AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TELEPHONE AND DATA SYSTEMS, INC.,
SINGER ACQUISITION CORP.
and
CHORUS COMMUNICATIONS GROUP, LTD.
November 24, 2000
TABLE OF CONTENTS
PAGE
RECITALS.................................................................1
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 The Merger.........................................................1
1.2 Effective Time.....................................................2
1.3 Effects of the Merger..............................................2
1.4 Closing............................................................2
ARTICLE II
SURVIVING CORPORATION
2.1 Certificate of Incorporation.......................................2
2.2 By-Laws............................................................2
2.3 Directors..........................................................2
2.4 Officers...........................................................2
ARTICLE III
MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGER
3.1 Share Consideration for the Merger; Conversion or Cancellation
of Shares in the Merger..........................................3
3.2 Payment for Shares in the Merger...................................4
3.3 Dissenting Shares..................................................5
3.4 No Further Rights or Transfers; Cancellation of Treasury
Shares...........................................................6
3.5 Stock Options......................................................6
3.6 Certain Company and Parent Actions.................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Corporate Organization and Qualification...........................8
4.2 Capitalization.....................................................8
ii
4.3 Subsidiaries and Investments.......................................9
4.4 Authority Relative to this Agreement..............................10
4.5 Consents and Approvals; No Violation..............................11
4.6 SEC Reports; Financial Statements.................................13
4.7 Operations Since Balance Sheet Date...............................13
4.8 Absence of Certain Changes or Events..............................15
4.9 Absence of Undisclosed Liabilities................................16
4.10 Litigation........................................................16
4.11 Proxy Statement...................................................16
4.12 Taxes.............................................................16
4.13 Employee Benefit Plans; Labor Matters.............................17
4.14 Environmental Laws and Regulations................................20
4.15 Real Property.....................................................20
4.16 Intangible Property...............................................20
4.17 Insurance.........................................................21
4.18 Compliance with Laws and Orders...................................21
4.19 Permits...........................................................21
4.20 Intellectual Property.............................................21
4.21 Rights Agreement..................................................22
4.22 Takeover Statutes.................................................22
4.23 Certain Agreements................................................22
4.24 Brokers and Finders...............................................23
4.25 Opinion of Financial Advisor......................................23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
5.1 Corporate Organization and Qualification..........................23
5.2 Authority Relative to This Agreement..............................24
5.3 Consents and Approvals; No Violation..............................24
5.4 SEC Reports; Financial Statements.................................25
5.5 Proxy Statement...................................................26
5.6 Financing.........................................................26
5.7 Interim Operations of Newco.......................................26
5.8 Brokers and Finders...............................................27
5.9 Share Ownership...................................................27
iii
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Shareholders Meeting..............................................27
6.2 Conduct of Business of the Company................................28
6.3 No Solicitation of Transactions...................................31
6.4 Reasonable Efforts................................................32
6.5 Access to Information.............................................33
6.6 Publicity.........................................................33
6.7 Indemnification of Directors and Officers.........................33
6.8 Employees.........................................................36
6.9 Transfer of Interests.............................................37
6.10 Employment Plans..................................................37
6.11 Change in Control Matters.........................................37
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligations to Effect the Merger.......38
7.2 Conditions to the Company's Obligations to Effect the Merger......38
7.3 Conditions to the Parent's and Newco's Obligations to
Effect the Merger...............................................39
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
8.1 Termination by Mutual Consent.....................................39
8.2 Termination by Either Parent or the Company.......................40
8.3 Termination by Parent.............................................40
8.4 Termination by the Company........................................40
8.5 Effect of Termination.............................................41
8.6 Extension; Waiver.................................................42
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Payment of Expenses...............................................42
9.2 Survival of Representations and Warranties; Survival of
Confidentiality.................................................42
iv
9.3 Modification or Amendment.........................................42
9.4 Waiver of Conditions..............................................43
9.5 Counterparts......................................................43
9.6 Governing Law.....................................................43
9.7 Notices...........................................................43
9.8 Entire Agreement; Assignment......................................45
9.9 Parties in Interest...............................................45
9.10 Certain Definitions...............................................45
9.11 Obligation of Parent..............................................47
9.12 Validity..........................................................48
9.13 Captions..........................................................48
v
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
November 24, 2000, by and among Telephone and Data Systems, Inc., a
Delaware corporation ("Parent"), Singer Acquisition Corp., a Wisconsin
corporation and a direct wholly owned subsidiary of Parent ("Newco"), and
Chorus Communications Group, Ltd., a Wisconsin corporation (the "Company").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has, subject to the conditions of this Agreement, determined
that the Merger (as defined below) is in the best interests of the
shareholders of the Company and approved and adopted this Agreement and the
transactions contemplated hereby in accordance with the Wisconsin Business
Corporation Law (the "WBCL"); and
WHEREAS, Parent, Newco and the Company desire to make certain
representations, warranties, covenants and agreements in connection with
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth
herein, Parent, Newco and the Company hereby agree as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined below), the Company and Newco
shall consummate a merger (the "Merger") in which (a) Newco shall be merged
with and into the Company and the separate corporate existence of Newco
shall thereupon cease, (b) the Company shall be the successor or surviving
corporation in the Merger and shall continue to be governed by the laws of
the State of Wisconsin, and (c) the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. The corporation surviving the
Merger is sometimes hereinafter referred to as the "Surviving Corporation."
1.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII hereof,
the appropriate parties hereto shall execute in the manner required by the
WBCL and file with the Wisconsin Department of Financial Institutions
appropriate articles of merger relating to the Merger, and the parties
shall take such other and further actions as may be required by Law to make
the Merger effective. The time the Merger becomes effective in accordance
with applicable Law is hereinafter referred to as the "Effective Time."
1.3 Effects of the Merger. The Merger shall have the effects
set forth in Section 180.1106 of the WBCL.
1.4 Closing. The closing of the Merger (the "Closing") shall
take place (a) at the offices of Skadden, Arps, Slate, Meagher & Flom
(Illinois), 333 West Wacker Drive, Chicago, Illinois, at 10:00 a.m. on the
first business day following the date on which the last of the conditions
set forth in Article VII hereof shall be fulfilled or waived in accordance
with this Agreement or (b) at such other place, time and date as Parent and
the Company may agree.
ARTICLE II
SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of
Incorporation of Newco, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving
Corporation.
2.2 By-Laws. The By-Laws of Newco, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation.
2.3 Directors. The directors of Newco at the Effective Time
shall, from and after the Effective Time, be the initial directors of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their
2
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
2.4 Officers. The officers of the Company at the Effective Time
shall, from and after the Effective Time, be the initial officers of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-Laws.
ARTICLE III
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF
SHARES IN THE MERGER
3.1 Share Consideration for the Merger; Conversion or
Cancellation of Shares in the Merger. (a) At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, Newco, the
Company, the Surviving Corporation or the holders of any outstanding shares
of common stock, each share having no par value, of the Company, together
with the associated right to purchase one common share purchase right (a
"Right"), issued pursuant to the Rights Agreement, dated as of March 22,
2000, by and between the Company and Norwest Bank Minnesota, N.A., as
Rights Agent (the "Rights Agreement"), issued and outstanding immediately
prior to the Effective Time (together with the associated Rights, the
"Shares") (other than Dissenting Shares (as defined below) and Shares owned
by Parent, Newco or any direct or indirect wholly owned Subsidiary of
Parent (collectively, "Parent Companies") or any of the Company's direct or
indirect wholly owned Subsidiaries or held in the treasury of the Company)
shall, by virtue of the Merger and without any action on the part of Newco,
the Company or the holder thereof, be cancelled and extinguished and
converted into the right to receive from Parent, pursuant to Section 3.2,
$36.07 per Share in cash (the "Merger Consideration"), payable to the
holder thereof, without interest thereon, less any required withholding of
taxes, upon the surrender of the certificate formerly representing such
Share.
(b) At the Effective Time, each Share issued and
outstanding and owned by any of the Parent Companies or any of the
Company's direct or indirect wholly owned Subsidiaries or held in the
Company's treasury immediately prior to the Effective Time shall cease to
be outstanding, be cancelled and retired without payment of any
consideration therefor and cease to exist.
(c) At the Effective Time, each share of common stock of
Newco issued and outstanding immediately prior to the Effective Time shall
be converted into one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
3
3.2 Payment for Shares in the Merger. The manner of making
payment for Shares in the Merger shall be as follows:
(a) At the Effective Time, Parent shall deposit or cause
to be deposited with a bank or trust company selected by Parent and
reasonably acceptable to the Company (the "Paying Agent") for the benefit
of the holders of Shares, the funds necessary to make the payments
contemplated by Section 3.1 (the "Payment Fund"). The Paying Agent shall,
pursuant to irrevocable instructions, deliver the Merger Consideration out
of the Payment Fund. The Payment Fund shall not be used for any other
purpose.
(b) The Paying Agent shall invest the Payment Fund as
directed by Parent or Newco in obligations of, or guaranteed by, the United
States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investor Services or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $200
million, in each case with maturities not exceeding seven days. Parent
shall cause the Payment Fund to be promptly replenished to the extent of
any losses incurred as a result of the aforementioned investments. All
earnings thereon shall inure to the benefit of Parent. If for any reason
(including losses) the Payment Fund is inadequate to pay the amounts to
which holders of Shares shall be entitled under Section 3.1 and this
Section 3.2, Parent shall in any event be liable for payment thereof. The
Payment Fund shall not be used for any purpose except as expressly provided
in this Agreement.
(c) As soon as reasonably practicable after the Effective
Time, the Paying Agent shall mail to each holder of record (other than
holders of certificates representing Dissenting Shares and for Shares
referred to in Section 3.1(b)) of a certificate or certificates which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates") (i) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and (ii) instructions for use in effecting the surrender
of the Certificates for payment therefor. Upon surrender of Certificates
for cancellation to the Paying Agent, together with such letter of
transmittal duly executed and any other required documents, the holder of
such Certificates shall be entitled to receive for each of the Shares
represented by such Certificates the Merger Consideration, without any
interest thereon, less any required withholding of taxes, and the
Certificates so surrendered shall forthwith be cancelled. Until so
surrendered, such Certificates shall represent solely the right to receive
the
4
Merger Consideration with respect to each of the Shares represented
thereby. If payment is to be made to a person other than the person in
whose name a Certificate so surrendered is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such payment shall pay to the Paying Agent any transfer or other
taxes required by reason of the payment to a person other than the
registered holder of the Certificate surrendered, or shall establish to the
satisfaction of the Paying Agent that such tax has been paid or is not
applicable. On and after the Effective Time, until surrendered in
accordance with the provisions of this Section 3.2(c), each Certificate
(other than Certificates representing Dissenting Shares) shall represent
for all purposes only the right to receive, for each Share represented
thereby, the Merger Consideration.
(d) Any portion of the Payment Fund made available to the
Paying Agent which remains unclaimed by the former shareholders of the
Company for one year after the Effective Time shall be delivered to Parent,
upon demand of Parent, and any former shareholders of the Company shall
thereafter look only to Parent for payment of their claim for the Merger
Consideration for the Shares.
(e) Neither the Paying Agent nor any party to this
Agreement shall be liable to any shareholder of the Company or holder of
any Option (as defined below) for any Shares, any Options, the Merger
Consideration or cash delivered to a public official pursuant to and in
accordance with any abandoned property, escheat or similar law.
(f) The Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any shareholder of the Company or Option holder such amounts
as the Company reasonably and in good faith determines are required to be
deducted and withheld with respect to the making of such payment under the
Code (as defined below), or any provision of state, local or foreign tax
Law. To the extent that amounts are so withheld by the Paying Agent, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the shareholder or Option holder in respect of which
such deduction and withholding was made by the Paying Agent.
3.3 Dissenting Shares. (a) Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the
Merger or consented thereto in writing and who has demanded payment for
such shares in accordance with Sections 180.1301 to
5
180.1331 of the WBCL, if such Sections provide for dissenters' rights for
such Shares in the Merger ("Dissenting Shares"), shall not be converted
into the right to receive the Merger Consideration as provided in Section
3.1, unless and until such holder fails to perfect or withdraws or
otherwise loses his or her right to dissent and demand payment under the
WBCL. If, after the Effective Time, any such holder fails to perfect or
withdraws or loses his or her right to demand payment, then such Dissenting
Shares shall thereupon be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration, if any,
to which such holder is entitled, without interest or dividends thereon,
and such Shares shall no longer be Dissenting Shares. The Company shall
give Parent prompt notice of any demands received by the Company for
payment of Shares and, prior to the Effective Time, Parent shall have the
right to participate in all negotiations and proceedings with respect to
such demands. Prior to the Effective Time, the Company shall not, except
with the prior written consent of Parent, make any payment with respect to,
or settle or offer to settle, any such demands.
(b) From time to time at or after the Effective Time,
Parent shall take all lawful action necessary to make the appropriate cash
payments, if any, to holders of Dissenting Shares. Prior to the Effective
Time, Parent shall enter into appropriate commercial arrangements to ensure
effectuation of the immediately preceding sentence.
3.4 No Further Rights or Transfers; Cancellation of Treasury
Shares. Except for the surrender of the certificate(s) representing the
Shares in exchange for the right to receive the Merger Consideration with
respect to each Share or the perfection of dissenters' rights with respect
to the Dissenting Shares, at and after the Effective Time, the holder of
Shares shall cease to have any rights as a shareholder of the Company, and
no transfer of Shares shall thereafter be made on the stock transfer books
of the Surviving Corporation. Each Share held in the Company's treasury
immediately prior to the Effective Time shall, by virtue of the Merger, be
canceled and retired and cease to exist without any conversion thereof
pursuant to Section 3.1(b).
3.5 Stock Options. At the Effective Time, each option
("Option") which has been granted under the Company's 2000 Stock Incentive
Plan or any predecessor plans thereto (the "Option Plan") and is
outstanding at the Effective Time, whether or not then exercisable, either
at the option of the holders thereof:
(a) will be exchanged for, and the holder of each such
Option will be entitled to receive upon surrender of the Option for
cancellation, a lump sum
6
cash payment equal to the product of (i) the excess, if any, of the Merger
Consideration over the per share exercise price of each such Option; times
(ii) the number of Shares covered by such Option; or
(b) shall become and represent an option to purchase such
number of Common Shares ("Parent Shares"), par value $1.00 per share of
Parent ("Parent Common Stock") (a "Substitute Option") determined by
multiplying the number of Shares subject to such Option immediately prior
to the Effective Time by a fraction, the numerator of which is the Merger
Consideration and the denominator of which is the Effective Time Market
Price of the Parent Shares, at an exercise price per Parent Share
(increased to the nearest whole cent) equal to the exercise price per Share
subject to such Option immediately prior to the Effective Time divided by a
fraction, the numerator of which is the Merger Consideration and the
denominator of which is the Effective Time Market Price of the Parent
Shares. All other terms and conditions applicable to the Options shall
remain unchanged with respect to the Substitute Options, including that the
Substitute Options shall be vested and exercisable at any time after the
Effective Time. No fractional Parent Shares will be issued upon the
exercise of a Substitute Option. In lieu of such issuance, the Parent
Shares issuable pursuant to the terms of each Substitute Option shall be
rounded to the closest whole Parent Share. After the Effective Time, except
as otherwise provided in this Section 3.5, each Substitute Option shall be
exercisable upon the same terms and conditions as were applicable to the
Option Plan immediately prior to the Effective Time, after giving effect to
the resolutions and other actions described in this Section 3.5(b). Not
later than ten days following the Effective Time, Parent shall file a
registration statement on Form S-8 or otherwise include in an existing
registration statement with respect to the Parent Shares to be issued upon
exercise of the Substitute Options and shall use its best efforts to
maintain the effectiveness of such registration statement for so long as
the Substitute Options shall remain outstanding. Prior to the Effective
Time, the Board of Directors of the Company shall adopt such resolutions or
shall take such other actions as may be required, with respect to the
Options subject to this Section 3.5(b), to specifically approve the
transactions contemplated by this Section 3.5.
The Company shall use reasonable efforts to obtain the election of the
holders of Options prior to the Effective Time.
3.6 Certain Company and Parent Actions. Prior to the Effective
Time, (i) the Company shall take all such steps as may be required to cause
any dispositions of Shares (including derivative securities with respect to
Shares) resulting from the transactions contemplated by Article III of this
Agreement by each individual who is
7
subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to the Company and (ii) Parent shall take all such steps as
may be required to cause any acquisitions of Parent Shares (including
derivative securities with respect to Parent Shares) resulting from the
transactions contemplated by Article III of this Agreement by each
individual who is expected to be subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to Parent, in either case,
to be exempt under Rule 16b-3 promulgated under the Exchange Act, such
steps to be taken in accordance with the No-Action Letter dated January 12,
1999 issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Newco
that:
4.1 Corporate Organization and Qualification. Each of the
Company and its Subsidiaries (as hereinafter defined in Section 9.10) is a
corporation or a limited liability company duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation and is qualified and in good standing as a foreign
corporation or foreign limited liability company in each jurisdiction
listed on Schedule 4.1 where the properties owned, leased or operated or
the business conducted by it require such qualification, except where
failure to so qualify or be in good standing would not have a Company
Material Adverse Effect (as hereinafter defined in Section 9.10). Each of
the Company and its Subsidiaries has all requisite power and authority
(corporate or otherwise) to own its properties and to carry on its business
as it is now being conducted except where failure to have such power and
authority would not have a Company Material Adverse Effect. The Company has
heretofore made available to Parent complete and correct copies of its
Amended and Restated Articles of Incorporation and By-Laws.
4.2 Capitalization. The authorized capital stock of the Company
consists of 25,000,000 Shares of which, as of November 24, 2000, 5,374,726
Shares were issued and outstanding and 40,562.576 Shares were held in the
Company's treasury. All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, except as otherwise provided in Section 180.0622(2)(b) of
the WBCL. As of November 24, 2000, 54,100 Shares were reserved for issuance
upon exercise of outstanding awards pursuant to the Option Plan
8
and 239,562.48 Shares were reserved for issuance under the Company's
Employee Stock Purchase Plan ("ESPP"). Except as set forth on Schedule 4.2,
all outstanding shares of capital stock of the Company's Subsidiaries are
owned by the Company or a direct or indirect wholly owned Subsidiary of the
Company, free and clear of all liens, charges, encumbrances, claims and
options of any nature. Except as set forth on Schedule 4.2, the Company or
its wholly owned Subsidiaries own the Limited Partnership Interests free
and clear of all liens, charges, encumbrances, claims and options of any
nature. Except as set forth above and on Schedule 4.2 and except for the
Rights, there are not as of the date hereof any outstanding or authorized
options, warrants, calls, rights (including preemptive rights), commitments
or any other agreements of any character which the Company or any of its
Subsidiaries is a party to, or may be bound by, requiring it to issue,
transfer, sell, purchase, redeem or acquire any shares of capital stock or
any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock of the Company or
any of its Subsidiaries.
4.3 Subsidiaries and Investments.
(a) Schedule 4.3 contains the name, the jurisdiction of
incorporation or organization, the authorized share or other equity
capital, the number and percentage of issued and outstanding shares or
other equity interests of each of the Subsidiaries owned, directly or
indirectly, of record or beneficially by the Company or any of the
Subsidiaries (naming each such owner), the number of shares of capital
stock held as treasury shares and, to the best knowledge of the Company as
of the date of this Agreement, the name of the owner and the number and
percentage of outstanding shares or other equity interests of each of the
Subsidiaries owned of record or beneficially by any other person.
(b) True and complete copies of the Certificate or
Articles of Incorporation and all amendments thereto and of the By-laws, as
amended, of each of the Subsidiaries that is a corporation and the
partnership or operating agreement of each of the Subsidiaries that is a
partnership or a limited liability company have been delivered or made
available to Parent.
(c) All of the outstanding capital stock of each of the
Subsidiaries of the Company is validly issued, fully paid and
nonassessable, except as otherwise provided in Section 180.0622(2)(b) of
the WBCL. Except as set forth in this Agreement and in Schedule 4.3, there
are no agreements, arrangements, options, warrants, calls, rights or
commitments of any character (i) relating to the issuance, sale, purchase
or
9
redemption of any capital stock, partnership interest or other equity
interest of any of the Subsidiaries of the Company, or (ii) requiring the
Company or any of its Subsidiaries to purchase any capital stock,
partnership interest or other equity interest held by others. None of the
issued and outstanding shares of capital stock or partnership interests or
other equity interests of any Subsidiary of the Company has been issued in
violation of, or is subject to, any preemptive or subscription rights.
Except as set forth in this Agreement and in Schedule 4.3, there are no
voting trust agreements or any other similar contracts, agreements,
arrangements, commitments, plans or understandings restricting or otherwise
relating to voting, dividend, ownership or transfer rights of any shares of
capital stock or partnership interests or other equity interests of any
Subsidiary of the Company. Except as set forth in Schedule 4.3, the Company
and/or its Subsidiaries have good and valid title to, and beneficial
ownership of, the shares, partnership interests or other equity interests
shown on Schedule 4.3 as being owned by each of them, free from all
encumbrances.
4.4 Authority Relative to this Agreement. (a) The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This
Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the approval
and adoption of the Merger and this Agreement by holders of the Shares in
accordance with the WBCL). This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding agreement of Parent and Newco,
constitutes the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except that such
enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity or at law).
(b) The Board of Directors has duly and validly approved
and taken all corporate action required to be taken by the Board of
Directors for the consummation of the transactions contemplated herein,
including but not limited to all actions required to (i) render the
provisions of Section 180.1141 of the WBCL restricting business
combinations with "interested stockholders" inapplicable to such
transactions and (ii) prevent the Rights from distributing or becoming
exercisable pursuant to the Rights Agreement as a result of such
transactions.
10
4.5 Consents and Approvals; No Violation. (a) Neither the
execution and delivery of this Agreement nor the consummation by the
Company of the transactions contemplated hereby will:
(i) conflict with or result in any breach of any
provision of or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a
loss of rights under, or result in the creation or imposition of any
encumbrance upon, the respective Amended and Restated Articles of
Incorporation, By-Laws or any limited partnership or operating
agreements of the Company or any of its Subsidiaries or any limited
partnerships;
(ii) except as set forth on Schedule 4.5(ii), conflict
with or result in any breach of any provision of any limited
partnership agreement with respect to the Limited Partnership
Interests;
(iii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, except (A) in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (B) pursuant to the applicable
requirements of the Exchange Act, (C) the filing of the articles of
merger pursuant to the WBCL and appropriate documents with the
relevant authorities of other states in which the Company or any of
its Subsidiaries is authorized to do business, (D) in connection with
any state or local tax which is attributable to the beneficial
ownership of the Company's or its Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), (E) such filings and consents as
may be required by the Federal Communications Commission (the "FCC")
or the rules and regulations promulgated by the FCC (the "FCC
Rules"), the Minnesota Public Utilities Commission (the "MPUC") or
the rules and regulations promulgated by the MPUC (the "MPUC Rules")
and the Wisconsin Public Service Commission ("WPSC") or the rules and
regulations promulgated by the WPSC (the "WPSC Rules"), (F ) as may
be required by any applicable state securities or "blue sky" laws or
state takeover laws, (G) such filings and consents as may be required
under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this
Agreement, (H) where the failure
11
to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not individually or in the
aggregate have a Company Material Adverse Effect, or (I) such
filings, consents, approvals, orders, registrations and declarations
as may be required as a result of the status or identity of Parent
and/or Newco;
(iv) except as set forth in Schedule 4.5(a)(iv),
result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or lien or other
charge or encumbrance) under any of the terms, conditions or
provisions of any note, license, agreement or other instrument or
obligation to which the Company or any of its Subsidiaries or any of
their assets may be bound, except for such violations, breaches and
defaults (or rights of termination, cancellation or acceleration or
lien or other charge or encumbrance) as to which requisite waivers or
consents have been obtained or which individually or in the aggregate
would not have a Company Material Adverse Effect; or
(v) assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in this Section
4.5 are duly and timely obtained or made and, with respect to the
Merger, the approval of the Merger and this Agreement by the
Company's shareholders has been obtained, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Company or any of its Subsidiaries or to any of their respective
assets, except for violations which would not individually or in the
aggregate have a Company Material Adverse Effect.
(b) The affirmative vote of a majority of the voting power
of the outstanding Shares in favor of the approval and adoption of this
Agreement (the "Company Shareholder Approval") is the only vote of the
holders of any class or series of the Company's or its Subsidiaries'
securities necessary to approve this Agreement, the Merger and the other
transactions contemplated hereby.
12
4.6 SEC Reports; Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed by it with the SEC since January 1, 1999, pursuant to
the federal securities laws and the SEC rules and regulations thereunder,
all of which, as of their respective dates, complied in all material
respects with all applicable requirements of the Exchange Act
(collectively, the "Company SEC Reports"). None of the Company SEC Reports,
including, without limitation, any financial statements or schedules
included therein, as of their respective dates, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(b) The consolidated balance sheets and the related
consolidated statements of income and cash flows (including the related
notes thereto) of the Company included in the Company SEC Reports, as of
their respective dates, complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, were prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods
(except as otherwise noted therein), and present fairly, in all material
respects, the consolidated financial position of the Company and its
consolidated Subsidiaries as of their respective dates, and the
consolidated results of their operations and their cash flows for the
periods presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
4.7 Operations Since Balance Sheet Date.
(a) Except as set forth in Schedule 4.7(a), since
September 30, 2000 until the date of this Agreement, there has been no
damage, destruction or loss, whether or not covered by insurance, or
condemnation or other taking adversely affecting in any material respect
any of the Company's material assets or its business.
(b) Except as set forth in Schedule 4.7(b) and except with
respect to the actions of the Company resulting in this Agreement, since
September 30, 2000 until the date of this Agreement, the Company has
conducted its business only in the ordinary course and in conformity with
past practice. Without limiting the generality of the foregoing, since
September 30, 2000 until the date of this Agreement, except as set forth in
such Schedule, the Company has not:
13
(i) issued, delivered or agreed (conditionally or
unconditionally) to issue or deliver, or granted any option, except
in the ordinary course of business consistent with past practice,
warrant or other right to purchase, any of its capital stock or other
equity interest or any security convertible into its capital stock or
other equity interest;
(ii) issued, delivered or agreed (conditionally or
unconditionally) to issue or deliver any of its bonds, notes or other
debt securities, or borrowed or agreed to borrow any funds, other
than in the ordinary course of business consistent with past
practice;
(iii) paid any obligation or liability (absolute or
contingent) other than current liabilities in the ordinary course of
business consistent with past practice;
(iv) except with respect to the declaration on
November 24, 2000, of a $0.16 dividend payable per Share, declared or
made, or agreed to declare or make, any payment of dividends or
distributions to its stockholders or purchased or redeemed, or agreed
to purchase or redeem, any of its capital stock or other equity
interest, except in each case as provided herein;
(v) except in the ordinary course of business
consistent with past practice, made or permitted any material
amendment or termination of any material agreement;
(vi) cancelled any debts owed to or claims held by the
Company (including the settlement of any claims or litigation) other
than in the ordinary course of its business consistent with past
practice;
(vii) created, incurred or assumed, or agreed to
create, incur or assume, any indebtedness for borrowed money or
entered into, as lessee, any capitalized lease obligations (as
defined in Statement of Financial Accounting Standards No. 13);
(viii) accelerated or delayed collection of notes or
accounts receivable in advance of or beyond their regular due dates
or
14
the dates when the same would have been collected in the ordinary
course of its business consistent with past practice;
(ix) delayed or accelerated payment of any account
payable or other liability beyond or in advance of its due date or
the date when such liability would have been paid in the ordinary
course of its business consistent with past practice;
(x) made or committed to make any material disposition
of assets of the Company and its Subsidiaries;
(xi) entered into or become committed to enter into
any other material transaction except in the ordinary course of
business;
(xii) allowed the levels of inventory of the Company
to vary in any material respect from the levels customarily
maintained in its business;
(xiii) instituted any material increase in any
compensation payable to any employee of the Company except in the
ordinary course of business or, except as set forth in Schedule
4.7(b)(xiii), in any profit-sharing, bonus, incentive, deferred
compensation, insurance, pension, retirement, medical, hospital,
disability, welfare or other benefits made available to employees of
the Company, except in each case as required by any Company Plan (as
defined in Section 4.13 of this Agreement);
(xiv) made any change in the accounting principles and
practices used by the Company from those applied in the preparation
of the September 30, 2000 balance sheet contained in the Company SEC
Reports and the related statements of income, stockholders' equity
and cash flow for the twelve months ended September 30, 2000.
4.8 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports, as set forth in the schedules to this Agreement
or as contemplated by this Agreement, since September 30, 2000, the Company
has not suffered any Company Material Adverse Effect and to the knowledge
of the Company as of the date
15
of this Agreement no fact or condition exists which, individually or in the
aggregate, is reasonably likely to have a Company Material Adverse Effect.
4.9 Absence of Undisclosed Liabilities. Except as reflected in
the Company SEC Reports or set forth on Schedule 4.9, or except as would
not individually or in the aggregate reasonably likely have a Company
Material Adverse Effect, the Company has no accrued or contingent liability
or liabilities arising out of any transaction or state of facts existing
prior to the date hereof, whether accrued, to become due, contingent, or
otherwise.
4.10 Litigation. Except as disclosed in the Company SEC Reports
or on Schedule 4.10, (i) to the knowledge of the Company as of the date of
this Agreement, there are no actions, claims, suits, proceedings and
governmental investigations ("Proceedings") pending or threatened against
the Company and/or its Subsidiaries and (ii) there are no Proceedings
against the Company and/or its Subsidiaries which would individually or in
the aggregate reasonably likely have a Company Material Adverse Effect.
4.11 Proxy Statement. Any proxy, information statement or
similar materials distributed to the Company's shareholders in connection
with the Merger, including any amendments or supplements thereto (the
"Proxy Statement") will comply in all material respects with applicable
federal securities laws, and the Proxy Statement will not, at the time that
it or any amendment or supplement thereto is mailed to the Company's
Shareholders, at the time of the Shareholders Meeting or at the Effective
Time contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading except that no representation is made by the Company
with respect to information supplied by Newco or Parent for inclusion in
the Proxy Statement.
4.12 Taxes.
(a) Tax Returns. For all years for which the applicable
statutory period of limitation has not expired, the Company has timely and
properly filed, and will through the date of the Closing timely and
properly file, all material federal, state, local and foreign tax returns
(including but not limited to income, franchise, sales, payroll, employee
withholding and social security and unemployment) which were or (in the
case of returns not yet due but due on or before the date of the Closing,
taking into account any valid extension of the time for filing) will be
required to be filed. The
16
Company has paid all taxes (including interest and penalties) and
withholding amounts owed by it, except where the failure to pay such taxes
or withholding amounts would not individually or in the aggregate have a
Company Material Adverse Effect. As of the date of this Agreement, no
material, unpaid tax deficiencies have been proposed or assessed against
the Company and no material tax deficiencies, whether paid or unpaid, have
been proposed or assessed against the Company since December 31, 1997.
Except as set forth in Schedule 4.12, the Company is not liable for any
taxes attributable to any other Person, whether by reason of being a member
of another affiliated group, being a party to a tax sharing agreement, as a
transferee or successor, or otherwise.
(b) Audits. Except as set forth in Schedule 4.12, the
Company has not consented to any extension of the statute of limitation
with respect to any open federal, state or local tax returns.
(c) Liens. Except as set forth in Schedule 4.12, there are
no tax liens upon any property or assets of the Company except for liens
for current taxes not yet due and payable.
(d) Withholding Taxes. The Company has properly withheld
and timely paid substantially all withholding and employment taxes which it
was required to withhold and pay relating to salaries, compensation and
other amounts heretofore paid to its employees or other Persons. All Forms
W-2 and 1099 required to be filed with respect thereto have been timely and
properly filed except where the failure to file would not individually or
in the aggregate have a Company Material Adverse Effect. The Shares are of
a class of stock that is regularly traded on an established securities
market within the meaning of Section 1445 of the Code.
(e) Other Representations. The Company (i) has not made
and will not make any elections under Section 341(f) of the Code and (ii)
has not made any payment (and is not obligated to make any payment) that
will be nondeductible under Section 280G of the Code.
4.13 Employee Benefit Plans; Labor Matters. (a) Set forth in
Schedule 4.13(a) is a true and complete list of each of the following
maintained by the Company, any Subsidiary or any ERISA Affiliate, or with
respect to which the Company, any Subsidiary or any ERISA Affiliate is or
will be required to make any payment, or which provides or will provide
benefits to present or prior employees of the Company, any Subsidiary or
any ERISA Affiliate due to such employment (the "Company Plans"): (i) each
"employee pension benefit plan" (as such term is defined
17
in Section 3(2) of ERISA) ("Pension Plan"), (ii) each "employee welfare
benefit plan" (as such term is defined in Section 3(1) of ERISA) and (iii)
each employee benefit plan, program or arrangement that is not subject to
ERISA, including without limitation any retirement, savings, profit
sharing, deferred compensation, severance, stock ownership, stock purchase,
stock option, performance, bonus, incentive, vacation or holiday pay,
hospitalization or other medical, disability, life or other insurance, or
other welfare, benefit or fringe benefit plan, policy, trust, understanding
or arrangement of any kind, whether written or oral. Except for the
Mid-Plains Telephone, Inc. Retirement Plan, which was terminated in
compliance with ERISA and the Code and for which all benefit obligations
and expenses were paid in full, none of the Company, any Subsidiary or any
ERISA Affiliate currently maintains or is required to contribute to or make
any payments in respect of, or has at any time maintained or been required
to contribute to or make any payments in respect of, (i) any Pension Plan
subject to Title IV or Section 302 of ERISA or Section 412 of the Code or
(ii) any "multiemployer plan" (as such term is defined in Section 3(37) of
ERISA) ("Multiemployer Plan").
(b) With respect to the Company Plans, except as set forth
in Schedule 4.13(b) or the Company SEC Reports and except as would not
individually or in the aggregate have a Company Material Adverse Effect:
(i) each Company Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), has received a
favorable determination letter from the Internal Revenue Service (the
"IRS") that it is so qualified and nothing has occurred since the date of
such letter that is reasonably likely to affect the qualified status of
such Company Plan; (ii) each Company Plan has been operated in all material
respects in accordance with its terms and the requirements of applicable
law; (iii) none of the Company, any of its Subsidiaries, or any ERISA
Affiliate has incurred or expects to incur any direct or indirect liability
under, arising out of or by operation of Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and no fact
or event exists that is reasonably likely to give rise to any such
liability; (iv) there is no pending or, to the knowledge of the Company,
threatened claim, suit or grievance in respect of any of the Company Plans
other than claims for benefits in the ordinary course of business; and (v)
all material contributions, reserves or premium payments for the Company
Plans accrued to the date of this Agreement have been made or provided for.
(c) Except as to Multiemployer Plans (as to which this
representation and warranty is made only to the knowledge of the Company),
none of the Company, any Subsidiary or, to the knowledge of the Company,
any other "disqualified person" (within the meaning of Section 4975 of the
Code) or "party in interest" (within the meaning of Section 3(14) of ERISA)
has taken any action with
18
respect to any Company Plan that could subject any such plan (or its
related trust), the Company or any Subsidiary or any officer, director or
employee of any of the foregoing to a material penalty or tax under Section
502(i) or Section 502(l) of ERISA or Section 4975 of the Code.
(d) Except as set forth in Schedule 4.13(d), neither the
Company nor any Subsidiary maintains or contributes to any employee welfare
benefit plan which provides benefits to employees after termination of
employment other than as required by Part 6 of Title I of ERISA. Any
employee welfare benefit plan set forth in Schedule 4.13(d) as described in
the previous sentence can be amended or terminated at any time in the
future.
(e) Except as set forth in Schedule 4.13(e) and except as
would not individually or in the aggregate reasonably likely have a Company
Material Adverse Effect, (i) the Company and the Subsidiaries have complied
in all material respects with all applicable laws, rules and regulations
which relate to wages, hours, discrimination in employment and collective
bargaining and are not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing and (ii) there is
no pending or, to the knowledge of the Company, threatened claim, suit,
arbitration, grievance or investigation regarding employment matters
against the Company or any Subsidiary. Except as set forth in Schedule
4.13(e), as of the date of this Agreement, (x) there is no unsatisfied
award, judgment or other final resolution of a dispute regarding employment
matters against the Company or any Subsidiary that requires continuing
compliance therewith or that individually or in the aggregate constitutes a
material liability or (y) neither the Company nor any of its Subsidiaries
is a party to any collective bargaining or other labor union contracts. As
of the date of this Agreement, there is no pending or, to the knowledge of
the Company, threatened labor dispute, strike or work stoppage against the
Company or any of its Subsidiaries which would interfere with the
respective business activities of the Company or its Subsidiaries, except
where such dispute, strike or work stoppage would not have a Company
Material Adverse Effect and, to the knowledge of the Company as of the date
of this Agreement, there is no pending or threatened union organizing or
election activities involving any non-union employees of the Company or any
Subsidiary.
(f) As used herein, "ERISA Affiliate" shall mean (i) any
corporation which at any time on or before the Effective Time is or was a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company; (ii) any partnership, trade or
business (whether or not incorporated) which at any time on or before the
Effective Time is or was under
19
common control (within the meaning of Section 414(c) of the Code) with the
Company; and (iii) any entity which at any time on or before the Effective
Time is or was a member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as either the Company, any
corporation described in clause (i) of this paragraph or any partnership,
trade or business described in clause (ii) of this paragraph.
4.14 Environmental Laws and Regulations. As of the date of this
Agreement, except as set forth in Schedule 4.14, (i) the Company and each
of its Subsidiaries is in material compliance with all applicable federal,
state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata) (collectively, "Environmental Laws"), except for non-
compliance that individually or in the aggregate would not have a Company
Material Adverse Effect and (ii) neither the Company nor any of its
Subsidiaries has received written notice of, or, to the knowledge of the
Company, is the subject of, any action, cause of action, claim,
investigation, demand or notice by any person or entity alleging liability
under or non-compliance with any Environmental Law which is reasonably
likely to have a Company Material Adverse Effect.
4.15 Real Property. Except as set forth on Schedule 4.15, the
Company and its Subsidiaries have good, valid and marketable title to all
of their real property (other than properties which are leased), free and
clear of all liens, mortgages, and other encumbrances and defects of title
of any nature whatsoever, except for Permitted Liens. Except as set forth
on Schedule 4.15, (i) no person or entity has any right or option to
purchase, lease, sublease or license the real property or any portion
thereof; and (ii) the use of the real property is permitted in all material
respects under applicable laws, ordinances, rules, or regulations and is in
conformity in all material respects with such as of the date of this
Agreement.
4.16 Intangible Property. The Company or a Subsidiary of the
Company is the owner of, or a licensee under a valid license for, all items
of intangible property which are material to the business of the Company
and its Subsidiaries as currently conducted, taken as a whole, including,
without limitation, trade names, unregistered trademarks and service marks,
brand names, patents and copyrights. As of the date of this Agreement,
except as disclosed on Schedule 4.16, there are no claims pending or, to
the Company's knowledge, threatened, that the Company or any Subsidiary is
in violation of any such intangible property rights of any third party
which is reasonably likely to have a Company Material Adverse Effect.
20
4.17 Insurance. Schedule 4.17 sets forth a true and complete
list of all material policies of insurance that are in full force and
effect.
4.18 Compliance with Laws and Orders. Except with respect to
the matters described in Sections 4.12, 4.13 and 4.14, neither the Company
nor any Subsidiary is in violation of or in default under any law, statute,
rule or regulation having the effect of law of the United States or any
state, county, city or other political subdivision thereof or of any
government or regulatory authority ("Laws") or writ, judgment, decree,
injunction or similar order of any governmental or regulatory authority, in
each case, whether preliminary or final, ( an "Order") applicable to the
Company or any Subsidiary or any of their respective assets and properties
the effect of which, individually or in the aggregate with other such
violations and defaults, could reasonably be expected to have a Company
Material Adverse Effect.
4.19 Permits.
(a) The Company owns, holds or possesses all licenses,
franchises, permits, privileges, immunities, approvals and other
authorizations from Governmental Entities which are reasonably necessary to
entitle it to own or lease, operate and use its assets and to carry on and
conduct its business substantially as currently conducted (herein
collectively called "Governmental Permits"). Complete and correct copies of
all of the Governmental Permits have heretofore been delivered or made
available to Parent.
(b) Except as set forth in Schedule 4.19, (i) the Company
has fulfilled and performed its obligations under each of the Governmental
Permits, and no event has occurred or condition or state of facts exists
which constitutes or, after notice or lapse of time or both, would
constitute a breach or default under any such Governmental Permit or which
permits or, after notice or lapse of time or both, would permit revocation
or termination of any such Governmental Permit, or which might adversely
affect in any material respect the rights of the Company under any such
Governmental Permit; and (ii) no notice of cancellation, of default or of
any material dispute concerning any Governmental Permit, or of any event,
condition or state of facts described in the preceding clause, has been
received by, or is known to, the Company as of the date of this Agreement.
4.20 Intellectual Property. The Company and its Subsidiaries
have all rights in all patents, patent rights, trademarks, trade names,
trade dress, logos, service marks, copyrights, know how and other
proprietary intellectual property rights and
21
computer programs held or used by the Company or its Subsidiaries
("Intellectual Property Rights") reasonably necessary to carry out the
current activities of the Company and its Subsidiaries. Except where the
failure to be true would not individually or in the aggregate reasonably
likely have a Company Material Adverse Effect, the Intellectual Property
Rights do not infringe on any proprietary right of any person and no claims
(x) challenging the validity, effectiveness or ownership by the Company or
its Subsidiaries of any of the Intellectual Property Rights, or (y) to the
effect that the Intellectual Property Rights infringe or will infringe any
intellectual property or other proprietary right of any person have been
asserted or, to the Company's knowledge, are threatened by any person nor
to the Company's knowledge are there any valid grounds for any bona fide
claim of any such kind. To the best of the Company's knowledge, as of the
date of this Agreement, there is no material unauthorized use, infringement
or misappropriation of any of the Intellectual Property Rights by any third
party, employee or former employee of the Company or its Subsidiaries.
4.21 Rights Agreement. Assuming the accuracy of Parent's and
Newco's representations in Section 5.9 of this Agreement, neither the
execution nor the delivery of this Agreement will result in a "Distribution
Date" or "Shares Acquisition Date" (as defined in the Rights Agreement).
The Company has irrevocably taken all actions necessary to make the Rights
inapplicable to the Merger and the transactions contemplated hereby.
4.22 Takeover Statutes. The Board of Directors has taken any
and all necessary and appropriate action to render inapplicable to the
Merger and the other transactions contemplated by this Agreement, the
provisions of Sections 180.1140 to 180.1144 of the WBCL. Assuming the
accuracy of the representation and warranty set forth in Section 5.9, no
"fair price", "moratorium", "control share acquisition" or other similar
antitakeover statute or regulation (each a "Takeover Statute"), is
applicable to the Company, the Shares, the Merger or the transactions
contemplated hereby. The Company makes no representation or warranty
concerning the applicability of any Takeover Statute other than those
Takeover Statutes existing under the WBCL.
4.23 Certain Agreements. Except as set forth in Schedule 4.23,
neither the Company nor any of its Subsidiaries is a party to any oral or
written agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this
22
Agreement. Except as described in Schedule 4.23 or except for any such as
would not result in a Company Material Adverse Effect, the transactions
contemplated by this Agreement will not constitute a "change of control"
under, require the consent from or the giving of notice to any third party
pursuant to, or accelerate the vesting or repurchase rights under, the
terms, conditions or provisions of any loan or credit agreement, note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound. Except as set forth in Schedule 4.23, there are no amounts payable
by the Company or its Subsidiaries to any officers of the Company or its
Subsidiaries (in their capacity as officers) as a result of the
transactions contemplated by this Agreement and/or any subsequent
employment termination.
4.24 Brokers and Finders. Except for the fees and expenses
payable to Legg Mason Wood Walker, Incorporated, which fees and expenses
are reflected in its agreement with the Company, the Company has not
employed any investment banker, broker, finder, consultant or intermediary
in connection with the transactions contemplated by this Agreement which
would be entitled to any investment banking, brokerage, finder's or similar
fee or commission in connection with this Agreement or the transactions
contemplated hereby.
4.25 Opinion of Financial Advisor. The Company has received the
opinion of Legg Mason Wood Walker, Incorporated, dated November 24, 2000,
to the effect that, as of such date, the cash consideration to be received
by the shareholders of the Company pursuant to the Merger is fair to such
shareholders from a financial point of view.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
AND NEWCO
Each of Parent and Newco represent and warrant jointly and
severally to the Company that:
5.1 Corporate Organization and Qualification. Each of Parent
and its Subsidiaries and Newco is a corporation duly organized, validly
existing and in good
23
standing under the laws of its respective jurisdiction of incorporation and
is qualified and in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification, except where the
failure to so qualify or be in such good standing would not have a Parent
Material Adverse Effect or adversely affect the consummation of the
transactions contemplated hereby. Each of Parent and its Subsidiaries has
all requisite power and authority (corporate or otherwise) to own its
properties and to carry on its business as it is now being conducted except
where failure to have such power and authority would not have a Parent
Material Adverse Effect or adversely affect the consummation of the
transactions contemplated hereby. Parent and Newco have heretofore made
available to the Company complete and correct copies of their respective
Certificate of Incorporation and By-Laws.
5.2 Authority Relative to This Agreement. Each of Parent and
Newco has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement and the consummation by Parent and Newco of the
transactions contemplated hereby have been duly and validly authorized by
the respective Boards of Directors of Parent and Newco and by Parent as
sole shareholder of Newco, and no other corporate proceedings on the part
of Parent and Newco are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by each of Parent and Newco and,
assuming this Agreement constitutes the valid and binding agreement of the
Company, constitutes the valid and binding agreement of each of Parent and
Newco, enforceable against each of them in accordance with its terms,
except that such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in
a proceeding at law or in equity).
5.3 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement by Parent or Newco nor the consummation by
Parent and Newco of the transactions contemplated hereby will:
(a) conflict with or result in any breach of any provision
of the Certificate of Incorporation or the By-Laws, respectively, of Parent
or Newco;
24
(b) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory
authority, except (i) in connection with the applicable requirements of the
HSR Act, (ii) pursuant to the applicable requirements of the Exchange Act,
(iii) the filing of the articles of merger pursuant to the WBCL and
appropriate documents with the relevant authorities of other states in
which Parent is authorized to do business, (iv) such filings and consents
as may be required by the FCC or the FCC Rules, the MPUC or the MPUC Rules
and the WPSC or the WPSC Rules, (v) as may be required by any applicable
state securities or "blue sky" laws or state takeover laws, (vi) such
filings, consents, approvals, orders, registrations, declarations and
filings as may be required under the laws of any foreign country in which
Parent or any of its Subsidiaries conducts any business or owns any assets,
(vii) such filings and consents as may be required under any local
government environmental, health or safety law or regulation pertaining to
any notification, disclosure or required approval triggered by the Merger
or the transactions contemplated by this Agreement or (viii) where the
failure to obtain such consent, approval, authorization or permit, or to
make such filing or notification, would not individually or in the
aggregate have a Parent Material Adverse Effect or adversely affect the
consummation of the transactions contemplated hereby;
(c) except as set forth in Schedule 5.3(c), result in a
violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or lien or other charge or encumbrance) under
any of the terms, conditions or provisions of any note, license, agreement
or other instrument or obligation to which Parent or any of its
Subsidiaries may be bound, except for such violations, breaches and
defaults (or rights of termination, cancellation or acceleration or lien or
other charge or encumbrance) as to which requisite waivers or consents have
been obtained or which individually or in the aggregate would not have a
Parent Material Adverse Effect or adversely affect the consummation of the
transactions contemplated hereby; or
(d) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 5.3 are
duly and timely obtained or made, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent or any of its
Subsidiaries or to any of their respective assets, except for violations
which would not individually or in the aggregate have a Parent Material
Adverse Effect or adversely affect the consummation of the transactions
contemplated hereby.
5.4 SEC Reports; Financial Statements.
25
(a) Parent has filed all forms, reports and documents
required to be filed by it with the SEC since January 1, 1999 pursuant to
the federal securities laws and the SEC rules and regulations thereunder,
all of which as of their respective dates complied in all material respects
with all applicable requirements of the Exchange Act (collectively, the
"Parent SEC Reports"). None of the Parent SEC Reports, including, without
limitation, any financial statements or schedules included therein, as of
their respective dates, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated balance sheets and the related
consolidated statements of operations, shareholders' equity and cash flows
(including the related notes thereto) of Parent included in the Parent SEC
Reports, as of their respective dates, complied in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles applied on a basis consistent
with prior periods (except as otherwise noted therein), and present fairly,
in all material respects, the consolidated financial position of Parent and
its consolidated Subsidiaries as of their respective dates, and the
consolidated results of their operations and their cash flows for the
periods presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
5.5 Proxy Statement. None of the information supplied by Parent
or Newco in writing for inclusion in the Proxy Statement will, at the time
that it or any amendment or supplement thereto is mailed to the Company's
shareholders, at the time of the Shareholders' Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading.
5.6 Financing. Parent or Newco will have sufficient cash and/or
cash equivalents available at the Effective Time to pay the aggregate
Merger Consideration and all other funds necessary to consummate the
Merger, the Agreement and the other transactions contemplated hereby.
5.7 Interim Operations of Newco. Newco was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than
in connection with the transactions contemplated hereby.
26
5.8 Brokers and Finders. Parent has not employed any investment
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
5.9 Share Ownership. Neither Parent nor Newco is an "interested
stockholder" as such term is defined in Section 1140(8)(a) of the WBCL or a
"significant shareholder" as such term is defined in Section 1130(11) of
the WBCL.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Shareholders Meeting. The Company, acting through the Board
of Directors, shall:
(a) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Shareholders Meeting"), to be held as
soon as practicable after the date hereof, for the purpose of considering
and taking action upon this Agreement;
(b) include in the Proxy Statement the recommendation of
the Board of Directors that shareholders of the Company vote in favor of
the approval and adoption of this Agreement; notwithstanding anything to
the contrary in this Agreement, the Board of Directors may withdraw, modify
or amend its recommendation if in the good faith opinion of the Board of
Directors, after consultation with counsel, such recommendation is
reasonably determined to be inconsistent with its fiduciary duties to the
Company's shareholders under applicable law; any such withdrawal,
modification or amendment shall not constitute a breach of this Agreement;
and
(c) use all reasonable efforts to promptly prepare and
file with the Securities and Exchange Commission (the "SEC") the Proxy
Statement and (A) obtain and furnish the information required to be
included by it in the Proxy Statement and, after consultation with Parent
and Newco, respond promptly to any comments made by the SEC with respect to
the Proxy Statement and any preliminary version thereof and cause the Proxy
Statement to be mailed to its shareholders at the earliest practicable time
following the date hereof and (B) obtain the necessary approvals by its
shareholders of this Agreement and the transactions contemplated hereby
unless, in the
27
good faith opinion of the Board of Directors after consultation with its
counsel, obtaining such approvals might be inconsistent with its fiduciary
duties to the Company's shareholders under applicable law.
At such meeting, Parent and Newco will vote all Shares, if any,
owned by them in favor of approval and adoption of this Agreement and the
transactions contemplated hereby.
6.2 Conduct of Business of the Company.
The Company agrees that during the period from the date of this
Agreement to the Effective Time (unless the other party shall otherwise
agree in writing and except as otherwise contemplated by this Agreement),
the Company will, and will cause each of its Subsidiaries to, conduct its
operations according to its ordinary and usual course of business
consistent with past practice and, to the extent consistent therewith, with
no less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organizations, keep
available the service of its current officers and employees and preserve
its relationships with customers, suppliers and others having business
dealings with it to the end that goodwill and ongoing businesses shall not
be impaired in any material respect at the Effective Time. Without limiting
the generality of the foregoing, and except as otherwise permitted in this
Agreement or as set forth in Schedule 6.2, prior to the Effective Time,
neither the Company nor any of its Subsidiaries will, without the prior
written consent of Parent:
(a) except for shares to be issued or delivered pursuant
to the Option Plan or pursuant to the ESPP, issue, deliver, sell, dispose
of, pledge or otherwise encumber, or authorize or propose the issuance,
sale, disposition or pledge or other encumbrance of (i) any additional
shares of capital stock of any class (including the Shares), or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for any shares of capital stock, or any rights,
warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock, or (ii) any other
securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date hereof;
(b) except pursuant to the Company's stock-based employee
benefit plans, redeem, purchase
28
or otherwise acquire, or propose to redeem, purchase or otherwise acquire,
any of its outstanding Shares, provided, however, that the Company may in
its discretion redeem the outstanding Rights at any time;
(c) split, combine, subdivide or reclassify any Shares or
declare, set aside for payment or pay any dividend, or make any other
actual, constructive or deemed distribution in respect of any Shares or
otherwise make any payments to shareholders in their capacity as such,
other than the declaration and payment of regular quarterly cash dividends
in accordance with past dividend policy (except that the Company shall not
declare, set aside for payment or pay any such dividend in respect of the
Company's first two fiscal quarters of 2001 and shall not pay any such
dividend prior to September 30, 2001) and except for dividends by a wholly
owned Subsidiary of the Company;
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries not
constituting an inactive subsidiary (other than the Merger);
(e) adopt any amendments to its Amended and Restated
Articles of Incorporation, By-Laws or except as necessary in connection
with the transactions contemplated by Sections 6.9(a) and 6.9(b), operating
agreement or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership
of any Subsidiary of the Company;
(f) except as otherwise contemplated or permitted by this
Agreement, make any acquisition, by means of merger, consolidation or
otherwise, or disposition, of assets or securities, other than in the
ordinary course of business consistent with past practice;
(g) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed money or
guarantee any such indebtedness or make any loans, advances or capital
contributions to, or investments in, any other person, other than to the
Company or any wholly owned Subsidiary of the Company;
(h) grant any material increases in the compensation of
any of its directors, officers or key employees, except in the ordinary
course of business and in accordance with past practice;
29
(i) except as set forth on Schedule 6.2(i), pay or agree
to pay any pension, retirement allowance or other employee benefit not
required or contemplated by any of the existing benefit, severance,
termination, pension or employment plans, agreements or arrangements as in
effect on the date hereof to any such director or officer, whether past or
present;
(j) except as set forth on Schedule 6.2(j), enter into any
new or materially amend any existing employment or severance or termination
agreement with any director, officer or key employee;
(k) except as set forth on Schedule 6.2(k) or as may be
required to comply with applicable law or as may be required by those items
listed on Schedule 4.13(e), become obligated under any new pension plan,
welfare plan, multiemployer plan, employee benefit plan, severance plan,
benefit arrangement, or similar plan or arrangement, which was not in
existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder;
(l) settle or compromise any material tax claim, file any
material amended tax return or claim for refund, or file any tax return
incorporating a material position, election or method of accounting
inconsistent with a position, election or method incorporated in past tax
returns, except as required by law;
(m) except in the ordinary course of business consistent
with past practice, (i) lease, sublease, license, sublicense, transfer,
mortgage, encumber its or any of its Subsidiaries' real or personal
property or (ii) acquire or permit any of its Subsidiaries to acquire any
real property;
(n) except as set forth in Schedule 6.2(n), make capital
expenditures; or
(o) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
30
6.3 No Solicitation of Transactions.
(a) Except as contemplated or as otherwise permitted by
this Agreement or pursuant to the exercise of Options or pursuant to the
ESPP, the Company shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any officer, director or employee of,
or any investment banker, attorney or other advisor or representative of,
the Company or any Subsidiary to (i) solicit or initiate, encourage, or
facilitate, directly or indirectly, any inquiries relating to, or the
submission of, any proposal or offer, whether in writing or otherwise, from
any person other than Parent, Newco or any affiliates thereof (a "Third
Party") to acquire beneficial ownership (as defined under Rule 13(d) of the
Exchange Act) of any of the assets of the Company and its Subsidiaries, or
any class of equity securities of the Company pursuant to a merger,
consolidation or other business combination, sale of shares of stock, sale
of assets, tender offer, exchange offer or similar transaction (a
"Competing Transaction"); (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information or data
with respect to or access to the properties of, or take any other action to
knowingly facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Competing Transaction; or (iii)
enter into any agreement with respect to any Competing Transaction, approve
or recommend or resolve to approve or recommend any Competing Transaction
or enter into any agreement requiring it to abandon, terminate or fail to
consummate the Merger and the other transactions contemplated by this
Agreement. Notwithstanding the foregoing sentence, if the Company receives
a bona fide, written proposal or offer for a Competing Transaction by a
Third Party, which the Board of Directors determines in good faith (after
consulting the Board of Directors' independent financial advisor) (A) is
reasonably likely to result in terms which are more favorable from a
financial point of view to the holders of Shares than the Merger and the
other transactions contemplated by this Agreement and (B) is reasonably
capable of being consummated (provided that the Company, including the
Board of Directors, and any of its advisors shall be permitted to contact
such Third Party and its advisors solely for the purpose of clarifying the
proposal and any material contingencies and the capability of consummation)
(a "Superior Competing Transaction"), then the Company may, in response to
an unsolicited request therefor and subject to compliance with Section
6.3(b), furnish information with respect to the Company and its
Subsidiaries to, and participate in discussions and negotiations directly
or through its representatives with, such Third Party. The Company shall
not be permitted to waive the provisions of any "standstill" agreement
between the Company and a Third Party and shall be required to use all
reasonable efforts to enforce the provisions of any such "standstill"
agreement. Nothing contained in this Agreement shall prevent the Board of
Directors from complying with
31
Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act.
Notwithstanding anything to the contrary contained in this Section 6.3,
nothing herein shall limit the ability of the Company or its Subsidiaries
to carry out the actions set forth in Section 6.9.
(b) The Company shall advise Parent orally and in writing
of (i) any Competing Transaction or any inquiry with respect to or which
could reasonably be expected to lead to any Competing Transaction received
by any officer or director of the Company or, to the knowledge of the
Company, any financial advisor, attorney or other advisor or representative
of the Company and (ii) the material terms of such Competing Transaction.
The Company will keep Parent reasonably informed of the status and details
of any such Competing Transaction proposal or inquiry in a timely manner.
6.4 Reasonable Efforts.
(a) Subject to the terms and conditions herein provided,
each of the parties hereto shall use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, including using its reasonable efforts to obtain all necessary
or appropriate waivers, consents and approvals, to effect all necessary
registrations, filings and submissions (including, but not limited to, (i)
filings under the HSR Act and any other submissions requested by the FCC,
Federal Trade Commission , Department of Justice, MPUC or WPSC and (ii)
such filings, consents, approvals, orders registrations and declarations as
may be required under the laws of any foreign country in which the Company
or any of its Subsidiaries conducts any business or owns any assets) and to
lift any injunction or other legal bar to the Merger (and, in such case, to
proceed with the Merger as expeditiously as possible), subject, however, to
the requisite votes of the shareholders of any or all of the Company, Newco
and Parent. Consistent with the foregoing, the parties shall use all
reasonable efforts to cooperate in the planning of any dispositions of
assets or operations that may be undertaken prior to and in contemplation
of the Merger, including planning to mitigate the tax costs of any such
dispositions.
(b) Notwithstanding the foregoing, the Company shall not
be obligated to use its reasonable efforts or take any action pursuant to
this Section 6.4 if in the good faith opinion of the Board of Directors
after consultation with its counsel such actions are reasonably determined
to be inconsistent with its fiduciary duties to the Company's shareholders
under applicable law.
32
6.5 Access to Information. Upon reasonable notice, the Company
shall (and shall cause each of its Subsidiaries to) afford to officers,
employees, counsel, accountants and other authorized representatives of
Parent ("Representatives"), in order to evaluate the transactions
contemplated by this Agreement, reasonable access, during normal business
hours and upon reasonable notice throughout the period prior to the
Effective Time, to its properties, books and records and, during such
period, shall (and shall cause each of its Subsidiaries to) furnish or make
available reasonably promptly to such Representatives all information
concerning its business, properties and personnel as may reasonably be
requested. Parent agrees that it will not, and will cause its
Representatives not to, use any information obtained pursuant to this
Section 6.5 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. The Confidentiality Agreement,
dated October 12, 2000 (the "Confidentiality Agreement"), by and between
the Company and Parent shall apply with respect to information furnished by
the Company, its Subsidiaries and the Company's officers, employees,
counsel, accountants and other authorized representatives hereunder.
6.6 Publicity. The parties will consult with each other and
will mutually agree upon any press releases or public announcements
pertaining to the Merger and shall not issue any such press releases or
make any such public announcements prior to such consultation and
agreement, except as may be required by applicable law or by obligations
pursuant to any agreement with any national securities exchange or
automated quotation system, in which case the party proposing to issue such
press release or make such public announcement shall use its reasonable
efforts to consult in good faith with the other party before issuing any
such press releases or making any such public announcements.
6.7 Indemnification of Directors and Officers.
(a) In the event of any threatened or actual claim,
action, suit, demand, proceeding or investigation, whether civil, criminal
or administrative, including, without limitation, any such claim, action,
suit, demand, proceeding or investigation in which any person who is now,
or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, a director, officer, employee, fiduciary or agent of
the Company or any Subsidiary of the Company (the "Indemnified Parties")
is, or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he
is or was a director, officer, employee, fiduciary or agent of the Company
or any Subsidiary of the Company, or is or was serving at the request of
the Company or any Subsidiary of the Company as a director, officer,
employee, fiduciary or agent of another corporation, partnership, joint
33
venture, trust or other enterprise or (ii) the negotiation, execution or
performance of this Agreement or any of the transactions contemplated
hereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their
commercially reasonable efforts to defend against and respond thereto. It
is understood and agreed that the Company shall indemnify and hold
harmless, and after the Effective Time, Parent shall cause the Surviving
Corporation to, and the Surviving Corporation shall, indemnify and hold
harmless, as and to the full extent permitted by applicable Law, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorneys' fees and expenses), judgments,
fines and amounts paid in settlement in connection with any such threatened
or actual claim, action, suit, demand, proceeding or investigation, and in
the event of any such threatened or actual claim, action, suit, demand,
proceeding or investigation (whether asserted or arising before or after
the Effective Time), (A) the Company, and after the Effective Time, Parent
shall cause the Surviving Corporation to, and the Surviving Corporation
shall, promptly pay expenses in advance of the final disposition of any
claim, suit, proceeding or investigation to each Indemnified Party to the
full extent permitted by law, subject to the provision by such Indemnified
Party of an undertaking to reimburse the amounts so advanced in the event
of a final non-appealable determination by a court of competent
jurisdiction that such Indemnified Party is not entitled to such amounts,
(B) the Indemnified Parties may retain one counsel satisfactory to them
(except in case of a conflict of interest among two or more Indemnified
Parties, in which case more than one counsel may be retained), and the
Company, and after the Effective Time, Parent shall cause the Surviving
Corporation to, and the Surviving Corporation shall, pay all reasonable
fees and expenses of such counsel for the Indemnified Parties within 30
days after statements therefor are received and (C) the Company and the
Surviving Corporation will, and Parent will cause the Surviving Corporation
to, use their commercially reasonable efforts to assist in the defense of
any such matter; provided that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and
provided further, that the Surviving Corporation shall have no obligation
hereunder to any Indemnified Party when and if, but only to the extent
that, a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and non-appealable, that
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law. Any Indemnified Party wishing to claim
indemnification under this Section 6.7, upon learning of any such claim,
action, suit, demand, proceeding or investigation, shall notify the Company
and, after the Effective Time, the Surviving Corporation, thereof;
provided, that the failure to so notify shall not affect the obligations of
the Company and
34
the Surviving Corporation except to the extent such failure to notify
materially prejudices such party.
(b) Parent and Newco agree that all rights to
indemnification existing in favor of, and all exculpations and limitations
of the personal liability of, the directors, officers, employees and agents
of the Company and the Subsidiaries of the Company in the Amended and
Restated Articles of Incorporation and By-Laws of the Company as in effect
as of the date hereof with respect to matters occurring at or prior to the
Effective time, including the Merger, shall continue in full force and
effect for a period of not less than six years from the Effective Time;
provided, however, that all rights to indemnification in respect of any
claims (each, a "Claim") asserted or made within such period shall continue
until the disposition of such Claim. For a period of six years after the
Effective Time, the Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, cause to be maintained in effect the existing
directors' and officers' liability insurance and fiduciary insurance
policies with an amount of coverage not less than one-hundred-percent
(100%) of the amount of existing coverage, or policies that are no less
favorable to the Indemnified Parties, and with an amount of coverage not
less than one-hundred-percent (100%) of the amount of existing coverage,
than the policies which are currently maintained by the Company, with
respect to claims arising from facts or events which occurred at or before
the Effective Time, so long as such policies are available for an annual
premium which is no more than two-hundred-percent (200%) of the current
annual premium for the existing policies; provided, that if such policies
are not available for an annual premium of no more than two-hundred-percent
(200%) of the current annual premium, then policies in an amount and scope
as great as can be obtained for an annual premium of two-hundred-percent
(200%) of the current annual premium shall be obtained.
(c) This Section 6.7 is intended for the irrevocable
benefit of, and to grant third party rights to, the Indemnified Parties and
shall be binding on all successors and assigns of Parent, the Company and
the Surviving Corporation. Each of the Indemnified Parties shall be
entitled to enforce the covenants contained in this Section 6.7.
(d) In the event that the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other
person or entity and shall not be the continuing or surviving entity of
such consolidation or merger or (ii) transfers or conveys a majority of its
properties and assets to any person or entity, then, and in each such case,
proper provision shall be made so that the successors, assigns and
35
transferees of the Surviving Corporation, as the case may be, assume the
obligations set forth in this Section 6.7.
(e) To the extent permitted by law, all rights of
indemnification for the benefit of any Indemnified Party shall be mandatory
rather than permissive.
6.8 Employees.
(a) Except as set forth on Schedule 6.8(a), Parent agrees
to provide or cause to be provided to at least December 31, 2002 employee
benefit plans, programs, arrangements and policies for the benefit of
employees of the Company and its Subsidiaries that in the aggregate for all
employees of the Company and its Subsidiaries as a group (and not as to any
individual employee) are substantially similar to the Company Plans and no
less favorable in the aggregate than those employee benefit plans,
programs, arrangements and policies for the benefit of similarly situated
employees of Parent and/or its Subsidiaries. In the case of benefit plans
and programs under which benefits are paid or determined by reference to
the value of Shares, Parent agrees that such benefits shall be paid or
determined by reference to the value of shares of Parent Common Stock in an
equitable manner. All service credited to each employee by the Company
through the Effective Time shall be recognized by Parent and/or its
Subsidiaries for all purposes, including for purposes of eligibility,
vesting and benefit accruals under any employee benefit plan provided by
Parent and/or its Subsidiaries for the benefit of the employees, except
that no credit shall be given for benefit accruals which would require any
contribution to or benefits under any or all of Parent's pension plans for
periods prior to the Effective Time or would result in duplication of
benefits. Without limiting the foregoing, neither Parent nor any of its
Subsidiaries shall treat any Company employee as a "new" employee for
purposes of any pre-existing condition exclusions, waiting periods,
evidence of insurability requirements or similar provision under any health
or other welfare plan, and will make appropriate arrangements with its
insurance carrier(s), to the extent applicable, to ensure such result.
(b) Parent and the Surviving Corporation hereby agree to
honor (without modification except as set forth on Schedule 6.8(b)) and
assume the employment agreements, executive severance agreements and
individual benefit arrangements listed on Schedule 6.8(b), all as in effect
at the Effective Time. It is understood and agreed by the parties hereto
that a termination of employment by an "Executive" after the Effective Time
and within 36 calendar months after a "Change of Control" shall meet the
standard of a "Good Reason" termination (as such terms are used and/or
defined in the executive severance agreements set forth in Schedule
6.8(b)).
36
(c) Parent and the Surviving Corporation hereby agree to
continue in effect the obligations under the Company's Supplemental
Executive Retirement Plan and its related trust for the greater of: (i) not
less than two years following the Effective Time and (ii) the time periods
required under their respective terms; provided that the Parent's or the
Surviving Corporation's obligations to accrue or credit benefits on behalf
of a participant under the Company's Supplemental Executive Retirement Plan
or make contributions under its related trust shall terminate in the year
of the participant's death or the participant's termination of his
employment with Mid-Plains, Inc.
(d) Parent and the Surviving Corporation hereby agree to
continue in effect the sick pay banking policy referred to in the Mid-
Plains, Inc. employee handbook.
6.9 Transfer of Interests.
(a) The Company hereby agrees to cause the transfer of its
interest in PCS Wisconsin, LLC prior to the Closing as set forth in
Schedule 6.9(a).
(b) The Company hereby agrees to cause the transfer of its
interest in Madison SMSA Limited Partnership prior to the Closing as set
forth in Schedule 6.9(b).
6.10 Employment Plans. On or before December 31, 2000 the
Company shall amend the Company ESPP to provide that no Shares will be
offered for sale under such plan after that date.
6.11 Change in Control Matters. The Company shall not take any
action that will trigger the provisions of Section 11 of that certain Joint
Venture Agreement dated September 23, 1999, between HBC Telecom, Inc. and
Hiawatha Broadband Communications, Inc.
37
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approval. The Merger and this Agreement
shall have been duly approved by the shareholders of the Company in
accordance with applicable law and the Amended and Restated Articles of
Incorporation of the Company.
(b) Injunction. There shall not be in effect any statute,
rule, regulation, executive order, decree, ruling or injunction or other
order of a court or governmental or regulatory agency of competent
jurisdiction directing that the transactions contemplated herein not be
consummated; provided, however, that prior to invoking this condition each
party shall use its reasonable efforts to have any such decree, ruling,
injunction or order vacated.
(c) Governmental Filings and Consents. All governmental
consents, orders and approvals legally required for the consummation of the
Merger and the transactions contemplated hereby shall have been obtained
and be in effect at the Effective Time, except where the failure to obtain
any such consent would not reasonably be expected to have a Parent Material
Adverse Effect (assuming the Merger had taken place), and the waiting
periods under the HSR Act shall have expired or been terminated.
7.2 Conditions to the Company's Obligations to Effect the
Merger. The obligations of the Company to effect the Merger are subject to
the satisfaction at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of Parent and Newco
contained in this Agreement shall be true and correct (in all material
respects, in the case of representations and warranties not already
qualified as to materiality by their terms) at and as of the Effective Time
as though made on and as of such date (except (i) for changes specifically
permitted by this Agreement and (ii) that those representations and
warranties which address matters only as of a particular date shall remain
true and
38
correct as of such date), and the Company shall have received a certificate
of the President or a Vice President of Parent to the foregoing effect.
(b) Parent and Newco shall have performed and complied
with in all material respects their obligations under this Agreement to be
performed or complied with on or prior to the Effective Time, and the
Company shall have received a certificate of the President or a Vice
President of Parent to the foregoing effect.
7.3 Conditions to the Parent's and Newco's Obligations to
Effect the Merger. The obligations of Parent and Newco to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following additional conditions:
(a) The representations and warranties of the Company
contained in this Agreement shall be true and correct (in all material
respects, in the case of representations and warranties not already
qualified as to materiality by their terms) at and as of the Effective Time
as though made on and as of such date (except (i) for changes specifically
permitted by this Agreement and (ii) that those representations and
warranties which address matters only as of a particular date shall remain
true and correct as of such date), and the Parent shall have received a
certificate of the President or a Vice President of the Company to the
foregoing effect.
(b) The Company shall have performed and complied with in
all material respects its obligations under this Agreement to be performed
or complied with on or prior to the Effective Time, and Parent shall have
received a certificate of the President or a Vice President of the Company
to the foregoing effect.
(c) Rights Agreement. No Distribution Date or Shares
Acquisition Date (as defined in the Rights Agreement) shall have occurred.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
8.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, by the mutual written consent of Parent and the Company.
39
8.2 Termination by Either Parent or the Company. This Agreement
may be terminated and the Merger may be abandoned by Parent or the Company
if (i) any court of competent jurisdiction in the United States or some
other governmental body or regulatory authority shall have issued an order,
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable or (ii)
the Company Shareholder Approval shall not have been received at the
Shareholders Meeting duly called and held, or (iii) the Effective Time
shall not have occurred on or before September 29, 2001 (the "Termination
Date"); provided, that the right to terminate this Agreement pursuant to
this Section 8.2(iii) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement results in such failure
to purchase.
8.3 Termination by Parent. This Agreement may be terminated by
Parent prior to the Effective Time, if (i) the Company shall have failed to
perform in any material respect any of its material obligations under this
Agreement to be performed at or prior to such date of termination, which
failure to perform is not cured, or is incapable of being cured, within
thirty (30) days after the receipt by the Company of written notice of such
failure, (ii) any representation or warranty of the Company contained in
this Agreement shall not be true and correct (except for changes permitted
by this Agreement and those representations which address matters only as
of a particular date shall remain true and correct as of such date),
except, in any case, such failures to be true and correct which are not
reasonably likely to have a Company Material Adverse Effect; provided, that
such failure to be true and correct is not cured, or is incapable of being
cured, within thirty (30) days after the receipt by the Company of written
notice of such failure or (iii) the Board of Directors withdraws or
materially modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Parent or Newco or (iv) a Distribution Date
or a Shares Acquisition Date (each as defined in the Rights Agreement)
shall have occurred.
8.4 Termination by the Company. This Agreement may be
terminated by the Company and the Merger may be abandoned at any time prior
to the Effective Time if (i) Newco or Parent shall have failed to perform
in any material respect any of their material obligations under this
Agreement to be performed at or prior to such date of termination, which
failure to perform is not cured, or is incapable of being cured, within
thirty (30) days after the receipt by Parent of written notice of such
failure, (ii) any representation or warranty of Newco or Parent contained
in this Agreement shall not be true and correct (except for changes
permitted by this Agreement and those representations which address matters
only as of a particular date shall remain true and
40
correct as of such date), except, in any case, such failures to be true and
correct which are not reasonably likely to adversely effect Parent's or
Newco's ability to complete the Merger; provided, that such failure to be
true and correct is not cured, or is incapable of being cured, within
thirty (30) days after receipt by Parent of written notice of such failure
or (iii) the Board of Directors withdraws or materially modifies or changes
its recommendation of this Agreement or the Merger if there exists at such
time a proposal or offer for a Competing Transaction that constitutes a
Superior Competing Transaction; provided, that it shall be a condition to
termination pursuant to this Section 8.4(iii) that the Company shall have
made the payment of the fee to Parent required by Section 8.5(b).
8.5 Effect of Termination. (a) In the event of the termination
and abandonment of this Agreement pursuant to Article VIII, this Agreement
shall forthwith become void and have no effect, without any liability on
the part of any party hereto or its affiliates, directors, officers or
shareholders, other than the provisions of this Section 8.5 and the
provisions of Sections 9.1 and 9.2 and the last two sentences of Section
6.5. Nothing contained in this Section 8.5 shall relieve any party from
liability for any willful breach of any covenant or other agreement
contained in this Agreement.
(b) In the event of termination of this Agreement without
consummation of the transactions contemplated hereby:
(i) by Parent pursuant to Section 8.3(iii);
(ii) by the Company pursuant to Section 8.4(iii); or
(iii) by either Parent or the Company pursuant to
Section 8.2(ii) if prior to such termination the
Company receives a proposal or offer for a
Superior Competing Transaction in circumstances
where within one year after the termination of
this Agreement pursuant to this Section
8.5(b)(iii) (A) the Company enters into a
definitive agreement in respect of, or approves
or recommends such Superior Competing
Transaction, or (B) agrees or resolves to do the
foregoing,
then the Company shall make payment to Parent by wire transfer of
immediately available funds of a fee in the amount equal to three (3)
percent of the aggregate Merger Consideration, in the case of clause (i)
above, within two business days following such termination, or, in the case
of clause (ii) above, concurrently with such termination, or,
41
in the case of clause (iii) above, not later than the earliest of the date
of such definitive agreement, approval, recommendation, agreement or
resolution.
8.6 Extension; Waiver. At any time prior to the Effective
Time, each of Parent, Newco and the Company may (i) extend the time for the
performance of any of the obligations or other acts of the other party,
(ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance by the other party with
any of the agreements or conditions contained herein. Any agreement on the
part of either party hereto to any such extension or waiver shall be valid
only if set forth in any instrument in writing signed on behalf of such
party. The failure of either party hereto to assert any of its rights
hereunder shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Payment of Expenses. Whether or not the Merger shall be
consummated, each party hereto shall pay its own expenses incident to
preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby; provided that Parent
shall pay any and all transfer taxes (including, without limitation, any
real property gains taxes), if any, for which the shareholders of the
Company are liable as a result of the transactions contemplated by this
Agreement.
9.2 Survival of Representations and Warranties; Survival of
Confidentiality. The representations and warranties made herein shall not
survive beyond the earlier of (i) termination of this Agreement or (ii) the
Effective Time. This Section 9.2 shall not limit any covenant or agreement
of the parties hereto which by its terms contemplates performance after the
Effective Time. The Confidentiality Agreement shall survive any termination
of this Agreement, and the provisions of such Confidentiality Agreement
shall apply to all information and material delivered by any party
hereunder.
9.3 Modification or Amendment. Subject to the applicable
provisions of the WBCL, at any time prior to the Effective Time, the
parties hereto may modify or amend this Agreement, by written agreement
executed and delivered by duly authorized officers of the respective
parties; provided, however, that after approval of this
42
Agreement by the shareholders of the Company, no amendment shall be made
which changes the consideration payable in the Merger or adversely affects
the rights of the Company's shareholders hereunder without the approval of
such shareholders.
9.4 Waiver of Conditions. The conditions to each of the
parties' obligations to consummate the Merger are for the sole benefit of
such party and may be waived by such party in whole or in part to the
extent permitted by applicable law.
9.5 Counterparts. For the convenience of the parties hereto,
this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
9.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without
giving effect to the principles of conflicts of law thereof.
9.7 Notices. Any notice, request, instruction or other document
to be given hereunder by any party to the other parties shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, or by facsimile transmission (with a confirming copy sent by
overnight courier), as follows:
(a) If to the Company, to
Chorus Communications Group, Ltd.
8501 Excelsior Drive
Madison, Wisconsin 53717
Attention: Mr. Dean W. Voeks
(608) 826-4200 (telephone)
(608) 826-4958 (telecopier)
43
with copies to:
Chorus Communications Group, Ltd.
8501 Excelsior Drive
Madison, Wisconsin 53717
Attention: Grant B. Spellmeyer, Esq.
(608) 826-4440 (telephone)
(608) 826-4958 (telecopier)
and
Skadden, Arps, Slate, Meagher
& Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attention: Gary P. Cullen, Esq.
(312) 407-0700 (telephone)
(312) 407-0411 (telecopier)
(b) If to Parent or Newco, to
Telephone and Data Systems, Inc.
30 North LaSalle Street, Suite 4000
Chicago, Illinois 60602
Attention: Mr. Scott H. Williamson
(312) 630-1900 (telephone)
(312) 630-9299 (telecopier)
44
with a copy to:
Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, Illinois 60603
Attention: Michael G. Hron, Esq.
(312) 853-7000 (telephone)
(312) 853-7036 (telecopier)
or to such other persons or addresses as may be designated in writing by
the party to receive such notice.
9.8 Entire Agreement; Assignment. This Agreement (including the
documents and the instruments referred to herein) and the Confidentiality
Agreement (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, among the parties or
any of them with respect to the subject matter hereof, and (b) shall not be
assigned by operation of law or otherwise.
9.9 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their respective
successors and assigns. Nothing in this Agreement, express or implied,
other than the right to receive the consideration payable in the Merger
pursuant to Article III hereof is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement; provided, however, that the
provisions of Section 6.7 shall inure to the benefit of and be enforceable
by the Indemnified Parties.
9.10 Certain Definitions. As used herein:
(a) An "Affiliate" of, or a person "affiliated" with, a
specific person is a person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, the person specified.
(b) "Company Material Adverse Effect" shall mean any
change, effect or circumstance that is adverse to the business, properties,
financial condition or results of operations of the Company or any of its
Subsidiaries which is material to the Company and its Subsidiaries, taken
as a whole but shall not include any change, effect
45
or circumstance arising from the execution, delivery or performance of this
Agreement or any change, effect or circumstance that is generally
applicable to or in (i) the telecommunications industry generally
including, without limitation, the adoption or implementation of regulatory
changes or the issuance of additional licenses for the provision of
wireless telecommunications services, (ii) the United States economy or the
economy generally prevailing in the jurisdictions where the Company does
business, or (iii) the United States or global financial or capital
markets.
(c) "Effective Time Market Price" means with respect to
one share of Parent Common Stock, the average of the Mean Price (calculated
on a weighted average based upon the volume of shares traded on each day)
for such share during the period of the first twenty (20) trading days out
of the last thirty (30) trading days ending on the trading day prior to the
Effective Time.
(d) "Governmental Entity" shall mean any federal, state or
local government or any court, tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency,
including the FCC, MPUC, WPSC and other public utility or service
commission or similar agency.
(e) "Limited Partnership Interest" shall mean the
Company's indirect ownership of a 2% limited partnership interest in
Wisconsin RSA #8 and an 18.132% limited partnership interest in Madison
SMSA Limited Partnership.
(f) "Mean Price" means, on any day in which shares are
traded on the American Stock Exchange, the average of the high and low
trading prices for which one share of common stock of Parent is traded on
the American Stock Exchange as reported by The Wall Street Journal.
(g) "Parent Material Adverse Effect" shall mean any
change, effect or circumstance that is adverse to the business, properties,
financial condition or results of operations of Parent or any of its
Subsidiaries which is material to Parent and its Subsidiaries, taken as a
whole but shall not include any change, effect or circumstance arising from
the execution, delivery or performance of this Agreement or any change,
effect or circumstance that is generally applicable to or in (i) the
telecommunications industry generally including, without limitation, the
adoption or implementation of regulatory changes or the issuance of
additional licenses for the provision of wireless telecommunications
services, (ii) the United States economy or the economy generally
prevailing in the jurisdictions where the Company does business, or (iii)
the United States or global financial or capital markets.
46
(h) "Permitted Liens" shall mean any (i) (A) platting,
subdivision, zoning, building and other similar legal requirements which
are not violated by the buildings, structures and other improvements
located thereon, (B) easements, restrictive covenants, rights-of-way,
leases, encroachments and other encumbrances and agreements (other than
contracts or options pursuant to which any property owned by the Company or
its Subsidiaries is or may be required to be sold), whether or not of
record, (C) reservations of coal, oil, gas, minerals and mineral interests,
whether or not of record, and (D) minor imperfections of title, none of
which items set forth in this clause (i), individually or in the aggregate,
could reasonably be expected to have a Company Material Adverse Effect;
(ii) mechanics', materialmen's, carriers', workmen's, warehousemen's,
repairmen's, landlords', or other like liens securing obligations that are
not delinquent or, if delinquent, that are being contested in good faith by
appropriate proceedings and in respect of which the Company has created
adequate reserves or which have been bonded; (iii) liens for Taxes and
other governmental charges, assessments or fees which are not yet due and
payable or which are being contested in good faith by appropriate
proceedings and in respect of which the Company, if required pursuant to
generally accepted accounting principles, has created adequate reserves or
which have been bonded; (iv) liens in favor of a landlord of leased
property (A) created by operation of statutory or common law, (B)
encumbering personal property located at such leased property, and (C)
which do not secure any rents or other payments that are past due as of the
date hereof or the Effective Time and in respect of which the Company, if
required pursuant to generally accepted accounting principles, has created
adequate reserves or which have been bonded; and (v) liens encumbering the
landlord's interest under leased property and in respect of which the
Company, if required pursuant to generally accepted accounting principles,
has created adequate reserves or which have been bonded.
(i) "Subsidiary" shall mean, when used with reference to
any entity, any corporation, partnership, joint venture, limited liability
corporation or other entity in which the former entity owns, directly or
indirectly, fifty percent (50%) or more of the outstanding voting
securities or equity interests or is a general partner.
9.11 Obligation of Parent. Whenever this Agreement requires
Newco to take any action, such requirement shall be deemed to include an
undertaking on the part of Parent to cause Newco to take such action and a
guarantee of the performance thereof.
47
9.12 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, each of which shall remain in
full force and effect.
9.13 Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof.
48
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers as of
the date first above written.
CHORUS COMMUNICATIONS GROUP, LTD.
By: /s/ Dean W. Voeks
________________________________
Name:
Title:
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ Scott H. Williamson
________________________________
Name:
Title:
SINGER ACQUISITION CORP.
By: /s/ Scott H. Williamson
________________________________
Name:
Title:
49
