principal and agent. (Attach copy of agency/straw
trust agreement). Tax paid prior deed $___________________________.
/ / Transfers to the Commonwealth, the United States, and Instrumentalities
by gift, dedication, condemnation or in lieu of condemnation. (Attach
copy of resolution).
/ / Transfer from mortgagor to a holder of a mortgage in default. Mortgage
Book Number _______, Page Number ______________.
/ / Corrective deed (Attach copy of the prior deed).
/ / Statutory corporate consolidation, merger or division. (Attach copy of
articles).
/X/ Other (Please explain exemption claimed, if other than listed above.)
Real Estate Lease For Term of One Year
---------------------------------------------------------------------
---------------------------------------------------------------------
Under penalties of law, I declare that I have examined this Statement,
including accompanying information, and to the best of my knowledge and
belief, it is true, correct and complete.
Signature of Correspondent or Responsible Date
Party 6/23/89
/s/ Chester B. Scholl, Jr. -------
---------------------------
(SEE REVERSE)
0060 0307
<PAGE> 24
Jun 23 3:55 PM '89 89 DR 06228
Mercer
ASSIGNMENT OF LEASE AND REAL ESTATE PURCHASE AGREEMENT
A. ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE AND REAL ESTATE PURCHASE AGREEMENT, made at
Mercer County, Pennsylvania, on this 31st day of MARCH, 1989 by and between:
GEORGE A. LAW; GEORGE C. LAW and JUDITH A. LAW, husband
and wife; and AUGUST THALMAN, JR. and BETTY THALMAN,
husband and wife, R.D. #5, Mercer, Pennsylvania 16137;
LESSORS;
A N D
WILCOM CORPORATION, an Ohio corporation, having its
principal place of business at 3910 South Avenue,
Youngstown, Ohio 44512,
LESSEE;
A N D
WILCOM/CELLULAR ONE, an Ohio Partnership, having its
principal place of business at 3910 South Avenue,
Youngstown, Ohio 44512,
ASSIGNEE;
WITNESSETH:
1. The LESSORS and LESSEE, in consideration of the covenants
hereinafter stipulated to and performed by ASSIGNEE, do hereby assign,
transfer and set over to the ASSIGNEE all of their rights, title and interest
to a lease governing the premises located at R.D. #5, Mercer, Findley
Township, County of Mercer and Commonwealth of Pennsylvania, and consisting of
approximately 6.9 acres, as originally described in a Lease dated July 21,
1987 between LESSORS and LESSEE, and recorded in the Records of Mercer County,
Pennsylvania on August 21, 1987.
2. The LESSORS are, by the execution of this Agreement, assigning any
rights to future rental payments for the use of this land.
3. This Agreement shall constitute written notification to LESSORS that
all rights and obligations are being assigned to the ASSIGNEE.
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0289
<PAGE> 25
89 06228
B. ASSIGNMENT OF REAL ESTATE PURCHASE OPTION
1. By the execution of this Agreement, the LESSEE is assigning and
transferring all rights, title or interest to an option contained in an Option
Agreement between the LESSORS and LESSEE dated July 21, 1987 and recorded in
the Records of Mercer County, Pennsylvania on August 21, 1987 to the ASSIGNEE.
2. By the execution of this Agreement, the LESSORS acknowledge that
they have received written notice of the assignment of this Option.
3. It is hereby acknowledged that at a meeting of the shareholders of
WILCOM CORPORATION held on the 15th day of March, 1989, for the purpose and
consideration of acting upon the assignment of said Option between WILCOM
CORPORATION and George Law et al. That as the result of said meeting, that
W.P. Williamson III was authorized to execute and deliver such agreement or
deed on behalf of the corporation in substantially the form presented to that
meeting for the purpose of effectuating the assignment of the rights under a
lease and purchase option agreement between George Law et al and WILCOM
CORPORATION dated July 21, 1987.
IN WITNESS WHEREOF, said LESSORS and LESSEE have hereunto set their hands
and seals the date first above written.
LESSORS:
/s/ GEORGE A. LAW (SEAL)
------------------
GEORGE A. LAW
/s/ GEORGE C. LAW (SEAL)
------------------
GEORGE C. LAW
/s/ JUDITH A. LAW (SEAL)
------------------
JUDITH A. LAW
/s/ AUGUST THALMAN, JR. (SEAL)
------------------------
AUGUST THALMAN, JR.
/s/ BETTY THALMAN (SEAL)
------------------
BETTY THALMAN
WILCOM CORPORATION
/s/ W.P. WILLIAMSON III (SEAL)
------------------------
W.P. WILLIAMSON, III/Pres. LESSEE
WILCOM/CELLULAR ONE
/s/ ALBERT H. PHARIS, JR. (SEAL)
--------------------------
ALBERT H. PHARIS, JR./Pres. ASSIGNEE
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0290
<PAGE> 26
89 06228
COMMONWEALTH OF PENNSYLVANIA :
: ss.
COUNTY OF ARMSTRONG :
ON THIS, the 15th day of April, 1989, before me, the undersigned officer,
personally appeared GEORGE A. LAW, known to me (or satisfactorily proven) to
be the person whose name is subscribed to the within instrument, and
acknowledged that he executed same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ CANDICE L. FOLTA (SEAL)
---------------------
Notary Public
MY COMMISSION EXPIRES
Notarial Seal
Candice L. Folta, Notary Public
Ford City Borough, Armstrong County
My Commission Expires July 31, 1989
Member, Pennsylvania Association of Notaries
STATE OF PENNSYLVANIA :
: ss
COUNTY OF PHILADELPHIA :
ON THIS, this 10th day of April, 1989, before me, a Notary Public, the
undersigned officer, personally appeared GEORGE C. LAW and JUDITH A. LAW,
known to me (or satisfactorily proven) to be the persons whose names are
subscribed to the within instrument, and acknowledge that they executed same
for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ PAUL STROUSE, JR.
---------------------
Notary Public
MY COMMISSION EXPIRES: [SEAL]
NOTARIAL SEAL
PAUL STROUSE, JR., Notary Public
City of Philadelphia, Phila. County
My Commission Expires April 24, 1989
STATE OF PENNSYLVANIA :
: ss
COUNTY OF ARMSTRONG :
ON THIS, this 15th day of April, 1989, before me, a Notary Public, the
undersigned officer, personally appeared AUGUST THALMAN, JR. and BETTY
THALMAN, known to me (or satisfactorily proven) to be the persons whose names
are subscribed to the within instrument, and acknowledge that they executed
same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ CANDICE L. FOLTA (SEAL)
---------------------
Notary Public
MY COMMISSION EXPIRES:
Notarial Seal
Candice L. Folta, Notary Public
Ford City Borough, Armstrong County
My Commission Expires July 31, 1989
Member, Pennsylvania Association of Notaries
FRUIT, DILL,
GOODWIN & SCHOLL
ATTORNEYS AT LAW
32 SHENANGO AVENUE
SHARON, PENNSYLVANIA 16146
0060 0291
<PAGE> 27
89 06228
ACKNOWLEDGEMENT
STATE OF Ohio :
: ss
COUNTY OF Mahoning :
ON THIS, this 13th day of June, 1989, before me, a Notary Public, the
undersigned officer, personally appeared W.P. Williamson, III who acknowledged
himself to be the President of Wilcom Corporation an Ohio Corporation, and
that he as such President, being authorized to do so, executed the foregoing
instruments for the purposes therein contained by signing the name of the
Corporation by himself as President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ CONSTANCE E. THOMPSON
-------------------------
Notary Public
MY COMMISSION EXPIRES:
CONSTANCE E. THOMPSON, NOTARY PUBLIC
State of Ohio
My Commission Expires February 17, 1994
ACKNOWLEDGEMENT
STATE OF :
: ss
COUNTY OF :
ON THIS, this 13th day of June, 1989, before me, a Notary Public, the
undersigned officer, personally appeared Albert H. Pharis, Jr. who
acknowledged himself to be the President of Wilcom/Cellular One an Ohio
Partnership, and that he as such President, being authorized to do so,
executed the foregoing instruments for the purposes therein contained by
signing the name of the Partnership by himself as President.
<PAGE> 28
OWNERS ONLY MERCER
POLICY OF TITLE INSURANCE
COMMONWEALTH
LAND TITLE INSURANCE COMPANY
A Reliance Group Holdings Company POLICY NUMBER
115-491505
SCHEDULE A
Amount of Insurance: $10,000.00 File No. E-973219
Premium:
Date of Policy: June 23, 1989 , at 3:57 A.M.
1. Name of Insured:
WILCOM/CELLULAR ONE, an Ohio Partnership,
2. The estate or interest in the land described herein and which is covered
by this policy is
Fee simple and is at Date of Policy vested in:
WILCOM/CELLULAR ONE, an Ohio Partnership, by deed of George A. Law; George C.
Law and Judith A. Law, husband and wife; August Thalman, Jr. and Betty
Thalman, husband and wife, dated March 31, 1989, and recorded June 23, 1989,
in 1989 D.R. No. 06229, Records of Mercer County, Pennsylvania
3. The land referred to in this policy is described in the said instrument,
is situated in the County of
Mercer , State of Pennsylvania, and is
identified as follows:
Being Lot No. 29 in the GEORGE LAW SUBDIVISION SECTION "D" recorded in the
Records of Mercer County on March 23, 1989, located in Findley Township,
Mercer County, Pennsylvania, being more particularly bounded and described as
follows:
Commencing at the southwest corner of the land in caption and the centerline of
Buckley Road 15 feet East from the centerline of a private lane; THENCE North 0
degrees 22' East, 500 feet along lands of George Law to an iron pin; THENCE
North 82 degrees 32' East, 600 feet along lands of George Law to an iron pin;
THENCE South 0 degrees 22' West, 500 feet along lands of George Law to a point;
THENCE South 82 degrees 32' West, along the centerline of the Clintonville Road,
600 feet to a point, the place of beginning. Containing 6.82 acres.
Countersigned:
-----------------------------------------------------------------
Authorized Officer or Agent
American Land Title Association Owner's Policy - 1970 - Form B (Rev. 10-17-70
and 10-17-84) Form 1005-6 Schedule A
ORIGINAL
<PAGE> 29
Policy No. 115-491505
SCHEDULE B
File No. E-973219
This policy does not insure against loss or damage by reason of the following:
1. Unrecorded easements, discrepancies or conflicts in boundary lines,
shortage in area and encroachments which an accurate and complete survey would
disclose.
2. Possible additional assessments for taxes for new construction or for any
major improvements pursuant to provisions of Acts of Assembly relating thereto
with none being due and payable.
3. Federal Liens, if any, which are not entered for record in the Records of
Mercer County, Pennsylvania.
4. Rights or claims of parties other than Insured in actual possession of
any or all of the property.
5. Unfiled mechanics' or materialmen's liens.
6. Lease from Wilcom/Cellular One, an Ohio Partnership, to George A. Law;
George C. Law and Judith A. Law, husband and wife; August Thalman, Jr. and
Betty Thalman, husband and wife, encumbering the property set forth in
Schedule A-3 hereof in the amount of $1.00, said Lease being dated March 31,
1989, and recorded June 23, 1989 at 1989 D.R. No. 06230, Records of Mercer
County, Pennsylvania. Said Lease to run for one year or until March 30, 1990.
7. See attached sheets for reservations and/or restrictions regarding the
within described property.
American Land Title Association Owner's Policy -- 1970 -- Form B (Amended
10-17-70 and 10-17-84) Form 1005-17 Schedule B
ORIGINAL
<PAGE> 30
COMMONWEALTH LAND
[LOGO] TITLE INSURANCE COMPANY
A Reliance Group Holdings Company
File No. E-973219 Policy No. 115-491505
CONTINUED FROM SCHEDULE B-7
(a) By Article of Agreement dated December 11, 1979, and recorded June 6,
1983, at 1983 D.R. No. 1524, Records of Mercer County, George A. Law et ux
granted a five (5) year lease for the removal of coal from the larger tract of
which the land in caption is part. The records of Pennsylvania Department of
Environmental Resources indicate that the permit on this land is in the first
stage of reclaiming and that all mining has ceased and vegetation has been
replanted.
(b) By agreement dated August 20, 1981, and recorded December 7, 1981, at
1981 D.R. No. 4493, George A. Law et ux, grant, demise lease and let
exclusively unto Petroleum Development Co. the land in caption for the
purposes of exploring, drilling, and operating for, producing, storing,
removing and marketing oil and gas, or either of them, and/or their
constituents, injecting air, gas, water, brine and other substances from
whatever source into any subsurface strata, except potable water strata and
working coal strata, together with the exclusive rights to enter into, in, on
and upon said lands at all times for the aforesaid purposes and to possess,
use and occupy portions of said lands as may be necessary or convenient for
the aforesaid purposes, and to install and maintain lines to transport oil,
gas, water and electricity, whether produced on said land or other lands,
from, to, over and across said lands for a period of three (3) years and so
much longer thereafter as oil and gas, or either of them, and/or their
constituents, is produced in paying quantities from the premises or the
premises are used for storage of such products.
(c) By Article of Agreement dated May 29, 1979 and recorded July 17, 1979, at
1979 D.R. No. 2419, Records of Mercer County, George A. Law et ux granted unto
James F. Winner, Jr. et al, the right to drill and test for coal and option
then to mine for coal. The term of this agreement, if the option is
exercised, shall be four (4) years from the date hereof, provided, however,
that this agreement shall continue thereafter so long as operations for the
removal of coal are continuously conducted on the premises.
(d) By Article of Agreement dated June 7, 1974 and recorded June 11, 1974, at
1974 D.R. No. 1974, Records of Mercer County, George A. Law et ux granted unto
Blacktown Telephone Company, its successors or assigns, a right-of-way or
easement for, and the right to construct, operate, maintain, remove, and
rebuild telephone cable, wire and other underground appurtenances as the
grantee may from time to time require on, over and across the larger tract of
which the land in caption is part, and the right to enter upon said land at
any time for said purposes.
(e) By agreement dated June 12, 1973, and recorded July 17, 1973, at 1973
A.R. No. 930, George A. Law, grant, demise lease and let exclusively unto The
People's Natural Gas Company, the land in caption for the purposes of
exploring, drilling, and operating for, producing, storing, removing and
marketing oil and gas, or either of them, and/or their constituents, injecting
air, gas, water, brine and other substances from whatever source into any
subsurface strata, except potable water strata and working coal strata,
together with the exclusive rights to enter into, in, on and upon said lands
at all times for the aforesaid purposes and to possess, use and occupy
portions of said lands as may be necessary or convenient for the aforesaid
purposes, and to install and maintain lines to transport oil, gas, water and
electricity, whether produced on said land or other lands, from, to, over and
FORM 2001 (CONTINUATION - 3 PART)
ORIGINAL
<PAGE> 31
COMMONWEALTH LAND
[LOGO] TITLE INSURANCE COMPANY
A Reliance Group Holdings Company
File No. E-973219 Policy No. 115-491505
CONTINUED FROM SCHEDULE B-7
across said lands for a period of fifteen (15) years and so much longer
thereafter as oil and gas, or either of them, and/or their constituents, is
produced in paying quantities from the premises or the premises are used for
storage of such products.
(f) By Article of Agreement dated January 13, 1965 and recorded March 27,
1965, at 1965 A.R. No. 123, Records of Mercer County, George A. Law et ux
granted unto The People's Natural Gas Company, its successors and assigns, the
right-of-way to lay, maintain, operate, replace and remove pipe lines with the
necessary drip, gate valves an appliances for the transportation of water,
oil, gas and/or their constituents or products similar thereto, on, over and
through the larger tract of which the land in caption is part, with ingress
and egress to and from the same.
(g) By Article of Agreement dated August 10, 1964 and recorded January 4,
1965, at 1965 A.R. No. 2, Records of Mercer County, George A. Law et ux
granted unto Pennsylvania Power Company, its successors, assigns, grantees and
licensees, a right-of-way to construct, operate, maintain, remove, inspect and
patrol lines for the transmission and distribution of electric energy and the
operation of telephone and telegraph lines, including the necessary poles,
wires, anchors, grounds, guys, brace poles and other appurtenances upon, over,
under and across the larger tract of which the land in caption is part in as
nearly a straight as possible to avoid corners, trees and obstructions on the
property, including the right to construct the necessary side lines to serve
this or adjoining properties along with the right to trim trees and brush.
(h) By Article of Agreement dated June 26, 1964 and recorded June 29, 1964,
at 1964 A.R. No. 501, Records of Mercer County, George A. Law et ux granted
unto Mays Coal Company, the exclusive right or option to go upon the larger
tract of which the land in caption for the purpose of testing by drilling
boring for coal. If this option is taken, then the grantee shall have the
right to mine for and remove the coal on said land. Shall remain in effect
for five (5) years from the effective date or until all the coal which the
coal company determines can be mined, removed and sold with economy and profit
has been removed or so long as minimum advance royalties are being tendered by
coal operator.
(i) By Article of Agreement dated May 23, 1962, and recorded June 4, 1962, at
1962 A.R. No. 229, Records of Mercer County, George A. Law, et al, granted
unto the Pennsylvania Power Company, its successors, assigns, or lessees, the
right, privilege and authority to remove and keep removed by such methods as
grantee may elect, all trees and undergrowth within fifty (50') of an existing
right-of-way over a larger tract of which the land in caption is part.
(j) By agreement dated July 10, 1958, and recorded October 13, 1958, at Deed
Book V, Volume 3, Page 34, Russell R. Buckley et ux, grant, demise lease and
let exclusively unto Union Light and Heat Company, the land in caption for the
purposes of exploring, drilling, and operating for, producing, storing,
removing and marketing oil and gas, or either of them, and/or their
constituents, injecting air, gas, water, brine and other substances from
whatever source into any subsurface strata, except potable water strata and
working coal strata, together with the exclusive rights to enter into, in, on
and upon said lands at all times for the aforesaid purposes and
FORM 2001 (CONTINUATION - 3 PART)
ORIGINAL
<PAGE> 32
COMMONWEALTH LAND
[LOGO] TITLE INSURANCE COMPANY
A Reliance Group Holdings Company
File No. E-973219 Policy No. 115-491505
CONTINUED FROM SCHEDULE B--7
to possess, use and occupy portions of said lands as may be necessary or
convenient for the aforesaid purposes, and to install and maintain lines to
transport oil, gas, water and electricity, whether produced on said land or
other lands, from, to, over and across said lands for a period of fifteen (15)
years and so much longer thereafter as oil and gas, or either of them, and/or
their constituents, is produced in paying quantities from the premises or the
premises are used for storage of such products.
(k) By Article of Agreement dated December 13, 1948, and recorded January 4,
1949, at Deed Book L, Volume 3, Page 44, R.R. Buckley, et al, granted unto the
Pennsylvania Power Company, its successors, grantees, lessees, licensees and
assigns, the right privilege and authority to construct, operate, maintain and
remove lines for the transmission and distribution of electric energy, and the
operation of telegraph and telephone lines, including the necessary poles,
wires, guys, anchors, brace poles and other appurtenances upon, over and
across the property in the caption, in as nearly a straight line as possible
so as to avoid corners, trees and obstructions on the property, including the
necessary side lines to serve this or adjoining property and to cut or trim
trees or brush as is necessary.
(l) By Article of Agreement dated December 4, 1937, and recorded July 21,
1938, at Deed Book V, Volume 2, Page 168, R.R. Buckley et ux, granted unto
Pennsylvania Power Company, its successors, grantees, lessees, licensees and
assigns, the right, privilege and authority to construct, operate, maintain
and remove lines for the transmission and distribution of electric energy and
the operation of telegraph and telephone lines including the necessary poles,
wires, guys, anchors, brace poles and other appurtenances upon, over, under
and across the larger tract of which the land in caption is part including the
necessary side line to serve this and adjoining property and the further right
to extend lines and trim and cut trees or brush as needed.
(m) By Article of Agreement dated December 5, 1938, and recorded July 17,
1939, at Deed book X, Volume 2, Page 91, Robert T. Peters et ux, granted unto
the Pennsylvania Power Company, its successors, grantees, lessees, licensees,
and assigns, the right, privilege and authority to construct, operate,
maintain and remove lines for the transmission and distribution of electric
energy, and the operation of telegraph and telephone lines including the
necessary poles, wires, guys, anchors, brace poles and other appurtenances
upon, over, under and across the larger tract of which the land in caption is
part.
(n) The Final Plot of George Law Subdivision Section "D", Lot No. 29,
recorded in the records of Mercer County, on March 23, 1989 at 1989 P.L.
02579-40, shows land herein described to be subject to a 75' minimum building
setback line, a 25' future right-of-way, a 16 1/2' existing right-of-way, and
a 8' bituminous cartway, all from the centerline of Buckley Road.
FORM 2001 (CONTINUATION - 3 PART)
ORIGINAL
<PAGE> 33
MY COMMISSION EXPIRES:
NOTARIAL SEAL
PAUL STROUSE, JR., Notary Public
City of Philadelphia, Phila. County
My Commission Expires April 24, 1993
STATE OF PENNSYLVANIA :
: ss
COUNTY OF ARMSTRONG :
ON THIS, this 3rd day of May, 1989, before me, a Notary Public, the
undersigned officer, personally appeared AUGUST THALMAN, JR. and BETTY
THALMAN, known to me (or satisfactorily proven) to be the persons whose names
are subscribed to the within instrument, and acknowledge that they executed
same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ CANDICE L. FOLTA (SEAL)
---------------------
Notary Public
MY COMMISSION EXPIRES:
Notarial Seal
Candice L. Folta, Notary Public
Ford City Borough, Armstrong County
My Commission Expires July 31, 1989
Member, Pennsylvania Association Notaries
DEED
GEORGE A. LAW, et al
TO
WILCOM/CELLULAR ONE,
an Ohio Partnership
WARRANTY
Chester B. Scholl, Jr., Esq.
FRUIT, DILL, GOODWIN & SCHOLL
32 Shenango Avenue
Sharon, PA 16146
do hereby certify that the precise residence and complete post
office address of the within named grantee is 3910 South Ave Youngstown Ohio
44512
/s/ CHESTER B. SCHOLL JR.
19 -------------------------
Attorney for grantee
COMMONWEALTH OF PENNSYLVANIA }
} ss.
County of MERCER }
[SEAL] RECORDED on this 23RD day of JUNE A.D. 1989, in the Recorder's
office of the said County, in Deed Book Vol. ________, Page
89 DR 06229
Given under my hand and the seal of the said office the date above
written.
/s/ MARILYN L. LELESAY, Recorder.
---------------------------------
0060 0297
<PAGE> 34
TOGETHER with all and singular the said property, improvements, ways,
waters, water courses, rights, liberties, privileges, hereditaments and
appurtenances whatsoever thereunto belonging or in anywise appertaining, and
the reversions and remainders, rents, issues and profits thereof, and all the
estate, right, title, interest, property, claim and demand whatsoever, of the
said parties of the first part, in law, equity or otherwise howsoever, of, in
and to the same and every part thereof,
TO HAVE AND TO HOLD the said piece or parcel of land
hereditaments and premises hereby granted or mentioned, and intended so to be,
with the appurtenances, unto the said party of the second part, its successors
and assigns, to and for the only proper use and behoof of the said party of
the second part, its successors and assigns forever.
AND the said grantors hereby covenant and agree that they and each of
them will warrant GENERALLY the property hereby conveyed.
Mercer Area School District
Mercer County, Pennsylvania
Realty Transfer Tax
$ 44.30
-----------------------------
COMMONWEALTH OF PENNSYLVANIA Recorder of Mercer County, Agent
DEPARTMENT OF REVENUE
REALTY FINDLEY
TRANSFER 88.60 Mercer County, Pennsylvania
TAX P.B.11328 REALTY TRANSFER TAX
$ 44.30
-----------------------------
Mercer County Recorder, Agent
IN WITNESS WHEREOF, the said parties of the first part have to these
presents set their hands and seals. Dated the day and year first above
written.
Signed, Sealed and Delivered /s/ GEORGE A. LAW [SEAL]
in the Presence of --------------------------------
GEORGE A. LAW
/s/ GEORGE C. LAW [SEAL]
--------------------------------
- -------------------------------------- GEORGE C. LAW
- -------------------------------------- /s/ JUDITH A. LAW [SEAL]
--------------------------------
JUDITH A. LAW
/s/ AUGUST THALMAN, JR. [SEAL]
--------------------------------
AUGUST THALMAN, JR.
/s/ BETTY THALMAN [SEAL]
--------------------------------
BETTY THALMAN
ACKNOWLEDGEMENT
COMMONWEALTH OF PENNSYLVANIA :
: ss.
COUNTY OF Armstrong :
ON THIS, the 3rd day of May, 1989, before me, the undersigned officer,
personally appeared George A. Law, known to me (or satisfactorily proven) to
be the person whose name is subscribed to the within instrument, and
acknowledged that he executed same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ CANDICE L. FOLTA (SEAL)
---------------------
Notary Public
MY COMMISSION EXPIRES:
Notarial Seal [SEAL]
Candice L. Folta, Notary Public
Ford City Borough, Armstrong County
My Commission Expires July 31, 1989
Member, Pennsylvania Association of Notaries
<PAGE> 35
221AT - Warranty Dead to a Corp. from 89 DR 06229
Individual or Corp. Henry Hall, Inc., Indiana, Pa.
THIS INDENTURE,
MADE THE 31st day of MARCH in the year of our Lord one thousand nine hundred
eighty-nine (1989)
BETWEEN
GEORGE A. LAW; GEORGE C. LAW and JUDITH A. LAW, husband
and wife; AUGUST THALMAN, JR. and BETTY THALMAN, husband
and wife, of the Borough of Mercer, County of Mercer and
Commonwealth of Pennsylvania,
of the first part,
and
Parties
WILCOM/CELLULAR ONE, an Ohio Partnership,
created and existing under the laws of the state of OHIO having its principal
office in 3910 South Avenue, Youngstown, Mahoning County, Party of the second
part, WITNESSETH, that the said parties of the first part, for and in
consideration of the sum of TEN THOUSAND AND NO/100 ($10,000.00) Dollars,
lawful money of the United States of America, unto them well and truly paid by
the said party of the second part, at and before the sealing and delivery of
these presents, the receipt whereof is hereby acknowledged, have grated,
bargained, sold, aliened, enfeoffed, released, conveyed and confirmed, and by
these presents do grant, bargain, sell, alien, enfeoff, release, convey and
confirm unto the said party of the second part, its successors, and assigns,
Being Lot No. 29 in the GEORGE LAW SUBDIVISION SECTION "D" recorded in the
Records of Mercer County on March 23, 1989, located in Findley Township,
Mercer County, Pennsylvania, being more particularly bounded and described as
follows:
Commencing at the southwest corner of the land in caption and the centerline
of Buckley Road 15 feet East from the centerline of a private lane; THENCE
North 0 degrees 22' East, 500 feet along lands of George Law to an iron pin;
THENCE North 82 degrees 32' East, 600 feet along lands of George Law to
a point; THENCE South 82 degrees 32' West, along the centerline of the
Clintonville Road, 600 feet to a point, the place of beginning. Containing
6.82 acres.
BEING part of the same piece or parcel of land conveyed to George A. Law, et
al, by deed of George A. Law, et ux, dated February 20, 1978 and recorded
March 16, 1978 at 87 D.R. No. 0744, Records of Mercer County, Pennsylvania.
IN ACCORDANCE with the provisions of "The Solid Waste Management Act of 1980"
we, the undersigned grantor, hereby certify to our actual knowledge that there
is not presently, nor has there ever been, any disposal of "hazardous waste"
on the piece or parcel of land herein conveyed.
<PAGE> 36
JUNE 23, 3:56 PM 1989
REV 183 EX (7.86)
COMMONWEALTH OF REALTY TRANSFER TAX RECORDER'S USE ONLY
PENNSYLVANIA STATEMENT OF VALUE
DEPARTMENT OF State Tax Paid 88.60
REVENUE See Reverse for
BUREAU OF Instructions Book Number 89 6229
INDIVIDUAL TAXES
POST OFFICE BOX Page Number
8910
HARRISBURG, PA Date Recorded
17105-8910
Complete each section and file in duplicate with Recorder of Deeds when (1)
the full consideration is not set forth in the deed, (2) when the deed is
without consideration, or by gift, or (3) a tax exemption is claimed. A
Statement of Value is not required if the transfer is wholly exempt from tax
based on: (1) family relationship or (2) public utility easement. If more
space is needed, attach additional sheet(s).
A. CORRESPONDENT - All inquiries may be directed to the following person:
Name Telephone Number:
Chester B. Scholl, Jr., Esquire Area Code (412) 981-4800
Street Address City State Zip code
32 Shenango Ave. Sharon PA 16146
B. TRANSFER DATA Date of Acceptance of Document
Grantor(s)/Lessor(s) Grantee(s)/Lessee(s)
George A. Law et al Wilcom/Cellular One
Street Address Street Address
R.D. #5 3910 South Ave.
City State Zip Code City State Zip Code
Mercer Pennsylvania 16137 Youngstown, OH 44512
C. PROPERTY LOCATION
Street Address City, Township, Borough
R.D. #5, (6.9 acres approx.) Mercer, Findley Township
County School District Tax Parcel Number
Mercer County
D. VALUATION DATA
1. Actual Cash 2. Other Consideration 3. Total Consideration
Consideration
10,000.00 + = $10,000.00
4. County Assessed 5. Common Level Ratio 6. Fair Market Value
Value Factor
X =
E. EXEMPTION DATA
1a. Amount of 1b. Percentage of
Exemption Claimed Interest Conveyed
$11.40
2. Check Appropriate Box Below for Exemption Claimed
/ / Will or intestate succession _____________________________________________
(Name of Decedent) (Estate File Number)
/ / Transfer to Industrial Development Agency.
/ / Transfer to Agent or Straw Party. (Attach copy of agency/straw party
agreement).
/ / Transfer between principal and agent. (Attach copy of agency/straw
trust agreement). Tax paid prior deed $_______________________.
/ / Transfers to the Commonwealth, the United States, and Instrumentalities
by gift, dedication, condemnation or in lieu of condemnation. (Attach
copy of resolution).
/ / Transfer from mortgagor to a holder of a mortgage in default. Mortgage
Book Number ______, Page Number ____________.
/ / Corrective deed (Attach copy of the prior deed).
/ / Statutory Corporate Consolidation, Merger or Division. (Attach copy of
articles).
/X/ Other (Please explain exemption claimed, if other than listed above.)
Reason for reduction in transfer tax payment - Due to a previous
----------------------------------------------------------------------
payment made when a long term Lease was recorded between George Law et
----------------------------------------------------------------------
ux and Wilcom Corporation dated 7/21/87, recorded 8/21/87 Records of
----------------------------------------------------------------------
Mer. Co. at 87 D.R. No. 8912.
----------------------------------------------------------------------
Under penalties of law, I declare that I have examined this Statement,
including accompanying information, and to the best of my knowledge and
belief, it is true, correct and complete.
Signature of Correspondent or Responsible Date
Party 6/23/89
/s/ CHESTER B. SCHOLL, JR. -------
--------------------------
(SEE REVERSE)
0060 0296
<PAGE> 1
EXHIBIT 10.11
COPY OF THE RESOLUTIONS OF THE
PARTNER'S COMMITTEE OF WILCOM CELLULAR
The undersigned, members of the Partner's Committee, hereby certify that
the following resolutions of the Partner's Committee of Wilcom Cellular were
duly adopted at a meeting of said Committee, duly called and held on May 13,
1993, at which a quorum was present and voting.
RESOLVED: That the Partner's Committee hereby authorizes Wilcom Cellular
to purchase the following assets from WKBN for the total price of $700,000.
- Complete Warren, Ohio facility located at Elm Road including office
building, real estate, furniture, cellular tower and cell site
building.
- Cell site building and tower located at 3930 Sunset Boulevard,
Youngstown, Ohio.
FURTHER RESOLVED: That the management of Wilcom Cellular is hereby
authorized to take all steps and execute all documents necessary for the
purchase of said assets for $700,000.
FURTHER RESOLVED: That the revised rental agreements for the rental of
additional WKBN property which is attached is hereby approved.
/s/ WARREN P. WILLIAMSON, III
------------------------------
Warren P. Williamson, III
/s/ ELDEN J. HEINZ
------------------------------
Elden J. Heinz
/s/ ALBERT H. PHARIS, JR.
------------------------------
Albert H. Pharis, Jr.
<PAGE> 2
GROUND LEASE
BETWEEN WKBN BROADCASTING CORPORATION ("Lessor")
AND
YOUNGSTOWN CELLULAR TELEPHONE COMPANY ("Lessee")
Table of Contents
Preamble-Parties and Addresses
ARTICLE 1. DEMISE OF LEASED LAND
1.01. Description
1.02. Land Subject to Liens, Encumbrances, and Other Conditions
1.03. Ingress-Egress Easement Granted by Lessor
1.04. Exception of Mineral Rights
1.05. Lessor's Covenant to Provide Water
ARTICLE 2. TERM AND RENT
2.01. Term of Lease
2.02. Holdover
2.03. Rent
2.04. Rent Adjustment Dates and Limits on Adjustments
2.05. Determination by Agreement or Appraisers
(a) Agreement or Selection of Appraisers
(b) Appraisal
(c) Hearing and Determination
(d) Cost of Appraisal
ARTICLE 3. USE AND CONSTRUCTION OF IMPROVEMENTS
3.01. Primary Use
3.02. Lessee's Right to Construct Buildings and Other
Improvements
3.03. Lessor's Assistance With Zoning and Building Permits
ARTICLE 4. OPERATING COSTS AND IMPOSITIONS
4.01. Rent to be Absolutely Net
4.02. Definition of Operating Costs
4.03. Definition of Impositions
ARTICLE 5. LAWS AND GOVERNMENTAL REGULATIONS
5.01. Compliance With Legal Requirements
5.02. Contest of Legal Requirements
ARTICLE 6. LIENS AND ENCUMBRANCES
6.01. Creation Not Allowed
6.02. Discharge After Filing or Imposition
6.03. Lessor Not Liable for Labor, Services, or
Materials Furnished to Lessee
<PAGE> 3
ARTICLE 7. INSURANCE AND INDEMNITY
7.01. Fire and Extended Coverage
7.02. Property and Personal Injury Liability Insurance
7.03. Construction Liability Insurance
7.04. Certificates of Insurance
7.05. Indemnification of Lessor
ARTICLE 8. DAMAGE OR DESTRUCTION OF IMPROVEMENTS
8.01. Destruction or 40 Percent Damage
8.02. Damage Less Than 40 Percent
8.03. Definitions
ARTICLE 9. CONDEMNATION
9.01. Interests of Parties
9.02. Termination on Total Taking
9.03. Termination on Partial Taking
9.04. Continuation With Rent Abatement After Partial Taking
9.05. Voluntary Conveyance
ARTICLE 10. LEASEHOLD MORTGAGES
10.01. Leasehold Mortgages Permitted
10.02. Provisions for Benefit of Leasehold Mortgagees
10.03. Notice of Default Served on Leasehold Mortgagees
10.04. Monetary Default
10.05. Curable Nonmonetary Default
10.06. Noncurable Default
10.07. Mortgagee's Option to Obtain New Lease
10.08. Terms and Conditions of New Lease
10.09. Obligations of New Lessee
10.10. Performance of Terms by Leasehold Mortgagee
10.11. Assignment of Lease or New Lease by Leasehold Mortgagee
10.12. Written Consent of Leasehold Mortgagees
ARTICLE 11. DEFAULT
11.01. Events of Default
11.02. Notice of Election to Terminate Lessee's Possession
11.03. Lessor's Entry After Termination of Lessee's Possession
11.04. Lessee's Liability for Accrued Rent
11.05. Reletting Land and Improvements
11.06. Rent From Reletting
11.07. Costs Incurred Due to Breach
ARTICLE 12. EXPIRATION OF TERM
12.01. Lessee's Delivery of Possession After Termination or
Expiration
12.02. Lessee's Removal of Movable Objects
ARTICLE 13. GENERAL PROVISIONS
13.01. No Waiver of Breach by Lessor's Actions
<PAGE> 4
13.02. Waiver of Any Provision Must be Written
13.03. Entire Agreement
13.04. Notices
13.05. Lessor's Entry and Inspection of Premises
13.06. Partial Invalidity or Unenforceability
13.07. Meaning of Term "Lessor"
13.08. Satisfaction of Judgment Against Lessor
13.09. Individuals Benefited by Lease
13.10. Assignment and Subletting
13.11. Attornment of Sublessee
13.12. Quiet Enjoyment
ARTICLE 14. DOCUMENTATION AND RECORDING OF LEASE
14.01. Estoppel Certificates
14.02. Memorandum of Lease and Recording Execution and
Acknowledgements Exhibits
ARTICLE 15. LESSOR'S OPTION TO PURCHASE
15.01. Notice of intent to purchase leasehold.
15.02. Appraisal
15.03. Hearing and Determination
15.04. Cost of Appraisal
15.05. Exercise of Option; holdover
15.06. Penalty in default of exercise
<PAGE> 5
GROUND LEASE
This ground lease ("Lease") is made on the 15th day of December, 1987
between WKBN Broadcasting Corporation ("Lessor"), an Ohio corporation with a
principal place of business at 3930 Sunset Blvd., Youngstown, Ohio 44512, and
Youngstown Cellular Telephone Company ("Lessee"), an Ohio partnership, with a
principal place of business at 3930 Sunset Blvd., Youngstown, Ohio 44512.
ARTICLE 1. DEMISE OF LEASED LAND
Description of Leased Land
1.01. Lessor leases to Lessee, and Lessee rents and accepts from Lessor
a parcel of land in Boardman Township, Mahoning County, Ohio ("Leased Land" or
"Leased Premises"), graphically depicted on Exhibit A and more particularly
described by metes and bounds in Exhibit B, both attached to this Lease and
made a part of it. In the event of any inconsistency between the depiction of
the property in Exhibit A and the description in Exhibit B, the metes and
bounds description in Exhibit B shall be the authoritative description.
Land Subject to Liens, Encumbrances, and Other Conditions
1.02. This Lease and the Leased Land are subject to all present liens,
encumbrances, conditions, rights, easements, restrictions, rights of way,
covenants, other matters of record, and zoning and building laws, ordinances,
regulations, and codes affecting or governing the Leased Land or that may
affect and govern the Leased Land after the execution of this Lease, and all
matters that may be disclosed by inspection or survey.
Ingress-Egress Easement Granted by Lessor
1.03. Lessor hereby grants an easement for ingress and egress and right
of way adjacent to the southside of the Leased premises, which is particularly
described in Exhibit C hereto. The easement is for the benefit of the leased
premises and attaches thereto and is made a part thereof and shall be deemed
to run with the land. The right of way, easements, rights, and privileges
herein granted shall be used only for the purpose of providing pedestrian and
vehicular ingress and egress between the paved road lying east of the leased
property and the leased land. This easement shall terminate upon the
termination of the lease for any reason. Lessor covenants to maintain the
right of way in good condition.
Exception of Mineral Rights
1.04. Lessor hereby reserves all of the oil and gas and other minerals
of the Leased Land.
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Lessor's Covenant to Provide Water
1.05. Lessor and Lessee hereby acknowledge that they are both aware
that there is no water main along South Avenue available for tap in, although
sewers, gas and electric service are available. In order to make the Leased
Premises improvable without installing a water main along South Avenue, Lessor
hereby covenants to Lessee to provide water to the edge of the Leased Premises
adjoining Lessor's property. The water will be piped underground by means of a
pipe at least 2" in diameter which will tie into the water main on Sunset
Boulevard. Lessor shall bear the cost of installing and maintaining the
portion of the pipe on its property only. This covenant is for the benefit of
the leased premises and shall be deemed to run with the land. A specific
easement of particular location is not granted hereby. Lessor at anytime
during the term of the lease may (at Lessor's expense) change the location of
the pipe, and, as reasonably necessary, may enter the Leased Premises, change
the location of the pipe on the Leased Property, and interrupt water service.
This covenant shall terminate upon the termination of the lease for any
reason or upon the availability of water along South Avenue. The expense of
tap in to any future water main along South Avenue shall be paid by Lessor.
If the Leased Premises are assessed by any taxing authority for the
construction of a water main along South Avenue, then the assessment (or
portion thereof attributable to a water main) shall bee paid by Lessor.
ARTICLE 2. TERM AND RENT
Term of Lease
2.01. Lessee's obligation to pay rent and occupy the Leased Land in
accordance with this Lease shall be for a term of ninety-nine years ("Term"),
commencing on the date of this lease and ending on the anniversary
date of this lease in the year 2086, unless terminated at an earlier date for
any reason set forth in this Lease.
Holdover
2.02. If Lessee holds over after the expiration of the Lease Term and
continues to pay rent without objection from Lessor, then Lessee's tenancy
shall be from month to month on all the terms and conditions of this Lease.
Rent
2.03. Lessee shall pay rent to Lessor, without notice or
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demand and without abatement, reduction, or set-off for any reason, at the
office of Lessor or any other place that Lessor may designate in writing. The
rent shall be payable at the following annual rates for the following periods
of the Lease:
Inception through December 31, 1988: S4,000.00
January 1, 1989 through December 31, 1990: $8,000.00
After December 31, 1990, rent shall be payable at the minimum annual rate of
$12,000.00 (Minimum Rent Amount), subject to adjustment as provided in this
Article 2.
Rent shall be payable in equal monthly installments in advance on the
first day of each calendar month. If any payment is not received within ten
days after the date when due, Lessee shall pay a late charge of ten percent of
the payment due for that month. This late charge payment shall be included
with the next monthly installment of rent, or on the date this Lease is
terminated, whichever is earlier. If this Lease is to commence on a date other
than the first day of a month, then on the date of commencement Lessee shall
pay rent for the fractional portion of the month on a per diem basis from the
date of commencement until the first day of the next succeeding month.
Rent Adjustment Dates and Limits on Adjustments
2.04. Rental rates under this Lease are subject to adjustment
periodically at five year intervals, the first adjustment date to be December
31, 1995. No rental amount, as adjusted for a rental period shall exceed the
quantity of the factor of 1.05 raised to the power of the number of years of
the lease term that have expired since December 31, 1990, multiplied by the
Minimum Rent Amount. No adjustment shall yield a rental rate below the Minimum
Rent Amount.
Determination by Agreement or Appraisers
2.05. The adjusted annual rental rates shall be determined
in the following manner:
Agreement or Selection of Appraisers
(a) Six months before the termination of any five year rental period,
Lessor shall propose a rental rate for the next period. If the proposed rate
is accepted in writing by Lessee at least ninety days before the termination
of the rental period, that rate shall be the new rental rate for the
succeeding period.
If the proposed rate is not accepted in writing by Lessee at least
ninety days before the termination of the rental period, Lessor and Lessee
shall each select an MAI (that is, a member of
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the American Institute of Real Estate Appraisers) real estate appraiser, and
the two appraisers so selected shall select a third MAI real estate appraiser.
Lessor shall, on selection of the appraisers, immediately fix a time and place
for a conference between the parties and the appraisers for the purpose of
agreeing on the general instructions to be given the appraisers.
Appraisal
(b) The appraisers selected by Lessee and Lessor shall within
forty-five days after receiving their instructions, deliver a copy of their
fully documented written appraisals to Lessee, Lessor, and the third
appraiser. The third appraiser shall analyze the appraisals and conduct any
investigations, interviews, and discussions with or without the other
appraisers or either of them, that he or she may deem necessary.
Hearing and Determination
(c) At a time no more than fifteen days after submission of the written
appraisals and at a place that the three appraisers shall name, the respective
parties may have representatives appear and argue any appraisal matters that
the parties deem appropriate. within five days after that time, the appraisers
shall make a final written determination of the rental rate for the period. If
the appraisers are unable to agree on a rental rate for the period, then the
final determination of the rate shall be made by the third appraiser.
Cost of Appraisal
(d) Each party shall pay the cost of the appraiser chosen by that party,
and the parties shall share the cost of the third appraiser equally.
ARTICLE 3. USE AND CONSTRUCTION OF IMPROVEMENTS
Primary Use
3.01. Lessee shall have the right to use the Leased Land for any lawful
purposes. In this connection, and without detracting from the foregoing, it is
understood and agreed that the primary purpose for which the Leased Land has
been leased is for the development and construction of buildings for
commercial and office use. Lessee covenants to keep the grounds, parking lots,
buildings and other improvements well maintained and in good repair. Lessee
covenants not to commit waste. Lessee covenants to keep the grounds well mowed
and attractive.
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Lessee's Right to Construct Buildings and Other Improvements
3.02. Lessee shall have the right to construct structures, buildings,
and other improvements ("Improvements") on the Leased Land, at Lessee's sole
cost and expense, without the prior approval of Lessor. In connection with any
construction, Lessee shall be permitted to grade, level, and fill the land,
remove trees and shrubs, install roadways and walkways, and install utilities,
provided all of the foregoing serve the Improvements erected on the Leased
Land. Lessor shall have no liability for any costs or expenses in connection
with the construction of Improvements on the Leased Land. Provided however, no
improvements by Lessee shall block or impede the drainage of surface water
from Lessor's land on the west and south of the Leased Land onto the Leased
Land; Lessee agrees that the Leased Land is subservient to Lessor's Land for
drainage purposes and Lessee covenants to Lessor not to impede the natural
flow of surface water onto the Leased Land.
Lessor's Assistance With Zoning and Building Permits
3.03. Lessor shall assist Lessee in applying for and obtaining any
zoning changes or variances, use permits, or building permits necessary for
the construction of buildings or other improvements on the Leased Land.
ARTICLE 4. OPERATING COSTS AND IMPOSITIONS
Rent to be Absolutely Net
4.01. The rent paid to Lessor in accordance with Article 2 of this
Lease shall be absolutely net to Lessor. This means that, in addition to the
rent, Lessee shall pay all "Operating Costs" and "Impositions," defined in
Paragraphs 4.02 and 4.03, below, in connection with the Leased Land. Provided
however, that Lessor shall bear the cost of any assessment for a water main
along South Avenue, see ss.1.05.
Definition of Operating Costs
4.02. "Operating Costs" shall include, but shall not be
limited to, all expenses paid or incurred in connection with the
following activities:
(1) Repairs, maintenance, replacements, painting, and redecorating,
(2) Landscaping, gardening and mowing.
(3) Snow removal.
(4) Insurance.
(5) Heating, ventilating, and air conditioning repair and maintenance.
(6) Water, sewer, gas, electricity, fuel oil, and other utilities.
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(7) Rubbish removal.
(8) Supplies and sundries.
(9) Sales or use taxes on supplies or services.
(10) Costs of wages and salaries for all persons engaged in the
operation, maintenance, and repair of the Leased Land, including
fringe benefits and Social Security taxes.
(11) All other expenses, whether or not mentioned in this Lease, that are
not incurred with respect to operation of the Leased Land, including
any replacements if necessary for repairs and maintenance or
otherwise.
Definition of Impositions
4.03. "Impositions" shall include all fines and levies that result from
construction activities or the normal operation of the premises on the Leased
Land, all real estate property taxes, assessments, and other governmental
charges that are laid, assessed, levied, or imposed on the Leased Land and
become due and payable during the term of this Lease, or any lien that arises
during the time of this Lease on the Leased Land and Improvements, any portion
of these, or the sidewalks or streets in front of or adjoining the Leased Land
and Improvements.
ARTICLE 5. LAWS AND GOVERNMENTAL REGULATIONS
Compliance With Legal Requirements
5.01 Lessee shall promptly comply with all laws and ordinances, and all
orders, rules, regulations, and requirements of federal, state, and municipal
governments and appropriate departments, commissions, boards, and officers of
these governments ("legal Requirements") throughout the term of this Lease,
and without cost to Lessor. Lessee shall promptly comply with these Legal
Requirements whether they are foreseen or unforeseen, or ordinary or
extraordinary.
Contest of Legal Requirements
5.02. Lessee shall have the right, after prior written notice to
Lessor, to contest the validity of any Legal Requirements by appropriate legal
proceedings, provided Lessor shall not be subject to any criminal or civil
liability as a result of any legal contest. Lessee shall indemnify and hold
Lessor harmless from all loss, claims, and expenses, including reasonable
attorneys' fees, as a result of Lessee's failure to comply with Legal
Requirements or any contest relating to Legal Requirements.
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ARTICLE 6. LIENS AND ENCUMBRANCES
Creation Not Allowed
6.01. Lessee shall not create, permit, or suffer any mechanics' or
other lien or encumbrance on or affecting the Leased Land or the fee estate or
reversion of Lessor except as specifically permitted in this Lease.
Discharge After Filing or Imposition
6.02. If any lien or encumbrance shall at any time be filed or imposed
against the Leased Land or the fee estate or reversion of Lessor, Lessee shall
cause the lien or encumbrance to be discharged of record within forty-five days
after notice of the filing or imposition by payment, deposit, bond, order of a
court of competent jurisdiction, or as otherwise permitted by law. If Lessee
shall fail to cause the lien or encumbrance to be discharged within the
forty-five day period, then in addition to any other right or remedy of Lessor,
Lessor shall be entitled but not obligated to discharge the lien or encumbrance
either by paying the amount claimed to be due or by procuring the discharge by
deposit or by bonding proceedings. In any event, Lessor shall be entitled to
compel the prosecution of an action for the foreclosure of any lien or
encumbrance by the lienor and to pay the amount of the judgment for and in favor
of the lienor with interest, costs, and allowances if Lessor elects to take this
action. All amounts paid by Lessor and all of its costs and expenses in
connection with the actions taken by Lessor, including court costs, reasonable
attorney's fees, and interest at the highest legal rate in effect at the time
these moneys are due, shall be deemed to be additional rent under this Lease and
shall be paid by lessee to lessor promptly on demand by Lessor.
Lessor Not Liable for Labor, Services, or
Materials Furnished to Lessee
6.02. Lessor shall not be liable for any labor, services, or materials
furnished or to be furnished to Lessee or to any sublessee in connection with
any work performed on or at the Leased Land, and no mechanics' lien or other
lien or encumbrance for any labor, services, or materials shall attach to or
affect Lessor's fee estate or reversion in the Leased Land.
ARTICLE 7. INSURANCE AND INDEMNITY
Fire and Extended Coverage
7.01. At all times during the Term of this Lease, Lessee shall
maintain, at its sole cost, insurance covering the Improvements including,
without limitation, all Improvements now
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located on the leased Land or that may be erected on the Leased Land, against
loss or damage by fire, vandalism, malicious mischief, windstorm, hail, smoke,
explosion, riot, civil commotion, vehicles, aircraft, flood, or earthquake,
together with any other insurance that Lessor may require from time to time.
The insurance shall be carried by insurance companies authorized to transact
business in Ohio, selected by Lessee and approved by Lessor and any Lender
under Article 10 of this Lease. In addition, the following conditions shall be
met:
(a) The insurance shall be in amounts no less than one hundred percent
of the replacement cost of the buildings and other improvements, exclusive of
foundations and below-ground improvements (but sufficient to satisfy the
requirements of any coinsurance clause).
(b) The insurance shall be maintained for the mutual benefit of Lessor
and Lessee, any succeeding owners of the fee title in the Leased Land, and any
successors and assigns of this Lease. The insurance policy or policies shall
name both Lessor and Lessee as insureds.
(c) Any and all fire or other insurance proceeds that become payable at
any time during the term of this lease because of damage to or destruction of
any Improvements on the Leased Land shall be paid to Lessee and applied by
Lessee toward the cost of repairing, restoring, and replacing the damaged or
destroyed Improvements in the manner required by Article 8 of this Lease.
However, if Lessee elects to exercise the option given under Article 8 of this
Lease to terminate this Lease because of damage to or destruction of
Improvements, then any and all fire or other insurance proceeds that become
payable because of that damage or destruction shall be applied as follows:
(1) Proceeds shall be applied first toward the reduction of the
unpaid principal balance of any and all obligations secured
pursuant to Article 10 of this Lease.
(2) The balance of the proceeds, if any, shall be paid to Lessor
to compensate Lessor, at least in part, for the loss to the
fee estate of value of the damaged or destroyed Improvements.
Property and Personal Injury Liability Insurance
7.02. At all times during the Term of this Lease, Lessee shall
maintain, at its sole cost, comprehensive broad-form general public liability
insurance against claims and liability for personal injury, death, and property
damage arising from the use, occupancy, disuse, or condition of the Leased Land
and Improvements, and adjoining areas. The insurance shall be carried by
insurance companies authorized to transact business in Ohio,
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selected by Lessee and approved by Lessor and any Lender under Article 10 of
this Lease. In addition, the following conditions shall be met:
(a) The insurance provided pursuant to this Paragraph 7.02 shall be in
an amount no less than $100,000.00 for property damage, and in an amount no less
than $500,000.00 for one person and $1,000,000.00 for one accident for personal
injury.
(b) the insurance shall be maintained for the mutual benefit of Lessor
and Lessee, any succeeding owners of the fee title in the Leased Land, and any
successors and assigns of this Lease. The insurance policy or policies shall
name both Lessor and Lessee as insureds.
(c) The amounts of insurance shall be increased as Lessor may
reasonably require from time to time to account for inflation, or generally
increased insurance settlements or jury verdicts.
Construction Liability Insurance
7.03. Lessee agrees to obtain and maintain (to the extent reasonably
procurable) construction liability insurance at all times when demolition,
excavation, or construction work is in progress on the Leased Land. This
insurance shall be carried by insurance companies authorized to transact
business in Ohio, selected by Lessee and approved by Lessor, and shall be paid
for by Lessee. The insurance shall have limits no less than $100,000.00 for
property damage, and $500,000.00 for one person and $1,000,000.00 for one
accident for personal injury. The insurance shall be maintained for the mutual
benefit of Lessor and Lessee, as well as any succeeding owners of the fee title
in the Leased Land, and any successors and assigns of this Lease, against all
liability for injury or damage to any person or property in any way arising out
of demolition, excavation, or construction work on the premises. The insurance
policy or policies shall name both Lessor and Lessee as insureds.
Certificates of Insurance
7.04. Lessee shall furnish Lessor with certificates of all insurance
required by this Article 7. Lessee agrees that if it does not keep this
insurance in full force and effect, Lessor may notify Lessee of this failure,
and if Lessee does not deliver to Lessor certificates showing all of the
required insurance to be in full force and effect within ten days after this
notice, Lessor may, at its option, take out and pay the premiums on the
insurance needed to fulfill Lessee's obligations under the provisions of this
Article 7. On demand from Lessor, Lessee shall reimburse Lessor the full amount
of any insurance premiums paid by Lessor, with interest at the rate of ten
percent per annum from the date of Lessor's demand until reimbursement by
Lessee.
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Indemnification of Lessor
7.05. Lessor shall not be liable for any loss, damage, or injury of any
kind or character to any person or property arising from any use of the Leased
Land or Improvements, or caused by any defect in any building, structure,
equipment, facility, or other improvement on the Leased Land, or caused by or
arising from any act or omission of Lessee, or any of its agents, employees,
licensees, or invitees, or by or from any accident, fire, or other casualty on
the land, or occasioned by the failure of Lessee to maintain the premises in
safe condition. Lessee waives all claims and demands on its behalf against
Lessor for any loss, damage, or injury, and agrees to indemnify and hold Lessor
entirely free and harmless from all liability for any loss, damage, costs, or
injury of other persons, and from all costs and expenses arising from any claims
or demands of other persons concerning any loss, damage, or injury, caused other
than by the negligent or intentional act or omission of Lessor.
ARTICLE 8. DAMAGE OR DESTRUCTION OF IMPROVEMENTS
Destruction or 40 Percent Damage
8.01. In the event that the Improvements are completely destroyed, or
are damaged in excess of 40 percent, due to any cause whatsoever, the Lessee may
at its own expense repair, restore, or replace the destroyed property if Lessee
deems it practical or advisable to do so, and this Lease shall continue in full
force and effect. If Lessee deems it impractical or inadvisable to repair,
restore, or replace' the destroyed property, this Lease shall terminate on sixty
days' written notice to Lessor and any lender under Article 10 of this Lease.
Damage Less Than 40 Percent
8.02. In the event that damage to the Improvements due to any cause
whatsoever is not in excess of 40 percent, Lessee shall at its own expense
repair, restore, or replace the damaged Improvements with due diligence, and
this Lease shall continue in full force and effect.
Definitions
8.03. The term "completely destroyed" shall be construed to mean the
destruction of the safe, tenantable use of occupancy of all Improvements under
this Lease. The term "damaged in excess of 40 percent" shall be construed to
mean any damage to the Improvements (excluding damage solely by water used in
extinguishing fire) that will require an expenditure in excess of 40 percent of
the market value (immediately prior to the damage) of the Improvements to
accomplish required repairs, restoration, or replacement.
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ARTICLE 9. CONDEMNATION
Interests of Parties
9.01. If the Leased Land and Improvements or any part of these premises
is taken for public or quasi-public purposes by condemnation in any action or
proceeding in eminent domain, or are transferred in lieu of condemnation to any
authority entitled to exercise the power of eminent domain, the interests of
Lessor and Lessee in the award or consideration for the taking or transfer and
the effect of the taking or transfer on this Lease shall be governed by this
Article 9.
Termination on Total Taking
9.02. If all or substantially all of the Leased Land and Improvements
are taken or transferred as described in Paragraph 9.01, this Lease and all of
the rights, title, and interest under this Lease shall cease on the date title
to the Leased Land and Improvements vests in the condemning authority, and the
proceeds of the condemnation shall be divided between Lessee and Lessor with
Lessor receiving from the proceeds an amount equal to the sum of the product of
the then adjusted annual rent (but not less than $12,000.00) multiplied by 12.5
plus the product of the difference of the proceeds and 12.5 times the then
adjusted annual rent multiplied times 0.9259 raised to the power of the number
of whole years left to run on the Lease, rounded to the nearest whole year;
or expressed algebraically:
Where P = proceeds received.
R = then adjusted annual rent.
A = amount of Lessors share of proceeds.
N = number of whole years remaining on lease term.
N
A = 12.5R + (P - 12.5R) * 0.9259
For example where: P = $ 2,000,000
R = $24,000
N = 20
Then:
20
A = $300,000 + ($2,000,000 - $300,000) * 0.9259
A = $300,000 + $1,700,000 * 0.2144
A = $300,000 + 364,480
A = $664,480
Lessee's share shall be the remaining proceeds. However, if ten or more
years remain on the term of the lease, Lessee's share shall not be less than 10%
of the proceeds, and if less than ten years remain on the term of the lease,
Lessee's share shall not be
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less than 1% for each of the number of whole years remaining, rounded to the
nearest whole year.
For purposes of this Article 9, "all or substantially all of the Leased
Land and Improvements" shall be deemed to have been taken if 40 percent or more
of the gross floor area of all Improvements is taken and cannot be restored or
repaired so as to be suitable for the conduct of the business conducted on the
Leased Land and Improvements prior to the taking.
Termination on Partial Taking
9.03. If less than all or substantially all of the Leased Land and
Improvements is taken or transferred as described in Paragraph 9.01, and if in
Lessee's opinion the remainder of the Leased Land and Improvements is in a
location, or in a form, shape, or reduced size that makes it impossible for
Lessee to effectively and practicably operate Lessee's business on the remaining
Leased Land and Improvements, then this Lease shall terminate on the date title
to the portion of the Leased Land and Improvements taken or transferred vests in
the condemning authority. The proceeds of the condemnation shall be divided
between Lessee and Lessor as specified in ss.9.02.
Continuation With Rent Abatement After Partial Taking
9.04. If less than all or substantially all of the Leased Land and
Improvements is taken or transferred as described in Paragraph 9.01, and if in
Lessee's opinion the remainder of the Leased Land and Improvements is in a
location and a form, shape, or size that makes it possible for Lessee to
effectively and practicably operate Lessee's business on the remaining Leased
Land and Improvements, this Lease shall terminate as to the portion of the
Leased Land and Improvements taken or transferred as of the date title to the
portion vests in the condemning authority. However, this Lease shall continue in
full force and effect as to the portion of the Leased Land and Improvements not
taken or transferred. From and after the date of taking or transfer, the rent
required to be paid by Lessee to Lessor shall be reduced during the unexpired
portion of this Lease by that proportion of the annual rent that the value of
the part of the Leased Land and Improvements taken or transferred bears to the
value of the total Leased Land and Improvements. These values shall be
determined as of the date immediately before any actual taking. The proceeds of
the condemnation shall be divided as specified in ss.9.02.
Voluntary Conveyance
9.05. Nothing in this Article 9 prohibits Lessor from voluntarily
conveying all of part of the Leased Land and Improvements to a public utility,
agency, or authority under threat
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of a taking under the power of eminent domain. Any voluntary conveyance shall
be treated as a taking within the meaning of this Article 9.
ARTICLE 10. LEASEHOLD MORTGAGES
Leasehold Mortgages Permitted
10.01. Lessee shall be permitted to mortgage Lessee's leasehold
interest in the Leased Land without Lessor's consent or approval.
Provisions for Benefit of Leasehold Mortgagees
10.02. Lessor agrees that the provisions set forth in this Article 10
shall apply to, and be for the benefit of, any mortgagee of Lessee's leasehold
interest in the Leased Land, whose mortgage is a first lien or second lien on
Lessee's leasehold interest ("Leasehold Mortgagee"). Lessor shall be served with
a copy of the mortgage ("Leasehold Mortgage") certified to be true by the
Leasehold Mortgagee and a certified true copy of the title insurance policy
insuring the Leasehold Mortgage to be a first or second lien on Lessee's
leasehold interest in the Leased land, or Lessor shall be provided with other
proof reasonably satisfactory to Lessor of the priority of the Leasehold
Mortgage.
Notice of Default Served on Leasehold Mortgagees
10.03. No notice of default, as provided in Article 11 of this Lease,
shall be valid, binding, and effective until the notice is served on all
Leasehold Mortgagees in the manner set forth in this Lease, at the address set
forth in the Leasehold Mortgage or the address the Leasehold Mortgagee provides
to Lessor according to the provisions set forth in this Lease.
Monetary Default
10.04. If there is a default due to nonpayment of monetary obligations
payable directly by Lessee to Lessor ("Monetary Default"), Lessor shall not
exercise any of the rights and remedies provided in Article 11 or elsewhere in
this Lease, or any remedies provided by law, unless the Monetary Default shall
have continued for at least thirty days after notice to all Leasehold
Mortgagees.
Curable Nonmonetary Default
10.05. If there is a curable default other than a Monetary Default
("Curable Nonmonetary Default"), Lessor shall not exercise any of the rights and
remedies provided in Article 11 or elsewhere in this Lease, or any remedies
provided by law, unless the Curable Nonmonetary Default shall have continued for
at least thirty days
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after notice to all Leasehold Mortgagees. However, if it is not reasonably
possible to cure the default within thirty days, then the time period for curing
the Curable Nonmonetary Default shall be extended, provided that the default is
cured as expeditiously as practicable by actions undertaken diligently and in
good faith.
Noncurable Default
10.06. If there is a default due to bankruptcy, insolvency, or any other
noncurable default ("Noncurable Default"), Lessor shall not exercise any of the
rights and remedies provided in Article 11 or elsewhere in this Lease, or any
remedies provided by law, if within thirty days after notice of default a
Leasehold Mortgagee notifies Lessor that it will foreclose its Leasehold
Mortgage, and that Leasehold Mortgagee diligently and continuously commences and
prosecutes to completion foreclosure proceedings and sale of Lessee's leasehold
interest in the Leased Land, or causes that leasehold interest to be conveyed
and assigned in lieu of foreclosure. However, nothing contained in this
Paragraph 10.06 shall prohibit Lessor from exercising its rights and remedies
pursuant to Article 11 or other parts of this Lease (subject to the other
Paragraphs of this Article 10), or any remedies provided by law, should there
occur a Monetary Default or Curable Nonmonetary Default after the occurrence of
a Noncurable Default.
Mortgagee's Option to Obtain New Lease
10.07. If this Lease is terminated due to a default pursuant to Article
11, Lessor shall serve notice of this termination on all Leasehold Mortgagees,
specifying all sums of money then due and payable under this Lease and
specifying any other default then existing. Each Leasehold Mortgagee shall have
the option of obtaining a new lease ("New Lease") on terms set forth in
Paragraph 10.08; this option shall be waived if it is not exercised within
twenty days after the Leasehold Mortgagee receives notice of termination. If
more than one Leasehold Mortgagee elects to obtain a New Lease, this New Lease
shall be entered into with the Leasehold Mortgagee holding the Leasehold
Mortgage senior in priority.
Terms and Conditions of New Lease
10.08. The New Lease entered into between Lessor and Leasehold Mortgagee
as the New Lessee shall contain terms identical to the terms of this Lease,
except that the commencement date of the New Lease shall be the date of
termination of this Lease, and the term of the New Lease shall be equal to the
remaining term of this Lease.
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Obligations of New Lessee
10.09. The New Lease shall be subject to the following terms:
(1) All Monetary Defaults and Curable Nonmonetary Defaults shall be cured
by the New Lessee.
(2) Effective on commencement of the term of the New Lease, all subleases
shall be assigned without recourse by Lessor to the New Lessee.
(3) All fees and expenses, including reasonable counsel fees, incurred by
Lessor in connection with Lessee's defaults, termination of this
Lease, recovery of possession, negotiations with Leasehold
Mortgagees, and preparation and execution of the New Lease, shall be
paid by the New Lessee.
Assignment of Lease or New Lease by Leasehold Mortgagee
10.11. If any Leasehold Mortgagee shall enter into a New Lease or
acquire Lessee's leasehold interest in the Leased Land by foreclosure or
otherwise, and then Leasehold Mortgagee assigns or otherwise conveys its
interest in this Lease or the New Lease, on that assignment or conveyance the
Leasehold Mortgagee shall be discharged and relieved from all liability for
performance of the terms of this Lease or the New Lease subsequently accruing,
but nothing contained in this Lease shall relieve the Leasehold Mortgagee from
its liabilities and obligations accruing before assignment or conveyance.
Written Consent of Leasehold Mortgagees
10.12. This Lease shall not be modified or amended, nor shall it be
voluntarily terminated by Lessor and Lessee without the prior written consent of
all Leasehold Mortgagees.
ARTICLE 11. DEFAULT
Events of Default
11.01 (a) Any one or more of the events listed in Subparagraphs (b)
through (f) of this Paragraph 11.01 shall constitute a default under this Lease.
(b) Lessee's failure to pay rent within thirty days after the rent
becomes due and payable in accordance with the terms, covenants, and agreements
of this Lease shall constitute a default under this Lease.
(c) Lessee's failure to observe or perform or cause to be
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observed or performed any other term, covenant, or agreement under this Lease,
and continuation of this failure for a period of thirty days after Lessor's
written notice to Lessee specifying the nature of Lessee's failure shall
constitute a default under this lease. However, a failure as described in this
Subparagraph (b) shall not constitute a default if it is curable but cannot
with reasonable diligence be cured by Lessee within a period of thirty days,
and if Lessee proceeds to cure the failure with reasonable diligence and in
good faith.
(d) Lessee's abandonment of the leased land and improvements shall
constitute a default under this lease. For the purposes of this Lease,
"abandonment" shall be defined as Lessee's failure to begin construction of
Improvements within one year following the date of this Lease.
(e) The occurrence of both of the following events at the date of the
commencement of this Lease or during its effective term shall constitute a
default under this lease:
(1) Filing of a petition in bankruptcy or insolvency, for reorganization
or the appointment of a receiver or trustee of all or a portion of
Lessee's property, by or against Lessee in any court pursuant to any
statute either of the United States or of any state.
(2) Lessee's failure to secure a dismissal of the petition within sixty
days after its filing.
(f) Lessee's assignment of the leasehold interest under this Lease for
the benefit of creditors shall constitute a default under this lease.
Notice of Election to Terminate Lessee's Possession
11.02. Subject to the provisions of Article 10, if any event creating
default occurs, Lessor may elect to terminate Lessee's right of possession under
this Lease after thirty days from the date of service of notice of the election.
If this notice is given, then at the expiration of the thirty days all Lessee's
rights, title, and interest in the Leased Land shall expire completely, and
Lessee shall quit and surrender the Leased Land and any Improvements erected on
the Leased Land to Lessor.
Lessor's Entry After Termination of Lessee's Possession
11.03. At any time after the termination of Lessee's right of
possession under this Lease pursuant to Paragraph 11.02 of this Lease, Lessor
may enter and possess the Leased Land and Improvement by summary proceedings,
ejectment, or otherwise, and Lessor may remove Lessee and all other persons and
property from the Leased
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Land and Improvements. If Lessor takes the actions described in this Paragraph
11.03. Lessor may then possess the Leased Land and Improvements and assume the
right to receive all rents income, and profits from the Leased Land and
Improvements, and Lessor may also sell any of the Improvements.
Lessee's Liability for Accrued Rent
11.04. The expiration of this Lease or termination of Lessee's right of
possession pursuant to Paragraphs 2.01 or 11.02 shall not relieve Lessee of its
liability and obligation to pay the rent and any other charges accrued prior to
these events, or relieve Lessee of liability for damages for breach. These
liabilities and obligations of Lessee shall survive any expiration or
termination of the Lease or any entry and possession by Lessor.
Reletting Land and Improvements
11.05. After the expiration of this Lease or termination of Lessee's right
of possession under this Lease pursuant to Paragraphs 2.01 or 11.03, Lessor
shall use reasonable efforts to mitigate damages by reletting the Leased Land
and Improvements, in whole or in part, either in its own name or as agent of
Lessee, for a term or terms that, at Lessor's option, may be for the remainder
of the then-current term of this Lease or for any longer or shorter period.
Rent From Reletting
11.06. Lessee shall be entitled to a credit if the rent received on
reletting exceeds the rent required pursuant to this Lease. Lessee shall remain
liable for the difference between the rent reserved under this Lease, and the
rent collected and received, if any, by Lessor during the remainder of the
unexpired term. Lessor shall have the option of collecting the deficiency
between the rent reserved and the rent collected in monthly payments as those
payments become due and payable, or of receiving in advance the deficiency for
the remainder of the term reduced to present value at the rate of eight percent
per year.
Costs Incurred Due to Breach
11.07. Lessee expressly agrees to pay all expenses that Lessor may
incur for reasonable attorneys' fees or brokerage commissions, and all other
costs paid or incurred by Lessor for enforcing the terms and provisions of this
Lease, reletting the Leased Land and Improvements, restoring the Leased Land and
Improvements to good order and condition, altering, decorating, repainting or
otherwise repairing the same for reletting and for maintaining the Leased Land
and Improvements.
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ARTICLE 12. EXPIRATION OF TERM
Lessee's Delivery of Possession After Termination or Expiration
12.01. On the expiration date of this Lease as set forth in Paragraph
2.01, or the termination of Lessee's possession under this Lease pursuant to
paragraph 11.03, or any entry or possession of the Leased Land and Improvements
by Lessor pursuant to Paragraph 11.04 (collectively referred to as the
"Expiration Date"), Lessee shall promptly quit and surrender the Leased Land and
Improvements, and deliver to Lessor actual possession and ownership of the
Leased Land and Improvements in good order, condition, and repair.
Lessee's Removal of Movable Objects
12.02. Lessee shall have the right to remove from the Leased Land and
Improvements all movable trade fixtures, movable equipment, and articles of
personal property used or procured for use in connection with the operation of
its business on or before the Expiration Date, provided that Lessee shall
promptly repair, or cause to be repaired, any damage resulting to the Leased
Land or Improvements by reason of this removal. Any trade fixtures, equipment,
or articles of personal property of Lessee that remain at or on the Leased Land
after the Expiration Date shall be deemed to have been abandoned by lessee, and
may either be retained by Lessor as its property or disposed of by Lessor
without accountability to Lessee for the value of these trade fixtures,
equipment, or articles of personal property, or any proceeds derived from the
sale of these items.
ARTICLE 13. GENERAL PROVISIONS
No Waiver of Breach by Lessor's Actions
13.01. The failure of Lessor to seek redress for violation of, or to
insist on the strict performance of any covenant, agreement, term, provision, or
condition of this Lease shall not constitute a waiver of the covenant,
agreement, term, provision, or condition. The receipt by Lessor of rent with
knowledge of the breach of any covenant, agreement, term, provision, or
condition of this Lease shall not be deemed a waiver of that breach.
Waiver of Any Provision Must be Written
13.02. No provision of this Lease shall be deemed to have been waived,
unless the waiver is in writing and signed by the party against whom enforcement
is sought. No payment by Lessee or receipt by Lessor of a lesser amount than the
rent stipulated in this Agreement shall be deemed to be other than for the
payment of rent or other charge owing by Lessee, as Lessor shall elect. No
endorsement or statement on any check or any letter accompanying
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any check or payment as rent shall be deemed binding on Lessor or deemed an
accord and satisfaction, and Lessor may accept a check or payment from Lessee
without prejudice to Lessor's right to recover the balance of the rent or the
other charges owing by Lessee, and without limitation on Lessor's right to
pursue each and every remedy in this Lease or provided by law. Each right and
remedy of Lessor provided for in this Lease shall be cumulative and in
addition to every other right or remedy provided for in this Lease, or now or
later existing at law, in equity, by statute, or otherwise.
Entire Agreement
13.03. This Lease and the Exhibits annexed to this Lease contain the
entire agreement between Lessor and Lessee, and any agreement made after the
execution of this Lease between Lessor and Lessee shall be ineffective to
change, modify, waive, release, discharge, terminate, or effect a surrender or
abandonment of this Lease, in whole or in part, unless that agreement is in
writing and signed by the party against whom enforcement is sought.
Notices
13.04. All notices and demands of any kind that either party may be
required or may desire to give to the other in connection with this Lease must
be given by registered or certified mail, return receipt requested, with postage
fully prepaid, and addressed to the party to be served at the party's address as
set forth above. Any notice shall be deemed received on first attempted
delivery. Any party may change the address to which notices to that party are to
be directed by notice given in the manner provided in this Paragraph 13.04.
Lessor's Entry and Inspection of Premises
13.05. Lessor, or its agents or designees, shall have the right to enter
the Leased Land and Improvements during reasonable business hours for
inspection, or to complete any work that may be necessary because of Lessee's
default under any of the terms, covenants, and conditions of this Lease
continuing beyond the applicable periods of grace, or to exhibit the Leased Land
and Improvements to potential buyers and agents.
Partial Invalidity or Unenforceability
13.06. If any term, covenant, or condition of this Lease shall be invalid
or unenforceable to any extent, the remainder of the terms, covenants, and
conditions of this Lease shall remain in full force and effect and shall in no
way be affected, impaired, or invalidated.
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Meaning of Term "Lessor"
13.07. The term "Lessor", as used in this Lease in relation to Lessor's
covenants and agreements under this Lease, shall be limited to mean and include
only the owner or owners of the fee title to the Leased Land at the time in
question. In the event of any conveyance of this fee title, Lessor named in this
Lease and each subsequent grantor shall be automatically relieved, at that date
of the conveyance, of all liability in respect to the performance of any of
Lessor's covenants and agreements remaining to be performed after the date of
conveyance, and each grantee shall be bound by all of the covenants and
agreements remaining to be performed under the Lease during the time of
grantee's ownership.
Satisfaction of Judgment Against Lessor
13.08. Anything contained in this Lease to the contrary notwithstanding,
Lessee agrees to look solely to the Leased Land and Lessor's interest in the
Leased Land for the collection and satisfaction of any judgment that Lessee may
obtain against Lessor because of Lessor's failure to observe or perform any of
its covenants or obligations under this Lease, including, but not limited to,
the breach of the covenant of quiet enjoyment, whether express or implied. If
Lessee receives any judgment resulting from Lessor's failure to observe or
perform any of its covenants or obligations under this Lease, Lessee further
agrees not to collect or execute, or attempt to collect or execute, that
judgment out of or against any other assets or properties of Lessor.
Individuals Benefited by Lease
13.09. This Lease shall inure to the benefit of and be binding on Lessor
and Lessee and their respective distributees, personal representatives,
executors, successors, and assigns except as otherwise provided in this Lease.
Assignment and Subletting
13.10. This Lease and the term and estate granted by this Lease, or any
part of this Lease or that term and estate, may be subleased or assigned,
without Lessor's written consent. However, no assignment or subletting shall
release or discharge Lessee from the terms of this Lease.
Attornment of Sublessee
13.11. All subleases shall provide that in the event of cancellation,
termination, expiration, or surrender of this Lease, the sublessee will attorn
to and recognize Lessor, or any assignee of Lessor, as Lessor under this Lease
for the balance then
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remaining of the term of this Lease, and subject to all terms of this Lease.
The provisions of this Paragraph 13.11 shall be automatic and no further
instrument or document shall be necessary unless required by Lessor or any
assignee of Lessor.
Quiet Enjoyment
13.12. Lessor covenants and agrees that Lessee, on payment of the rent
and other charges provided for in this Lease and fulfillment of the obligations
under the covenants, agreements, and conditions of this Lease, shall lawfully
and quietly hold, occupy, and enjoy the Leased Land during the term of this
Lease without any interference from anyone claiming through or under Lessor.
ARTICLE 14. DOCUMENTATION AND RECORDING OF LEASE
Estoppel Certificates
14.01. Lessor or Lessee shall have the right to request the other party
to provide an estoppel certificate, as described below, without charge, at any
time on or after twenty days after the requesting party sends a written notice.
This estoppel certificate shall consist of a written statement certifying the
following information to the requesting party or to any person specified by that
party:
(1) That this Lease is unmodified and in full force and effect; or, if
there have been any modifications in this Lease, that this Lease is
in full force and effect as modified, specifying the nature of each
modification.
(2) The dates through which the rent and other charges payable under
this Lease have been paid.
(3) Whether the other party to this Lease is in default in the
performance or observance of any covenant, agreement, condition,
term, or provision contained in this Lease, to the best knowledge of
the certifying party, and, if so, specifying the nature of each
default the certifying party has knowledge of.
(4) Any other information with respect to this Lease and the Leased Land
that the requesting party shall reasonably request.
Memorandum of Lease and Recording
14.02. Upon the request of either Lessor or Lessee, Lessor and Lessee shall
execute, in recordable form, a Memorandum of Lease in the form annexed to this
Lease as Exhibit D, and Lessee shall record the Memorandum of Lease in the
office of the County Recording Officer of Mahoning County, Ohio.
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ARTICLE 15. LESSOR'S OPTION TO PURCHASE
Notice of Intent to Purchase Leasehold
15.01. At any time after December 31, 1993, Lessor may notify Lessee of
Lessor's intent to purchase the leasehold which notice shall also specify a
proposed purchase price for the leasehold. Within 90 days, Lessee shall either
accept or reject the proposed purchase price.
If the proposed purchase price is not accepted in writing by Lessee
within 90 days of the notice, Lessor and Lessee shall each select an MIA (that
is, a member of the American Institute of Real Estate Appraisers) Real Estate
Appraiser, and the two appraisers so selected shall select a third MIA Real
Estate Appraiser. Lessor shall, on selection of the appraisers, immediately fix
a time and place for a conference between the parties and the appraisers for the
purpose of agreeing on the general instructions to be given the appraisers.
Appraisal
15.02. The appraisers selected by Lessee and Lessor shall, within 45
days after receiving their instructions, deliver a copy of their fully
documented written appraisals to Lessee, Lessor, and the third appraiser. The
third appraiser shall analyze the appraisals and conduct any investigations,
interviews, and discussions with or without the other appraisers or either of
them, that he or she may deem necessary.
Hearing and Determination
15.03. At a time no more than 20 days after submission of the written
appraisals and at a place that the three appraisers shall name, the respective
parties may have representatives appear and argue any appraisal matters that the
parties deem appropriate. Within 10 days after that time, the appraisers shall
make a final written determination of the purchase price for the leasehold. If
the appraisers are unable to agree on a purchase price for the leasehold, then
the final determination of the purchase price for the leasehold shall be made by
the third appraiser.
Cost of Appraiser
15.04. Each party shall pay the cost of the appraiser chosen by that
party, and the parties share the cost of the third appraiser equally.
Exercise of Option; Holdover
15.05. If Lessor chooses to purchase the leasehold at the
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final appraised price, Lessor shall within 10 days of the appraisers final
written determination so notify Lessee in writing.
If the Lessee accepts Lessor's offer to purchase the leasehold prior to
appraisal, closing and payment of the purchase price in cash by Lessor shall be
within 60 days of Lessee's acceptance. If Lessor notifies Lessee of his exercise
of option to purchase at the final appraised value, closing shall be within 60
days of the notice. In either case, at any time up to the date of closing,
Lessee may give Lessor notice of Lessee's intent to holdover. The maximum period
which Lessee may hold over occupancy of the leased premises is two years after
the date of closing. Lessee's holdover notice prior to closing to Lessor may
specify a date when Lessee will quit the premises at any time up to the two
years maximum holdover. If Lessee's holdover notice does not specify a date,
then the holdover notice shall be for the full two year holdover term. During
the holdover term, this lease shall continue in full force in effect with no
change as to rental and operating costs, but Lessor shall pay all impositions
and Lessor shall receive all insurance proceeds and condemnation awards. During
the holdover Lessee may give notice of terminating Lessee's right of possession
to the leased premises on a date a least six months from the date of the notice,
in which case Lessee shall not be liable for rent or operating costs after the
date specified.
Penalty in Default of Exercise
15.06. If Lessor fails to notify Lessee of Lessor's exercise of the
option to purchase at the final appraised price for the Leasehold within 30 days
of the final determination of the appraised price, then Lessor shall immediately
pay to Lessor a penalty in the amount of 3% of the final determination of the
appraised price of the leasehold. If Lessor revokes his offer to purchase prior
to the final determination of appraised value, then Lessor shall immediately pay
a penalty to Lessee equal to the greater of 3% of the amount Lessor offered to
pay for the leasehold or three months rent. If Lessor either revokes his offer
to purchase the leasehold, or fails to exercise his option to purchase the
leasehold at the final appraised value, then Lessor shall no longer have any
right to purchase the leasehold at an appraised price for the balance of the
leased term.
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IN WITNESS WHEREOF, Lessor and Lessee have executed and signed this
Lease or have caused this Lease to be executed and signed, and corporations have
affixed their proper corporate seals at Youngstown, Ohio on this 15th day of
December, 1987.
LESSEE
Youngstown Cellular Telephone Company
By: /s/ W.P. WILLIAMSON, III
----------------------------------------
W.P. Williamson, III, Chairman of the
Managing Committee
LESSOR
WKBN Broadcasting Corporation
By: /s/ W.P. WILLIAMSON, JR.
----------------------------------------
Chairman of the Board
Signature acknowledged
in the presence of:
/s/ [SIG]
- ---------------------------
- ---------------------------
24
<PAGE> 29
ACKNOWLEDGEMENT BY CORPORATION
State of Ohio )
)ss:
County of Mahoning )
I certify that on this 15th day of December, 1987, Warren P. Williamson, Jr.
of WKBN Broadcasting Corporation personally appeared before me and
acknowledged under oath, to my satisfaction, that he signed, sealed with the
seal of the corporation, and delivered this instrument as the officer of the
named corporation, and that this instrument is the voluntary act and deed of
that corporation as authorized by its Board of Directors.
/s/ DORIS SALOOM
-----------------------------------
DORIS SALOOM, Notary Public
State of Ohio
My Commission Expires Nov. 8, 1988
NOTARY PUBLIC
This instrument was prepared by:
/s/ RALPH A. BEARD
-------------------------------------
Ralph A. Beard, of
Harrington, Huxley & Smith
1200 Mahoning Bank Building
Youngstown, Ohio 44503
Telephone: (216) 744-1111
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<PAGE> 30
Exhibit A
[SITE LOCATION MAP OF PREMISES DESCRIBED IN EXHIBIT B]
<PAGE> 31
Exhibit B
LEASE BOUNDARY DESCRIPTION
Situated in the Township of Boardman, County of Mahoning, State of Ohio
and being known as part of Lot Number 2 of the Julia Barger Plat Number 1 as
recorded in Volume 39 of Page 52 of the Mahoning County Record of Plats and
being more fully bounded and described as follows:
Beginning at an iron pin on the Northerly Line of above said lot which
is also the Southerly Line of the Lot Number 1, a parcel of land now or formerly
owned by Mahoning Bank and it's intersection with the Westerly right-of way of
South Avenue (a.k.a. State Route 164), said pin being 40.00 feet from the
centerline of South Avenue, said pin also being the true place of beginning;
thence S 29 degrees 04' E along said Westerly right-of-way of South Avenue a
distance of 151.14 feet to an iron pin; thence continuing along the Westerly
right-of-way of South Avenue S 33 degrees 03'40" E a distance of 42.96 feet to a
point; thence S 60 degrees 56' W a distance of 75.47 feet to a point said point
being the point of curvature of a curve deflecting to the right and having a
Delta of 21 degrees -01', a Radius of 190.00 feet, an arc of 69.69 feet, a
Tangent of 35.24 feet, a chord bearing of S 71 degrees 26'30"W and a chord of
distance of 69.30 feet to the point of Tangency; thence S 81 degrees 57' W a
distance of 136.49 feet to a point, said point being the point of curvature of a
curve deflecting to the Right, and having a Delta of 24 degrees 54'42", a Radius
of 90.00 feet, an Arc of 39.13 feet, a Tangent of 19.88 feet, a chord bearing of
N 85 degrees 35'39" W and a chord distance of 38.82 feet to a point on said
curve; thence N 8 degrees 03' W a distance of 145.38 feet to a point; thence N 4
degrees 27' E a distance of 116.49 feet to a point on the Northerly line of the
above described lot; thence S 85 degrees 33' E along said Northerly line a
distance of 220.64 feet to an iron pin, said pin being the true place of
beginning and containing 1.486 acres of land more or less; however subject to
all legal highways and easements.
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<PAGE> 32
EXHIBIT C
INGRESS-EGRESS EASEMENT
Situated in the Township of Boardman, County of Mahoning, State of Ohio and
being known as part of Lot Number 2 of the Julia Barger Plat Number 1 as
recorded in Volume 39, Page 52 of the Mahoning County Record of Plats and being
more fully bounded and described as follows:
Beginning at an iron pin on the Northerly Line of above said lot which
is also the Southerly Line of Lot Number 1 a parcel of land now or formerly
owned by Mahoning Bank and it's intersection with the Westerly right-of-way of
South Avenue (a.k.a. State Route 164) said pin being 40.00 feet from the
centerline of South Avenue; thence S 29 degrees 04" E along the said Westerly
right-of-way of South Avenue a distance of 151.14 feet to an iron pin; thence
continuing along the Westerly right-of-way of South Avenue S 33 degrees 03'40" E
a distance of 42.96 feet to a point, said point being the true place of
beginning; thence continuing along said right-of-way S 33 degrees 03'40" E a
distance of 20.05 feet to a point; thence S 60 degrees 56' W a distance of 76.87
feet to a point, said point being the point of curvature of a curve deflecting
to the right and having a Delta of 21 degrees -01', a Radius of 210.00 feet, an
arc of 77.03 feet, a Tangent of 38.95 feet, a chord bearing of S 71 degrees
26'30" W and a chord distance of 76.60 feet to a point said point being the
point of Tangency; thence S 81 degrees 57' W a distance of 136.49 feet to a
point, said point being the point of curvature of a curve deflecting to the
Right, and having a Delta of 24 degrees 54'42", a Radius of 110.00 feet, an arc
of 47.83 feet, a tangent of 24.30 feet, a chord bearing of N 85 degrees 35'39"
W, and a Chord distance of 47.45 feet to a point on said curve; thence N 16
degrees 51'42" E a distance of 20.00 feet to a point, said point being on a
curve, and deflecting to the left having a delta of 24 degrees 54'42", a Radius
of 90.00 feet, an arc of 39.13 feet a tangent of 19.88 feet, a chord bearing of
S 85 degrees 35'39" E and a chord distance of 38.82 feet to a point, said point
being the true point of Tangency; thence N 81 degrees 57' E a distance of 136.49
feet to a point, said point being the point of curvature of a curve deflecting
to the left and having a Delta of 21 degrees -01, a radius of 190.00 feet, an
arc of 69.69 feet, a tangent of 35.24 feet a chord bearing of N 71 degrees
26'30" E and a chord distance of 69.30 feet to a point, said point being the
point of Tangency; thence N 60 degrees 56' E a distance of 75.47 feet to a point
on the Westerly right-of-way of South Avenue, said point being the true place of
beginning and containing 0.151 acres of land more or less; however subject to
all legal highways and easements.
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Exhibit D
MEMORANDUM OF LEASE
On the _______ day of ___________ 1987, a lease was entered into
between WKBN Broadcasting Corporation, Lessor and Youngstown Cellular Telephone
Company, Lessee. This Memorandum of that lease is presented for recording:
1. Name of Lessor in Lease: WKBN Broadcasting Corporation.
2. Name of Lessee therein: Youngstown Cellular Telephone Co.
3. Addresses set forth in Lease as addresses of Lessor and Lessee;
Lessor: 3930 Sunset Blvd., Youngstown, Ohio 44512, and Lessee: Youngstown
Cellular Telephone Company 3930 Sunset Blvd., Youngstown, Ohio 44512.
4. The instrument under which the Lessor claims an interest in the
leased premises is recorded in Volume _____ at page _____ of the deed records in
the office of the County Recorder of Mahoning County, Ohio.
5. Date of Lease: ______________________
6. Description of Leased premises as set forth in Lease:
Situated in the township of Boardman, County of Mahoning, State of Ohio and
being known as part of Lot Number 2 of the Julia Barger Plat Number 1 as
recorded in Volume 39 of Page 52 of the Mahoning County Record of Plats and
being more fully bounded and described as follows:
Beginning at an iron pin on the Northerly Line of above said lot which
is also the Southerly Line of the Lot Number 1, a parcel of land now or formerly
owned by Mahoning Bank and it's intersection with the Westerly right-of way of
South Avenue (a.k.a. State Route 164), said pin being 40.00 feet from the
centerline of South Avenue, said pin also being the true place of beginning;
thence S 29 degrees 04' E along said Westerly right-of-way of South Avenue a
distance of 151.14 feet to an iron pin; thence continuing along the Westerly
right-of-way of South Avenue S 33 degrees 03'40" E a distance of 42.96 feet to a
point; thence S 60 degrees 56' W a distance of 75.47 feet to a point said point
being the point of curvature of a curve deflecting to the right and having a
Delta of 21 degrees-01', a Radius of 190.00 feet, an arc of 69.69 feet, a
Tangent of 35.24 feet, a chord bearing of S 71 degrees 26'30"W and a chord of
distance of 69.30 feet to the point of Tangency; thence S 81 degrees 57' W a
distance of 136.49 feet to a point, said point being the point of curvature of a
curve deflecting to the Right, and having a Delta of 24 degrees 54'42", a Radius
of 90.00 feet, an Arc of 39.13 feet, a Tangent of 19.88 feet, a
28
<PAGE> 34
chord bearing of N 85 degrees 35'39" W and a chord distance of 38.82 feet to a
point on said curve; thence N 8 degrees 03' W a distance of 145.38 feet to a
point; thence N 4 degrees 27' E a distance of 116.49 feet to a point on the
Northerly line of the above described lot; thence S 85 degrees 33' E along said
Northerly line a distance of 220.64 feet to an iron pin, said pin being the true
place of beginning and containing 1.486 acres of land more or less; however
subject to all legal highways and easements.
Provided however, Lessor reserves all of the oil and gas and other minerals of
the leased premises.
Lessor also grants to Lessee and easement for Ingress and Egress and right of
way adjacent to the southside of the lease premises, to be used only for the
purpose of providing pedestrian and vehicular ingress and egress between the
paved road line east of the leased property and the leased land. This easement
shall terminate upon the termination of the lease for any reason but until that
time is for the benefit of the leased premises and attaches thereto and is made
apart thereof and shall be deemed to run with the land, and is more particularly
described as follows:
Situated in the Township of Boardman, County of Mahoning, State of Ohio and
being known as part of Lot Number 2 of the Julia Barger Plat Number 1 as
recorded in Volume 39, Page 52 of the Mahoning County Record of Plats and being
more fully bounded and described as follows:
Beginning at an iron pin on the Northerly Line of above said lot which
is also the Southerly Line of Lot Number 1 a parcel of land now or formerly
owned by Mahoning Bank and it's intersection with the Westerly right-of-way of
South Avenue (a.k.a. State Route 164) said pin being 40.00 feet from the
centerline of South Avenue; thence S 29 degrees 04" E along the said Westerly
right-of-way of South Avenue a distance of 151.14 feet to an iron pin; thence
continuing along the Westerly right-of-way of South Avenue S 33 degrees 03'40" E
a distance of 42.96 feet to a point, said point being the true place of
beginning; thence continuing along said right-of-way S 33 degrees 03'40" E a
distance of 20.05 feet to a point; thence S 60 degrees 56' W a distance of 76.87
feet to a point, said point being the point of curvature of a curve deflecting
to the right and having a Delta of 21 degrees-01', a Radius of 210.00 feet, an
arc of 77.03 feet, a Tangent of 38.95 feet, a chord bearing of S 71 degrees
26'30" W and a chord distance of 76.60 feet to a point said point being the
point of Tangency; thence S 81 degrees 57' W a distance of 136.49 feet to a
point, said point being the point of curvature of a curve deflecting to the
Right, and having a Delta of 24 degrees 54'42", a Radius of 110.00 feet, an arc
of 47.83 feet, a tangent of 24.30 feet, a chord bearing of N 85 degrees 35'39"
W, and a Chord distance of 47.45 feet to a point on said curve; thence N 16
degrees 51'42" E a distance of 20.00 feet to a point, said point being on a
curve, and deflecting to the left having a delta
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<PAGE> 35
of 24 degrees 54'42", a Radius of 90.00 feet, an arc of 39.13 feet a tangent of
19.88 feet, a chord bearing of S 85 degrees 35'39" E and a chord distance of
38.82 feet to a point, said point being the true point of Tangency; thence N 81
degrees 57' E a distance of 136.49 feet to a point, said point being the point
of curvature of a curve deflecting to the left and having a Delta of 21
degrees-01, a radius of 190.00 feet, an arc of 69.69 feet, a tangent of 35.24
feet a chord bearing of N 71 degrees 26'30" E and a chord distance of 69.30 feet
to a point, said point being the point of Tangency; thence N 60 degrees 56' E a
distance of 75.47 feet to a point on the Westerly right-of-way of South Avenue,
said point being the true place of beginning and containing 0.151 acres of land
more or less; however subject to all legal highways and easements.
7. The date on which the term of the Lease commences is __________.
8. Term of the Lease: 99 years.
9. Lessee has no right of extension or renewal.
IN WITNESS WHEREOF, Lessor and Lessee have executed and signed this
Memorandum of Lease or have caused this memorandum of Lease to be executed and
signed, and corporations have affixed their proper corporate seals at
Youngstown, Ohio on this _____ day of ___________, 1987.
LESSEE
Youngstown Cellular Telephone Company
By:
-------------------------------------
W.P. Williamson, III, Chairman of
the Managing Committee
LESSOR
WKBN Broadcasting Corporation
By:
-------------------------------------
Chairman of the Board
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<PAGE> 36
LESSOR'S signature
acknowledged in the presence of:
- --------------------------------
- --------------------------------
ACKNOWLEDGEMENT BY CORPORATION
State of Ohio )
) ss:
County of Mahoning )
I certify that on this _____ day of ____________, 1987, Warren P. Williamson,
Jr. of the corporation named in the foregoing instrument personally appeared
before me and acknowledged under oath, to my satisfaction, that he signed,
sealed with the seal of the corporation, and delivered this instrument as the
officer of the named corporation, and that this instrument is the voluntary act
and deed of that corporation as authorized by its Board of Directors.
----------------------------------------
NOTARY PUBLIC
This instrument was prepared by:
----------------------------------------
Ralph A. Beard, of
Harrington, Huxley & Smith
1200 Mahoning Bank Building
Youngstown, Ohio 44503
Telephone: (216) 744-1111
31
<PAGE> 1
EXHIBIT 10.12
DMS-MTX CELLULAR
SUPPLY AGREEMENT
BETWEEN
YOUNGSTOWN CELLULAR TELEPHONE COMPANY
AND
NORTHERN TELECOM INC.
<PAGE> 2
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. DEFINITIONS 1
2. SCOPE 4
3. PURCHASE ORDERS 5
4. PRICE 6
5. PAYMENT 6
6. DELIVERY, RISK OF LOSS, TITLE 8
7. WARRANTIES, REMEDIES AND LIMITATION OF WARRANTIES AND 9
REMEDIES AND DISCLAIMERS OF WARRANTIES AND LIABILITY
8. FORCE MAJEURE 12
9. PATENT OR COPYRIGHT INFRINGEMENTS 12
10. SOFTWARE LICENSE 13
11. SOFTWARE UPDATES 15
12. REMEDIES 15
13. BUYER'S RESPONSIBILITIES 17
14. TESTING, TURNOVER AND ACCEPTANCE 17
15. COVERAGE, INTERFERENCE AND THIRD-PARTY FACILITIES 18
16. REGULATORY COMPLIANCE 19
17. CHANGES 19
18. CONDITION OF INSTALLATION SITE(S) 21
19. RELEASE OF INFORMATION 21
20. CONFIDENTIALITY 21
21. INTERCONNECTION TO SWITCH 22
22. EQUIPMENT CHANGES 23
23. ANNEXES 23
24. GENERAL 23
ANNEXES
- -------
ANNEX 1 - EQUIPMENT/PRICING
ANNEX 2 - STATEMENT OF WORK/SAMPLE PROJECT SCHEDULE
ANNEX 3 - DMS-MTX ACCEPTANCE CRITERIA
ANNEX 4 - TURNOVER AND ACCEPTANCE NOTICES
ANNEX 5 - SELLER WARRANTY SERVICES
ANNEX 6 - SOFTWARE LICENSE
ANNEX 7 - DOCUMENTATION
i
<PAGE> 3
NORTHERN TELECOM, INC.
DMS-MTX CELLULAR
SUPPLY AGREEMENT
AGREEMENT dated June 1, 1996, by and between Youngstown Cellular Telephone
Company (hereinafter referred to as "Buyer") a Partnership with offices
located at 3910 South Avenue, Youngstown, Ohio 44512-1399 and Northern Telecom
Inc., a Delaware corporation with offices located at 2435 N. Central
Expressway, Richardson, Texas 75080 (hereinafter referred to as "NTI" or
"Seller").
WITNESSETH:
In consideration of the mutual promises and covenants hereinafter set forth,
the parties hereby agree as follows:
1. DEFINITIONS
As used herein, the following capitalized terms have the following
meanings:
1.1 "CELL SITE" shall mean any Seller-engineered Hardware and Software
comprised of Seller radios and common equipment, but not Switch or
Switch-related equipment.
1.2 "COMMISSIONING" shall mean the on-site testing of Equipment
installed by Seller in accordance with Seller's Acceptance Criteria
set forth in Annex 3 hereof.
1.3 "DOCUMENTATION" shall mean System documentation, whether in written
or electronic form, delivered to Buyer in the medium set forth in
Buyer's Purchase Order, such media being more fully described in
Annex 7, "Documentation." All Documentation delivered to Buyer
shall be subject to any copyright and confidentiality restrictions.
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<PAGE> 4
1.4 "EQUIPMENT" shall mean either singularly or collectively the
NTI-manufactured 800 MHz Hardware and Software products provided
hereunder. The terms of this Agreement applicable to "Equipment"
shall also be deemed to apply to OEM Equipment, unless otherwise
expressly excluded in this Agreement and subject to the limitations
set forth in Section 2.1.4 hereof.
1.5 "EXPANSION" shall mean Equipment (which may in certain circumstances
include a Cell Site) added to a System after Turnover that is beyond
the wired-for System capacity as provided in its original
configuration, and which Equipment requires Seller engineering and
Installation/Commissioning Services.
1.6 "HARDWARE" shall mean the NTI hardware components listed in Annex 1
as may comprise a System, an Expansion, a Cell Site, or Merchandise.
1.7 "INSTALLATION" shall mean the installation of Equipment by Seller.
1.8 "INSTALLATION SITE" shall mean the location (contiguous United
States) specified in Buyer's Purchase Order for Installation of a
Switch and/or Cell Sites.
1.9 "MERCHANDISE" shall mean miscellaneous components of Hardware, with
respect to which no engineering, Installation, or Commissioning are
to be provided by Seller.
1.10 "OEM EQUIPMENT" shall mean miscellaneous items of non-NTI equipment
made available for sale to Buyer by Seller under this Agreement, not
integrated into the Hardware during the manufacturing process.
1.11 "PROJECT SCHEDULE" shall mean those delivery, installation and/or
in-service dates, as applicable, proposed by Buyer and accepted by
Seller.
1.12 "PURCHASE ORDER" shall mean any Purchase Order issued by Buyer
hereunder to Seller pursuant to Section 3 of this Agreement.
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<PAGE> 5
1.13 "SERVICES" shall mean those services performed by Seller under this
Agreement.
1.14 "SHIP DATE" shall mean the scheduled date agreed upon by Buyer and
Seller as the date on which the appropriate Equipment shall be
shipped.
1.15 "SOFTWARE" shall mean the proprietary and/or third party software
computer programs (consisting of firmware and logic instructions in
machine-readable code residing in, or intended to be loaded in
System memories which provide basic logic, operating instructions
and user-related application instructions, but excluding customer
data) as well as associated documentation used to describe, maintain
and use the programs which are integral to any Hardware furnished to
Buyer. Any reference herein to Equipment or Software being "sold,"
"purchased" or the like is understood to be a reference in fact to
the program being licensed.
1.16 "SPECIFICATIONS" shall mean the specifications and performance
standards of the Hardware, Software and System as set forth in the
applicable sections of Northern Telecom Practices ("NTPs"),
incorporated herein by reference. Seller shall have the right, at
its sole discretion to modify, change or amend the Specifications at
any time during the term of this Agreement.
1.17 "SWITCH" shall mean a DMS-MTX 800 MHz switching component.
1.18 "SYSTEM" shall mean the combination of a Switch and one or more Cell
Sites furnished hereunder requiring Seller engineering and
Installation/Commissioning Services.
1.19 "TERM" shall mean the period commencing on the date first set forth
above (hereinafter "Effective Date") and ending thirty-six (36)
months therefrom, unless terminated earlier in accordance with the
terms and conditions hereof, or unless extended by the mutual
written consent of the parties hereto.
1.20 "TURNOVER" shall mean that time when Seller has completed
Installation and Commissioning of a Switch, Cell Site or Expansion
and turns over such equipment for Buyer's placing into service.
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<PAGE> 6
1.21 "WARRANTY PERIOD" shall mean:
1.21.1 With respect to the Hardware engineered, furnished and installed by
Seller, a period of twelve (12) consecutive months from the date of
Turnover.
1.21.2 With respect to Cell Sites not installed by Seller, thirteen (13)
consecutive months from the shipment date.
1.21.3 With respect to the Software, a period of twelve (12) consecutive
months from the date of Turnover.
1.21.4 With respect to Merchandise, a period of ninety (90) consecutive
days from the shipment date of that Merchandise.
2. SCOPE
2.1 During the Term, in accordance with an appropriate Purchase Order
issued by Buyer for Equipment and/or Services, Seller shall:
2.1.1 engineer, deliver, install (or have installed) and Commission the
Equipment for use in the continental United States;
2.1.2 grant to Buyer a nonexclusive license to use all Software associated
with, and integral to, Hardware purchased by Buyer hereunder, which
license shall continue beyond the Term, in accordance with Annex 6
attached hereto;
2.1.3 carry out the Installation of Equipment at the applicable
Installation Site substantially in accordance with the Sample
Project Schedule set forth in Annex 2 and in accordance with the
relevant Purchase Orders;
2.1.4 furnish OEM Equipment to Buyer at prices to be quoted by Seller and
in accordance with such OEM vendor's then-current terms, conditions
and specifications.
2.2 During the Term, in accordance with appropriate Purchase Order(s)
issued by Buyer and accepted by Seller, Buyer shall:
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<PAGE> 7
2.2.1 purchase Seller Hardware, Software products, engineering,
Installation and commissioning Services totaling not less than
twenty (20) million dollars ($20,000,000) net price ("Volume
Purchase Commitments") during the Term, to qualify for the discounts
set forth in Section 1.1 of Annex 1, ("Volume Discount.
2.2.2 Should Buyer fail to meet the obligations under the Commitment, then
Buyer shall pay to Seller a termination charge, as set forth in
Section 1.2 of Annex 1, for the balance of the Commitment that
remains at the end of the Term. Such amount shall be due and payable
within thirty (30) days following the date of Seller's invoice
therefor.
2.3 If and when Buyer wishes to purchase CDMA 800 MHz products from
Seller during the Term of this Agreement, Seller and Buyer will in
good faith negotiate an amendment to this Agreement containing terms
and conditions applicable to such products to accommodate the sale
and purchase of such products, as mutually agreed to by Buyer and
Seller.
3. PURCHASE ORDERS
3.1 Each Purchase Order for Equipment and/or Services issued during the
Term of this Agreement, or as it may be extended, shall be governed
by the terms and conditions of this Agreement, and shall incorporate
these terms and conditions by reference. Buyer hereby expressly
agrees that except for non-conflicting administrative terms as
provided below, any additional or preprinted terms or conditions on
the applicable Purchase Order, shall be null, void and of no effect.
Each such Purchase Order shall specify:
3.1.1 The description of the ordered Equipment and/or Services, including
any identification referenced in the price list herein attached as
Annex 1;
3.1.2 Requested place and date of delivery as previously agreed by Seller;
3.1.3 Applicable Price for the ordered Equipment and/or Services as set
forth in Annex 1 or as may be separately quoted by Seller from time
to time;
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<PAGE> 8
3.1.4 Prices for Equipment engineering, installation and testing to be
quoted by Seller, together with a mutually agreed Installation and
Turnover schedule;
3.1.5 Installation Site(s) where applicable;
3.1.6 Other appropriate information as may be required by Seller necessary
to fill the Purchase Order such as Buyer's floor plan and frequency
plan; and
3.1.7 Location to which the applicable invoice shall be rendered for
payment.
3.2 Any Purchase Order issued by Buyer and not rejected in writing
within ten (10) business days after receipt by Seller shall be
deemed accepted.
4. PRICE
4.1 The price ("Price") for any Equipment shall consist of (i) unit list
prices for Hardware and Merchandise, as set forth in Annex 1; (ii)
license fees to use the Software associated with such Hardware, as
set forth in Annex 1; and (iii) for OEM Equipment and Services, the
Prices as may be quoted by Seller from time to time.
4.2 Unless otherwise specified, the Prices set forth in Annex 1 are
exclusive of it Seller's charge for any Services associated
therewith.
4.3 The Prices are exclusive of any taxes, which shall be the
responsibility of Buyer pursuant to Section 5.4 hereof.
5. PAYMENT
5.1 With respect to Purchase Orders for Equipment that include
Installation Services therefor, Buyer shall pay to Seller the
appropriate Price in accordance with the following schedule:
5.1.1 100% of the Purchase Order Price shall be invoiced by Seller upon
shipment of the Switch in the case of a System Installation or, in
the case of an Expansion or Cell Site installation, upon shipment of
the major components to the Installation Site. Such payment shall be
paid to Seller within thirty (30) days following the date of
Seller's invoice therefor.
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<PAGE> 9
5.2 Any additional monies that become due to Seller (including, without
limitation, Merchandise orders, Service orders, such items as are
described in Section 5.4, Equipment purchases wherein Installation
is not provided by Seller, and OEM Equipment not part of the
original System order) shall be invoiced one hundred percent (100%)
upon shipment, or upon completion of Services performed, and paid to
Seller by Buyer within thirty (30) days of Seller's invoicing Buyer
therefor. In the case of a phased Installation, or if portions of an
Installation are delayed due to no fault of Seller, Seller may
invoice on a per Installation Site basis upon completion of the
applicable milestone event.
5.3 All past due amounts (collectively, "Past Due Amounts") shall bear
interest at the rate of one and one-half percent (1 1/2%) per month
(or such lesser rate as may be the maximum permissible rate under
applicable law), beginning with the date on which the applicable
Past Due Amount was due and payable.
5.4 Except for any franchise tax or any tax assessed on Seller's net
income, Buyer shall pay to Seller the amount of any sales and/or use
tax, duty, excise tax, fee or similar charges which Seller may be
required to pay because of its performance of this Agreement.
Personal property taxes assessable on the Equipment shall be the
responsibility of Buyer. To the extent Seller is required by law to
collect such taxes (state or local), one hundred percent (100%)
thereof shall be added to invoices as separately stated charges and
paid in full by Buyer, unless the Buyer is exempt from such taxes
and furnishes Seller with a certificate of exemption prior to
issuance of invoice in a form reasonably acceptable to Seller. Buyer
shall hold Seller harmless from any and all subsequent assessments
levied by a proper taxing authority for such taxes, including any
interest, penalties or late charges due to Buyer's failure to
perform hereunder.
5.5 Until the total Price for each Purchase Order is paid to Seller,
Seller shall retain and Buyer hereby grants to Seller a purchase
money security interest in the Equipment, as applicable, and Buyer
shall cooperate with Seller in perfecting such interest.
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<PAGE> 10
5.6 Prior to payment in full of the Price and all additional monies due
to Seller, without written permission of Seller, Buyer shall not
sell or lease Equipment purchased by it, or assign any license to
use the Software, or allow any liens or encumbrances to attach to
any such Equipment, or remove such Equipment or Software from the
Installation Site (if applicable).
5.7 Seller reserves the right to require reasonable assurances of
payment by Buyer, e.g., funded financing by a financial institution
acceptable to Seller or letter of credit from a reputable bank
provided by Buyer to Seller not later than thirty (30) days prior to
the scheduled Ship Date. Seller may, from time to time, evaluate
Buyer's credit standing, and on that basis, establish a credit limit
to accommodate Buyer's issuance of Purchase Orders as herein
provided. Buyer shall provide any reasonable assistance requested
by Seller necessary for Seller to make such evaluation.
6. DELIVERY, RISK OF LOSS, TITLE
6.1 Equipment shall be shipped F.O.B. the place of shipment with freight
charges prepaid and invoiced back to Buyer, except that in the case
of a Switch purchase or a Cell Site purchase that includes the E, F,
and I option, Seller we be responsible for freight charges. Seller
will select the method and common carrier for shipment unless
otherwise specified by Buyer on the Purchase Order, in which case,
Buyer will be responsible for any additional premium freight
charges.
6.2 Title and risk of loss or damage to any Equipment furnished by
Seller to Buyer in accordance with this Agreement shall pass to
Buyer upon delivery. Seller warrants to Buyer that such title shall
be good and clear title, free and clear of all liens and
encumbrances. The foregoing notwithstanding, title to Software shall
not pass to Buyer at any time.
6.3 Not later than thirty (30) days prior to the earliest Ship Date
relating to any of the items covered by the applicable Purchase
Order Buyer may notify Seller that Buyer (i) does not wish to
receive shipment of any Equipment on the date set forth in such
Purchase Order, or (ii) that Buyer's facilities are not prepared
pursuant to Annex 2 hereof in sufficient time for Seller to
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<PAGE> 11
make delivery pursuant to the date set forth in the applicable
Purchase Order. In such case Seller shall have the right to place
such Equipment in storage and Buyer shall be liable for all
additional transportation, demurrage, loading, storage, and
associated costs thereby incurred by Seller. The shipment of
Equipment to a storage location as provided in this Section 6.3
shall be deemed to constitute shipment of the Equipment for purposes
of invoicing, passage of title and risk of loss, and commencement of
the Warranty Period.
7. WARRANTIES, REMEDIES AND LIMITATION OF WARRANTIES
AND REMEDIES AND DISCLAIMERS OF WARRANTIES AND LIABILITY
7.1 Hardware and Services Warranty
7.1.1 Seller warrants that during the Warranty Period, the Hardware
furnished under this Agreement shall be free from defects in
material and workmanship, and shall conform to the applicable
portions of the Specifications, and that the Services furnished
under this Agreement shall be performed in a professional and
workmanlike manner. Any and all claims for breach of this warranty
are conclusively deemed waived unless made during the Warranty
Period. Performance of Seller's obligations hereunder shall not
extend the Warranty Period, except that any Hardware and/or Services
repaired, replaced or corrected during the Warranty Period shall
continue to be warranted for the balance of the Warranty Period.
7.1.2 Seller's sole obligation and Buyer's exclusive remedy under this
warranty are limited to the replacement or repair, at Seller's
option, of the defective component of the Hardware, or the
correction of the faulty Services. Such replacement Hardware may be
new or reconditioned to perform as new, at Seller's option. Buyer
shall bear the risk of loss and damage and all transportation costs
for defective Hardware shipped to Seller; and Seller shall bear the
risk of loss and damage and all transportation costs for replacement
Hardware shipped to Buyer. Title to defective or replacement
Hardware shall pass to Seller or Buyer, as appropriate, upon receipt
thereof.
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7.2 Software Warranty
Seller warrants that, provided the Software is not altered by Buyer,
and provided the Software is used in conjunction with the DMS-MTX
Hardware purchased under this Agreement and such Hardware has been
maintained in accordance with Seller's recommended maintenance
procedures, the Software shall function during the Warranty Period
without defects which materially affect Buyer's use of the Software
in accordance with Seller's Specifications for the Software. In the
event the Software fails to so perform and Buyer's use of the System
is materially affected by such failure, Buyer's exclusive remedy
under this warranty is to require Seller to correct such failure and
such remedy is conditioned upon Seller's receiving written notice
within the Warranty Period (or oral notice promptly confirmed in
writing) of such failure. The correction of any Software failure
shall not extend the Software Warranty Period.
7.3 Response Services/Time
7.3.1 During the Warranty Period, Seller's technical assistance service
("TAS") department shall provide reasonable assistance in the
investigation and resolution of service-affecting problems. If such
assistance is requested by Buyer, Buyer agrees to follow Seller's
standard policies and procedures related to such TAS services as set
forth in Annex 5, "Seller Warranty Services." The Hardware Warranty
Period shall include TAS only to the extent that any TAS services
provided under the Switch warranty also apply to Hardware operating
in conjunction with the applicable Switch. For routine warranty
service situations, Seller shall ship replacement or repaired
Hardware (or components thereof) within thirty (30) days of receipt
of the defective Hardware (or components thereof) from Buyer.
7.3.2 For emergency warranty service situations, Seller shall, during the
Warranty Period, use all reasonable efforts to ship replacement
Hardware (or components thereof) within twenty-four (24) hours of
notification of the warranty defect by Buyer. Buyer shall pay to
Seller the surcharge set forth in Annex 5, for such expedited
shipment of replacement Hardware. Buyer shall ship the defective
Hardware to Seller within thirty (30) days of receipt of the
replacement Hardware. In the event Seller fails to receive such
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<PAGE> 13
defective Hardware within such thirty (30) day period, Seller shall
invoice Buyer for the replacement Hardware at the then-current price
in effect therefor. For the purpose of this Agreement, an emergency
shall be deemed to exist upon the occurrence of a Priority E1 or E2
problem, as defined in Annex 5.
7.4 THE WARRANTIES AND REMEDIES SET FORTH ABOVE CONSTITUTE
THE ONLY WARRANTIES WITH RESPECT TO THE EQUIPMENT AND
SERVICES PROVIDED, AND BUYER'S EXCLUSIVE REMEDIES IN THE
EVENT SUCH WARRANTIES ARE BREACHED. THEY ARE IN LIEU OF
ALL OTHER WARRANTIES WRITTEN OR ORAL, STATUTORY, EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTY OF
MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE. SELLER SHALL NOT BE LIABLE FOR ANY
INCIDENTAL CONSEQUENTIAL, OR SPECIAL DAMAGES OF ANY
NATURE WHATSOEVER.
7.4.1 Seller's obligations under this Article 7 shall not apply to (i)
Equipment or components thereof such as fuses and bulbs that are
normally consumed in operation, or have a normal life inherently
shorter than the Warranty Period; (ii) defects that are the result
of improper storage, installation, use, maintenance or repair by the
Buyer (including, without limitation, operation of the Equipment
outside the environmental parameters defined in the Specifications);
(iii) improper operation of Equipment with other hardware used by
Buyer, including the operation of Equipment with hardware not
authorized by Seller for use with the Equipment, or use of the
Equipment with any improperly operating equipment not supplied by
Seller under this Agreement; (iv) Equipment or components thereof
that due to no fault of Seller have been subjected to any other kind
of misuse or detrimental exposure or have been involved in an
accident, fire explosion, Act of God, or any other cause not
attributable to Seller, or (v) Equipment or Installation Services
altered, repaired, installed or relocated by any party other than
Seller or Seller's agents. For purposes of subsection (v), "install"
shall not mean the routine plug-in of the components done in
accordance with NTP guidelines.
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<PAGE> 14
7.5 OEM Equipment
7.5.1 OEM Equipment furnished under the initial Purchase Order in
conjunction with a Switch, (e.g., terminals and printers), shall be
warranted in accordance with the Hardware warranties set forth in
Section 7.1 and handled through Seller's Repair and Return
department. With respect to all other OEM items ordered by Buyer,
Buyer shall receive the warranties for such OEM Equipment directly
from such OEM vendors. Except for the warranty of title extended in
Section 6.2 hereof, the warranties provided in this Section 7.5 are
Buyer's sole and exclusive remedy against Seller with respect to OEM
Equipment provided under this Agreement.
8. FORCE MAJEURE
If the performance of this Agreement, or of any obligation hereunder
except for the obligations set forth in Article 5 is prevented,
restricted or interfered with by reason of fires, breakdown of
plant, labor disputes, embargoes, government ordinances or
requirements, civil or military authorities, acts of God or of the
public enemy, acts or omissions of carriers, inability to obtain
necessary materials or services from suppliers, or other causes
beyond the reasonable control of the party whose performance is
affected, then the party affected, upon giving prompt notice to the
other party, as set forth in Section 24.2 shall be excused from such
performance on a day-for-day basis to the extent of such prevention,
restriction, or interference (and the other party shall likewise be
excused from performance of its obligations on a day-for-day basis
to the extent such party's obligations relate to the performance so
prevented, restricted or interfered with); provided that the party
so affected shall use reasonable efforts to avoid or remove such
causes of non-performance and both parties shall proceed to perform
their obligations with dispatch whenever such causes are removed or
cease.
9. PATENT OR COPYRIGHT INFRINGEMENTS
9.1 Seller agrees to indemnify Buyer with respect to any suit, claim, or
proceeding brought against Buyer alleging that Buyer's use of the
Equipment constitutes an infringement of any United States patent or
copyright. Seller agrees to defend Buyer against any such claims and
to
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pay all litigation costs, reasonable attorneys fees, settlement
payments and any damages awarded in any final judgment arising from
such suit, claim or proceeding; provided, however, that Buyer shall
promptly advise Seller of any such suit, claim, or proceeding and
shall cooperate with Seller in the defense or settlement of such
suit, claim or proceeding and provided Seller shall have sole
control thereof.
9.2 In the event that an injunction is obtained against Buyer's use of
Equipment arising from such patent or copyright suit, claim or
proceeding, in whole or in part, Seller shall, at its option,
either: (i) procure for Buyer the right to continue using the
portion of a System enjoined from use; or (ii) replace or modify the
same so that Buyer's use is not subject to any such injunction.
9.3 In the event that Seller cannot perform under Section 9.2, Buyer
shall have the right to return such Equipment or portion thereof to
Seller upon written notice to Seller and in the event of such
return, neither party shall have any further liabilities or
obligations under this Agreement, except that Seller shall refund
the depreciated value of any such Equipment or portion thereof as
carried on the Buyer's books at the time of such return.
9.4 Seller's indemnity obligations under Section 9.1 shall not apply to
infringement claims (i) arising from any portion of the Equipment
that is manufactured to Buyer's design, or (ii) arising from the use
of the Equipment in combination with any other apparatus or material
not supplied by Seller to the extent that the claims arise from such
combination usage.
9.5 The foregoing states the entire liability of Seller for patent or
copyright infringement by the Equipment. Seller shall have no
liability whatsoever for any patent or copyright infringement
arising from Buyer's use of the OEM Equipment, and Seller makes no
warranty with respect thereto.
10. SOFTWARE LICENSE
10.1 With respect to Equipment containing Software acquired under this
Agreement, Buyer is hereby granted a non-exclusive license to use
the
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<PAGE> 16
Software in accordance with the terms set forth in Annex 6,
"Software License." Buyer is granted no title or ownership rights to
the Software, which rights shall remain in Seller or Seller's
suppliers as appropriate. An initial Software license fee paid by
Buyer shall not cover charges for future Software releases as
contemplated in Section 11, and which fees are set forth in Annex 1.
10.2 From time to time Seller may, at its discretion, offer to license,
at variable fees, optional Software features to Buyer for use on
Buyer's System. Such variable fees shall be calculated on the basis
of measurable units of usage. The criteria for measurement may vary
from feature to feature, but will consist of units that may be
quantified, such as, by way of example and not limitation, radios
(voice channels), effective traffic channels, cell sites or
subscribers (hereinafter "measurable units"). For purposes of this
Article 10, "System" shall mean, in addition to the definition set
forth in Section 1.18 hereof, Buyer's DMS-MTX and all interconnected
cell sites.
10.2.1 A list of Seller's current variable license fee offerings is
included in Annex 1, as amended from time to time. Seller shall
notify Buyer of any price increases affecting such features not
later than sixty (60) days prior to the effective date. All such
updates to Annex 1 shall be provided to Buyer under separate cover
and shall be deemed to be incorporated herein by reference. The fees
for all such features shall be subject to a minimum charge as
determined for each individual Software feature; however, the total
fees for each individual Software feature based on the total number
of such measurable units quantified during the duration of the
Software license will not aggregately exceed the then-current fixed
rate price for that particular feature. Buyer, at its option, may
license such Software features at the applicable fixed-rate price.
10.2.2 In the event Buyer elects to license certain Software features on a
measurable unit basis as described hereinabove, Buyer hereby gives
Seller the right to audit Buyer's System either remotely or
visually, or some combination thereof, for purposes of determining
such unit quantities. Seller shall conduct an audit at the time the
applicable Software is loaded onto Buyer's DMS-MTX to determine the
initial quantity of measurable units. Thereafter, Seller shall have
the right to audit Buyer's System on an
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<PAGE> 17
annual basis as set forth herein. Following each annual audit, Buyer
shall be invoiced for any additional measurable units as compared
with the preceding twelve-month period total. No license fees shall
be pro rated because of usage of any additional measurable units
during any portion of the preceding twelve-month period. Payment
shall be made to Seller by Buyer for all license fees and associated
taxes in accordance with Article 5 of this Agreement. Seller's right
to audit and invoice Buyer in accordance with this Section 10.2
hereof for measurable units added following the expiration of the
Agreement shall survive the term of the Agreement.
10.3 The obligations of Buyer under this Article 10 and Annex 6 shall
survive the termination of this Agreement, regardless of the cause
of termination.
11. SOFTWARE UPDATES
11.1 The license fees set forth in Annex 1 for additional Software
releases assume that Buyer's System is operating on Software at the
same level of maintainability as set forth in Section 11.3 hereof.
Otherwise, retrofitting features from a new release onto Buyer's
System shall be considered and quoted by Seller on a case-by-case
basis. Additionally, future Hardware purchases may require the
support of a then-current Software load.
11.2 Any such Software release may require the purchase of additional
Hardware by Buyer.
11.3 If Buyer elects to remain on a prior Software release, Seller's sole
obligation hereunder shall be to make available maintenance for the
Software for the previous two consecutive releases from the
then-current, Seller-numbered release (i.e., numbered Software
load).
12. REMEDIES
12.1 Seller shall have the right to suspend its performance under this
Agreement by written notice to the Buyer and forthwith remove and
take possession of any portion of the Equipment that has been
delivered if the Buyer, prior to payment to Seller of the Price,
shall become insolvent or
15
<PAGE> 18
bankrupt, make a general assignment for the benefit of, or enter
into any arrangement with creditors, file a voluntary petition under
any bankruptcy, insolvency, or similar law, or have proceedings
under any such laws or proceedings seeking appointment of a
receiver, trustee or liquidator instituted against it which are not
terminated within thirty (30) days of such commencement.
12.2 In the event of any material breach of this Agreement by either
party which shall continue for thirty (30) or more days after
written notice of such breach (including a reasonably detailed
statement of the nature of such breach) shall have been given to the
breaching party by the aggrieved party, the aggrieved party shall be
entitled at its option:
12.2.1 if the aggrieved party is the Buyer, to suspend its performance
under Article 5 of the Agreement for so long as the breach continues
uncorrected or;
12.2.2 if the aggrieved party is Seller, to suspend performance of all of
its obligations under the Agreement for so long as the breach
continues uncorrected or;
12.2.3 to avail itself of any and all remedies available at law or equity
whether or not it elects to suspend its performance under Section
12.2.1 or 12.2.2 as applicable.
12.3 NOTWITHSTANDING THE PROVISIONS OF SECTION 12.2. OR ANY OTHER
PROVISION OF THIS AGREEMENT, SELLER SHALL NOT BE LIABLE FOR
INCIDENTAL, INDIRECT, CONSEQUENTIAL, OR SPECIAL DAMAGES OF ANY
NATURE WHATSOEVER FOR ANY ACTION ARISING UNDER THIS AGREEMENT.
12.4 Any action for breach of this Agreement or to enforce any right
hereunder shall be commenced within two (2) years after the cause of
action accrues or it shall be deemed waived and barred (except that
any action for nonpayment may be brought at any time permitted by
applicable law).
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<PAGE> 19
13. BUYER'S RESPONSIBILITIES
13.1 With respect to Equipment Installation, Buyer agrees that certain
duties shall be performed by the Buyer in a timely and proper
fashion as a condition precedent to Sellers obligations hereunder,
including, but not by way of limitation, those responsibilities
designated in Annex 2 (Statement of Work) as being the Buyer's, and
the following:
13.2 Buyer shall prepare the Installation Site(s) in accordance with
Seller's requirements for the Equipment as further set forth herein
and in Annex 2, no later than by the project dates as stated in
Purchase Order(s) accepted by Seller pursuant to the terms of this
Agreement.
13.3 Buyer, at its expense, shall obtain all necessary local and federal
government permits applicable to a cellular telecommunications
system installation and operation (excluding any applicable permits
required in the normal course of Seller's doing business). Buyer
understands and agrees that all site engineering (including cell
sites) architectural work, civil work and supervision thereof, site
selection engineering, propagation engineering, environmental
approvals and rights-of-way are the responsibility of Buyer.
13.4 Buyer shall insure that only qualified technicians shall perform any
maintenance and/or repair to the Equipment during the Warranty
Period, which maintenance and/or repair shall be confined to routine
tasks performed in accordance with Seller provided specifications.
14. TESTING, TURNOVER AND ACCEPTANCE
14.1 On completion of Installation of Equipment installed by Seller,
Seller shall provide Buyer five (5) days prior written notification
that such Equipment is ready for Commissioning. Following such
notification, Buyer agrees to have a representative present to
witness and acknowledge completion of such testing. Seller shall
test the Equipment in accordance with its standard testing
procedures to determine Equipment conformity with the standards and
specifications (hereinafter "Acceptance Criteria") of the
17
<PAGE> 20
applicable Seller installation manuals as referenced in Annex 3,
"DMS-MTX Acceptance Criteria, as may be amended from time to time.
14.2 On the date that such Commissioning has been successfully completed,
Seller shall turn the Equipment over to Buyer ("Turnover"). On the
date of Turnover, Buyer shall complete and return to Seller the
"Turnover Notice" as described in Annex 4.
14.3 For purposes of this Agreement, the occurrence of any of the
following shall be deemed to constitute "Acceptance" of the
Equipment:
14.3.1 Within fifteen (15) days following the date of Turnover, Buyer shall
either accept the Equipment in writing as provided in Annex 4,
"Acceptance Noticed or notify Seller in writing specifying in
reasonable detail those particulars in which the Equipment does not
meet the Acceptance Criteria. With respect to any such particulars,
Seller shall promptly proceed to take corrective action, and
following correction, Buyer shall accept the Equipment in writing.
14.3.2 The failure of Buyer to notify Seller within fifteen (15) days after
Turnover (or, in the case of correction, fifteen [15] days following
such correction) of any particulars in which the Equipment does not
meet the Acceptance Criteria, or the use by Buyer of the Equipment
or any portion thereof in revenue-producing service at any time,
shall be deemed to constitute Acceptance of such Equipment.
14.4 Acceptance of Equipment not installed by Seller shall be deemed to
occur upon receipt of and inspection by Buyer.
15. COVERAGE, INTERFERENCE AND THIRD-PARTY FACILITIES
15.1 Seller will not be responsible for radio propagation or coverage
distance due to Buyer's design. Seller shall not be responsible for
any failures or inadequacies of performance resulting from equipment
not supplied and installed by Seller or Seller's agents and
subcontractors pursuant to this Agreement. Seller shall not be
responsible for interference or disruption of service caused by
operation of other radio systems, lightning, motor ignition or other
similar interference.
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<PAGE> 21
15.2 In the event Buyer utilizes facilities or services supplied by
others such as common carrier circuits or towers, Seller shall have
no responsibility for the availability or adequacy of such services
or facilities.
16. REGULATORY COMPLIANCE
16.1 Seller shall use all reasonable efforts to install Equipment so that
it shall comply in all material respects with all Federal, State,
and local laws and regulations in force on the Effective Date of
this Agreement, which directly impose obligations upon the
manufacturer, Seller, or installer thereof.
16.2 The prices set forth for the Equipment described herein are based on
Seller's design, manufacture, and delivery of the Equipment pursuant
to its design criteria and manufacturing processes and procedures in
effect on the Effective Date of this Agreement. If, as a result of
the imposition of requirements by any Federal, State or local
government during the Term of this Agreement there is a change in
such criteria, processes or procedure or any change in the
Equipment, the Prices will be adjusted equitably to reflect the
added cost and expense of such change.
17. CHANGES
17.1 Up to ninety (90) days prior to the scheduled Ship Date (or such
later time as is acceptable to Seller), Buyer may request Equipment
addition(s) or deletion(s) to an original Equipment configuration.
At any time prior to the start of Commissioning, Buyer may request
changes to the Project Schedule or Statement of Work. All such
Equipment reconfigurations or changes to the Statement of Work or
Project Schedule ("Changes") shall be subject to prior written
approval of Seller.
17.2 Except as provided in 17.3 below, all Changes shall be documented in
a written change order ("Change Order"), which shall be executed by
Buyer and returned to Seller prior to implementation of the
requested Changes. The Change Order shall detail any adjustments to
the Price, Statement of Work, or Project Schedule required by Seller
for any aspect of its performance under this Agreement.
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<PAGE> 22
17.3 Upon written request of Buyer for a Change to the Statement of Work
that entails additional services totaling $10,000, or less, and upon
written acceptance thereof by Seller, Seller will proceed in good
faith to implement such Change prior to receipt of an executed
Change Order. Within five (5) days following Buyer's written
request, the parties shall agree upon an appropriate price for such
Changes, all of which will be summarized in a subsequent Change
Order and executed by an authorized representative of Buyer within
fifteen (15) days following the date of the request for Change.
17.4 Calculations for any System reconfigurations prior to the Ship Date
shall be based on Prices set forth in Annex 1, provided that (i) any
additions shall include any necessary engineering, Installation and
testing charges and (ii) any deletions shall include applicable
discounts, and further provided that the net cumulative amount of
Changes shall not reduce the Price of a Purchase Order by more than
ten percent (10%).
17.5 Upon prior written notification to Seller, Buyer may elect to cancel
Purchase Orders prior to shipment of Equipment subject to the
following:
17.5.1 Without charge, Buyer may cancel any Purchase Order no later than
ninety (90) days prior to the earliest scheduled Ship Date; or
17.5.2 If Buyer cancels a Purchase Order less than ninety (90) days prior
to the earliest scheduled Ship Date, Buyer shall pay a cancellation
charge of ten percent (10%) of the Price to Seller; or
17.5.3 If Buyer cancels a Purchase Order less than sixty (60) days prior to
the earliest scheduled Ship Date, Buyer shall pay to Seller a
cancellation charge of fifteen percent (15%) of the Price; or
17.5.4 If Buyer cancels a Purchase Order less than thirty (30) days prior
to the earliest scheduled Ship Date, Buyer shall pay to Seller a
cancellation charge of twenty percent (20%) of the Price.
17.5.5 Buyer may not cancel a Purchase Order subsequent to the Ship Date.
The payment of such charges shall be Seller's sole remedy and
Buyer's sole obligation for such canceled Purchase Order(s).
20
<PAGE> 23
18. CONDITION OF INSTALLATION SITE(S)
Buyer warrants that the Installation Site is free from friable
asbestos or other hazardous contamination. In the event that such
contamination is found to be present at the Installation Site,
Seller shall be relieved of all of its obligations hereunder until
such contamination is removed. In the event that Buyer fails or
refuses to remove such contamination, Seller shall have the right to
remove the Equipment or portions thereof if already delivered and
relocate the Equipment to an alternate site provided by Buyer and
charge Buyer for (i) any additional delivery charges to the new
Installation Site, (ii) all materials expended at the site including
cabling, permanently affixed equipment, and those items which cannot
reasonably be removed for use elsewhere, (iii) specifically ordered
items requested by Buyer, and (iv) all labor and materials expended
at the sites relating to the relocation using Seller's then current
rates.
19. RELEASE OF INFORMATION
19.1 Unless required by law, or as otherwise permitted under this
Agreement, Buyer and Seller agree that the terms and conditions of
this Agreement shall not be disclosed to any other party without the
prior written consent of the other; provided, however, that Seller
may release information to Northern Telecom Ltd., its research and
development affiliates, Bell Northern Research and BNR Inc. or any
wholly-owned subsidiaries ("Affiliate") on a need-to-know basis.
19.2 Neither Buyer nor Seller shall publish or use any advertising, sales
promotion, press releases or publicity matters relating to this
Agreement without the prior written approval of the other.
20. CONFIDENTIALITY
Buyer, Seller and Seller's Affiliates shall receive in confidence
from each other all technical information, business information,
documentation and expertise which is either (i) stamped or otherwise
marked as being confidential or proprietary whether in written or
electronic form, or (ii) if delivered in oral form, is summarized in
a written memorandum and listed
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<PAGE> 24
as being confidential ("Confidential Information") and shall not,
except as previously authorized in writing by the other party,
publish, disclose or make use of such information (except as
required by law and after notice to the other party), unless and
until the Confidential Information shall have ceased to be
proprietary as evidenced by general public knowledge or shall have
been legally acquired by such party. This prohibition against
disclosure, publication or use of Confidential Information shall not
restrict either party from developing similar information in the
exercise of its own technical skill, so long as such other
information is independently developed by such party without making
use of Confidential Information.
21. INTERCONNECTION TO SWITCH
21.1 Buyer understands that Equipment purchased hereunder does not
necessarily provide Buyer with a complete cellular
telecommunications System. In some cases, Buyer may intend to
interconnect the Equipment to an NTI DMS-MTX switch component, which
switch component, and the facilities for interconnection, may not be
included in Buyer's Purchase Order. In the event that Buyer
interconnects such Equipment to an NTI DMS-MTX switch not a part of
a complete System purchase (hereinafter "Host Switch"), it is
understood and agreed that the making and maintaining of all
necessary arrangements (whether commercial, legal or otherwise) with
the supplier of such NTI DMS-MTX switch component, including not
only arrangements necessary to permit the timely performance by
Seller of its responsibilities under this Agreement, (e.g., physical
and remote dial-up access to the Host Switch for installation and
services purposes), but also any arrangements necessary for the
ongoing operation of the Equipment in conjunction with the Host
Switch, shall be solely the responsibility of Buyer, and failure by
Buyer to timely make or maintain, any necessary arrangements shall
not excuse Buyer from its obligations under this Agreement. Seller
shall have no responsibility whatsoever under this Agreement for the
proper performance of the Host Switch or for any failures of the
Equipment resulting from improper performance of the Host Switch.
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<PAGE> 25
21.2 Buyer further acknowledges and agrees that the proper operation of
the Equipment and/or the availability of optional Software features,
is dependent upon having the appropriate Software Release Load
operating on the Host Switch.
22. EQUIPMENT CHANGES
With respect to any Purchase Order issued under this Agreement,
notwithstanding any other provisions contained in this Agreement,
Seller has the right, without prior approval from or notice to
Buyer, to make changes in the Equipment in whole or in part, or in
the related Specifications or other related documentation, or to
substitute products of later design at any time prior to delivery
thereof, provided that such changes do not adversely affect
performance or function. Seller is not obligated to make any such
changes in items of the Equipment previously delivered.
23. ANNEXES
The following Annexes shall form an integral part of this Agreement
as though written out in full in this Agreement:
Annex 1 - Equipment/Pricing
Annex 2 - Statement of Work/Sample Project Schedule
Annex 3 - DMS-MTX Acceptance Criteria
Annex 4 - Turnover and Acceptance Notices
Annex 5 - Seller Warranty Services
Annex 6 - Software License
Annex 7 - Documentation
24. GENERAL
24.1 Buyer may assign or transfer this Agreement or any rights hereunder
to any other party only with the prior written consent of Seller. No
assignment or sublicense of or under this Agreement, or of any
rights under this Agreement, by Buyer, shall relieve Buyer of
primary responsibility for performance of Buyer's obligations under
this Agreement. Seller reserves
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<PAGE> 26
the right to refuse to honor any assignment or sublicense which, in
the opinion of its legal counsel, would require it to violate any
United States export restriction, other law, or regulation. Seller
reserves the right to subcontract any portion of its obligation
under this Agreement, but no such subcontract shall relieve Seller
of primary responsibility for performance of Seller's obligations
under this Agreement.
24.2 Notices and other communications shall be transmitted in writing by
Certified U.S. Mail, postage prepaid, return receipt requested,
addressed to the parties as follows:
Northern Telecom Inc.
2435 N. Central Expressway
Richardson, Texas 75080
Attention: Director, Contracts
cc: Program Manager
Youngstown Cellular Telephone Co.
3910 South Avenue
Youngstown, Ohio 44512-1399
Attention: Mr. Albert Pharis, Jr.
Any notice given pursuant to this Section 24.2 shall be effective
five (5) days after the day it is mailed or upon receipt as
evidenced by the U.S. Postal Service return receipt card, whichever
is earlier.
24.3 This Agreement may not be modified or amended or any rights of a
party to it waived except in a writing signed by duly authorized
representatives of the parties hereto.
24.4 Failure by either party at any time to require performance by the
other party or to claim a breach of any provision of this Agreement
shall not be construed as affecting any subsequent breach or the
right to require performance with respect thereto or to claim a
breach with respect thereto.
24.5 Each party shall be liable for direct losses incurred by the other
party due to personal injury or damage to tangible property,
including the Hardware,
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which results from the negligence of that party's employees or
agents, provided, however, that nothing in this Section shall affect
or in any way increase Seller's obligation under this Agreement with
respect to the performance of the Hardware and/or Software Except
for personal injury, the total liability of Seller for all claims of
any kind for any loss or damage, whether in contract, warranty, tort
(including negligence), strict liability or otherwise, or claims for
indemnification arising out of, connected with, or resulting from
the performance or non-performance of this Agreement shall in no
case exceed the total Price of the Purchase Order accepted under
this Agreement giving rise to the claim.
24.6 The rights and obligations of the parties and all interpretations
and performance of this Agreement shall be governed in all respects
by the laws of the State of Texas except for its rules with respect
to the conflict of laws.
24.7 Article headings are inserted for convenience only and shall not be
used in any way to construe the terms of this Agreement.
24.8 The invalidity in whole or in part, of any provision of this
Agreement shall not affect the validity of the remainder of such
provision of this Agreement.
24.9 This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which taken together
shall constitute one and the same instrument.
24.10 Each party hereto represents and warrants that (i) it has obtained
all necessary approvals, consents and authorizations of third
parties and governmental authorities to enter into this Agreement
and to perform and carry out its obligations hereunder; (ii) the
persons executing this agreement on its behalf have express
authority to do so, and, in so doing, to bind the party thereto;
(iii) the execution, delivery, and performance of this Agreement
does not violate any provision of any bylaw, charter, regulation, or
any other governing authority of the party; and (iv) the execution,
delivery and performance of this Agreement has been duly authorized
by all necessary partnership or corporate action and this
25
<PAGE> 28
Agreement is a valid and binding obligation of such party,
enforceable in accordance with its terms
24.11 This Agreement constitutes the entire agreement between Seller and
the Buyer with respect to the subject matter hereof and supersedes
all previous negotiations, proposals, commitments, writings,
advertisements, publications and understandings of any nature
whatsoever. No agent, employee or representative of Seller has any
authority to bind Seller to any affirmation, representation, or
warranty concerning the System, except as stated in this Agreement
and unless such affirmation, representation, or warranty is
specifically included within this Agreement, it shall not be
enforceable by Buyer or any assignee or sublicensee of Buyer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their representatives being thereunto duly authorized.
YOUNGSTOWN CELLULAR NORTHERN TELECOM INC.
TELEPHONE COMPANY
By /s/ ALBERT H. PHARIS, JR. By: /s/ MATTHEW J. DESCH
-------------------------- --------------------------------------------
(Authorized Signature) (Authorized Signature)
Name: Albert H. Pharis, Jr. Name: Matt Desch
----------------------- ------------------------------------------
(Type/Print) (Type/Print)
Title: President Title: General Manager and Group Vice President
---------------------- -----------------------------------------
Date: 6-28-96 Date: July 2, 1996
----------------------- -----------------------------------------
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ANNEX 1
EQUIPMENT/PRICING
The following Hardware, Services, and Software being provided under this
Agreement are subject to the following:
The Typical DMS-MTX Spares, Typical Cell Site Spares, and Typical RF Spares
Set listings may be changed by Seller in part or in whole during the life of
his Agreement depending on the configuration of said System as provided to
Seller by the Buyer. Any such change/update shall be explained in writing to
the Buyer by Seller within ninety (90) days from the date that the
changes/updates are made. Seller reserves the right, without notice, to make
changes in Hardware design or components as progress in engineering or
manufacturing methods may warrant. However, such changes shall not adversely
affect the System performance.
Unless otherwise specifically stated, installation, testing, and engineering
are not included in the prices listed herein. Hardware prices shall be at
Seller's then-current list pricing for DMS-MTX 800 MHz products subject to any
applicable discounts as described herein, which prices and any subsequent
updates thereto shall be provided to Buyer under separate cover and shall be
deemed effective sixty (60) days following prior written notice thereof to
Buyer at the address and to the attention of Buyer personnel as provided in
Section 24.2 of this Agreement, or as such address and personnel may be
updated from time to time by Buyer in writing to Seller.
1.0 HARDWARE DESCRIPTION UNIT PRICE
Switch Hardware Then Current List Price less
applicable volume discount
Cell Site Hardware Then Current List Price less
applicable volume discount
RF Hardware Then Current List Price less
applicable volume discount
1-1
<PAGE> 30
VOLUME DISCOUNT AND NEW SWITCH DISCOUNT SCHEDULE
1.1 Equipment Prices during the Term shall be at Seller's then-current List
Prices for DMS-MTX products, less the following discounts. OEM Equipment,
Installation, Commissioning, engineering and other Services do not
qualify for a discount.
Unless otherwise specifically stated, Installation, Commissioning and
engineering are not included in List Prices and will be quoted
separately.
The following discount percentages, as applicable, shall be applied to
Seller's then-current List Prices and shall be applicable to the Initial
Purchase Order and all Purchase Orders issued thereafter. Such discounts
are based on a commitment from Buyer to purchase an aggregate of
$20,000,000 worth of Equipment (net amount after discounts) during the
Term of the Agreement.
The new Switch discount detailed below ("New Switch Discount") is a stand
alone, one-time discount for the purchase of a complete new Switch. Only
the new Switch and the initial Software load and features installed with
such new Switch will receive this special discount. Following such
initial purchases, the Expansion Equipment Discount shall apply for
Equipment added on to such Switch.
AMPS/TDMA Volume Discount Structure:
EXPANSION NEW SWITCH
DISCOUNT DISCOUNT
-------- --------
Switch Equip 45% 60%
NT800 OR Cells w/ATC 42%
Other RF Infrastructure 40%
TRUII Radios (fixed price $4,850
per unit, includes discount)
Software 50% 65%
1-2
<PAGE> 31
PRICING TERMS AND CONDITIONS
a. The cumulative dollar amount of Seller Equipment purchased to achieve the
Volume Purchase Commitment may be a mix of Hardware (excluding OEM
Equipment), Switch Software, and Cell Sites for both NTI and RIP Markets.
All such Equipment shall be ordered by Buyer prior to June 30, 1999 with
delivery dates scheduled to occur no later than ninety (90) days
following June 30, 1999.
b. Buyer agrees to issue Purchase Order(s) (that are acceptable to Seller)
and take delivery of at least $2M of Equipment and/or Services by June
30, 1997 based substantially on the following configurations. Buyer is
not obligated to purchase this exact configuration of Equipment and can
make changes to such Equipment as mutually acceptable to both Buyer and
Seller.
16CH OMNI/ICRM CELL SITES
EQUIPMENT LISTING: LIST EXT
DESCRIPTION PEC QTY PRICE PRICE
- ----------- ----- --- ------- -------
16CH OMNUICRM/DRU/ATC CC1016NU 10 $115,534 $1,155,340
TRUII Radios RD0000NU 140 $10,500 $1,470,000
DICP w/DSP Module MA1034NU 2 $493,716 $987,432
(MTX/MTXM)
-------------
SUB-TOTAL EQUIPMENT $3,612,772
LESS APPLICABLE EXPANSION DISCOUNTS ($1,720,587)
-------------
TOTAL EQUIPMENT PRICE $1,892,185
-------------
E F & I
1 ICP-Standalone - EF&I MT1013NU 2 $12,534 $25,068
Live Switch CP Install MI1016NU 1 $6,300 $6,300
Cell Site EF&I CE0000NU 10 $110,580 $110,580
-------------
TOTAL EF&I $141,948
-------------
TOTAL PRICE $2,034,133
=============
SCOPE OF QUOTE:
1. Quote includes: 16CH OMNI/ICRM/TRUII/ATC cell sites with Switch support
equipment.
2. Installation, engineering & freight included in quote.
3. Pricing discount: Switch 45%; NT800DR Cell site 42%; TRUII @$4,850.
4. Delivery: All equipment shipped by June 30, 1997.
1-3
<PAGE> 32
c. P3 Analog Radios will not be sold under this Agreement.
1.2 At the end of the Term, Seller shall calculate any termination fee (as
explained in Section 2.2.2) on the basis of Buyer's net volume
purchase(s) during the term of the Agreement. The termination fee as
stated in Table A below will be determined by calculating Buyer's actual
net volume purchases to be applied as a percentage against the balance of
the Commitment that remains at the end of the Term. Buyer shall pay
Seller the termination fee within thirty (30) days of receipt of invoice
from Seller.
TABLE A
Actual Net Volume Purchases
<TABLE>
<CAPTION>
$0M-4.0M $4.1M-8.0M $8.1M-12.0M $12.1M-16.0M 16.1M-19.9M
-------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Termination Fee 20% 15% 10% 5% 2.5%
</TABLE>
For example: Buyer's actual net volume purchase(s) equal eighteen (18)
million dollars ($18,000,000) at the end of the Term of this Agreement.
Buyer's Volume Purchase Commitment (refer to Section 2.2.1) is equal to
twenty (20) million dollars ($20,000,000). The difference between Buyer's
Volume Purchase Commitment and Buyer's actual net volume purchase(s) at
the end of the Term is two (2) million dollars ($2,000,000). The
termination fee percentage applicable in this example would be two and a
half percent (2.5%) since the actual net volume purchase(s) equal
eighteen million dollars ($18,000,000) (refer to Table A of this
section). Therefore, the termination fee due to Seller from Buyer would
be equal to two and a half percent (2.5%) of the balance of the
Commitment that remains at the end of the Term ($2,000,000), or when
calculated, the termination fee is equal to fifty thousand dollars
($50,000). The following illustrates the termination fee equation:
A) Buyer's Volume Purchase Commitment
(per Section 2.2.1) = $20,000,000
Less Buyer's actual net volume purchase(s)
at end of term = ($18,000,000)
Remaining balance of Buyer's Commitment = $2,000,000
1-4
<PAGE> 33
B) Termination percentage fee applicable per
Table A of this Section = 2.5%
C) Termination fee = ($2,000,000 multiplied by 2.5%) = $50.000
=======
2.0 TRAINING
Seller's current recommended training courses for Buyer's technicians are
listed below. All training is conducted at Seller facilities in
Richardson, Texas. Upon request, Seller will provide then-current tuition
rates, which rates are exclusive of travel, lodging or per diem expenses,
which shall be for Buyer's account. Course content is subject to change
at Seller's discretion.
COURSE DESCRIPTION/NUMBER DAYS
------------------------- ----
Introduction to Cellular #921 3
Technical Introduction to Cellular #922 5
DMS-MTX Switch Maintenance #944 TBD
Analog Cell Site and Radio Maintenance #961 5
DRU Cell Site and Radio Maintenance #962 5
COURSE DESCRIPTION/NUMBER DAYS
------------------------- ----
Translations #980 8
Cell Site Database #982 5
International Translations #983 5
DMS-MTX Networking (IS-41 Rev. B) #984 5
1-5
<PAGE> 34
ANNEX 2
STATEMENT OF WORK/SAMPLE PROJECT SCHEDULE
1.0 This Statement of Work defines the work requirements and
responsibilities of both Seller and the Buyer which are necessary to
engineer, furnish, deliver, install and test the Equipment furnished
hereunder at the Installation Site(s) in accordance with the Project
Schedule contained herein. Seller's obligation to perform the
Services described hereunder assumes receipt and acceptance of a
valid Purchase Order for such Services and associated Equipment
2.0 Seller's Responsibilities
Seller, or its designated subcontractor, shall perform the
following:
2.1 Engineer, furnish, deliver, install and test all Equipment in
accordance with the applicable Specifications and in accordance with
this Annex 2. Any changes to the Statement of Work will cause
adjustments to this Annex and may affect the Equipment pricing.
2.2 In conjunction with a Switch Installation, furnish a Customer Input
("CI") Questionnaire and Data Base Engineering Questionnaire to
Buyer on or before the date as specified in the Project Schedule.
2.3 In conjunction with a Switch Installation, perform a site visit on
or before the date as specified in the Project Schedule to Buyer's
facilities to review the information requested on the
Questionnaires, survey the Installation Sites(s) and generate floor
plans to be used to engineer and install the Equipment. Any services
outside this Statement of Work requested by Buyer as a result of the
CI meeting shall be quoted by Seller, upon request by Buyer, and if
accepted by Buyer, will be documented in a Change Order pursuant to
Section 17 of the Agreement.
2.4 During a Switch Installation, provide draft floor plans for the
Switch Installation Site to the Buyer on or before the date as
specified in the Project Schedule. Floor plan layouts will be
finalized at the CI meeting.
2.5 Ship the Equipment for which Seller has accepted a Purchase Order to
the Installation Site location(s) specified below on or before the
date as specified in the Purchase Order and/or Project Schedule ("D"
Date). Delivery will be delayed if the Installation Site(s) are not
made ready by the "D" Date.
2-1
<PAGE> 35
2.5.1 SWITCH LOCATION
Name:___________________________________
Street Address:_________________________
City:___________________________________
State/Country/Zip Code:_________________
2.5.2 CELL SITE(S)
Name:___________________________________
Street Address:_________________________
City:___________________________________
State/Country/Zip Code:_________________
2.6 Begin the Installation on or before the date as specified in the
Project Schedule ("H" Date), of the Equipment specified in Buyer's
Purchase Order according to the applicable sections of the Northern
Telecom Installation Manual and the engineering specifications and
drawings generated for the Equipment. The Installation work will be
done in a professional workmanlike manner.
2.7 Provide all tools, installation and test equipment necessary for
performance of Seller's obligations listed in this Annex. Any use of
tools and/or test equipment by the Buyer must be approved by Seller
and may subject Buyer to additional charges.
2.8 Comply with the Buyer's security regulations for the Installation
Site(s).
2.9 Furnish the System Documentation as described in Annex 7 on or
before the date as specified in the Project Schedule.
2.10 Engineer, furnish, install and test the following materials required
to connect from Seller provided Equipment to the demarcation points
defined below:
2.10.1 RF Demarcation
The RF demarcation point is defined as the RF output connector
port(s) on the combiner(s) and the antenna input port(s) on the
receive multicoupler(s) in the cell site equipment frames. Seller
will provide all Equipment including voice frequency ("VF") and
radio frequency ("RF") cables, wire, and associated materials for
both inter- and intra-frame connections. (RF jumpers [including
connectors] to the Buyer's antenna system main transmission line
shall be provided by the Buyer in accordance with Section 3.6
herein.)
2-2
<PAGE> 36
2.10.2 Telco Facilities Demarcation
The Telco Facility demarcation point is defined as the Main
Distribution Frame (MDF) and shall be provided by the Buyer.
Terminal blocks required for Equipment, VF, data, and alarm cables
will be provided and installed by Seller on the Buyers MDF. Fifty
feet of each type cable (standard length) shall be provided by
Seller per Installation Site to connect the Equipment to the MDF.
Seller will cross connect the jumpers as directed by the Buyer.
Appropriate information must be supplied by the Buyer in such cases.
Additional cable and associated materials, if required, will be
provided at Buyer's expense. Seller shall terminate MTX DS-1 cables
to the Buyer-provided DSX-1 panel. Buyer shall be responsible for
bringing all other DS-1 facilities to the DSX-1.
2.10.3 DC Power System Demarcation
The DC power system demarcation point is defined as the DC power
board fuse(s) and/or breaker(s). Wire for each power and return lead
shall be provided by Seller for each Installation Site (a maximum of
50 ft. per frame) to connect to the Equipment. Additional wire and
associated materials, if required, will be provided at Buyer's
expense. DC fuses and/or breakers and any other part of the power
board or DC power system (including inverters) are not provided by
Seller. The required fuse and/or breaker quantities and sizes are
available upon request.
2.10.4 Alarm System Demarcation
The Alarm System demarcation point is defined as the Seller
furnished alarm terminal block. Fifty feet of alarm cable shall be
provided by Seller per Installation Site to connect Equipment alarms
to the terminal block. Fifty feet of cable shall also be provided to
connect Seller's alarm display and control panel at the MTX.
Additional cable and associated materials, if required, will be
provided at Buyer's expense. Any alarm points that the Buyer may
want to take to an external alarm system will be done at the Buyer's
expense.
2.11 Fifty feet of wire for each ground lead extending from Equipment to
the Main Ground Bar (MGB) shall be provided by Seller per
Installation Site.
2.12 During a Switch Installation, furnish, install and test one VDU, one
printer, one Norstar KSU equipped with two telephone sets and fifty
feet of associated cable with terminal blocks. Any additional items
will be provided and installed at Buyer's expense.
2.13 Complete the Installation and Testing on or before the date as
specified in the Project Schedule ("K" Date).
2-3
<PAGE> 37
2.14 Provide training to the Buyer as described in Annex 1 and in
accordance with Buyer's Purchase Order(s) as soon as course
schedules and Buyer's schedule allows.
2.15 Provide ongoing Technical Assistance Service (TAS) as described in
Annex 5.
NOTE: THE MATERIALS AND SERVICES DETAILED ABOVE REPRESENT SELLER'S TOTAL
RESPONSIBILITY FOR INSTALLATION ACTIVITIES. ANY ADDITIONAL MATERIALS
AND LABOR BEYOND THOSE DESCRIBED HEREIN SHALL BE QUOTED AND
FURNISHED BY SELLER, AT BUYER'S REQUEST, IN ACCORDANCE WITH ARTICLE
17 OF THE SUPPLY AGREEMENT.
3.0 Buyer's Responsibilities
Buyer or its designated subcontractor, shall perform the following:
3.1 Provide overall program management and engineering functions related
to the Buyer's responsibilities listed in this Agreement. This
includes, but is not limited to, management of schedules for other
equipment suppliers, telco circuit orders and engineering relating
to Installation Site locating, frequency planning coordination and
RF propagation studies and coverage verification.
3.2 Provide all real estate property, environmental approvals, leases,
rents, and all permits and licenses, including but not limited to,
Certificates of Occupancy, FCC construction permits, zoning and FAA
permits.
3.3 Gather the information necessary to complete the Customer
Information and Data Base Questionnaires on or before the date as
specified in the Project Schedule.
3.4 Review, approve and return Seller's draft floor plan for each
Installation Site on or before the date as specified in the Project
Schedule.
3.5 Provide all required civil engineering and construction work
including, but not limited to, site preparation such as grading,
tree removal, roads, tower and building foundations, and fencing.
3.6 Provide and install towers, coax bridges, antennas, transmission
line and associated materials. This includes RF jumpers (with
connectors) between the main transmission line and the RF equipment
bays. Antenna system return loss measurements and other antenna
system tests are the Buyer's responsibility.
3.7 Provide adequate building facilities, utilities, space and
environmental conditions for Seller's Installation personnel and
Equipment as well as any other Buyer equipment on or before the date
as specified in the
2-4
<PAGE> 38
Project Schedule ("J" Date). The minimum building requirements are
given below. The Equipment environmental and space requirements are
given in Section 4.0 of this Annex.
3.7.1 Building facilities shall be provided with air-conditioning,
heating, ventilation, lighting and have adequate working space that
is free of debris and other clutter which might hinder the
Installation. The building must be dry and free from dust and in
such condition as not to be hazardous to Seller personnel or the
Equipment and materials to be installed. Seller shall gather and
separate debris from usable material, mark accordingly, and place in
an area identified by Buyer for Buyer's pick-up and disposition.
3.7.2 Provide any building renovations, computer floors and wall
penetrations. Provide openings (including elevator space where
required) to allow the Equipment to be placed into position.
3.7.3 Provide and install adequate fire fighting apparatus at each
Installation Site. Activation of a water fire extinguishing system
may void the warranty on the Equipment.
3.7.4 Provide and install all required commercial AC power and associated
fixtures including, but not limited to, AC panels, AC circuit
breakers, AC fuses, building wiring, convenience outlets, lighting
and AC grounds. All electrical facilities shall conform to the
latest issue of the National Electrical Code (NEC) and any local
codes to insure a safe work area.
3.7.5 Provide adequate security for the Equipment, installation materials
and tools at each installation Site and/or storage facility (if
required).
3.7.6 Provide three telephone lines (two for modems and one telephone
set), and service (dial tone from a local exchange) at each switch
Installation Site and one telephone set at each cell site on or
before the "H" Date.
3.8 Engineer, furnish, deliver, install and test the following on or
before the "S" Date as specified in the Project Schedule in a
professional and workmanlike manner:
3.8.1 All overhead cable trays at each Installation Site.
3.8.2 An MDF for each Installation Site. The MDF can be a free standing
rack or a plywood panel board (4' x 8' x 5/8" typical) for wall
mounting.
3.8.3 A single point grounding system, including an MGB and all subsequent
connections to the ground field shall be provided for the Equipment
at each Installation Site. The ground fields shall measure 5 ohms or
less.
3.8.4 A negative 48 VDC power system and a 500VA DC to AC inverter for
each DMS-MTX switch and a +24VDC power system for each cell site
2-5
<PAGE> 39
including all required fuses and/or circuit breakers for all
Equipment and any Buyer provided equipment. This includes any alarm
cables, terminal blocks and AC power wiring.
3.8.5 Dedicated DS-1 facilities to connect each DMS-MTX switch to the PSTN
and to each cell site. If direct digital DS-1 facilities are not
available, the Buyer may incur additional costs to interface the
Equipment. DS-1 facilities are to be provided (from the DSX-1 panel
provided by Buyer) to the Telco Facility demarcation point as
defined in paragraph 2.10.2 of this Annex at each Installation Site.
3.8.6 All channel banks and DSX-1 cross connect panels including: any
associated relay racks; fuse and alarm panels; power wiring; HF
cables; jumpers; alarm cables; VF jack fields; patch cords and
terminal blocks. Channel bank make and model numbers must be
approved by Seller prior to their use. Channel banks must be
equipped with two 4-wire 56 kb/s dedicated data circuits and one
dedicated 4-wire audio circuit per cell site voice channel to each
cell site. Any other associated equipment such as ring generators
and other channel units are to be provided by the Buyer.
3.8.7 All alarm sensors and wiring, other than those which are included in
Equipment, and connect to Buyer provided alarm terminal blocks. This
includes, but is not limited to, open door, high/low temperature,
tower lights and smoke detector alarm sensors.
3.9 Provide Seller designated personnel free access to each Installation
Site as required to perform Seller's obligations under this
Agreement. Access is to be provided as follows:
3.9.1 Adequate roads and parking to each site for delivery vans and
two-wheel drive vehicles.
3.9.2 All required security passes and clearances.
3.9.3 24 hours/day, 7 days a week access to the Equipment. Seller shall
provide Buyer twenty-four hours' advance notice of the need for
access. Telephonic notification is permissible.
3.10 Provide or bear the cost for any special equipment required to
deliver Equipment to the Installation Site(s) such as 4-wheel drive
vehicles, bulldozers, cranes, helicopters, etc.
3.11 Provide and install all materials required to adequately support and
brace the Equipment in accordance with the seismic risk zone of each
Installation Site.
3.12 Buyer shall provide free telephone service (air time and long
distance) to Seller personnel during the Installation, testing, and
service period of the project. The purpose of such service will be
to support the Equipment Installation for testing purposes, business
communications, and safety needs of Seller personnel. The free
service shall include, but not be
2-6
<PAGE> 40
limited to, activation charges, air time, long distance, and roamer
charges. All traffic generated by Seller personnel will be limited
to business and Equipment testing purposes only. Any personal calls
will be the responsibility of Seller.
3.13 The Buyer and/or its representatives are encouraged to be present
for preliminary testing and Turnover. Sign-off sheets in Annex 4
shall serve to provide a test record and establish the warranty
start date.
4.0 DMS-MTXI Northern Telecom Cell Site Environmental Requirements (For
MTXD)
4.1 The Equipment is designed to operate in the controlled environment
described below. Operation outside the normal conditions will void
the warranty. The more stringent conditions will govern for
co-located switch and cell site configurations.
4.2 Ambient Temperature
4.2.1 System Normal Extreme
DMS-MTX/NT 50 to 86 deg. F 41 to 120 deg. F
Cell Site
Conditions above or below the normal tolerance for more than 72
consecutive hours and 15 days maximum per year are considered
extreme.
The rate of change shall not exceed 15 degrees F per hour.
Ambient Temperature is measured at a point 5 feet above floor level
and either mid-aisle or 15" in front of the equipment, whichever is
less.
4.2.2 Storage Ambient Temperature: -40 to 160 deg. F.
4.3 Relative Humidity (non-condensing)
4.3.1 System Normal Extreme
DMS-MTX 20% to 55% 20% to 80%
NT Cell Site 20% to 55% 5% to 65%
The DMS-MTX switch is allowed 80% relative humidity at an ambient
temperature that cannot exceed 70 degrees F. At an ambient
temperature of 120 degrees F, the maximum allowable relative
humidity is 30%.
Relative humidity is measured at a point 5 feet above floor level
and either mid-aisle or 15" in front of the equipment, whichever is
less.
4.3.2 Storage Humidity: 10% to 90%; maximum water vapor pressure not to
exceed 25 mmHg.
2-7
<PAGE> 41
4.4 Air Cleanliness
The Equipment functions indefinitely in an ambient air having a
cleanliness standard no higher than class 100,000. Classes are
defined as the number of particles of 0.5 microns and larger, per
cubic foot.
4.5 Space Requirements
The minimum distance between the ceiling and the finished floor is
9'-0" at all Installation Sites. Each DMS-MTXD cabinet is 28.4" x
28" x 72" (WxDxH). All SuperNode cabinets are 42" x 24" x 72"
(WxDxH). The minimum front and rear aisle space is 36". Each cell
site frame is 23" x 18" x 84" (WxDxH). However, the footprint space
required is 23" x 26" x 84", which space is in addition to the
minimum aisle space required: 36" in front; 24" in rear; 6" at the
side.
4.6 Floor and Heat Dissipation Requirements
4.6.1 The Buyer's building facilities shall accommodate the following
Equipment parameters. (The number and type of cabinets and frames
depend upon the configuration requirements):
Heat
4.6.2 DMS-MTX Cabinets Weight (lbs) Dissipation (BTU/Hr)
MCAM 643 2305
MCEX 650 2000
MCOR 725 4380
MNET 675 4380
MCTM-I 710 3546
LPP 1100 3180
ENET 1120 3740
MCOR-II 1600 3500
MDSP 663 1068
4.6.3 NT Cell Site Frames
Common Equipment 400 2600
8 Charnel RF frame 600 5500
16 Channel RF frame 800 11000
5.0 (Sample) Project Schedule (In Weekly Intervals)
The sample project schedule listed below shall serve as an
informational guideline for the time periods involved in a typical
System installation. The project intervals assume one DMS-MTX and up
to 5 NT cell sites maximum. Add one week for each additional cell
site. Buyer and Seller shall agree upon specific Project Schedules
and/or delivery dates on a case-by-case basis prior to Seller's
acceptance of a Purchase Order.
2-8
<PAGE> 42
Responsible
Week Milestone Event Party
---- --------------- -----------
1 Purchase Order Documents completed Seller/Buyer
and accepted by Seller
2 Send Customer Input/Data Base
Questionnaire to Buyer Seller
4 Customer Information Meeting with
Buyer (site survey may be performed) Seller/Buyer
6 Issue Draft Floor Plans to Buyer Seller
7 Approved Floor Plans returned
to Seller Buyer
11 Installation Site Ready ("J" Date) Buyer
12 Ship MTX ("D" Date) Seller
13 Ship System Documentation Seller
13 Overhead Cable Tray/MDF Available
("S" Date) Buyer
13 DC Power/Ground System Available
("S" Date) Buyer
13 DS-1 Facilities/Channel Banks/DSX-1
Cross connect Panels/Buyer's External
Alarm Points Available ("S" Date) Buyer
14 Start Installation ("H" Date) Seller
15 Frequency Plans provided Buyer
19 Installation Complete ("K" Date)
(See Note) Seller
20 Pre-In-service check Seller
21 System In-service ("IS" or
"Turnover" Date) Seller/Buyer
NOTE: Seller's Price assumes continuous performance of on-site
Installation and Commissioning Services without delay or
interruption of Services. In the event of delays or disruption of
Services, Buyer and Seller shall agree upon a revised Project
Schedule, provided, however, that in the case of a schedule
revision, there may not necessarily be a day-for-day adjustment to
the schedule.
2-9
<PAGE> 43
ANNEX 3*
DMS-MTX ACCEPTANCE CRITERIA
SITE: _____________________ DATE STARTED: _________________
PROJECT: _____________________ COEO: _________________
LOCATION: _____________________ DATE COMPLETED: ________________
_____________________ SELLER REP: _________________
BUYER REP: _________________
Seller Buyer
Section Name Initials Initials
1225 EQUIPMENT GROUNDING VERIFICATION ________ ________
5160 POWER UP DMS SUPERNODE ________ ________
5172 POWER VERIFICATION ________ ________
5454 SLM COMMISSIONING ________ ________
5452 SLM LOAD ROUTE VERIFICATION ________ ________
5620 OFFICE IMAGE CAPTURE-SUPERNODE ________ ________
5453 DMS-CORE COMMISSIONING ________ ________
5615 DMS-BUS COMMISSIONING ________ ________
5211 SYSTEM LOADING ENET ________ ________
5198 ENET COMMISSIONING ________ ________
5184 SPARE CIRCUIT PACK TEST
DMS-SUPERNODE ________ ________
0310 CORE MAINTENANCE (PROC. 4,5,6,7
SECT. 4.7, 4.8) ________ ________
0345 PERIPHERAL MODULE DIAGNOSTICS ________ ________
0350 TRUNK DIAGNOSTICS ________ ________
0831 INSTALLATION AND TEST OF DDU ________ ________
0177 MAGNETIC TAPE DRIVE TESTS ________ ________
5472 CABINET ALARM TESTING ________ ________
0190 CARRIER INTERFACE CARD FIELD
EQUALIZATION ________ ________
0355 DRAM TESTING ________ ________
0461 TONES AND ANNOUNCEMENTS ________ ________
5623 SYNCHRONIZATION FEATURE TEST ________ ________
0692 MTX TRUNK OPERATIONAL FEATURE TEST ________ ________
0693 AMA/CDR TEST ________ ________
0385 SPARE CIRCUIT PACK TEST ________ ________
* All of the Test Criteria set forth in this Annex 3 may not be applicable
to the Equipment being ordered by Buyer under a Purchase Order. If a
referenced Section is not applicable, "NA" will be written in and Seller
and Buyer will initial off appropriately.
In certain instances it may be necessary for Seller to perform additional
Testing, depending on the Equipment being ordered under Buyer's Purchase
Order. When this occurs, the Section from Seller's installation manual
that the Equipment is to be Tested against will be written in, and
following successful completion of the Test, Seller and Buyer will
initial off appropriately.
3-1
<PAGE> 44
ANNEX 3*
DMS-MTX ACCEPTANCE CRITERIA
(CONTINUED)
SELLER BUYER
SECTION NAME INITIALS INITIALS
0446 OPERATIONAL MEASUREMENT TEST ________ ________
0690 CSC DATA LINK TEST ________ ________
**** O.R.R. (OFFICE RELEASE RECORD) ________ ________
5159 ASU COMMISSIONING ON LIS (LIU,
NIU, EIU) ________ ________
2161 NORSTAR INSTALLATION ________ ________
5203 SOFTWARE AUDIT ________ ________
0410 TEST LINE OPERATIONAL TEST ________ ________
5562 SCSI-DDU INSTALLATION & TESTING
(1X55FA) ________ ________
1581 INSTALLATION & TEST OF DDU ________ ________
1865 TURBO LINK INSTALLATION & TESTING ________ ________
5218 XPM PATCHING PROCESS ________ ________
5043 LIS LOADING & DIAGNOSTICS ________ ________
1086 INSTALLATION & COMMISSIONING OF
DSPM ________ ________
SELLER:________________________ DATE:________________________
BUYER:_________________________ DATE:________________________
3-2
<PAGE> 45
ICP BASED CELL (ANALOG) ACCEPTANCE CRITERIA
SITE: _____________________ DATE STARTED: ________________
PROJECT: _____________________ COEO: ________________
LOCATION: _____________________ DATE COMPLETED:________________
_____________________ SELLER REP: ________________
BUYER REP: ________________
SELLER BUYER
SECTION NAME INITIALS INITIALS
1290 PROCEDURE TO INSTALL NT800 BASE ________ ________
1271 POWER AND GROUND VERIFICATION ________ ________
1269 TESTING THE MASTER OSCILLATOR ________ ________
1299 TRANSCEIVER DEBUG OPERATION ________ ________
1298 CELL SITE TRANSCEIVER TRANSMIT TEST ________ ________
1297 CELL SITE TRANSCEIVER RECEIVE TEST ________ ________
1296 TRANSCEIVER AUDIO ALIGNMENT ________ ________
1272 POWER AMPLIFIER MODULE TESTING ________ ________
1295 COMBINER TUNING AND TESTING ________ ________
1273 TESTING THE RCMI IN AN NT800
CELL SITE ________ ________
1294 TESTING CELL SITE ALARMS ________ ________
**** O.R.R. (OFFICE RELEASE RECORD) ________ ________
1106 CELL SITE EXTENDED SPECTRUM FRAME
TEST ________ ________
MOBILE ORIGINATION AND
TERMINATION TEST ________ ________
(MOBILE TO MOBILE, MOBILE TO LAND,
LAND TO MOBILE, ALL RADIOS)
1291 CONNECT CUSTOMER FACILITIES TO CELL ________ ________
5026 MTX-CELL SITE INTEGRATION TEST ________ ________
5295 LOADING AND COMMISSIONING THE ICRM ________ ________
1545 ICRM INSTALLATION INTO THE CE1
FRAME ________ ________
SELLER:________________________ DATE:________________________
BUYER:_________________________ DATE:________________________
3-3
<PAGE> 46
ICP BASED CELL (DIGITAL) ACCEPTANCE CRITERIA
SELLER BUYER
SECTION NAME INITIALS INITIALS
1290 PROCEDURE TO INSTALL NT800 BASE ________ ________
1271 POWER AND GROUND VERIFICATION ________ ________
1269 TESTING THE MASTER OSCILLATOR ________ ________
1299 TRANSCEIVER DEBUG OPERATION ________ ________
5298 CELL SITE DRU COMMISSIONING TESTS
WITH IFR 1600 ________ ________
1272 POWER AMPLIFIER MODULE TESTING ________ ________
1295 COMBINER TUNING AND TESTING ________ ________
5295 LOADING AND COMMISSIONING THE ICRM ________ ________
1294 TESTING CELL SITE ALARMS ________ ________
**** O.R.R. (OFFICE RELEASE RECORD) ________ ________
1106 CELL SITE EXTENDED SPECTRUM FRAME
TEST ________ ________
MOBILE ORIGINATION AND TERMINATION
TEST ________ ________
(MOBILE TO MOBILE, MOBILE TO LAND,
LAND TO MOBILE, ALL RADIOS)
1291 CONNECT CUSTOMER FACILITIES TO CELL ________ ________
2176 DIGITAL CELLULAR OVERLAY ________ ________
1547 DRUM INSTALLATION INTO THE CE1
FRAME ________ ________
SELLER:________________________ DATE:________________________
BUYER:_________________________ DATE:________________________
3-4
<PAGE> 47
ICP BASED CELL (ANALOG/DIGITAL COMBINATION)
ACCEPTANCE CRITERIA
SELLER BUYER
SECTION NAME INITIALS INITIALS
1290 PROCEDURE TO INSTALL NT800 BASE ________ ________
1271 POWER AND GROUND VERIFICATION ________ ________
1269 TESTING THE MASTER OSCILLATOR ________ ________
1299 TRANSCEIVER DEBUG OPERATION ________ ________
5298 CELL SITE DRU COMMISSIONING TESTS
WITH IFR 1600 ________ ________
1272 POWER AMPLIFIER MODULE TESTING ________ ________
1295 COMBINER TUNING AND TESTING ________ ________
5295 LOADING AND COMMISSIONING THE ICRM ________ ________
1294 TESTING CELL SITE ALARMS ________ ________
**** O.R.R. (OFFICE RELEASE RECORD) ________ ________
1106 CELL SITE EXTENDED SPECTRUM FRAME
TEST ________ ________
MOBILE ORIGINATION AND TERMINATION
TEST ________ ________
(MOBILE TO MOBILE, MOBILE TO LAND,
LAND TO MOBILE, ALL RADIOS)
1291 CONNECT CUSTOMER FACILITIES TO CELL ________ ________
2176 DIGITAL CELLULAR OVERLAY ________ ________
1547 DRUM INSTALLATION INTO THE CE1
FRAME ________ ________
1297 CELL SITE TRANSCEIVER RECEIVE TEST ________ ________
1298 CELL SITE TRANSCEIVER TRANSMIT TEST ________ ________
1296 TRANSCEIVER AUDIO ALIGNMENT ________ ________
1273 TESTING THE RCMI IN AN NT800 CELL
SITE ________ ________
5026 MTX-CELL SITE INTEGRATION TEST ________ ________
SELLER:________________________ DATE:________________________
BUYER:_________________________ DATE:________________________
3-5
<PAGE> 48
Reference: Supply Agreement dated
_____________ between Northern Telecom Inc.
and Youngstown Cellular Telephone Company
ANNEX 4
TURNOVER NOTICE
TO: Northern Telecom Inc.
2435 N. Central Expressway
Richardson, Texas 75080
Attention: Manager, Contract Administration
The undersigned hereby acknowledges that the Equipment located at __________
has been installed and tested by Northern Telecom Inc., is available to be
placed in service and Commissioning has been completed as set forth in the
referenced Agreement.
The undersigned Buyer further acknowledges the commencement of the Warranty
Period as defined in the referenced Agreement as of the date written below.
Date: ________________________
Buyer: ________________________
By: ________________________
Title: ________________________
4-1
<PAGE> 49
Reference: Supply Agreement dated
______________ between Northern Telecom
Inc. and Youngstown Cellular Telephone
Company
ACCEPTANCE NOTICE
TO: Northern Telecom Inc.
2435 N. Central Expressway
Richardson, Texas 75080
Attention: Manager, Contract Administration
Pursuant to the terms and conditions of the referenced Agreement, I, the
undersigned Buyer, hereby acknowledge that Northern Telecom Inc. has completed
all requirements for Acceptance of the Equipment located at _______________,
as set forth in the Agreement and all Annexes, and hereby certify to the final
Acceptance of such Equipment.
Date: ________________________
Buyer: ________________________
By: ________________________
Title: ________________________
4-2
<PAGE> 50
ANNEX 5
SELLER WARRANTY SERVICES
1.0 TAS WARRANTY SERVICES
1.1 If Buyer experiences operational difficulties, Buyer may contact
Seller's Technical Assistance Service (TAS) Department. Special
remote terminals in the TAS center are used to communicate with
Buyer's System to diagnose fault conditions and recommend corrective
action.
1.2 This function provides three (3) basic classifications of assistance
to a customer:
1.2.1 Emergency Technical Assistance Service
This service is available to customers who require immediate
assistance with operational problems (i.e., loss of call processing,
loss of billing). This service is available 24 hours/day, seven
days/week. Through verbal reports and remote diagnoses of the
System, TAS technicians recommend actions to restore the System to
stable operation as quickly as possible.
1.2.2 Routine Technical Assistance Service
This service is available to customers who require problem
isolation/resolution in a Non-Emergency situation. This service is
available during normal business hours (8-5 CST, M-F) and is
primarily used for analysis of routine technical problems using
verbal reports from site personnel and System-generated information.
1.2.3 Technical Information Service
This service is available during normal working hours to answer the
variety of questions about specific System functionality,
procedures, operational issues, new features, and other telephony
oriented questions.
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<PAGE> 51
2.0 SERVICES NOT COVERED BY WARRANTY
2.1 Seller will provide technical assistance free of charge during the
initial warranty period, as defined in the terms and conditions of
the Supply Agreement. Some situations may arise during this
no-charge warranty period that will result in a service request
being considered as billable. Such situations include, but are not
limited to the following:
2.1.1 Requests resulting from problems with equipment not furnished by
Seller.
2.1.2 Requests where the problem solution was available via Seller
documentation such as NTPs, Advisory Bulletins, and BCS release
documents.
2.1.3 Requests that result from customer requested feature patches which
alter the design intent of standard Software in order to provide
customer requested changes in operations.
2.1.4 Requests for on-site assistance in lieu of remote testing.
2.1.5 Non-emergency requests outside normal business hours (8-5 CST, M-F,
Seller Holidays), unless scheduled with appropriate TAS manager in
advance.
2.1.6 Requests for assistance in performing System data changes or changes
to "write restricted" tables.
2.1.7 Requests for assistance in identifying faulty Hardware or Software
for which standard maintenance fault-locating procedures exists.
3.0 PRIORITY CLASSIFICATION
3.1 The TAS Center offers a single point of contact for customers who
require assistance to resolve problems which affect the technical
operation of their Northern Telecom DMS-MTX equipment.
TAS is available 24 hours/day, 7 days/week; therefore, the Service
Priority Classification System is designed to establish an
5-2
<PAGE> 52
interrelationship between the problems and the appropriate level of
reaction and resolution. The system is based upon a problem's direct
or potential effect upon subscriber service.
System problems are assigned one of five priority levels as defined
in Northern Telecom Practices: "Northern Telecom Service Priority
Classification," or as such document may be revised from time to
time. The following situations are deemed by Seller to comprise an
emergency:
3.2 E1 Degradation and/or Outage.
3.2.1 Central Control (CC) or Computing Module (CM) inability to recover
from initialization on the active Central Processing Unit (CPU).
3.2.2 System call processing degraded for a reason such as:
- a trunk group out of service;
- 10% or more cellular channels out of service;
- CDR billing;
- inability to recover from initialization;
3.3 E2 Potential Degradation and/or Outage.
3.3.1 Standby Central Control (CC) out of service.
3.3.2 Any Central Message Control (CMC), Master Clock, Network Module
(NM), Input/Output Controller (IOC), Peripheral Processor out of
service:
3.3.3 Affecting billing, 50% loss of DDU, MTD with no backup.
4.0 CUSTOMER SERVICE REPORT (CSR) PROCEDURES
4.1 Buyer Responsibility
It is recommended that the Buyer arrange to have all Engineering and
Technical Support personnel attend specified training courses in
order to properly utilize existing documentation and diagnostic
resources
5-3
<PAGE> 53
required to ensure proper day to day operations of its Northern
Telecom equipment. Buyer is expected to understand and determine all
engineering parameters and to use all locally available resources to
troubleshoot and isolate system problems prior to calling Seller TAS
for assistance; however, in emergency situations such as System
outages, TAS should be notified immediately.
Whatever the nature of the service call, the more completely the
trouble is described, the more efficiently the problem can be
analyzed and rectified.
When a service call is placed with TAS, the following information
must be provided;
- Indicate if the call is an emergency or not;
- Company name and switch site location;
- Main telephone number;
- Contact name and telephone number;
- Hardware type;
- Detailed problem description.
After a service call is placed, Buyer site personnel must be
available to take direction from TAS to perform on-site activity
required to isolate and resolve the problem.
4.2 TAS Responsibility
a. Seller Normal Business Hours
Routine or Emergency Service calls are taken during normal
business hours (8-5 CST, M-F, except Seller holidays).
The TAS coordinator (Receptionist) will direct the service call
to the prime TAS representative assigned to the account. If the
prime TAS representative is unavailable, a message may be taken
or the call may be referred to a secondary TAS representative.
TAS is committed to a same day reply to all messages. Emergency
calls are responded to immediately by the first available TAS
representative.
5-4
<PAGE> 54
The TAS representative taking the service call will request the
required customer information, determine if the problem
description requires that a Customer Service Report (CSR) be
opened (general questions which do not require investigation
may not need to be formally documented by a CSR), determine the
appropriate priority classification, and respond according to
the response objective associated with that classification.
The TAS representative responsible for the CSR will prioritize
all assigned CSRs according to priority classification and will
resolve and close the CSR with the Buyer based on
classification.
b. Outside Normal Business Hours
Emergency Service Only (E1, E2)
After-hours service calls are taken by an answering service.
The answering service will record the calling party name,
company and telephone number and will activate the emergency
pager service to page the designated TAS representative
on-call. If there is no response within five minutes, the
answering service will begin calling home phone numbers and
pagers of TAS Managers and other TAS representatives until
contact is made. The responding Seller representative will
contact Buyer immediately and take appropriate action to
resolve the trouble. The service call will be formally
documented the next regular business day.
5.0 EMERGENCY SHIPPING SERVICE FOR REPLACEMENT HARDWARE
5.1 For requests received during Seller regular business hours 8:00 a.m.
- 5:00 p.m. Monday-Friday (excluding holidays), the surcharge shall
be $50 per request.
5.2 For requests received outside regular business hours (as defined
above), the surcharge shall be $150 per request.
5-5
<PAGE> 55
ANNEX 6
SOFTWARE LICENSE
NORTHERN TELECOM INC. ("NTI") TELECOMMUNICATIONS PRODUCTS
1. Subject to the terms hereinafter set forth, Northern Telecom Inc.,
("NTI") grants to Buyer a personal, non-exclusive license: (1) to use certain
Licensed Software, proprietary to NTI or its suppliers, contained as an
integral part of the Hardware; and (2) to install and use each item of
Licensed Software not an integral part of the Hardware; and (3) to use the
associated documentation. Buyer is granted no title or ownership rights in or
to the Licensed Software, in whole or in part, which rights if any, as between
the parties, shall remain with NTI or its suppliers. The right to use Software
or any individual feature thereof may be restricted by a measure of usage of
applications based upon the number of devices, subscribers, or some similar
measure. Expansion beyond a specified usage level may require payment of an
additions fee.
2. NTI considers the Licensed Software to contain "trade secrets" of NTI
and/or its suppliers. Such "trade secrets" include, without limitation
thereto, the specific design, structure and logic of individual Licensed
Software programs, their interactions with other portions of Licensed
Software, both internal and external, and the programming techniques employed
therein. In order to maintain the "trade secret" status of the information
contained within she Licensed Software, the Licensed Software is being
delivered to Buyer in object code form only.
3. NTI or its suppliers holding any intellectual property rights in the
Licensed Software, and/or any third party owning any intellectual property
right in software from which the Licensed Software was derived, are intended
third party beneficiaries of this License. All grants of rights to use
intellectual property intended to be accomplished by this License are
explicitly stated and no additional grants of such rights shall be inferred or
created by implication.
4. Buyer warrants to NTI that Buyer is not purchasing the rights granted by
this License in anticipation of reselling those rights.
5. Buyer shall:
5.1 Hold the Licensed Software in confidence for the benefit of NTI and/or
suppliers; and
5.2 Keep a current record of the location of each copy of Licensed Software
made by it; and
5.3 Use each copy of the Licensed Software only on a single CPU at a time
(for this purpose, single CPU shall include systems with redundant processing
units); and
5.4 Affix to each copy of Licensed Software made by it, in the same form and
location, a reproduction of the copyright notices, trademarks and all other
proprietary legends and/or logos of NTI and/or its suppliers, appearing on the
original copy of such Licensed Software delivered to Buyer; and retain the
same without alteration on all original copies; and
5.5 Destroy the Licensed Software and all copies at such time as the Buyer
chooses to permanently cease using it.
6. Buyer shall not:
6.1 Use the Licensed Software (i) for any purpose other than Buyer's own
internal business purposes and (ii) other than as provided by this License; or
6.2 Allow anyone other than Buyers employees and agents to have physical
access to the Licensed Software; or
6.3 Make copies of the Licensed Software except such limited number of object
code copies in machine readable form only, as may be reasonably necessary for
execution or archival purposes only; or
6.4 Make any modifications, enhancements, adaptations, or translations to or
of the Licensed Software, except for those resulting from those Buyer
interactions with the Licensed Software associated with normal use and
explained in the associated documentation; or
6.5 Attempt to reverse engineer, disassemble, reverse translate, decompile,
or in any other manner decode the Licensed Software, in order to derive the
source code form or for any other reason; or
6.6 Make full or partial copies of any documentation or other similar printed
or machine-readable matter provided with Licensed Software unless the same has
been supplied in a form by NTI intended for periodic reproduction of partial
copies or except limited partial/copies of documentation for Buyer's internal
use only; or
6.7 Export or re-export the Licensed Software and/or associated documentation
from the fifty states of the United States and the District of Columbia.
7. Buyer may assign collectively its rights under this License to any
subsequent owner of the Hardware, but not otherwise except that no such
assignment or sublicense may be made to a direct competitor of NTI who
manufacturers or sells wireless communications systems. No such assignment
shall be valid until Buyer shall delegate all of its obligations under the
Agreement to such party, And obtains from the assignee an unconditional
written assumption of all of such obligations, and NTI consents, in writing,
to such delegation And assumption. NTI shall not unreasonably withhold such
consent. Upon completion of such delegation and assumption Buyer shall
transfer physical possession of all Licensed Software including all backup
copies) to the assignee. Except as provided, neither this License or any
rights acquired by Buyer through this License are assignable. Any attempted
assignment of rights and/or transfer of Licensed Software not specifically
allowed shall be void and conclusively presumed a material breach of this
License.
8. If NTI claims a material breach of this License and files an action in a
court of competent jurisdiction seeking relief, and a judge issues a court
order, or a judgment rendered, that there is a material breach of this
License, then Buyer shall be required to return the Software to NTI or its
distributor. If Buyer fails to return such Software within five (5) working
days after the issuance of the court order or judgment, or in the case of
disclosure of the Software to anyone other than Buyer's employees or agents
the initial issuance of a court order or judgment, then NTI shall have the
right, without further notice, to temporarily terminate Buyer's right to
continue to possess and use the Software. If NTI elects to exercise that
right, NTI may enter upon the premises of Buyer during regular business hours
and take possession of, remove, and retain the Software until such time as the
court may order otherwise. For purposes of obtaining injunctive relief
hereunder Buyer shall be deemed to have agreed that remedies available at law
are not adequate to protect the interests of NTI and/or its suppliers, and to
have consented to the equity jurisdiction of the court
9. IN NO EVENT WILL NTI AND/OR ANY OF ITS SUPPLIERS BE LIABLE TO OR THROUGH
BUYER FOR: (1) ANY INDIRECT, SPECIAL, INCIDENTAL AND/OR CONSEQUENTIAL DAMAGES
(INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOST SAVINGS, OR INTERRUPTION OF
BUSINESS) SUFFERED BY BUYER FOR ANY REASON; (2) ANY DAMAGES SUFFERED BY BUYER
AS A RESULT OF BUYER'S FAILURE TO LIVE UP TO BUYER'S OBLIGATIONS UNDER THIS
AGREEMENT; (3) ANY CLAIM AGAINST BUYER BY ANY THIRD PARTY FOR DAMAGES OF ANY
KIND; ANY OR ALL OF WHICH ARISE FROM OR IN CONNECTION WITH THE DELIVERY, USE,
OR PERFORMANCE OF SOFTWARE GOVERNED BY THIS AGREEMENT, AND EVEN IF NTI AND/OR
ANY OF ITS SUPPLIERS HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS. EXCEPT
AS GRANTED IN THE BODY OF THE AGREEMENT TO WHICH THIS LICENSE IS ATTACHED, THE
LICENSED SOFTWARE IS PROVIDED BY NTI "AS IS" AND WITHOUT WARRANTY OF ANY KIND
OR NATURE, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING (WITHOUT LIMITATION)
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR
PURPOSE. THIS LIMITATION OF WARRANTIES WAS A MATERIAL FACTOR IN THE
ESTABLISHMENT OF THE LICENSE FEE CHARGED FOR EACH SPECIFIC ITEM OF SOFTWARE
LICENSED.
6-1
<PAGE> 56
ANNEX 7
DOCUMENTATION
System Documentation is available through Seller's computer-based information
system ("HELMSMANN") as described below:
HELMSMAN CD-ROM: Includes one (1) compact disc and one (1) application
program; CD-ROM reader and interface card are optionally available
through Seller for use on Buyer-supplied DOS personal computer. Updates
are available at additional costs. (Documents not available on compact
disc will be provided in paper format.)
7-1
<PAGE> 1
EXHIBIT 10.13
INTERCARRIER SERVICES AGREEMENT
THIS INTERCARRIER SERVICES AGREEMENT (the "Agreement"), entered into as of
April 25, 1995 (the "Effective Date"), is between Youngstown Cellular Telephone
Company, Partnership with offices at 3910 South Avenue, Youngstown, OH 44512
("Customer"), and EDS Personal Communications Corporation, a Delaware
corporation with offices at 1601 Trapelo Rd., Waltham, MA 02154 ("EDS PCC").
WITNESSETH:
WHEREAS, Customer desires to purchase certain intercarrier services
from EDS PCC; and,
WHEREAS, EDS PCC desires to furnish such intercarrier services to
Customer on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, Customer and EDS PCC hereby agree as follows:
1. Agreement for Services.
(a) Services. During the term of this Agreement, EDS PCC will
provide to Customer, and Customer will purchase from EDS PCC,
subject to the terms and conditions of this Agreement, the
services set forth below which are initialed by a
representative of EDS PCC and Customer and which are more fully
described in the exhibits relating to such services attached to
this Agreement. Specific selections with respect to each
service must be made by Customer within the exhibit related
thereto. EDS PCC and Customer will each work diligently and
cooperate in good faith toward making each purchased service
available for Customer as soon as practicable after the
Effective Date and EDS PCC will give prompt notice to Customer
of the date that EDS PCC will begin providing each such service
to Customer (such date in respect of any such service being
referred to herein as the "Start Date" for such service).
<TABLE>
<CAPTION>
Customer EDS PCC
Service Initials Initials
------- -------- --------
<S> <C> <C> <C>
(i) Positive Roamer AHP JRD/CNU
Verification Service ----- -------
("PRV")
(ii) Intercarrier Settlement AHP JRD/CNU
Services ("ISS") ----- -------
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
(iii) InfoROAM
----- -------
(iv) XLI Services ("XLI") AHP JRD/CNU
----- -------
(v) Roaming America Plus
("RA Plus") ----- -------
(vi) Network Services AHP JRD/CNU
("NS") ----- -------
</TABLE>
(b) Use of Services. Customer agrees that EDS PCC will be the
sole provider to Customer of the selected services and any
other service similar to those services listed in Section 1(a)
above except for IS-41 based and SS7 network interswitch
connections. Customer shall use all reasonable efforts to
fully utilize each of the selected services in connection with
the provision of cellular telephone services by Customer in
each Cellular Geographic Service Area managed or otherwise
controlled by Customer and serviced under this Agreement. If
Customer has purchased ISS services hereunder, Customer will
utilize EDS PCC to provide such ISS services in respect of all
of Customers' outcollect and incollect records.
(c) Additional Services. Upon the reasonable written request of
Customer during the term of this Agreement, EDS PCC will
provide Customer with additional services, which are beyond
the scope of services provided pursuant to Section 1(a) but
are related to Customer's cellular service needs, on such
terms as are mutually agreed upon by EDS PCC and Customer.
Customer will pay EDS PCC for such additional services as
provided in Section 3(d) below.
2. Term. The term of this Agreement for the Services initialed by the
Customer pursuant to Section 1(a) above shall be as follows:
(a) Network Support Services shall be from April 25, 1995 until
June 30, 1997.
(b) PRV/XLI Services shall be from the Effective Date of this
Agreement until June 30, 1997.
(c) ISS Services shall be from the Effective Date of this
Agreement until June 30, 1999.
2
<PAGE> 3
The Network Support Services, PRV Services and ISS Services shall
be provided by EDS PCC as indicated herein unless earlier
terminated in accordance with the provisions of this Agreement.
Thereafter, the term of this Agreement, by Service, will
automatically extend on a month to month basis for up to one-year
after the appropriate Service termination date unless either of the
parties notifies the other party in writing at least 30 days prior
to the last month that this Agreement will not be extended further.
However, under no circumstances will this Agreement, by Service, be
extended past the anniversary date of the termination date
indicated above.
3. Charges.
(a) Charges for Services. In consideration for the performance
by EDS PCC of the services set forth in Section l(a), and
beginning on the Start Date for each such service,
Customer will pay to EDS PCC the charges set forth in the
exhibits hereto related to such services. Several of these
charges are calculated based on EDS PCC's monthly billing
cycles (each a "Billing Cycle"). Charges that are
calculated based on a fixed charge per Billing Cycle
(rather than the volume of services rendered) will be
billed at the full rate for each Billing Cycle, or portion
thereof, during which the applicable service was provided
by EDS PCC hereunder. In the event that a valid assignment
of this Agreement by Customer (in accordance with Section
21 below) shall be effective during a Billing Cycle,
Customer shall be responsible for payment of any charges
relating to such Billing Cycle.
(b) Miscellaneous Charges and Out-of-Pocket Expenses. In
addition to all other charges specified in the attached
exhibits, Customer will pay, or reimburse EDS PCC for, all
miscellaneous charges and expenses and all reasonable
out-of-pocket expenses, including but not limited to
travel, travel-related expenses, living expenses for EDS
PCC employees working off-site and all postage and related
charges incurred by EDS PCC in connection with the
performance of its obligations under this Agreement or
incurred by EDS PCC at the request or with the approval of
Customer.
(c) Charges During Extension. In the event this Agreement is
extended for any period pursuant to Section 2, the charges
for EDS PCC's services under this Agreement for such
period will be mutually agreed upon by the parties;
provided, however, that in the absence of such an
agreement, the charges for such period will be equal to
the charges in effect under this Agreement immediately
prior to such extension.
(d) Charges for Additional Services. In consideration for the
performance by EDS PCC from time to time of additional
services pursuant to Section 1(b), Customer will pay to
EDS PCC (i) the amounts mutually agreed upon by EDS PCC
and Customer for such additional services or, in the
absence of such an
3
<PAGE> 4
agreement, amounts therefor based on EDS PCC'S then
standard commercial billing rates and (ii) all
miscellaneous charges and expenses and all reasonable
out-of-pocket expenses, including, but not limited to,
travel, travel-related expenses, living expenses for all
EDS PCC employees working off-site and all postage and
related charges incurred by EDS PCC in connection with the
performance by EDS PCC of the services described in
Section 1.
(e) Cellular Standard(s) Compliance Charges. All expenses
which EDS PCC incurs due to an upgrade or development or
specific functionality for one or more of the Services
provided hereunder caused by one or more new industry
standards, or modifications to the current standards, as
referenced in Section 6 (a) herein, may be billed to
Customer and to other customers of the Services on a
prorated basis, as determined by EDS PCC. In such cases,
Customer agrees to reimburse EDS PCC for all such
expenses.
(f) Payment Terms: Late Payment. EDS PCC will invoice Customer
on a monthly basis following the Effective Date for all
charges payable by Customer to EDS PCC on a monthly basis
pursuant to Section 1(a). All such charges will be due and
payable on the 30th calendar day following the invoice
date for such monthly charges. Any sum due EDS PCC under
this Agreement for which a time for payment is not
otherwise specified will be due and payable upon receipt
by Customer of an invoice from EDS PCC. Any sum due EDS
PCC hereunder that is not paid within 30 calendar days of
its due date will thereafter bear interest until paid at a
rate of interest equal to the lesser of (i) 1.25 percent
per month, or (ii) the maximum rate of interest allowed by
applicable law.
(g) Taxes. There will be added to any charges hereunder, and
Customer will pay to EDS PCC, amounts equal to any taxes,
however designated or levied, based upon such charges or
upon this Agreement or any services or items provided
hereunder, or their use, including all state and local
sales, use, privilege, telecommunications and federal
excise or similar taxes imposed and any taxes or amounts
in lieu thereof paid or payable by EDS PCC in respect of
the foregoing, exclusive, however, of franchise taxes and
taxes based on income of EDS PCC.
(h) Payment in U.S. Dollars. All sums payable by Customer to
EDS PCC pursuant to this Agreement are stated in United
States dollars and will be payable in United States
dollars in the form of a draft drawn on a mutually
acceptable United States bank.
4
<PAGE> 5
4. Customer Obligations. In connection with the services provided by
EDS PCC hereunder, Customer will be responsible for the performance
of the items set forth as customer obligations in the exhibits
attached hereto. Customer agrees that it will not use the EDS PCC
product(s) or services(s) in a manner which interferes with the use
of the EDS PCC product(s) or service(s) by other customers or
authorized users of EDS PCC's product(s) or service(s). Failure to
use the product(s) and service(s) as intended may require EDS PCC
to inform those authorized users affected by such invalid use.
5. Termination.
(a) Termination for Cause. In the event that either party
hereto materially defaults in the performance of any of
its duties or obligations hereunder (except for a default
in payments to EDS PCC), which default shall not be
substantially cured within 60 days after written notice is
given to the defaulting party specifying the default, or,
with respect to any default which cannot reasonably be
cured within 60 days, if the defaulting party fails to
proceed within 60 days to commence curing said default and
thereafter to proceed to substantially cure the same, then
the party not in default may, by giving written notice
thereof to the defaulting party, terminate this Agreement
as of a date specified in such notice of termination.
(b) Termination for Non-Payment. In the event that Customer
defaults in the payment when due of any amount due to EDS
PCC hereunder and does not cure such default within 15
calendar days after being given written notice of such
default, then EDS PCC may, by giving written notice
thereof to Customer, terminate this Agreement as of a date
specified in such notice of termination.
(c) Termination for Insolvency. In the event that either party
hereto becomes or is declared insolvent or bankrupt, is
the subject of any proceedings relating to its
liquidation, insolvency or for the appointment of a
receiver or similar officer for it, makes an assignment
for the benefit of all or substantially all of its
creditors, or enters into an agreement for the
composition, extension, or readjustment of all or
substantially all of its obligations, then the other party
hereto may, by giving written notice thereof to such
party, terminate this Agreement as of a date specified in
such notice of termination.
6. Limitations of Warranties and Limitation of Liabilities.
(a) Limitation of Warranties. The Services provided by EDS PCC
pursuant to this Agreement are based on, and are in
substantial compliance with, the cellular telephone
industry standards applicable to such Services that are
promulgated by the Cellular Telephone Industry Association
("CTIA") and the Telephone Industry Association ("TIA"),
as in effect on the Effective Date. EDS PCC
5
<PAGE> 6
will work with Customer to bring the Services provided
hereunder into substantial compliance with other
applicable industry standards promulgated by other
cellular telephone associations so long as, in EDS PCC's
sole decision, the standard(s) to which compliance is
being requested by Customer are standards which are
recognized or accepted by either CTIA or TIA, or a
majority of the cellular telephone service providers in
the United States.
(b) EXCEPT AS EXPRESSLY STATED IN SECTION 6(a) ABOVE OR AS
EXPRESSLY STATED HEREIN, EDS PCC MAKES NO REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE EDS PCC
SOFTWARE (DEFINED IN SECTION 8) OR THE SERVICES PROVIDED
BY EDS PCC PURSUANT TO THIS AGREEMENT, INCLUDING BUT NOT
LIMITED TO, WARRANTIES OF MERCHANTABILITY, SUITABILITY,
ORIGINALITY OR FITNESS FOR A PARTICULAR PURPOSE.
(c) Limitation of Liability. In the event EDS PCC shall be
liable to Customer for any matter relating to or arising
in connection with this Agreement whether based on an
action or claim in contract, equity, negligence, intended
conduct, tort, or otherwise, the amount of damages
recoverable against EDS PCC for all events, acts or
omissions shall not exceed, in the aggregate, three times
the average monthly compensation paid to EDS PCC pursuant
to this Agreement prior to the initial occurrence of any
such event, act or omission. In no event will the measure
of damages include, nor will EDS PCC be liable for, any
amounts for loss of income, profit or savings or indirect,
incidental, consequential, or punitive damages of any
party, including third parties. Further, no cause of
action which accrued more than two years prior to the
filing of a suit alleging such cause of action may be
asserted against EDS PCC.
(c) EDS PCC reserves the right to recommend system and/or
network modifications to Customer due to unusual changes
in usage. In the event that Customer does not implement
such recommended modifications, EDS PCC shall incur no
liability for failure to provide any service hereunder
which results, directly or indirectly, from Customer's
failure to implement such recommended modifications. If
failure to implement these recommendations impacts other
authorized users, EDS PCC reserves the right to inform
such users of such failure.
7. Confidentiality. Each party will use reasonable means, but not
less than the means that it uses to protect its own confidential
information, to prevent the disclosure and to protect the
confidentiality of both written information received from the other
party which is marked or identified as confidential and oral or
visual information identified as confidential at the time of
disclosure (collectively, "Confidential Information"). Each party
will use Confidential Information received from the other party
only in
6
<PAGE> 7
connection with the purposes of this Agreement. The provisions of
this Section 7 will not prevent either party from disclosing its
own Confidential Information or from disclosing Confidential
Information which is (i) already known by the recipient party
without an obligation of confidentiality; (ii) publicly known or
becomes publicly known through no unauthorized act of the recipient
party; (iii) rightfully received from a third party; (iv)
independently developed by the recipient party without use of the
other party's Confidential Information; or (v) required to be
disclosed pursuant to a requirement of a governmental agency or law
so long as the disclosing party provides the other party with
notice of such requirement prior to any such disclosure. The EDS
PCC Software (as defined below) shall be deemed the Confidential
Information of EDS PCC for purposes of this Section 7, and nothing
in this Section 7 shall be deemed to limit or modify any of the
provisions of Section 8 hereof with respect to the EDS PCC Software
or EDS PCC's rights or Customer's obligations with respect thereto.
Notwithstanding the foregoing, Customer may disclose to its end
users the general nature of the services provided by EDS PCC
hereunder. The provisions of this Section 7 will survive
termination of this Agreement for any reason.
8. Rights to EDS PCC Software, Equitable Relief. All rights, title and
interest to any and all software owned, designed or used by EDS PCC
(and not proprietary to any other party) in the provision of
services hereunder (the "EDS PCC Software") is and will remain the
property of EDS PCC, and shall not pass to Customer pursuant to
this Agreement. Except as otherwise expressly provided in an
exhibit hereto, no licenses, expressed or implied, under any
patents, copyrights, trademarks or other proprietary rights are
granted to Customer under this Agreement. Customer agrees that it
will not for itself or as a partner, stockholder or in any other
capacity, market or commercially exploit the EDS PCC Software or
the services provided by EDS PCC hereunder. Customer acknowledges
the services hereunder use valuable computer software which has
been developed at considerable expense and in the event of a breach
or threatened breach of the provisions of this Section 8, EDS PCC
will be entitled to injunctive or equitable relief, in addition to
damages. The covenants contained in this section shall be construed
as covenants independent of any other provision of this Agreement
and will survive the termination of this Agreement. The existence
of any claim or cause of action of Customer shall not constitute a
defense to the enforcement of the foregoing covenants. The rights
and remedies of EDS PCC provided in this section shall not be
exclusive and are in addition to any other rights and remedies
provided by law or this Agreement.
9. Equipment Custody. Customer agrees and acknowledges that any
equipment supplied to Customer by EDS PCC from time to time which
is not otherwise purchased from EDS PCC by Customer as provided in
an exhibit hereto (the "EDS PCC Equipment") is and will remain the
property of EDS PCC. Customer agrees to keep all of the EDS PCC
Equipment in good repair and free and clear of any and all liens
and encumbrances. Customer further agrees that, upon termination of
this Agreement, it will deliver all of the EDS PCC Equipment to EDS
PCC at Customer's expense as
7
<PAGE> 8
soon as practicable. Customer will be responsible for any and all
loss or damage affecting the EDS PCC Equipment while in the
Customer's possession or control, reasonable wear and tear
excepted.
10. Compliance with Laws. Customer will comply with all laws, rules,
regulations and judgments applicable to Customer's receipt and use
of the services provided hereunder and will not, by any action or
inaction, violate any such law, rule, regulation or judgment or
cause EDS PCC, or any affiliate of EDS PCC, to violate any law,
rule, regulation or judgment applicable to EDS PCC or any such
affiliate of EDS PCC.
11. Force Majeure. Each party will be excused from performance
hereunder (other than from the performance of payment obligations)
for any period and to the extent that it is prevented from
performing any services pursuant hereto, in whole or in part, as a
result of an act of God, delays caused by the other party or
natural disaster or phenomenon, war, civil disturbance, court
order, labor dispute, third party nonperformance, or other cause
beyond its reasonable control, including failures or fluctuations
in electrical power, heat, light, air conditioning or
telecommunications equipment, and such nonperformance will not be a
default hereunder or a ground for termination hereof.
12. Dispute Resolution. Any dispute, controversy or claim arising
under, out of, in connection with, or in relation to this
Agreement, or the breach, termination, validity or enforceability
of any provision of this Agreement, will be settled by final and
binding arbitration conducted in accordance with and subject to the
Commercial Arbitration Rules of the American Arbitration
Association. Unless otherwise mutually agreed upon by the parties,
the arbitration hearings will be held in the city of Boston,
Massachusetts. The arbitrator(s) will allow such discovery as is
appropriate, consistent with the purposes of arbitration in
accomplishing fair, speedy and cost effective resolution of
disputes. The arbitrator(s) will reference the rules of evidence of
the Federal Rules of Civil Procedure then in effect in setting the
scope of discovery. The decision of the arbitrator(s) shall be
final and conclusive upon the parties. Any award by the
arbitrator(s) must be in accordance with Section 6(b). Limitations
of Liabilities herein. Judgment upon the award rendered in any such
arbitration may be entered in any court having jurisdiction
thereof, or application may be made to such court for a judicial
acceptance of the award and an enforcement, as the law of such
jurisdiction may require or allow.
13. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws, other than the choice of law rules and
procedures, of the Commonwealth of Massachusetts.
8
<PAGE> 9
14. Section Headings. The section headings used herein are for
convenience of reference only and are not intended to be, and shall
not be deemed to be, part of or to affect the meaning or
interpretation of this Agreement.
15. Severability. If any term or provisions (other than a term or
provision relating to any payment obligation) of this Agreement or
the application thereof to any person or circumstances shall, to
any extent, be held invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to persons
or circumstances other than those as to which it is invalid or
unenforceable, will not be affected thereby, and will be valid and
enforceable to the extent permitted by law.
16. Notice. All notices or other communications required or permitted
under this Agreement (including any exhibit hereto) will be deemed
to have been duly given if delivered personally to the applicable
party at the address for such party set forth below or telecopied
to the applicable party at the fax number for such party set forth
below:
For EDS PCC:
EDS PCC Personal Communications Division
1601 Trapelo Road
Waltham, Massachusetts 02154
Attention: Intercarrier Services General Manager
Telephone Number: (617) 890-1000
Fax Number: (617) 890-0367
With a copy to:
EDS PCC Personal Communications Corporation
c/o Electronic Data Systems Corporation
800 Tower Drive, 7th Floor
Troy, Michigan 48007-7019
Attention: Robert C. Feller (5N-E39)
Telephone Number: (810) 265-6387
Fax Number: (810) 265-8033
9
<PAGE> 10
For Customer:
Youngstown Cellular Telephone Company
3910 South Avenue
Youngstown, Ohio 44512
Attention: Lynn Williamson
Telephone Number: (216) 565-9503
Fax Number: (216) 782-5379
With a copy to:
-------------------------
-------------------------
-------------------------
Attention:
--------------
Telephone Number:
-------
Fax Number:
----------
Any party may change its name, address, fax number, or phone
confirmation number for receipt of notice as set forth in this
Section 16 from time to time by giving due notice thereof to the
other party in accordance with the foregoing. All notices or other
communications required or permitted under this Agreement
(including any exhibit hereto) will be effective (i) if delivered
personally, upon delivery, or (ii) if delivered by telecopy, upon
confirmation of receipt by the receiving party.
17. No Waiver. Either party's failure at any time to enforce any of the
provisions of this Agreement or any right with respect thereto, or
to exercise any option herein provided, will in no way be construed
to be a waiver of such provisions, rights or options or to in any
way affect the validity of any provision of this Agreement.
18. Entire Agreement; Amendment. This Agreement and the exhibits
attached hereto constitute the entire agreement between the parties
with respect to the services purchased by Customer under this
Agreement and will supersede all previous negotiations and
commitments, both oral and written. The exhibits attached hereto
are incorporated by this reference to the same extent as if such
exhibits were set forth in their entirety in the body of this
Agreement. This Agreement may not be modified or amended in any
respect except by an instrument in writing signed by a duly
authorized representative of each of the parties.
19. No Third-Party Beneficiary. This Agreement is not intended, nor
will it be construed, to create or convert any right in or upon any
person or entity not a party to this Agreement.
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<PAGE> 11
20. Preprinted Terms. The preprinted terms and conditions contained in
a Purchase Order placed pursuant to this Agreement shall be deemed
null and void. Terms and conditions of this Agreement apply in lieu
of any preprinted terms and conditions on Purchase Orders.
21. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party; provided that
EDS PCC shall have the right to assign this Agreement without
Customer's consent (a) to an affiliate of EDS PCC, (b) pursuant to
a merger or consolidation of EDS PCC into or with another
corporation, or (b) in connection with the sale of EDS PCC or its
business (whether effected through a sale of stock, a sale of all
or substantially all of EDS PCC's assets, or otherwise). No
assignment shall relieve the assignor of its obligations under this
Agreement. Any unauthorized assignment by the Customer hereof will
be null and void and shall result in the Customer being liable to
EDS PCC for an amount equal to the remaining amount of revenue
projected by EDS PCC for the remainder of the Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective duly authorized representatives, all
as of the Effective Date.
EDS PERSONAL COMMUNICATIONS YOUNGSTOWN CELLULAR
CORPORATION TELEPHONE COMPANY
By: /s/ JAMES R. DRISCOLL By: /s/ ALBERT H. PHARIS, JR.
----------------------------- -------------------------
Name: James R. Driscoll Name: Albert H. Pharis, Jr.
--------------------------- ------------------------
Title: Vice President Title: President
-------------------------- ------------------------
Date: 4-27-95 Date: 4-25-95
--------------------------- ------------------------
12
<PAGE> 12
EXHIBIT PRV
EDS PCC PERSONAL COMMUNICATIONS CORPORATION
INTERCARRIER SERVICES AGREEMENT
POSITIVE ROAMER VERIFICATION SERVICE
I. Description of Service
The Positive Roamer Verification ("PRV") service will give Customer
the ability to verify the billing status of roamers who receive
cellular services from Customer. Such verification will be
available for all roamers whose home service provider is either a
purchaser of PRV or a participant in a positive verification
service with which EDS PCC has a gateway agreement who is
operating/using the services as they are intended to be used
pursuant to this Agreement (a "Participating Carrier").
The PRV service includes the following features:
A. EDS PCC's goal is to determine the validity of a roamer on
Customer's switch by verifying that a roamer's mobile
identification number ("MIN") and electronic serial number
("ESN") are either (i) included within the positive
database of the recent activity file (the "RAF")
maintained by EDS PCC based on guidelines for valid
MINs/ESNs provided to EDS PCC by Participating Carriers,
(ii) are not listed in the Subscriber Status Database (the
"SSDB") maintained by EDS PCC with a canceled status based
upon information provided to EDS PCC by Participating
Carriers, or (iii) are listed as a valid customer on
roamer's home switch database (when available). EDS PCC
will update the SSDB and RAF with the status information
from the home switch database. Verification of a single
ESN against the RAF, the SSDB, or the roamer's home switch
constitutes one "ESN Verification".
PRV validates cellular calls to reduce unauthorized access
to a Customer's network. The goal of PRV is to prevent the
unauthorized ESN from completing subsequent calls.
B. EDS PCC will update Customer's local switch file with
specific information to assist Customer in denying or
restoring service to callers currently roaming on their
switch when applicable.
C. EDS PCC will provide daily transaction and inquiry
reporting.
D. EDS PCC will take reasonable steps to provide for the
confidentiality of all roamer information transmitted and
processed by EDS PCC. In addition, the access of EDS PCC
personnel to carrier files and individual records will be
controlled through the use of user IDs and passwords.
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<PAGE> 13
E. Subject to any applicable confidentiality provisions, EDS
PCC will provide Customer with access to on-line
information regarding other carriers who purchase the PRV
service, such as contact names, addresses, and phone
numbers.
F. Telephone support for PRV will be available to Customer at
no charge 24 hours per day, seven days per week, excluding
holidays observed by EDS PCC. This support will be
provided through EDS PCC's Customer Support Group from
8:00 A.M. to 8:00 P.M. Eastern time, Monday through
Friday. At other times, EDS PCC's Technical Support Group
will be directly available to Customer for application and
market level monitoring and problem troubleshooting.
II. CHARGES
In consideration for the performance by EDS PCC of the PRV service
described in this Exhibit PRV, Customer will pay to EDS PCC each of
the applicable charges described below.
A. ESN Charge or Original ESN Charge.
The charge set forth in Section A of Attachment I to this
Exhibit PRV applies to the first ESN Verification
performed by EDS PCC for Customer with respect to a unique
ESN within a given 24-hour period (12:00 Midnight to
11:59:59 PM). The ESN Charge does not apply to additional
calls made using the same ESN during the same 24-hour
period.
Customer's total monthly ESN Charge per System
Identification Number ("SID") will be at least equal to
the minimum amount set forth in Section A of Attachment I
to this Exhibit PRV.
B. Monthly Subscription Charge. The monthly charge set forth
in Section B of Attachment I to this Exhibit PRV applies
to each SID operated by the Customer.
C. File Storage and Update Charges. If PRV service is the
sole service selected by Customer under this Agreement, or
if only PRV service is provided hereunder together with
Network Services, Customer will pay to EDS PCC the file
storage charges set forth in Section C of Attachment I to
this Exhibit PRV.
EXHIBIT PRV
PAGE 2
<PAGE> 14
D. Installation Charge. The one-time charge set forth in
Section D of Attachment I to this Exhibit PRV applies to
the installation of PRV for the first Customer-operated
SID. Installation of PRV for additional SID's will be
billed at EDS PCC's then current standard commercial
billing rates.
III. INSTALLATION; TRAINING; MAINTENANCE
A. Customer Site -- Hardware Installation.
EDS PCC will provide dedicated telephone support to assist
Customer's switch technician with installation of hardware
at the Customer's location. This installation will include
lines, modems and software.
All switch upgrades or new installations will be billed to
and paid for by Customer at EDS PCC's then standard
commercial billing rates.
B. Customer Training.
EDS PCC will provide to Customer at no additional charge
an initial one-day training class offered at the EDS PCC
training center in Waltham, MA. This class includes an
overview of the PRV service. It is currently anticipated
that this class will be held on a bimonthly basis.
Customer will be responsible for its travel, lodging and
other costs related to such training. At Customer's
request, any of such training may be conducted at
Customer's site; provided, that Customer shall pay EDS
PCC's standard commercial billing rates for such training
and shall reimburse EDS PCC for its travel, lodging and
other expenses incurred in connection with providing such
training at Customer's site. Post implementation or
additional training not identified above is available to
Customer at EDS PCC's then standard commercial billing
rates.
C. Maintenance.
1. EDS PCC may perform remote diagnostics to determine
the orientation of problems.
2. Software engineering changes and upgrades may be
distributed by EDS PCC over the modem and phone line.
3. Should EDS PCC personnel determine that a problem
resides in the site hardware supplied by EDS PCC, a
replacement unit(s) will be shipped as soon as
reasonably feasible via next day delivery. The
Customer must return the original unit(s) to EDS PCC
via next day air freight.
EXHIBIT PRV
PAGE 3
<PAGE> 15
All freight and maintenance charges will be billed to
and paid for by Customer.
IV. CUSTOMER OBLIGATIONS
A. Customer will provide EDS PCC with written notice of all
changes in the valid range of NPA/NXX combinations
relevant to its operation. Customer will use the form
which is provided by EDS PCC for this purpose. EDS PCC
will return a copy of this same written notice to
Customer, signed and dated by EDS PCC. The NPA/NXX change
will become effective for purposes of this Agreement
within two business days after the date noted by EDS PCC
on such notice.
B. Customer will provide a minimum of ninety (90) calendar
days advance notice for new version switch upgrades which
may require lab testing and a minimum of sixty (60)
calendar days advance notice for upgrades that do not
require lab testing. While all upgrades will be mutually
agreed to, it is anticipated the minimum cost for a switch
upgrade will be $400.00 per switch. A five per cent (5%)
penalty will be incurred if inadequate notice is provided.
Additional information and questions may be addressed to
the EDS PCC Account Support Coordinator or to
1-800-9ED-SPCC (1-800-933-7722).
C. Customer will provide written notice to EDS PCC of
Cellular Geographic Service Area ("CGSA") changes relevant
to Customer's operation, including any agreements to
provide services purchased hereunder in markets served by
other carriers.
D. On or before the Effective Date, Customer will provide EDS
PCC with a list of all CGSAs that are to receive PRV
services pursuant to this Agreement.
E. Customer will promptly notify the EDS PCC Technical
Support Group of any problems with the PRV services that
require maintenance services.
F. Customer will identify one or more employee's with proper
training and experience to support PRV Service.
G. Customer must provide a telecommunications network that is
approved by EDS PCC as adequate to transmit data from
Customer's site to the appropriate EDS PCC data center.
Unless EDS PCC is providing its Network Services to
Customer under the Agreement, EDS PCC shall not be
responsible for performance or other problems related to
telecommunications networks. During
EXHIBIT PRV
PAGE 4
<PAGE> 16
any period that EDS PCC is providing its Network Services
to Customer, EDS PCC shall be responsible for Customer's
telecommunications networks as set forth in any applicable
Exhibit NS to this Agreement
H. All equipment moves or changes are Customer's
responsibility.
I. All EDS PCC personnel or Customer travel and lodging
expenses in connection with installation and training are
Customer's responsibility.
J. Customer will provide written notice to EDS PCC of all
requested changes in service at least 30 days in advance
of such changes.
V. SELECTION OF TYPE OF PRV SERVICE
Customer has selected the type of PRV service listed below which is
initialed by Customer's representative.
Customer
Initials
--------
A. Standard PRV services
(using an EDS PCC -approved network) AHP
-----
VI. SELECTION OF OPTIONAL PRV SERVICES
The optional services related to PRV may be requested by Customer
by notifying EDS PCC in writing during the term of this Agreement.
EDS PCC will provide these optional services to Customer at its
then current standard commercial billing rates. Information on
optional services and rates will be provided by the EDS PCC account
representative upon request.
EXHIBIT PRV
PAGE 5
<PAGE> 17
ATTACHMENT I
TO EXHIBIT PRV
A. MONTHLY TRANSACTION CHARGE
Pricing Tiers (Unique ESN)
Tiers Fee
----- ---
0 - 100,000 $0.215/ESN
100,001 - 250,000 $0.2.05/ESN
250,001 + $0.195/ESN
The transaction charges listed above must be equal to or
greater than the below listed minimum monthly charge or
the minimum is billed per bill to address.
Minimum monthly charges per SID/BID: $1,000.00
Minimum monthly charges/4 Youngstown SID/BIDS $1,000.00
B. MONTHLY SUBSCRIPTION CHARGE:
Basic charge per SID $350.00
Each additional customer operated SID/BID $ 50.00
C. FILE STORAGE AND UPDATE FEES*
Monthly charge per stored record $0.10
Monthly charge per updated record $1.00
D. INSTALLATION OF NEW MARKET
- $2,000 per switch
- $ 500 per additional SID/BID on same switch requiring
separate "FROM SID/BID" reporting
- $1,000 per additional SID/BID on same switch requiring
separate "ON and FROM SID/BID" reporting (Not available on
all switch types. Additional monthly recurring fees may
also apply.)
The above is exclusive of circuit and network hardware charges for
realtime PRV.
*Waived if PRV is purchased in conjunction with Intercarrier
Settlement Services (ISS).
EXHIBIT PRV
ATTACHMENT I
PAGE 1
<PAGE> 18
EXHIBIT ISS
EDS PCC PERSONAL COMMUNICATIONS CORPORATION
INTERCARRIER SERVICES AGREEMENT
INTERCARRIER SETTLEMENT SERVICE
I. DESCRIPTION OF SERVICE
The Intercarrier Settlement Service ("ISS") will perform the edits
described in Section 1. A. below in order to verify the billable
status of call records sent by Customer to, and received by
Customer from, other carriers (Customer's "Roaming Partners"). In
addition, ISS will provide to Customer certain reports and other
services, as described in Section I. B. below.
A. ISS Edits. The edits currently performed by EDS PCC to
verify the billable status of call records are described
below. All ISS edits will be performed in accordance with
the current industry standards, as defined by Cibernet
Corporation ("Cibernet"), a wholly-owned subsidiary of the
Cellular Telecommunications Industry Association ("CTIA").
1. Subscriber Status Database Edit. EDS PCC will
check each call record MIN/ESN to determine
whether it is listed in the Subscriber Status
Database ("SSDB") with a negative status. The
SSDB is maintained by EDS PCC based on
information provided to EDS PCC by cellular
carriers. If the MIN/ESN is listed on the SSDB as
negative, the caller's home carrier will be
charged for calls made using that MIN/ESN prior
to the industry-defined time (as established from
time to time by Cibernet) that such home carrier
is not liable therefor (the "CutOff Time"). If a
call is made after the Cut-Off Time, the call
record will be returned to the serving carrier.
2. CIBER Edit. EDS PCC will check call records to
determine whether all required fields are
populated correctly in accordance with the
Cellular Industry Billing Exchange Roamer
("CIBER") record format, as defined and
maintained by Cibernet. Call records that are not
populated in accordance with the CIBER record
format will be returned to the serving carrier.
3. NPA/NXX Edit -- Proper Routing of Call. EDS PCC
will compare the NPA/NXX of each call record to
the NPA/NXX database maintained by EDS PCC to
determine whether the call record's NPA/NXX is
recognized by the home carrier as one of its own.
If the NPA/NXX is not recognized by the home
carrier, the call record will be returned to the
serving carrier.
EXHIBIT ISS
PAGE 1
<PAGE> 19
4. Call Age Edit. EDS PCC will check each call
record to verify that it is received by EDS PCC
within 30 days after the date of the call. Calls
received more than 30 days after the date of the
call will be returned to the serving carrier.
Returned call records from other authorized
receipt points are checked to verify that they
are received by EDS PCC within 60 days of the
date of the call. Returned call records received
from other authorized receipt points more than 60
days after the date of the call will be returned
to the authorized receipt point who sent them.
5. Out-of-Sequence Batch Edit. EDS PCC will confirm
that each batch of call records has arrived
properly identified as the next batch in sequence
for a particular sending and receiving pair of
System Identification ("SID") and/or Billing
Identification ("BID") numbers. Out-of-sequence
batches will be returned to the carrier or
authorized receipt point who sent them.
6. Duplicate Call Edit. EDS PCC will compare
specific fields of individual call records
against the same fields of all call records
processed within the previous 30 days as defined
by Cibernet. If a call is determined to be a
duplicate, it is returned to the serving carrier.
The Duplicate Call Edit prevents carriers from
being billed for calls they were previously
billed for and from passing them through to their
subscribers.
B. Standard Reports. The standard reports provided in
connection with ISS are described below. These reports
reflect activity during a given Billing Cycle. These
reports may be prepared on a batch detail, summary, or
carrier level as selected by Customer. The default level
of detail is SID to SID Summary. Each report is produced
at the end of each Billing Cycle (on approximately the
23rd day of the calendar month).
1. Incollect Reports. Incollect reports summarize
the amounts owed by Customer to Customer's
Roaming Partners from whose SID or BID Customer's
subscribers received service.
2. Outcollect Reports. Outcollect reports summarize
the amounts owed to Customer by Customer's
Roaming Partners whose subscribers received
service from Customer's SID or BID.
EXHIBIT ISS
PAGE 2
<PAGE> 20
3. Net Settlement Reports. Net settlement reports
reflect the net amount owed to or owed by
Customer for roamer calls with respect to each
Roaming Partner.
C. Distribution of CIBER Message Details. EDS PCC will
provide for distribution of CIBER billing messages within
two business days following receipt of the message
details.
D. Telephone Support. Telephone support for ISS will be
available to Customer at no charge through EDS PCC's
Customer Support Group from 8:00 A.M. to 8:00 P.M. Eastern
time, Monday through Friday. At other times, EDS PCC's
Technical Support Group will be directly available to
Customer for application and market level monitoring and
problem troubleshooting.
II. CHARGES
In consideration for the performance by EDS PCC of the service
described in this Exhibit ISS, Customer will pay to EDS PCC each of
the charges described below. Several of these charges are
calculated based on EDS PCC's Billing Cycle.
A. CIBER Record Charges (Transaction Charge). The charges set
forth in Section A of Attachment I to this Exhibit ISS
apply to transactions processed by EDS PCC for Customer
during the term of this Agreement.
B. Installation and Training Charge. The charge set forth in
Section D of Attachment I to this Exhibit ISS is a
one-time charge for installation and training.
C. Postage and Handling Charges. All postage and handling
expenses incurred by EDS PCC in connection with ISS will
be billed back by EDS PCC to Customer. EDS PCC's charge
for CIBER tape handling is $50.00 per month.
D. Special Programming Charges. Special programming will be
performed at EDS PCC's then current standard commercial
billing rates.
E. CIBER Development Charges. All expenses relating to any
upgrade or development of CIBER incurred by EDS PCC in
connection with ISS may be billed to Customer by EDS PCC.
EXHIBIT ISS
PAGE 3
<PAGE> 21
III. CUSTOMER ORIENTATION AND TRAINING
Customer orientation and training for ISS will include each of the
items listed below:
A. Product orientation and description of data needed from
customer for installation.
B. Data entry to various ISS systems and tables and
verification of customer data on the ISS system to prepare
for call record processing.
C. One telephone training session with receipt of initial set
of reports.
D. Full month of coaching by installation team during first
month of operation through telephone support.
E. A one-day training class offered at the EDS PCC training
center in Waltham, MA. This class includes an overview of
ISS and report detailing. It is currently anticipated that
this class will be held on a bimonthly basis.
The initial training described in Sections A.-E. above will be
provided by EDS PCC at no additional charge to Customer. Customer
will be responsible for its travel, lodging and other costs related
to such training. At Customer's request, any of such training may
be conducted at Customer's site; provided, that Customer shall pay
EDS PCC's standard commercial billing rates for such training and
shall reimburse EDS PCC for its travel, lodging and other expenses
incurred in connection with providing such training at Customer's
site. Post implementation and additional training not identified
above is available to Customer at EDS PCC's then standard
commercial billing rates.
IV. CUSTOMER OBLIGATIONS
A. Customer will provide EDS PCC with prompt written notice
of all changes in the valid range of NPX/NXX combinations
relevant to its operation. Customer will use the form
which is provided by EDS PCC for this purpose. EDS PCC
will return a copy of this same written notice to
Customer, signed and dated by EDS PCC. The NPA/NXX change
will become effective for purposes of this Agreement
within two business days after the date noted on such
form.
B. Customer will identify one or more employees with
sufficient training and experience to support the ISS
Service.
C. All travel and lodging expenses incurred by EDS PCC or
Customer personnel in connection with installation and
training are Customer's responsibility.
EXHIBIT ISS
PAGE 4
<PAGE> 22
D. Customer will provide written notice to EDS PCC of all
requested changes in service at least 30 days in advance
of such changes.
V. OPTIONAL ISS SERVICES
The optional services related to ISS may be requested by Customer
by notifying EDS PCC in writing during the term of this Agreement.
EDS PCC will provide these optional services to Customer at its
then current standard commercial billing rates.
EXHIBIT ISS
PAGE 5
<PAGE> 23
ATTACHMENT I
TO EXHIBIT ISS
A. TRANSACTION PRICING
Outcollect call processing tiered pricing schedule:
<TABLE>
<CAPTION>
Range of Records: Fee
---------------- ---
<S> <C> <C> <C>
0 - 50,000 $0.045
50,001 - 150,000 $0.036
150,001 - 300,000 $0.027
300,001 - 1,000,000 $0.023
1,000,000 + $0.020
</TABLE>
Tiering based on all SIDs being grouped under one ISS company code.
If separate reporting for settlement purposes is required, a
specific SID or group of SIDs can be assigned a separate company
code. Separate tiering applies to each company code grouping of
SIDS.
The transaction charges must be equal to or greater than the below
listed minimum monthly charge or the minimum is billed per market.
Minimum monthly charge per SID/BID $500.00
FILE AND STORAGE UPDATE FEE
Monthly charge per stored record $0.10
Monthly charge per updated record $1.00
B. REPORTS
Base Report Package (20 reports) Standard Service
- Monthly Report Package (12 reports)
- Daily Report Package (8 reports)
EXHIBIT ISS
ATTACHMENT I
PAGE 1
<PAGE> 24
Customers may create their own base report package. Each carrier
may substitute any optional or additional marketing or financial
report for a report within the base monthly or daily package at no
additional charge.
On-line Report Storage Fee - quota is
determined on a per customer basis based
on usage/Month. (1000 block minimum) $10.00/1000 blocks
MARKETING REPORT PACKAGE (7 REPORTS) $300 per company
code per month
C. MISCELLANEOUS
1. $0.01/Non-EDS PCC incollect and outcollect record
2. $0.02/Type 11/Type 30 record processed
3. All postage, handling, and overnight freight charges are
billed back to the Customer (Pass-thru charge based on
usage. EDS PCC Federal Express discount applied)
4. CIBER tape handling fee of $50 per month (per contract)
D. INSTALLATION
- $750.00 per report ship to location
Please note the Net Settlement service is available at no charge
from EDS PCC to Customers clearing both incollects and outcollects.
EXHIBIT ISS
ATTACHMENT I
PAGE 2
<PAGE> 25
INFOROAM ADDENDUM TO EXHIBIT ISS
EDS PCC PERSONAL COMMUNICATIONS CORPORATION
INTERCARRIER SERVICES
I. DESCRIPTION OF SERVICE
InfoROAM is an adjunct service to the EDS PCC ISS service. InfoROAM
is a PC-based data query and analysis system that provides the
Customer with automated access to their roamer data and the ability
to analyze this data. Roamer information, which resides in a
database on the Customer's PC, is summarized on a SID to SID half
cycle (the 16th-End of Month and 1st-15th of the Month) level.
InfoROAM runs in a Windows environment.
Using InfoROAM, the Customer can perform a variety of queries and
analyses:
A: Standard Queries: Provide a common set of queries that
retrieve information most frequently requested.
B. Customized Queries: Enable the creation of
customer-tailored queries and review of their results.
C. Forecasting Analysis: Provides the ability to input
variable rate and usage factors and see their impact on
roaming partners time, receipt and dollars.
D. Geographic Analysis: Allows targeting of roaming partners
within a certain state or province.
E. Usage Analysis: Identifies and retrieves information on
the Customer's highest or lowest roaming partner based on
minutes of usage within a specified period.
The Customer can view InfoROAM data on a PC screen, print selected
information on a post-script printer, or translate specific
information into a format that can be imported into a third party
application such as a spreadsheet or other system.
InfoROAM provides on-line help and a graphical user interface for
ease of use.
Data from EDS PCC
- The Customer can elect to receive InfoROAM data from EDS
PCC either once a month (the 16th-15th of the Month) or
twice a month (the 16th-End of Month and 1st-15th of the
Month).
- The data file will be shipped to the Customer on diskettes
via overnight courier with a transmittal report for
quality control purposes.
INFOROAM ADDENDUM
PAGE 1
<PAGE> 26
Database Loading and Storage
- The Database Load feature enables the Customer to load
roamer data received from EDS PCC into their PC.
- The Database Archival feature facilitates efficient
storage of older roamer information on the Customer's PC.
- The Database Reorganization feature helps to improve
performance of data retrieval after several database
maintenance procedures have been performed.
II. Charges
In consideration of the performance of the InfoROAM service
described in this InfoROAM Addendum, Customer will pay to EDS PCC
each of the charges as listed below.
A. Runtime Application Software Charge - One time:
Customer will pay a charge of $2995 for the initial
system. Additional copies are available at a charge of
$995 per copy.
Upgrades will be provided to the Customer at no additional
charge.
B. Customer Requested Software Enhancements:
Customer requested software enhancements will be performed
at EDS PCC's then current standard billing rates.
C. Maintenance/Data Shipment Charge - Monthly or Bi-monthly
recurring:
A fee of $200 per InfoROAM data shipment received will be
assessed, plus a monthly maintenance fee to $200. For each
InfoROAM system installed, the total recurring charge will
be:
- $400 per month if Customer receives data once a month.
- $600 per month if Customer receives data twice a month.
D. DOCUMENTATION
Once copy of the InfoRoam User's Guide is included with
each purchased copy of the runtime application software.
Additional copies of the User Guide are available at a
charge of $50.00 per copy.
INFOROAM ADDENDUM
PAGE 2
<PAGE> 27
III. Installation and Training
To assist the Customer with installation of the InfoROAM software,
EDS PCC will provide the Customer with complete documentation on
installation procedures as well as installations phone support
during software installation.
A one day training session at the EDS PCC Training facility in
Waltham, MA, which instructs the Customer on how to use the
service, is included at no additional cost to the Customer. The
Customer will be responsible for travel, lodging, and other costs
related to such training. At the Customer's request, training can
be conducted at the Customer's site; provided, that Customer shall
pay EDS PCC's standard commercial billing rates for such training
and shall reimburse EDS PCC for personnel's travel, lodging, and
other expenses incurred in connection with providing such training
at the Customer's site.
IV. Telephone Support
Telephone support will be available to Customer through their
standard EDS PCC's Customer Support Representative who can be
reached via 1-800-9 EDS PCC.
V. Customer Obligations
A. Customer will follow documented procedures for using the
InfoROAM service.
B. Customer will identify one or more employees with
sufficient training and experience to act as InfoROAM
coordinator.
C. Customer agrees to meet the minimum system requirements
for the personal computer system(s) that will run InfoROAM
at the Customer site. Customer also agrees to inform EDS
PCC of any hardware and/or software modifications made to
this personal computer system(s) prior to its
installation.
D. Customer understands that the software, database, and
other files that constitute the InfoROAM system cannot be
copied or resold without the prior written consent of EDS
PCC.
INFOROAM ADDENDUM
PAGE 3
<PAGE> 28
EXHIBIT XLI
EDS PCC PERSONAL COMMUNICATIONS CORPORATION
INTERCARRIER SERVICES AGREEMENT
XLI SERVICE
I. DESCRIPTION OF SERVICE
The XLI Service ("XLI") will provide Customer with validation and routing
services. The validation service provides precall validation against an EDS PCC
provided positive determination industry database.
The routing service provides switch-to-switch routing for IS-41 transactions
("Routing"). Key features are routing database administration, transaction
routing to the home switch or to the XLI database ("SSDB"), as appropriate,
reporting of roaming transactions, and protocol translation.
EDS PCC will provide Customer with the ability to make changes to the SSDB
after the initial load ("Database Updates"). These changes include both adds
and updates.
EDS PCC will provide Customer with access to daily summary reports for both
"on" and "from" markets.
II. CHARGES
In consideration for the performance by EDS PCC of the XLI services including
the XLI Full Visibility capability, Customer agrees to pay the Charges in
Attachment I to this Exhibit.
III. ONE-TIME INSTALLATION AND TRAINING FOR XLI
A. Customer Site -- Hardware Installation.
EDS PCC will provide support to assist Customer's switch
technician with installation of hardware at the Customer's
location. This installation will include customer's lines,
modems and software.
B. Customer Training.
EDS PCC will provide training to Customer personnel once
in connection with the installation of XLI for the charge
specified in Attachment I of this Exhibit XLI.
EXHIBIT XLI
PAGE 1
<PAGE> 29
IV. TECHNICAL SUPPORT AND MAINTENANCE
A. Customer Technical Support
1. During the term of this Agreement, Customer
will be eligible for telephone support
through the EDS PCC Technical Support Group
at no charge. This support will be available
24 hours per day, seven days per week,
including holidays observed by EDS PCC.
Further, EDS PCC's Customer Support Group
will be available by phone to answer user
questions relating to XLI between 8:00 a.m.
and 8:00 p.m., Eastern time, on EDS PCC
business days.
2. All switch upgrades or new installations will
be billed to and paid for by Customer at EDS
PCC's then standard commercial billing rates.
3. Additional on-site XLI training will be
available to Customer at EDS PCC's then
current standard commercial billing rates.
Customer will also reimburse EDS PCC for all
reasonable out-of-pocket expenses (including,
without limitation, travel and travel-related
costs) incurred by EDS PCC in connection with
providing on-site training.
B. Maintenance.
1. EDS PCC may perform remote diagnostics to
determine the orientation of problems.
2. Software engineering changes and upgrades may
be distributed by EDS PCC over modem and
phone lines. Except with respect to releases
which are critical to the operation of XLI,
EDS PCC will provide Customer with at least
seven day's prior notice of XLI software
releases.
3. Should EDS PCC personnel determine that a
problem resides in the site hardware supplied
by EDS PCC, a replacement unit(s) will be
shipped as soon as reasonably feasible via
next day delivery. The Customer must return
the original unit(s) to EDS PCC via next day
air freight. All freight and maintenance
charges will be billed to and paid for by
Customer.
EXHIBIT XLI
PAGE 2
<PAGE> 30
4. EDS PCC will notify Customer of any
unscheduled XLI downtime within one hour
thereof. Such notice will be in the form of a
phone call to a contact person designated by
Customer. EDS PCC will also provide Customer
with a monthly report reflecting downtime for
the previous month.
V. CUSTOMER OBLIGATIONS
A. Customer will provide EDS PCC with written
notice, via certified mail or facsimile, of
all changes in the valid range of NPA/NXX
combinations relevant to its operation.
Customer will use the form which is provided
by EDS PCC for this purpose. EDS PCC will
return a copy of this same written notice to
Customer, signed and dated by EDS PCC. The
NPA/NXX change will become effective for
purposes of this Agreement within two
business days after the date received by EDS
PCC.
B. Customer will provide a minimum of ninety
(90) calendar days advance notice for new
version switch upgrades which may require lab
testing and a minimum of sixty (60) calendar
days advance notice for upgrades that do not
require lab testing. While all upgrades will
be mutually agreed to, it is anticipated the
minimum cost for a switch upgrade will be
$400.00 per switch. A five per cent (5%)
penalty will be incurred if inadequate notice
is provided. Additional information and
questions may be addressed to the EDS PCC
Account Support Coordinator or to
1-800-9ED-SPCC (1-800-933-7722).
C. Customer will provide written notice to EDS
PCC, via certified mail or fax, of
Metropolitan Service Area ("MSA") and Rural
Service Area ("RSA") changes relevant to
Customer's operation, including any
agreements to provide services purchased
hereunder in markets served by other
carriers.
D. On or before the Effective Date, Customer
will provide EDS PCC, via certified mail or
fax, with a list of all MSA/RSA's that are to
receive XLI services pursuant to this
Agreement.
E. Customer will notify the EDS PCC Technical
Support Group of any problems, with the XLI
services that require maintenance services.
In addition, Customer will designate a
Customer employee who will act as a single
point of contact for EDS PCC in connection
with such maintenance services including,
without limitation, with respect to
EXHIBIT XLI
PAGE 3
<PAGE> 31
receipt of the notice described in this
Exhibit XLI. The parties may escalate
problems relating to the XLI services within
their respective organizations pursuant to a
mutually acceptable process.
F. Customer will provide reasonable care for
equipment provided by EDS PCC.
G. Customer will identify one or more employees
with proper training and experience to
support the XLI service.
H. Customer must provide a telecommunications
network that has been approved by EDS PCC as
adequate to transmit data from Customer's
site to the appropriate EDS PCC data center.
EDS PCC is not responsible for performance or
other problems related to telecommunications
networks not approved by EDS PCC.
I. All equipment moves or changes are Customer's
responsibility.
J. All EDS PCC personnel or Customer travel and
lodging expenses in connection with
installation and training are Customer's
responsibility.
K. Except as stated in Section IV L 4 below,
Customer will provide written notice to EDS
PCC, via certified mail or fax, of all
requested changes in service at least 30 days
in advance of such changes. Services provided
for any portion of a billing period will be
charged at the full monthly rate.
L. Customer will perform the obligations below
for the XLI Full Visibility Services:
1. Customer will enable/disable an
NPA/NXX line range or SID/BID
once in a 30 day period
through the EDS PCC user
interface.
2. Customer will provide a list of
participating and authorized
user names for each SID/BID
prior to activation of service.
3. Customer will follow documented
procedures for turning on Full
Visibility.
EXHIBIT XLI
PAGE 4
<PAGE> 32
VI. SELECTION OF SERVICES
Customer has selected the services listed below that are initialed
by Customer's representative.
Customer
Initials
--------
A. Type of XLI
---- -- ---
XLI for X.25
-------
XLI for SS7 AHP
-------
B. Optional Protocol Translation Services
-------- -------- ----------- --------
Rev. 0 to Rev. A
---------
Rev. A to Rev. 0
---------
X.25 to SS7 (not currently available)
--------
SS7 to X.25 (not currently available)
--------
EXHIBIT XLI
PAGE 5
<PAGE> 33
ATTACHMENT I
TO EXHIBIT XLI
In consideration for the performance by EDS PCC of the XLI service described in
this Exhibit XLI, Customer will pay to EDS PCC each of the charges described
below.
SECTION I.
l. Transaction-Based Pricing--All IS-41 transactions are billed under
XLI version 3.0. Consult current XLI documentation for transaction
descriptions.
<TABLE>
<CAPTION>
Tiers $
----- ---
<S> <C>
0 - 25,000 $0.070
25,001 - 250,000 $0.060
250,001 - 1,000,000 $0.055
1,000,000 + $0.050
</TABLE>
The above mentioned transaction charges must be greater than or
equal to the below minimum charges or the minimum is billed.
Minimum monthly charges per SID/BID: $1,000.00
Minimum monthly charges/4 Youngstown SID/BIDS: $1,000.00
2. Base XLI Service monthly subscription charge:
Basic Charge per First SID/ID: $350.00
Each additional customer
operated SID/BID: $50.00
3. File Storage and Update Fees (applies to cancelled/restored entries
only)*
Monthly charge per stored record= $0.10
Monthly charge per updated record= $1.00
Based on carriers subscribers with negative status
*Waived when XLI is purchased in conjunction with Intercarrier
Settlement Services (ISS)
4. Full Visibility - allows users ability to monitor their Roamers on
non-EDS PCC served markets.
EXHIBIT XLI
ATTACHMENT I
PAGE 1
<PAGE> 34
A. Base FV monthly subscription *charge:
Base Charge per SID/BID= $500.00
Additional SID/BID= $50.00
*Includes the cloning report.
B. Transaction-based Pricing=.03/VIS Notification
C. INSTALLATION/UPDATES=$95/Hr. - 1 hour minimum
Note: The above is exclusive of circuit and network charges.
SECTION II.
XLI/RAPlus Implementation $3,000/NTI switch
(plus travel and expenses
if required)
This fee includes:
- - One User ID access port
- - One day training at EDS PCC facility (12 students maximum).
- - Full testing of XLI functionality, network connection, IS-41 transactions
- - Coaching and market monitoring by the installation team to ensure all
aspects of XLI are operational
- - Documentation - XLI User Guide
Ongoing Account Support
- - For the term of the contract the customer is eligible for phone support
through EDS PCC Account Support Group and Technical Support Group at no
additional charge. The Account Support Group is available from 8:00 a.m.
to 8:00 p.m. Eastern Time, Monday through Friday, excluding holidays
observed by EDS PCC. The Technical Support Group is available for
application monitoring and troubleshooting 7 days a week, excluding
holidays observed by EDS PCC.
- - An Account Support Representative and a Technical Support Analyst is
assigned to each account to personally monitor its activity and provide
ongoing market support.
Note: The above is exclusive of network hardware and network installation
charges.
EXHIBIT XLI
ATTACHMENT I
PAGE 2
<PAGE> 35
EXHIBIT ROAMING AMERICA PLUS
EDS PCC PERSONAL COMMUNICATIONS CORPORATION
INTERCARRIER SERVICES
I. DESCRIPTION OF SERVICE
The Roaming America Plus ("RA Plus") service is an adjunct service to EDS PCC'
XLI service. RA Plus adds support for IS-41 automatic call delivery and Roaming
America integration to the XLI service. XLI is a prerequisite for the RA Plus
service.
XLI markets currently using Roaming America that select RA Plus will be
de-installed on Roaming America as part of the RA Plus installation.
RA Plus allows Customer to take advantage of the following features:
- - When both the home and visited system use RA Plus, roamers do not need to
activate to receive incoming calls while roaming on the visited system.
- - If the visited system is unable to deliver an incoming call to a roamer,
the call may be redirected back to the home system.
- - RA Plus is integrated with Roaming America which allows RA Plus customers
to activate Transparent Call Forwarding Service ("TCF") on Roaming America
markets using an activation method of `all call'. TCF enables a subscriber
to receive incoming calls while roaming in a foreign area by transferring
such calls from the subscriber's home switch to the serving switch in the
foreign Cellular Geographic Service Area ("CGSA").
The integration feature also allows subscribers from Roaming America markets to
activate Roaming America TCF and Caller Notification ("CN") services on RA Plus
markets. Both star code and 'all call' activation methods are supported. CN
allows a roamer to have incoming calls transferred to a voice announcement on
the roamer's home switch. The announcement provides the calling party with the
roamer access port number for calling the roamer on the foreign system.
- - RA Plus provides both on-line and next business day reporting functions.
II. CHARGES
In consideration for the performance by EDS PCC of the RA Plus service
described in this Exhibit Roaming America Plus, Customer will pay to EDS PCC
each of the applicable charges listed below.
A. Installation charges
Should RA Plus be installed as a separate project subsequent to Customer's
installation of XLI, EDS PCC shall bill the installation at EDS PCC's then
standard commercial hourly billing rates. Customer shall pay EDS PCC four hours
minimum per switch installed with RA Plus.
EXHIBIT RA PLUS
PAGE 1
<PAGE> 36
Note: The above is exclusive of circuit and network hardware charges.
B. Development Charges
IS-41 lab trials and development related to Modified Final Judgement (MFJ)
requirements may be necessary to install a switch with RA Plus. If development
and/or lab testing is required, a one time development charge may be assessed
at EDS PCC's then standard commercial hourly billing rates.
C. IS-41 Transaction Fees
IS-41 call delivery transactions are billed monthly at XLI IS-41 transaction
rates, tiered in a separate group.
D. Roaming America Activation Transaction
Roaming America activation charges apply when Customer is the serving carrier
for a roamer who has subscribed to Roaming America in another market. This
charge applies to each activation of service by a unique mobile-identification
number within the billing cycle. A subscriber may activate Roaming America
service on a RA Plus market by dialing a predefined star code or through an
activation method of 'all call'. All call activation occurs whenever the RA
Plus market generates a validation request to XLI for the subscriber.
Activation Charge: $1.50 per activation per day as the serving carrier
III. MISCELLANEOUS
A. Customer Training
EDS PCC will provide to Customer at no additional charge a one-day RA Plus
training class offered at the EDS PCC training center in Waltham, MA. This
class includes an overview of the RA Plus service. Customer will be responsible
for its travel, lodging and other costs related to such training. At customer's
request, any of such training may be conducted at Customer's site; provided,
that the Customer has a minimum of four students and that Customer shall pay
EDS PCC's standard commercial rates for such training and shall reimburse EDS
PCC for its travel, lodging and other expenses incurred in connection with
providing such training at Customer's site. Additional training not identified
above is available to Customer at EDS PCC's then standard commercial billing
rates.
IV. CUSTOMER OBLIGATIONS
A. Customer will provide a sufficient number of "temporary" directory
numbers ("TDNs") (accessible via the public telephone network) for use by
subscribers of Customer's roaming partners when calls are forwarded to the
Customer's cellular system. The TDN pool must be separate from the pool of
IS-41 TLDNs (Temporary Local Directory Numbers).
EXHIBIT RA PLUS
PAGE 2
<PAGE> 37
B. Customer will provide EDS PCC with prompt written notice of all changes
in the valid range of NPA/NXX combinations and temporary directory numbers
relevant to this operation. Customer will use the form provided by EDS PCC for
this purpose. EDS PCC will return a copy of this same written notice to
Customer, signed and dated by EDS PCC. The NPA/NXX or TDN change will become
effective for the purposes of this agreement within two business days after the
date noted by EDS PCC on such form.
C. To support the Roaming America integration feature of RA Plus, Customer
will define *30, *31 and *32 as IS-41 Remote Feature Control Requests when
dialed by roamers on Customer's cellular system.
EXHIBIT RA PLUS
PAGE 3
<PAGE> 38
EXHIBIT NS
EDS PERSONAL COMMUNICATIONS CORPORATION
INTERCARRIER SERVICES AGREEMENT
NETWORK SERVICES
Both EDS PCC and Customer agree that, except for the "Total Non-Recurring
Network Service Charges" and implementation services associated with such
charges, EDS PCC shall provide Network Services and Customer shall reimburse
EDS PCC for such Network Services in accordance with EDS PCC's November 1, 1994
proposal titled, "Network Service Proposal for Youngstown Cellular Telephone
Company" ("Proposal") attached to this Exhibit as Attachment A. Further, both
EDS PCC and Customer agree Customer selected Option C Support as identified and
priced in the Proposal.
EXHIBIT NS
PAGE 1
<PAGE> 39
Attachment A
Network Service Proposal
for
Youngstown Cellular Telephone Company
Objective
To provide Youngstown Cellular Telephone Company with a new network
architecture which facilitates their projected growth, is consistent with
Youngstown Cellular Telephone Company network strategy, and builds the
infrastructure for Real-Time product implementations like TeleCourier. EDS
PCD's goal is to migrate the existing X.25 platform to a LAN platform with WAN
interconnections.
This architecture will use the TCP/IP suite for:
* terminal traffic via Telnet.
* switch traffic via TCP (converted to LAT at EDS for application
compatibility).
* file transfer via FTP.
* socket connections via IP for RealTime systems.
* Upgraded architecture will support all existing PCD IS, ICS and Real
Time applications already in place.
* Anticipated improvement of 50% in response time for CMIS application
screens.
Assumptions
* The customer has an extended network from the primary network site for a
synchronous connections and/or 10BaseT connections to remote switch
sites and/or remote office locations. The customer will continue to
support their extended network.
* The customer will use IP communications for file transfers to EDS PCD.
* The customer will have NIC approved/registered IP address.
What is Frame Relay?
Frame Relay service is an evolutionary standard beyond the current X.25 packet
network. Joining the flexibility of the X.25 packet protocol with the
performance of private data lines, Frame Relay services move data more
effectively than the packet protocol. An upgrade to Frame Relay service is
simple and cost effective because Frame Relay services is based on the HDLC
protocol. The HDLC protocol is popular among LAN bridges, routers and other
communications devices.
A-1
<PAGE> 40
[GRAPHIC]
Predefined Permanent Virtual Connections (PVCs) for each pair
of endpoint devices so a network path is ready for your
applications at any time.
Frame Relay is a packet-oriented network access protocol ideally suited bursty
data applications.
Like X.25, frame relay is a packet-oriented technology. Packet-oriented
protocols provide a way to intelligently allocate bandwidth to individual data
streams on an as-needed basis instead of fixed channel allocations. Data
packets can be transmitted through the network as bandwidth is available.
A protocol is a set of agreed upon standards that govern the transfer of
information between devices.
Bursty data applications are such things as file transfers or downloading of
reports to an intelligent desk top (i.e. PC) that occur on an irregular basis.
There are multiple benefits to a frame relay network. Below are some
improvements that a frame relay network is likely to provide.
* IMPROVED NETWORK PERFORMANCE
Frame Relay minimizes network processing delays, consequently the
results are faster response times and greater network throughput.
Maximum bandwidth can be provided to a user while other users are idle,
hence data bursts go through faster and greater performance out of the
same pipe.
* IMPROVED PRODUCTIVITY/INCREASED CUSTOMER SATISFACTION
Because frame relay supports multiple types of data traffic and large
volumes of bursty data, the network throughput increases without
increasing circuit capacity (or cost). Faster response times could
improve productivity and potentially result in happier (or more loyal)
customers.
A-2
<PAGE> 41
* DECREASED OPERATING COSTS/INCREASED RELIABILITY
Faster response times and the ability to transmit bursty data
applications decreases the cost per data bit transmitted. Frame relay's
single line interface to the network results in both bandwidth and
hardware savings. Here's how. Like an X.25 network, frame relay
supports multiple virtual connections at the network access point,
eliminating the need for multiple physical connections. Eliminating the
need for multiple connections simplifies the topology - this can
translate into dollar savings every month. Also, by reducing hardware
requirements (and the multiple connections), the network becomes more
reliable. To put it simply - shared data pipes means lower costs.
* LIFE-CYCLE COST SAVINGS/MAXIMIZE ROI OF NETWORK INVESTMENT
All of the above benefits lead inevitably to the principal benefit. By
using frame relay in the proper network environment, you can save money
now and in the future. Your investment is protected by EDS's
recommended solution which is a fully expandable network hub. A more
complete description of the EDS solution is explained in the Frame Relay
Solution.
Description
The proposed LAN/WAN solution provides the customer with a state-of-the art
networking solution that has the performance required by the customer as it
continues to grow in both number of users and new EDS service bureau
applications.
The solution consists of a Xyplex 6-slot intranetworking hub with the following
components:
* 1# terminal server card. The terminal servers connect up to 20
asynchronous terminal users and switch ports to the hub's internal LAN
for TCP/IP access
* 1# 10BaseT interface card. The 10Base-T card provides direct ethernet
connections for 12 intelligent network devices such user workstations,
as well as an AUI port for access to an external ethernet LAN.
* 1# Synchronous Router Card. The router card can support 2# V.35
connections.
* 2# Managed (load sharing) power supplies.
* 2# Hub slots for future expansion.
The proposed solution has been configured with a 64 Kbps Burst Rate with a 0
Kbps Committed Information Rate (CIR). Other burst rates/CIR's are available,
please request additional information through your Account Representative.
The central site in Waltham will be equipped with a second router card and a
TCP/IP to LAT translator. The routers will route the TCP/IP traffic over the
Frame Relay Network from the
A-3
<PAGE> 42
customers site to PCD for delivery to the appropriate application. The
translator at EDS PCD does a protocol conversion between TCP/IP and LAT.
The TCP/IP to LAT translator is necessary because:
* The applications currently support LAT for talker/listener traffic.
* The routers cannot route LAT.
Leased Line Backup
The router card has multiple wide area network (WAN) ports. The Sprintframe
relay network will use one port and a second WAN port can be used for dial
restoral of the WAN connection in the event of a line outage.
Pricing
The pricing section consists of five sections:
1. Non-recurring network service charges for the Youngstown Cellular
Telephone Company Cellular location.
2. Non-recurring network service charges for the EDS location.
3. Non-recurring EDS implementation costs. This includes the following:
1) configuration of the unit at EDS, shipping the unit to site, three
(3) days on-site installation (cost includes travel expenses.)
4. Monthly recurring network service charges. Customer must choose either
Option A, Option B or Option C. The EDS recurring charge includes the
following:
* EDS Network Operations support
* The IXC serving EDS
* Xyplex's 24 hour expedite to customer site replacement
hardware (that customer swaps and returns to factory)
OR
* Next business day on-site response time
OR
* 4-hour business day response time
5. Youngstown Cellular Telephone Company Costs. Additional costs to
Youngstown Cellular Telephone Company will be the installation costs and
monthly recurring costs for the Frame Relay service.
A-4
<PAGE> 43
1. Non-Recurring Network Service Charges
<TABLE>
<CAPTION>
Unit Ext.
Model # Description Qty. Price Price
<S> <C> <C> <C> <C>
N9-9006-001 Xyplex 9000, 6-slot Hub 1 $2,495.00 $2,495.00
N9-130-0000 Managed Power Supply 2 $995.00 $1,990.00
N9-210-000 MgmL Processor Module 1 $1,250.00 $1,250.00
N9-000-253 12 port, 10BaseT module w/AUI adapt. 1 $1,995.00 $1,995.00
N9-401-000 Bridge/Router Processor Module 1 $4,495.00 $4,495.00
N9-000-461 Bridge/Router I/O 1 $2,495.00 $2,495.00
MED-IM-08 Flash Card 401/210 1 $850.00 $850.00
N9-720-000 Terminal Server Processor Module 1 $1,995.00 $1,995.00
N9-000-723 Terminal Server I/O 1 $1,745.00 $1,745.00
MED-CSK-13 Flash Card 720 1 $850.00 $850.00
N9-000-003 Cable Mgmt. cars, 6-slot chassis 1 $50.00 $50.00
MX-420-0617 Frame Relay Option 1 $500.00 $500.00
1SX5300SA-CSU Excalibur ISX 5300 CSU/DSU 1 $2,021.00 $2,021.00
5956-879R-10 V.35 Adapter Cable 1 $80.00 $80.00
ALM3223-SA ALM 3223 Modem 1 $524.00 $524.00
RS232 modem cable 1 $15.00 $15.00
$22,355.00 $23,350.00
</TABLE>
2. Non-recurring network service charges for the EDS location
<TABLE>
<CAPTION>
Model # Description Qty. Price Price
<S> <C> <C> <C>
N9-401-000-8 Bridge Router Processor Module 1 $1,143.00 $1,143.00
N9-000-462 Bridge Router I/O 1 $914.00 $914.00
MED-IM-08 Flash Card 401/210 1 $195.00 $195.00
MX-2710-A TCP/LAT Converter 1 $1,827.00 $1,827.00
Rack/Slot Allocation 2 $576.00 $1,152.00
$4,655.00 $5,231.00
3. Implementation Costs $4,200.00
Total Non-Recurring Network Service Charges $ 32,781.00
</TABLE>
A-5
<PAGE> 44
4. Monthly EDS recurring network service charges:
<TABLE>
<S> <C> <C> <C>
A. This includes: EDS support in Waltham $ 900.00
Local Loop charges from the LXC
Option A vendor support
B. This includes: EDS support in Waltham $ 1,050.00
Local Loop charges from the IXC
Option B vendor support
C. This includes: EDS support in Waltham $ 1,250.00
Local Loop charges from the IXC
Option C vendor support
</TABLE>
Customer must choose either Option A, Option B or Option C recurring
service charges.
5. Youngstown Cellular Telephone Company Costs
<TABLE>
<S> <C>
a. Sprint Frame Relay Installation Fees (one time) estimated $1,264.00
b. Sprint Frame Relay 64K/0K CIR (monthly) estimated $ 625.00
</TABLE>
On-Site Sparing
Customer may elect to purchase and stock on-site spares. EDS recommends the
following spares list:
<TABLE>
<CAPTION>
Unit Maint.
Model # Description Qty. Price (Annual)
<S> <C> <C> <C> <C>
N9-210-000 Mgmt. Processor Module 1 $1,250.00 $75.00
N9-000-253 12 port, 10BaseT module w/AUI adapt. 1 $1,995.00 $119.70
N9-401-000 Bridge/Router Processor Module 1 $4,495.00 $269.70
N9-000-461 Bridge/Router/I/O 1 $2,495.00 $149.70
N9-720-000 Terminal Server Processor Module 1 $1,995.00 $119.70
N9-000-723 Terminal Server I/O 1 $1,745.00 $104.70
$13,975.00 $838.50
</TABLE>
Redundancy
Xyplex's Intranetworking hub is equipped with managed power supplies.
Replacement and repair parts for the cards in the hub or communication gear are
covered by the manufacturer's service field support plan outlined below.
A-6
<PAGE> 45
Support
In the event of perceived network trouble, the customer will follow the same
procedures in place today to report the problem to EDS. If it is determined by
EDS that there is a network hardware failure, EDS and/or the customer can
contract the appropriate vendor.
The customer may purchase one of three different service options:
<TABLE>
<S> <C> <C>
Option A: Xyplex * Unlimited 24 hour toll free phone support
* 1# Class 1 media kit and doc. set per product
* Software and Documentation updates for major releases
* Expedited warranty service on request
* 25% discount on Class 2 media
* Per incident replacement of defective hardware, expedited 24 hour
replacement, customer swapable and return to factory
Racal * Support hours 8am to 6pm, Monday - Friday
* On-site response time 4 or 8 hours depending upon customer location.
Option B: Xyplex * Unlimited 24 hour toll free phone support
* 1# Class 1 media kit and doc. per product
* Software and Documentation updates for major releases
* Expedited warranty service on request
* 25% discount on Class 2 media
* On-site remedial hardware service, including next business day response
time for all calls dispatched between 8:00 AM and 5:00 PM.
* Single point of contact for support users
Racal * Support hours 8am to 6pm, Monday - Friday
* On-site response time 4 or 8 hours depending upon customer location.
Option C: Xyplex * Unlimited 24 hour toll free phone support
* 1# Class 1 media kit and doc. set per product
* Software and Documentation updates for major releases
* Expedited warranty service on request
*25% discount on Class 2 media
* On-site remedial hardware service, including 4-Hour response time for
all calls dispatched between 8:00 AM and 5:00 PM.
* Single point of contact for support issues
Racal * Support hours 8am to 6pm, Monday - Friday
* On-site response time 4 or 8 hours depending upon customer location.
</TABLE>
Note: Customers who elect the option for Xyplex on-site support must
install a TelCo measured business (MB) line for remote access.
A-7
<PAGE> 46
EXHIBIT MARKET
YOUNGSTOWN MARKETS
The Services to be ordered by the Customer and provided by EDS PCC hereunder
are pursuant to this Agreement for the benefit of the Customer's subscriber.
However, as the EDS PCC billing for Services ordered by the Customer under this
Agreement are priced upon certain representations by the Customer as to the
number of its markets and the SID/BIDs of these markets, Customer represents
and warrants to EDS PCC that the Customer owns, manages, or services each of
the markets specified below in its own name or through an affiliated entity
controlled by the Customer, including assumed names, and has the authority to
enter into this Agreement for the provision of the Services ordered for each
market under this Agreement on behalf of such market.
<TABLE>
<CAPTION>
MARKET SID/BID PRV ISS XLI RA+
------ ------- --- --- --- ---
<S> <C> <C> <C> <C>
Youngstown, OH 00089 X X X
----- ----- ----- -----
Sharon, PA 30395 X X X
----- ----- ----- -----
Poland, OH 30397 X X X
----- ----- ----- -----
E. Liverpool, OH 30421 X X X
----- ----- ----- -----
</TABLE>
"X" indicates Market will receive the indicated Service.
Customer agrees to notify EDS PCC pursuant to Section 16 of this Agreement
within sixty (60) days of any changes to the above list to Markets or SID/BID
Numbers. Such notification shall be protected under Section 17 of this
Agreement and is required by this Exhibit under the Agreement to provide
notification to EDS PCC of any changes necessitating changes to EDS PCC's
billing to the Customer for the Service(s) ordered by the Customer for each of
the above specified markets.
Any request by the Customer for EDS PCC to provide Services for the benefit of
any market not specified above or for Subscribers outside of the above
specified markets shall be considered a request for additional markets subject
to either or both Sections 1(c) and 3(d) of this Agreement
EXHIBIT MARKET
PAGE 1
<PAGE> 47
July 18, 1995
Mr. Herb Williams
EDS PCD
1601 Trapelo Rd.
Waltham, MA 02154
Dear Herb,
Per our telephone conversation, what follows is a confirmation of our intent to
acquire the FCC A-band cellular license for Erie, Pennsylvania.
It is our desire to contract with EDS for the provision of validation and
clearing services as an addendum to the current agreement between EDS and
Youngstown Cellular Telephone Company.
We expect the sale to close on or around September 30, 1995. It is our
intention to operate the Erie market as an extension of our Youngstown system,
running the cell sites and NPA/NXX's as BID 30067. This BID currently belongs
to McCaw, but we will be jointly petitioning Cibernet to change ownership of
the BID from SID 39 to SID 89.
Please advise me if there is anything else that I can do to facilitate this. I
feel certain that we will be getting good cooperation with McCaw during this
transition, and would expect that EDS would be hearing from them soon about
their intent to divest.
Sincerely,
/s/ LYNN WILLIAMSON
Lynn Williamson
Vice President, Information Services
<PAGE> 48
March 21, 1996 [EDS LETTERHEAD]
Ms. Lynn Williamson
Sygnet Communications
6550 Seville Dr. Suite B
Canfield, OH 44406
Dear Ms. Williamson:
It has come to our attention that certain language additions to the standard
EDS InterOperator Services Agreement are required immediately, in order to
support current industry practice for CIBER edits. Current industry practice
for intercarrier financial settlement dictates that EDS accept and edit returns
and rejects on behalf of your Roaming Partners. Optional edits are growing in
use by the industry, and will continue to do so with the advent of Selective
Editing as an added function of ISS. In order to map EDS' InterOperator
Services Agreement language to this existing practice, and to continue to
support you per current standards with no potential break in service, EDS
wishes to add the following language as Section I.A.7. to Exhibit ISS of your
Agreement:
Standard Industry Edits. Standard industry edits noted in this
Agreement will be performed by EDS PCC unless otherwise indicated by
Customer. Additional edits may be performed upon request, (i.e.
roaming agreement edit) on Customer's behalf. In addition, subsequent
edits may be performed by the Customer's Roaming Partner's Authorized
Receipt Point ("ARP") which may be a clearinghouse or billing service.
Records may be rejected and/or returned by this ARP to EDS PCC and
accepted by EDS PCC on behalf of the Customer in accordance with
industry standards. It is the Customer's responsibility to ensure it
has made all necessary administrative and contractual arrangements per
its roaming agreements allowing EDS PCC to perform these custom edits,
and to ensure EDS PCC is fully notified of all applicable terms and
conditions of the Customer's roaming agreements, so that EDS PCC can
perform custom edits in accordance with this Agreement, with
Customer's roaming agreements, and with applicable industry standards.
For purposes of this notification, the "Custom Edit Set-up
Instructions and Terms and Conditions ("Custom Edit Form") is
incorporated into this Exhibit ISS as Attachment II. This Custom Edit
Form is to be used by Customer to set up all custom edits and to
provide adequate notification, as defined by EDS PCC, of any changes
to either Customer's roaming partners or to any applicable terms and
conditions of Customer's roam agreements. Customer agrees that
failure to submit the Custom Edit Form, failure to update the Custom
Edit Form as required herein or failure to ensure the Custom Edit Form
is accurate as to either Customer's information or Customer's roam
agreements shall release EDS PCC from any and all liability due to
such failure.
<PAGE> 49
Please indicate your concurrence with this additional language and the
enclosed Attachment II to Exhibit ISS, by signing this letter in the space
provided below, and returning this document to me by May 1st, 1996. We
appreciate your assistance in updating our records so that EDS can continue to
serve you and to support standard industry practices.
Sincerely,
/s/ HERBERT R. WILLIAMS
Herb Williams
EDS InterOperator Services
Concurrence:
By: /s/ LYNN WILLIAMSON
------------------------------------
Name: Lynn Williamson
----------------------------------
Title: VP Information Services
---------------------------------
Company: SYGNET Communications, Inc.
-------------------------------
Date: 4/10/96
----------------------------------
<PAGE> 1
EXHIBIT 10.14
SOFTWARE LICENSE AGREEMENT
THIS SOFTWARE LICENSE AGREEMENT ("Agreement") is entered into this
20th day of April, 1995, between INTERNATIONAL TELECOMMUNICATION DATA SYSTEMS,
INC. ("ITDS"), a Connecticut corporation with principal offices at 969 High
Ridge Road, Suite 205, Stamford, Connecticut 06905, and YOUNGSTOWN CELLULAR
TELEPHONE COMPANY, a New York partnership with principal offices at 3910 South
Avenue, Youngstown, Ohio 44512 ("YCTC") and WILCOM CELLULAR, an Ohio
partnership with principal offices at 3910 South Avenue, Youngstown, Ohio 44512
("WC"), a reseller of YCTC's cellular telephone services, the permittees or
Holders of FCC nonwireline licenses to provide cellular telephone services in
Metropolitan Service Areas and Rural Service Areas ("Customers Market" or
"Market") described as Nonwireline MSA 66 Youngstown - Warren, OH, Nonwireline
MSA 238 Sharon, PA and Nonwireline RSA Ohio 11 - SID #595A. For purposes of
this Agreement, YCTC and WC shall hereinafter jointly be referred to as
"Customer".
WHEREAS, ITDS is in the business of licensing billing software,
including ITDS 10X Software and other billing services to FCC licensees of
cellular telephone services; and
WHEREAS, Customer desires to contract with ITDS to use billing
software and obtain billing services for Customer's specific benefit in
Customers above-described Market.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
Section 1. Definitions:
1.1 "Billing Services" shall mean those services described in
Schedule "A" attached hereto and incorporated herein by reference.
1.2 "Business Day" shall mean week days from 7:00 a.m. to 8:00 p.m.
(E.S.T.), and shall exclude weekends and ITDS Holidays, hereinafter defined in
Section 1.19.
1.3 "Business Hour" shall mean any sixty (60) minute period during
any Business Day.
1.4 "Call Records" are the electronic expression of home, roam,
reseller and unbillable calling experiences in Customer's Market, which may
include a listing of the calling party by cellular telephone number and/or ESN,
the identification of the called party by cellular telephone number, and the
off-hook mark in the billing tape as well as the call termination mark which
determines the length of any call. Call Records are divided into home call
records, roam call records, reseller call records and unbillable call records.
Home call records are calls recorded by the Customer's MTSO (hereinafter
defined) which are originated by the Customer's home Subscribers. Roam call
records are comprised of (i) "outcollect" roam call records, which are calls
recorded on the Customer's MTSO and which are originated by Subscribers of the
Customer's roaming partners, and (ii) "incollect" roam call records, which are
calls originated by Customer's Subscribers on
<PAGE> 2
Customer's roaming partners' MTSO and which are received by ITDS and/or
Customer from Customer's designated clearinghouse in Ciber Format. Reseller
call records are comprised of those rated home and roam call records that are
formatted in a predetermined record layout and that are forwarded to the
reseller. Unbillable call records are those calls recorded by Customer's MTSO
which are not designated as having billable call completion codes by Customer,
or are otherwise invalid calls.
1.5 "Cell Site(s)" is/are the location(s) where there is an antenna,
tower, building, security fence and/or other equipment necessary to operate a
Cellular Network.
1.6 "Cellular Network" is a radiotelephone system consisting of a
MTSO or MTSOs and a Cell Site or Cell Sites located within an MSA or RSA and
connected to an Interconnect Carrier.
1.7 "Ciber Format" or the Cellular Intercarrier Billing Exchange
Roamer Record, contains the recognized cellular industry standard record format
that is utilized to facilitate the transfer of billing information among
cellular telephone carriers.
1.8 "Conversion" or "Convert" shall mean the gathering, interpreting
and restructuring of Customer's existing Customer Records into ITDS' standard
specified format, from sources provided to ITDS by Customer.
1.9 "Custom Programming" shall mean programming provided by ITDS, at
Customer's reasonable written request, for software changes, modifications, or
enhancements during the term of this Agreement; provided, however, ITDS may
make, in the course of its business, custom changes, modifications or
enhancements for other ITDS customers which are similar to or different from
those provided to Customer so long as such changes, modifications or
enhancements do not include Confidential Information provided by Customer to
ITDS.
1.10 "Customer Data" is information used to identify individual
Subscribers of Customer, including, but not limited to, name, address,
electronic serial number, mobile identification number, payment history and
other descriptive and identifying billing information.
1.11 "Customer Service Center" is the location where Customer provides
service or support to its Subscribers, and such location(s) shall be set forth,
as amended from time to time hereafter, on Schedule "C" attached hereto and
incorporated herein by reference.
1.12 "Data Base" is the documentation, computer tapes, records, lists
or other material containing the telephone numbers, ESN numbers and other
descriptive and identifying information concerning Subscribers. For purposes
of this Agreement, "Data Base" shall also include the rate or tariff
information used by Customer's Market.
2
<PAGE> 3
1.13 "Designated Agent" shall mean the employee of Customer that
Customer has selected to perform the "Duties of Customer" set forth in Section
4 of this Agreement. At the time of execution of this Agreement, Customer's
Designated Agent is the employee set forth on Schedule "C". In the event that
Customer changes its Designated Agent any time during the term of this
Agreement, or any renewal term hereof, Customer shall notify ITDS in writing no
later than ten (10) days after the effective date of such change.
1.14 "ESN" means the decimal, hexadecimal or octal electronic serial
number assigned to a radiotelephone.
1.15 "FCC" is the abbreviation for Federal Communication Commission.
1.16 "Generic Improvements" shall mean all modifications,
alterations, enhancements, updates, repairs or revisions of ITDS 10X Software
which are developed and made generally available by ITDS to its licensees after
the date of execution hereof.
1.17 "Interconnect Carrier" is that wireline telephone company or
companies, providing local exchange telecommunications services, within the
geographic area of Customer's Market or the service area where Customer's MTSO
is located.
1.18 "ITDS 10X Software" is proprietary software owned by ITDS and
licensed for use by ITDS licensees, including Customer, to enter data and
output a Data Base of said data for subsequent processing by ITDS or authorized
ITDS subcontractors to generate Subscriber bills.
1.19 "ITDS Holidays" are New Year's Day, Lincoln's Birthday,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Election Day, Veteran's Day, Thanksgiving, Christmas Eve and
Christmas, provided that ITDS may change its holidays at any time on notice to
Customer.
1.20 "Message Processing" shall mean the reading, editing,
formatting, guiding and rating of Call Records and the merging of the product
thereof with any previously unbilled calls.
1.21 "MTSO" is the abbreviation for Mobile Telephone Switching
Office, and is the switch facility of an Interconnect Carrier to which
radiotelephone traffic is routed.
1.22 "Operation Schedule" is that schedule detailed below that
identifies the sequence and timing of services, materials and other activities
necessary to meet agreed upon operation dates between the parties hereto and to
have Customer's bills to its Subscribers mailed out within the specified
billing and collection cycle. The Operation Schedule can be changed from time
to time upon the mutual agreement of the parties hereto.
3
<PAGE> 4
1.23 "Print Vendor" shall mean a third party selected by ITDS to
perform invoice fulfillment services, including, but not limited to, converting
magnetic tape images (or other mutually acceptable electronic media) to
invoices and then printing, folding, inserting and mailing such invoices to
Customer's Subscribers.
1.24 "Site" is the location where the MTSO operates.
1.25 "Subscriber" is any user of cellular telephone services provided
by Customer's Market.
Section 2. Term of Agreement:
2.1 The initial term of this Agreement shall commence upon execution
hereof and shall continue in effect for a period of three (3) years from the
date of the conversion, cycle cutoff and actual bill shipment by ITDS of the
last of Customer's markets to be converted to ITDS' 10X Software. Upon
termination of the initial term of this Agreement, Customer shall in all events
continue to be obligated to pay for all services previously performed by or
then in process with ITDS.
Section 3. Scope of Billing Services:
3.1 Billing Services provided and performed by ITDS shall include
services specified in Schedule "A" and the deliverables specified in Schedule
"F", which are attached hereto and made a part hereof by this reference.
Customer agrees that ITDS has the sole and exclusive right to provide and
perform the Billing Services set forth herein on behalf of Customer, and any
other party providing cellular telephone services to the public through the use
of Customer's Market, during the term of this Agreement. ITDS and Customer
agree that ITDS will provide and perform those Billing Services specifically
designated in Schedule "A" attached hereto, during the term of this Agreement,
in consideration of Customer's satisfaction of the specific charges set forth
in Schedules "A" and "B".
3.2 ITDS shall provide additional billing services as reasonably
requested by Customer within a reasonable time from the date of such request,
subject only to ITDS' (i) existing commitments and (ii) available resources.
Such additional billing services shall be provided at ITDS' then prevailing
rates plus reasonable travel and lodging expenses.
3.3 ITDS hereby grants, and Customer hereby accepts, a revocable,
nontransferable and nonexclusive license for Customer and its Designated Agent
to use the ITDS 1OX Software and all related documentation during the term or
any renewal term hereof in accordance with the terms of this Agreement and
solely for Customer's benefit at the agreed upon Customer location where ITDS
installs and verifies the operability of the ITDS 10X Software. Any rights not
expressly granted herein are reserved by ITDS. Suitable computer programs will
be provided for the use of Customer and its Designated Agent in machine
readable object code form. The ITDS 10X Software shall be used only with
respect to the business
4
<PAGE> 5
of Customer's Market, and shall be limited to reporting and maintaining
Customer's own information. Customer and its Designated Agent shall not permit
any third party, not otherwise licensed by ITDS, to use or have access to the
ITDS 10X software, or the computer hardware within which the ITDS 10X Software
resides.
3.4 ITDS shall, as part of this Agreement, assist Customer in the
conversion of Customer's records as presently established and formatted with
Customer's current bill processing vendor. Such service will be provided
pursuant to the terms of this Agreement. Customer acknowledges that the degree
of cooperation received from Customer's current bill processing vendor will
substantially determine the efficiency of this conversion process.
Notwithstanding anything herein to the contrary, all of ITDS' obligations and
duties under this Agreement are contingent upon the successful completion of
the conversion process, and all outcollect roam call records submitted to
Customer's clearinghouse(s) that are lost as a result of "ciber return reason
code 4 10 007-message over xx days" or its equivalent, due to delays
surrounding the conversion process, will be the sole liability of Customer,
though ITDS will make every effort to minimize the potentiality of any such
loss. Both parties hereto agree to take all reasonable and necessary steps to
accomplish such conversion, and Customer further agrees to use all reasonable
means at its disposal with its current bill processing vendor to attain full
cooperation.
3.5 The parties to this Agreement recognize that in order to confirm
completeness and accuracy of Data Base conversion programming, ITDS will
conduct testing and parallel bill processing before final live conversion of
the Customer's records. These preliminary processing steps will include
generation and analysis of key standard month end reports and a representative
sample of invoices defined by Customer. The parties acknowledge that Customer
may desire additional testing and/or parallel billings before full cutoff of
Customer's current bill processing vendor, and Customer hereby agrees to pay
for such testing and/or parallel billings, at ITDS' then current rate.
3.6 ITDS shall provide monthly bills to Subscribers based on the
Operation Schedule agreed upon by the parties below. In connection therewith,
and in the performance of all of its services under this Section 3, ITDS shall
cooperate and communicate with the Designated Agent as necessary to perform its
tasks contemplated hereunder in a workmanlike and conscientious manner.
(i) Customer shall provide ITDS with magnetic tapes (or other
mutually acceptable electronic media) from its MTSO containing Customer's Call
Records and certain other charges and credits. ITDS shall sort such Call
Records into home call records, roam call records or unbillable call records in
accordance with the specific written instructions conveyed by Customer. ITDS
shall take such sorted Call Records and shall rate the outcollect roam call
records contained therein, at which point ITDS shall submit such rated
outcollect roam call records to Customer's designated clearinghouse, in Ciber
Format, via magnetic tape or other mutually
5
<PAGE> 6
acceptable electronic media. ITDS shall forward such outcollect roam call
records to Customer's clearinghouse within four (4) Business Days after ITDS'
receipt of Customer's magnetic tapes or other mutually acceptable electronic
media. The parties hereto agree that they will work with one another and with
Customer's designated clearinghouse in the event the outcollect roam call
records submitted by ITDS to Customer's designated clearinghouse are not in an
acceptable format, or are unable to be read.
(ii) After receipt of Call Record data from Customer and cycle
completion verification by Customer, ITDS shall accept and process all Call
Record data, Data Base data and roaming data (provided by Customer or by any
clearinghouse at Customer's direction), provided such data is in an ITDS
specified format, and shall begin the conversion of such data, providing
Customer with exception and error reports for Customer's review within four (4)
Business Days thereafter.
(iii) Upon ITDS' receipt of Customer's approval and/or
correction of any such exception or error reports, ITDS shall begin conversion
of such approved data and produce a bill image file, providing Customer with
sample bill(s) for Customer's review no later than three (3) Business Days
after ITDS' receipt of Customer's approval. Customer shall specifically be
responsible for reviewing sample bills for accuracy, integrity and
completeness, and for approving the same, based on among other things,
Customer's Call Record data, Customer Data and Data Base data.
(iv) Upon ITDS' receipt of Customer's approval of such sample
bill(s), ITDS shall commence bill printing, with the maximum time period to
complete printing, insertion of bills, mail metering and mailing not to exceed
the following:
<TABLE>
<CAPTION>
Total Volume of Bills per Cycle Maximum Time After Approval
- ------------------------------- ----------------------------
<S> <C>
1 to 16,000 3.0 Business Days
16,001 to 22,000 3.5 Business Days
22,001 and up 4.0 Business Days
</TABLE>
(v) The parties hereto agree to designate and replace from
time to time, as necessary, representatives of each party so that the billing
process can work as expeditiously and smoothly as possible. All approvals, or
waivers thereof, from Customer as required under the above-described Operation
Schedule shall be in writing or by fax. Any performance required of ITDS
hereunder shall be waived until such time as Customer responds as required
hereunder.
3.7 ITDS shall begin investigation and correction of any errors
concerning any bills within two (2) Business Hours after written notification
by Customer or discovery by ITDS of such errors, and shall diligently continue
correction measures until such errors are resolved. Any billing re-runs or
corrections of re-runs required as a result of errors or omissions on the part
of
6
<PAGE> 7
ITDS or its employees shall be done at no additional charge to Customer.
3.8 ITDS shall provide initial training in the operation and use of
ITDS 10X Software to Customer as provided in Schedule "B". Any training or
installation necessary concerning any Generic Improvements of ITDS 10X Software
shall be at no cost to Customer, except for reimbursement to ITDS for
reasonable travel and lodging expenses.
3.9 As of the effective date of this Agreement, ITDS shall provide
customer with the "1OX library reports" and "1OX production reports" set forth
on Schedule "E" attached hereto and incorporated herein by reference. Any
additional reports requested by Customer shall be deemed additional billing
services and shall be subject to Section 3.2 herein.
Section 4. Duties of Customer:
4.1 Customer shall deliver Call Record data, Data Base data and
documentation describing certain record layout data (e.g. formatted electronic
expressions of Call Record and Data Base data) to ITDS, in IBM machine-readable
form consisting of on-line transmissions, magnetic tape or other mutually
acceptable electronic media, in specified formats which may be designated or
revised by ITDS from time to time. In the event ITDS receives data which is
not in such format, ITDS shall notify Customer of such problem and shall
provide Customer with an estimate of the hours needed to reformat such data, at
Customer's expense as provided in Schedule "B" hereto. Customer shall have the
option of replacing the problematic data with IBM machine-readable data or
authorizing ITDS to reformat the data at Customer's expense, if possible,
except that should Customer fail to inform ITDS of its decision within one (1)
Business Day after notification of such problem, ITDS shall proceed to reformat
such data, if possible, at ITDS' then prevailing rates. Notwithstanding
anything to the contrary contained in this Agreement, Customer shall
specifically be responsible for establishing, maintaining, updating, and
validating the accuracy, integrity and completeness of Call Record data,
Customer Data, Data Base data, and record layout data, and shall be solely at
risk for any revenue loss associated with any failure therein. Included in
Customer's responsibilities as set forth in the preceding sentence is
Customer's obligation to promptly provide ITDS with prior written notice and
technical specifications and/or documentation regarding any change that would
impact ITDS' Billing Services. A Customer change would include, but not be
limited to, a modification to: Customer's MTSO or MTSO software or network;
Customer's rate plans; Customer's SID or BID numbers; Customer's cell sites;
Customer's long distance toll rates or Customer's computer hardware or computer
network. ITDS shall respond to Customer within thirty (30) days of receipt of
such written notice, shall provide Customer with an implementation schedule
related to any such notification and shall notify Customer of any ITDS charge
related thereto.
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4.2 Customer shall promptly provide ITDS with all approvals or waivers
required on Customer's part as set forth in Section 3 above within one (1)
Business Day of receipt by Customer. With respect to any exception or error
reports, Customer shall review such reports and provide ITDS with the
information necessary to process such data free of any such exceptions or
errors, or waive processing of any raw call records containing such exceptions
or errors, as set forth therein. Failure by Customer to perform any of its
responsibilities as provided hereunder shall extend the time for ITDS'
performance under this Agreement by at least the amount of time equal to
Customer's delay, but in no event shall such extension exceed Customer's delay
by more than two (2) Business Days. Additionally, in the event that such
failure increases ITDS' costs of providing Billing Services, ITDS shall bill
Customer and Customer shall pay all reasonable and verified costs directly
resulting from Customer's failure to perform its responsibilities.
4.3 Customer shall provide ITDS with the name of at least one (1)
employee or third party vendor that is a fully qualified systems integrator.
The systems integrator should ideally be certified to install and maintain the
major hardware components required to support the ITDS 10X Software system,
Customers Data Base and the related tables and files associated therewith.
Customer shall also provide ITDS with the name of at least one (1) employee who
must be proficient with personal computers, and who will receive initial
training in the operation and use of ITDS' 10X Software.
4.4 Customer shall acquire, at its sole expense, the compatible
computer and telecommunications equipment necessary for the operation of the
ITDS 10X Software. The parties shall consult as to compatibility prior to
installation of such equipment; however, ITDS assumes no responsibility for any
equipment acquired by Customer. ITDS has designated and approved the computer
and telecommunications equipment configuration for ITDS' 10X Software, set
forth on Schedule D attached hereto and incorporated herein by reference. The
cost of installing, operating, maintaining, upgrading and removing such
equipment shall be borne entirely by Customer. Customer agrees to promptly
provide the necessary installations and to permit reasonable access to such
equipment by ITDS and others engaged in installing or removing such equipment
or maintaining it after installation as may be necessary for the provision of
the Billing Services contracted for hereby.
4.5 Customer shall provide ITDS with those types of Call Records
recorded by Customer's MTSO which are designated by Customer as having billable
call completion codes. All Call Records designated by Customer as not having
billable completion codes shall be treated as unbillable call records by ITDS.
Customer shall provide ITDS with all billable call completion codes and/or
designations (including rate and tariff information, if applicable), in
writing, within five (5) Business Days of the effective date hereof, and within
fifteen (15) Business Days prior to each scheduled monthly billing cycle in
which Customer elects to modify such billable call completion codes.
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4.6 ITDS and Customer shall each establish regular and reasonable
internal measures to verify the accuracy of all Billing Services performed by
ITDS on behalf of Customer. Customer shall notify ITDS of all errors,
omissions or inaccuracies in its Data Base or in any data, record, statement or
other document processed or delivered by ITDS, within fifteen (15) days after
such work is delivered to or picked up by Customer. Customer agrees that in
the event of any errors, omissions or inaccuracies in Billing Services, ITDS
shall be given a reasonable period, not to exceed thirty (30) days, in which to
run a rebilling to correct such error. ITDS agrees to take all reasonable
steps to rebill in the event of any errors in Billing Services. Customer agrees
to reimburse ITDS for any cost and expense incurred if the rebilling is
required through no fault of ITDS. The parties agree that the limitation
periods in this Section shall apply only to the matters arising under this
Section.
Section 5. Payment Terms and Conditions:
5.1 Customer acknowledges that ITDS has contracted with a Print Vendor
to provide certain billing services which under this Agreement are to be
performed and provided by ITDS. Customer shall provide ITDS with a postage
deposit equal to the average monthly cost of postage for billings mailed on
Customer's behalf. Customer understands that without this deposit, the Print
Vendor will not mail Customer's bills. Customer shall forward the postage
deposit due under this Section at the same time it satisfies ITDS' invoice for
the previous months Billing Services. ITDS reserves the right to designate
another company in the Print Vendor's place and stead, and Customer reserves
the right to designate another company in the Print Vendor's place and stead.
To the extent Customer elects to designate another company in the Print
Vendor's place and stead, the parties agree that ITDS shall have no
responsibility to any party with regard to any services, costs, liabilities,
damages etc. in any way resulting from and/or associated with the services to
be performed by Customer's print vendor.
5.2 Customer shall pay all invoices from ITDS within thirty (30) days
from receipt of invoice. Customer shall be deemed to be in receipt of an
invoice three (3) days after such invoice is deposited by ITDS in the United
States mail, postage prepaid. If timely payment is not received by ITDS, ITDS
may bill and Customer shall pay all costs, including reasonable attorneys' fees
expended in collecting unpaid amounts and a late payment charge on the unpaid
balance of two percent (2%) per month or the maximum rate allowed by law,
whichever is higher. Notwithstanding anything to the contrary contained in
this Agreement, Customer understands that to the extent any invoice is not paid
within thirty (30) days from Customer's receipt of the same, ITDS may cease to
perform Billing Services for Customer until such time as all payments due and
payable to ITDS are received by ITDS. In addition, Customer understands and
agrees that ITDS' cessation of Billing Services as provided above shall not
constitute a breach by ITDS of any of its duties or obligations under this
Agreement or be deemed an election of remedies by ITDS.
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5.3 Customer agrees to pay all federal, state and local taxes,
however designated (excluding taxes based upon ITDS' net income) imposed on or
based upon the provision of technical services hereunder. If any such taxes or
assessments are required to be collected and/or paid by ITDS, then Customer
agrees to reimburse ITDS for all such sums within thirty (30) days of
notification from ITDS of its liability therefor.
Section 6. Operational Changes and Improvements:
6.1 ITDS reserves the right at any time or from time to time, in its
sole discretion, to make changes in rules of operation, including, but not
limited to, sign on procedures, access commands, programming languages, or the
location of ITDS' access stations, provided that such changes do not materially
and adversely impact Customer. Adjustment to the processing period and
Customer equipment installed at Customer's premises shall be as mutually agreed
upon by the parties.
6.2 In the event that Customer requests Custom Programming of ITDS,
additional contractual agreements will be required. Any such requested Custom
Programming modifications will be performed on and charged at a time and
material basis at ITDS' then prevailing rates. In the event of agreed travel
by employees or representatives of ITDS, Customer will pay reasonable travel
and lodging expenses.
6.3 Customer shall prioritize all changes it requests to the ITDS 10X
Software and submit such prioritized list in writing to ITDS regularly, as
mutually agreed. Customer shall update its prioritized list from time to time
to reflect all changes. ITDS shall provide Customer with an acceptance and
implementation schedule for the requested changes, after ITDS has received all
Customer information ITDS deems necessary or appropriate to respond. ITDS
shall notify Customer in its response of any additional charges for requested
changes and of any additional information needed to implement such changes.
6.4 When Customer requests an ITDS 10X Software enhancement, such
request must include sufficient detail for the parties to determine the exact
nature of such enhancement. Any requests for improvements must be in writing.
6.5 ITDS will notify Customer in advance of any Generic Improvement,
new release or new version of ITDS' 10X Software, which may or may not have
been requested by Customer, but which directly impacts Customer. ITDS shall
provide Customer with written documentation regarding any such Generic
Improvement or new version of ITDS' 10X Software prior to the delivery of the
same. ITDS shall, through the use of Generic Improvements, new releases and\or
new versions, maintain its ITDS 10X Software so that such Software allows ITDS
to provide billing services in accordance with the then existing standards
established by CTIA through its CIBER or other related committees.
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6.6 ITDS is, and shall be, the sole owner of all inventions,
discoveries, updates, improvements, modifications, changes and/or enhancements
relating to the ITDS 10X Software, all copies thereof, including translations,
compilations, partial copies, derivative works and updated works, whether
partial or complete and whether or not modified or merged into other program
materials and whether in written or unwritten form and whether developed by
Customer or ITDS. Customer acknowledges and agrees that the foregoing
inventions, discoveries, et cetera, shall not be deemed or considered "work for
hire". ITDS shall retain the exclusive right to reproduce, publish, patent,
copyright, sell, license or otherwise make use of such inventions, discoveries,
updates, improvements, modifications, changes and/or enhancements. Customer
hereby grants to ITDS a perpetual, nonexclusive, worldwide royalty free license
and right to use, execute, display, perform and distribute copies of and
prepare or have prepared for ITDS' own use or use by its customers, any and all
custom coding or programming done by ITDS for or on behalf of Customer in
respect of the ITDS 10X Software, both object code and source code, additions
and modifications thereto and derivative works therefrom.
6.7 ITDS shall not be responsible for any changes made to the ITDS 10X
Software by any party other than ITDS without the express written permission of
ITDS. Any changes made without the express written permission of ITDS shall
immediately release ITDS from any and all obligations to correct or maintain
the ITDS 10X Software, but in no way shall this alter or modify ITDS' ownership
of the ITDS 10X Software or Customer's duty and obligation to maintain the
standards of confidentiality set forth herein.
6.8 Should Customer desire any changes in the format or appearance of
bills printed and mailed to its Subscribers after execution hereof, including
changes in the type, format, appearance or printing of inserts to be inserted
in such bills, Customer shall give ITDS no less than thirty (30) days prior
written notice thereof. ITDS shall endeavor to comply with any such requests of
Customer, subject to any contractual limitations ITDS may have with the Print
Vendor. ITDS shall provide Customer with an implementation schedule related to
any such request, and shall notify Customer of any ITDS and/or Print Vendor
charges related thereto to alter existing formats or establish new formats.
All such requests by Customer shall include sufficient detail for ITDS to
determine the exact nature of the changes requested.
Section 7. Security and Confidentiality:
7.1 The parties are willing to exchange certain information that the
disclosing party deems to be confidential and proprietary for the mutual
purpose of performing the terms of this Agreement. Each party shall use its
best efforts to maintain the security and confidentiality of all data and
documentation which is considered proprietary to any party hereto.
7.2 For purposes hereof "Confidential Information" shall include all
business and technical information or data relating to either party hereto,
including but not limited to the ITDS 10X
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Software and related documentation, training materials, financial information,
trade secrets (hereinafter defined as information, including a formula,
pattern, compilation, program, devise, method, technique, or process that
derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by
persons who can obtain economic value from its disclosure or use), know-how,
methods of operation, research and development data, customer lists, sales and
pricing information, customer surveys, drawings, processes, patent data, files,
sketches, models, samples, marketing data, copyrightable data, object code,
source code, training materials, system documentation and the like, whether or
not patentable or copyrightable. Notwithstanding anything contained herein to
the contrary, Confidential Information shall not include the following:
(i) Information developed independently by either party hereto
or lawfully received from another source without breach of this Agreement as
documented in the dated or written records of the developing or receiving
party; or
(ii) Information within the public domain through no wrongful
act of the receiving party; or
(iii) Information previously known by either party hereto
prior to the execution hereof as evidenced by prior written documentation
thereof; or
(iv) Information rightfully received by either party hereto
after the execution hereof from a third party who learned of it or developed it
independently from any party hereto, or from a party hereto with the consent of
that party and without any restriction on disclosure thereof; or
(v) Information disclosed pursuant to law, judicial order or
governmental regulation after any statutory appeal rights have expired
concerning any such prospective disclosure.
7.3 The party receiving Confidential Information ("Recipient") shall
not use or communicate, directly or indirectly, any of the Confidential
Information to any third party without the prior written consent of the party
disclosing said Confidential Information ("Discloser"). Recipient shall use
its best efforts to prevent inadvertent disclosure of all or any part of the
Confidential Information to any third party. Recipient shall advise its agents
and employees who are to receive the Confidential Information that the
Confidential Information is confidential and proprietary to Discloser, and
shall instruct such agents and employees that Recipient and its agents and
employees have a legal obligation to maintain the Confidential Information in
confidence and not to disclose it to any third party.
7.4 Customer recognizes that the ITDS' 10X Software and all related
information, including, but not limited to, any and all updates, modifications,
Generic Improvements, enhancements, user and installation manuals,
documentation, and information related to
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installation at the location(s) of Customer are proprietary to and constitute
TRADE SECRETS of ITDS, and that all rights thereto, including copyrights, are
owned by ITDS. ITDS shall at all times retain title to the ITDS 10X Software
and all related information.
7.5 Customer shall keep each and every item of ITDS 10X Software and
all related information furnished hereunder free and clear of any claims, liens
and encumbrances.
7.6 Customer shall not (i) copy or duplicate, or permit anyone else to
copy or duplicate, any of the ITDS 10X Software or related information, whether
in written, magnetic or any other form, except pursuant to reasonable backup
procedures; nor (ii) provide or make the ITDS 10X Software or related
information available to any person or entity other than employees of Customer
who have a need to know consistent with Customer's use thereof under this
Agreement; nor (iii) create or attempt to create, or permit others to create or
attempt to create by disassembling, reverse engineering or otherwise, the
source programs or any part thereof from the object program or from other
information (whether oral, written, tangible or intangible) made available to
Customer under this Agreement; nor (iv) copy for the use of others operator
manuals, system reference guides, training materials and other user-oriented
materials without the prior written consent of ITDS. In order to protect ITDS'
TRADE SECRETS and copyrights in the ITDS 10X Software and related information,
Customer agrees to reproduce and incorporate ITDS' relevant notices, including
copyright and TRADE SECRET notices, in any copies, modifications or partial
copies authorized under this Agreement. The ITDS 10X Software shall be kept in
a secure place with access and use restrictions recommended by ITDS.
7.7 Customer agrees to notify ITDS forthwith if it obtains information
as to any unauthorized possession, use or disclosure of any item of ITDS' 10X
Software or related information by any person or entity, known by Customer to
be possessing, using or disclosing the ITDS 10X Software without authorization,
and upon making such notification to ITDS, agree to cooperate with ITDS in
protecting ITDS' proprietary rights.
7.8 Customer agrees and acknowledges that ITDS may use, or require
Customer to use, at ITDS' expense, software locks in order to limit the use of
the ITDS 10X Software consistent with the use permitted hereunder.
7.9 Each party's obligations under this Section shall continue after
the termination of this Agreement with respect to each item of Confidential
Information for as long as that Confidential Information remains confidential
and proprietary to the party attempting to enforce its confidentiality.
Section 8. Warranty. ITDS shall perform Billing Services with
reasonable care and in a professional and workmanlike manner. EXCEPT FOR THE
EXPRESS WARRANTY STATED HEREIN, WHICH IS IN LIEU OF ALL OTHER REPRESENTATIONS
AND WARRANTIES, ITDS MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT
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NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE AND ANY OTHER STATUTORY OR COMMON-LAW WARRANTY IN CONNECTION WITH THE
BILLING SERVICES PROVIDED HEREUNDER OR THE PRODUCTS SOLD HEREUNDER.
Section 9. Limitation of Liability and Remedy.
9.1 NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER
ITDS NOR ANY OF ITS AFFILIATES SHALL BE LIABLE TO CUSTOMER, WHETHER SUCH
LIABILITY ARISES UNDER WARRANTY, CONTRACT, STRICT LIABILITY IN TORT,
NEGLIGENCE, OR OTHERWISE, FOR LOST REVENUES, LOST PROFITS OR OTHER SPECIAL,
INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR FOR LOSS, DAMAGE OR EXPENSES
INDIRECTLY ARISING FROM CUSTOMER'S OR ANY THIRD PARTY'S USE OF OR INABILITY TO
USE THE BILLING SERVICES, EVEN IF ITDS HAS BEEN ADVISED OF THE PROBABILITY OF
SUCH DAMAGES. DURING EACH CALENDAR YEAR OF THIS AGREEMENT, ANY LOSS OR DAMAGE
TO CUSTOMER ARISING SOLELY FROM ITDS' ERRORS, OMISSIONS, INTERRUPTIONS OR
DELAYS IN BILLING SERVICES, SHALL BE LIMITED, IN THE AGGREGATE, TO DIRECT
DAMAGES NOT TO EXCEED AN AMOUNT EQUAL TO THE TOTAL MOBILE NUMBER PROCESSING
FEES PAID BY CUSTOMER FOR THE HIGHEST TWO (2) MONTH PERIOD DURING THE CALENDAR
YEAR IN WHICH SUCH DIRECT DAMAGES OCCURRED. THIS CLAUSE SHALL SURVIVE FAILURE
OF AN EXCLUSIVE REMEDY. NO ACTION OR PROCEEDING UNDER THIS AGREEMENT MAY BE
COMMENCED MORE THAN ONE (1) YEAR AFTER THE CAUSE OF ACTION ACCRUES.
9.2 IN THE EVENT OF ANY LOSS OR DAMAGE TO CUSTOMER ARISING FROM ITDS'
ERRORS, OMISSIONS, INTERRUPTIONS OR DELAYS IN BILLING SERVICES, ITDS MUST BE
NOTIFIED IN WRITING AND GIVEN THE OPPORTUNITY TO RESOLVE EACH SUCH PROBLEM IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 4.6 ABOVE. CUSTOMER AGREES IT SHALL
TAKE ALL REASONABLE STEPS TO COLLECT ALL AMOUNTS DUE AFTER ANY REBILLING,
SUPPLEMENTAL BILLING OR ANY OTHER ACTION BY ITDS TO RESOLVE SUCH ERROR,
OMISSION, INTERRUPTION, DELAY OR OTHER PROBLEM. IN THE EVENT CUSTOMER CLAIMS
AMOUNTS DUE UNDER THE PROVISIONS OF THIS SECTION AFTER TAKING SUCH REASONABLE
EFFORTS, CUSTOMER SHALL ALSO PROVIDE ITDS WITH ALL DOCUMENTATION REASONABLY
REQUIRED BY ITDS TO ESTABLISH THE AMOUNT OF LOSS CLAIMED. IN THE EVENT OF ANY
PAYMENT OF MONEY DAMAGES BY ITDS HEREUNDER TO CUSTOMER, CUSTOMER AGREES TO
EXECUTE AND DELIVER TO ITDS ANY AND ALL DOCUMENTS AS MAY BE REQUIRED TO
SUBROGATE ITDS TO ALL OF THE RIGHTS OF CUSTOMER TO COLLECT ANY AND ALL AMOUNTS
DUE WHICH CONSTITUTE SUCH DAMAGES.
9.3 THE REMEDIES STATED IN THIS SECTION 9 SHALL BE THE EXCLUSIVE
REMEDIES OF CUSTOMER FOR ANY BREACH BY ITDS OF ITS OBLIGATIONS UNDER THIS
AGREEMENT.
Section 10. Recovery. ITDS shall provide recovery procedures
reasonably designed to protect Customer's billing data and to assist in the
reconstruction of such data in the event of loss or destruction while under
ITDS' control. Should ITDS cause any of Customers billing data within its
control to be rendered unusable or unfit for billing purposes, ITDS shall use
its best efforts to reconstruct the data to its condition immediately prior to
the time such data was rendered unusable or unfit without charge to Customer.
Customer and its Agents shall reasonably cooperate with
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ITDS to reconstruct damaged data.
Section 11. Default. Failure by any party to comply with any
material term or condition under this Agreement shall entitle the non-breaching
party to give the defaulting party written notice of such default. If the
defaulting party has not cured such default within thirty (30) days after
receipt of notice, the non-breaching party shall be entitled, in addition to
all other remedies, unless limited by this Agreement, to terminate this
Agreement by giving notice to take effect immediately. Notwithstanding
anything to the contrary contained herein, if Customer is in default under or
breaches this Agreement, ITDS' damages shall include, but not be limited to an
early termination fee equal to the product of (i) the total number of
Customer's Subscribers as of the date of default and (ii) the mobile number
processing and other related charges set forth on Schedule "B" attached hereto,
multiplied by (iii) the number of months remaining on the term of the
Agreement. To the extent an early termination occurs during ITDS' processing
and actual bill shipment of Customers 25th through 36th consecutive monthly
billing cycle, the calculation of the early termination fee set forth above
shall be modified by multiplying such early termination fee by 75%. The
foregoing provisions shall not be deemed an election of remedies or liquidated
damages. The right of the non-breaching party to terminate hereunder shall not
be affected in any way by its waiver of or failure to take action with respect
to any previous default.
Section 12. Indemnification. ITDS will indemnify and save Customer
harmless from any loss or damage (including reasonable attorney's fees)
incurred by Customer, resulting from any claim by any third party that ITDS'
10X Software infringes upon, or wrongfully copies the proprietary or
intellectual property of another. In addition, ITDS will indemnify and save
Customer harmless from any loss or damage (including reasonable attorney's
fees) incurred by Customer because of claims, suits or demands of third parties
for personal injury or tangible property damage to the extent such loss or
damage is caused by or results solely from the grossly negligent acts of ITDS
or its employees or agents, provided: (a) Customer promptly notifies ITDS in
writing of any suits, claims or demands against Customer for which ITDS is
responsible under this indemnity, (b) Customer gives ITDS full opportunity and
authority to assume the sole defense of and settle such suits and (c) Customer
furnishes to ITDS upon request all information and assistance available to
Customer for defense against such suit, claim or demand. ITDS' liability under
this indemnity shall in no event exceed the maximum dollar figure set forth in
Section 9.1 herein. This indemnity is in lieu of all other obligations of
ITDS, express or implied, in law or in equity, to indemnify Customer. In the
event it is determined that loss or damage was not caused solely by the grossly
negligent acts of ITDS, its employees or agents, Customer shall reimburse ITDS
for all reasonable legal expenses incurred.
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Section 13. Termination or Expiration:
13.1 In the event of termination for uncured default by Customer or
expiration of this Agreement, ITDS may, if Customer so requests, continue to
provide Billing Services under the existing terms and conditions for a period
of up to one hundred eighty (180) days to allow for an orderly transition to a
new provider of services similar to those provided by ITDS. ITDS shall then
extract all Customer billing data from the ITDS billing system and shall
deliver such data to Customer on such media as Customer shall reasonably
request. Customer shall pay all costs of such data extraction including, but
not limited to, ITDS programming time, machine time, and printing. ITDS shall
charge Customer its then prevailing rates at the time data extraction is
performed.
13.2 Upon any termination, the license granted herein shall terminate
and ITDS shall have the right to take immediate possession of the ITDS 10X
Software, all related information, and all copies thereof, wherever located,
without demand or notice. Unless ITDS has already taken possession of such
ITDS 10X Software, related information and copies thereof, Customer shall
return to ITDS, within five (5) business days after termination hereof, the
ITDS 10X Software, related information, software locks and all copies thereof
in the form provided by ITDS or as modified by Customer.
13.3 Notwithstanding any other provisions of this Agreement, in the
event that any court or any regulatory agency requires ITDS to cease providing
Billing Services or any portion thereof as required under this Agreement, then
this Agreement shall be terminated or modified in accordance with such court or
regulatory agency without penalty to ITDS. When possible, ITDS will provide at
least sixty (60) days notice of such requirement and will continue, if allowed
by such court or regulatory agency to provide Billing Services for
one-hundred-eighty (180) days from the date of such order or request to allow
for an orderly transition.
Section 14. Force Majeure. Neither party will be deemed to be
negligent, at fault, or liable in any respect for any delay, damage, loss or
failure in performance, including the interruption of Billing Services,
resulting from acts of God, war, accidents, labor disputes, strikes, or any
other cause beyond the reasonable control of the party delayed. The foregoing
shall not apply to Customer's obligation to make payment for services rendered.
Section 15. Applicable Law and Forum. This Agreement shall be
governed by, and construed in accordance with the laws of the State of
Connecticut, except a provision of that law which would refer resolution of any
issue to another jurisdiction. The forum for resolution of any dispute shall be
the State of Connecticut.
Section 16. Assignment. All rights of ITDS hereunder shall inure to
the benefit of its successors and assigns; all obligations of Customer shall
bind the heirs, legal representatives, successors and permitted assigns of
Customer. This Agreement shall not be assigned by Customer in whole or in part
without the prior written
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consent of ITDS.
Section 17. Personnel Employment. Customer agrees not to solicit or
offer employment to, or accept employment of, employees, agents or consultants
of ITDS who are associated with any Billing Services provided under this
Agreement during the term hereof and for a period of one (1) year after
termination of this Agreement for any reason.
Section 18. Section Headings. The headings of the several Sections
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 19. Severability. In the event any of the provisions of this
Agreement are found to be invalid by any administrative agency or court of
competent jurisdiction, the remaining provisions of this Agreement, whether
relating to similar or dissimilar subjects, shall nevertheless be binding with
the same effect as though the invalid provisions were deleted, unless the
result would be to substantially change the rights or obligations of either
party, in which event this Agreement shall terminate.
Section 20. No Waiver. Either party's failure at any time to enforce
any of the provisions of this Agreement or any right with respect thereto, or
to exercise any option herein provided, will in no way be construed to be a
waiver of such provisions, rights, or options or in any way to affect the
validity of this Agreement. The exercise by either party of any rights or
options under the terms or covenants herein shall not preclude or prejudice the
exercise thereafter of the same or other rights under this Agreement.
Section 21. Notices. Any notice required or permitted to be given by
either party hereto to the other shall be confirmed by facsimile, hand
delivery, or certified or registered mail, return receipt requested, at the
address hereon stated, and shall be deemed to have been given three (3) days
after deposited in the United States mail with postage prepaid.
If to ITDS: Counsel
International Telecommunication Data
Systems, Inc.
969 High Ridge Road Suite 205
Stamford, CT 06905
Tel: (203) 329-3300
If to Customer: Ms. Lynn Williamson
Youngstown Cellular Telephone Company
3910 South Avenue
Youngstown, Ohio 44512
Tel: (216) 565-9503
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Section 22. Entire Agreement. This Agreement and any Schedules
attached hereto constitute the entire agreement between the parties with
respect to the subject matter hereof and shall supersede all previous
negotiations, representations, and commitments, in oral or written form. This
Agreement may not be modified except by an instrument in writing signed by a
duly authorized representative of each of the parties. In the event of any
conflict between the body of this Agreement and any Schedule attached hereto,
the text of the body of the Agreement shall prevail.
Section 23. Non-exclusive Agreement. This Agreement is
non-exclusive. ITDS reserves the right to extend to others service similar or
dissimilar to the Billing Services provided hereunder.
Section 24. Customer Referral. Upon providing ITDS with its prior
written approval, Customer hereby agrees to allow ITDS to use Customer's name
for purposes of marketing the ITDS 10X Software to potential ITDS customers.
Section 25. Multiple Copies or Counterparts of Agreement. The
original and one or more copies of this Agreement may be executed by one or
more of the parties hereto. In such event, all of such executed copies shall
have the same force and effect as the executed original and all of such
counterparts taken together shall have the effect of a fully executed original.
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Section 26. Favored Nation Status. Notwithstanding anything to the
contrary contained in Schedule "B" hereto, to the extent that ITDS enters into
an agreement to provide billing services to a provider of cellular services,
and such billing services are the same in scope to those Billing Services
provided by this Agreement, and such agreement is formalized by a software
license agreement that: (i) provides for a term that is equal to or greater
than the length of the term of this Agreement; (ii) provides for ITDS to
perform Mobile Number Processing Billing Services for a number of subscribers
that is equal to or less than the number of Customer's subscribers and (iii)
provides for more favorable ITDS charges for such billing services, each
determined as of the date that each respective software license agreement is
executed, then ITDS agrees to extend such more favorable ITDS charges to
Customer at such time without delay.
Section 27. Customer Market Acquisition. Notwithstanding anything to
the contrary contained herein, to the extent Customer purchases an additional
license, or additional licenses, to provide cellular and/or PCS services, each
such additional cellular and/or PCS market that owns such license may be added
to this Agreement by addendum, and shall be subject to the terms and conditions
of this Agreement, except that any such cellular and/or PCS market shall be
subject to a reasonable minimum monthly charge for Billing Services, and shall
also be subject to a reasonable implementation/conversion fee.
IN WITNESS WHEREOF, the parties have executed this Agreement:
<TABLE>
<S> <C>
INTERNATIONAL TELECOMMUNICATION YOUNGSTOWN CELLULAR TELEPHONE
DATA SYSTEMS, INC.: COMPANY:
By SYGNET, INC.:
By: /s/ CHARLES L. BAKES By: /s/ ALBERT H. PHARIS, JR.
----------------------------- --------------------------
Name: Charles L. Bakes Name: Albert H. Pharis, Jr.
Title: President Title: President & CEO
Date: 4-20-1995 Date: 4-18-95
----------------------------- ------------------------
WILCOM CELLULAR:
By SYGNET, INC.:
By: /s/ ALBERT H. PHARIS, JR.
-----------------------------
Name: Albert H. Pharis, Jr.
Title: President & CEO
Date: 4-18-95
---------------------------
</TABLE>
19
<PAGE> 20
SCHEDULE A
DESCRIPTION OF ITDS SERVICES
The following services are provided by ITDS [Charges associated with such
services are set forth on Schedule B, or to the extent any of such services are
not set forth on Schedule B, such services shall be provided at ITDS' then
prevailing rates, plus reasonable travel and lodging expenses, if applicable]:
- - Running of all ITDS 10X production jobs.
- - Receipt point for data from Customer's switch, clearinghouse, carrier
or other source required for ITDS' production of the Customer's
subscribers invoices.
- - Basic security administration.
- - Transfer of Customer data back and forth between Customer and ITDS for
purposes of cycle processing and in/outcollect administration.
- - Printing, folding, and inserting of subscriber invoices, return
envelopes, and client supplied inserts into each mailing envelope.
- - Sealing, postage metering and mailing of subscriber invoices.
- - Processing of in\outcollect call records to and from Customer's
clearinghouses.
- - Processing of Customer's month end bill runs, which shall include the
production of month end reports, summary files, invoice images and the
updated return of the same following monthly cycle processing.
- - Processing of parallel month end invoice runs (during conversion of
Customer's Market), if any.
- - Processing involving Customer's resellers, if any.
- - Custom programming, if requested by Customer and agreed to by ITDS.
- - Support of ITDS' Creditlink, Collection Module, PayScan and
prospective billing services offered by ITDS, if requested by Customer
and agreed to by ITDS.
- - Correction of input data received from Customer or its agents (not to
be performed by ITDS personnel unless specifically requested by
Customer and agreed to by ITDS).
- - Tracing of missing data. Customer assumes the sole risk and
responsibility for its data arriving at ITDS in a timely manner, and
in readable form. ITDS will notify Customer once it determines such
data has not arrived or is not in readable form, thereafter Customer
must locate and/or remedy any problem with the data and expedite its
delivery to ITDS.
- - Production of microfiche, if requested by Customer and agreed to by
ITDS.
- - Cycle billing, and/or additional billings necessitated by late receipt
of data which Customer or Customer's agents are responsible for
providing to ITDS, if requested by Customer and agreed to by ITDS.
20
<PAGE> 21
SCHEDULE B
Flat Charge Per Mobile Number Processed * Tiered
First 20,000 $1.60
20,001 30,000 $1.50
30,001 40,000 $1.40
40,001 50,000 $1.35
50,001 Or More $1.30
Outcollect Message Processing * Tiered
First 20,000 $ .015
20,001 30,000 $ .0125
30,001 40,000 $ .0100
40,001 50,000 $ .0075
50,001 or More $ .0050
Flat Charge Per Pager Number Processed * Tiered
First 5,000 $0.70
5,001 10,000 $0.65
10,001 or more $0.60
Pricing Includes:
* Initial business meeting
* On-site installation of ITDS 10X software
* Fifteen (15) days training on site
* Hardware configuration consultation
* Non-exclusive license fee for initial contract term
* 10X Report Writer
* Trouble Monitor
* Unlimited training in CT.
* Reasonable telephone support
* Dedicated service rep
* All agreed upon initial programming through conversion
* Parallel bill runs through conversion
* Incollect roamer message processing
* Toll message rating
* One hour per month of programming per 1,000 subscribers billed(1)
ADDITIONAL CHARGES
* One time implementation fee $10,000.00 WAIVED
* One time conversion fee $ 7,500.00 WAIVED
* One additional formatter required $ 1,500.00 WAIVED
* Production of all bills:
* Cellular: Cost of paper, (2) envelopes, printing, $ .32(2)
stuffing, inserting and mail preparation
* Pager: Cost of paper, (2) envelopes, printing, $ .13(2)
stuffing, inserting and mail preparation
* Reseller tapes $ 100.00 per tape
* Programming in excess of free
programming allowance $ 65.00/hr.
* Overnight courier PASS THROUGH
* Shipment or transmission of tapes
or other media PASS THROUGH
* Postage PASS THROUGH
* Travel and lodging required of ITDS personnel PASS THROUGH
ADDITIONAL MODULES:
* Collection Module
* Credit Card Link
* CreditLink SEE ITDS
* Debit & Threshold Billing Module PRODUCTS/SERVICES
* Inventory Scan PRICE CHART
* PayScan
* Point of Sale
* SwitchLink
(1) 30,000 Subscribers processed by ITDS would generate 30 hours of free
programming per month. Unused hours may be accumulated and applied to
programming charges within any calendar quarter.
(2) If Customer elects to have ITDS perform fulfillment services.
<PAGE> 22
Schedule B
Price Chart Definitions
Mobile Number Processing:
Mobile numbers processed during a monthly cycle include the following:
1. All active mobiles.
2. All unassigned mobiles which have been active for a portion of
the monthly cycle.
3. All unassigned mobiles which have incollect usage processed
during the monthly cycle.
4. All additional mobiles for each account billed that has no
mobiles.
Incollect Roamer Message Processing
All records submitted to ITDS by Customer's Clearinghouse for incollect
processing. The count is included on the Clearinghouse transmittal sheet which
accompanies the magnetic tape containing incollect records forwarded to ITDS.
Outcollect Roamer Message Processing
All Outcollect records processed and submitted to the Clearinghouse by ITDS.
The count is the number of Outcollect records that appears on the transmittal
sheets sent by ITDS to Customer's Clearinghouse.
Toll Message Rating
All home interlata and interstate rated messages and all type 20 Outcollect
records.
Incollect Roamer Batches
All incollect batches received from the Customer's Clearinghouse for the
monthly cycle as they appear on the Customer's Clearinghouse incollect
transmittal sheets
Outcollect Roamer Batches
All Outcollect batches submitted by ITDS to the Customer's Clearinghouse during
a monthly cycle. A record of the total number to Outcollect batches appears on
ITDS' Outcollect transmittal sheets.
<PAGE> 23
ITDS CUSTOMER PRODUCTS & SERVICES PRICE CHART
SUPPLEMENT TO ITDS PRICE CHART
MARCH 1, 1995
<TABLE>
<CAPTION>
PRODUCT PRICE
<S> <C>
COLLECTION MODULE $995.00 License Fee
Provides full support for .03/Mo./Subscriber
dedicated collections units
that share the ITDS 10X
data base.
CREDIT CARD LINK $3,995.00 License Fee
A direct interface with credit (included at no additional
bureaus for on line validation charge if Point Of Sale
and electronic funds transfer. is purchased).
CREDITLINK $1,995 License Fee
An electronic credit bureau 0.25 Per Score (optional)
inquiry module that provides
on-line credit analysis for
new customers.
DEBIT & THRESHOLD BILLING MODULE To be released
System Operators maintain firm 3rd quarter 1995
control over usage and payments
of subscribers with marginal
credit through the ability to
limit usage of specific phones.
INVENTORYSCAN $3,995.00 License Fee
A complete inventory management
system interface which allows
easy bar code scanning and on-
line inventory record maintenance.
PAYSCAN $1,995.00 License Fee
A high performance, automated
lockbox remittance processing
product. A bar code scanner
creates automatic payment files
that link to the ITDS 10X
Billing System. Speeds processing
and reduces dependence on
inflexible external bank vendors.
</TABLE>
<TABLE>
<CAPTION>
POINT OF SALE Per Unit
<S> <C> <C>
A convenient and powerful Bulk Pricing License Fee
point of sale system for the ------------ -----------
entire sales process One $13,995.00
including initial Two-Five $12,995.00
application, credit check, Six-Ten $ 9,995.00
activation, inventory update, Eleven or more $ 8,995.00
and invoicing. Monthly $ 50.00
maintenance
and support
per unit
(includes all
new Point of
Sale software
releases)
</TABLE>
<TABLE>
<CAPTION>
SWITCHLINK By Quote
<S> <C>
A direct multi-switch interface
service module to automatically
manage line and feature
activation or deactivation
in connection with ITDS 10X
service order activity.
</TABLE>
For more information call ITDS at 203-329-3300
969 High Ridge Road, Suite 205 - Stamford, Connecticut 06905
<PAGE> 24
SCHEDULE C
CUSTOMER INFORMATION
Customer Service Center
Youngstown Cellular Telephone Company
3910 South Avenue
Youngstown, Ohio 44512
Tel: (216) 565-9503
Customer Designated Agent
Ms. Lynn Williamson
22
<PAGE> 25
SCHEDULE D
[THE FOLLOWING IS INFORMATION PRESENTED IN GRAPHIC FORMAT]
REQUIRED EQUIPMENT CONFIGURATION FOR
CUSTOMER BASES UNDER 2000 SUBSCRIBERS
DEDICATED SERVER
80486 PC 50mhz
MS DOS 6.0
8 Meg RAM
1.2 Gigabyte HD (Novell Certified)
800 meg dedicated
to ITDS Directory(s)*
SCSI Controller Card
with 4 meg CACHE Memory
VGA or EGA Monitor
1.44 Meg 3 1/2 Floppy
1.2 Meg 5 1/4 Floppy
Novell Netware Version 3.12
Ethernet LAN Cabling
Thin net RJ58U
PC Anywhere LAN Version
PK ZIP
R&R Report Writer
The above software packages are installed by ITDS during the ITDS 10X
installation.
Micronet DAT
1 gig Tape Back Up Drive
Software: ARCSOLO
HP Laserjet Printer
Hayes Optima 28800 Baud RJ11 DEDICATED LINE (DID)
WORKSTATION
80486SX PC 33mhz
MS DOS 6.0
2 Meg RAM
(Optional) 40 Meg HD
VGA or EGA Monitor
1.2 Meg 5 1/4 Floppy
Novell Connection using IPX/NETX
NOTE:
* The ITDS Directories include:
1)ITDS - Houses the ITDS Operating System and the Customer Data Files.
2)ITDSSCRS - Houses the ITDS Operating Screens.
3)RR - Houses the R&R Report Writer Operating System.
4)ITDSBILL - Houses all the reports transmitted from the ITDS home office.
<PAGE> 26
SCHEDULE D
[THE FOLLOWING INFORMATION IS PRESENTED IN GRAPHIC FORMAT]
REQUIRED EQUIPMENT CONFIGURATION
FOR CUSTOMER BASES BETWEEN 2000 - 7500 SUBSCRIBERS
DEDICATED SERVER
80486 PC 50mhz
MS DOS 6.0
32 Meg RAM
2.0 Gigabyte HD (Novell Certified)
1.5 gig dedicated
to ITDS Directory(s)*
SCSI Controller Card
with 4 meg CACHE Memory
VGA or EGA Monitor
1.44 Meg 3 1/2 Floppy
1.2 Meg 5 1/4 Floppy
WORKSTATION
80486DX PC 33mhz
MS DOS 6.0
4 Meg RAM
(Optional) 40 Meg HD
VGA or EGA Monitor
1.2 Meg 5 1/4 Floppy
Novell Connection using IPX/NETX
Novell Netware Version 3.12
Ethernet LAN Cabling Thin net RJ58U
* PC Anywhere LAN Version
* PK Zip
* R&R Report Writer
* The above software packages are installed by ITDS during the ITDS10X
installation.
Micronet DAT
2 gig Tape Back Up Drive
Software: ARCSOLO
HP Laserjet
Printer
Hayes Optima 28800 Baud
RJ11 DEDICATED LINE (DID)
NOTE:
* The ITDS Directories include:
1)ITDS - Houses the ITDS Operating System and the Customer Data Files.
- 12 Months of Invoice Summary information.
- 3 Months of Call Detail information.
2)ITDSSCRS - Houses the ITDS Operating Screens.
3)RR - Houses the R&R Report Writer Operating System.
4)ITDSBILL- Houses all the reports transmitted from the ITDS home office.
<PAGE> 27
SCHEDULE D
[THE FOLLOWING INFORMATION IS PRESENTED IN GRAPHIC FORMAT]
REQUIRED EQUIPMENT CONFIGURATION FOR
CUSTOMER BASES BETWEEN 7500 - 15000 SUBSCRIBERS
DEDICATED SERVER
80486 PC 66mhz
MS DOS 6.0
32 Meg RAM
4.0 Gigabyte HD (Novell Certified)
3.5 gig dedicated
to ITDS Directory(s)*
SCSI Controller Card
with 8 meg CACHE memory
VGA or EGA Monitor WORKSTATION
1.44 Meg 3 1/2 Floppy
1.2 Meg 5 1/4 Floppy
WORKSTATION
80486DX PC 50mhz
MS DOS 6.0
4 Meg RAM
(Optional) 40 Meg HD
VGA or EGA Monitor
1.2 Meg 5 1/4 Floppy
Novell Connection using IPX/NETX
Novell Netware Version 3.12
Ethernet LAN Cabling
Thin net RJ58U
* PC Anywhere LAN Version
* PK Zip
* R&R Report Writer
* The above software packages are installed by ITDS during the ITDS 10X
installation.
Micronet DAT
2 gig Tape Back Up Drive
Software: ARCSOLO
HP Laserjet Printer
IOMEGA Bernoulli Drive
150 meg Removable Floppy
Hayes Optims
28800 Baud
RJ11 DEDICATED LINE (DID)
NOTE:
* The ITDS Directories include:
1)ITDS - Houses the ITDS Operating System and the Customer Data Files.
- 12 Months of Invoice Summary information.
- 3 Months of Call Detail information.
2)ITDSSCRS - Houses the ITDS Operating Screens.
3)RR - Houses the R&R Report Writer Operating System.
4)ITDSBILL - Houses all the reports transmitted from the ITDS home office.
<PAGE> 28
SCHEDULE D
[THE FOLLOWING INFORMATION IS PRESENTED IN GRAPHIC FORMAT]
REQUIRED EQUIPMENT CONFIGURATION FOR
CUSTOMER BASES OVER 15000+ SUBSCRIBERS
DEDICATED SERVER
80486 PC DX50 or DX266
MS DOS 6.0
64 Meg RAM*
6.0 Gigabyte HD (Novell Certified)
5.5 gig dedicated
to ITDS Directory(s)
SCSI Controller Card
with 16 meg CACHE Memory*
Mono VGA or EGA Monitor
1.44 Meg 3 1/2 Floppy
1.2 Meg 5 1/4 Floppy
*Additional memory will be required when hard disk space is increased due to
market growth.
WORKSTATION
80486DX PC 50mhz
MS DOS 6.0
4 Meg RAM
(Optional) 40 Meg HD
VGA or EGA Monitor
1.2 Meg 5 1/4 Floppy
Novell Connection using IPX/NETX or IPXODI/NETX
Novell Netware Version 3.12
Ethernet LAN Cabling Thin net RJ58U
or 10 BASET
* PC Anywhere LAN Version
* PK Zip
* R&R Report Writer
* The above software packages are installed by ITDS during the ITDS 10X
installation.
Archive Compatible DAT
2 gig Tape Back Up Drive
Software: ARCSOLO
HP Laserjet Printer
IOMEGA Bernoulli Drive
150 meg Removable Floppy
Hayes Optima
28800 Baud
RJ11 DEDICATED LINE (DID)
NOTE:
* The ITDS Directories include:
1)ITDS - Houses the ITDS Operating System and the Customer Data Files.
- 12 Months of Invoice Summary information.
- 3 Months of Call Detail information.
2)ITDSSCRS - Houses the ITDS Operating Screens.
3)RR - Houses the R&R Report Writer Operating System.
4)ITDSBILL - Houses all the reports transmitted from the ITDS home office.
<PAGE> 29
SCHEDULE E
000 REPORT LIBRARY VERSION 5.0
001 CUSTOMER MASTER LISTING (CUSMAST2)
002 CUSTOMER MASTER ADDRESS LIST (CUSMAST1)
003 CUSTOMER MASTER LIST- ROAMERS (CUSMAST5)
004 CUSTOMER MASTER LIST - GROUP ACT (CUSMAST7)
005 PAST DUE ACCOUNTS BY CUSTOMER NUMBER (COLLECT1)
006 ACCOUNT EXCEEDS CREDIT LIMIT (COLLECT2)
007 ACCOUNT STATUS AS OF LAST INVOICE (ACTSTAT1)
008 ACCOUNT STATUS - CREDIT BALANCE (ACTSTAT2)
010 ACCOUNT STATUS - ROAMERS ONLY (ACTSTAT1)
011 ACCOUNT STATUS - SORTED BY TYPE (ACTSTAT5)
012 ACCOUNT STATUS - PAYMENTS APPLIED BATCH FILE - ITDSSTA1)
013 PRE-DUNNING REVIEW - DETAIL (COLLECT5)
014 PRE-DUNNING REVIEW - SUMMARY (COLLECT6)
015 COLLECTION LETTER 1 - LATE (LETTER1)
016 COLLECTION LETTER 2- 30 DAYS (LETTER2)
017 COLLECTION LETTER 3 - 60 DAYS (LETTER3)
018 COLLECTION LETTER 4 - DISCONNECT (LETTER4)
019 COLLECTION LETTER 5 - 90 DAYS (LETTERS)
020 ACCOUNT STATUS SORTED BY ACCT (ACTSTAT4)
021 HOTLINED CUSTOMERS (COLLECT3)
022 TAX EXEMPT CUSTOMERS (TAXEXEPT)
023 WOFF\IACT PAYMENTS AND ADJUSTMENTS BY CUSTOMER(TRANWOFF)
024 PRE-DUNNING - SUMMARY DESCENDING (COLLECT 8)
025 CHARGE OFF ACCOUNT INFORMATION (COLLECT9)
026 ACCOUNT STATUS - WOFF/IACT ACCTS (ACTSTAT3)
027 SECURITY DEPOSITS (SECTRNDP)
030 TRANSACTION LIST - TRANSACTION BY BATCH (TRANSPAY)
031 TRANSACTION LIST - PAYMENTS ONLY BY BATCH (TRANSPAY2)
032 TRANSACTION LIST - TRANSACTION BY CUSTOMER (TRANS)
033 TRANSACTION LIST - TRANSACTION BY DATE (TRANSPY4)
034 TRANSACTION LIST - PAYMENTS ONLY BY DATE (TRANSPY5)
036 CYCLE TRANSACTION SUMMARY HOME SUBSCRIBERS (TRANSME)
037 TRANSACTION LIST - TRANSACTION BY CODE (TRANSAD2)
038 TRANSACTION LIST - TRANSACTION BY G/L (TRANSAD3)
039 TRAN LIST - REOCCURRING BY CODE (TRANRAD)
040 TRAN LIST - REOCCURRING BY CUST (TRANRAD2)
041 CYCLE TRANSACTION SUMMARY ROAMING PARTNERS (TRANSMER)
045 ADJUSTMENT CODE MASTER LIST (ADJLIST)
046 GENERAL LEDGER MASTER LIST (GLCODES)
050 INVOICE SUMMARY BY CUSTOMER (INVSUM1)
051 INVOICE SUMMARY BY TYPE (INVSUM2)
054 INVOICE SUMMARY WITH BALANCES (INVSUM3)
056 INVOICE SUMMARY BY DEALER/SLMN (INVSUM5)
058 CYCLE SUMMARY RECAP HOME SUBSCRIBERS ONLY (INVSUM10)
059 INVOICE SUMMARY CREDIT CARD (INVSUM6)
060 PEAK / OFFPEAK MINUTES BY CUST (POPMINC)
061 PEAK/OFFPEAK MINUTES BY MOBILE (POPMINM)
062 PEAK / OFFPEAK MINUTES BY RATE PLAN (POPMINR)
070 GENERAL LEDGER TRIAL BALANCE (GLEDGER)
100 MOBILE MASTER - FREE MINUTES (MOBMST10)
101 MOBILE MASTER BY CUSTOMER # (MOBMAST2)
102 MOBILE MASTER BY MOBILE ID (MOBMAST1)
103 MOBILE MASTER BY RATING PLAN (MOBMAST3)
104 MOBILE MASTER - CURR ACTIVATIONS (MOBMAST4)
105 MOBILE MASTER - CURRENT DEACTIVATES (MOBMAST5)
106 MOBILE MASTER BY MOBILE ID SUBS ONLY (MOBMAST8)
107 DEACTIVATIONS BY REASON CODE (MOBMAST6)
108 CURRENT MONTH ACTIVATIONS (CUSMAST3)
109 CREDIT CARD MOBILE LIST (MOBMAST9)
110 MOBILE MASTER - FEATURES ONLY (MOBFEAT1)
111 MOBILE MASTER - ROLLOVER PLANS (MOBROLL)
<PAGE> 30
Schedule E (continued)
112 MOBILE MASTER - DEALER/SALESMAN (MOBMST11)
113 MOBILE SUMMARY - BY RATE/NPA-NXX (MOBSUM1)
115 MOBILE SUMMARY - BY NPA-NXX/RATE (MOBSUM2)
119 FREE POOL WARNING REPORT (ITDSFREE)
120 EQUIPMENT LIST BY MAKE/MODEL (EQUIP2)
121 LEASE/PURCHASE EQUIPMENT (EQUlP1)
122 PHONES BY MOBILE TYPE (EQUIP3)
123 EQUIPMENT BY CUSTOMER (EQUIP4)
124 CURRENT MONTH PURCHASED EQUIP (EQUIP5)
125 CURRENT MONTH EQUIP CHARGES (EQUIP6)
130 PRINT REPORTS FROM OUTCOLLECT (ITDSOUTS)
131 PRINT ITDSPERR - ERROR REPORT (ITDSERRS)
132 PRINT INVOICE REPORTS - MONTHEND (ITDSINVR)
133 PRINT BILLING REPORTS - MONTHEND (ITDS81LR)
134 PRINT TAX REPORTS - MONTHEND (ITDSTAXR)
135 PRINT SAMPLE INVOICES (ITDSSINV)
136 PRINT MONTH END CIB REPORTS (ITDSCIB1)
151 INCOMING ROAMER BY SID/BATCH (RCALLDT1)
160 ROAMER CROSS REF BY RATE/SID (CROSREF4)
161 ROAMER CROSS REFERENCE BY NPA-NXX (CROSREF)
162 ROAMER CROSS REFERENCE BY SID (CROSREF2)
163 ROAMER CROSS REFERENCE BY COMPANY (CROSREF3)
164 SID/BID LISTING IN SID ORDER (CROSREF5)
165 NET SETTLEMENT BY CYCLE (NETSET)
166 NET SETTLEMENT HISTORY (NETSET)
167 NET SETTLEMENT FOR ONE SID (NETSET)
168 CYCLE SUMMARY OF OUTGOING ROAMING (ROAM01)
169 TOTAL SUMMARY OF OUTGOING ROAMING (ROAM02)
170 CYCLE SUMMARY INCOMING ROAMING (ROAM03)
171 TOTAL SUMMARY INCOMING ROAMING (ROAM04)
172 ROAMER INVOICE COVER LETTER (ROAMINVS)
200 DEALER/SALESMAN LISTING (SALES01)
201 CLIENT LEAD PROFILE (LEAD04)
202 ALL LEADS BY DEALER CODE (LEAD01)
204 OPEN LEAD AGING (LEAD03)
206 LOST LEADS BY DEALER/SALESMAN (LEAD02)
210 SALES COMMISSIONS CURRENT MONTH ACTIVATIONS (SALES03)
211 SALES COMMISSIONS CURRENT MONTH DEACTS (SALES04)
212 SALES COMMISSIONS BY RATE PLANS - ACTIVE (SALES06)
213 SALES COMMISSIONS BY RATE PLANS DEACT (SALES07)
214 SALES COMMISSIONS CURRENT MONTH BY WEEK (SALES11)
215 SALES COMMISSIONS CURRENT MONTH WITH CALL FEATURES (SALES12)
216 GROUP CODE DETAIL REPORT (GROUP01)
217 GROUP CODE SUMMARY REPORT (GROUP02)
218 GROUP CODE ALPHA SUMMARY RPT (GROUP03)
219 GROUP CODE CONTRIB MESSAGES (GROUP04)
300 MASTER INVENTORY REPORT (INVENTRY)
301 CELLULAR INVENTORY - BY STATUS (INVTRY2)
302 CELLULAR INVENTORY - BY ESN (INVTRY1)
400 MESSAGE LIST- COMPLETE (MESSAGES)
401 MESSAGES - FIRST LINE ONLY (MESSAGE2)
403 PRINT CUSTOMER NOTES (MEMOS)
410 BIRTHDAY LIST (BDAYLIST)
411 ANNIVERSARY LIST (ANVYLIST)
450 LASER LABELS 1X4 ACCOUNT ORDER (LSRLAB1)
451 LASER LABELS 1X2 5/8 ACCOUNT ORDER (LSLRLAB2)
452 LASER LABELS 1X4 ZIPCODE ORDER (LSRLAB3)
453 LASER LABELS 1X2 5/8 ZIPCODE ORDER (LSRLAB4)
455 LASER LABELS 1X4 TELEMARKETING (LSRLAB5)
460 ZIPCODE ANALYSIS LIST (ZIPLIST)
500 REPORT LISTING BY REPORT # (REPORTS)
501 REPORT LISTING BY TYPE (REPORTS)
502 REPORT LISTING - ALPHABETICAL (REPORTS)
<PAGE> 31
Schedule E (continued)
600 REFRESH MAIN MASTER FILES (BATCH FILE- ITDSRFSH)
601 REFRESH INVOICE SUMMARY (BATCH FILE- ITDSRFSM)
602 REFRESH CALL DETAIL (BATCH FILE - ITDSRFCD)
603 REFRESH INVENTORY FILE - ITIEQUIP (BATCH FILE - ITDSRFEQ)
607 PREPARE COLLECTION FILES (BATCH FILE - ITDSRFCL)
610 PRINT PRE-INVOICE WARNING REPORT (BATCH FILE - ITDSWARN)
611 PRINT ITDS TELEPHONE INV. RPT (BATCH FILE - ITDSTNI1)
612 PRINT ITDS AGING REPORT (ITDSNAG1)
ITDS COBOL PRODUCTION REPORT LISTING - Cellular
HOME PROCESSING
ITDSTAPE.LOC List tapes included in processed run.
ITDSPERR.LOC Sorts and prints all errors from initial process run
ITDSCIBA.LOC Prints incollect activity before and after rating
ITDSUSID.LOC Prints unrated incollect roamers by SID number.
ITDSDATE.LOC Sorts and prints summary of unrated calls and errors by date.
ITDSPRAT.LOC Prints all access prorations by customer
ITDSRPT1.LOC Customer invoice summary register and balance sheet report
ITDSRPT2.LOC Rate plan invoice summary
ITDSRPT3.LOC Customer balance register
ITDSHBAL.LOC Prints payments and adjustments by Adjustment Code
ITDSRPT4.LOC Customer access and usage summary by rate plan and account
status
ITDSTAXP.LOC Tax sales analysis by tax plan
ITDSTAXA.LOC Tax sales analysis by Adjustment Code
ITDSTAXR.LOC Tax sales analysis by rate plan
ITDSTAXJ.LOC Tax sales analysis by jurisdiction
ITDSUB1L.LOC Customer usage summary for Home and Roam
ITDSHTOL.LOC Prints toll records by Toll Tariff
ITDSCIBP.LOC Prints incollect activity by batch.
INVOICE.LOC Customer sample invoices for review
ITDS COBOL PRODUCTION REPORT LISTING
OUTCOLLECT PROCESSING
ITDSTAPE.LOC Lists tapes included in processed run
ITDSPERR.LOC Sorts and prints all errors from initial process run
ITDSDATE.LOC Sorts and prints summary of unrated calls and errors by date
ITDSCIBR.LOC CIBER transmittal report
ITDSUBIL.LOC Customer usage summary for Home and Roam
ITDSOBIL.LOC Sorts and prints rated billable/unbillable air/toll by SID #
ITDSOTOL.LOC Prints outcollect toll records by Toll Tariff
<PAGE> 32
SCHEDULE F
Customer Deliverables
Not Applicable
23
<PAGE> 33
FIRST ADDENDUM TO AGREEMENT
The following terms and conditions are made a part of the Software License
Agreement (hereinafter referred to as the "Agreement") entered into on April
18, 1995, between INTERNATIONAL TELECOMMUNICATION DATA SYSTEMS, INC. ("ITDS"),
a Connecticut corporation with principal offices at 969 High Ridge Road, Suite
205, Stamford, Connecticut 06905, and YOUNGSTOWN CELLULAR TELEPHONE COMPANY and
WILCOM CELLULAR, both with principal offices at 6550 Seville Drive, Suite B,
Canfield, Ohio 44406 ("Customer").
In addition to those provisions set forth in the Agreement, the parties agree
to amend and/or modify such Agreement as follows:
1. THE INITIAL PARAGRAPH, SECTION 21, AND SCHEDULE C OF THE AGREEMENT SHALL
BE DELETED IN THEIR ENTIRETY, AND THE FOLLOWING INITIAL PARAGRAPH, SECTION
21, AND SCHEDULE C SHALL BE SUBSTITUTED IN THEIR PLACE AND STEAD:
" THIS SOFTWARE LICENSE AGREEMENT ("Agreement") is entered into
this 18th day of April, 1995, between INTERNATIONAL TELECOMMUNICATION DATA
SYSTEMS, INC. ("ITDS"), a Connecticut corporation with principal offices at 969
High Ridge Road, Suite 205, Stamford Connecticut 06905, and each of YOUNGSTOWN
CELLULAR TELEPHONE COMPANY, a New York partnership with principal offices at
6550 Seville Drive, Suite B, Canfield, Ohio 44406 ("YCTC"), WILCOM CELLULAR, an
Ohio partnership with principal offices at 6550 Seville Drive, Suite B,
Canfield, Ohio 44406 ("WC"), a reseller of YCTC's cellular telephone services,
YCTC and WC being the permittees or Holders of FCC nonwireline licenses to
provide cellular telephone services in Metropolitan Service Areas and Rural
Service Areas described as Nonwireline MSA 66 Youngstown - Warren, OH,
Nonwireline MSA 238 Sharon, PA and Nonwireline RSA Ohio 11 - SID #595A
("Customer's Market" or "Market"), and ERIE CELLULAR TELEPHONE COMPANY, a
partnership with principal offices at 6550 Seville Drive, Suite B, Canfield,
Ohio 44406 ("ECTC"), the permittee or Holder of an FCC nonwireline license to
provide cellular telephone services in the Metropolitan Service Area described
as Nonwireline MSA 130 Erie, PA. ("Customer's Market" or "Market"). For
purposes of this Agreement, YCTC, WC and ECTC shall hereinafter be referred to
as "Customer"."
"Section 21. Notices. Any notice required or permitted to be given by
either party hereto to the other shall be confirmed by facsimile, hand
delivery, or certified or registered mail, return receipt requested, at the
address hereon stated, and shall be deemed to have been given three (3) days
after deposited in the United States mail with postage prepaid.
If to ITDS: Counsel
ITDS
969 High Ridge Road, Suite 205
Stamford, CT 06905
Tel: (203) 329-3300
33
<PAGE> 34
If To Customer: Ms. Lynn Williamson
Youngstown Cellular Telephone Company
6550 Seville Drive
Canfield, Ohio 44406
Tel: (216) 565-5000"
"SCHEDULE C
CUSTOMER INFORMATION
Customer Service Center
Youngstown Cellular Telephone Company
6550 Seville Drive
Canfield, Ohio 44406
Tel: (216) 556-5000
Customer Designated Agent
Ms. Lynn Williamson"
Except to the extent modified by the terms of this Addendum to the Agreement,
the parties hereby ratify and confirm all of the terms and conditions of the
Agreement dated April 18, 1995.
This Addendum to the Agreement shall also be considered to be legally binding
and incorporated into the above referenced Agreement when executed by all
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement:
INTERNATIONAL TELECOMMUNICATION YOUNGSTOWN CELLULAR TELEPHONE
DATA SYSTEMS, INC.: COMPANY:
By SYGNET, INC.:
By: /s/ CHARLES L. BAKES By: /s/ ALBERT H. PHARIS, JR.
----------------------------- -----------------------------
Name Charles L. Bakes Name: Albert H. Pharis, Jr.
Title: President Title President & CEO
Date: Date: 1-19-96
--------------------------- ---------------------------
WILCOM CELLULAR: ERIE CELLULAR TELEPHONE
By SYGNET, INC.: COMPANY:
By SYGNET, Inc.:
By: /s/ ALBERT H. PHARIS, JR. By: /s/ ALBERT H. PHARIS, JR.
----------------------------- -----------------------------
Name: Albert H. Pharis, Jr. Name: Albert H. Pharis, Jr.
Title: President & CEO Title: President & CEO
Date: 1-19-96 Date: 1-19-96
--------------------------- ---------------------------
<PAGE> 1
EXHIBIT 10.15
Computer Dialog Interface Engine (CODIE)
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is made by and between JSJ SOFTWARE,
INC., a Georgia corporation, whose address is 3902 Cloudland Drive, Lithonia,
Georgia 30058 ("JSJ"), and the following licensee and recipient of the
Software whose name and address is stated below.
YOUNGSTOWN CELLULAR TELEPHONE CO. (hereinafter, "Customer")
- -------------------------------------------------------
Customer Name
3910 S. AVENUE
- -------------------------------------------------------
Customer Address
YOUNGSTOWN OH 44512
- -------------------------------------------------------
City, State Zip
1. LICENSE. JSJ grants to Customer a personal, nonexclusive and
nontransferable license to use one copy of the CODIE software (the "Software")
solely for internal, in-house purposes on a single computer at the Customer's
site identified above. The Software shall be considered in use on a computer
when it is loaded into temporary memory (i.e., RAM) or installed onto
permanent memory (e.g., hard disk or other storage device). Customer may
either make one copy of the Software for backup and archival purposes or
install the Software on a hard disk and retain the original media as a backup.
The Customer is expressly prohibited from transferring or assigning the
Software and related written materials ("Documentation"), in any form or by
any means, to any other party or to any other site without the express written
consent of JSJ. Any and all other rights and licenses with regard to the
Software and Documentation are expressly reserved to JSJ and its third party
suppliers.
2. INSTALLATION AND INITIAL TRAINING. As a part of the License Fee, JSJ agrees
to provide the initial installation and training for the Software. Such
installation and training shall be in accordance with JSJ's normal procedures.
In no event shall JSJ be required to provide more than 4 hours of initial
training. Customer agrees to pay all travel and other out-of-pocket expenses
associated with the provision of initial installation and training for the
Software.
3. MAINTENANCE AND TECHNICAL SUPPORT. In the event that Customer elects to
receive and pay for the annual maintenance described on Exhibit "A", then JSJ
will provide Customer with upgrades and enhancements to the Software and
Documentation as they become available for a period of one (1) year from the
date of delivery of the Software to Customer. In addition, as a part of the
annual maintenance fee, JSJ will provide up to two (2) hours of telephone
support per month for troubleshooting, helping to isolate recent change
related problems, and for making changes to the CODIE tables. In the event
that Customer utilizes more that two (2) hours of telephone support in any
month, then Customer agrees to pay JSJ's then published rates for telephone
support, as such rates may change from time to time at the sole discretion of
JSJ. As of the effective date of this Agreement, the hourly rate for telephone
support in excess of two (2) hours per month is fifty dollars ($50.00) per
hour. Unused hours for a month shall not carry over to subsequent months. JSJ
agrees to provide sufficient personnel for telephone support such that calls
for assistance will normally be returned within four (4) hours of receipt of
the call. Annual maintenance may be renewed from year to year by Customer so
long as JSJ continues to provide such maintenance at JSJ's then published
rates for annual maintenance. Other service, support and enhancements not
described in this Agreement may be available for an additional charge, subject
to the request of Customer and the agreement of JSJ to perform such additional
services. Services to be provided under this Agreement are included as Exhibit
"C". All requested services shall be invoiced to Customer monthly. Customer
agrees to payment terms of 30 days net. Customer shall provide to JSJ dial-up
access to the Software and shall be responsible for the payment of all long
distance charges associated with Customer's maintenance and technical support.
4. HARDWARE AND ADDITIONAL SOFTWARE. Customer acknowledges and agrees that the
Software requires the minimum hardware and additional third party software
described on Exhibit "B." Customer shall be solely responsible for obtaining
all hardware and third party software necessary to run CODIE.
5. PROTECTION AND NONDISCLOSURE. Customer acknowledges that the Software and
Documentation may be protected by the copyright and other intellectual
property laws of the United States and other countries and that the
information contained therein constitutes trade secrets and confidential
information of JSJ or a third party supplier. Customer shall not transfer,
copy, reproduce, reverse engineer, disassemble, decompile, lease, rent or
transmit, by any means or in any form, the Software or Documentation or any
part thereof, or permit any other party to do so, without the prior written
consent of JSJ. Customer will not operate the Software in a service bureau or
time-sharing facility. Customer agrees that the Software and Documentation are
the sole property of JSJ or a third party supplier and shall at all times
retain all serial numbers, logos, copyright notices and other marks or notices
affixed or attached to them by JSJ.
6. LIMITED WARRANTY. JSJ warrants that for a period of ninety (90) days from
the date of delivery of the Software to Customer that the Software shall
operate materially in accordance with the Documentation. JSJ further warrants
that JSJ owns or has acquired rights to all proprietary interests in the
Software and Documentation and has the right to convey the license set forth
in Paragraph 1 hereof. Notwithstanding the foregoing, the sole and exclusive
remedy for a breach of the warranties contained in this Paragraph 6 shall be
that JSJ, at the sole option of JSJ, shall either replace the nonconforming
Software or provide services to correct the nonconforming portion of the
Software. The warranties described in this Paragraph 6 are subject to the
<PAGE> 2
limitations of liability described below. EXCEPT AS PROVIDED IN THIS PARAGRAPH
6, JSJ DOES NOT MAKE ANY EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO THE
SOFTWARE AND DOCUMENTATION, INCLUDING BUT NOT RESTRICTED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. SOME
STATES DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE
EXCLUSION MAY NOT APPLY TO CUSTOMER. CUSTOMER MAY ALSO HAVE OTHER RIGHTS THAT
MAY VARY FROM STATE TO STATE.
7. LIMITATION OF LIABILITY. IN NO EVENT SHALL JSJ BE LIABLE TO CUSTOMER OR
ANY THIRD PARTY FOR ANY DAMAGES, WHETHER INDIRECT, SPECIAL, GENERAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOSS OF
PROFITS OR ANTICIPATED PROFITS AND LOSS OF GOODWILL, ARISING IN CONNECTION
WITH THE USE OF (OR INABILITY TO USE) THE SOFTWARE OR DOCUMENTATION BY ANY
PARTY FOR ANY PURPOSE WHATSOEVER, EVEN IF JSJ OR ITS THIRD PARTY SUPPLIERS
HAVE BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES. SOME STATES DO NOT ALLOW
THE LIMITATION OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL
DAMAGES, SO THIS EXCLUSION MAY NOT APPLY TO CUSTOMER.
8. TERM. The license granted herein shall be effective as of the date Customer
takes possession of the Software ("Effective Date") and shall remain in force
until terminated as provided herein. Customer may terminate this agreement
upon 30 days written notice to JSJ. JSJ may terminate this Agreement at any
time upon notice to customer of their intent to do so. Such termination would
be enforced upon the occurrence of one or more of the following: the
termination of billing services provided to Customer by International
Telecommunication Data Systems, Inc., Customer's billing and management
information services provider, breach by Customer of any term of this
Agreement, commencement of a bankruptcy proceeding by or against or
dissolution of Customer, assignment by Customer for the benefit of creditors,
or appointment of a receiver for Customer's property. Customer agrees to pay
reasonable attorneys' fees and legal costs incurred by JSJ, to the maximum
extent permitted by law, in enforcing this Agreement after a breach by
Customer of this Agreement.
9. POST TERMINATION. Upon termination of this Agreement for any reason,
Customer agrees to return to JSJ or its designee all of the Software and
Documentation and all copies thereof, in whatever form the Software and
Documentation exist. Customer agrees to render unusable all Software in any
computer or other apparatus under its control. After termination of this
Agreement and upon JSJ's request, Customer shall provide to JSJ a written
statement in a form acceptable to JSJ that Customer has fully complied with
the terms of this paragraph.
10. LIABILITY. ANY USE OF THE SOFTWARE OR DOCUMENTATION, OR ANY PART THEREOF,
BY CUSTOMER IN VIOLATION OF THIS AGREEMENT, IN ADDITION TO CONSTITUTING A
MATERIAL BREACH OF THIS AGREEMENT, MAY BE BOTH A CRIMINAL AND CIVIL OFFENSE
FOR WHICH CUSTOMER MAY BE LIABLE FOR MONETARY FINES, DAMAGES, AND ATTORNEYS'
FEES.
11. UPGRADES. This Agreement and the restrictions herein will govern and apply
to all upgrades, additional modules, modifications, and revisions, if any, to
the Software and/or Documentation which may be provided directly or indirectly
by JSJ in its discretion to Customer. All references to Software and
Documentation herein shall include any such upgrades, additional modules,
modifications and revisions.
12. GOVERNMENT RESTRICTED RIGHTS. The Software and Documentation are provided
with RESTRICTED RIGHTS. Use, duplication, or disclosure by the Government is
subject to restrictions as set forth in FAR 52.227-14 (June 1987) Alternate
III(8)(3) (June 1987), FAR 52.227-19 (June 1987), or DFARS
52.225-7013(c)(l)(III) (June 1987), as applicable. Contractor/manufacturer is
JSJ SOFTWARE, INC., 3902 Cloudland Drive, Lithonia, Georgia 30058
13. MISCELLANEOUS. This Agreement and all rights hereunder may not be
assigned, sold, leased, rented, or otherwise transferred in whole or in part
by Customer without the prior written approval of JSJ. Should any part of this
Agreement, for any reason, be declared invalid by a court of competent
jurisdiction, such determination shall not affect the validity of any
remaining portion, and such remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid portion eliminated.
Upon being signed by an authorized officer of JSJ, this Agreement shall be
deemed accepted in the State of Georgia and shall be governed by and construed
in accordance with the laws of the State of Georgia, which laws shall prevail
in the event of any conflict. This Agreement contains the entire understanding
between the parties with respect to the software licensed herein, and no
representations, statements or inducements, oral or written, not contained
herein shall be binding upon the parties.
14. ENTIRE AGREEMENT. This agreement and any attached exhibits constitute the
entire agreement between the parties. This agreement may not be modified
except by an instrument in writing signed by a duty authorized representative
of each of the parties.
JSJ: CUSTOMER:
JSJ SOFTWARE, INC. a Georgia Cellular Telephone Co.
corporation
By: /s/ UNCLEAR SIGNATURE By: /s/ ALBERT H. PHARIS, JR.
-------------------------- -----------------------------
Title: President Albert H. Pharis, Jr., President and CEO
<PAGE> 3
EXHIBIT "A"
SOFTWARE LICENSE, MAINTENANCE AND TECHNICAL SUPPORT FEES
CODIE License Fee (Includes interface to one system) $3,500.00
Interfaces to additional systems (Each) $1,250.00
First year Maintenance and Technical Support Fees:
(For CODIE and one interface): $125.00 per month
Each additional interface: $ 50.00 per month
<PAGE> 4
EXHIBIT "B"
REQUIRED HARDWARE AND SOFTWARE
MINIMUM HARDWARE CONFIGURATION
CODIE requires the following hardware: A dedicated 486 (DX) computer system
(minimum 33 Mhz is recommended) with a minimum of eight megabytes of memory; a
200 megabyte hard disk, a floppy diskette, a 2400 baud or faster modem and a
telephone line for dial-up maintenance support; a DigiBoard PC/Xe
communications board, and necessary LAN interface card.
REQUIRED THIRD PARTY SOFTWARE
CODIE requires the following third party software:
Deskview Version 4.1 or greater
PC Anywhere Version 5.0
<PAGE> 5
EXHIBIT "C"
SERVICES REQUESTED BY CUSTOMER
ITEM DEVICE VERSION
CODIE Interface NTI DMS-MTX BCS 34
CODIE Interface Glenayre GL3000ES 5.0
CODIE Interface Glenayre MVP VoiceMail 3.0
Annual Maintenance and Technical Support fees for above.
Note: Interface to MVP is not scheduled for delivery with the execution of
this license agreement. Delivery to be determined by Customer.
<PAGE> 1
EXHIBIT 10.16
[GLENAYRE LOGO] GLENAYRE CARE - PRODUCT SERVICE AGREEMENT
SCHEDULE "A"
CUSTOMER NAME: Wilcom Cellular
CUSTOMER NUMBER: 5227
SCHEDULE: (A-001 Page 1 of 01)
CONTRACT NUMBER: 137
EFFECTIVE DATE: 1-Feb-96
REVISION DATE: 16-Jan-96
SCL NUMBER: 1499
1 SERVICE CENTER LOCATION
NAME: Wilcom Cellular
TELEPHONE: 216-585-5000
CONTACT: Greg Pauley
TITLE: Network Operations Manager
ADDRESS 1: 3910 South Avenue
ADDRESS 2:
FAX PHONE: 216-782-5379
DATA PHONE:
CITY: Youngstown
STATE: Ohio
ZIP CODE: 44512
COUNTRY: USA
CONTACT:
TITLE:
2 EQUIPMENT
Item No.: 1
Model Number Description: MVP1
Equipment Location: Youngstown
Hardware Serial Number: 440296
Software Serial Number:
Maintenance Fee for Selected Services
Hardware: 2,250.00
Software: 3,684.00
On-Site:
Total: $6,204.00
PPM
8x5:
24x7:
Warranty End Date:
Start Date: 2/1/96
Renewal Date: 2/1/97
Stop Date
See Note
SUBTOTAL ANNUAL MAINTENANCE FEE - THIS PAGE $6,204.00
TOTAL ANNUAL MAINTENANCE FEE - THIS SERVICE CENTER $6,204.00
NOTATION
3
Annual Maintenancec Fee includes a five percent (5%) discount for having both
Hardware and Software Support.
<PAGE> 2
Glenayre Electronics, Inc.
[GLENAYRE LOGO] 4203 Congress Street, Suite 455
Charlotte, NC 28209 USA
Telephone: (704) 553-0038
Facsimile: (704) 553-0524
GLENAYRE CARE - PRODUCT SERVICE AGREEMENT
CONTRACT NUMBER 137
CUSTOMER NUMBER 5227
EFFECTIVE DATE 2/1/95
PAGE 1 OF 4
1 CUSTOMER INFORMATION
FULL LEGAL NAME Wilcom Cellular
JURISDICTION OF INCORPORATION
REGISTRATION NO. 34-1689827
ADDRESS 3910 South Avenue
CITY Youngstown
STATE OR PROVINCE Ohio
COUNTRY USA
POSTAL ZIP CODE 44512
CONTACT NAME Greg Pauley
TITLE Vice President Network Operations
TELEPHONE NO. (216) 565-5000
FACSIMILE NO. (216) 782-5379
2 SERVICES
THE CUSTOMER WISHES GLENAYRE TO PROVIDE THE FOLLOWING SERVICES, AS INDICATED
HERE, FOR THE EQUIPMENT LISTED IN SCHEDULES "A" FOR THE TERM OF THE AGREEMENT.
SOFTWARE SUPPORT SERVICES /x/
CUSTOMER INITIALS _______
________ INITIALS _______
HARDWARE SUPPORT SERVICES /x/
CUSTOMER INITIALS _______
________ INITIALS _______
ON-SITE SUPPORT SERVICES / /
CUSTOMER INITIALS _______
________ INITIALS _______
3 PAYMENT TERMS
THE PARTIES AGREE THAT THE PAYMENT PERIOD SHALL BE AS INDICATED WITH PAYMENT TO
BE MADE ON THE SAME DAY EACH
MONTH / / THIRD MONTH / / SIXTH MONTH / / YEAR /x/
4 LEGAL TERMS
BY SIGNING THIS AGREEMENT, THE CUSTOMER ACKNOWLEDGES: THAT IT HAS READ,
UNDERSTOOD AND AGREE TO BE BOUND BY THE PROVISIONS SET OUT IN THIS AGREEMENT;
AND THAT GLENAYRE DOES NOT REPRESENT OR WARRANT THAT THE SERVICES PROVIDED BY
GLENAYRE UNDER THIS AGREEMENT WILL ENSURE UNINTERRUPTED OR ERROR-FREE OPERATION
OF THE EQUIPMENT, NOR THAT ALL SOFTWARE DEFECTS WILL BE CORRECTED. WHERE
PERMITTED BY APPLICABLE LAW, THE PROVISIONS OF THIS AGREEMENT MAY CONTAIN
LIMITATIONS TO THE CUSTOMER'S RIGHTS.
PRINT NAME Greg Pauley
TITLE Vice President Network Operations
SIGNATURE /s/ GREG PAULEY
DATE January 19, 1995
THIS AGREEMENT IS NOT VALID UNTIL EXECUTED BY GLENAYRE
FOR GLENAYRE William V. Friedrichs
TITLE Director - Contract Services
SIGNATURE /s/ WILLIAM V. FRIEDRICHS
DATE January 25, 1995
<PAGE> 3
PROVISIONS
1. DEFINITIONS
1.1 In this Agreement, unless there is something in the subject
matter or context necessarily inconsistent:
(a) "Basic Support" means the provision by GLENAYRE of over the
telephone technical fault analysis during normal business
hours, every day excluding statutory holidays and weekends,
or for major service affecting emergencies, 24 hours per
day, every day; and access to the GLENAYRE CARE Electronic
Bulletin Board for service bulletins, service advisories
and software patches;
(b) "CUSTOMER" means the entity whose full legal name appears
in Section 1 on the front page, and all wholly owned
subsidiaries of it;
(c) "Default Event" means the CUSTOMER;
(i) makes any unauthorized modifications to the
Equipment;
(ii) assigns or transfers the CUSTOMER's rights or
obligations under this Agreement without the
prior written consent of GLENAYRE;
(iii) becomes bankrupt or insolvent, or is put into
receivership;
(iv) on written notice from GLENAYRE, has not paid
GLENAYRE all amounts then due, less any
portion in dispute, within 30 days of such
notices; or
(v) fails to reach agreement with GLENAYRE on the
upgrading necessary for Equipment which the
CUSTOMER wishes to add to Schedule "A";
(d) "Diagnostic Analysis" means visual inspection,
operational checks, troubleshooting and testing of
the Equipment to determine if the Equipment is
defective, and the labor to replace those parts which
are found to be defective;
(e) "Effective Date", set out in the block entitled
"Effective Date" on the front page, means the date on
which GLENAYRE shall begin providing Services under
this Agreement;
(f) "Equipment", which is listed in Section 2 of the
Schedules "A", means the items of equipment for which
the Services designated in Section 2 of the Schedules
"A" will be provided;
(g) "Extraordinary Expenses" means expenses incurred by
GLENAYRE which are the result of Force Majeure or
Misuse;
(h) "Force Majeure" means an event beyond either party's
reasonable control such as, but not limited to,
delays by supplier or material shortages, strikes,
lockouts or any other industrial
disputes,disturbances, government regulation, flood,
lightning, fire, war, accident and acts of God;
(i) "GLENAYRE" means Glenayre Electronics, Inc., any
direct and indirect affiliates, and any duly
authorized service agents of it;
(j) "Misuse" means any of the following:
(i) the Equipment or any part of it having been
installed, modified, adapted, repaired,
maintained, transported or relocated by any
person other than GLENAYRE, or qualified
CUSTOMER technician without GLENAYRE's prior
written consent;
(ii) storage, or environmental characteristics,
Equipment operation not conforming to the
applicable GLENAYRE Equipment Manual;
(iii) external causes including, without
limitation, use in conjunction with
incompatible equipment, unless such use was
with GLENAYRE's prior written consent;
(iv) damages caused by external electrical stress
or lightning;
(v) accidental damage, negligence, neglect,
mishandling, abuse or misuse, other than by
GLENAYRE;
(k) "Maintenance Fees", which are set out in Section 2 of
the Schedules "A", means the annual maintenance fees
for the Services selected for each item of Equipment;
(l) "Preventive Maintenance" means the scheduled
maintenance by GLENAYRE, during normal business
hours, of the Equipment in accordance with the
manufacturer's specifications and the Site
Maintenance Procedures Manual;
(m) "PPM", which is set out in the Schedules "A", means
the principal period of maintenance for each item of
Equipment;
(n) "Remedial Maintenance" means maintenance of the
Equipment by GLENAYRE at the CUSTOMER's request
following a failure caused by normal wear or use. It
includes the time and the cost of traveling to and
from the CUSTOMER's facility, and the labor necessary
to provide Diagnostic Analysis and to restore the
Equipment to the manufacturer's operating
specifications;
(o) "Renewal Date" means the date (set out in the column
entitled "Renewal Date" in Section 2 of the Schedules
"A") on which Services shall be automatically renewed
for that item of Equipment.
(p) "Replacement Parts" means the component parts and
field replaceable units for Equipment manufactured or
supplied by GLENAYRE;
(q) "Response Time" means the period from when a request
for Remedial Maintenance service is placed with
GLENAYRE to the time a GLENAYRE technician is enroute
to the specified Equipment location;
(r) "Service Center" means the location specified in
Section 1 of the Schedules "A";
(s) "Services" means the services indicated on the front
page and enumerated in the Schedules "A" for each
item of Equipment;
(t) "Sites" means the Equipment locations enumerated in
the Site Maintenance Procedures Manual, at which the
Equipment is situated;
(u) "Site Maintenance Procedures Manual" means the manual
provided by the CUSTOMER and approved by GLENAYRE
which sets out the specific maintenance procedures to
be applied to the Site and to the Equipment, and
which includes a Preventive Maintenance schedule for
each item of Equipment, appropriate system diagrams,
and CUSTOMER specific maintenance procedures;
(v) "Start Date", means the date (set out in the column
entitled "Start Date" in Section 2 of the Schedules
"A") on which the Services for that item of Equipment
commence;
(w) "Stop Date", when set out in the column entitled
"Stop Date" in Section 2 of the Schedules "A", means
the date on which the Services for that item of
Equipment cease; and
(x) "Termination Date" means the date on which GLENAYRE
terminates this Agreement in accordance with the
provisions of Paragraph 10.
2. SUPPORT
2.1. For each option (Software Support/Hardware Support/On Site
Support) selected, GLENAYRE shall provide the selected support
for the Equipment from the Start Date to the earlier of the
Stop Date and the Termination Date.
2.2. For Software Support, GLENAYRE shall provide the following:
(a) Basic Support; and
(b) all software revisions, including previously
purchased turn-on feature updates, and periodic media
updates, including patches, to the installed
software.
2.3 For Hardware Support, GLENAYRE shall provide the following:
(a) Basic Support;
(b) for GLENAYRE manufactured products only, non-feature
hardware revision level updates deemed necessary by
GLENAYRE if the Equipment is sent to GLENAYRE for
repair or upgrade; and
(c) if the item of Equipment malfunctions or fails in
normal use, GLENAYRE shall, upon receipt either
repair or exchange the defective item, or for major
service affecting malfunctions provide advance
Replacement Parts, as follows:
(i) the CUSTOMER shall promptly notify GLENAYRE
of the failure and the serial number of the
defective item, at which time GLENAYRE shall
issue a Return Authorization ("RA") Number to
the CUSTOMER;
Page 2
<PAGE> 4
PROVISIONS
(ii) the CUSTOMER shall, at its cost, ship the
item to the Service Location specified by
GLENAYRE when it issues the RA Number. The
CUSTOMER shall:
(1) label each returned item with the RA
Number;
(2) provide a description of the fault
with each returned item; and
(3) properly pack the returned item and
prepay the insurance and shipping
charges;
(iii) if the CUSTOMER requests repair of the
defective item:
(1) GLENAYRE shall complete the repair
or shall provide a Replacement Part
within 10 days of receipt of the
returned defective item, exclusive
of statutory holidays and weekends.
The Replacement Part may be new or
refurbished; where refurbished, it
shall be equivalent to new in
operation; and
(2) GLENAYRE shall, at its cost, ship
the Replacement Part to the Service
Center.
(iv) If the CUSTOMER requests an advance
Replacement Part:
(1) GLENAYRE shall, if stock is
available at a GLENAYRE service
stock location, ship the requested
item within 24 hours of the
CUSTOMER's request. If stock is not
available, GLENAYRE will attempt to
provide it within 10 business days;
(2) the CUSTOMER shall ship the
defective item to the GLENAYRE
service location within 15 days from
the date of shipment of the advance
Replacement Part, failing which
GLENAYRE shall bill the CUSTOMER for
the full current list price of the
advance Replacement Part;
(v) If the CUSTOMER has requested expedited
repair, replacement or shipment, the CUSTOMER
shall pay GLENAYRE an expedite fee; and
(vi) Where GLENAYRE replaces a returned item, the
item returned to GLENAYRE shall become the
property of GLENAYRE;
(vii) Equipment which is repaired or replaced by
GLENAYRE shall be free of defects in material
or workmanship that would prevent compliance
in all material respects with the applicable
documentation until the later of the
Termination Date, or 90 days from the date of
shipping the Replacement Part. All other
terms of this Agreement apply to the
Replacement Part.
2.4 For On-Site Support, GLENAYRE shall:
(a) provide Basic Support, Preventive Maintenance; and
Remedial Maintenance.
(b) provide a Response Time of less than 2 hours after
receiving a request for Remedial Maintenance, unless
the problem has been previously resolved by other
means,
(c) maintain records of all work performed under this
Agreement, and make them reasonably available to the
CUSTOMER on request.
2.5 For On-Site Support, the CUSTOMER shall, at its cost:
(a) provide the required power source(s) at Site, free
from interfering noise;
(b) provide access and environmental conditions
appropriate for Preventive Maintenance and Remedial
Maintenance;
(c) provide all system design and Site engineering;
(d) secure all appropriate equipment installation and
operation licenses from the appropriate government
agencies, and provide proof of them to GLENAYRE on
request; and
(e) designate one individual as the primary technical
interface to GLENAYRE, and who shall be responsible
for system administration, for placing requests for
Remedial Maintenance, and for coordinating Preventive
Maintenance with GLENAYRE. The CUSTOMER shall make
the individual reasonably available to GLENAYRE
during the PPM; and
(f) maintain the stock of spare parts which GLENAYRE
recommends the CUSTOMER hold at each Service Center.
3. EXCLUDED ITEMS
3.1 The following services are not provided under this Agreement,
but are available on request at an additional charge:
(a) additional software turn-on features and additional
hardware which are required to support new software
features that the CUSTOMER has not previously
purchased or made a part of this Agreement;
(b) service calls to install new software turn-on
features or additional hardware;
(c) service calls for Equipment installation, technical
inspections, modifications, enhancements, upgrading
or refurbishment, relocation, disconnection or
reconnection, or removals, which are not specifically
included in this Agreement;
(d) service calls to inspect and, where necessary,
refurbish equipment which the CUSTOMER wishes to add
to the Schedules "A" and to be covered by this
Agreement;
(e) service calls necessary to assist other entities in
gaining Site access or the supervision of work to
repair other equipment not specifically the
reasonability of GLENAYRE;
(f) Remedial Maintenance that does not locate a problem
with the Equipment at that location, and which is not
determined to be of an intermittent nature;
(g) Remedial Maintenance to repair or replace or service
Equipment which, other than through normal wear and
use, has become defective or has been damaged by
accidents, Force Majeure, or Misuse;
(h) Remedial Maintenance provided outside the PPM; and
(i) compensating for the CUSTOMER's failure to meet the
requirements of Paragraph 2.5.
4. SCOPE OF SERVICES
4.1 Before the Termination Date, the CUSTOMER may, with the prior
written approval of GLENAYRE, modify the scope of Services by:
(a) adding items or, if the items are taken out of
service by the CUSTOMER, deleting items of Equipment
from Schedule "A";
(b) changing the locations of the Equipment and Site;
(c) amending the Site Maintenance Procedures Manual; and
(d) adding Services to those previously contracted for,
and GLENAYRE shall amend Section 2 of the Schedules
"A" and may adjust the Maintenance Fee accordingly.
4.2 If the CUSTOMER selects Services for a type of Equipment, all
items of that type which are in use by the CUSTOMER shall be
made part of this Agreement.
5. TERM AND RENEWAL
5.1 This Agreement will remain in effect for an initial term of 12
months and will be automatically renewed for successive
renewal terms of 12 months each, unless terminated by
agreement or as otherwise provided in Paragraph 10.
6. PAYMENT
6.1 The Maintenance Fees determined at the time of execution shall
remain in effect for the initial term of this Agreement.
Thereafter, GLENAYRE may change the Maintenance Fees upon 30
days written notice.
6.2 The CUSTOMER shall pay GLENAYRE all of the Maintenance Fees at
the frequency set out on the front page, with interest on any
outstanding amounts. All amounts unpaid 30 days following the
due date, less any portion in dispute, shall accrue interest
from the due date at the rate of 18% per year.
6.3 In addition to the amount determined under Paragraph 6.1 and
6.2, the CUSTOMER shall pay GLENAYRE for:
(a) all charges due as a result of GLENAYRE providing
services under Paragraphs 2.3(c)(iv)(2); 2.3(c)(v);
and 3;
(b) Extraordinary Expenses; and
Page 3
<PAGE> 5
PROVISIONS
(c) third party charges for services outside the scope of
this Agreement and which GLENAYRE incurs at the
CUSTOMER's request.
6.4 GLENAYRE shall invoice the CUSTOMER monthly for all amounts
then due under the Agreement.
6.5 To secure the payment of the list price of the advanced
Replacement Parts, for defective items not returned to
GLENAYRE, the CUSTOMER hereby grants GLENAYRE a purchase money
security interest in the advanced Replacement Parts.
7. ACCESS
7.1 To enable GLENAYRE to carry out its obligations under this
Agreement, the CUSTOMER shall provide GLENAYRE:
(a) with unrestricted access to the Equipment at the
Site. Those Sites which have only limited access
shall be designated on Schedule "A", and GLENAYRE's
response time shall be adjusted to that reasonable
under the circumstances; and
(b) remote access, via modem and modem port, for
Diagnostic Analysis of the Equipment. GLENAYRE shall
obtain the CUSTOMER's permission prior to
establishing remote access to the Equipment.
8. CUSTOMER WARRANTY
8.1 The CUSTOMER warrants that it is the legal owner of, or has a
valid interest in the Equipment, the legal owner of, or has a
valid lease of, the Site, and is entitled to grant GLENAYRE
the right to perform the Services on the Equipment and to
grant access to the Site to perform the Services.
9. INDEMNITY
9.1. The CUSTOMER shall indemnify GLENAYRE and save it harmless
from any action, claim or demand which arises as a result of
GLENAYRE entering on the Site to perform the Services; or in
performing the Services, other than claims based on GLENAYRE's
own negligence.
10. DEFAULT AND TERMINATION
10.1 If the Customer commits a Default Event, GLENAYRE may, upon
notice to the CUSTOMER and the expiration of a thirty 30 day
resolution period, terminate this Agreement and end GLENAYRE's
performance.
10.2 GLENAYRE shall, within 30 days of receipt of a written notice
from the CUSTOMER that GLENAYRE has failed to meet its
obligations under this Agreement, take the necessary action to
resolve promptly the failure.
10.3 Despite termination of this Agreement, the CUSTOMER shall
remain responsible for all amounts then due, and shall return
to GLENAYRE any chattels, such as spare or Replacement Parts
belonging to GLENAYRE.
10.4 Neither party shall be liable for failing to perform its
obligations under this Agreement due to Force Majeure.
11. WARRANTY BY GLENAYRE
11.1 GLENAYRE warrants that it will perform the Services in a
workmanlike manner and will comply with all applicable laws
and regulations.
12. LIMITATION ON DAMAGES
12.1 THE WARRANTY STATED HEREIN IS THE CUSTOMER'S EXCLUSIVE
WARRANTY. GLENAYRE DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE AND OF MERCHANTABILITY. GLENAYRE SHAVE NO LIABILITY IN
TORT SUCH AS LIABILITY IN NEGLIGENCE OR STRICT LIABILITY. THE
REMEDIES STATED HEREIN ARE THE CUSTOMER'S EXCLUSIVE REMEDIES.
GLENAYRE SHALL NOT BE LIABLE FOR DIRECT DAMAGES EXCEPT FOR A
FAILURE TO FULFILL ITS OBLIGATIONS HEREUNDER. GLENAYRE'S
LIABILITY FOR FAILURE TO FULFILL ITS OBLIGATION HEREUNDER (OR
ANY OTHER LIABILITY UNDER THIS AGREEMENT OR IN CONNECTION WITH
THE EQUIPMENT) SHALL BE LIMITED TO THE AMOUNT OF THE PURCHASE
PRICE OF THE CONTRACT IN QUESTION. GLENAYRE SHALL HAVE NO
LIABILITY FOR INJURY TO PERSONS OR PROPERTY.
12.2 IN NO EVENT SHALL GLENAYRE BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES EVEN IF GLENAYRE
HAS BEEN ADVISED OF THE POSSIBILITY THEREOF, INCLUDING, WITHOUT
LIMITATION, LOST PROFITS AND REVENUES, FAILURE TO REALIZE
EXPECTED SAVINGS, ANY CLAIM AGAINST A CUSTOMER BY A THIRD
PARTY, OR ANY OTHER COMMERCIAL OR ECONOMIC LOSSES OF ANY KIND.
12.3 THESE LIMITATIONS AND DISCLAIMERS ARE NOT MADE BY GLENAYRE
WHERE PROHIBITED BY LAW.
13. MISCELLANEOUS
13.1 This Agreement shall enure to the benefit of and be binding
upon the successor and assigns of GLENAYRE.
13.2 This Agreement may not be assigned by the CUSTOMER without
prior written consent of GLENAYRE.
13.3 This Agreement, as amended from time to time, consists of the
Agreement and the Schedules "A", the Site Maintenance
Procedures Manual and the GLENAYRE Software and Patent
Licenses, constitutes the entire Agreement between the
parties. If there is a conflict between any of them, they
shall have the following descending order of precedence:
(a) the GLENAYRE Software and Patent License;
(b) the Site Maintenance Procedures Manual; and
(c) this Agreement and the Schedules "A".
13.4 Neither party shall have any claim against the other with
respect to any agreement or understanding, written or oral,
made prior to the date of this Agreement. Any provision may
be added, altered, or varied only by a document signed and
made part of this Agreement by the authorized officers of the
parties.
13.5 Headings have been inserted in this Agreement for convenience
of reference only and will not affect the construction of this
Agreement.
13.6 With the exception of GLENAYRE's Software & Patent License,
all questions relating to the validity, construction or
performance of this Agreement, shall be governed by the laws
of the jurisdiction in which the service is performed. For
the GLENAYRE's Software & Patent License, all such questions
shall be governed by the laws of the State of Washington, USA.
13.7 Any provision of this Agreement which is, or is deemed to be,
unenforceable in any jurisdiction shall be severable from this
Agreement in such jurisdiction, without in any way
invalidating the remaining provisions, and any such
unenforceability in that jurisdiction shall not render
unenforceable that provision in any other jurisdiction.
13.8 The failure of either party to enforce at any time or for any
period of time any of the provisions hereof shall not be
construed to be a waiver of such provisions or of the right of
such party thereafter to enforce each and every provision.
13.9 Nothing contained herein shall be construed to limit in any
way the remedies in law or in equity that might otherwise be
available to the parties.
14. NOTICE
14.1 Any notice required or permitted to be given to the other
party must be in writing and may be given by delivering the
same by registered mail to the intended recipient at the
addresses first noted above, or such other address as may be
substituted by notice in writing. Such notice shall be deemed
to have been given and received on the tenth (10th) business
day after the date on which it was mailed by registered mail.
Page 4
<PAGE> 6
<TABLE>
<CAPTION>
CUSTOMER INVOICE SHIPMENT ID NUMBER
------------------------------------------------------
[GLENAYRE LOGO] INVOICE NO. RVSH DATE PAGE
4203 CONGRESS STREET SUITE 455 201891 0 01/22/96 1
CHARLOTTE, NC 28209 ------------------------------------------------------
BILL TO SHIP TO CUSTOMER ORDER NO. SALES NO. TAXABLE
*See below 80-676 NO
------------------------------------------------------
WILCOM CORPORATION WKBN BROADCASTING CORPORATION BILL OF LADING NO. DATEOFSHIPMENT
01/22/96
3910 SOUTH AVENUE 3930 SUNSET BLVD. ------------------------------------------------------
YOUNGSTOWN, OH 44512 YOUNGSTOWN, OH 44501 SHIPPED VIA F.O.B. P.P.D.
BEST WAY 2 xxx
------------------------------------------------------
SA
1202
------------------------------------------------------
TERMS
NET 30
------------------------------------------------------
BILL TO CUSTOMER - 5227 SHIP TO CUSTOMER - 5227 *P.O.: SIGNED CONTRACT #137
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ITEM PROJECT DESCRIPTION TAX QTY. QTY. NET UNIT PRICE EXTENSION
NUMBER SHIPPED
1 SS-MVP SOFTWARE SUPPORT FOR MVP 1.0 0 3684.000 3684.00 .0 ****
2 HS-MVPS HARDWARE SUPPORT FOR MVP SIN 1.0 0 2520.000 2520.00 .0 ****
BILLING PERIOD: FEBRUARY 1,
1996 THROUGH JANUARY 31, 1997
TOTAL: THANK YOU FOR THIS ORDER. IF
YOU HAVE ANY QUESTIONS PLEASE 6204.00
CONTACT SUSAN RASBERRY AT
800/543-2382 OR 704/553-0038.
THIS IS FOR GLENAYRE CARE -
CONTRACT #137
CUSTOMER CONTACT: GREG PAULEY
216 565-9520
RECEIVED JAN 31 1996
</TABLE>
FREIGHT TERMS FOR FACTORY, FRT PPD
<PAGE> 1
EXHIBIT 10.17
- --------------------------------------------------------------------------------
ASSET ACQUISITION AGREEMENT
AMONG
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.,
AND
SYGNET COMMUNICATIONS INC.
July 11, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Certain Definitions; Purchase and Sale of Assets;
Assumption of Liabilities............................................ 1
1.1 Certain Definitions........................................ 1
1.2 Purchased Assets........................................... 3
1.3 Excluded Assets............................................ 5
1.4 Assumption of Liabilities by Purchaser..................... 5
1.5 Excluded Liabilities....................................... 5
1.6 Assets Not Assignable...................................... 6
2. Escrows, Acquisition Price and Closing............................... 6
2.1 Escrows.................................................... 6
2.2 Acquisition Price.......................................... 8
2.3 Manner of Payment.......................................... 8
2.4 Acquisition Price Adjustment............................... 8
2.5 Allocation of Acquisition Price............................ 10
2.6 The Closing................................................ 10
2.7 Closing Costs; Transfer Taxes and Fees..................... 11
3. Representations and Warranties of Sellers............................ 11
3.1 Organizational Status...................................... 11
3.2 Qualification.............................................. 11
3.3 Authorization; No Conflict................................. 11
3.4 Financial Statements....................................... 12
3.5 Compliance with Laws....................................... 12
3.6 Permits; FCC Licenses...................................... 12
3.7 Litigation................................................. 14
3.8 Real Property.............................................. 14
3.9 Personal Property Leases................................... 14
3.10 Contracts and Other Agreements............................. 14
3.11 Consents................................................... 15
3.12 Title; Condition........................................... 16
3.13 No Material Adverse Change................................. 16
3.14 Taxes...................................................... 16
3.15 Environmental Matters...................................... 16
3.16 Employee Matters........................................... 17
3.17 Inventory.................................................. 17
3.18 Receivables................................................ 17
3.19 Labor Relations............................................ 18
3.20 Employee Compensation...................................... 18
3.21 Employee Benefit Plans..................................... 18
3.22 Absence of Undisclosed Liabilities......................... 19
3.23 Intellectual Property...................................... 19
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
4. Representations and Warranties of Purchaser.............................. 19
4.1 Organizational Status.......................................... 19
4.2 Qualification.................................................. 20
4.3 Authorization; No Conflict..................................... 20
4.4 Compliance with Laws........................................... 20
4.5 Litigation..................................................... 20
4.6 Consents....................................................... 21
4.7 FCC and PSC Matters............................................ 21
4.8 Financial Ability to Close..................................... 21
5. Covenants of Sellers and Purchaser....................................... 21
5.1 Continuance of Business........................................ 21
5.2 Access to Information; Notice of Breach........................ 22
5.3 Governmental Permits and Approvals; Consents................... 23
5.4 Employees; Employee Compensation............................... 23
5.5 HSR Act........................................................ 23
5.6 Regulatory Approvals........................................... 24
5.7 Restrictions on Certain Actions................................ 24
5.8 Casualty or Condemnation....................................... 25
5.9 Supplemental Disclosure........................................ 25
5.10 Disclaimer of Other Representations and Warranties............. 25
5.11 Notice of Certain Events....................................... 26
5.12 Public Announcements........................................... 26
5.13 Pre-Closing Deliveries......................................... 26
5.14 No Solicitation................................................ 26
5.15 Escrow Balance; Replacement Letter of Credit................... 27
5.16 Securities Filings............................................. 27
5.17 Audited Financial Statements................................... 27
5.18 Cooperation Regarding Financing................................ 28
6. Conditions Precedent to Purchaser's Obligations.......................... 28
6.1 Regulatory Approvals........................................... 28
6.2 Premerger Notification Compliance.............................. 28
6.3 Representations and Warranties on Closing Date................. 28
6.4 Terms, Covenants and Conditions................................ 28
6.5 No Material Adverse Change..................................... 28
6.6 No Negative Economic Impact.................................... 29
6.7 Absence of Litigation.......................................... 29
6.8 Closing Deliveries............................................. 29
7. Conditions Precedent to Sellers' Obligations............................. 29
7.1 Regulatory Approvals........................................... 29
7.2 Premerger Notification Compliance.............................. 29
7.3 Representations and Warranties on Closing Date................. 29
7.4 Terms, Covenants and Conditions................................ 30
7.5 Absence of Litigation.......................................... 30
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
7.6 Closing Deliveries............................................. 30
8. Deliveries at the Closing................................................ 30
8.1 Sellers' Deliveries............................................ 30
8.2 Purchaser's Deliveries......................................... 31
9. Confidentiality.......................................................... 32
10. Survival of Representations and Warranties............................... 32
11. Indemnification.......................................................... 32
11.1 Obligation to Indemnify by Sellers............................. 32
11.2 Obligation to Indemnify by Purchaser........................... 33
11.3 Procedures for Claims Between the Parties...................... 33
11.4 Defense of Third-Party Actions................................. 33
11.5 Limitations.................................................... 34
12. Breaches and Defaults; Termination; Remedies............................. 35
12.1 Breaches and Defaults; Opportunity to Cure..................... 35
12.2 Termination.................................................... 35
12.3 Effect of Termination.......................................... 36
13. Miscellaneous............................................................ 36
13.1 Resolution of Disputes......................................... 36
13.2 Expenses....................................................... 37
13.3 Further Assurances............................................. 37
13.4 Access to Records.............................................. 37
13.5 Indemnification of Brokerage................................... 37
13.6 Severability................................................... 38
13.7 Notices........................................................ 38
13.8 Entire Agreement............................................... 39
13.9 Amendments and Waivers......................................... 39
13.10 Governing Law.................................................. 39
13.11 Assignment; Binding Effect..................................... 39
13.12 Non-Recourse................................................... 40
13.13 Beneficiaries of Agreement..................................... 40
13.14 Counterparts; Facsimile Signatures............................. 40
13.15 Exhibits and Schedules......................................... 40
13.16 Computation of Days; Holidays.................................. 40
13.17 Headings....................................................... 41
</TABLE>
-iii-
<PAGE> 5
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
2.1(a) Form of Letter of Credit
2.3(a) Form of Instrument of Assumption
3.12 Form of Payoff Letter
8.1(b)(i) Form of Opinion of Sellers' Corporate Counsel
8.1(b)(ii) Form of Opinion of Sellers' FCC Counsel
8.1(i)(A) Form of Confidentiality and Restrictive Covenant Agreement
(Executive Officers)
8.1(i)(B) Form of Confidentiality and Restrictive Covenant Agreement
(Sellers and Certain Affiliates)
8.2(d) Form of Opinion of Purchaser's Counsel
SCHEDULES
1 RSAs
1.1(1) Certain Permitted Encumbrances
1.2(j) Books and Records
1.3(g) Certain Affiliate Assets Not Used Exclusively for the Systems
1.3(h) Other Excluded Assets
1.4 Assumed Liabilities
2.4(a)(i) Capital Expenditures
2.4(a)(iii) Subscribers
3.5 Unlicensed Facilities
3.6(b) FCC Licenses
3.6(c) PSC Licenses
3.6(d) Pending Applications
3.7 Litigation
3.8(b) Real Property Leases
3.9 Material Personal Property Leases
3.10 Material Contracts
3.11 Sellers' Material Consents
3.12 Material Personal Property
3.18 Receivables
3.20 Compensation
3.21 Employee Benefit Plans
4.6 Purchaser's Consents
5.13(b) ITDS Reports
6.5 Budgeted EBITDA
11.1 Certain Seller Indemnification
-iv-
<PAGE> 6
ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT (this "Agreement") is made as of July
11, 1996 among 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., each a Delaware limited partnership (collectively,
"Sellers"), and SYGNET COMMUNICATIONS INC., an Ohio corporation ("Purchaser").
W I T N E S S E T H
WHEREAS, Sellers are the sole holders of certain licenses, including
cellular and microwave licenses, granted by the Federal Communications
Commission (the "FCC") for the Non-Wireline Cellular Rural Service Areas
("RSAs") in Pennsylvania ("the Pennsylvania RSAs") and New York (the "New York
RSA") set forth on Schedule 1;
WHEREAS, Sellers are the owners and operators of the cellular telephone
communication systems in the RSAs (the "Systems") and, in connection therewith,
are engaged in the business of marketing, selling and providing cellular
telephone service in the RSAs (the "Business");
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to
acquire from Sellers, all of the Purchased Assets (as hereinafter defined) in
accordance with the terms and conditions hereinafter set forth; and
WHEREAS, the parties acknowledge that the terms and conditions set forth
in this Agreement and the performance by the parties of their respective
obligations hereunder are subject to and are intended to be in compliance with
all FCC and other state and local governmental rules and regulations governing
the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Certain Definitions: Purchase and Sale of Assets: Assumption of
Liabilities.
1.1 Certain Definitions. As used in this Agreement, the following terms
have the following meanings unless the context otherwise requires:
(a) "affiliate", with respect to any person, means any other person
controlling, controlled by or under common control with such person.
(b) "business day" means any day other than a Saturday, Sunday,
legal holiday in the Commonwealth of Pennsylvania or other day of the year on
which banks are authorized or required by law to close.
<PAGE> 7
(c) "Current Assets" means, for purposes of this Agreement, Sellers'
(i) accounts receivable (net of reserves for subscriber receivables calculated
as follows: 2.5% for subscriber receivables that are current to less than or
equal to 30 days past due; 15% for subscriber receivables that are between 31
and 60 days past due; 50% for subscriber receivables that are between 61 and 90
days past due; and 100% for subscriber receivables that are more than 90 days
past due), plus (ii) inventory (other than any inventory that is obsolete in
accordance with GAAP (as hereinafter defined)), plus (iii) prepaid expenses,
each as reflected on the Closing Date Balance Sheet (as hereinafter defined)
and only to the extent such constitutes a Purchased Asset.
(d) "Current Liabilities" means, for purposes of this Agreement,
Sellers' (i) accounts payable, plus (ii) accruals - comp. related, plus (iii)
other accruals (including customer security deposits), plus (iv) deferred
income, each as reflected on the Closing Date Balance Sheet, and only to the
extent such constitutes an Assumed Liability (as hereinafter defined).
(e) "Executive Officers" shall mean Messrs. Michael E. Kalogris,
Steven R. Skinner, and Bruce M. Hernandez.
(f) "governmental or regulatory body" means any government or
political subdivision thereof, whether federal, state, local or foreign, or any
agency or instrumentality of any such government or political subdivision.
(g) "herein", "hereby", "hereunder", "hereof" or other equivalent
words refer to this Agreement and not solely to the particular section or
portion of this Agreement in which any such word is used.
(h) "includes", "including" or other equivalent words mean
"including, without limitation".
(i) "lien or other encumbrance" means any lien, pledge, mortgage,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any stockholder or similar
agreement, encumbrance or any other restriction or limitation whatsoever.
(j) "Material Adverse Change" means a material adverse change in the
Business, taken as a whole; provided, however, that neither (i) the effects of
any events, circumstances or conditions resulting from changes, developments or
circumstances in worldwide, national or local conditions (political, economic,
regulatory or otherwise) that adversely affect generally the markets where the
Systems are operated or affect generally industries engaged in the
telecommunications business (including proposed legislation or regulations by
any governmental or regulatory body or the introduction of any technological
changes in the telecommunications industry), or adversely affect a broad group
of industries generally, nor (ii) any effects of competition (including
competition resulting from personal communication services or the introduction
of any new technological changes in the telecommunications industry), shall be
deemed to give rise to a Material Adverse Change.
-2-
<PAGE> 8
(k) "Material Adverse Effect" means an effect that would result in a
Material Adverse Change; provided, however, that neither (i) the effects of any
events, circumstances or conditions resulting from changes, developments or
circumstances in worldwide, national or local conditions (political, economic,
regulatory or otherwise) that adversely affect generally the markets where the
Systems are operated or affect generally industries engaged in the
telecommunications business (including proposed legislation or regulation by
any governmental or regulatory body or the introduction of any technological
changes in the telecommunications industry), or adversely affect a broad group
of industries generally, nor (ii) any effects of competition (including
competition resulting from personal communication services or the introduction
of any new technological changes in the telecommunications industry), shall
constitute a Material Adverse Effect.
(l) "Permitted Encumbrances" means (i) any lien or other encumbrance
for taxes and assessments, not yet past due or otherwise being contested in
good faith and for which appropriate reserves have been established, (ii) any
lien or other encumbrance arising out of deposits made to secure leases or
other obligations of a like nature arising in the ordinary course of business,
(iii) any lien or other encumbrance that does not materially interfere with the
use by Sellers of the property subject thereto or affected thereby (including
any easements, rights of way, restrictions, installations or public utilities,
title imperfections and restrictions, reservations in land patents, zoning
ordinances or other similar liens or other encumbrances) or otherwise does not
materially impair the results of operations or financial condition of the
Business considered as a whole, and (iv) any lien or other encumbrance set
forth on Schedule 1.1(1).
(m) "person" means any individual, corporation, limited liability
company, partnership, limited liability partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.
(n) "to Sellers' knowledge" or any similar phrase means the actual
knowledge of one of the Executive Officers or the general managers of the
respective Systems.
(o) "Material Consent" has the meaning given to such term in Section
3.11(a)(iv).
1.2 Purchased Assets. On the terms and subject to the conditions
contained in this Agreement, Sellers agree to sell, assign, transfer and
deliver to Purchaser all of the right, title and interest of Sellers in or to
the following assets in existence as of the Closing Date (collectively referred
to herein as the "Purchased Assets"):
(a) all accounts receivable billed and unbilled, all subscriber
accounts receivable that have been written off as uncollectible, and all
negotiable instruments or other instruments and chattel paper generated in the
conduct of the Business (the "Receivables");
(b) all inventory, including cellular mobile telephones and related
accessories (collectively, the "Inventory");
-3-
<PAGE> 9
(c) all furniture, fixtures, cellular systems and other equipment
and machinery, cellular switches, cell site equipment, electrical power units,
antennas, transmission lines, microwave equipment, test equipment, tools,
vehicles, office equipment, improvements, parts and other tangible personal
property other than Inventory, used or useful in the operation of the Business,
whether or not obsolete;
(d) any lots and pieces of ground together with the buildings,
structures and improvements erected thereon, and together with all easements,
rights and privileges appurtenant thereto (the "Owned Real Property");
(e) all leasehold interests created by all leases of personal
property (the "Personal Property Leases") or real property (the "Real Property
Leases") under which any Seller is a lessee or lessor;
(f) all of Sellers' interest in all buildings, towers, facilities
and other structures and improvements located on Owned Real Property and the
real property subject to a Real Property Lease (the "Leased Real Property", and
together with the Owned Real Property, the "Real Property"), together with
Sellers' interest in all fixtures, furnishings, installations, machinery,
equipment and appliances used in connection with the operation, maintenance or
occupancy of the Real Property and Sellers' interest in all leasehold
improvements;
(g) all prepaid expenses, advance payments, deferred charges,
security and other deposits deposited by Sellers with third parties with
respect to Leased Real Property or other Purchased Assets;
(h) all licenses, permits, franchises, registrations, certificates
of public convenience and necessity, approvals and operating rights to the
extent transferable under applicable law or with any required consent,
including all licenses, permits and authorizations that have been issued to
Sellers or KCCGP, L.P., a Delaware limited partnership that is the general
partner of Sellers (the "General Partner"), by the FCC (the "FCC Licenses") and
the State of New York Public Service Commission ("PSC") (the "PSC Licenses"),
any and all rights under any applications pending before the FCC or PSC on
behalf of Sellers or the General Partner or licenses, permits or authorizations
issued to Sellers or the General Partner by the FCC or PSC for currently
unlicensed facilities, as listed on Schedule 3.5, any interim operating
authority, or other regulatory authority, in connection with the Business and
the construction and operation of the Systems, and all planning, zoning,
building, environmental, occupancy and other permits and licenses used in
connection with the Systems (collectively, and including the FCC Licenses and
the PSC Licenses, the "Permits"), provided, however that as to the General
Partner, the Purchased Assets shall only include such Permits that are used in
connection with the Business and the construction and operation of the Systems;
(i) all rights of Sellers under all contracts and agreements
(including roaming agreements) relating to the Business (collectively, and
including the Personal Property Leases and the Real Property Leases, the
"Contracts");
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(j) originals or copies (at the option of Sellers) of all books and
records, manuals, files and operating data to the extent relating to the
Business, including the books and records described on Schedule 1.2(i); and
(k) all other assets, except for the Excluded Assets (as hereinafter
defined), of every kind or description wherever located, real, personal,
tangible or intangibles, owned, held or used in the conduct of the Business by
Sellers on the Closing Date.
1.3 Excluded Assets. Notwithstanding anything to the contrary contained
herein or otherwise, the Purchased Assets do not include the following:
(a) all cash on hand and in financial institutions, cash
equivalents, marketable securities and bonds ("Cash and Cash Equivalents");
(b) all federal, state and local income and franchise tax credits
and tax refund claims;
(c) the minute books, partnership record books and tax returns of
Sellers;
(d) any insurance policies maintained by Sellers with respect to the
Business;
(e) all claims, causes of action and rights of recovery (other than
those arising under or with respect to the assets described in Section 1.2(a))
arising out of, or relating to, events or occurrences prior to the Closing Date
relating to the Systems or the Business, whether asserted or commenced before,
on or after the Closing Date (including with respect to warranty claims and
rights of recovery relating to roaming receivables);
(f) Sellers' rights under this Agreement;
(g) those assets set forth on Schedule 1.3(g), which assets are used
by affiliates of Sellers and do not relate exclusively to the operation of the
Systems;
(h) the personal effects, memorabilia and other assets described on
Schedule 1.3(h); and
(i) any receivables from any of Sellers' affiliates.
1.4 Assumption of Liabilities by Purchaser. On the Closing Date,
Purchaser shall assume and agree to discharge and perform, as and when due, all
liabilities and obligations of Sellers set forth on Schedule 1.4 (collectively,
the "Assumed Liabilities").
1.5 Excluded Liabilities. Notwithstanding any provision in this Agreement
or any other writing to the contrary, Purchaser is assuming only the Assumed
Liabilities and' is not assuming any other liability or obligation of any
Seller (or of any predecessor owner of all or part of their respective
businesses and assets) of whatever nature, whether presently in
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existence or arising hereafter. All such other liabilities and obligations
shall be retained by and remain obligations of Sellers (all such liabilities
and obligations not being assumed being herein referred to as the "Excluded
Liabilities"). Without limiting the generality of the foregoing, none of the
following shall be Assumed Liabilities for the purposes of this Agreement:
(a) any liabilities or obligations of Sellers to any of Sellers'
affiliates;
(b) any liabilities or obligations for legal, accounting and audit
fees and any other expenses incurred by Sellers in connection with the
preparation of, negotiation of, and performance under, this Agreement (and the
transactions and other agreements contemplated hereby);
(c) any liabilities or obligations for Sellers' federal, state or
local income taxes;
(d) any liabilities or obligations of Sellers to pay severance
benefits, if any, to any employees of Sellers whose employment is terminated by
Sellers prior to or in connection with the sale of the Business; and
(e) any liabilities or obligations of Sellers as a borrower under
any loan agreements, subordinated debt agreements or other credit facilities.
1.6 Assets Not Assignable. To the extent that any interest in the
Contracts, Permits or other Purchased Assets is not capable of being assigned,
transferred or conveyed without the consent, waiver or authorization of a third
person (including a governmental or regulatory body), or if such assignment,
transfer or conveyance or attempted assignment, transfer or conveyance would
constitute a breach of any of the Contracts, Permits or other Purchased Assets,
or a violation of any law, statute, decree, rule, regulation or other
governmental edict or is not immediately practicable, this Agreement shall not
constitute an assignment, transfer or conveyance of such interest, or an
attempted assignment, transfer or conveyance of such interest (any such
interest being referred to herein as a "Restricted Interest") unless and until
the required consent, waiver or authorization is obtained. Anything in this
Agreement to the contrary notwithstanding, Sellers shall not be obligated to
transfer to Purchaser any Restricted Interest without first having obtained the
required consent, waiver or authorization necessary for such transfer;
provided, however, that nothing in this Section 1.6 shall limit Sellers'
obligations under Section 5.3(b).
2. Escrows' Acquisition Price and Closing.
2.1 Escrows.
(a) Purchaser shall deliver to CoreStates Bank, N.A., Philadelphia,
Pennsylvania, as escrow agent (the "Escrow Agent"), the amount of $10,000,000
(the "Escrow Amount"), which amount shall be held by the Escrow Agent pursuant
to the terms of a certain
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escrow agreement of even date herewith (the "Escrow Agreement") by and among
the parties hereto and the Escrow Agent. Concurrently with the execution of
this Agreement, Purchaser has delivered to the Escrow Agent the amount of
$1,000,000. As promptly as practicable after the date hereof (but no later than
July 18, 1996), Purchaser shall deliver to the Escrow Agent as the balance of
the Escrow Amount (the "Escrow Balance") either (i) $9,000,000 in immediately
available funds or (ii) an irrevocable, unconditional standby letter of credit
in favor of the Escrow Agent in the amount of $9,000,000 from a financial
institution reasonably acceptable to Sellers in the form of Exhibit 2.1(a) (the
"Letter of Credit").
(b) The parties agree that Purchaser's breach in any material
respect of any representation, warranty, covenant or agreement contained in
this Agreement will cause damage to Sellers that will be difficult or
impossible to prove accurately. Therefore, with the intention of providing a
fair and reasonable measure of such damage, and to impose damages that the
parties agree would not be disproportionate to the presumed loss, the parties
agree that in the event of a termination of this Agreement by Sellers in
accordance with the terms of Section 12.2(c)(ii), Sellers shall be entitled to
payment pursuant to the Escrow Agreement, as liquidated damages, and not as a
penalty, the entire Escrow Amount on the terms and subject to the conditions
contained in the Escrow Agreement; provided, however, that if such termination
occurs prior to the date of Purchaser's delivery of the Escrow Balance to
Escrow Agent, Purchaser shall pay directly to Sellers promptly in immediately
available funds the difference between $10,000,000 and the portion of the
Escrow Amount that Sellers receive from the Escrow Agent; and provided further,
however, that in any such event Sellers shall also be entitled to interest, on
the terms contained in the Escrow Agreement, on any portion of the Escrow
Amount constituting immediately available funds that have been delivered to the
Escrow Agent. Notwithstanding anything to the contrary contained herein or in
the Escrow Agreement, the Escrow Amount (together with interest as aforesaid)
shall constitute Sellers' sole recourse in the event of a termination of this
Agreement by Sellers in accordance with the terms of Section 12.2(c)(ii).
(c) As security for the indemnification covenants of Sellers
contained in this Agreement, on the Closing Date, Purchaser shall deliver to
Escrow Agent the amount of Ten Million Dollars ($10,000,000) (the
"Indemnification Escrow"), which amount shall be held by the Escrow Agent
pursuant to the terms of the Escrow Agreement. On the terms and subject to the
conditions contained in the Escrow Agreement, $5,000,000 of the Indemnification
Escrow (plus all interest earned on such $5,000,000 from the Closing Date until
such date) shall be released to Sellers on the date that is six (6) months
after the Closing Date, and the balance thereof (together with interest earned
thereon) shall be released to Sellers on the date that is twelve (12) months
after the Closing Date. Purchaser shall be entitled to draw upon the
Indemnification Escrow (and applicable interest thereon) for payment of all
indemnification claims made by Purchaser to the extent, but only to the extent,
provided in the Escrow Agreement. Notwithstanding anything to the contrary
contained herein or in the Escrow Agreement, the Indemnification Escrow shall
constitute Purchaser's sole recourse for recovery of Sellers' indemnification
covenants contained in this Agreement.
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2.2 Acquisition Price. The aggregate acquisition price for the Purchased
Assets shall be $250,000,000 (the "Preliminary Acquisition Price"), subject to
adjustment as provided in Section 2.4 (as so adjusted, the "Acquisition
Price").
2.3 Manner of Payment. Subject to adjustment as provided in this
Agreement, at Closing:
(a) Purchaser shall assume the Assumed Liabilities by written
instrument of assumption in the form of Exhibit 2.3(a) (the "Instrument of
Assumption");
(b) Purchaser and Sellers shall provide joint written instructions
to Escrow Agent (the "Escrow Agent Instructions") instructing Escrow Agent to
deliver the Escrow Amount to Purchaser in the manner prescribed by the Escrow
Agreement;
(c) Purchaser shall pay to Sellers (or to any other person as
Sellers may direct in writing) by wire transfer of immediately available funds
to such banks and accounts thereat as shall be specified in writing by Sellers
(which shall include such banks as are necessary to obtain the releases
referred to in the Payoff Letter (as hereinafter defined)), the following:
(i) the amount of $240,000,000 (the "Closing Cash Payment")
representing the difference between the Preliminary Acquisition Price and the
Indemnification Escrow; plus or minus
(ii) the Initial Adjustments Amount (as hereinafter defined);
and
(d) Purchaser shall deliver the Indemnification Escrow to the Escrow
Agent to be retained and disbursed by the Escrow Agent pursuant to the terms of
the Escrow Agreement.
2.4 Acquisition Price Adjustment.
(a) The Preliminary Acquisition Price shall be increased or
decreased (the "Acquisition Price Adjustment") on a dollar-for-dollar basis for
the cumulative net adjustment required by the following:
(i) Set forth on Schedule 2.4(a)(i) is Sellers' capital
expenditure budget (the "Capital Budget") for calendar year 1996, setting forth
on a monthly basis the amount and categories of capital expenditures budgeted
by Sellers with respect to the Business for calendar year 1996. Sellers agree
to use commercially reasonable efforts to make capital expenditures in
accordance with the Capital Budget, except as otherwise consented to by
Purchaser (such consent not to be unreasonably withheld, conditioned or
delayed). The Preliminary Acquisition Price shall be (A) increased to the
extent that, between December 31, 1995 and the Closing Date, Sellers make
capital expenditures (excluding capital expenditures made to repair or replace
property damaged after the date of this Agreement) with respect to the Business
in excess of those budgeted to be made through the Closing Date in the Capital
Budget, and (B)
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decreased to the extent that, between December 31, 1995 and the Closing Date,
Sellers make capital expenditures with respect to the Business that are less
than those budgeted to be made through the Closing Date in the Capital Budget.
The amount of $750,000 contained in the Capital Budget with respect to a
proposed upgrade of an Ericsson switch in the New York RSA (the "Ericsson
Upgrade") shall be disregarded in the foregoing test. Instead, the Preliminary
Acquisition Price shall be reduced by $500,000 on account of the Ericsson
Upgrade. The determination of whether an expenditure constitutes a capital
expenditure shall be made in accordance with generally accepted accounting
principles consistently applied ("GAAP"), and shall include capital
expenditures for which payment has not yet been made by Sellers but for which a
current liability has been established in Sellers' books and records.
(ii) The Preliminary Acquisition Price shall be further
adjusted by the dollar amount (positive or negative) of the Net Working Capital
of Sellers on the Closing Date. As used herein, the term "Net Working Capital"
shall mean Current Assets minus Current Liabilities.
(iii) The Preliminary Acquisition Price shall be further
adjusted based upon the actual ending subscribers on the last day of the month
preceding the Closing Date ("Actual Ending Subscribers") as follows: (A) the
Preliminary Acquisition Price shall be increased by an amount equal to $300
times the positive difference, if any, equal to the Actual Ending Subscribers
less the Maximum Ending Subscribers on the last day of the month preceding the
Closing Date (as reflected on Schedule 2.4(a)(iii)), and (B) the Preliminary
Acquisition Price shall be decreased by an amount equal to $300 times the
positive difference, if any, equal to the Minimum Ending Subscribers on the
last day of the month preceding the Closing Date (as reflected on Schedule
2.4(a)(iii)) less the Actual Ending Subscribers.
(b) The initial adjustments to the Preliminary Acquisition Price
will be made at the Closing based upon a good faith estimate by Sellers of the
dollar amounts of such adjustments (the "Initial Adjustments Amount"), a
schedule (the "Initial Adjustments Amount Schedule") of such estimates to be
delivered by Sellers to Purchaser at least three (3) business days prior to
Closing.
(c) As promptly as practicable after the Closing Date (but in no
event later than ninety (90) days thereafter) Sellers shall prepare and deliver
to Purchaser for its review and comment (i) a balance sheet prepared in
accordance with GAAP and the same accounting practices and methods used to
prepare the Financial Statements and the Unaudited Financial Statements (each
as hereinafter defined) and dated as of the close of business on the Closing
Date (the "Closing Date Balance Sheet") and (ii) an accompanying closing
statement (the "Closing Statement") reasonably detailing as of the close of
business on the Closing Date Sellers' determination of each element of the
Acquisition Price Adjustment. If Purchaser objects to any amounts reflected on
the Closing Date Balance Sheet or the Closing Statement, Purchaser must, within
thirty (30) days after Purchaser's receipt of the Closing Date Balance Sheet
and Closing Statement, give written notice (the "Notice") to Sellers specifying
in reasonable detail its objections, or Sellers' determination of the
Acquisition Price Adjustment shall be final, binding and conclusive on the
parties. With respect to any disputed amounts,
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the parties shall meet in person and negotiate in good faith during the thirty
(30) day period (the "Resolution Period") after the date of Sellers' receipt of
the Notice to resolve any such disputes. If the parties are unable to resolve
all such disputes within the Resolution Period, then within five (5) business
days after the expiration of the Resolution Period, all disputes shall be
submitted to Arthur Andersen & Co. (the "Independent Accountant") who shall be
engaged to provide a final and conclusive resolution of all unresolved disputes
within forty-five (45) days after such engagement. The determination of the
Independent Accountant shall be final, binding and conclusive on the parties
hereto, and the fees and expenses of the Independent Accountant shall be borne
by the party who, in the Independent Accountant's determination, submitted a
disputed amount that differs more significantly from the amount finally
determined by the Independent Accountant. From and after the Closing Date,
Purchaser and Sellers will provide each other with access to such books,
records and personnel as Purchaser or Sellers, as the case may be, reasonably
request in connection with the preparation and review of the Closing Date
Balance Sheet and the Closing Statement.
(d) If the Acquisition Price Adjustment (as finally determined in
accordance with the provisions set forth above) less the Initial Adjustments
Amount is a positive (negative) amount, then, within five (5) business days
after such final determination, Purchaser (Sellers) shall pay to Sellers
(Purchaser) such amount in immediately available funds plus interest at the
rate of 10% per annum from the Closing Date through the date of payment.
2.5 Allocation of Acquisition Price. On the Closing Date, Purchaser and
Sellers shall mutually agree in writing upon the allocation of the Acquisition
Price among the Purchased Assets. Such allocation shall be adjusted as
necessary in connection with the final determination of the Acquisition Price
Adjustment. The parties agree that such allocation shall be made based upon
the relative fair market values of the Purchased Assets as of the Closing Date
conforming with the requirements of Section 1060 of the Internal Revenue Code
of 1986, as amended. The parties agree that the fair market value of the
tangible personal property of Sellers to be transferred to Purchaser on the
Closing Date is equal to the net book value of such property for tax purposes.
The parties agree to file with their respective federal income tax returns for
the tax year in which the Closing occurs IRS Form 8594 containing the
information agreed upon by the parties pursuant to this Section 2.5. Sellers
and Purchaser agree not to assert for income tax purposes (including in
connection with any tax return, tax audit or similar proceeding) any allocation
of the Acquisition Price that differs from that determined pursuant to this
section and contained in IRS Form 8594.
2.6 The Closing. Unless this Agreement shall have been earlier terminated
in accordance with the terms hereof, the transactions contemplated by this
Agreement shall be consummated (the "Closing") at the offices of Kleinbard,
Bell & Brecker, 1900 Market Street, Philadelphia, Pennsylvania 19103, on the
latest to occur of (i) September 30, 1996, (ii) the tenth (10th) business day
after receipt of the Regulatory Approvals (as hereinafter defined) in
accordance with Section 5.6 and (iii) the expiration of all necessary filing
and waiting requirements under the HSR Act (as hereinafter defined), or at such
other place or on such other date as Purchaser and Sellers may agree in
writing. The date on which the Closing shall
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occur is referred to in this Agreement as the "Closing Date". The Closing shall
be deemed to have occurred as of 11.59 p.m. on the Closing Date.
2.7 Closing Transfer Taxes and Fees. Purchaser shall be responsible for
(i) any documentary and transfer taxes and any sales, use or other taxes
imposed by reason of the transfers of Purchased Assets provided hereunder and
any deficiency, interest or penalty asserted with respect thereto, (ii) any
fees and costs of recording or filing all applicable conveyancing instruments
described in Section 8.1(a) or otherwise, (iii) all costs of applying for new
Permits and obtaining the transfer of existing Permits that may be lawfully
transferred, (iv) the filing fee required under the HSR Act, (v) the costs and
expenses of any title insurance that Purchaser may choose to obtain with
respect to any Real Property and (vi) the costs and expenses of any
environmental audits that Purchaser may choose to conduct at any or all of the
Real Property.
3. Representations and Warranties of Sellers. Each of the Sellers
represents and warrants to Purchaser that:
3.1 Organizational Status. Each of the Sellers is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of the Sellers has all requisite partnership power and
authority to own, lease and operate its assets, properties, and its Business,
and to carry on its Business as now being conducted.
3.2 Qualification. Each of the Sellers is duly qualified to do business
and is in good standing as a foreign partnership in all jurisdictions where
such qualification is required except for those jurisdictions where the failure
to be so qualified would not reasonably be expected to have a Material Adverse
Effect.
3.3 Authorization: No Conflict. Each of the Sellers has the full legal
right and all partnership power and authority required to enter into, execute
and deliver this Agreement and the documents and other agreements required to
be executed and delivered hereunder and to perform fully its respective
obligations hereunder and thereunder. The execution, delivery and performance
of this Agreement by each of the Sellers have been duly authorized by all
necessary partnership action on the part of each of the Sellers. This Agreement
has been duly executed and delivered and constitutes, and each of the other
agreements and documents to be delivered by Sellers hereunder when executed and
delivered by Sellers will constitute, the valid and binding obligation of each
of the Sellers, enforceable in accordance with their respective terms, subject
to bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting creditors' rights generally. The execution,
delivery and performance of this Agreement and the documents and other
agreements to be delivered hereunder by Sellers and the consummation of the
transactions contemplated hereby and thereby by Sellers will not (i) violate
any provision of any Seller's certificate of limited partnership or partnership
agreement, (ii) violate, conflict with or result in the breach of any of the
terms of, result in a modification of the effect of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any contract to which any of
the Sellers is a party or by or to which it or any
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of its assets or properties may be bound or subject, excluding in any case such
violations, conflicts, breaches or defaults that would not reasonably be
expected to have a Material Adverse Effect, (iii) violate any order, judgment,
injunction, award or decree of any court, arbitrator or governmental or
regulatory body by which any of the Sellers, or the assets, properties or
Business of Sellers are bound, (iv) violate any statute, law or regulation,
applicable to Sellers, excluding in any case such violations that would not
reasonably be expected to have a Material Adverse Effect, or (v) violate or
cause any revocation of or limitation on any Permit that is necessary to the
lawful conduct of the Business, excluding any such violation, revocation or
limitation of which could reasonably be expected to have a Material Adverse
Effect.
3.4 Financial Statements. Sellers have delivered to Purchaser copies of
the audited annual financial statements of Horizon Cellular Telephone Company,
L.P. ("Horizon") as of December 31, 1995 and 1994 and for the years then ended
(collectively, the "Financial Statements"). The Financial Statements (i) fairly
present the financial condition of Horizon as of such dates and the results of
its operations and changes in its cash flows for the periods covered thereby,
and (ii) were prepared in accordance with GAAP. As used herein, the term
"Balance Sheet Date" shall mean December 31, 1995. Sellers have also delivered
to Purchaser copies of Sellers' unaudited financial statements as of December
31, 1995 (under and together with a cover letter dated July 3, 1996 from Bruce
Hernandez) and May 31, 1996 and for the periods then ended (the "Unaudited
Financial Statements"). As used herein, the term "Current Balance Sheet" shall
mean the balance sheet of Sellers as of May 31, 1996. The Unaudited Financial
Statements (i) fairly present the financial condition of Sellers as of such
dates and the results of their operations for the respective periods covered
thereby, and (ii) were prepared in accordance with GAAP (subject to normal
recurring year-end adjustments and except for the omission of certain footnotes
and other presentation items required by GAAP with respect to audited financial
statements).
3.5 Compliance with Laws. Each of the Sellers is in, and has operated in,
compliance with all applicable federal (including the Communications Act of
1934, as amended, and the rules, regulations, orders, policies and procedures
of the FCC promulgated thereunder (the "Communications Act")), state and local
laws, regulations and ordinances and any applicable requirements of any
governmental or regulatory body, court or arbitrator affecting its Business or
its assets, except for the following: (i) the matters set forth on Schedule 3.5
and (ii) noncompliance that, individually or in the aggregate, has not and
would not reasonably be expected to have a Material Adverse Effect.
3.6 Permits: FCC Licenses.
(a) Except as set forth on Schedule 3.5, Sellers and the General
Partner have all of the Permits necessary to operate the Systems and the
Business as now operated, except for those Permits the absence of which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. To Sellers' knowledge, such Permits are in full force
and effect, and are unimpaired by any acts or omissions of Sellers or the
General Partner.
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(b) Sellers and the General Partner, as applicable, applied for and
obtained the FCC Licenses in compliance with the Communications Act, and
Sellers and the General Partner, as applicable, are, and on the Closing Date
will be, the exclusive holders of the FCC Licenses. The consents of the FCC to
the issuance, assignment or transfer of control of the FCC Licenses to Sellers
and the General Partner, as applicable, have been granted by Final Order (as
hereinafter defined). Sellers and the General Partner, as applicable, are, and
at all times since acquiring the FCC Licenses have been, qualified to hold the
FCC Licenses under the Communications Act. Sellers and the General Partner, as
applicable, are legally qualified under the Communications Act to assign the
FCC Licenses to Purchaser. A list of the FCC Licenses is set forth on Schedule
3.6(b). The FCC Licenses are in full force and effect. There are no existing
or, to the Sellers' knowledge, threatened proceedings by or before the FCC that
could reasonably be expected to result in the revocation, cancellation,
suspension, or material adverse modification of the FCC Licenses, except for
proceedings that affect the cellular telephone industry generally. Subject to
obtaining the Regulatory Approvals, Sellers and the General Partners, as
applicable, will transfer to Purchaser at Closing all of Sellers' and the
General Partner's, as applicable, right, title and interest in and to the FCC
Licenses free and clear of any lien or other encumbrance.
(c) Horizon Cellular Telephone Company of Chautauqua, L.P.
("HCTC-Chautauqua") applied for and obtained the PSC Licenses in compliance
with the laws of the State of New York, and HCTC-Chautauqua is, and on the
Closing Date will be, the exclusive holder of the PSC Licenses. The consents of
the PSC to the issuance, assignment or transfer of control of the PSC Licenses
to HCTC-Chautauqua has been granted by Final Order. HCTC-Chautauqua is, and at
all times since acquiring the PSC Licenses has been, qualified to hold the PSC
Licenses under applicable New York state law and the rules and regulations of
the PSC. HCTC-Chautauqua is legally qualified under such laws, rules and
regulations to assign the PSC Licenses to Purchaser. A list of the PSC Licenses
is set forth on Schedule 3.6(c). The PSC Licenses are in full force and effect.
There are no existing or, to Sellers' knowledge, threatened proceedings by or
before the PSC that could reasonably be expected to result in the revocation,
cancellation, suspension, or material adverse modification of the PSC Licenses,
except for proceedings that affect the cellular industry generally. Subject to
obtaining the Regulatory Approvals, HCTC-Chautauqua will transfer to Purchaser
at Closing all of HCTC- Chautauqua's right, title and interest in and to the
PSC Licenses free and clear of any lien or other encumbrance.
(d) Schedule 3.6(d) sets forth all applications, petitions and other
requests filed by or on behalf of Sellers with respect to the Business and
pending before the FCC or PSC (the "Pending Applications"). Such Pending
Applications are uncontested and, to Sellers' knowledge, there is no reason to
believe that any Pending Application will not be favorably acted upon in due
course.
(e) A "Final Order", as used in this Agreement, means an action by
the FCC or PSC (i) that is not reversed, stayed, enjoined, set aside, annulled
or suspended within the deadlines, if any, provided by applicable statute or
regulation, (ii) with respect to which no request for stay, motion or petition
for reconsideration or rehearing, application or request for
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review, or notice of appeal or other judicial petition for review that is
filed within such period is pending, and (iii) as to which the deadline, if
any, for filing any such request, motion, petition, application, appeal or
notice, and for the entry of orders staying, reconsidering or reviewing on the
FCC's or PSC's own motion have expired.
3.7 Litigation. Except as set forth on Schedule 3.7, and except for legal
or administrative proceedings affecting the cellular telephone industry
generally, there is no action, suit, claim, arbitration, investigation or other
legal or administrative proceeding (collectively, "Actions") pending or, to
Sellers' knowledge, threatened against any of the Sellers with respect to the
Business or any of the Purchased Assets, excluding in any case such Actions
that would not reasonably be expected to have a Material Adverse Effect.
3.8 Real Property.
(a) Sellers own no Owned Real Property.
(b) Schedule 3.8(b) sets forth a list of all of the Real Property
Leases. There have been made available to Purchaser true and complete copies of
all of the Real Property Leases. All of the Real Property Leases are valid, in
full force and effect and binding upon the respective Seller that is a party
thereto, and to Sellers' knowledge, the other parties thereto, enforceable in
accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally. None of the Sellers is in default under any of the
Real Property Leases, nor does any condition exist that, with notice or lapse
of time or both, would constitute such a default, excluding in any case
such-defaults that would not reasonably be expected to have a Material Adverse
Effect.
3.9 Personal Property Leases. Set forth on Schedule 3.9 is a list of all
material Personal Property Leases, true and complete copies of which have been
previously made available to Purchaser. Each Personal Property Lease is valid,
in full force and effect and binding upon the respective Seller that is a party
thereto and, to Sellers' knowledge, the other parties thereto, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting creditors'
rights generally. None of the Sellers is in default of any Personal Property
Lease nor, to Sellers' knowledge, has any event occurred that constitutes, or
with notice or lapse of time or both may constitute, a default under any
Personal Property Lease, excluding in any case such defaults that would not
reasonably be expected to have a Material Adverse Effect.
3.10 Contracts and Other Agreements.
(a) Schedule 3.10 lists the following contracts and other agreements
relating to the Business to which any of the Sellers is a party:
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(i) those contracts and other agreements that involve the
receipt or payment after the date hereof by the respective Seller that is a
party thereto of more than $100,000 annually;
(ii) those contracts and other agreements that involve the
receipt or payment after the date hereof by the respective Seller that is a
party thereto of more than $25,000 annually (but less than $100,000 annually)
that are not terminable by the respective Seller that is a party thereto on
ninety (90) or fewer days' notice at any time without penalty; and
(iii) all other contracts and agreements that are material to
the Business.
(b) There have been made available to Purchaser true and complete
copies of all of the contracts and other agreements set forth on Schedule 3.10.
Except as disclosed on Schedule 3.10, all of such contracts and other
agreements are valid, in full force and effect, binding upon the respective
Seller that is a party thereto, and, to Sellers' knowledge, the other parties
thereto and enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting creditors' rights generally. None of the Sellers
is in default under any of such contracts and other agreements, nor, to
Sellers' knowledge, does any condition exist that, with notice or lapse of time
or both, would constitute such a default, excluding in any case such defaults
that would not reasonably be expected to have a Material Adverse Effect.
3.11 Consents.
(a) Except for (i) the consent of the FCC to the assignment of the
FCC Licenses from Sellers and the General Partner to Purchaser, (ii) the
consent of the PSC to the assignment of the PSC Licenses, and the transfer of
the Purchased Assets of HCTC-Chautauqua from HCTC-Chautauqua to Purchaser,
(iii) the expiration of the waiting period under the HSR Act, and (iv) the
consent of, approval, or authorization of, or registration or filing with such
other governmental or regulatory body or third parties as are separately
identified on Schedule 3.11 (such consents referred to in this clause (iv), the
"Material Consents"), no consent, approval or authorization of, or registration
or filing with any person is required by Sellers in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, excluding in any case such consents,
approvals, authorizations, registrations or filings, the failure of which to
obtain or make, as the case may be, would not reasonably be expected to have a
Material Adverse Effect.
(b) The Material Consents identified on Schedule 3.11 are segregated
into two groups: (i) those designated by the parties as material and necessary
for consummation of the transactions contemplated hereby (the "Class A Material
Consents") and (ii) all other Material Consents (the "Class B Material
Consents").
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3.12 Title; Condition.
(a) Schedule 3.12 sets forth a substantially complete list of the
material personal property included in the Purchased Assets, whether owned,
leased or licensed (the "Personal Property List") that will be updated and
modified in accordance with Section 5.13(c). Sellers have good and marketable
title to all of the Purchased Assets. Notwithstanding anything to the contrary
contained herein or otherwise, each of the Sellers confirms that its assets are
generally subject to a security interest that has been granted by Sellers and
their affiliates to Citicorp North America, as collateral agent ("Lender"),
which security interest will be released at or promptly following Closing in
accordance with the terms of a payoff letter substantially in the form of
Exhibit 3.12 (the "Payoff Letter") upon payment to Lender of certain amounts
owed thereto. Sellers will at Closing convey to Purchaser good and marketable
title to all Purchased Assets, in each case free and clear of any lien or other
encumbrance other than Permitted Encumbrances, subject to the recording by
Purchaser or its agent after Closing of the releases to be delivered by Lender
promptly after payment thereto in accordance with the terms of the Payoff
Letter.
(b) The Purchased Assets are in good operating condition and repair,
have been reasonably maintained consistent with standards generally followed in
the cellular telephone industry (ordinary wear and use excepted), and, in the
case of buildings, towers and other structures, to Sellers' knowledge, are
structurally sound.
(c) The Purchased Assets constitute all of the assets and properties
under or held for use in the Business except for those Excluded Assets
identified in Section 1.3.
(d) EXCEPT AS SET FORTH HEREIN, SELLERS MAKE NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, CONCERNING THE PURCHASED ASSETS, INCLUDING THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
3.13 No Material Adverse Change. Since the Balance Sheet Date, there has
been no Material Adverse Change.
3.14 Taxes. Since the date of each Seller's ownership of its respective
System(s), (i) such Seller has timely filed or caused to be filed with the
appropriate taxing authorities all true, correct and complete tax returns for
federal, state, and local taxes (collectively, "Taxes"), (ii) all Taxes, in
respect of periods beginning before the Closing Date, have been timely paid or
an adequate reserve has been established therefor in the Financial Statements
and (iii) there are no pending or, to Sellers' knowledge, threatened audits,
investigations or claims for or relating to any additional liability in respect
of Taxes.
3.15 Environmental Matters. Neither the Business nor the operation
thereof by Sellers, nor the ownership or use of the Purchased Assets by
Sellers, violates any applicable environmental laws and no condition or event
has occurred with respect to the Business or Purchased Assets that, with the
giving of notice, lapse of time, or both, would constitute a
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violation of such laws, excluding in any event such violations, conditions and
events that, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
3.16 Employee Matters.
(a) Sellers represent that Purchaser shall have no liability
whatsoever to employees or former employees of Sellers with respect to such
employees' service with Sellers or for any accrued benefits (including all
severance benefits to which any of Sellers' employees shall become entitled by
virtue of this Agreement) unless and to the extent described on Schedule 3.21
and set forth within the Current Liabilities category on the Closing Date
Balance Sheet, whether such benefits are vested or non-vested, under any Plan
(as hereinafter defined), regardless of whether any of such employees are
offered employment by or become employees of Purchaser. As used herein, the
term "Plan" means any agreement, arrangement, plan, or policy, whether or not
considered legally binding, that involves (i) any pension, retirement, profit
sharing, deferred compensation, bonus, stock option, stock purchase, phantom
stock, health, welfare, or incentive plan; or (ii) welfare or "fringe"
benefits, including without limitation any voluntary employees' beneficiary
associations or related trusts, vacation, severance, disability, medical,
hospitalization, dental, life and other insurance, tuition, company car, club
dues, sick leave, maternity, paternity or family leave, or other benefits; or
(iii) any employment, consulting, engagement, or retainer agreement or
arrangement.
(b) Sellers represent that there will be no incidence of severance
payments or any other termination benefits for which Purchaser will be
responsible as a consequence of the transactions contemplated hereby or
otherwise.
3.17 Inventory. Except for Inventory which is obsolete or non-saleable
and for which adequate reserves have been provided for in the Current Balance
Sheet and will be provided for in the Closing Date Balance Sheet, as the case
may be, all of the Inventory, whether held for rental, resale or for use as
spare parts, is, as of the date hereof, and will be, as of the Closing
substantially of a quality, quantity and condition, usable, leasable or salable
in the ordinary course of the Business within the time periods consistent with
the past experience of Sellers. Inventories are, and at the Closing will be
valued at the lower of cost or market.
3.18 Receivables. All of the Receivables represent amounts receivable for
services and merchandise actually provided or delivered in bona fide
transactions (or, in the case of non-trade accounts or notes, represent amounts
receivable in respect of other bona-fide business transactions), have arisen in
the ordinary course of business, are to Sellers' knowledge, not subject to any
counterclaims or offsets, and have been billed or are billable. The reserve for
bad debt on the Current Balance Sheet has been determined in accordance with
GAAP. Schedule 3.18 sets forth (a) the total amounts of subscriber Receivables
of the Seller as of the date of the Current Balance Sheet and (b) the aging of
such subscriber Receivables based on the following Schedule: 0-30 days, 31-60
days, 61-90 days and over 90 days, from the due date thereof.
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3.19 Labor Relations. (a) To Sellers' knowledge, the relations of each
Seller with its employees are good; (b) no employee of any Seller is
represented by any union or other labor organization; (c) there is no unfair
labor practice complaint against any Seller pending or, to Sellers' knowledge,
threatened before the National Labor Relations Board; (d) there is no labor
strike, dispute, slow down or stoppage actually pending or, to the knowledge of
Sellers, threatened against or involving any Seller; (e) to Sellers' knowledge,
no grievance which might have an adverse affect on any Seller or the conduct of
the Business is pending; (f) no private agreement restricts any Seller from
relocating, closing or terminating any of its operations or facilities; (g) no
Seller has, since the date of its formation, experienced any work stoppage or
other labor difficulty or committed any unfair labor practice; and (h) no
organizational effort is being made or is, to Sellers' knowledge, threatened by
or on behalf of any labor union with respect to the employees of any Seller.
3.20 Employee Compensation. Schedule 3.20 sets forth the following
information: the names, job title, and current base compensation of all present
employees of Sellers.
3.21 Employee Benefit Plans.
(a) Schedule 3.21 contains a complete list of all employee benefit
plans, whether formal or informal, whether or not set forth in writing, and
whether covering one person or more than one person, sponsored, maintained or
contributed to by Sellers. For the purposes hereof, the term "employee benefit
plan" includes all plans, funds and programs providing benefits of economic
value to any employee, former employee, or present or former beneficiary,
dependent or assignee of any such employee or former employee other than
regular salary, wages or commissions paid to the employees substantially
concurrently with the performance of the services for which paid.
(b) Except as set forth on Schedule 3.21, Sellers do not sponsor,
maintain or have any outstanding liabilities with respect to, and are not
required, either by law or contract, to contribute to any employee welfare
benefit plan within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974 as amended ("ERISA"), nor any employee pensions
benefit plans within the meaning of Section 3(2) of ERISA or any multi-employer
plan within the meaning of Section 3(37) of ERISA. Except as may be required by
applicable law, no employee benefit plan listed on Schedule 3.21 provides for
the continuation of employer-paid health or life insurance coverage beyond the
termination of an employee's employment with Sellers.
(c) All contributions required by law or contract to be made to fund
the employee benefit plans for any plan year, or other period on the basis of
which contributions are required ending before the date hereof, have been made
as of the date hereof or have adequately been provided for in the Financial
Statements.
(d) The employee benefit plans, and any trusts or insurance
contracts maintained in connection therewith, have been administered in
compliance with ERISA and
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the Code, in all material respects, and Sellers have complied in all
material respects with all reporting and disclosure requirements with respect
to such plans.
(e) Sellers have furnished to Purchaser a copy of each handbook or
other document summarizing (i) employee benefit plans or (ii) general internal
policies applicable to their respective employees, which Sellers may have
furnished to all or any of their respective employees. A list of any such
handbooks or other documents so furnished is included in Schedule 3.21.
3.22 Absence of Undisclosed Liabilities. Sellers have no liabilities or
obligations with respect to the Purchased Assets or the Business, either direct
or indirect, matured or unmatured, or absolute, contingent or other, except:
(a) those liabilities or obligations set forth on the Current
Balance Sheet and not heretofore paid or discharged;
(b) liabilities arising in the ordinary course of the Business
consistent with past practice under the Contracts which (i) are disclosed on
Schedule 3.8(b). 3.9 or 3.10 or (ii) were entered into in the ordinary course
of business containing customary terms and provisions and which were not
required to be disclosed in Schedules 3.9 or 3.10 or (iii) are disclosed on any
other Schedule to this Agreement; and
(c) those liabilities or obligations incurred, consistent with past
practice, in or as a result of the normal and ordinary course of the Business
since the date of the Current Balance Sheet, which in the aggregate are not
material.
For purposes of this Section 3.22, the term "liabilities" shall include
any direct or indirect indebtedness, guaranty, endorsement, claim, loss,
damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, secured or unsecured.
3.23 Intellectual Property. Sellers lawfully possess, and (except for
rights with respect to the "CellularOne" trademarks and trade names and the
software licenses utilized by Sellers for fraud protection) the Purchased
Assets will include, all intellectual property rights that are necessary to the
conduct of the Business, the absence of any such rights which would not
reasonably be expected to have a Material Adverse Effect.
4. Representations and Warranties of Purchaser. Purchaser represents and
warrants to Sellers as follows:
4.1 Organizational Status. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio and
has all requisite corporate power and authority to own, lease and operate its
assets, properties, and its business, and to carry on its business as now being
and as heretofore conducted.
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4.2 Qualification. Purchaser is duly qualified to do business and is in
good standing as a foreign corporation in all jurisdictions where such
qualification is required except for those jurisdictions where the failure to
be so qualified would not reasonably be expected to have a material adverse
effect on Purchaser's ability to perform its obligations hereunder.
4.3 Authorization: No Conflict. Purchaser has the full legal right and
all corporate power and authority required to enter into, execute and deliver
this Agreement and the documents and other agreements required to be executed
and delivered hereunder and to perform fully its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement by
Purchaser have been duly authorized by all necessary corporate action on the
part of Purchaser. This Agreement has been duly executed and delivered and
constitutes, and each of the other agreements and documents to be delivered by
Purchaser hereunder when executed and delivered by Purchaser will constitute,
the valid and binding obligation of Purchaser, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting creditors'
rights generally. The execution, delivery and performance of this Agreement and
the documents and other agreements to be delivered hereunder by Purchaser and
the consummation of the transactions contemplated hereby and thereby by
Purchaser will not (i) violate any provision of Purchaser's articles of
incorporation or bylaws, (ii) violate, conflict with or result in the breach of
any of the terms of, result in a modification of the effect of, otherwise give
any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any contract to
which Purchaser is a party or by or to which it or any of its assets or
properties may be bound or subject, excluding in any case such violations,
conflicts, breaches or defaults that would not reasonably be expected to have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder, (iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body by which Purchaser, or
the assets, properties or business of Purchaser are bound, (iv) violate any
statute, law or regulation applicable to Purchaser, excluding in any case such
violations that would not reasonably be expected to have a material adverse
effect on Purchaser's ability to perform its obligations hereunder, (v) violate
or cause any revocation of or limitation on any permit that is necessary to the
lawful conduct of Purchaser's business, excluding any such violation,
revocation or limitation of which could reasonably be expected to have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder.
4.4 Compliance with Laws. Purchaser is in, and has operated in,
compliance with all applicable federal (including the Communications Act),
state and local laws, regulations and ordinances and any applicable
requirements of any governmental or regulatory body, court or arbitrator
affecting its business or its assets, except for noncompliance that has not,
individually or in the aggregate, and would not reasonably be expected to have
a material adverse effect on Purchaser's ability to perform its obligations
hereunder.
4.5 Litigation. Except for legal or administrative proceedings affecting
the cellular telephone industry generally, there is no Action pending or, to
Purchaser's knowledge, threatened against Purchaser with respect to its
business, excluding in any case such Actions
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that would not reasonably be expected to have a material adverse effect on
Purchaser's ability to perform its obligations hereunder.
4.6 Consents. Except for (i) the consent of the FCC to the assignment of
the FCC Licenses from Sellers and the General Partner to Purchaser, (ii) the
consent of the PSC to the assignment of the PSC Licenses from HCTC-Chautauqua
to Purchaser, (iii) the expiration of the waiting period under the HSR Act, and
(iv) the consent of, approval, or authorization of, or registration or filing
with such other governmental or regulatory body or third parties as are
separately identified on Schedule 4.6, no approval, consent or authorization
of, or registration or filing with any person is required by Purchaser in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
4.7 FCC and PSC Matters. Purchaser is fully qualified under the
Communications Act and any comparable state law to be an FCC and PSC licensee,
respectively, and to be approved as the assignee of the FCC Licenses and the
PSC Licenses, respectively. Purchaser knows of no reason why the FCC and the
PSC will not grant its consent to the assignment of the FCC Licenses and the
PSC Licenses, respectively, from Sellers to Purchaser. Neither Purchaser, nor
any "real party in interest" (as defined by Section 22.13 of the FCC's rules)
(i) has had the FCC or the PSC deny an application for an authorization, (ii)
has had the FCC or the PSC revoke an authorization granted to it, or (iii) has
been the subject of an investigation by the FCC or the PSC.
4.8 Financial Ability to Close. Purchaser specifically agrees with
Sellers that the obligation of Purchaser to consummate the transactions
contemplated hereby is not subject to any financing contingency.
5. Covenants of Sellers and Purchaser. Sellers and Purchaser covenant and
agree with each other as follows:
5.1 Continuance of Business. From the date hereof until the Closing Date
(or the earlier termination hereof), Sellers agree that they will, unless
otherwise consented to in writing by Purchaser, which consent will not be
unreasonably withheld, conditioned or delayed:
(a) use commercially reasonable efforts to carry on the Business in
the usual, regular and ordinary course in substantially the same manner as
heretofore carried on; preserve intact all material Permits and the present
business organization of the Business; and use commercially reasonable efforts
to preserve their relationships with customers, suppliers, employees and others
having business dealings with the Business to the end that their goodwill and
ongoing business shall be conducted on substantially the same basis on the
Closing Date as on the date hereof;
(b) keep in full force and effect insurance comparable to that
carried by Sellers with respect to the Business and the Purchased Assets on the
date hereof;
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(c) perform in all material respects all of Sellers' obligations
under all contracts and other agreements relating to the Business, including
the discharge of all accounts payable of the Business in accordance with past
practices, except when the amount thereof is being contested in good faith;
(d) not amend, terminate or waive any rights under any material
Contracts or enter into any material Contracts relating to the Business, except
in the ordinary course of business;
(e) with respect to the Business, not acquire a material amount of
assets from any other person;
(f) not sell, lease, license or otherwise dispose of any Purchased
Assets except (i) pursuant to existing contracts or commitments disclosed on
any Schedule to this Agreement or (ii) in the ordinary course of business
consistent with past practice;
(g) continue to conduct marketing, advertising and promotional
expenditures in the ordinary course;
(h) continue to conduct customer care functions in the ordinary
course; and
(i) not (A) take or agree or commit to take any action that would
make any representation and warranty of Sellers hereunder inaccurate in any
material respect at, or as of any time prior to, the Closing Date or (B) omit
or agree or commit to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect any
such time.
5.2 Access to Information: Notice of Breach. From the date hereof until
the Closing Date (or the earlier termination hereof), at reasonable times and
upon reasonable advance written notice to one of the Executive Officers,
Purchaser shall be entitled, through its employees and representatives, to make
such investigation of the assets, properties, facilities, personnel, business
and operations of the Business and such examination of the books, records and
financial condition of the Business as Purchaser reasonably requests; provided,
however, that any such inspection shall be done in such a manner so as not to
unreasonably disrupt Sellers' conduct of the Business and shall be subject to
any reasonable restrictions imposed by the Executive Officers. Purchaser agrees
to provide one of the Executive Officers with prompt written notice if
Purchaser determines that, based upon information provided to Purchaser or
through its own investigation, any of the Sellers is in breach of any
representation, warranty or covenant of Sellers set forth in this Agreement;
provided, however, that no investigation pursuant to this Section 5.2 shall
affect any representation or warranty made by Sellers hereunder. If this
Agreement is terminated, Purchaser agrees to return or cause to be returned all
such information provided to Purchaser or its representatives within five (5)
days after the date of such termination.
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5.3 Governmental Permits and Approvals; Consents.
(a) Sellers and Purchaser shall use commercially reasonable efforts
to obtain promptly all permits and approvals (including Material Consents) from
any governmental or regulatory body or third-party necessary for lawful
consummation of the Closing. In furtherance of the foregoing, Purchaser agrees
to provide all information (including financial information) that is reasonably
requested by any person from whom any approval or consent (including any
Material Consent) is necessary for lawful consummation of the Closing.
(b) With respect to any Class A Material Consent that Sellers are
unable to obtain and deliver to Purchaser, if Purchaser waives the condition of
delivery of any such Class A Material Consent as provided in Section 8.1(g),
Sellers and Purchaser shall use commercially reasonable efforts to (i) provide
to Purchaser after the Closing the benefits of the related Restricted Interest,
and (ii) cooperate in reasonable and lawful arrangements designed to provide
such benefits to Purchaser. Nothing contained in this Section 5.3 will be
deemed to require Purchaser to waive any condition to Closing, and the decision
to waive any such condition will be in the sole discretion of Purchaser.
(c) With respect to any Class B Material Consent that Sellers are
unable to obtain and deliver to Purchaser, Sellers and Purchaser shall use
commercially reasonable efforts to, at Sellers' option, (i) provide Purchaser
after Closing the benefits of the related Restricted Interest, or (ii)
cooperate in reasonable and lawful arrangements designed to provide such
benefits to Purchaser, including Sellers' agreement to relocate any affected
cell site (provided that Purchaser shall have the right to terminate this
Agreement if there are more than ten (10) cell sites to be so relocated.
5.4 Employees; Employee Compensation. In connection with the Closing,
Purchaser shall extend offers of employment to substantially all employees of
Sellers, which offers shall be on terms and conditions comparable to those
offered by Purchaser to its current employees performing similar jobs. At least
thirty (30) days prior to the Closing Date, Purchaser shall provide written
notice to Sellers identifying any employees of Sellers to whom Purchaser does
not intend to extend offers of employment. Nothing contained in this Agreement
shall confer upon any such employee any right with respect to continued
employment by Sellers or Purchaser. No provision of this Agreement shall create
any third party rights in any such employee, or any beneficiary or dependent
thereof, with respect to the compensation, terms and conditions of employment
and benefits that may be provided to such employee by Purchaser or under any
benefit plan that Purchaser may maintain. Purchaser agrees to indemnify Sellers
(in accordance with the provisions contained in Section 11) for any Losses of
Sellers as a result of any discharges of employees by Purchaser on or after the
Closing Date.
5.5 HSR Act. Promptly (but in any event within ten (10) business days)
after the date hereof, the parties shall file all information and documents
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act").
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5.6 Regulatory Approvals.
(a) The parties agree that in order to consummate the transactions
contemplated hereby, the FCC and the PSC shall have given their consent to the
assignment of the FCC Licenses and PSC Licenses from Sellers and the General
Partner, as applicable, to Purchaser and to the transactions contemplated
hereby (collectively, the "Regulatory Approvals") and, unless waived by the
parties pursuant to Sections 6.1 and 7.1, respectively, or as contemplated by
Section 5.6(d), such Regulatory Approvals shall have become Final Orders.
(b) In the event that the FCC shall have granted its consent to the
assignment of the FCC Licenses from Sellers and the General Partner, as
applicable, to Purchaser but the PSC shall not yet have granted its consent to
the assignment of the PSC Licenses for the New York RSA from HCTC-Chautauqua to
Purchaser, the parties agree to consider and negotiate in good faith an
agreement that would facilitate a Closing with respect to the Pennsylvania RSAs
prior to a Closing with respect to the New York RSA.
(c) The parties shall diligently pursue the filings made previously
by the parties with the FCC and the PSC, including submitting all information
and documents required in connection with obtaining the approvals of the FCC
and the PSC to the transactions contemplated by this Agreement.
(d) (i) Sellers shall undertake to obtain (or modify, if
appropriate) licenses, permits or authorizations for the microwave facilities
listed on Schedule 3.5; (ii) if licenses, permits or authorizations are
obtained (or modified, as appropriate) for the microwave facilities listed on
Schedule 3.5, Purchaser and Sellers shall cooperate in the preparation and
submission of any filings necessary to obtain FCC consent to assign such
licenses, permits or authorizations to Purchaser (including, if requested by
the FCC, any amendments to such filings to have such licenses, permits or
authorizations issued directly in the name of Purchaser); and (iii) in the
event that the FCC has not granted its consent to the assignment of such
licenses, permits or authorizations to Purchaser before Closing, Purchaser,
with the cooperation of Sellers, shall undertake any efforts necessary to
obtain FCC consent to operate such microwave facilities after Closing
(including, if requested by the FCC, any amendments to such filings to have
such licenses, permits or authorizations issued directly in the name of
Purchaser).
5.7 Restrictions on Certain Actions. From the date hereof until the
earlier to occur of the Closing Date or the termination of this Agreement,
Purchaser will not, and Purchaser will use its best efforts to ensure that all
persons whose actions or ownership interests would be attributable to Purchaser
under the Communications Act or any comparable state law will not, in any
manner, directly or indirectly, solicit, initiate, encourage or participate in
applications, bids, purchases or negotiations with respect to the acquisition
of any interest in an FCC or PSC license that, if consummated, would have the
effect under the Communications Act or any comparable state law of preventing
or delaying Purchaser from consummating the acquisition of the Purchased Assets
as contemplated by this Agreement.
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5.8 Casualty or Condemnation. If, after the date hereof but prior to the
Closing Date, a material portion of the Purchased Assets is damaged, destroyed
or lost by fire or other casualty, or if condemnation or eminent domain
proceeding are proposed, threatened or commenced against a material portion of
the Purchased Assets, Sellers will promptly notify Purchaser of such event.
Sellers shall have the option to repair, rebuild or replace the portion of the
Purchased Assets damaged, destroyed or lost prior to the Closing Date. If such
repair or replacement is not completed prior to the Closing Date, the parties
will use commercially reasonable efforts to negotiate a mutually satisfactory
Acquisition Price adjustment or, in the absence of such agreement, the parties
agree to extend the time for Closing as reasonably necessary to permit Sellers
to complete such repairs or replacement; provided, however, that nothing in
this Section 5.8 shall be deemed to require Purchaser to waive any condition to
Closing, and the decision to waive any such condition will be in the sole
discretion or Purchaser.
5.9 Supplemental Disclosure. Sellers shall have the right from time to
time prior to the Closing Date to supplement in writing (pursuant to Section
13.7) the Schedules hereto with respect to any matter hereafter arising that,
if existing or known as of the date of this Agreement, would have been required
to be set forth or described in the Schedules hereto; provided, however, that
no such supplemental disclosure shall be deemed to cure any breach of any
representation or warranty of Sellers made in this Agreement unless Purchaser
fails to object in writing to Sellers to any such supplemental disclosure
within ten (10) business days after Purchaser's receipt thereof.
5.10 Disclaimer of Other Representations and Warranties. Purchaser
acknowledges and agrees that Sellers do not make, and have not made, any
representations or warranties relating to Sellers, the Business or the
Purchased Assets other than the representations and warranties of Sellers
expressly set forth in this Agreement. Without limiting the generality of the
disclaimer set forth in the preceding sentence, Sellers do not make, and
Sellers, their officers, employees and agents have not made, and shall not be
deemed to have made any representations or warranties in the Confidential
Offering Memorandum dated September 1995, and any supplements or addenda
thereto (collectively, the "Offering Memorandum"), any presentation relating to
Sellers, the Business or the Purchased Assets given in connection with the
transactions contemplated by this Agreement, in any filing made by or on behalf
of Sellers with any governmental agency or in any other information provided to
or made available to Purchaser, and no statement contained in the Offering
Memorandum, made in any such presentation, made in any such filing or contained
in any such other information shall be deemed to be a representation or
warranty of Sellers hereunder or otherwise. No person has been authorized by
Sellers to make any representation or warranty in respect of Sellers, the
Business or the Purchased Assets in connection with the transactions
contemplated by this Agreement that is inconsistent with or in addition to the
representations and warranties of Sellers expressly set forth in this
Agreement.
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5.11 Notice of Certain Events. From the date hereof until the Closing
Date (or earlier termination of this Agreement), Sellers and Purchaser shall
promptly notify the other of:
(a) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
transaction contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any matter hereafter arising, that if existing or known as of
the date of this Agreement, would have been required to be set forth or
described in the Schedules hereto.
5.12 Public Announcements. Neither party shall make any public
announcement concerning this Agreement or the transactions contemplated hereby
without the prior consent of the other party, except as otherwise required by
law (including securities laws). The parties acknowledge that prior to the date
hereof Sellers issued a statement for public dissemination with the consent of
Purchaser.
5.13 Pre-Closing Deliveries.
(a) Beginning with the financial statements as of and for the period
ended June 30, 1996, and for each month-end thereafter through the month
immediately preceding the month in which the Closing Date occurs, Sellers shall
deliver to Purchaser, within 30 days after such month end, the monthly balance
sheet and income statement for the Business. Such financial statements shall
fairly present the financial condition of the Business as of such dates and
there results of its operations for the periods covered thereby, and shall be
prepared in accordance with GAAP (subject to normal recurring year-end
adjustments and except for the omission of certain footnotes and other
presentation items required by GAAP with respect to audited financial
statements).
(b) Beginning with June 30, 1996, and for each month thereafter
through the month immediately preceding the month in which the Closing Date
occurs, Sellers shall deliver to Purchaser, within 30 days after the end of
each such month, the monthly ITDS billing reports set forth on Schedule
5.13(b), including the RPT-1 reports, with the respect to the Business.
(c) Not less than 30 days prior to the Closing Date, Sellers will
deliver to Purchaser an updated and modified Personal Property List as of a
date within seven (7) business days of delivery thereof.
5.14 No Solicitation. After the date of this Agreement and prior to the
Closing Date or earlier termination of the Agreement, unless the Purchaser
shall otherwise agree in writing, Sellers shall not, and shall not permit any
affiliate or employee of Sellers, or any attorney,
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accountant, investment banker or other agent retained by Sellers to initiate,
solicit, negotiate, encourage, or provide confidential information to
facilitate any proposal or offer to acquire all or any substantial part of the
Business whether by purchase of assets or otherwise, whether for cash,
securities or any other consideration or combination thereof.
5.15 Escrow Balance: Replacement Letter of Credit. As promptly as
practicable after the date hereof (but no later than July 18, 1996), Purchaser
shall deliver to the Escrow Agent the Escrow Balance. Prior to the Closing
Date, Purchaser agrees that at least thirty (30) days prior to the stated
expiration date of the Letter of Credit (or any replacement thereof approved by
Sellers), it shall deliver to the Escrow Agent a replacement Letter of Credit
that contains the same terms as the Letter of Credit and remains in effect for
at least one (1) year from the stated expiration date of the Letter of Credit
(or any such replacement). The parties agree that time is of the essence with
respect to the delivery of the Escrow Balance and any replacement Letter of
Credit.
5.16 Securities Filings. Purchaser intends to prepare and file with the
Securities and Exchange Commission ("SEC") certain securities filings in
accordance with its public disclosure obligations required by law (the
"Securities Filings"). Purchaser shall furnish to Sellers and their counsel for
their review and approval (which approval shall not be unreasonably withheld),
in advance of any filing thereof, any Securities Filings containing any
information (financial or otherwise) concerning Sellers, their respective
financial condition or results of operations, the Purchased Assets or the
Systems (collectively, "Seller Information"), and Purchaser agrees to
indemnify, defend and hold harmless Sellers and their affiliates from and
against any and all Losses sustained by Sellers or such affiliates as a result
of the inclusion of any Seller Information in any Securities Filings if (a)
Sellers and their counsel were not furnished with such Seller Information for
their review and approval or (b) Sellers objected in writing to the inclusion
of such Seller Information on the grounds that such Seller Information
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements contained therein not misleading. No such
indemnification shall be required by Purchaser, however, if (x) Sellers and
their counsel were furnished with such Seller Information for their review and
approval, (y) Sellers did not object to the inclusion of such Seller
Information in the Securities Filings and (z) such Seller Information
constitutes a material breach of a representation or warranty of Sellers made
herein.
5.17 Audited Financial Statements. Within twenty-five (25) business days
after the date hereof, and subject to Purchaser's compliance with the
provisions contained in Section 5.16, Sellers will obtain and deliver to
Purchaser the unqualified report of Ernst & Young LLP ("Sellers' Accountant")
on the audited balance sheets of Sellers as of December 31, 1995 and the
related statements of income and cash flows for the year then ended
(collectively, "Audited Financial Statements"), prepared in accordance with the
Rules and Regulation S-X of the SEC. Additionally, as promptly as practicable
after such twenty-five (25) business day period, Sellers shall use their
reasonable best efforts to deliver prior to the Closing Date (i) the
unqualified report of "Sellers' Accountant on the audited balance sheets of
Sellers as of December 31, 1994 and 1993 and the related statements of income
and cash flows for the years then ended (if required to be included in the
Securities Filings), (ii) related comfort letters to underwriters,
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if required, and (iii) the consent of Sellers' Accountant, consenting to the
inclusion of the Audited Financial Statements in both an 8-K Statement and an
appropriate form of Registration Statement under the Securities Act of 1933, as
amended, as applicable, of Purchaser. The fees and disbursements of Sellers'
Accountant for the foregoing and all related services shall be borne and paid
solely by Purchaser and, if requested by Sellers, directly to Sellers'
Accountant.
5.18 Cooperation Regarding Financing. Sellers agree to use commercially
reasonable efforts to deliver to Purchaser any documents reasonably requested
by Purchaser or its lenders in connection with the financing to be provided to
Purchaser to consummate the transactions contemplated hereby; provided,
however, that this covenant shall not in any way detract from the
representation of Purchaser contained in Section 4.8.
6. Conditions Precedent to Purchaser's Obligations. The obligation of
Purchaser to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
of which may be waived in writing by Purchaser (provided that if any condition
shall not have been satisfied due primarily to the action or inaction of
Purchaser or any of its affiliates that constitutes a breach of this Agreement,
such condition shall be deemed to have been satisfied or waived by Purchaser):
6.1 Regulatory Approvals. Subject to the provisions of Section 5.6(b) and
5.6(d), all Regulatory Approvals shall have been received in accordance with
the provisions of Section 5.6 and shall have become Final Orders.
6.2 Premerger Notification Compliance. All requirements under the HSR Act
and the rules promulgated thereunder applicable to the transactions
contemplated hereby shall have been met, including the expiration of all
necessary filing and waiting requirements, and neither the United States
Department of Justice nor the Federal Trade Commission shall have raised an
objection to the transactions contemplated hereby.
6.3 Representations and Warranties on Closing Date. All representations
and warranties of Sellers made in this Agreement shall be true and correct on
and as of the Closing Date with the same force and effect as though such
representations and warranties were made on and as of the Closing Date, except
for (i) inaccuracies that have not resulted, and would not reasonably be
expected to result, in a Material Adverse Effect, (ii) changes contemplated by
this Agreement, (iii) representations and warranties that are made as of a
specific date (provided that such representations and warranties shall have
been true and correct as of such date), and (iv) inaccuracies that have been
waived in writing by Purchaser.
6.4 Terms, Covenants and Conditions. All the terms, covenants and
conditions of this Agreement to be complied with and performed by Sellers on or
prior to the Closing Date shall have been complied with and performed in all
material respects unless waived in writing by Purchaser.
6.5 No Material Adverse Change. There shall have been no Material Adverse
Change since the date of this Agreement and no circumstances shall have arisen
that would
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reasonably be expected to result in a Material Adverse Change. For
purposes of this Section 6.5, Sellers' failure to achieve at least 85% of
aggregate budgeted EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization) from January 1, 1996 through the last day of the month prior to
the Closing Date (such budgeted amounts being set forth on Schedule 6.5) shall
constitute a Material Adverse Change.
6.6 No Negative Economic Impact. The Audited Financial Statements as of
December 31, 1995 and for the year then ended to be delivered in accordance
with Section 5.17 shall not differ materially and adversely from the Unaudited
Financial Statements as of December 31, 1995 and for the year then ended
delivered in accordance with Section 3.4. As used in this Section 6.6, the term
"differ materially and adversely" shall mean a negative adjustment shall have
been made that will affect (or is of a recurring type such that it will affect)
the Business after the Closing Date and that would constitute a Material
Adverse Effect; provided, however that changes resulting from adjustments
between or among Sellers and/or any of their affiliates that are made to
convert the Unaudited Financial Statements to standalone or consolidated, as
the case may be, financial statements for each of the Sellers shall be
disregarded.
6.7 Absence of Litigation. There shall have been no law, order,
injunction or decree issued or promulgated, and no action shall have been
instituted before any court or governmental or regulatory body by any person
(other than Purchaser or any of its affiliates), or instituted or threatened by
any governmental or regulatory body, that in any case would reasonably be
expected to prevent the carrying out of the transactions contemplated hereby.
6.8 Closing Deliveries. Sellers shall have delivered or caused to be
delivered to Purchaser at Closing those items specified in Section 8.1.
7. Conditions Precedent to Sellers' Obligations. The obligation of Sellers
to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
of which may be waived in writing by Sellers (provided that if any condition
shall not have been satisfied due primarily to the action or inaction of
Sellers or any of their affiliates that constitutes a breach of this Agreement,
such condition shall be deemed to have been satisfied or waived by Sellers):
7.1 Regulatory Approvals. All Regulatory Approvals shall have been
received in accordance with the provisions of Section 5.6 and shall have become
Final Orders.
7.2 Premerger Notification Compliance. All requirements under the HSR Act
and the rules promulgated thereunder applicable to the transactions
contemplated hereby shall have been met, including the expiration of all
necessary filing and waiting requirements, and neither the United States
Department of Justice nor the Federal Trade Commission shall have raised an
objection to the transactions contemplated hereby.
7.3 Representations and Warranties on Closing Date. All representations
and warranties of Purchaser made in this Agreement shall be true and correct on
and as of the
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Closing Date with the same force and effect as though such representations and
warranties were made on and as of the Closing Date, except for (i) changes
contemplated by this Agreement, (ii) representations and warranties that are
made as of a specific date (provided that such representation and warranties
shall have been true and correct as of such date), and (iii) inaccuracies that
have been waived in writing by Sellers.
7.4 Terms Covenants and Conditions. All the terms, covenants and
conditions of this Agreement to be complied with and performed by Purchaser on
or prior to the Closing Date shall have been complied with and performed in all
material respects unless waived in writing by Sellers.
7.5 Absence of Litigation. There shall have been no law, order,
injunction or decree issued or promulgated, and no action shall have been
instituted before any court or governmental or regulatory body by any person
(other than Sellers or any of their affiliates) or instituted or threatened by
any governmental or regulatory body that in any case would reasonably be
expected to prevent the carrying out of the transactions contemplated hereby.
7.6 Closing Deliveries. Purchaser shall have delivered or caused to be
delivered to Sellers at Closing those items specified in Section 8.2.
8. Deliveries at the Closing. The following deliveries shall be made at the
Closing, each of which shall be conditional on completion of all the others and
all of which shall be deemed to have taken place simultaneously:
8.1 Sellers' Deliveries. At the Closing, Sellers shall deliver or cause
to be delivered to Purchaser all of the following:
(a) all conveyances, deeds, assignments, bills of sale, and other
appropriate conveyancing instruments transferring to Purchaser the Purchased
Assets in accordance with the last sentence of Section 3.12(a) (all in form and
substance reasonably satisfactory to Purchaser);
(b) the opinions of Kleinbard, Bell & Brecker, corporate counsel to
Sellers, and Latham & Watkins, FCC counsel to Sellers, substantially in the
forms of Exhibits 8.1 (b)(i) and 8.1(b)(ii), respectively;
(c) the Initial Adjustments Amount Schedule in accordance with the
provisions of Schedule 2.4(b);
(d) a certificate executed by an executive officer of Horizon G.P.,
Inc., a Delaware corporation ("Horizon Corporate") that is the general partner
of KCCGP, L.P., a Delaware limited partnership ("KCCGP") that is the general
partner of each of the Sellers, confirming the matters contained in Sections
6.3 and 6.4;
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(e) a certificate of the secretary of Horizon Corporate attesting to
(i) the resolutions adopted by the board of directors of Horizon Corporate duly
authorizing the execution, delivery and performance of this Agreement by
Sellers and the execution and delivery by Sellers of all instruments and
documents contemplated hereby, and (ii) the signatures of the officers of
Horizon Corporate who have been authorized to execute and deliver this
Agreement and any other agreement executed or to be executed in connection
herewith;
(f) good standing certificates of Sellers, KCCGP and Horizon
Corporate from the Secretary of State of Delaware;
(g) the Class A Material Consents and, if and to the extent
received, any Class B Material Consents (in form and substance reasonably
satisfactory to Purchaser);
(h) the Escrow Agent Instructions;
(i) confidentiality and restrictive covenant agreements from (A)
each of the Executive Officers in the form of Exhibit 8.1(i)(A) and (B) the
Sellers and certain of their affiliates in the form of Exhibit 8.1(i)(B); and
(j) the Payoff Letter, if necessary to release any liens or other
encumbrances referred to therein.
8.2 Purchaser's Deliveries. At the Closing, Purchaser shall deliver or
cause to be delivered to Sellers (or to any other person as directed by Sellers
in writing) all of the following:
(a) the Instrument of Assumption,
(b) the Closing Cash Payment plus or minus, as the case may be, the
Initial Adjustments Amount;
(c) the Escrow Agent Instructions and the Indemnification Escrow to
the Escrow Agent;
(d) the opinion of Bryan Cave LLP, counsel to Purchaser,
substantially in the form of Exhibit 8.2(d);
(e) a certificate executed by an executive officer of Purchaser
confirming the matters contained in Sections 7.3 and 7.4; and
(f) a certificate of the secretary of Purchaser attesting to (i) the
resolutions adopted by the board of directors of Purchaser duly authorizing the
execution, delivery and performance of this Agreement by Purchaser and the
execution and delivery by Purchaser of
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all instruments and documents contemplated hereby, and (ii) the signatures of
the officers of Purchaser who have been authorized to execute and deliver this
Agreement and any other agreement executed or to be executed in connection
herewith; and
(g) a good standing certificate of Purchaser from the Secretary of
State of Ohio.
9. Confidentiality. From the date hereof until the Closing Date, Purchaser
shall keep secret and retain in strictest confidence, and shall not, without
the express prior written consent of one of the Executive Officers, directly or
indirectly, disclose, disseminate, publish, reproduce, retain, use (for its
benefit or for the benefit of others) or otherwise make available in any manner
whatsoever, any Confidential Information (as hereinafter defined) regarding
Sellers (or this Agreement or the transactions contemplated hereby) to anyone
except (i) to Purchaser's representatives (who shall be informed of the
confidential nature of such information and who shall agree to keep such
information confidential), (ii) as otherwise required by law, (iii) as required
to obtain the Regulatory Approvals, or (iv) to the extent such information was
previously known to Purchaser on a non-confidential basis or later lawfully
acquired by Purchaser from sources other than Sellers. As used in this
Agreement, the term "Confidential Information" shall mean all confidential and
proprietary knowledge and information not readily available to the public
heretofore or hereafter conceived, learned or disclosed (including all
documents, writings, memoranda, business plans, computer software, reports,
pricing, cost and sales information, financial statements, customer and
supplier lists, trade secrets, discoveries, ideas, concepts, models,
prototypes, diagrams and marketing strategies, plans and techniques). If
Purchaser breaches, or threatens to commit a breach of, any of the provisions
of this Section 9, Sellers shall have the right (in addition to any other
rights and remedies available to Sellers at law or in equity) to equitable
relief (including injunctions) against such breach or threatened breach, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable harm to Sellers and that money damages would not be an
adequate remedy to Sellers. Purchaser agrees that it will not seek, and hereby
waives any requirement for, the securing or posting of a bond or proving actual
damages in connection with Sellers' seeking or obtaining such relief.
10. Survival of Representations and Warranties. Unless this Agreement is
terminated as provided herein, the representations and warranties of Sellers
and Purchaser contained herein shall survive the consummation of the
transactions contemplated hereby and the Closing Date and shall expire one (1)
year after the Closing Date.
11. Indemnification.
11.1 Obligation to Indemnify by Sellers. Subject to the terms of Section
10, from and after the Closing Date, Sellers agree to indemnify, defend and
hold harmless Purchaser (and its affiliates, and their directors, officers,
stockholders, employees, representatives and agents), from and against all
losses, Taxes, liabilities, damages, lawsuits, deficiencies, claims, demands,
costs or expenses, including interest, penalties and reasonable attorneys' fees
and disbursements (collectively, "Losses"), based upon (i) any breach of any
representation or
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warranty of Sellers contained in this Agreement, (ii) any breach of any
covenant or agreement of Sellers contained in this Agreement (including
Sellers' agreement to be responsible for the Excluded Liabilities),
(iii) the failure of the parties to comply with the procedures of any
applicable "Bulk Sales Act"; or (iv) the matters set forth on Schedule 11.1.
11.2 Obligation to Indemnify by Purchaser. Subject to the terms of
Section 10, from and after the Closing Date, Purchaser agrees to indemnify,
defend and hold harmless Sellers (and their respective partners, affiliates,
and their directors, officers, stockholders, employees, representative and
agents) from and against all Losses based upon (i) any breach of any
representation or warranty of Purchaser contained in this Agreement, or (ii)
any breach of any covenant or agreement of Purchaser contained in this
Agreement (including Purchaser's agreement to be responsible for the Assumed
Liabilities).
11.3 Procedures for Claims Between the Parties. If a claim (a "Claim") is
to be made by the party claiming indemnification (the "Claimant") against the
other party (the "Indemnifying Party"), the Claimant shall give written notice
(a "Claim Notice") to the Indemnifying Party as soon as practicable after the
Claimant becomes aware of the facts, condition or event that gave rise to
Losses for which indemnification is sought under this Section 11, provided that
in no event shall such notice be effective if given after the date that is one
(1) year after the Closing Date. Following receipt of the Claim Notice from the
Claimant, the Indemnifying Party shall have thirty (30) days to make such
investigation of the Claim as the Indemnifying Party deems necessary or
desirable. For the purposes of such investigation, the Claimant agrees to make
available to the Indemnifying Party and/or its authorized representative(s) the
information relied upon by the Claimant to substantiate the Claim. If the
Claimant and the Indemnifying Party agree at or prior to the expiration of said
thirty (30) day period to the validity and amount of such Claim, the
Indemnifying Party shall pay to the Claimant the amount of such Claim. If the
Claimant and the Indemnifying Party do not agree within said period, the
Claimant may seek appropriate legal remedy in accordance with the provisions of
Section 13.1.
11.4 Defense of Third-Party Actions. If any lawsuit or enforcement action
(a "Third Party Action") is filed against a Claimant entitled to the benefit of
indemnity hereunder, written notice thereof (the "Third-Party Action Notice")
shall be given by the Claimant to the Indemnifying Party as promptly as
practicable (and in any event within five (5) business days after the service
of the citation or summons or other manner of process), provided that in no
event shall such notice be effective if given after the date that is one (1)
year after the Closing Date. After such notice, if the Indemnifying Party shall
acknowledge in writing to the Claimant that the Indemnifying Party shall be
obligated under the terms of its indemnity hereunder in connection with such
Third-Party Action, then the Indemnifying Party shall be entitled, if it so
elects, (i) to take control of the defense and investigation of such
Third-Party Action (provided the Indemnifying Party shall keep the Claimant
timely informed of the progress of any such defense), (ii) to employ and engage
attorneys of its choice to handle and defend the same, at the Indemnifying
Party's cost, risk and expense, and (iii) to compromise or settle such
Third-Party Action, which compromise or settlement shall be made only with the
written consent of the Claimant (such consent not to be unreasonably withheld,
conditioned or delayed)
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unless such compromise or settlement involves only the payment of money damages
and does not impose an injunction or other equitable relief upon the Claimant.
If the Indemnifying Party fails to assume the defense of such Third-Party
Action within fifteen (15) days after receipt of the Third-Party Action Notice,
the Claimant will (upon delivering notice to such effect to the Indemnifying
Party) have the right to undertake the defense, compromise or settlement of
such Third-Party Action at the Indemnifying Party's expense; provided, however,
that such Third-Party Action shall not be compromised or settled without the
prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, conditioned or delayed. In the event the Claimant
assumes the defense of the Third-Party Action, the Claimant will keep the
Indemnifying Party timely informed of the progress of any such defense,
compromise or settlement.
11.5 Limitations. The Indemnifying Party's obligations to indemnify the
Claimant pursuant to this Section 11 shall be subject to the following
limitations:
(a) Except with respect to (i) the matters set forth on Schedule
11.1, (ii) the obligation of Sellers to be responsible for the Excluded
Liabilities and (iii) the obligation of Purchaser to be responsible for the
Assumed Liabilities, no indemnification shall be required to be made by the
Indemnifying Party until the aggregate amount of the Claimant's Losses exceeds
Five Hundred Thousand Dollars ($500,000) (the "Deductible") and then
indemnification shall only be required to be made by the Indemnifying Party to
the extent of such Losses that exceed the Deductible.
(b) Except with respect to (i) the matters set forth on Schedule
11.1, (ii) the obligation of Sellers to be responsible for the Excluded
Liabilities and (iii) the obligation of Purchaser to be responsible for the
Assumed Liabilities, no indemnification shall be required to be made by the
Indemnifying Party for the amount of the Claimant's Losses that is in excess of
Ten Million Dollars ($10,000,000).
(c) The indemnification obligation of an Indemnifying Party shall be
reduced so as to give effect to any net reduction in federal, state, local or
foreign income or franchise tax liability realized at any time by the Claimant
in connection with the satisfaction by the Indemnifying Party of a Claim with
respect to which indemnification is sought hereunder. The indemnification
obligation of an Indemnifying Party shall also be reduced to the extent of any
available insurance proceeds; provided, however that such reduction shall not
be effective until the Claimant has realized the benefit of any such tax
reduction or has received any such insurance proceeds. The Indemnifying Party
shall pay its indemnification obligations as and when required by this Article
11, and the Claimant shall refund to the Indemnifying Party any such amounts
determined to be in excess of the Indemnifying Party's obligations due to
reductions pursuant to this Section 11.5(c). Additionally, the Claimant shall
refund promptly to the Indemnifying Party any amount of the Claimant's Losses
that are subsequently recovered by the Claimant pursuant to a settlement or
otherwise.
(d) From and after the Closing Date, the indemnification rights
contained in this Section 11 shall constitute the sole and exclusive remedies
of the parties hereunder and
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shall supersede and displace all other rights that either party may have under
statute or common law, except with respect to any liability, breach or
obligation that results from (i) the fraud or intentional misrepresentation of
the other party, (ii) the intentional breach of any covenant by the other
party, or (iii) any other claim for injunctive or other equitable relief.
12. Breaches and Defaults; Termination; Remedies.
12.1 Breaches and Defaults; Opportunity to Cure. Prior to the exercise by
a party of any termination rights afforded under this Agreement, if either
party (the "Non-Breaching Party") believes the other (the "Breaching Party") to
be in breach hereunder, the Non-Breaching Party shall provide the Breaching
Party with written notice specifying in reasonable detail the nature of such
breach, whereupon the Breaching Party shall have thirty (30) days from the
receipt of such notice to cure such breach to the reasonable satisfaction of
the Non-Breaching Party; provided, however, that if such breach is curable but
is not capable of being cured within such period and if the Breaching Party
shall have commenced action to cure such breach within such period and is
diligently attempting to cure such breach, then the Breaching Party shall be
afforded an additional reasonable amount of time to cure such breach to the
reasonable satisfaction of the Non-Breaching Party; provided, further, however,
Purchaser shall have no opportunity to cure the breach of its obligations (a)
to deliver any required portion of the Acquisition Price to be delivered to
Sellers at Closing or (b) to deliver the Escrow Balance or any replacement to
the Letter of Credit to the Escrow Agent in accordance with Sections 2.1(a) and
5.15. If the breach is not cured within such time period, then the Breaching
Party shall be in default hereunder and the Non-Breaching Party shall be
entitled to terminate this Agreement (as provided in Section 12.2). This right
of termination shall be in addition to, and not in lieu of, any legal or
equitable remedies available to the Non-Breaching Party.
12.2 Termination. This Agreement may be terminated at any time prior to
the Closing as follows:
(a) by mutual written agreement of the parties hereto;
(b) by Purchaser, provided Purchaser is not then in breach of this
Agreement, pursuant to a written notice to Sellers, (i) if any one or more of
the conditions to Purchaser's obligation to close has not been fulfilled in any
material respect as of the Closing Date, (ii) subject to Section 12.1, if
Sellers have breached in any material respect any representation,
warranty, covenant or agreement contained in this Agreement, (iii) in
accordance with the terms of Section 5.3(c), or (iv) if the Closing shall not
have taken place by the date that is twelve (12) months after the date of the
execution of this Agreement (the "Outside Date") (unless any of the foregoing
events shall have resulted primarily from Purchaser breaching any
representation, warranty, covenant or agreement contained in this Agreement);
and
(c) by Sellers, provided that no Seller is then in breach of this
Agreement, pursuant to a written notice to Purchaser, (i) if any one or more of
the conditions to Sellers' obligation to close has not been fulfilled in any
material respect as of the Closing Date, (ii) subject to Section 12.1, if
Purchaser has breached in any material respect any representation,
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warranty, covenant or agreement contained in this Agreement, or (iii) if
the Closing shall not have taken place by the Outside Date (unless any
of the foregoing events shall have resulted primarily from a Seller's breach of
any representation, warranty, covenant or agreement contained in this
Agreement).
12.3 Effect of Termination. In the event of any termination of this
Agreement, all obligations of the parties hereto under this Agreement (except
for the obligations contained in Sections 9, 13.1, 13.2 and 13.5) shall
terminate as of such date of termination and this Agreement shall thereafter
become void and be of no further force and effect, and upon such termination no
party hereto shall be liable to the other party, except for Losses (as defined
in Section 11.1) resulting from breaches of this Agreement prior to such
termination.
13. Miscellaneous.
13.1 Resolution of Disputes.
(a) Any controversy, dispute or claim (collectively, a "Dispute")
between the parties arising out of or relating to this Agreement, or the
breach, termination or validity thereof, shall be finally settled by
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association ("AAA") then obtaining. However, in all events, these
arbitration provisions shall govern over any conflicting rules that may now or
hereafter be contained in the AAA rules. The arbitration shall be held in
Philadelphia, Pennsylvania unless the parties mutually agree to have the
arbitration held elsewhere, and judgment upon the award made therein may be
entered by any court having jurisdiction in Philadelphia, Pennsylvania;
provided, however, that nothing contained in this Section 13.1 shall be
construed to limit or preclude a party from bringing any action in any court of
competent jurisdiction for injunctive or other provisional relief to compel
another party to comply with its obligations under this Agreement during the
pendency of the arbitration proceedings. Any judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction over the
subject matter hereof. The arbitrator shall have the authority to grant any
equitable and legal remedies that would be available in any judicial proceeding
instituted to resolve any claim hereunder.
(b) Any such arbitration will be conducted before three (3)
arbitrators, one of which shall be chosen by Sellers, one of which shall be
chosen by Purchaser, and the third chosen by the other two arbitrators. The
decision of a majority of the arbitrators will be the decision of the
arbitrators. The arbitrators shall permit such discovery as they shall
determine is appropriate in the circumstances, taking into account the needs of
the parties and the desirability of making discovery expeditious and
cost-effective. Any such discovery shall be limited to information directly
related to the controversy or claim in arbitration and shall be concluded
within sixty (60) days after appointment of the third arbitrator.
(c) The prevailing party in any arbitration hereunder shall be
entitled to an award of its reasonable costs incurred in connection therewith,
including attorneys' fees.
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(d) For any Dispute submitted to arbitration, the burden of proof
will be as it would be if the claim were litigated in a judicial proceeding.
(e) Upon the conclusion of any arbitration proceedings hereunder,
the arbitrators will render findings of fact and conclusions of law and a
written opinion setting forth the basis and reasons for any decision reached
and will deliver such documents to each party to this Agreement along with a
signed copy of the award.
(f) The arbitrators chosen in accordance with these provisions will
not have the power to alter, amend or otherwise affect the terms of these
arbitration provisions or the provisions of this Agreement.
13.2 Expenses. The parties to this Agreement shall, except as otherwise
specifically provided herein, bear their respective expenses incurred in
connection with the preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, including all fees and
expenses of agents, representatives, consultants, counsel and accountants.
13.3 Further Assurances. Each of the parties shall execute such
agreements and documents and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall use its best efforts (which shall
not include the payment of money) to fulfill or obtain the fulfillment of the
conditions to the Closing, including the execution and delivery of any other
agreement or document, the execution and delivery of which are conditions
precedent to the Closing.
13.4 Access to Records. From and after the Closing Date, Sellers shall
allow Purchaser, and its counsel, accountants and other representatives, such
access to Sellers' records that after the Closing are in the custody or control
of Sellers as Purchaser reasonably requires in order to comply with its
obligations under law or under contracts constituting Assumed Liabilities. From
and after the Closing Date, Purchaser shall allow Sellers, and their counsel,
accountants and other representatives, such access to records that after the
Closing are in the custody or control of Purchaser as Sellers reasonably
require in order to comply with their obligations under law (including with
respect to tax matters and the preparation of the Closing Date Balance Sheet
and the Closing Statement).
13.5 Indemnification of Brokerage. Sellers agree to indemnify and save
Purchaser harmless from any claim or demand for commissions or other
compensation by any broker, finder, agent or similar intermediary claiming to
have been employed by or on behalf of Sellers or any affiliate (including
Morgan Stanley & Co. Incorporated), and to bear the cost of reasonable legal
fees and expenses incurred in defending against any such claim. Purchaser
agrees to indemnify and save Sellers harmless from any claim or demand for
commissions or other compensation by any broker, finder, agent or similar
intermediary claiming to have been employed by or on behalf of Purchaser or any
affiliate (including Columbia Capital
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Corporation) and to bear the cost of reasonable legal fees and expenses
incurred in defending against such claim.
13.6 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any court determines
that any covenant, or any part of any covenant is invalid or unenforceable,
such covenant shall be enforced to the extent permitted by such court, and all
other covenants shall not thereby be affected and shall be given full effect,
without regard to the invalid portions.
13.7 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when
received if delivered personally against receipt; when transmitted if
transmitted by telecopy, electronic or digital transmission method; the next
day if sent for next day delivery by a nationally recognized overnight courier
service; or upon receipt if sent by certified, registered or express mail,
return receipt requested, postage prepaid. In each case notice shall be sent as
follows:
(a) if to Sellers, to:
Horizon Cellular Group
101 Lindenwood Drive / Suite 125
Malvern, PA 19355
Telecopy No.: 610-993-2683
Attention: Mr. Bruce M. Hernandez
with a required copy to:
Kleinbard Bell & Brecker
1900 Market Street / Suite 700
Philadelphia, Pennsylvania 19103
Telecopy No.: 215-568-0140
Attention: Howard J. Davis, Esquire
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<PAGE> 44
(b) if to Purchaser, to:
SYGNET Communications Inc.
6550-B Seville Drive
Canfield, OH 44406
Telecopy No. 216-565-9557
Attention: Mr. Craig T. Sheetz
with a required copy to:
Bryan Cave LLP
700 Thirteenth Street NW
Washington, DC 20005
Attention: Thomas F. Dowd, Esquire
Telecopy No. 202-508-6200
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
13.8 Entire Agreement. This Agreement (including the Schedules and
Exhibits) and the agreements (including the Escrow Agreement), certificates and
other documents delivered hereunder contain the entire agreement between the
parties with respect to the transactions described herein, and, except as
provided in the next sentence, supersede all prior agreements, written or oral,
with respect thereto.
13.9 Amendments and Waivers. This Agreement may be modified or amended,
and the terms hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
party of any such right, power or privilege, nor any single or partial exercise
of any such right, power or privilege, preclude any further exercise thereof or
the exercise of any other such right, power or privilege.
13.10 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
principles of conflicts of law or any rule of interpretation or construction as
to which party drafted this Agreement, except with respect to matters of law
concerning the internal corporate affairs of any corporate entity that is a
party to or the subject of this Agreement (as to those matters of law, the
jurisdiction under which the respective entity derives its powers shall
govern).
13.11 Assignment; Binding Effect. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned (including by operation of law)
by any party without the prior written consent of the other party except that
Purchaser may assign its rights under this Agreement to an affiliate of
Purchaser provided the Purchaser remains liable for the performance of all of
its obligations hereunder notwithstanding such assignment. Subject to
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the foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
13.12 Non-Recourse. Notwithstanding anything to the contrary contained
herein or otherwise, this Agreement and all of the agreements and documents
executed in connection herewith shall be non-recourse to the partners,
affiliates and officers of Sellers and their partners, affiliates, officers,
directors and stockholders, and if Sellers are in default hereof or under such
other agreements or documents, Purchaser's recourse shall be limited solely (i)
prior to Closing, to Sellers' and Sellers' equity in their respective assets,
and (ii) following Closing, to the Indemnification Escrow. Notwithstanding
anything to the contrary contained herein, the Escrow Amount (together with
interest thereon as provided in Section 2.1(b)) shall constitute Sellers' sole
recourse in the event of a termination of this Agreement by Sellers in
accordance with the terms of Section 12.2(c)(ii).
13.13 Beneficiaries of Agreement. The representations, warranties,
covenants and agreements expressed in this Agreement are for the sole benefit
of the other party or parties hereto and are not intended to benefit, and may
not be relied upon or enforced by, any other party as a third-party beneficiary
or otherwise.
13.14 Counterparts: Facsimile Signatures. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by
all of the parties hereto. Facsimile signatures on this Agreement and any of
the agreements and documents executed in connection herewith shall be deemed
original signatures.
13.15 Exhibits and Schedules. The Exhibits and Schedules are a part of
this Agreement as if fully set forth herein. All references herein to Sections,
subsections, clauses, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require.
13.16 Computation of Days; Holidays. Whenever this Agreement provides for
a period of time that is expressed in terms of a numbers of days prior to or
within which actions or events are to occur or not occur, such time period
shall be measured in calendar days unless otherwise expressly provided.
Whenever this Agreement provides for a date, day or period of time on or prior
to which actions or events are to occur or not occur, and if such date, day or
last day of such period of time falls on a Saturday, Sunday, or legal holiday,
then the same shall be deemed to fall on the immediately following business
day.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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13.17 Headings. The headings in this Agreement are for reference only,
and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HORIZON CELLULAR TELEPHONE COMPANY OF
CHAUTAUQUA, L.P.
By: KCCGP, L.P., its general partner
By: HORIZON G.P., INC., its general partner
By: /s/ BRUCE M. HERNANDEZ
----------------------------------
Bruce M. Hernandez, Vice President
HORIZON CELLULAR TELEPHONE COMPANY OF
CRAWFORD, L.P.
By: KCCGP, L.P., its general partner
By: HORIZON G.P., INC., its general partner
By: /s/ BRUCE M. HERNANDEZ
----------------------------------
Bruce M. Hernandez, Vice President
HORIZON CELLULAR TELEPHONE COMPANY OF
INDIANA, L.P.
By: KCCGP, L.P., its general partner
By: HORIZON G.P., INC., its general partner
By: /s/ BRUCE M. HERNANDEZ
----------------------------------
Bruce M. Hernandez, Vice President
SYGNET COMMUNICATIONS INC.
By: /s/ ALBERT H. PHARIS
----------------------------------
Name: Albert H. Pharis, Jr.
Title: President
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<PAGE> 1
EXHIBIT 10.18
AGREEMENT FOR PURCHASE OF PARTNERSHIP INTEREST
BY AND BETWEEN
SYGNET COMMUNICATIONS, INC.,
AND
ERIE CELLULAR SYSTEMS, INC.
(Formerly McCaw Communications of Erie, Inc.)
DATED: September 15, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
SALE OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3
PURCHASE PRICE; CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2. Designation of Closing Date . . . . . . . . . . . . . . . . . . . . . . 7
3.3. Payment of Preliminary Net Purchase Price at Closing . . . . . . . . . . 7
ARTICLE 4
COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1. Covenants of McCaw . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2. Covenants of SYGNET . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3. Covenants and Acknowledgments of McCaw and SYGNET . . . . . . . . . . . 11
ARTICLE 5
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1. McCaw's Representations and Warranties . . . . . . . . . . . . . . . . . 13
5.2. SYGNET's Representations and Warranties . . . . . . . . . . . . . . . . 19
ARTICLE 6
CONDITIONS TO OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1. Conditions to SYGNET's Obligation . . . . . . . . . . . . . . . . . . . 20
6.2. Conditions to McCaw's Obligation . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 7
SURVIVAL: INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1. Survival of Representations and Warranties . . . . . . . . . . . . . . . 23
7.2. McCaw' Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3. SYGNET's Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4. Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5. Indemnification Payments in Cash . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
7.6. Investigations: Waivers . . . . . . . . . . . . . . . . . . . . . . . . 25
7.7. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 8
POST-CLOSING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.1 Pittsburgh Switching Services; Ericsson Equipment . . . . . . . . . . . 26
8.2 Networking and Roaming Services . . . . . . . . . . . . . . . . . . . . 26
8.3 Transition Services Agreement . . . . . . . . . . . . . . . . . . . . . 26
8.4 Removal of General Electric Plane Cell Site . . . . . . . . . . . . . . 27
8.5 Access to McCaw Billing Systems . . . . . . . . . . . . . . . . . . . . 27
8.6 Operation in Ordinal Course After Closing . . . . . . . . . . . . . . . 27
8.7 Billing Information Deliveries . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 9
SYGNET'S ACQUISITION OF REMAINING PARTNERS . . . . . . . . . . . . . . . . . . . 27
ARTICLE 10
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2. Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.4. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.5. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.8. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.9. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.10. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.11. Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.12. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.14. Guarantee of Performance . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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<PAGE> 4
AGREEMENT FOR PURCHASE OF INTEREST
THIS AGREEMENT FOR PURCHASE OF INTEREST is dated this 15th day of
September, 1995 (the "Agreement"), by and between SYGNET COMMUNICATIONS, INC.,
an Ohio corporation with offices at 6550 Seville Drive, Suite B, Canfield, Ohio
44406 ("SYGNET"), and ERIE CELLULAR SYSTEMS, INC. (formerly McCaw
Communications of Erie, Inc.) a Pennsylvania corporation with offices at 5400
Carillon Point, Kirkland, Washington 98033 ("McCaw").
W I T N E S S E T H:
WHEREAS, McCaw owns a 95.46% general partnership interest (the
"Interest") in Erie Cellular Telephone Company ("ECTC"), a Delaware general
partnership;
WHEREAS, ECTC holds the operating license issued by the Federal
Communications Commission to construct and operate the non-wireline cellular
telephone system serving the Erie MSA, Market 130 (the "MSA"), and has
constructed, owns and operates the non-wireline cellular telephone system in
the MSA;
WHEREAS, the respective boards of directors of SYGNET and McCaw
have approved and adopted resolutions declaring advisable the sale of the
Interest from McCaw to SYGNET on the terms and conditions hereinafter set
forth; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions and promises hereinafter set forth, the parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS
"Advanced Billing Amounts" shall mean all amounts that have been
billed to subscribers by ECTC and are included in accounts receivable as of the
Effective Date, but which relate to service to be provided after the Effective
Date.
"Affiliate" shall mean with respect to any party, any individual
or entity directly or indirectly in control of, controlled by or under common
control with such party.
"Authorizations" shall mean all requisite franchises, licenses,
authorizations, consents, permits and approvals of the FCC and all other
material franchises, licenses, authorizations, consents, permits and approvals
of governmental agencies exercising jurisdiction over ECTC or its businesses or
assets required to carry on the business of ECTC as now conducted in and around
the MSA.
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<PAGE> 5
"Balance Sheet" shall mean a balance sheet of ECTC prepared from
the books and records of ECTC in a manner consistent with prior practice and in
conformity with generally accepted accounting principles, and fairly presenting
the financial condition of ECTC as of the date thereof.
"Closing" means the consummation of the purchase and sale of the
Interest contemplated by this Agreement.
"Closing Date" is that date computed in accordance with the
provisions of Section 3.2.
"Contaminant" means any waste, pollutant, hazardous or toxic
substance or waste, petroleum, petroleum-based substance or waste, special
waste, or any constituent of any such substance of waste as defined in or
pursuant to any Environmental Law.
"Contracts" means all leases, rental agreements, insurance
policies, collective bargaining agreements, union contracts, licenses,
agreements, permits, purchase orders, sales orders, employment agreements,
consulting or management agreements, agency agreements, agreements with
suppliers, reseller agreements, agreements with agents, agreements with
customers, commitments, and any and all other contracts, consents or binding
arrangements or understandings (including, without limitation, capital
commitments and arrangements with respect to construction in progress), whether
written or oral, express or implied, to which ECTC is a party and which in any
way relate to the operations or the properties of ECTC or which will be binding
upon ECTC, or its operations or properties, after the Closing Date.
"Disclosures" shall have the meaning set forth in Section
10.11.1.
"Earned but Unbilled Amounts" shall mean all amounts that relate
to service provided to subscribers before the Effective Date, but which have
not been billed and are not reflected in accounts receivable as of the
Effective Date.
"Effective Date" shall have the meaning set forth in Section 3.2.
"Environmental Law" means any law or regulation derived from or
relating to all federal, state and local laws or regulations relating to or
addressing the environment, health or safety.
"FCC" shall mean the Federal Communications Commission.
"FCC Application" shall mean that joint application filed with
the FCC relating to the transfer of control of the System to SYGNET in the
manner contemplated by this Agreement.
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<PAGE> 6
"Final Order" means an action or decision as to which no request
for a stay is pending, no stay is in effect, and any deadline for filing such
request that may be designated by statute or regulation has passed; no petition
for rehearing or reconsideration or application for review is pending and the
time for filing any such petition or application has passed; the FCC (or
comparable body exercising jurisdiction over McCaw) does not have the action or
decision under reconsideration on its own motion and the time for initiating
such reconsideration has passed; no appeal is pending or in effect and any
deadline for filing any such appeal that may be designated by statute or rule
has passed; and no such action has been commenced or threatened.
"Financial Statements" shall have the meaning set forth in
Section 5.1.3.
"HSR Act" shall mean the Antitrust Improvement Acts of 1976, as
amended.
"Indebtedness" shall mean all obligations of a Person which in
accordance with generally accepted accounting principles would be classified on
such Person's balance sheet as liabilities of such Person, and in any case
shall include any indebtedness for borrowed money or for the deferred purchase
price of property or services evidenced by notes, bonds or other instruments,
lease obligations which would normally be capitalized under generally accepted
accounting principles, or obligations under direct or indirect guarantees of
(including obligations (contingent or otherwise) to assure a creditor against
loss in respect of) indebtedness or obligations of others.
"Indemnification Period" shall have the meaning set forth in
Section 7.1.
"Interest" shall have the meaning set forth in the first preamble
to this Agreement.
"Legal Matters" shall have the meaning set forth in Section
5.1.4.
"Lien" shall mean any lien, claim, security interest, charge,
encumbrance, restriction, title retention agreement or any liability or claim
of any nature.
"Losses" shall have the meaning set forth in Section 7.2.1.
"Material Adverse Effect" means a material adverse effect on the
business, assets (taken as a whole), condition (financial or otherwise),
results of operations or prospects of the continued business of ECTC; provided,
however, that such term shall not include any matters explicitly contemplated
by this Agreement, any matters effecting the cellular industry generally, or
any seasonal variations in subscriber numbers.
"Material Consents" shall mean those required consents the
receipt of which are designated as being material on Schedule 5.1.2.
"MSA" shall mean the Erie MSA, Marker 130.
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<PAGE> 7
"Net Current Assets" shall have the meaning set forth in Section
3.1.4.
"Net Purchase Price" shall have the meaning set forth in Section
3.1.2.
"Partnership Agreement" means the Partnership Agreement of ECTC
dated as of June 14, 1988.
"Person" means any general or limited partnership, corporation,
joint venture, trust, business trust, governmental agency, cooperative,
association, individual or other entity, and heirs, executors, administrators,
legal representatives, successors and assigns of such person.
"Pittsburgh Cluster Markets" shall have the meaning set forth in
Section 8.2.2.
"Preliminary Net Purchase Price" shall have the meaning set forth
in Section 3.1.5.1.
"Purchase Price" shall have the meaning set forth in Section
3.1.1.
"Switching Services" shall have the meaning set forth in Section
8.1.
"System" shall mean the cellular telephone system operating on
frequency block A in the MSA.
"Taxes" shall mean all taxes of any kind, including, without
limitation, those on, or measured by or referred to as income, gross receipts,
sales, use, ad valorem, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property or windfall
profits taxes, customs duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority, domestic or foreign.
ARTICLE 2
SALE OF INTEREST
Subject to the terms and conditions hereof, McCaw agrees to sell
to SYGNET, and SYGNET agrees to acquire from McCaw, the Interest.
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<PAGE> 8
ARTICLE 3
PURCHASE PRICE; CLOSING DATE
3.1. Purchase Price.
3.1.1. The Interest shall be transferred to SYGNET in
exchange for the sum of Thirty Nine Million Seven Hundred Fifty Thousand and
00/100 Dollars ($39,750,000.00)(the "Purchase Price"), as adjusted pursuant to
this Section to arrive at the Net Purchase Price.
3.1.2. To arrive at the Net Purchase Price the Purchase Price
shall be increased by:
3.1.2.1. 95.46% of the positive Net Current Assets of
ECTC as of the Effective Date, if any;
3.1.2.2. 95.46% of all capital expenditures made by ECTC
after the date of this Agreement and before the Closing relating to the
construction or operation of the System, provided that such expenditures were
first approved in writing by SYGNET (which approval shall not be unreasonably
withheld);
3.1.2.3 95.46% of the Earned but Unbilled Amounts; and
3.1.2.4 50% of any amount paid by McCaw or ECTC to settle
dealer residual payments resulting from the termination of the Dealer Agreement
with Bommarito Cellular, Inc. as set forth in Schedule 5.1.10 up to a cap of
$6,500.00.
3.1.3. To arrive at the Net Purchase Price the Purchase Price
shall be decreased by:
3.1.3.1. 95.46% of all Indebtedness of ECTC as of the
Effective Date; and
3.1.3.2. 95.46% of the negative Net Current Assets of ECTC
as of the Effective Date, if any;
3.1.3.3. 95.46% of the Advanced Billing Amounts; and
3.1.3.4. Interest on the Preliminary Net Purchase Price
(calculated at the Prime Rate as reported in the Wall Street Journal two
business days prior to the Closing Date) for the Closing Date and for each day,
if any, from the Closing Dare to and including the Effective Date.
3.1.4. For purposes hereof "Net Current Assets" shall mean
the difference between:
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3.1.4.1. All of ECTC's cash, accounts receivable (adjusted
by a reasonable bad-debt allowance), inventory, and prepaid expenses; minus
3.1.4.2. All of ECTC's accounts payable, accrued
obligations, accrued and payable taxes, subscriber deposits and deferred access
revenue.
3.1.5. Procedure Regarding Adjustment of Purchase Price.
3.1.5.1 At the Closing Date the parties will agree upon a
preliminary Net Purchase Price (the "Preliminary Net Purchase Price") using
adjustments based upon the most recent Balance Sheet of ECTC then available and
McCaw's good faith estimates of the adjustments regarding capital expenditures,
Indebtedness, Earned but Unbilled Amounts, Advanced Billing Amounts and
Interest on the Preliminary Net Purchase Price.
Within 60 days after the Closing Date, SYGNET will
cause to be prepared (i) a Balance Sheet dated as of the effective date of the
Closing (the "Closing Date Balance Sheet") and (ii) a statement (the "True Up
Statement") setting forth each of the adjustments to the Purchase Price
required by Sections 3.1.2 and 3.1.3 and SYGNET's calculation of the Net
Purchase Price, and shall submit the Closing Date Balance Sheet and the True Up
Statement to McCaw for its review. For purposes of preparing the Closing Date
Balance Sheet and the True Up Statement, McCaw shall give SYGNET (i) reasonable
access to all books, records and other information, and (ii) such other
assistance, as SYGNET may reasonably deem necessary. McCaw acknowledges that
amounts received after the Effective Date by McCaw or an Affiliate thereof with
respect to accounts receivable of ECTC as of the Effective Date or Earned but
Unbilled Amounts shall be for the account of SYGNET.
3.1.5.2 If McCaw disagrees with any item on the Closing
Date Balance Sheet or the True Up Statement, it may within 60 days after
receipt thereof deliver written notice to SYGNET specifying in reasonable
detail those items with which McCaw disagrees and McCaw's basis for such
disagreement (the "Notice of Disagreement"). If no Notice of Disagreement is
received by SYGNET from McCaw within such 60 day period, SYGNET may notify
McCaw in writing of its intent to treat the Closing Balance Sheet and True Up
Statement as final. If McCaw does not provide SYGNET with a Notice of
Disagreement within ten (10) days of its receipt thereof, such Closing Balance
Sheet and True Up Statement shall be deemed final.
3.1.5.3 If a Notice of Disagreement is duly delivered to
SYGNET pursuant to Section 3.1.5.2 hereof, the parties shall, during the 30
days following such delivery negotiate in good faith and use their best efforts
to resolve such disagreement. If the parties are unable to reach a matter to
be submitted to Price Waterhouse, or such other independent public accountants
reasonably satisfactory to McCaw and SYGNET (which accountants shall not have
any material relationship with either McCaw or SYGNET or any of their
respective Affiliates) who shall promptly review this Agreement and the
disputed Closing Date
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Balance Sheet or True Up Statement items and deliver to Mccaw and SYGNET a
report resolving such disputed items and containing a True Up Statement
prepared by such accountants. Such True Up Statement shall be final and binding
on the parties hereto. Each of the parties shall cooperate with such
accountants in their review, and the fees and expenses of such accountants
shall be borne equally by the parties.
3.1.5.4 Within 5 business days after the True Up Statement
shall have become final, whether by expiration of time, agreement of the
parties or calculation by a firm of accountants (the "True Up Payment Date"):
(i) if the Net Purchase Price reflected on the final True Up Statement is
greater than the Preliminary Net Purchase Price, SYGNET will pay McCaw the
amount of such excess, and (ii) if the Net Purchase Price reflected on the
final True Up Statement is less than the Preliminary Net Purchase Price, McCaw
will pay SYGNET the amount of such difference. Payment pursuant to this Section
shall be by wire transfer of immediately available funds on or prior to the
True Up Payment Date, to an account designated by the parry to receive such
payment.
3.2 Designation of Closing Date. Subject to the terms and conditions of
this Agreement, the Closing shall be held at the offices of Stokes, Eitelbach &
Lawrence, P.S., McCaw's counsel, in Seattle, Washington, or such other place as
the parties may agree, at 9:00 am., local time, on the Closing Date. Unless
otherwise agreed by the parties, the Closing Date shall be September 29, 1995,
provided that all conditions to Closing have been satisfied, or waived by the
party entitled to the benefit thereof, as of such date. If all such conditions
are not satisfied or waived as of September 29, 1995, the Closing Date shall be
the earlier of (i) the fifteenth day of the next succeeding month on which all
such conditions are satisfied or waived, or if the fifteenth is not a business
day, the last business day immediately preceding the fifteenth of the month on
which all such conditions are satisfied or waived, or (ii) the last business
day of the next succeeding month on which all such conditions are satisfied or
waived. For purposes of this Agreement, the Closing shall be deemed to be
effective as of 11:59 p.m. (Erie, Pennsylvania time) September 30, 1995, or, if
the Closing Date is not September 29, 1995, then the Closing shall be deemed to
be effective as of 11:59 p.m. on (i) the last calendar day of the month in
which the Closing Date occurs or (ii) the fifteenth of the month in which the
Closing Date occurs, whichever is closer to the actual Closing Date (in either
case, the "Effective Date").
3.3 Payment of Preliminary Net Purchase Price at Closing. In
consideration of the sale of the Interest to SYGNET and the other undertakings
and agreements of McCaw in this Agreement, and subject to the terms and
conditions of this Agreement, SYGNET shall pay the Preliminary Net Purchase
Price to McCaw by wire transfer of immediately available funds to an account
designated by McCaw in writing at least 2 business days prior to the Closing
Date.
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ARTICLE 4
COVENANTS AND AGREEMENTS
4.1. Covenants of McCaw. McCaw covenants and agrees that from
and after the execution and delivery of this Agreement to and including the
Closing Date:
4.1.1. Consummate Transactions. McCaw shall use its best
efforts to cause the transactions contemplated by this Agreement to be
consummated in accordance with the terms hereof, and, without limiting the
generality of the foregoing, use best efforts to obtain all necessary
approvals, consents, permits, licenses and other authorizations required in
connection with this Agreement and the transactions contemplated hereby,
including, without limitation, all governmental authorities and agencies, and
to make all filings with and to give all notices to and obtain all consents
from, third parties which may be necessary or reasonably required of McCaw in
order to consummate the transactions contemplated hereby.
4.1.2. Full Access.
4.1.2.1 McCaw shall give to SYGNET and its agents and
representatives (including, without limitation, its independent auditors and
attorneys) reasonable access during normal business hours to all of ECTC's
personnel, premises, properties, assets, financial statements and records,
books, contracts, documents and commitments of or relating to the business of
ECTC, shall furnish SYGNET and its agents and representatives with all such
information concerning the affairs of ECTC as SYGNET may request, and shall
instruct the employees of McCaw and ECTC to cooperate with SYGNET in its
investigation of ECTC; provided that no such investigation shall affect any
representation or warranty hereunder.
4.1.2.2 During the period beginning on the date
hereof, and ending at Closing (the "Transition Period"), McCaw will cause ECTC
to permit SYGNET to take such actions as SYGNET may reasonably deem necessary
or appropriate to effect the orderly transition of the System to ownership and
operation by SYGNET. During the Transition Period, McCaw shall, and shall cause
ECTC to, cooperate with SYGNET to prepare for such transition and each of
SYGNET, McCaw and ECTC shall use their respective best efforts to assure that
actual transition of the System to operation by SYGNET shall be effected
immediately following the Closing Date. The parties agree that transition
activities to occur during the Transition Period shall include, but not be
limited to, (i) the installation of SYGNET equipment alongside equipment
currently used in the operation of the System, and the testing of such SYGNET
equipment as may be requested by SYGNET and consented to by McCaw, such consent
not to be unreasonably withheld, provided that such currently used equipment
shall remain in place and shall not be disconnected until after the Closing
Date, (ii) the conversion to SYGNET's systems of customer information
including, without limitation, billing and accounts receivable and payable
information, provided that such conversion shall not impact the continued
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operation and use of the systems currently used in the operation of the System,
and (iii) the transition of customer interface functions. Any costs associated
with such transition activities shall be borne by SYGNET; provided, however,
that McCaw shall, at McCaw's sole expense, deliver to SYGNET the information
listed on Schedule 4.1.2.2, and has made such delivery, or shall use its
reasonable efforts to make such delivery, in accordance with the deadlines set
forth on Schedule 4.1.2.2, provided that any immaterial failure to meet any
such deadline shall not be deemed a breach of this Agreement. Notwithstanding
the foregoing, no transition activities shall unreasonably disrupt the
operations of the System prior to Closing or shall violate the provisions of
Section 4.3.5 hereof, and no changes shall actually be made to the System that
may interfere with McCaw's continued operation of the System in the ordinary
course of its business, consistent with its past practices. In the event any
changes to the System or its operations are made by or at the request of SYGNET
and the Closing does not occur, SYGNET shall immediately restore the System and
its Assets to their prior condition and operational capacity at no cost to
McCaw.
4.1.3. Ordinary Course. McCaw shall cause the business and
affairs of ECTC, including, without limitation, the payment of its bills and
obligations, to be conducted only in the ordinary course and consistent with
past practices. Without limiting the foregoing, and except for actions taken in
the ordinary course of business, McCaw shall not, without the prior written
consent of SYGNET, permit ECTC to: (ii) incur any obligation or liability,
absolute or contingent, other than obligations to McCaw's brokers, attorneys
and accountants, all of which shall be paid by McCaw; (iii) assume, guarantee,
change any existing guarantee, endorse or otherwise as an accommodation become
responsible for obligations of any other individual or entity; (iv) make any
loans or advances to any individual or entity; (v) sell, transfer, convey,
mortgage, pledge, hypothecate or subject to any Lien the Interest or any asset
of ECTC; (vi) waive or compromise any right or claim for any material amount;
(vii) cancel any material note, loan or other material obligation owing to
ECTC; (viii) enter into any Contract with any Person, including, without
limitation, McCaw or any of its Affiliates, consultants, agents or assigns;
(ix) agree to pay any new or additional compensation of any type to any of
their employees, officers, directors, agents or consultants or to increase or
modify any compensation currently so paid; (x) make any arrangement which would
bind ECTC after the Closing for any profit-sharing plan, retirement plan, bonus
plan, severance arrangement, employee benefit plan, or any similar plan; (xi)
except as required by law, enter into any collective bargaining agreement, or
make any commitment whatsoever to any union or other representative or party
which intends to represent any employees; (xii) hire any employees; (xiii)
enter into any additional reseller agreements; (xiv) sell, lease or otherwise
dispose of any of its assets; (xv) acquire any assets of any other Person; or
(xvi) agree or commit to do any of the foregoing.
4.1.4. Preserve Business and Goodwill. McCaw shall use its
best reasonable efforts to keep the organization of ECTC's business intact, to
preserve and maintain its assets and properties, to preserve the business of
ECTC and the goodwill of suppliers,
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subscribers and others dealing with ECTC, and to otherwise take all actions as
may be reasonably necessary to maintain the value of the System.
4.1.5. Compliance with Law. McCaw shall cause ECTC to
comply, in all material respects, with all applicable laws, rules, ordinances,
regulations, codes, orders, decrees, licenses and permits of all applicable
jurisdictions and governmental authorities or agencies relating to ECTC, its
properties or the conduct of its businesses.
4.1.6. Approvals; Consents. McCaw shall cause ECTC to
obtain and maintain, in full force and effect all approvals, consents, permits,
licenses and other authorizations, from all appropriate Federal, state and
local governmental agencies or authorities necessary or required for the
operation of ECTC's business as presently conducted, as and when such
approvals, consents, permits, licenses or other authorizations are necessary or
required. Without limiting the generality of the foregoing, McCaw shall cause
ECTC to maintain the Authorizations in full force and effect, and shall not
take any action which might have a material adverse effect on such
Authorizations. The parties shall consult with one another as to the approach
to be taken with any governmental authority or agency with respect to obtaining
any necessary consent of such governmental agency or authority to the
transactions contemplated hereby, and each of the parties shall keep each other
party reasonably informed as to the status of any such communications with any
governmental authority or agency. McCaw shall not permit ECTC to make any
material commitments relating to any approval, consent, permit or license to
any governmental authority or agency without SYGNET's prior written consent,
which consent shall not be unreasonably withheld.
4.1.7. No Transfer. McCaw shall not sell, transfer, assign
or dispose of, or offer to, or enter into an agreement to, sell, transfer,
assign or dispose of the Interest or negotiate therefor. McCaw shall not
create, incur or suffer to exist any Lien of any nature whatsoever or enter
into any restriction on transfer or grant any right of first refusal relating
to the Interest.
4.1.8. No Amendments or Issuance of Additional Partnership
Interest. McCaw shall not amend the partnership agreement of ECTC or any
comparable governing instrument. McCaw will not authorize the issuance of any
additional partnership interest in ECTC pending the Closing.
4.1.9. No Sale. McCaw shall not permit ECTC to enter into
any contract to sell or encumber any of its assets, other than in the ordinary
course of business.
4.1.10. Books and Records. McCaw shall cause ECTC to
maintain its books, accounts and records in the usual manner, on a basis
consistent with prior years.
4.1.11. Notice of Claims. McCaw shall give written notice
to SYGNET promptly upon the commencement of any action, investigation,
arbitration or proceeding (including any proceeding before any governmental
agency), or promptly upon obtaining
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knowledge of any facts giving rise to a threat of any such action,
investigation, arbitration or proceeding which would, if adversely determined,
materially and adversely affect McCaw's ability to consummate the transactions
contemplated hereby or would be reasonably likely to have a Material Adverse
Effect.
4.1.12. Material Contracts. McCaw shall not allow ECTC to
be in default in any material respect under, or breach any term or provision
of, or suffer or permit to exist any condition or event which, after notice or
lapse of time, or both, would constitute a material default under, any
Contract.
4.1.13. No Amendment or Termination of Material Contracts.
McCaw shall not permit ECTC to cause or permit the termination, modification or
amendment of any material Contract of ECTC, except that McCaw or one of its
Affiliates may, and expect to, enter into agreements (terminable on any sale of
the Interest and on sixty (60) days' or less prior notice) relating to
management of ECTC by McCaw or one of its Affiliates pending the Closing.
4.1.14. Retention of Records. On the Closing Date, McCaw
shall deliver to SYGNET all such books, contracts and records of ECTC as are
reasonably requested by SYGNET. In addition, for a period of two (2) years
after the Closing Date, at the written request and expense of SYGNET, McCaw
shall make available to SYGNET copies of any documents not theretofore
delivered to SYGNET relating to ECTC.
4.2. Covenants of SYGNET. SYGNET covenants and agrees that
from and after the execution and delivery of this Agreement to and including
the Closing Date that it shall use its best efforts to cause the transactions
contemplated by this Agreement to be consummated in accordance with the terms
hereof, and, without limiting the generality of the foregoing, to obtain the
approval of this Agreement and the transactions contemplated hereby by all
governmental authorities and agencies, including the FCC, and to make all
filings with and to give all notices to third parties which may be necessary or
reasonably required of SYGNET in order to consummate the transactions
contemplated hereby.
4.3. Covenants and Acknowledgments of McCaw and SYGNET. McCaw
and SYGNET covenant, agree and acknowledge as follows:
4.3.1. Short Period. The tax liability of ECTC for the
taxable year ending on the Closing Date shall be determined by closing the
books and records of ECTC as of the close of business on the Effective Date, by
treating such period as a separate taxable year (the "short year"), and by
employing accounting methods which are consistent with those employed in
preparing the tax return for ECTC in prior taxable years and which do not have
the effect of distorting income or expenses, except that Taxes based on items
other than net income, gross income, gross receipts or sales shall be computed
for the taxable year beginning on the first day of the short year and prorated
on a time basis between the short period and the period beginning on the day
after the Effective Date and ending on the last day of the taxable year which
includes the day after the Effective Date; provided
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that with respect to any Tax which is not in effect during the entire short
year, the proration of such Tax shall be based on the period during the short
year that such Tax was in effect.
4.3.2 Tax Returns. McCaw shall be responsible for
preparing and filing on behalf of ECTC all tax returns for taxable years of
ECTC ending on or prior to the Closing Date, including tax returns of ECTC for
such periods which are due on or after the Closing Date; provided, however,
that McCaw shall furnish SYGNET with copies of such returns of the Company
within thirty (30) days following the filing date. ECTC and SYGNET shall be
responsible for preparing and filing all tax returns of ECTC for taxable years
ending after the Closing Date (including for taxable years beginning prior to
and ending after the Closing Date); provided, however, that SYGNET shall, or
shall cause ECTC to, furnish McCaw with copies of any such returns of ECTC
which include a short period within thirty (30) days following the filing date.
4.3.3. Governmental Filings. Each of McCaw and SYGNET
covenant and agree that from and after the execution and delivery of this
Agreement to and including the Closing Date that the parties have filed or will
file with the FCC, as soon as practicable following the date hereof, joint
applications requesting the approval of the transfer of control of ECTC to
SYGNET, and, if required, will file all necessary applications with the
Department of Justice and/or the Federal Trade Commission pursuant to the HSR
Act. Each of the parties hereto shall diligently take or cooperate in the
taking of all steps which are necessary or appropriate to expedite the
prosecution and favorable consideration of such applications. The parties
covenant and agree to undertake all actions and file such material as shall be
necessary or required to obtain any necessary waivers or other authority in
connection with the foregoing applications.
4.3.4 Equal Access. McCaw is currently required to convert
the System to "equal access" before April, 1996, and such conversion requires
McCaw to begin taking action to achieve that result no later than October,
1995. If the Closing Date has not occurred by that time (and is not
substantially certain to occur by the end of 1995), SYGNET acknowledges that
McCaw will be required to carry out such conversion process. McCaw agrees to
give SYGNET at least thirty (30) days prior notice before commencing such
conversion process. Assuming the conversion process has not yet commenced,
McCaw represents and warrants to SYGNET that SYGNET and ECTC shall not be
legally required after the Closing to convert the System to equal access as a
result of any order, decree or judgment of any court or governmental or
regulatory authority, or any other facts or circumstances, which order, decree,
judgment, facts or circumstances pertain specifically to McCaw or any Affiliate
of McCaw.
4.3.5. SYGNET Not to Control. Notwithstanding any
provision of this Agreement that may be construed to the contrary, pending the
consummation of the transactions contemplated herein, McCaw shall maintain
actual (de facto) and legal (de jure) control over ECTC. Specifically, and
without limitation, the responsibility for the operation of ECTC shall, pending
the Closing Date, reside with ECTC, including, but not
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limited to, responsibility for the following matters: access to and the use of
the facilities of and equipment owned by ECTC; control of the daily operation
of ECTC; creation and implementation of policy decisions; employment and
supervision of employees; payment of financing obligations and expenses
incurred in the operation of ECTC; receipt and distribution of monies and
profits derived from the operation of ECTC; and execution and approval of all
contracts and applications prepared and filed before regulatory agencies.
4.3.6. Purchase Price Allocation. Prior to the Closing
Date, SYGNET and McCaw shall agree to the allocation of the Purchase Price to
the assets or classes of assets of ECTC. SYGNET and McCaw shall (and shall
cause their respective Affiliates to) file all tax returns consistent with such
agreed-upon allocation unless otherwise required due to a change in applicable
law.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1. McCaw's Representations and Warranties. McCaw represents
and warrants to SYGNET as follows:
5.1.1. Due Organization. McCaw is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Pennsylvania. ECTC is a general partnership duly organized, validly existing
and in good standing under the laws of the state of Delaware. ECTC has all
requisite partnership power and authority to own, operate and lease its
property, and to carry on its business as now conducted. ECTC is duly qualified
to do business and is in good standing in the State of Pennsylvania, and all
states where the conduct of its business or the ownership of its properties
makes such qualification necessary. McCaw has delivered to SYGNET true and
complete copies of the Partnership Agreement and McCaw's certificate of
incorporation and bylaws as such instruments are currently in effect.
5.1.2. Power and Authority; No Violation. McCaw has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement, and to consummate the transactions contemplated hereby.
This Agreement and all transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of McCaw, and this
Agreement constitutes a legal, valid and binding obligation of McCaw
enforceable in accordance with its terms (except that such enforceability may
be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally). Neither
the execution, delivery or performance of this Agreement by McCaw, nor the
consummation of the transactions contemplated hereby will, with or without the
giving of notice or the passage of time, or both, conflict with, result in a
default or loss of rights (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any Lien,
pursuant to (A) any provision of the certificate of incorporation or bylaws of
McCaw or
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the Partnership Agreement of ECTC; (B) any material note, bond, indenture,
mortgage, deed of trust, contract, agreement lease or other instrument or
obligation to which McCaw or ECTC is a party or by which McCaw or ECTC may be
bound or affected; (C) any law, order, judgment, ordinance, rule, regulation or
decree to which McCaw or ECTC is a party or by which either of their respective
properties are bound or affected; or (D) give rise to any right of first
refusal or similar right with respect to the Interest, or any interest or any
properties or assets of McCaw or ECTC. Except as described on Schedule 5.1.2
annexed hereto, no permit, consent, filing or approval of any third party
(including any governmental authority) is required to be obtained or made by
McCaw or ECTC in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby in order to render
this Agreement and the transactions contemplated hereby valid and effective, or
to enable McCaw to consummate the transactions contemplated hereby. Schedule
5.1.2 specifically identifies those consents (the "Material Consents") which,
if not obtained prior to Closing, could have a Material Adverse Effect.
5.1.3. Financial Statements; No Liability. McCaw has
previously delivered to SYGNET (i) the audited balance sheets, statements of
results of operations and statements of cash flows, together with the notes
thereto and auditors' reports thereon, of ECTC for the fiscal years ended
December 31, 1992, 1993 and 1994, and (ii) the unaudited balance sheets,
statements of results of operations and statements of cash flows of ECTC for
the fiscal quarters ended March 31, 1995 and June 30, 1995 (collectively, the
"Financial Statements"). All Financial Statements are true and correct in all
material respects, have been prepared from the books and records of ECTC and
fairly present the financial position of ECTC and the results of its operations
and its cash flows for the year or interim period then ended, in each case in
conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto). ECTC has
not incurred nor is it subject to any liabilities or obligations, whether
accrued, absolute or contingent, which are not disclosed in the Financial
Statements.
5.1.4. Legal Matters. Except as set forth on Schedule
5.1.4, there is no claim, legal action, counterclaim, suit, arbitration,
governmental investigation or other legal, administrative or tax proceeding,
nor any order, decree or judgment (collectively the "Legal Matters"), in
progress or pending, or, to the knowledge of McCaw, threatened, against or
relating to McCaw, ECTC or their respective assets, nor does McCaw know of any
basis for the same, which would be reasonably likely to individually or in the
aggregate have a materially adverse effect on the Interest or McCaw's ability
to consummate the transaction as herein contemplated, or to have a Materially
Adverse Effect.
5.1.5. Title to Interest. McCaw has on the date hereof,
and will have on the Closing Date, good and marketable title to the Interest,
free and clear of all Liens, restrictions on transfer and rights of first
refusal, direct or indirect, whether accrued, absolute, contingent or
otherwise. Subject to the approval of the FCC, and the receipt of all other
consents, approvals, orders or authorizations of, or registrations,
qualifications or
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filings with, any governmental authority which are required to be obtained in
connection with the consummation of the transactions contemplated hereby, McCaw
has full right, power and authority to consummate the transactions contemplated
hereby. The Interest is a general partnership interest in ECTC representing a
95.46% ownership interest in accordance with the terms of the Partnership
Agreement. The ownership interests of all ECTC partners other than McCaw
aggregate 4.54% and (other than this Agreement) there are no outstanding
options, warrants or other rights of any Person to acquire any part of the
Interest. There are no outstanding obligations of ECTC to repurchase or
otherwise acquire, or to issue to any Person, any general partnership interests
or other equity interests in ECTC. There are no certificates representing
ownership of the Interest or any other outstanding partnership interests of
ECTC.
5.1.6. The System; ECTC's Title to Assets. Except as set
forth below, the System consists of, and ECTC owns, all assets necessary or
appropriate for ECTC to carry on the business of the System as presently
conducted, and all assets which are currently used or held for use in the
operation of the System, including, but not limited to, those assets set forth
on Schedule 5.1.6 hereto. ECTC has on the date hereof, and will have on the
Closing Date, good and marketable title to all its assets (including but not
limited to its cellular telephone and related equipment and its customer base),
free and clear of all Liens and claims, whether absolute, contingent or
otherwise, in each case other than obligations which are specifically disclosed
herein or on Schedule 5.1.9 hereto. Notwithstanding the foregoing, the parties
acknowledge that McCaw or one of its Affiliates has located one digital cell
site at a General Electric Plant that is presently being used by the System,
but that all equipment relating to such cell site is not part of the assets of
ECTC, and does not constitute part of the System. Schedule 5.1.6A sets forth
all equipment related to such digital cell site. The parties acknowledge that
all such equipment may be removed from the System by McCaw prior to the
Closing, or within ninety (90) days after the Closing. The parties further
acknowledge that significant functions relating to ECTC's business are
currently carried out by personnel of Affiliates of McCaw (e.g., customer care,
collections, switching, roamer verification and administration, management, and
the like), and that such Affiliates allocate costs and charge fees to ECTC for
such services. SYGNET acknowledges that ECTC does not own, and SYGNET shall not
by purchasing the Interest acquire, any facilities, systems or employment
relationships, or any other interests that may relate to or arise by reason of
such relationships with McCaw's Affiliates, other than those relating solely
and expressly to ECTC and the MSA; provided, however, that if so requested by
SYGNET, McCaw (and any Affiliate of McCaw, as appropriate) shall enter into the
Transition Services Agreement with SYGNET in accordance with Section 8.3
hereof.
5.1.7. Compliance with Laws. ECTC is in compliance with
all applicable laws, regulations and administrative or judicial orders,
judgments or decrees of the United States and all states, (including, without
limitation, all applicable rules and regulations of the FCC or any other
federal or state governmental agency or instrumentality exercising jurisdiction
over ECTC or its properties or businesses), and of each municipality, county or
subdivision of any thereof, to which any of its businesses or any of its
properties may be
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subject, the noncompliance with which would be reasonably likely to have a
material adverse effect upon McCaw's (or, after the Closing, SYGNET's)
ownership of the Interest or McCaw's ability to consummate the transactions
contemplated hereby, or would be reasonably likely to have a Material Adverse
Effect.
5.1.8. Authorizations.
5.1.8.1. ECTC has all requisite Authorizations
required to carry on the business of ECTC as now conducted in and around the
MSA. All such Authorizations are listed on Schedule 5.1.8 annexed hereto.
5.1.8.2. The Authorizations are in full force and
effect and have not been pledged or otherwise encumbered, assigned, suspended,
modified in any material adverse respect, canceled or revoked, and ECTC has
operated in compliance with all terms thereof or any renewals thereof
applicable to it except, in the case of non-material state and local
Authorizations, where failure to so comply would not be reasonably likely to
have a Material Adverse Effect. No event has occurred with respect to any of
the Authorizations which permits, or after notice or lapse of time or both
would permit, revocation or termination thereof or would result in any other
material impairment of the rights of the holder of any such Authorizations.
There is not pending as of the date hereof any application, petition, objection
or other pleading with the FCC or any similar body having jurisdiction or
authority over the communications operations of ECTC which questions the
validity of or contests any Authorization or which presents a risk that, if
accepted or granted, it would result in the revocation, cancellation,
suspension or any materially adverse modification of any Authorization.
5.1.9. Indebtedness. Except as specifically set forth on
Schedule 5.1.9 hereto, there are no indentures, trust deeds, loan agreements,
or other instruments pursuant to which ECTC has incurred Indebtedness or has
guaranteed the Indebtedness of any Person. On the Closing Date, ECTC shall not
be indebted to McCaw or any Affiliate, beneficiary, director, officer, entity,
employee, agent, Trustee, or partner of McCaw, and no Affiliate, shareholder,
director, officer, entity, employee, agent, Trustee, or partner of McCaw shall
be indebted to ECTC.
5.1.10. Contracts.
5.1.10.1. Schedule 5.1.10 hereto sets forth all
Contracts of ECTC. Accurate and complete copies of all written agreements
listed on Schedule 5.1.10 have been provided to SYGNET.
5.1.10.2. As of the Closing Date, except for
Contracts set forth on the Schedules hereto and subscriber agreements entered
into in the ordinary course of business and in form and substance substantially
the same as ECTC's prior subscriber agreements, ECTC, as of the Closing Date,
will not be a party to nor will its property be bound by any
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Contract, and it shall have no liability of any type relating to cancellation
or termination of any Contract.
5.1.10.3. ECTC has in all material respects performed
all obligations required to be performed by it under all material Contracts to
which it is a party or by which its assets are bound, and no condition exists
that with notice or lapse of time, or both, would constitute a material default
under any such Contract.
5.1.10.4. Except as set forth on Schedule 5.1.4,
there are no currently threatened cancellations of, nor are there any
outstanding disputes under, any Contracts relating to the operation of the
System.
5.1.10.5 Each Contract required to be set forth on
Schedule 5.1.10 is a valid and binding agreement of ECTC and is in full force
and effect, and except as set forth in Schedule 5.1.10.5, neither ECTC nor, to
the best of McCaw's knowledge, any other party thereto is in default under any
such Contract where such default would be reasonably likely to have a Material
Adverse Effect.
5.1.11. Real Property; Leases.
5.1.11.1. Schedule 5.1.11 contains a brief
description of each parcel of real property owned by ECTC and used in or
relating to the operations of the System showing the record title holder,
location, improvements, the uses being made thereof and any indebtedness
secured by a mortgage or other Lien thereon. Except as set forth in Schedule
5.1.11, there are no leases, subleases, tenancies or other rights of occupancy
affecting such real property.
5.1.11.2. Schedule 5.1.11 also sets forth a list of
each lease or similar agreement under which ECTC is lessee of, or holds or
operates, or has an option to lease, hold, or operate, any real property owned
by any third person and used in (or intended to be used in) or relating to the
operations of the System. Except as set forth in such Schedule, ECTC has the
right to quiet enjoyment of all the real property described in such Schedule
for the full term of each such lease or similar agreement relating thereto (and
any renewal option related thereto), and the leasehold, option or other
interest of ECTC in such real property is not subject or subordinate to any
Lien or security interest.
5.1.11.3. Neither the whole nor any part of any real
property owned, optioned, leased, used or occupied by ECTC in connection with
the operations of the System is subject to any pending suit for condemnation or
other taking by any public authority, and, to the best knowledge of ECTC, no
such condemnation or other taking is threatened or contemplated.
5.1.11.4. ECTC has in all material respects performed
all obligations required to be performed by it under all real property leases
related to the operation of the System.
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5.1.11.5. There are no currently threatened
cancellations of, nor are there any outstanding disputes under, any real
property leases relating to the operation of the System.
5.1.12. Environmental Laws and Compliance. ECTC has no
knowledge of any liability under, or violation by ECTC of, any Environmental
Law, or of any condition with respect to the environment, which could or does
result in any liability, loss, cost, damages, fees or expenses to or against
ECTC or SYGNET. ECTC has not generated, manufactured, refined, transported,
treated, stored, handled, disposed, transferred, produced or processed, and has
no knowledge of the actual or potential releasing, spilling, leaking or
discharging of any Contaminant at or in the vicinity of the properties owned,
leased or used by ECTC (excluding from the foregoing the storage (but not the
releasing, spilling, leaking or discharging) of petroleum-based products
intended to power any standby backup generators at ECTC's cell sites). Schedule
5.1.12 attached hereto sets forth a list of all known underground and
aboveground storage tanks located on property owned, leased or used by ECTC.
5.1.13. Employees; Employment Obligations. ECTC and/or the
System currently employs those persons in those positions and at those salaries
(including benefits) as are listed on Schedule 5.1.13 hereto. ECTC shall hire
no further employees without the prior written consent of SYGNET. As to all
existing employees whose employment SYGNET may elect to terminate on the
Closing Date, McCaw will bear all expenses of severance or termination of such
employees. Except as otherwise set forth on such Schedule 5.1.13, ECTC is not
bound by any oral or written collective bargaining agreement, severance,
pension, retirement, profit-sharing, 401(k) or other employment agreement with
any officer, employee or consultant, nor does ECTC have any liability under any
such agreements which were terminated previously. ECTC has complied in all
material respects with all applicable laws, rules and regulations which relate
to prices, wages, hours, discrimination in employment and collective bargaining
and to the operation of the System, and is not liable for any arrears of wages
or any taxes or penalties for failure to comply with any of the foregoing. ECTC
is not a party to, and is not affected by or threatened with, any dispute or
controversy with a union or with respect to unionization or collective
bargaining involving the employees of ECTC.
5.1.14. Bank Accounts. Schedule 5.1.14 hereto lists all
bank accounts, deposit accounts, deposits and investments of ECTC.
5.1.15. No Brokers. McCaw represents and warrant to SYGNET
that except for Columbia Capital Corporation, whom McCaw will pay in full, no
agent, broker, investment banker, Person or firm is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly in connection with the transactions contemplated by this Agreement
based in any way on any arrangements, agreements or understandings made by or
on behalf of McCaw.
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5.1.16. Truth and Correctness. No representation or
warranty by McCaw or ECTC herein, nor any written statement or certificate or
other instrument furnished to SYGNET by McCaw or ECTC pursuant hereto or in
connection with the transactions contemplated hereby, including, without
limitation, the Schedules annexed hereto, after disregarding any materiality
qualification therein, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which such statements
are made, not misleading.
5.1.17 Subsidiaries. ECTC does not own any securities or
other ownership interests in any other Person.
5.1.18 Insurance. All insurance policies and fidelity
bonds covering the System, and the assets and operations of ECTC, are in full
force and effect. There is no claim by ECTC pending under any of such policies
or bonds as to which coverage has been questioned or disputed by the
underwriters of such policies or bonds. All premiums due and payable under such
policies and bonds are paid in full and ECTC is in material compliance with the
terms and conditions of all such policies and bonds. Such policies and bonds
are of a type and in amounts customarily carried by Persons conducting
businesses similar to that of ECTC.
5.1.19 Absence of Certain Changes. Since December 31,
1994, and except as set forth on Schedule 5.1.19, ECTC has conducted its
business in the ordinary course, consistent with past practice, and no event
has occurred that would be reasonably likely to have a Material Adverse Effect.
5.2. SYGNET's Representations and Warranties. SYGNET
represents and warrants to McCaw and ECTC as follows:
5.2.1. Due Incorporation. SYGNET is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio, and SYGNET has all requisite corporate power and authority to execute and
deliver this Agreement and perform its obligations hereunder.
5.2.2. Authority. This Agreement and all transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of SYGNET, and this Agreement constitutes a legal,
valid and binding obligation of SYGNET enforceable in accordance with its terms
(except that such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally). Neither the execution, delivery or performance of
this Agreement by SYGNET nor the consummation of the transactions contemplated
hereby will, with or without the giving of notice or the passage of time, or
both, conflict with, result in a default or loss of rights (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of any Lien, pursuant to (i) any provision of the certificate of
incorporation or bylaws of SYGNET; (ii)
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any material note, bond, indenture, mortgage, deed of trust, contract,
agreement, lease or other instrument or obligation to which SYGNET is a party
or by which it or its property is bound or affected; or (iii) any law, order,
judgment, ordinance, rule, regulation or decree to which SYGNET is a party or
by which it or its property is bound or affected. Except as described on
Schedule 5.1.2 annexed hereto, no permit, consent, approval, authorization,
qualification or registration of, or declaration to or filing with any
governmental or regulatory authority or agency or third party is required to be
obtained or made by SYGNET in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby in
order to render this Agreement or the transactions contemplated hereby valid
and effective, or to enable SYGNET to consummate the transactions contemplated
hereby.
5.2.3. Legal Matters. There is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of SYGNET threatened, against or
relating to SYGNET's right to perform its obligations under this Agreement, nor
does SYGNET know of any basis for the same which would be reasonably likely to,
individually or in the aggregate, have a material adverse effect on SYGNET's
ability to consummate the transaction as herein contemplated.
5.2.4. No Brokers. SYGNET represents and warrants to McCaw
that no agent, broker, investment banker, Person or firm is or will be entitled
to any broker's or finder's fee or any other commission or similar fee directly
or indirectly in connection with the transactions contemplated by this
Agreement based in any way on any arrangements, agreements or understandings
made by or on behalf of SYGNET.
5.2.5. Truth and Correctness. No representation or
warranty by SYGNET, or any written statement or certificate or other instrument
furnished to McCaw or ECTC by SYGNET pursuant hereto or in connection with the
transactions contemplated hereby, after disregarding any materiality
qualification therein, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which such statements
are made, not misleading.
ARTICLE 6
CONDITIONS TO OBLIGATIONS
6.1. Conditions to SYGNET's Obligation. The obligation of
SYGNET to perform or fulfill or carry out its agreements, undertakings and
obligations herein made or expressed to be performed, fulfilled or carried out
on the Closing Date is and shall be subject to fulfillment of or compliance
with, on or prior to the Closing Date, the following conditions precedent, any
of which may be waived by SYGNET, in its sole discretion, in whole or in part:
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6.1.1. Each of McCaw's and ECTC's representations and
warranties contained in this Agreement shall be deemed to have been made again
at and as of the Closing Date and shall then be true in all material respects
(after disregarding any materiality qualification therein), except for changes
contemplated by this Agreement, and McCaw and ECTC shall have performed and
complied, in all material respects (after disregarding any materiality
qualification therein), with all agreements, covenants and conditions required
by this Agreement to be performed or complied with by each of them prior to or
on the Closing Date. SYGNET shall have been furnished with a certificate of
McCaw and of ECTC, dated the Closing Date, certifying to the fulfillment of the
foregoing conditions by McCaw and ECTC, respectively, and to the truth and
correctness in all material respects, except for changes contemplated by this
Agreement, as of the Closing Date of the representations and warranties of
McCaw and ECTC, respectively, contained herein.
6.1.2. There shall not then be pending any suit or
proceeding by any third party to restrain or invalidate, in whole or in part,
this Agreement or the transactions herein contemplated.
6.1.3. SYGNET shall have been furnished with an opinion of
in-house counsel for McCaw, dated the Closing Date, substantially in the form
of Schedule 6.1.3 annexed hereto.
6.1.4. SYGNET shall have been furnished with an opinion of
FCC counsel for McCaw, dated the Closing Date, substantially in the form of
Schedule 6.1.4 annexed hereto.
6.1.5. All consents, approvals and actions of Federal,
state and local authorities (including the FCC and all other comparable bodies
exercising jurisdiction over ECTC) as may be required for the consummation of
the transactions contemplated herein shall have been obtained or taken pursuant
to a Final Order, which consents and approvals shall not contain any conditions
or restrictions which are not customary in transactions of this nature, and all
Material Consents shall have been obtained.
6.1.6. If applicable, the waiting period prescribed by the
HSR Act shall have lapsed or been terminated, and any investigation of the
transactions contemplated by this Agreement commenced by the Department of
Justice and/or the Federal Trade Commission pursuant to the HSR Act shall have
been terminated.
6.1.7. McCaw shall have delivered to SYGNET, or made
arrangements for the delivery to SYGNET, of all partnership books and records
of ECTC which SYGNET has reasonably requested.
6.1.8 McCaw shall have delivered to SYGNET such other
documents as SYGNET may reasonably request in order to effect the transactions
contemplated hereby.
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6.2. Conditions to McCaw's Obligation. The obligation of
McCaw to perform or fulfill or carry out its agreements, undertakings and
obligations herein made or expressed to be performed, fulfilled or carried out
on the Closing Date is and shall be subject to fulfillment of or compliance
with, on or prior to the Closing Date, the following conditions precedent, any
of which may be waived by McCaw, in its sole discretion, in whole or in part:
6.2.1. Each of SYGNET's representations and warranties
contained in this Agreement shall be deemed to have been made again at and as
of the Closing Date and shall then be true in all material respects (after
disregarding any materiality qualification therein), except for changes
contemplated by this Agreement, and SYGNET shall have performed and complied,
in all material respects (after disregarding any materiality qualification
therein) with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by SYGNET prior to or on the Closing
Date; and McCaw shall have been furnished with a certificate of SYGNET, dated
the Closing Date, certifying to the fulfillment of the foregoing conditions by
SYGNET and to the truth and correctness in all material respects, except for
changes contemplated by this Agreement, as of the Closing Date of the
representations and warranties of SYGNET contained herein.
6.2.2. There shall not then be pending any suit or
proceeding by any third party to restrain or invalidate, in whole or in part,
this Agreement of the transactions herein contemplated.
6.2.3. All consents, approvals and actions of Federal,
state and local authorities (including the FCC and all comparable bodies
exercising jurisdiction over ECTC) as may be required for the consummation of
the transactions contemplated herein shall have been obtained or taken;
provided that such consents, approvals and actions need not be Final Orders.
6.2.4. If applicable, the waiting period prescribed by the
HSR Act shall have lapsed or been terminated, and any investigation of the
transactions contemplated by this Agreement commenced by the Department of
Justice and/or the Federal Trade Commission pursuant to the HSR Act shall have
been terminated.
6.2.5. McCaw shall have been furnished with an opinion of
counsel for SYGNET, dated the Closing Date, substantially in the form of
Schedule 6.2.5 annexed hereto.
6.2.6 SYGNET shall have delivered to McCaw such other
documents as McCaw may reasonably request in order to effect the transactions
contemplated hereby.
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ARTICLE 7
SURVIVAL: INDEMNITY
7.1. Survival of Representations and Warranties.
Notwithstanding any investigation or review made at any time by or on behalf of
any party hereto, all representations and warranties contained in this
Agreement, or in the Schedules annexed hereto or in any of the agreements,
certificates or instruments delivered in connection herewith shall survive the
Closing Date for a period of two (2) years after the Closing Date. The period
during which such representations and warranties continue is referred to herein
as the "Indemnification Period."
7.2. McCaw's Indemnity.
7.2.1. During the Indemnification Period (or thereafter
solely with respect to any claim for which indemnification has been made prior
to the expiration of the Indemnification Period), in addition to any other
indemnification provided for under this Agreement, McCaw shall indemnify and
hold harmless SYGNET, its subsidiaries and Affiliates (including ECTC) from and
against any and all demands, claims, losses, liabilities, actions or causes of
action, assessments, actual damages, fines, taxes (including, without
limitation, excise and penalty taxes), penalties, costs and expenses
(including, without limitation, interest, expenses of investigation, reasonable
fees and disbursements of counsel, accountants and other experts (whether such
reasonable fees and disbursements of counsel, accountants and other experts
relate to claims, actions or causes of action asserted by SYGNET or its
subsidiaries or Affiliates against McCaw or asserted by third parties))
(collectively "Losses") incurred or suffered by SYGNET, its subsidiaries and
Affiliates (including ECTC) and their respective officers, directors,
employees, agents and representatives arising out of, resulting from, or
relating to:
7.2.1.1. Any breach of any of the representations or
warranties made by McCaw or ECTC in this Agreement or in any agreement,
certificate, Exhibit or other instrument delivered by McCaw or ECTC pursuant to
this Agreement;
7.2.1.2. Any losses occasioned by any law suit filed
by or on behalf of a minority partner in ECTC with respect to acts or omissions
of McCaw, ECTC, or any of their Affiliates before the Closing Date;
7.2.1.3. Any failure by ECTC or McCaw, including,
without limitation, the failure by McCaw to cause ECTC, to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by McCaw or ECTC pursuant to this
Agreement; or
7.2.1.4 Losses arising during, or relating to events
which occurred or conditions which arose, on or prior to the Closing Date.
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7.2.1.5 Any Taxes assessed with respect to the
ownership or operation of the System or the Interest on or before the Closing
Date; provided, however, that the Indemnification Period for indemnification
pursuant to this Section 7.2.1.5 shall be the applicable statute of limitations
period.
7.3. SYGNET's Indemnity.
7.3.1. During the Indemnification Period (or thereafter
solely with respect to any claim for which indemnification has been made prior
to expiration of the Indemnification Period), in addition to any other
indemnification provided for under this Agreement, SYGNET shall indemnify and
hold harmless McCaw, its subsidiaries and Affiliates, from and against any and
all Losses incurred or suffered by McCaw, its subsidiaries and Affiliates, and
their respective officers, directors, employees, agents and representatives,
arising out of, resulting from, or relating to:
7.3.1.1. Any breach of any of the representations or
warranties made by SYGNET in this Agreement or in any agreement, certificate or
other instrument delivered by SYGNET pursuant to this Agreement;
7.3.1.2. Any failure by SYGNET to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by SYGNET pursuant to this Agreement;
7.3.1.3 Losses arising during or relating to events
which occur or conditions which arise after the Closing Date; or
7.3.1.4. Any Taxes assessed with respect to the
ownership or operation of the System or the Interest after the Closing Date;
provided, however, that the Indemnification Period for indemnification pursuant
to this Section 7.3.1.4 shall be the applicable statute of limitations period.
7.4. Procedure. In the event that any party indemnified
hereunder shall sustain or incur, or there shall exist the reasonable prospect
of such party sustaining or incurring, any Losses in respect of which
indemnification may be sought by such party pursuant to this Article 7, the
party seeking such indemnification (the "Indemnitee") shall assert a claim for
indemnification by giving prompt written notice thereof (the "Notice") which
shall describe in reasonable detail the facts and circumstances upon which the
asserted claim for indemnification is based, along with a copy of any claim or
complaint received by the Indemnitee, to the party providing indemnification
(the "Indemnitor") and shall thereafter keep the Indemnitor reasonably informed
with respect thereto; provided that failure of the Indemnitee to give the
Indemnitor prompt notice as provided herein shall not relieve the Indemnitor of
any of its obligations hereunder, except to the extent that the Indemnitor is
materially prejudiced by such failure. For purposes of this Section, any
notice which is sent within 15 days of the date upon which the Indemnitee
learned of such Loss shall be deemed to have been a "prompt notice."
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7.4.1 Defense of Claim by Indemnitor. If the Indemnitor
wishes to defend any claim for any Losses for which such Indemnitor is or may
be liable, and such Indemnitor first establishes (to the reasonable
satisfaction of the Indemnitee) that the Indemnitor is financially able to pay
for any such Losses, then such Indemnitor may, at its own expense, defend such
claim; provided that the Indemnitee may retain counsel (at its own expense) to
monitor the defense of such claim, and may take over such defense at the
expense of the Indemnitor if, during the course thereof, it reasonably appears
that the Indemnitor has lost its ability to pay for any Losses threatened by
such claim.
7.4.2. Losses Payable as Incurred. Amounts payable by the
Indemnitor to the Indemnitee in respect of any Losses for which the Indemnitee
is entitled to indemnification hereunder shall be payable by the Indemnitor as
incurred by the Indemnitee.
7.5. Indemnification Payments in Cash. All payments in
respect to any indemnification obligation shall be made in cash.
7.6. Investigations: Waivers. The survival periods and rights
to indemnification provided for in this Article 8 shall remain in effect
notwithstanding any investigation at any time by or on behalf of any party
hereto, or any waiver by any party hereto of any condition to such party's
obligations to consummate the transactions contemplated hereby.
7.7. Limitation of Liability. Notwithstanding anything in
this Agreement to the contrary, no indemnification shall be required to be made
under this Article until the aggregate amount of the Indemnitee's Losses exceed
Fifty Thousand Dollars ($50,000.00)(the "Indemnity Floor"). If the Indemnitee's
Losses exceed Fifty Thousand Dollars ($50,000.00), then the Indemnitee shall be
entitled to seek indemnification hereunder for all Losses, including the first
Fifty Thousand Dollars ($50,000.00) thereof Notwithstanding the foregoing, the
Indemnity Floor shall not apply to matters concerning adjustments to the
Purchase Price that are to be made under Section 3.1.5 of this Agreement, nor
to matters relating to the representations and warranties of Sections 5.1.5
(Title), 5.1.8 (Authorizations), or arising under the indemnification provided
pursuant to Sections 7.2.1.2 (Minority Suits), 7.2.1.5 (Taxes of McCaw),
7.3.1.4 (Taxes of SYGNET), nor to matters relating to ECTC's failure to pay its
bills and obligations in the ordinary course, or to any suit or claim that is
pending on the Closing Date and that has been made by a former or present
employee of ECTC with respect to matters concerning their employment with ECTC.
The aggregate amount of any party's liability under this
Article shall not exceed the amount of the Net Purchase Price (the
"Indemnification Amount"), plus attorneys' fees and expenses to which the
Indemnitee would be entitled under this Article.
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ARTICLE 8
POST-CLOSING AGREEMENTS
8.1 Pittsburgh Switching Services; Ericsson Equipment. An
Affiliate of McCaw, Pittsburgh Cellular Telephone Company ("PCTC") is presently
providing certain switching services to ECTC from the Pittsburgh, Pennsylvania
Ericsson switch. (Switching services provided by PCTC from such switch are
hereinafter referred to as "Switching Services"). McCaw agrees that for a
period of up to one (1) year after the Closing Date its Affiliate, PCTC, shall
continue to provide comparable Switching Services to ECTC for the operation of
the System. During such term the Switching Services shall be provided on terms
no less favorable to ECTC than those made available to other non-Affiliated
third party users of Switching Services, which terms shall be included in the
Transition Services Agreement (as defined in Section 8.3) or a separate switch
sharing agreement entered into by SYGNET and PCTC at Closing.
8.2 Networking and Roaming Services. For a period of three
(3) years after the Closing Date SYGNET agrees to:
8.2.1 Cause ECTC to network with the Pittsburgh Cluster
Markets, either directly or through the Youngstown, Ohio facilities, in such
manner as to facilitate wide-area automatic paging and call delivery to the
Pittsburgh Cluster Market customers while they are in the MSA; and
8.2.2 Provide roaming services to the Pittsburgh Cluster
Market customers for $.35 per minute, with no daily surcharge or comparable
premium, provided McCaw or one of its Affiliates provides the same service at
the same rates to customers of ECTC roaming in the Pittsburgh Cluster Market.
As used in this Section, "Pittsburgh Cluster Markets" shall
mean the Pittsburgh, Wheeling, Johnstown and Steubenville MSAs, and all other
markets presently or hereafter owned or managed by McCaw using the Switching
Services.
8.3 Transition Services Agreement. At Closing, if so
requested by SYGNET, McCaw (and any Affiliate of McCaw, as appropriate) shall
enter into an agreement with SYGNET (the "Transition Services Agreement") in
substantially the form attached hereto as Schedule 8.3, which shall be
effective as of the Closing and pursuant to which McCaw (and its Affiliates),
during a transition period (which shall not exceed ninety (90) days after the
Closing without the express written agreement of McCaw), shall provide certain
services to the System on behalf of ECTC, and provide certain services to ECTC.
McCaw agrees and acknowledges that the Transition Services Agreement is
intended only to provide SYGNET with additional assurance of an orderly
transition of ownership and operation of the System in the event all transition
activities are not completed during the
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Transition Period as contemplated Section 4 1.2.2, and that this Section 8.3
shall in no way limit McCaw's obligations under Section 4.1.2.2.
8.4 Removal of General Electric Plant Cell Site. McCaw agrees
that prior to Closing, or within ninety (90) days after Closing, it will take
all action, at McCaw's sole expense, including making all filings with the FCC
or other governmental authorities, necessary to remove from service the digital
cell site at the General Electric Plant and its related equipment as referenced
in Section 5.1.6.
8.5 Access to McCaw Billing Systems. For a period of ninety
(90) days after the Closing Date, SYGNET shall have access to the billing
systems of McCaw and any Affiliate of McCaw solely for the purpose of obtaining
information with respect to the System and its subscribers. To accomplish the
foregoing, McCaw shall provide SYGNET, as of the Closing Date and at McCaw's
sole expense, with direct on-line access from SYGNET's customer service center
to a database which shall enable SYGNET to review historical billing
information with respect to the System's customers upon demand.
8.6 Operation in Ordinary Course After Closing. SYGNET agrees
that from the Closing Date until and including the Effective Date the System
and its business shall continue to be operated in the ordinary course,
consistent with the immediate past practices of McCaw except for the
transitional activities contemplated by this Agreement.
8.7 Billing Information Deliveries. McCaw shall, at its sole
expense, deliver to SYGNET the information listed on Schedule 8.7, and has made
such delivery, or shall use its reasonable efforts to make such delivery, in
accordance with the deadlines set forth in Schedule 8.7, provided that any
immaterial failure to meet any such deadline shall not be deemed a breach of
this Agreement.
ARTICLE 9
SYGNET'S ACQUISITION OF REMAINING PARTNERS
Within five (5) business days before the Closing SYGNET (or
an Affiliate thereof) shall provide the remaining partners of ECTC with an
offer to acquire their respective interests in ECTC. Such offer shall provide
that SYGNET (or such Affiliate) will acquire:
1) all (but not less than all) of the remaining partnership
interests in ECTC at a pro-rata price for each such
interest determined by multiplying the ownership
percentage represented by such interest times the amount
obtained by dividing the Net Purchase Price as determined
hereunder by .9546; and
2) if less than all of the remaining partners agree to sell
their interests under the provisions of section 1) above,
all partnership interests of those partners who do agree
to sell their interests to SYGNET (or its Affiliate) at a
price equivalent
-27-
<PAGE> 31
to $110 per 1994 population comprised by such interests.
The population comprised by such interests shall be equal
to 282,791 (the total 1994 population of the Erie MSA as
reported in the SNL Branch Migration Datasource)
multiplied by the percentage interests in ECTC being sold
by such selling partners.
The offer shall be in writing, shall be conditioned upon
consummation of the Closing, and shall require that the offer is to be accepted
in writing within 30 days after it is sent to the offeree, at the offeree's
address as reflected on the records of ECTC, by courier service for next
business day delivery (the "Offer Period"). The consummation of the purchase of
any such selling remaining partners' interests shall occur within 30 days after
the expiration of the Offer Period (the "Consummation Period"); provided,
however, that if the remaining partnership interests are to be acquired under
clause 1) of this Article, and the Net Purchase Price has not been finally
determined pursuant to Section 3.1.5 by the end of the Consummation Period, the
Consummation Period shall be extended until 5 business days after the Net
Purchase Price is finally determined. The selling partner shall provide SYGNET
(or its Affiliate) with such documentation as may be reasonably required to
provide SYGNET (or its Affiliate) with good and marketable title to such
partners' interest in ECTC.
ARTICLE 10
MISCELLANEOUS
10.1. Expenses. Except as specifically provided for in this
Agreement, each party shall bear its own expenses incident to the negotiation,
preparation, authorization and consummation of this Agreement and the
transactions contemplated hereby, including, without limitation, all fees and
expenses of its counsel and accountants, whether or not such transactions are
consummated.
10.2. Equitable Remedies. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each party agrees
that it will not assert, as a defense against a claim for specific performance,
that the party seeking specific performance has an adequate remedy at law.
10.3. Notices. All notices, claims and other communications
hereunder shall be in writing and shall be made by hand delivery, registered or
certified mail (postage prepaid, return receipt requested), telex, facsimile,
or overnight air courier guaranteeing next day delivery, as follows:
-28-
<PAGE> 32
If to SYGNET, to:
SYGNET COMMUNICATIONS, INC.
6550 Seville Drive, Suite B
Canfield, OH 44406
Attention: Albert H. Pharis, Jr
(Fax No. 216-782-5379)
With a copy (which shall not constitute notice) to:
Bryan Cave
700 Thirteenth Street, N.W.
Washington, D. C. 20005
Attention: John R. Wilner, Esq.
(Fax No. 202-508-6200)
If to McCaw to:
5400 Carillon Point
Kirkland, Washington 98033
Attention: Scott I. Anderson, Esq.
(Fax No. 206-828-8451)
With a copy (which shall not constitute notice) to:
Stokes, Eitelbach & Lawrence, P.S.
800 Fifth Avenue, Suite 4000
Seattle, Washington 98104
Attention: Douglas C. Lawrence, Esq.
(Fax No. 206-464-1496)
or at such other address as any party may from time to time furnish to the
other parties by a notice given in accordance with the provisions of this
Section. All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, first class postage prepaid, return
receipt requested, if mailed; when answered back, if telexed; when receipt
confirmed, if sent by facsimile; and the next business day after timely
delivery to the courier, if sent by an over-night air courier service
guaranteeing next day delivery.
10.4. Entire Agreement. This Agreement, together with the
Schedules annexed hereto contains the entire understanding among the parties
hereto concerning the subject matter hereof and may not be changed, modified,
altered or terminated except by an agreement in writing executed by the parties
hereto. Any waiver by any party of any of its rights under this Agreement or of
any breach of this Agreement shall not constitute a waiver of any other rights
or of any other or future breach.
-29-
<PAGE> 33
10.5. Remedies Cumulative. Except as otherwise provided
herein, each and all of the rights and remedies in this Agreement, and each and
all of the rights and remedies allowed at law and in equity in like case, shall
be cumulative, and the exercise of one right or remedy shall not be exclusive
of the right to exercise or resort to any and all other rights or remedies
provided in this Agreement, at law, or in equity.
10.6. Governing Law. This Agreement shall be construed in
accordance with and subject to the laws and decisions of the State of
Pennsylvania (without giving effect to the conflicts of law principles thereof)
applicable to contracts made and to be performed entirely therein.
10.7. Counterparts. This Agreement may be executed in several
counterparts hereof, and by the different parties hereto on separate
counterparts hereof, each of which shall be an original, but such counterparts
shall together constitute one and the same instrument.
10.8. Waivers. No provision in this Agreement shall be deemed
waived by course of conduct unless such waiver is in writing signed by the
parties and stating specifically that it was intended to modify this Agreement.
10.9. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no assignment of rights hereunder shall
relieve the assigning party of its obligations hereunder. No party shall have
the right to assign this Agreement or any of its rights or obligations
hereunder to any Person without the written consent of the other parties
hereto; provided that SYGNET may assign its rights and delegate its obligations
hereunder without such consent, in whole or in part, to one or more Affiliates
of SYGNET provided that SYGNET remains fully liable for, and guarantees, such
Affiliates' performance of such obligations.
10.10. Further Assurances. Each of SYGNET, McCaw and ECTC
shall, at the request of any other party hereto from time to time, execute and
deliver such other assignments, transfers, conveyances and other instruments
and documents, and do and perform such other acts and things as may be
reasonably necessary or desirable for effecting complete consummation of this
Agreement and the transactions herein contemplated.
10.11. Disclosures.
10.11.1. Each of SYGNET, McCaw and ECTC acknowledges and
confirms that in connection with the negotiation of this Agreement, the
execution hereof and during the period from the date hereof through the Closing
Date, the parties hereto will have furnished to one another certain materials,
information, data and other documentation ("Disclosures") concerning their
business, financial condition and operations which are proprietary and
confidential. Each party acknowledges that the party making such
-30-
<PAGE> 34
Disclosures considers them secret and confidential, and asserts a proprietary
interest therein. Accordingly, each of SYGNET, McCaw and ECTC covenants and
agrees that it shall maintain all Disclosures made by another party in strict
confidence and shall not disclose them to third parties, except to its agents,
representatives, counsel and employees involved in evaluating the transactions
contemplated by this Agreement, its partners (and the partners or other
security holders thereof), and in the case of SYGNET to its financing sources,
or as may otherwise be required by law.
10.11.2. No public announcement by any party hereto (or
any representative of such a party) with regard to the transactions
contemplated hereby or the material terms hereof (including, without
limitation, the dollar amount to be delivered hereunder) shall be issued by any
party without the prior consent of the other parties.
10.11.3. This Agreement shall not restrict any party
hereto from using information already known to it, to which it is entitled
under existing agreements, or information generally in the public domain or any
information coming into its possession after it becomes public knowledge unless
it became public knowledge through a breach of this Agreement.
10.12. Termination.
10.12.1. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, without further obligation
of any of McCaw, ECTC or SYGNET at any time prior to the Closing Date as
follows:
10.12.1.1. By mutual written consent of SYGNET and
McCaw; or
10.12.1.2. By McCaw or by SYGNET if the consummation
of the transactions contemplated hereby shall be prohibited by a final,
non-appealable order, decree or injunction of the FCC or a court of competent
jurisdiction; or
10.12.1.3. By McCaw or by SYGNET, upon ten days'
prior written notice to the other party, if the Closing Date has not occurred
by June 30, 1996 unless such date is extended by agreement of all parties to
this Agreement; provided that the June 30, 1996 date shall be extended as to
the terminating party until 30 days after the end of any period during which
the contemplated transaction did not close by reason of an uncured material
default by such party.
10.12.2. In the event of a termination of this
Agreement, no party hereto shall have any liability or further obligation to
any other party to this Agreement except that nothing herein will relieve any
party from liability for any breach of this Agreement.
10.13. Severability. In the event that any term or
provision of this Agreement is determined to be void, unenforceable, or
contrary to law, the remainder of this Agreement shall continue in full force
and effect; provided that such continuation would not
-31-
<PAGE> 35
materially alter the terms hereof or materially diminish the benefits or
materially increase the burdens of this Agreement for any party.
10.14. Guarantee of Performance. By executing this
Agreement McCaw Cellular Communications, Inc., hereby guarantees and assures
the performance by McCaw of all of McCaw's obligations hereunder.
IN WITNESS WHEREOF, the parties, all of whom are duly
authorized to act, have caused this Agreement to be executed the day, month and
year above written.
SYGNET: SYGNET COMMUNICATIONS, INC.
By /s/ ALBERT H. PHARIS, JR.
-------------------------------
Its President & CEO
------------------------------
McCAW: ERIE CELLULAR SYSTEMS, INC.
By /s/ WILLIAM W. HAGUE
-------------------------------
Its Vice President
------------------------------
For Purposes of Affirming Section 10.14 Only:
McCAW CELLULAR COMMUNICATIONS, INC.
By: /s/ WILLIAM W. HAGUE
--------------------------
Its: Vice President
-------------------------
-32-
<PAGE> 36
LIST OF SCHEDULES
Schedule 4.1.2.2 Transition Information
Schedule 5.1.2 Permits, Consents, Filings and Approvals Required of McCaw
or ECTC
Schedule 5.1.4 Legal Matters
Schedule 5.1.6 List of ECTC Assets
Schedule 5.1.6A Digital Cell Site Equipment
Schedule 5.1.8 List of Authorizations
Schedule 5.1.9 List of Obligations, Liens, Security Interests and Adverse
Claims to Title - Interest and Assets
Schedule 5.1.10 Contracts of ECTC
Schedule 5.1.11 Real Property Owned, Leased and Optioned by ECTC
Schedule 5.1.12 Storage Tanks Located on Property
Schedule 5.1.13 Employees, Employment Obligations
Schedule 5.1.14 Bank Accounts and Deposits of ECTC
Schedule 5.1.19 Changes since December 31, 1994
Schedule 6.1.3 Opinion of Counsel to McCaw
Schedule 6.1.4 Opinion of FCC Counsel to McCaw
Schedule 6.2.5 Opinion of Counsel to SYGNET
Schedule 8.3 Transition Services Agreement
Schedule 8.7 Billing Conversion Information
-33-
<PAGE> 37
Schedule 4.1.2.2
Transition Information to be Delivered by McCaw
<TABLE>
<CAPTION>
===============================================================================================================================
INFORMATION* DELIVERY DEADLINE**
- ------------ -------------------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Download of information from McCaw's Ericsson switch regarding the System's September 15, 1995
subscribers, including mobile identification numbers, electronic serial numbers
and features for each subscriber
- -------------------------------------------------------------------------------------------------------------------------------
2. Download of information regarding the System's voicemail subscribers, including September 15, 1995
mailbox number, subscriber name, outdial number and voice mailbox service plan
- -------------------------------------------------------------------------------------------------------------------------------
3. Test conversion tape for billing conversion including: September 15, 1995
- Account level information
- Mobile level information
- Equipment information
- Payments, adjustments and pending OCCs
- Tickler notes
- -------------------------------------------------------------------------------------------------------------------------------
4. A/R balance report, including file descriptions and tape headers September 15, 1995
- -------------------------------------------------------------------------------------------------------------------------------
5. Revenue reports for 8/10/95 and 9/10/95 billing cycles September 25, 1995
- -------------------------------------------------------------------------------------------------------------------------------
6. Copies of all notices delivered to clearinghouse and roaming partners regarding September 15, 1995
net settlements, incollect and outcollect effective dates as follows:
- Incollect eff. date = 10/1/95; date on which incollects for
30067 will be routed to SID 89
- Outcollect eff. date = 10/1/95; date on which SID 89 will bill
for outcollects from 30067
- Net settlement eff. date = 10/16/95; date on which SYGNET will
enter net settlement for BID 30067
===============================================================================================================================
</TABLE>
- ------------------------------------
* All information other than that set forth in item 6 to be provided on
electronic tape, with hardcopy if requested by SYGNET. Information in
item 6 to be provided in hardcopy.
** Delivery deadlines based on September 29, 1995 Closing. If Closing
occurs after that date, deadlines will be adjusted accordingly.
<PAGE> 38
SCHEDULE 5.1.2
PERMITS, CONSENTS, FILINGS AND
APPROVALS REQUIRED OF MCCAW OR ECTC
1. Consent of Federal Communications Commission for the transfer of
control of ECTC.*
2. Notice of transfer of control to be given to Cellular One Group with
respect to the Cellular One License Agreement effective December 1,
1991 between Cellular One Group and Erie Cellular Telephone Company.*
3. Prior notice required to be given pursuant to the Lease Agreement
dated September 21, 1988 between Public Broadcasting of Northwest
Pennsylvania, Inc. and McCaw Communications of Erie, Inc., as amended
on October 1, 1988. (For assignment from McCaw Communications of Erie,
Inc. to ECTC.)*
4. Notice required to be given pursuant to the Option and Site Lease
Agreement dated March 16, 1993 between Lyle F. Bisbee and McCaw
Communications of Erie, Inc. (For assignment from McCaw Communications
of Erie, Inc. to ECTC.)*
5. Termination of Guaranty of Lease by McCaw Cellular Communications,
Inc., which relates to the Lease Agreement dated November 27, 1989
between JCG Partnership and Erie Cellular Telephone Company d/b/a
Cellular One.*
6. Termination of Guaranty of Lease and Lease Amendment by McCaw Cellular
Communications, Inc., dated August 20, 1990, which relates to the
Lease Agreement dated November 27, 1989 between JCG Partnership and
Erie Cellular Telephone Company d/b/a Cellular One, as amended on July
6, 1990 and August 2, 1990.*
- --------------------------------------------------------------------------------
*Material consents
<PAGE> 39
SCHEDULE 5.1.4
LEGAL MATTERS
1. Complaint filed by Janice Y. Baumbach in the Court of Common Pleas of
Allegheny County, Pennsylvania, Civil Division, GD 95-091, alleging
sex and age discrimination.
2. Threatened class action suit may be brought by Joseph W. Carcione, Jr.
on behalf of minority partners.
<PAGE> 40
SCHEDULE 5.1.6
LIST OF ECTC ASSETS
See attached.
<PAGE> 41
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 11
M c C a w C e l l u l a r C o m m u n i c a t i o n s , Inc.
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T
-----------------------------------------------
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) END OF PERIOD
- -------- ------------------ ------------- ------------ -------------
: 2010 PP&E - Leasehold Improvements. 2010: 0000 General
<S> <C> <C>
7616.00 LEASEHOLD IMPROVEMENTS 18,194 18,194
30138.00 BACKHOE AND TRENCH FOR POWER 1,360 1,360
30212.00 L/H IMPROVEMENTS CONSTRUCTION 10,151 10,151
35405.00 CONCRETE 105 105
39178.00 SEEDING OF SITE AREA 200 200
39179.00 LABOR FOR FENCE RELOCATION 200 200
39180.00 CONSTRUCT CONCRETE PAD FOR PO 2,226 2,226
39181.00 CONSTRUCT 2 CONCRETE BASES FO 912 912
39182.00 PHONE TOWER SITE PREPARATION 13,766 13,766
39189.00 FENCED SITE & INSTALLED GATE 5,700 5,700
40525.00 LEASEHOLD IMPROVEM 775 775
40529.00 SCREEN FOR GLIDER WINDOW 26 26
46143.00 SERVICE CENTER SECURITY AGREE 961 961
51260.00 LEASEHOLD IMPROVEMENTS FOR ER 926 926
51261.00 FLOOR INVESTIGATION 620 620
84519.00 STONE GUY AREA AND FENCE 2,000 2,000
99946.00 ERIE RENOVATIONS 3,384 3,384
00041.00 LABOR & MATERIALS ERIE RENOVA 26,300 26,300
00043.00 MOTION DETECTOR ALARM 236 236
00044.00 KEY LOCK VAULT 218 218
01139.00 ERIE RENOVATION 114 114
01140.00 ERIE RENOVATIONS 4,530 4,530
01141.00 ERIE RENOVATIONS 218 218
01760.00 LEASEHOLD IMPROVEMENTS 392 392
93501.00 SIGN-ERIE 5,335 5,335
98627.00 CARPET-ERIE 2,275 2,275
98649.00 94 ERIE PROJECTS 816 816
98657.00 CORRY 3,259 3,259
00934.00 ERIE BUILDOUT PJT 4,317 4,317
01196.00 FRONT SALES COUNTER 1,375 1,375
01197.00 FRONT COUNTER/YTOWN 650 650
01198.00 YORKTOWN SIGNAGE 3,098 3,098
01589.00 SALES COUNTERS-FR & BACK 1,535 1,535
01590.00 SALES COUNTERS-FR & BACK 702 702
03231.00 INSTALL SLAT WALL 2,500 2,500
------------- -------------
TOTAL FOR 2010 0000 119,376 119,376
<CAPTION>
: 2050 PP&E - Switches and Terminals 2050: 0020 MISO Equipment
<S> <C> <C>
7600.00 CELLULAR SYSTEM-SWI 800 800
7607.00 CELLULAR SYSTEM-SWI 147 147
7608.00 CELLULAR SYSTEM-01 11,371 11,371
7613.00 CELLULAR SYSTEMS- 20,000 20,000
96804.00 POWER EQUIP FOR ERIE POP 2,105 2,105
------------- -------------
TOTAL FOR 2050-0020 34,423 34,423
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED DEPRECIATION
-------------------------------------------
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) END OF PERIOD
- -------- ------------------ ------------- ------------- -------------
: 2010 PP&E - Leasehold Improvements. 2010: 0000 General
<S> <C> <C> <C>
7616.00 LEASEHOLD IMPROVEMENTS 18,194 18,194
30138.00 BACKHOE AND TRENCH FOR POWER 1,360 1,360
30212.00 L/H IMPROVEMENTS CONSTRUCTION 10,151 10,151
35405.00 CONCRETE 105 105
39178.00 SEEDING OF SITE AREA 193 3 197
39179.00 LABOR FOR FENCE RELOCATION 193 3 197
39180.00 CONSTRUCT CONCRETE PAD FOR PO 2,152 37 2,189
39181.00 CONSTRUCT 2 CONCRETE BASES FO 881 15 896
39182.00 PHONE TOWER SITE PREPARATION 13,307 230 13,537
39189.00 FENCED SITE & INSTALLED GATE 5,510 95 5,605
40525.00 LEASEHOLD IMPROVEM 775 775
40529.00 SCREEN FOR GLIDER WINDOW 26 26
46143.00 SERVICE CENTER SECURITY AGREE 864 16 880
51260.00 LEASEHOLD IMPROVEMENTS FOR ER 787 16 803
51261.00 FLOOR INVESTIGATION 527 10 537
84519.00 STONE GUY AREA AND FENCE 1,200 33 1,233
99946.00 ERIE RENOVATIONS 1,580 56 1,636
00041.00 LABOR & MATERIALS ERIE RENOVA 11,835 438 12,273
00043.00 MOTION DETECTOR ALARM 106 4 109
00044.00 KEY LOCK VAULT 98 4 102
01139.00 ERIE RENOVATION 50 2 51
01140.00 ERIE RENOVATIONS 1,963 76 2,039
01141.00 ERIE RENOVATIONS 91 4 95
01760.00 LEASEHOLD IMPROVEMENTS 169 7 176
93501.00 SIGN-ERIE 890 89 978
98627.00 CARPET-ERIE 266 38 303
98649.00 94 ERIE PROJECTS 95 14 109
98657.00 CORRY 380 54 434
00934.00 ERIE BUILDOUT PJT 432 72 503
01196.00 FRONT SALES COUNTER 92 23 115
01197.00 FRONT COUNTER/YTOWN 43 11 54
01198.00 YORKTOWN SIGNAGE 206 52 258
01589.00 SALES COUNTERS-FR & BACK 102 26 128
01590.00 SALES COUNTERS-FR & BACK 47 12 59
03231.00 INSTALL SLAT WALL 10 7 17
------------- ------------ -------------
TOTAL FOR 2010 0000 74,680 1,445 76,125
<CAPTION>
: 2050 PP&E - Switches and Terminals 2050: 0020 MISO Equipment
<S> <C> <C> <C>
7600.00 CELLULAR SYSTEM-SWI 401 6 406
7607.00 CELLULAR SYSTEM-SWI 71 1 72
7608.00 CELLULAR SYSTEM-01 6,160 79 6,239
7613.00 CELLULAR SYSTEMS- 10,449 145 10,594
96804.00 POWER EQUIP FOR ERIE POP 471 16 487
------------- ------------ -------------
TOTAL FOR 2050-0020 17,552 246 17,798
</TABLE>
<PAGE> 42
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 12
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
: 2080 PP&E CELL SITES AND FIXED STATIONS 2080: 0010 TOWER
30140.00 ROHN MODEL #80 GUYED TOWER GI 130,567 130,567 55,290 953 56,243
39314.00 LCC ALLOCATION 1,505 1,505 637 10 647
40526.00 DIG & FILL HOLES, GRADING-TOWE 5,496 5,496 2,290 38 2,328
40532.00 CONSTRUCT SUPERVISE 1,136 1,136 467 8 474
49644.00 200 AMP MANUAL TRANSFER SWITCH 4,334 4,334 1,564 30 1,595
64105.00 FILING FEE FOR THE NORTHEAST 230 230 71 2 73
77041.00 FEE TO INCREASE ANTENNA HEIGH 60 60 18 0 18
79155.00 TOWER FOR NORTHEAST SITE 31,369 31,369 8,278 218 8,496
80482.00 FEE TO MODIFY CELL SITE 230 230 58 2 60
97925.00 ERIE/MODIFY 2 SITES 60 60 13 0 13
10450.00 TOWER FOR UNION CITY 6,337 6,337 968 44 1,012
14586.00 FEE TO MODIFY SITE 60 60 8 0 8
50548.00 TOWER FOR VOICE CHANNEL EXPAN 6,396 6,396 800 44 844
50553.00 TOWER MOD. FOR VOICE CHANNEL 1,714 1,714 215 12 226
52265.00 MODIFY UNION CITY 60 60 8 0 8
98628.00 FAIRVIEW 73,114 73,114 3,555 508 4,062
98629.00 FAIRVIEW 66,115 66,115 3,214 459 3,673
98630.00 FAIRVIEW 24,264 24,264 1,180 169 1,349
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2080-0010 353,047 353,047 78,631 2,498 81,129
: 2080 PP&E Cell Sites and Fixed Stations, 2080: 0015 RF Radio Equipment
93639.00 TOWER LIGHT CONTROLLER 1,090 1,090 235 8 243
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2080-0015 1,090 1,090 235 8 243
: 2080 PP&E Cell Sites and fixed Stations. 2080: 0020 Cell Electronics
33461.00 CELLULAR ELECTRONICS - BALDWI 3,413 3,413 1,469 24 1,492
33464.00 RADIO CHANNEL UNITS (6) W/ AS 8,537 8,537 3,676 59 3,735
35414.00 RADIO CHANNEL UNITS (6) 24,169 24,169 10,022 168 10,190
39177.00 6 RADIO CHANNEL UNITS & ASSOC 14,963 14,963 6,028 104 6,131
39200.00 (6) RADIO CHANNEL UNITS & ASS 50,256 50,256 20,242 349 20,591
39210.00 6 RADIO CHANNEL UNITS & ASSOC 6,513 6,513 2,625 45 2,670
40528.00 6 RADIO CHANNEL UNITS & ASSOC 78,192 78,192 33,319 541 33,860
41342.00 CELL ELECTRONICS 21,670 21,670 9,782 151 9,933
43719.00 RADIO ELECTRONICS 47,338 47,338 20,546 327 20,872
58078.00 FILING FEE FOR MODIFICATIONS 230 230 76 2 78
58080.00 FILING FEE FOR MODIFICATIONS 60 60 21 0 21
77841.00 TWO POSITION FUSE PANEL 2,467 2,467 669 17 686
79156.00 CELLULAR ELECT FOR NORTHEAST 80 80 21 1 22
79159.00 CELL ELECTR FOR NORTHEAST SIT 7,207 7,207 1,902 50 1,953
79160.00 CELL ELECTR FOR NORTHEAST SIT 13,408 13,408 3,537 93 3,631
79161.00 RF RADIO EQUIP FOR NORTHEAST 47,309 47,309 12,483 329 12,812
84520.00 17 50W 832CH RADIOS 98,119 98,119 24,531 681 25,212
96816.00 CELL ELECTRONICS ERIE POP 1,444 1,444 323 11 333
</TABLE>
<PAGE> 43
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 13
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
96817.00 CELL ELECTRONICS FOR ERIE POP 11,546 11,546 2,585 86 2,671
96820.00 CELL ELECTRONICS FOR ERIE POP 292 292 65 2 67
96823.00 CELL ELECTR FOR ERIE POP 240 240 54 2 55
08623.00 FEE FOR NEW SITE-UNION CITY 60 60 10 0 10
08625.00 ERIE/MOD UNION CITY 60 60 10 0 10
10452.00 RF RADIO EQMT FOR UNION CITY 35,927 35,917 5,489 250 5,739
10455.00 CELL ANTENNAE & CABL FOR UNIO 8,520 8,520 1,302 59 1,361
10459.00 CELL ELECTRONICS FOR UNION CI 11,917 11,917 1,821 83 1,903
10460.00 CELL ELECTRONICS FOR UNION CI 2,550 2,550 390 18 407
10461.00 CELL ELECTRONICS FOR UNION CI 2,013 2,013 308 14 322
10462.00 CELL ELECTRONICS FOR UNION CI 206 206 32 1 33
10511.00 CELL OTHER FOR UNION CITY 33,293 33,293 5,086 231 5,317
11843.00 FEE TO BUILD SITE-UNION CITY 230 230 33 2 35
14581.00 CELL ELECTR FOR UNION CITY 68,558 68,558 9,521 476 9,998
14583.00 CELL ELECTR FOR 530 CACCS 1,012 1,012 140 7 147
14585.00 CELL ELECTR FOR 530 DACCS 304 304 41 2 44
50544.00 CELL ELECTRONICS FOR UNION CI 1,458 1,458 182 10 193
50554.00 RF RADIO EQUIPMENT FOR VOICE 55,542 55,542 6,943 386 7,328
50555.00 CELL OTHER FOR VOICE CHANNEL 12,758 12,758 1,594 89 1,683
50556.00 CELL ANTENNAE & CABL FOR VOIC 4,765 4,765 595 33 629
50561.00 CELL ELECTRONICS FOR VOICE CH 2,700 2,700 338 19 356
50562.00 CELL ELECTRONICS FOR VOICE CH 8,065 8,065 1,008 56 1,064
50563.00 CELL ELECTRONICS FOR VOICE CH 3,515 3,515 440 24 464
50564.00 CELL ELECTRONICS FOR 530 DACC 1,024 1,024 127 7 135
52305.00 STATE TAX DEFICIENCY 3,903 3,903 406 27 434
52306.00 STATE TAX DEFICIENCY 210 210 22 2 24
52307.00 STATE TAX DEFICIENCY 316 316 33 2 35
56102.00 REQ FOR DEV AUTH 70 70 6 1 7
58143.00 CELL ELEC VOICE CHANNEL EXPAN 22,933 22,933 1,912 159 2,071
98632.00 FAIRVIEW 15,647 15,647 761 109 870
98637.00 FAIRVIEW 3,500 3,500 170 24 194
98638.00 FAIRVIEW 6,063 6,063 294 42 337
98639.00 FAIRVIEW 215 215 10 2 12
98640.00 FAIRVIEW 10,623 10,623 517 74 590
98641.00 FAIRVIEW 3,661 3,661 178 25 203
98642.00 ERIE EXPANISON 154,560 154,560 7,513 1,073 8,586
98643.00 ERIE EXPANSION 10,623 10,623 517 74 590
98644.00 ERIE EXPANSION 10,134 10,134 493 70 563
98647.00 ERIE EXPANSION 11,717 11,717 569 81 650
98648.00 ERIE EXPANSION 3,032 3,032 147 21 169
98651.00 94 ERIE PROJECTS 2,054 2,054 100 1 114
98655.00 94 ERIE PROJECTS 7,407 7,407 360 51 411
98656.00 94 ERIE PROJECTS 24 24 1 0 1
98658.00 CORRY 3,906 3,906 190 27 217
98659.00 CORRY 1,070 1,070 52 7 59
98661.00 CORRY 2,543 2,543 124 18 142
</TABLE>
<PAGE> 44
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 14
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
98662.00 CORRY 919 919 45 6 51
00935.00 UNION CITY PRJT 18,598 18,598 646 129 775
00936.00 ERIE EXPANSION 16,045 16,045 557 111 669
00937.00 ERIE '93 PROJECTS 20,921 20,921 726 145 872
00938.00 CORRY PROJECT 7,720 7,720 268 54 322
01199.00 ERIE/MODIFY CORRY 70 70 2 1 3
02473.00 CLOSE UNION CITY 40 40 1 0 1
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2080 0020 1,030,454 1,030,454 206,000 7,159 213,160
: 2080 PP&E CELL SITES AND FIXED STATIONS, 2080: 0030 SITE SHELTERS
7597.00 CELLULAR SYSTEM-SIT 221,582 221,582 120,023 1,539 121,561
7599.00 SHELTERS AND GENERA 71,395 71,395 38,673 496 39,168
7601.00 CELLULAR SYSTEM-SIT 19,608 19,608 10,621 136 10,757
30139.00 SITE SHELTER - FIBERGLASS 11' 79,191 79,191 34,533 565 35,098
39192.00 50 TON CRANE TO SET SHELTER 650 650 261 5 266
39213.00 STORAGE CHARGE FOR EDINBORO S 570 570 230 4 233
39215.00 STORAGE & DELIVERY AT SHELTER 580 580 232 4 237
79162.00 SITE SHELTER FOR NORTHEAST SI 39,837 39,837 10,513 277 10,790
10456.00 SHELTER/PLACEMENT FOR UNION C 13,393 13,393 2,046 93 2,139
50557.00 SHELTER/PLACEMENT FOR VOICE C 1,498 1,498 188 10 198
98633.00 FAIRVIEW 30,946 30,946 1,505 215 1,719
98652.00 94 ERIE PROJECTS 957 957 47 7 54
------------- ----------- -------------- -------------- -----------
TOTAL FOR 2080-0030 480,207 480,207 218,870 3,350 222,221
: 2080 PP&E Cell sites and Fixed Stations, 2080: 0050 Power
30148.00 BATTERY AND RECTIFIERS W/ SPA 12,578 12,578 5,432 90 5,522
33462.00 POWER SUPPLY-INSTALL 200 AMP 28,278 28,278 12,176 196 12,372
33463.00 BATTERY AND RECTIFIERS W/SPAR 6,523 6,523 2,809 45 2,854
35402.00 POWER SUPPLY FOR TOWER LIGHT 820 820 363 6 369
39191.00 FURNISH & INSTALL 65' WOODEN 451 451 182 3 185
39193.00 INSTALL 12" CONDUIT UNDER DRIV 300 300 120 2 123
39201.00 CHARGER, BATTERIES, BREAKER & 1,103 1,103 445 8 453
39218.00 DELIVER & SET 30' POLE WITH G 185 185 74 1 75
40527.00 CADWELL MOLD-FED EX SHIP=GRO 119 119 48 1 49
43721.00 ELECTRICAL POWER 7,462 7,462 2,954 52 3,006
45664.00 SOILS TEST AND REPORT FOR TOW 312 312 117 2 119
77620.00 TWO GNB ABSOLYTE 11 BATTERIES 9,954 9,954 2,696 69 2,766
79164.00 POWER & GENERATORS NORTHEAST 1,250 1,250 329 9 338
79165.00 SITE SURVEY WORK FOR NORTHEAS 4,537 4,537 1,197 32 1,229
79166.00 BLDG. PERMITS AND FEES FOR NOR 377 377 99 3 102
79167.00 SITE WORK FOR NORTHEAST SITE 119 119 32 1 33
79168.00 INSPECTION AND TESTING FOR NO 3,188 3,188 842 22 864
93566.00 1000 FT. #1 WELDING CABLE 706 706 153 5 157
96811.00 POWER EQUIP FOR ERIE POP 992 992 223 7 230
</TABLE>
<PAGE> 45
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 15
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
96813.00 RECTIFIERS BATTERIES ERIE POP 3,176 3,176 711 24 734
10454.00 POWER EQUIPMENT FOR UNION CIT 10,338 10,338 1,580 72 1,651
10457.00 SITE ACQUISITION FOR UNION CI 10,356 10,356 1,583 72 1,654
10458.00 BLDGS PERMITS & FEES FOR UNIO 10 10 1 0 2
50558.00 SITE ACQUISITON FOR VOICE CH 14 14 1 0 2
50559.00 SITE WORK FOR VOICE CH. EXPAN 13,118 13,118 1,639 91 1,731
94121.00 4 STEEL I-BEAMS 206 206 46 1 47
98631.00 FAIRVIEW 19,004 19,004 924 132 1,056
98634.00 FAIRVIEW 747 747 36 5 41
98635.00 FAIRVIEW 3,118 3,118 152 22 174
98636.00 FAIRVIEW 67,868 67,868 3,299 471 3,770
98650.00 94 ERIE PROJECTS 19,219 19,219 934 134 1,068
98653.00 94 ERIE PROJECTS 1,500 1,500 73 10 83
98660.00 CORRY 500 500 24 4 28
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2080 0050 228,428 228,428 41,292 1,592 42,884
: 2080 PP&E Cell Sites and Fixed Stations, 2080: 0060 Site Development
30133.00 SURVEYING SERVICES - GIRARD 2,786 2,786 1,257 19 1,276
30135.00 AERONAUTICAL STUDY AND ANALYS 815 815 368 6 374
30144.00 SOILS REPORT GIRARD 3,050 3,050 1,376 21 1,397
30153.00 RECORDER OF DEEDS-GIRARD SITE 22 22 11 0 11
30159.00 GIRARD SITE DEVELOPMENT 1,433 1,433 647 10 656
30168.00 CELL SITE ELECTRONICS - GIRAR 86,018 86,018 38,827 597 39,424
33514.00 S. BERNSTEIN-SITE DEVELOPMENT 1,268 1,268 547 9 556
39154.00 SITE DEVELOPMENT-BERNSTEIN 4,712 4,712 1,899 33 1,932
39176.00 SURVEY FOR CELL SITE 1,339 1,339 540 9 549
39195.00 AERONAUTICAL STUDY & ANALYSIS 695 695 280 5 285
40530.00 PREPARATION OF FAA FORM 7460- 240 240 98 2 100
42519.00 FCC - CORPORATE 60 60 23 0 23
43716.00 SITE DEVEL - GRAFF 669 669 261 5 266
49857.00 FILING FEE FOR MODIFICATIONS 60 60 22 0 22
49858.00 FILING FEE FOR MODIFICATIONS 230 230 82 2 84
96952.00 ERIE/NEW SITES CORRY FAIRVIEW 70 70 4 1 5
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2080 0060 103,467 103,467 46,241 719 46,960
: 2080 PP&E Cell Sites and Fixed Stations, 2080: 0070 Antennas & Coaxial Cables
7603.00 CELLULAR ANTENNAS A 13,821 13,821 7,488 96 7,584
30137.00 CABLE BOOT/CONNECTORS FOR ANT 596 596 270 4 274
30141.00 LARRY BROUDY-SUPERVISION OF A 166 166 76 1 77
30142.00 ANTENNA AND CABLE FOR GIRARD 31,354 31,354 13,528 226 13,754
33473.00 ANTENNA 820 855 OMNI 9DB / 86 2,019 2,019 868 14 882
33474.00 COAXIAL CABLE & PARTS FOR BAL 3,455 3,455 1,488 24 1,512
33475.00 COAXIAL CABLE INSTALL FOR BAL 1,884 1,884 798 13 812
33476.00 CABLEING & CLAMPS FOR BALDWIN 2,305 2,305 992 16 1,008
</TABLE>
<PAGE> 46
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 16
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
33520.00 PARTS FOR ANTENNA SYSTEM AT B 854 854 367 6 372
39183.00 GROUNDING KIT 153 153 62 1 64
39184.00 COAX CABLE & HARDWARE 1,250 1,250 503 9 512
39186.00 GROUNDING KIT LOF-5-50A 20498 39 39 15 0 15
39187.00 NUTS & WASHERS 83 83 33 1 34
39188.00 ALTON ATTENUATOR 273 273 112 2 113
39196.00 TRANSPORATION-6-13690 102 102 41 1 41
39198.00 (3)L46N CONNECTOR JACKS, (1) 2,263 2,263 912 16 927
39205.00 COAX CABLE & GROUNDING KITS 695 695 280 5 285
39208.00 N-F 7/8" CONNECTOR K-327 185 185 74 1 75
11383
39209.00 EXPENSES WHILE WORKING ON SIT 507 507 203 4 207
41890.00 LCC ALLOCATION 752 752 289 5 294
45666.00 ANTENNA 877 877 328 6 335
79171.00 ANTENNA AND CABLING FOR NORTH 7,884 7,884 2,081 55 2,135
96815.00 CELL. ANT. AND CABLING ERIE P 745 745 167 6 173
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2080-0070 72,262 72,262 30,973 510 31,484
: 2130 PP&E - Interconnection Equipment, 2130: 0020 Microwave Electronics
79172.00 TELCO INTERFACE FOR NORTHEAST 1,196 1,196 316 8 324
79173.00 INTERCONNECT EQUIPMENT 1,316 1,316 357 9 366
14582.00 TELCO INTERFACE FOR 530 DACCS 20,564 20,564 2,857 143 3,000
50560.00 TELCO INTERFACE EQU FOR VOICE 36,833 36,833 4,604 256 4,859
98645.00 ERIE EXPANSION 60 60 3 0 3
98646.00 ERIE EXPANSION 208 208 10 1 11
98654.00 94 ERIE PROJECTS 10,405 10,405 506 72 578
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2130-0020 70,582 70,582 8,651 490 9,141
: 2130 PP&E - Interconnection Equipment, 2130: 0030 Telco Interconnect
7610.00 PROPERTY & EQUIP-TE 17,142 17,142 8,452 119 8,571
7615.00 PROPERTY & EQUIPMEN 960 960 427 7 434
20703.00 MINI DACC INTERFACE 12,680 12,680 5,725 88 5,813
20705.00 TELCO INTERCONNECT - INSTALLA 1,815 1,815 818 13 831
39206.00 INSTALLATION OF CABLE TO MCI 200 200 82 1 83
39308.00 48 CHANL ADPCM I-CO 7,019 7,019 2,828 49 2,876
40531.00 MODEL 1544 CHANNEL SERVICE UN 939 939 371 7 378
42515.00 OPX CIRCUITS 320 320 124 2 126
42526.00 OPX CIRCUITS 683 683 266 5 270
79655.00 NON RECURRING ILE 900 900 251 6 257
88169.00 SMART CSU'S FOR ERIE BALDWIN 5,448 5,448 1,249 38 1,287
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2130-0030 48,106 48,106 20,592 334 20,926
</TABLE>
<PAGE> 47
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 17
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
: 2150 PP&E - Other Equipment, 2150: 0010 Spares - Switch/Sites/Interconnect
7604.00 SPARE PARTS 3,876 3,876 2,100 27 2,126
20717.00 SPARES FOR 351 MINI DACC 6,664 6,664 6,664 6,664
27575.00 SPARES CELL ELECTRONICS 6,433 6,433 6,433 6,433
35908.00 SPARE ERICSSON EQUIP FOR ALL 18,385 18,385 18,385 18,385
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2150-0010 35,358 35,358 33,581 27 33,608
: 2150 PP&E - Other Equipment, 2150: 0020 Test Equipment
7609.00 TEST EQUIPMENT 1,940 1,940 957 14 971
30136.00 CORE SITES TEST EQUIPMENT 171 171 171 171
47108.00 RADIO TEST EQUIPMENT 10,667 10,667 9,600 178 9,778
48620.00 HB-800 HELPER MATCHBOX 800 654 654 567 11 578
53866.00 THREE UNIT OPTIMIZER AND BATT 993 993 843 17 860
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2150-0020 14,425 14,425 12,139 219 12,357
: 2150 PP&E - Other Equipment, 2150: 0030 Tools & Safety Equipment
47110.00 VARIOUS SMALL TOOLS AND 582 582 515 10 524
EQUIPM
48283.00 ERIE SSC TOOLS 316 316 279 5 284
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2150 0030 898 898 793 15 809
: 2150 PP&E - Other Equipment, 2150: 0090 Other Equipment
33515.00 LEAD/LAG CONTROLLER FOR HVAC 231 321 231 231
46825.00 SYMBOL LASER GUN 1,592 1,592 1,433 27 1,460
97857.00 NEON SIGN FOR ERIE OFFICE 2,624 2,624 1,313 44 1,356
97858.00 SMALL OFFICE REFRIDGERATOR OF 350 350 175 6 181
14584.00 CELL ELECTR FOR 530 DACCS 3,914 3,914 1,305 65 1,370
93502.00 FAX & SHREDDER 3,337 3,337 500 56 556
01195.00 PAPER SHREDDER 3802 530 530 53 9 62
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2150-0090 12,578 12,578 5,010 206 5,215
: 2150 PP&E - Other Equipment, 2150: 0100 Credit, Collection & Billing Equip
47111.00 CASH DRAWER W/TILL & 120 PLUG 431 431 388 7 395
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2150 0100 431 431 388 7 395
: 2150 PP&E - Other Equipment, 2150: 0110 Display Booths
28242.00 PHONE DISPLAY UNITS FOR SALES 1,082 1,082 1,082 1,082
52308.00 TRADE SHOW BOOTH 4,806 4,806 1,441 80 1,522
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2150-0110 5,888 5,888 2,523 80 2,604
</TABLE>
<PAGE> 48
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 18
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
: 230 Cellular Phones - Demonstration, 2300: 0000 General
58494.00 PAN-EB500T/2-071970 562 562 562 562
62550.00 FUJI POCK COMM/8504FD81 799 799 799 799
62553.00 MC-U/C/822B5CB3 621 621 621 621
65858.00 DEMO PHONE ACCESS. & STATE US 122 122 122 122
65858.01 MC-ULTRACLASSIC/822F492E 606 606 606 606
65858.02 PAN-HP600P/880EC38F 760 760 760 760
65858.04 MC-420T W/BATT/824D81D 330 330 330 330
72686.00 ERIE DEMO PHONES FOR DEC. '91
72686.01 MC-420M/8243BCA9 277 277 277 277
72686.02 MC-420M/8243BBEF 277 277 277 277
77628.00 TOTE PHONE 82460DCB - 4/92 297 297 297 297
81086.00 DEMO PHONES 6-92 202 202 202 202
81086.01 MC-420T W/ 825297D6 310 310 310 310
81086.02 MC-420T W/ 82529174 310 310 310 310
81086.03 MC-420T W/ 82519B85 310 310 310 310
81086.04 MC-420T W825353C2 310 310 310 310
81086.05 MC-420T W/ 82550EA4 310 310 310 310
81086.06 MC-760P 8250AA45 335 335 335 335
81086.07 MC-750P 8250CAE7 335 335 335 335
81086.08 MC-750P 8250CAE9 335 335 335 335
81086.09 MC-750P 8250E7E8 335 335 335 335
81086.10 MC-P-USED 18221484C 477 477 477 477
87941.00 DEMO PHONES 9-92 162 162 153 4 157
87941.01 MC-750 825E86AA 599 599 566 17 582
87941.02 MC-3101 W/ 8257673C 310 310 292 9 301
87941.03 MC-3101 W/ 8257F1C4 310 310 292 9 301
87941.04 P-600 87116FDC 725 725 685 20 705
87941.05 U/C M 822F13CO 470 470 444 13 457
92971.00 DEMO PHONES 11/92 617 617 549 17 566
109053.00 DEMO PHONES - AUG. 271 271 173 8 181
109053.01 MC-310M 82A5E76D 231 231 148 6 154
109053.02 MC-::II 8268CC7C 522 522 334 15 348
109053.03 MC-PPII 82A85899 522 522 334 151 348
454449.00 DEMO PHONES 5/94 146 146 57 4 62
456096.00 EMP PHONES 6/94 454 454 163 13 176
658146.00 DEMO PHONES 0794 66 66 20 2 22
993508.00 DEMOS AUG 94 349 349 107 10 116
993511.00 DEMOS PH 9/94 197 197 55 6 61
997393.00 DEMO PHONE 11/94 554 554 124 15 139
999542.00 DEMO PHONES 12/94 423 423 83 12 94
999649.00 NOV USE TAX DEMOS 39 39 7 1 9
000932.00 DEMO PHONES 1/95 781 781 130 22 152
00941.00 DEMO PHONES 2/95 357 357 50 10 59
003349.00 0595 DEMOS 225 16 241 6 6 13
------------- ------------ ---------- ------------- ------------- ----------
TOTAL FOR 2300-0000 16,550 16 16,566 12,991 232 13,223
</TABLE>
<PAGE> 49
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 19
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
: 2300 Cellular Phones - Demonstration 2300: 0006 Demos
7612.00 SHOP & OFFICE - DEM 596 596 596 596
30177.00 MOTOROLA PERSONEL PHONE II 1,195 1,195 1,195 1,195
30177.01 NEC PORTABLE 899 899 899 899
30177.04 CELLULAR MOBILE TELEPHONE 399 399 399 399
30177.05 CELLULAR MOBILE TELEPHONE 399 399 399 399
30177.06 6000X W/VOICE 1,195 1,195 1,195 1,195
30177.07 CELLULAR PHONE W/GH ANTENNA 420 420 420 420
30179.00 DEMO PHONE UNIDEN TRANSPORTAB 640 640 640 640
35589.00 MC-500V-MC300-PT500-BATTERY 1,305 1,305 1,305 1,305
39502.00 DEMO PHONE P300 795 795 795 795
48404.00 MOTOROLA ULTRA CLASSIC DEMP P 735 735 735 735
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2300-0006 8,578 8,578 8,577 8,577
: 2302 Cellular Phones - Loaners, 2302: 0000 General
:522266.00 JOS HORNES CO PHONES 729 729 345 20 365
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2302-000 729 729 345 20 365
: 2315 Cellular Phones - Employee, 2315: 0000 General
28949.00 MC300 52046 MOBILE PHONE W/GL 420 420 420 420
30178.00 EMPLOYEE PHONE MOTOROLA MC500 1,526 1,526 1,526 1,526
46832.00 EMPLOYEE PHONE/MOTOROLA PPII/ 830 830 830 830
46833.00 EMPLOYEE PHONE/NEC H3700/0077 332 332 332 332
75940.00 EMPLOYEE PHONES, ACCES AND US 218 218 218 218
75940.01 MC-420M 824D96C5 277 277 277 277
77634.00 EMPLOYEE PHONES-LRTE 4/92 166 166 166 166
77634.02 MC420M 82513CE3 277 277 277 277
77634.03 MC420M 824DD697 277 277 277 277
77634.04 ALPHA STAR824D154E 771 771 771 771
81085.02 MC-420M 8247A616 261 261 261 261
81085.02 MC-420T W/ 8255970B 308 308 308 308
81085.03 MC-P-USED T82105753 477 477 477 477
81085.04 MC-PPII 82404591 785 785 785 785
87940.00 EMPLOYEE PHONES 9-92 44 44 41 1 42
87940.01 P-600 87117A9F 725 725 685 20 705
97926.00 EMPLOYEE PHONES - JANUARY 844 844 703 23 726
100880.00 EMPLOYEE PHONES 5/93 1,425 1,425 1,029 40 1,069
109055.00 EMPLOYEE PHONES - AUG. 4,310 4,310 2,754 120 2,873
109055.01 ATT3020 14202154832 259 259 165 7 173
109055.02 MC-420M 82B7E5CF 208 208 132 6 138
454450.00 EMP PHONES 5/94 755 755 294 21 315
456099.00 EMP. PHONES 6/94 50 50 19 1 20
658150.00 EMPLOYEE PHONES 0794 270 270 82 8 90
993510.00 EMPLOYEE PH 8/94 1,610 1,610 493 45 537
</TABLE>
<PAGE> 50
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 20
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
93513.00 EMP PHONES 9/94 85 85 23 2 25
96956.00 EMP PHONES 10/94 163 163 41 5 46
97394.00 EMPLOYEE PH 11/94 78 78 17 2 19
99543.00 EMP PHONES 12/94 2,221 2,221 432 62 494
99648.00 NOV USE TAX EMP PH 5 5 1 0 1
00933.00 EMPLOYEE PH 1/95 1,321 1,321 220 37 257
00942.00 EMPLOYEE PHONES 2/95 1,750 1,750 243 49 292
01592.00 3/95 - EMPLOYEE PHONES 1,512 1,512 168 42 210
02472.00 04-95 EMPLOYEE PH 724 724 60 20 80
03350.00 0595 EMPLOYEE 1,254 88 1,342 35 35 70
------------- ------------ ---------- ------------- ------------- ----------
TOTAL FOR 2315-0000 26,538 88 26,626 14,564 545 15,109
: 2340 personal Computers, 2340: 0000 Personal Computers
22882.00 PERSONAL COMPUTER DP386S M40 3,401 3,401 3,401 3,401
79647.00 86/33 220 MB PERFORMANCE SYS 3,295 3,295 3,295 3,295
03227.00 PC SUPPORT AXYS 8,260 8,260 688 229 918
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2340 0000 14,956 14,956 7,384 229 7,613
: 2345 EDP Equipment - EDP Hardware, 2345: 0000 General
02470.00 ACCESS - T211 5,688 5,688 379 95 474
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2345 0000 5,688 5,688 379 95 474
: 2345 EDP Equipment - EDP Hardware. 2345: 0001 Billing Computer
28244.00 PRINTER HP LASERJET SERIES II 703 703 703 703
------------- ---------- ------------- ----------
TOTAL FOR 2345-0001 703 703 703 703
: 2345 EDP Equipment - EDP Hardware. 2345: 0007 INO-Cable/Modems/Wiring/Other
42517.00 OPX CIRCUITS 320 320 293 5 299
42523.00 OPX DATA CIRCUITS 683 683 637 11 649
46178.00 LA210 LETTER QUALITY PRINTER 2,433 2,433 2,190 41 2,231
------------- ---------- ------------- ------------- ----------
TOTAL FOR 2345 0007 3,436 3,436 3,121 57 3,178
: 2360 Furniture and Fixtures. 2360: 0000 General
7611.00 SHOP & OFFICE - OFF 675 675 675 675
7614.00 SHOP & OFFICE-OFFICE 1,175 1,175 1,175 1,175
20707.00 FURNITURE - 6E20G1307GOLD STZ 436 436 436 436
20713.00 PICTURES FOR OFFICE 578 578 578 578
20714.00 WINDOW BLINDS/DRAPES 1,190 1,190 1,190 1,190
22873.00 OFFICE FURNITURE 1,679 1,679 1,679 1,679
22874.00 OFFICE FURNITURE 1,525 1,525 1,525 1,525
22875.00 OFFICE CUBICLES 225 225 225 225
</TABLE>
<PAGE> 51
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 21
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
-------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
22876.00 OFFICE FURNITURE 2,843 2,843 2,843 2,843
22877.00 OFFICE FURNITURE 580 580 580 580
22878.00 OFFICE FURNITURE 677 677 677 677
22879.00 TACK BOARD - DECORATIVE WITH 102 102 102 102
22880.00 PRESENTATION BOARD 48X48 502 502 502 502
22881.00 TWO DRAWER LATERAL FILE - 36X 358 358 358 358
23171.00 TYPEWRITER PANASONIC KX-E508 582 582 582 582
27235.00 SHELF-COATRACK 147 147 147 147
27236.00 BLINDS - LOUVER DRAPE VERTICA 737 737 737 737
27237.00 BLINDS - LOUVER DRAPE VERTICL 306 306 306 306
27244.00 OFFICE FURNITURE 2,000 2,000 2,000 2,000
27565.00 OFFICE CUBICLE MOVE - TRUCK R 167 167 167 167
33460.00 DELIVERY AND SET-UP OF OFFICE 830 830 830 830
36223.00 SIGN-10" NEON-SALES & SERVICE 3,887 3,887 3,758 65 3,822
37622.00 TABLES(2) & MULTI COLORED LAM 472 472 449 8 457
37622.01 LOVESEAT 524 524 498 9 507
37622.02 RECLINERS(2) 577 577 549 10 558
39312.00 REUPHOLSTER SEATING PANELS 1,656 1,656 1,545 28 1,573
39313.00 VERTICLE BLINDS 137"X78" - GR 678 678 633 11 644
48621.00 REPRINTS, FRAMES AND GLASSES 629 629 545 11 556
99943.00 FURNITURE & FIXTURES - RECOVE 496 496 232 8 240
99945.00 FURNITURE & FIXTURES-BLINDS 188 188 85 3 88
100045.00 ERIE RENOVATIONS COUNTERS 1,003 1,003 452 17 468
100879.00 ERIR RENOVATIONS 49 49 21 1 22
101138.00 FURNITURE AND FIXTURES 898 898 389 15 404
101142.00 ERIE RENOVATIONS 138 138 60 2 62
101765.00 ERIE RENOVATIONS 618 618 258 10 268
103622.00 FURNITURE & FIXTURES-ERIE 277 277 120 5 125
454448.00 OFFICE FURNITURE 338 338 79 6 85
000939.00 RETAIL KIOSK DESIGN 825 825 69 14 82
001200.00 MALL KIOSK 9,456 9,456 630 158 788
001593.00 KIOSK DESIGN/DEVELOP 1,300 1,300 87 22 109
003225.00 FORT STEUBEN MALL KIOSK 4,728 4,728 79 39 118
003234.00 MILLCREEK MALL KIOSK 4,684 4,684 156 78 234
004071.00 2 KIOSK ISLANDS AT MILLCREEK 901 901 30 30
------------- ------------ ---------- ------------- ------------- ----------
TOTAL FOR 2360-0000 50,735 901 51,636 28,007 548 28,555
: 2365 Telephone Systems and Equipment. 2365: 0000 General
39318.00 TOSHIBA SPEAKER PHONE 673 673 639 11 651
62539.00 TOSHIBA SPEAKER AND REGULAR P 647 647 507 11 517
62541.00 SSTU-5 S VI CARD 380 380 291 6 297
99942.00 TELEPHONE SYSTEMS-CHG LOC OF 86 86 40 1 41
99944.00 TELEPHONE SYSTEMS 610 610 28 10 295
99947.00 TELEPHONE SYSTEMS-WIRED 9 LOC 716 716 322 12 333
996953.00 MERLIN LEGEND PHONE SYS 15,395 15,395 2,309 257 2,566
</TABLE>
<PAGE> 52
RSDR BSDR 14 Aug 95 05:19 AM [BENDER.COMPAS]M PAGE 22
M c C a w C e l l u l a r C o m m u n i c a t i o n s , I n c .
ASSET SUMMARY REPORT BOOK
For the 1 month ended 07/95
<TABLE>
<CAPTION>
:5428 Erie Cellular Telephone Co.
C O S T ACCUMULATED DEPRECIATION
--------------------------------------------- ----------------------------------------
END OF END OF
ASSET ID DESCRIPTION BEG OF PERIOD ADD/(RETIRE) PERIOD BEG OF PERIOD ADD/(RETIRE) PERIOD
- -------- ------------------ ------------- ------------ ----------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
996954.00 MERLIN LEGEND PHONE SYS 4,820 4,820 723 80 803
003230.00 ERIE PHONE EXP 5,772 5,772 193 96 289
003533.00 PHONE SYSTEM EXPANSION 5,772 5,772 193 96 289
------------- ----------- ------------- ------------- ----------
TOTAL FOR 2365-0000 34,871 34,871 5,500 581 6,082
------------- ------------ ----------- ------------- ------------- ----------
TOTAL FOR CO: 5428 2,773,804 1,005 2,774,809 879,724 21,211 900,935
</TABLE>
<PAGE> 53
SCHEDULE 5.1.6A
DIGITAL CELL SITE EQUIPMENT
All digital transmission facility equipment and electronics
formerly housed at the cell site at the General Electric plant in Erie,
Pennsylvania.
<PAGE> 54
SCHEDULE 5.1.8
LIST OF AUTHORIZATIONS
1. FCC Authorization for Station KNKA743, Market 130, Erie, Pennsylvania.
<PAGE> 55
SCHEDULE 5.1.9
LIST OF OBLIGATIONS, LIENS, SECURITY INTERESTS
AND ADVERSE CLAIMS TO TITLE - INTEREST AND ASSETS
None
<PAGE> 56
SCHEDULE 5.1.10
CONTRACTS OF ECTC
1. Leases identified on Schedule 5.1.11.
2. Authorizations identified on Schedule 5.1.8.
3. Switch Sharing Agreement.*
4. Microwave Backbone Agreement with Horizon Cellular Group dated July 2,
1993.*
5. Subscriber agreements.
6. Intercarrier Roamer Service Agreement dated June 6, 1991 between
DICOMM Cellular, L.P. and Erie Cellular Telephone Company, as amended
on November 18, 1993.*
7. Cellular One License Agreement effective December 1, 1991 between
Cellular One Group and Erie Cellular Telephone Company.
8. "Cellular One" Fictitious Name Registration issued by the Pennsylvania
Department of State on November 2, 1990.
9. Equipment Lease with Walnut Equipment Leasing Co., Inc. for Hewlett
Packard HP700 fax machine.
10. Occupancy Permit issued by the Pennsylvania Department of Labor and
Industry.
11. Employment Agreements with the following individuals:***
Tracy Alfieri
Frederic J. Amendola
Stephen Beason
Thomas Berndt
Alan Bonam
Patricia Buchna
Mark E. Concilla
George Flanders, Jr.
William K. Flatley
Gina M. Hawse
Chad Keene
<PAGE> 57
Alfred F. Lynch, III
Dennis G. Myers
Terrence Pytlarz
Carl J. Siebauer
Richard Demski
Tammy Van Dyke
Kelly Lorance
12. Dealer Agreements with the following:
Humes Ford of Corry
Yount Alarm Systems
Procomm
Mobile Communication Service, Inc.
William Miner Enterprise
SKN Enterprises, Inc.
Simply Cellular
Swim Town, Inc.
Network Computer, Inc.
Northeast Tire & Auto Sales
Warren Radio/Studio One
Lakeside Electronics
Bommarito Cellular, Inc.**
- --------------------------------------------------------------------------------
*Agreement to be terminated prior to Closing, except that the Microwave Backbone
Agreement with Horizon will remain in effect during the term, if any, of the
Transition Services Agreement.
**Agreement with Bommarito Cellular, Inc. to be terminated prior to Closing.
One-half of any funds paid to Bommarito in settlement of agreement termination
will be added to the Purchase Price, up to a cap of $6,500, pursuant to Section
3.1.2.4.
***The parties agree that these Employment Agreements are terminated as of the
Closing and thee SYGNET will notify the employees of such termination.
<PAGE> 58
SCHEDULE 5.1.11
REAL PROPERTY OWNED, LEASED
AND OPTIONED BY ECTC
Real Property Owned
None
Real Property Leased
1. Lease Agreement dated September 21, 1988 between Public Broadcasting
of Northwest Pennsylvania, Inc. and McCaw Communications of Erie, Inc.
for site at WQLN-TV, as amended on October 1, 1988.(1)
2. Lease Agreement dated March 5, 1990 between Tenth Street Building
Corporation of Erie and Erie Cellular Telephone Company d/b/a Cellular
One for site at the Baldwin Building.
3. Site Lease Agreement dated November 1, 1989 between Richard Gloskey
and Mary Margaret Gloskey, and Erie Cellular Telephone Company for
site in Girard.
4. Site Lease Agreement dated March 29, 1990 between Milan John Vanco and
Alice C. Vanco, husband and wife, and Erie Cellular Telephone Company
for site at Edinboro.
5. Option and Site Lease Agreement dated November 1, 1991 between Wesley
H. McGarvey and Teresa McGarvey, and Pittsburgh Cellular Telephone
Company for site in northeast Erie, as subsequently assigned to Erie
Cellular Telephone Company on April 30, 1993 pursuant to an Assignment
of Lease executed by Pittsburgh Cellular Telephone Company in favor of
Erie Cellular Telephone Company.
6. Option and Site Lease Agreement dated March 16, 1993 between Lyle F.
Bisbee and McCaw Communications of Erie, Inc. for site in Union.(2)
- ---------------------------------------
(1) Lease needs to be assigned to Erie Cellular Telephone Company
prior to or at the Closing.
(2) Lease needs to be assigned to Erie Cellular Telephone Company
prior to or at the Closing.
<PAGE> 59
7. Option and Water Tank Lease Agreement dated May 11, 1994 between
Fairview Borough and Erie Cellular Telephone Company for site in
Fairview.
8. Option and Rooftop Lease Agreement dated April 1, 1994 between Corry
Memorial Hospital and McCaw Communications of Erie, Inc. for site in
Corry.(3)
9. Lease Agreement dated March 6, 1995 between 79 Realty, Inc. and Erie
Cellular Telephone Company for retail space at Yorktown Centre.
10. Lease dated June 6, 1995 between The Cafaro Company and Erie Cellular
Telephone Company for kiosk space in Millcreek Mall.
11. a. Lease Agreement dated November 27, 1989 between JCG
Partnership and Erie Cellular Telephone Company d/b/a Cellular
One for sales and installation facilities at Hillsdale Plaza.
b. Guaranty of Lease by McCaw Cellular Communications, Inc.
c. Lease Amendment Agreement dated July 6, 1990 between JCG
Partnership and Erie Cellular Telephone Company d/b/a Cellular
One.
d. Lease Amendment Agreement dated August 2, 1990 between JCG
Partnership and Erie Cellular Telephone Company d/b/a Cellular
One.
e. Guaranty of Lease and Lease Amendment by McCaw Cellular
Communications, Inc. dated August 20, 1990.
f. Subordination, Non-Disturbance and Attornment Agreement dated
November 30, 1990 between Pennbank, Erie Cellular Telephone
Company d/b/a Cellular One and JCG Partnership.
g. Lease Extension Agreement dated February 2, 1995 between JCG
Partnership and Erie Cellular Telephone Company d/b/a Cellular
One.
Option on Real Property
1. Option and Site Lease Agreement dated February 2, 1995 between Peter
A. Damiano and Erie Cellular Telephone Company for site in Waterford.
- ------------------------------------
(3) Lease needs to be assigned to Erie Cellular Telephone Company
prior to or at the Closing.
<PAGE> 60
SCHEDULE 5.1.12
STORAGE TANKS LOCATED ON PROPERTY
Containers and tanks (all above-ground) storing
petroleum-based products intended to power standby backup generators at the
Edinboro cell site in Erie.
<PAGE> 61
SCHEDULE 5.1.13
EMPLOYEES, EMPLOYMENT OBLIGATIONS
See attached.
<PAGE> 62
ERIE
1995 Employee Compensation
[TABLE]
<PAGE> 63
CHART G
SATELLITE MARKETS
[PERSONNEL FLOWCHART]
<PAGE> 64
SCHEDULE 5.1.14
BANK ACCOUNTS AND DEPOSITS OF ECTC
Pittsburgh National Bank
5001 Peach Street
Erie, PA 16509
Account No. 62-9010-1367
<PAGE> 65
SCHEDULE 5.1.19
CHANGES SINCE DECEMBER 31, 1994
1. Removal of digital cell site equipment referred to in Schedule 5.1.6A.
<PAGE> 66
SCHEDULE 6.1.3
OPINION OF IN-HOUSE COUNSEL FOR MCCAW
Sygnet Communications, Inc.
6550 Seville Drive, Suite B
Canfield, OH 44406
Ladies and Gentlemen:
I have acted as in-house counsel to Erie Cellular Systems,
Inc., formerly McCaw Communications of Erie, Inc.("McCaw"), in connection with
the Agreement for Purchase of Interest dated ________________________________
(the "Agreement") among McCaw and Sygnet Communications, Inc. ("SYGNET"). This
opinion is being furnished to you pursuant to Section 6.1.3 of the Agreement.
Unless otherwise defined herein, the definitions or terms used in this opinion
shall be the same as those in the Agreement.
In connection with this opinion, I have examined originals or
copies of the Agreement and such other agreements, documents, certificates
and/or instruments as I have deemed necessary as a basis for the opinion herein
set forth. I have assumed the authenticity of all documents submitted to me as
originals, the genuineness of all signatures, the legal capacity of natural
persons, the conformity to the originals of all documents submitted to us as
copies and, with respect to all persons and entities other than McCaw, the due
organization, existence and capacity of such persons and entities, the right,
power and authority of such persons and entities to enter into all agreements
to which they are parties and the valid execution and delivery of the Agreement
by them.
I call your attention to the fact that I am a member of the
Bar of the State of Washington and do not purport to be an expert on, or
generally familiar with or qualified to express legal conclusions based upon,
the laws of any other state or jurisdiction other than the federal laws of the
United States of America (except that I render no opinion with respect to the
federal communications laws and the rules and regulations of the Federal
Communications Commission). I express no opinion with respect to federal or
state law relating to the ownership, operation or regulation of nonwireline
cellular communication systems, including, without limitation, the need to
obtain or make any consents, applications, licenses, approvals or the like upon
or prior to the execution of the Agreement or the exercise of any rights or
remedies under the Agreement.
Based upon the foregoing, I am of the opinion that:
1. McCaw is a corporation duly organized, validly
existing and in good standing under the laws of the State of Pennsylvania. In
rendering the opinion of good
<PAGE> 67
standing set forth herein, I have relied solely upon a good standing
certificate of the Department of State of the State of Pennsylvania dated
_________________, 1995.
2. The execution and delivery by McCaw of the Agreement,
all certificates, assignments and other documents contemplated by the
Agreement, and the performance of McCaw's obligations thereunder are within
McCaw's corporate power and authority, have been duly and validly authorized by
all necessary corporate action on the part of McCaw, and will not contravene or
constitute a default (or an event which, with the giving of notice or lapse of
time or both, would constitute a default) under or with respect to any
provision of applicable law or regulation, or of its articles of incorporation
or bylaws, and will not result in any breach of any term, condition or
provision of, or constitute a default (or an event which, with the giving of
notice or lapse of time or both, would constitute a default) under, or cause or
permit the acceleration of the obligation of or excuse the performance by any
person of any of its obligations under, any note, mortgage, indenture,
contract, agreement, judgment, order or other instrument binding upon or
related To McCaw.
3. The Agreement, all assignments, and all other
instruments of conveyance executed pursuant to the Agreement constitute the
legal, valid and binding obligations of McCaw enforceable in accordance with
their respective terms. In rendering the opinions set forth in this Paragraph
3, I have assumed that the laws of the State of Pennsylvania are substantially
the same as the laws of the State of Washington. Further, my opinions set forth
in this Paragraph 3 are qualified to the extent that enforcement may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or limiting the enforcement of
creditors' rights generally; (ii) general principles of equity, whether applied
by a court of law or equity; (iii) the availability of particular remedies, and
(iv) limitations based upon statutes or public policy limiting a person's right
to waive the benefits of statutory provisions or common law rights.
4. Erie Cellular Telephone Company ("ECTC") is a
partnership duly organized and validly existing under the laws of the State of
Delaware. As of the date of this letter, ECTC has all requisite partnership
power and authority to own, operate and lease its property and to carry on its
business as now conducted.
5. To the best of my knowledge, after due inquiry and
except as otherwise disclosed in the Agreement and its schedules, neither McCaw
nor ECTC is subject to any judgment, award, writ, injunction, arbitration
decision or decree that would materially and adversely affect ECTC or would
materially or adversely affect McCaw's ability to perform its obligations under
the Agreement.
6. To the best of my knowledge, after due inquiry, and
except as otherwise disclosed in the Agreement and its Schedules, there exists
no litigation, proceedings or
2
<PAGE> 68
investigation pending or overtly threatened, against McCaw or ECTC in any
federal, state or local court, or before any administrative agency or
arbitrator, or before any other tribunal duly authorized to resolve disputes,
which seeks to enjoin or prohibit, or otherwise questions the validity of, any
action taken or to be taken by McCaw or ECTC pursuant to or in connection with
the Agreement, or, if adversely determined, could materially adversely affect
McCaw's or ECTC's ability to perform their respective obligations under the
Agreement.
This opinion is being delivered to you for your benefit in
connection with the transactions described herein and may not be used or relied
upon by any other person or entity for any purpose whatsoever without my prior
written consent.
Very truly yours,
ERIE CELLULAR SYSTEMS, INC.
3
<PAGE> 69
SCHEDULE 6.1.4
OPINION OF FCC COUNSEL TO MCCAW
The form and substance of the Opinion of FCC Counsel to McCaw
shall be of a type (1) that is typical in a transaction of this nature and (2)
that is mutually acceptable to the parties.
<PAGE> 70
SCHEDULE 6.2.5
OPINION OF COUNSEL TO SYGNET
See attached.
<PAGE> 71
SCHEDULE 8.3
TRANSITION SERVICES AGREEMENT
See attached.
<PAGE> 72
SCHEDULE 8.3
[FORM OF TRANSITION SERVICES AGREEMENT]
This Transition Services Agreement (this "Agreement") is dated
______, 1995, by and between McCaw Cellular Communications, Inc. ("MCCI") and
Sygnet Communications, Inc. ("Sygnet").
WHEREAS, Sygnet and Erie Cellular Systems, Inc. ("Erie
Cellular"), an Affiliate of MCCI, have entered into an Agreement for Purchase
of Partnership Interest dated ________________, 1995 (the "Purchase Agreement")
pursuant to which Sygnet has agreed to buy, and Erie Cellular has agreed to
sell, Erie Cellular's 95.46% general partnership interest in Erie Cellular
Telephone Company ("ECTC").
WHEREAS, Section 8.3 of the Purchase Agreement provides that
Sygnet and MCCI shall, if requested by Sygnet, enter into a Transition Services
Agreement.
WHEREAS, this is the Transition Services Agreement referenced
in such Section 8.3.
NOW, THEREFORE, in consideration of the premises, and the
mutual covenants, conditions and promises hereinafter set forth, the parties
hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Purchase Agreement.
2. Provision of Transition Services. Subject to the
terms and conditions set forth in this Agreement, and to the supervision,
oversight and control of Sygnet, MCCI agrees to provide, and to cause its
Affiliates to provide, the "Transition Services" to Sygnet and ECTC after
Closing. The "Transition Services" shall consist of all services supplied to
ECTC or the System by MCCI or any Affiliate of MCCI prior to the Closing
including, without limitation, billing, customer care, switching, credit
approval and activation. Notwithstanding the foregoing, the Transition
Services shall not include overall management of the System or marketing with
respect to the System, which activities shall be performed by ECTC and Sygnet
after Closing.
3. Term of Agreement; Payment. The term of this
Agreement shall commence on the Closing Date and shall terminate on December
31, 1995, provided, however, that Sygnet shall have the right to terminate this
Agreement upon ten days written notice to MCCI at any time. The parties
contemplate that the Closing Date will be September 29, 1995. MCCI shall
provide the Transition Services hereunder without charge for the period from
the Closing Date until october 10, 1995. Sygnet agrees to pay MCCI for
Transition Services rendered after October 10, 1995, as follows:
<PAGE> 73
$15.00 per subscriber for the period from October 11 through
November 10, 1995.
$16.50 per subscribe for the period from November 11 through
December 15, 1995.
$9.87 per subscriber for the period from December 16 through
December 31, 1995.
The number of subscribers for each of the above periods shall be determined as
of the first date of such period. If Sygnet terminates this Agreement prior to
December 31, 1995, the fees payable hereunder will be appropriately prorated.
In the event the Closing occurs after September 29, 1995, the above periods
will be adjusted accordingly.
4. Liability of MCCI. MCCI shall not be liable for any
failure or delay in its performance hereunder, or any performance which is
substandard, except where such failure, delay or substandard performance is the
result of intentionally wrongful acts or willful misconduct by MCCI. MCCI will
not be liable for the negligent acts of its employees. Moreover, MCCI will not
be responsible to Sygnet for indirect, incidental, consequential or special
damages, including, without limitation, any damages for loss of revenues, for
any failure of the switch or failure of performance hereunder. MCCI's
liability to Sygnet for any such failure shall be limited to the amount of
service charges or costs paid by Sygnet pursuant to this Agreement.
Notwithstanding the foregoing, Sygnet may suspend payment under this Agreement
for any period of time during which MCCI is in material breach of its
obligations hereunder.
5. Notices. Notices, claims and other communications
hereunder shall be delivered in accordance with Section 10.3 of the Purchase
Agreement, with notices to MCCI to be sent to the address listed for McCaw in
such Section.
2
<PAGE> 74
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written
MCCAW CELLULAR COMMUNICATIONS, INC.
By:
---------------------------
Name:
Title:
SYGNET COMMUNICATIONS, INC.
By:
---------------------------
Name:
Title:
3
<PAGE> 75
Schedule 8.7
Billing Conversion Information to be Delivered by McCaw
<TABLE>
<CAPTION>
===========================================================================================================
Information* Delivery Deadline
----------- -----------------
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Full live conversion tape as of the Within ___ business days after the Effective Date.
Effective Date
-----------------------------------------------------------------------------------------------------------
2. A/R balance report as of the Effective Within 15 business days after the Effective Date.
Date.
-----------------------------------------------------------------------------------------------------------
3. A/R balances after 10/10/95 billing November 1, 1995**
cycle.**
-----------------------------------------------------------------------------------------------------------
4. Revenue reports for the 10/10/95 billing November 1, 1995**
cycle.**
-----------------------------------------------------------------------------------------------------------
5. Last outcollect batch sequence number _________, 1995**
report as of 10/15/95**
===========================================================================================================
- ----------------------------------
</TABLE>
* All information to be provided on electronic tape, with hardcopy if
requested by SYGNET.
** Based on September 29, 1995 Closing Date. If Closing occurs after
that date, deadlines will be adjusted accordingly.
<PAGE> 76
CLOSING AGREEMENT
This Closing Agreement (this "Agreement") is made this 15th
day of September, 1995 by and between SYGNET COMMUNICATIONS, INC., an Ohio
corporation ("SYGNET"), and Erie Cellular Systems, Inc., a Pennsylvania
corporation ("McCaw").
WITNESSETH:
WHEREAS, SYGNET and McCaw have entered into an Agreement for
Purchase of Interest (the "Purchase Agreement") of even date herewith, pursuant
to which McCaw will sell and SYGNET will purchase McCaw's 95.46% general
partnership interest in Erie Cellular Telephone Company, a Delaware general
partnership ("ECTC"); and
WHEREAS, SYGNET and McCaw wish to set forth in this Agreement
the additional agreements and understandings reached between them in connection
with the transactions contemplated by the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, conditions and promises hereinafter set forth, and intending
to be legally bound hereby, the parties hereby agree as follows:
1. Definitions. Capitalized terms used in this Agreement
and not otherwise defined herein shall have the meanings ascribed to such terms
in the Purchase Agreement.
2. Performance of Obligations on Schedules. The parties
agree to perform their respective obligations set forth on the Schedules
attached to this Agreement and made a part hereof. Prior to Closing, the
parties may append additional Schedules to this Agreement. The parties'
acceptance of each such additional Schedule, if any, shall be indicated by the
signature of an authorized representative of each of the parties thereon.
3. This Agreement an Addendum to Purchase Agreement.
This Agreement shall be deemed to be a written instrument modifying the
Purchase Agreement as contemplated by Section 10.4 of the Purchase Agreement,
and the agreements and understanding set forth herein and in the Schedules
hereto shall be in addition to the agreements of the parties set forth in the
Purchase Agreement.
<PAGE> 77
IN WITNESS WHEREOF, the parties, all of whom are authorized to
act have caused this Agreement to be executed the day, month and year above
written.
SYGNET COMMUNICATIONS, INC.
By: /s/ ALBERT H. PHARIS, JR.
-------------------------
Its: President & CEO
-------------------------
ERIE CELLULAR SYSTEMS, INC.
By: /s/ WILLIAM W. HAGUE
-------------------------
Its: Vice President
-------------------------
By its signature below, McCaw Cellular Communications, Inc. hereby guarantees
and assures the performance by McCaw of all of McCaw's obligations hereunder.
MCCAW CELLULAR COMMUNICATIONS, INC.
By: /s/ WILLIAM W. HAGUE
-------------------------
Its: Vice President
-------------------------
2
<PAGE> 78
SCHEDULE A
Purchase of Equipment by McCaw
Within 5 business days after the Effective Date, McCaw shall
buy, and SYGNET shall cause ECTC to sell, certain cellular equipment (the
"Purchased Equipment") as described on Schedule A-1 hereto. The purchase price
for the Purchased Equipment shall be $474,030.00, and payment of such purchase
price shall be made by wire transfer of immediately available funds to an ECTC
account designated by SYGNET; provided that the parties may agree to handle the
purchase price for the Purchased Equipment as an adjustment to the Purchase
Price under the Purchase Agreement. Title to the Purchased Equipment shall pass
to McCaw upon receipt by ECTC of the purchase price for the Purchase Equipment,
and SYGNET shall cause ECTC to execute and deliver to McCaw a bill of sale for
the Purchased Equipment in form and substance reasonably satisfactory to ECTC
and McCaw.
The Purchased Equipment shall be sold to McCaw "as is", and
shall be made available to McCaw at a location or locations agreed upon by
SYGNET and McCaw. McCaw shall be responsible for retrieving the Purchased
Equipment at such location(s). McCaw shall not remove any of the Purchased
Equipment so long as such Purchased Equipment is necessary in order for McCaw
to perform its obligations under the Transition Services Agreement, but will be
able to remove the Purchased Equipment no later than January 5, 1996. SYGNET
will notify McCaw when the Purchased Equipment may be removed.
3
<PAGE> 79
SCHEDULE A-1
The Pittsburgh Cellular Telephone Company would like to purchase the Ericsson
cell site equipment that will be taken out of service from the Erie MSA. The
following bid is based upon RF radio and switch interface equipment only. It
does not include any power equipment (rectifiers & batteries), telco interface
equipment, antenna systems, alarm systems, tower lighting controllers, etc.
<TABLE>
<S> <C>
Erie 1 75,310
Erie 2 43,670
Erie 3 106,425
Erie 4 66,685
Erie 5 26,700
Erie 6 45,630
Erie 7 62,930
Erie 8 57,100
------
TOTAL $474,030
</TABLE>
Erie Site 1 - Summit
Comprised of a basic ERI rack, 3 radio racks, manual tune combiners, and 19
analog radio channels. This site is the oldest in the system. The manual
combiners will not be reused. We offer $7,310 for the site.
Erie Site 2 - Girard
Comprised of a basic ERI rack, 2 radio racks, manual tune combiners, and 8
analog radio channels. The manual combiners will not be reused. We offer
$43,670 for the site.
Erie Site 3 - Baldwin Building
Compromised of a basic ERI rack, 4 radio racks, manual tune combiners, and 26
analog radio channels. The manual combiners will not be reused. We offer
$106,425 for the site.
Erie Site 4 - Edinboro
Comprised of a basic ERI rack, 2 radio racks, manual tune combiners, and 10
analog radio channels. The manual combiners will not be reused. We offer
$56,385 for the site.
Erie Site 5 - Northeast
Northeast was built out of older "spare" equipment. Comprised of a basic ERI
rack (2) 880 radio racks, (1) 882 radio rack, manual tune combiners, and (8)
880 analog radio channels,
<PAGE> 80
and (3) 882 analog radio channels. The 880 equipment will not be reused in a
new site due to it's age. It can be used as spare parts at a value of $3,000.
The manual combiners will not be reused. We offer $23,700 plus $3,000 for a
total of $26,700 for the site.
Erie Site 6 - Union City
Comprised of a self-constructed ERI rack, 2 radio racks, manual tune combiners,
and 7 analog radio channels. The manual combiners will not be reused. We
offer 45,530 for the site.
Erie Site 7 - Fairview
Comprised of a basic ERI rack, 2 radio racks, autotune combiners, and 8 analog
radio channels. This is the newest Erie site. The manual combiners will not
be reused. We offer $362,930 for the site.
Erie Site 8 - Corry
Comprised of a self-constructed two cabinet cell site originally used in the
Fort Pitt tunnels since 1989, manual tune combiners, 7 analog radio channels,
internal ERI, rectifiers, and batteries. We offer $57,100 for the site.
2
<PAGE> 1
EXHIBIT 10.19
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made this _____ day of August 1994,
by and among SYGNET Communications, Inc., an Ohio corporation, and Wilcom
Corporation, an Ohio corporation (individually "Buyer" and collectively
referred to as "Buyers"); and Advent IV Capital Liquidating Trust, a trust
organized under Massachusetts law (the "Liquidating Trust"), TA Associates IV,
a Massachusetts partnership, and TA Venture Investors Limited Partnership, a
Massachusetts limited partnership (the "Partnerships"), Elden J. Heinz,
Individual Trustee, and Security Investment Management & Trust Company, as
Corporate TTEE FBO the Heinz Family Charitable Remainder Trust DTD 7/6/94 (the
"Heinz Trust"), The Planned Giving Foundation, Inc., a Delaware corporation
(the "Foundation"), and Erma Heinz (the Liquidating Trust, the Partnerships,
the Heinz Trust, the Foundation, and Erma Heinz are herein individually
referred to as a "Seller" and collectively referred to as "Sellers" and the
Liquidating Trust and the Heinz Trust are herein called the "Trusts").
RECITALS:
WHEREAS, Sellers collectively own one hundred (100) shares of common
stock of Sharron Youngstown Cellular, Inc., an Ohio corporation (the
"Company"), which represents all of the issued and outstanding shares of common
stock of the Company, and
WHEREAS, Sellers desire to sell, and Buyers desire to purchase, such
shares of stock from Sellers on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, Buyers and Sellers hereby agree as follows:
SECTION 1. SALE OF STOCK. At closing (as defined in Section 3)
Sellers shall sell to Buyers, and Buyers shall purchase from Sellers, all of
Sellers' interest in and to the shares of common stock of Sharron Youngstown
Cellular, Inc., listed on Exhibit "A", which is attached hereto and
incorporated herein by reference. At the closing, Sellers shall deliver to
Buyers the Share Certificates
<PAGE> 2
for the stock to be sold hereunder, in proper form and duly endorsed for
transfer, with seventy-five (75) shares assigned to SYGNET Communications, Inc.
and with twenty-five (25) shares assigned to Wilcom Corporation.
SECTION 2. PURCHASE PRICE. The Purchase Price with respect to
the stock sold hereunder shall be $4,500,000.00 ($45,000 per share), payable to
each shareholder in accordance with the share ownership set forth on Exhibit
"A". The Purchase Price shall be paid by delivery of certified or bank
cashier's checks to Sellers at closing, unless one or more of Sellers notifies
Buyers of Seller's wire transfer request and instructions, in which case Buyers
shall pay by such wire transfer of immediately available federal funds.
SECTION 3. CLOSING. The closing of the transactions provided for
herein shall take place on the date hereof. The closing shall take place at the
offices of Harrington Huxley Smith Mitchell & Reed, 1200 Mahoning Bank
Building, Youngstown, Ohio 44503.
SECTION 4. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF
SELLERS. Sellers hereby jointly and severally represent and warrant to each
of the Buyers as follows (Buyers acknowledge that Sellers have advised them
that none of Sellers have been active in the Company; that the knowledge of
Sellers respecting the Company and its operations is accordingly limited, and
that Sellers have made no independent inquiry or investigation for the purpose
of their representations and warranties respecting the Company and its
operations; all Sellers are nevertheless joining in making the representations
and warranties relating to the Company and its operations for the purpose of
sharing the economic risk with respect thereto):
(a) ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Ohio and has full corporate power and authority to
own its assets listed in Section 4(d). The Company has
delivered to Buyers true, complete and correct copies of (i)
the Articles of Incorporation of the Company, plus all
amendments; (ii) the Code of Regulations of the Company, plus
all amendments; and (iii) the minutes of all Director and
Shareholder meetings of the Company.
(b) STOCK OF THE COMPANY. The Company has issued and
outstanding exactly one hundred (100) shares of common stock.
The Company has outstanding no other equity securities or any
securities, options, warrants or rights convertible into
equity securities of the Company.
(c) FINANCIAL STATEMENTS. Sellers have delivered to Buyers
true and complete copies of the Company's federal income tax
returns for the years ending December 31, 1990, 1991, 1992 and
1993.
(d) ASSETS AND LIABILITIES OF THE COMPANY. At closing, the
assets of the Company shall consist of a 7.26% partnership
interest in Wilcom Cellular and a 7.26% partnership interest
in Youngstown Cellular Telephone Company ("YCTC"), together
with the Company's books and records. The Company is the sole
owner of such partnership interests and such partnership
interests are
2
<PAGE> 3
free and clear of all liens, charges or encumbrances, other
than those arising from the PNC Loan described in the next
sentence or arising under the partnership agreements of YCTC
and Wilcom Cellular.
The Company shall have no debts and/or liabilities at closing,
other than those arising out of its status as a partner of
YCTC and Wilcom Cellular and those arising out of the loan
transaction between PNC Bank, National Association, and
Youngstown Cellular Telephone Company and Wilcom Cellular,
governed by the Third Amended and Restated Credit Agreement
dated April 20, 1993, as amended from time to time, and
related documents, or any refinancing thereof ("PNC Loan").
(e) TAX MATTERS. The Company has filed all income, franchise,
property, and other tax returns required to be filed by any
taxing authority, and has paid or accrued all taxes required
to be paid by it in respect to the periods covered by such
returns, and no liability for such taxes in excess of the
amounts so paid or accrued exists. The Company is not
delinquent in the payment of any tax, assessment or
governmental charge, has not requested any extension of time
within which to file any tax returns which have not since been
filed, and no deficiencies for any tax, assessment or
governmental charge have been claimed, proposed or assessed by
any taxing authority. The Company does not warrant or
represent any tax matters of YCTC or Wilcom Cellular under
this Agreement and shall not provide any assurance or evidence
thereof.
(f) NO BUSINESS, REAL ESTATE, ETC. The Company, since its
formation, has: never been in any business other than the
ownership of its partnership interests in YCTC and Wilcom
Cellular; never owned any real or tangible personal property
other than its books and records; never owned any intangible
assets other than money and its partnership interests in
Wilcom Cellular and YCTC; never had employees; and never sold
any goods or services. As of closing, no contractual
obligations (other than in connection with the PNC Loan and
other than under the partnership agreements of YCTC and Wilcom
Cellular) of the Company will exist; there are no claims
against the Company, other than in its capacity as a partner
of Wilcom Cellular or YCTC; and there is no pending or
threatened litigation involving the Company, other than in its
capacity as a partner of Wilcom Cellular or YCTC.
(g) NO LEGAL OBSTACLE TO AGREEMENT. Subject to the provisions of
the documents respecting the PNC Loan and to the provisions of
the partnership agreements of YCTC and Wilcom Cellular, the
execution, delivery and performance of this Agreement, the
consummation of any transactions herein referred to or
contemplated and the fulfillment of the terms hereof do not
and will not conflict with, or result in a breach or violation
of, or constitute a default under, the Articles of
Incorporation and/or the Code of Regulations (as amended) of
the Company or any applicable law or regulation or any
judgment, order or decree binding upon the Company or upon the
property of the Company, or conflict with, or result in a
breach or violation of, or constitute a default in the
performance, observance or fulfillment of any obligation,
covenant or condition contained in, or constitute, or, but for
any requirement of notice or lapse of time
3
<PAGE> 4
or both, would constitute, an event of default by the Company
under any applicable lease, mortgage or other contractual
obligation to which the Company is bound, or result in, or
require, the creation or imposition of any lien, charge or
encumbrance upon the assets of the Company.
SECTION 5. SELLER'S INDIVIDUAL REPRESENTATIONS AND WARRANTIES.
Each Seller, with respect to itself, hereby individually represents and
warrants to each of Buyers that:
(a) AUTHORIZATION OF AGREEMENT. The execution and delivery
of this Agreement and the performance of the transactions
contemplated hereby have been duly and validly authorized by
Seller.
(b) VALID AND BINDING AGREEMENT. This Agreement has been
validly executed and delivered by, and constitutes a valid and
binding obligation of Seller, enforceable against Seller in
accordance with its respective terms, except as limited by
insolvency, reorganization, moratorium or similar laws of
general applicability affecting creditor's rights and the
application of general principles of equity (including
entitlement to specific performance).
(c) SELLERS OWN THE STOCK FREE AND CLEAR. Seller owns shares
of stock of the Company in the amount shown opposite Seller's
name on Exhibit A. Seller has valid and unencumbered title to
said stock, free and clear of all restrictions, claims, liens,
encumbrances, and equities whatsoever, and has full legal
right, power and authority to enter into this Agreement, to
sell said stock, and to perform each and every obligation
under this Purchase Agreement. The foregoing warranties set
forth in this Section 5(c) shall not apply to the pledge of
Seller's stock, or to any other restrictions, claims,
equities, or other matters, in connection with the PNC Loan.
(d) CONSENTS. Subject to the provisions of the documents
respecting the PNC Loan and to the provisions of the
partnership agreements of YCTC and Wilcom Cellular, no consent
or approval of any party with whom Seller has contractual
relationships or has had such contractual relationships are
required or will be required, in order to permit the
consummation of the transactions contemplated by this
Agreement.
(e) NO LEGAL OBSTACLE. Subject to the provisions of the
documents respecting the PNC Loan and to the provisions of the
partnership agreements of YCTC and Wilcom Cellular, the
execution, delivery and performance of this Agreement, the
consummation of any transaction herein referred to or
contemplated and the fulfillment of the terms hereof do not
and will not conflict with, or result in a breach or violation
of, or constitute a default under, any applicable law or
regulation or any judgment, order or decree binding upon
Seller, or conflict with, or result in a breach or violation
of, or constitute a default in the performance, observation or
fulfillment of any obligation, covenant or condition contained
in, or constitute or, but for the requirement of notice or
lapse of time or both, would constitute, an event of default
of Seller under any applicable lease, mortgage or other
contractual obligation to which Seller is bound.
4
<PAGE> 5
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYERS. Buyers
jointly and severally represent and warrant to each of the Sellers as follows:
(a) ORGANIZATION. Each one of Buyers is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Ohio, has corporate power and authority
to own all of its property and assets and to carry on its
business as it is now being conducted, and is duly qualified
to do business and is in good standing in all jurisdictions
where the ownership or leasing of property by it or the
conduct of its business requires it to be so qualified.
(b) AUTHORIZATION OF AGREEMENT. The execution and delivery
of this Agreement and the performance of the transactions
contemplated hereby have been duly and validly authorized by
the boards of directors of Buyers, and all corporate action
necessary for the authorization and consummation of the
transactions contemplated hereby have been taken.
(c) VALID AND BINDING AGREEMENT. This Agreement has been
validly executed and delivered by and constitutes a valid and
binding obligation of Buyers, enforceable against Buyers in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws of
general applicability affecting creditor's rights and the
application of general principles of equity (including
entitlement to specific performance).
(d) CONSENTS. No consent or approval of any party with whom
either Buyer has contractual relationships or has had such
contractual relationships are required or will be required, in
order to permit the consummation of the transactions
contemplated by this Agreement.
(e) NO LEGAL OBSTACLE. The execution, delivery and
performance of this Agreement, the consummation of any
transaction herein referred to or contemplated and the
fulfillment of the terms hereof do not and will not conflict
with, or result in a breach or violation of, or constitute a
default under, the Articles of Incorporation and/or Code of
Regulations (as amended) of either of Buyers, any applicable
law or regulation or any judgment, order or decree binding
upon either OF Buyers, or conflict with, or result in a breach
or of, or constitute a default in the performance, observation
or fulfillment of any obligation, covenant or condition
contained in, or constitute, or, but for the requirement of
notice or lapse of time or both, would constitute, an event of
default of either Buyer under any applicable lease, mortgage
or other contractual obligation to which either Buyer is
bound.
SECTION 7. SURVIVAL AND INDEMNIFICATION.
(a) The representations, warranties and covenants of Buyers and
Sellers made in this Agreement shall survive the closing, and
shall not expire until the third anniversary of the closing.
Any claim for indemnification on account of breach of any such
representations, warranties, or covenants must be made by
written notice given within such three year period from the
party or parties seeking
5
<PAGE> 6
indemnification (the "Indemnified Party") to the party or
parties against which indemnification is sought (the
"Indemnifying Party"), and all rights with respect to any such
breach shall terminate at the end of such three year period as
to all claims for which notice has not been given within such
three year period.
(b) If the closing occurs, Sellers shall indemnify and hold
harmless Buyers from and against any loss, liability, damage,
cost or expense (including reasonable attorneys' and
accountants' fees) which arises out of or is connected with
any breach of any representation or warranty made or covenant
to be performed by Sellers herein. In general, the liability
of Sellers hereunder shall be several, but in the case of
liability arising under Section 4, shall be joint and several.
However, each Seller's liability hereunder shall be limited to
the Purchase Price paid to or for the account of such Seller.
(c) If the closing occurs, Buyers shall jointly and severally
indemnify and hold harmless Sellers from and against any loss,
liability, damage, cost, or expense (including reasonable
attorneys' and accountants' fees) which arises out of or in
connection with any breach of any representation or warranty
made or covenant to be performed by Buyers herein.
(d) Before being required to make any payment under this Section
7, the Indemnifying Party may, at its expense, elect to take
all necessary steps to contest any claim involving third
parties or to prosecute such contest to conclusion or
settlement satisfactory to the Indemnifying Party. The
Indemnified Party shall notify the Indemnifying Party of any
claim to indemnification it may wish to assert involving third
parties as soon as reasonably practicable; thereafter, the
Indemnified Party shall, at the expense of the Indemnifying
Party, cooperate fully with the Indemnifying Party in the
conduct of any such contest. The Indemnified Party shall have
the right to participate at its expense in all proceedings. If
the Indemnifying Party does not make such election, it shall
be bound by whatever result is obtained by the Indemnified
Party respecting such third party claim.
(e) The rights to indemnification under this Section 7 (including
rights to enforce any judgment obtained under this Section 7)
shall constitute the sole remedy for breach of any
representation, warranty or covenant under this Agreement,
except for (i) actions under the Ohio Uniform Fraudulent
Transfer Act, including actions, in the circumstances provided
under such Act, to recover from beneficiaries of the Trusts
and partners of the Partnerships amounts distributed to them
(but, as to any beneficiary or partner, not more than the
amount distributed to it) by the Trusts and the Partnerships,
and (ii) actions for declaratory judgment, specific
performance, or fraud.
SECTION 8. MISCELLANEOUS.
(a) AMENDMENTS. Any amendment to this Agreement must be in
writing and duly executed by an authorized representative of
each of the Buyers and of Sellers holding at least 90% of the
Shares, and any such amendment shall be binding on
6
<PAGE> 7
all Sellers. Any waiver, consent, determination, or other
action of the Sellers under this Agreement may be given, made,
or taken by Sellers holding at least 90% of the Shares (or, if
after the Closing, by Sellers that held at least 90% of the
Shares at the time of the Closing and any such waiver,
consent, determination, or action shall be binding on all
Sellers.)
(b) NOTICES. All notices, requests, demands and other
communications under or in connection with this Agreement (i)
if to Buyers or, after the closing the Company shall be in
writing addressed to Craig T. Sheetz, SYGNET Communications,
Inc., 3910 South Avenue, Youngstown, Ohio 44512, with a copy
to Ralph A. Beard, Esq., of Harrington Huxley Smith Mitchell &
Reed, 1200 Mahoning Bank Building, Youngstown, Ohio 44503, and
(ii) if to Sellers or, prior to closing, the Company shall be
in writing addressed to them as follows:
<TABLE>
<CAPTION>
<S> <C>
Sharron Youngstown Cellular, Inc. Advent IV Capital Liquidating Trust
c/o Media Communications Partners c/o Foley, Hoag & Eliot
75 State Street One Post Office Square
Suite 2500 Boston, MA 02109
Boston, MA 02109 Attn: James F. Wade
Attn: Arnold M. Zaff, Esq.
TA Associates IV and Erma Heinz
TA Venture Investors 3301 Bone Road
c/o TA Associates Jamestown, OH 45335
High Street Tower, Suite 2500
125 High Street
Boston, MA 02110
Attn: Katherine Cromwell
Security Investment Management & The Planned Giving Foundation, Inc.
Trust Company as Corporate TTEE 1008 Johnson
FBO the Heinz Family Charitable Boise, ID 83705
Remainder Trust Attn: Jane Daly
2525 East Camelback Rd., Ste. 570
Phoenix, AZ 85016
Attn: Grant Seeger, President
</TABLE>
All such notices, requests, demands or communications shall be
mailed postage prepaid, first class mail, registered or
certified mail, return receipt requested; shall be sent by
overnight courier or by facsimile transmission; or shall be
delivered personally; and shall be sufficient and effective
when delivered to or received at the address as specified. Any
party may change the addresses at which same is to receive
notice by written notice to the other parties.
(c) HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
7
<PAGE> 8
(d) ENTIRE AGREEMENT. This Agreement is intended by the
parties to, and does, constitute the entire Agreement of the
parties with respect to the transactions contemplated by this
Agreement. This Agreement supersedes any and all prior
understandings, written or oral, between the parties. This
Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and
assigns, but nothing herein, express or implied, is intended
to or shall confer any rights, remedies or benefits upon any
person other than the parties hereto and such successors and
assigns. Prior to the closing, this Agreement may not be
assigned by any party hereto without the written consent of
the other party(s). This Agreement and its validity,
interpretation and effect shall be construed in accordance
with and governed by he laws of the State of Ohio. The parties
agree that the courts of Ohio shall have exclusive
jurisdiction in connection with this Agreement.
(e) NON-RECOURSE. Buyers agree that the obligations of the
Trusts and the rights and remedies of Buyers with respect to
the Trusts are without recourse to the trustees of the Trusts,
except for Elden J. Heinz, in their individual capacities, and
Buyers shall have no recourse to any such trustee, personally,
or to any such trustee's personal assets, but except that
Buyers shall have recourse to Elden J. Heinz in his personal
capacity and against his personal assets.
(f) COUNTERPARTS. To facilitate execution of this Agreement, it
may be signed with any number of signature pages and with any
number of counterparts.
IN WITNESS WHEREOF, Buyers and Sellers have caused this Agreement to be
executed as of the date first written above.
BUYERS:
SYGNET COMMUNICATIONS, INC. WILCOM CORPORATION
BY: BY:
----------------------- ------------------------
TITLE: TITLE:
----------------------- -----------------------
SELLERS:
ADVENT IV CAPITAL LIQUIDATING TA ASSOCIATES IV
TRUST
BY: BY:
----------------------- ----------------------
TRUSTEE, AND NOT INDIVIDUALLY GENERAL PARTNER
8
<PAGE> 9
TA VENTURE INVESTORS LIMITED
PARTNERSHIP
BY:
----------------------------- ----------------------
GENERAL PARTNER ERMA HEINZ
SECURITY INVESTMENT MANAGEMENT &
TRUST COMPANY AS CORPORATE TTEE FBO
THE HEINZ FAMILY CHARITABLE REMAINDER
TRUST DTD 7/6/94
BY:
- ----------------------------- ----------------------------
ELDEN J. HEINZ, TRUSTEE FBO THE GRANT SEEGER, PRESIDENT
HEINZ FAMILY CHARITABLE REMAINDER
TRUST DTD 7/6/94
THE PLANNED GIVING FOUNDATION, INC.
BY:
-------------------------
JANE DALY, PRESIDENT
9
<PAGE> 10
EXHIBIT A
TO STOCK PURCHASE AGREEMENT
Ownership of Common Stock of the Company
<TABLE>
<CAPTION>
================================================================
SELLER NO. OF
SHARES
- ----------------------------------------------------------------
<S> <C>
Liquidating Trust 65.983
- ----------------------------------------------------------------
TA Associates IV 1.4672
- ----------------------------------------------------------------
TA Venture Investors Limited Partnership 9.5368
- ----------------------------------------------------------------
Heinz Trust 20.758
- ----------------------------------------------------------------
Erma Heinz 0.451
- ----------------------------------------------------------------
Foundation 1.804
- ----------------------------------------------------------------
TOTAL: 100.0000
================================================================
</TABLE>
10
<PAGE> 11
WAIVER OF RIGHT OF FIRST REFUSAL
Reference is hereby made to the Agreement Granting Right of First
Refusal dated November 22, 1988 (the "First Refusal Agreement") between WKBN
BROADCASTING CORPORATION ("WKBN") and SHARRON YOUNGSTOWN CELLULAR, INC.
("Sharron") respecting transfers by Sharron of its interests in Wilcom/Cellular
One (now known as Wilcom Cellular). WKBN desires that the stockholders of
Sharron sell 75% of the outstanding common stock of Sharron to SYGNET
COMMUNICATIONS, INC. ("SYGNET"), and 25% of the outstanding common stock of
Sharron to WILCOM CORPORATION ("Wilcom"), both of which are under common
control with WKBN BROADCASTING CORPORATION (such sales being herein called the
"Sale").
For $1.00 and other valuable consideration paid to it, and in order to
induce Sharron's stockholders to sell the outstanding common stock of Sharron
to SYGNET and Wilcom, WKBN hereby irrevocably waives any right of first refusal
or similar right which it may have under the First Refusal Agreement on account
of the Sale with respect to Sharron's interest in Wilcom Cellular. WKBN also
waives any right of first refusal or similar right that it may have on account
of the Sale with respect to Sharron's interest in Youngstown Cellular Telephone
Company under any agreement that may exist with Sharron or its predecessor in
interest, E&J Mobile Radio Service, Inc.
Signed as of the _____ day of August 1994.
WKBN Broadcasting Corporation
By:
-----------------------------
Title:
----------------------------
<PAGE> 1
EXHIBIT 10.21
[PNC BANK LETTERHEAD]
COMMITMENT LETTER
August 21, 1996
Sharron Youngstown Cellular, Inc.
6550-B Seville Drive
Canfield, OH 44406
Attention: Craig T. Sheetz
Vice President and
Chief Financial Officer
Ladies and Gentlemen:
PNC Bank, National Association and The Toronto-Dominion Bank (each a "MANAGING
AGENT" and collectively the "MANAGING AGENTS") are pleased to confirm to you
that, subject to the terms and conditions referred to in this letter, the
Managing Agents have each agreed to underwrite $150,000,000 of the Facility.
The "FACILITY" is a $300,000,000 secured reducing revolving credit facility
made available to Sharron Youngstown Cellular, Inc., which will change its name
to Sygnet Communications, Inc. as part of the planned reorganization and
consolidation of the Sygnet group of companies (the "BORROWER").
The proceeds of the Facility will be used (i) to pay transaction costs incurred
in connection with the Facility, (ii) to finance certain permitted
acquisitions, including without limitation the acquisition of certain assets of
Horizon Cellular Telephone Company of Chatauqua, L.P., Horizon Cellular
Telephone Company of Crawford, L.P., and Horizon Cellular Telephone Company of
Indiana, L.P. (the "HORIZON ACQUISITION"), (iii) to refinance all amounts
outstanding under the Credit Agreement dated as of September 29, 1995 entered
into by and among SYGNET Communications, Inc. and certain of its affiliates as
borrowers, the lenders which are parties thereto and PNC Bank, National
Association as the agent (the "EXISTING CREDIT FACILITY"), (iv) for the
Borrower's ongoing working capital and capital expenditures requirements and
(v) for the Borrower's general corporate purposes, all as permitted as
described in the Summary of Terms and Conditions dated August 21, 1996 attached
hereto and made a part hereof (the "TERM SHEET").
The Facility will be provided pursuant to the terms of, and shall become
effective only upon, the execution and delivery of a mutually satisfactory
credit agreement and other definitive loan and security documents
incorporating, among other things, the terms and conditions contained in the
Term Sheet and other terms and conditions customarily included in credit
facilities of this size, type and purpose. These terms and conditions will
necessarily be further developed during the course of preparing and negotiating
the loan and security documents. In the event of any conflict between the terms
and conditions of this letter and the Term Sheet (collectively the "COMMITMENT
LETTER") and the terms and conditions of the final loan and security documents,
the terms and conditions of the final loan and security documents will control.
<PAGE> 1
EXHIBIT 10.22
PROMISSORY NOTE
Youngstown, Ohio
December 29, 1994
1. PROMISE TO PAY. For value received, the undersigned, Albert H.
Pharis, Jr. ("Borrower"), hereby promises to pay to the order of SYGNET
Communications, Inc. (hereinafter referred to as "Lender"), the sum of Two
Hundred Forty-Nine Thousand Fifty-Two Dollars ($249,952.00), plus interest on
the unpaid balance of said amount at the annual rate of 8.23%, compounded
annually, in accordance with the terms and conditions hereof.
2. PERIODIC PAYMENT. Borrower shall make payment to Lender of accrued
interest on December 31, 1995, December 31, 1996, and December 31, 1997.
Thereafter, Borrower shall make payment in seven (7) annual installments of
principal plus interest in the amount of $48,386.79 per year, beginning
December 31, 1998, and continuing thereafter on the 31st day of December each
year for a total of seven (7) consecutive years.
3. APPLICATION OF PAYMENTS. All payments received by Lender shall first
be applied to interest due hereunder, then to principal.
4. PREPAYMENT. Borrower shall have the right to prepay the principal of
this note in whole or in part prior to its due date without premium or penalty.
5. DEFAULT. Failure to pay any part of the principal or interest of this
note when due, shall authorize the holder of this note to declare as
immediately due and payable the then unpaid principal and interest and to
exercise any and all rights and remedies provided at law and/or equity. No
course of dealing or any delay or omission in exercising any right, power or
remedy shall operate as a waiver thereof and any such right, power and remedy
may be exercised from time to time as shall be deemed appropriate by Lender.
6. WAIVER. The Borrower waives demand, presentment, notice of dishonor,
diligence in collection, and notice of protest, and agree to all extensions and
partial payments before or after maturity, without prejudice to the holder.
The Borrower agrees that the rights, powers and remedies given to Lender by
this Agreement, are cumulative and not exclusive of any other powers or
remedies available to the Lender.
7. ASSIGNMENT. Lender shall be permitted to assign this Promissory Note,
upon notice, in writing to Borrower.
8. GOVERNING LAW. This Agreement shall be governed in accordance with
the laws of the State of Ohio.
/s/ ALBERT H. PHARIS, JR.
----------------------------
ALBERT H. PHARIS, JR.
<PAGE> 1
EXHIBIT 12.1
<TABLE>
SYGNET Communications, Inc. and Wilcom Corporation
Computation of Ratio of Earnings to Fixed Charges
<CAPTION>
Historical Pro Forma
-------------------------------------------------------- --------------------
Pro
Forma
Pro Six
Six Months Forma Months
(Dollars in Thousands) Year Ended December 31, Ended June 30, Year Ended Ended
-------------------------------------- ---------------- December 31 June 30
1991(c) 1992(c) 1993 1994 1995 1995 1996 1995 (a) 1996 (a)
-------------------------------------- ---------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pretax income (loss) from continuing
operations, including preferred stock dividend
requirement...................................... $(116) $ 866 $1,660 $1,795 $2,015 $1,409 $ 1,579 $(29,509) $(12,310)
Less capitalized interest ......................... 0 0 0 0 0 0 0 0 0
----- ------ ------ ------ ------ ------ -------- -------- --------
(116) 866 1,660 1,795 2,015 1,409 1,579 (29,509) (12,310)
Fixed Charges:
Interest expense ................................ 219 997 702 989 2,660 844 2,642 28,444 14,222
Amortization of deferred financing costs ........ 10 10 14 61 197 7 103 1,068 528
Estimated interest portion of rentals............ 7 23 69 75 153 77 94 366 375
Preferred stock dividend requirement............. 0 0 0 0 0 0 0 7,570 4,325
----- ------ ------ ------ ------ ------ -------- -------- --------
Total fixed charges ............................... 236 1,030 785 1,125 3,010 928 2,839 37,448 19,450
----- ------ ------ ------ ------ ------ -------- -------- --------
Earnings used in ratio
computation ..................................... $ 120 $1,896 $2,445 $2,920 $5,025 $2,337 $ 4,418 $ 7,939 $ 7,140
===== ====== ====== ====== ====== ====== ======== ======== ========
Ratio of Earnings to Fixed Charges (b)............. 1.84 3.11 2.60 1.67 2.52 1.56
- ----------
<FN>
(a) To give effect to the increase in interest expense, amortization of deferred financing costs and interest portion of rentals due
to the following: (i) Sale of the Notes, (ii) borrowings under the Bank Credit Facility, (iii) the Erie Acquisition, (iv)
the Horizon Acquisition, and (v) the Preferred Stock Investment.
(b) The ratio of earnings to fixed charges is determined by dividing the sum of earnings before extraordinary items and accounting
changes, interest expense, amortization of deferred financing cost, taxes and a portion of rent expense representative of
interest by the sum of interest expense, amortization of deferred financing costs and a portion of rent expense representative
of interest. The ratio of earnings to fixed charges is not meaningful for periods that result in a deficit. For the year ended
December 31, 1991, the deficit of earnings to fixed charges was $116. On a pro forma basis, the Company includes preferred
stock dividend requirements in computing its ratio of earnings to combined fixed charges and preferred stock dividends. On a pro
forma basis, the deficit of earnings to combined fixed charges and preferred stock dividends was $29,509 and $12,310,
respectively for the year ended December 31, 1995 and six months ended June 30, 1996.
(c) Operating results of Wilcom Corporation, which consist of paging operations, have been combined effective December 31, 1992.
Prior to such date, the operations of Wilcom Corporation were not significant and would not impact comparability of the
financial data.
</TABLE>
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARY OF SYGNET WIRELESS, INC.
Sygnet Communications, Inc., an Ohio corporation, is the only subsidiary of
Sygnet Wireless, Inc.
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Selected Financial
Data" and "Experts" and to the use of our report on the combined financial
statements of SYGNET Communications, Inc. and Wilcom Corporation dated August
8, 1996 (except as to Note 12, as to which the date is _____, 1996), in
Amendment No. 1 to the Registration Statement (Form S-1 No. 333-10161) and
related Prospectus of Sygnet Wireless, Inc. for the registration of
$110,000,000 of Senior Notes due 2006.
ERNST & YOUNG LLP
Cleveland, Ohio
The foregoing consent is in the form that will be signed upon completion of the
corporate restructuring described in Note 12 to the financial statements.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
August 30, 1996
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our report on the financial statements of DICOMM Cellular Limited
Partnership dated March 25, 1994, in Amendment No. 1 to the Registration
Statement (Form S-1 No. 333-10161) and related Prospectus of Sygnet Wireless,
Inc. for the registration of $110,000,000 of Senior Notes due 2006.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
August 30, 1996
<PAGE> 1
EXHIBIT 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Selected Financial
Data -- Horizon Companies" and "Experts" and to the use of our report dated
July 26, 1996, with respect to the combined financial statements of Selected
Systems of Horizon Cellular Telephone Company, L.P. included in Amendment No. 1
to the Registration Statement (Form S-1 No. 333-10161) and related Prospectus
of Sygnet Wireless, Inc. for the registration of $110,000,000 of Senior Notes
due 2006.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
August 29, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report,
dated January 27, 1995 (except with respect to the matter discussed in Note 9,
as to which the date is August 2, 1996) on the financial statements of Erie
Cellular Telephone Company as of December 31, 1994 and 1993, and for the years
then ended, (and to all references to our Firm) included in Amendment No. 1 to
the Registration Statement (Form S-1 No. 333-10161) and related Prospectus of
Sygnet Wireless, Inc. for registration of $110,000,000 of its Senior Notes due
2006.
/s/ ARTHUR ANDERSEN, LLP
Seattle, Washington,
August 30, 1996
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Amendment No. 1 to the Registration Statement
(Form S-1 No. 333-10161) of SYGNET Wireless, Inc. of our report dated
August 2, 1996, on our audit of the statements of operations and changes in
partners' capital and cash flows of Erie Cellular Telephone Company for the
period January 1, 1995 to September 29, 1995. We also consent to the reference
to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Seattle, Washington
August 30, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 448,292 1,661,363
<SECURITIES> 0 0
<RECEIVABLES> 5,654,208 4,755,063
<ALLOWANCES> 0 0
<INVENTORY> 1,096,961 737,905
<CURRENT-ASSETS> 7,463,183 7,390,063
<PP&E> 21,048,896 22,429,951
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 79,618,473 80,180,603
<CURRENT-LIABILITIES> 5,583,334 3,906,274
<BONDS> 69,500,000 70,500,000
0 0
0 0
<COMMON> 1,331,163 1,331,163
<OTHER-SE> 2,955,100 4,153,954
<TOTAL-LIABILITY-AND-EQUITY> 79,618,473 80,180,603
<SALES> 24,576,928 17,226,665
<TOTAL-REVENUES> 24,576,928 17,226,665
<CGS> 7,529,844 4,333,700
<TOTAL-COSTS> 19,662,777 12,785,544
<OTHER-EXPENSES> 286,016 228,916
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,612,699 2,632,728
<INCOME-PRETAX> 2,015,436 1,579,477
<INCOME-TAX> 65,400 119,000
<INCOME-CONTINUING> 1,950,036 1,460,477
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,950,036 1,460,477
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
