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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported): May 15, 1998
HICKORY TECH CORPORATION
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(Exact name of registrant as specified in its charter)
Minnesota 0-13721 41-1524393
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
221 East Hickory Street, P.O. Box 3248, Mankato, MN 56002-3248
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(Address of principal executive offices) (Zip code)
Registrant's telephone number including area code (800) 326-5789
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 1, 1998, the Registrant, under terms of a purchase agreement dated
December 17, 1997, completed a stock purchase of cellular property from
Frontier Corporation in southern Minnesota. The cellular property, known in
the industry as Minnesota's Rural Service Area (RSA) 10 is the "A-side" FCC
license encompassing seven counties in south central Minnesota. The
population of the serving area is 230,000 and overlaps the telephone line
serving area of the Registrant's Minnesota telephone property. The acquisition
price of $40,000,000 cash was accounted for as a purchase and approximately
$36,000,000 of cost in excess of net tangible assets acquired was recorded.
The Registrant funded the acquisition by initiating a new revolving credit
facility with a national banking syndicate with experience in financing
telecommunications ventures. The $45,000,000 credit facility will finance the
cellular acquisition and provide capital for additional corporate
development. The Registrant's strong financial status earned a very favorable
interest rate of approximately 6.5% varying with LIBOR rates. There are no
mandatory principal repayment terms. The unsecured credit facility has a
termination date of April 29, 2003.
The audited financial statements and pro forma financial information as of
and for the year ended December 31, 1997, which are required as a result of
this acquisition, are not included in this filing. The audited financial
statements and pro forma financial information will be filed prior to July
15, 1998.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
2 Stock Purchase Agreement between Frontier Cellular Holding Inc.
and Frontier Corporation AND Hickory Tech Corporation dated
December 17, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: May 15, 1998
HICKORY TECH CORPORATION
By /s/ Robert D. Alton, Jr.
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Robert D. Alton, Jr., Chief Executive Officer
By /s/ David A. Christensen
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David A. Christensen, Chief Financial Officer
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<TABLE>
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EXHIBIT INDEX
EXHIBIT NO. DOCUMENT DESCRIPTION
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<S> <C>
2 Stock Purchase Agreement between
Frontier Cellular Holding Inc. and
Frontier Corporation AND Hickory Tech
Corporation dated December 17, 1997.
</TABLE>
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Exhibit 2
DOWDY MINNESOTA 10, INC.,
MLD MINNESOTA 10, INC.,
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
STOCK PURCHASE AGREEMENT
BETWEEN
FRONTIER CELLULAR HOLDING INC. and
FRONTIER CORPORATION
AND
HICKORY TECH CORPORATION
DATED: DECEMBER 17, 1997
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<TABLE>
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TABLE OF CONTENTS
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Page
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ARTICLE I - Purchase and Sale of Stock...................................... 1
1. 1. Purchase and Sale of Stock....................................... 1
1.2. Purchase Price................................................... 1
1.3. Section 338 (h) (10) Election.................................... 2
1.4 Section 754 Election............................................. 2
ARTICLE II - Settlement of Intercompany Accounts............................ 2
2.1 Settlement of Intercompany Accounts Payable...................... 2
2.2. Settlement of Intercompany Accounts Receivable................... 2
ARTICLE III - The Closing................................................... 3
3.1. Time and Place of Closing........................................ 3
3.2. Conditions to Obligation of Buyer to Close....................... 3
3.3. Conditions to Obligation of Seller to Close...................... 4
3.4. Seller's Deliveries at Closing................................... 5
3.5 Buyer's Deliveries at Closing.................................... 5
ARTICLE IV - Representations and Warranties of Seller....................... 6
4.1. Existence and Authority of Seller................................ 6
4.2. Organization, Authority, and Qualification of Dowdy and MLD...... 6
4.3. Capital Stock of Dowdy and MLD................................... 6
4.4 Organization, Authority and Qualification of MSCTC............... 7
4.5. Subsidiaries..................................................... 7
ARTICLE V - Additional Representations and Warranties of Seller............. 7
5.1. Consents and Approvals; No Violation............................. 7
5.2. Financial........................................................ 8
5.3. Taxes............................................................ 10
5.4. Title and Related Matters........................................ 10
5.5. Patents, Trademarks, and Other Intellectual Property............. 11
5.6. Litigation....................................................... 11
5.7. Labor Matters.................................................... 11
5.8. Environmental Matters............................................ 13
5.9. Liabilities...................................................... 13
5.10. Planned Public Improvements and Special Assessments.............. 14
5.11. Leased Personal Property......................................... 14
5.12. Government License and Regulation................................ 14
5.13. Compliance with Law.............................................. 14
5.14. Insurance........................................................ 14
5.15. Transactions with Certain Persons................................ 14
5.16. Bank Accounts.................................................... 14
5.17. Full Disclosure.................................................. 15
5.18 Reports.......................................................... 15
5.19 Customers........................................................ 15
ARTICLE VI - Representations and Warranties of Buyer........................ 15
6.1. Existence and Authority of Buyer................................. 15
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6.2. Consents and Approvals; No Violation............................. 15
6.3. Litigation....................................................... 16
6.4. Acquisition of Stock for Investment.............................. 16
6.5. Full Disclosure.................................................. 16
ARTICLE VII-Additional Covenants and Agreements of the Parties.............. 16
7.1. Operation of Business Pending Closing............................ 16
7.2. Access to Information............................................ 18
7.3. Reasonable Efforts............................................... 19
7.4. HSR Notification................................................. 19
7.5 Regulatory Filings and Approval.................................. 19
7.6. Tax Returns...................................................... 20
7.7. Employment Offers Following Closing.............................. 20
ARTICLE VIII - Compliance with 47 C.F.R. Section 22.942..................... 21
8.1 Means of Compliance.............................................. 21
8.2 Alternative Means of Compliance.................................. 21
ARTICLE IX - Indemnification................................................ 22
9.1. Indemnification by Seller and by Parent.......................... 22
9.2. Procedure........................................................ 23
9.3. Limitations...................................................... 24
9.4. Indemnification by Buyer......................................... 24
9.5. Cooperation on Tax Matters....................................... 24
9.6. Procedure........................................................ 25
ARTICLE X - Termination and Abandonment..................................... 25
10.1. Termination Unrelated to FCC Approval............................ 25
10.2 Termination Related to FCC Approval.............................. 25
10.3. Effect of Termination............................................ 26
ARTICLE XI - Miscellaneous.................................................. 26
11.1. Expenses......................................................... 26
11.2. Brokers.......................................................... 26
11.3. Further Assurances............................................... 26
11.4. Entire Agreement and Modifications............................... 27
11.5. Binding Agreement; Assignment.................................... 27
11.6. Counterparts..................................................... 27
11.7. Notices.......................................................... 27
11.8. Governing Law.................................................... 28
11.9. Public Announcements............................................. 28
11.10. Certain Definitions.............................................. 28
11.11. Arbitration...................................................... 28
11.12 No Waiver........................................................ 29
11.13. Survival......................................................... 29
</TABLE>
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LIST OF EXHIBITS
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Exhibit 3.2(d) Opinion from Counsel to Seller
Exhibit 3.3(d) Opinion from Counsel to Buyer
SCHEDULES
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Disclosure Schedule
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into this 17th day of December,
1997, by and between Frontier Cellular Holding Inc., a Delaware Corporation
("Seller"), Frontier Corporation, a New York corporation ("Parent") and Hickory
Tech Corporation, a Minnesota Corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is the owner of all of the issued and outstanding stock of
Dowdy Minnesota 10, Inc., a Florida corporation ("Dowdy") and MLD Minnesota 10,
Inc., a Florida corporation ("MLD") (collectively the "Stock"); and
WHEREAS, Dowdy and MLD each hold a fifty percent general partnership
interest in Minnesota Southern Cellular Telephone Company ("MSCTC"), the
licensee of the A-block cellular license for Minnesota Rural Service Area 10 -
Le Sueur;
WHEREAS, Buyer and Seller have reached an agreement pursuant to which
Seller will sell to Buyer and Buyer will purchase from Seller all of the issued
and outstanding stock of Dowdy and MLD on the terms and conditions herein set
forth; and
WHEREAS, it is anticipated that Buyer will, prior to Closing, assign its
rights, but not its obligations under this Agreement to Minnesota Southern
Wireless Corporation, a Minnesota corporation and wholly-owned subsidiary of
Buyer ("Acquisition Subsidiary").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1. PURCHASE AND SALE OF STOCK. At the Closing (as defined in section 3.1,
below), and subject to the terms and conditions herein set forth, Seller shall
sell to Buyer, and Buyer shall purchase from Seller, all of the issued and
outstanding capital stock of MLD and Dowdy (the "Stock") for the consideration
specified in section 1.2, below.
1.2. PURCHASE PRICE. The purchase price for the purchase of the Stock (the
"Purchase Price") will be, Forty Million Dollars ($40,000,000.00), payable by
wire transfer on the Closing Date in immediately available funds to an account
specified by Seller before Closing.
1.3. SECTION 338(H)(10) ELECTION. Buyer and Seller shall make a timely,
effective and irrevocable election under Sections 338(a) and 338(h)(10) of the
Internal Revenue Code of 1986, as amended (the "Code"), to treat the purchase of
the Stock as a deemed asset sale (the "Section
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338(h)(10) Elections"), and shall file such election in accordance with
applicable federal regulations and in those states where applicable,
permitted by law and where the filing of a consolidated or combined tax
return is not a prerequisite to making the Section 338(h)(10) Elections.
Buyer and Seller shall complete, execute and deliver to the federal and
applicable state taxing authorities such forms and documents as may be
required in order to make the Section 338(h)(10) Elections binding and
effective. Seller and Buyer shall negotiate in good faith to allocate the
Purchase Price among the assets of MLD and Dowdy (and MSCTC as required under
Section 743(b) based on the Section 754 Election in effect pursuant to
Section 1.4 of this Agreement) for the purposes of determining the federal
income tax liability resulting from the Section 338(h)(10) Elections (the
"Price Allocations"). Seller and Buyer agree to act in accordance with all
applicable laws and regulations relating to the Section 338(h)(10) Elections,
including the Price Allocations, in the preparation and filing of any Tax
Return.
1.4. SECTION 754 ELECTION. MSCTC shall make a timely, effective and
irrevocable election under Section 754 (the "Section 754 Election") of the
Internal Revenue Code and shall file such election in accordance with applicable
federal regulations. Buyer and Seller shall complete, execute and deliver to
the federal and applicable state taxing authorities such forms or documents as
may be required to make the Section 754 Election binding and effective. Seller
and Buyer agree to act in accordance with all applicable laws and regulations
relating to the Section 754 Election in the preparation and filing of any Tax
Return.
ARTICLE II
SETTLEMENT OF INTERCOMPANY ACCOUNTS
2.1. SETTLEMENT OF INTERCOMPANY ACCOUNTS PAYABLE. Immediately before the
Closing, Seller shall make a capital contribution to MSCTC by forgiving any
Intercompany Accounts Payable by MSCTC to Seller as of the Closing Date. For
purposes hereof, "Intercompany Accounts Payable" means any debt, liability or
other obligation, but excluding any obligation arising under this Agreement or
under leases with subsidiaries or affiliates of Seller.
2.2. SETTLEMENT OF INTERCOMPANY ACCOUNTS RECEIVABLE. Immediately before
Closing, Seller shall cause MSCTC to distribute to Seller as a dividend all of
the right, title and interest of MSCTC in any Intercompany Accounts Receivable
due from Seller or Seller's affiliates or subsidiaries as of such date.
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ARTICLE III
THE CLOSING
3.1. TIME AND PLACE OF CLOSING. The closing of the sale and purchase of the
Stock contemplated hereby (the "Closing") shall take place at the offices of
Frontier Corporation, 180 South Clinton Avenue, Rochester, New York 14646 at
10:00 a.m. local time on the fifth (5th) business day following the date on
which all necessary final and unappealable regulatory approvals required as a
result of the transactions contemplated hereby are obtained, including, without
limitation, any approval required under the Communications Act of 1934, as
amended, and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (the "Closing Date"), or at such other time and place
as the parties may mutually agree, provided, that on that day, there shall not
be in effect any injunction, temporary restraining order, or other order of a
court or governmental or regulatory authority of competent jurisdiction
directing that the purchase and sale of the Stock pursuant to this Agreement not
be consummated. If such an injunction or order is in effect on that day, the
Closing shall take place as soon as practicable after it is no longer in effect.
3.2. CONDITIONS TO OBLIGATION OF BUYER TO CLOSE. The obligation of Buyer to
consummate the purchase of the Stock as provided herein shall be subject to
fulfillment at or prior to the Closing, or written waiver by Buyer, of each of
the following conditions:
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects on the date hereof
and as of the Closing Date as though made as of the Closing Date, except for
changes (i) contemplated by this Agreement; (ii) approved by Buyer; or (iii)
set forth in the update to the Disclosure Schedule delivered by Seller at
Closing, that, in the aggregate do not have a negative financial effect on
MSCTC, Dowdy or MLD greater than Five Hundred Fifty Thousand Dollars
($550,000.00) provided that any individual changes described in clause (iii) of
this Section 3.2(a) that would qualify as "Indemnified Claims" if they occurred
after the Closing may be applied in the Basket Amount or may be presented as an
"Indemnified Claim" under the provisions of Article IX hereof.
(b) Seller shall have duly performed or complied with all of the
obligations to be performed or complied with by it under the terms of this
Agreement.
(c) Seller shall have delivered to Buyer (i) a certificate certifying to
the fulfillment of the conditions set forth in paragraphs 3.2(a) and (b), and
(ii) a copy of certified resolutions of its Board of Directors authorizing the
sale of the Stock pursuant to this Agreement, both of which shall be in a form
reasonably satisfactory to Buyer.
(d) Buyer shall have received an opinion from counsel to Seller, dated as
of the Closing Date, substantially in the form attached hereto as Exhibit
3.2(d). In rendering such opinion, counsel may rely to the extent
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it deems appropriate upon certificates of officers of Seller and of public
officials as to factual matters and upon opinions of other counsel delivered
together with such opinion.
(e) All government consents and licenses, permits, authorizations,
approvals or, filings with and notifications to any United States, state, local
or other governmental regulatory body required to be made or obtained or made in
connection with the consummation of the transactions contemplated by this
Agreement shall have been made or obtained.
(f) Buyer shall receive from Seller at or prior to Closing, Seller's
Closing Deliveries (as defined in section 3.4, below).
(g) The directors and officers of MLD and Dowdy shall have resigned their
offices effective as of the Closing Date.
3.3. CONDITIONS TO OBLIGATION OF SELLER TO CLOSE. The obligation of Seller
to consummate the sale of the Stock as provided herein shall be subject to
fulfillment at or prior to the Closing, or written waiver by Seller, of each of
the following conditions:
(a) The representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects on the date hereof and as of
the Closing Date as though made as of the Closing Date.
(b) Buyer shall have duly performed or complied with all of the obligations
to be performed or complied with by it under the terms of this Agreement at or
prior to the Closing.
(c) Buyer shall have delivered to Seller (i) a certificate certifying to
the fulfillment of the conditions set forth in paragraphs 3.3(a) and (b), and
(ii) a copy of certified resolutions of its Board of Directors authorizing the
purchase of the Stock pursuant to this Agreement, both of which shall be in a
form reasonably satisfactory to Seller.
(d) Seller shall have received an opinion from counsel to Buyer, dated as
of the Closing Date, substantially in the form attached hereto as Exhibit
3.3(d). In rendering such opinion, counsel may rely to the extent it deems
appropriate upon certificates of officers of Buyer and of public officials as to
factual matters and upon opinions of other counsel delivered together with such
opinion.
(e) All government consents and licenses, permits, authorizations,
approvals or, filings with and notifications to any United States, state, local
or other governmental regulatory body required to be made or obtained or made in
connection with the consummation of the transactions contemplated by this
Agreement shall have been made or obtained.
(f) Buyer or Acquisition Subsidiary (as herein defined) shall have,
effective as of the Closing, extended written offers of employment to those
employees of MSCTC which were terminated by MSCTC effective as of
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the Closing on the terms described in Section 7.6 hereof.
(g) Seller shall have received from Buyer at or prior to Closing, Buyer's
Closing Deliveries (as defined in section 3.5 below).
3.4. SELLER'S DELIVERIES AT CLOSING. At the Closing, Seller shall deliver
or cause to be delivered to Buyer (collectively, "Seller's Closing Deliveries"):
(a) The certificates representing the Stock duly endorsed by Seller for
transfer to Buyer;
(b) The opinions, certificates and other documents required to be delivered
under section 3.2, above;
(c) The minute book, stock book and corporate seal of each of Dowdy and
MLD, as well as the partnership records of MSCTC;
(d) An assignment by Seller to Buyer, in form and substance reasonably
satisfactory to Buyer, of all of the right, title and interest of Seller in
Leases of equipment and real property used by MSCTC. Seller shall use its
reasonable efforts to obtain consents of the lessors to such assignments.
(e) A Certificate of Status for Seller, MLD, Dowdy, and MSCTC issued by the
Secretary of State of Delaware and Florida, respectively, dated within ten days
of the Closing Date;
(f) An update to the Disclosure Schedule, if any.
3.5. BUYER'S DELIVERIES AT CLOSING. At Closing, Buyer shall pay, deliver or
cause to be delivered to Seller (collectively, "Buyer's Closing Deliveries"):
(a) The Purchase Price pursuant to section 1.2, above;
(b) A Good Standing Certificate for Buyer issued by the Secretary of State
of its incorporation dated within ten days of the Closing Date:
(c) The opinions, certificates, and other documents required to be
delivered under section 3.3 above:
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the following
statements are true and correct as of the date of this Agreement, except as set
forth in the Disclosure Schedule attached hereto, as the same may be updated at
or prior to the Closing (the "Disclosure Schedule"). The Disclosure Schedule is
incorporated into this Agreement by reference, and is made an integral part
hereof. Disclosure of any information in any one section or schedule of the
Disclosure Schedule shall be deemed to be disclosure in any other section or
schedule thereof.
4.1. EXISTENCE AND AUTHORITY OF SELLER.
(a) Seller is a corporation validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and corporate
authority to enter into this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement by Seller have been
duly authorized by all necessary corporate proceedings on the part of Seller,
and this Agreement constitutes the valid and legally binding obligation of
Seller, enforceable in accordance with its terms, except to the extent limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or
similar laws affecting creditors, rights generally, or by general equitable
principles.
(b) Seller is the record and beneficial owner of all the Stock, free and
clear of all liens, claims, encumbrances and restrictions of every kind, and
subject to no restrictions with respect to the transferability, other than
restrictions imposed by the Communications Act of 1934, the Securities Act of
1933, state securities or blue sky laws, or the HSR Act.
4.2. ORGANIZATION, AUTHORITY, AND QUALIFICATION OF DOWDY AND MLD. Dowdy and
MLD are each corporations duly organized, validly existing and in good standing
under the laws of the State of Florida. The Disclosure Schedule contains
complete and correct copies of Dowdy's and MLD's Articles of Incorporation
(certified by the Secretary of State of Florida) and By-Laws (certified by the
Secretary of each of Dowdy and MLD), as currently in effect. Dowdy and MLD each
have full corporate power and corporate authority to carry on the business in
which they are engaged, and to own and use the properties owned and used by
them. Dowdy and MLD are each duly qualified or licensed to do business as
foreign corporations and are in good standing in the State of Minnesota.
4.3. CAPITAL STOCK OF DOWDY AND MLD. The authorized capital stock of Dowdy
and MLD each consists of one hundred (100) shares of common stock of which with
respect to each of Dowdy and MLD one hundred (100) shares are issued and
outstanding and owned, legally and beneficially, solely by Seller. All of the
outstanding shares of such stock have been duly authorized and validly issued,
and are fully paid and nonassessable. There are no outstanding options,
warrants, calls, convertible securities, rights to subscribe or commitments of
any character relating to the authorized and
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unissued or issued and outstanding stock of Dowdy or MLD which give any
person any right to acquire any such stock.
4.4. ORGANIZATION, AUTHORITY, AND QUALIFICATION OF MSCTC. MSCTC is a
general partnership duly organized, validly existing and in good standing under
the laws of the State of Minnesota. The Disclosure Schedule contains a complete
and correct copy of MSCTC's Partnership Agreement, as currently in effect.
MSCTC has full power and authority to carry on the business in which it is
engaged, and to own and use the properties owned and used by it. MSCTC is duly
qualified or licensed to do business and is in good standing in the State of
Minnesota. Except for the partnership interests in MSCTC held by Dowdy and MLD,
there are not outstanding and MSCTC has not issued to any person any options,
warrants, calls, convertible securities, rights to subscribe for or commitments
to sell any interest in MSCTC.
4.5. SUBSIDIARIES. Dowdy and MLD each hold a fifty percent general
partnership interest in MSCTC. Neither Dowdy nor MLD have granted an option or
right to purchase any portion of their respective general partnership interests
in MSCTC and no person has any such right or claim. Other than such ownership,
neither Dowdy nor MLD own any stock or equity interest in any corporation,
partnership, joint venture, or other entity, have no employees and are not
otherwise engaged in any business activity. The business of MSCTC is
exclusively directed to conducting cellular telephone operations in and around
Minnesota RSA 10 (as authorized by the Federal Communications Commission and
MSCTC. MSCTC does not own any stock or equity interest in any corporation,
partnership, joint venture, or any other entity.
ARTICLE V
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants that the following statements are
true and correct as of the date of this Agreement, except as set forth in the
Disclosure Schedule. Disclosure of any information in any one section or
schedule of the Disclosure Schedule shall be deemed to be disclosure in any
other section or schedule thereof.
5.1. CONSENTS AND APPROVALS: NO VIOLATION. Except as described in
Paragraphs 3.1 and 3.2(e) above, there is no authorization, consent or approval
of, or notice to, any governmental or regulatory authority required to be
obtained or given or waiting period required to expire as a condition to the
lawful consummation by Seller of the sale and purchase of the Stock pursuant to
this Agreement other than any such requirement that results from the specific
legal or regulatory status of Buyer, or facts that specifically relate to the
business or activities in which Buyer is, or proposes to be, engaged (other than
the business or activities of MSCTC). Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any provision of, or result in the acceleration of, or entitle any
party to accelerate (whether after the filing of notice or lapse of time or
both), any obligation under, or permit any person to terminate, modify or cancel
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the rights of MSCTC, Dowdy, MLD or Seller under, or result in the creation or
imposition of any lien, charge, pledge, security interest or other encumbrance
upon the assets of MSCTC, pursuant to any provision of, any mortgage, lien,
agreement, lease, license or other obligation to which MSCTC or Seller is a
party, or by which MSCTC or Seller is bound, or to which any of their assets are
subject, (ii) violate any provision of the Articles of Incorporation or By-Laws
of Dowdy, MLD or Seller or partnership agreement of MSCTC, or (iii) violate or
result in a breach of, or constitute a default under, any judgment, statute,
order, decree, rule or regulation of any court or governmental agency to which
Seller, Dowdy, MLD, or MSCTC is subject, which as to each of clause (i), (ii) or
(iii) would have a Material Adverse Effect. For the purposes of this Agreement,
the term "Material Adverse Effect" or the term "material" means a change in the
business, operations or financial condition of MSCTC, MLD, or Dowdy which has a
negative financial effect on MSCTC of $25,000 or more, provided that no
individual such change shall give Buyer the ability to terminate this Agreement
unless all such changes, in the aggregate, have a cumulative negative financial
effect on MSCTC, Dowdy or MLD of greater than $550,000. Schedule 5.1 of the
Disclosure Schedule lists all written or oral contracts, leases, mortgages,
indentures, commitments and other instruments to which MSCTC is a party or by
which it is bound, other than customer contracts which involve a total receipt
or expenditure by, or liability of, MSCTC in excess of $25,000 (the "Contracts")
which are not identified in another Schedule of the Disclosure Schedule. True
and complete copies of all written Contracts and true and complete descriptions
of all oral Contracts have been delivered to Buyer heretofore. All of the
Contracts were entered into in the ordinary course of MSCTC's business and are
valid and in full force and effect. No event of default on the part of MSCTC or
(to the best of Seller's knowledge) any other party has occurred under any of
the Contracts and no event of default will occur under any such Contract upon
the sale of the Stock to Buyers and all such Contracts will continue in full
force and effect following the consummation of the transactions contemplated by
this Agreement. MSCTC is not a party to or bound by any Contract or any decree
or order of any court or governmental agency which might have a Material Adverse
Effect.
5.2. FINANCIAL.
(a) The Disclosure Schedule contains unaudited balance sheets and income
statements of MSCTC as of and for the year ended December 31, 1996 and the
period ended October 31, 1997 (collectively, the "Financial Statements"). The
Financial Statements have been prepared from books and records of the Seller,
and to the best of Seller's knowledge and belief, have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied and maintained throughout the periods indicated, fairly present in
accordance with the applicable requirements of GAAP (except that Financial
Statements lack footnotes and other presentation items and are subject to year
end adjustments) the financial position of MSCTC as of the respective dates and
the results of operations and cash flows of MSCTC for the periods presented
herein. The October 31, 1997 balance sheet is hereinafter referred to as the
"Balance Sheet" and October 31, 1997 as the "Balance Sheet Date".
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(b) Since the Balance Sheet Date, there has not been:
(1) any material adverse change in the business, operations, or financial
condition of MSCTC taken as a whole;
(2) any sale, lease, transfer or assignment of any material assets,
tangible or intangible, of MSCTC other than in the ordinary course of business,
or any damage, destruction or loss, whether or not covered by insurance, which
has had a Material Adverse Effect: or
(3) any declaration, setting aside or payment of any distribution (whether
in cash, stock or property) by MSCTC to its partners;
(4) any repurchase, redemption or other acquisition by MSCTC of any
outstanding partnership interests;
(5) any incurrence, assumption or guarantee by MSCTC of any indebtedness
for borrowed money other than in the ordinary course of business and in amounts
and on terms consistent with past practices;
(6) any creation or assumption by MSCTC of any lien on any asset other than
in the ordinary course of business consistent with past practices;
(7) any making of any loan or advance or any investment in any entity;
(8) any change in any method of accounting or accounting practice by MSCTC,
except for any such change required by reason of a concurrent change in
applicable requirements of GAAP;
(9) except in the ordinary course of business consistent with past
practice, any (A) grant of any severance or termination pay to any director,
officer or employee of MSCTC, (B) execution of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of MSCTC, (C) increase in
benefits payable under existing severance or termination pay policies or
employment agreements, or (D) increase in compensation, bonus or other benefits
payable to directors, officers or employees of MSCTC.
(10) any entry into any agreement, action, commitment or transaction
(including any capital expenditure or capital financing) by MSCTC which is
material to MSCTC taken as a whole, except agreements, actions, commitments or
transactions entered in the ordinary course of business or as contemplated
herein.
(c) The accounts and notes receivable reflected in the Financial Statements
were generated in the ordinary course of business and are good and collectible.
The reserves in the Financial Statements for doubtful accounts accurately
reflect the expected collectability of such accounts and notes receivable.
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5.3. TAXES. Dowdy, MLD and MSCTC have duly filed all reports and returns
("Tax Returns") required to be filed by it relating to all taxes imposed by any
jurisdiction ("Taxes"). All liabilities for Taxes which are due from Dowdy, MLD
or MSCTC with respect to periods ending on or before the Closing Date for which
a statute of limitations has not barred the assessment of deficiencies have been
paid or provision therefor has been made on the Balance Sheet. Seller will pay
taxes resulting from the deemed sale of assets pursuant to Internal Revenue
Service Code Section 338(h)(10). The Tax Returns reflect all Taxes due and
payable with respect to the periods covered thereby and there are no other tax
liabilities, deficiencies, interest or penalties payable or asserted with
respect to such periods. There are no actions, suits, proceedings,
investigations or claims pending or, to the knowledge of Seller, threatened in
writing against Dowdy, MLD or MSCTC with respect to Taxes, governmental charges
or assessments. There are no pending audits by any federal, state, local or
foreign taxing authority of any payment, return or report made or filed by
Dowdy, MLD and MSCTC nor has there been any claimed failure to pay or report any
kind of tax which may be assessed by any such taxing authority against Dowdy,
MLD and MSCTC.
5.4. TITLE AND RELATED MATTERS.
(a) MSCTC has good title to all of its properties and assets, other than
those that are leased, including, without limitation, the properties and assets
reflected in its Balance Sheet, free and clear of all security interests,
claims, charges or other encumbrances, except (i) such properties and assets as
may have been sold in the ordinary course of business or such encumbrances as
may have been incurred in the ordinary course of business since the Balance
Sheet Date, or (ii) such imperfections, defects of title and encumbrances which
are not material to the business, operations, or financial condition of MSCTC
taken as a whole. The assets of MSCTC are, in all material respects, normal wear
and tear excepted, in a condition and working order sufficient to conduct
MSCTC's business in the manner currently and historically conducted by MSCTC.
(b) The Disclosure Schedule contains a complete and accurate list of all
the real property owned or leased by MSCTC (the "Real Property"). The Real
Property and all building systems, structures, fixtures and improvements, owned,
leased or used by MSCTC are, in all material respects, normal wear and tear
excepted, in a condition and working order sufficient to conduct MSCTC's
business in the manner currently and historically conducted by MSCTC.
5.5. PATENTS, TRADEMARKS, AND OTHER INTELLECTUAL PROPERTY. The Disclosure
Schedule contains a list of all patents, patent applications, trademarks,
trademark applications, trade names, service marks and copyrights, and licenses
and rights to any of the foregoing (collectively the "Intellectual Properties")
which are used or held by MSCTC and material to the conduct of the business of
MSCTC taken as a whole. MSCTC is the owner or is licensed or otherwise has the
right to use the Intellectual Properties in the conduct of its business, and the
consummation of the transactions contemplated hereby will not alter or impair
any such rights.
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No claims have been asserted or threatened in writing by any person
challenging MSCTC's ownership or use of any of the Intellectual Properties
which, if successful, would have a Material Adverse Effect. None of the
Intellectual Properties infringes or otherwise violates the rights of others
or is being infringed by others. No licenses, sublicenses or agreements
pertaining to any of the Intellectual Properties have been granted by MSCTC.
5.6. LITIGATION. There are no actions, suits, proceedings, or governmental
investigations against or affecting MSCTC before any court, governmental or
regulatory authority, domestic or foreign, which are pending or threatened in
writing by any third party with respect to its ownership or operation of its
cellular telephone business or otherwise relating to the assets of MSCTC, nor
does Seller know or have any reason to be aware of any basis for the same. In
particular, but without limiting the generality of the foregoing, except as
listed on the Disclosure Schedule, there are no applications, complaints or
proceedings pending, or to the best of Seller's knowledge, threatened (I) before
the FCC relating to the business or operations of MSCTC other than rulemaking
proceedings which affect the cellular telephone industry generally, (ii) before
any federal or state agency relating to the business or operations of MSCTC
involving charges of illegal discrimination under any federal or state
employment laws or regulations; or (iii) before any federal, state or local
agency relating to the business or operations of MSCTC involving zoning issues
under any federal, state or local zoning law, rule or regulation other than
zoning and similar applications and proceedings required in the ordinary course
of MSCTC's business or operations. MSCTC is not subject to any judgment,
stipulation, order, decree, or agreement arising from any such action, suit,
proceeding or investigation. No action, suit, proceeding or governmental
investigation is pending or threatened in writing, which seeks to question,
delay, or prevent the consummation of the transactions contemplated hereby.
5.7. LABOR MATTERS.
(a) Except as listed in the Disclosure Schedule, neither Seller, Dowdy, MLD
or MSCTC, nor any trade or business (whether or not incorporated) under common
control with Seller, Dowdy, MLD or MSCTC within the meaning of Section 414(b),
(c), (m) or (o) of the Code ("ERISA Affiliate"), maintains or contributes to any
bonus, deferred compensation, incentive compensation, severance, pension, profit
sharing, retirement, stock purchase, stock option, employee welfare benefit or
any other fringe benefit plan, agreement, arrangement, arrangement or practice
for which Seller, Dowdy, MLD, MSCTC or any ERISA Affiliate has any liability.
The Disclosure Schedule set forth a true and complete list of each plan which is
an "employee benefit plan" (within the meaning of Section 3(3) of ERISA)
maintained or contributed to by Seller, Dowdy, MLD, MSCTC or and ERISA Affiliate
(each, a "Plan"). Each Plan is and has been operated in compliance with the
provisions of ERISA, the Code, all regulations, and all other applicable
governmental laws and regulations. Each other benefit plan, arrangement or
practice which is not an "employee benefit plan" (the "Other Benefit
Arrangements") is and has been operated in compliance with
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its terms and all applicable governmental laws, regulations, rulings and
announcements. The Disclosure Schedule also sets forth all written
employment agreements presently in effect between Seller or MSCTC and
employees or MSCTC, and all collective bargaining agreements between Seller
or MSCTC and employees of MSCTC.
(b) MSCTC, Dowdy and MLD have complied with all laws, rules and regulations
relating to the employment of labor, including those relating to wages, hours,
collective bargaining, occupational safety, discrimination and the payment of
social security and other payroll related taxes, and have not received any
notice alleging failure to comply in any material respect with any such laws,
rules or regulations. No controversies, disputes or proceedings are pending, or
to the best of Seller's knowledge, threatened, between it and any employee of
MSCTC, Dowdy or MLD. There is no labor strike, dispute, slowdown,
representation campaign or work stoppage actually pending or, to the knowledge
of Seller, threatened with respect to MSCTC employees.
(c) Since the Balance Sheet Date, there has not been (i) any increase in
the rate or terms of compensation payable by MSCTC to, or any increase in the
rate or terms of any bonus, insurance, pension, or other employee benefit plan
on behalf of its employees, except increases occurring in the ordinary course of
business in accordance with its customary practices (which shall include normal
period performance reviews and related compensation and benefit increases).
(d) Neither Seller, Dowdy, MLD, MSCTC or and ERISA Affiliate nor any "party
in interest" (within the meaning of Section 4975 of the Code) has engaged in a
transaction or transactions in connection with which Dowdy, MLD or MSCTC could
be subject, individually or in the aggregate, to other civil penalties assessed
pursuant to Section 502(i) of ERISA or tax liabilities imposed by Section 4975
of the Code. No liability under Title IV of ERISA has been incurred either
directly or indirectly by Seller, Dowdy, MLD, MSCTC or any ERISA Affiliate.
There is no pending or, to the knowledge of Seller, threatened claim against or
otherwise involving any Plan, or any fiduciary thereof, by or on behalf of any
participant or beneficiary under any Plan (other than routine claims for
benefits), nor is there any pending or, to the Knowledge of Seller, threatened
claim by or on behalf of any of the Plans, which has or could have a material
adverse effect on Dowdy, MLD or MSCTC. Except as set forth in the Disclosure
Schedule, there are no unfunded obligations under any Plan providing benefits
after termination of employment to any employee of MSCTC (other than
continuation of health coverage as required by Part 6 of Title I of ERISA).
(e) Subject to any applicable governmental statutes, rules or regulations,
nothing in the terms and conditions of the benefit plans listed on the
Disclosure Schedule, or otherwise, prohibits or limits the ability of Buyer,
Dowdy, MLD or MSCTC to terminate all such benefit plans concurrent with the
consummation of the transactions contemplated hereby or will trigger or result
in a financial obligation on Buyer, Dowdy, MLD, or MSCTC by virtue of such
termination, it being understood and agreed that
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effective as of the Closing, Buyer will offer employment to each of MSCTC's
employees in accordance with the provisions of Section 7.6.
(f) MSCTC is not a party to any collective bargaining agreement and no such
contract is being negotiated with MSCTC. No representation question exists or
has been raised respecting the employees of MSCTC, nor are there any campaigns
being conducted to solicit cards from the employees of MSCTC to authorize
representation by any labor organization.
5.8. ENVIRONMENTAL MATTERS. MSCTC, Dowdy and MLD have not violated any
federal, state or local law, regulation or rule or ordinance relating to the
protection of the environment that is applicable to the facilities and
operations of MSCTC, nor is there any condition with respect to the environment
created by their actions or inactions which could or would result in any such
violation. There has been no illegal release, spill, leak or discharge at,
under or in the properties currently owned or operated by MSCTC of any
pollutant, toxic substance, hazardous waste, hazardous material, hazardous
substance, solid waste or oil, as defined in or pursuant to the Resource
Conservation Recovery Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, the Federal Clean Water Act, as
amended, or any other federal, state or local environmental law, regulation,
rule or ordinance in violation of any such law. There are no actions pending
or, to the knowledge of Seller, threatened in writing against MSCTC which assert
or allege (a) MSCTC or its business has violated or any of its Real Property is
in violation of any environmental laws or is in default with respect to any
order, writ, judgment, variance, award or decree applicable to MSCTC of any
governmental authority (an "Environmental Law"); (b) MSCTC is required to clean
up or take any investigation, remedial or other response action under any
Environmental Law; or (c) MSCTC is required to contribute to the cost of any
past, present or future cleanup or remedial or other response action which
arises under any Environmental Law.
5.9. LIABILITIES. MSCTC has no liabilities, absolute, direct or contingent,
or any outstanding evidence of indebtedness, except (a) as reflected or as
reserved against on the Balance Sheet; or (b) liabilities incurred in the
ordinary course of business since the Balance Sheet Date. There are no material
defaults under any terms or conditions of any indebtedness, liability, contract
or obligation of MSCTC which would have a Material Adverse Effect.
5.10. PLANNED PUBLIC IMPROVEMENTS AND SPECIAL ASSESSMENTS. MSCTC has not
received notice of any planned, contemplated or commenced public improvements
that may result in special assessments or special charges pertaining to the Real
Property or that may otherwise affect the availability of utility service or
access to the Real Property.
5.11. LEASED PERSONAL PROPERTY. The Disclosure Schedule sets forth a list
of all machinery, equipment, vehicles and other tangible personal property used
in the operation of MSCTC which is covered by a lease to which MSCTC is a party.
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5.12. GOVERNMENT LICENSE AND REGULATION. MSCTC has all cellular and
microwave licenses and authorizations from the FCC to conduct its business as it
is currently being conducted. Such licenses are disclosed on Schedule 5.12 of
the Disclosure Schedule. MSCTC has all other domestic and foreign governmental
licenses and permits necessary to conduct its business, except where the failure
to have such license or permit would not have a Material Adverse Effect. Such
licenses and permits are in full force and effect and will remain in full force
and effect for the benefit of Buyer immediately after Closing. No proceeding is
threatened regarding the revocation or limitation of any such governmental
license or permit.
5.13. COMPLIANCE WITH LAW. The operation of MSCTC, its business, and
MSCTC's use of the Real Property do not violate any applicable federal, state or
local laws or ordinances or any other rule or regulation of any international,
federal, state or local agency or body, except where the failure to so comply
would not have a Material Adverse Effect.
5.14. INSURANCE. The Disclosure Schedule lists all insurance policies owned
by or covering assets or risks of MSCTC. All premiums on such policies due prior
to the date hereof have been paid. MSCTC has not received notice that any such
insurance is in default. will be canceled or not renewed.
5.15. TRANSACTIONS WITH CERTAIN PERSONS. MSCTC does not owe any amount to,
or have any contract with or commitment to, any shareholder, director, officer,
employee or consultant of MSCTC or Seller (other than compensation for current
services not yet due and payable and reimbursement of expenses arising in the
ordinary course of business), and no such person owes any amount to MSCTC. Upon
the resignation of the officers and directors of MLD and Dowdy as contemplated
by Section 3.2(g), MSCTC will have no obligation to any such person to pay
termination compensation or any other similar payment.
5.16. BANK ACCOUNTS. The Disclosure Schedule sets forth the names and
locations of all banks and other financial institutions at which MSCTC maintains
accounts of any nature, the type and number of such accounts and the authorized
signatories therefor.
5.17. FULL DISCLOSURE. As of the date hereof, this Agreement, the Exhibits
hereto, the Financial Statements and the Disclosure Schedule, taken as a whole,
do not contain any material misstatements, material misleading statements or
material omissions. Seller does not have knowledge of any fact which is
reasonably likely to materially adversely affect MSCTC's business, assets,
financial condition, operations or prospects which have not been set forth in
this Agreement, the Exhibits, the Financial Statements or the Disclosure
Schedule, other than facts pertaining to or affecting the industries in which
MSCTC competes, or its markets, generally.
5.18. REPORTS. All reports, filings and statements that MSCTC is
currently required to maintain or file with the FCC or with any other
governmental agency have been filed and all reporting requirements of the
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FCC and other governmental authorities having jurisdiction over MSCTC have been
complied with all such reports, filings and statements are substantially
complete and correct as filed. MSCTC has timely paid all regulatory fees
payable with respect to its FCC licenses.
5.19. CUSTOMERS. As of October 31, 1997, MSCTC had no less than 12, 973
customers and will have no less than 12,973 customers as of the Closing..
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that the following
statements are true and correct as of the date of this Agreement:
6.1. EXISTENCE AND AUTHORITY OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Minnesota and
has full power and authority to enter into this Agreement and the Ancillary
Agreements and to perform its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements by Buyer have been duly authorized by all necessary proceedings on
the part of Buyer, and this Agreement and the Ancillary Agreements constitute
the valid and legally binding obligation of Buyer, enforceable in accordance
with their terms except to the extent limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by general equitable principles.
6.2. CONSENTS AND APPROVALS; NO VIOLATION. Except as described in
Paragraphs 3.1 and 3.3(e), above, there is no authorization, consent or approval
of, or notice to, any governmental or regulatory authority required to be
obtained or given or waiting period required to expire as a condition to lawful
consummation by Buyer of its purchase of the Stock pursuant to this Agreement.
Neither the execution and delivery of this Agreement, nor the consummation of
the transaction contemplated hereby, will (i) violate any provision of the
Articles or Certificate of Incorporation or By-Laws (or other charter documents)
of Buyer, (ii) violate any provision of any agreement or other obligation to
which Buyer or any of its subsidiaries or affiliates is a party or by which
any of them is bound or to which their respective assets is subject, or (iii)
violate or result in a breach of, or constitute a default under, any judgment,
order, decree, rule or regulation of any court or governmental agency to which
Buyer or any of its subsidiaries or affiliates is subject, which in each of
clauses (i), (ii), or (iii) would materially affect the consummation of the sale
and purchase of the Stock pursuant to this Agreement.
6.3. LITIGATION. No action, suit, proceeding or governmental investigation
is pending or, to the knowledge of Buyer, threatened in writing by any third
party which seeks to question, delay, or prevent the consummation of the
transaction contemplated hereby.
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6.4. ACQUISITION OF STOCK FOR INVESTMENT. Buyer is acquiring the Stock for
investment only and not with a view toward, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same. Buyer acknowledges that the Stock is not registered under the
Securities Act of 1933, as amended, or applicable state securities laws, and
that it may not be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under such Act, except pursuant to an
exemption from such registration available under such Act and laws.
6.5. FULL DISCLOSURE. Buyer has notified Seller in writing of any fact,
condition or circumstance of which Buyer has knowledge which Buyer reasonably
believes would constitute a breach or default, or any fact, condition or
circumstance of which Buyer reasonably believes would, after notice or lapse of
time or both, constitute a breach or default by Seller under any agreement or
document contemplated hereby.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
7.1. OPERATION OF BUSINESS PENDING CLOSING. Seller will use its reasonable
best efforts to cause MSCTC to conduct its business according to its ordinary
and usual course of business and substantially in the manner heretofore
conducted and will use its reasonable best efforts to preserve in all material
respects the business organization and business relationships of MSCTC intact.
By way of amplification and not limitation, Dowdy, MLD and MSCTC each shall not,
between the date of this Agreement and the Closing Date, directly or indirectly
do, or propose or commit to do, any of the following, except as contemplated by
this Agreement or as previously disclosed with reasonable specificity to Buyer,
or except in the ordinary course of business and in a manner consistent with
past practice and in compliance with applicable laws, without the prior written
consent of Buyer, such consent not to be unreasonably withheld or delayed:
(a) Amend or otherwise change their Articles of Incorporation, By-Laws or
Partnership Agreement;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or authorize or
commit to the issuance, sale, pledge, disposition or encumbrance of, (i) any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest (including, but not limited to, stock
appreciation rights or phantom stock), of Dowdy or MLD, or (ii) any assets of
Dowdy, MLD or MSCTC, except for sales of services and products in the ordinary
course of business and in a manner consistent with past practice;
(c) Declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock (except as specifically contemplated by this
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Agreement);
(d) Reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(e) (i) Acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any obligation for borrowed money, long term or short term
debt, or issue any debt securities having a maturity of any duration, whether or
not incurred prior to the date hereof, (together, the "Funded Debt"), (iii)
assume, guarantee, or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans, advances or
capital contributions to, or investments in, any other person, (iv) enter into
any employment contract or agreement or any other contract or agreement other
than in the ordinary course of business consistent with past practice, or (v)
enter into or amend any contract, agreement, commitment or arrangement with
respect to any of the matters set forth in this section 7.1(e):
(f) Except as set forth in the Disclosure Schedule, as previously approved
by Buyer or to the extent required under existing employee and director benefit
plans, agreements or arrangements as in effect on the date of this Agreement,
increase the compensation or fringe benefits of any of their directors, officers
or employees, except for increases in salary or wages of employees of MSCTC in
the ordinary course of business in accordance with past practice, or grant any
severance or termination pay not currently required to be paid under existing
severance plans to, or enter into any employment, consulting or severance
agreement with any present or former director, officer or other employee of
MSCTC, Dowdy or MLD (other than an agreement entered into in exchange for a
release by an employee, of any and all claims against MSCTC following such
employee's termination of employment, but only if the aggregate amount payable
to any terminated employee under any such agreement are paid by Seller without
cost or expense to Buyer, MSCTC, Dowdy or MLD, or establish, adopt, enter into
or amend or terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors, officers or
employees, or grant any stock options or stock-based compensation to any
directors, officers or employees (provided that Buyer acknowledges that the
participation of employees of MSCTC in benefit plans of Seller will terminate as
a result of the Closing);
(g) Except as may be required as a result of a change in law or in
generally accepted accounting principles, change of any of the accounting
practices or principles used by it;
(h) Make any tax election or settle or compromise any material federal,
state, local or foreign tax liability;
(i) Take any action, including, but not limited to, introducing a new
service or product, which, in the good faith judgment of MSCTC, is
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reasonably likely to result in any claim that MSCTC has violated applicable
laws, rules or regulations;
(j) Adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of Dowdy,
MLD or MSCTC;
(k) Not extend or shorten the time for payment of MSCTC's accounts
receivable;
(l) Pay, discharge, satisfy or settle any claims, actions, suits,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, satisfaction or
settlement (i) involving payments of not more than Fifty Thousand Dollars
($50,000.00) in the aggregate, which also involve no form of injunctive relief,
(ii) in the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of MSCTC,
or (iii) incurred in the ordinary course of business and consistent with past
practice; or
(m) Take, or offer or propose to take, or agree to take in writing or
otherwise, any of the actions described in sections 7.1(a) through 7.1(k) or any
action which would make any of the representations or warranties of MSCTC
contained in this Agreement untrue and incorrect as of the date when made if
such action has been taken.
(n) Incur any debt for borrowed money, except for debt which is repaid at
or prior to the Closing by Seller.
7.2. ACCESS TO INFORMATION.
Between the date of this Agreement and the Closing Date, Seller will (i)
afford Buyer and its authorized representatives reasonable access, during
ordinary business hours, to all books, records, offices and other facilities and
properties of MSCTC and permit Buyer and its authorized representatives to make
such inspections thereof as they may reasonably request, (ii) make available to
Buyer, during ordinary business hours and upon reasonable notice, all senior
management personnel of MSCTC or of Seller responsible for the management of
MSCTC for the purpose of obtaining information regarding MSCTC, and (iii)
furnish Buyer with such financial and operating data and other information with
respect to the financial statements, business and properties of MSCTC as Buyer
may from time to time reasonably request; provided, however, that any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of MSCTC or Seller. Any
information provided to Buyer pursuant to this Agreement shall be held by Buyer
in the strictest confidence. No investigation pursuant to this section 7.2
shall affect any representation or warranty of Seller or MSCTC herein or the
conditions to the obligations of Buyer hereunder.
7.3. REASONABLE EFFORTS. Subject to the terms and conditions herein
provided, Seller and Buyer each agree to use reasonable best efforts to
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take, or to cause to be taken, all actions 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 purchase and sale of the
Stock pursuant to this Agreement, including without limitation (i) using its
reasonable best efforts to cause the fulfillment of the conditions listed in
sections 3.2 and 3.3, above, within its control and (ii) using its reasonable
best efforts to obtain all required consents from third parties or
governmental bodies.
7.4. HSR NOTIFICATION. Unless Seller and Buyer each shall have received an
opinion or advice of their respective counsel that no such filings are required,
as soon as practicable (but no later than twenty (20) business days) after the
execution of this Agreement, Seller and Buyer will file, or cause to be filed,
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice pursuant to the HSR Act, the notification and
documentary material required in connection with the acquisition of the Stock by
Buyer pursuant to this Agreement. Thereafter, Seller and Buyer will promptly
file any additional information requested as soon as practicable after receipt
of a request for additional information under the HSR Act. Buyer and Seller will
use reasonable efforts to obtain early termination of the applicable waiting
period under the HSR Act. The parties hereto will coordinate and cooperate with
one another in exchanging such information and providing such reasonable
assistance as may be requested in connection with such filings. Buyer and Seller
shall be responsible for one-half of the filing fees required under the HSR Act.
7.5 REGULATORY FILINGS AND APPROVAL. Seller and Buyer shall, as soon as
practicable (but in no event later than fifteen (15) business days) after the
execution of this Agreement, cause to be filed with the Federal Communications
Commission under the Communications Act of 1934, as amended, all necessary
applications, waiver requests and related documentary material required in
connection with the acquisition of the Stock by Buyer pursuant to this
Agreement. Notwithstanding the generality of the foregoing, Buyer shall cause
the relevant applications to contain a showing of compliance with 47 C.F.R.
Section 22.942. Such showing shall be consistent with the provisions of Article
VIII hereof and with applicable requirements of the Commission's rules and
regulations. Thereafter, Buyer and Seller will promptly file any additional
information under the Communications Act. Buyer and Seller will utilize their
respective best efforts to obtain the requisite approvals of the FCC at the
earliest possible time. The parties hereto will coordinate with one another in
exchanging such information and providing such assistance as may be requested in
connection with such filings. Buyer and Seller shall each be responsible for
one-half of the filing fees required under the Communications Act and the FCC's
rules and regulations.
7.6. TAX RETURNS. Seller shall timely file all income tax returns required of
Dowdy, MLD or MSCTC for the period ending on or before the Closing Date with the
appropriate government officials and shall ensure
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that the amounts of Tax shown due on such returns are paid in a timely manner.
7.7 EMPLOYMENT OFFERS FOLLOWING CLOSING. Immediately following the
Closing, subject to passing a pre-employment drug-screening test which Buyer
requires of all of its new employees, Buyer shall offer to all of MSCTC's
employees (the "Employees") employment with Buyer or Acquisition Subsidiary as
of the Closing date which offer, as to each employee, will provide for the same
level of base cash compensation paid to such employee as of the Closing Date and
the same standard package of benefits available to all other employees of Buyer,
as more specifically described below. Buyer reserves the right, following
further review and in its sole discretion, to adjust the commission, bonus and
incentive compensation paid to MSCTC's employees as of the Closing.. The
Employees shall receive credit following Closing for services rendered while
employed by MSCTC prior to Closing for all purposes, including, without
limitation, participation in employee benefit programs of Buyer or any other
term or condition of employment which varies with seniority. In particular,
(a) the Employees will be terminated by Seller effective as of the Closing
and, concurrently, will be offered employment on the terms and conditions
described above;
(b) Seller will be solely responsible for the Stock Option Agreements with
Kathy Baaken and Jerry Wilke. Buyer will bear no cost, expense or other
responsibility for these agreements;
(c) Effective as of the Closing Date, Seller will treat MSCTC employees as
terminated employees for administration purposes of its 401(k) plan. Buyer will
assume no responsibility for 401(k) fund balances;
(d) At the Closing, Seller will treat MSCTC employees as terminated
employees for purposes of paid time off plan. Buyer will assume no cost,
expense or other responsibility for any paid time off banks;
(e) Buyer will assume no employment agreements;
(f) All MSCTC employees will be deemed job applicants for their same or
similar positions with Buyer and will be required to take a pre-employment drug
screen test required by Buyer of all of its new employees. Buyer will have no
responsibility to hire any employee who fails the positive drug screen test.
7.8. EMPLOYMENT AND EMPLOYEE BENEFITS AFTER THE CLOSING. Certain terms and
conditions regarding the parties' respective obligations with respect to
employment and employee benefit matters under this Agreement, and the
corresponding rights of employees of MSCTC hereunder, are set forth in Schedule
7.8 of the Disclosure Schedules hereto, the terms of which are incorporated
herein by this reference and made a part hereof.
ARTICLE VIII
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COMPLIANCE WITH 47 C.F.R. Section 22.942
8.1 MEANS OF COMPLIANCE. Buyer shall comply with 47 C.F.R. Section
22.942, in the first instance, by seeking from the FCC a waiver of the
requirements of such rule or by proposing to divest, including, for example,
divestiture into a qualifying trust, prior to the Closing contemplated by this
Agreement, of its ownership interest in Midwest Wireless Communications LLC
("Midwest") in a manner consistent with prior FCC precedent demonstrating
compliance with such section. If it appears and when it appears to Seller that
such proposal will not result in FCC approval of the transaction contemplated
herein in time for the Closing to occur by June 30, 1998, Seller may, in its
sole and exclusive discretion, elect to make an offer to purchase Buyer's
interest in Midwest in order that Buyer may bring itself into compliance with 47
C.F.R. Section 22.942 as is more fully set forth in Section 8.2 hereof.
8.2 ALTERNATIVE MEANS OF COMPLIANCE. Upon the occurrence of the condition
described in the second sentence of Section 8.1 hereof, Seller shall notify
Buyer of the existence of such condition. Thereupon, Seller, in its sole and
exclusive discretion may elect to make an offer to purchase Buyer's interest in
Midwest at the fair market value of such interest, taking into account that the
interest is a minority interest in a privately-held limited liability company
("Fair Market Value") in accordance with the following procedures:
(a) VALUATION. Each party shall appoint an independent appraiser to value
the fair market value of Buyer's interest in Midwest, such appraisers to report
back as soon as practicable. If the two valuations are within ten percent of
each other, the average of the two shall be deemed by the parties hereto to
constitute the Fair Market Value. If the two valuations are greater than ten
percent apart, the two appraisers shall jointly appoint a third independent
appraiser. Such third appraiser shall submit a single valuation to each party
hereto, as soon as practicable after its appointment. This third valuation
shall be no less than the lower of the two previously submitted valuations,
shall be no higher than the higher of the two previously-submitted valuations
and shall be deemed the Fair Market Value.
(b) PURCHASE OF BUYER'S INTEREST IN MIDWEST. At its option, Seller may
purchase Buyer's interest in Midwest at the Fair Market Value determined in
accordance with Section 8.2(a) above, subject to Buyer complying with the rights
of first refusal provisions of the Midwest Wireless Communications Limited
Liability Company Agreement ("MWC Agreement") to which Buyer is a party. Such
purchase will take place on commercially reasonable terms and conditions to be
agreed to between the parties hereto immediately prior to the Closing, such
Closing to occur no later than June 30, 1998 or such other time as the parties
may agree if the Buyer's interest in Midwest is not purchased under the MWC
Agreement. It is the intention of the parties hereto that the purchase
contemplated herein shall be solely to permit Buyer to bring itself into
compliance with
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47 C.F.R. Section 22.942 to enable the parties to close the transaction
contemplated hereby.
(c) SUBSEQUENT SALE BY SELLER OF BUYER'S INTEREST IN MIDWEST. Buyer
recognizes that Seller reserves the right to dispose of Buyer's interest in
Midwest that it may acquire pursuant to Section 8.2(b) above. In the event
that Seller, in its sole discretion, disposes of such interest by June 30, 1999,
then Seller and Buyer shall each share one-half of the after-tax gains or losses
resulting from such disposition.
(d) COSTS OF PURCHASE AND/OR SUBSEQUENT DISPOSITION. Buyer shall bear all
of its own as well as Seller's reasonable out-of-pocket costs (including, but
not limited to, attorneys' fees, appraisers' fees and similar professional fees)
in connection with Seller's acquisition of Buyer's interest in Midwest and/or
Seller's subsequent disposition of such interest as provided for in Section
8.2(c) above, provided that Buyer's maximum liability for such of Seller's costs
described herein shall be limited to a total of One Hundred Thousand Dollars
($100,000.00).
ARTICLE IX
INDEMNIFICATION
9.1. INDEMNIFICATION BY SELLER AND BY PARENT. As Buyer's sole and exclusive
remedy for breach of this Agreement, Seller and Parent, jointly and severally,
agree to indemnify, defend and hold Buyer and its directors, officers,
employees, agents and shareholders harmless from and against any damage (other
than consequential damages), liability, loss, cost or deficiency (including, but
not limited to, reasonable attorneys' fees), less any amount recoverable by
Seller or MSCTC under insurance or from any third party and less the amount of
any tax benefit to Buyer or MSCTC as a result thereof ("Buyer's Damages")
arising out of, resulting from or relating to:
(a) any inaccuracy in or breach of a representation or warranty of Seller
pursuant to this Agreement;
(b) any failure of Seller to duly perform or observe any term, provision,
covenant or agreement to be performed or observed by Seller pursuant to this
Agreement; and
(c) any Federal income taxes paid or payable after the Closing Date by
Buyer or by Dowdy, MLD or MSCTC or any of their affiliates, relating to periods
ending prior to the Closing Date or for which Dowdy, MLD or MSCTC is liable
because it is included in the consolidated Federal income tax return of Seller
or its affiliates (other than relating to any election or action taken by Buyer
or Dowdy, MLD or MSCTC at the direction of Buyer on or following the Closing
Date) in excess of any refund of Federal income taxes receivable by Buyer or
Dowdy, MLD or MSCTC that are attributable to any periods ending on or prior to
the Closing Date or because MSCTC is included in the consolidated Federal income
tax return of seller or its
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affiliates
9.2. PROCEDURE.
(a) NOTICE OF CLAIMS. Buyer shall give Seller prompt notice of any claim,
demand, assessment, action, suit or proceeding to which Buyer believes the
indemnity set forth in section 8.1 applies (an "Indemnified Claim"), including
those claims arising between the date of this Agreement and the Closing as
contemplated by clause (iii) of Section 3.2(a). Such notice shall provide in
reasonable detail such information as Buyer may have with respect to such
Indemnified Claim (including, without limitation, copies of any summons,
complaints or other pleadings which may have been served on Buyer or its agents
and any written claim, demand, invoice, billing or other document evidencing the
same). If such Indemnified Claim is evidenced by a court pleading, Buyer shall
give such notice within five days of receipt of such pleading. If such
Indemnified Claim is evidenced by some other writing from a third party, Buyer
shall give such notice within ten days of the date it receives such writing.
(b) CONTROL OF DEFENSE OF CLAIMS. If Buyer's request for indemnification
arises from the claim of a third party or a claim for which indemnification is
available under paragraph 9.1(c) hereof, Seller may assume control of the
defense of such Indemnified Claim or any litigation resulting from such
Indemnified Claim by giving Buyer notice of Seller's decision to do so. If
Seller assumes control of the defense of an Indemnified Claim, Seller shall
thereafter take all reasonable steps necessary in the defense or settlement of
such Indemnified Claim, and Seller shall hold Buyer harmless from and against
all damages arising out of or resulting from any settlement approved by Seller
or any judgment in connection with such Indemnified Claim. Notwithstanding
Seller's assumption of the defense of an Indemnified Claim, Buyer shall have the
right to participate in the defense of such Indemnified Claim at its own
expense. Seller shall not, in the defense of such Indemnified Claim, consent to
entry of any judgment or enter into any settlement, which does not provide for a
full and complete release by the third party asserting such Indemnified Claim of
all of its then existing claims against Buyer and Dowdy, MLD or MSCTC, except in
either case with a written consent of Buyer, which consent shall not be
unreasonably withheld. Buyer shall furnish Seller in reasonable detail all
information Buyer may have with respect to any such Indemnified Claim and shall
make available to Seller and its representatives all records and other similar
materials which are reasonably required in the defense of such an Indemnified
Claim and shall otherwise cooperate with and assist Seller in the defense
thereof.
9.3. LIMITATIONS. No indemnification shall be payable by Seller or by
Frontier Corporation to Buyer with respect to an Indemnified Claim pursuant to
Paragraph 9.1(a) (other than with respect to inaccuracies in or a breach of the
representations or warranties of Seller in sections 4.2, 4.3 or 5.3 hereof
(collectively, the "Excluded Representations"), as to which the limitations in
this section 9.3 shall not apply) unless Seller has received notice thereof
within twenty-four (24) months after the Closing Date and unless and until
Buyer's Damages for all Indemnified Claims, other than any
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Indemnified Claims made under the Excluded Representations, in the aggregate,
exceed Three Hundred Thousand Dollars ($300,000.00) (the "Basket Amount").
At such time that such Buyer's Damages exceed the Basket Amount, Seller shall
be liable to Buyer only for the portion of such Buyer's Damages which exceed
the Basket Amount, and in no event shall Seller's liability with respect to
all Indemnified Claims, other than any Indemnified Claims made under the
Excluded Representations (as to which the limitations of this Section 9.3
shall not apply), in the aggregate, exceed One Million One Hundred Fifty
Thousand Dollars ($1,150,000.00). In addition, the above limitations shall
not apply to intentional or knowing inaccuracies in or breaches of the
representations and warranties set forth in Articles IV and V hereof.
Seller's liability for such intentional or knowing inaccuracies in or
breaches shall have no Basket Amount, but shall be limited to Five Million
Dollars ($5,000,000.00).
9.4. INDEMNIFICATION BY BUYER. As Seller's sole and exclusive remedy for
breach of this Agreement, Buyer agrees to indemnify, defend and hold Seller, its
directors, officers, employees, agents and shareholders harmless from and
against any damage, liability, loss, cost or deficiency (including, but not
limited to, reasonable attorneys' fees) ("Seller's Damages") arising out of,
resulting from or relating to:
(a) any inaccuracy in or breach of representation or warranty of Buyer
pursuant to this Agreement; and
(b) any failure to duly perform or observe any term, provision or covenant
to be performed or observed by Buyer pursuant to this Agreement or any of the
Ancillary Agreements.
9.5. COOPERATION ON TAX MATTERS. Buyer and Seller shall cooperate fully,
and to the extent reasonably requested by the other party, in connection with
the filing of any Tax Return or any amended Tax Return, any audit, litigation or
other proceeding with respect to taxes payable by Dowdy, MLD or MSCTC. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
Tax Return, audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder, provided that the party making any such
request will reimburse the party complying with such request for any actual,
out-of-pocket costs it has incurred. Buyer and Seller agree to (i) retain all
books and records with respect to tax matters pertinent to Dowdy, MLD or MSCTC
relating to any tax period ending on or before the Closing Date until the
expiration of the statute of limitations therefor, and to abide by all record
retention agreements entered into with any taxing authority, and (ii) give the
other party reasonable written notice prior to destroying or discarding any such
books and records and, if the other party so requests, allow the other party to
take possession of such books and records.
9.6. PROCEDURE. The procedures for Seller's indemnification of Buyer
hereunder shall be the same as for Buyer's indemnification of Seller pursuant to
section 9.2 and the provisions of section 9.2 shall apply,
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mutatis mutandis, with respect to such indemnification by Buyer.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. TERMINATION UNRELATED TO FCC APPROVAL.
(a) This Agreement may be terminated prior to the Closing for reasons
unrelated to obtaining the approval of the FCC.
(i) At any time after August 31, 1998, by either Buyer or Seller, unless
the party seeking to terminate is not in compliance with its obligations under
section 7.3, above;
(ii) by Buyer if, as of the time of the Closing, all conditions specified
in Section 3.3 have been satisfied but the conditions specified in section 3.2
to be satisfied by Seller have not been satisfied;
(iii) by Seller if, as of the time of the Closing, all conditions set forth
in Section 3.2 have been satisfied but the conditions specified in section 3.3
to be satisfied by Buyer have not been satisfied.
(b In the event of termination of this Agreement pursuant to section 10.1
a(iii) hereof, Buyer agrees to pay Seller the sum of Two Million Dollars
($2,000,000).
10.2 TERMINATION RELATED TO FCC APPROVAL. This Agreement may be terminated
prior to Closing for reasons related to delay or unavailability of approval by
the FCC:
(a) at any time after June 30, 1998, by Seller, if as a result of Buyer's
failure to use its reasonable best efforts to comply with the requirements of
section 8.1 or failure to cooperate with Seller as contemplated by Section 8.2
and no third party has filed a petition to deny or substantively similar
pleading with the FCC.
(b) at any time after August 31, 1998, by either Seller or Buyer if a
third party has filed a petition to deny or substantively similar pleading with
the FCC and the FCC has not yet granted the necessary authorizations for the
Closing to occur on or prior to August 31, 1998.
(c) In the event of termination of this Agreement pursuant to this Section
10.2:
(i) as a result of the circumstances described in Section 10.2(a) hereof
that are a proximate result of Buyer's actions or inactions, Buyer agrees to pay
Seller a termination fee of Two Million Dollars ($2,000,000.00); or
(ii) as a result of the circumstances described in Section 10.2(a) hereof
that are not a proximate cause of Buyer's actions or inactions or as
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a result of the circumstances described in Section 10.2(b) hereof no
termination fee shall be due from Buyer to Seller.
10.3. EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to section 10.1 hereof, this Agreement, other than with
respect to Buyer's obligations under sections 11.1 and 11.2 and the
Confidentiality Agreement and Seller's obligations under sections 11.1 and
11.2, shall thereafter become void and have no effect, and without any
liability on the part of any party or its shareholders or directors or
officers in respect thereof, except that nothing herein will relieve any
party from liability for any breach of this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1. EXPENSES. The parties shall bear their own respective expenses
(including, but not limited to, all compensation and expenses of counsel,
financial advisors, consultants, actuaries and independent accountants) incurred
in connection with this Agreement and consummation of the transaction
contemplated hereby.
11.2. BROKERS. Except for Lazard Freres & Co., whose fee will be borne by
Seller, each party represents to the other that no broker, finder, or other
person is entitled to any brokerage or finder's fee or commission in connection
with the transaction contemplated by this Agreement.
11.3. FURTHER ASSURANCES. Upon reasonable request, from time to time, each
party agrees that it shall (or direct its employees to, if applicable) execute
and deliver such further instruments and documents as may be necessary or
desirable in the reasonable opinion of Buyer to protect the right or title of
Buyer to the Stock. all without further consideration.
11.4. ENTIRE AGREEMENT AND MODIFICATIONS. This Agreement, including the
Disclosure Schedule and the Ancillary Agreements constitute the entire agreement
between the parties with respect to the purchase and sale of the Stock. No
change of, modifications of, or additions to this Agreement shall be valid
unless the same shall be in writing and signed on behalf of both parties.
11.5. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and to their respective
successors. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by either party without the prior written
consent of the other party; provided, however that the rights and obligations of
Seller hereunder may be assigned to and assumed by a parent or subsidiary
corporation of Seller to which Seller may transfer the Stock, but no such
assignment shall relieve Seller of any of its obligations hereunder. Buyer may
assign its rights and obligations hereunder to a wholly-owned subsidiary in a
chain of wholly-owned subsidiaries, provided that no such assignment shall
relieve Buyer of its liability hereunder.
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11.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.7. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given on the day delivered personally, by facsimile
transmission, or telexed, or on the second business day following the day on
which mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Seller, to
Hickory Tech Corporation
221 E. Hickory Street
P.O. Box 3248
Mankato, Minnesota 56002
Attention: President
Telephone: (507) 387-3355
Facsimile: (507) 625-9191
with a required copy to:
Lindquist & Vennum. P.L.L.P.
4200 IDS Center
80 South 8th Street
Minneapolis, Minnesota 55402
Attention: Richard A. Primuth, Esq.
Telephone: (612) 371-3211
Facsimile: (612) 371-3207
(b) if to Buyer, to
Frontier Corporation
180 South Clinton Avenue
Rochester, NY 14646-0700
Telecopy: (716) 325-7639
Attention: James G. Dole
with required copies to:
Frontier Corporation
180 South Clinton Avenue
Rochester, NY 14646-0700
Telephone: (716) 777-1028
Telecopy: (716) 546-7823
Attention: Michael J. Shortley, III, Esq.
11.8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Minnesota without regard to
conflicts of law provisions.
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11.9. PUBLIC ANNOUNCEMENTS. No publication and/or press release of any
nature shall be issued pertaining to this Agreement or the transactions
contemplated hereby without the mutual consent of Seller and Buyer, or except as
may be required by law. In the event that either party hereto is required by
applicable law, regulation or legal process to make a public announcement
regarding the transactions contemplated hereby, such party: (i) shall promptly
notify the other party hereto so that such other party may seek a protective
order or other appropriate remedy or, in such other party's sole discretion,
waive compliance with the terms of this section 10.9, (ii) shall not make such
announcement if such other party delivers a written opinion of counsel that such
announcement is not required under applicable law, regulation or legal process,
and (iii) in the event that no such protective order, opinion of counsel or
other remedy is obtained, shall disclose only that portion of the information
regarding the transaction contemplated hereby which it is advised by counsel is
legally required.
11.10. CERTAIN DEFINITIONS. Wherever this Agreement refers to matters
within Seller's "knowledge," known to Seller," "knowledge of Seller" or of which
Seller "knows", such reference shall be defined to mean the actual knowledge of
any one or more of those persons listed in section 10.10 of the Disclosure
Schedule. Wherever this Agreement refers to an "affiliate" of a person, such
reference shall be defined to mean any other person controlling, controlled by
or under common control with the person in question.
11.11. ARBITRATION. Any dispute arising out of or relating to this
Agreement, any Ancillary Agreements or the Confidentiality Agreement or the
breach, termination or validity thereof, shall be settled by arbitration in
accordance with the then current Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes by a sole arbitrator. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
Section 1-16, and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The arbitrator is not
empowered to award damages in excess of compensatory damages and each party
hereby irrevocably waives any right to recover such damages with respect to any
dispute resolved by arbitration. The arbitration proceedings must be commenced
within one (1) year after accrual of the cause of action giving rise to the
proceedings. The arbitration proceedings shall be held in Chicago, Illinois.
The decision of the arbitrator shall be binding and conclusive on the parties
and each party agrees to comply therewith and perform the obligations imposed
thereunder. Arbitration and the provisions-of this section 9.13 shall be a
condition precedent to any legal or equitable right of action by any party
hereto. The fees and expenses of the arbitration proceedings shall be borne by
the parties hereto as follows: Buyer shall be responsible for fifty percent
(50%) of such fees and expenses and Seller shall be responsible for the
remaining fifty percent (50%) thereof; provided, however, that the party
ultimately prevailing in such arbitration proceeding shall be entitled to be
reimbursed by the other party for its share of such fees and expenses. Each
party shall pay the fees and expenses of its own counsel and representatives.
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11.12. NO WAIVER. The failure of any party at any time or times to require
the performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. The waiver by any party of any condition, or the
breach of any provision, term, covenant, representation or warranty contained in
this Agreement, whether by conduct or otherwise, in any one or more instances
shall not be deemed to be construed as a further or continuing waiver of any
such condition or breach of any other provision, term, covenant, representation
or warranty of this Agreement.
11.13. SURVIVAL. The representations, warranties and covenants made in this
Agreement and in any agreement or instrument executed and delivered in
connection with this Agreement shall survive the Closing.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
FRONTIER CORPORATION FRONTIER CELLULAR HOLDING, INC.
By: R.C. Mancini By: R.C. Mancini
------------------------ --------------------------
Title: Vice President Title: Vice President
-------------------- -----------------------
HICKORY TECH CORPORATION
By: /s/ Robert D. Alton
------------------------------
Title: President/CEO
----------------------------
The above mentioned exhibits and schedules have been omitted. The
Registrant agrees to furnish supplementally a copy of any omitted schedule
to the Commission upon request.
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