EXHIBIT 10.26
AGREEMENT AND PLAN OF MERGER
Dated as of
March 12, 1998
By and among
MJD COMMUNICATIONS, INC.
CHOUTEAU ACQUISITION CORP.,
CHOUTEAU TELEPHONE COMPANY
AND
CERTAIN SHAREHOLDERS OF
CHOUTEAU TELEPHONE COMPANY
AGREEMENT AND PLAN OF MERGER
AGREEMENT made as of this 12th day of March, 1998 by and among
CHOUTEAU TELEPHONE COMPANY, an Oklahoma corporation (the "COMPANY"), MJD
COMMUNICATIONS, INC., a Delaware corporation ("PARENT"), CHOUTEAU ACQUISITION
CORP., an Oklahoma corporation ("ACQUISITION SUB") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "PRINCIPAL SELLING SHAREHOLDERS").
WITNESSETH
WHEREAS, the respective Boards of Directors of Parent, Acquisition Sub
and the Company have approved the merger of Acquisition Sub with and into the
Company (the "MERGER"), upon the terms and subject to the conditions set forth
herein and in the certificate of merger annexed as EXHIBIT A (the "CERTIFICATE
OF MERGER"), as a result of which Acquisition Sub will be merged with and into
the Company and the shareholders of the Company (other than shareholders who
perfect appraisal rights) (the "SELLING SHAREHOLDERS") will be entitled to
receive the consideration provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and of the representations, warranties, covenants and
agreements hereinafter contained, Parent, Acquisition Sub and the Company agree
as follows:
SECTION 1. THE MERGER
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1.1 Surviving Corporation. In accordance with the provisions of
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this Agreement, the Certificate of Merger and the General Corporation Act of the
State of Oklahoma ("OGCA"), at the Effective Date (as defined in Section 1.6),
Acquisition Sub shall be merged with and into the Company, and the Company shall
be the surviving corporation in the Merger (hereinafter sometimes called the
"SURVIVING CORPORATION"). At the Effective Date, the separate existence of
Acquisition Sub shall cease.
1.2 Certificate of Incorporation. As of the Effective Date, the
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Certificate of Incorporation of the Company immediately prior to the Effective
Date shall be the Certificate of Incorporation of the Surviving Corporation,
until thereafter amended as otherwise provided by law or in such Certificate of
Incorporation.
1.3 By-laws. The By-laws of the Company as in effect at the
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Effective Date shall be the By-laws of the Surviving Corporation, until
thereafter amended or repealed as provided by law.
1.4 Directors. The directors of Acquisition Sub at the Effective
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Date (whose names are set forth on SCHEDULE 1.4) shall, from and after the
Effective Date, be the directors of the Surviving Corporation and shall hold
office from the Effective Date until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and By-laws of the Surviving Corporation, or as otherwise provided
by law.
1.5 Officers. The officers of Acquisition Sub at the Effective
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Date (whose names are set forth on SCHEDULE 1.4) shall, from and after the
Effective Date, be the officers of the Surviving Corporation and shall hold
office from the Effective Date until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and By-laws of the Surviving Corporation, or as otherwise provided
by law.
1.6 Effective Date. The Merger shall become effective at the time
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of filing of the Certificate of Merger with the Secretary of State of the State
of Oklahoma in accordance with Section 1081 of the OGCA. The Certificate of
Merger shall be filed with the Secretary of State of the State of Oklahoma on
the Closing Date (as defined in Section 8.1 hereof). The date when the Merger
becomes effective is herein referred to as the "EFFECTIVE DATE".
1.7 Additional Actions. If, at any time after the Effective Date,
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the Surviving Corporation determines that any deeds, bills of sale, assignments,
assurances or any other acts or things are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, its
right, title or interest in, to or under any of the rights, properties or assets
of the Company or its Subsidiaries acquired or to be acquired by reason of, or
as a result of, the Merger, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors shall
be authorized to execute and deliver, in the name and on behalf of the Company
and its Subsidiaries, all such deeds, bills of sale, assignments and assurances
and to do, in the name and on behalf
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of the Company and its Subsidiaries, all such other acts and things necessary or
desirable to vest, perfect or confirm any and all right, title or interest in,
to or under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out the purposes of this Agreement.
1.8 Conversion of Company Common Stock.
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(a) Each share of the Company's voting common stock, par value
$1.00 per share (the "VOTING COMMON STOCK")and nonvoting common stock, par value
$1.00 per share(the "NONVOTING COMMON STOCK" and together with the Voting Common
Stock, the "COMPANY COMMON STOCK"), actually issued and outstanding at the
Effective Date (except for Dissenting Shares, as defined in Section 1.10) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive from Parent consideration,
payable as set forth on SCHEDULE 1.8 hereto (the "MERGER CONSIDERATION"). The
Merger Consideration consists of $11,550,000 in cash and $7,000,000 in 7% seven-
year notes (the "NOTES"). The Notes will be issued in the form attached hereto
as EXHIBIT B.
(b) Any share of Company Common Stock or other equity security
of the Company held by Parent or in the Company's treasury at the Effective Date
shall, by virtue of the Merger, be canceled without payment of any consideration
therefor and without any conversion thereof.
1.9 Conversion of Acquisition Sub Common Stock. Each share of
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common stock, par value $.01 per share, of Acquisition Sub (the "ACQUISITION SUB
COMMON STOCK") issued and outstanding at the Effective Date shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into and exchangeable for one fully paid and nonassessable share of
voting common stock, par value $1.00 per share, of the Surviving Corporation
(the "SURVIVING CORPORATION COMMON STOCK"). From and after the Effective Date,
each outstanding certificate theretofore representing shares of Acquisition Sub
Common Stock shall be deemed for all purposes to evidence ownership of, and to
represent the number of shares of, Surviving Corporation Common Stock into which
such shares of Acquisition Sub Common Stock shall have been converted.
1.10 Dissenting Shares.
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(a) Notwithstanding anything in this Agreement to the contrary,
shares of Company Common Stock issued and outstanding on the Effective Date
which are held of record by shareholders who shall not have voted such shares in
favor of the Merger and who shall have properly exercised rights to demand
payment of the fair value of such shares in accordance with Section 1091 of the
OGCA ("DISSENTING SHARES") shall not be converted into the right to receive any
portion of the Merger Consideration specified in Section 1.8, but the holders
thereof instead shall be entitled to payment of the fair value of such shares in
accordance with the provisions of 1091 of the OGCA (the "DISSENTING
CONSIDERATION"); provided, however, that (i) if such a holder fails to file a
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notice of election to dissent in accordance with Section 1091 of the OGCA or,
after filing such notice of election, subsequently delivers an effective written
withdrawal of such notice or fails to establish his entitlement to appraisal
rights as provided in Section 1091 of the OGCA, if he or she be so required, or
(ii) if a court shall determine that such holder is not entitled to receive
payment for his shares or such holder shall otherwise lose his or her appraisal
rights, then in either of such cases, each share of Company Common Stock held of
record by such holder or holders shall automatically be converted into and
represent only the right to receive the portion of the Merger Consideration
indicated on SCHEDULE 1.8, upon the surrender of the certificate or certificates
representing such Dissenting Shares. The Company shall give Parent prompt
notice of any demands received by the Company for payment of the fair value of
such shares, and Parent shall have the right to participate in all the
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment (except
to the extent that any such payment is made pursuant to a court order) with
respect to, or settle or offer to settle, any such demands.
(b) To the extent any shareholder exercises its rights pursuant
to this Section 1.10, and as a result of such exercise such shareholder is to
receive consideration in addition to the Merger Consideration set forth on
SCHEDULE 1.8, any and all such additional consideration shall be paid to such
shareholder by the Principal Selling Shareholders and none of Parent,
Acquisition Sub or the Company shall have any liability therefor.
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1.11 Surrender of Shares.
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(a) Subject to Section 1.11(b), at the Closing, Parent shall
deliver the Merger Consideration to the Principal Selling Shareholders.
(b) Upon surrender to Parent of a certificate representing each
of the shares of Company Common Stock (each, a "CERTIFICATE") or an affidavit of
loss stating that the holder of the Certificate has lost such Certificate,
together with an indemnity agreement providing for indemnification of the
Company, Parent and Surviving Corporation for any loss, damage or other expense
resulting from a third party having a claim to such Certificate or the shares of
stock underlying such Certificate ("AFFIDAVIT"), the holder of such Certificate
or Affidavit shall be entitled to receive in exchange for each share of Company
Common Stock represented by such Certificate or subject to the Affidavit, as the
case may be, the portion of the Merger Consideration indicated on SCHEDULE 1.8,
and such Certificate shall forthwith be canceled (if a Certificate is presented)
and the records of the Company shall be modified accordingly upon receipt by the
holder of such Certificate or Affidavit, as the case may be, of the indicated
portion of the Merger Consideration; such surrender of Certificates and
Affidavits to Parent shall be made at Closing by the Principal Selling
Shareholders. No interest will be paid or accrued on any portion of the Merger
Consideration payable upon the surrender of such Certificates or Affidavit.
(c) If payment is to be made to a person other than the person
in whose name the Certificate surrendered in exchange therefor is registered, it
shall be a condition of payment of the Merger Consideration that the Certificate
so surrendered be properly endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name of the record holder appears on such
Certificate, with signature guaranteed, and is otherwise in proper form for
transfer, and that the Person requesting such payment shall pay any transfer or
other taxes required by law as a result of such payment to a Person other than
the record holder of the Certificate surrendered, or shall establish to Parent's
satisfaction that such tax has been paid or is not applicable.
(d) After the Effective Date, there shall be no further
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock which are outstanding at the Effective Date. The
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consideration payable upon the surrender for exchange of Certificates in
accordance with the terms of this Section 1 shall be deemed to have been paid in
full satisfaction of all rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates. If, after the Effective Date,
Certificates are presented to the Surviving Corporation for transfer, they shall
be canceled and there shall be issued to the transferee in exchange for each
share of Company Common Stock the portion of the Merger Consideration indicated
on SCHEDULE 1.8.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL
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SELLING SHAREHOLDERS
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The Company and the Principal Selling Shareholders hereby represent
and warrant to Parent and Acquisition Sub as follows:
2.1 Organization and Corporate Power. Each of the Company and its
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Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation as specified in SCHEDULE
2.1 attached hereto, (b) except as provided in SCHEDULE 2.1, is qualified to do
business as a foreign corporation in each jurisdiction in which such
qualification is required, except where failure to so qualify would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole,
and (c) has all required corporate power and authority to own its property and
to carry on its business as presently conducted or contemplated. Subject to the
receipt of required OCC and FCC approvals (if any are required), each of the
Company and its Subsidiaries has all required corporate power and authority to
enter into and perform this Agreement and the Related Documents, and generally
to carry out the transactions contemplated hereby and by the Related Documents.
The copies of the charter and by-laws of the Company and each of its
Subsidiaries, as amended to date, which have been furnished to counsel for
Parent are correct and complete at the date hereof. Except as provided in
SCHEDULE 2.1, neither the Company nor any of its Subsidiaries is in violation of
any term of its charter or by-laws, or any agreement, instrument, judgment,
decree, order, statute, rule or government regulation applicable to it, which
such violation could have a material adverse effect on the Company and its
Subsidiaries, taken as a whole.
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2.2 Authorization and No Contravention. Subject to the receipt of
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the approval of the Company's shareholders in accordance with Section 1081 of
Oklahoma Corporation Act, the execution and delivery of, and performance by the
Company of its obligations under, this Agreement and the Related Documents have
been duly authorized by all corporate action of the Company, and except as may
otherwise be specifically provided in this Agreement, and subject to the receipt
of the approval of the Company's shareholders, each of this Agreement and the
Related Documents constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally, and general principles of equity and
the availability of equitable remedies. The Company's execution and delivery of
this Agreement and the Related Documents, and its respective performance of the
transactions contemplated hereby and thereby, will not: (i) except as set forth
on SCHEDULE 2.2, violate, conflict with or result in a default under any
contract, instrument, agreement, indenture, obligation or commitment to which
the Company or any of its Subsidiaries is a party or by which it or its assets
are bound, or any charter provision or by-law of the Company or any of its
Subsidiaries, or the creation of any lien, charge or encumbrance of any nature
upon any of the properties or assets of the Company or any of its Subsidiaries;
(ii) violate or result in a violation of, or constitute a default under, any
provision of any law, statute, ordinance, regulation or rule, or any decree,
judgment or order of, or any restriction imposed by, any court or other federal,
state or local governmental agency; or (iii) except as set forth on SCHEDULE
2.2, require any notice to, filing with, or consent or approval of any
governmental authority or other third party. In addition, the allocation of the
Merger Consideration as set forth on SCHEDULE 1.8 is not inconsistent with any
agreement to which any of the Company, any of its Subsidiaries or any of the
Selling Shareholders is a party.
2.3 Capitalization; Shareholders; Subsidiaries. The authorized and
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issued capital stock of the Company and each of its Subsidiaries is as set forth
in SCHEDULE 2.3. All of the presently issued shares of capital stock of the
Company and each of its Subsidiaries have been duly and validly authorized and
issued in accordance, in all material respects, with all applicable federal and
state securities
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laws and are fully paid and non-assessable. Neither the Company nor any of its
Subsidiaries has issued any other shares of its capital stock and there are no
outstanding warrants, options or other rights to purchase or acquire any of such
shares, nor any outstanding securities convertible into such shares or
outstanding warrants, options or other rights to acquire any such convertible
securities. There are no preemptive rights with respect to the issuance or sale
by the Company, or any of its Subsidiaries of the Company's or such Subsidiary's
capital stock. Except as disclosed in SCHEDULE 2.3, there are no restrictions on
the transfer of the Company's capital stock other than those arising from
federal and state securities laws or under this Agreement. The outstanding
shares of capital stock of the Company and its Subsidiaries are held of record
by the persons identified in SCHEDULE 2.3 in the amounts indicated therein.
Except as set forth in SCHEDULE 2.3, the Company has no Subsidiaries and neither
the Company nor any of its Subsidiaries has any investments in, or loans or
advances to, any other corporation, trust, partnership or business entity and is
not a party to any joint venture. All of the outstanding capital stock of each
of the Company's subsidiaries is owned directly or indirectly by the Company
free and clear of all liens of any nature.
2.4 Financial Statements. Attached hereto as SCHEDULE 2.4 are the
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Company's (i) consolidated and consolidating audited statements of income, cash
flows and shareholders' equity and the related balance sheets for the fiscal
years ended December 31, 1994, December 31, 1995 and December 31, 1996 and (ii)
consolidated and consolidating unaudited statements of income, cash flows and
shareholders' equity and the related balance sheet for the fiscal year ended
December 31, 1997 (the December 31, 1997 balance sheet is herein referred to as
the "COMPANY BALANCE SHEET"). Except as set forth in the Company Balance Sheet,
neither the Company nor any of its Subsidiaries has any material contingent
obligations, liabilities or material forward or long-term commitments. The
foregoing financial statements have been prepared (i) to the extent required, in
accordance with the rules and regulations of the OCC and the FCC and (ii) in
accordance with generally accepted accounting principles applied on a consistent
basis. All of such financial statements fairly present the financial condition
and results of operations of the Company and its Subsidiaries as of the date
thereof, and are true and correct as of the date thereof in all material
respects. No event has occurred since such dates which would cause such
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financial statements not to be true and correct in all material respects as of
the date thereof.
2.5 Business; Franchises and Regulations. Except as set forth in
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SCHEDULE 2.5, the Company and each of its Subsidiaries has ownership of and/or
the right to use (i) all franchises, permits, licenses (other than FCC Licenses)
required by applicable law or regulation, and (ii) all patent, copyright,
trademark, or other rights and privileges, in the case of both (i) and (ii) used
or useful in their respective businesses as presently conducted or contemplated
to be conducted or required or necessary to permit it to own its properties and
to conduct its business as presently conducted or contemplated to be conducted
and neither their present nor contemplated activities infringe any such patent,
copyright, trademark or other proprietary rights of others. SCHEDULE 2.5
correctly sets forth all of the franchises, authorizations, permits and licenses
(other than FCC Licenses) which are held by the Company and its Subsidiaries
(the "COMPANY FRANCHISES") and correctly sets forth the issuer and termination
date of each Company Franchise. Each Company Franchise was duly and validly
issued by the issuer thereof pursuant to procedures which complied with all
requirements of applicable law. Each Company Franchise or other right held by
the Company or any of its Subsidiaries is in full force and effect, free of any
lien, charge or encumbrance of any nature, and the Company and each of its
Subsidiaries are in compliance with the terms thereof with no known conflict
with the valid rights of others which could affect or impair in any manner the
business, assets or condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole to any material extent except as set forth in
SCHEDULE 2.5. No event has occurred which permits, or after notice or lapse of
time or both would permit, the revocation or termination of any Company
Franchise so as to adversely affect in any manner the business or assets or
condition, financial or otherwise, of the Company and its Subsidiaries, taken as
a whole, to any material extent except as set forth in SCHEDULE 2.5.
Except as described on SCHEDULE 2.10, the Company has timely and
properly made all filings and reports required by the OCC, the FCC and all other
regulatory entities having jurisdiction over the Company.
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2.6 Tariffs: FCC Licenses.
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(a) The regulatory tariffs applicable to the Company and its
Subsidiaries stand in full force and effect in accordance with their terms, and
there is no outstanding notice of cancellation or termination or, to the
Company's knowledge, any threatened cancellation or termination in connection
therewith. Except as otherwise disclosed on SCHEDULE 2.6(A), neither the
Company nor any of its Subsidiaries is subject to any restrictions or conditions
applicable to its regulatory tariffs that limit or would limit the operations of
the Company or any of its Subsidiaries (other than restrictions or conditions
generally applicable to tariffs of that type or which would not have a material
adverse effect on the Company or any of its Subsidiaries). Each such tariff has
been duly and validly approved by the appropriate regulatory agency. Except as
otherwise disclosed on SCHEDULE 2.6(A), neither the Company nor any of its
Subsidiaries is in material violation under the terms and conditions of any such
tariff, and there is no basis for any claim of material violation by the Company
or any of its Subsidiaries under any such tariff. There are no applications by
the Company or any of its Subsidiaries, nor any complaints or petitions by
others, or proceedings pending or threatened, before the OCC relating to the
Company or any of its Subsidiaries, or their respective operations or regulatory
tariffs. To the knowledge of the Company, there are no material violations by
subscribers or others under any such tariff. A true and correct copy of each
tariff applicable to the Company or any of its Subsidiaries has been made
available to Parent.
(b) Listed on SCHEDULE 2.6(B) are the FCC Licenses held by the
Company or any of its Subsidiaries. Except as disclosed on SCHEDULE 2.6(B), each
such FCC License is valid and in full force and effect in accordance with its
terms, and there is no outstanding notice of cancellation or termination or, to
the Company's knowledge, any threatened cancellation or termination in
connection therewith nor are any of such FCC Licenses subject to any
restrictions or conditions that limit the operations of the Company or any of
its Subsidiaries (other than restrictions or conditions generally applicable to
licenses of that type).
2.7 Rate Base. Neither the Company nor any of its Subsidiaries has
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any material amount of inventory, plant or equipment that has been disallowed
from rate base or excluded from the revenue calculations for any pool, and
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neither the Company nor any of its Subsidiaries has received notification that
the FCC or any state regulatory authority or pool administrator proposes to
exclude any material assets from rate base or revenue calculations for the
pools.
2.8 Overbillings; Refunds. Except as set forth on SCHEDULE 2.8,
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neither the Company nor any of its Subsidiaries has any liabilities for any
customer overbillings or prospective refunds of overearnings.
2.9 Capital Improvements Required by State Authorities. Except as
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set forth on SCHEDULE 2.9, neither the Company nor any of its Subsidiaries is
required by any state regulatory body to make any changes, upgrades or
enhancements with respect to its physical plant and neither the Company nor any
of its Subsidiaries has reason to believe that any such changes, upgrades or
enhancements will be so required in the foreseeable future.
2.10 Compliance with Law. Except as set forth in SCHEDULE 2.10,
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neither the Company nor any of its Subsidiaries is in violation of any statute,
law, ordinance, regulation, rule or order of any foreign, federal, state or
local government or any governmental department or agency (including without
limitation, the OCC and the FCC), or any judgment, decree or order of any court,
applicable to its business or operations except where any such violation would
not have a material adverse effect on the Company and its Subsidiaries, taken as
a whole; and the conduct of the Company's and each of its Subsidiaries'
respective businesses is in conformity with all federal, state and local energy,
public utility, health, workplace or worker safety and health, including but
limited to OSHA, and environmental requirements and all other federal, state and
local governmental regulatory requirements (including, without limitation,
requirements of the OCC and the FCC) except where any such non-conformity
individually or in the aggregate, and taking into account the passage of time
and accumulation of penalties and other obligations, would not have a material
adverse effect on the Company or any of its Subsidiaries. The Company and its
Subsidiaries have all permits, licenses and franchises from, and have made all
necessary filings with, all governmental agencies, including the OCC and the
FCC, required to conduct their businesses as now being conducted.
2.11 Absence of Undisclosed Liabilities. Except as specifically
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disclosed in SCHEDULE 2.11 or the Company Balance Sheet, neither the Company nor
any of its
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Subsidiaries has any accrued or contingent material liability or liabilities
arising out of any transaction or state of facts existing prior to the date
hereof, accrued, to become due, contingent, or otherwise.
2.12 Absence of Certain Developments. Except as specifically
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disclosed in SCHEDULE 2.12, since December 31, 1996 there has been (i) no
material adverse change in the assets, liabilities, properties, business,
prospects or condition (financial or otherwise) of the Company or any of its
Subsidiaries, (ii) no declaration, setting aside or payment of any dividend or
other distribution with respect to, or any direct or indirect redemption or
acquisition of, any of the capital stock of the Company or any of its
Subsidiaries, (iii) no waiver of any valuable right of the Company or any of its
Subsidiaries or the cancellation of any debt or claim held by the Company or any
of its Subsidiaries, (iv) no loan by the Company or any of its Subsidiaries to
any officer, director, employee or shareholder of the Company or any of its
Subsidiaries, or any agreement or commitment therefor, (v) other than pursuant
to the current contractual obligations set forth on SCHEDULE 2.12 or as
otherwise set forth on SCHEDULE 2.12, no increase, direct or indirect, in the
compensation paid or payable to any officer, director, employee or agent of the
Company or any of its Subsidiaries, (vi) no material loss, destruction or damage
to any property of the Company or any of its Subsidiaries, whether or not
insured, (vii) no strikes, work stoppages, union organizing or recognition
efforts involving the Company or any of its Subsidiaries and no material change
in the personnel of the Company or any of its Subsidiaries or the terms and
conditions of any employment contracts to which any of them are parties, (viii)
no investment by the Company in any equity interest of any person or any change
in any such investment held by the Company as of December 31, 1996, and (ix) no
acquisition or disposition of any material assets (or any contract or
arrangement therefor) nor any other transaction by the Company or any of its
Subsidiaries otherwise than in the ordinary course of business.
2.13 Title to Properties.
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(a) Except as specifically disclosed on SCHEDULE 2.13, the
Company and each of its Subsidiaries has good and marketable title to all of its
properties and assets, free and clear of all mortgages, liens, restrictions or
encumbrances, except in such cases as would not have a material adverse effect
on the use of such properties or
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assets by the Company. All owned or leased real estate of the Company and its
Subsidiaries is listed on SCHEDULE 2.13. A true copy of each lease to which the
Company or any of its Subsidiaries is a party, is listed on SCHEDULE 2.13 and
has been delivered by the Company to Parent, is in full force and effect and
affords the Company or the Subsidiary, as the case may be, peaceful and
undisturbed possession of the subject matter of such lease. No material default
or event of default on the part of the Company or any of its Subsidiaries or on
the part of the lessor, exists under any lease, and neither the Company nor any
of its Subsidiaries has received any notice of default under any such lease or
any indication that the owner of the leased property intends to terminate such
lease. Except as specifically disclosed on SCHEDULE 2.13, the Company holds all
easements, rights-of-way and other rights (collectively, "EASEMENTS") necessary
to own, operate and maintain its physical plant (including all telephone lines)
and the Company is not in breach of, or default under, any such Easement and
there are not any materially burdensome limitations or obligations on the
Company under any such Easement. All material Easements held by the Company are
listed on SCHEDULE 2.13. Each Easement held by the Company is valid, binding and
enforceable in favor of the Company and no party is in violation of such
Easement.
(b) Neither the Company nor any of its Subsidiaries is in
violation of any zoning, land-use, building or safety law, ordinance, regulation
or requirement or other law or regulation applicable to the operation of its
owned or leased properties, nor has it received any notice of violation with
which it has not complied, in any case in which the consequences of such
violation if asserted by the applicable regulatory authority would be materially
adverse with respect to the Company or such Subsidiary. All real property
occupied pursuant to leases, and substantially all tangible personal property
owned or leased by the Company and its Subsidiaries taken as a whole and
required for the purpose of carrying on its business and operations, is in good
operating condition and repair, reasonable wear and tear excepted, and no
material portion of any such real or personal property has suffered any damage
by fire or other casualty which has not heretofore been completely repaired and
restored to its original condition if and to the extent necessary or useful in
the continued operation of its business.
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2.14 Tax Matters.
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(a) Each of the Company and its Subsidiaries has filed all Tax
reports and returns that it was required to file. All such reports and returns
were correct and complete in all respects. All Taxes owed by any of the Company
and its Subsidiaries (whether or not shown on any report or return) have been
paid. Except as disclosed on SCHEDULE 2.14, none of the Company or its
Subsidiaries currently is the beneficiary of any extension of time within which
to file any report or return. Except as disclosed on SCHEDULE 2.14, no claim has
ever been made by an authority in a jurisdiction where any of the Company or its
Subsidiaries does not file reports and returns that it is or may be subject to
taxation by that jurisdiction. There are no security interests on any of the
assets of the Company and its Subsidiaries that arose in connection with any
failure (or alleged failure) to pay any Tax.
(b) Except as disclosed in SCHEDULE 2.14, each of the Company
and its Subsidiaries has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, Shareholder or other third party.
(c) There is reasonable basis to believe that no authority will
assess any additional Taxes for any period for which returns have been filed.
Except as disclosed in SCHEDULE 2.14, there is no dispute or claim concerning
any Tax liability of any of the Company or its Subsidiaries either (i) claimed
or raised by any authority in writing or (ii) as to which any of the directors
and officers (and employees responsible for Tax matters) of the Company and its
Subsidiaries has knowledge based upon personal contact with any agent of such
authority. All federal, state, local, and foreign income tax returns filed with
respect to the Company and/or any of the Subsidiaries for taxable periods ended
on or after December 31, 1994, December 31, 1995 and December 31, 1996 are set
forth on SCHEDULE 2.14, and SCHEDULE 2.14 indicates those returns that have been
audited or currently are the subject of an audit. The Company has delivered to
the Parent correct and complete copies of all federal income Tax returns,
examination reports and statements of deficiencies assessed against or agreed to
by any of the Company and its Subsidiaries since December 31, 1994.
-14-
(d) None of the Company and its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency. Neither the Company nor any of
its Subsidiaries has entered into a closing agreement pursuant to Section 7121
of the Internal Revenue Code of 1986, as amended (the "CODE").
(e) The unpaid Taxes of the Company and its Subsidiaries (i)
did not, as of December 31, 1996 exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Company's December 31,
1996 balance sheet (rather than in any notes thereto) and (ii) do not exceed
that reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company and its Subsidiaries
in filing their Tax returns.
(f) None of the Company and its Subsidiaries has filed a
consent under Code Section 341(f) concerning collapsible corporations. None of
the Company and its Subsidiaries has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under Code Section
280G. None of the Company and its Subsidiaries has been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii). Each of the
Company and its Subsidiaries has disclosed on its federal income Tax returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Section 6662. None of the Company
and its Subsidiaries is a party to any Tax allocation or sharing agreement. None
of the Company and its Subsidiaries (i) has been a member of an Affiliated Group
filing a consolidated federal income Tax return (other than a group the common
parent of which was the Company) or (ii) has any liability for the Taxes of any
Person (other than any of the Company and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(g) SCHEDULE 2.14 sets forth the following information with
respect to each of the Company and its Subsidiaries as of the most recent
practicable date: (i) the basis of the Company and its Subsidiaries in their
-15-
respective assets; (ii) the amount of any net operating loss, net capital loss,
unused investment or other credit, unused foreign tax, or excess charitable
contribution allocable to the Company or any of its Subsidiaries and (iii) the
amount of any deferred gain or loss allocable to the Company or any of its
Subsidiaries arising out of any Deferred Intercompany Transaction.
2.15 Insurance. The Company has in force all policies of insurance
---------
described in SCHEDULE 2.15, in the amounts and covering the risks described
therein. Neither the Company nor any of its Subsidiaries has ever been refused
any insurance coverage for which it has applied.
2.16 Contracts and Commitments. Except as set forth in SCHEDULE
-------------------------
2.16, neither the Company nor any of its Subsidiaries (a) is a party to any
contract, obligation or commitment which involves a potential commitment or
aggregate payments in excess of $5,000, or which is otherwise material and not
entered into in the ordinary course of business, or (b) has any employment
contracts; stock redemption or purchase agreements; financing agreements; or
agreements with officers, directors, employees or shareholders of the Company or
any of its Subsidiaries or persons or organizations related to or affiliated
with any such persons. Except as disclosed in SCHEDULE 2.16, neither the
Company nor any of its Subsidiaries is in default under any contract, obligation
or commitment, and to the best knowledge of the Company, there is no state of
facts which upon notice or lapse of time or both would constitute such a
default, the consequences of which default if asserted by the other contracting
party would be materially adverse with respect to the Company and its
Subsidiaries, taken as a whole. Except as set forth in SCHEDULE 2.16, neither
the Company nor any of its Subsidiaries is a party to any contract or
arrangement which is likely to have a material adverse effect on the assets,
liabilities, properties, business, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole. Neither the
Company nor any of its Subsidiaries has entered into any government contracts or
subcontracts that remain in full force and effect.
2.17 Litigation. Except as set forth in SCHEDULE 2.17, there is no
----------
investigation, action, suit or proceeding at law or in equity or by or before
any governmental instrumentality or other agency (including, without limitation,
the OCC or the FCC) now pending or, to the best knowledge of the Company,
threatened against the
-16-
Company or any of its Subsidiaries, or, to the best knowledge of the Company,
any director, officer or key employee of the Company or any of its Subsidiaries
which has a reasonable possibility of calling into question the validity, or
hindering the enforceability or performance, of this Agreement or any action
taken or to be taken pursuant hereto or any of the other agreements and
transactions contemplated hereby, or which might, if adversely determined, have
a material adverse effect on the Company and its Subsidiaries, taken as a whole,
or their respective business prospects; nor, to the best knowledge of the
Company, has there occurred any event or does there exist any condition on the
basis of which any such litigation, proceeding or investigation might properly
be instituted.
2.18 Environmental Matters. (a) No hazardous wastes, hazardous
---------------------
substances, or hazardous materials have ever been or are being generated, used,
stored, treated, or otherwise managed on any real property owned or leased by
the Company or any of its Subsidiaries (the "PROPERTIES"), except as set forth
in SCHEDULE 2.18 and in compliance with applicable law and regulations, and then
only in the ordinary course of business as then conducted and only in such
amounts as will not have a material adverse effect on the business, operations,
prospects or assets of the Company or any of its Subsidiaries. Except as set
forth in SCHEDULE 2.18, no hazardous wastes, hazardous substances, hazardous
materials, oil, or petroleum products have ever been, are being, are intended to
be, or are threatened to be spilled, released, discharged, disposed, placed, or
otherwise caused to become located in the soil or water in, under, or upon any
of the Properties by the Company or any of its Subsidiaries, or to the best
knowledge of the Company, any other persons. Except as set forth in SCHEDULE
2.18, no hazardous wastes, hazardous substances, hazardous materials, oil, or
petroleum products which may pose a risk to human health or the environment have
been shipped from any of the Properties for treatment, storage, or disposal at
any other site or facility by the Company or any of its Subsidiaries, or to the
best knowledge of the Company, any other persons. For purposes of this
paragraph and paragraph (b) below, "hazardous wastes", "hazardous substances",
"hazardous materials", "oil", and "petroleum products" shall have the meanings
set forth in the federal Resources Conservation and Recovery Act, the federal
Comprehensive Environmental Response Compensation and Liability Act, the federal
Hazardous Materials Transportation Act, the federal Clean Water Act, and
corresponding state and local laws and ordinances, as such
-17-
acts, laws, or ordinances may be amended through the date hereof, or as defined
in any federal, state, or local regulation adopted under such acts, laws, or
ordinances.
(b) Except as set forth in SCHEDULE 2.18, the Company and its
Subsidiaries have no liability (contingent or otherwise) under, have never
violated, and are presently in compliance in all respects with all federal,
state, and local environmental laws, regulations, ordinances, and other
requirements including, but not limited to, all laws, regulations, ordinances,
and other requirements relating to the spilling, release, discharge, storage,
treatment, disposal, management, control, and reporting of pollutants,
contaminants, hazardous wastes, hazardous materials, hazardous substances, oil,
petroleum products, and other materials which may pose a risk to human health or
the environment. The Company and each of its Subsidiaries have not disposed or
treated, or sent for disposal or treatment, any solid waste, pollutants,
contaminants, hazardous wastes, hazardous materials, hazardous substances, oil
or petroleum products except as set forth in SCHEDULE 2.18 and to a facility
which possessed a proper permit for the storage and treatment of the material or
waste, and then only in compliance with all applicable legal requirements.
(c) Except as set forth in SCHEDULE 2.18, no circumstances
exist to support any, and the Company and its Subsidiaries have not received,
and have no reason to believe they will receive any: (i) notice of violation of
any federal, state, or local environmental law, regulation, ordinance, or other
requirement; or (ii) notice of any suit, action, claim, liability (contingent or
otherwise), or legal, administrative, or other proceeding concerning
environmental conditions or matters, including but expressly not limited to
notice of responsibility under the federal Comprehensive Environmental Response,
Compensation and Liability Act or any similar state or local law, regulation, or
ordinance.
2.19 Investment Company. Neither the Company nor any of its
------------------
Subsidiaries is an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
-18-
2.20 Employee Benefit Programs.
-------------------------
(a) SCHEDULE 2.20 sets forth a list of every Employee Program
that has been maintained by the Company and its Subsidiaries at any time during
the past six years.
(b) Each Employee Program which has ever been maintained by the
Company or any of its Subsidiaries and which has been intended to qualify under
Section 401(a) or 501(c)(9) of the Code has received a favorable determination
letter from the Internal Revenue Service ("IRS") regarding its qualification
under such section. Each such Employee Program has, in fact, remained qualified
under the applicable section of the Code from the effective date of the
favorable determination letter for such Employee Program through and including
the date hereof (or, if earlier, the date that all of such Employee Program's
assets were distributed). No event or omission has occurred which would cause
any such Employee Program to lose its qualification under the applicable Code
section.
(c) The Company is in compliance with any laws applicable with
respect to the Employee Programs that have been maintained by the Company or any
of its Subsidiaries. With respect to any Employee Program ever maintained by the
Company, any Subsidiary or any affiliate thereof, there has been no "prohibited
transaction" as defined in Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Code Section 4975, or breach of
any duty under ERISA or other applicable law or any agreement which could
subject the Company or any of its Subsidiaries thereof to material liability
either directly or indirectly (including, without limitation, through any
obligation of indemnification or contribution) for any damages, penalties, or
taxes, or any other loss or expense. No litigation or governmental
administrative proceeding (or investigation) or other proceeding (other than
those relating to routine claims for benefits) is pending or, to the best
knowledge of the Company, threatened with respect to any such Employee Program.
(d) Neither the Company, any of its Subsidiaries nor any
affiliate thereof has incurred any liability under Title IV of ERISA which has
not been paid in full prior to the date hereof. There is no "accumulated funding
deficiency" (whether or not waived) with respect to any Employee Program
maintained by the Company or any Subsidiary thereof and subject to Code Section
412 or ERISA
-19-
Section 302. With respect to any Employee Program maintained by the Company, any
of its Subsidiaries or any affiliate thereof and subject to Title IV of ERISA
there (i) has been no "reportable event," within the meaning of Section 4043 of
ERISA (for which the notice requirement is not waived under 29 C.F.R, Part 2615)
and (ii) no event or condition which presents a material risk of plan
termination. All payments and/or contributions required to have been made (under
the provisions of any agreements or other governing documents or applicable law)
with respect to all Employee Programs maintained by the Company or any of its
Subsidiaries, for all periods prior to the date hereof, either have been made or
have been accrued (and all such unpaid but accrued amounts are described on
SCHEDULE 2.20). Except as described in SCHEDULE 2.20, no Employee Program
maintained by the Company, any of its Subsidiaries or any affiliate thereof and
subject to title IV of ERISA has ever had any "unfunded benefit liabilities"
within the meaning of Section 4001(a)(18) of ERISA, as of the date hereof.
Except as described in SCHEDULE 2.20, none of the Employee Programs maintained
by the Company or any Subsidiary thereof has ever provided or promised health
care or non-pension benefits to former employees (other than as required by Part
6 of subtitle B of title I of ERISA).
(e) With respect to each Employee Program maintained by the Company or
any of its Subsidiaries within the three years preceding the date hereof,
complete and correct copies of the following documents (if applicable to such
Employee Program) have previously been delivered to Parent: (i) all documents
embodying or governing such Employee Program, as they may have been amended to
the date hereof; (ii) the most recent IRS determination letter with respect to
such Employee Program and any applications for determination subsequently filed
with the IRS; (iii) the three most recently filed IRS Forms 5500, with all
applicable schedules attached thereto; (iv) the three most recent actuarial
valuation reports completed with respect to such Employee Program; (v) the
summary plan description for such Employee Program (or other descriptions of
such Employee Program provided to employees) and all modifications thereto; and
(vi) any insurance policy (including any fiduciary liability insurance policy)
related to such Employee Program.
(f) Except as disclosed in SCHEDULE 2.20 hereto, no collective
bargaining agreement or other contract, written or oral, with any trade or labor
union, employees' association or similar organization is in effect
-20-
as of the date hereof with respect to any employee of the Company or any of its
Subsidiaries, and neither the Company, any of its Subsidiaries nor any affiliate
has ever maintained or participated in any multiemployer plan, as defined in
Section 3(37) of ERISA.
(g) For purposes of this section:
(i) "EMPLOYEE PROGRAM" means (A) all employee benefit plans
within the meaning of Section 3(3) of ERISA (including, but not limited to,
employee benefit plans such as foreign or excess benefit plans which are
not subject to ERISA); and (B) all stock option plans, bonus, incentive
award or profit sharing plans, severance pay policies or agreements,
deferred compensation agreements, supplemental income arrangements, and all
other employee benefit plans, agreements, and arrangements not described in
(A) above.
(ii) An entity "MAINTAINS" an Employee Program if such entity
sponsors, contributes to, or provides benefits under such Employee Program,
or has any obligation (by agreement or under applicable law) to contribute
to or provide benefits under such Employee Program, or if such Employee
Program provides benefits to or otherwise covers employees of such entity
(or their spouses, dependents, or beneficiaries).
(iii) An entity is an "AFFILIATE" of the Company or any of its
Subsidiaries if it would have ever been considered a single employer with
the Company or such Subsidiary under Section 4001(b) of ERISA or part of
the same "controlled group" as the Company or such Subsidiary for purposes
of 302(d)(8)(C) of ERISA.
2.21 Brokers or Finders. Other than ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Associates,
------------------
Inc., none of the Company or any Subsidiary thereof has engaged the services of
any brokers or finders in connection with the execution of this Agreement.
2.22 Corporate Records. (a) The minute books of the Company and its
-----------------
Subsidiaries contain true and complete records of all meetings of, or written
consents in lieu of meetings executed by, their respective boards of directors
(and all committees thereof) and shareholders; (b) all material actions and
transactions taken or entered into by
-21-
the Company or any of its Subsidiaries, or otherwise requiring action by their
respective boards of directors or shareholders, have been duly authorized or
ratified as necessary and are evidenced in such minute books; (c) the stock
certificate books and stock records of the Company and its Subsidiaries are true
and complete; and (d) the signatures appearing in such minute books, stock
certificate books and stock records are the genuine signatures of the persons
purporting to have signed them.
2.23 Books of Account. The books of account of the Company and its
----------------
Subsidiaries have been maintained in accordance with normal business practices,
and accurately and fairly reflect all of the properties, assets, liabilities,
transactions and appropriate accruals of the Company and each of its
Subsidiaries.
2.24 Certain Employment Matters.
--------------------------
(a) SCHEDULE 2.24 contains a true and complete list of names
and current hourly wage, monthly salary or other compensation of all directors,
officers, management employees, consultants or managers of the Company, with a
summary of existing bonuses, additional compensation and other benefits (whether
current or deferred), if any, paid or payable to each such person for services
rendered in the fiscal year ended December 31, 1997, or, determined as of the
date hereof, to be rendered in the fiscal year ended December 31, 1998. SCHEDULE
2.24 contains a true and complete listing and summary description of all
employment, deferred compensation, noncompetition, confidential information and
consulting agreements between the Company or any Subsidiary thereof and its
directors, officers, management employees, consultants and managers.
(b) Except as set forth in SCHEDULE 2.24, the Company and its
Subsidiaries have complied in all material respects with all applicable laws
relating to the payment and withholding of taxes, including income and social
security taxes, and has withheld (and paid over to the appropriate authorities)
all amounts required by local, state or federal law or by other agreement to be
withheld from the wages or salaries of its employees. Neither the Company nor
any Subsidiary thereof has any liability or obligation for any arrears of wages
or benefits or any taxes or penalties for failure to comply with any of the
foregoing.
-22-
(c) Except as set forth on SCHEDULE 2.24, the Company and its
Subsidiaries are not parties to any contract with any labor organization, nor
have they agreed to recognize any union or other collective bargaining unit, nor
has any union or other collective bargaining unit been certified as representing
any of their respective employees. Neither the Company nor any Subsidiary
thereof has knowledge of any organization currently being made or threatened by
or on behalf of any labor union with respect to their respective employees.
Except as set forth on SCHEDULE 2.24, neither the Company nor any Subsidiary
thereof has, within the last three years, experienced any strike, work stoppage,
grievance proceeding, claim of unfair labor practices or other significant labor
difficulty of any nature, nor are any material claims pending or, to the best
knowledge of the Company, threatened between the Company or its Subsidiaries and
any of their respective employees.
(d) Except as set forth on SCHEDULE 2.24, neither the Company
nor any Subsidiary thereof has received notification that any of its current
management employees presently plan to terminate employment, whether by reason
of the transactions contemplated hereby or otherwise. Except as set forth on
SCHEDULE 2.24, the employment of all persons presently employed or retained by
the Company is terminable at will, and neither the Company nor any of its
Subsidiaries will be, pursuant to any current contract, arrangement or
understanding, applicable law, or otherwise, obligated to pay any severance pay
or other benefit by reason of the voluntary or involuntary termination of
employment of any present or former employee, consultant, agent or manager,
prior to, on or after the Effective Date.
2.25 Voting Agreements. Each holder of 5% or more of the Company
-----------------
Common Stock has executed voting agreements, in form and substance reasonably
satisfactory to Parent, providing that such holder will, among other things,
vote in favor of the Merger at the Special Meeting (as defined herein), not
dispose of such holder's shares of Company Common Stock except pursuant to the
Merger and not take any actions inconsistent with the Closing.
2.26 No Material Misstatement or Omission. No statement of fact
------------------------------------
made by or on behalf of the Company or any of its Subsidiaries in this Agreement
or in any certificate, schedule or exhibit furnished to Parent pursuant hereto,
or otherwise delivered by the Company or any of its Subsidiaries to Parent
contains any untrue statement of a
-23-
material fact or omits to state any material fact necessary to make the
statements contained therein or herein, under the circumstances in which they
were made, not misleading. There is no fact relating to the Company or any of
its Subsidiaries, or the properties, business, operations, assets, liabilities,
profits, or condition (financial or otherwise) of the Company or any of its
Subsidiaries, presently known to the Company which has not been disclosed to the
Parent and which materially adversely affects or in the future is reasonably
likely to materially adversely affect the properties, business, operations,
assets, liabilities or profits, condition (financial or otherwise) or prospects
of the Company and its Subsidiaries, taken as a whole.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Parent hereby represents and warrants to the Company and the Selling
Shareholders as follows:
3.1 Organization and Corporate Power. Parent and each of its
--------------------------------
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, (b) is qualified to do
business as a foreign corporation in each jurisdiction in which such
qualification is required, except where failure to so qualify would not have a
material adverse effect on the Parent or its Subsidiaries and (c) has all
required corporate power and authority to own its property and to carry on its
business as presently conducted or contemplated. Subject to OCC and FCC
approvals (if any are required), the Parent has all required corporate power and
authority to enter into and perform this Agreement and the Related Documents and
generally to carry out the transactions contemplated hereby and by the Related
Documents.
3.2 Authorization and No Contravention. The execution and delivery
----------------------------------
of, and performance by the Parent of its obligations under, this Agreement and
the Related Documents and the delivery of the Merger Consideration have been
duly authorized by all requisite corporate, director and shareholder action of
Parent, and except as otherwise may be specifically provided in this Agreement,
each of this Agreement and the Related Documents constitutes the legal, valid
and binding obligation of Parent, enforceable in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization,
-24-
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally, and general principles of equity and
the availability of equitable remedies. Parent's execution and delivery of this
Agreement and the Related Documents, and its performance of the transactions
contemplated hereby and thereby, will not: (i) violate, conflict with or result
in a default under any contract, instrument, agreement, indenture, obligation or
commitment to which Parent is a party or by which it or its assets are bound, or
any charter provision or by-law of Parent, or the creation of any lien, charge
or encumbrance of any nature upon any of the properties or assets of Parent;
(ii) violate or result in a violation of, or constitute a default under, any
provision of any law, statute, ordinance, regulation or rule, or any decree,
judgment or order of, or any restriction imposed by, any court or other federal,
state or local governmental agency; or (iii) except as set forth on SCHEDULE
3.2, require any notice to, filing with, or consent or approval of any
governmental authority or other third party which will not, prior to the
closing, have been duly and properly given, made or obtained.
3.3 Brokers or Finders. Neither Parent nor any of its Subsidiaries
------------------
has engaged the services of any brokers or finders in connection with the
execution of this Agreement.
3.4 Financial Statements. Attached hereto as SCHEDULE 3.4 are
--------------------
Parent's (i) consolidated audited statements of income, cash flows and
shareholders' equity and the related balance sheet for the fiscal years ended
December 31, 1996 and 1997(such December 31, 1997 balance sheet is referred to
herein as the "PARENT'S BALANCE SHEET"). Except as set forth in Parent's
Balance Sheet or as set forth on SCHEDULE 3.4, neither Parent nor any of its
subsidiaries has any material contingent obligations, liabilities or material
forward or long-term commitments. The foregoing financial statements have been
prepared (i) to the extent required, in accordance with the rules and
regulations of the FCC and (ii) in accordance with generally accepted accounting
principles applied on a consistent basis. All of such financial statements
fairly present the financial condition and results of operations of Parent and
its Subsidiaries as of the date thereof, and are true and correct as of the date
thereof in all material respects. No event has occurred since such dates which
would cause such financial statements not to be true and correct in all material
respects as of the date thereof.
-25-
3.5 Authority to Execute and Deliver Notes. Parent is duly
--------------------------------------
authorized under its articles of incorporation and the laws of the State of its
organization and all other applicable provisions of law to execute and deliver
the Notes; and all necessary action on its part for the execution and delivery
of the Notes has been duly authorized, and the Notes, when executed and
delivered pursuant hereto, will be duly authorized, validly issued and
enforceable obligations of Parent in accordance with their terms, except to the
extent their enforceability may be limited by laws affecting creditors
generally, by the exercise of judicial discretion in accordance with general
provisions of equity or because waivers of statutory or common law rights or
remedies may be limited.
3.6 Payment of Notes. Parent will duly and punctually pay the
----------------
principal of and interest on the Notes in addition to any other amounts due
thereunder at the dates and places and in the manner provided therein, according
to the true intent and meaning thereof, and all other sums becoming due
hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES REGARDING ACQUISITION SUB
--------------------------------------------------------
Parent and Acquisition Sub hereby jointly and severally represent and
warrant to the Company and the Selling Shareholders as follows:
4.1 Organization and Corporate Power. Acquisition Sub (a) is a
--------------------------------
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, (b) is qualified to do business as a foreign
corporation in each jurisdiction in which such qualification is required, except
where failure to so qualify would not have a material adverse effect on
Acquisition Sub and (c) has all required corporate power and authority to own
its property and to carry on its business as presently conducted or
contemplated. Acquisition Sub has all required corporate power and authority to
enter into and perform this Agreement and the Related Documents and to generally
carry out the transactions contemplated hereby and by the Related Documents.
4.2 Authorization and No Contravention. The execution and delivery
----------------------------------
of, and performance by Acquisition Sub of its obligations under, this Agreement
and the Related Documents have been duly authorized by all requisite
-26-
corporate action of Acquisition Sub subject to the receipt of the approval of
the sole shareholder of Acquisition Sub, and except as may otherwise be
specifically provided in this Agreement, each of this Agreement and the Related
Documents constitutes the legal, valid and binding obligation of Acquisition
Sub, enforceable in accordance with its respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally, and general principles of equity and
the availability of equitable remedies. The execution and delivery of this
Agreement and the Related Documents by Acquisition Sub, and its performance of
the transactions contemplated hereby and thereby, will not: (i) violate,
conflict with or result in a default under any contract, instrument, agreement,
indenture, obligation or commitment to which Acquisition Sub is a party or by
which it or its assets are bound, or any charter provision or by-law of
Acquisition Sub or the creation of any lien, charge or encumbrance of any nature
upon any of the properties or assets of Acquisition Sub, except pursuant to this
Agreement and the agreements contemplated hereby; (ii) violate or result in a
violation of, or constitute a default under, any provision of any law, statute,
ordinance, regulation or rule, or any decree, judgment or order of, or any
restriction imposed by, any court or other federal, state or local governmental
agency; or (iii) except as set forth on SCHEDULE 4.2, require any notice to,
filing with, or consent or approval of any governmental authority or other third
party which will not, prior to the closing, have been duly and properly given,
made or obtained.
4.3 Capitalization. The authorized and issued capital stock of
--------------
Acquisition Sub is as set forth on SCHEDULE 4.3.
4.4 Brokers or Finders. Acquisition Sub has not engaged the
------------------
services of any brokers or finders in connection with the execution of this
Agreement.
SECTION 5. PARENT'S AND ACQUISITION SUB'S CONDITIONS OF MERGER
---------------------------------------------------
Parent's and Acquisition Sub's obligations hereunder shall be subject
to compliance by the Company with its agreements herein contained and to the
fulfillment to Parent's and Acquisition Sub's satisfaction on or before and
-27-
at the Closing Date of the following conditions:
5.1 Certificate. The representations and warranties of the Company
-----------
contained in this Agreement, including but not limited to the representations
and warranties made in Section 2, shall be true and correct in all material
respects with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date; each of the conditions
hereafter specified in this Section shall have been satisfied in all material
respects; and on the Closing Date one or more certificates to such effect
executed by the President and the Chief Financial Officer of the Company shall
be delivered to Parent.
5.2 Delivery of Documents. The Company shall have executed and
---------------------
delivered to Parent (or shall have caused to be executed and delivered to Parent
by the appropriate persons) the following:
(a) Certified copies of resolutions of the Board of Directors
and the shareholders of the Company and its Subsidiaries authorizing the
execution and delivery of this Agreement and the Related Documents;
(b) A copy of the Company's and each of its Subsidiaries'
corporate charter certified as of a recent date by the appropriate Secretary of
State;
(c) A copy of the by-laws of each of the Company and each of
its Subsidiaries certified, in each case, by the secretary of the pertinent
corporation;
(d) A certificate issued as of a recent date by the
appropriate Secretary of State of the state of incorporation of the Company and
each of its Subsidiaries certifying that the Company or such Subsidiary, as the
case may be, is in good standing in such state;
(e) True and correct copies of all consents, instruments and
other documents specified in SCHEDULE 2.2 attached hereto which have not
otherwise been made available for review by Parent; and
(f) All other certificates and other documents reasonably
requested by Parent. The form and substance of all such certificates and other
documents hereunder shall be reasonably satisfactory in all respects to Parent
and its counsel.
-28-
5.3 Opinion of Company's Counsel. Parent shall have received the
----------------------------
favorable written opinion of counsel for the Company dated the Closing Date, in
substantially the form attached hereto as EXHIBIT C.
5.4 Opinion of Special OCC Counsel. To the extent required by any
------------------------------
lender, Parent shall have received the favorable written opinion of special
communications counsel for the Company, dated the Closing Date, with respect to
OCC and related matters, in form and substance reasonably acceptable to Parent.
5.5 Opinion of Special FCC Counsel. Parent shall have received the
------------------------------
favorable written opinion of special FCC counsel for the Company, dated the
Closing Date, in form and substance reasonably acceptable to Parent.
5.6 Compliance with Agreements. The Company shall have performed
--------------------------
and complied with all agreements, covenants and conditions contained herein, in
any other document contemplated hereby and all other Related Documents which are
required to be performed or complied with by the Company on or before the
Closing Date.
5.7 All Proceedings Satisfactory. All corporate and other
----------------------------
proceedings taken prior to or at the Closing in connection with the transactions
contemplated by this Agreement, and all documents and evidences incident
thereto, shall be reasonably satisfactory in form and substance to Parent, and
Parent shall receive such copies thereof and other materials (certified, if
requested) as they may reasonably request in connection therewith.
5.8 Directors and Officers. Parent shall have received duly and
----------------------
validly obtained resignations of all directors and officers of the Company and
each of its Subsidiaries whose resignation is requested by Parent, to be
effective as of the Effective Date.
5.9 Regulatory Matters.
------------------
(a) All required waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, shall have expired or been
terminated.
(b) The OCC and the FCC shall, if required by law, have
approved the consummation of the transactions contemplated hereby and such
approvals shall: (i) be free
-29-
of any terms, conditions or restrictions that are reasonably unacceptable to
Parent and (ii) have become Final Orders.
(c) The approval of any other governmental entity or person
required for the consummation of the transactions contemplated hereby shall have
been obtained including, without limitation, the approval of any local or
municipal governmental entity necessary or appropriate in connection with the
transfer of control of the Company Franchises.
5.10 Litigation. There shall be no investigation, action, suit or
----------
proceeding at law or in equity or by or before any governmental instrumentality
or other agency pending or threatened against the Company or any of its
Subsidiaries, or, to the best knowledge of the Company, any director, officer or
key employee of the Company or any of its Subsidiaries which would have a
reasonable possibility of calling into question the validity, or hinder the
consummation, enforceability or performance, as the case may be, of the Closing,
this Agreement, any action taken or to be taken pursuant hereto or any of the
other agreements and transactions contemplated hereby.
5.11 Adverse Changes. From the date hereof, through and including
---------------
the Effective Date, and without regard to matters related to approvals required
by Section 5.9 hereof or actions undertaken pursuant to this Agreement, there
shall have been (i) no material adverse change in the assets and properties of
the Company, the business operations, liabilities, profits or financial
condition of the Company; (ii) no material damage to the assets and properties
of the Company caused by fire, flood, casualty, act of God or the public enemy
or other cause, the loss of any of which is not adequately covered by insurance
in Parent's sole judgment; or (iii) no further Federal or state regulation or
deregulation, or changes in laws applicable to Federal or state deregulation of
the Company which have, or are reasonably expected to have, a material adverse
effect on the properties, business operations, assets, liabilities, profits or
condition (financial or otherwise) of the Company.
5.12 Dissenting Shareholders. Dissenters' rights shall not have
-----------------------
been exercised pursuant to Section 1.10 with respect to more than five percent
(5%) of the number of shares of Company Common Stock issued and outstanding as
of the date hereof.
-30-
5.13 Special Meeting. The Company shall have called and held the
---------------
Special Meeting (as defined herein), at which at least 51% of the shares of
Company Common Stock entitled to vote thereat shall have been cast in favor of
the Merger or the Company shall have received the written consent of at least
51% of the shares of the Company in lieu of the special meeting approving the
Merger.
5.14 Amendment of CCTC Partnership Agreement. The Agreement of Limited
---------------------------------------
Partnership of Chouteau Cellular Telephone Company shall have been amended and
restated in its entirety to read as set forth on EXHIBIT D.
SECTION 6. COMPANY'S CONDITIONS OF MERGER
------------------------------
The Company's obligation hereunder shall be subject to compliance by the
Parent and Acquisition Sub with their agreements herein contained and to the
fulfillment to the Company's satisfaction on or before and at the Closing Date
of the following conditions:
6.1 Certificate. The representations and warranties of the Parent
-----------
and Acquisition Sub contained in this Agreement, including but not limited to
the representations and warranties made in Sections 3 and 4, shall be true and
correct in all material respects with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date; each
of the conditions hereafter specified in this Section 6 shall have been
satisfied; and on the Closing Date one or more certificates to such effect
executed by the Senior Vice President and the Chief Financial Officer of the
Parent and Acquisition Sub shall be delivered to the Company.
6.2 Compliance with Agreements. Parent and Acquisition Sub shall
--------------------------
have performed and complied with all agreements, covenants and conditions
contained herein, in any other document contemplated hereby and all other
Related Documents which are required to be performed or complied with by Parent
and Acquisition Sub on or before the Closing Date.
6.3 All Proceedings Satisfactory. All corporate and other
----------------------------
proceedings taken prior to or at the Closing in connection with the transactions
contemplated by this Agreement, and all documents and evidences incident
thereto, shall be reasonably satisfactory in form and substance to the Company
and Company shall receive such
-31-
copies thereof and other materials (certified, if requested) as they may
reasonably request in connection therewith.
6.4 Regulatory Matters.
------------------
(a) All required waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, shall have expired or been
terminated.
(b) The OCC and the FCC shall each have approved, to the extent
any approval is necessary, the consummation of the transactions contemplated
hereby and such approvals shall: (i) be free of any terms, conditions or
restrictions that are reasonably unacceptable to the Company and (ii) have
become Final Orders.
6.5 Litigation. There shall be no investigation, action, suit or
----------
proceeding at law or in equity or by or before any governmental instrumentality
or other agency pending or threatened against Parent or Acquisition Sub, or, to
the best knowledge of Parent and Acquisition Sub, any director, officer or key
employee of Parent or Acquisition Sub, which would have a reasonable possibility
of calling into question the validity, or hinder the consummation,
enforceability or performance, as the case may be, of the Closing, this
Agreement, any action taken or to be taken pursuant hereto or any of the other
agreements and transactions contemplated hereby.
6.6 Opinion of Parent's and Acquisition Sub's Counsel. The Company
-------------------------------------------------
and the Selling Shareholders shall have received the favorable written opinion
of counsel for each of Parent and Acquisition Sub dated the Closing Date, in
substantially the form attached hereto as EXHIBIT E.
6.7 Transfer of Store Front Assets. At the time of or prior to
------------------------------
Closing, the Subsidiary shall have transferred and assigned to a new limited
liability company to be formed by the Principal Selling Shareholders the
inventory and other assets currently owned and used by the Subsidiary in
connection with its store front operations in Pryor, Oklahoma and the leasehold
interest of the Company or the Subsidiary in such premises.
-32-
SECTION 7. COVENANTS
---------
Until the Closing Date (unless provided otherwise herein), each of the
Parent, Acquisition Sub and the Company agree that they shall act, or refrain
from acting where so required, to comply with the following:
7.1 Regular Course of Business.
--------------------------
(a) Generally. The Company shall operate its business consistent
---------
with past management practices, shall maintain all of its properties in
customary repair, order and condition, shall maintain (except for expiration due
to lapse of time or cancellation by another party pursuant to the terms thereof)
in the ordinary course of business all leases and contracts in effect without
change except as expressly provided herein and shall comply in all material
respects with the provisions of all laws, regulations and orders of Governmental
Authorities and all Company Franchises applicable to the Company and the conduct
of its business. The Company shall comply, without modification, with all
contracts and commitments relating to capital expenditures as set forth on
SCHEDULE 2.9. The Company shall maintain its financial and accounting records in
a manner consistent with that employed at December 31, 1996.
(b) Compensation. Without the prior written consent of the Parent,
------------
the Company shall not hire or fire any employee and shall not grant any increase
in the compensation of any board member, employee, consultant or independent
contractor, except customary merit, cost-of-living and promotional increases.
(c) Insurance. The Company shall maintain in full force and effect
---------
its insurance policies with the coverage and in the amounts set forth on
SCHEDULE 2.15.
(d) Claims. The Company shall promptly notify the Parent of any
------
actions, claims, complaints, lawsuits or investigations that may be commenced
against it.
(e) Supplement. From time to time prior to the Closing Date, the
----------
Company shall promptly notify the Parent of any changes with respect to the
information set forth in this Agreement or the Schedules hereto and of any
matters hereafter arising which, if in existence at the date hereof, would have
been required to be set forth in this Agreement or the Schedules hereto;
provided, that such
--------
-33-
notification shall not constitute an amendment to this or any of such Schedules
unless expressly agreed in writing by Parent.
7.2 Amendments; Sales and Acquisitions. No change or amendment
----------------------------------
shall be made to the charter or by-laws of the Company. Except as set forth in
SCHEDULE 7.2, the Company shall not merge into or consolidate with any other
Person, sell or acquire any assets (except in the ordinary course of business)
or acquire or make any investment in any Person, or otherwise change the
character of its business.
7.3 Capital Changes. The Company shall not issue, sell, purchase,
---------------
acquire or redeem any shares of its capital stock of any class or any of its
debt or issue or sell any securities convertible into, or options, warrants or
other rights to subscribe for, any shares of its capital stock. The Company
shall not pledge or otherwise encumber any shares of its capital stock.
7.4 Dividends. The Company shall not declare, pay or set aside for
---------
payment any dividend or other distribution in respect of its capital stock.
7.5 Capital Expenditures. Without the prior written consent of
--------------------
Parent, the Company shall not make any capital expenditures in excess of $10,000
in the aggregate, or commitments with respect thereto, except as provided in
SCHEDULE 2.9. The Company shall not make or accept any loan or advance to or
from any of its Affiliates.
7.6 Borrowing. Without the prior written consent of the Parent,
---------
the Company shall not incur, assume or guarantee any indebtedness or obligation
not reflected on the Company Balance Sheet, except for amounts not to exceed ten
thousand dollars ($10,000) in the ordinary course of business.
7.7 Property. The Company shall not sell, transfer, or dispose of
--------
any of its assets and properties, or allow any of its assets and properties to
become subject to a Lien, except in the ordinary course of business. At the
time of or prior to Closing, the Subsidiary shall have transferred and assigned
to a new limited liability company to be formed by the Principal Selling
Shareholders the inventory and other assets currently owned and used by the
Subsidiary in connection with its store front operations in Pryor, Oklahoma and
the leasehold interest of the Company or the Subsidiary in such premises.
-34-
7.8 Other Commitments. Except as set forth in this Agreement or
-----------------
permitted in writing by the Parent, the Company shall not enter into any
transaction, make any commitment or incur any obligation other than in the
ordinary course of business.
7.9 Interim Financial Information. The Company shall supply the
-----------------------------
Parent with a copy of its internal unaudited monthly financial statements within
thirty (30) days after the end of each month.
7.10 Consents and Authorizations. The Parent and the Company shall,
---------------------------
promptly after the date hereof, cooperatively commence efforts to obtain OCC
approval of the transactions contemplated hereby and the consents, waivers and
authorizations listed in SCHEDULES 2.2, including the approval of the Company's
shareholders, which approval the Company agrees to use reasonable efforts to
obtain within 30 days of the date hereof. The Parent and the Company shall
diligently pursue and use their best efforts to obtain such consents, waivers
and authorizations as promptly as practicable prior to the Closing Date.
7.11 Access. The Company shall afford to the Parent and its
------
counsel, accountants, agents and other authorized representatives and to any
financing sources specified by the Parent reasonable access during business
hours to the Company's personnel, plants, properties, books and records in order
that the Parent and such other Persons may have full opportunity to make such
reasonable investigations as it shall desire to make of the affairs of the
Company. The Company shall cause its officers, employees and auditors to
furnish such additional financial and operating data and other information as
the Parent shall from time to time reasonably request.
7.12 Notice of Transfer. Each of the Parent and the Company shall
------------------
cooperate in providing any required notices to all appropriate Governmental
Authorities regarding any issues of ownership or control or change thereof
(including, without limitation, any such issues relating to the Company
Franchises).
7.13 Payment of Tax. All transfer (including any real estate
--------------
transfer or gains tax), documentary (other than stock transfer), sales, use,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be borne by the
Company when due, and it will file on a timely basis all
-35-
necessary Tax returns and other documentation with respect to all such transfer,
documentary, sales, use, registration and other Taxes and fees, and, if required
by applicable regulation, will, and will cause its Affiliates to, join in the
execution of any such Tax returns and other documentation.
7.14 Agreement to Defend. In the event any claim of the nature
-------------------
specified in Section 5.10 hereof is commenced, whether before or after the
Closing Date, the parties hereto agree to cooperate and use all reasonable
efforts to defend against and respond thereto.
7.15 Further Assurances. On the terms and subject to the conditions
------------------
of this Agreement, the parties hereto shall use all reasonable efforts at their
own expense to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable under applicable regulations
to consummate and make effective as promptly as possible the transactions
contemplated by this Agreement, and to cooperate with each other in connection
with the foregoing, including, without limitation, using all reasonable efforts
(a) to obtain all necessary waivers, consents and approvals from other parties
to loan agreements, leases, mortgages and other contracts, (b) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any regulations or in connection with any Company Franchises, (c) to lift
or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby and (d) to fulfill all conditions to the obligations of the parties under
this Agreement. Each of the parties hereto further covenants and agrees that it
shall use all reasonable efforts to prevent a threatened or pending preliminary
or permanent injunction or other order.
7.16 Consents. Without limiting the generality of Sections 7.10 and
--------
7.15, each of the parties hereto shall use reasonable efforts to obtain all
waivers, authorizations, consents and approvals of all Persons and Governmental
Authorities necessary, proper or advisable in connection with the consummation
of the transactions contemplated by this Agreement prior to the Closing Date.
7.17 No Solicitation or Negotiation.
------------------------------
(a) Unless and until this Agreement is terminated, the Company
shall not, and shall use its best
-36-
efforts to cause its Affiliates, and the directors, officers, employees,
representatives, agents, advisors, accountants, shareholders and attorneys of
each of them, not to (i) encourage, initiate or solicit, directly or indirectly,
any inquiries or the making of any proposal with respect to, or engage in
negotiations concerning, or provide any confidential information or data to any
Person with respect to, or have any discussions with any Person relating to, any
merger, acquisition, reorganization, consolidation, business combination,
recapitalization, liquidation, dissolution, sale of all or any significant
portion of assets, sale of shares of capital stock (including without limitation
by way of tender offer or exchange offer) or similar transactions involving the
Company or any Subsidiary other than the transactions contemplated hereby (any
of the foregoing inquiries or proposals being referred to herein as an
"ACQUISITION PROPOSAL"), or otherwise facilitate any effort or attempt to do or
seek to do any of the foregoing and shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing, (ii) engage in
negotiations or discussions concerning, or provide any nonpublic information or
assistance to any person in connection with any Acquisition Proposal, or (iii)
agree to, approve or recommend any Acquisition Proposal. Nothing contained in
this Section 7.17 shall prevent the Board of Directors of the Company from
considering, negotiating, discussing, approving and recommending to the
shareholders of the Company a bona fide Acquisition Proposal not solicited in
violation of this Section 7.17, provided that the Board of Directors of the
--------
Company determines in good faith (after consultation with and based upon the
advice of outside counsel) that it is required to do so in order to discharge
properly its fiduciary duties to the Company's shareholders; and provided,
--------
further, that the Company shall keep Parent informed, on a reasonably current
-------
basis, as to the status and details of any such consideration, negotiations or
discussions, including but not limited to, prompt delivery to Parent of any
written inquiries, proposals, agreements or Acquisition Proposals.
(b) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company or
any of its Subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any Subsidiary by any
person or
-37-
entity that informs the Board of Directors of the Company or such Subsidiary
that it is considering making, or has made, an Acquisition Proposal. Such notice
to Parent shall be made orally and in writing, shall indicate whether the
Company is providing or intends to provide the person making the Acquisition
Proposal with access to information concerning the Company as provided in
Section 7.17(c) and, if reasonably practicable, shall be made prior to
furnishing any such information to, or entering into negotiations or discussions
with, such person.
(c) If the Board of Directors of the Company receives a request for
material nonpublic information by a person who makes, or indicates that it is
considering making, a bona fide Acquisition Proposal, and the Board of Directors
determines in good faith and upon the advice of outside counsel that is required
to cause the Company to act as provided in this Section 7.17(c) in order to
discharge properly the directors' fiduciary duties to the Company's
shareholders, then, provided that such person has executed a confidentiality
--------
agreement containing customary standstill, no solicitation and confidentiality
provisions, the Company may provide such person with access to information
regarding the Company.
(d) The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any persons (other than Parent)
conducted heretofore with respect to any of the foregoing. The Company agrees
not to release any third party from the confidentiality provisions of any
confidentiality agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its Subsidiaries and any investment banker or other
advisor or representative retained by the Company are aware of the restrictions
described in this Section 7.17.
(f) The Company shall not accept any Acquisition Proposal unless,
at least five days prior to such acceptance, the Company shall have delivered to
Acquisition Sub written notice of such Acquisition Proposal together with a copy
of any and all agreements to be entered into in connection with such Acquisition
Proposal.
7.18 Public Announcements. Prior to the Closing Date, no party
--------------------
hereto nor any Affiliate, representative or shareholder of such party, shall
disclose any of the terms
-38-
of this Agreement to any third party, except as required by applicable law or as
required to obtain the consents, waivers and authorizations listed in SCHEDULES
2.2, 3.2 AND 4.2 and in connection with the Parent's financing of the
transactions contemplated hereby, without the other parties' prior written
consent. Prior to the Closing Date, subject to the requirements of applicable
law, the form, content and timing of all press releases, public announcements or
publicity statements with respect to this Agreement and the transactions
contemplated hereby shall be subject to the prior approval of both the Company
and Parent, which approval shall not be unreasonably withheld. Prior to the
Closing Date, subject to the requirements of applicable law, no press releases,
public announcements or publicity statements shall be released by either party
without such prior mutual agreement. Notwithstanding the foregoing, no party
hereto will disclose the Merger Consideration or the manner in which the Merger
Consideration is calculated, without the prior written consent of the other
parties hereto, other than in connection with seeking consents required by
Section 7.16.
7.19 Environmental Inspections. The Company agrees to cooperate
-------------------------
with any reasonable request of Parent for a site assessment or review concerning
any environmental matter, including the making available of such personnel,
documents, records or other information of the Company as Parent may reasonably
request.
7.20 Regulatory Matters. The Company will not change local rates
------------------
charged to telephone customers and will not apply for any change in the
intrastate or interstate pooling mechanisms, without the written consent of the
Parent.
7.21 Indemnification and Insurance. The Surviving Corporation
-----------------------------
agrees to indemnify and hold harmless the Company's officers and directors
against any costs or expenses (including reasonable attorney's fees), judgments,
fines, losses, claims, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative arising out of or pertaining to matters existing
or occurring at or prior to the Effective Date, to the fullest extent permitted
under the OGCA.
7.22 Payment of Regulatory Fees. Parent shall pay (i) any filing
--------------------------
fee imposed under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, in
-39-
connection with the transactions contemplated by this Agreement and the Related
Documents and (ii) any fees and expenses incurred in connection with obtaining
OCC and FCC approval of the transactions contemplated by this Agreement and the
Related Documents.
7.23 Shareholder Approval. Within thirty (30) days of the date of
--------------------
this Agreement, the Company shall call a special meeting of common shareholders
of the Company to be held for the purpose of voting on the Merger ("SPECIAL
MEETING") at which at least 51% of the shares of Company Common Stock entitled
to vote thereat shall have been cast in favor of the Merger and the transactions
contemplated by this Agreement or the Company shall have received the written
consent of at least 51% of the shares of the Company in lieu of the Special
Meeting approving the Merger and the transactions contemplated by this
Agreement. Any proxy statement required by applicable law to be delivered to
the Company's shareholders in connection with the Special Meeting (the "PROXY
STATEMENT") shall state, among other things, (i) that the Board of Directors of
the Company has unanimously approved the Merger and recommends that the
shareholders vote in favor of the Merger (ii) that all of the Board members
intend to vote in favor of the Merger, and (iii) that all of the Company's
shareholders should make plans to deliver their shares free and clear of all
liens and encumbrances; such Proxy Statement shall be prepared and disseminated
in accordance with applicable law.
7.24 Accountant's Consent. The Company shall use its best efforts
--------------------
to cause its independent accountants, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., to give their
consent (i) to the inclusion of their report on the consolidated financial
statements of the Company and its Subsidiaries and (ii) to be named as experts
in any offering document of Parent or its affiliates as reasonably requested by
Parent.
SECTION 8. CLOSING
-------
8.1 Time and Place.
--------------
(a) The closing (the "CLOSING") of the transactions
contemplated hereby shall take place at the offices of Paul, Hastings, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as
agreed to by the parties, at 9:30 a.m., local time, as soon as possible
following the satisfaction or waiver of the conditions set forth in Section 5
and 6 hereof; provided
--------
-40-
however, that in no event shall the Closing occur later than August 31,
--------
1998 (the "CLOSING DATE").
(b) On the Closing Date, Parent, Acquisition Sub and the Company
shall cause the Certificate of Merger to be filed in accordance with the
provisions of the OGCA and shall take any and all other lawful actions and do
any and all other lawful things necessary to effect the Merger and to cause the
Merger to become effective.
SECTION 9. INDEMNIFICATION OF PARENT AND ACQUISITION SUB
---------------------------------------------
9.1 Survival. The covenants, agreements, representations and
--------
warranties of the Principal Selling Shareholders contained herein or in any
certificate or other document delivered pursuant hereto shall survive any
examination made by or on behalf of Parent and Acquisition Sub, the execution
and delivery of this Agreement, the Effective Date and the consummation of the
transactions called for by this Agreement until one hundred twenty (120) days
after the first fiscal year end of the Company after the Effective Date (the
"RELEASE DATE") except that (i) all covenants and agreements set forth in this
Section 9 shall continue until all obligations hereunder have been performed and
satisfied and (ii) any covenants and agreements which are to be performed after
the Effective Date, including without limitation, the covenants of Parent set
forth in Section 7.21, shall continue until all such obligations have been fully
performed and satisfied. Except as provided herein, no claim under this Section
9 may be brought with respect thereto after the Release Date; provided that if,
--------
prior to such date, Parent or Acquisition Sub has notified the Principal Selling
Shareholders of a claim for indemnity under this Section 9 (whether or not
formal legal action shall have been commenced based upon such claim), such claim
shall continue to be subject to indemnification until finally resolved.
9.2 Indemnification. The Principal Selling Shareholders shall, pro
---------------
rata based upon the initial principal amount of the Notes issued to them
hereunder, indemnify and hold harmless Parent and Acquisition Sub, and each of
their respective officers, directors, affiliates, shareholders and
representatives (each, an "INDEMNITEE") in the manner set forth in and subject
to Section 9.4, at all times from and after the Effective Date against and in
respect of any and all damages, claims, losses,
-41-
deficiencies, liabilities and expenses, including, without limitation,
reasonable legal, accounting, and other fees and other expenses (collectively,
"DAMAGES"), incurred or suffered by any such Indemnitee as a result, or that may
arise out of, any breach by the Company or the Principal Selling Shareholders of
any of the representations and warranties made by the Company and the Principal
Selling Shareholders in this Agreement or pursuant hereto, or for any other
breach or violation of any covenant, agreement, term or condition of this
Agreement by the Principal Selling Shareholders or the Company.
9.3 Notice of Claims. Upon obtaining knowledge thereof, the
----------------
Indemnitee shall promptly notify the Principal Selling Shareholders in writing
of any Damages (including but not limited to any Damages arising from Third-
Party Claims (as defined in Section 9.5 hereof)) which the Indemnitee has
determined has given or could give rise to a claim under Section 9.2 (such
written notice being referred to as a "NOTICE OF CLAIM"). A Notice of Claim
shall specify in reasonable detail the nature and estimated amount of any such
claim giving rise to a right of indemnification.
9.4 Method of Indemnification. In the event that an Indemnitee
-------------------------
shall seek indemnification pursuant to Section 9.2, such Indemnitee may seek
recovery in an amount equal to the aggregate Damages incurred or suffered by
such Indemnitee with respect to which such Indemnitee is entitled to
indemnification pursuant to Section 9.2. Except as provided herein, any amounts
recoverable by an Indemnitee pursuant to this Section 9 shall be deducted from
the outstanding principal balance of the Notes on a pro rata basis. Except as
provided herein, no indemnification payment for Damages suffered or incurred by
an Indemnitee shall be made to such Indemnitee, until the amount which all
Indemnitees under this Agreement would otherwise be entitled to receive as
indemnification under this Agreement aggregates in excess of the sum of $100,000
(such sum, hereinafter, the "THRESHOLD"), at which time each Indemnitee shall be
entitled to recover any and all amounts for which a claim for indemnity has
theretofore been made, in excess of the amount of the Threshold. Notwithstanding
any provision herein to the contrary, the Principal Selling Shareholders shall,
pro rata based upon the initial principal amount of the Notes issued to them
hereunder, indemnify and hold harmless each Indemnitee, without regard to the
Threshold or the Release Date, at all times from and after the Effective Date
against and in respect of any and all Damages (including without limitation, any
and all Damages resulting
-42-
from claims asserted by any Selling Shareholder or other party), incurred or
suffered by any such Indemnitee as a result of, or that may arise out of (i) the
consummation of the transactions contemplated by this Agreement; (ii) any claim
by a Selling Shareholder for any portion of the Merger Consideration previously
remitted to the Selling Shareholders by Parent, or for any amount in addition to
the Merger Consideration; (iii) any claim by any Selling Shareholder or third
party in connection with any actual or alleged tax liability of any Selling
Shareholder; or (iv) any claim by any Selling Shareholder or third party in
connection with the payment of the Merger Consideration as provided for herein,
or in connection with any withholding requirement with respect to the payment of
the Merger Consideration as provided for herein. Any amounts recoverable by any
Indemnitee pursuant to the preceding sentence shall be payable in cash to such
Indemnitee by the Principal Selling Shareholders on a pro rata basis. In the
event the Principal Selling Shareholders fail to make such payment within thirty
(30) days of a written demand therefor, such Indemnitee may, at its option,
elect to reduce the outstanding principal amount of the Notes on a pro rata
basis by the amount of such Damages.
9.5 Defense of Third-Party Claims.
-----------------------------
(a) If any claim or liability is asserted by a third party
after the Closing for which Parent believes indemnification may be sought under
the terms of this Section 9 (a "THIRD-PARTY CLAIM"), then Parent shall promptly
notify the Principal Selling Shareholders in writing of such Third-Party Claim
(said notification being referred to as a "THIRD-PARTY CLAIM NOTICE"). Any
Third-Party Claim Notice shall state with reasonable specificity, in light of
the then current circumstances, the basis of the Third-Party Claim.
(b) Parent shall have fifteen (15) days after receipt by the
Principal Selling Shareholders of such Third-Party Claim Notice to elect to
undertake, conduct and control, through counsel of its own choosing, the
settlement or defense thereof, and the Principal Selling Shareholders shall
cooperate with Parent in connection therewith. Parent shall have the right to
contest, settle or compromise the Third-Party Claim in the exercise of its
reasonable discretion; provided, that Parent shall notify the Principal Selling
--------
Shareholders of any proposed compromise or settlement of any such Third-Party
Claim and shall not effect such compromise or settlement without the prior
-43-
written consent (not to be unreasonably withheld or delayed) of the Principal
Selling Shareholders; provided, further, that Parent shall not, in the defense
-------- -------
of such claim, consent to entry of any judgment unless the judgment provides
only for the payment of monetary damages or unless Parent obtains the written
consent of the Principal Selling Shareholders, or (if the Company is a party to
such proceeding) consent to entry of any judgment or enter into any settlement
(except with the written consent of the Principal Selling Shareholders) which
does not include as an unconditional term thereof the giving by the claimant to
the Company of a release from all liability in respect of such claim.
(c) If Parent elects not to undertake the defense of the Third-
Party Claim, then the Principal Selling Shareholders may undertake, conduct and
control, through counsel approved by Parent (such approval not to be
unreasonably withheld or delayed), and at its own expense, the settlement or
defense thereof; provided, that the Principal Selling Shareholders shall not
--------
compromise or settle any Third-Party Claim without Parent's prior written
consent (not to be unreasonably withheld or delayed); provided, further, that
-------- -------
the Principal Selling Shareholders shall not, in the defense of such claim,
consent to entry of any judgment unless the judgment provides only for the
payment of monetary damages or unless the Principal Selling Shareholders obtains
the written consent of Parent, or consent to entry of any judgment or enter into
any settlement (except with the written consent of Parent) which does not
include as an unconditional term thereof the giving by the claimant to the
Indemnitees of a release from all liability in respect of such claim.
SECTION 10. DEFINITIONS
-----------
Unless the context specifically requires otherwise, capitalized terms
used in this Agreement shall have the meaning specified below:
"AFFILIATED GROUP" means any affiliated group within the meaning of
Code Section 1504(a), or similar group defined under a similar provision of
state, local or foreign law.
"FCC" means the Federal Communications Commission (or any successor
agency, commission, bureau, department or other political subdivision of the
United States of America).
-44-
"FCC LICENSE" means any license, permit, approval or authorization
granted or issued by the FCC.
"FINAL ORDER" means an action by the FCC or the OCC as to which: (a)
no request for stay of the action by the FCC or the OCC, as the case may be, is
pending, no such stay is in effect, and if any time period is permitted by
statute or regulation for filing any request for such a stay, such time period
has passed; (b) no petition for rehearing or reconsideration, or application for
review, of the action is pending before the FCC or the OCC, as the case may be,
and the time permitted for filing any such petition or application has passed;
(c) the FCC or the OCC, as the case may be, does not have the action under
reconsideration on its own motion and the time in which such reconsideration is
permitted has passed; and (d) no appeal to a court, or request for stay by a
court, of the FCC's or OCC's action, as the case may be, is pending or in
effect, and the deadline for filing any such appeal or request has passed.
"GAAP" means generally accepted accounting principles in effect from
time to time.
"GOVERNMENTAL AUTHORITY" means any governmental agency, body or
instrumentality (whether federal, state, local or foreign).
"LIEN" means any interest in property securing an obligation owed to,
or claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" includes reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, shareholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property. For the purposes of this
Agreement the Company or a Subsidiary shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes and such
retention or vesting shall be deemed to be a "Lien".
"OCC" means the Oklahoma Corporation Commission.
-45-
"OSHA" means the Occupational Safety and Health Act of 1978, as
amended from time to time.
"PERSON" means any individual, corporation, partnership, joint
venture, trust or unincorporated organization or any government or any agency or
political subdivision thereof.
"RELATED DOCUMENTS" means the Certificate of Merger, together with all
other instruments and documents related to this Agreement as the same may be
amended from time to time.
"SUBSIDIARY" of any Person means any corporation or other entity of
which more than 50% of the outstanding voting securities are at the time owned,
directly or indirectly, by such Person.
"TAX" means any federal, state, local, or foreign income, gross
receipts, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, stamp, excise,
occupation, sales, use, transfer, value added, alternative minimum, estimated or
other tax, including any interest, penalty or addition thereto, whether disputed
or not.
"TAXING AUTHORITY" means any domestic, foreign, federal, national,
state, provincial, county or municipal or other local government, any
subdivision, agency, commission or authority thereof, or any quasi-governmental
body exercising any taxing authority or any other authority exercising any Tax
regulatory authority.
The following terms shall have the meanings assigned to them in the
provisions of this Agreement referred to below:
AAA - Section 11.16
Acquisition Proposal - Section 7.17(a)
Acquisition Sub Common Stock - Section 1.9
Acquisition Sub - Preamble
Affidavit - Section 1.11(b)
Affiliate - Section 2.20(g)(iii)
Certificate - Section 1.11(b)
Certificate of Merger - Recitals
Closing - Section 8.1
Closing Date - Section 8.1
Code - Section 2.14(d)
Company Balance Sheet - Section 2.4
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Company Common Stock - Section 1.8(a)
Company - Preamble
Company Franchises - Section 2.5
Damages - Section 9.2
Dissenting Consideration - Section 1.10
Dissenting Shares - Section 1.10
Effective Date - Section 1.6
Easements - Section 2.13(a)
Employee Program - Section 2.20(g)(i)
ERISA - Section 2.20(c)
Indemnitee - Section 9.2
IRS - Section 2.20(b)
maintains - Section 2.20(g)(ii)
Merger - Recitals
Merger Consideration - Section 1.8(b)
Nonvoting Common Stock - Section 1.8(a)
Notes - Section 1.8(b)
Notice of Claim - Section 9.3
OGCA - Section 1.1
Parent - Preamble
Parent Balance Sheet - Section 3.4
Presiding Arbitrator - Section 11.16
Principal Selling Shareholders - Preamble
Properties - Section 2.18(a)
Proxy Statement - Section 7.23
Release Date - Section 9.1
Selling Shareholders - Recitals
Special Meeting - Section 7.23
Surviving Corporation - Section 1.1
Surviving Corporation Common Stock - Section 1.9
Threshold - Section 9.4
Third-Party Claim - Section 9.5(a)
Third-Party Claim Notice - Section 9.5(a)
Voting Common Stock - Section 1.8(a)
SECTION 11. GENERAL
-------
11.1 Termination.
-----------
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by mutual written consent of the parties hereto;
(ii) by written notice by either the Company, on the one
hand, or the Parent and Acquisition Sub, on the other hand, if there has been a
material
-47-
misrepresentation or breach of warranty or breach of covenant on the part of the
other parties in the representations and warranties or covenants set forth in
this Agreement which breach has not been cured within 10 days following receipt
by the breaching party of written notice of such breach;
(iii) by written notice by either the Company or Parent if
the Closing has not occurred by August 31, 1998, provided that neither the
Company nor Parent will be entitled to terminate this Agreement pursuant to this
subsection if its willful breach of this Agreement has prevented the
consummation of the transactions contemplated hereby; or
(iv) by either the Company or Parent, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the other set forth in this Agreement, which breach has not been cured
within 30 days following receipt by the breaching party of written notice of
such breach, in any case such that the conditions set forth in Sections 5 and 6,
as the case may be, would be incapable of being satisfied by August 31, 1998
(provided that the right to terminate this Agreement under this Section
--------
11.1(a)(iv) shall not be available to any party who is itself in material breach
of any of its representations, warranties, covenants or agreements set forth in
this Agreement, such that the conditions set forth in Sections 5 or 6, as the
case may be, would be incapable of being satisfied by August 31, 1998.
11.2 Effect of Termination. Except as provided in Section 9.1, in
---------------------
the event of the termination of this Agreement pursuant to Section 11.1, this
Agreement shall forthwith become void and there shall be no liability on the
part of any party hereto or any of its affiliates, directors, officers or
stockholders; provided however that nothing herein shall relieve any party from
liability for any breach hereof occurring prior to termination.
11.3 AMENDMENTS, WAIVERS AND CONSENTS. FOR THE PURPOSES OF THE
--------------------------------
AGREEMENT AND ALL AGREEMENTS, DOCUMENTS, AND INSTRUMENTS EXECUTED PURSUANT
HERETO, EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH HEREIN OR THEREIN, NO COURSE
OF DEALING BETWEEN THE COMPANY, THE PARENT AND ACQUISITION SUB AND NO DELAY ON
THE PART OF ANY PARTY HERETO IN EXERCISING ANY RIGHTS HEREUNDER OR THEREUNDER
SHALL OPERATE AS A WAIVER OF THE RIGHTS HEREOF AND THEREOF. NO COVENANT OR
OTHER PROVISION HEREOF OR THEREOF MAY BE WAIVED OTHERWISE THAN BY
-48-
A WRITTEN INSTRUMENT SIGNED BY THE PARTY SO WAIVING SUCH COVENANT OR OTHER
PROVISION.
11.4 GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
--------------------------------------
DEEMED TO BE A CONTRACT MADE UNDER, AND SHALL BE CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF OKLAHOMA.
11.5 Section Headings. The descriptive headings in this Agreement
----------------
have been inserted for convenience only and shall not be deemed to limit or
otherwise affect the construction of any provision hereof.
11.6 Notices and Demands. Any notice or demand which, by any
-------------------
provision of this Agreement or any agreement, document or instrument executed
pursuant hereto or thereto, except as otherwise provided therein, is required or
provided to be given shall be deemed to have been sufficiently given or served
and received for all purposes three days after being sent by certified or
registered mail, postage and charges prepaid, return receipt requested, by
express delivery providing receipt of delivery, or by facsimile, to the
following addresses:
If to Parent to:
MJD Communications, Inc.
Morehead Place
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
-49-
If to the Company to:
Chouteau Telephone Company
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Telephone:
Facsimile:
If to the Principal Selling Shareholders:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, A Professional Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ Tower
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at any other address designated by any party to this Agreement to each of the
other parties in writing.
11.7 Counterparts. This Agreement may be executed simultaneously in
------------
any number of counterparts, each of which when so executed and delivered shall
be taken to be an original; but such counterparts shall together constitute but
one and the same document.
11.8 Severability; Complete Agreement. Whenever possible, each
--------------------------------
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be deemed prohibited or invalid under such applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
-50-
THIS AGREEMENT AND THE RELATED DOCUMENTS ARE INTENDED BY THE PARTIES
HERETO TO BE A COMPLETE AND FINAL EXPRESSION OF THEIR AGREEMENT AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT. THE
PARTIES ACKNOWLEDGE AND AGREE THAT NO UNWRITTEN ORAL AGREEMENT EXISTS BETWEEN
THEM WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT.
11.9 Expenses. Unless otherwise provided for in this Agreement,
--------
each of the Parent, the Company and Acquisition Sub shall pay all costs and
expenses that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement.
11.10 Assignment. This Agreement and all of the provisions hereof
----------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be assigned by any of
the parties hereto, either in whole or in part, without the prior written
consent of the other parties hereto; provided that Parent may assign this
Agreement or any of the rights, interests or obligations hereunder to an
affiliate without the prior written consent of the Company.
11.11 Accounting Terms. All accounting terms used herein which are
----------------
not expressly defined in this Agreement shall have the meanings given to them in
accordance with GAAP.
11.12 Parties. Nothing in this Agreement is intended to confer any
-------
rights or remedies under or by reason of this Agreement on any persons or
entities other than the parties hereto and their respective successors and
permitted assigns. Without limiting the foregoing, no third Person shall be a
beneficiary of any provision of this Agreement.
11.13 JURY WAIVER. EACH OF THE PARENT, COMPANY, AND ACQUISITION SUB
-----------
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, SUIT, OR COUNTERCLAIM ON
ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT
AND THE RELATED DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
11.14 Schedules. The Parties hereto acknowledge and agree that the
---------
restatement or partial restatement in the schedules attached hereto of any
representation, warranty or other portion of this Agreement shall not in any way
be
-51-
deemed to limit or eliminate the requirement for full disclosure on the
schedule relating to such representation, warranty or other portion of this
Agreement.
11.15 Arbitration. Any controversy or claim arising out of or
-----------
relating to this Agreement not resolved by mutual agreement of Parent and the
Company shall be settled by arbitration in Tulsa, Oklahoma, or in such other
location as the parties may mutually agree, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA"). In the
event of such a dispute, either party may demand arbitration by written notice
to the other and, within fifteen (15) days after receipt of such demand, each
party shall appoint an arbitrator (each, an "Appointed Arbitrator") who shall
together agree on a third Arbitrator, failing which agreement they shall request
the AAA to appoint a third and presiding arbitrator ("PRESIDING ARBITRATOR"), in
accordance with the then existing rules of the AAA or any successor organization
thereto. The parties acknowledge and agree that individuals may be designated
as Appointed Arbitrators by each respective party, whether or not such Appointed
Arbitrators are listed on the National Panel of Arbitrators as such list is
maintained by the AAA. Any award therein shall be final and binding on the
parties and judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof. The costs of the arbitration
(including, but not limited to, fees and disbursements of counsel and the
Appointed Arbitrator, and the fees of the Presiding Arbitrator) shall be borne
by the non-prevailing party or as otherwise determined by the Presiding
Arbitrator.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as a
sealed instrument as of the day and year first above written.
CHOUTEAU TELEPHONE COMPANY
By:_______________________________
MJD COMMUNICATIONS, INC.
By:_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
CHOUTEAU ACQUISITION CORP.
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
PRINCIPAL SELLING SHAREHOLDERS:
_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-53-
EXHIBIT A
CERTIFICATE OF MERGER
OF
CHOUTEAU ACQUISITION CORP.
INTO
CHOUTEAU TELEPHONE COMPANY
PURSUANT TO SECTION 1081 OF THE
GENERAL CORPORATION ACT OF THE STATE OF OKLAHOMA
************************************************************
THE UNDERSIGNED CORPORATION, organized and existing under and by
virtue of the General Corporation Act of the State of Oklahoma, does hereby
certify that:
1. The name, state of incorporation and date of filing of the
certificate of incorporation of each of the constituent corporations of the
merger are as follows:
State of
Name Incorporation
---- -------------
Chouteau Acquisition Oklahoma
Corp.
Chouteau Telephone Oklahoma
Company
2. An Agreement and Plan of Merger has been approved, adopted,
certified, executed and acknowledged by unanimous written consent of the
respective Board of Directors of each of the aforesaid constituent corporations
in accordance with the requirements of Section 1081 of the General Corporation
Act of the State of Oklahoma.
3. The name of the surviving corporation of the merger is Chouteau
Telephone Company, which will continue its existence as said surviving
corporation under its present name upon the effective date of said merger
pursuant to the provisions of the General Corporation Act of the State of
Oklahoma.
4. The certificate of incorporation of the surviving corporation
shall be the surviving corporation's certificate of incorporation.
5. The executed Agreement and Plan of Merger between the aforesaid
constituent corporations is on file at the following address:
Chouteau Telephone Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6. The Agreement and Plan of Merger was duly approved by the
shareholders of each of the constituent corporations in accordance with Section
1081 of the General Corporation Act of the State of Oklahoma.
7. A copy of the Agreement and Plan of Merger will be furnished by
the surviving corporation, on request and without cost, to any shareholder of
any constituent corporation.
-2-
IN WITNESS WHEREOF, the undersigned has subscribed this certificate on
the date set forth below and hereby affirms that the statements contained herein
are true and correct.
________________, 1998_
CHOUTEAU TELEPHONE
COMPANY
By:___________________________
Name: ________________________
Title: _______________________
ATTESTED TO:
By:___________________________
Name: ________________________
Title: _______________________
-3-
EXHIBIT B
FORM OF NOTE
EXHIBIT C
OPINION OF COMPANY COUNSEL
EXHIBIT D
CCTC PARTNERSHIP AGREEMENT
EXHIBIT E
OPINION OF PARENT'S AND
ACQUISITION OF SUB'S COUNSEL
-2-
TABLE OF CONTENTS
Page
----
SECTION 1. THE MERGER.................................................. 1
1.1 Surviving Corporation....................................... 1
1.2 Certificate of Incorporation................................ 1
1.3 By-laws..................................................... 2
1.4 Directors................................................... 2
1.5 Officers.................................................... 2
1.6 Effective Date.............................................. 2
1.7 Additional Actions.......................................... 2
1.8 Conversion of Company Common Stock.......................... 3
1.9 Conversion of Acquisition Sub Common Stock.................. 3
1.10 Dissenting Shares........................................... 3
1.11 Surrender of Shares......................................... 5
SECTION 2. REPRESENTATIONS AND WARRANTIES.............................. 6
2.1 Organization and Corporate Power............................ 6
2.2 Authorization and No Contravention.......................... 7
2.3 Capitalization; Shareholders; Subsidiaries.................. 7
2.4 Financial Statements........................................ 8
2.5 Business; Franchises and Regulations........................ 9
2.6 Tariffs: FCC Licenses....................................... 10
2.7 Rate Base................................................... 10
2.8 Overbillings; Refunds....................................... 11
2.9 Capital Improvements Required by State
Authorities................................................. 11
2.10 Compliance with Law......................................... 11
2.11 Absence of Undisclosed Liabilities.......................... 11
2.12 Absence of Certain Developments............................. 12
2.13 Title to Properties......................................... 12
2.14 Tax Matters................................................. 14
2.15 Insurance................................................... 16
2.16 Contracts and Commitments................................... 16
2.17 Litigation.................................................. 16
2.18 Environmental Matters....................................... 17
2.19 Investment Company.......................................... 18
2.20 Employee Benefit Programs................................... 19
2.21 Brokers or Finders.......................................... 21
2.22 Corporate Records........................................... 21
2.23 Books of Account............................................ 22
2.24 Certain Employment Matters.................................. 22
2.25 Voting Agreements........................................... 23
2.26 No Material Misstatement or Omission........................ 23
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT.................... 24
3.1 Organization and Corporate Power............................ 24
3.2 Authorization and No Contravention.......................... 24
3.3 Brokers or Finders.......................................... 25
-i-
3.4 Financial Statements........................................ 25
3.5 Authority to Execute and Deliver Notes...................... 26
3.6 Payment of Notes............................................ 26
SECTION 4. REPRESENTATIONS AND WARRANTIES REGARDING
ACQUISITION SUB............................................. 26
4.1 Organization and Corporate Power............................ 26
4.2 Authorization and No Contravention.......................... 26
4.3 Capitalization.............................................. 27
4.4 Brokers or Finders.......................................... 27
SECTION 5. PARENT'S AND ACQUISITION SUB'S CONDITIONS OF
MERGER...................................................... 27
5.1 Certificate................................................. 28
5.2 Delivery of Documents....................................... 28
5.3 Opinion of Company's Counsel................................ 29
5.4 Opinion of Special OCC Counsel.............................. 29
5.6 Compliance with Agreements.................................. 29
5.7 All Proceedings Satisfactory................................ 29
5.8 Directors and Officers...................................... 29
5.9 Regulatory Matters.......................................... 29
5.10 Litigation.................................................. 30
5.11 Adverse Changes............................................. 30
5.12 Dissenting Shareholders..................................... 30
5.13 Special Meeting............................................. 31
5.14 Amendment of CCTC Partnership Agreement..................... 31
SECTION 6. COMPANY'S CONDITIONS OF MERGER.............................. 31
6.1 Certificate................................................. 31
6.2 Compliance with Agreements.................................. 31
6.3 All Proceedings Satisfactory................................ 31
6.4 Regulatory Matters.......................................... 32
6.5 Litigation.................................................. 32
6.6 ........................................................... 32
SECTION 7. COVENANTS................................................... 32
7.1 Reular Course of Business................................... 32
7.2 Amendments; Sales and Acquisitions.......................... 33
7.3 Capital Changes............................................. 34
7.4 Dividends................................................... 34
7.5 Capital Expenditures........................................ 34
7.6 Borrowing................................................... 34
7.7 Property.................................................... 34
7.8 Other Commitments........................................... 34
7.9 Interim Financial Information............................... 34
7.10 Consents and Authorizations................................. 35
7.11 Access...................................................... 35
7.12 Notice of Transfer.......................................... 35
7.13 Payment of Tax.............................................. 35
7.14 Agreement to Defend......................................... 35
7.15 Further Assurances.......................................... 36
7.16 Consents.................................................... 36
7.17 No Solicitation or Negotiation.............................. 36
-ii-
7.18 Public Announcements....................................... 38
7.19 Environmental Inspections.................................. 39
7.20 Regulatory Matters......................................... 39
7.21 Indemnification and Insurance.............................. 39
7.22 Payment of Regulatory Fees................................. 39
7.23 Shareholder Approval....................................... 39
7.24 Accountant's Consent....................................... 40
SECTION 8. CLOSING.................................................... 40
8.1 Time and Place............................................. 40
SECTION 9. INDEMNIFICATION OF PARENT AND ACQUISITION SUB.............. 41
9.1 Survival................................................... 41
9.2 Indemnification............................................ 41
9.3 Notice of Claims........................................... 42
9.4 Method of Indemnification.................................. 42
9.5 Defense of Third-Party Claims.............................. 43
SECTION 10. DEFINITIONS................................................ 44
SECTION 11. GENERAL.................................................... 47
11.1 Termination................................................ 47
11.2 Effect of Termination...................................... 48
11.3 AMENDMENTS, WAIVERS AND CONSENTS........................... 48
11.4 GOVERNING LAW; CONSENT TO JURISDICTION..................... 48
11.5 Section Headings........................................... 48
11.6 Notices and Demands........................................ 49
11.7 Counterparts............................................... 50
11.8 Severability; Complete Agreement........................... 50
11.9 Expenses................................................... 51
11.10 Assignment................................................. 51
11.11 Accounting Terms........................................... 51
11.12 Parties.................................................... 51
11.13 JURY WAIVER................................................ 51
11.14 Schedules.................................................. 51
11.15 Arbitration................................................ 52
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