EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
By and Among
MEBCOM COMMUNICATIONS, INC.,
ITS STOCKHOLDERS
And
MADISON RIVER TELEPHONE COMPANY, LLC
September 12, 1997
STOCK PURCHASE AGREEMENT
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This STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as of
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September 12, 1997, by and among MebCom Communications, Inc., a North Carolina
corporation (the "Company"), the stockholders of the Company ("Sellers") and
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Madison River Telephone Company, a Delaware limited liability company ("Buyer").
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WHEREAS, the Company has a capitalization consisting of 60,000 authorized
shares of Class A Common Stock, $1.00 par value per share (the "Class A Common
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Stock"), of which 480 shares (the "Class A Shares") are issued and outstanding;
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110,000 shares of Class B Common Stock, $1.00 par value per share (the "Class B
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Common Stock"), of which 1,920 shares are issued and outstanding (the "Class B
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Shares"); and 30,000 shares of 8% Non-voting, Non-cumulative Class B Preferred
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Stock, $100.00 par value per share the "Preferred Stock"), of which 989.69
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shares are issued and outstanding (the "Preferred Shares") all of which Class A
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Shares, Class B Shares and Preferred Shares (collectively, the "Shares") are
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owned by Sellers in the respective amounts set forth opposite each Seller's name
on Exhibit A hereto; and
WHEREAS, Sellers desire to sell the Shares to Buyer, and Buyer desires to
purchase the Shares from Sellers.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained in this Agreement, Sellers and Buyer agree as
follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Transfer of Stock. On the Closing Date (as defined below) and subject
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to the terms and conditions set forth in this Agreement, Sellers will sell,
assign, transfer and deliver to Buyer the Shares, in each case free and clear of
all options, pledges, security interests, liens, charges or other encumbrances
or restrictions on transfer ("Encumbrances") of any kind whatsoever, other than
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the restrictions imposed by federal and state securities laws.
1.2 Consideration. On the Closing Date and subject to the terms and
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conditions set forth in this Agreement, in reliance on the representations,
warranties, covenants and agreements of the parties contained herein and in
consideration of the sale, assignment, transfer and delivery of the Shares,
Buyer will pay to Sellers $23,340.000 in the aggregate (the "Purchase Price") by
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wire transfer of immediately available funds to an account or accounts
designated by Sellers; provided however, that, subject to Section 5. 12 hereof,
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in the event that on the Closing Date the Company shall hold less than
$2,600,000 in cash and cash equivalents, Buyer shall have the option to pay a
portion of the Purchase Price, equal to the difference between $2,600,000 and
the amount of cash and cash equivalents held by the Company on the Closing Date,
with a term note issued by the Company to the order of ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇. (the "Note"), which Note shall bear no interest and the principal amount of
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which shall be payable on the date which is seventy (70) days after the Closing
Date The specific amounts to be paid to each Seller on account of each Seller's
Class A Shares, Class B Shares and Preferred Shares are enumerated on Exhibit A
hereto, provided, however, that in the event that a portion of the Purchase
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Price is paid
with the Note, the amount payable to each Seller other than ▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. shall be payable only in immediately available funds and the amount
payable to ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. shall be payable: first, with the Note and
second, in immediately available funds.
1.3 Post-Closing Adjustment Based on Certain Assets and Liabilities.
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Buyer shall, prepare and present not later than twenty (20) business days after
the Closing (as defined below) a special purpose statement (the "Special
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Purchase Statement") which shall set forth Buyer's true and correct
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determination of the Net Asset Value (as defined below) as of the Closing Date.
The Purchase Price shall be adjusted as provided below to the extent that the
Net Asset Value as reflected in the Special Purpose Statement differs from the
Net Asset Value as reflected on the May 31, 1997 adjusted consolidated balance
sheet of the Company (the "May 31 1997 Adjusted Balance Sheet") attached hereto
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as Section 1.3 of the Disclosure Schedule relating to this Agreement (the
"Disclosure Schedule").
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The Special Purpose Statement shall be certified by the Company as being
prepared on a basis consistent with that of the 1996 Audited Financial
Statements (as hereinafter defined), except for the adjustments identified in
the May 31, 1997 Adjusted Balance Sheet. In the event that Sellers shall make a
preliminary determination that the Special Purpose Statement has not been
prepared in accordance with the previous sentence such that an adjustment to the
Purchase Price is required to be made pursuant to the next to the last paragraph
of this Section 1.3, Sellers shall have ten business days after receipt of such
statement to notify Buyer in writing thereof. The parties shall then have
fifteen (15) business days to resolve the matter. If the matter cannot be
resolved in this manner during the 15 business day period, the parties shall
submit the matter to the North Carolina office (if possible) of a nationally
recognized certified public accounting firm mutually agreed upon by the parties
hereto (the "Auditor"). The Auditor shall have fifteen (15) business days to
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audit the Special Purpose Statement. The audit will be performed using generally
accepted auditing standards and will address whether the information contained
in the Special Purpose Statement presents fairly, in all material respects, the
Net Asset Value as of the Closing Date in accordance with generally accepted
accounting principles on a basis consistent with the 1996 Audited Financial
Statements, except for the adjustments identified in the May 31, 1997 Adjusted
Balance Sheet. The costs of retaining the Auditor, including their reasonable
out-of-pocket expenses (collectively, the "Accounting Costs"), in connection
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with the procedures set forth in this Section 1.3 shall be shared equally by
Sellers, on the one hand, and Buyer, on the other.
In accordance with the procedures set forth above, within fifteen (15)
business days of the final determination of the amounts to be reflected on the
Special Purpose Statement, the Purchase Price shall be (i) increased and prompt
payment made on a dollar for dollar basis by Buyer to Sellers on a pro rata
basis determined with reference to the number of Class A Shares and/or Class B
Shares set forth opposite the name of each of the Sellers on Exhibit A hereto (a
"Pro Rata Basis") to the extent the Net Asset Value as set forth on the May 31,
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1997 Adjusted Balance Sheet is less than the Net Asset Value as set forth on the
Special Purpose Statement, or, as the case may be, (ii) decreased and prompt
payment made on a dollar for dollar basis by Sellers on a Pro Rata Basis to
Buyer to the extent the Net Asset Value as set forth on the May 31, 1997
Adjusted Balance Sheet is greater than the Net Asset Value as set forth on the
Special
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Purpose Statement; provided, however, that such adjustment shall be made only if
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such difference exceeds $50,000.
For purposes of this Section 1.3, "Net Asset Value" as of any date shall
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mean the amount determined by subtracting the aggregate amount of liabilities of
the Company on a consolidated basis from the aggregate amount of assets of the
Company on a consolidated basis, in each case taking into account the
adjustments of the same character and nature identified in the May 31, 1997
Adjusted Balance Sheet, in each case as such liabilities and assets arc
reflected in the May 31, 1997 Adjusted Balance Sheet or the Special Purpose
Statement, as the case may be.
1.4 The Closing. The closing (the "Closing") of the transactions
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contemplated in this Agreement shall take place at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇, P.A., Attorneys for Sellers, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on the later of the last day of the calendar month in which
the second business day following the satisfaction or waiver of all of the
conditions set forth in Article IV and Article V (with the exception of
paragraph 5. 11) hereof falls or January 2, 1998 (the "Closing Date"), or at
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such other place and time as may be agreed upon by Sellers and Buyer. In the
event that the Closing Date is January 2, 1998, the pre-closing shall be held on
December 30, 1997 at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A. specified above, or at
such other time or other place as may be agreed upon by Sellers and Buyer.
(a) Deliveries of Sellers. At or prior to the Closing, Seller shall
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deliver or cause to be delivered to Buyer the following:
(i) certificates evidencing the Shares, which certificates
shall be properly endorsed for transfer or accompanied by duly executed stock
powers, in either case executed in blank or in favor of Buyer or its nominee as
Buyer may have directed prior to the Closing Date, and otherwise in a form
acceptable for transfer on the books of the Company; and
(ii) all other previously undelivered documents required to be
delivered by Sellers or the Company to Buyer at or prior to the Closing Date in
connection with the transactions contemplated hereby.
(b) Deliveries by Buyer. At or prior to the Closing, Buyer shall
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deliver or cause to be delivered to Sellers the following:
(i) the Purchase Price by wire transfer of immediately
available funds to an account or accounts designated by Sellers;
(ii) An amount calculated to the Closing Date in accordance with
the Employment Agreement as attached in Section 1.4 of the Disclosure Schedule
(the "Employment Agreement") estimated to be $1,021,000, less amounts withheld
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by the Company in accordance with Section 4.1 of such Employment Agreement in
order to comply with all federal, state and local tax laws, by wire transfer of
immediately available funds of the Company to an account designated by ▇▇. ▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in full satisfaction of the obligations of Mebtel, Inc., a wholly
owned subsidiary of the Company, to ▇▇. ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ excluding continuing
obligations provided other employees separated from service from the Company
(e.g., COBRA);
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(iii) $369,000 by wire transfer of immediately available funds
to accounts designated by ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ in full satisfaction of the
obligations of the Company to ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ and
(iv) all other previously undelivered documents required to be
delivered by Buyer to Sellers at or prior to the Closing Date in connection with
the transactions contemplated hereby.
1.5 Life Insurance Policies. Within ten (10) days after Closing, W.
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▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. and ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have the option to purchase from
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the Company the split dollar life insurance policies on their respective lives,
which are set forth on Section 1.5 of the Disclosure Schedule, at a cost equal
to the then current cash values. The Buyer agrees to provide Company cooperation
as reasonably requested to effectuate the purchase should either insured
exercise this option.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND SELLERS
The Company and Sellers, jointly and severally, represent and warrant to
Buyer as follows:
2.1 Corporate Organization. The Company is duly organized, validly
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existing and in good standing under the laws of the State of North Carolina and
has full corporate power and authority to own and operate its properties and
assets and to carry on its business as it is now being conducted. The Company is
duly qualified or licensed to do business as a foreign corporation in good
standing in the jurisdictions in which the ownership of property or the conduct
of its business requires such qualification, except jurisdictions 'in which the
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the business, operations, prospects, assets,
liabilities or financial condition of the Company and its Subsidiaries (as
defined below), taken as a whole, or on the ability to consummate the
transactions contemplated hereby (hereinafter referred to as a "Material Adverse
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Effect"). Sellers have previously delivered to Buyer complete and correct copies
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of the charter and all amendments thereto to the date hereof and the bylaws as
presently in effect of each of the Company and its Subsidiaries. Section 2.1 of
the Disclosure Schedule sets forth a list of each of the Company's subsidiaries
(the "Subsidiaries"). Each Subsidiary is a corporation duly organized. validly
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existing and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to own and operate its
properties and assets and to carry on its business as it is now being conducted.
Except as set forth in Section 2.1 of the Disclosure Schedule, the Company does
not own, directly or indirectly, any capital stock or other equity securities of
any corporation or have any direct or indirect equity or ownership interest in
any partnership, joint venture or other business.
2.2 Capital Stock. The authorized capital stock of the Company consists
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of 60,000 shares of Class A Common Stock, of which only the Class A Shares are
issued and outstanding;
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110,000 shares of Class B Common Stock, of which only the Class B Shares are
issued and outstanding; and 30,000 shares of Preferred Stock, of which only the
Preferred Shares are issued and outstanding. As of the Closing there will be no,
and, except as set forth in Section 2.3 of the Disclosure Schedule, there are as
of the date hereof no, subscriptions, options, warrants, calls, rights,
contracts, commitments, understandings, restrictions or arrangements relating to
the issuance, sale or transfer by Sellers, the Company or any of its
Subsidiaries of any shares of such capital stock, including any rights of
conversion or exchange under any outstanding securities or other instruments.
All outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights. As of the Closing there will be no, and, except as set forth in Section
2.3 of the Disclosure Schedule, there are as of the date hereof no, accrued and
unpaid dividends or other amounts due and owing with respect to the Preferred
Shares. All of the issued and outstanding shares of each Subsidiary are owned by
the Company, free and clear of all Encumbrances of any kind whatsoever, other
than the restrictions imposed by the federal and state securities laws, and all
such shares have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights.
2.3 Ownership of Stock. The Shares are owned by Sellers (as more
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specifically set forth in Exhibit A hereto) and, as of the Closing, the Shares
shall be free and clear of all Encumbrances of any kind whatsoever, other than
the restrictions imposed by federal and state securities laws. Except as set
forth in Section 2.3 of the Disclosure Schedule. the Shares are, as of the date
hereof, free and clear of all Encumbrances of any kind whatsoever, other than
the restrictions imposed by federal and state securities laws. Upon the
consummation of the transactions contemplated hereby, Buyer will acquire title
to the Shares, free and clear of all Encumbrances of any kind whatsoever except
any encumbrances relating to then existing Company debt if assumed by Buyer,
other than the restrictions imposed by federal and state securities laws.
2.4 Authorization, Etc. Each Seller has full power, authority and
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capacity, and the Company has full corporate power and authority, to execute and
deliver this Agreement and to carry out the transactions contemplated hereby.
The Board of Directors of the Company has duly approved and authorized the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and no other corporate proceedings on the part
of Sellers or the Company are necessary to approve and authorize the execution
and delivery of this Agreement by Sellers and the Company and, except as set
forth in Section 2.4 of the Disclosure Schedule, the consummation by Sellers and
the Company of the transactions contemplated hereby. This Agreement constitutes
a valid and binding agreement of each of Sellers and of the Company enforceable
against Sellers and the Company in accordance with its terms, except that the
enforcement hereof may be limited by (i) bankruptcy, insolvency, reorganization,
creditor arrangement, moratorium, fraudulent conveyance, or other similar state
or federal debtor relief laws now or hereafter in effect relating to creditors'
rights or the collection of debtor's obligations generally and (ii) general
principles of equity (including the possible unavailability of specific
performance or injunctive relief) regardless of whether enforceability is
considered in a proceeding in equity or at law.
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2.5 Financial Statements. The audited consolidated financial statements
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of the Company for the year ended December 31, 1996 (the "1996 Audited Financial
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Statements") and the unaudited consolidated financial statements of the Company
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for the five months ended May 31, 1997 (the "May 31, 1997 Internal Financial
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Statements") are set forth in Section 2.5 of the Disclosure Schedule. The 1996
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Audited Financial Statements have been prepared in accordance with generally
accepted accounting principles consistently applied. The 1996 Audited Financial
Statements and the May 31, 1997 Internal Financial Statements fairly present the
financial condition of the Company and the consolidated results of operations of
the Company for the periods indicated, except as set forth in the notes thereto.
To the best of Sellers' knowledge after reasonable and prudent investigation,
except as disclosed in the Financial Statements or Section 2.5 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any liabilities or
obligations, whether accrued, absolute, contingent or otherwise, which (i) would
be required to be disclosed on a financial statement prepared in conformity with
generally accepted accounting principles or (ii) are material to the
consolidated business or operations of the Company and its Subsidiaries (the
"Business"), except for obligations incurred or paid in connection with
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transactions since May 31, 1997 by the Company and its Subsidiaries in the
ordinary course of business consistent with past practice.
2.6 No Approvals or Conflicts. Except as set forth in Section 2.6 of the
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Disclosure Schedule, neither the execution and delivery by Sellers and the
Company of this Agreement nor the consummation by Sellers and the Company of the
transactions contemplated hereby will violate, conflict with or result in a
breach of any provision of the charter or bylaws of any of the Company and its
Subsidiaries. To the best of Sellers' knowledge after reasonable and prudent
investigation, except as set forth in Section 2.6 of the Disclosure Schedule,
neither the execution and delivery by Sellers and the Company of this Agreement
nor the consummation by Sellers and the Company of the transactions contemplated
hereby will (i) conflict with or result in a breach of any provision of, or
constitute a default under, or result in the termination or cancellation of, or
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties of any of
the Company and its Subsidiaries or upon any Seller's interest in the Shares
under, any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, lease, contract, agreement or other instrument or commitment or
obligation to which any Seller or any of the Company and its Subsidiaries or any
of their respective properties may be bound or affected, (ii) violate any order,
writ, injunction, decree, judgment, ruling, law, rule or regulation of any court
or governmental authority, domestic or foreign, applicable to any Seller or any
of the Company and its Subsidiaries or any of their respective properties, or
(iii) except for approvals of the Federal Communications Commission (the "FCC")
and the North Carolina Utilities Commission (the "NCUC") require any consent,
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approval or authorization of, or notice to, or declaration, filing or
registration with, any governmental or regulatory authority in connection with
the execution, delivery and performance of this Agreement by any Seller or the
Company or to enable the Company and its Subsidiaries to continue fully to
conduct the Business after the Closing Date in a manner which is in all material
respects consistent with that in which it is presently conducted, which, in the
case of clauses (i), (ii) and (iii) above, would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
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2.7 Compliance with Law; Governmental Authorizations. To the best of
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Sellers' knowledge after reasonable and prudent investigation, neither the
Company nor any of its Subsidiaries is in violation in any material respect of
any applicable law, statute, order, rule or regulation (including those relating
to the protection of the environment) promulgated or judgment entered by any
federal, state, local or United States court or governmental authority relating
to or affecting the operation, conduct or ownership of any property or business
of any of the Company and its Subsidiaries. Except as set forth in Section 2.7
of the Disclosure Schedule, the licenses, permits and other governmental
authorizations held by the Company and its Subsidiaries are valid and sufficient
for the conduct of the Business as currently conducted.
2.8 Litigation. To the best of Sellers' knowledge after reasonable and
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prudent investigation, except as otherwise set forth in Section 2.8 of the
Disclosure Schedule, there are no claims, actions, proceedings or investigations
pending or, to the best knowledge of Sellers and the Company, threatened against
the Company or any of its Subsidiaries before any court or governmental or
regulatory authority or body which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect. Neither the Company, its
Subsidiaries nor any of their respective properties is subject to any order,
judgment, injunction or decree which, individually or in the aggregate, would be
likely to have a Material Adverse Effect.
2.9 Changes. Since May 31, 1997 except as otherwise disclosed in Section
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2.9 of the Disclosure Schedule:
(a) the Business has been conducted only in the ordinary course and
consistent with past practice in all material respects;
(b) neither the Company nor its Subsidiaries has suffered any
Material Adverse Effect; and
(c) the Company has not taken any action which would require the
consent of Buyer under Section 6. l(b) had such action been taken by the Company
after the date hereof.
2.10 Taxes. (a) The Company, or an affiliate or other representative of
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the Company on its behalf, has (i) duly filed with the appropriate Federal,
state, local and foreign taxing authorities all material Tax Returns (as defined
below) required to be filed by or with respect to the Company and its
Subsidiaries, and (ii) paid or made provision for in the May 31, 1997 Internal
Financial Statements all material Taxes (as defined below) due and required to
be paid by the Company and its Subsidiaries regardless of whether shown as being
owed on such required Tax Returns. Except as set forth in Section 2.10 of the
Disclosure Schedule, as of the date of this Agreement, (i) neither Sellers, the
Company nor any affiliate or, to the Company's knowledge, other representative
of the Company has received any written notice of deficiency or assessment from
any Federal, state, local or foreign taxing authority with respect to
liabilities for material Taxes of the Company or any Subsidiary or any member of
the consolidated, combined or unitary group, of which the Company or any
Subsidiary is or was at any time a member (a "Tax Group") which have not been
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paid or finally settled and any such deficiency or assessment disclosed in
Section 2.10 of the Disclosure Schedule is being contested in good faith through
appropriate proceedings; (ii) no audit of any Tax Return concerning the Company
or any
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member of a Tax Group is pending, being conducted, or, to the knowledge of the
Company and the Sellers, threatened to be instituted by a Tax authority; (iii)
no extension of the statute of limitations on the assessment of any Taxes has
been granted to the Company or any member of a Tax Group and is currently in
effect; (iv) no consent under Section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code"), has been filed with respect to the Company or any
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member of a Tax Group; (v) neither the Company nor any Subsidiary is a party to
any agreement or arrangement that would result, separately or in the aggregate,
in the actual or deemed payment by the Company of any "excess parachute
payments" within the meaning of Section 280G of the Code; (vi) neither the
Company nor any Subsidiary has been at any time a member of any partnership or
joint venture or the holder of a beneficial interest in any trust for any period
for which the statute of limitations for any Tax has not expired; (vii) neither
the Company nor any Subsidiary has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code; (viii)
neither the Company nor any Subsidiary is doing business in or engaged in a
trade or business in any jurisdiction in which it has not filed all required
income or franchise Tax Returns; (ix) all Taxes required to be withheld,
collected or deposited by or with respect to the Company and each Subsidiary
have been timely withheld, collected or deposited, as the case may be, and, to
the extent required, have been paid to the relevant taxing authority; (x) no
power of attorney that is currently in force has been granted with respect to
any matter relating to Taxes that could materially affect the Tax liability of
the Company or any Subsidiary; (xi) neither the Company nor any Subsidiary is a
party to any written or unwritten tax sharing agreement or indemnity agreement
or agreement executed or agreed to on or prior to the date of this Agreement;
(xii) Section 2. 10 of the Disclosure Schedule sets forth, to Sellers' and the
Company's best knowledge as of the date of this Agreement, the actual and
estimated tax bases of the Company's inventory and property, plant and equipment
as of December 31, 1996 and the date of this Agreement; and (xiii) the Company
has no liability for the Taxes of any person other than the Company and the
Subsidiaries under Treasury regulation section 1. 1502-6 (or any similar
provision of state, local or foreign law).
(b) For purposes of this Agreement, "Taxes" shall mean all taxes,
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charges, fees, levies, penalties or other assessments imposed by any United
States Federal, state, local or foreign taxing authority, including, but not
limited to, income, gross receipts, service, leasing, occupation, excise,
property, sales and use, transfer, gains, franchise, payroll, withholding,
social security or other taxes, including any interest, penalties or additions
attributable thereto.
(c) For purposes of this Agreement, "Tax Return" shall mean any
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return, amended return, report, information return or other document (including
any related or supporting information) filed or required to be filed with any
taxing authority with respect to Taxes.
2.11 Employee Benefits. (a) Section 2.11 of the Disclosure Schedule sets
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forth a true and complete list of each employee benefit or compensation plan,
program and contract, including, but not limited to, any employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"),and any multiemployer plan within the meaning
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of Section 3(37) of ERISA, to which the Company or its subsidiary is a party,
under which any employee or former employee of the Company or its
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subsidiary has any present or future right to benefits, with respect to which
the Company or its subsidiary could incur liability under ERISA or the Code that
is maintained for employees or former employees of the Company or its subsidiary
and to which the Company or any trade or business, whether or not incorporated,
that together with the Company would be deemed a "single employer" within the
meaning of Section 4001(b) of ERISA (an "ERISA Affiliate"), is obligated to
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contribute (the "Plans"). Each Plan has been maintained in substantial
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compliance with all applicable laws and has been operated in all material
respects in compliance with its terms. Except as set forth in Section 2.11 of
the Disclosure Schedule, (i) no Plan has an accumulated or waived funding
deficiency within the meaning of Section 412 of the Code, and (ii) no
proceedings have been instituted to amend or terminate any Plan that is subject
to Title IV of ERISA. Any Plan intended to be "qualified" (within the meaning of
Section 401(a) of the Code) either (x) has received a favorable Determination
Letter from the Internal Revenue Service and, to the knowledge of Sellers and
the Company, no event has occurred nor condition exists which could reasonably
be expected to result in the revocation of such Determination Letter, or (y) is
the subject of an application for such a Determination Letter.
(b) No event has occurred which would subject the Company to liability
under the terms of any Plan (including solely for this purpose, any Plan
maintained by any ERISA Affiliate of the Company) under ERISA, the Code or any
other applicable law which, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.
2.12 Labor Relations. Except as set forth in Section 2.12 of the
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Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement, labor contract or letter of
understanding with a union or labor organization applicable to employees of the
Company or any of its Subsidiaries nor are any of their employees represented by
any other union or labor organization. Except as set forth in Section 2.12 of
the Disclosure Schedule, (i) the Company is in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, (ii) the Company is not engaged in
any unfair labor practice which, individually or in the aggregate, has had or is
reasonably expected to have a Material Adverse Effect, and (iii) there is no
labor strike, material slowdown or stoppage or material labor dispute actually
pending or, to the knowledge of the Company, threatened against the Company.
2.13 Contracts and Leases. Section 2.13 of the Disclosure Schedule
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identifies each of the material contracts, leases, agreements and understandings
to which any of the Company and its Subsidiaries is a party or by which any of
their respective assets or operations may be bound (except for any tariff or
terms and conditions pursuant to which any of the Company and its Subsidiaries
provides telephone service to a customer) (a "Material Contract"). Except as
-----------------
otherwise disclosed in Section 2.13 of the Disclosure Schedule, each Material
Contract is in full force and effect, except where the failure to be in full
force and effect would not have a Material Adverse Effect. There are no existing
defaults by any of the Company and its Subsidiaries under any Material Contract,
which defaults would, individually or in the aggregate, result in a Material
Adverse Effect. As of the date hereof, the Employment Agreement is, and as of
the Closing will be, in full force and effect and there are, as of the date
hereof, and will be, as of the Closing, no existing defaults by any of the
Company and its Subsidiaries thereunder.
9
2.14 Environmental Matters. To the best knowledge of Sellers and the
---------------------
Company after reasonable and prudent investigation, except as set forth in
Section 2.14 of the Disclosure Schedule, none of the Sellers, the Company nor
any of its Subsidiaries has received any written notice alleging the violation
of any applicable federal, state and local laws and regulations related to the
protection of the environment ("Environmental Laws"), and (i) each of the
------------------
Company and its Subsidiaries is in compliance in all material respects with all
Environmental Laws; (ii) each of the Company and its Subsidiaries has obtained
and complies in all material respects with all required governmental
environmental permits with respect to the Business as currently conducted; (iii)
no storage, treatment or disposal of hazardous waste, substance or material on
the real estate owned, leased or managed by any of the Company and its
Subsidiaries has been made except in compliance with applicable Environmental
Laws, and (iv) each of the Company and its Subsidiaries has lawfully disposed of
its hazardous waste products with respect to the operations of the Business. All
underground storage tanks located on the real estate owned by any of the Company
and its Subsidiaries have been duly registered with the appropriate governmental
authorities, to the extent required by law.
2.15 Title to Assets and Leases. (a) On May 31, 1997, either the Company
--------------------------
or a Subsidiary had and, except with respect to assets disposed of in the
ordinary course of business since May 31, 1997, now has, good and marketable
title to all real property and all other properties and assets reflected on the
May 31, 1997 Internal Financial Statements or which would have been reflected
thereon had they not been fully depreciated, free and clear of all Encumbrances
except for (i) Encumbrances which secure indebtedness or obligations which are
properly reflected on the May 31, 1997 Internal Financial Statements; (ii) liens
for Taxes accrued but not yet payable; (iii) liens arising as a matter of law in
the ordinary course of business, provided that the obligations secured by such
liens are not delinquent or are being contested in good faith; (iv) such
imperfections of title and encumbrances, if any, as do not materially interfere
with the present use of any of its properties and assets; and (v) leases, if
any, to third parties which, if material, are set forth on Section 2.15 of the
Disclosure Schedule. Either the Company or a Subsidiary owns, or has valid
leasehold interests in, all material properties and assets used in the conduct
of the Business.
(b) Neither the Company nor any of its Subsidiaries has any legal
obligation, absolute or contingent, to any other person to sell or otherwise
dispose of any substantial part of its assets, or to sell or otherwise dispose
of any of its assets, except in the ordinary course of business.
2.16 Number of Access Lines. As of June 30, 1997, the Company and its
----------------------
Subsidiaries provide local exchange telephone service to not less than 8720
access lines.
2.17 Intellectual Property. (a) Except as set forth on Section 2.17 of the
---------------------
Disclosure Schedule, the Company and its Subsidiaries own no patents,
trademarks, tradenames or other intellectual property and has not filed any
applications or registrations therefor.
(b) To the best knowledge of Sellers and the Company after reasonable
and prudent investigation, neither the Company nor any of its Subsidiaries is,
in any material respect,
10
infringing or violating any patents, trademarks, service marks, trade names,
copyrights, royalty rights, design rights, or applications or registrations
therefor, foreign or domestic, of any person or entity.
2.18 Insurance. (a) Set forth on Section 2.18 of the Disclosure Schedule
---------
is a list of all material policies and binders of insurance held by or on behalf
of the Company and/or its Subsidiaries or relating to their respective
businesses and properties (specifying the amount of the coverage, the type of
the coverage and any pending claims thereunder). Each of these policies and
binders is valid and enforceable in accordance with its terms and is outstanding
and duly in force.
(b) Neither the Company nor any of its Subsidiaries is in material
default with respect to any provision contained in any such policy or binder,
nor has there been any failure to give notice or to present any claim relating
to the Company or any of its Subsidiaries under any such policy or binder in a
timely fashion or in the manner or detail required by the policy or binder.
There are no outstanding unpaid premiums (except premiums not yet due and
payable), and no notice of cancellation or nonrenewal with respect to, or
disallowance of any claim under, any such policy or binder has been received by
the Company or any of its Subsidiaries.
2.19 Regulatory Rate Base. Neither the Company nor any of its Subsidiaries
--------------------
has any inventory, plant or equipment that has been disallowed from regulatory
rate base or excluded from the revenue calculations for any pool (unless due to
the deregulation of the service for which such assets are used) in any rate
order issued by the NCUC or the FCC or any determination by an administrator of
an interstate or intrastate pool, or received notification that the NCUC or the
FCC or any pool administrator proposes to exclude any assets from rate base or
revenue calculations for the pools.
2.20 No Brokers' or Other Fees. No broker, finder or investment banker is
-------------------------
entitled to any brokerage, finder or other fee or commission in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of any Seller, the Company or any affiliate thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
3.1 Organization. Buyer is a limited liability company duly organized,
------------
validly existing and in good standing under the laws of the State of Delaware,
and authorized to do business in the State of North Carolina.
3.2 Authorization, Etc. Buyer has full power and authority to execute and
------------------
deliver this Agreement and to carry out the transactions contemplated hereby.
The Managers (Members) of Buyer have duly approved and authorized the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, and no other proceedings on the part of
11
Buyer are necessary to approve and authorize the execution and delivery of this
Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby. This Agreement constitutes a valid and binding obligation
of Buyer enforceable against Buyer in accordance with its terms, except that the
enforcement hereof may be limited by (i) bankruptcy, insolvency, reorganization,
creditors arrangement, moratorium, fraudulent conveyance, or other similar state
or federal debtor relief laws now or hereafter in effect relating to creditors'
rights or the collection of debtor's obligations generally and (ii) general
principles of equity (including the possible unavailability of specific
performance or injunctive relief) regardless of whether enforceability is
considered in a proceeding at law or in equity.
3.3 No Approvals or Conflicts. Except as set forth in Section 3.3 of the
-------------------------
Disclosure Schedule, neither the execution and delivery by Buyer of this
Agreement nor the consummation by Buyer of the transactions contemplated hereby
will (i) violate, conflict with or result in a breach of any provision of the
organizational documents of Buyer, (ii) violate, conflict with or result in a
breach of any provision of, or constitute a default under, or result in the
termination or in a right of termination or cancellation of, or accelerate the
performance required by, or result in the creation of any Encumbrance upon any
of Buyer's properties under, any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, lease, contract, agreement or other instrument or
commitment or obligation to which Buyer or any of its properties may be bound or
affected, (iii) violate any order, writ, injunction, decree, judgment, ruling,
law, rule or regulation of any court or governmental authority, domestic or
foreign, applicable to Buyer or any of its properties, or (iv) except for
approvals of the FCC and the NCUC, require any consent, approval or
authorization of, or notice to, or declaration, filing or registration with, any
governmental or regulatory authority in connection with the execution, delivery
and performance of this Agreement by Buyer, which, in the case of clauses (ii),
(iii) and (iv) above, would, individually or in the aggregate, reasonably likely
have a material adverse effect on the business, assets, liabilities, operations
or financial condition of Buyer (a "Buyer Material Adverse Effect").
-----------------------------
3.4 No Distribution. The Shares will be acquired by Buyer for investment
---------------
purposes only and not with a view to the resale or other distribution thereof,
and will not be transferred except in a transaction registered or exempt from
registration under the Securities Act of 1933, as amended.
3.5 Litigation. Except as set forth in Section 3.5 of the Disclosure
----------
Schedule, to the best of Buyer's knowledge, there are no claims, actions,
proceedings or investigations pending or, to the best knowledge of Buyer,
threatened against the Buyer or any of its Subsidiaries before any court or
governmental or regulatory authority or body which, individually or in the
aggregate, is reasonably likely to have a Buyer Material Adverse Effect. Neither
Buyer nor any of its respective properties is subject to any order, judgment,
injunction or decree which, individually or in the aggregate, would be likely to
have a Buyer Material Adverse Effect.
3.6 Environmental Inspections. Buyer represents and warrants that Buyer
-------------------------
has conducted a limited inspection of the real property owned by the Company,
and the results thereof have been made available to Company and Sellers. As of
the date hereof, Buyer does not have any present intention of conducting
additional environmental inspections of the real property owned by the Company.
12
3.7 No Brokers' or Other Fees. No broker, finder or investment banker is
-------------------------
entitled to any brokerage, finder or other fee or commission in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of Buyer.
ARTICLE IV
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Sellers under this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions,
unless waived in writing by Sellers.
4.1 Representations and Warranties. The representations and warranties
------------------------------
made by Buyer in this Agreement that are qualified by materiality shall be true
and correct in all respects on the Closing Date as though such representations
and warranties were made at such date, except to the extent such representations
and warranties speak as of an earlier date, in which case they shall be true in
all respects as of such earlier date, and the representations and warranties
made by Buyer in this Agreement that are not qualified by materiality shall be
true and correct in all material respects as though such representations and
warranties were made at such date, except to the extent such representations and
warranties speak as of an earlier date, in which case they shall be true in all
material respects as of such earlier date, except in either case for changes
expressly permitted by the terms of this Agreement.
4.2 Performance. Buyer shall have performed and complied in all material
-----------
respects with all agreements, obligations and conditions required by this
Agreement to be so performed or complied with by Buyer prior to the Closing.
4.3 Officer's Certificate. Buyer shall have delivered to Seller a
---------------------
certificate, dated the date of the Closing and executed by the Chief Executive
or Managing Director of Buyer, certifying to the fulfillment of the conditions
specified in Sections 4.1 and 4.2 hereof.
4.4 Government Approvals. All approvals of the FCC and the NCUC, and any
--------------------
other applicable governmental approvals, shall have been received.
4.5 Injunctions. On the Closing Date there shall be no injunction, writ,
-----------
preliminary restraining order or other order in effect of any nature issued by a
court or governmental agency of competent jurisdiction directing that the
transactions provided for herein not be consummated as provided herein.
4.6 Closing Deliveries. In addition to the Purchase Price, the payments
------------------
referred to in clauses (ii) and (iii) of Section 1.4 hereof and any and all
other documents required to be delivered by Buyer hereunder, Sellers shall have
received from Buyer the following documents:
(i) a copy of the organizational documents of Buyer certified as
of a date within 30 days of the Closing Date by the Secretary of State of the
State of Delaware, and further separately certified by the Manager(s) of Buyer
as to the absence of any amendments to
13
such documents between the date of certification by the Secretary of State of
the State of Delaware and the Closing Date;
(ii) a certificate from the Secretary of State of the State of
Delaware as to the good standing of Buyer in Delaware, and a certificate of the
Secretary of State of North Carolina as to the authority of Buyer to do business
in North Carolina certified as of a date within ten days of the Closing Date;
and
(iii) a certificate of the Manager(s) of Buyer attaching thereto a
true and correct copy of the resolutions of the Board of Directors of Buyer
authorizing this Agreement and the consummation of the transactions contemplated
hereby.
4.7 Opinion of Counsel to Buyer. Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
---------------------------
(Illinois), counsel for Buyer, shall have delivered an opinion dated the Closing
Date with respect to this Agreement and the transactions contemplated hereby in
substantially the form attached hereto as Exhibit B.
4.8 Consents. All Consents referred to in Section 6.3(b) hereof shall
--------
have been obtained.
ARTICLE V
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer under this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions,
unless waived in writing by Buyer.
5.1 Representations and Warranties. The representations and warranties
------------------------------
made by Sellers and the Company in this Agreement that are qualified by
materiality shall be true and correct in all respects on (he Closing Date as
though such representations and warranties were made at such date, except to the
extent such representations and warranties speak as of an earlier date, in which
case they shall be true in all respects as of such earlier date, and the
representations and warranties made by Sellers and the Company in this Agreement
that are not qualified by materiality shall be true and correct in all material
respects as though such representations and warranties were made at such date,
except to the extent such representations and warranties speak as of an earlier
date, in which case they shall be true in all material respects as of such
earlier date, except in either case for changes expressly permitted by the terms
of this Agreement.
5.2 Performance. Sellers and the Company shall have performed and
-----------
complied in all material respects with all agreements, obligations and
conditions required by this Agreement to be so performed or complied with by
Sellers and the Company prior to the Closing.
5.3 Officer's Certificate. Sellers and the Company shall have delivered
---------------------
to Buyer a certificate, dated the date of the Closing and executed by the
President of the Company, certifying to the fulfillment of the conditions
specified in Sections 5.1 and 5.2 hereof.
14
5.4 Government Approvals. All approvals of the FCC and the NCUC, and any
--------------------
other applicable governmental approvals, shall have been received.
5.5 Injunctions. On the Closing Date there shall be no injunction, writ,
-----------
preliminary restraining order or other order in effect of any nature issued by a
court or governmental agency of competent jurisdiction directing that the
transactions provided for herein not be consummated as provided herein.
5.6 Closing Deliveries. In addition to the delivery of the Shares and any
------------------
and all other documents required to be delivered by the Sellers or the Company
hereunder, Buyer shall have received from Sellers or the Company the following
documents:
(i) a copy of the charter of each of the Company and its
Subsidiaries, each certified as of a date within 30 days of the Closing Date by
the Secretary of State of North Carolina, further, separately certified by its
respective corporate secretary as to the absence of any amendments to such
charter between the date of such certification and the Closing Date;
(ii) good standing certificates for each of the Company and its
Subsidiaries, each certified as of a date within ten days of the Closing Date by
the Secretary of State of North Carolina; and
(iii) a certificate of the corporate secretary of the Company
attaching thereto true and correct copies of the bylaws of each of the Company
and its Subsidiaries and the resolutions of the Board of Directors of the
Company authorizing this Agreement and the consummation of the transactions
contemplated hereby.
5.7 Consents. All consents referred to in Section 6.3(b) hereof shall
--------
have been obtained.
5.8 Non-Competition Agreements. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. shall have entered
--------------------------
into a non-competition and confidentiality agreement in substantially the form
attached hereto as Exhibit C hereto.
5.9 Opinion of Counsel to Sellers. ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., counsel to
-----------------------------
Sellers, shall have delivered an opinion, dated the Closing Date, with respect
to this Agreement and the transactions contemplated hereby in substantially the
form attached hereto as Exhibit D. ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP,
Greensboro, North Carolina shall have delivered an opinion, dated the Closing
Date, with respect to regulatory approvals required in connection with this
Agreement and the transactions contemplated hereby. Any fees and expenses of ▇▇.
▇▇▇▇ incurred in connection with the delivery of such opinion shall be borne
exclusively by the Sellers.
5.10 Certain Receipts and Releases. Sellers shall have delivered to Buyer
-----------------------------
a receipt and release in form and substance satisfactory to Buyer executed by
each of Messrs. ▇. ▇▇▇▇▇▇▇
15
▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ with respect to the payments referred to in clauses
(ii) and (iii) of Section 1.4(b) hereof.
5.11 Transition Cooperation Agreement. Both parties anticipate the need
--------------------------------
for cooperation during transition after Closing. Upon reasonable notice and
subject to schedule constraints, Seller agrees to provide cooperation and
transition assistance through ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and/or ▇▇. ▇▇▇ ▇▇▇▇▇
(provided he is then employed by ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. or an entity
controlled by him) for a period not to exceed twelve (12) weeks after Closing
for no more than five (5) hours per week collectively.
5.12 Cash and Cash Equivalents. On the Closing Date, the Company shall
-------------------------
have not less than $2,300,000 in cash and cash equivalents.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Conduct of Business. Sellers and the Company covenant that, except
--------------------
for actions specifically contemplated hereby or as consented to in writing by
Buyer, from and after the date of this Agreement and until the Closing Date they
shall:
(a) use reasonable efforts consistent with good business
judgment to: (i) preserve intact the present business organization of the
Company and its Subsidiaries; (ii) keep available the services of employees of
the Company and its Subsidiaries; (iii) preserve the present relationships of
the Company and its Subsidiaries with entities or persons having business
dealings with them; and (iv) operate the Company and its Subsidiaries in the
ordinary course consistent with prior practice;
(b) except as otherwise provided in Section 6.1 of the
Disclosure Schedule, not (i) issue or sell any shares of capital stock or other
securities of the Company or any of its Subsidiaries or any options, warrants or
commitments of any kind with respect thereto; (ii) directly or indirectly
purchase, redeem or otherwise acquire or dispose of any shares of capital stock
of the Company or any of its Subsidiaries; (iii) declare, set aside or pay any
dividend or other distribution or advance on its capital stock or make any other
distribution to its stockholders; (iv) borrow or agree to borrow any funds or
incur, whether directly or by way of guarantee, any obligation for borrowed
money; (v) subject any of the property or assets of the Company or any of its
Subsidiaries (real, personal or mixed, tangible or intangible) to any
Encumbrance or otherwise permit or allow the sale or other disposition of any
material property or assets of the Company or any of its Subsidiaries (real,
personal or mixed, tangible or intangible), other than the sale of products in
the ordinary course of business consistent with past practice; (vi) make any
change in its accounting policies from those applied in the preparation of the
1996 Audited Financial Statements and the May 31, 1997 Internal Financial
Statements; (vii) make any capital expenditures not set forth in the budget set
forth in Section 6.1 of the Disclosure Schedule, except for capital expenditures
not in excess of $10,000 individually or $50,000 in the aggregate; (viii) modify
or change in any material respect, or enter into or terminate, any material
contract or commitment; (ix) acquire an equity interest in, or the assets
16
of, any other corporation or entity; (x) waive any claims or rights relating to
the Company's business, except in the ordinary course of business and consistent
with past practice in an amount not to exceed $10,000 in the aggregate; (xi)
increase the compensation payable or to become payable to any of the directors,
officers or employees of the Company or any of its Subsidiaries or take any
action with respect to the grant or payment of any severance or termination pay,
or stay bonus or other bonus or incentive arrangement except in the normal
course of business consistent with past practice (other than required pursuant
to benefit plans and policies in effect on the date of this Agreement) or pay or
agree to pay any subscriptions or membership fees or dues for or behalf of any
of the directors, officers or employees of the Company or any of its
Subsidiaries; (xii) make any material Tax election, other than in the ordinary
course of business consistent with past practice or pay any amounts under, or in
respect of, any tax sharing agreement or arrangement; (xiii) amend the charter
or bylaws of the Company or any of its Subsidiaries; (xiv) enter into any
agreements or arrangements with any affiliate; (xv) take any action that would,
or that could reasonably be expected to, result in any of the representations or
warranties of Sellers or the Company set forth in this Agreement to become
untrue; (xvi) enter into agreements with or take any action to file or petition
to the NCUC, FCC or any other governmental or regulatory agency without prior
discussion with and approval of Buyer or (xvii) agree to do any of the
foregoing; and
(c) maintain the books and records of the Company and its
Subsidiaries in accordance with prior practice.
6.2 Access to Books and Records. Upon reasonable written notice to
---------------------------
Sellers Representative and subject to operational considerations, the Company
shall, and shall cause each of its Subsidiaries to, afford to Buyer, and to
Buyer's accountants, counsel and other representatives, reasonable access to and
permit them to make such inspections of, as they may reasonably require during
normal business hours, including all available environmental reviews or audits,
for reasonable periods during the period from the date of this Agreement through
the Closing, their respective properties, books, contracts, commitments and
records. The Company and its Subsidiaries shall furnish or cause to be furnished
to Buyer such financial and operating data and other information with respect to
the business and properties of the Company and its Subsidiaries, including
access to the work papers of the Company's independent auditors, as Buyer may
from time to time reasonably request, and Buyer and its representatives shall be
entitled, in consultation with the Company, to such access to the
representatives, officers and employees of the Company and its Subsidiaries as
Buyer may reasonably request. Buyer will hold, and will cause its affiliates,
associates and representatives to hold, any nonpublic information in accordance
with the terms of the Confidentiality Agreement, dated as of July 1, 1997,
between Buyer and the Company (the "Confidentiality Agreement"). The Company
-------------------------
shall, and shall cause each of its subsidiaries to, afford to Buyer and Buyer's
attorneys and consultants, access to the real property of the Company and its
subsidiaries to conduct environmental assessments of said real property. Said
environmental assessments may include, without limitation, the collection and
analysis of soil samples, subsurface soil samples, surface water samples,
groundwater samples, sediment samples, and suspect asbestos-containing building
materials. Said environmental assessments may be conducted in phases, at the
discretion of the Buyer.
17
6.3 Approvals and Consents. After the execution hereof, each of the
----------------------
Company and Sellers, on the one hand, and Buyer, on the other: (a) shall
promptly prepare and make any required filings under the regulations of the FCC
and the NCUC, as required, and (b) shall use all reasonable efforts to obtain
and to cooperate in obtaining any consent, approval, authorization or order of,
or in making any registration or filing with, any governmental agency or body
required in connection with the execution, delivery or performance of this
Agreement. The Company shall be represented in connection with such approvals
and consents by its utility counsel, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP,
Greensboro, North Carolina and the first $15,000 of costs for such counsel,
approvals and consents shall be borne equally by Buyer and Sellers, the balance
of such costs to be borne by the Buyer; provided, however, that the Sellers
-------------------
shall bear no such costs hereunder in the event that the Closing does not occur
as a result of Buyer's failure to satisfy the conditions set forth in Article IV
hereof and each Seller has satisfied the conditions set forth in Article V
hereof. The Company and Buyer will furnish to one another such necessary
information and reasonable assistance as may be requested in connection with the
preparation of necessary filings or submissions under the regulations of the FCC
and the NCUC. Sellers and Buyer will supply to one another copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between Buyer or Sellers or their respective representatives,
on the one hand, and the Federal Trade Commission, the FCC, the NCUC or any
other governmental agency or authority or their respective staffs, on the other
hand, with respect to this Agreement or the transactions contemplated hereby,
other than confidential or proprietary information therein. Sellers and the
Company shall use reasonable best efforts to obtain at the earliest practicable
date and prior to the Closing all consents, waivers and/or approvals required in
connection with the performance of this Agreement and the consummation of the
transactions contemplated thereby pursuant to the terms of (i) all Material
Contracts and (ii) any other contracts, leases, agreements and understandings to
which any of the Company and its Subsidiaries is a party or by which any of
their respective assets or operations may be bound, except in the case of this
clause (ii) for any consents, waivers and/or approvals the failure to obtain
would not impair in any material respect the consummation of the transactions
contemplated hereby or the ability of the Company and its Subsidiaries to
operate the Business following the Closing. The Sellers and the Company shall
also proceed in good faith to obtain prior to the Closing all other consents
that may be required in connection with the performance of this Agreement
pursuant to the terms of other agreements or instruments of the Company and its
Subsidiaries.
6.4 Further Assurances. After the Closing, each party hereto shall from
------------------
time to time, at the request of the other party and at the cost and expense of
the requesting party (including reimbursement of the other party for its
reasonable out-of-pocket expenses in connection therewith), execute and deliver
or cause to be executed and delivered such other instruments of conveyance and
transfer and such other certificates and other documents and take such other
actions as such requesting party may reasonably request in order to more
effectively consummate the transactions contemplated hereby.
6.5 Confidentiality Agreement. The Confidentiality Agreement will survive
-------------------------
and remain in full force and effect following the Closing or the termination of
this Agreement.
18
6.6 Tax Matters. (a) Sellers Indemnification. Sellers shall be liable
----------- --------------------------
for, and shall indemnify and hold Buyer, the Company and their affiliates
harmless against, all Taxes (i) imposed on any person (other than the Company or
the Subsidiaries) under Treas. Reg. (S) 1. 1502-6 (or any similar provision
under state, local or foreign law) (including as a transferee or successor, by
contract or otherwise) and (ii) of the Company or the Subsidiaries for any
taxable year or taxable period ending on or before the Closing Date due or
payable with respect to the income, operations, assets or business of the
Company or the Subsidiaries on or before the Closing Date, but only to the
extent that the aggregate amount of such Taxes exceeds the amount of Taxes that
have been reserved for on the Special Purpose Statement. In order to
appropriately apportion any income Taxes relating to any taxable year beginning
before (and ending after) the Closing Date, the parties hereto shall apportion
such income Taxes to the taxable period ending on or before the Closing Date by
a closing of the Company's and Subsidiaries' books, except that exemptions,
allowances or deductions that are calculated on a time basis, such as the
deduction for depreciation, shall be apportioned on a time basis. In order to
appropriately apportion any non-income Taxes relating to any taxable year
beginning before (and ending after) the Closing Date, the parties hereto shall
apportion such non-income taxes to the taxable period ending on or before the
Closing Date as follows: (x) ad valorem Taxes (including, without limitation,
----------
real and personal property Taxes) shall be accrued on a monthly basis over the
period for which the Taxes are levied, or if it cannot be determined over what
period the Taxes are being levied, over the fiscal period of the relevant taxing
authority, in each case irrespective of the lien or assessment date of such
Taxes, (y) all Taxes relating to actions outside the ordinary course of business
occurring on or prior to the Closing Date shall be apportioned to the period
ending on or prior to Closing, and (z) franchise and other privilege taxes not
measured by income shall be accrued on a monthly basis over the period to which
the privilege relates. Any tax allocation agreement or arrangement between the
Company and Sellers or any of their affiliates in effect prior to Closing (other
than this Agreement) shall cease to exist as of the Closing Date.
(b) Company's Indemnification. Except as otherwise provided in
-------------------------
Section 6.6(a) hereof, the Company and Buyer shall be liable for, and shall
indemnify and hold Sellers or any affiliate of Sellers harmless against, any and
all Taxes imposed on the Company or the Subsidiaries relating to any taxable
year ending after the Closing Date.
(c) Refunds or Credits. The Company shall promptly pay to
------------------
Sellers any refunds or credits of Taxes for which the Sellers may be liable
under Section 6.6(a) hereof; provided, however, that the Company shall not be
required to pay to Sellers any refunds or credits not actually received. Upon
the reasonable request of Sellers, the Company shall prepare and file, or cause
to be prepared and filed, all claims for refunds relating to such Taxes;
provided, however, that the Company shall not be required to file such claims
for refund to the extent such claims for refund would have a material adverse
effect on the Company and its Subsidiaries in future periods or to the extent
the claims for refund relates to a carryback of an item. The Company shall be
entitled to all other refunds or credits of Taxes.
(d) Mutual Cooperation. As soon as practicable, but in any
------------------
event within 15 days after either Sellers' or Buyer's request, as the case may
be, Buyer shall deliver to Sellers or Sellers shall deliver to Buyer, as the
case may be, such information and other data relating to the Tax Returns and
Taxes of the Company and the Subsidiaries and shall provide such other
19
assistance as may reasonably be requested, to cause the completion and filing of
all Tax Returns or to respond to audits by any taxing authorities with respect
to any Tax Returns or taxable periods or to otherwise enable Sellers, Buyer or
the Company to satisfy their accounting or tax requirements. For a period of
five years from and after the Closing, Buyer shall, and shall cause the Company
to, maintain and make available to Seller, on Seller's reasonable request,
copies of any and all information, books and records referred to in this Section
6.6(d). After such five-year period, Buyer or the Company may dispose of such
information, books and records, provided that prior to such disposition Buyer
shall give Sellers the opportunity to take possession of such information, books
and records. The Company shall be responsible for preparing and filing the 1997
tax return, provided that, prior to filing the 1997 tax return, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. and or his advisors shall be provided ten (10) business days to
review said return and all back-up information, and, in the event of questions
or disagreement as to information on the return the parties agree to cooperate
to resolve such questions or disagreements. If a resolution cannot be reached,
then the provisions of Section 6.6(f) below shall apply.
(e) Contests. Whenever any taxing authority asserts a claim,
--------
makes an assessment, or otherwise disputes the amount of Taxes for which Sellers
are or may be liable under this Agreement, Buyer shall, if informed of such an
assertion, promptly inform Sellers, and Sellers shall have the right to control
any resulting proceedings and to determine whether and when to settle any such
claim, assessment or dispute to the extent such proceedings or determinations
affect the amount of Taxes for which Sellers are liable under this Agreement.
Whenever any taxing authority asserts a claim, makes an assessment or otherwise
disputes the amount of Taxes for which Buyer is liable under this Agreement,
Sellers shall, if informed of such an assertion, promptly inform Buyer, and
Buyer shall have the right to control any resulting proceedings and to determine
whether and when to settle any such claim, assessment or dispute, except to the
extent such proceedings affect the amount of Taxes for which Sellers are liable
under this Agreement.
(f) Resolution of Disagreements Between Sellers and Buyer. If
-----------------------------------------------------
Sellers and Buyer disagree as to the amount of Taxes for which Sellers or Buyer
may be liable under this Agreement, Sellers and Buyer shall promptly consult
each other in an effort to resolve such dispute. If any such point of
disagreement cannot be resolved within thirty (30) days of the date of
consultation, Sellers and Buyer shall within ten (10) days after such 60-day
period jointly select a nationally recognized independent public accounting firm
mutually agreed upon by the parties hereto which has not, except pursuant to
this Section 6.6(f), performed any services since January 1, 1992, for either
Sellers or Buyer or their respective subsidiaries, to act as an arbitrator to
resolve, within thirty (30) days after their selection, all points of
disagreement concerning tax matters with respect to this Agreement and presented
to such accounting firm at the time of its selection. If the parties cannot
agree on the selection of an accounting firm within such ten-day period, within
two business days after such ten-day period the parties shall petition the Chief
Judge of the United States District Court for the Middle District of North
Carolina to select such accounting firm. The cost of any such independent public
accounting firm shall be paid equally by the parties.
20
(g) Survival of Obligations. The obligations of the parties
-----------------------
set forth in this Section 6.6 shall be unconditional and absolute, and shall
remain in effect without limitation as to time or amount of recovery.
6.7 Employee Matters.
----------------
(a) A schedule shall be delivered to Buyer by the Company prior
to the Closing Date, setting forth the name and position of each person employed
(excluding those employees listed in Section 6.7 of the Disclosure Schedule) on
a full-time or part-time basis by the Company and/or its Subsidiaries and the
aggregate compensation (including salary, bonuses and commissions) paid to each
such person for the period commencing January 1, 1997, and ending with the pay
period not more than 30 days prior to the Closing Date, together with the date
of most recent commencement of service of each such person and the accrued
holiday, vacation, sick leave, long-service entitlement (if any) of each such
person and permitted time off due as compensation for additional time worked by
each person .
(b) Subject to the obligations under Section 6.1 (a), none of
the Sellers nor Company will take any action to solicit for employment outside
the Company or its subsidiaries other than those individuals set forth in
Section 6.7 of the Disclosure Schedule.
6.8 WARN Act. Buyer and Sellers agree that for purposes of the United
--------
States Worker Adjustment and Retraining Notification Act (the "WARN Act"), the
--------
Closing Date shall be the "effective date" as such term is used in the WARN Act.
Buyer acknowledges and represents that it has no present intent to effectuate a
"mass layoff" or "plant closing" with respect to the Company as defined in the
WARN Act. Buyer agrees that from and after the Closing Date the Company shall be
responsible for any notification required under the WARN Act with respect to the
Company and the Company and Buyer shall indemnify the Sellers and hold the
Sellers harmless from and against all fines and other payments which may become
due under the WARN Act with respect to the Company.
6.9 Employee Benefits. Immediately after the Closing, the Company shall
-----------------
have the same responsibilities and rights with respect to any employee benefit
plan or labor contract, plan, program, agreement, policy or arrangement
including any employment agreement, severance agreement, option agreement or
collective bargaining agreement in effect and disclosed to Buyer on the date
hereof as the Company had prior to the Closing.
6.10 Supplements to Disclosure Schedule. From time to time prior to the
----------------------------------
Closing, Sellers, the Company and Buyer will promptly supplement or amend the
sections of the Disclosure Schedule relating to their respective representations
and warranties in this Agreement with respect to any material matter, condition
or occurrence hereafter arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in their
respective sections of the Disclosure Schedule. Except with respect to a
supplement or amendment not objected to in writing by Sellers, the Company or
Buyer within ten business days after receipt thereof, no supplement or amendment
by Sellers, the Company or Buyer shall have any effect for the purpose of (i)
determining satisfaction by Sellers of the conditions set forth in
21
Sections 4.1 and 4.2 hereof or (ii) determining satisfaction by Buyer of the
conditions set forth in Sections 5.1 and 5.2 hereof.
6.11 Covenant to Satisfy Conditions. Each party agrees to use all
------------------------------
reasonable efforts to insure that the conditions set forth in Article IV and
Article V hereof are satisfied, insofar as such matters are within the control
of such party.
6.12 Director and Officer Liability and Indemnification. For a period of
--------------------------------------------------
five years after the Closing, Buyer shall not permit the Company to amend,
repeal or modify any provision in its charter or bylaws relating to the
exculpation or indemnification of former officers and directors (unless required
by law), it being the intent of the parties that the officers and directors of
the Company prior to the Closing shall continue to be entitled to such
exculpation and indemnification to the fullest extent permitted under applicable
law. Notwithstanding the foregoing, the provisions of this Section 6.12 may not
be relied upon by Sellers to avoid liability in connection with any
indemnification claim made by a Buyer Indemnified Party (as defined herein)
pursuant to Section 8.1 of this Agreement.
6.13 Financing. The Company and Sellers acknowledge that Buyer desires to
---------
obtain outside financing in connection with the transactions contemplated
hereby. It is agreed and understood by the Buyer that the financing contemplated
hereby is not a condition precedent to Closing. In connection therewith, the
Company and its officers and appropriate employees will provide reasonable
cooperation in connection with the arrangement of the financing contemplated
hereby (the "Financing") as may be reasonably requested by Buyer, including the
---------
execution of such certificates and other documents and the provision of such
legal opinions as the tender in the Financing shall require as a condition for
consummation of the Financing. Buyer hereby agrees to use its reasonable best
efforts (i) in the negotiation of definitive agreements with lenders and (ii) to
satisfy all conditions applicable to Buyer in such definitive agreements to the
extent that the satisfaction of such conditions are within the control of Buyer.
Buyer will keep the Company informed of the status of its efforts to arrange the
Financing, including making reports to Sellers with respect to significant
developments.
6.14 Affiliated Transactions. Except as set forth in Section 6.14 of the
-----------------------
Disclosure Schedule, prior to or concurrently with the Closing, all contracts,
arrangements or obligations between the Company or any of its Subsidiaries, on
the one hand, and Sellers or any of their affiliates, on the other hand, shall
be terminated without the payment of any monies by the Company or its
Subsidiaries.
6.15 Financial Statements and Reports. As promptly as practicable, the
--------------------------------
Company shall provide to Buyer true and complete copies of the Company's monthly
unaudited consolidated balance sheets and consolidated statements of income,
stockholders' equity and cash flows, together with the notes thereto, if any
(the "Interim Financial Statements"). The Interim Financial Statements shall be
----------------------------
prepared on a basis consistent with the May 31, 1997 Internal Financial
Statements and shall fairly present the financial position and results of
operations of the Company as of the dates and for the periods set forth in such
Interim Financial Statements. As promptly as practicable, the Company shall
deliver to Buyer true and complete copies of such
22
other regularly prepared financial statements, reports and analyses as may be
prepared by the Company and delivered to the Company's existing lenders under
its credit facilities.
6.16 Disclosure. Sellers and the Company shall promptly notify Buyer of,
----------
and furnish Buyer with any information Buyer may reasonably request with respect
to the occurrence, to the best knowledge of Sellers and the Company, of any
event or condition or the existence of any fact that would cause any of the
conditions to Buyer's obligations to consummate the transactions contemplated by
this Agreement not to be fulfilled. Buyer shall promptly notify Sellers of, and
furnish Sellers with any information the Sellers may reasonably request with
respect to the occurrence, to the best knowledge of Buyer, of any event or
condition or the existence of any fact that would cause any of the conditions to
Sellers' obligations to consummate the transactions contemplated by this
Agreement not to be fulfilled.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and abandoned at any
-----------
time prior to Closing:
(a) by the mutual consent of Sellers and Buyer;
(b) by written notice by Sellers delivered to Buyer no later
than October 6, 1997, in the event that the redacted copy of the commitment
letter referred to in Section 6.13 hereof is not provided to Sellers on or prior
to October 1, 1997;
(c) by either Sellers or Buyer in the event the Closing has not
occurred by January 31, 1998 (the "Cutoff Date"), unless the failure of such
-----------
consummation shall be due to the failure of the party seeking to terminate this
Agreement to comply in all material respects with the agreements and covenants
contained herein to be performed by such party on or before the Cutoff Date; or
(d) by either Sellers or Buyer in the event any court of competent
jurisdiction in the United States or other federal, state or local governmental
body shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby and such order, decree or ruling or other action shall have become final
and nonappealable.
7.2 Effect of Termination. In the event of any termination of this
---------------------
Agreement, neither party to this Agreement will have any liability to the other,
except for (i) any breach of any provisions of this Agreement and (ii)
obligations arising out of the Confidentiality Agreement.
23
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Sellers. Sellers jointly and severally (including
--------------------------
their successors and assigns) agree to indemnify promptly Buyer, its successors
and assigns, and any officer, director, employee or affiliate of Buyer
(collectively, the "Buyer Parties") against and hold the Buyer Parties harmless
-------------
from and in respect of any and all assessments, liens, losses, claims, damages,
fines, penalties, judgments, settlements, liabilities, costs, reasonable
expenses (including, without limitation, expenses of investigation and defense
fees and disbursements of counsel and other professionals) and any other
obligations of any nature whatsoever (collectively the "Losses") which may be
------
incurred by any of the Buyer Parties directly or indirectly by virtue of or
resulting from the breach of (i) any covenant or agreement made by the Company
or Sellers in this Agreement, (ii) any of the representations and warranties
contained in Sections 2.2, 2.3, 2.10, and 2.11 hereof (which are the only
representations and warranties of the Company or Sellers which survive the
Closing) and (iii) agreements to which the Company or any Subsidiary is a party,
including indemnification agreements, which were not provided to Buyer;
provided, however, that the provisions of this Article VIII shall not apply to
-------- --------
the covenants and agreements contained in Section 6.6 hereof, which shall be
controlled by the terms therein; provided, further, that indemnification for
-------- -------
breaches of the representations and warranties listed in clause (ii) of this
Section 8.1 shall not be available except with respect to claims of breaches
made thereunder by any Buyer Party prior to the 18 month anniversary of the
Closing Date, except that indemnification for breaches of the representations
and warranties contained in Sections 2.10 and 2.11 herein shall survive until 30
days following the expiration of the relevant statute of limitations (including
extensions thereof).
8.2 Indemnification by Buyer. Buyer (including its successors and
------------------------
assigns) agrees to indemnify promptly Sellers, their successors and assigns, and
any affiliate of any of Sellers (collectively the "Seller Parties") against arid
--------------
hold the Seller Parties harmless from and in respect of any and all Losses which
may be incurred by any of the Seller Parties directly or indirectly by virtue of
or resulting from the breach of any covenant or agreement of Buyer in this
Agreement; provided, however, that the provisions of this Article VIII shall not
-------
apply to the covenants and agreements contained in Section 6.6 hereof, which
shall be controlled by the terms therein.
8.3 Notification of Claims. (a) A party entitled to be indemnified
----------------------
pursuant to Section 8.1 or 8.2 hereof (the "Indemnified Party") shall notify the
-----------------
party liable for such indemnification (the "Indemnifying Party") in writing of
------------------
any claim or demand which the Indemnified Party has determined has given or
could give rise to a right of indemnification under this Agreement. Such notice
must be given, in the case of a third-party claim, within thirty (30) days after
actual receipt by the Indemnified Party of written notice of the third-party
claim; provided, however, that the Indemnified Party shall in any event give
-------- -------
written notice to the Indemnifying Party within such reasonable period of time
as shall be necessary to allow the Indemnifying Party to respond to any judicial
pleading or other document for which a timely response is required.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any claim or demand pursuant to Section 8.3(a) hereof, and if such claim or
demand relates to a claim or
24
demand asserted by a third party against the Indemnified Party which the
Indemnifying Party acknowledges is a claim or demand for which it must indemnify
or hold harmless the Indemnified Party under Section 8.1 or 8.2 hereof, the
Indemnifying Party shall have the right to employ counsel reasonably acceptable
to the Indemnified Party to defend any such claim or demand asserted against the
Indemnified Party, the parties acknowledging that the respective counsel in this
transaction are, and will be, acceptable. The Indemnified Party shall have the
right to cooperate in the defense of any such claim or demand at its own
expense. The Indemnifying Party shall notify the Indemnified Party in writing,
within 30 days after the date of the notice of claim given by the Indemnified
Party to the Indemnifying Party under Section 8.3(a) hereof, of its election to
defend in good faith any such third-party claim or demand. So long as the
Indemnifying Party is defending in good faith any such claim or demand asserted
by a third party against the Indemnified Party, the Indemnified Party shall not
settle or compromise such claim or demand. The Indemnified Party shall make
available to the Indemnifying Party or its agents all records and other
materials in the Indemnified Party's possession reasonably required by it for
its use in contesting any third-party claim or demand. If the Indemnifying Party
does not assume the defense of a third-party claim or demand, the Indemnified
Party shall defend such claim or demand and the Indemnifying Party shall have
the right to participate in such defense. The Indemnified Party shall not, in
such defense, settle or compromise such claim or demand, except with the written
consent of the Indemnifying Party.
ARTICLE IX
MISCELLANEOUS
9.1 Termination of Representations and Warranties. Except as set forth in
---------------------------------------------
Section 8.1 hereof, the respective representations and warranties of the
Company, Sellers and Buyer contained herein or in any certificates or other
documents delivered prior to or at the Closing shall expire with and be
terminated and extinguished as of the Closing, and thereafter neither Sellers
nor Buyer nor any officer, director or principal thereof shall be under any
liability whatsoever with respect to any such representation or warranty.
9.2 Fees and Expenses. All of the parties shall bear their own expenses
-----------------
in connection with the negotiation and consummation of the transactions
contemplated by this Agreement. If any of the parties has retained a broker or
finder in connection with the transactions contemplated herein, such party shall
bear the fees and expenses of such broker or finder; provided,_that Sellers
--------
shall be solely responsible for the fees and expenses of any broker or finder
employed by or on behalf of Sellers, the Company or any of its Subsidiaries.
9.3 Governing Law. This Agreement shall be construed under and governed
-------------
by the laws of the State of North Carolina without regard to the conflicts-of-
laws provisions thereof, and the parties hereto agree that exclusive
jurisdiction and venue for all disputes between or among them arising out of or
connected with the Agreement or the transactions contemplated hereby, and
whether arising in contract, tort, equity or otherwise shall be the State or
Federal Courts located in Raleigh, North Carolina.
25
9.4 Amendment. This Agreement may not be amended, modified or
---------
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
9.5 No Assignment. Neither this Agreement nor any of the rights,
-------------
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other parties; provided, that Buyer may assign
--------
its rights and obligations hereunder to an affiliate of Buyer without the
consent of any other party.
9.6 Waiver. Any of the terms or conditions of this Agreement which may be
------
lawfully waived may be waived in writing at any time by the party which is
entitled to the benefits thereof. Any waiver of any of the provisions of this
Agreement by any party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision, and no waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other provision hereof (whether
or not similar) nor shall such waiver constitute a continuing waiver.
9.7 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given by hand,
overnight delivery service, delivery, telex, telecopier or mail (registered or
certified mail, postage prepaid, return receipt requested) to the respective
parties as follows:
If to Buyer:
Madison River Telephone Company, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman and Chief Executive
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
with copies to:
Madison River Telephone Company, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Managing Director Finance and General Counsel
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
and
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
26
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
If to Sellers:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇.▇. ▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & Waller, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner.
Notices shall be deemed given, in the case of hand delivery, upon receipt,
in the case of overnight delivery service, on the second business day after
delivery to a recognized overnight delivery service, in the case of telex and
telecopy, upon telephonic confirmation of transmission and, in the case of mail,
upon the fifth business day after deposit with the U.S. mail.
9.8 Complete Agreement. This Agreement, the Disclosure Schedule, the
------------------
Confidentiality Agreement and the other documents and writings referred to
herein or delivered pursuant hereto contain the entire understanding of the
parties with respect to its subject matter. There are no restrictions,
agreements, promises, warranties, covenants or undertakings other than those
expressly set forth in such documents between the Company and Buyer with respect
to the subject matter of this Agreement. Except for the Confidentiality
Agreement, which shall remain in full force and effect, this Agreement
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to this subject matter. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors.
27
9.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.10 Publicity. No publication and/or press release of any nature shall be
---------
issued pertaining to this Agreement or the transactions contemplated hereby (a)
until ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. has been provided an opportunity to address the
employees of the Company with respect to this Agreement and the transactions
contemplated hereby and (b) without the prior consent of the parties hereto
(which shall not be unreasonably withheld), except, in either case, as may be
required by applicable law.
9.11 Headings. The headings contained in this Agreement are for reference
--------
only and shall not affect in any way the meaning or interpretation of this
Agreement.
9.12 Severability. Any provision of this Agreement which is invalid,
------------
illegal or unenforceable in any jurisdiction shall, as to that Jurisdiction, be
ineffective to the extent of such invalidity, illegality, or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
9.13 Arbitration. Any dispute arising out of or relating to this Agreement
-----------
or the breach or validity hereof shall be finally settled and exclusively
resolved by arbitration in the Raleigh-Durham, North Carolina Metropolitan
Statistical Area, by three arbitrators, one of whom shall be appointed by the
Buyer, one of whom shall be appointed by the Seller and the third of whom shall
be appointed by the first two arbitrators so chosen. If either the Buyer or the
Seller fails to appoint an arbitrator within twenty (20) days of a request in
writing by the other to do so, or if the first two arbitrators cannot agree on
the appointment of a third arbitrator within twenty (20) days after the second
arbitrator is designated, then such arbitrator shall be appointed by the Chief
Judge of the United States District Court located in the city of Raleigh, North
Carolina or by the American Arbitration Association. Following the selection of
arbitrators as set forth above, the arbitration shall be conducted promptly and
expeditiously and in accordance with the rules of the American Arbitration
Association so as to enable the arbitrators to render an award within ninety
(90) days after the three arbitrators have been appointed. The arbitrators shall
not be empowered to award punitive damages or other damages in excess of a
party's actual damages, and each party hereby irrevocably waives any damages in
excess of actual damages. The arbitrators shall award the prevailing party
interest for the period from the date that the loss or damage occurred to the
date of payment to the prevailing party. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction therefor. Each party
shall bear the expenses of the arbitrator it selects and shall jointly and
equally share with the other expenses for the third arbitrator and the
arbitration proceeding, including without limitation, any expenses of the
arbitrators, but excluding legal, expert, accountant and other professional fees
of the other side.
28
IN WITNESS WHEREOF, Buyer, Seller and the Company have executed or caused
this Agreement to be executed by their duly authorized officers as of the day
and year first above written.
MEBCOM COMMUNICATIONS, INC.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
-----------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: President
----------------------------
MADISON RIVER TELEPHONE COMPANY, LLC
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
By: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-------------------------------
Title:______________________________
SELLERS:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
U/T/A dated 12/31/92 fbo
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
U/T/A dated 12/31/92 fbo
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
U/T/A dated 12/31/92 fbo
29
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
U/T/A dated 12/31/92 fbo
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
U/T/A dated 12/31/92 fbo
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Custodian for
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III under UGTMA
▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Custodian for
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III under UGTMA
▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Custodian for
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ under UGTMA
▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Custodian for
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ under UGTMA
▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Custodian for
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ under UGTMA
30