UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
_ X _ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997
_ _ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM _ _ _ TO _ _
Commission File Number 1-13732
SHARED TECHNOLOGIES CELLULAR, INC.
(Exact name of registrant as specified
in its charter)
Delaware 06-1386411
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Great Meadow Road, Suite 102
Wethersfield, Connecticut 06109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(860) 258-2500
Securities registered pursuant to Section 12(b) of the
Act: None
Securities registered pursuant to Section 12(g) of the
Act: Common Stock,
$.01 par value
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes_ _X_ _ No _ _ _ _
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the registrant's Common Stock
held by nonaffiliates as of March 26, 1998 was approximately
$6,513,000 based on the average of the closing bid and asked
prices as reported on such date in the over-the-counter market.
Indicate the number of shares outstanding of each of the
registrant's classes of Common Stock, as of March 26, 1998
7,236,564 shares of Common Stock
$.01 par value
The following document is hereby incorporated by reference
into Part III of this Form 10-K: The registrant's Proxy
Statement for its Annual Meeting of Stockholders to be held
on May 22, 1998 to be filed with the Securities and
Exchange Commission in definitive form on or before April
28, 1998.
PART I
Item 1.
Business
(a) General Development of Business - Shared Technologies
Cellular, Inc. ("STC" or the "Company"), a Delaware corporation
incorporated in 1989, is a national cellular service provider
offering rental, prepaid and activation services in over 640 of
approximately 950 Cellular Geographical Service Areas
("CGSA") within the United States. The Company rents portable
cellular telephones to business and leisure travelers, the press,
attendees, and participants at conventions, sporting events and
government agencies. As a reseller or agent for cellular and
PCS carriers, the Company offers cellular service to approximately
94% of the U.S. population. STC also performs nationwide cellular
activation services through a variety of retail and commercial
outlets. The Company is expanding the scope of its prepaid (debit)
cellular service to include a national activation, customer
service
and collection service operation through major mass merchants.
Through the acquisitions of certain assets from Road and Show
Cellular East, Inc., Road and Show South Ltd. and Road and Show
Pennsylvania, Inc. (collectively "Road and Show"), in December
1993, the Company obtained a national distribution network,
including relationships with national car rental companies and
hotels, which the Company has significantly expanded since that
date. Immediately following the Road and Show acquisitions, the
Company had approximately 1,300 portable cellular telephones
available to rent at approximately 60 distribution outlets. As
of December 31, 1997, the Company had approximately 4,000 cellular
telephones available to rent at approximately 300
distribution outlets.
In April 1995, the Company completed its initial public offering.
Prior to the offering, the Company was an approximately 86%-owned
subsidiary of Shared Technologies Fairchild Inc., ("STFI"). The
Company sold 950,000 shares of its common stock, $0.01 par value
("Common Stock") for $5.25 per share, which generated net proceeds
of approximately $3,562,000 after underwriters' commissions and
offering expenses. In conjunction with the Company's initial
public offering, $1,184,000 of the amount due to STFI was
contributed to the Company's capital in excess of par value.
In May 1995, the Company commenced management of, and subsequently
acquired the outstanding capital stock of Cellular Hotline, Inc.,
("Hotline"), a cellular telephone activation service provider.
The purchase price was $1,329,000 comprised of $217,000 in cash,
the assumption of $712,000 of accounts payable, the issuance of
a promissory note of $150,000 and the balance through the
issuance of 50,000 shares of the Company's Common Stock, valued at
$5.00 per share. The Company used a portion of the proceeds from
its April 21, 1995 public offering for the cash portion of the
purchase. At the discretion of the former Hotline stockholders,
in September 1995, STC was required to repurchase all of the
Common Stock issued to the former Hotline stockholders for $5.00
per share. The Common Stock was subsequently retired.
Additionally, at closing, STC issued options to purchase 50,000
additional shares, excersizable at $7.50 per share for three
years.
In November 1995, the Company completed its acquisition of
substantially all of the assets of PTC Cellular, Inc. ("PTCC"),
one of the largest in-car cellular telephone providers in the
United States. The purchase price was $3,725,000, comprised of
$300,000 in cash, $1,200,000 in assumed accounts payable, a
five-year promissory note in the principal amount of $2,000,000
and the issuance of 100,000 shares of Common Stock, valued at
$2.25 per share.
In December 1995, the Company sold its resale business to
SNET Mobility, Inc. The sale included the Company's customer
accounts relating to the resale business and the corresponding
accounts receivable, for approximately $1.1 million in cash.
In December 1995, the Company completed a $3 million private
placement of equity with International Capital Partners,
Inc., ("ICP"), a Stamford, Connecticut based investment firm,
two of whose principals are currently directors of the Company.
The $3 million offering proceeds, net of commissions, was
used primarily for the acquisition of certain assets of PTCC
and to provide additional working capital. Under the terms
of the offering, STC issued 300,000 shares of its Series A
Convertible Preferred Stock, $.01 par value per share (the
"Series A Stock"). Each preferred shareholder is entitled
to receive dividends equal to 10% per annum for the first
twelve month period, payable in additional shares of Series
A Stock. In addition, the Company issued to ICP a five-year
warrant to purchase 150,000 shares of the Company's Common
Stock at an exercise price of $2.50. In May 1996, all of
the outstanding Series A Stock, including 11,260 shares
received as dividends, were converted into 1,146,450 shares
of Common Stock. In August 1996 the Companys' stockholders
voted to cancel the Companys' authority to issue additional
shares of the Series A Stock.
In April 1996, the Company completed its acquisition of
substantially all of the assets of its only franchisee, Summit
Assurance Cellular, Inc. and certain other parties
(collectively "Summit") The purchase price was approximately
$3,563,000 comprised of $335,000 in cash, the assumption of
$669,000 of accounts payable and $656,000 of notes payable,
the issuance of a promissory note for $953,000, and the
issuance of 300,000 shares of Common Stock, valued at $3.125
per share and three-year warrants each to purchase 100,000
shares of the Company's Common Stock at prices of $3.00,
$4.00 and $5.00 per share, respectively. These warrants
were valued at $13,000.
In August 1996, the Company completed a $5 million private
placement with ICP and STFI for 500,000 shares of Series
B Preferred Stock, $.01 par value per share (the "Series
B Stock"). The Company received gross proceeds from the
offering of $5 million, including the cancellation of
$1,200,000 of preexisting debt to STFI. A commission of
$125,000 was paid to ICP. In August 1997, all of the
outstanding Series B Stock was converted into 1,666,666
shares of the Company's Common Stock and the shareholders
received warrants to purchase an equal number of Common
Stock at an exercise price of $3.00 per share. Separately,
the Company engaged the services of ICP to provide certain
financial advisory services to the Company for a period
of one year. In consideration for such services, the
Company issued a five-year Common Stock Warrant to
ICP for the purchase of 240,000 shares of Common Stock
at an exercise price of $3.00 per share and on terms
substantially the same as those provided for in the Common
Stock Warrants issued to the purchasers of the Series
B Stock.
In December 1996, the Company entered into an agreement
(the "Purchase Agreement") with RHI Holdings, Inc. ("RHI")
pursuant to which the Company sold to RHI 500,000 common
stock units ("Units") with each Unit consisting of one
share of Common Stock, and one warrant to purchase an additional
share of Common Stock at $3.00 per share. The Company
received proceeds of $1,469,000, net of certain transactional
expenses, from the sale of such Units. The Purchase Agreement
provided for STC to use its best efforts to cause the Board
of Directors of STC to include at least one member designated
by RHI so long as RHI owns capital stock (or the rights to
purchase capital stock) comprising 5% or more of the voting
power in STC, and at least two members designated by RHI so
long as RHI owns capital stock (or the rights to purchase
capital stock) comprising 10% or more of the voting power
in STC. To date, no RHI-designated directors have joined
the Board of Directors. The Company used the proceeds
received from the sale of the Units for working capital.
In August and September 1997, the Company sold an
additional 406,667 Units through a private placement
that included various members of the Company's management.
The sale generated proceeds of $1,220,000.
(b) Financial Information about Industry Segments - The
Company is engaged in one industry segment, the
telecommunications industry, providing a wide range of
services including, short-term cellular telephone rentals,
activation of cellular phones and debit cellular phone
systems.
(c) Narrative Description of Business
(1) (i) Products and Services
Cellular Phone Rentals
The Company markets its cellular telephone rental services
principally through car rental agencies, international
airlines and hotels. The Company has agreements with the
Hertz Corporation ("Hertz"), National Car Rental System,
Inc., ("National"), Budget Rent a Car Corporation ("Budget"),
Avis Rent a Car Systems, Inc. ("Avis"), and Alamo Rent a Car,
Inc. ("Alamo"), as well as significant car rental company
licensees, to offer its portable cellular telephones at designated
car rental locations. The Company's phones are located primarily
at airport terminals, in approximately 70 cities throughout
the United States. In addition, during 1996, the Company
developed an airline cellular rental program designed to
market to international customers in-bound to the United States.
These travelers typically do not utilize the car rental
companies, and require the communication convenience of
renting a cellular phone. Through contracts with two major
airlines, STC coordinates cellular phone rentals in most
major cities, utilizing its centralized reservation/customer
service and fulfillment center.
In addition, the Company markets its cellular telephone
services at conventions and sporting events. For example,
the Company has rented cellular telephones at the NCAA
basketball tournament for the last three years, the 1996
Summer Olympics in Atlanta, and the 1996 and 1995 New York
Marathon. The Company also rents cellular telephones on
site following emergency and disaster situations through
arrangements with telecommunications carriers, the Federal
Emergency Management Agency and other governmental agencies.
Debit Services
The growth of the cellular industry has been accompanied by
significant amounts of bad debt. Cellular carriers have
responded to the bad debt problem by imposing stringent
credit requirements on potential customers which have
resulted in approximately 35% of the subscribers who apply
for cellular service being rejected. To allow these customers
to enjoy the advantages of cellular communications, STC is
developing programs that allow subscribers easy, pay-in-advance
options for cellular service. Debit, or prepaid, cellular
service is presented as a solution for credit issues and
for businesses requiring more control over the cellular
expenses in their organizations. Cellular debit services
open a substantial and relatively untapped segment of
the cellular marketplace, which STC intends to aggressively
pursue. The Company provides the necessary tracking,
customer service, collection services, and reporting functions
required to support its prepaid cellular service. The Company
currently has an agreement with a national retailer, Thorn
Americas, Inc. ("Rent A Center") for whom the Company is
performing these functions. As of December 31, 1997, the
Company had activated approximately 13,000 lines for Rent
A Center throughout the United States.
The Company has also established an end-user program where
the retailer acts as an agent for the debit service and
receives on-going commissions from the revenue without
on-going responsibilities. This product is marketed under
the CellEase brand name. All customers of CellEase debit
service are customers of STC, effectively establishing a
direct and on-going relationship with the end-user. The
customer purchases the phone from an authorized retailer,
then calls STC using a toll-free number to activate the
phone. At a minimum, customers must purchase $30 of pre-
paid usage every 30 days, customers can make pre-paid
usage purchases from authorized retailers or directly
from STC in increments of $30, $50, or $100.
Activation Services
With the acquisition of Hotline, STC became one of the largest
providers of nationwide cellular phone activation services.
The Company acts as an agent linking retail points of sale
to more than 690 cellular markets, using its 1,200 individual
carrier contracts nationwide. In addition, STC offers its
activation services to the cellular carriers under its
"MOVE/Customer Retention Program". The Company maintains
contracts and relationships with most cellular carriers
in the United States, and can provide the necessary
administrative services to permit a customer in a store
within the United States to purchase a phone with activated
cellular service. In addition to charging a service fee
to the national distribution partner, the Company also
derives revenues from the cellular carrier in the form
of commissions, residual payments, and other revenue sharing.
The Company is currently exploring a retail activation
program with a national retailer. The program offers
mass merchants two alternatives to traditional cellular
phone programs from local carriers. The first uses
freestanding, retail kiosks located in high volume stores.
These kiosks are fully staffed by STC employees, removing
the retailer from the complex cellular sales transaction.
For lower volume stores, STC can use similar displays to
offer a Phone-In-Box program. The retailer's sales
transactions and administration are simplified because
service activation occurs by having the customer call
a toll-free number at STC's National Activation Center.
(iv) Patents, Trademarks, Licenses, Franchises, Concessions
"Shared Technologies Cellular" is a registered trademark,
which is licensed to the Company by STFI. The Company
filed for a registration of the servicemark "CellEase"
which is used in connection with the Company's debit cellular
business. The Company utilizes proprietary technology that
is licensed from third party software developers.
(v) Seasonality
The Company has experienced a reduction of revenues in the
winter months due to the reduction in business travel
during the holiday season and inclement weather.
(vi) Working Capital
Since its inception as a subsidiary of STFI, and through its
initial public offering in April 1995, the Company's losses
were substantially funded by STFI. In addition, STFI funded
the purchase price paid for the Company's Road and Show
acquisitions. In January 1997 and in April 1996, STFI
contributed to the Company's capital in excess of par
value approximately $1,700,000 and $1,184,000, respectively,
of the Company's indebtedness to STFI. See Item 1(a) -
"General Development of Business", "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
and "Notes to Consolidated Financial Statements" herein.
(vii) Dependence on Certain Customers
Approximately 26%, 24%, 13% and 11% of the Company's
revenues for 1997 were attributable to Rent A Center,
Hertz, Avis, and National, respectively. The Company
has enjoyed its relationship with Hertz, Avis and
National for several years, and has been working with
Rent A Center for over one year. Nevertheless, the longevity
of these relationships is generally subject to contractual
termination provisions that are effective upon relatively
short notice.
(viii) Backlog
At any given time the Company maintains approximately
4,000 portable cellular telephones available for short-
term rentals. Due to the varying utilization of the
telephones, backlog information for the portable rental
business cannot be quantified.
(ix) Government Regulation
From time to time, legislation and regulations that could
potentially affect the Company, either beneficially or
adversely, have been proposed by federal and state legislators
and regulators. Management is not aware of any current
pending or proposed legislation or regulations which, if
adopted, would have a material adverse impact on the
Company's operations.
(x) Competition
The telecommunications industry in general, and the cellular
telephone industry in particular, are highly competitive.
Competitive factors include price, customer service,
geographical coverage and the ability to increase revenues
through marketing. The Company's short-term portable service
competes with both regional and national cellular service
companies, some of which have substantially more experience
and greater financial, technical and other resources than
the Company.
Other cellular providers in the debit market include: World
Wide Cellular, Boston Communications Group, USCI, Inc., national
carriers such as MCI, GTE, AT&T, and local resellers. In
addition, Topp Telecom, Inc., an alternative technology
provider, offers a turn-key solution similar to the STC
CellEase program.
In the activation business, the Company faces competition
mainly from other resellers, mass merchants, carriers and
agents, many of which may have substantially more experience
and greater financial, marketing, technical and other
resources than the Company.
(xiii) Employees
As of March 26, 1998, the Company had approximately 204
employees; 10 in management, 44 in administration, 142
in sales and service and 8 in technical positions. The
Company's employees are not represented by a labor union.
The Company believes its relations with its employees are
satisfactory.
Item 2.
Property
The Company does not own any real estate and has no present
plans to purchase any real estate. The Company's principal
executive office is leased and is located at 100 Great Meadow
Road, Suite 102, Wethersfield, Connecticut 06109.
The Company's executive office currently occupies
approximately 6,300 square feet pursuant to a five-year
lease agreement expiring in 1999 (the "Term"). The Company
pays a monthly rent of approximately $8,100 during the
remainder of the Term. In addition, the Company leases
an aggregate of approximately 15,000 square feet in various
locations nationwide for the purpose of direct sales by
its sales force, for a total monthly rent of approximately
$13,000. Each of the leased properties is, in management's
opinion, generally well maintained and is suitable to support
the Company's business. The Company is anticipating an
expansion of its current leased space at the executive office
in the first quarter of 1998 to approximately 18,400 square
feet, with a rental rate and terms substantially the same
as those under the current lease.
Item 3.
Legal Proceedings
The Company is not involved in any litigation which,
individually or in the aggregate, if resolved against
the Company, would be likely to have a material adverse
effect on the Company's financial condition, results of
operations or cash flows.
Item 4.
Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's
security holders during the fiscal quarter ended December
31, 1997.
PART II
Item 5.
Market for Registrant's Common Stock and Related Stockholder
Matters
The Company's shares of common stock (trading symbol: STCL)
have been quoted and traded in the over-the-counter market
since April 21, 1995. Over-the-counter market quotations
reflect interdealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent
actual transactions. During 1997 and 1996, the quarterly
high and low closing prices were as follows:
<TABLE>
Market for Registrant's Common Stock
<CAPTION>
1997 1997 1996 1996
High Low High Low
<S> <C> <C> <C> <C>
First Quarter 2 21/32 1 3/8 4 1/8 1 5/8
Second Quarter 2 3/8 1 3/16 6 1/8 2 3/4
Third Quarter 6 1/4 1 15/16 4 1/4 1 15/16
Fourth Quarter 5 3/4 3 1/8 3 1 1/2
</TABLE>
Number of beneficial holders of the Company's common stock
as of March 26, 1998 was 719.
Item 6.
Selected Financial Data
The following table sets forth the selected financial data
of the Company for each of the last five years. Financial
statements for 1994 and 1993 are not presented in this filing.
Such selected financial data were derived from audited
financial statements not included herein. The selected
financial data of the Company should be read in conjunction
with the Consolidated Financial Statements and related notes
appearing elsewhere in this Form 10-K. All amounts, except
per share amounts, are in thousands.
<TABLE>
Selected Financial Data
<CAPTION>
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Statement of
Operations-Data:
Revenues 24,198 20,914 13,613 10,217 2,200
Gross margin 10,667 7,285 5,026 4,923 596
Total operating
expenses 14,120 14,173 8,015 4,272 1,463
Income (loss) from
operations (3,453) (6,888) (2,989) 651 (867)
Gain on sale of
Division 689
Loss on discontinued
Affiliate 364
Loss on contract
Cancellation (980)
Interest expense
(income) net 232 906 136 49 (8)
Net income (loss)
before income taxes(3,685) (8,774) (2,800) 602 (859)
Income taxes (10) (22) (48)
Net income (loss) (3,695) (8,796) (2,848) 602 (859)
Preferred stock
Dividends (113)
Net income (loss)
applicable to
common stock (3,695) (8,909) (2,848) 602 (859)
Basic and diluted
income (loss)
per common share (0.63) (2.18) (1.04) 0.28 (0.39)
Weighted average
number of
shares outstanding 5,900 4,082 2,748 2,185 2,185
Balance Sheet
Data:
Working capital
Deficit (6,956) (8,975) (1,851) (920) (301)
Total assets 11,535 14,262 14,378 5,452 3,173
Notes payable
(including current
Portion) 1,487 2,579 2,000
Obligations under
capital leases
(including current
portion) 190
Other liabilities 7,832 8,767 6,290 2,449 687
Indebtedness to
STFI 1,052 59 985 2,434 4,153
Accumulated
deficit (16,709) (13,013) (4,105) (1,256)(1,858)
Stockholders'
equity(deficit) 1,165 2,857 5,102 569 (1,857)
</TABLE>
See accompanying notes to consolidated financial statements
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations:
Year Ended December 31, 1997 Compared to Year Ended December
31, 1996
Revenues for 1997 were $24,198,000, an increase of $3,284,000
(16%) over revenues for 1996. This increase was primarily due
to the expansion of the debit business and the April 1996
purchase of the operations of the Company's sole franchisee,
both of which were partially offset by the elimination of the
in-car cellular rental operations. The loss from operations,
excluding non-recurring charges, was $1,416,000 in 1997 and
$6,888,000 in 1996. The net loss for 1997 was $3,695,000,
compared to a net loss of $8,796,000 for 1996. The
improvement was a result of the change in the revenue mix to
more profitable lines of business and a reduction in operating
expenses. The net loss per common share was $0.63 for 1997,
compared to $2.18 for 1996.
Revenues
The cellular telephone rental operations had revenues of
$15,242,000 for 1997, compared to $16,339,000 for 1996.
The decrease of $1,097,000 (7%) was attributable to two
non-recurring sources of revenue in 1996. In 1996, the
in-car operation generated revenues of $3,143,000; such
line of business was discontinued in 1997. In the third
quarter of 1996, the Company generated revenues of
$1,434,000 from the summer's Olympic Games. These decreases
for 1997 were offset by $2,259,000 in additional revenues
in 1997 from the Summit acquisition. The remaining balance
of the increase was mainly due to the addition of Avis,
which allowed the Company to increase its penetration
within existing portable cellular rental market areas.
The debit operations had revenues of $6,299,000 for 1997,
compared to $1,516,000 for 1996. This significant increase
was due to the rapid expansion into the debit business
in the first quarter of 1997. The Company increased the
number of cellular prepaid lines with Rent A Center
from 5,000 to 15,000 during that period.
The activation operations had revenues of $2,657,000 for
1997, compared to $3,059,000 for 1996. This decrease was
mainly due to a reduction in activation revenues by the
Company's Texas location that was closed in November 1997.
In addition, several national retailers ceased to offer
cellular telephone activations through the Company in 1996.
These revenue losses were offset by activations done at
various retail locations.
Gross Margin
Gross margin increased to 44% of revenues for 1997, from
35% of revenues for 1996. This improvement was mainly
due to significant changes in revenue mix. The in-car
operations represented 15% of 1996 revenues but had no
gross margin, compared to no revenues in 1997. As
previously discussed, the in-car operations were discontinued
in 1997. The gross margin for both the portable cellular
rental and the debit operations improved due to a reduction
in carrier costs as a result of better line management and
lower carrier usage costs. As a percentage of revenue, the
debit business increased from 7% in 1996 to 26% in 1997.
The activation operations had a small reduction in gross
margin due to lower activation commissions received
from carriers.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A")
decreased $2,090,000 (15%), to $12,083,000 for 1997
from $14,173,000 for 1996. As a percentage of revenues,
SG&A decreased to 50% for 1997, compared to 68% for 1996.
This decrease was due to several factors. In the latter
part of fiscal year 1996, the Company made a concerted
effort to reduce its operating expenses. The Company
consolidated its Special Events operation into its portable
rental business, it transitioned its in-car cellular
telephone rental operation to its portable cellular
telephone rental business, and implemented other cost-
cutting measures, such as staff reductions, office
closings and travel restrictions that resulted in an
overall decrease in SG&A. The Company was also able
to include the revenues from the Summit acquisition
with minimal amounts of additional SG&A, which helped
to reduce SG&A as a percentage of revenues.
Loss on Discontinued Product Line
During 1997, the Company completed the transition of its
in-car rental accounts to portable rentals. In conjunction
with this transition, the Company attempted to develop
alternate uses for the in-car cellular telephones, as well
as the capitalized software development costs associated with the
in-car cellular rental business. Although management believes
that there are viable uses for such assets, the probability
that such usage will be successful is not known. As a
result, the Company recognized a $2,037,000 writedown to
reduce the in-car cellular phones and the capitalized
software development costs to net realizable value and classified
them on the balance sheet as assets held for disposition.
Interest Expense
Interest expense, was $232,000 for 1997, compared to $906,000
for 1996. Interest expense in 1997 was mainly due to debt
relating to the PTCC acquisition in November 1995 and the
Summit acquisition in April 1996.
Year Ended December 31, 1996 Compared to Year Ended December
31, 1995
Revenues
The Company's revenues rose to $20,914,000 for 1996, an
increase of $7,301,000 (54%) over 1995. Such revenue increase
was due to acquisitions and the expansion of the Company's
existing businesses.
The portable rental operations had a $5,825,000 (79%) revenue
increase due to several factors: In April 1996, the Company
purchased the portable cellular telephone business of Summit,
completing the Company's ability to provide portable cellular
phones on a nationwide basis. This acquisition enabled the
Company to generate $2,399,000 (33%) in additional revenues in
1996. The Company also generated approximately $1,434,000 (19%)
revenues at the 1996 Summer Olympics in Atlanta. The balance of
the increase ($1,992,000 or 27%) in the portable rental operation
was due to the transition of some of the in-car accounts and
improved penetration at existing locations. As a result of the
acquisition of certain in-car cellular telephone assets of
PTCC as of November 1, 1995, the Company generated $2,171,000
(223%) more in-car rental revenues in 1996 than in 1995.
The debit cellular telephone operations were started in
late 1995 and generated $1,516,000 in revenues in 1996,
versus $33,000 in 1995. In 1996, the Company signed an
agreement with Rent A Center that was principally
responsible for this significant revenue growth.
The activation operations had revenues of $3,059,000 in 1996,
compared to $5,238,000 in 1995. This decrease was due to
several national retailers ceasing to offer cellular
telephone activations through the Company. The agency
activation operations had a $665,000 revenue decrease from
1995. The decrease was due to the conversion of the
1996. Connecticut location from a resale operation to
an agency operation. In December 1995, the Company sold
its resale business to SNET Mobility, Inc. (See Gain on
Sale of Assets).
Gross Margin
Gross margin increased $2,259,000, or 45%, from 1995 to 1996.
As a percentage of revenues, gross margin decreased slightly
in 1996 to 35% of revenues, from 37% of revenues in 1995.
The decrease was the result of significant changes in the
Company's revenue mix as a result of various acquisitions,
the sale of its resale business and the rapid growth of the
debit business. In addition, the in-car rental operations
showed a dramatic decrease in its gross margin as a result
of decreasing revenues offset by fixed costs and significant
amounts of fraudulent phone usage, which the Company was
forced to absorb.
Operating Expenses
Operating expenses increased to $14,173,000 for the year
ended December 31, 1996, compared to $8,015,000 for the
year ended December 31, 1995. As a percentage of revenues,
operating expenses increased to 68% for the year ended
1996, from 59% for the year ended 1995. Part of this
increase as a percentage of revenue was due to the conversion
of the resale operation into an agency operation at the
beginning of 1996. Although operating expenses for this group
were similar for the two years, as a percentage of revenues,
the expenses went from 19% in 1995 to 47% in 1996. However,
due to better margins in the agency operations, the group
generated more operating profits in 1996 than in 1995.
Overall, had the Company not had several extraordinary
operating expenses in 1996, the 1996 percentage would have
dropped to approximately 52%. The following are the
extraordinary operating expenses incurred by the Company in
1996.
The Company's former events division rented cellular
telephones on a short-term basis at special events such
as conventions and sporting events. Due to the significant
overhead requirements for this division, the Company
decided to consolidate the division into its existing
portable rental operations at mid year. Operating expenses
for the events division were approximately $1,300,000
in 1996, representing over 120% of the revenues generated.
Prior to the consolidation, the events division had
approximately 30 employees, most of which were terminated
in the consolidation.
Operating expenses in 1996 included over $1,000,000 related
to the in-car operations. As previously discussed, the
Company began transitioning the existing in-car accounts
to portable rentals and eventually discontinued offering
in-car rentals and terminated the approximately 20
employees and substantially all of the related expenses
associated with the in-car operations.
The Company also invested approximately $600,000 in the
expansion of the portable rental operations into the
international airlines business. These expenses were
incurred in an effort to start-up and market its rental
services through various worldwide airlines, primarily
focusing on international travelers who cannot use their
cellular phones in the United States. The Company was
successful in obtaining contracts with two major
international airlines during 1996.
Operating expenses in 1996 included approximately $500,000
related to the start up and expansion of debit cellular
services. Due to the dramatic sales growth from these
operations, 5,000 lines were activated through the end of
1996, with an additional 9,000 lines on backorder. The
Company has created an infrastructure to accommodate
significant revenue growth without the addition of significant
operating costs.
Another significant operating expense incurred by the
Company was the provision for bad debt. Bad debt expense
was $1,772,000 in 1996 and $1,249,000 in 1995. As a
percentage of revenues, the provision was 8% in 1996
and 9% in 1995. The significant amount of bad debt
was due to a change in the Company's marketing approach.
The Company negotiated with various car rental companies
to allow the car rental company employees to deal directly
with the Company's customers. This allowed the Company
to significantly expand the number of locations renting
its cellular telephones, thereby increasing the Company's
revenues. However, as a result of the change in the
marketing approach, the Company was exposed to an increased
level of credit risk that resulted in an increase in bad
debt realized during 1996 and 1995. The Company continues
to work closely with its car rental company partners to
improve the integration of specific information between the
Company and the car rental companies' computer systems,
in an effort to reduce credit risk.
Interest Expense
Interest expense increased significantly to $906,000 for the
year ended December 31, 1996, compared to $136,000 for the
year ended December 31, 1995. This increase was mainly
due to debt incurred as a result of the acquisition of
certain assets from PTCC and Summit. In addition, the
Company recorded a $491,000 accrual for certain estimated
interest charges.
Loss on Contract Cancellation
As part of the acquisition of certain assets of PTCC, the
Company made a commitment to make an investment in new
telephone technology for the in-car business. Consequently,
the Company entered into a contract with a vendor to build
new in-car cellular telephones with improved technology.
When the Company determined that the in-car business could
not justify the significant investment needed to purchase
the next generation of in-car cellular telephones, the
Company negotiated with the vendor to terminate the contract.
Gain on Sale of Assets
Effective December 26, 1995, the Company sold its resale business
to SNET Mobility, Inc. ("Mobility"). The sale included the
Company's customer accounts relating to the resale business and
the corresponding accounts receivable for approximately $1.1
million in cash. The Company realized a gain on the sale of
approximately $689,000. Subsequent to the sale of the resale
business, the Company entered into an agreement with a local
cellular carrier to serve as an agent, providing cellular
activations as well as mobile equipment sales and service.
Loss of Discontinued Affiliate
In December 1995, the Company's affiliate, SafeCall, Inc., ceased
its operations. Amounts previously advanced to the affiliate were
written off.
Preferred Stock Dividends
In 1996, the Company issued preferred stock dividends totaling
$112,603 to the shareholders of the Series A Convertible Preferred
Stock, payable in 11,260 additional shares of Series A Convertible
Preferred Stock. All outstanding shares of Series A Convertible
Preferred Stock as of May 14, 1996 were converted
into 1,146,450 shares of the Company's Common Stock.
Liquidity and Capital Resources:
The Company had a working capital deficit of $6,955,000 at
December 31, 1997, compared to a deficit of $8,975,000 at December
31, 1996. Stockholders' equity at December 31, 1997 was
$1,165,000, compared to $2,857,000 at December 31, 1996.
Net cash used in operations for the year ended December 31, 1997
was $1,413,000. The Company used a portion of the proceeds from
the sale of Common Stock units (discussed below) to improve the
timeliness of its payments to carriers and other vendors.
Net cash used in investing activities for the year ended December
31, 1997 was $271,000. This was mainly attributable to the
purchase of portable cellular equipment and accessories as well as
the updating of computer equipment.
Financing activities were focused primarily on raising capital to
meet obligations relating to the PTCC and Summit acquisitions and
for working capital. During the year ended December 31, 1997, the
Company raised cash of $1,932,000, net of expenses, through the
sale of 250,000 units in January 1997 and an aggregate of 406,667
units in August 1997 and September 1997. Each unit consisted of
one share of the Company's Common Stock and one warrant to
purchase an additional share of such Common Stock. The units were
priced at $3.00 each, and the warrants had an exercise price of
$3.00 per share. The Company used a portion of the proceeds to
make payments of $1,091,000 on various notes payable relating to
the PTCC and Summit acquisitions. The Company also borrowed
$993,000 from its former parent, Shared Technologies Fairchild
Inc. (STFI).
The Company will require additional funds in order to satisfy
existing obligations arising from completed acquisitions, and to
fund current expansion plans. In March 1998, the Company received
$1,000,000 of long-term debt financing from the Chairman and Chief
Executive Officer of the Company. In addition, on March 31,
1998, he committed to fund an additional $2,000,000 of long-
term debt financing if the Company is unsuccessful in raising
additional third-party financing by April 30, 1998. Management
believes that ongoing operations, together with the debt
financing, will provide the Company with sufficient funds to
finance operations and planned expansion for at least the next 12
months, and long-term liquidity will depend on the Company's
ability to obtain long-term financing and attain profitable
operations.
Year 2000
The Company believes that its computer systems are properly
adapted to avoid a Year 2000 problem, and therefore does not
anticipate any material adverse effect to the operations of the
Company with respect to such issue. Many of the systems used by
the Company were developed internally within the last few years
and are Year 2000 compliant. The Company is currently working
with outside vendors to obtain assurances that they are Year 2000
compliant.
1998 Company Outlook
The Company expects to show revenue growth in each of its
operations in 1998. The wireless industry continues to diversify
and expand with abundant opportunities. PCS, GSM and other
wireless carriers are now entering the marketplace. Subscription
growth continues to be double-digit as new products and services,
such as pre-paid cellular, have been launched. The Company
believes it is positioned to take advantage of these
opportunities; offering travelers a communication device
throughout the United States, offering pre-paid cellular and
activation services through national retailers, and working with
wireless carriers to offer their customers, who are relocating, a
more economical activation process.
The portable cellular rental operations are expected to have
moderate revenue growth in 1998. To achieve this, STC intends to
refocus the car rental partners' efforts in soliciting more
customers through training and improved policies and procedures,
by improving awareness through marketing programs, and by
penetrating the premiere traveler programs (e.g. Avis Preferred,
Hertz Gold). Also, with the addition of Alamo in August 1997, the
Company expects to improve the utilization of its cellular
inventory since it will have up to five car rental company
partners in most of its market areas across the United
States.
The debit operations are expected to show considerable revenue
growth with the introduction of the CellEase prepaid cellular
program. In October 1997, the Company signed an agreement
appointing Worldwide Direct, Inc. ("WWD") and DTR Associates LP
("DTR") as its exclusive distributors of CellEase. WWD will
develop, produce, and maintain a national television marketing
campaign supporting CellEase using a short-form (60 to 90 seconds)
TV advertising format. In addition, DTR will offer CellEase to
national retail accounts under the "As Seen On TV" banner. Both
of these programs are expected to begin late in the first quarter
of 1998. The CellEase program utilizes proprietary technology,
some of which is developed internally and other technology that is
licensed from third-party software developers.
The activation operations are expected to have moderate revenue
growth. The Company is working with various carriers to implement
its MOVE/Customer Retention Program, which provides activation
services for carriers' customers who are in the process of
relocating. The Company has recently automated the activation
process by establishing an activation Internet site, which should
make the Program more attractive to carriers. In addition, the
Company is currently testing a retail activation program with a
national retailer at four of its locations within Virginia. If
the test is successful, the Company may expand the program.
The CellEase program, and to a smaller degree, the program with
the national retailer, will require significant initial
investments. The success of either program is partially dependent
on the ability of the Company to raise adequate capital.
In June 1997, the Financial Accounting Standard Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income". This statement establishes
standards for the reporting and display of comprehensive income
and its components in the Company's financial statements.
This statement will not have an impact on the Company's
consolidated financial position, results of operations, or cash
flows.
Also in June 1997, the FASB issued SFAS No.131, "Disclosures about
segments of a business and related information". This statement
established revised standards for the reporting of financial
information about a Company's operating segments for both interim
and annual financial statements. Since the Company currently
operates in one industry segment, this statement will not effect
the Company.
"Safe Harbor" statement under the Private Securities Litigation
Reform Act of 1995: The Management's Discussion and Analysis may
include forward-looking statements with respect to the Company's
future financial performance. These forward-looking statements
are subject to various risks and uncertainties that could cause
actual results to differ materially from those in any forward-
looking statement. Such risks and uncertainties may include,
without limitation, technological obsolescence, price and industry
competition, financing capabilities, and dependence on major
customers and relationships.
Item 8.
Financial Statements and Supplementary Data
Attached.
Item 9.
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None
SHARED TECHNOLOGIES CELLULAR, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE (ITEM
8)
Page
Financial Statements:
Independent Auditors' Report F-2
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Stockholders' Equity F-5
Consolidated Statements of Cash Flows F-6-7
Notes to Consolidated Financial Statements F-8-21
Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts for the
Years Ended December 31, 1997, 1996 and 1995 S-1
Note:
(a) All other schedules are not submitted because they are not
applicable, not required or the required information is included
in the consolidated financial statements or notes thereto.
F-1
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Shared Technologies
Cellular, Inc.
We have audited the accompanying consolidated balance sheets of
Shared Technologies Cellular, Inc. and Subsidiary as of December
31, 1997 and 1996 and the related consolidated statements of
operations, stockholders' equity, cash flows and financial
statement schedule for each of the three years in the
period ended December 31, 1997. These financial statements and
financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements and financial statement schedule
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Shared Technologies Cellular, Inc. and
Subsidiary as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1997, in conformity with
generally accepted accounting principles. Also in our opinion,
the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all
material respects, the information required to be included
therein.
ROTHSTEIN, KASS & COMPANY, P.C.
Roseland, New Jersey
March 10, 1998, except for Notes 3 and 20,
as to which the date is March 31, 1998.
<TABLE>
SHARED TECHNOLOGIES CELLULAR, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
<CAPTION>
1997 1996
ASSETS
<S> <C> <C>
Current assets:
cash $294,000 $144,000
Accounts receivable,
less allowance for
doubtful accounts of
$991,000 in 1997 and
$1,392,000 in 1996 $1,637,000 $1,621,000
Carrier commissions
receivable, less unearned
income $163,000 $53,000
Inventories $131,000 $80,000
Current portion of note
receivable $107,000 $39,000
Prepaid expenses and
Other current assets $127,000 $133,000
Total current assets $2,459,000 $2,070,000
Telecommunications and
office equipment, net $985,000 $2,131,000
Other assets:
Intangible assets, net $7,551,000 $9,322,000
Deposits $326,000 $373,000
Note receivable, less
current portion $62,000 $119,000
Assets held for
disposition $153,000 $247,000
$8,092,000 $10,061,000
$11,536,000 $14,262,000
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes
payable $530,000 $2,218,000
Accounts payable and
other current liabilities $7,666,000 $8,719,000
Commissions payable $166,000 $49,000
Due to former parent $1,052,000 $59,000
Total current liabilities $9,414,000$11,045,000
Notes payable, less
Current portion $957,000 $360,000
Commitments and
contingencies
Stockholders' equity:
Preferred stock, $.01
Par value, Series B
Convertible, authorized
1,250,000 shares, issued
and outstanding none in
1997 and 500,000 shares
in 1996 $5,000
Common stock, $.01 par
value, authorized
20,000,000 shares, issued
and outstanding 7,216,000
shares in 1997 and
4,863,000 shares in 1996 $72,000 $49,000
Capital in excess of par
Value $17,801,000 $15,816,000
Accumulated deficit ($16,708,000)($13,013,000)
Total stockholders' equity $1,165,000 $2,857,000
$11,536,000 $14,262,000
</TABLE>
See accompanying notes to consolidated financial statements
<TABLE>
SHARED TECHNOLOGIES CELLULAR, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS
OF OPERATIONS
Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Revenues $24,198,000 $20,914,000 $13,613,000
Cost of revenues $13,531,000 $13,629,000 $8,587,000
Gross margin $10,667,000 $7,285,000 $5,026,000
Selling, general and
administrative expenses $12,083,000 $14,173,000 $8,015,000
Loss on discontinued
product line $2,037,000
$14,120,000 $14,173,000 $8,015,000
Loss from operations ($3,453,000)($6,888,000)($2,989,000)
Other income (expense):
Interest expense ($232,000) ($906,000) ($136,000)
Gain on sale of assets $689,000
Loss on discontinued
Affiliate ($364,000)
Loss on contract
Cancellation ($980,000)
($232,000)($1,886,000) $189,000
Loss before income taxes ($3,685,000)($8,774,000)($2,800,000)
Income taxes ($10,000) ($22,000) ($48,000)
Net loss ($3,695,000)($8,796,000)($2,848,000)
Preferred stock dividends ($112,000)
Net loss applicable to
Common Stock ($3,695,000)($8,908,000)($2,848,000)
Basic and diluted loss
per common share ($0.63) ($2.18) ($1.04)
Weighted average number
of common shares
outstanding 5,900,000 4,082,000 2,748,000
</TABLE>
See accompanying notes to consolidated financial statements
<TABLE>
SHARED TECHNOLOGIES CELLULAR, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
Series A Series A Series B Series B
Preferred Preferred Preferred Preferred
Stock Stock Stock Stock
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Balances, January 1,
1995 - - - -
Issuance of common
stock
Issuance of
preferred stock 300,000 3,000
Contribution to
capital by parent
Issuance of common
stock for
acquisitions
Acquisition of
common stock
Net loss
Balances, December
31, 1995 300,000 3,000 - -
Issuance of common
stock
Issuance of preferred
stock 500,000 5,000
Preferred stock
dividend 11,000
Conversion of
preferred
stock (311,000) (3,000)
Issuance of common
stock for
acquisitions
Common stock
subscription
Net loss
Balances, December
31, 1996 500,000 5,000
Issuance of common
stock
Conversion of
preferred stock (500,000) (5,000)
Net loss
Balances, December
31, 1997 - - - -
</TABLE>
See accompanying notes to consolidated financial statements
<TABLE>
SHARED TECHNOLOGIES CELLULAR, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CONTINUED
Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
Common Common Common Capital in
Stock Stock Stock Excess of
Shares Amount Subscription Par Value
<S> <C> <C> <C> <C>
Balances, January 1, 1995 2,070,000 $21,000 $5,000 $1,805,000
Issuance of common stock 950,000 $9 ,000 $3,400,000
Issuance of preferred stock $2,685,000
Contribution to capital by
parent $1,184,000
Issuance of common stock
for acquisition 150,000 $2,000 $473,000
Acquisition of common stock (81,000) ($1,000) ($374,000)
Net loss
Balances, December 31, 1995 3,089,000 $31,000 $5,000 $9,173,000
Issuance of common stock 264,000 $3,000 $760,000
Issuance of preferred stock $4,828,000
Preferred stock dividend $112,000
Conversion of preferred
stock 1,147,000 $11,000 ($8,000)
Issuance of common stock for
acquisition 300,000 $3,000 $947,000
Common stock subscription 63,000 $1,000($5,000) $4,000
Net loss
Balances, December 31, 1996 4,863,000 $49,000 $15,816,000
Issuance of common stock 686,000 $7,000 $1,996,000
Conversion of preferred
stock 1,667,000 $16,000 ($11,000)
Net loss
Balances, December 31, 1997 7,216,000 $72,000 - $17,801,000
</TABLE>
See accompanying notes to consolidated financial statements
<TABLE>
SHARED TECHNOLOGIES CELLULAR, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CONTINUED
Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
Total
Accumulated Note Stockholders'
Deficit Receivable Equity
<S> <C> <C> <C>
Balances, January 1, 1995 ($1,257,000) ($5,000) $569,000
Issuance of common stock $3,409,000
Issuance of preferred stock $2,688,000
Contribution to capital by
parent $1,184,000
Issuance of common stock for
acquisitions $475,000
Acquisition of common stock ($375,000)
Net loss ($2,848,000) ($2,848,000)
Balances, December 31, 1995 ($4,105,000) ($5,000) $5,102,000
Issuance of common stock $763,000
Issuance of preferred stock $4,833,000
Preferred stock dividend ($112,000)
Conversion of preferred stock
Issuance of common stock for
acquisitions $950,000
Common stock subscription $5,000 $5,000
Net loss ($8,796,000) ($8,796,000)
Balances, December 31, 1996 ($13,013,000) $2,857,000
Issuance of common stock $2,003,000
Conversion of preferred stock
Net loss ($3,695,000) ($3,695,000)
Balances, December 31, 1997 ($16,708,000) $1,165,000
</TABLE>
See accompanying notes to consolidated
financial statements
F-5
<TABLE>
SHARED TECHNOLOGIES CELLULAR, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1997, 1996 and 1995
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Cash flows from
operating activities:
Net loss ($3,695,000)($8,796,000) ($2,848,000)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Loss on discontinued
product line $2,037,000
Depreciation and
amortization $1,292,000 $1,684,000 $1,086,000
Common stock issued for
compensation and services $71,000 $40,000
Accrued interest, note
receivable ($11,000)
Accretion of interest
on notes payable $30,000
Gain on sale of assets ($689,000)
Loss on discontinued
affiliate $364,000
Changes in assets and
liabilities, net of
effect of acquisitions:
Accounts receivable ($16,000) ($429,000) ($161,000)
Carrier commissions
receivable ($110,000) $400,000 $13,000
Inventories ($51,000) ($31,000) ($52,000)
Prepaid expenses and
other current assets $6,000 $339,000 ($239,000)
Accounts payable and
other current
liabilities ($1,053,000) $2,124,000 $1,749,000
Commissions payable $117,000 ($404,000) ($21,000)
Net cash used in
operating activities ($1,413,000)($5,043,000) ($798,000)
Cash flows from
investing activities:
Acquisitions of businesses ($336,000) ($1,047,000)
Purchases of equipment ($318,000) ($953,000) ($341,000)
Payments for intangible
assets ($514,000) ($612,000)
(Increase) decrease in
deposits $47,000 ($231,000) ($53,000)
Collection of receivable
from sale of assets $1,078,000
Collections of note
receivable $45,000 $18,000
Net cash used in investing
activities ($271,000) ($911,000) ($2,035,000)
Cash flows from financing
activities:
Payments on notes payable ($1,091,000)($1,080,000)
Advances from (payments
to) former parent $993,000 $274,000 ($266,000)
Payments to affiliate ($273,000)
Issuance of common and
preferred stock $1,932,000 $4,362,000 $6,279,000
Acquisition of common
stock ($375,000)
Net cash provided by
financing activities $1,834,000 $3,556,000 $5,365,000
Net increase (decrease)
in cash $150,000 ($2,398,000) $2,532,000
Cash, beginning of year $144,000 $2,542,000 $10,000
Cash, end of year $294,000 $144,000 $2,542,000
</TABLE>
See accompanying notes to consolidated financial statements
<TABLE>
SHARED TECHNOLOGIES CELLULAR, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
Years ended December 31, 1997, 1996 and 1995
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Supplemental disclosures
of cash flow information:
Cash paid during the year
for:
Interest $379,000 $280,000 $76,000
Income taxes $10,000 $20,000 $48,000
Supplemental schedules
of noncash investing and
financing activities:
Contribution to capital in
excess of par
value of due to parent - - $1,184,000
Cost of intangible assets
included in
accounts payable - $88,000 $203,000
Note received for sale
of assets - - $1,078,000
Issuance of common stock
for acquisitions - $950,000 $475,000
Note payable incurred for
acquisition of assets - $1,139,000$2,000,000
Issuance of Series B
Convertible Preferred
Stock in exchange for
amount due to parent - $1,200,000 -
Preferred stock issued
for preferred stock dividend - $112,000 -
</TABLE>
See accompanying notes to consolidated financial statements
NOTE 1 - Nature of Operations
Shared Technologies Cellular, Inc. (STC) together with its
subsidiary (collectively the "Company") is a nationwide provider
of short-term cellular telephone services, activation services and
debit telephone services in the United States.
The Company's operations are subject to regulation by the
Federal Communications Commission (FCC), which has generally
preempted the regulatory jurisdiction of state agencies with
respect to the business in which the Company is engaged.
NOTE 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
STC and its wholly-owned subsidiary. All material intercompany
accounts and transactions have been eliminated in consolidation.
Cash
The Company maintains its cash in bank deposit accounts which
at times may exceed federally insured limits. The Company has not
experienced any losses in such accounts and believes it is not
subject to any significant credit risk on cash.
Fair Value of Financial Instruments
The fair value of the Company's assets and liabilities which
qualify as financial instruments under Statement of Financial
Accounting Standards No. 107 approximates the carrying amounts
presented in the consolidated balance sheets.
Carrier Commissions Receivable
Carrier commissions receivable are due from cellular carriers
for new cellular telephone line activations done by the Company
for third parties. The commissions are earned only after the
cellular telephone user has remained on the cellular telephone
network for a specified period of time (vesting period).
The Company records an allowance, as a reduction to carrier
commissions receivable, for estimated cancellations of cellular
service by the user prior to the end of the aforementioned vesting
period. Although there is a short-term vesting period for which
the Company must wait in order to receive its commission, the
Company believes that the revenue process has been completed.
Inventories
Inventories, consisting of telecommunications equipment and
parts expected to be sold to customers, are valued at the lower of
cost, on the first-in, first-out (FIFO) method, or market.
NOTE 2 - Summary of Significant Accounting Policies (Continued)
Impairment of Long-Lived Assets
The Company reviews its long-lived assets, such as
telecommunications and office equipment, identifiable intangibles
and goodwill, for impairment whenever events or changes in
circumstances indicate that the carrying amount of the
assets may not be fully recoverable. To determine the
recoverability of its long-lived assets, the Company evaluates the
probability that future undiscounted net cash flows will be less
than the carrying amount of the assets. Impairment is the amount
by which the carrying value of the asset exceeds its fair value.
Telecommunications and Office Equipment
Telecommunications and office equipment are stated at cost.
The Company records depreciation on the straight-line method over
the estimated useful lives of the assets as follows:
Telecommunications equipment 2-5 years
Office equipment 3-5 years
Intangible Assets
Goodwill represents the excess of cost over the fair market
value of net assets of acquired businesses and is amortized over
periods ranging from 15 to 20 years from the respective
acquisition dates. The Company monitors the cash flows of the
acquired operations to assess whether any impairment of recorded
goodwill has occurred.
Deferred start-up costs relate to costs associated with the
opening of new cellular telephone rental locations throughout the
United States. These costs are amortized on a straight-line basis
over 12 months. The number of new locations opened in 1997 and
1996 was none and 18, respectively.
The Company amortizes the cost to obtain exclusive agreements
to provide cellular telephone rentals at specific locations on the
straight-line basis over the life of the respective agreements,
generally five to six years.
Capitalized software development costs, including significant
product enhancements incurred subsequent to establishing
technological feasibility in the process of software production,
are capitalized according to Statement of Financial Accounting
Standards No. 86. Costs incurred prior to the establishment
of technological feasibility are charged to research, product
development, and support expenses. Capitalized software costs
relate to developing a system in which the cellular telephones
physically located in the rental cars can regularly communicate
with the corporate offices. This software, in conjunction
with the cellular telephone, was to be used for customer billing
and other monitoring functions. In 1997, these capitalized
software development costs were written off with the
discontinuation of the in-car product line (Note 14).
NOTE 2 - Summary of Significant Accounting Policies (Continued)
Advertising Costs
The Company expenses costs of advertising and promotions as
incurred.
Advertising expenses included in selling, general and
administrative expenses for the years ended December 31, 1997,
1996 and 1995 were approximately $132,000 $153,000 and $137,000,
respectively.
Income Taxes
The Company filed its federal income tax returns on a
consolidated basis with its former parent through April 1995, the
date of its initial public offering ("IPO"). Subsequent to April
1995, the Company's income tax returns are being filed separately.
The Company complies with Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), "Accounting for Income Taxes",
which requires an asset and liability approach to financial
reporting for income taxes. Deferred income tax assets and
liabilities are computed for differences between the
financial statement and tax bases of assets and liabilities that
will result in taxable or deductible amounts in the future, based
on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce
the deferred tax assets to the amount expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Loss Per Common Share
Effective December 31, 1997, the Company adopted Statement of
Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings
Per Share". SFAS No. 128 requires dual presentation of basic and
diluted earnings per share for all periods presented. Basic
earnings per share excludes dilution and is computed by dividing
loss available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the
entity. Prior period loss information has been restated as
required by SFAS No. 128. Diluted loss per common share is the
same as basic loss per common share for the years ended December
31, 1997, 1996 and 1995. Unexercised employee stock options to
purchase 365,000, 281,000 and 231,000 shares of the Company's
common stock as of December 31, 1997, 1996 and 1995, respectively,
were not included in the computations of diluted earnings per
share because their effect would have been antidilutive as a
result of the Company's losses.
NOTE 3 - Liquidity
The Company has incurred cumulative net losses of
approximately $16,700,000 through December 31, 1997 and has a
working capital deficit of approximately $7,000,000 at December
31, 1997. Management plans are to raise debt or equity financing
and the Company has received $1,000,000 of long-term debt
financing from an executive/stockholder of the Company on March
19, 1998. In addition, on March 31, 1998, the
executive/stockholder has committed to fund an additional
$2,000,000 of long-term debt financing if the Company is
unsuccessful in raising additional third-party financing by April
30, 1998. Long-term liquidity is dependent on the Company's
ability to obtain additional long-term financing and attain
profitable operations.
NOTE 4 - Acquisitions
In April 1996, the Company completed its acquisition of
substantially all of the assets of its only franchisee, Summit
Assurance Cellular Inc. and subsidiaries and affiliates (Summit).
The purchase price was $3,563,000, comprised of $335,000 in cash,
the assumption of $669,000 of accounts payable and $656,000 of
notes payable, the issuance of a promissory note for $953,000,
the issuance of 300,000 shares of the Company's common stock
valued at fair market value of $3.125 per share and warrants to
purchase an aggregate of 300,000 shares of the Company's common
stock at prices of $3.00, $4.00 and $5.00 per share, respectively,
for each 100,000 shares. These warrants were valued at
$13,000, which represents the excess of the fair market value of
the common stock over the exercise price on the date of issuance.
The warrants vest immediately and expire in three years (Note 20).
In November 1995, STC completed its acquisition of
substantially all of the assets of PTC Cellular, Inc. (PTCC). The
purchase price was $3,725,000, comprised of $300,000 in cash, the
assumption of $1,200,000 of accounts payable, the issuance of a
promissory note of $2,000,000 and the issuance of 100,000
shares of the Company's common stock valued at fair market value
of $2.25 per share.
In May 1995, the Company commenced management of, and
subsequently acquired the outstanding capital stock of, Cellular
Hotline, Inc. (Hotline), a cellular telephone activation service
provider. The purchase price was $1,329,000, comprised of
$217,000 in cash, the assumption of $712,000 of accounts payable,
the issuance of a promissory note of $150,000 and the balance
through the issuance of 50,000 shares of the Company's common
stock (Shares) valued at fair market value of $5.00 per share.
The former Hotline stockholders had the right to require the
Company to repurchase all or a portion of the Shares for $5.00 per
share. In September 1995, the former Hotline stockholders
exercised their put option and the Company purchased
all the Shares and subsequently retired them. In connection with
the acquisition, the Company issued the former Hotline
stockholders a three-year option to purchase an aggregate of
50,000 shares of the Company's common stock at a price of $7.50
per share.
NOTE 4 - Acquisitions (Continued)
These acquisitions were accounted for as purchases, and the
purchase prices were determined as follows:
<TABLE>
Note 4 Continued
<CAPTION>
Hotline PTCC Summit
<S> <C> <C> <C>
Cash $217,000 $300,000 $335,000
Notes payable $150,000 $2,000,000 $953,000
Common stock $250,000 $225,000 $937,000
Warrants:
50,000 @ $7.50
100,000 @ $3.00 $13,000
100,000 @ $4.00
100,000 @ $5.00
Liabilities assumed $712,000 $1,200,000 $1,325,000
Total purchase
price $1,329,00 $3,725,000 $3,563,000
The purchase prices
were allocated on
the basis of the
relative fair
market values of
the assets acquired
and the liabilities
assumed, as follows:
Cash $19,000 - -
Accounts receivable $13,000 $20,000
Commissions
receivable $466,000
Prepaid expenses
and other current
assets $71,000 $62,000
Equipment $50,000 $1,806,000 $170,000
Intangibles $520,000
Goodwill $710,000 $1,337,000 $3,373,000
Total purchase
price $1,329,00 $3,725,000 $3,563,000
The following
unaudited pro forma
condensed
consolidated
statement of
operations for
1996 gives effect to
the acquisition of
Summit as if it
had occurred on
January 1, 1996:
Revenues $21,784,000
Net loss ($9,269,000)
Net loss applicable
to common
stockholders ($9,382,000)
Basic and diluted
loss per common share ($2.25)
</TABLE>
<TABLE>
NOTE 5 - Telecommunications and
Office Equipment
Telecommunications and office
equipment consist of the following at
December 31, 1997 and 1996:
<CAPTION>
1997 1996
<S> <C> <C>
Telecommunications
equipment $2,341,000 $3,298,000
Office equipment $835,000 $636,000
$3,176,000 $3,934,000
Accumulated
depreciation $2,191,000 $1,803,000
$985,000 $2,131,000
Depreciation expense
for the years ended
December 31, 1997,
1996 and 1995 was
$650,000, $902,000 and
$537,000,respectively.
NOTE 6 -
Intangible Assets
Intangible assets
consist of the
Following at December
31, 1997 and 1996:
Goodwill $8,426,000 $8,426,000
Deferred start-up costs $903,000
Covenant not to compete $142,000 $142,000
Rental car agreement $520,000 $520,000
Capitalized software
development costs $890,000
$9,088,000 $10,881,00
Accumulated amortization $1,537,000 $1,559,000
$7,551,000 $9,322,000
Amortization expense for
the years ended December
31, 1997, 1996 and 1995
was $642,000, $782,000
and $549,000
respectively.
NOTE 7 -
Note Receivable
In connection with the
acquisition of Summit
(Note 4), the unpaid
balance of a note
receivable from Summit
of $180,000 was
renegotiated to a three
- -year noninterest.
bearing note due in
monthly installments
of $5,000 through February
2000. In discounting
the note to $158,000
interest has been
imputed at 10% per
annum (Note 20)
</TABLE>
NOTE 8 - Assets Held For Disposition
In connection with the Company's discontinuance of providing
In-Car cellular phone services, the Company has recorded, as
assets held for disposition, certain telecommunications equipment
at an amount which approximates fair market value.
<TABLE>
NOTE 9 - Accounts Payable and Other
Current Liabilities
Accounts payable and other current
liabilities consist of the following at
December 31, 1997 and 1996:
<CAPTION>
1997 1996
<S> <C> <C>
Trade $3,876,000 $6,227,000
Sales and other taxes $3,174,000 $1,685,000
Payroll and payroll
taxes $137,000 $194,000
Other $479,000 $613,000
$7,666,000 $8,719,000
NOTE 10 - Notes Payable
Notes payable consist
of the following
At December 31, 1997
and 1996:
Promissory note,
$2,000,000 original
Face amount, bearing
interest at 8% per
annum and payable in
semi-annual
principal installments
of $225,000 through May
2000. The note is
collateralized by
substantially all
of the assets acquired
from PTCC $1,125,000 $1,800,000
Promissory note for
the purchase of Summit,
noninterest-bearing and
payable in installments
through February 1997 - $292,000
Promissory notes,
bearing interest at
10% per annum and
payable in monthly
installments
aggregating
$12,000 through
March 2002 $362,000 $486,000
$1,487,000 $2,578,000
Less current portion $530,000 $2,218,000
$957,000 $360,000
NOTE 10 - Notes
Payable (Continued)
Aggregate future
principal payments
for the next five
years are as
follows:
Year Ending December
31:
1998 $530,000
1999 $528,000
2000 $310,000
2001 $94,000
2002 $25,000
NOTE 11 -
Stockholders' Equity
The Company has reserved for issuance 3,518,000 shares of its
common stock relating to common stock purchase warrants
outstanding as of December 31, 1997 at exercise prices ranging
from $2.75 to $7.09.
In August and September 1997, the Company sold an aggregate
of 406,667 units, at $3.00 per unit, through a private placement
that included various members of the Company's management. Each
unit consists of one share of common stock and one warrant to
purchase one share of common stock at $3.00 per share.
During December 1996, the Company entered into an agreement to
sell an aggregate of 500,000 units, at $3.00 per unit, through a
private placement. In December 1996, 250,000 units were sold, and
the remaining 250,000 units were sold in January 1997.
In August 1996, the Company's certificate of incorporation
was amended whereby the authorized number of shares of the
Company's common stock was increased to 20,000,000. In addition,
the Company was authorized to issue 5,000,000 shares of preferred
stock at $.01 par value, issuable from time to time in one or more
series with such rights, preferences, privileges and restrictions
as determined by the Board of Directors.
In August 1996, the Company sold 500,000 shares of Series B
Convertible Preferred Stock (Series B) for $10 per share through a
private placement, including 250,000 shares purchased by its
former parent, Shared Technologies Fairchild Inc. (STFI). Each
share of Series B was convertible into a minimum of 2.50 shares
and a maximum of 3.33 shares of the Company's common stock,
subject to certain adjustments, and pays no dividends. During
1997, the Series B stockholders converted their shares into an
aggregate of 1,667,000 shares of the Company's common stock. Upon
conversion of the Series B shares, the holders received one
warrant per common share to purchase an additional share of the
Company's common stock at an exercise price of $3.00 per share.
In addition, in 1996, the Company paid an advisory fee of $125,000
and issued warrants to purchase 240,000 shares of common stock, at
an exercise price of $3.00 per share. The advisory firm in which
two of its principals are directors of the Company, was a party to
the sale of 250,000 shares of Series B.
NOTE 11 - Stockholders' Equity (Continued)
In December 1995, the Company sold 300,000 shares of Series A
Convertible Preferred Stock (Series A) at $10 per share through a
private placement. Each preferred stockholder was entitled to
receive dividends equal to 10% per annum per share for the first
twelve month period, payable in additional shares of Series A.
For 1995, the dividend applicable to these shares, and the impact
on the loss to the common stockholders, were deemed to be
insignificant. The Company paid an advisory fee of $300,000 and
issued warrants to purchase 150,000 shares of common stock, at an
exercise price of $2.50, to a firm in which two of its principals
are directors of the Company. During 1996, the Series A
stockholders converted all their shares, including 11,000 shares
received as dividends, into 1,147,000 shares of the Company's
common stock.
In June 1995, in connection with a consulting agreement, the
Company issued warrants to purchase 95,000 shares of its common
stock, at an exercise price of $6.00 per share, subject to certain
anti-dilution provisions.
In May 1995, the Company purchased 31,000 shares of its
common stock for $125,000 from a consultant and subsequently
retired the shares.
In April 1995, the Company completed its initial public
offering of 950,000 shares of its common stock at $5.25 per share.
In March 1995, the Board of Directors adopted a resolution to
effect a reverse stock split of two for three. Accordingly, all
number of shares and per share data presented in these
consolidated financial statements have been restated to reflect
this reverse stock split.
NOTE 12 - Stock Option Plans
The Board of Directors adopted, and the Company's
stockholders approved, a stock option plan (the Plan) pursuant to
which 525,000 shares of the Company's common stock were reserved
for issuance upon the exercise of options granted to officers,
employees, consultants and directors of the Company.
Options issued under the Plan are nonqualified stock options
(NSO's) and the Board of Directors (Committee) will grant NSO's at
an exercise price which is not less than the fair market value on
the date such options are granted. The Plan further
provides that the maximum period in which stock options may be
exercised will be determined by the Committee, except that they
may not be exercisable after ten years from the date of grant. At
December 31, 1997, options to purchase 339,000 shares of common
stock are outstanding.
The Board of Directors adopted, and the stockholders approved, the
Company's 1994 Director Option Plan (the Director Plan) pursuant
to which 33,000 shares of the Company's common stock are reserved
for issuance upon the exercise of options to be granted to non-
employee directors of the Company. Under the Director Plan, an
eligible director will automatically receive, at the commencement
of the Director's one year term, nonstatutory options to purchase
2,000 shares of the Company's common stock at an exercise price
equal to the fair market value of such shares at the time of
grant. Each such option is immediately exercisable within the
ten years from the date of grant, but generally may not be
exercised more than 90 days after the date the director
ceases to serve as a director of the Company. At December 31,
1997, options to purchase 26,000 shares of the Company's common
stock were outstanding under the Director Plan.
</TABLE>
<TABLE> The activity in the Plan and the Director
Plan are as follows:
<CAPTION>
Exercise Price Per Share
Per Share
Number of Weighted
Options Range Average
<S> <C> <C> <C>
Balance outstanding,
January 1, 1995 171,000 $3.68 $3.68
Granted 95,000 1.63-5.0 $3.15
Expired (35,000) $3.68 $3.68
Balance outstanding,
December 31, 1995 231,000 1.63-5.0 $3.45
Granted 55,000 2.75-4.7 $3.69
Expired (5,000) $3.68 $3.68
Balance outstanding,
December 31, 1996 281,000 1.63-5.0 $3.33
Granted 93,000 2.13-2.5 $2.15
Expired (9,000) 3.68-5.0 $4.22
Balance outstanding,
December 31, 1997 365,000 1.63-4.7 $3.01
Exercisable,
December 31, 1997 225,000 1.63-4.7 $3.36
</TABLE>
NOTE 12 - Stock Option Plans (continued)
The Company has adopted the disclosure requirements of
Statement of Financial Accounting Standards No. 123 (SFAS No.
123), "Accounting for Stock-Based Compensation". The Company
applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its plans. Had
compensation cost for the Company's stock-based compensation plans
been determined based on the fair value at the grant dates,
consistent with SFAS No. 123, the Company's net loss and loss per
share would have been adjusted to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net loss applicable
to common
stockholders:
As reported ($3,695,000)($8,909,000) ($2,848,000)
Pro forma ($3,770,000)($8,920,000) ($2,854,000)
Basic and diluted
loss per
common share:
As reported ($0.63) ($2.18) ($1.04)
Pro forma ($0.64) ($2.19) ($1.04)
</TABLE>
The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option pricing model with the
following weighted average assumptions used for grants in 1997,
1996 and 1995, respectively: risk-free interest rate of 6%; no
dividend yield; expected lives of 3 to 10 years; and expected
volatility of 64%, 62% and 62%, respectively.
NOTE 13 - Related Party Transactions
The Company entered into an agreement, effective January 1,
1996, to pay a fee of $25,000 per month not to exceed $200,000
annually, for certain services to be performed by STFI. The fee
is not payable in any month in which there is a pre-tax loss and
cannot exceed pre-tax profit prior to the fee. No payments
were due under the agreement for the years ended December 31, 1997
and 1996. In addition, STFI agrees to provide telecommunications
services, as may be requested, including local access and long
distance service, at a price not to exceed STFI's cost for such
services plus 20%. This agreement is cancelable by the Company on
thirty days notice to STFI.
Amounts due to former parent are due on demand, unsecured and
noninterest-bearing.
NOTE 14 - Loss on Discontinued Product Line
During 1997, the Company completed the transition of the
existing in-car rental accounts to portable rentals. In
conjunction with this transition, the Company attempted to develop
alternate uses for the in-car cellular telephones as well as the
capitalized software associated with the in-car cellular rental
business. Although management believes that there are viable uses
for such assets, the probability that such uses will be successful
is not known. As a result, the Company reduced the in-car
cellular phones and the capitalized software to net realizable
value and classified them on the balance sheet as assets held for
disposition.
NOTE 15 - Savings and Retirement Plan
In June 1996, the Company formed a savings and retirement
plan (the Plan), which covers substantially all eligible
employees. Participants in the Plan may elect to make
contributions up to a maximum of 20% of their compensation. For
each participant, the Company will make a matching contribution of
one-half of the participant's contributions, up to 5% of the
participant's compensation. Matching contributions may be made in
the form of the Company's common stock and are vested at the rate
of 33% per year. Prior to the formation of the Plan, the
Company participated in a plan maintained by STFI. Matching
contributions in STFI's plan were made in STFI common stock. For
the years ended December 31, 1997, 1996 and 1995, the Company's
matching contributions were $71,000, $40,000 and $25,000,
respectively.
<TABLE>
NOTE 16 - Income Taxes
<CAPTION>
A reconciliation of income tax
benefit, to the federal statutory
rate follows:
Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Income tax benefit
on reported
pretax loss at
federal statutory
rate (34.0%) (34.0%) (34.0%)
State income tax,
net of federal
benefit 1.7%
Net operating loss
carryforward
not recognized 34.0% 34.0% 34.0%
Income taxes 0% 0% 1.7%
</TABLE>
At December 31, 1997 and 1996, the Company recorded net
deferred tax assets of approximately $5,511,000 and $4,400,000,
respectively, and valuation allowances in the same amounts. The
valuation allowances were increased by $1,111,000, $3,296,000 and
$994,000, respectively, for the years ended December 31, 1997,
1996 and 1995. SFAS No. 109 requires that the Company record a
valuation allowance when it is "more likely than not that some
portion or all of the deferred tax asset will not be realized".
The ultimate realization of the deferred tax asset depends on the
Company's ability to generate sufficient taxable income.
<TABLE>
NOTE 16 - Income Taxes Continued
<CAPTION>
The net deferred tax assets and
liabilities as of December 31, 1997
and 1996 are as follows:
1997 1996
<S> <C> <C>
Deferred tax assets:
Net operating loss
carryforwards $5,164,000 $3,940,000
Allowance for doubtful
accounts $390,000 $550,000
Asset basis difference,
intangible assets $10,000
$5,554,000 $4,500,000
Deferred tax liabilities,
asset basis difference,
fixed and intangible
assets ($43,000) ($100,000)
Deferred tax asset, net $5,511,000 $4,400,000
Valuation allowance for
deferred tax ($5,511,00)($4,400,000)
- -
</TABLE>
At December 31, 1997, the Company has federal net operating
loss carryforwards of approximately $13,140,000, which can be
utilized against future taxable income and expire through the year
2012. Net operating losses available for state income tax
purposes are less than those for federal purposes and
generally expire earlier.
NOTE 17 - Commitments and Contingencies
The Company leases office facilities, which expire in various
years through December 2001. Future aggregate minimum annual
rental payments as of December 31, 1997 are as follows:
Year Ending December 31
1998 $192,000
1999 164,000
2000 63,000
2001 35,000
Rent expense for the years ended December 31, 1997, 1996 and
1995 was approximately $352,000, $418,000 and $256,000,
respectively.
The Company is a party to various legal actions, the outcome
of which, in the opinion of management, will not have a material
adverse effect on results of operations, cash flows or financial
position of the Company.
NOTE 17 - Commitments and Contingencies (Continued)
In October 1997, the Company entered into an agreement with a
promotion company relating to the marketing of a certain product
line. In addition to certain commission arrangements and upon
obtaining specified sales levels, the Company has agreed to issue
warrants to purchase shares of the Company's common stock at $6.00
per share. This agreement will remain in force for a two-year
period with automatic renewal periods of one year unless
terminated.
NOTE 18 - Dependence Upon Key Relationships and Major
Customers
Approximately 26%, 24%, 13% and 11% of the Company's revenues
for 1997 were attributable to Thorn Americas, Inc. (a national
retailer), Hertz Corporation ("Hertz"), Avis Rent-A-Car Systems,
Inc. ("Avis") and National Car Rental System, Inc. ("National"),
respectively. Approximately 21%, 16% and 13% of the Company's
revenues for 1996 and 14%, 0%, and 11% of the Company's
revenues for 1995 were attributable to Hertz, Avis and National,
respectively. The agreements with these companies are terminable
with cause and require written notification, typically effective
upon relatively short notice. The termination of any one of these
agreements would have a material adverse effect on the Company.
NOTE 19 - Loss on Contract Cancellation
In 1996, in connection with the transition of the In-Car
cellular phone service to portable rentals, the Company recognized
a loss of approximately $980,000 relating to the cancellation of a
certain contract for the production of certain in-car
telecommunications equipment.
NOTE 20 - Subsequent Event
In March 1998, the Company and Summit reached an agreement in
principle whereby the Company will receive from Summit 100,000
shares of the Company's common stock, previously issued in
connection with the acquisition (Note 4). The stock received is
in exchange for the payment by the Company of $150,000 to
a vendor on behalf of Summit, a one year extension of the
expiration date of the warrants issued in connection with the
acquisition, additional warrants to purchase 100,000 shares of the
Company's common stock at a price of $5.00 per share, and
forgiveness of all amounts due, including accrued interest, on the
note receivable.
<TABLE>
VALUATION AND
QUALIFYING ACCOUNTS
Years Ended December 31,
1997, 1996 and 1995
<CAPTION>
Balance at Charged to Balance
Beginning Costs and at End
Description of Year Expenses Deductions (of Year
<S> <C> <C> <C> <C>
December 31, 1997:
Allowance for
Doubtful accounts
and discounts $1,392,000 $1,341,000 $1,742,000 $991,000
December 31, 1996:
Allowance for
Doubtful accounts
and discounts $685,000 $1,772,000$1,065,000$1,392,000
December 31, 1995:
Allowance for
Doubtful accounts
and discounts $243,000 $1,249,000 $807,000 $685,000
(1) Represents write
off of uncollectible
accounts, net of
recoveries.
</TABLE>
SHARED TECHNOLOGIES CELLULAR, INC.
100 Great Meadow Road
Suite 102
Wethersfield, CT 06109
PART III
Item 10
Directors and Executive Officers of the Registrant
Item 11
Executive Compensation
Item 12
Security Ownership of Certain Beneficial Owners and Management
Item 13
Certain Relationships and Related Transactions.
The Company incorporates by reference items 10, 11, 12, and 13 in
its Proxy Statement for its Annual Meeting of Stockholders to be
held on May 22, 1998 (to be filed with the Securities and
Exchange Commission on or before April 28,
1998).
PART IV
Item 14
Exhibits, Financial Statement Schedules and Reports on Form 10-K
(a) Financial Statements
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1997 and 1996.
Consolidated Statements of Operations for the years ended December
31, 1997, 1996, and 1995.
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended December
31, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
Financial Statement Schedules: Schedule II.
(b) Reports on Form 8-K
none
(c) Exhibits
Exhibit No. Description of Exhibit
3. (i) Amended and Restated Certificate of
Incorporation.
Incorporated by reference from Exhibit 3.1 of the Company's
Registration Statement on Form SB-2 dated December 8, 1994.
3. (ii) By-laws. Incorporated by reference from
Exhibit 3.1 of the Company's Registration Statement on Form SB-2
dated December 8, 1994.
4.1 Specimen of Common Stock Certificate.
Incorporated by reference from exhibit 4.2 of the Company's
Registration Statement of Form SB-2 filed with Amendment No. 3 to
such Registration Statement dated January 27, 1995.
4.2 Certificate of Designations, Preferences and
Rights of Series B Convertible Preferred Stock of Shared
Technologies Cellular, Inc. dated August 19, 1996. Incorporated
by Reference from Exhibit 4.1 of the Company's Form 8-K dated
August 19, 1996 and filed September 5, 1996.
4.3 Series B Convertible Preferred Stock Purchase
Agreement by and between International Capital Partners, Inc. and
the Company dated August 19, 1996 (agreement between STFI and the
Company is substantially the same), including form of Common Stock
Warrant. Incorporated by Reference from Exhibit 4.2 of the
Company's Form 8-K dated August 19, 1996 and filed September 15,
1996.
4.4 Equity Holders Agreement by and among
International Capital Partners, Inc. Zeisiger Capital Group, LLC
and Shared Technologies Fairchild, Inc. dated August 19, 1996.
Incorporated by Reference from Exhibit 4.3 of the Company's Form
8-K dated August 19, 1996 and filed September 15, 1996.
4.5 Purchase Agreement, Common Stock Warrant
Certificate and Option Agreement by and among RHI Holdings, Inc.,
and the Company dated December 27, 1996. Incorporated by Reference
from Exhibit 4.1, 4.2, 4.3 respectively of the Company's Form 8-K
dated December 27, 1996, and filed January 22, 1997.
10.1 Agreement by and between the Hertz Corporation
and the Company dated October 1, 1996. Incorporated by reference
from Exhibit 10.1 of the Company's Form 10-K dated March 27, 1997.
10.2 Agreement by and between National Car Rental
System, Inc. and the Company dated July 1, 1996. Incorporated by
reference from Exhibit 10.2 of the Company's Form 10-K dated March
27, 1997.
10.3 Lease Agreement by and between Putnam Park
Associated and the Company dated January 1, 1995. Incorporated by
reference from Exhibit 10.10 of the Company's Registration
Statement on Form SB-2 filed with Amendment No. 1 to such
Registration Statement dated January 4, 1995.
10.4 1994 Director Option Plan, as amended.
Incorporated by reference from Exhibit 10.5 of the Company's Form
10-K dated March 27, 1997.
10.5 Management Agreement by and between the
Company and Shared Technologies Fairchild Inc., dated January 1,
1996. Incorporated by reference from Exhibit 10.13 of the
Company's Form 10-K dated March 23, 1996
10.6 Employment Agreement by and between Sean P.
Hayes and the Company dated October 1, 1994. Incorporated by
reference from Exhibit 10.14 of the Company's Registration
Statement on Form SB-2 filed with Amendment No. 1 to such
Registration Statement dated January 4, 1995.
10.7 Sample Customer Service Agreement.
Incorporated by reference from Exhibit 10.15 of the Company's
Registration Statement on Form SB-2 filed with Amendment No. 1 to
such Registration Statement dated January 4, 1995.
10.8 Sample Customer Service Agreement.
Incorporated by reference from Exhibit 10.16 of the Company's
Registration Statement on Form SB-2 filed with Amendment No. 1 to
such Registration Statement dated January 4, 1995.
10.9 Stock Purchase Agreement by and between the
stockholders of The Cellular Hotline, Inc. and the Company dated
June 11, 1995. Incorporated by reference from Exhibit 10.1 of the
Company's Form 8-K dated June 19, 1995 and filed June 30, 1995.
10.10 Asset Purchase Agreement by and between
Peoples Telephone Company, Inc., PTC Cellular, Inc. and the
Company dated November 1, 1995. Incorporated by reference from
Exhibit 10.1 of the Company's Form 8-K dated November 13, 1995 and
filed November 22, 1995.
10.11 Consulting Agreement between Vertical
Financial Holding and the Company dated June 21, 1995.
Incorporated by reference from Exhibit 10.19 of the Company's Form
10-K dated March 28, 1996.
10.12 Employment Agreement by and between Jon
Sorenson and the Company dated October 1, 1996. Incorporated by
reference from Exhibit 10.13 of the Company's Form 10-K dated
March 27, 1997
10.13 Asset Purchase Agreement by and between
Summit, et al. the Company dated April 27, 1996. Incorporated by
reference from Exhibit 10.1 of the Company's Form 8-K dated April
27, 1996 and filed May 9, 1996.
10.14 Shared Technologies Cellular, Inc. Savings and
Retirement Plan, Effective as of April 1, 1996. Incorporated by
reference from Exhibit 10.15 of the Company's Form 10-K dated
March 27, 1997.
10.15 1994 Stock Option Plan, as amended, dated May
23, 1997.
10.16 Agreement by and between Budget Rent A Car
Corporation and the Company dated July 28, 1997.
10.17 Agreement by and between Thorn Americas, Inc. and
the Company dated December 1, 1996.
21 List of subsidiaries of the registrant.
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SHARED TECHNOLOGIES CELLULAR, INC.
(Registrant)
By
----------------------------------
Anthony D. Autorino
Chief Executive Officer
and Director March 30, 1997
By
----------------------------------
Vincent DiVincenzo
Chief Financial Officer
and Director
Date: March 30, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/Anthony D. Autorino By: /s/ William A. DiBella
Anthony D. Autorino William A. DiBella
Chief Executive Officer Director
and Director Date:________________
Date:_________________
By: /s/ Ajit G. Hutheesing By: /s/ Thomas H. Decker
Ajit G. Huthessing Thomas H. Decker
Director Director
Date:_________________ Date:________________
By: /s/ Vincent DiVincenzo By: /s/ Nicholas E. Sinacori
Vincent DiVincenzo Nicholas E. Sinacori
Chief Financial Officer Director
and Director Date:________________
Date:_________________
By:___________________
Craig A. Marlar
Director
Date:_________________
Exhibit 10.5
SHARED TECHNOLOGIES CELLULAR, INC.
1994
STOCK OPTION PLAN
1. Purpose. The Shared Technologies Cellular, Inc. 1994
Stock Option Plan (the "Plan") is intended to encourage the
ownership of stock of Shared Technologies Cellular, Inc., a
Delaware corporation (the "Company"), by qualified and competent
persons who are key to the success of the Company and its direct
and indirect subsidiaries (the "Subsidiaries") and to provide
additional incentive for them to promote the growth, development
and financial success of the Company and its Subsidiaries business
as determined by a committee consisting of two or more members of
the Board of Directors of the Company (the "Board"), as appointed
pursuant to Section 2 hereof, by offering them an opportunity
to increase their proprietary interest in the Company through the
grant of nonqualified stock options (the "Options") to purchase
shares of Common Stock of the Company, par value $0.01 per share
(the "Common Stock"). Consistent with these objectives, the Plan
authorizes the granting of Options to acquire shares of Common
Stock pursuant to the terms and conditions hereinafter set forth.
The Options are not intended to qualify as "Incentive Stock
Options" within the meaning of Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Administration of the Plan.
a. Members of the Committee. The Plan shall be
administered by a committee (the "Committee") duly appointed by
the Board which shall consist of at least two members of the
Board, each of whom shall be a "disinterested person" as defined
in subsection (c)(2)(i) of Rule 16b-3 ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Members of the Committee shall serve at the pleasure of the Board
of Directors of the Company.
b. Authority of the Committee. The Committee shall
adopt such rules as it may deem appropriate in order to carry out
the purposes of the Plan. Subject to the provisions of this Plan,
the Committee shall have the complete authority, in its
discretion, to make the following determinations with respect to
each Option to be granted by the Company: (A) the person to
receive the Option; (B) the time of granting the Option; (C) the
number of shares subject thereto; (D) the Option Price (as defined
in Section 5(b) hereof); and (E) the Option Period (as defined in
Section 5(d) hereof). In making such determinations the Committee
may take into account the nature of the services rendered by the
person, their present and potential contributions to the success
of the Company and its Subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of this Plan, all questions of interpretation,
administration, and application of the Plan shall be determined by
a majority of the members of the Committee then in office, except
that the Committee may authorize any one or more of its members,
or any officer of the Company, to execute and deliver documents on
behalf of the Committee. The determination of such majority shall
be final and binding in all matters relating to the Plan or all
persons concerned. No member of the Committee shall be liable for
any act done or omitted to be done by such member or by any other
member of the Committee in connection with the Plan, except for
such member's own willful misconduct or as expressly provided by
statute.
3. Persons to Whom Options May be Granted. Options may be
granted, at the discretion of the Committee:
a. To one or more persons who are employees or
employees
and directors of the Company or of any of its present or future
Subsidiaries, or any employee of a Parent Corporation (within the
meaning of Code Section 424(e)) (collectively, an "Employee");
b. To one or more persons who provides services to the
Company or of any of its present or future Subsidiaries as a
consultant or otherwise in the capacity of an independent
contractor and who is not otherwise an Employee.
4. Stock Subject to the Plan. The shares subject to the
Plan shall consist of 400,000 shares of Common Stock, subject to
adjustment pursuant to Section 5(h) hereof, which shares may be
either authorized but unissued shares or previously issued shares
of Common Stock reacquired and held by the Company as treasury
shares, not reserved for any other purpose. The Company shall at
all times during the term of this Plan and of the Options granted
hereunder reserve and keep available such number of shares of the
Company's stock as will be sufficient to satisfy the requirements
of this Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith. If any
outstanding Option under the Plan for any reason expires or is
canceled or otherwise terminated without having been exercised in
full, the shares of Common Stock allocable to the unexercised
portion of such Option shall (unless the Plan shall have been
terminated) become available for subsequent grants of Options
under the Plan.
5. Terms and Conditions of Options. Each Option granted
pursuant to the Plan shall be evidenced by a written agreement
(the "Option Agreement") between the Company and the person to
whom such Option is awarded (the "Optionee"), which Option
Agreement shall comply with and be subject to the following terms
and conditions:
a. Number of Shares. Each Option Agreement shall
state the number of shares of Common Stock to which the Option
relates.
b. Option Price. Each Option Agreement shall state
the option price, which shall not be less than seventy percent
(70%) of the Fair Market Value (as defined below) of the shares of
Common Stock on the date of grant of the Option (the "Option
Price"). The term "Fair Market Value" of a share of Common Stock
shall mean (i) if the shares of Common Stock are then traded on an
over-the-counter market, the average of the closing bid and asked
prices for the shares of Common Stock in such over-the-counter
market for the last preceding date on which there was a sale of
such Common Stock in such market, (ii) in the shares of
Common Stock are then listed on a national securities exchange,
the closing sales price per share for the last preceding date on
which there was a sale of such Common Stock on such exchange, or
(iii) if the shares of Common Stock are not then traded in an
over-the-counter market or listed on a national securities
exchange, such value as the Committee in its discretion may
determine. The Option Price shall be subject to adjustment as
provided in Section 5(h) hereof.
c. Payment of Option Price. i) Shares of Common
Stock shall be issued to the Optionee upon payment in full either
in cash (or cash equivalent) or by an exchange of shares of Common
Stock of the Company previously owned by the Optionee, or a
combination of both, in an amount or having a combined value equal
to the aggregate purchase price for the shares subject to the
Option or portion thereof being exercised. The value of the
previously owned shares of Common Stock exchanged in full or
partial payment for the shares purchased upon the exercise of an
Option shall be equal to the aggregate Fair Market Value of such
shares on the date of the exercise of such Option. ii) Whenever
shares of Common Stock are to be issued under the Plan, the
Company shall have the power to require the recipient of the
Common Stock to remit to the Company an amount sufficient to
satisfy federal, state and local withholding tax requirements
prior to issuance of the certificate for shares of Common Stock.
The Option Agreement may provide that an Optionee shall be
entitled to elect to pay all or a portion of all federal, state or
local withholding taxes arising in connection with the exercise of
an Option by electing to (1) have the Company withhold shares of
Common Stock, or (2) deliver other shares of Common Stock
previously owned by the Optionee having a Fair Market Value
equal to the amount to be withheld; provided, however, that the
amount to be withheld shall not exceed the Optionee's estimated
total federal, state and local tax obligations associated with the
transaction. The election shall be made in writing and shall be
made according to such rules and in such form as the committee
shall from time to time determine. The Fair Market Value of
fractional shares remaining after payment of the withholding taxes
shall be paid to the Optionee in cash.
d. Terms and Exercise of Options. Options shall be
exercisable over the exercise period as and at the times and upon
such conditions as the committee may determine, as reflected in
the Option Agreement, including the authority to accelerate the
exercisability of any outstanding Option at such time and under
such circumstances as it, in its sole discretion, deems
appropriate (the "Option Period"), provided however, that the
Option period shall not exceed ten (10) years from the date of
grant of such Option. The Option Period shall be subject to
earlier termination as provided in Sections 5(e) and 5(f)
hereof. An Option may be exercised, as to any or all full shares
of Common Stock as to which the Option has become exercisable, by
giving written notice of such exercise to the Committee or to such
individual(s) as the Committee may from time to time designate.
e. Termination of Employment Other than for Death,
Disability or Retirement In the event that the employment of an
Optionee shall terminate (other than by reason of death,
disability or retirement), all Options of such Optionee that are
exercisable at the time of such termination may, unless earlier
terminated in accordance with their terms, be exercised within
three (3) months after such termination; provided, however, that
if the employment of an Optionee shall terminate for Cause (as
defined herein), all options theretofore granted to such Optionee
shall, to the extent not theretofore exercised, terminate
immediately. The term "Cause" means for purposes of whether
and when an Optionee has incurred a termination of employment for
Cause any act or omission which permits the Company or the Parent
Corporation to terminate the written agreement or arrangement
between such Optionee and the Company or the Parent Corporation,
as the case may be; Cause as defined in such agreement or
arrangement, or in the event there is no such agreement or
arrangement or the agreement or arrangement does not
define the term "Cause", than Cause shall mean (a) the conviction
of the Optionee for committing a felony under Federal law or the
law of the state in which such action occurred or (b) the willful
or negligent failure on the part of such Optionee to perform his
duties to the Company or the Parent Corporation, as the case may
be.
f. Termination of Employment Due to Death, Disability
or Retirement of Optionee. If an Optionee shall die while
employed by the Company, its Subsidiaries or the Parent
Corporation, or within three (3) months after the termination of
such Optionee's employment other than for Cause, or if the
Optionee's employment shall terminate by reason of Disability
(within the meaning of Section 22(e)(3) of the Code) or
retirement, all Options theretofore granted to such Optionee (to
the extent otherwise exercisable at the time of death or
termination of employment) may, unless earlier terminated in
accordance with their terms, be exercised by the Optionee or by
the Optionee's estate or by a person who acquired the right to
exercise such Option by bequest or inheritance or otherwise by
reason of death or disability of the Optionee, at any time within
six months (or such longer period as may be determined by the
Committee in its sole discretion) after the date of
any such death, disability or retirement of the Optionee.
g. Nontransferability of Options. Options granted
under the Plan shall not be transferable otherwise than by will or
by the laws of descent and distribution, and Options may be
exercised, during the lifetime of the Optionee, only by the
Optionee or by his guardian or legal representative.
h. Effect of Certain Changes. (i) If there is any
change in the number or class of shares of Common Stock through
the declaration of stock or cash dividends, or, recapitalization
resulting in stock splits, or combinations or exchanges of such
shares, the number or class of shares of Common Stock available
for Options, the number or class of such shares covered by
outstanding Options, and the exercise price per share of such
Options may be proportionately adjusted by the Committee in its
sole discretion to reflect any such change in the number or class
of issued shares of Common Stock; provided, however, that any
fractional shares resulting from any such adjustment shall be
eliminated. In the event of any other extraordinary corporate
transaction, including but not limited to distributions of cash or
other property to the Company's shareholders, the Committee may
equitably adjust outstanding Options as it deems appropriate in
its sole discretion.
(ii) in the event of the proposed dissolution or
liquidation of the Company, in the event of any corporate
separation or division, including, but not limited to, split-up,
split-off or spin-off, or in the event of a merger or
consolidation of the Company with another corporation, the
Committee may provide that the holder of each Option then
exercisable shall have the right to exercise such Option (at
its then Option Price) solely for the kind and amount of shares of
stock and other securities, property, cash or any combination
thereof receivable upon such dissolution, liquidation or corporate
separation or division, or merger or consolidation by a holder of
the number of shares of Common Stock for which such option might
have been exercised immediately prior to such dissolution,
liquidation, or corporate separation or division, or merger or
consolidation.
(iii) Paragraph (ii) of this Section 5(h) shall
not apply to a merger or consolidation in which the Company is the
surviving corporation and shares of Common Stock are not converted
into or exchanged for stock, securities of any other corporation,
cash or any other thing of value. Notwithstanding the preceding
sentence, in case of any consolidation or merger of another
corporation into the Company in which the Company is the surviving
corporation and in which there is a reclassification or change
(including a change to the right to receive cash or other
property) of the shares of Common Stock (other than a
change in par value, or from par value to no par value, or as a
result of a subdivision or combination, but including any change
in such shares into two or more classes or series of shares), the
Committee may provide that the holder of each Option then
exercisable shall have the right to exercise such Option solely
for the kind and amount of shares of stock and other securities
(including those of any new direct or indirect parent of the
Company), property, cash or any combination thereof receivable
upon such reclassification, change, consolidation or merger
by the holder of the number of shares of Common Stock for which
such Option might have been exercised.
(iv) In the event of a change in the Common Stock
of the Company as presently constituted, which is limited to a
change of all of its authorized shares with par value into the
same number of shares with a different par value or without par
value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
(v) To the extent that the foregoing adjustments
relate to stock or securities of the Company, such adjustments
shall be made by the Committee, whose determination in that
respect shall be final, binding and conclusive.
(vi) Except as expressly provided in this Section
5(h), the Optionee shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class or
the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger, or consolidation
or spin-off of assets or stock of another corporation; and any
issue by the Company of shares of any class, or
securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject
to the Option. The grant of any Option pursuant to the Plan shall
not affect in any way the right or power of the Company to make
adjustments, reclassification, reorganizations or changes of its
capital or business structures or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or part of its
business or assets.
i. Rights as a Stockholder. An Optionee or a
transferree of an Option shall have no rights as a stockholder
with respect to any shares covered by the Option until the date of
the issuance of a stock certificate to him or her for such shares.
No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distribution of other rights for which the record date is prior to
the date such stock certificate is issued, except as
provided in Section 5(h) hereof.
j. Employment. Nothing in the Plan shall interfere
with or limit in any way the right of the Company to terminate any
Optionee's employment at any time, nor confer upon any Optionee
any right to continue in the employ of the Company, nor will
anything in the Plan require an Optionee to continue in the employ
of the Company.
k. Other Provisions. The Option Agreements authorized
under the Plan shall contain such other provisions not
inconsistent with this Plan, including, without limitation, the
imposition of restrictions upon the exercise of an Option as the
Committee shall deem advisable.
6. Term of Plan. Options under this Plan may be granted
pursuant to the Plan from time to time within a period of ten (10)
years from the date the Plan is adopted by the Board, or the date
the Plan is approved by the stockholders of the Company, whichever
is earlier.
7. Amendment. The Board may at the time and from time to
time alter, amend, suspend, or terminate the Plan in whole or in
part; provided, however, that no amendment which requires
shareholder approval in order for the exemptions available under
Rule 16b-3 to be applicable to the Plan and the Optionees, shall
be effective unless the same shall be approved by the stockholders
of the Company entitled to vote thereon on or before the effective
date of the amendment. Such approval shall be obtained in such
manner as is required by the Company's Certificate of
Incorporation, its By-Laws, and the laws of the State of
Delaware as in effect at the time of such approval.
Notwithstanding the foregoing, no amendment shall affect adversely
any of the rights or obligations of any Optionee, without such
Optionee's consent, under any Option theretofore granted under the
Plan.
8. Headings. The headings of sections and subsections
herein are included solely for convenience of reference and shall
not affect the meaning of any of the provisions of the Plan.
9. Governing Law. The Plan and all rights hereunder shall
be construed in accordance with and governed by the laws of the
State of Delaware.
10.15
Exhibit 10.16
MASTER CELLULAR SERVICE
AGREEMENT BETWEEN
SHARED TECHNOLOGIES CELLULAR, INC.
AND
BUDGET RENT A CAR CORPORATION
This Master Cellular Service Agreement (the "Agreement") is made
as of the 1st day of May, 1997 (the "Effective Date"), by and
among Shared Technologies Cellular, Inc., a Delaware corporation,
having offices at 100 Great Meadow Road, Wethersfield, CT 06109,
("STC"), Budget Rent a Car Corporation, a Delaware corporation,
having offices at 4225 Naperville Road, Lisle, IL 60532 ("BRACC"),
and Budget Rent A Car Systems, Inc., a Delaware corporation and a
wholly-owned subsidiary of BRACC, having offices at 4225
Naperville Road, Lisle, IL 60532 ("BRACSI"). BRACC and BRACSI
shall hereinafter be referred to collectively as "Budget".
WHEREAS, Budget is in the business of renting vehicles without
drivers to the traveling public from various locations throughout
the United States; and
WHEREAS, STC is in the business of renting portable cellular
telephones including all accessories (the "Equipment") to
customers for short-term use; and
WHEREAS, STC and Budget desire to enter into this Agreement to
allow STC access to certain vehicle rental locations in order for
STC to rent Equipment directly to Budget customers.
NOW THEREFORE, in consideration of the promises and covenants
contained herein, the receipt and adequacy of which are
acknowledged, the parties agree as follows.
1. Appointment.
(a) Budget hereby grants to STC the exclusive right to rent
Equipment to Budget customers at the corporate locations owned and
operated by Budget in the United States, which locations are
identified in the location schedule (the "Location Schedule")
attached hereto as Exhibit A. The Location Schedule may be
modified by mutual written agreement of the parties hereto.
(b) Upon request by STC, Budget agrees to approach any third party
who operates a car rental business pursuant to a grant of a
franchise or license from Budget (a "Budget Licensee") to promote
STC as Budget's preferred cellular phone rental services provider
and to assist STC in securing an agreement with such Budget
Licensee for a cellular phone rental program. STC agrees to offer
Budget Licensees a commission which is at least as favorable as
the commission provided to Budget in Paragraph 5(a) and Paragraph
5(b) of this Agreement.
(c) In the event that during the term of this Agreement Budget
desires to expand the Equipment rental program to additional
Budget corporate locations within the United States other than the
locations identified in the Location Schedule, Budget shall notify
STC in writing and STC shall have a right of first refusal
to provide Equipment rentals to Budget customers at the locations
designated by Budget in such written notice on the same terms and
conditions set forth herein. STC shall have up to thirty (30)
days to exercise such right of first refusal. If STC exercises
such right of first refusal, STC shall have up to thirty (30)
days from the date STC exercises the right of first refusal to
implement an Equipment rental program at the locations identified
in such notice. In the event that STC does not exercise such
right of first refusal as provided above, Budget may contract with
third parties to provide cellular phone rentals at the locations
designated by Budget in its written notice to STC.
2. Term and Termination.
(a) This Agreement shall have a term of two (2) years, commencing
as of the date first written above, subject to the following.
Thereafter, this Agreement shall be renewed only by written mutual
agreement of the parties.
(b) Notwithstanding anything contained in this Agreement to the
contrary, STC will have the right to immediately terminate this
Agreement upon written notice to Budget, if the Federal
Communications Commission or any other regulatory agency
promulgates any rule, regulation, or order which) in
effect or application substantially impedes STC from fulfilling
its obligations hereunder, or ii) materially or adversely affects
STC's ability to conduct its business.
(c) Notwithstanding anything contained in this Agreement to the
contrary, upon furnishing Budget with reasonable evidence that the
continuation of the Equipment rental program at any Budget
location identified in the Location Schedule is not or is not
likely to become a profitable business in the then foreseeable
future, STC may terminate the Equipment rental program at such
location(s). In such event, Budget shall have the right to engage
a third party to replace STC as provider of Equipment rentals at
such location(s).
(d) Notwithstanding anything contained in this Agreement to the
contrary, upon furnishing Budget with reasonable evidence that
STC's losses due to fraud or Equipment theft are so great that it
is no longer economically practical to operate at a location
identified in the Location Schedule, STC may terminate the
Equipment rental program at such location(s). In such event,
Budget shall have the right to engage a third party to replace STC
as provider of Equipment rentals at such location(s).
3. Responsibilities of Budget.
(a) Budget acknowledges that all Equipment delivered under this
Agreement is the property of STC. Upon termination of this
Agreement for any reason whatsoever or the termination of the
rental program at any individual Budget location, STC may
remove its Equipment from Budget's premises.
(b) With respect to each location identified on the Location
Schedule, Budget agrees to:
i) Provide a safe and secure area for the storage and recharging
of Equipment;
ii) Designate a responsible individual who will communicate with
a designated representative of STC on a regular basis regarding
the Equipment rental business;
iii) Inform its customers at the time of car rental of the
Equipment rental program and the opportunity to rent a portable
cellular telephone from STC;
iv) Use its reasonable efforts to solicit orders for Equipment
rentals by asking Budget customers at the time the customer
reserves a vehicle from Budget if such customer wants to rent
Equipment from STC;
v) Display at rental counters (where not prohibited by local
airport rules and regulations) point-of-sale materials provided by
either Budget or STC and previously approved by both parties;
vi) Report all known malfunctions, improper operation, damage,
theft or other loss of Equipment to STC;
vii) Be responsible for the Equipment rental, turn around (e.g.
battery charging and phone kit preparation), return and
administrative functions during STC's unstaffed hours of
operation; and
viii) Develop independent and/or cooperative marketing programs
and promotional materials with STC to maximize revenue potential
at all locations on the Location Schedule. All promotional
materials developed on a cooperative basis will require the prior
approval of both Budget and STC and each party will mutually agree
to its share of the cost of such cooperative marketing materials
in advance. All promotional materials developed on an independent
basis will require the prior approval of each party, to the extent
that such materials refer to the Equipment rental program
conducted hereunder or to the other party.
(c) Budget shall be solely responsible for obtaining any permits,
licenses, consents or other authorizations (collectively,
"Authorizations") as required by any federal, state or local law
or by any airport authority or other governmental entity having
jurisdiction over Budget's operations at any location
identified on the Location Schedule to conduct the Equipment
rental program with STC. In the event that Budget is unable to
obtain an Authorization for a location on the Location Schedule,
such location will be deemed to be deleted from the Location
Schedule.
4. Responsibilities of STC.
(a) For those locations identified on the Location Schedule, STC
agrees to maintain a supply of Equipment that is sufficient to
meet customer demand. STC shall introduce upgrades to its
Equipment as technology advances.
(b) STC, at its sole cost, will provide staff ranging from full
time rental agents, who will complete the entire Equipment rental
process, to support staff only, who will train and assist Budget
employees in completing the Equipment rental process, as more
fully described in the attached Exhibit C. For those
locations where STC provides Equipment rental agents during peak
hours agreed to by Budget and STC, the STC Equipment rental agents
shall be responsible for completing the entire Equipment rental
process during those peak hours. STC phone rental agents should
be dressed in a professional manner and conduct themselves
appropriately.
(c) STC will provide the following monthly management reports for
each location identified on the Location Schedule:
i) a detailed revenue and Equipment utilization analysis by
location;
ii) commission reports by location;
iii) a rental agreement report which indicates the Budget car
rental agreement number of each customer who rents STC's Equipment
at a particular Budget location; and
iv) itemized list of deductions (including uncollected revenue)
from revenue
d) With respect to each location identified on the Location
Schedule, STC agrees to:
i) Train local Budget personnel in the use of the Equipment,
STC's pre-packaged telephone kits, and STC's sales materials. STC
will inform all Budget employees that they are not authorized to
use Equipment without completing an STC rental agreement and
paying all normal charges for such use. Budget employees
will be billed directly by STC for any charges for such use;
ii) Establish call restrictions and all rates to be charged for
Equipment rental and metered airtime usage. STC has the right to
offer special promotions or rate changes as it deems proper. Such
promotions or rate changes will remain competitive with the
portable cellular rental industry. STC will provide Budget with
collateral materials and point of sales materials such as quick
contracts and rate cards which are previously approved by Budget
(except for Equipment rental and usage charges) and which reflect
such promotions or rate changes;
iii) Be responsible for billing all charges to each customer for
the rental of Equipment and the provision of service;
iv) Be responsible for resolving all customer billing inquiries.
In the event of an irreconcilable billing dispute between STC and
a customer, STC will notify Budget promptly. Upon such
notification, Budget will have the right but not the obligation to
intervene in the dispute and attempt to bring about a reasonable
solution; and
v) Be responsible for administrative paperwork, battery charging,
equipment maintenance, and inventories associated with the
Equipment rental program. All repairs and maintenance of the
Equipment will be at the expense of STC, except any repairs for
damage caused by the negligence of Budget employees or agents that
STC can clearly demonstrate shall be at the expense of Budget.
STC shall make all repairs and necessary replacements of Equipment
as soon as practical after notification by Budget.
(e) STC shall allow Budget, upon reasonable prior notice and at
the sole cost and expense of Budget, to inspect the books and
records of STC during normal business hours, as such records
pertain to Budget and this Agreement.
5. Compensation.
(a) STC agrees to pay Budget a monthly commission ("Commission")
at the rates set forth in Exhibit A. Commissions due Budget are
based on the applicable percentage of Gross Revenues (as
hereinafter defined) received by STC in connection with Equipment
rentals for the applicable month at each Budget location
identified on the Location Schedule. For the purposes of
determining Commission hereunder, the term "Gross Revenues" shall
mean the total amount of airtime revenues, theft protection
charges and equipment rental charges received by STC for Equipment
rentals at the applicable Budget location; provided,
however, Gross Revenues shall exclude all taxes collected on
behalf of any federal, state or local taxing authority, customer
credits and bad debt write-offs (as determined in accordance with
generally accepted accounting principles). Such Commissions shall
be payable to Budget by STC forty-five (45) days after the end of
each month in which such compensation is earned.
This Agreement may be amended by mutual written agreement of the
parties hereto to include additional products that complement the
Equipment rentals. In such event, the definition of Gross
Revenues will be modified by mutual written agreement of the
parties to include revenues collected by STC in connection with
additional products offered by STC at applicable Budget locations.
(b) In addition to the Commissions payable by STC pursuant to
Paragraph 5(a), STC agrees to pay incentives to Budget employees
as provided by the STC Commission Incentive Program attached
hereto as Exhibit B and made a part hereof.
(c) STC agrees to pay Budget an annual bonus ("Annual Bonus") in
accordance with the following schedule, based on the indicated
percentage of total Gross Revenues received by STC during each
Contract Year (as hereinafter defined) for Equipment rentals
provided by STC for the applicable Contract Year at all Budget
locations identified on the Location Schedule. STC agrees that
the aggregate monthly gross revenues received by STC during an
applicable Contract Year pursuant to an agreement between STC and
a Budget Licensee for the provision of Equipment rentals at car
rental locations owned and operated by a Budget Licensee (a
"Budget Licensee Service Agreement") shall be included in the
calculation of the Annual Bonus payable by STC hereunder. In
addition, STC agrees that the aggregate monthly gross revenues
received by STC during an applicable Contract Year pursuant to
that certain Agreement between STC and Budget Group, Inc.,
successor-in-interest to Team Rental Group, Inc., dated
August 26, 1996 shall be included in the calculation of the Annual
Bonus payable by STC hereunder. Contract Year shall mean each
successive period of one (1) year during the term of this
Agreement, ending on the same day and month, but not year, as the
day and month on which the Effective Date occurs. Once a
higher percentage becomes applicable, it applies to lower
threshold levels. The Annual Bonus shall be payable by STC within
sixty (60) days of the end of each Contract Year.
Total Gross Revenues Percentage of
Received by STC During Total Gross
Applicable Contract Year Revenue
0 - $2,750,000 0%
$2,750,000.01 - $3,250,000 1%
$3,250,000.01 - $3,750,000 2%
$3,750,000.01 - $4,250,000 3%
$4,250,000.01 - $4,750,000 4%
$4,750,000 and greater 5%
(d) The parties hereto agree that any Commission or Annual Bonus
payments payable by STC to Budget hereunder shall be made solely
to BRACC.
6. Indemnification.
(a) Budget shall defend, indemnify and hold STC, its parent and
subsidiaries, and each of their officers, directors, employees and
agents harmless from and against all claims, damages and
liabilities arising from Budget's negligence or Budget's other
wrongful acts or omissions arising in any way out of this
Agreement or Budget's performance hereunder.
(b) STC shall defend, indemnify and hold Budget, its parent and
subsidiaries, and each of their officers, directors, employees and
agents harmless from and against all claims, damages and
liabilities arising from STC's negligence or STC's other wrongful
acts or omissions arising in any way out of this Agreement
or STC's performance hereunder.
7. Risk of Loss. Budget understands that all Equipment provided
to it in connection with the performance of this Agreement is the
personal property of STC. Budget shall be responsible for the
safekeeping of all Equipment delivered to it by STC and shall bear
the risk of loss or damage to, or theft of, such Equipment (only
to the extent that STC can clearly demonstrate that such loss or
damage was caused by the negligence or wrongful conduct of a
Budget employee). In those instances where Budget is responsible
for lost, damaged or stolen equipment, Budget will reimburse STC
for the replacement cost of the Equipment and for all charges
attributable to the use of the Equipment, subject to the
following. STC agrees that the replacement cost of the Equipment
shall be the actual wholesale value of the Equipment less
applicable depreciation calculated on a straight line basis
(assuming an estimated useful life of three (3) years and an
estimated salvage value of zero), such amount not to exceed
$500 per cellular phone rental kit (which includes one cellular
phone, one overnight battery charger, two rechargeable batteries,
a cigarette lighter adapter and a custom carrying case) and that
the usage charges shall be billed to Budget on the basis of STC's
actual cost for cellular airtime, not to exceed $1000 for
airtime charges per phone line. In addition, STC agrees that
Budget shall not be responsible for cellular usage charges after
one (1) business day has elapsed from the date STC receives a
report from Budget (either a copy of a police report or a
completed missing equipment report form in the format
provided by STC from time to time) of the loss or theft of a
cellular phone. In the event that Budget incurs any payment
obligation to STC for lost, damaged or stolen Equipment, then STC
shall have the right to withhold such amounts from any
commission owed to Budget hereunder.
8. Confidentiality. Each party shall maintain the
confidentiality of, and shall not disclose to any third party, any
confidential or proprietary information concerning the other
party, including, without limitation, customer lists and financial
information. This Paragraph shall remain in effect for a period
of two (2) years following the termination of this Agreement.
9. Trademarks. Neither party shall use any trademarks or trade
names, service marks, copyrights, logos, corporate names, other
proprietary information or intellectual property of the other
party in any manner, except as expressly authorized by the other
party. Upon termination of this Agreement, Budget shall return to
STC all marketing and sales materials then in the possession of
Budget that refer to this Agreement or to STC or contain any trade
name, trademarks, service marks, logos or other proprietary
information or intellectual property of STC.
10. Default. In the event either party fails to perform any of
its obligations under this Agreement and such failure continues
for more than thirty (30) days following written notice of such
default, then the non-defaulting party shall have the right to
terminate this Agreement with written notice to the other
party, without limiting any other remedies available hereunder or
at law or equity. However, if such breach cannot be cured within
said thirty (30) day period, then, if the breaching party has
commenced to cure within such period and diligently pursues the
cure, such party shall not be in default hereunder as long as it
continues to diligently pursue such cure, but in no event for a
period in excess of sixty (60) days from the initial notice date.
11. Relationship of the Parties.
(a) STC shall at all times hereunder be deemed to be an
independent contractor of Budget. Nothing in this Agreement is
intended to constitute either party as a joint venturer, partner,
agent, dealer, franchisee or employee of the other for any purpose
whatsoever.
(b) Each party's employees will not be or be deemed to be
employees or joint employees of the other party. Each party
assumes full responsibility for the acts of its employees and for
their supervision, daily direction and control. Each party will
not be responsible for workers compensation premiums, disability
benefits, withholding taxes, social security, unemployment
insurance or any other taxes or benefits of the other party's
employees.
(c) Neither party shall have any authority to enter into or bind
the other party in contract, nor make any unauthorized
representations or warranties concerning the other party's
products or services.
12. Notice. All notices required or permitted to be given
hereunder shall be deemed to have been given when deposited in the
mail (certified and postage prepaid) or delivered in hand to the
applicable address set forth below. Either party may change its
notice address by notifying the other in writing.
If to STC:
Shared Technologies Cellular, Inc.
100 Great Meadow Road
Suite 102
Wethersfield, CT 06109
Attn: Legal Department
If to Budget:
Budget Rent a Car Corporation
4225 Naperville Road
Lisle, IL 60532
Attn: Jill Di Franco, Marketing Department
13. Limitation of Liability. Notwithstanding any other provision
of this Agreement, neither party shall be liable to the other,
either directly or through the operation of any indemnification or
hold harmless provision of this Agreement, for any consequential
(including lost profits), incidental, indirect, special or
punitive damages arising in any way out of this Agreement.
14. Insurance. STC shall maintain a commercial general liability
insurance policy which policy shall provide coverage of a minimum
of $1,000,000 combined single limit, which shall name Budget as
additional insured thereunder, and such coverage shall include
broad form contractual liability covering this Agreement.
STC shall provide thirty (30) days prior written notice to Budget
prior to cancellation, modification or expiration of such
insurance policy. STC shall also maintain adequate Workers'
Compensation insurance providing coverage for its employees
engaged in work related activities at each location. Certificates
of insurance evidencing the foregoing shall be provided to Budget
at its request.
15. Assignment. This Agreement may not be assigned by either
party without the prior written consent of the other party, which
consent shall not be unreasonably withheld or unduly delayed.
Notwithstanding anything contained in this Agreement to the
contrary, Budget may assign this Agreement to Budget Group, Inc.
("BGI") without the consent of STC, but with notice to STC. In
the event of any such assignment, STC agrees to use good faith
efforts, for a period of 120 days from the notice of assignment,
to renegotiate the provisions of this Agreement with BGI. This
Agreement shall remain in full force and effect during such 120-
day period. Further, in the event that STC and BGI are unable to
reach a mutually agreeable definitive amendment to this Agreement,
then this Agreement shall expire on the first anniversary of the
assignment of this Agreement from Budget to BGI, notwithstanding
anything contained in Section 2(a) to the contrary.
16. Special Provision. At its sole discretion, Budget may elect
to implement the terms of this Special Provision Paragraph:
(a) Budget agrees to use its best efforts to incorporate the
Equipment rental and return process into Budget's automated car
rental reservation system in accordance with functional
specifications mutually agreed to by the parties. The date that
the Equipment rental and return process is automated by Budget
shall be referred to herein as the "Cutover Date."
(b) STC shall reimburse Budget all reasonable and necessary costs
of incorporating the Equipment rental and return process into
Budget's automated car rental reservation system, so long as such
costs do not exceed $50,000 and provided that Budget provides
STC with receipts or documentation sufficient to prove such
expenses were incurred with respect to automating the Equipment
rental and return process.
(c) In the event that the aggregate Commission payments made to
Budget pursuant to Paragraph 5(a) during the twelve (12) month
period from the Cutover Date do not exceed the aggregate
Commission payments made by STC for the twelve (12) month period
prior to the Cutover Date by $50,000, then STC agrees to pay
Budget the lesser of (i) $50,000 or (ii) $50,000 less the
difference between the aggregate Commission payments made by
STC for the twelve (12) month period from the Cutover Date and the
aggregate Commission payments made by STC for the twelve (12)
month period prior to the Cutover Date (taking into consideration
payments made under this Agreement and, if necessary, payments
that were made under that Master Cellular Service Agreement dated
February 10, 1995 between STC and BRACC, which was terminated
prior to the Effective Date of this Agreement).
Example. Assume that the Cutover Date is January 1, 1998 and that
the aggregate Commission payments made to Budget during the
calendar year 1997 are $220,000. If the aggregate commission
payments made to Budget during the calendar year 1998 are
$240,000, then the amount due Budget would be $30,000 calculated
as follows: $50,000 - ($240,000 - $220,000).
17. General.
(a) Each party hereto represents and warrants to the other that
this Agreement will not conflict with or violate any prior
commitment, agreement or understanding that it has with any third
party and that the person signing this Agreement on its behalf has
been properly authorized and empowered to enter into this
Agreement.
(b) This Agreement shall be governed by the laws of the State of
Connecticut.
(c) This Agreement constitutes the entire understanding between
the parties relating to the subject matter hereof and supersedes
any and all prior discussions, proposals or agreements, whether
oral or written. No modification, waiver or addition to this
Agreement shall be valid unless in writing signed by the parties
hereto.
(d) The section headings of this Agreement are for reference
purposes only and shall not constitute a part hereof or affect the
meaning or interpretation of this Agreement.
(e) In the event of a dispute arising out of this Agreement, the
prevailing party shall be entitled to recovery of its reasonable
legal fees and expenses.
(f) The waiver of any provision of this Agreement shall not be
construed as a continuing waiver of such breach or of other
breaches of the same or of other provisions hereof. All
provisions of this Agreement are severable. The invalidity,
unenforceability or illegality of any provision in this Agreement
shall not affect any other provision.
(g) The parties acknowledge that they have each read this
Agreement in its entirety, understand it and agree to be bound by
the terms and conditions contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
Shared Technologies Cellular, Inc. Budget Rent a Car
Corporation
By:_________________________ By:___________________________
Its:_________________________ Its:___________________________
Date:_______________________ Date:_________________________
Budget Rent A Car Systems, Inc.
By:____________________________
Its:____________________________
Date:___________________________
Exhibit B
STC Incentive Program
1. STC agrees to pay a one-time commission in the amount of Four
Dollars ($4) for each Equipment rental order that is procured
solely by the efforts of a Budget customer service representative
employee, subject to the following. The basis for the one-time
commission payable to an individual Budget customer service
representative employee will be the receipt by STC of an
Equipment rental application completed by the Budget customer
service representative employee. Such application must be signed
by the customer and must designate the Budget location and the
Budget customer service representative employee as the source of
the sale. Generally, the one-time commission will be paid by STC
to individual Budget customer service representative employees on
a weekly basis. STC will issue individual Budget customer
service representative employees a Form 1099 in accordance with
applicable IRS requirements.
2. Notwithstanding anything contained in Paragraph 1 above, if a
Budget bus driver employee assists a Budget customer service
representative employee in procuring an Equipment rental order,
then the one-time commission payable by STC pursuant to Paragraph
1 above shall be shared and paid on an equal basis between
such Budget employees.
Exhibit 10.17
AGREEMENT BETWEEN
SHARED TECHNOLOGIES CELLULAR, INC.
AND THORN AMERICAS FOR THE PROVISION OF
DEBIT CELLULAR SERVICES
This Agreement (the "Agreement") is made as of the 1st day of
December, 1996, by and between Shared Technologies Cellular, Inc.,
a Delaware corporation, having offices at 100 Great Meadow Road,
Wethersfield, CT 06109, ("STC"), and Thorn Americas, Inc., a
Delaware corporation, having a place of business at 8200 Thorn
Drive, Wichita, KS 67226 ("Thorn").
WHEREAS, Thorn rents and occasionally sells Debit Phones (as
defined in Section 1 below) that will require cellular service;
and
WHEREAS, STC provides cellular activation and debit services and
Thorn desires to utilize such services for the Debit Phones;
WHEREAS, Thorn, in addition to renting Debit Phones to End Users,
desires to market and bill STC's Debit Cellular Service sold to
End Users who are also renting Debit Phones from Thorn.
NOW, THEREFORE, in consideration of the promises and covenants
contained herein, the receipt and adequacy of which are
acknowledged, the parties agree as follows.
1. Definitions. The following terms when used herein shall have
the following meanings:
(a) "ACC" shall mean an airtime control code supplied by STC
which must be entered on the keypad of a Debit Phone to allow an
End User to redeem a particular Debit Code to make and receive
calls with the Debit Phone until the units of airtime associated
with such Debit Code have been depleted.
(b) "Carrier" shall mean a person or entity authorized by the
Federal Communications Commission to construct and operate a
cellular system within a specific CGSA.
(c) "CGSA" shall mean a cellular geographic service area, which
is a region within the United States in which a Carrier is
authorized to provide cellular telephone service.
(d) "Debit Code" shall mean a multi-digit number assigned by STC
to identify a specific block of airtime units provided to Thorn by
STC for sale to End Users. Airtime units will be available in
blocks consisting of 30 and 60 units and each block will be
identified by a unique Debit Code.
(e) "Debit Cellular Service" shall mean prepaid cellular service
using wireless technology that will allow an End User to make and
receive calls with a Debit Phone for a predetermined period of
time (measured in units of airtime).
(f) "Debit Phone" shall mean a mobile phone that contains
software and firmware to permit the phone to track the airtime
usage of an End User.
(g)"End User" shall mean a person or entity that buys or rents a
Debit Phone from Thorn.
(h)"MIN" shall mean the ten digit cellular telephone number
provided by STC to Thorn for a particular Debit Phone.
2. Term. This Agreement shall have a term of two (2) years,
commencing as of the date first written above, subject to the
following. The term hereof shall automatically renew for
successive one (1) year terms unless notice of termination is
given by either party at least thirty (30) days prior to the
end of the initial term or any term then in effect.
3. Responsibilities of Thorn and STC.
(a) Thorn agrees to use STC as the exclusive provider of Debit
Cellular Service for all Debit Phones which are rented or sold by
Thorn to End Users at all rental store locations owned and
operated by Thorn in the cities dentified in Exhibit A (the
"Territory"), which is attached hereto and made a part hereof.
(b) Thorn shall be solely responsible for the rental or sale
of Debit Phones to End Users and STC shall have no obligations
with respect thereto, other than as provided in this Agreement.
For each Debit Phone that Thorn purchases for distribution within
the Territory, Thorn agrees to purchase such phones with the
technology and configuration identified in Exhibit B, and as
may be supplemented from time to time by mutual consent of the
parties. Both parties acknowledge that Thorn shall not be
obligated, either expressly or implied, to conduct or refrain from
any activity when the same would constitute a restraint of trade
or would otherwise be unlawful.
Both parties further acknowledge that STC is not receiving a
commission, royalty or other payments from any equipment vendor
with respect to the sale of Debit Phones and that STC is solely
licensing certain software from the debit technology
vendor to integrate the Debit Phone technology with the Debit
Cellular Services.
(c) STC shall use its best efforts to cause its
Carriers to promptly (i) provide Debit Cellular Service to End
Users renting Debit Phones who purchase STC's Cellular Services,
and (ii) disconnect Debit Cellular Service for certain Debit
Phones, at Thorn's request, subject to the rights of End Users.
If Debit Cellular Service is disconnected, then Thorn shall be
responsible for applicable termination charges in accordance with
Exhibit E. In addition, STC shall perform all reasonable and
necessary tasks to ship Debit Phones to Thorn's stores and provide
Debit Cellular Service to such Debit Phones pursuant to a roll-out
schedule to be mutually agreed upon by the parties. Lastly, STC
shall pay its Carrier's invoices for Debit Cellular Services
ultimately provided to End Users in the normal course of business.
(d) STC shall provide all necessary and reasonable
assistance to End Users related to cellular service questions,
hardware issues, billings, and on any other matters arising in the
normal course of End Users' usage of STC's Debit Cellular Service.
(e) STC represents and warrants to Thorn that to the best of
its knowledge it has secured or filed any tariffs, permits or
other authorizations, and will file or maintain as appropriate,
regardless of its knowledge, tariffs, permits or other
authorizations as may hereafter be required for the cellular
phone service. Thorn agrees to cooperate with STC in establishing
such tariffs in order to assure that Thorn may obtain a commission
in the amount as provided in this Agreement for marketing and
billing of STC's services to End Users. STC shall comply with all
laws applicable to its business, its obligations and duties to End
Users and Thorn arising out of this Agreement including but not
limited to the payment of all applicable taxes.
(f) STC shall provide assistance to Thorn for the
training of Thorn's employees regarding the use of Debit Phones,
activation and deactivation of Debit Phones, marketing of STC's
Debit Cellular Service, and marketing of cellular services in the
ordinary course of business.
(g) Notwithstanding anything in the Agreement, in the
event of the total outage of cellular telephone service for a
period of twenty-four (24) hours or more in any specific CGSA or
any outage or material loss of cellular telephone service which
does not constitute a total outage of cellular telephone service
in a specific CGSA, a credit allowance will be made by STC
to End Users to be administered by Thorn, in the form of a pro-
rata adjustment of the monthly recurring access charges billed by
STC for any period of such outage; provided that such outage is
caused by the negligence or intentional misconduct of STC, or
STC's failure to perform its obligations under this Agreement.
(h) STC agrees to be solely responsible for filing all
tax returns, and paying the related taxes due related to End
Users' purchase of Debit Cellular Service except for sales tax
applicable at point of sale in Iowa, Missouri, Pennsylvania or
Washington, subject to any future changes by applicable taxing
authorities. These taxes include, but are not limited to
Federal state and local excise and communication taxes, and state
and local sales or use taxes, which are levied at the time of sale
of Debit Cellular Services. Except to the extent that Thorn is
responsible for filing tax returns and paying the related sales
taxes due in Iowa, Missouri, Pennsylvania and Washington, STC
shall indemnify and hold harmless Thorn in connection with
liability for such taxes including any expense in the event of
governmental audits of such returns (but not including liability
which is attributable to the act or omission, negligent or
otherwise, of Thorn in the collection of, or failure to collect
taxes included in the retail prices paid by End Users for
STC's account pursuant to Section 6 (a) (iii) below). STC
represents and warrants the tax information contained in Exhibit D
is true and accurate to the best of its knowledge. STC shall
promptly notify Thorn in writing of any changes in the tax rates
in any jurisdiction referenced in Exhibit D, so that Thorn may
have at least forty-five (45) days advance notice of any tax rate
changes.
4. MIN Assignment.
(a) At the time Thorn purchases Debit Phones for distribution to
its rental stores in the Territory, Thorn will notify STC, in a
format and according to the procedures specified by STC from time
to time, of the number of MINs required for such phones, the
electronic serial number ("ESN") and the manufacturer's shipping
date for each Debit Phone and the address of the rental store that
will stock each Debit Phone. STC will use its best efforts
to obtain, by the manufacturer's shipping date, a MIN from the
applicable Carrier under a reseller agreement for each Debit
Phone. Thorn acknowledges that STC will obtain a MIN for a
particular Debit Phone from a Carrier that provides cellular
service for the CGSA where such Debit Phone will be stocked
and that the ESN for each Debit Phone will be required to order a
MIN for such Debit Phone. If STC must cancel all or a portion of
an order for MINs that STC places with a Carrier as a result of
Thorn canceling an order for Debit Phones, then Thorn shall be
responsible for the applicable Deactivation Fees identified in
Paragraph 2(c) of Exhibit E, attached hereto and made a part
hereof. STC shall deliver to Thorn all MINs required within ten
(10) business days following its receipt of Thorn's purchase order
and STC's receipt of Debit Phones at the address in Section 5 (a)
below to satisfy Thorn reorders for its stores already served by
STC, or thirty (30) days for any stores not already served by STC.
Any order not shipped within thirty (30) days following STC's
receipt of Thorn's purchase order and STC's receipt of
Debit Phones at the address in Section 5 (a) below will incur a
penalty of $100.00 per MIN, to be deducted from STC's next
invoice. Notwithstanding anything contained herein to the
contrary, and except as provided in Exhibit F attached hereto STC
will not be obligated to activate more than 2,500 MINs in
each consecutive 30-day period during the term of this Agreement;
and provided further, STC will use its best efforts to activate in
excess of 2,500 MINs in a thirty (30) day period in the event of
unusual circumstances such as acquisition by Thorn of a large
rental company.
(b) Thorn shall notify STC whenever the inventory of Debit Phones
stocked by Thorn at a particular rental store location in the
Territory is reassigned to another rental store location. If such
reassignment results in the movement of the Debit Phones to a new
CGSA, then STC shall obtain new MINs for such Debit Phones and
Thorn shall be responsible for any Extraordinary Charges in
accordance with Section 7(a) below . In addition, Thorn shall
reprogram such Debit Phones in accordance with the instructions
provided by STC.
(c) Thorn agrees to pay all charges set forth in Section 7(a)
below for each MIN provided by STC for use with a Debit Phone.
(d) Thorn acknowledges and agrees that STC is the customer of
record with all Carriers, is solely responsible for paying all
charges billed by such Carriers to STC, and retains all rights
associated with the use of the MINs and access codes assigned to
STC and provided for use with the Debit Phones. Neither Thorn nor
any End User shall acquire any proprietary interest in any
specific MIN or access code provided by STC for use with a Debit
Phone.
5. Debit Phone Programming.
(a) After Thorn notifies STC, pursuant to Section 4(a) above, that
MINs are required for certain Debit Phones, Thorn shall ship, at
its sole cost and expense, including appropriate freight
insurance, such Debit Phones to STC at the following address (or
such other address as provided by STC from time to time):
Shared Technologies Cellular, Inc.
149 Weldon Road, Suite 109
Maryland Heights, MO 63043
Attn: Fulfillment Department
Thorn shall include with each shipment a custom carrying case and
any hardware accessories required for each Debit Phone.
(b) STC will program each Debit Phone with the MIN previously
reserved by STC for a particular Debit Phone pursuant to Section
4(a) above. STC will verify that cellular service has been
initiated by the applicable Carrier for each MIN prior to the
shipment of the Debit Phone.
(c) STC will program each Debit Phone with the airtime unit
settings described in Section 6(a)(i) below.
(d) After each Debit Phone has been programmed by STC, STC
will package each Debit Phone with the custom carrying case and
hardware accessories supplied by Thorn. STC shall then ship each
Debit Phone, at Thorn's cost and expense, including appropriate
freight insurance, to each store location that Thorn has
identified, pursuant to Section 4(a) above, as the location
responsible for stocking such phones.
(e) Thorn shall pay STC a service charge in accordance with
Section 7(c) below for each Debit Phone that is programmed by STC.
Such charges shall be due and payable pursuant to Section 7 (c)
below.
6. Debit Cellular Service.
(a) STC resells the cellular service of various Carriers
throughout the United States. STC will be solely responsible for
relationships with such Carriers and will rely on such
relationships to provide Debit Cellular Service for each Debit
Phone which is distributed by Thorn to an End User. STC will
be solely responsible for the provision of Debit Cellular Service
to End Users,. Debit Cellular Service will be activated for the
Debit Phones. in accordance with the following procedures:
(i) At the time an End User purchases or rents a Debit Phone from
Thorn, Thorn will inform the End User that in order to access the
Debit Cellular Services, the End User must purchase a Debit Code
from STC. Thorn will inform End User that Debit Codes are
available for a block of 30 and 60 units of airtime, at the retail
rates identified in Exhibit C, attached hereto and made a part
hereof. Such rates shall be established by STC, and may be
modified by STC from time to time in accordance with the
provisions of Section 7(b) below. Thorn will inform the End User
that each time a call is made or received with the Debit Phone,
units of airtime will be reduced in accordance with the type and
duration of the call in accordance with the following
parameters:
(a) one (1) unit of airtime will allow an End User to make
or receive a local call for one (1) minute;
(b) two (2) units of airtime will allow an End User to make
a domestic long distance or toll call for one (1) minute;
(c) one (1) unit of airtime will allow an End User to
receive a domestic long distance or toll call for one (1)
minute; and
(d) three (3) units of airtime will allow End User to make
or receive a roaming call for one (1) minute.
Thorn shall inform End Users that the account balance of airtime
units will be debited for partial minutes in sixty (60) second
increments. For example, if the duration of a roaming call is
forty-five (45) seconds, then three (3) units will be debited
from the End User's account balance of airtime units.
Thorn will also inform the End User that 911 and 611 calls can be
placed without charge even if the airtime balance is $0 and that
the Debit Phone is restricted from making international calls
(01+) and from making calls to local directory assistance (411)
and "Dial It Services" such as 900 and 976 area codes.
(ii) Whenever a Debit Code is sold to an End User, Thorn or the
End User must contact STC and provide STC with the Debit Code and
the MIN assigned to the Debit Phone. STC will redeem the Debit
Code by generating an ACC, which will be entered into the Debit
Phone by Thorn or the End User. Such ACC provided by STC will
allow the End User to make and receive calls for a predetermined
period of time in accordance with the Debit Code for the
number of units of airtime purchased by End User (as identified by
a particular Debit Code associated with a certain ACC). Each time
a call is made or received with the Debit Phone, units of airtime
will be reduced in accordance with type and duration of the call
pursuant to the parameters indicated in Section 6(a)(i) above.
Once the units of airtime have been depleted, the Debit Phone
will prompt the End User to purchase additional units of airtime
to regain access to Debit Cellular Service.
(iii) For each Debit Code that is purchased by an End User at a
particular rental store location of Thorn in the Territory, Thorn
shall collect the established retail rate for such location, as
identified in Exhibit C for each unit of airtime purchased by End
User. Thorn and STC agree to share revenues received from the
sale of Debit Codes to End Users in accordance with the schedule
set forth in Exhibit C. Thorn shall collect from each End User
applicable federal, state or local telecommunications tax and
state and local sales and use taxes (collectively, the "Taxes")
included in the retail prices paid by each End User at the total
per unit rates set forth in Exhibit D, attached hereto and made a
part hereof, for Debit Codes sold to each End User at the
applicable rental store location. Thorn shall retain
its share of the revenues (as identified in Exhibit C ) for
marketing and billing services in connection with the sale of
Debit Codes. Thorn shall remit to STC the applicable Taxes and
STC's share of the revenues received from End Users for the sale
of Debit Codes, in accordance with the provisions of Section 7(b)
below.
(b) Debit Codes will be distributed in accordance with the
following procedures:
(i) Thorn will contact STC in writing or by means of electronic
mail (e.g. Verifone equipment) with requests for Debit Codes for a
specific rental store location in the Territory.
(ii) STC will supply Debit Codes in the quantities specified by
Thorn for each rental store location in the Territory, within
five (5) business days of STC's receipt of Thorn's purchase order
for Debit Codes. STC will supply such Debit Codes by means of
registered U.S. Mail, second day courier or electronic mail
transmission (e.g. Verifone equipment). STC will be responsible
for all freight expenses incurred.
(iii) Whenever an End User purchases a Debit Code in order to
access STC's Debit Cellular Services, Thorn shall provide the End
User with a receipt from Thorn's point of sale terminal. Such
receipt shall identify the Debit Code purchased by the End User,
Thorn will also supply to End Users STC's toll-free customer
service phone number, which number can be used by the
End User to redeem the Debit Code for an ACC. STC will use its
best efforts to provide such ACCs to End Users as soon as
reasonably possible, which will not exceed four (4) business
hours. Notwithstanding the foregoing, Thorn may call STC to
redeem the Debit Code for the End User at the time of sale.
If STC cannot provide an ACC for a particular MIN within four (4)
business hours of a request, then Thorn, at its discretion, may
terminate such MIN within five (5) business days thereafter
without any payment of any Deactivation Fees identified in
Paragraph 2 (c) of Exhibit E attached hereto.
7. Pricing and Payment Terms.
(a) Recurring and Extraordinary Charges. For each MIN provided
by STC for each Debit Phone that is stocked by Thorn in the
Territory, Thorn shall bill to End Users and remit to STC the
monthly recurring access charges identified in Exhibit E. Such
monthly recurring access charges shall be payable in advance, on
the first of each month. STC reserves the right to increase or
decrease such charges any time after the 13-month anniversary of
this Agreement. Any such changes shall be effective ninety (90)
days after issuance of notice to Thorn.
In addition, Thorn shall bill to End Users at its discretion and
remit to STC any extraordinary charges identified in Exhibit E
("Extraordinary Charges") for each MIN provided by STC to Thorn
for use with a Debit Phone in the Territory.
Notwithstanding anything contained herein to the contrary, Thorn
shall be liable for any charges identified in Exhibit E,
regardless of whether Thorn bills or collects such charges from
End Users. Such charges shall be due and payable within twenty
(20) days after Thorn's receipt of STC's invoice. A late payment
charge will apply as stated in Section (d) below.
(b) Airtime Charges and Taxes for Debit Codes. Within fifteen
(15) days of the end of each month, STC shall send a statement
("Settlement Statement") to Thorn for the Debit Cellular Services
provided by STC in the prior month. The Settlement Statement will
identify the number of Debit Codes redeemed by STC in the prior
month for sales of Debit Codes made at each rental store location
in the Territory, along with a statement for Taxes applicable to
such sales. For such Debit Codes redeemed by STC, Thorn shall
remit to STC all amounts indicated on the Settlement Statement due
STC for its share of the revenues, as specified in Exhibit C , for
the sale of Debit Codes to End Users (as determined by the rates
in effect on the date the Debit Code is redeemed by an End User)
as well as the Taxes collected by Thorn from End Users for such
Debit Codes redeemed by STC in the prior month. STC reserves
the right to increase or decrease the retail rates identified in
Exhibit C anytime after the 13-month anniversary of this
Agreement. Any such changes shall be effective ninety (90) days
after issuance notice to Thorn. In such event, the parties will
mutually agree upon the future commission retained by Thorn for
each Debit Code purchased by an End User .
Notwithstanding anything contained in this Agreement to the
contrary, Thorn acknowledges that STC shall be compensated on the
basis of Debit Codes redeemed by STC pursuant to this Agreement
regardless of customer credits issued and uncollected revenue in
connection with the sale of Debit Codes to End Users. STC
acknowledges that Thorn will not be liable for charges for any
Debit Code activated for an End User more than four hours after
STC is contacted by Thorn or End User pursuant to paragraph 8(c)
below.
c) Debit Phone Programming Charges. Thorn shall pay STC a service
charge in the amount of $10 for each Debit Phone that is
programmed by STC pursuant to this Agreement. Such charges shall
be due and payable within twenty (20) days after Thorn's receipt
of STC's invoice. A late payment charge will apply as stated in
Section 7 (d) below.
(d) Settlement Statements shall be due and payable within twenty
(20) days after Thorn's receipt thereof. Payment shall be made to
STC at the address set forth on the Settlement Statement or at
such other address as may be designated in writing from time to
time by STC. A late payment charge, at the rate of 1-1/2% per
month or the highest lawful rate, whichever is lower,
shall be charged on any amount which is not paid within thirty
(30) days after receipt of STC's invoice.
(e) Upon request by Thorn, STC will provide Thorn monthly
Settlement Statements in electronic format. However, Thorn shall
be responsible for all delivery costs associated with the
transmission of such electronic reports.
(f) During the term of this Agreement or any extension thereof,
STC shall not sell or make available Debit Cellular Service,
including Debit Codes, to any competitor of Thorn in the household
durable goods rental industry, for prices that are lower than
those applicable to this Agreement.
8. Fraud/Cloning.
(a) In the event that a Debit Phone is lost, stolen or otherwise
absent from the possession of Thorn for any reason other than the
sale or rental of the Debit Phone to an End User, then Thorn shall
only be liable for charges attributable to the Debit Codes
purchased for such Debit Phone until the loss, theft or absence
has been reported to STC and the MIN assigned to such Debit Phone
has been deactivated by STC.
(b) STC shall be liable for all charges attributable to the
cloning of any MIN or ESN , or any combination thereof, except to
the extent that such cloning can be attributed to Thorn's
employees or agents. Thorn agrees to use its best efforts to
assist STC and any Carrier or governmental authority in
the investigation or detection of any cloning or other fraudulent
activity.
(c) Thorn shall bear the risk of loss or theft of any Debit Code
provided by STC pursuant to this Agreement after it has been
received in one of Thorn's rental stores, until receipt by STC, in
a form reasonably prescribed by STC, of notice from Thorn to
disable any such Debit Code. STC shall bear such risks, if any,
that may occur prior to the delivery of Debit Codes to Thorn's
rental stores.
9. Confidentiality.
(a) Each party shall maintain the confidentiality of, and shall
not disclose to any third party, any confidential or proprietary
information concerning the other party obtained pursuant to this
Agreement, including, without limitation, customer lists,
financial information, reports and all nonpublic business
information.
(b) This Section 9 shall remain in effect for a period of two (2)
years following the termination of this Agreement. The receiving
party shall safeguard proprietary and confidential information in
the same manner as it protects its own proprietary or confidential
information, shall use such information solely for the purposes
contemplated by this Agreement and shall not in any way disclose
such information to any third parties, unless and until such time
as the proprietary or confidential information:
(i) is within the public domain; or
(ii) is already in the possession of the receiving party without
restriction, as evidenced by adequate documentation; or
(iii) is or has been lawfully disclosed to the receiving party by
a third party without an obligation of confidentiality upon the
receiving party; or
(iv) is independently developed by the receiving party, as
evidenced by adequate documentation.
(c) Upon termination of this Agreement for any reason, all
confidential and proprietary information, including any and all
copies thereof, shall be returned to the disclosing party.
10. Trademarks.
(a) Thorn shall not use the name, tradenames, service marks,
trademarks, trade dress or logos of STC or any of its affiliates
in any manner, except as expressly authorized in writing by STC.
Upon termination of this Agreement, Thorn shall immediately cease
any and all use of the name, tradenames, service marks,
trademarks, trade dress or logos of STC or any of its affiliates.
(b) STC shall not use the name, tradenames, service marks,
trademarks, trade dress or logos of Thorn in any manner, except as
expressly authorized in writing by Thorn. Upon termination of
this Agreement, STC shall immediately cease any and all use of the
name, tradenames, service marks, trademarks, trade dress or logos
of Thorn.
11. Relationship of the Parties.
(a) Thorn shall at all times hereunder be deemed to be an
independent contractor of STC for the purpose of marketing STC's
Debit Cellular Service as provided herein. Nothing in this
Agreement is intended to constitute either party as a joint
venturer, partner, general agent, dealer, franchisee
or employee of the other for any purpose whatsoever.
(b) Thorn shall not have any authority to enter into or bind STC
in contract, nor shall Thorn make any unauthorized representations
or warranties concerning STC's products or services, except as
provided herein or otherwise in writing by STC.
(c) In no event shall Thorn's employees be considered employees
of STC. Thorn assumes full responsibility for the acts of its
employees and for their supervision, daily direction and control.
Under no circumstances shall STC be responsible for workers
compensation premiums, disability benefits, withholding taxes,
social security, unemployment insurance or any other taxes
or benefits with respect to Thorn or Thorn's employees.
12. Indemnification.
(a) Thorn shall defend, indemnify and hold STC and its affiliates
harmless from and against any and all claims, damages and
liabilities arising out of or resulting from (i) the lease and
sale of Debit Phones to End Users and (ii) any negligent or
intentional act or omission on the part of Thorn, its employees,
officers, directors or agents, in the performance of or failure
to perform the activities contemplated by this Agreement.
(b) STC shall defend, indemnify and hold Thorn harmless from and
against any and all claims, damages and liabilities arising out of
or resulting from any negligent or intentional act or omission on
the part of STC, its employees, officers, directors, agents or
affiliates, in the performance of or failure to perform the
activities contemplated by this
Agreement.
13. Limitations of Liability. NEITHER PARTY SHALL BE LIABLE TO
THE OTHER, EITHER DIRECTLY OR THROUGH THE OPERATION OF ANY
INDEMNIFICATION OR HOLD HARMLESS PROVISION HEREOF, FOR INCIDENTAL,
CONSEQUENTIAL (INCLUDING LOST PROFITS), INDIRECT, PUNITIVE OR
SPECIAL DAMAGES ARISING IN ANY WAY OUT OF THIS AGREEMENT.
14. Warranties. STC warrants to Thorn that the services provided
hereunder will be performed in a workmanlike manner. STC's
liability and Thorn's remedy are limited to correction within a
reasonable time of the services which do not comply with this
warranty, provided that written notice of such non-compliance
shall have been given to STC by Thorn within thirty (30) days
after such services are performed. THE WARRANTIES CONTAINED IN
THIS AGREEMENT ARE EXCLUSIVE AND ARE GIVEN IN LIEU OF ANY AND ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
15. Default.
(a) Either party shall be deemed to be in default of this
Agreement if it:
(i) fails to make any payment when due and such failure has not
been cured within ten (10) days from the receipt of written notice
thereof;
(ii) materially breaches any provision of this Agreement and such
breach continues beyond thirty (30) days from the receipt of
written notice thereof. However, if such breach cannot reasonably
be cured within said 30-day period, then, if the breaching party
has commenced to cure within such period and diligently pursues
the cure, such party shall not be held in default hereunder as
long as it diligently continues to pursue such cure, but in no
event for a period in excess of sixty (60) days beyond the initial
notice date;
(iii) has appointed on its behalf a trustee, receiver or
liquidator by a court of competent jurisdiction and such trustee,
receiver or liquidator is not dismissed within thirty (30) days of
appointment; or
(iv) shall file a petition in bankruptcy of for an arrangement or
reorganization pursuant to the Federal Bankruptcy Code or any
similar law, federal or state, or if, by decree of a court of
competent jurisdiction the defaulting party shall be adjudicated a
bankrupt or be declared insolvent, or the defaulting party shall
admit in writing its inability to pay its debts generally when
they become due.
(b) In the event of a default by a party hereto, the non-
defaulting party may upon three (3) days' written notice, at its
option and in addition to other remedies available hereunder, at
law or in equity, terminate this Agreement. Termination
regardless of cause or nature shall be without prejudice to any
other rights or remedies of the parties.
(c) STC shall send by express overnight delivery to Thorn, within
three (3) business days of STC's receipt thereof, a complete copy
of any termination notice it receives from any of its Carriers
supplying Debit Cellular Service to End Users.
16. Notice.
(a) Whenever any notice is required to be given hereunder, such
notice shall be given in writing and personally delivered or sent
by certified or registered mail, return receipt requested. Notice
shall be deemed to have been given at the time of receipt, if
personally delivered, or upon mailing if sent by certified or
registered mail.
(b) If sent by Thorn to STC, such notice shall be addressed to:
Shared Technologies Cellular, Inc.
100 Great Meadow Road, Suite 102
Wethersfield, CT 06109
Attention: Legal Department
(c) If sent by STC to Thorn, such notice shall be addressed to:
Thorn Americas, Inc.
8200 Thorn Drive
Wichita, KS 67226
Attention: General Counsel
(d) Either party may change the address at which it is to receive
notice by giving notice of the change to the other party pursuant
to this Section 16.
17. Assignment. Either party may assign this Agreement with the
prior written consent of the other, such consent not to be
unreasonably withheld. Notwithstanding the foregoing, either
party may assign this Agreement without the consent of the other
to a parent corporation or subsidiary.
18. Excuse of Performance. Either party shall be relieved from
liability for non-performance due to an act of God or the public
enemy, riots, labor disputes, delays of suppliers or
subcontractors, severe weather, fire, flood or any act or omission
of a Carrier or any cause beyond the reasonable control of the
party to be excused. In the event of such cause for delay,
the party so affected shall take all commercially reasonable steps
to avoid or remove such cause of non-performance and both parties
shall recommence performance as soon as such cause is removed or
ceases. The party claiming such delay shall give the other party
notice of the delay as soon as practicable, such time not to
exceed thirty (30) days.
19. General.
(a) This agreement shall be governed by the laws of the State of
Connecticut.
(b) This Agreement, including any exhibits or addenda attached
hereto, constitutes the entire understanding between the parties
relating to the subject matter hereof and supersedes any and all
prior discussions, proposals or agreements, whether oral or
written. No modification or addition to this Agreement shall be
valid unless in writing signed by the parties hereto.
(c) In the event of a dispute arising out of this Agreement, the
prevailing party shall be entitled to recovery of its reasonable
legal fees and expenses.
(d) Each party shall be responsible for all expenses incurred by
each of them, respectively, unless otherwise agreed in writing.
(e) The waiver of any provision of this Agreement shall not be
construed as a continuing waiver of such breach or of other
breaches of the same or of other provisions hereof.
(f) The section headings of this Agreement are for reference
purposes
only and shall not constitute a part hereof or affect the meaning
or
interpretation of this Agreement.
(g) The parties acknowledge that they have each read this
Agreement in
its entirety, understand it and agree to be bound by the terms and
conditions
contained herein.
IN WITNESS WHEREOF, an authorized representative of the parties
hereto have
executed this Agreement as of the date first written above.
Shared Technologies Cellular, Inc. Thorn Americas, Inc.
By:_________________________ By:_______________________
Its:_____________________ Its:___________________
Date:_______________________ Date:_____________________
<TABLE>
Exhibit A
<CAPTION>
Count of store STATUS
ADI City State CGSA CURRENT NEW GRAND
TOTAL
<S> <C> <C> <C> <C> <C> <C>
2701Fall River MA 76 0 1
1
Middletown RI 38 0 1
1
New Bedford MA 76 0 1
1
Pawtucket RI 38 0 1
1
Providence RI 38 0 2
2
South Attleboro MA 76 0 1
1
Tauton MA 76 0 1
1
Warwick RI 38 0 1
1
West Warwick RI 38 0 1
1
Woonsocket RI 38 0 1
1
2701Total 0 11
11
2702Greenfield MA 470 0 1
1
Holyoke MA 63 0 1
1
Springfield MA 63 0 3
3
2702Total 0 5
5
2703Albany NY 44 2 0
2
Amsterdam NY 44 1 0
1
Bennington VT 680 1 0
1
East Greenbush NY 44 1 0
1
Gloversville NY 977 1 0
1
Hudson NY 564 1 0
1
North Adams MA 213 1 0
1
Pittsfield MA 213 1 0
1
Rotterdam NY 44 1 0
1
Schenectady NY 44 1 0
1
Troy NY 44 2 0
2
Watervliet NY 44 1 0
1
2703Total 1 4 0
14
2704Auburn NY 562 1 0
1
Ithaca NY 562 1 0
1
Mattydale NY 53 1 0
1
Oneida NY 53 1 0
1
Oswego NY 53 1 0
1
Rome NY 115 1 0
1
Syracuse NY 53 3 0
3
Watertown NY 559 1 0
1
2704Total 1 0 0
10
2705Binghamton NY 122 1 0
1
Endicott NY 122 1 0
1
2705Total 2 0
2
2706East StroudsbPA 56 0 1
1
Edwardsville PA 56 0 1
1
Hazleton PA 56 0 1
1
Pottsville PA 619 0 1
1
Scranton PA 56 0 1
1
Williamsport PA 251 0 1
1
2706Total 0 6
6
2707Erie PA 130 0 2
2
2707Total 0 2
2
2708Gates NY 34 1 0
1
Geneva NY 34 1 0
1
Newark NY 34 1 0
1
Rochester NY 34 3 0
3
2708Total 6 0
6
2709Batavia NY 561 1 0
1
Blasdell NY 25 1 0
1
Buffalo NY 25 1 0 0
10
Jamestown NY 561 1 0
1
Lackawanna NY 25 1 0
1
Lockport NY 25 1 0
1
Niagara Falls NY 25 2 0
2
Olean NY 561 1 0
1
Tonawanda NY 25 1 0
1
Yorkshire NY 561 1 0
1
2709Total 2 0 0
20
2710Dayton OH 40 5 0
5
Huber Heights OH 40 1 0
1
Piqua OH 40 1 0
1
Richmond IN 408 1 0
1
Springfield OH 180 1 0
1
Xenia OH 40 1 0
1
2710Total 1 0 0
10
2712Benton HarborMI 193 0 1
1
Elkhart IN 223 0 1
1
Mishawaka IN 129 0 1
1
Niles MI 193 0 1
1
South Bend IN 129 0 1
1
Warsaw IN 404 0 1
1
2712Total 0 6
6
2715Decatur AL 307 1 0
1
Florence AL 226 1 0
1
Huntsville AL 120 2 0
2
2715Total 4 0
4
2716Guthrie OK 598 1 0
1
Guymon OK 596 1 0
1
Midwest City OK 45 1 0
1
Norman OK 45 1 0
1
Oklahoma City OK 45 4 0
4
Warr Acres OK 45 1 0
1
Woodward OK 597 1 0
1
2716Total 1 0 0
10
2717Coffeyville KS 442 1 0
1
Muskogee OK 601 1 0
1
Sand Springs OK 57 1 0
1
Tulsa OK 57 3 0
3
2717Total 6 0
6
2718Marshall TX 206 0 1
1
Shreveport LA 100 0 1
1
Texarkana TX 240 0 1
1
2718Total 0 3
3
2720Bay City MI 94 0 1
1
Bridgeport MI 94 0 1
1
Flint MI 68 0 3
3
Mt. Morris MI 68 0 1
1
Owosso MI 68 0 1
1
Saginaw MI 94 0 3
3
2720Total 0 10
10
2722Council BluffIA 65 0 1
1
Omaha NE 65 0 3
3
2722Total 0 4
4
2723Bloomington IL 250 0 1
1
Pekin IL 103 0 1
1
Peoria IL 103 0 2
2
2723Total 0 4
4
2724Des Moines IA 102 2 0
2
2724Total 2 0
2
2725Milwaukee WI 21 1 0 0
10
Racine WI 189 1 0
1
Sheboygan WI 277 1 0
1
West Allis WI 21 1 0
1
2725Total 1 3 0
13
2726Alton IL 11 1 0
1
Arnold MO 11 1 0
1
Breckenridge Hil MO 11 1 0
1
Cahokia IL 11 1 0
1
Collinsville IL 11 1 0
1
Country Club Hil MO 11 1 0
1
East St. Louis IL 11 1 0
1
Fairmont City IL 11 1 0
1
Farmington MO 516 1 0
1
Festus MO 11 1 0
1
Florissant MO 11 1 0
1
Granite City IL 11 2 0
2
Maplewood MO 11 2 0
2
O'Fallon MO 11 1 0
1
St. Ann MO 11 1 0
1
St. Charles MO 11 1 0
1
St. Louis MO 11 1 1 0
11
University City MO 11 1 0
1
2726Total 3 0 0
30
2728Colorado SpriCO 117 0 3
3
Pueblo CO 241 0 2
2
2728Total 0 5
5
2729Audubon NJ 4 0 1
1
Bensalem PA 4 0 1
1
Burlington NJ 4 0 1
1
Claymont DE 69 0 1
1
Clementon NJ 4 0 1
1
Dover DE 359 0 2
2
Easton PA 58 0 1
1
Ewing NJ 121 0 1
1
Folcroft PA 4 0 1
1
Glassboro NJ 4 0 1
1
New Castle DE 69 0 1
1
Newark DE 69 0 1
1
Norristown PA 4 0 1
1
Pennsauken NJ 4 0 1
1
Philadelphia PA 4 0 5
5
Pleasantville NJ 134 0 1
1
Pottstown PA 4 0 1
1
Reading PA 118 0 1
1
Rio Grande NJ 134 0 1
1
Salem NJ 69 0 1
1
Thorndale PA 4 0 1
1
Upper Darby PA 4 0 1
1
Vineland NJ 228 0 1
1
Whitehall PA 58 0 1
1
Wilmington DE 69 0 2
2
Woodlyn PA 4 0 1
1
2729Total 0 32
32
2730Anderson SC 227 0 1
1
Asheville NC 183 0 2
2
Elberton GA 374 0 1
1
Greenville SC 67 0 2
2
Greenwood SC 626 0 1
1
Hendersonville NC 568 0 1
1
Spartanburg SC 67 0 2
2
2730Total 0 10
10
2731Cincinnati OH 23 9 0
9
Covington KY 23 2 0
2
Florence KY 23 1 0
1
Hamilton OH 145 1 0
1
Middletown OH 145 1 0
1
Newport KY 23 1 0
1
2731Total 1 5 0
15
2733Auburn WA 20 0 1
1
Bellingham WA 270 0 1
1
Bremerton WA 212 0 1
1
Centralia WA 698 0 1
1
Everett WA 20 0 2
2
Kent WA 20 0 1
1
Lynnwood WA 20 0 1
1
Olympia WA 242 0 1
1
Renton WA 20 0 1
1
Seattle WA 20 0 4
4
Tacoma WA 82 0 3
3
Wenatchee WA 694 0 1
1
2733Total 0 18
18
2737Chalmette LA 29 1 0
1
Gretna LA 29 1 0
1
Hammond LA 460 1 0
1
Houma LA 184 1 0
1
Laplace LA 461 1 0
1
Marrero LA 29 1 0
1
Metairie LA 29 1 0
1
New Orleans LA 29 4 0
4
2737Total 1 1 0
11
2740Aurora CO 19 0 5
5
Commerce City CO 19 0 1
1
Denver CO 19 0 6
6
Edgewater CO 19 0 1
1
Englewood CO 19 0 1
1
Federal Heights CO 19 0 2
2
Greeley CO 243 0 1
1
Lakewood CO 19 0 1
1
Wheatridge CO 19 0 1
1
2740Total 0 19
19
2741Beverly MA 6 0 1
1
Boston MA 6 0 1
1
Brockton MA 6 0 1
1
Chelsea MA 6 0 1
1
Concord NH 549 0 1
1
Dorchester MA 6 0 1
1
East Boston MA 6 0 1
1
Fitchburg MA 55 0 1
1
Framingham MA 6 0 1
1
Franklin NH 549 0 1
1
Haverhill MA 6 0 1
1
Hyannis MA 471 0 1
1
Hyde Park MA 6 0 1
1
Jamaica Plain MA 6 0 1
1
Keene NH 548 0 1
1
Laconia NH 549 0 1
1
Lawrence MA 6 0 2
2
Leominster MA 55 0 1
1
Lowell MA 6 0 2
2
Lynn MA 6 0 1
1
Manchester NH 133 0 1
1
Nashua NH 133 0 1
1
Portsmouth NH 156 0 1
1
Quincy MA 6 0 1
1
Revere MA 6 0 1
1
Rochester NH 156 0 1
1
Roslindale MA 6 0 1
1
Somersworth NH 156 0 1
1
Somerville MA 6 0 1
1
South Boston MA 6 0 1
1
Waltham MA 6 0 1
1
Webster MA 55 0 1
1
Worcester MA 55 0 2
2
2741Total 0 36
36
2742Clinton TownsMI 5 0 1
1
Detroit MI 5 0 16
16
Ferndale MI 5 0 1
1
Hamtramck MI 5 0 1
1
Inkster MI 5 0 1
1
Lincoln Park MI 5 0 1
1
Madison Heights MI 5 0 1
1
Madison Township MI 480 0 1
1
Monroe MI 48 0 1
1
Pontiac MI 5 0 2
2
Redford MI 5 0 1
1
Roseville MI 5 0 1
1
Taylor MI 5 0 1
1
Warren MI 5 0 1
1
Wayne MI 5 0 1
1
Ypsilanti MI 5 0 1
1
2742Total 0 32
32
2747Boardman OH 66 1 0
1
Calcutta OH 66 1 0
1
Hermitage PA 238 1 0
1
Niles OH 66 1 0
1
Warren OH 66 1 0
1
Youngstown OH 66 1 0
1
2747Total 6 0
6
2748Bridgeport OH 178 1 0
1
Steubenville OH 199 1 0
1
2748Total 2 0
2
2749Utica NY 115 1 0
1
2749Total 1 0
1
2750Aberdeen MD 14 0 1
1
Annapolis MD 14 0 1
1
Baltimore MD 14 0 18
18
Cambridge MD 468 0 1
1
Catonsville MD 14 0 1
1
Chestertown MD 468 0 1
1
Denton MD 468 0 1
1
Easton MD 468 0 1
1
Elkton MD 69 0 1
1
Essex MD 14 0 2
2
Glen Burnie MD 14 0 1
1
Laurel MD 8 0 1
1
Northeast MD 69 0 1
1
2750Total 0 31
31
2751Baton Rouge LA 80 2 0
2
2751Total 2 0
2
2752Bessemer AL 41 1 0
1
Birmingham AL 41 4 0
4
Fairfield AL 41 1 0
1
Gadsden AL 272 1 0
1
2752Total 7 0
7
2753Champaign IL 196 0 1
1
Danville IL 400 0 1
1
Decatur IL 230 0 1
1
Jacksonville IL 397 0 1
1
Springfield IL 176 0 1
1
2753Total 0 5
5
2754Columbus OH 31 6 0
6
Heath OH 590 1 0
1
Lancaster OH 31 1 0
1
Marion OH 589 1 0
1
Zanesville OH 957 1 0
1
2754Total 1 0 0
10
2756Arlington TX 9 2 0
2
Athens TX 913 1 0
1
Dallas TX 9 1 5 0
15
Denton TX 9 1 0
1
Ft. Worth TX 9 7 0
7
Garland TX 9 2 0
2
Grand Prairie TX 9 2 0
2
Haltom City TX 9 1 0
1
Halton City TX 9 1 0
1
Irving TX 9 2 0
2
Mesquite TX 9 1 0
1
Richardson TX 9 1 0
1
Sherman TX 292 1 0
1
2756Total 3 7 0
37
2757Bloomfield NJ 1 1 0
1
Bridgeport CT 42 1 0
1
Bronx NY 1 4 0
4
Danbury CT 42 1 0
1
East Orange NJ 1 1 0
1
Elizabeth NJ 1 1 0
1
Irvington NJ 1 1 0
1
Jersey City NJ 1 1 0
1
Mount Vernon NY 1 1 0
1
Neptune City NJ 70 1 0
1
New Brunswick NJ 62 1 0
1
New Rochelle NY 1 1 0
1
Newark NJ 1 1 0
1
Passaic NJ 1 1 0
1
Paterson NJ 1 1 0
1
Peekskill NY 1 1 0
1
Perth Amboy NJ 62 1 0
1
Plainfield NJ 62 1 0
1
Spring Valley NY 1 1 0
1
Stamford CT 42 1 0
1
Staten Island NY 1 1 0
1
Union City NJ 1 1 0
1
Yonkers NY 1 1 0
1
2757Total 2 6 0
26
2759Georgetown DE 359 0 1
1
Milford DE 359 0 2
2
Millsboro DE 359 0 1
1
Ocean City MD 468 0 1
1
Onley VA 692 0 1
1
Pocomoke City MD 468 0 1
1
Salisbury MD 468 0 3
3
Seaford DE 359 0 1
1
2759Total 0 11
11
2762Alexandria VA 8 0 2
2
Arlington VA 8 0 1
1
Capitol Heights MD 8 0 1
1
Chambersburg PA 909 0 1
1
Coral Hills MD 8 0 1
1
Forestville MD 8 0 1
1
Forrestville MD 8 0 1
1
Frederick MD 469 0 1
1
Fredericksburg VA 691 0 1
1
Gaithersburg MD 8 0 1
1
Hagerstown MD 257 0 1
1
Hyattsville MD 8 0 1
1
Landover MD 8 0 2
2
Langley Park MD 8 0 1
1
Lavale MD 269 0 1
1
Lexington Park MD 468 0 1
1
Manassas VA 8 0 1
1
Martinsburg WV 704 0 1
1
Ne Washington DC 8 0 1
1
Oxon Hill MD 8 0 1
1
Washington DC 8 0 3
3
Winchester VA 960 0 1
1
Woodbridge VA 8 0 1
1
2762Total 0 27
27
2767Ansonia CT 49 0 1
1
Bloomfield CT 32 0 1
1
East Hartford CT 32 0 1
1
Hamden CT 49 0 1
1
Hartford CT 32 0 2
2
Meriden CT 49 0 1
1
New Britain CT 32 0 1
1
New Haven CT 49 0 1
1
New London CT 154 0 1
1
Norwich CT 154 0 1
1
Orange CT 49 0 1
1
Torrington CT 357 0 1
1
Waterbury CT 49 0 1
1
2767Total 0 14
14
2768Barre VT 679 1 0
1
Burlington VT 248 1 0
1
Claremont NH 548 1 0
1
Littleton NH 548 1 0
1
North Walpole NH 547 1 0
1
Plattsburgh NY 560 1 0
1
Rutland VT 905 1 0
1
St. Albans VT 679 1 0
1
West Lebanon NH 548 1 0
1
2768Total 9 0
9
2769Elmira NY 284 1 0
1
Horseheads NY 284 1 0
1
2769Total 2 0
2
2770Kennewick WA 214 1 0
1
Sunnyside WA 191 1 0
1
Walla Walla WA 700 1 0
1
Yakima WA 191 2 0
2
2770Total 5 0
5
2771Spokane WA 109 2 0
2
2771Total 2 0
2
2772Albany OR 609 1 0
1
Beaverton OR 30 1 0
1
Longview WA 698 1 0
1
Portland OR 30 3 0
3
Salem OR 148 1 0
1
Vancouver WA 30 1 0
1
2772Total 8 0
8
2775Montgomery AL 139 2 0
2
Selma AL 310 1 0
1
2775Total 3 0
3
2776Longview TX 206 0 1
1
Nacogdoches TX 662 0 1
1
Tyler TX 237 0 1
1
2776Total 0 3
3
2778Murray UT 39 0 1
1
Ogden UT 39 0 2
2
Orem UT 159 0 1
1
Provo UT 159 0 1
1
Salt Lake City UT 39 0 4
4
South Ogden UT 39 0 1
1
Taylorsville UT 39 0 1
1
West Valley UT 39 0 2
2
2778Total 0 13
13
2788Aliquippa PA 13 0 1
1
Beaver Falls PA 13 0 1
1
Belle Vernon PA 620 0 1
1
Fairmont WV 703 0 1
1
Greensburg PA 13 0 1
1
Mckees Rocks PA 13 0 1
1
Mckeesport PA 13 0 1
1
Morgantown WV 703 0 1
1
New Castle PA 924 0 1
1
New Kensington PA 13 0 1
1
Pittsburgh PA 13 0 4
4
Washington PA 13 0 1
1
Wilkinsburg PA 13 0 1
1
2788Total 0 16
16
2789Fond Du Lac WI 944 1 0
1
Green Bay WI 186 2 0
2
Manitowoc WI 277 1 0
1
Menasha WI 125 1 0
1
Oshkosh WI 125 1 0
1
2789Total 6 0
6
2791Bullhead CityAZ 318 0 1
1
Casa Grande AZ 322 0 1
1
Chandler AZ 26 0 2
2
Glendale AZ 26 0 1
1
Mesa AZ 26 0 3
3
Phoenix AZ 26 0 11
11
Scottsdale AZ 26 0 1
1
Tempe AZ 26 0 1
1
2791Total 0 21
21
2792Albuquerque NM 86 0 3
3
Espanola NM 553 0 1
1
Farmington NM 553 0 1
1
Los Lunas NM 553 0 1
1
Roswell NM 917 0 1
1
Santa Fe NM 556 0 1
1
2792Total 0 8
8
2793Sierra Vista AZ 323 1 0
1
Tucson AZ 77 3 0
3
2793Total 4 0
4
2798Duluth MN 141 0 1
1
2798Total 0 1
1
2799Columbia HeigMN 15 0 1
1
Maplewood MN 15 0 1
1
Minneapolis MN 15 0 3
3
St. Paul MN 15 0 2
2
2799Total 0 7
7
2801Citrus HeightCA 35 1 0
1
Fairfield CA 111 1 0
1
Modesto CA 142 2 0
2
North Highlands CA 35 1 0
1
Sacramento CA 35 5 0
5
Stockton CA 107 2 0
2
West Sacramento CA 35 1 0
1
Yuba City CA 274 1 0
1
2801Total 1 4 0
14
2804Tuscaloosa AL 222 1 0
1
2804Total 1 0
1
2805Cheyenne WY 721 0 1
1
2805Total 0 1
1
2806Anniston AL 249 1 0
1
2806Total 1 0
1
2808Columbia PA 105 0 1
1
Hanover PA 99 0 1
1
Harrisburg PA 84 0 1
1
Lancaster PA 105 0 1
1
Lebanon PA 623 0 1
1
York PA 99 0 1
1
2808Total 0 6
6
2812Ardmore OK 604 1 0
1
2812Total 1 0
1
2813Columbia SC 95 1 0
1
Sumter SC 630 1 0
1
West Columbia SC 95 1 0
1
2813Total 3 0
3
2817Hilo HI 387 0 2
2
Honolulu HI 50 0 2
2
Kahului HI 386 0 1
1
Kailua-Kona HI 387 0 1
1
Kamuela HI 387 0 1
1
Kaneohe HI 50 0 1
1
Lihue HI 385 0 1
1
Wahiawa HI 50 0 1
1
Waianae HI 50 0 1
1
Waipahu HI 50 0 1
1
2817Total 0 12
12
2818Beloit WI 216 1 0
1
Janesville WI 216 1 0
1
2818Total 2 0
2
2819Cedar Rapids IA 195 1 0
1
Dubuque IA 286 1 0
1
Waterloo IA 201 1 0
1
2819Total 3 0
3
2820Clinton IA 964 0 1
1
Davenport IA 98 0 1
1
East Moline IL 98 0 1
1
Muscatine IA 415 0 1
1
Rock Falls IL 394 0 1
1
Rock Island IL 98 0 1
1
2820Total 0 6
6
2826Bakersfield CA 97 1 0
1
2826Total 1 0
1
2827Indio CA 2 1 0
1
2827Total 1 0
1
2829Florence SC 264 1 0
1
2829Total 1 0
1
2833Commerce CA 2 1 0
1
Compton CA 2 1 0
1
El Monte CA 2 1 0
1
Highland Park CA 2 1 0
1
Inglewood CA 2 2 0
2
Long Beach CA 2 1 0
1
Los Angeles CA 2 2 0
2
Oxnard CA 73 1 0
1
Pacoima CA 2 1 0
1
Panorama City CA 2 1 0
1
Paramount CA 2 1 0
1
Pasadena CA 2 1 0
1
Reseda CA 2 1 0
1
Wilmington CA 2 1 0
1
2833Total 1 6 0
16
2834Aurora IL 3 0 2
2
Bedford Park IL 3 0 1
1
Berwyn IL 3 0 1
1
Bolingbrook IL 3 0 1
1
Bradley IL 273 0 1
1
Bridgeview IL 3 0 1
1
Chicago IL 3 0 24
24
Chicago Heights IL 3 0 1
1
Cicero IL 3 0 1
1
Dolton IL 3 0 2
2
East Dundee IL 3 0 1
1
Elgin IL 3 0 1
1
Gary IN 54 0 3
3
Hammond IN 54 0 1
1
Hanover Park IL 3 0 1
1
Highland IN 54 0 1
1
Joliet IL 3 0 2
2
Kankakee IL 273 0 1
1
Kenosha WI 244 0 1
1
Markham IL 3 0 1
1
Melrose Park IL 3 0 2
2
Merrillville IN 54 0 1
1
Michigan City IN 959 0 1
1
Niles IL 3 0 1
1
Norridge IL 3 0 1
1
Round Lake Beach IL 3 0 1
1
S. Chicago Heigh IL 3 0 1
1
Schaumburg IL 3 0 1
1
Villa Park IL 3 0 1
1
Waukegan IL 3 0 2
2
Wheeling IL 3 0 1
1
2834Total 0 61
61
2835Aiken SC 108 1 0
1
Augusta GA 108 3 0
3
SC 108 1 0
1
Thomson GA 108 1 0
1
Washington GA 17 1 0
1
2835Total 7 0
7
2836Columbus GA 153 1 0
1
Phenix City AL 153 1 0
1
2836Total 2 0
2
2837Savannah GA 155 0 1
1
2837Total 0 1
1
2838Acworth GA 17 1 0
1
Athens GA 234 2 0
2
Atlanta GA 17 6 0
6
Calhoun GA 371 1 0
1
Cartersville GA 373 1 0
1
College Park GA 17 2 0
2
Commerce GA 234 1 0
1
Decatur GA 17 2 0
2
Doraville GA 17 2 0
2
Douglasville GA 17 1 0
1
Forest Park GA 17 2 0
2
Griffin GA 376 1 0
1
Jonesboro GA 17 1 0
1
Lawrenceville GA 17 1 0
1
Monroe GA 17 1 0
1
Rome GA 373 1 0
1
Smyrna GA 17 2 0
2
Stone Mountain GA 17 2 0
2
Summerville GA 373 1 0
1
Winder GA 372 1 0
1
2838Total 3 2 0
32
2839Macon GA 138 1 0
1
2839Total 1 0
1
2847Albany GA 261 1 0
1
2847Total 1 0
1
2848Eau Claire WI 232 1 0
1
2848Total 1 0
1
2851North CharlesSC 90 1 0
1
2851Total 1 0
1
2852Amityville NY 1 1 0
1
Astoria NY 1 1 0
1
Bayshore NY 1 1 0
1
Brooklyn NY 1 1 0
1
Cambria Heights NY 1 1 0
1
Central Islip NY 1 1 0
1
East Patchogue NY 1 1 0
1
Freeport NY 1 1 0
1
Hempstead NY 1 1 0
1
Hollis NY 1 1 0
1
Inwood NY 628 1 0
1
Jackson Heights NY 1 2 0
2
Richmond Hill NY 1 1 0
1
Ridgewood NY 1 1 0
1
2852Total 1 5 0
15
2853Johnston PA 143 0 1
1
2853Total 0 1
1
2854El Centro CA 342 0 1
1
Yuma AZ 321 0 1
1
2854Total 0 2
2
2869Dothan AL 246 0 1
1
2869Total 0 1
1
2874CharlottesvilVA 256 0 1
1
2874Total 0 1
1
2876Medford OR 229 0 1
1
2876Total 0 1
1
2877Chico CA 215 0 1
1
Redding CA 254 0 1
1
2877Total 0 2
2
Gran d Total 38 7 455
842
</TABLE>
Exhibit B
JRC 830 configured for debit cellular with Omni Telecommunications
software
Exhibit C
1. Revenue Sharing. STC and Thorn agree to share revenue from
Debit Code
sales to End Users on the following basis:
For the sale of Debit Codes at all stores owned and operated by
Thorn in the
Territory, End Users shall be initially charged a retail rate
("Retail Rate")
of $0.75 per airtime unit (which includes applicable Taxes). STC
shall
receive $0.48 for each airtime unit redeemed plus applicable Taxes
(at the per
unit rate set forth in the last column in Exhibit D) for the
applicable store
location. Thorn shall retain as its commission, for marketing and
billing
services, the Retail Rate less (i) STC's share of the revenues
($0.48 per
airtime unit) and (ii) Taxes for each airtime unit redeemed by
STC.
Example: If an End User purchases a Debit Code in Philadelphia, PA
for 120
airtime units at a Retail Rate of $0.75 per unit, then Thorn will
collect $90
from the End User (which will include applicable Taxes at the per
unit rate
set forth in the last column of Exhibit D). Thorn will remit to
STC $57.60
(120 units x $0.48 per unit) for STC's share of the revenues for
such sale,
plus Taxes in the amount of $11.74 (120 units x $0.0978 per unit).
Thorn
shall retain as its commission $20.66 [$90 - ($57.60 + $11.74)]
for such sale.
2. Additional Commission: STC and Thorn further agree that the
revenues that
Thorn is required to remit to STC for STC's share of Debit Codes
sales
pursuant to Paragraph 1 of this Exhibit C shall decline or
increase as the
monthly volume of units sold increases or decreases for a given
month, in
accordance with the following schedule:
Airtime Units Sold Revenue due STC
(for a given month) (per airtime unit)
0 - 208,333 $0.48
208,334 - 520,833 0.46
520,834 - 1,041,666 0.45
1,041,667 and greater 0.43
Example. In a particular month, STC redeems Debit Codes for a
total of 500,000 airtime units. The airtime unit revenues Thorn
is required to remit to STC is $230,000( 500,000 units x $0.46)for
the sale of such Debit Codes, plus all applicable Taxes. If in
the following month STC redeems Debit Codes for a total of 95,000
airtime units then Thorn would remit $45,600 (95,000 units x
$0.48) for the sale of such Debit Codes, plus all applicable
Taxes.
<TABLE>
Exhibit D
<CAPTION>
TaxIDCGS A City TelcTelcTelcTelcoTotalStatLocaMCDTTotaGTotal
Tax
<S> <C> <C>
1249Anniston AL 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
"3310Bibb,Selma,AL" 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
4041Birmingham AL 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
"6313Butler,TroyAL" 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
7940Chambers coAL 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
"8311Cleburne,TaAL" 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
"9906Coosa,TallaAL" 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
11307Decatur/FraAL 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
13246Dothan AL 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
14226Florence AL 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
15272Gadsden AL 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
17120Huntsville AL 3.0%6.700.000.00%9.7000.000.000.000.009
0.0663
"19308Jackson,Ft.AL" 3.0%6.700.000.00%9.7000.000.000.000.009
0.0663
20083Mobile AL 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
21139Montgomery AL 3.0%6.700.000.00%9.7000.000.000.000.009
0.0663
22222Tuscaloosa AL 3.0%6.700.000.00%9.7000.000.000.000.009
0.0663
24314Tuskegee AL 3.0%6.700.000.00%9.7000.000.000.000.009 0.0663
25329CleburnePraAR 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
26182FayettevillAR 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
27328ForrestCityAR 3.0%0.000.000.00%3.0007.500.000.007.501 0.0713
28165Fort Smith AR 3.0%0.000.000.00%3.0006.500.000.006.509
0.0651
"29333Garland,HotAR" 3.0%0.000.000.00%3.0006.500.000.006.509
0.0651
30327Jonesboro AR 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
31092Little RockAR 3.0%0.000.000.00%3.0007.000.000.007.001
0.0682
32324MadisonEureAR 3.0%0.000.000.00%3.0007.500.000.007.501 0.0713
33330MorriltonRuAR 3.0%0.000.000.00%3.0007.000.000.007.001 0.0682
34331Ozark AR 3.0%0.000.000.00%3.0007.000.000.007.001 0.0682
"731323Benson,SierAZ" 3.0%2.350.000.00%5.3507.000.000.007.001
0.0824
"35319Coconio,FlaAZ" 3.0%2.350.000.00%5.3505.500.000.005.501
0.0734
"36322Gila,CasaGrAZ" 3.0%2.350.000.00%5.3508.000.000.008.001
0.0883
37320Navajo/WinsAZ 3.0%2.350.000.00%5.3505.000.000.005.001 0.0703
38026Phoenix AZ 3.0%2.350.000.00%5.3505.752.700.008.451 0.0909
39077Tucson AZ 3.0%2.350.000.00%5.3505.752.000.007.751 0.0869
40321Yuma AZ 3.0%2.350.000.00%5.3505.000.000.005.001 0.0703
41097BakersfieldCA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
43215Chico CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
"44336DelNorte,EuCA" 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
45074Fresno CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
46345GrassValleyCA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
"47347Kings,LemooCA" 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
48002Los AngelesCA 3.0%0.7210.00.00%13.720.000.000.000.001 0.0905
49344Mendocino CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
"51339Merced,MadeCA" 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
52142Modesto CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
"53337Modoc,SusanCA" 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
"55341Mono,BishopCA" 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
57144Orange CounCA 3.0%0.721.500.00%5.2200.000.000.000.005
0.0372
58073Oxnard/VentCA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
59254Redding CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
60035Sacramento CA 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
61126Salinas-MonCA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
62018San Diego CA 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
63007San FrancisCA 3.0%0.725.500.00%9.2200.000.000.000.009 0.0633
64027San Jose CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
65340SanBenitoSaCA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
66124Santa BarbaCA 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
67175Santa Cruz CA 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
68123Santa Rosa-CA 3.0%0.720.000.00%3.7200.000.000.000.003
0.0269
69107Stockton CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
70343Tehama CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
71111Vallejo/NapCA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
72150Visalia CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
73274Yuba City CA 3.0%0.720.000.00%3.7200.000.000.000.003 0.0269
74354Alamosa CO 3.0%0.000.000.00%3.0003.004.300.007.301 0.07
75117Colorado SpCO 3.0%0.000.000.00%3.0003.004.300.007.301 0.07
76019Denver CO 3.0%0.000.000.00%3.0003.004.300.007.301 0.07
77210Fort CollinCO 3.0%0.000.000.00%3.0003.004.300.007.301 0.07
78243Greeley CO 3.0%0.000.000.00%3.0003.004.300.007.301 0.07
"79355LaMar,LaJunCO" 3.0%0.000.000.00%3.0003.004.300.007.301
0.07
80352Limon CO 3.0%0.000.000.00%3.0003.004.300.007.301 0.07
81241Pueblo CO 3.0%0.000.000.00%3.0003.004.300.007.301 0.07
82356Trinidad CO 3.0%0.000.000.00%3.0003.004.300.007.301 0.07
83350VailAspenDiCO 3.0%0.000.000.00%3.0003.004.300.007.301 0.07
84042Bridgeport CT 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
85032Hartford CT 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
86357Litchfield CT 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
87049New Haven CT 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
88154New London-CT 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
89358Windham CT 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
90008Washington DC 3.0%0.000.000.00%3.0005.750.000.005.758
0.0603
91069Wilmington DE 3.0%0.000.000.00%3.0004.250.000.004.257
0.0507
92211Bradenton FL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
"93931Citrus,HernFL" 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
94360Collier couFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
"95365Dixie,GilchFL" 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
97364Flagler couFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
98164Fort Myers FL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
100208Fort PierceFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
101265Fort WaltonFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
102192GainesvilleFL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
104932Glades counFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
"106362Hardee,DeSoFL" 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
"107901Hendry,ClewFL" 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
"108367Jefferson,MFL" 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
110370Keys FL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
111952Lafayette cFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
113363Lake countyFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
114366LakeCityLivFL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
115114Lakeland FL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
"116369Marianna,ChFL" 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
118012Miami/Ft. LFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
119937Monroe FL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
120245Ocala FL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
"121060Orlando,AltFL" 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
122283Panama CityFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
123127Pensacola FL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
124368Port Saint FL
3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
126951Putnam counFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
128167Sarasota FL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
129949Sumter counFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
130168TallahasseeFL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
132022Tampa FL 3.0%2.500.000.00%5.5007.000.000.007.001 0.0833
133361VeroBeach FL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
134976Walton CounFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
136072West Palm BFL 3.0%2.500.000.00%5.5007.000.000.007.001
0.0833
137261Albany GA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
138380Ashburn GA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
139234Athens GA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
141017Atlanta GA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
143108Augusta/AikGA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"144382Brunswick,SGA" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
145373ChattoogaRoGA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
146153Columbus GA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
147379CrispClayTeGA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"148372Dawson,GainGA" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"149383Early,BainbGA" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"150374Jasper,EatoGA" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
152138Macon-WarneGA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
153933Preston GA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
154155Savannah GA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"155376Spalding,GrGA" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
156942TaylorTalboGA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
157381Toombs/WaycGA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"159378Warren,StatGA" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
160371Whitfield/DGA 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"161979Wilkes,LincGA" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"162384Worth,Tift,GA" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
164050Honolulu HI 3.0%5.880.000.00%8.8854.500.000.004.501 0.0885
165387Kailua KonaHI 3.0%5.880.000.00%8.8854.500.000.004.501
0.0885
167386Kalawao/MauHI 3.0%5.880.000.00%8.8854.500.000.004.501 0.0885
168385Kauai HI 3.0%5.880.000.00%8.8854.500.000.004.501 0.0885
"169421Ames,Boone,IA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"171418Atlantic,CaIA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
173195Cedar RapidIA 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
175424CharlesCityIA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
177964ClintonJackIA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
178098Davenport IA 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
179102Des Moines IA 3.0%0.000.000.00%3.000N/A
0.000.000.003
0.0218
181286Dubuque IA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
"183417Grinnell,NeIA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"184422Hardin,MarsIA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"185420Ida,Sac,CalIA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
186423IndependnceIA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
187296Iowa City IA 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
189416Jones countIA 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"191425Kossuth,MasIA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
192427Lyon/LeMarsIA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
"193412Mills,Red" OIA 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
194419Monona/OnawIA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
"195414Monroe,OttuIA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
197415Muscatine/BIA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
198253Sioux City IA 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"199413Union,OsceoIA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
201201Waterloo IA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
203190Boise City ID 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
204393Clark/PocatID 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
205388Coeurd'AlenID 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"206391Elmore,NampID" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
207390Lemhi ID 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"209389Payette,EmmID" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
"211392SunValley,CID" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
213935TwinFallsBuID 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"214397Adams,QuincIL" 3.0%5.000.000.00%8.0000.000.000.000.008
0.0556
215303Aurora-ElgiIL 3.0%5.000.000.00%8.0000.000.000.000.008 0.0556
"217395Bureau,LaSaIL" 3.0%5.000.000.00%8.0000.000.000.000.008
0.0556
218003Chicago IL 3.0%5.005.000.00%13.000.000.000.000.001 0.0863
220394FreeportDekIL 3.0%5.000.000.00%8.0000.000.000.000.008 0.0556
221304Joliet IL 3.0%5.000.000.00%8.0000.000.000.000.008 0.0556
223273Kankakee IL 3.0%5.000.000.00%8.0000.000.000.000.008 0.0556
225943Logan countIL 3.0%5.000.000.00%8.0000.000.000.000.008
0.0556
"226396Macomb,GaleIL" 3.0%5.000.000.00%8.0000.000.000.000.008
0.0556
228103Peoria IL 3.0%5.000.000.00%8.0000.000.000.000.008 0.0556
230217Anderson IN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
231282BloomingtonIN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
232223Elkhart-GosIN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
233119Evansville IN 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
234054Gary IN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
236028IndianapoliIN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
238271Kokomo IN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
"239404Kosciusko,WIN" 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
240247Lafayette-WIN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
241959LaPorte/MicIN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
"242406Miami,LoganIN" 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
243236Muncie IN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
244409OwenJasperVIN 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
"245408Randolph,RiIN" 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
247403Rensselaer IN 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
248129South Bend IN 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
"249407Warren,CrawIN" 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
"737432Brown,LeaveKS" 3.0%0.000.000.00%3.0005.900.000.005.908
0.0613
"250428Cheyenne,GoKS" 3.0%0.000.000.00%3.0006.900.000.006.909
0.0676
"251440Edwards,PraKS" 3.0%0.000.000.00%3.0005.900.000.005.908
0.0613
252442Elk KS 3.0%0.000.000.00%3.0005.900.000.005.908 0.0613
"254437Franklin,IoKS" 3.0%0.000.000.00%3.0006.400.000.006.409
0.0644
"256438Hamilton,GaKS" 3.0%0.000.000.00%3.0005.400.000.005.408
0.0581
"257439Hodgeman,DoKS" 3.0%0.000.000.00%3.0006.400.000.006.409
0.0644
"258430Jewell,ConcKS" 3.0%0.000.000.00%3.0005.900.000.005.908
0.0613
260301Lawrence KS 3.0%0.000.000.00%3.0006.900.000.006.909 0.0676
261431MarshallJunKS 3.0%0.000.000.00%3.0007.150.000.007.151 0.0691
"263436Morris,EmpoKS" 3.0%0.000.000.00%3.0005.900.000.005.908
0.0613
"265429Norton,StocKS" 3.0%0.000.000.00%3.0005.400.000.005.408
0.0581
"266441Reno,HutchiKS" 3.0%0.000.000.00%3.0005.900.000.005.908
0.0613
"268435Salina,EalsKS" 3.0%0.000.000.00%3.0005.900.000.005.908
0.0613
270179Topeka KS 3.0%0.000.000.00%3.0006.150.000.006.159 0.0629
"271434Trego,Hays" KS 3.0%2.350.000.00%5.3505.900.000.005.901
0.0758
"272433Wallace,OakKS" 3.0%0.000.000.00%3.0005.900.000.005.908
0.0613
273089Wichita KS 3.0%0.000.000.00%3.0006.900.000.006.909 0.0676
"274453Clay,MiddleKY" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"275451Elliott,PikKY" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
276449Frankfort KY 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"277443Fulton,PaduKY" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
278116Lexington-FKY 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
279037Louisville KY 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"281445Meade,BowliKY" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
282293Owensboro KY 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"283452Powell,HazaKY" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"284444Union,MadisKY" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
285956WilliamstowKY 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
287080Baton RougeLA 3.0%0.000.000.00%3.0003.000.000.003.006
0.0425
289461Destrehan/LLA 3.0%0.000.000.00%3.0003.000.000.003.006 0.0425
290458EvangelineALA 3.0%0.000.000.00%3.0003.000.000.003.006 0.0425
291184Houma-ThiboLA 3.0%0.000.000.00%3.0003.000.000.003.006 0.0425
292459IbervilleMoLA 3.0%0.000.000.00%3.0003.000.000.003.006 0.0425
293460Kentwood/HaLA 3.0%0.000.000.00%3.0003.000.000.003.006 0.0425
294174Lafayette LA 3.0%0.000.000.00%3.0003.000.000.003.006
0.0425
295029New OrleansLA 3.0%0.000.000.00%3.0003.000.000.003.006 0.0425
296100Shreveport LA 3.0%0.000.000.00%3.0003.000.000.003.006
0.0425
297471Barnstable/MA 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
298006Boston MA 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
"299470Franklin,GrMA" 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
300076New BedfordMA 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
301213Pittsfield MA 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
302063SpringfieldMA 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
303055Worcester MA 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
304014Baltimore MD 3.0%2.000.000.00%5.0005.000.000.005.001
0.0682
305269Cumberland MD 3.0%2.000.000.00%5.0005.000.000.005.001
0.0682
"306467Garrett,McHMD" 3.0%2.000.000.00%5.0005.000.000.005.001
0.0682
307257Hagerstown MD 3.0%2.000.000.00%5.0005.000.000.005.001
0.0682
308224Bangor ME 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"309465Kennebec,AuME" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
310279Lewiston-AuME 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"311463Oxford,RumfME" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
312464Somerset ME 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"313466Washington,ME" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
314005Detroit MI 3.0%0.005.000.00%8.0006.000.000.006.001 0.0921
315068Flint MI 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
316141Duluth/SupeMN 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
"317485Lake,TwoHarMN" 3.0%0.000.000.00%3.0006.500.000.006.509
0.0651
318015MinneapolisMN 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
733288Rochester MN 3.0%0.000.000.00%3.0006.500.000.006.509
0.0651
319482Thief RiverMN 3.0%0.000.000.00%3.0006.500.000.006.509
0.0651
"734504Atchison,MaMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"320517Aurora,MoneMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"321512Bates,HenryMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"322511Callaway,JoMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
323507Cameron MO 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
"324915Collins,OscMO" 3.0%0.000.000.00%3.0006.100.000.006.109
0.0626
326278Columbia MO 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
"327505Harrison,BeMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
328514Jeff.City MO 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
329239Joplin MO 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
330024Kansas CityMO 3.0%0.000.000.00%3.000N/A
0.000.000.003
0.0218
"331519Laclede,LebMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"333508Linn,MoberlMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"334515Maries,RollMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"335509Marion,HannMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"336513OsageBeach,MO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"337521Perry,CapeGMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"338506Schuyler,KiMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"340520Shannon,FreMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
341163SpringfieldMO 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
342275St. Joseph MO 3.0%0.000.000.00%3.000N/A
0.000.000.003
0.0218
343011St. Louis MO 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"344522Stoddard,SiMO" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
345518StoneW.PlaiMO 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
347516WashingtonFMO 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
"349530Beaverhead,MT" 3.0%1.800.000.00%4.8000.000.000.000.004
0.0344
350268Billings MT 3.0%1.800.000.00%4.8000.000.000.000.004 0.0344
351528Butte MT 3.0%1.800.000.00%4.8000.000.000.000.004 0.0344
352531CarbonHardiMT 3.0%1.800.000.00%4.8000.000.000.000.004 0.0344
"353526Daniels,GleMT" 3.0%1.800.000.00%4.8000.000.000.000.004
0.0344
354297Great FallsMT 3.0%1.800.000.00%4.8000.000.000.000.004
0.0344
"355523Kalispell,LMT" 3.0%1.800.000.00%4.8000.000.000.000.004
0.0344
"356529Lewistown,BMT" 3.0%1.800.000.00%4.8000.000.000.000.004
0.0344
"357527Missoula,HeMT" 3.0%1.800.000.00%4.8000.000.000.000.004
0.0344
"358525Phillips,GlMT" 3.0%1.800.000.00%4.8000.000.000.000.004
0.0344
"359532Prairie,MilMT" 3.0%1.800.000.00%4.8000.000.000.000.004
0.0344
"360524Toole,HavreMT" 3.0%1.800.000.00%4.8000.000.000.000.004
0.0344
"361567Ashe,Mount" NC 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
362183Asheville NC 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
"363972Bladen,RobeNC" 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
365280Burlington NC 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
"367573Camden,ElizNC" 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
369061Charlotte NC 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
370149FayettevillNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
"372577Greene,New" NC 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
374047Greensboro/NC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
376568HendersonviNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
377166Hickory NC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
378258JacksonvillNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
380569Laurinburg NC 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
"381973Lee,ChathamNC" 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
383566LenoirCaldwNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
384904LincolnClevNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
385579MocksvilleDNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
"386570Moore,SouthNC" 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
388572NorthamptonNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
390578Pitt/GreenvNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
392071Raleigh-DurNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
394571Reidsville NC 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
396948Rockingham NC 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
397975RoxboroHendNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
"399576Sampson,CliNC" 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
401574Smithfield/NC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
"403926Stanly,CabaNC" 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
404971StatesvilleNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
405575WhitevilleCNC 3.0%3.220.000.00%6.2206.500.000.006.501 0.0846
407218Wilmington NC 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
"409908Yancey,MitcNC" 3.0%3.220.000.00%6.2206.500.000.006.501
0.0846
410298Bismarck/MaND 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
411581Devils LakeND 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
412583Dickinson ND 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"413580Divide,MinoND" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
414221Fargo-MoorhND 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"416582Grafton,MayND" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
418276Grand ForksND 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
420584Jamestown ND 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
421537BooneColumCNE 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"422542Cass,BeatriNE" 3.0%0.000.000.00%3.0006.500.000.006.509
0.0651
"423540Chase,McCooNE" 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
"424534Cherry,ValeNE" 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
"425536Grant,St." PNE 3.0%0.000.000.00%3.0005.000.000.005.008
0.0556
426539HallSewardYNE 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"427541Hasting,AdaNE" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"428535Knox,NorfolNE" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
429172Lincoln NE 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
430065Omaha NE 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
431538PlatteKeyKeNE 3.0%0.000.000.00%3.0005.000.000.005.008 0.0556
"432548Coos," LebanNH 3.0%5.500.000.00%8.5000.000.000.000.008
0.0588
433133Manchester-NH 3.0%5.500.000.00%8.5000.000.000.000.008 0.0588
434134Atlantic CiNJ 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
435070Long BranchNJ 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
436062New BrunswiNJ 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
437086AlbuquerqueNM 3.0%0.000.000.33%3.3305.560.000.005.568 0.0612
"438554Colfax,SpriNM" 3.0%0.000.000.33%3.3306.190.000.006.189
0.0652
439934Curry CountNM 3.0%0.000.000.33%3.3305.380.000.005.378
0.0601
"440557Grant,DeminNM" 3.0%0.000.000.33%3.3306.440.000.006.439
0.0667
441558HobbsRoswelNM 3.0%0.000.000.33%3.3306.000.000.006.009 0.064
"442917Lea,Chaves,NM" 3.0%0.000.000.33%3.3305.940.000.005.939
0.0636
443553San "Juan,FaNM" 3.0%0.000.000.33%3.3305.940.000.005.939
0.0636
444556Sante "Fe,LoNM" 3.0%0.000.000.33%3.3306.250.000.006.259
0.0656
446543Humboldt/WiNV 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"447544Lander,ElkoNV" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
448093Las Vegas NV 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
"449546Mineral,HawNV" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
450171Reno NV 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"451545Storey,GardNV" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
"452547WhitePine,ENV" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
453044Albany NY 3.0%3.502.500.00%9.0008.000.000.008.001 0.109
454122Binghamton NY 3.0%3.502.500.00%9.0008.000.000.008.001
0.109
455025Buffalo NY 3.0%3.502.500.00%9.0008.000.000.008.001 0.109
456561ChautauquaFNY 3.0%3.502.500.00%9.0007.000.000.007.001 0.1034
457564Columbia NY 3.0%3.502.500.00%9.0008.000.000.008.001 0.109
458151Dutchess coNY 3.0%3.502.500.00%9.0007.250.000.007.251 0.1048
459284Elmira NY 3.0%3.502.500.00%9.0007.000.000.007.001 0.1034
460560FranklinPlaNY 3.0%3.502.500.00%9.0007.000.000.007.001 0.1034
461977Fulton counNY 3.0%3.502.500.00%9.0007.000.000.007.001
0.1034
462266Glens FallsNY 3.0%3.502.500.00%9.0007.000.000.007.001
0.1034
463562Ithaca NY 3.0%3.502.500.00%9.0008.000.000.008.001 0.109
"464559Jefferson,WNY" 3.0%3.502.500.00%9.0007.000.000.007.001
0.1034
465001New York NY 3.0%3.502.500.00%9.0008.250.000.008.251 0.1103
466900Orange CounNY 3.0%3.502.500.00%9.0007.250.000.007.251
0.1048
"467563Ostego,DelaNY" 3.0%3.502.500.00%9.0007.000.000.007.001
0.1034
468034Rochester NY 3.0%3.502.500.00%9.0008.000.000.008.001
0.109
469053Syracuse NY 3.0%3.502.500.00%9.0007.000.000.007.001 0.1034
470115Utica-Rome NY 3.0%3.502.500.00%9.0008.000.000.008.001
0.109
471052Akron OH 3.0%0.000.000.00%3.0005.750.000.005.758 0.0603
472587Ashtabula OH 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
473594Athens OH 3.0%0.000.000.00%3.0006.250.000.006.259 0.0635
474087Canton OH 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
475023Cincinnati OH 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
476016Cleveland OH 3.0%0.000.000.00%3.0007.000.000.007.001
0.0682
477595Columbiana OH 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
478031Columbus OH 3.0%0.000.000.00%3.0005.750.000.005.758 0.0603
479040Dayton OH 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
480145Hamilton OH 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
481589HancockFindOH 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
482158Lima OH 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
483958Logan OH 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
484136Lorain-ElyrOH 3.0%0.000.000.00%3.0005.750.000.005.758 0.0603
485231Mansfield OH 3.0%0.000.000.00%3.0005.750.000.005.758
0.0603
"486588Mercer,SidnOH" 3.0%0.000.000.00%3.0006.500.000.006.509
0.0651
487590NewarkWoostOH 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"488591Noble,MonroOH" 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
489593RossJacksonOH 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
490586Sandusky OH 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
491180SpringfieldOH 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
492199SteuebenvilOH 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
493048Toledo OH 3.0%0.000.000.00%3.0006.500.000.006.509 0.0651
494592WashingtonCOH 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"495585Williams,DeOH" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
496066Youngstown-OH 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
497957Zanesville OH 3.0%0.000.000.00%3.0006.500.000.006.509
0.0651
"498604Garvin,ArdmOK" 3.0%0.000.000.00%3.0004.502.000.006.509
0.0651
"500598Grant,StillOK" 3.0%0.000.000.00%3.0004.503.000.007.501
0.0713
"501907Harmon,GreeOK" 3.0%0.000.000.00%3.0004.501.000.005.508
0.0588
502936HugoAntlersOK 3.0%0.000.000.00%3.0004.504.000.008.501 0.0774
"504603Jackson," DuOK 3.0%0.000.000.00%3.0004.502.500.007.001
0.0682
505260Lawton OK 3.0%0.000.000.00%3.0004.503.250.007.751 0.0728
506605McCurtain OK 3.0%0.000.000.00%3.0004.502.000.006.509
0.0651
"507599Nowata,BartOK" 3.0%0.000.000.00%3.0004.504.000.008.501
0.0774
508045Oklahoma CiOK 3.0%0.000.000.00%3.0004.503.870.008.371 0.0766
"509601Seminole,HeOK" 3.0%0.000.000.00%3.0004.503.500.008.001
0.0743
510057Tulsa OK 3.0%0.000.000.00%3.0004.503.000.007.501 0.0713
"511609Albany,CorvOR" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
"512606Clatsop,AstOR" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
"513611Crook,Bend,OR" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
514135Eugene-SpriOR 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"515610GrantsPass,OR" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
516607Hood "River,OR"
3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
517229Medford OR 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
518030Portland OR 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
519148Salem OR 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"520608Umatilla,PeOR" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
522225Altoona PA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
523621Bedford couPA 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
"524615Bradford,SaPA" 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
525909ChambersburPA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
526130Erie PA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
527084Harrisburg PA 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
528143Johnstown PA 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
529925Juniata CouPA 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
530105Lancaster PA 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
531924Lawrence coPA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
532623Lebanon PA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
"533619Lewisburg,SPA" 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
534004PhiladelphiPA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
535013Pittsburgh PA 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
"536614Potter,ClinPA" 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
"537056Scranton,WiPA" 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
538238Sharon PA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
539259State CollePA 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
540612TitusvilleMPA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
"541616Wayne,HonesPA" 3.0%5.000.000.00%8.000N/A
0.000.000.008 0.0556
543251WilliamsporPA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
544099York PA 3.0%5.000.000.00%8.000N/A 0.000.000.008
0.0556
545624Newport RI 3.0%0.000.000.00%3.0007.000.000.007.001 0.0682
546038Providence RI 3.0%0.000.000.00%3.0007.000.000.007.001
0.0682
"547626Abbeville,GSC" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
548227Anderson SC 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"549631Calhoun,OraSC" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
550921Camden SC 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
552090Charleston SC 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
553627CherokeeCheSC 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
554630ClarendonSuSC 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
555095Columbia SC 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"556628Darlington,SC" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
558264Florence SC 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
559067GreenvilleSSC 3.0%0.000.000.00%3.0006.000.000.006.009 0.0619
"560632HiltonHead,SC" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"561633Lancaster,YSC" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
562629Myrtle BeacSC 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"563625Oconee,WalhSC" 3.0%0.000.000.00%3.0006.000.000.006.009
0.0619
"564641Brookings,HSD" 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
"565635Corson,MobrSD" 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
"566638Custer,Hot" SD 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
"567639Haakon,Ft." SD 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
"568634Harding,SpeSD" 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
"569637Marshall,WaSD" 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
570636McPherson/ASD 3.0%0.000.000.00%3.0004.000.000.004.007 0.0491
571289Rapid City SD 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
572267Sioux FallsSD 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
"573640Sully,ChambSD" 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
574642Vermillion SD 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
575643BentonCarroTN 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
576649BledsoeRheaTN 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
"577644Cannon,MancTN" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
578088ChattanoogaTN 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
579209ClarksvilleTN 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
"580647Fayette," JaTN 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"581648Giles,FayetTN" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"583646Hamblen,GreTN" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
584910JeffersonCoTN 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
"585650Johnson,MouTN" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
586079Knoxville TN 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"588903Lake,DyersbTN" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"589645Macon,CookeTN" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
591651Maury/ColumTN 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
592911McMinnPolkMTN 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
593036Memphis TN 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
594046Nashville TN 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
595085Tri-Cities/TN 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
597220Abilene TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
"598663Alpine,Van" TX 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"599913Anderson,HoTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"600670Atascosa,KiTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
601075Austin TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
602101Beaumont-PoTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
603666BoerneFredeTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
"604655Briscoe,ChiTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
605672Chambers CoTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
"606912Concho,MenaTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
608112Corpus ChriTX 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
609009Dallas TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
610920DeltaHopkinTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
"611669Dilley,HondTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"612659Gaines,Big" TX 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
613170Galveston TX 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"614656Hardeman,VeTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
615928Hillsboro TX 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
616010Houston TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
618160Killeen-TemTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
619281Laredo TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
620914LimestoneFaTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
621206Longview-MaTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
"622665Loving,MonaTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
623161Lubbock TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
624295Midland TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
735668Newton/HuntTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
625255Odessa TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
"626654Parmer,LittTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"627664Pecos,Ft.StTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
"628918Rusk,PanolaTX" 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
629294San Angelo TX 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
630292Sherman-DenTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
631237Tyler TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
632919UpshurMarioTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
633300Victoria TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
634194Waco TX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
635233Wichita FalTX 3.0%0.000.000.00%3.0008.250.000.008.251
0.0758
636671WilsonBVillTX 3.0%0.000.000.00%3.0008.250.000.008.251 0.0758
637673BrighamCityUT 3.0%0.000.000.00%3.0005.880.000.005.878 0.0611
"638674DeerValley,UT" 3.0%0.000.000.00%3.0005.880.000.005.878
0.0611
639159Provo-Orem UT 3.0%0.000.000.00%3.0005.880.000.005.878
0.0611
640039Salt Lake CUT 3.0%0.000.000.00%3.0005.880.000.005.878
0.0611
"641688Amelia,BrodVA" 3.0%0.000.000.00%3.0004.500.000.004.507
0.0523
"642685Bath,CovingVA" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
"643947Bedford,FraVA" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
"644687Buckingham,VA" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
646930Caroline coVA 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
647256CharlottesvVA 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"649922Culpepper,MVA" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
650262Danville VA 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"651682Grayson,SmyVA" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
653689GreensvilleVA 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
655923Louisa counVA 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
656203Lynchburg VA 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
658684MartinsvillVA 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
660686Nelson counVA 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
661104Newport NewVA 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
663043Norfolk-VA VA 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
665235Petersburg-VA 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
667929Prince EdwaVA 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
669059Richmond VA 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
670157Roanoke VA 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"671974Tazewell,BlVA" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
"672681Wise,NortonVA" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
738927Barre VT 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
673680BenningtonWVT 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
674248Burlington VT 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
"675679Franklin,MoVT" 3.0%0.000.000.00%3.0000.000.000.000.003
0.0218
676905RutlandAddiVT 3.0%0.000.000.00%3.0000.000.000.000.003 0.0218
"677693Anacortes,BWA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
678270Bellingham WA 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
679212Bremerton WA 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
"680695Ferry,CheweWA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
681697Kittitas WA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
"682694Okanogan,WeWA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
683242Olympia WA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
"684698Pacific,LonWA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
685214Richland-KeWA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
686020Seattle-EveWA 3.0%0.006.000.00%9.000N/A 0.000.000.009
0.0619
687696SheltonAberWA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
"689699Skamania,UnWA" 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
690109Spokane WA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
691082Tacoma WA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
692700Walla WallaWA 3.0%0.000.000.00%3.000N/A
0.000.000.003 0.0218
693191Yakima WA 3.0%0.000.000.00%3.000N/A 0.000.000.003
0.0218
694125Appleton WI 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
"695717Door,ManitoWI" 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
696232Eau Claire WI 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
697944Fond du LacWI
3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
698186Green Bay WI 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
699216Janesville-WI 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
700244Kenosha WI 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
701290LaCrosse WI 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
702113Madison WI 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
703711Marinette WI 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
704021Milwaukee WI 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
"705712Pierce,MenoWI" 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
706716Portage-LakWI 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
707189Racine WI 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
708277Sheboygan WI 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
709713TrempealeauWI 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
"710715Vernon,PlatWI" 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
712263Wausau WI 3.0%0.000.000.00%3.0005.500.000.005.508 0.0588
"713714Wood," SteveWI 3.0%0.000.000.00%3.0005.500.000.005.508
0.0588
714140Charleston WV 3.0%4.000.000.00%7.0000.000.000.000.007
0.0491
715704GrantBerk.HWV 3.0%4.000.000.00%7.0000.000.000.000.007 0.0491
716110Huntington-WV 3.0%4.000.000.00%7.0000.000.000.000.007 0.0491
"717706Lincoln,LogWV" 3.0%4.000.000.00%7.0000.000.000.000.007
0.0491
"718701Mason,RipleWV" 3.0%4.000.000.00%7.0000.000.000.000.007
0.0491
719703Morgantown WV 3.0%4.000.000.00%7.0000.000.000.000.007
0.0491
720200ParkersburgWV 3.0%4.000.000.00%7.0000.000.000.000.007 0.0491
"721707Raleigh,BecWV" 3.0%4.000.000.00%7.0000.000.000.000.007
0.0491
"722705Tucker,ElkiWV" 3.0%4.000.000.00%7.0000.000.000.000.007
0.0491
"736702Wetzel,WestWV" 3.0%4.000.000.00%7.0000.000.000.000.007
0.0491
723178Wheeling WV 3.0%4.000.000.00%7.0000.000.000.000.007 0.0491
724299Casper WY 3.0%0.000.000.00%3.0004.000.000.004.007 0.0491
"726721Cheyenne,LaWY" 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
"728722Converse,DoWY" 3.0%0.000.000.00%3.0004.000.000.004.007
0.0491
730719Sheridan WY 3.0%0.000.000.00%3.0004.000.000.004.007 0.0491
</TABLE>
Exhibit E
1. Monthly Access Charges
Thorn shall pay to STC a monthly access charge of $25 for each MIN
that is provided by STC for use with a Debit Phone in the
Territory plus applicable Taxes at the rates set forth in the
column labeled: "Grand Total Tax" in -Exhibit D, subject to the
following. Charges for a partial month will be pro-rated on the
basis of a thirty (30) day month The access charges paid by
Thorn shall be reduced as described below based on utilization
("Utilization") by End Users during each month during the term of
this Agreement. Utilization will be calculated in accordance with
the following formula:
Number of MINs in service for End Users in a particular month for
which STC has redeemed at least one Debit Code during such month,
divided by Total MINs, as hereinafter defined. Total MINs shall
mean the number of MINs in service on the first day of the
applicable month plus fifty percent (50%) of any MINs activated by
STC during such month and less fifty percent (50%) of any MINs
that are deactivated by STC during such month.
The credit for access charges based on Utilization is as follows:
Credit Utilization
0 Up to 49.9 %
$1.00 per MIN 50% up to 59.9 %
$3.00 per MIN 60% up to 69.9 %
$5.00 per MIN 70% and greater
2. Extraordinary Charges
The following Extraordinary Charges apply to each MIN provided by
STC for use with a Debit Phone in the Territory:
(a) Activation Fee: This is a one-time charge to initiate service
for each MIN. STC will not charge an Activation Fee for each MIN.
However, Thorn shall reimburse STC for any Activation Fees
assessed by a Carrier for a particular MIN reserved by STC for use
by End Users pursuant to this
Agreement.
(b) Suspension Fee: This is a charge to temporarily suspend
service for a MIN. STC will charge a Suspension Fee in the amount
of $20 whenever Thorn notifies STC to suspend service for a
particular MIN. While service is suspended for a particular MIN,
the monthly access charges identified in Paragraph 1 above
will not apply. Notwithstanding the foregoing, Thorn shall
reimburse STC for any monthly access charges assessed by a Carrier
while a particular MIN is under suspension.
(c) Deactivation Fee: This is a charge to terminate service for a
MIN. STC will charge a Deactivation Fee in the amount of $15 for
each MIN and Thorn will pay such fees to STC. In addition, Thorn
will reimburse STC for any charges assessed by a Carrier in
connection with the termination of a MIN.
(d) Reconnect Fee: This is a charge to initiate service for a
suspended MIN. STC will charge a Reconnect Fee in the amount of
$30 per MIN and Thorn will pay such fees to STC
(e) ESN/MIN Swap Fee: This is a charge to change the MIN assigned
to the ESN associated with a particular Debit Phone. STC will
charge an ESN/MIN Swap Fee in the amount of $15 per Debit Phone
for each request and Thorn will pay such fees to STC.
(f) Stolen Phone Report Fee: STC will charge this fee to process a
stolen phone report with a Carrier. STC will charge a Stolen
Phone Report Fee in the amount of $15 per Debit Phone for each
request and Thorn will pay such fees to STC.
Exhibit 21
Subsidiaries of Shared Technologies Cellular, Inc.
1. Cellular Hotline, Inc.
2. STC Europe, Ltd.
Operations of this subsidiary were immaterial for fiscal
1997 and were discontinued in the first quarter of 1998.
[TYPE] EX-27
[DESCRIPTION] ART. 5 FDS FOR YEAR END 10-K
[ARTICLE] 5
[MULTIPLIER] 1000
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1997
[PERIOD-START] JAN-01-1997
[PERIOD-END] DEC-31-1997
[CASH] 294
[SECURITIES] 0
[RECEIVABLES] 2628
[ALLOWANCES] 991
[INVENTORY] 131
[CURRENT-ASSETS] 2459
[PP&E] 3176
[DEPRECIATION] 2191
[TOTAL-ASSETS] 11536
[CURRENT-LIABILITIES] 9414
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 72
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 11536
[SALES] 24198
[TOTAL-REVENUES] 24198
[CGS] 13531
[TOTAL-COSTS] 14120
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 232
[INCOME-PRETAX] (3685)
[INCOME-TAX] 10
[INCOME-CONTINUING] (3695)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (3695)
<EPS-BASIC> (0.63)
[EPS-DILUTED] (0.63)
