VIRGINIA
|
|
54-1162807
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
o
|
Accelerated filer
þ
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
|
|
Page
|
|
|
Numbers
|
|
|
|
PART I.
|
FINANCIAL INFORMATION
|
|
|
|
|
Item 1.
|
Financial Statements
|
|
|
|
|
|
3-4
|
|
|
|
|
|
5
|
|
|
|
|
|
6
|
|
|
|
|
|
7-8
|
|
|
|
|
|
9-13
|
|
|
|
|
Item 2.
|
14-25
|
|
|
|
|
Item 3.
|
26
|
|
|
|
|
Item 4.
|
27
|
|
|
|
|
PART II.
|
OTHER INFORMATION
|
|
|
|
|
Item 1A.
|
28
|
|
|
|
|
Item 2.
|
28
|
|
|
|
|
Item 6.
|
29
|
|
|
|
|
|
30
|
|
|
|
|
|
31
|
ASSETS
|
March 31,
2014
|
December 31,
2013
|
||||||
|
|
|
||||||
Current Assets
|
|
|
||||||
Cash and cash equivalents
|
$
|
53,681
|
$
|
38,316
|
||||
Accounts receivable, net
|
25,538
|
25,824
|
||||||
Income taxes receivable
|
7,745
|
16,576
|
||||||
Materials and supplies
|
8,577
|
10,715
|
||||||
Prepaid expenses and other
|
5,626
|
5,580
|
||||||
Deferred income taxes
|
1,169
|
963
|
||||||
Total current assets
|
102,336
|
97,974
|
||||||
|
||||||||
Investments, including $
2,544 and $2,528
carried at fair value
|
9,463
|
9,332
|
||||||
|
||||||||
Property, plant and equipment, net
|
405,729
|
408,963
|
||||||
|
||||||||
Other Assets
|
||||||||
Intangible assets, net
|
69,991
|
70,816
|
||||||
Deferred charges and other assets, net
|
9,076
|
9,921
|
||||||
Net other assets
|
79,067
|
80,737
|
||||||
Total assets
|
$
|
596,595
|
$
|
597,006
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
March 31,
2014
|
December 31,
2013
|
||||||
|
|
|
||||||
Current Liabilities
|
|
|
||||||
Current maturities of long-term debt
|
$
|
11,500
|
$
|
5,750
|
||||
Accounts payable
|
5,727
|
12,604
|
||||||
Advanced billings and customer deposits
|
12,042
|
11,661
|
||||||
Accrued compensation
|
2,633
|
4,192
|
||||||
Accrued liabilities and other
|
9,242
|
9,787
|
||||||
Total current liabilities
|
41,144
|
43,994
|
||||||
|
||||||||
Long-term debt, less current maturities
|
218,500
|
224,250
|
||||||
|
||||||||
Other Long-Term Liabilities
|
||||||||
Deferred income taxes
|
72,202
|
74,547
|
||||||
Deferred lease payable
|
6,393
|
6,156
|
||||||
Asset retirement obligations
|
6,611
|
6,485
|
||||||
Other liabilities
|
8,137
|
7,259
|
||||||
Total other liabilities
|
93,343
|
94,447
|
||||||
|
||||||||
Commitments and Contingencies
|
||||||||
|
||||||||
Shareholders' Equity
|
||||||||
Common stock
|
27,783
|
26,759
|
||||||
Accumulated other comprehensive income
|
2,247
|
2,594
|
||||||
Retained earnings
|
213,578
|
204,962
|
||||||
Total shareholders' equity
|
243,608
|
234,315
|
||||||
|
||||||||
Total liabilities and shareholders' equity
|
$
|
596,595
|
$
|
597,006
|
|
Three Months Ended
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Operating revenues
|
$
|
80,452
|
$
|
76,010
|
||||
|
||||||||
Operating expenses:
|
||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
32,236
|
30,700
|
||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
17,149
|
16,129
|
||||||
Depreciation and amortization
|
15,387
|
13,972
|
||||||
Total operating expenses
|
64,772
|
60,801
|
||||||
Operating income
|
15,680
|
15,209
|
||||||
|
||||||||
Other income (expense):
|
||||||||
Interest expense
|
(2,048
|
)
|
(2,152
|
)
|
||||
Gain (loss) on investments, net
|
(18
|
)
|
148
|
|||||
Non-operating income, net
|
628
|
520
|
||||||
Income before income taxes
|
14,242
|
13,725
|
||||||
|
||||||||
Income tax expense
|
5,626
|
5,374
|
||||||
Net income
|
$
|
8,616
|
$
|
8,351
|
||||
|
||||||||
Other comprehensive income:
|
||||||||
Unrealized gain (loss) on interest rate hedge, net of tax
|
(347
|
)
|
532
|
|||||
Comprehensive income
|
$
|
8,269
|
$
|
8,883
|
||||
|
||||||||
Earnings per share:
|
||||||||
Basic and diluted earnings per share
|
$
|
0.36
|
$
|
0.35
|
||||
|
||||||||
Weighted average shares outstanding, basic
|
24,059
|
23,973
|
||||||
|
||||||||
Weighted average shares, diluted
|
24,221
|
24,032
|
|
Shares
|
Common
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||
Balance, December 31, 2012
|
23,962
|
$
|
24,688
|
$
|
184,023
|
$
|
(863
|
)
|
$
|
207,848
|
||||||||||
|
||||||||||||||||||||
Net income
|
-
|
-
|
29,586
|
-
|
29,586
|
|||||||||||||||
Other comprehensive income, net of tax
|
-
|
-
|
-
|
3,457
|
3,457
|
|||||||||||||||
Dividends declared ($0.36 per share)
|
-
|
-
|
(8,647
|
)
|
-
|
(8,647
|
)
|
|||||||||||||
Dividends reinvested in common stock
|
20
|
475
|
-
|
-
|
475
|
|||||||||||||||
Stock based compensation
|
-
|
1,938
|
-
|
-
|
1,938
|
|||||||||||||||
Common stock issued through exercise of incentive stock options
|
66
|
1,186
|
-
|
-
|
1,186
|
|||||||||||||||
Common stock issued for share awards
|
68
|
-
|
-
|
-
|
-
|
|||||||||||||||
Common stock issued
|
1
|
10
|
-
|
-
|
10
|
|||||||||||||||
Common stock repurchased
|
(77
|
)
|
(1,600
|
)
|
-
|
-
|
(1,600
|
)
|
||||||||||||
Net excess tax benefit from stock options exercised
|
-
|
62
|
-
|
-
|
62
|
|||||||||||||||
|
||||||||||||||||||||
Balance, December 31, 2013
|
24,040
|
$
|
26,759
|
$
|
204,962
|
$
|
2,594
|
$
|
234,315
|
|||||||||||
|
||||||||||||||||||||
Net income
|
-
|
-
|
8,616
|
-
|
8,616
|
|||||||||||||||
Other comprehensive loss, net of tax
|
-
|
-
|
-
|
(347
|
)
|
(347
|
)
|
|||||||||||||
Stock based compensation
|
-
|
1,147
|
-
|
-
|
1,147
|
|||||||||||||||
Stock options exercised
|
50
|
1,110
|
-
|
-
|
1,110
|
|||||||||||||||
Common stock issued for share awards
|
55
|
-
|
-
|
-
|
-
|
|||||||||||||||
Common stock issued
|
1
|
2
|
-
|
-
|
2
|
|||||||||||||||
Common stock repurchased
|
(50
|
)
|
(1,540
|
)
|
-
|
-
|
(1,540
|
)
|
||||||||||||
Net excess tax benefit from stock options exercised
|
-
|
305
|
-
|
-
|
305
|
|||||||||||||||
Balance, March 31, 2014
|
24,096
|
$
|
27,783
|
$
|
213,578
|
$
|
2,247
|
$
|
243,608
|
|
Three Months Ended
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Cash Flows From Operating Activities
|
|
|
||||||
Net income
|
$
|
8,616
|
8,351
|
|||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
14,556
|
12,808
|
||||||
Amortization
|
831
|
1,164
|
||||||
Provision for bad debt
|
234
|
453
|
||||||
Stock based compensation expense
|
1,147
|
425
|
||||||
Excess tax benefits on stock awards
|
(305
|
)
|
(30
|
)
|
||||
Deferred income taxes
|
(2,013
|
)
|
(1,394
|
)
|
||||
Net (gain) loss on disposal of equipment
|
(425
|
)
|
100
|
|||||
Realized (gain) loss on disposal of investments
|
-
|
(3
|
)
|
|||||
Unrealized (gain) loss on investments
|
29
|
(93
|
)
|
|||||
Net gains from patronage and equity investments
|
(163
|
)
|
(171
|
)
|
||||
Other
|
(12
|
)
|
696
|
|||||
Changes in assets and liabilities:
|
||||||||
(Increase) decrease in:
|
||||||||
Accounts receivable
|
52
|
230
|
||||||
Materials and supplies
|
2,138
|
2,603
|
||||||
Income taxes receivable
|
8,831
|
2,466
|
||||||
Increase (decrease) in:
|
||||||||
Accounts payable
|
(384
|
)
|
(2,815
|
)
|
||||
Deferred lease payable
|
237
|
318
|
||||||
Other prepaids, deferrals and accruals
|
(772
|
)
|
(2,399
|
)
|
||||
|
||||||||
Net cash provided by operating activities
|
$
|
32,597
|
$
|
22,709
|
||||
|
||||||||
Cash Flows from Investing Activities
|
||||||||
Purchase and construction of property, plant, and equipment
|
(17,196
|
)
|
(26,024
|
)
|
||||
Proceeds from sale of assets
|
-
|
25
|
||||||
Cash received from sales of equipment
|
84
|
128
|
||||||
Purchase of investment securities
|
-
|
(12
|
)
|
|||||
Proceeds from sale of investment securities
|
3
|
45
|
||||||
|
||||||||
Net cash used in investing activities
|
$
|
(17,109
|
)
|
$
|
(25,838
|
)
|
|
Three Months Ended
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Cash Flows From Financing Activities
|
|
|
||||||
Principal payments on long-term debt
|
$
|
-
|
$
|
(739
|
)
|
|||
Excess tax benefits on stock awards
|
305
|
30
|
||||||
Repurchases of stock
|
(1,540
|
)
|
(155
|
)
|
||||
Proceeds from sale of stock
|
1,112
|
2
|
||||||
|
||||||||
Net cash used in financing activities
|
$
|
(123
|
)
|
$
|
(862
|
)
|
||
|
||||||||
Net increase (decrease) in cash and cash equivalents
|
$
|
15,365
|
$
|
(3,991
|
)
|
|||
|
||||||||
Cash and cash equivalents:
|
||||||||
Beginning
|
38,316
|
71,086
|
||||||
Ending
|
$
|
53,681
|
$
|
67,095
|
||||
|
||||||||
Supplemental Disclosures of Cash flow Information
|
||||||||
Cash payments for:
|
||||||||
|
||||||||
Interest
|
$
|
1,954
|
$
|
2,171
|
||||
|
||||||||
Income taxes (refunded) paid, net
|
$
|
(1,192
|
)
|
$
|
4,302
|
|
March 31,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
Plant in service
|
$
|
654,586
|
$
|
633,480
|
||||
Plant under construction
|
13,136
|
23,181
|
||||||
|
667,722
|
656,661
|
||||||
Less accumulated amortization and depreciation
|
261,993
|
247,698
|
||||||
Net property, plant and equipment
|
$
|
405,729
|
$
|
408,963
|
|
Gains and (Losses) on Cash Flow Hedges
|
Income Taxes
|
Accumulated Other Comprehensive Income (Loss)
|
|||||||||
|
|
|
|
|||||||||
Balance as of December 31, 2013
|
$
|
4,336
|
$
|
(1,742
|
)
|
$
|
2,594
|
|||||
Other comprehensive income before reclassifications
|
(1,002
|
)
|
401
|
(601
|
)
|
|||||||
Amounts reclassified from accumulated other comprehensive income (to interest expense)
|
423
|
(169
|
)
|
254
|
||||||||
Net current period other comprehensive income
|
(579
|
)
|
232
|
(347
|
)
|
|||||||
Balance as of March 31, 2014
|
$
|
3,757
|
$
|
(1,510
|
)
|
$
|
2,247
|
|
Wireless
|
Cable
|
Wireline
|
Other
|
Eliminations
|
Consolidated
Totals
|
||||||||||||||||||
External revenues
|
|
|
|
|
|
|
||||||||||||||||||
Service revenues
|
$
|
47,232
|
$
|
17,424
|
$
|
5,100
|
$
|
-
|
$
|
-
|
$
|
69,756
|
||||||||||||
Other
|
2,756
|
3,030
|
4,910
|
-
|
-
|
10,696
|
||||||||||||||||||
Total external revenues
|
49,988
|
20,454
|
10,010
|
-
|
-
|
80,452
|
||||||||||||||||||
Internal revenues
|
1,091
|
26
|
5,765
|
-
|
(6,882
|
)
|
-
|
|||||||||||||||||
Total operating revenues
|
51,079
|
20,480
|
15,775
|
-
|
(6,882
|
)
|
80,452
|
|||||||||||||||||
|
||||||||||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
18,657
|
12,390
|
7,482
|
-
|
(6,293
|
)
|
32,236
|
|||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
8,432
|
4,646
|
1,244
|
3,416
|
(589
|
)
|
17,149
|
|||||||||||||||||
Depreciation and amortization
|
7,196
|
5,404
|
2,697
|
90
|
-
|
15,387
|
||||||||||||||||||
Total operating expenses
|
34,285
|
22,440
|
11,423
|
3,506
|
(6,882
|
)
|
64,772
|
|||||||||||||||||
Operating income (loss)
|
$
|
16,794
|
$
|
(1,960
|
)
|
$
|
4,352
|
$
|
(3,506
|
)
|
$
|
-
|
$
|
15,680
|
|
Wireless
|
Cable
|
Wireline
|
Other
|
Eliminations
|
Consolidated
Totals
|
||||||||||||||||||
External revenues
|
|
|
|
|
|
|
||||||||||||||||||
Service revenues
|
$
|
44,065
|
$
|
16,163
|
$
|
5,117
|
$
|
-
|
$
|
-
|
$
|
65,345
|
||||||||||||
Other
|
3,019
|
2,301
|
5,345
|
-
|
-
|
10,665
|
||||||||||||||||||
Total external revenues
|
47,084
|
18,464
|
10,462
|
-
|
-
|
76,010
|
||||||||||||||||||
Internal revenues
|
1,073
|
49
|
4,639
|
-
|
(5,761
|
)
|
-
|
|||||||||||||||||
Total operating revenues
|
48,157
|
18,513
|
15,101
|
-
|
(5,761
|
)
|
76,010
|
|||||||||||||||||
|
||||||||||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
17,530
|
11,222
|
7,166
|
-
|
(5,218
|
)
|
30,700
|
|||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
7,887
|
4,425
|
1,361
|
2,999
|
(543
|
)
|
16,129
|
|||||||||||||||||
Depreciation and amortization
|
6,028
|
5,205
|
2,731
|
8
|
-
|
13,972
|
||||||||||||||||||
Total operating expenses
|
31,445
|
20,852
|
11,258
|
3,007
|
(5,761
|
)
|
60,801
|
|||||||||||||||||
Operating income (loss)
|
$
|
16,712
|
$
|
(2,339
|
)
|
$
|
3,843
|
$
|
(3,007
|
)
|
-
|
$
|
15,209
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2014
|
2013
|
||||||
Total consolidated operating income
|
$
|
15,680
|
$
|
15,209
|
||||
Interest expense
|
(2,048
|
)
|
(2,152
|
)
|
||||
Non-operating income (expense), net
|
610
|
668
|
||||||
Income before income taxes
|
$
|
14,242
|
$
|
13,725
|
|
March 31,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Wireless
|
$
|
215,734
|
$
|
229,038
|
||||
Cable
|
209,320
|
199,184
|
||||||
Wireline
|
87,777
|
92,455
|
||||||
Other
|
428,761
|
435,804
|
||||||
Combined totals
|
941,592
|
956,481
|
||||||
Inter-segment eliminations
|
(344,997
|
)
|
(359,475
|
)
|
||||
Consolidated totals
|
$
|
596,595
|
$
|
597,006
|
* | The Wireless segment provides digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, as a Sprint PCS Affiliate. This segment also owns cell site towers built on leased land, and leases space on these towers to both affiliates and non-affiliated service providers. |
* | The Cable segment provides video, internet and voice services in franchise areas in portions of Virginia, West Virginia and western Maryland, and leases fiber optic facilities throughout its service area. It does not include video, internet and voice services provided to customers in Shenandoah County, Virginia. |
* | The Wireline segment provides regulated and unregulated voice services, DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia. The segment also provides video services in portions of Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor, including portions of West Virginia and Maryland. |
* | A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company. |
|
Three Months Ended
|
|
|
|||||||||||||
(in thousands)
|
March 31,
|
Change
|
||||||||||||||
|
2014
|
2013
|
$
|
%
|
||||||||||||
|
|
|
|
|
||||||||||||
Operating revenues
|
$
|
80,452
|
$
|
76,010
|
$
|
4,442
|
5.8
|
|||||||||
Operating expenses
|
64,772
|
60,801
|
3,971
|
6.5
|
||||||||||||
Operating income
|
15,680
|
15,209
|
471
|
3.1
|
||||||||||||
|
||||||||||||||||
Interest expense
|
2,048
|
2,152
|
(104
|
)
|
(4.8
|
)
|
||||||||||
Other income (expense)
|
610
|
668
|
(58
|
)
|
(8.7
|
)
|
||||||||||
Income before taxes
|
14,242
|
13,725
|
517
|
3.8
|
||||||||||||
Income tax expense
|
5,626
|
5,374
|
252
|
4.7
|
||||||||||||
Net income
|
$
|
8,616
|
$
|
8,351
|
$
|
265
|
3.2
|
|
March 31,
|
December 31,
|
March 31,
|
December 31,
|
||||||||||||
|
2014
|
2013
|
2013
|
2012
|
||||||||||||
|
|
|
|
|
||||||||||||
Retail PCS Subscribers - Postpaid
|
275,025
|
273,721
|
263,957
|
262,892
|
||||||||||||
Retail PCS Subscribers - Prepaid
|
138,537
|
137,047
|
134,404
|
128,177
|
||||||||||||
PCS Market POPS (000) (1)
|
2,402
|
2,397
|
2,390
|
2,390
|
||||||||||||
PCS Covered POPS (000) (1)
|
2,072
|
2,067
|
2,058
|
2,057
|
||||||||||||
CDMA Base Stations (sites)
|
526
|
526
|
521
|
516
|
||||||||||||
Towers
|
153
|
153
|
151
|
150
|
||||||||||||
Non-affiliate cell site leases (2)
|
206
|
217
|
218
|
216
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Gross PCS Subscriber Additions - Postpaid
|
15,585
|
15,824
|
||||||
Net PCS Subscriber Additions - Postpaid
|
1,304
|
1,065
|
||||||
Gross PCS Subscriber Additions - Prepaid
|
19,172
|
21,422
|
||||||
Net PCS Subscriber Additions - Prepaid
|
1,490
|
6,227
|
||||||
PCS Average Monthly Retail Churn % - Postpaid (3)
|
1.73
|
%
|
1.87
|
%
|
||||
PCS Average Monthly Retail Churn % - Prepaid (3)
|
4.27
|
%
|
3.87
|
%
|
1) | POPS refers to the estimated population of a given geographic area and is based on information purchased from third party sources. Market POPS are those within a market area which the Company is authorized to serve under its Sprint PCS affiliate agreements, and Covered POPS are those covered by the Company’s network. |
2) | The decrease from December 31, 2013 to March 31, 2014 is a result of expected termination of Sprint iDEN leases associated with the former Nextel network. The Company expects its remaining 14 iDEN leases to terminate during the second quarter of 2014. |
3) | PCS Average Monthly Retail Churn is the average of the monthly subscriber turnover, or churn, calculations for the period. |
|
Three Months Ended
|
|
||||||||||||||
|
March 31,
|
Change
|
||||||||||||||
(in thousands)
|
2014
|
2013
|
$ |
%
|
||||||||||||
Segment operating revenues
|
|
|
|
|||||||||||||
Wireless service revenue
|
$
|
47,232
|
$
|
44,065
|
$
|
3,167
|
7.2
|
|||||||||
Tower lease revenue
|
2,565
|
2,562
|
3
|
0.1
|
||||||||||||
Equipment revenue
|
1,197
|
1,331
|
(134
|
)
|
(10.1
|
)
|
||||||||||
Other revenue
|
85
|
199
|
(114
|
)
|
(57.3
|
)
|
||||||||||
Total segment operating revenues
|
51,079
|
48,157
|
2,922
|
6.1
|
||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
18,657
|
17,530
|
1,127
|
6.4
|
||||||||||||
Selling, general, and administrative, exclusive of depreciation and amortization shown separately below
|
8,432
|
7,887
|
545
|
6.9
|
||||||||||||
Depreciation and amortization
|
7,196
|
6,028
|
1,168
|
19.4
|
||||||||||||
Total segment operating expenses
|
34,285
|
31,445
|
2,840
|
9.0
|
||||||||||||
Segment operating income
|
$
|
16,794
|
$
|
16,712
|
$
|
82
|
0.5
|
|
March 31,
|
December 31,
|
March 31,
|
December 31,
|
||||||||||||
|
2014
|
2013
|
2013
|
2012
|
||||||||||||
Homes Passed (1)
|
170,711
|
170,470
|
169,035
|
168,475
|
||||||||||||
Customer Relationships (2)
|
||||||||||||||||
Video customers
|
51,153
|
51,197
|
53,017
|
52,676
|
||||||||||||
Non-video customers
|
19,517
|
18,341
|
16,220
|
15,709
|
||||||||||||
Total customer relationships
|
70,670
|
69,538
|
69,237
|
68,385
|
||||||||||||
Video
|
||||||||||||||||
Customers (3)
|
52,725
|
53,076
|
54,624
|
54,840
|
||||||||||||
Penetration (4)
|
30.9
|
%
|
31.1
|
%
|
32.3
|
%
|
32.6
|
%
|
||||||||
Digital video penetration (5)
|
57.5
|
%
|
49.2
|
%
|
39.6
|
%
|
39.5
|
%
|
||||||||
High-speed Internet
|
||||||||||||||||
Available Homes (6)
|
168,573
|
168,255
|
164,789
|
163,273
|
||||||||||||
Customers (3)
|
48,068
|
45,776
|
42,435
|
40,981
|
||||||||||||
Penetration (4)
|
28.5
|
%
|
27.2
|
%
|
25.8
|
%
|
25.1
|
%
|
||||||||
Voice
|
||||||||||||||||
Available Homes (6)
|
163,582
|
163,282
|
157,409
|
154,552
|
||||||||||||
Customers (3)
|
15,799
|
14,988
|
12,795
|
12,262
|
||||||||||||
Penetration (4)
|
9.7
|
%
|
9.2
|
%
|
8.1
|
%
|
8.0
|
%
|
||||||||
Total Revenue Generating Units (7)
|
116,592
|
113,840
|
109,854
|
108,083
|
||||||||||||
Fiber Route Miles
|
2,461
|
2,446
|
2,116
|
2,077
|
||||||||||||
Total Fiber Miles (8)
|
70,332
|
69,715
|
40,686
|
39,418
|
1) | Homes and businesses are considered passed (“homes passed”) if we can connect them to our distribution system without further extending the transmission lines. Homes passed is an estimate based upon the best available information. |
2) | Customer relationships represent the number of customers who receive at least one of our services. |
3) | Generally, a dwelling or commercial unit with one or more television sets connected to our distribution system counts as one video customer. Where services are provided on a bulk basis, such as to hotels and some multi-dwelling units, the revenue charged to the customer is divided by the rate for comparable service in the local market to determine the number of customer equivalents included in the customer counts shown above. |
4) | Penetration is calculated by dividing the number of customers by the number of homes passed or available homes, as appropriate. |
5) | Digital video penetration is calculated by dividing the number of digital video customers by total video customers. Digital video customers are video customers who receive any level of video service via digital transmission. A dwelling with one or more digital set-top boxes or digital adapters counts as one digital video customer. |
6) | Homes and businesses are considered available (“available homes”) if we can connect them to our distribution system without further extending the transmission lines and if we offer the service in that area. |
7) | Revenue generating units are the sum of video, voice and high-speed internet customers. |
8) | Fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles. Fiber counts were recalculated after a fiber audit and deployment of enhanced mapping software in the fourth quarter of 2013. |
|
Three Months Ended
|
|
|
|||||||||||||
(in thousands)
|
March 31,
|
Change
|
||||||||||||||
|
2014
|
2013
|
$
|
%
|
||||||||||||
|
|
|
|
|||||||||||||
Segment operating revenues
|
|
|
|
|||||||||||||
Cable service revenue
|
$
|
17,424
|
$
|
16,163
|
$
|
1,261
|
7.8
|
|||||||||
Equipment and other revenue
|
3,056
|
2,350
|
706
|
30.0
|
||||||||||||
Total segment operating revenues
|
20,480
|
18,513
|
1,967
|
10.6
|
||||||||||||
|
||||||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
12,390
|
11,222
|
1,168
|
10.4
|
||||||||||||
Selling, general, and administrative, exclusive of depreciation and amortization shown separately below
|
4,646
|
4,425
|
221
|
5.0
|
||||||||||||
Depreciation and amortization
|
5,404
|
5,205
|
199
|
3.8
|
||||||||||||
Total segment operating expenses
|
22,440
|
20,852
|
1,588
|
7.6
|
||||||||||||
Segment operating loss
|
$
|
(1,960
|
)
|
$
|
(2,339
|
)
|
$
|
379
|
16.2
|
|
March 31,
|
December 31,
|
March 31,
|
December 31,
|
||||||||||||
|
2014
|
2013
|
2013
|
2012
|
||||||||||||
Telephone Access Lines
|
21,955
|
22,106
|
22,279
|
22,342
|
||||||||||||
Long Distance Subscribers
|
9,773
|
9,851
|
10,116
|
10,157
|
||||||||||||
Video Customers
|
6,222
|
6,342
|
6,633
|
6,719
|
||||||||||||
DSL Subscribers
|
12,714
|
12,632
|
12,709
|
12,611
|
||||||||||||
Fiber Route Miles
|
1,454
|
1,452
|
1,428
|
1,420
|
||||||||||||
Total Fiber Miles (1)
|
85,327
|
85,135
|
84,365
|
84,107
|
1) | Fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles. |
|
Three Months Ended
|
|
|
|||||||||||||
(in thousands)
|
March 31,
|
Change
|
||||||||||||||
|
2014
|
2013
|
$
|
%
|
||||||||||||
|
|
|
|
|||||||||||||
Segment operating revenues
|
|
|
|
|||||||||||||
Wireline service revenue
|
$
|
5,585
|
$
|
5,463
|
$
|
122
|
2.2
|
|||||||||
Access revenue
|
2,928
|
3,248
|
(320
|
)
|
(9.9
|
)
|
||||||||||
Facilities lease revenue
|
6,443
|
5,148
|
1,295
|
25.2
|
||||||||||||
Equipment revenue
|
11
|
9
|
2
|
22.2
|
||||||||||||
Other revenue
|
808
|
1,233
|
(425
|
)
|
(34.5
|
)
|
||||||||||
Total segment operating revenues
|
15,775
|
15,101
|
674
|
4.5
|
||||||||||||
|
||||||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
7,482
|
7,166
|
316
|
4.4
|
||||||||||||
Selling, general, and administrative, exclusive of depreciation and amortization shown separately below
|
1,244
|
1,361
|
(117
|
)
|
(8.6
|
)
|
||||||||||
Depreciation and amortization
|
2,697
|
2,731
|
(34
|
)
|
(1.2
|
)
|
||||||||||
Total segment operating expenses
|
11,423
|
11,258
|
165
|
1.5
|
||||||||||||
Segment operating income
|
$
|
4,352
|
$
|
3,843
|
$
|
509
|
13.2
|
· | it does not reflect capital expenditures; |
· | many of the assets being depreciated and amortized will have to be replaced in the future and adjusted OIBDA does not reflect cash requirements for such replacements; |
· | it does not reflect costs associated with share-based awards exchanged for employee services; |
· | it does not reflect interest expense necessary to service interest or principal payments on indebtedness; |
· | it does not reflect gains, losses or dividends on investments; |
· | it does not reflect expenses incurred for the payment of income taxes; and |
· | other companies, including companies in our industry, may calculate adjusted OIBDA differently than we do, limiting its usefulness as a comparative measure. |
|
Three Months Ended
|
|||||||
(in thousands)
|
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Adjusted OIBDA
|
$
|
31,729
|
$
|
29,635
|
Consolidated:
|
|
|
||||||
(in thousands)
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Operating income
|
$
|
15,680
|
$
|
15,209
|
||||
Plus depreciation and amortization
|
15,387
|
13,972
|
||||||
Plus (gain) loss on asset sales
|
(366
|
)
|
82
|
|||||
Plus share based compensation expense
|
1,028
|
372
|
||||||
Adjusted OIBDA
|
$
|
31,729
|
$
|
29,635
|
Wireless Segment:
|
|
|
||||||
(in thousands)
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Operating income
|
$
|
16,794
|
$
|
16,712
|
||||
Plus depreciation and amortization
|
7,196
|
6,028
|
||||||
Plus (gain) loss on asset sales
|
(352
|
)
|
90
|
|||||
Plus share based compensation expense
|
216
|
108
|
||||||
Adjusted OIBDA
|
$
|
23,854
|
$
|
22,938
|
Cable Segment:
|
|
|
||||||
(in thousands)
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Operating loss
|
$
|
(1,960
|
)
|
$
|
(2,339
|
)
|
||
Plus depreciation and amortization
|
5,404
|
5,205
|
||||||
Plus gain on asset sales
|
(23
|
)
|
(19
|
)
|
||||
Plus share based compensation expense
|
396
|
162
|
||||||
Adjusted OIBDA
|
$
|
3,817
|
$
|
3,009
|
Wireline Segment:
|
|
|
||||||
(in thousands)
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
|
|
||||||
Operating income
|
$
|
4,352
|
$
|
3,843
|
||||
Plus depreciation and amortization
|
2,697
|
2,731
|
||||||
Plus loss on asset sales
|
9
|
12
|
||||||
Plus share based compensation expense
|
175
|
78
|
||||||
Adjusted OIBDA
|
$
|
7,233
|
$
|
6,664
|
|
Actual
|
|
Covenant Requirement at March 31, 2014
|
Total Leverage Ratio
|
1.87
|
|
3.00 or Lower
|
Debt Service Coverage Ratio
|
11.70
|
|
2.50 or Higher
|
Equity to Assets Ratio
|
40.8%
|
|
32.5% or Higher
|
PART II.
|
OTHER INFORMATION
|
|
Number of Shares
Purchased
|
Average Price Paid per Share
|
||||||
January 1 to January 31
|
2
|
$
|
24.56
|
|||||
February 1 to February 28
|
16,228
|
$
|
26.15
|
|||||
March 1 to March 31
|
33,610
|
$
|
33.21
|
|||||
|
||||||||
Total
|
49,840
|
$
|
30.91
|
(a)
|
The following exhibits are filed with this Quarterly Report on Form 10-Q:
|
10.43* | First Amendment dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders. |
10.44* | Joinder Agreement dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders. |
10.45* | Addendum XVI dated as of December 9, 2013, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC. |
10.46* | Addendum XVII dated as of April 11, 2014, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC. |
10.47* | 2014 Stock Incentive Plan. |
31.1* | Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. |
31.2* | Certification of Vice President - Finance and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. |
32* | Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350. |
(101) | Formatted in XBRL (Extensible Business Reporting Language) |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
Exhibit No
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Exhibit
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First Amendment dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders.
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Joinder Agreement dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders.
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Addendum XVI dated as of December 9, 2013 to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC
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Addendum XVII dated as of April 11, 2014, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC.
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2014 Stock Incentive Plan.
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Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
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Certification of Vice President - Finance and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
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Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. 1350.
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(101)
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Formatted in XBRL (Extensible Business Reporting Language)
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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SHENANDOAH TELECOMMUNICATIONS COMPANY
, as Borrower
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By:
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/s/
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Name:
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Christopher E. French
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Title:
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President
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SHENANDOAH CABLE TELEVISION LLC,
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SHENTEL CABLE OF SHENANDOAH COUNTY, LLC
,
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SHENANDOAH PERSONAL COMMUNICATIONS, LLC
,
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SHENANDOAH MOBILE, LLC
,
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SHENTEL COMMUNICATIONS
,
LLC
,
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SHENTEL MANAGEMENT COMPANY
,
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each as a Guarantor
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By:
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/s/
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Name:
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Christopher E. French
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Title:
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President
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COBANK, ACB
, as Administrative Agent and a Lender
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By:
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/s/
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Gloria Hancock
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Vice President
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AgFirst Farm Credit Bank, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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John W. Burnside, Jr.
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Title:
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Vice President
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Farm Credit Bank of Texas, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Nicholas King
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Title:
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Vice President
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Farm Credit Services of America, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Ben Fogle
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Title:
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Vice President
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Farm Credit Mid-America, FLCA, fka Farm Credit Services of Mid-America, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Ralph Bowman
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Title:
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Vice President Capital Markets
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United FCS, FLCA d/b/a FCS Commercial Finance Group, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Jeremy Voigts
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Title:
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Vice President
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GreenStone Farm Credit Services, ACA/FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Jeff Pavlik
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Title:
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Vice President
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1
st
Farm Credit Services, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Dale A. Richardson
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Title:
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Vice President, Capital Markets Group
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MidAtlantic Farm Credit FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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William J. Rutta
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Title:
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Vice President
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AgStar Financial Services, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Troy Mostaert
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Title:
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VP Capital Markets
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AgChoice Farm Credit, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Mark F. Kerstetter
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Title:
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Vice President
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Frontier Farm Credit, ACA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Stuart R. Hays
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Title:
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Vice President
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Northwest Farm Credit Services, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Mark Westfall
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Title:
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Vice President
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Farm Credit West, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Ben Madonna
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Title:
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Vice President
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Badgerland Financial, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Terry A. McMahon
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Title:
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Chief Credit Officer
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American Ag Credit, FLCA, as a voting participant pursuant to Subsection 8.1(D) of the Credit Agreement
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By:
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/s/
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Name:
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Edwin A. Adams, Jr.
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Title:
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Vice President
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1. | New Subsidiary and Administrative Agent, on behalf of itself and the Lenders, hereby acknowledge, agree and confirm that, by New Subsidiary’s execution of this Joinder, New Subsidiary will be deemed to be a party to the Credit Agreement and a “Guarantor” and a “Loan Party” for all purposes of the Credit Agreement, including, Subsection 9.20 thereof, and the other Loan Documents, and shall have all of the obligations and rights of a Guarantor and a Loan Party thereunder as if it had executed the Credit Agreement and the other Loan Documents. New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Loan Documents, including, (i) all of the representations and warranties of a Loan Party set forth in Section 5 of the Credit Agreement, (ii) all of the affirmative and negative covenants set forth in Sections 2, 3 and 4 of the Credit Agreement, and (iii) the right of set off set forth in Subsection 6.7 of the Credit Agreement. Without limiting the generality of the foregoing terms of this paragraph 1, New Subsidiary hereby jointly and severally, together with the other Guarantors, unconditionally and irrevocably guarantees as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, by acceleration or otherwise, of any and all Secured Obligations strictly in accordance with the terms thereof, on order, or demand, and that in the case of any extension of time of payment or renewal of any of the Secured Obligations of Borrower, the same will be promptly paid in full when due in accordance with the terms of such extension or renewal, all as provided in the Credit Agreement, including, Subsection 9.20 of the Credit Agreement. |
2. | New Subsidiary and Administrative Agent, on behalf of itself and the Lenders, hereby acknowledge, agree and confirm that, by its execution of this Joinder, New Subsidiary will be deemed to be a party to the Pledge and Security Agreement and a “Guarantor” and a “Grantor” for all purposes of the Pledge and Security Agreement and the other Loan Documents, and shall have all the obligations and rights of a Guarantor and a Grantor thereunder as if it had executed the Pledge and Security Agreement. New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Pledge and Security Agreement, including, all of the representations and warranties and all of the negative and affirmative covenants set forth in the Pledge and Security Agreement. Without limiting the generality of the foregoing terms of this paragraph 2, New Subsidiary hereby grants to Administrative Agent, for the benefit of the Secured Parties, a continuing security interest in its Collateral, all on the terms and subject to the conditions set forth in the Pledge and Security Agreement. |
4. | Except to the extent excluded pursuant to Section 2.3 of the Pledge and Security Agreement, each of the parties hereto acknowledges and confirms that the Equity Interests described in the Annex A to the attached Schedule A are part of the Equity Interests within the meaning of the Pledge and Security Agreement and are part of the Collateral and secure all of the Secured Obligations as provided in the Pledge and Security Agreement. |
5. | Each of Borrower, the existing Guarantors, and the existing Grantors confirms that all of its obligations under the Credit Agreement, the Pledge and Security Agreement, and the other Loan Documents are, and upon the New Subsidiary becoming a Guarantor and Grantor, shall continue to be, in full force and effect. The parties hereto confirm and agree that immediately upon the New Subsidiary becoming a Guarantor and Grantor the term “Obligations” and “Secured Obligations”, as used in the Credit Agreement, the Pledge and Security Agreement and the other Loan Documents, shall include all obligations of the New Subsidiary under the Credit Agreement, the Pledge and Security Agreement and under each other Loan Document. |
6. | Each of Borrower, New Subsidiary, the existing Guarantors and the existing Grantors agree that at any time and from time to time, upon the written request of Administrative Agent, they will execute and deliver such further documents and do such further acts and things as Administrative Agent may reasonably request in order to effect the purposes of this Joinder. |
7. | This Joinder may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute one contract. |
8. | This Joinder shall be governed by and shall be construed in accordance with the internal laws of the State of Colorado, without regard to conflicts of law principles that require or permit application of the laws of any other state or jurisdiction. |
9. | This Joinder shall be governed by and shall be construed and enforced in accordance with all provisions of the Credit Agreement. |
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SHENANDOAH TELECOMMUNICATIONS COMPANY,
as Borrower and a Grantor
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By:
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/s/
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Name: Christopher E. French
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Title: President
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SHENTEL CABLE OF SHENANDOAH COUNTY, LLC
, as the New Subsidiary
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By:
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/s/
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Name: Christopher E. French
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Title: President
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SHENANDOAH CABLE TELEVISION, LLC,
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SHENANDOAH PERSONAL COMMUNICATIONS, LLC
,
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SHENANDOAH MOBILE, LLC
,
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SHENTEL MANAGEMENT COMPANY
,
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SHENTEL COMMUNICATIONS, LLC,
as existing Guarantors and existing Grantors
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By:
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/s/
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Name: Christopher E. French
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Title: President
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COBANK, ACB,
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as Administrative Agent
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By:
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/s/
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Name: Gloria Hancock
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Title: Vice President
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(a)
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Subject only to the exceptions set forth in Section 2.3(d) Manager will be the only person or entity that is a manager, operator or provider of wireless mobility services for Sprint PCS and its Related Parties in the Service Area in the: (i) 1850-1865 MHz and 1870-1885 MHz spectrum ranges on the uplink and 1930-1945 and 1950-1965 MHz spectrum ranges on the downlink with respect to CDMA and LTE in the applicable Shentel Territory; provided, however, that with respect to the Altoona, PA BTA only, the applicable spectrum ranges for purposes of this Section 2.3(a)(i) are 1850-1860 MHz, 1870-1885MHz and 1905-1910 MHz spectrum ranges on the uplink and 1930-1940 and 1950-1965 and 1985-1990 MHz spectrum ranges on the downlink; (ii) the 1900 MHz PCS G-Block Spectrum Range. with respect to CDMA and LTE, effective upon the Network Vision Completion Date; and (iii) the former iDEN Block in the 800 MHz Spectrum Range (with respect to CDMA and LTE products and services only), subject to the limitations set forth below in this Section 2.3(a) and upon receipt of written approval from Sprint PCS. The amount of spectrum in the 800 MHz Spectrum Range made available to Manager by Sprint PCS may vary between BTAs based on re-banding schedules, conflicts with local incumbents, conflicts with residual iDEN usage, regulatory approvals, and other factors. Sprint PCS will notify Manager in writing of specific spectrum availability in each BTA as determined by Sprint PCS in its sole discretion as of the Network Vision Completion Date, and thereafter as additional portions of the 800 MHz Spectrum Range become available. Manager agrees to comply with all FCC rules related to interference mitigation during its management of spectrum in the 800 MHz Spectrum Range. The rights to manage, operate and provide wireless mobility services utilizing the spectrum ranges set forth in (i) - (iii) in the preceding sentence are collectively referred to as the "Exclusive Rights." Neither Sprint PCS nor any of its Related Parties will permit any other person or entity to manage, operate or provide wireless mobility services in violation of the Exclusive Rights for Sprint PCS and/or its Related Parties in the Service Area, except that Sprint PCS may enter into roaming arrangements with other parties. For purposes of this Section 2.3, "mobility" means the capability to sustain a continuous session (voice or data) throughout a broad geographic area by transferring the session from cell site to cell site as the mobile device moves within the geographic area. For purposes of clarification, Wi-Fi is not a wireless mobility service unless such service can be transferred from cell site to cell site.
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SHENANDOAH PERSONAL COMMUNICATIONS, LLC
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By:
/s/Christopher E. French
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Name: Christopher E. French
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Title: President
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SPRINT SPECTRUM L.P.
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By:
/s/ Traci Jovanovic
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Nam
e
:
Traci
Jovanovic
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Title: Vice President
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SPRINT
COMMUNICATI
O
.
N
.
S
COMPANY,
L
.
P
.
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By:
/s/ Traci Jovanovic
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Nam
e
:
Traci
Jovanovic
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Title: Vice President
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WIRELESSC
O
,
L
.
P
.
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By:
/s/ Traci Jovanovic
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Nam
e
:
Traci
Jovanovic
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Title: Vice President
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APC PCS, LLC
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By:
/s/ Traci Jovanovic
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Nam
e
:
Traci
Jovanovic
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Title: Vice President
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PhillieCo, L.P.
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By:
/s/ Traci Jovanovic
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Nam
e
:
Traci
Jovanovic
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Title: Vice President
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Manager:
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Shenandoah Personal Communications, LLC
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Service Area:
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Altoona, PA #12
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Hagerstown, MD-Chambersburg, PA-Martinsburg, WV #179
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Harrisburg, PA #181
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Harrisonburg, VA #183
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Washington, DC (Jefferson County, WV only) #471
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Winchester, VA #479
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York-Hanover, PA #483
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1. | The last paragraph of Section 1.1 of the Management Agreement is amended to read as follows: |
2. | A new Section 3.8 is hereby inserted into the Management Agreement: |
3.8
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INSTALLMENT BILLING
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3.8.2. | COMPENSATION. |
3.8.2.1. | Commissions . Neither Manager nor its distributors are entitled to any commissions or other compensation from Sprint PCS or the customer relating to the Retail Installment Contract except for the Installment Product compensation payable below. |
3.8.2.2. | Installment Product Compensation . Manager Inventory, Product Title Transfer . Manager and its distributors may fulfill Installment Products purchased by customers under the Installment Billing Program from products owned by Manager from Manager’s inventory. Manager acknowledges that for an Installment Product provided to a customer executing a Retail Installment Billing Contract that is purchased from a Manager owned facility or from one of Manager’s distributors, title and ownership of the Installment Product will transfer to the Sprint PCS designated Related Party immediately prior to the execution of the Retail Installment Billing Contract by the customer. Upon transfer of title and ownership of the Product from Manager to such Sprint PCS Related Party, provided that Manager or its distributor enters the transaction into the Sprint PCS systems, has provided the Installment Product to the customer, and has obtained an executed Retail Installment Billing Contract and collected the applicable sales tax from the customer and any down payments required, Sprint PCS will pay to Manager an amount equal to the SRP for the Installment Product, less any down payment collected by Manager or its distributor (the “Net Purchase Price”). Sprint PCS will pay Manager within 31-60 days of the title and ownership transfer to Sprint PCS. If for any reason the Installment Billing transaction is not consummated between the Sprint PCS Related Party and the customer, no transfer of title and ownership of the Product will occur, and no Installment Product compensation is due from Sprint PCS to Manager. |
3.8.3. | PRICING / DOWN PAYMENT. Sprint PCS will establish all terms related to the Installment Billing Program, including Installment Product installment billing pricing (for example SRP), down payment, finance terms (including length), and finance charge, if applicable. Manager may not alter the terms, or establish any additional terms related to the Installment Billing Program. If directed by Sprint PCS for applicable customers, Manager will collect a down payment established by Sprint PCS on certain Installment Products. Manager will retain the down payment, and the down payment will be applied against the amount Sprint PCS will reimburse Manager for under Section 3.8.2.2 above for the transfer of title and ownership of the Product. |
3.8.4. | SALES TAX AND SURCHARGES . Because the sale of the Installment Product to the Sprint PCS customer under the Installment Billing Program is a sale of a Sprint PCS Related Party owned product, Manager must collect or cause its distributors to collect sales tax on the Sprint PCS Related Party’s behalf for the sale of the Installment Product. Manager or its distributor will calculate the appropriate sales tax based upon the jurisdiction in which the transaction occurs, and will remit the sales tax within 30 days to Sprint PCS as directed by Sprint PCS. Manager and its distributors will comply with all processes and procedures established by Sprint PCS related to such remittance. In addition to any of its other rights under the Agreement, Sprint PCS may collect reimbursement from Manager for any under-collection of sales tax within the applicable statute of limitations, as extended within any taxing jurisdictions, plus any interest and penalty that Sprint PCS is obligated to pay as a result of such under-collection. |
3.8.5. | RETAIL INSTALLMENT BILLING CONTRACTS. The Retail Installment Billing Contracts to be executed by customers will vary between jurisdictions. Manager will ensure that Manager’s Facilities utilize the appropriate Retail Installment Billing Contracts supplied by Sprint PCS in the jurisdiction where such Facility is located, as directed by Sprint PCS. Manager must return executed Retail Installment Billing Contracts to Sprint PCS, as directed by Sprint PCS. If Manager fails to return the correct executed Retail Installment Billing Contract to Sprint PCS, in addition to any other remedies under the Agreement, Sprint PCS will not be required to reimburse Manager for the Installment Product price. |
3.8.5.1. | Ineligible Plans/ Ineligible Products . Only certain Services Plans are available for the Installment Billing Program, and only Installment Products are eligible for the Installment Billing Program. Manager must ensure that customers are activated on the proper Service Plans, and utilize only eligible Installment Products. If Manager activates a customer on an ineligible Service Plan or ineligible product, in addition to any other remedies under the Agreement, Sprint PCS will not be required to reimburse Manager for the product price. |
3.8.5.2. | Qualified Installment Billing Handset Upgrades. For a customer to upgrade their current handset under the Installment Billing Program, in addition to customer’s meeting all eligibility requirements for a Qualified Installment Billing Handset Upgrade, customers who have remaining payments on their Retail Installment Billing Contracts will be required to Give Back their current handset to the Manager (the “Give Back Handset”), and execute a new Retail Installment Billing Contract. Manager will ensure that only upgrade eligible customers execute Retail Installment Billing Contracts. Manager will ensure that the Give Back Handset must power on and have no broken, cracked or missing pieces, and comply with any additional requirements on the handset established by Sprint PCS from time to time. Manager must return that handset to Sprint PCS as specified in Section 3.8.6 below. |
3.8.6. | RETURNS / EXCHANGES / GIVE BACK . |
3.8.6.1. | Returns. If a customer returns an Installment Product under the Installment Billing Program to Manager within 14 days of Service Activation as part of the current version of Sprint PCS’s Satisfaction Guarantee or if a customer returns a defective Installment Product to Manager within 14 days of Service Activation, Manager must return that Installment Product to Sprint PCS in accordance with Sprint PCS’s then current returns process, subject to any additional processes as directed by Sprint PCS. During the return process, title and ownership of the Installment Product will be as follows. When the customer returns the Installment Product to Manager or its distributor, title and ownership of the Installment Product will first pass back to the designated Sprint PCS Related Party. Sprint PCS will then charge Manager the Net Purchase Price for the Installment Product and title and ownership of the Installment Product will pass to Manager. |
3.8.6.2. | Exchanges. If a customer exchanges an Installment Product under the Installment Billing Program with Manager within 14 days of Service Activation as part of the current version of Sprint PCS’s Satisfaction Guarantee, Manager must return that Installment Product to Sprint PCS in accordance with Sprint PCS’ then current returns process, subject to any additional processes as directed by Sprint PCS. During the exchange process, title and ownership of the Installment Product will be as follows. When the customer returns the Installment Product that they are exchanging to Manager, title and ownership of the Installment Product will first pass to Sprint PCS. Sprint PCS will then charge Manager the Net Purchase Price for the Product and title and ownership of the Installment Product will pass to Manager. When Manager returns the Installment Product to Sprint PCS, Sprint PCS will repay Manager the Net Purchase Price for the Installment Product and title and ownership of the Product will pass back to the designated Sprint PCS Related Party. For the new Installment Product purchased by the customer as part of the exchange, Manager must ensure that the customer executes a new Retail Installment Billing Contract for the new Installment Product. In the cases where due to exchanges of Installment Products, Sprint PCS has charges for the Net Purchase Price of Installment Products due from Manager, and payment due to Manager for the Net Purchase Price of separate Installment Products, Sprint PCS may net out the payments. |
3.8.6.3. | Give Back. When Manager receives a Give Back handset (as defined in Section 3.8.5.2 above) as part of a Qualified Installment Billing Handset Upgrade, Manager must return that Give Back Handset to Sprint PCS. A Qualified Installment Billing Handset Upgrade means the activation of an Installment Product (provided the customer’s existing handset had been active on the line of service for more than 14 continuous days prior to the upgrade transaction) for an existing customer to replace their existing handset in accordance with Sprint’s current customer-facing Handset Upgrade Program, posted on either Sprint’s intranet site for Manager owned stores using RMS or on the Sprint Indirect Website. Manager will utilize Sprint PCS’ then existing returns process, subject to any additional processes as directed by Sprint PCS. Title and ownership of the Give Back Handset will pass to the designated Sprint PCS Related Party when customer provides the Give Back Handset to Manager. If Manager fails to return the Give Back Handset to Sprint PCS, Manager will be charged a fee that approximates the value of the Give Back Handset, as reasonably determined by Sprint PCS. |
3.8.7. | ELIGIBLE LOCATIONS / SPECIFIC REQUIREMENTS . The Installment Billing Program will only be available in certain jurisdictions, as approved by Sprint PCS in its sole and absolute discretion. Sprint PCS will provide Manager with the approved jurisdictions. Sprint PCS may withdraw the program from certain jurisdictions from time to time. Manager will ensure that the Installment Billing Program is offered only in approved jurisdictions, and will ensure that facilities in non-approved jurisdictions will not make available the Installment Billing Program. Additionally, certain requirements may apply only to certain jurisdictions (for example, limits on the number of installment transactions per customer per day), and Manager will comply and cause its distributors to comply with all such requirements as directed by Sprint PCS. If Manager or its distributors sells in unapproved jurisdictions or fail to comply with jurisdictional requirements, in addition to any other remedies under the Agreement, Sprint PCS will not be obligated to reimburse Manager for the Product price. |
3.8.8. | SPRINT PCS INDIRECT WEBSITE / TRAINING . Policies, processes and procedures related to Manager’s participation in the Installment Billing Program will be posted either on Sprint PCS’ internal on Sprint’s intranet site for Manager owned stores using RMS or on the Sprint Indirect Website. As described in the Agreement, Manager and its distributors are responsible for checking Sprint’s intranet site and the Sprint Indirect Website for new and updated policies, processes and procedures, and must ensure that Manager, it distributors and their employees, subcontractors, agents and subagents comply with such policies, processes and procedures. Additionally, Manager and its distributors must participate in all training required by Sprint PCS related to the Installment Billing Program. |
3.8.9. | MODIFICATIONS. Sprint PCS may change or withdraw the Installment Billing Program at any time, effective immediately upon notice by Sprint PCS. Manager agrees to participate in the Installment Billing Program in accordance with the terms of this Section 3.8, including any changes implemented by Sprint PCS. Manager’s continued performance after a change to the Installment Billing Program goes into effect constitutes acceptance of that change. |
3.8.10. | TRUTH IN LENDING ACT. Manager hereby acknowledges and agrees that for the purposes of Section 16.1 of the Management Agreement, “applicable law” specifically includes the Truth in Lending Act. |
3. | The first sentence of the second paragraph of Section 10.2 is deleted and replaced with the following: |
4. | The first sentence of Section 10.3.2.2 of the Management Agreement is deleted and replaced with the following: |
5. | Amounts payable to Sprint under the Installment Billing Program described in Section 3.8 are “100% Sprint PCS Retained Amounts” to which Sprint PCS is entitled to 100% of the amounts that customers are billed for such items. Exhibit 10.3 is hereby revised to include such amounts as a “100% Sprint PCS Retained Amount.” |
6. | Section 10.3.2.5 of the Management Agreement is deleted in its entirety and replaced with the following: |
7. | MANAGER AND SPRINT PCS’ REPRESENTATIONS . Manager and Sprint PCS each represents and warrants that its respective execution, delivery and performance of its obligations described in this Addendum have been duly authorized by proper action of its governing body and do not and will not violate any material agreements to which it is a party. Each of Manager and Sprint PCS also represents and warrants that there are no legal or other claims, actions, counterclaims, proceedings or suits, at law or in arbitration or equity, pending or, to its knowledge, threatened against it, its Related Parties, officers or directors that question or may affect the validity of this Addendum, the execution and performance of the transactions contemplated by this Addendum or that party's right or obligation to consummate the transactions contemplated by this Addendum. |
8. | REAFFIRMATION OF SPRINT AGREEMENTS . Each of the undersigned reaffirms in their entirety, together with their respective rights and obligations thereunder, the Management Agreement, the Services Agreement, the Trademark and Service Mark License Agreements, and the Schedule of Definitions (as defined in the Management Agreement). |
9. | COUNTERPARTS . This Addendum may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. |
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SHENANDOAH PERSONAL COMMUNICATIONS, LLC
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By:
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/s/
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Name:
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Christopher E. French
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Title:
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President
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SPRINT SPECTRUM L.P.
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By:
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/s/
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Name:
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Matthew S. Gunter
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Title:
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VP National Channels
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SPRINT COMMUNICATIONS COMPANY, L.P.
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By:
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/s/
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Name:
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Matthew S. Gunter
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Title:
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VP National Channels
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WIRELESSCO, L.P.
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By:
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/s/
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Name:
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Matthew S. Gunter
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Title:
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VP National Channels
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APC PCS, LLC
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By:
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/s/
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Name:
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Matthew S. Gunter
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Title:
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VP National Channels
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PhillieCo, L.P.
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By:
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/s/
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Name:
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Matthew S. Gunter
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Title:
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VP National Channels
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Section
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Page
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Article I DEFINITIONS
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1
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1.01.
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Affiliate
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1
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1.02.
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Agreement
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1
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1.03.
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Board
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1
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1.04.
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Change in Control
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1
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1.05.
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Code
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2
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1.06.
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Committee
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2
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1.07.
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Common Stock
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2
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1.08.
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Company
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3
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1.09.
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Control Change Date
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3
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1.10.
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Corresponding SAR
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3
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1.11.
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Dividend Equivalent Right
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3
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1.12.
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Exchange Act
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3
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1.13.
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Fair Market Value
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3
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1.14.
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Incentive Award
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4
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1.15.
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Initial Value
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4
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1.16.
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Option
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4
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1.17.
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Participant
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4
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1.18.
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Performance Goal
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4
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1.19.
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Performance Units
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5
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1.20.
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Person
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5
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1.21.
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Plan
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5
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1.22.
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SAR
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5
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1.23.
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Stock Award
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6
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1.24.
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Ten Percent Stockholder
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6
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Article II PURPOSES
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6
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Article III ADMINISTRATION
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7
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Article IV ELIGIBILITY
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8
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Article V COMMON STOCK SUBJECT TO PLAN
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8
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5.01.
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Common Stock Issued
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8
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5.02.
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Aggregate Limit
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8
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5.03.
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Individual Grant Limit
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8
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5.04.
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Reallocation of Shares
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9
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Article VI OPTIONS
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9
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6.01.
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Award
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9
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6.02.
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Option Price
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9
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6.03.
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Maximum Option Period
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9
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6.04.
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Nontransferability
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10
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6.05.
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Employee Status
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10
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6.06.
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Exercise
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10
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6.07.
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Payment
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11
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6.08.
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Stockholder Rights
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11
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6.09.
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Disposition of Shares
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11
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Article VII SARS
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11
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7.01.
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Award
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11
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7.02.
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Maximum SAR Period
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12
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7.03.
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Nontransferability
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12
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7.04.
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Exercise
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12
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7.05.
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Employee Status
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12
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7.06.
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Settlement
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13
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7.07.
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Stockholder Rights
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13
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7.08.
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No Reduction of Initial Value
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13
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Article VIII STOCK AWARDS
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13
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8.01.
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Award
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13
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8.02.
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Vesting
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13
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8.03.
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Employee Status
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14
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8.04.
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Stockholder Rights
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14
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Article IX PERFORMANCE UNIT AWARDS
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14
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9.01.
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Award
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14
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9.02.
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Earning the Award
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15
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9.03.
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Payment
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15
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9.04.
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Stockholder Rights
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15
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9.05.
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Nontransferability
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15
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9.06.
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Employee Status
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15
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Article X INCENTIVE AWARDS
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16
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10.01.
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Award
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16
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10.02.
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Terms and Conditions
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16
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10.03.
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Nontransferability
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16
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10.04.
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Employee Status
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16
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10.05.
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Settlement
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17
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10.06.
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Stockholder Rights
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17
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Article XI ADJUSTMENT UPON CHANGE IN COMMON STOCK
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17
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Article XII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
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18
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Article XIII GENERAL PROVISIONS
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18
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13.01.
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Effect on Employment and Service
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18
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13.02.
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Unfunded Plan
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18
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13.03.
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Rules of Construction
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19
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13.04.
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Withholding Taxes
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19
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13.05.
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Return of Awards; Repayment
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20
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Article XIV CHANGE IN CONTROL
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20
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14.01.
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Impact of Change in Control
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20
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14.02.
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Assumption Upon Change in Control
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20
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14.03.
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Cash-Out Upon Change in Control
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21
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14.04.
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Limitation of Benefits
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21
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Article XV AMENDMENT
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23
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Article XVI DURATION OF PLAN
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23
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Article XVII EFFECTIVE DATE OF PLAN
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23
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(1)
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any “Person” is or becomes the Beneficial Owner, as such term is defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company representing at least 50% of the combined voting power or common stock of the Company;
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(2)
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during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than (A) a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (1), (3), or (4) of this Section 1.04 or (B) a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of trustees of the Company) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;
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(3)
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there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, more than 50% of the combined voting power and common stock of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or
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(4)
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there is consummated a sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect, including a liquidation) other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, more than fifty percent (50%) of the combined voting power and common stock of which is owned by stockholders of the Company in substantially the same proportions as their ownership of the common shares of the Company immediately prior to such sale.
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1. | I have reviewed this quarterly report on Form 10-Q of Shenandoah Telecommunications Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
1. | I have reviewed this quarterly report on Form 10-Q of Shenandoah Telecommunications Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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/S/CHRISTOPHER E. FRENCH
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Christopher E. French
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President and Chief Executive Officer
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May 2, 2014
|
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/
S/ADELE M. SKOLITS
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Adele M. Skolits
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Vice President - Finance and
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Chief Financial Officer
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May 2, 2014
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