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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 9, 1995
FRONTEER DIRECTORY COMPANY, INC.
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(Exact Name of Registrant as Specified
in Its Charter)
Colorado 0-17637 45-0411501
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification
Number)
216 North 23rd Street
Bismarck, North Dakota 58501
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(Address of principal executive offices)
Registrant's telephone number, including area code: (701) 258-4970
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ITEM 1.CHANGES IN CONTROL OF REGISTRANT. AND ITEM 2. ACQUISITION OR DISPOSITION
OF ASSETS.
ACQUISITION OF RAFCO
On April 26, 1995, the Registrant entered into a Plan of Reorganization and
Exchange Agreement ("Reorganization Agreement") with RAFCO, Ltd., a Nevada
corporation ("RAFCO"), 1700 Lincoln Street, Denver, Colorado 80203. Under the
Agreement, the Registrant acquired all of the assets of RAFCO in exchange for
the assumption by the Registrant of the liabilities of RAFCO and the issuance by
the Registrant to RAFCO of 7,223,871 shares of the $0.01 par value common stock
of the Registrant and 87,500 shares of the $0.10 par value Series A Voting
Cumulative Preferred Stock ("Series A Preferred Stock") of the Registrant. RAFCO
dissolved as a corporation and will distribute the Registrant's common stock and
Series A Preferred Stock to the 20 persons who were shareholders of RAFCO. Under
the Reorganization Agreement, after compliance with Rule 14f-1 under the
Securities Exchange Act of 1934, as amended, all directors of the Registrant,
except for Dennis W. Olson, will resign as directors of the Registrant and
Robert A. Fitzner, Jr. and Robert L. Long will be appointed as directors of the
Registrant to fill two of the vacancies created by such resignations. As a
result of the reorganization transaction described in the Reorganization
Agreement and as a result of being a shareholder of RAFCO, Mr. Fitzner will
receive 4,784,705 shares of common stock of the Registrant and 5,000 shares of
the Series A Preferred Stock of the Registrant. As of April 26, 1995, Mr.
Fitzner will own 37.9% of the outstanding voting securities of the Registrant.
Earlene E. Fitzner, the mother of Robert A. Fitzner, Jr., will own 2,500 shares
of the Series A Preferred Stock of the Registrant. Mr. Fitzner may be deemed to
be in control of the Registrant as a result of his position as a director of the
Registrant and his ownership of 37.9% of the outstanding voting securities of
the Registrant. The other persons who will receive common stock of the
Registrant as a result of the reorganization transaction and as a result of
being shareholders of RAFCO are: Kanouff Corporation (1,558,078 shares); Dorothy
K. Englebrecht (220,272 shares); Steven Fishbein (220,272 shares); Peter O'Leary
(220,272 shares); and Arlene Wilson (220,272 shares).
The principal assets acquired by the Registrant from RAFCO under the
Reorganization Agreement are all of the outstanding stock of RAF Financial
Corporation, a Colorado corporation ("RAF") and approximately 50% of the
outstanding common stock of Secutron Corp., a Colorado corporation ("Secutron").
Also, the Registrant acquired furniture, fixtures, and equipment which were used
by RAFCO in its businesses and which the Registrant intends to continue to use
in the businesses acquired under the Reorganization Agreement. RAF is registered
as a broker dealer with the Securities and Exchange Commission, is a member of
the National Association of Securities Dealers, Inc. and the Boston Stock
Exchange, is an associate member of the American Stock Exchange, and is
registered as a securities broker dealer in all 50 states. RAF is a member of
the Securities Investor Protection Corporation ("SIPC") and other regulatory and
trade organizations. RAF's securities business consists of providing securities
transaction clearing services for other broker dealers on a fully disclosed
basis, providing retail
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securities brokerage and investment services, trading fixed income and equity
securities, providing investment banking services to corporate and municipal
clients, managing and participating in underwriting of corporate and municipal
securities, and distributing mutual fund shares. Secutron develops, installs,
markets, and supports industry specific application software systems and
provides consulting services in the software development and data processing
areas. Also, Secutron markets computer hardware for several manufacturers. For
the fiscal year ended December 31, 1994, RAF had gross revenues of $13,796,032
and Secutron had gross revenues of $3,515,230. For the fiscal year ended
December 31, 1994, RAF had earnings of $4,591 and Secutron had a loss of
($224,419). The number of shares of common stock and Series A Preferred Stock
issued by the Registrant in the reorganization transaction under the Reorganiza-
tion Agreement were determined by arm's length negotiations between
representatives of the Registrant and representatives of RAFCO.
TELECOM AGREEMENTS
On April 27, 1995, the Registrant entered into a Sale and Purchase
Agreement ("Sale Agreement") with Telecom * USA Publishing Company, an Iowa
corporation ("Telecom"). Under the Sale Agreement, the Registrant agreed to sell
to Telecom eleven of the Registrant's telephone directories located in the
States of Idaho, Montana, South Dakota, Utah, and Wyoming and certain equipment
for a purchase price of $2,400,000 payable $1,500,000 at the closing which is
expected to occur on May 5, 1995, and $900,000 prior to December 31, 1995. The
Sale Agreement requires that nine employees of the Registrant personally enter
into noncompetition agreements with Telecom. As consideration for such
noncompetition agreements, Telecom has agreed to pay $800,000 to such nine
employees, four of whom are officers and directors of the Registrant.
On April 27, 1995, the Registrant entered an option agreement with Telecom
("Option Agreement"). The Option Agreement is conditioned upon the occurrence of
the closing of the Sale Agreement between the Registrant and Telecom. At the
closing of the Sale Agreement, Telecom will make a noninterest bearing and
nonrecourse $500,000 loan to the Registrant as consideration for the Option
Agreement. Under the Option Agreement, Telecom has the right and option to
acquire from the Registrant nine North Dakota telephone directories. The option
period is from June 1, 1997 to June 1, 1999. If Telecom exercises this option,
the purchase price payable to the Registrant will equal the total net cash
revenue for the most recent edition of each of the nine directories published
and distributed prior to the date of the closing of the purchase under the
Option Agreement. This purchase price is subject to adjustment under certain
circumstances as described in the Option Agreement. If Telecom does not exercise
its option, the full amount of the $500,000 loan made by Telecom to the
Registrant will be forgiven. If Telecom exercises its option to purchase the
North Dakota directories from the Registrant, the full amount of the $500,000
loan will be applied against the purchase price of such directories. If Telecom
exercises its option to purchase the nine North Dakota directories, Telecom will
require that nine employees of the Registrant enter into noncompetition
agreements with Telecom. Four of such employees are currently officers and
directors of the Registrant. As
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consideration for entering into such noncompetition agreements, such employees
of the Registrant will receive approximately 25% of the purchase price paid by
Telecom for the nine North Dakota directories.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) and (b) Financial Statements.
The financial statements required to be filed by the Registrant as a
result of the transactions described in this Form 8-K Report are not available
for filing as of the date of this Report. Such financial statements will be
filed as an amendment to this Form 8-K Report as soon as practicable, but not
later than 60 days after the date of this Form 8-K Report.
(c) Exhibits.
2.1 Plan of Reorganization and Exchange Agreement dated
April 26, 1995, with Exhibits A, B, C, F, and I.
2.2 Sale and Purchase Agreement dated April 27, 1995, with
Exhibits A and J.
2.3 Option Agreement dated April 27, 1995, with Exhibits A,
B, and D.
3.0(i) Articles of Amendment to the Registrant's Articles of
Incorporation dated April 28, 1995.
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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.
FRONTEER DIRECTORY COMPANY, INC.
By:/s/ DENNIS W. OLSON
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Authorized Signatory
Date Signed: MAY 5, 1995
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DENNIS W. OLSON
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Printed Name of Signatory
PRESIDENT
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Title of Signatory
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File No. 0-17637
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
DATED MAY 9, 1995
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FRONTEER DIRECTORY COMPANY, INC.
EXHIBITS
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EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
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2.1 Plan of Reorganization and Exchange Agreement dated
April 26, 1995, with Exhibits A, B, C, F, and I.
2.2 Sale and Purchase Agreement dated April 27, 1995, with Exhibits
A and J.
2.3 Option Agreement dated April 27, 1995, with Exhibits A, B,
and D.
3.0 (i) Articles of Amendment to the Registrant's Articles of
Incorporation dated April 28, 1995.
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EXHIBIT 2.1
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D: 4/26/95
PLAN OF REORGANIZATION
AND
EXCHANGE AGREEMENT
RAFCO, LTD. ("RAFCO"), a Nevada corporation, and FRONTEER DIRECTORY
COMPANY, INC. ("Fronteer"), a Colorado corporation, agree as follows:
1.0 EXCHANGE AND DISSOLUTION.
1.1 TRANSFER OF ASSETS. RAFCO hereby transfers, conveys, assigns,
and delivers to Fronteer and Fronteer hereby accepts and acquires all of RAFCO's
assets of every kind and description (tangible or intangible, real, personal, or
mixed) wherever located and whether or not recorded upon the balance sheet or
books and records of RAFCO. The assets being conveyed, transferred, assigned,
and delivered to Fronteer as herein provided shall (without limiting the
generality of the foregoing) include:
(i) EXHIBIT OF ASSETS. Those assets described on the Exhibit of
Assets which is attached hereto as EXHIBIT A and which is made a part
hereof by reference.
(ii) INTANGIBLES. All right, title, and interest of RAFCO in or
under all contracts, agreements, leases, arrangements, trademarks, data,
applications, permits, and licenses of any nature whatsoever which RAFCO
has or has pending or to which RAFCO was or is a party, including those
which are described on the Exhibit of Contracts which is attached hereto as
EXHIBIT B and which is made a part hereof by reference.
1.2 CASH RETAINED. The assets of RAFCO to be transferred to Fronteer
on the Closing Date shall exclude only cash in an amount which is sufficient to
pay all expenses of RAFCO in connection with the transfer of its assets to
Fronteer and its dissolution as contemplated by this Agreement. RAFCO will set
such amount aside from its assets and will pay all such expenses from the
reserved amount and, after all the expenses have been paid, the balance, if any,
of the cash funds reserved shall be paid to Fronteer.
1.3 ASSUMPTION. Fronteer assumes, agrees to pay, perform, discharge,
and hold RAFCO harmless from only (i) those contracts, agreements and
arrangements of RAFCO which are listed on EXHIBIT B, (ii) those debts,
obligations, and liabilities of RAFCO which are shown on the Exhibit of
Liabilities that is attached hereto as EXHIBIT C and that is made a part hereof
by reference, as such liabilities may have been
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adjusted and changed in the ordinary course of business, (iii) those debts,
obligations, and liabilities of RAFCO which are reflected in the regular
business records or on the books and accounts of RAFCO as of the date of this
Agreement, and (iv) those rights or claims against RAFCO existing or incurred
prior to the date of this Agreement if action or proceeding thereon is commenced
against RAFCO within two years after the date of this Agreement. The agreements
of Fronteer contained in this Section 1.3 are made expressly for the benefit of
RAFCO and are not made for the benefit of and shall not be enforceable by any
other party. Fronteer will not assume any other debt, liability, or obligation
of RAFCO, whether known, unknown, or contingent, unless such debt, liability, or
obligation of RAFCO is described in and expressly assumed under this Section
1.3.
1.4 OBLIGATIONS NOT ASSUMED. The following debts, liabilities, and
obligations are specifically not being assumed by Fronteer and Fronteer shall
not be responsible for the payment of any of the following:
(i) INDEMNIFICATION. Any debt, liability, or obligation assumed
by Fronteer under Section 1.3 of this Agreement, if RAFCO is indemnified by
any person against any loss, or any cost or expense in connection
therewith, to the extent RAFCO is successful in collecting its loss, cost,
or expense from the indemnifying party.
(ii) SHAREHOLDER TAXES. Any liability or obligation of RAFCO
shareholders for any federal or state taxes resulting solely from the
transactions described in this Agreement.
1.5 RAFCO SHARES OUTSTANDING. On the date of this Agreement there
are 130,000 shares of $0.01 par value Class A Common Stock of RAFCO issued and
outstanding; there are no shares of $0.02 par value Class B Common Stock of
RAFCO issued and outstanding; and there are 87,500 shares of $0.03 par value
Preferred Stock issued and outstanding. Such Preferred Stock is designated as
Series A Cumulative Participating Preferred Stock ("RAFCO Series A Preferred
Stock").
1.6 EXCHANGE. In addition to the assumption of RAFCO's debts,
obligations, and liabilities as provided in Section 1.3 hereof, Fronteer hereby
agrees on the date of this Agreement to issue and deliver to RAFCO (i) 87,500
shares of the Series A Voting Cumulative Preferred Stock of Fronteer ("Fronteer
Series A Preferred Stock") and (ii) 7,223,871 shares of the $0.01 par value
Common Stock of Fronteer ("Fronteer Common Stock"). Attached hereto as EXHIBIT D
and incorporated herein by reference is the Resolution setting forth the rights,
preferences, limitations, restrictions, and relative rights and variations of
the Fronteer Series A Preferred Stock. There is no
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EXHIBIT E to this Agreement. On the last business day prior to the date of this
Agreement or on the date of this Agreement, the Company will file Articles of
Amendment to its Articles of Incorporation with the Colorado Secretary of State
which set forth the information required by Section 7-106-102(4) of the Colorado
Business Corporation Act, including the information required by such Section
with respect to the Series A Preferred Stock of Fronteer.
1.7 DISSOLUTION. On the date of this Agreement:
(i) RAFCO will file a Certificate of Dissolution with the Nevada
Secretary of State; and
(ii) RAFCO will distribute the Fronteer Series A Preferred Stock
to shareholders of RAFCO who own of record RAFCO Series A Preferred Stock
as of the date of this Agreement and RAFCO will distribute the Fronteer
Common Stock to shareholders of RAFCO who own of record Class A Common
Stock of RAFCO as of date of this Agreement.
1.8 FRONTEER SHARES. Each person who receives shares of Series A or
Common Stock of Fronteer as a result of the dissolution of RAFCO has been
provided with a copy of this Agreement and, by voting to approve the
transactions described herein, acknowledges that such person understands the
following and makes the following representations:
(i) The shares of Fronteer to be received by such person:
(a) have not been registered under the Securities Act of
1933, as amended ("1933 Act") or under any state securities laws
("Blue Sky Laws");
(b) will be issued by Fronteer in reliance upon exemptions
from registration under the 1933 Act and the Blue Sky Laws;
(c) may not be resold by the holder thereof unless such
shares are registered under the 1933 Act and any applicable Blue Sky
Law unless exemptions from such registration requirements are
available;
(d) will be represented by a certificate which contains the
following legend:
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"The securities represented by this certificate
may not be offered for sale, sold or otherwise
transferred except pursuant to an effective
registration statement under the Securities Act of
1933 ("the Act"), or pursuant to an exemption from
registration under the Act, the availability of
which is to be established to the satisfaction of
the Company."
(ii) Such person has been provided with full and complete access
to management of RAFCO and Fronteer to obtain any information desired by
such person concerning RAFCO and Fronteer or the transactions described in
this Agreement and such person has been provided with full and complete
access to all of the books and records of RAFCO and Fronteer.
(iii) Such person has such knowledge and experience in
financial and business matters that such person is capable of evaluating
the merits and risks of the transactions described in this Agreement.
(iv) Such person understands there is not and will not be an
established trading market for the Series A Preferred Stock of Fronteer.
2.0 CORPORATE RECORDS. All of RAFCO's books and records as of the Closing
Date shall become the property of Fronteer.
3.0 TRANSFER AND ASSUMPTION OF DOCUMENTS. The conveyance, transfer,
assignment, and delivery of the assets to Fronteer from RAFCO as herein provided
shall be effected on the date of this Agreement (or as soon thereafter as
reasonably possible) by deeds, bills of sale, endorsements, assignments, drafts,
checks, and other instruments of transfer or conveyance in such form as Fronteer
shall reasonably request. If the assignment of any license, lease, or other
agreement to be assigned or transferred pursuant to this Agreement without the
consent of another party thereto could be construed to be a violation of such
license, lease, or other agreement, then this Agreement shall not be construed
to be an assignment or an agreement to assign until such third party's consent
shall have been obtained. In addition to its agreement set forth in Section 1.3
hereof, on the date of this Agreement Fronteer shall deliver to RAFCO in form
satisfactory to RAFCO a document or documents in which Fronteer agrees to
assume, pay, perform, discharge and hold RAFCO harmless as provided in Section
1.3 hereof.
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4.0 RAFCO'S REPRESENTATIONS AND WARRANTIES. RAFCO represents, warrants,
and agrees that the following are true and correct on the date hereof:
4.1 ORGANIZATION. RAFCO is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada, and RAFCO
is qualified to do business as a foreign corporation in the State of Colorado.
4.2 CAPITALIZATION. RAFCO's authorized capital stock consists of
10,000,000 shares of $0.01 par value Class A Common Stock; 10,000,000 shares of
$0.01 par value Class B Common Stock; and 2,000,000 shares of $0.03 par value
Preferred Stock. Except as otherwise made mandatory by law or as otherwise
provided in the Certificate of Designation filed by RAFCO with the Nevada
Secretary of State, all voting rights are vested exclusively in the holders of
the Class A Common Stock. All shares of RAFCO stock, when issued, are fully paid
and nonassessable.
4.3 OUTSTANDING SHARES. There are 130,000 shares of Class A Common
Stock issued and outstanding and 87,500 shares of RAFCO Series A Preferred Stock
issued and outstanding. The name and number of shares of Class A Common Stock of
RAFCO and of RAFCO's Series A Preferred Stock owned by each person who is a
shareholder of record of RAFCO on the date of this Agreement is set forth in
EXHIBIT F attached hereto.
4.4 BANK ACCOUNTS. Attached hereto as EXHIBIT G and incorporated
herein by reference is a list which sets forth all accounts of any nature
maintained by RAFCO in any bank, trust company, savings and loan association, or
other financial institution, and the name and address of such institution.
4.5 OBLIGATIONS. RAFCO does not have any agreement, contract, or
arrangements with any of its officers, directors, agents, or employees which is
not terminable upon 30 days or less notice without penalty.
4.6 ENCUMBRANCE ON ASSETS. Except as expressly set forth in the
Exhibit of Assets which is attached hereto as EXHIBIT A, RAFCO has good and
marketable title to all of its assets, free and clear of all liens and
encumbrances. RAFCO is not in default under any of the contracts or commitments
described in EXHIBIT B attached hereto, and there exists no restriction on the
right of RAFCO to transfer and assign its assets and convey good title thereto
to Fronteer as herein contemplated except as described in the Exhibit of RAFCO
Approvals which is attached as EXHIBIT H hereto and which is made a part hereof
by reference.
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4.7 THIRD PARTY APPROVALS. Neither the execution of this Agreement,
nor the consummation of the transactions provided for herein, constitutes, or
will result in any breach of any of the terms, conditions, or provisions of, or
constitute a default under, any indenture, charter, bylaw, mortgage, loan
agreement, lien, lease, license, judgment, decree, order, agreement or other
instrument to which RAFCO is a party or is subject, except insofar as it is
necessary to obtain the approval or consent of a third party as expressly
described in EXHIBIT H attached hereto.
4.8 LIABILITIES. RAFCO had as of December 31, 1994, and has as of
the date of this Agreement, no known liabilities of any nature, whether
absolute, accrued, contingent, fixed or undetermined in amount, or otherwise and
whether or not due and payable except (i) liabilities shown or provided for in
the consolidated audited balance sheet of RAFCO dated December 31, 1994, (ii)
liabilities disclosed on Exhibits hereto, and (iii) liabilities incurred in the
ordinary course of business reflected in the regular business records or on the
books and accounts of RAFCO on the date of this Agreement.
4.9 EXECUTORY CONTRACTS. RAFCO does not have any contract or
commitment whether written or oral (i) to be completely performed in more than
12 months after the date hereof; or (ii) to be completely performed in less than
12 months after the date hereof and involving a commitment of more than $10,000;
except for the contracts and commitments that are described on EXHIBIT B
attached hereto and except for contracts and commitments entered into with
Fronteer's written consent. RAFCO has complied with all provisions of each of
such contracts and commitments.
4.10 ACCOUNTS RECEIVABLE. RAFCO's accounts receivable as of the date
of this Agreement are not subject to any counterclaims or setoff.
4.11 LITIGATION. RAFCO does not know of any pending or threatened
litigation, proceeding or investigation by any governmental authority or any
other person against RAFCO.
4.12 CORPORATE APPROVAL. The execution, delivery and performance of
this Agreement duly has been authorized and approved by the director of RAFCO
and by the shareholders of RAFCO to the extent required under RAFCO's Articles
of Incorporation and the Nevada General Corporation Law.
4.13 TAXES. RAFCO has filed all federal income tax and excise tax
returns, and, in each state where qualified or incorporated, all state and local
tax or franchise returns, and all real and personal property tax returns which
are required to
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be filed by it, and has paid all taxes as shown on said returns and has paid all
assessments received by it.
4.14 COMPLIANCE WITH REGULATIONS. RAFCO is entitled to own or lease
its properties and to carry on its business as and in the places where such
properties now are owned, leased, or operated, or such business now as conducted
and is not in violation of any statute, rule, ordinance, regulation, or
executive order applicable to it.
4.15 ACCESS. RAFCO has and will continue to provide to Fronteer and
its officers and representatives full and complete access to all of RAFCO's
properties, books, and records and all information concerning RAFCO which is
requested by any of such persons.
All of the foregoing representations and warranties relate only to
RAFCO and do not relate to any of RAFCO's subsidiaries. All of the foregoing
representations and warranties of RAFCO are being made on the basis of the
knowledge of the director and officers of RAFCO on the date of such
representation and warranty. For purposes of this Agreement, Fronteer shall be
deemed to have consented to an action or transaction by RAFCO if Dennis W.
Olson, the president of Fronteer, gives his prior written consent to such action
or transaction.
5.0 FRONTEER'S REPRESENTATIONS AND WARRANTIES. Fronteer represents,
warrants, and agrees that the following are true and correct.
5.1 ORGANIZATION. Fronteer is a corporation duly organized, validly
existing, and in good standing under the laws of Colorado and has full power and
authority and has been duly authorized by all necessary corporate proceedings to
enter into and carry out this Agreement. Fronteer is duly qualified as a foreign
corporation to do business in the State of North Dakota.
5.2 CAPITALIZATION. Fronteer's authorized capital stock consists of
100,000,000 shares of $0.01 par value Common Stock and 25,000,000 shares of
$0.10 par value Preferred Stock.
5.3 OUTSTANDING SHARES. As of the close of business on the last
business day prior to the date of this Agreement, there are 5,334,190 shares of
Common Stock of Fronteer issued and outstanding and there are options and
warrants outstanding entitling the holders thereof to purchase 576,250 shares of
Common Stock of Fronteer. Attached hereto as EXHIBIT I and incorporated herein
by reference is a summary of such outstanding options and warrants.
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5.4 NO CONFLICTING AGREEMENT. Fronteer is not in breach of any of
the terms, conditions, or provisions of or in default under any indenture,
charter, bylaw, mortgage, loan agreement, lien, lease, license, judgment,
decree, order, agreement or other instrument to which Fronteer is a party or is
subject.
5.5 THIRD PARTY APPROVALS. Neither the execution of this Agreement
nor the consummation of the transactions provided for herein constitutes, or
will result in, any breach of any of the terms, conditions, or provisions of, or
constitute a default under, any indenture, charter, bylaw, mortgage, loan
agreement, lien, lease, license, judgment, decree, order, agreement, or other
instrument to which Fronteer is a party or is subject.
5.6 LITIGATION. There is no pending or threatened litigation
proceeding or investigation by any governmental authority or any other person by
or against or otherwise affecting Fronteer or any of its assets, nor does
Fronteer know of any ground for any such litigation, proceeding, or
investigation.
5.7 COMPLIANCE WITH REGULATIONS. Fronteer is entitled to carry on
its business as and in the places where such business now is conducted and is
not in violation of and in consummating this Agreement will not violate any
statute, rule, ordinance, regulation, or executive order.
5.9 1934 ACT REGISTRATION AND REPORTING. The Company has registered
its Common Stock with the Securities and Exchange Commission ("SEC") under the
Securities Exchange Act of 1934, as amended ("1934 Act"), and the Company is
current in filing required reports with the SEC under the 1934 Act.
5.10 ACCESS. Fronteer has provided to RAFCO and its officers,
representatives and shareholders full and complete access to all of Fronteer's
properties, books, and records and all information concerning Fronteer which is
requested by any of such persons.
All of the foregoing representations and warranties relate only to
Fronteer and do not relate to any of Fronteer subsidiaries. All of the foregoing
representations and warranties of Fronteer are being made on the basis of the
knowledge of the directors and officers of Fronteer on the date of such
representation and warranty.
6.0 MERGER AND ACQUISITION FEE. Within a reasonable time after the date
of this Agreement, Dennis W. Olson, Robert A. Fitzner, Jr., and Robert L. Long
will negotiate the amount and terms of a merger and acquisition fee payable to
Robert L. Long.
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7.0 RAFCO LEGAL COUNSEL. Hopper and Kanouff, P.C. is providing legal
services to RAFCO in connection with the transaction described in this
Agreement. Kanouff Corporation owns 28,039 shares of the Class A Common Stock of
RAFCO. Kanouff Corporation is owned by Patricia M. Kanouff, the wife of John P.
Kanouff. John P. Kanouff is a director of Hopper and Kanouff, P.C. There are
potential conflicts of interest which result from this situation which have been
disclosed to RAFCO, and RAFCO has requested and agreed that, notwithstanding
such potential conflicts of interest, Hopper and Kanouff, P.C. provide legal
services to RAFCO in connection with the transaction described in this
Agreement.
8.0 FRONTEER DIRECTORS. As of the date of this Agreement, Fronteer has
seven directors. On the 15th day after the date of this Agreement, the directors
of Fronteer other than Dennis W. Olson will resign as directors of Fronteer and
the remaining director of Fronteer will accept the resignations of such six
directors and will appoint Robert A. Fitzner, Jr. and Robert L. Long as
directors of Fronteer to fill two of the vacancies created by such resignations.
During such 15 day period Fronteer will take all actions necessary to comply
with Rule 14f-1 under the Securities Exchange Act of 1934, as amended.
9.0 DIRECTORY DIVISION. As of the date of this Agreement, Fronteer hereby
creates a separate operating division which shall be known as the "Directory
Division." The Directory Division shall include all directory activities plus
Fronteer Personnel Services, Inc. and Fronteer Marketing Group, Inc., a
telemarketing firm. All directory marketing and publishing operations of
Fronteer shall be conducted by the Directory Division. Except as otherwise
provided in this Section 9.0, all decisions with respect to the operations of
the Directory Division shall be made by a majority vote of the directors of the
Directory Division. The directors of the Directory Division may not increase the
compensation of management executives who perform services in the Directory
Division without the prior approval of a majority of the directors of Fronteer.
The Directory Division shall be treated as a separate corporation and the
directors of the Directory Division are Dennis W. Olson, Marlow E. Lindblom,
Roland Haux, Larry Myers, Larry Scott, Theodore Becker, and Richard Flurer. For
a period of three years after the date of this Agreement, these division
directors may resign but may not be removed and/or replaced without the prior
approval of a majority of the directors of Fronteer and a majority of the
directors of the Directory Division.
10.0 REORGANIZATION. The transactions described in this Agreement are
intended to comply with the requirements of Section 368(a)(1)(C) of the Internal
Revenue Code ("Code"). It is understood that there are no assurances that the
transactions described herein will meet all of the requirements of such Section
of the Code.
- 9 -
<PAGE>
11.0 ADDITIONAL COMMON STOCK. Fronteer may issue some of its common shares
in connection with a loan which may be obtained by Fronteer. In the event
Fronteer issues common shares prior to June 30, 1995, in connection with a loan
obtained by Fronteer, Fronteer agrees to issue additional common shares to those
persons who are the holders of Fronteer Common Stock (as such term is described
in Section 1.6 hereof) on the date of issuance of such additional common shares.
Fronteer will issue 55/100th of one common share to such holders for each common
share of Fronteer issued in connection with such loan transaction. Such
additional common shares will be divided among the holders of Fronteer Common
Stock based upon the percentage of the total outstanding shares of Fronteer
Common Stock owned by each such holder as of the date of issuance of such common
shares by Fronteer.
12.0 GOVERNING LAW. This Agreement shall be construed according to the
laws of Colorado as now or hereafter in effect.
13.0 MISCELLANEOUS. Paragraph headings are not to be considered part of
this Agreement and are included solely for convenience and are not intended to
full or accurate descriptions of the contents thereof. All of the terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors, and assigns. This constitute the entire agreement of Fronteer and
RAFCO and may not be changed, terminated, or discharged orally. 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.
Dated: APRIL 26 , 1995.
--------------------------
RAFCO, LTD.
By:/s/ ROBERT A. FITZNER, JR.
--------------------------
Robert A. Fitzner, Jr., President
FRONTEER DIRECTORY COMPANY, INC.
By:/s/ DENNIS W. OLSON
-------------------
Dennis W. Olson, President
- 10 -
<PAGE>
EXHIBIT A
EXHIBIT OF ASSETS
_____________
172,711 shares of common stock of RAF Financial Corporation.
50,479,511 shares of common stock of Secutron Corporation.*
$ 2,000 cash
$ 409,000 consulting fee from Secutron Corp. under letter
agreement dated July 18, 1986.
$ 498,102 miscellaneous guarantees and repayments due to RAFCO
and related to the acquisition of all rights and title
to intellectual property, software, and development of
products by Robert C. Colvin (dba The Foresight Group)
and used in the analysis and asset/liability consulting
in the commercial banking industry.
possible cause of action against Harrop & Cie. S.A. in
a presently unknown amount.
$ 290,000 furniture, fixtures and equipment (net of depreciation
and amortization).
$ 424,867 loans receivable resulting from registered
representative recruiting, of which $119,130 is subject
to cancellation, under certain conditions, on June 1,
1995 and $73,554 is subject to cancellation, under
certain conditions, on July 20, 1995.
$ 5,149 note receivable
_____________
*Security for loans from MidRange Solutions and Secutron Corp. (See Exhibit C).
<PAGE>
EXHIBIT B
EXHIBIT OF CONTRACTS
1. Letter Agreement dated July 18, 1986, between RAFCO, Ltd. and Anthony R.
Kay.
2. Sublease dated January 30, 1992, between United Bank of Denver, N.A. and
RAFCO, Ltd. relating to the 31st Floor at 1700 Lincoln Street, Denver, CO
("United Sublease").
3. Sublease dated January 30, 1992, between Norwest Corporation and RAFCO,
Ltd. relating to the 32nd Floor at 1700 Lincoln Street, Denver, CO
("Norwest Sublease").
4. Amended and Restated STAR Alliance Agreement dated September 1, 1993, among
Sheshunoff Information Services Inc., Trepp & Company, Inc., Asset Backed
Securities Group, a division of Thomson Financial Networks Inc., and RAFCO,
Ltd.
5. Settlement Agreement dated January 24, 1994, among Sharon M. Gomez, RAF
Financial Corporation and RAFCO, Ltd.
<PAGE>
EXHIBIT C
EXHIBIT OF LIABILITIES
1. 10% Senior Subordinated Notes Due December 31, 2003:
Bradley Bank $ 400,000
Gladys Bradbury 100,000
Harry J. Dumond 100,000
Lucy Frisch 100,000
Earlene Fitzner 150,000
Robert A. Fitzner, Sr. 50,000
Robert A. and Susan E.
Fitzner 50,000
Manteno Bank 375,000
---------
Total $1,325,000 plus interest
2. Accounts Payable: $ 31,000 (estimate)
3. MidRange Solutions: $ 50,000 plus interest.
4. Secutron Corp.: $ 100,000 plus interest.
5. Guaranty Bank: $ 100,000 plus interest.
6. Davis & Ceriani, P.C. $ 60,174
7. Norwest Corporation $ 18,064
8. Unclaimed payments due under
expired RAFCO Notes $ 77,800
9. Future lease payments Amounts disclosed on RAFCO audited
financial statements at December 31,
1994.
10. Robert L. Long (expense $ 9,453
reimbursements)
<PAGE>
EXHIBIT F
LIST OF SHAREHOLDERS
NAME CLASS A COMMON STOCK
- ------------------------------ ----------------------
Robert A. Fitzner, Jr. 86,105 shares
Kanouff Corporation 28,039 shares
Dodie Englebrecht 3,964 shares
Steven Fishbein 3,964 shares
Peter O'Leary 3,964 shares
Arlene Wilson 3,964 shares
Total: 130,000 shares
RAFCO SERIES A
NAME PREFERRED STOCK
- ------------------------------------- ---------------------
Dean H. Boedeker 7,500 shares
Thomas Bremer 2,500 shares
Peter L. Conroy 10,000 shares
Harry J. Dumond 5,000 shares
Dorothy K. and Charles E. Englebrecht 2,500 shares
Robert A. and Susan E. Fitzner 5,000 shares
Earlene E. Fitzner 2,500 shares
S. M. Fishbein 2,500 shares
Lucy Frisch 5,000 shares
Harold W. Gorden 2,500 shares
Donald and Deloras D. Hunter 5,000 shares
Barbara M. Johnson 5,000 shares
Patrick F. and Sylvia A. McGee 5,000 shares
Peter K. O'Leary 2,500 shares
Pluss Poultry Company 10,000 shares
Steven Quoy 5,000 shares
Jack K. and Betty L. Robertson 2,500 shares
Fred F. Teal, M.D. 2,500 shares
Arlene M. and Gary Lee Wilson 5,000 shares
-------
Total: 87,500 shares
<PAGE>
EXHIBIT I
SUMMARY OF FRONTEER OUTSTANDING SHARES,
OPTIONS, AND WARRANTS
April 26, 1995 5,334,190
Incentive Stock Option Plan
(600,000 Authorized)
(Source: 10-K) -0-
5 Officers ($.95 per Share)
Expire: 8-25-97 340,000
PR Firm ($.70 per Share)
Expire: 3-9-96 80,000
RAF and Long ($.96 per Share) 156,250
---------
Fully Diluted Shares 5,910,440
<PAGE>
EXHIBIT 2.2
<PAGE>
SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 27th day of April, 1995,
between TELECOM*USA PUBLISHING COMPANY, an Iowa corporation ("Telecom"), and
FRONTEER DIRECTORY COMPANY, INC., a Colorado corporation ("Fronteer").
RECITALS
Telecom desires to purchase certain telephone directory business of
Fronteer; and
Fronteer desires to sell certain of its telephone directory business to
Telecom under the terms and conditions set out below.
AGREEMENT
In consideration of the mutual covenants contained in this Agreement,
Telecom and Fronteer agree as follows:
1. DIRECTORIES TO BE PURCHASED
Fronteer hereby sells and Telecom hereby purchases all of Fronteer's
telephone directories listed on Exhibit "A" attached hereto (the "Directories"),
including all product designs and drawings (subject to the rights of advertising
subscribers or third parties in such literary property), catalogs, data, files,
records, price lists, and other documents relating to suppliers of Fronteer, and
all customer lists and contracts, catalogs and marketing materials, and contract
lead systems used by Fronteer in connection with the Directories. This
transaction includes any patents, trademarks, licenses, copyrights, brand names,
and trade names owned by Fronteer (whether registered or subject to being
registered), proprietary information and trade secrets. The above described
items relating to the Directories published by Fronteer prior to Closing (as
described below) shall be delivered to Telecom on or before Closing. The above
described items relating to the Directories to be published by Fronteer after
Closing (as set out in Section 3 below) shall be delivered to Telecom on the
date each of those Directories is delivered to a printer for printing. In
addition, Telecom shall have the exclusive right to use any trade name used by
Fronteer for the Directories.
The purchase does not include Fronteer's equipment or other tangible
assets, except Fronteer's audiotex equipment used to provide audiotex service
for any of the Directories, such audiotex equipment listed on Exhibit "B"
attached hereto. After Closing, Fronteer shall continue to use the audiotex
equipment as set out in Section 3 below, but Telecom shall perform all
maintenance and service work on the audiotex equipment. In addition, Telecom
shall purchase two delivery vans from Fronteer at such time as Fronteer has
completed delivery of the Directories. The delivery vans are identified on
Exhibit "B." Telecom shall pay Fronteer the NADA wholesale blue book value for
the delivery vans. Fronteer shall deliver certificates of title to the vans to
Telecom free and clear of any and all liens.
<PAGE>
This transaction does not include any receivables of Fronteer, and Telecom
is NOT assuming any liabilities of Fronteer (except as set out below). Fronteer
is entitled to all receivables in connection with the 1995 editions and prior
editions of the Directories sold and published by Fronteer and the 1995 editions
of the Directories that are scheduled to be sold and published by Fronteer as
shown on Exhibit "A." Telecom is entitled to all receivables generated from the
1996 editions and future editions of the Directories sold and published by
Telecom. Telecom shall not publish its first edition of any of the Directories
until at least one year after the publication date of the last edition of such
Directory published by Fronteer.
Notwithstanding the above, Telecom shall assume Fronteer's future lease
obligations under Fronteer's two (2) short term leases for sales offices located
in Great Falls, Montana, and Idaho Falls, Idaho, as of Closing. Copies of such
leases are attached as Exhibits "C" and "D."
2. CONSIDERATION
The consideration for this Agreement is $3,200,000, payable $1,500,000 at
Closing, $400,000 within 15 days after Fronteer certifies that distribution of
the August 1995 edition of the Billings, Montana directory is complete, $500,000
within 15 days after Fronteer certifies that distribution of the final 1995
edition of the Directories is complete, subject to any adjustments pursuant to
Section 5 below, and $800,000 payable under certain Non-Competition Agreements
described in Section 10 below.
Closing shall take place at Telecom's offices, 201 Third Avenue S.E., Suite
500, Cedar Rapids, Iowa, at 2:00 p.m. on or before June 1, 1995, or at such
other time, date, and place as may be agreed by the parties ("Closing").
3. CONDUCT OF FRONTEER
Fronteer shall continue and complete all sales, production and distribution
of the Directories scheduled for publication in 1995. Sales, production, and
distribution of these Directories shall be completed by the 15th day of the
month immediately following the month of publication set out on Exhibit "A," in
the same manner as the last published editions of such Directories, including
but not limited to, the number of Directories printed and distributed as set out
on Exhibit "A," the distribution area, the pricing, the credit terms, the
quality and size of print and paper, and the general production standards.
Fronteer shall promptly pay all sales and production expenses for those editions
of the Directories and for all prior editions of the Directories.
If Fronteer fails to complete all sales, production and distribution of the
Directories as set out above, Telecom shall have, in addition to any other right
it may have, the right to terminate this Agreement and receive a full refund of
the purchase price previously paid.
Fronteer shall, at its cost, continue to provide all information, updates,
data and telephone lines for audiotex service included in any of the Directories
for one year after the date such Directory is published, in the same manner as
provided in the prior edition of such
<PAGE>
Directory. Fronteer shall have the right to continue to use the audiotex
equipment at no additional cost.
Beginning on the date hereof, Telecom shall have the right to conduct an
investigation of Fronteer and its telephone directory business as Telecom deems
necessary. Fronteer shall cooperate fully with Telecom in such investigation.
4. PRE-SALES
Fronteer may have made sales for editions of the Directories to be
published by Telecom ("Pre-Sales"), but will make no more Pre-Sales as of
Closing. Telecom shall have the right to review and approve any such Pre-Sales,
but such approval shall not be unreasonably withheld. All approved Pre-Sales
shall be delivered to Telecom, along with any deposits, accounts receivable,
contracts, finished copies and any other items held by Fronteer in connection
with such approved Pre-Sales, on or before Closing. Telecom shall pay Fronteer,
in addition to the consideration set out in Section 2 above, a commission equal
to 25% of the net cash amount of such approved Pre-Sales on or before the date
of the last payment due under Section 2 above.
5. NET CASH REVENUE REQUIREMENT
Fronteer represents and warrants that the total net cash revenue of the
1995 edition of the Directories sold and published by Fronteer (or the 1995
edition of the particular Directories listed on Exhibit "A" to be sold and
published by Fronteer, as the case may be) shall be at least $4,100,000. Net
cash revenue shall include all contracted for gross revenue in the form of cash
paid or accounts receivable (reduced by commissions paid to Bridgerland Phone
Book, Inc. and any other telephone company), including national revenue, but
shall exclude cancellations, promotional discounts, payment plan discounts, and
any revenue traded for value other than cash or accounts receivables. If the
total net cash revenue from the 1995 edition of the Directories is less than
$4,100,000, the consideration paid by Telecom shall be reduced by $0.75 on the
dollar for each dollar the total net cash revenue falls below $4,100,000, with
such reduction to be applied to the last payment due pursuant to Section 2
above. If the total net cash revenue from the 1995 edition of the Directories
is more than $4,100,000, the consideration paid by Telecom shall be increased by
$0.75 on the dollar for each dollar the total net cash revenue exceeds
$4,100,000, with such increase to be added to the last payment due pursuant to
Section 2 above. Telecom and Fronteer shall determine the net cash revenue on
or before October 15, 1995.
-3-
<PAGE>
6. REPRESENTATIONS AND WARRANTIES OF FRONTEER
Fronteer hereby represents and warrants to Telecom that:
DUE ORGANIZATION. Fronteer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Colorado.
AUTHORIZATION OF AGREEMENT. The execution and delivery of this Agreement
and consummation of the transactions contemplated by this Agreement have
been duly and validly authorized by all necessary corporate action on the
part of Fronteer and this Agreement constitutes a valid and legally binding
obligation of Fronteer enforceable according to its terms. The execution
and delivery of this Agreement, consummation of the transactions
contemplated by this Agreement and compliance by Fronteer with all the
provisions of this Agreement will not (i) violate any provision of the
terms of any applicable law, rule, or regulation of any governmental body
having jurisdiction; (ii) conflict with or result in a breach of any
provision of Fronteer's Articles of Incorporation or Bylaws or constitute a
default under any of the terms, conditions, or provisions of, or result in
the breach of, or accelerate or permit the acceleration of the performance
required by any note, bond, mortgage, indenture, license, agreement, or
other instrument or obligation of any nature whatsoever to which Fronteer
is a party; or (iii) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to Fronteer or any of its property or
assets. A copy of the resolution of Fronteer's Board of Directors
approving this transaction is attached hereto as Exhibit "E." Fronteer
makes NO representation or warranty as to the effect of any state or
federal law, rule or regulation regulating monopolies or anti-competitive
conduct on this Agreement or the transactions contemplated herein.
PAYMENT OF TAXES.
Fronteer has filed all federal, state, and local tax returns required to be
filed (including any use tax returns), and has made timely payment of all
taxes shown by those returns to be due and payable. All filed tax returns
are complete, true and correct in all material respects.
NO ADVERSE CONDITIONS. There are no adverse conditions or circumstances
that may interfere with Telecom's use and enjoyment of or opportunity to
operate the directory business of Fronteer to be purchased by Telecom
pursuant to this Agreement.
NO OMISSIONS OR MISREPRESENTATIONS. No representation, warranty, or
statement of Fronteer contains any misrepresentation or misstates any
material fact or omits to state any material fact necessary to make each
representation or warranty or statement in this Agreement, or in any
certificates or other instruments furnished or to be furnished to Telecom,
accurate and not misleading in any material respect.
-4-
<PAGE>
INVESTIGATION BY TELECOM. No investigation conducted by Telecom shall
affect the representations and warranties of Fronteer herein, and each such
representation and warranty shall survive the execution hereof.
CONSENTS. Fronteer has obtained the consent of each of its lenders to the
transactions contemplated by this Agreement, and each such lender has
agreed to release any and all liens or security interests covering the
Directories, the audiotex equipment, and delivery vans being purchased by
Telecom pursuant to the terms of this Agreement, such consents attached
hereto as Exhibit "F".
PUBLICATION AGREEMENTS. Fronteer is a party to an agreement with Peak
Media, Inc., in connection with the Twin Falls, Idaho directory, a copy of
such agreement is attached as Exhibit "G." In addition, Fronteer is a
party to an agreement with Upper Valley Phone Book, Inc., in connection
with the Idaho Falls, Idaho directory, a copy of such agreement is attached
as Exhibit "H."
TELEPHONE PUBLISHING CONTRACTS. Fronteer is a party to telephone
publishing contracts with Bridgerland Phone Book, Inc., Ronan Telephone
Company, Range Cooperative, Inc., and with the local telephone company
covering the Big Horn Basin directory, copies of which contracts are
attached hereto as Exhibit "I."
CORPORATE ACTIONS. Fronteer shall take such action and shall file all
documents necessary to comply with all state and federal statutes requiring
shareholder consent/approval of this Agreement and the transactions
contemplated hereby.
7. REPRESENTATIONS AND WARRANTIES OF TELECOM
Telecom represents and warrants to Fronteer that:
DUE ORGANIZATION. Telecom is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Iowa and has
the power and authority, corporate and otherwise, to own its properties and
conduct the business in which it is presently engaged.
AUTHORIZATION OF AGREEMENT. The execution and delivery of this Agreement
and consummation of the transactions contemplated by this Agreement have
been duly and validly authorized by all necessary corporate action on the
part of Telecom and this Agreement constitutes a valid and legally binding
obligation of Telecom enforceable according to its terms. The execution
and delivery of this Agreement, consummation of the transactions
contemplated by this Agreement and compliance by Telecom with all the
provisions of this Agreement will not (i) violate any provision of the
terms of any applicable law, rule, or regulation of any governmental body
having jurisdiction; (ii) conflict with or result in a breach of any
provision of Telecom's Articles of Incorporation or Bylaws or constitute a
default under any of the terms, conditions, or
-5-
<PAGE>
provisions of, or result in the breach of, or accelerate or permit the
acceleration of the performance required by any note, bond, mortgage,
indenture, license, agreement, or other instrument or obligation of any
nature whatsoever to which Telecom is a party; or (iii) violate any order,
writ, injunction, decree, statute, rule, or regulation applicable to
Telecom or any of its property or assets.
8. PUBLIC ANNOUNCEMENT
Except as required by state or federal law to obtain consent of this
transaction from the shareholders of Fronteer, Fronteer shall make no public
announcement of this Agreement or the transactions contemplated hereby without
the prior written consent of Telecom. Telecom shall make no public announcement
of this Agreement or the transactions contemplated hereby prior to Closing
without the prior written consent of Fronteer.
9. EMPLOYEES AND INDEPENDENT CONTRACTORS
Telecom is NOT, as a term or condition of this Agreement, assuming any of
Fronteer's obligations with respect to employment contracts or independent
contractor contracts, if any, and Telecom is NOT obligated to employ Fronteer's
employees. Telecom shall have the right, on or after the date hereof, to
contact Fronteer's sales managers and sales employees who work on any of the
Directories to discuss future employment with Telecom. Fronteer shall use its
best efforts to assist Telecom in Telecom's efforts to employ some or all of
Fronteer's employees. Telecom agrees to cooperate with Fronteer in Telecom's
hiring of Fronteer's sales managers or sales employees in an effort to allow
Fronteer to complete its obligations under Section 3. In addition, Fronteer
agrees not to solicit, hire, contract with or otherwise employ any employee(s)
of Telecom for a period of two (2) years after such employee(s) employment with
Telecom has terminated.
10. NON-COMPETE AGREEMENTS
In consideration of Telecom's purchase of the Directories, for a period of
ten (10) years, beginning on the date of Closing, and subject to Fronteer's
express obligations to complete the sales, publication and distribution of
certain Directories set out in Section 3 above, Fronteer shall not compete with
Telecom in Telecom's business in the states of Iowa, Minnesota, Michigan,
Missouri, Nebraska, South Dakota, Colorado, Wyoming, Idaho, Montana, Utah,
Illinois, Indiana, or Wisconsin, nor shall Fronteer deal with, invest in, lend
money to, guarantee loans of, make gifts to, advise, or by any other means
assist any other person to so compete with Telecom. If any court of competent
jurisdiction shall determine that these restrictions are unreasonable, the
parties, by this Agreement, agree to any restrictions that any such court would
find to be reasonable under the circumstances. Notwithstanding the terms set
out in this Section 10, Fronteer shall have the right to contract for directory
production services as a third party independent vendor for other telephone
directory publishers and may conduct CMR business (limited to "A" advertising
accounts only, as defined by Yellow Page Publishers Association).
-6-
<PAGE>
If Telecom, through no fault of Fronteer, does not exercise the option
described in Section 15 below, and complete its purchase of Fronteer's directory
publishing business in the state of North Dakota pursuant to the terms of the
Option Agreement, the areas to which this section applies shall automatically be
revised to only the distribution areas for all telephone directories published
by Telecom as of the date the option expires.
The employees, officers and/or directors of Fronteer listed on Exhibit "J"
attached hereto agree to execute Non-Competition Agreements in the form attached
hereto as Exhibit "K" on or before Closing. In addition to the consideration
paid to Fronteer for Telecom's purchase of the Directories, Telecom agrees to
pay each of such employees, officers and/or directors the amounts set out beside
their names on Exhibit "J." Such amounts shall be paid as follows: 50% at
Closing, 40% one year after the date of Closing, and 2% each year thereafter for
the next 5 years.
James Greff, an employee of Fronteer, agrees to execute the Non-
Competition Agreement in the form attached hereto as Exhibit "L" on or before
Closing. The amount to be paid to James Greff set out in the Non-Competition
Agreement is unrelated to the consideration described in Section 2 above.
11. INDEMNIFICATION OF TELECOM
Fronteer hereby indemnifies and saves Telecom harmless from and against any
and all costs, liability, or expenses, including reasonable attorneys' fees,
arising out of (i) any breach of warranty, covenant, agreement, or
representation made by Fronteer in this Agreement; (ii) any nonfulfillment of
any agreement of Fronteer under this Agreement or any misrepresentation in or
omission from this Agreement or from any certificates or other instrument
furnished or to be furnished to Telecom; (iii) any cause of action or expense
directly or indirectly related to Fronteer's sale, publication or distribution
of the editions of the Directories published by Fronteer; and (iv) all actions,
suits, proceedings, demands, assessments, judgments, costs, and expenses
incident to any of the foregoing.
12. INDEMNIFICATION OF FRONTEER
Telecom hereby indemnifies and saves Fronteer harmless from and against any
and all costs, liability, or expenses, including reasonable attorneys' fees,
arising out of (i) any breach of warranty, covenant, agreement, or
representation made by Telecom in this Agreement; (ii) any nonfulfillment of any
agreement of Telecom under this Agreement or any misrepresentation in or
omission from this Agreement or from any certificates or other instrument
furnished or to be furnished to Fronteer; and (iii) all actions, suits,
proceedings, demands, assessments, judgments, costs, and expenses incident to
any of the foregoing.
-7-
<PAGE>
13. CONFIDENTIAL INFORMATION
DEFINITION. For purposes of this Section, "Confidential Information" means
any information or compilation of information not generally known, which is
proprietary to the business, and includes, without limitation, trade
secrets, inventions, and information pertaining to development, marketing,
sales, accounting, and licensing of the business products and services,
customer information contained in customer records, working papers or
correspondence files, all financial information contained in federal and
state tax returns, and the financial terms of this transaction.
Information shall be treated as Confidential Information irrespective of
its source and all information that is identified as being "confidential",
"trade secret", or is identified or marked with any similar reference, or
any information that Fronteer treats as confidential or Telecom should know
is being treated by Fronteer as confidential, shall be presumed to be
Confidential Information.
COVENANTS BY PARTIES. Telecom and Fronteer agree and covenant with respect
to all Confidential Information received or learned by either of them as
follows:
A. that they will treat as confidential all Confidential Information
made available to them or any of their employees, agents or
representatives;
B. that they will maintain the same in a secure place and limit
access to the Confidential Information to those employees, agents
and representatives to whom it is necessary to disclose the
Confidential Information in furtherance of the transactions
contemplated by this Agreement;
C. that they and their employees, agents and representatives will
not copy any Confidential Information (unless authorized),
disclose any Confidential Information to any unauthorized party,
or use any Confidential Information for any purpose, including
competition with the other party or solicitation of the other
party's customers; and
D. that each party will assume liability for any breach of this
paragraph by it or any of its employees, agents or
representatives.
14. CONDITIONS
Telecom's obligations hereunder, unless waived by Telecom in writing, are
expressly contingent upon the following: (A) Telecom being successful in
reaching employment arrangements with at least 75% of the employees of Fronteer
listed on Exhibit "M" attached hereto, under Telecom's customary employment
terms; (B) Fronteer obtaining assignments to Telecom of the telephone publishing
contracts with Bridgerland Phone Book, Inc., Ronan Telephone Company, and with
the local telephone company covering the Big Horn Basin directory; (C) Fronteer
using all reasonable efforts to acquire a similar assignment from Range
-8-
<PAGE>
Cooperative, Inc.; and (D) Fronteer being released from any and all obligations
or liability pursuant to its agreements with Peak Media, Inc. and Upper Valley
Phone Book, Inc., as described above, with Fronteer assigning Telecom any and
all rights Fronteer may have in and to any agreements from Peak Media, Inc. or
Upper Valley Book, Inc., not to compete with Fronteer in the telephone directory
publishing business.
15. OPTION AGREEMENT
The parties hereto expressly acknowledge that Telecom and Fronteer have, of
even date herewith, entered into an Option Agreement under which Telecom shall
have an option to acquire all of Fronteer's telephone directory business in the
state of North Dakota under the terms set out in the Option Agreement.
16. MISCELLANEOUS
BROKER OR FINDER. Telecom and Fronteer represent that no person is
entitled to any brokerage commission, finder's fee, or any other like
payment in connection with any transaction contemplated by this Agreement
by reason of the action of any party to this Agreement.
SEVERABILITY. If any provision of this Agreement is held for any reason to
be unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall, nevertheless, remain in full force and effect.
APPLICABLE LAW. This Agreement shall be construed in accordance with the
laws of the State of Iowa. Venue for any action to enforce this Agreement
shall be in Iowa or in North Dakota at the option of the party filing such
action.
NOTICES. Any notices or other communications required or permitted under
this Agreement shall be sufficiently given if sent by certified mail,
return receipt requested, postage prepaid, addressed as follows:
TELECOM: Telecom*USA Publishing Company
P.O. Box 3162
Cedar Rapids, IA 52406-3162
Attn: Arthur L. Christoffersen
FRONTEER: Fronteer Directory Company, Inc.
216 North 23rd Street
Bismarck, ND 58501
Attn: Dennis W. Olson
CAPTIONS. The captions in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
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<PAGE>
USE OF FACSIMILE. The parties hereto expressly consent to the use of
facsimile signatures and agree that such facsimile signatures shall be
binding as originals.
SURVIVAL. Each and every provision of this Agreement shall survive the
execution hereof and shall remain binding on the parties hereto until all
performance called for hereunder is complete.
BINDING EFFECT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no party hereto
may make any assignment of this Agreement or any interest herein without
the prior written consent of the other parties hereto. Assignments without
such consent shall be void.
TELECOM*USA PUBLISHING COMPANY
By:/s/ ARTHUR L. CHRISTOFFERSEN
----------------------------
Arthur L. Christoffersen, President
FRONTEER DIRECTORY COMPANY, INC.
By:/s/ DENNIS W. OLSON
-------------------
Dennis W. Olson, President
By their signatures below, the undersigned agree to execute the Non-Competition
Agreements described in Section 10.
/s/ DENNIS W. OLSON /s/ MARLOW E. LINDBLOM
- ---------------------------------------- ------------------------------
Dennis W. Olson Marlow E. Lindblom
/s/ ROLAND HAUX
- ------------------------------ ------------------------------
Edwin Dressler Roland Haux
- ------------------------------ ------------------------------
Randall L. Gowin James B. Qualls
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<PAGE>
/s/ LARRY A. SCOTT
- ------------------------------ ------------------------------
James Greff Larry A. Scott
/s/ LANCE OLSON, CPA
- ------------------------------ ------------------------------
Lance L. Olson Kelly Helgeson
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<PAGE>
EXHIBIT "A"
MINIMUM
DISTRIBUTION NUMBER
DIRECTORY DATE DISTRIBUTED
- ---------- ------------ ------------
Big Sky Central, MT March 1995 23,000
Billings, MT August 1995 117,000
Big Horn Basin, WY April 1995 40,000
Bridgerland, UT October 1995 43,000
Central, SD March 1995 27,000
Great Falls, MT January 1995 103,000
Twin Falls, ID January 1995 93,000
Range, MT April 1995 22,000
Ronan, MT March 1995 22,000
Idaho Falls, ID May 1995 146,000
Bozeman, MT January 1995 68,000
<PAGE>
EXHIBIT "J"
EMPLOYEES/OFFICERS/DIRECTORS SIGNING
NON-COMPETITION AGREEMENTS
Dennis W. Olson $250,000
Marlow E. Lindblom $170,000
Roland Haux $140,000
Larry A. Scott $ 80,000
James B. Qualls $ 50,000
Lance L. Olson $ 50,000
Edwin Dressler $ 20,000
Randall L. Gowin $ 20,000
Kelly Helgeson $ 20,000
<PAGE>
EXHIBIT 2.3
<PAGE>
OPTION AGREEMENT
This Option Agreement is made and entered into this 27th day of April,
1995, between FRONTEER DIRECTORY COMPANY, INC., a Colorado corporation
("Fronteer"), and TELECOM*USA PUBLISHING COMPANY, an Iowa corporation
("Telecom").
RECITALS
Fronteer and Telecom have, of even date herewith, entered into a Sale and
Purchase Agreement whereby Telecom is acquiring Fronteer's telephone directory
business in the states of Idaho, Montana, Utah and Wyoming (the "Idaho Sale
Agreement"). In consideration of the Idaho Sale Agreement, and the additional
consideration set out below, Fronteer is willing to grant, and Telecom desires
to receive, the option set out below.
NOW THEREFORE, it is agreed between the parties as follows:
1. OPTION GRANTED. Fronteer grants Telecom the right and option to
acquire all of Fronteer's telephone directories listed on Exhibit "A" attached
hereto (the "Directories"), the sale and purchase of the Directories shall be
pursuant to the terms of a Sale and Purchase Agreement substantially in the form
of Exhibit "B" attached hereto (the "North Dakota Sale Agreement"). As part of
this transaction, Telecom shall receive assignments from Fronteer of all of
Fronteer's rights under any directory publication contracts with telephone
utility companies.
2. OPTION CONSIDERATION. In addition to entering into the Idaho Sale
Agreement, Telecom has, of even date herewith, loaned Fronteer $500,000 as
consideration for this Option Agreement, said loan evidenced by a promissory
note of even date herewith in the form of Exhibit "C" attached hereto. The
promissory note is non-interest bearing and non-recourse, secured by a first
lien security interest in the publishing rights to the Fargo, North Dakota
directory. Upon Telecom's exercise of the option granted by this Option
Agreement, the full amount of the promissory note shall be applied to the
initial payment due by Telecom under the North Dakota Sale Agreement. If
Fronteer materially fails to perform its obligations under the terms of this
Option Agreement or files for protection from creditors under the United States
Bankruptcy Code during the term of this Option Agreement, then this note shall
be immediately due and payable and Telecom may then exercise its rights under
the applicable security agreement covering the publishing rights in the Fargo,
North Dakota directory. If Fronteer does not default under the terms of this
Option Agreement or file for protection from creditors under the United States
Bankruptcy Code during the term of this Option Agreement, and if Telecom does
not exercise the option granted herein, the full amount of the promissory note
shall be forgiven by Telecom. Each party hereto agrees to execute any
additional documents reasonably necessary to effectuate the terms hereof.
3. PRICE. The price for the Directories shall be equal to the total net
cash revenue for the most recent edition of the Directories published and
distributed by Fronteer as of the date of Closing (as described below, except
the Souris River directory). Net cash revenue shall include all contracted for
gross revenue in the form of cash paid or accounts receivable (reduced
<PAGE>
by any telephone company commissions), including national revenue, but shall
exclude cancellations, promotional discounts, payment plan discounts and any
revenue traded for value other than cash or accounts receivable. The price
shall be subject to the adjustments described in Section 6 below.
The price shall be increased by an amount equal to the net cash
revenue for the most recent edition of the telephone directory for the Souris
River, North Dakota area, published and distributed by Fronteer as of the date
of Closing. Net cash revenue shall be calculated as set out above. If the
directory publication contract with the telephone utility company for the Souris
River directory does not have five or more editions remaining on its term, the
price shall be reduced by 20% of the net cash revenue for the Souris River
directory multiplied by the sum of five minus the number of editions included in
the remaining term of such directory publication contract. If the directory
publishing contract allows the telephone utility company to cancel or terminate
the contract without fault of Fronteer, any editions subject to such right shall
not be deemed part of the remaining term of the contract. If Telecom continues
to publish the Souris River directory under the original term of the directory
publishing contract or any renewal, extension or replacement of such contract,
with the same telephone utility company, Telecom shall pay Fronteer 20% of the
net cash revenue for each year such directory is published by Telecom for up to
five years, less any editions for which Fronteer was compensated at Closing.
4. METHOD OF PAYMENT. Twenty-five percent (25%) of the price shall be
paid to the officers/shareholders/directors listed on Exhibit "D" attached
hereto in the percentages set out beside each such officers/shareholders/
directors' name, with such amount payable as set out in the attached North
Dakota Sale Agreement. The remaining seventy-five percent (75%) of the price
shall be divided by the total number of Directories to be published and
distributed by Fronteer under the North Dakota Sale Agreement to determine
the "per directory price." At Closing, Telecom shall pay Fronteer the "per
directory price" for the number of Directories distributed by Fronteer as of
Closing. Thereafter, in increments of not less than $500,000, Telecom shall
pay Fronteer the "per directory price" for the number of Directories Fronteer
certifies have been delivered; provided, however, Telecom shall have the
right to retain the greater of (i) $500,000, or (ii) the per directory price
for the last two (2) Directories scheduled to be published by Fronteer under
this Agreement (up to a maximum of $1,000,000) until Telecom receives
certification that the last Directories have been distributed.
5. MANNER OF EXERCISE. Telecom may exercise this Option at any time on
or after June 1, 1997. This Option expires on June 1, 1999, unless sooner
exercised by Telecom. This Option may be exercised by written notice from
Telecom to Fronteer, specifying a closing date not less than 90 days from the
date of such notice ("Closing"). Upon receipt of such notice from Telecom,
Fronteer shall be responsible for completing all sales, production and
distribution of any edition of the Directories for which such sales, production
or distribution has commenced prior to the date of the notice.
6. ADJUSTMENT TO OPTION PRICE. The rights to be acquired by Telecom to
publish a telephone directory for Southeast, North Dakota shall include an
assignment of the
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<PAGE>
directory publication contract with the telephone utility company in that area
with at least three directory editions remaining on its term. If the directory
publication contract with the telephone utility company does not have three or
more editions remaining on its term, the price for the Directories shall be
reduced by 20% of the net cash revenue for the Southeast, North Dakota directory
multiplied by the sum of three minus the number of editions included in the
remaining term of such directory publication contract. If the directory
publishing contract allows the telephone utility company to cancel or terminate
the contract without fault of Fronteer, any editions subject to such right shall
not be deemed part of the remaining term of the contract. If Telecom continues
to publish the Southeast, North Dakota directory under the original term of the
directory publishing contract or any renewal, extension, or replacement of such
contract, with the same telephone utility company, Telecom shall pay Fronteer
20% of the net cash revenue for each year such directory is published by Telecom
for up to three years, less any editions for which Fronteer was compensated at
Closing.
7. ALLOCATION OF PURCHASE PRICE. The price for the Directories shall be
allocated 25% to the Non-Competition Agreements described in the North Dakota
Sale Agreement below (with a maximum to be paid for the Non-Competition
Agreements of $1,200,000), and 75% (or more if the maximum is met for the Non-
Competition Agreements) to Fronteer for the assets described above.
8. CONDUCT OF BUSINESS. From the date hereof until June 1, 1999, unless
the option set out herein is sooner exercised by Telecom, Fronteer shall carry
on its business in the usual and ordinary manner. Fronteer will not enter into
any contracts or make any commitments affecting the operation of the business
not in the ordinary course of business or sell any publishing or other rights in
the Directories. During the term of this Option Agreement, Telecom, through its
agents and representatives, shall have full and complete access, at all
reasonable times, to the premises and to all of Fronteer's books and records.
Fronteer shall provide Telecom with copies of all financial records and filings
reasonably requested by Telecom.
9. APPROVAL. This Option Agreement has been approved at a duly held
meeting of Fronteer's Board of Directors. A certified copy of the Director's
Resolutions has been delivered to Telecom.
10. BROKER OR FINDER. Telecom and Fronteer represent that no person is
entitled to any brokerage commission, finder's fee, or any other like payment in
connection with any transaction contemplated by this Agreement by reason of the
action of any party to this Option Agreement.
11. SEVERABILITY. If any provision of this Option Agreement is held for
any reason to be unenforceable by a court of competent jurisdiction, the
remainder of this Option Agreement shall, nevertheless, remain in full force and
effect.
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<PAGE>
12. APPLICABLE LAW. This Option Agreement shall be construed in
accordance with the laws of the State of Iowa. Venue for any action to enforce
this Option Agreement shall be in Iowa or in North Dakota, at the option of the
party filing such action.
13. NOTICES. Any notices or other communications required or permitted
under this Option Agreement shall be sufficiently given if sent by certified
mail, return receipt
requested, postage prepaid, addressed as follows:
TELECOM: Telecom*USA Publishing Company
P.O. Box 3162
Cedar Rapids, IA 52406-3162
Attn: Arthur L. Christoffersen
Fronteer: Fronteer Directory Company, Inc.
216 North 23rd Street
Bismarck, ND 58501
Attn: Dennis W. Olson
14. CAPTIONS. The captions in this Option Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
15. USE OF FACSIMILE. The parties hereto expressly consent to the use of
facsimile signatures and agree that such facsimile signatures shall be binding
as originals.
16. SURVIVAL. Each and every provision of this Option Agreement shall
survive the execution hereof and shall remain binding on the parties hereto
until all performance called for hereunder is complete.
17. BINDING EFFECT. This Option Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, that no party hereto
may make any assignment of this Option Agreement or any interest herein without
the prior written consent of the other parties hereto. Assignments without such
consent shall be void.
TELECOM*USA PUBLISHING COMPANY, INC.
By:/s/ ARTHUR L. CHRISTOFFERSEN
---------------------------------------------------------
Arthur L. Christoffersen, President
FRONTEER DIRECTORY COMPANY, INC.
By:/s/ DENNIS W. OLSON
---------------------------------------------------------
Dennis W. Olson
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<PAGE>
EXHIBIT "A"
Badlands Consolidated
Bismarck/Mandan Metro
Durum Triangle
Fargo
Jamestown
Williston Basin
Souris River
Southeast
Valley City
<PAGE>
EXHIBIT "B"
SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of _________________,
199___, between TELECOM USA PUBLISHING COMPANY, an Iowa corporation ("Telecom"),
and FRONTEER DIRECTORY COMPANY, INC., a Colorado corporation ("Fronteer").
RECITALS
Telecom desires to purchase certain telephone directory business of
Fronteer; and
Fronteer desires to sell certain of its telephone directory business to
Telecom under the terms and conditions set out below.
AGREEMENT
In consideration of the mutual covenants contained in this Agreement,
Telecom and Fronteer agree as follows:
1. DIRECTORIES TO BE PURCHASED
Fronteer hereby sells and Telecom hereby purchases all of Fronteer's
telephone directories in North Dakota, including but not limited to the
directories listed on Exhibit "A" attached hereto (the "Directories"), including
all product designs and drawings (subject to the rights of advertising
subscribers or third parties in such literary property), catalogs, data, files,
records, price lists, and other documents relating to suppliers of Fronteer, and
all customer lists and contracts, catalogs and marketing materials, and contract
lead systems used by Fronteer in connection with the Directories. This
transaction includes any patents, trademarks, licenses, copyrights, brand names,
and trade names owned by Fronteer (whether registered or subject to being
registered), proprietary information and trade secrets. The above described
items relating to the Directories published by Fronteer prior to Closing (as
described below) shall be delivered to Telecom on or before Closing. The above
described items relating to the Directories to be published by Fronteer after
Closing (as set out in Section 3 below) shall be delivered to Telecom on the
date each of those Directories is delivered to a printer for printing. In
addition, Telecom shall have the exclusive right to use any trade name used by
Fronteer for the Directories.
The purchase does not include Fronteer's equipment or other tangible
assets, except Fronteer's audiotex equipment used to provide audiotex service
for any of the Directories, such audiotex equipment listed on Exhibit "B"
attached hereto. After Closing, Fronteer shall continue to use the audiotex
equipment as set out in Section 3 below, but Telecom shall perform all
maintenance and service work on the audiotex equipment.
<PAGE>
This transaction does not include any receivables of Fronteer, and Telecom
is NOT assuming any liabilities of Fronteer. Fronteer is entitled to all
receivables in connection with the 199___ editions and prior editions of the
Directories sold and published by Fronteer and the 199___ editions of the
Directories that are scheduled to be sold and published by Fronteer as shown on
Exhibit "A." Telecom is entitled to all receivables generated from the 199___
editions and future editions of the Directories sold and published by Telecom.
Telecom shall not publish its first edition of any Directories until at least
one year after the publication date of the last edition of such Directory
published by Fronteer.
2. CONSIDERATION
The consideration for this Agreement is $_____________. Twenty-five
percent (25%) of the purchase price shall be paid to the
officers/shareholders/directors pursuant to the Non-Competition Agreements
described in Section 10 below (up to a maximum of $1,200,000). The remaining
seventy-five percent (75%) of the purchase price shall be divided by the total
number of Directories to be published and distributed by Fronteer under this
Agreement (the "per directory price"). At Closing, Telecom shall pay Fronteer
the per directory price for the number of Directories distributed by Fronteer as
of Closing. Thereafter, in increments of not less than $500,000 each, Telecom
shall pay Fronteer the per directory price for the number of Directories
Fronteer certifies have been delivered; provided, however, Telecom shall have
the right to retain the greater of (i) $500,000, or (ii) the per directory price
for the last two (2) Directories scheduled to be published by Fronteer under
this Agreement (up to a maximum of $1,000,000) until Telecom receives
certification that the last Directories have been distributed.
The purchase price shall be adjusted pursuant to Section 5 below and as
follows:
The rights to be acquired by Telecom to publish a telephone
directory for Southeast, North Dakota shall include an assignment of
the directory publication contract with the telephone utility company
in that area with at least three directory editions remaining on its
term. If the directory publication contract with the telephone
utility company does not have three or more editions remaining on its
term, the purchase price shall be reduced by 20% of the net cash
revenue for the Southeast, North Dakota directory multiplied by the
sum of three minus the number of editions included in the remaining
term of such directory publication contract. If the directory
publishing contract allows the telephone utility company to cancel or
terminate the contract without fault of Fronteer, any editions subject
to such right shall not be deemed part of the remaining term of the
contract. If Telecom continues to publish the Southeast, North Dakota
directory under the original term of the directory publishing contract
or any renewal, extension, or replacement of such contract, with the
same telephone utility company, Telecom shall pay Fronteer 20% of the
net cash revenue for each year such directory is published by Telecom
for up to three years, less any editions for which Fronteer was
compensated at Closing.
<PAGE>
The rights to be acquired by Telecom to publish a telephone
directory for the Souris River, North Dakota area shall include an
assignment of the directory publication contract with the telephone
utility company in that area with at least five directory editions
remaining on its term. If the directory publication contract with the
telephone utility company does not have five or more editions
remaining on its term, the purchase price shall be reduced by 20% of
the net cash revenue for the Souris River directory multiplied by the
sum of five (5) minus the number of editions included in the remaining
term of such directory publication contract. If the directory
publishing contract allows the telephone utility company to cancel or
terminate the contract without fault of Fronteer, any editions subject
to such right shall not be deemed part of the remaining term of the
contract. If Telecom continues to publish the Souris River directory
under the original term of the directory publishing contract or any
renewal, extension, or replacement of such contract, with the same
telephone utility company, Telecom shall pay Fronteer 20% of the net
cash revenue for each year such directory is published by Telecom for
up to five years, less any editions for which Fronteer was compensated
at Closing.
Closing shall take place at Telecom's offices, 201 Third Avenue S.E., Suite
500, Cedar Rapids, Iowa, at 2:00 p.m. on or before __________________, 199___,
or at such other time, date, and place as may be agreed by the parties
("Closing").
3. CONDUCT OF FRONTEER
Fronteer shall continue and complete all sales, production and distribution
of the Directories for which Fronteer had commenced sales, production or
distribution on the date Telecom notified Fronteer of Telecom's election to
exercise its option to purchase the Directories. Sales, production, and
distribution of these Directories shall be completed by the 15th day of the
month immediately following the month of publication set out on Exhibit "A," in
the same manner as the last published editions of such Directories, including
but not limited to, the number of Directories printed and distributed, the
distribution area, the pricing, the credit terms, the quality and size of print
and paper, and the general production standards. Fronteer shall promptly pay
all sales and production expenses for those editions of the Directories and for
all prior editions of the Directories.
If Fronteer fails to complete all sales, production and distribution of the
Directories as set out above, Telecom shall have, in addition to any other right
it may have, the right to terminate this Agreement and receive a full refund of
the purchase price previously paid.
Fronteer shall, at its cost, continue to provide all information, updates,
data and telephone lines for audiotex service included in any of the Directories
for one year after the date such Directory is published, in the same manner as
provided in the prior edition of such
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<PAGE>
Directory. Fronteer shall have the right to continue to use the audiotex
equipment at no additional cost.
Beginning on the date hereof, Telecom shall have the right to conduct an
investigation of Fronteer and its telephone directory business as Telecom deems
necessary. Fronteer shall cooperate fully with Telecom in such investigation.
4. PRE-SALES
Fronteer may have made sales for editions of the Directories to be
published by Telecom ("Pre-Sales"), but will make no more Pre-Sales as of
Closing. Telecom shall have the right to review and approve any such Pre-Sales,
but such approval shall not be unreasonably withheld. All approved Pre-Sales
shall be delivered to Telecom, along with any deposits, accounts receivable,
contracts, finished copies and any other items held by Fronteer in connection
with such approved Pre-Sales, on or before Closing. Telecom shall pay Fronteer,
in addition to the consideration set out in Section 2 above, a commission equal
to 25% of the net cash amount of such approved Pre-Sales on or before the date
of the last payment due under Section 2 above.
5. NET CASH REVENUE REQUIREMENT
Fronteer represents and warrants that the total net cash revenue of the
editions of the Directories sold and published by Fronteer listed on Exhibit "A"
shall be at least $___________. Net cash revenue shall include all contracted
for gross revenue in the form of cash paid or accounts receivable (reduced by
commissions paid to any telephone company), including national revenue, but
shall exclude cancellations, promotional discounts, payment plan discounts, and
any revenue traded for value other than cash or accounts receivable. If the
total net cash revenue for the applicable edition of the Directories is less
than the amount set out above, the consideration paid by Telecom shall be
reduced dollar for dollar for each dollar the total net cash revenue falls below
such amount, with such reduction to be applied to the last payment due pursuant
to Section 2 above. If the total net cash revenue from the applicable edition
of the Directories is more than the amount set out above, the consideration paid
by Telecom shall be increased dollar for dollar for each dollar the total net
cash revenue exceeds the amount set out above, with such increase to be added to
the last payment due pursuant to Section 2 above. Telecom and Fronteer shall
determine the net cash revenue on or before _________.
6. REPRESENTATIONS AND WARRANTIES OF FRONTEER
Fronteer hereby represents and warrants to Telecom that:
DUE ORGANIZATION. Fronteer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Colorado.
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<PAGE>
AUTHORIZATION OF AGREEMENT. The execution and delivery of this Agreement
and consummation of the transactions contemplated by this Agreement have
been duly and validly authorized by all necessary corporate action on the
part of Fronteer and this Agreement constitutes a valid and legally binding
obligation of Fronteer enforceable according to its terms. The execution
and delivery of this Agreement, consummation of the transactions
contemplated by this Agreement and compliance by Fronteer with all the
provisions of this Agreement will not (i) violate any provision of the
terms of any applicable law, rule, or regulation of any governmental body
having jurisdiction; (ii) conflict with or result in a breach of any
provision of Fronteer's Articles of Incorporation or Bylaws or constitute a
default under any of the terms, conditions, or provisions of, or result in
the breach of, or accelerate or permit the acceleration of the performance
required by any note, bond, mortgage, indenture, license, agreement, or
other instrument or obligation of any nature whatsoever to which Fronteer
is a party; or (iii) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to Fronteer or any of its property or
assets. Fronteer makes NO representation or warranty as to the effect of
any state or federal law, rule or regulation regulating monopolies or anti-
competitive conduct on this Agreement or the transactions contemplated
herein.
PAYMENT OF TAXES. Fronteer has filed all federal, state, and local tax
returns required to be filed (including any use tax returns), and has made
timely payment of all taxes shown by those returns to be due and payable.
All filed tax returns are complete, true and correct in all material
respects.
NO ADVERSE CONDITIONS. There are no adverse conditions or circumstances
that may interfere with Telecom's use and enjoyment of or opportunity to
operate the directory business of Fronteer to be purchased by Telecom
pursuant to this Agreement.
NO OMISSIONS OR MISREPRESENTATIONS. No representation, warranty, or
statement of Fronteer contains any misrepresentation or misstates any
material fact or omits to state any material fact necessary to make each
representation or warranty or statement in this Agreement, or in any
certificates or other instruments furnished or to be furnished to Telecom,
accurate and not misleading in any material respect.
INVESTIGATION BY TELECOM. No investigation conducted by Telecom shall
affect the representations and warranties of Fronteer herein, and each such
representation and warranty shall survive the execution hereof.
CONSENT AND RELEASES. Fronteer has obtained the consent of each of its
lenders to the transactions contemplated by this Agreement, and each such
lender has agreed to release any and all liens or security interests
covering the Directories and the audiotex equipment.
-5-
<PAGE>
7. REPRESENTATIONS AND WARRANTIES OF TELECOM
Telecom represents and warrants to Fronteer that:
DUE ORGANIZATION. Telecom is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Iowa and has
the power and authority, corporate and otherwise, to own its properties and
conduct the business in which it is presently engaged.
AUTHORIZATION OF AGREEMENT. The execution and delivery of this Agreement
and consummation of the transactions contemplated by this Agreement have
been duly and validly authorized by all necessary corporate action on the
part of Telecom and this Agreement constitutes a valid and legally binding
obligation of Telecom enforceable according to its terms. The execution
and delivery of this Agreement, consummation of the transactions
contemplated by this Agreement and compliance by Telecom with all the
provisions of this Agreement will not (i) violate any provision of the
terms of any applicable law, rule, or regulation of any governmental body
having jurisdiction; (ii) conflict with or result in a breach of any
provision of Telecom's Articles of Incorporation or Bylaws or constitute a
default under any of the terms, conditions, or provisions of, or result in
the breach of, or accelerate or permit the acceleration of the performance
required by any note, bond, mortgage, indenture, license, agreement, or
other instrument or obligation of any nature whatsoever to which Telecom is
a party; or (iii) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to Telecom or any of its property or
assets.
8. PUBLIC ANNOUNCEMENT
Except as required by state or federal law, Fronteer shall make no public
announcement of this Agreement or the transactions contemplated hereby without
the prior written consent of Telecom. Telecom shall make no public announcement
of this Agreement or the transactions contemplated hereby prior to Closing
without the prior written consent of Fronteer.
9. EMPLOYEES AND INDEPENDENT CONTRACTORS
Telecom is NOT, as a term or condition of this Agreement, assuming any of
Fronteer's obligations with respect to employment contracts or independent
contractor contracts, if any, and Telecom is NOT obligated to employ Fronteer's
employees. Telecom shall have the right, on or after the date hereof, to
contact Fronteer's sales managers and sales employees who work on any of the
Directories to discuss future employment with Telecom. Fronteer agrees to use
its best efforts to assist Telecom in Telecom's efforts to employ employees of
Fronteer, in Telecom's sole discretion. Telecom agrees to cooperate with
Fronteer in Telecom's hiring of Fronteer's sales managers or sales employees in
an effort to allow Fronteer to complete its obligations under Section 3. In
addition, Fronteer agrees not to solicit, hire, contract with, or otherwise
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<PAGE>
employ any employee(s) of Telecom for a period of two (2) years after such
employee(s) employment with Telecom has terminated.
10. NON-COMPETE AGREEMENTS
In consideration of Telecom's purchase of the Directories, for a period of
ten (10) years, beginning on the date of Closing, and subject to Fronteer's
express obligations to complete the sales, publication and distribution of
certain Directories set out in Section 3 above, Fronteer shall not compete with
Telecom in Telecom's business in the states of Iowa, Minnesota, Michigan,
Missouri, Nebraska, North Dakota, South Dakota, Colorado, Wyoming, Idaho,
Montana, Utah, Illinois, Indiana, or Wisconsin, nor shall Fronteer deal with,
invest in, lend money to, guarantee loans of, make gifts to, advise, or by any
other means assist any other person to so compete with Telecom. If any court of
competent jurisdiction shall determine that these restrictions are unreasonable,
the parties, by this Agreement, agree to any restrictions that any such court
would find to be reasonable under the circumstances. Notwithstanding the terms
set out in this Section 10, Fronteer shall have the right to contract for
directory production services as a third party independent vendor for other
telephone directory publishers and may conduct CMR business (limited to "A"
advertising accounts only as defined by Yellow Page Publishers Association).
The officers and/or directors of Fronteer listed on Exhibit "C" attached
hereto agree to execute Non-Competition Agreements in the form attached hereto
as Exhibit "D" on or before Closing. In addition to the consideration paid to
Fronteer for Telecom's purchase of the Directories, Telecom agrees to pay a
total of $_____________ (a maximum of $1,200,000) to such officers and/or
directors according to the percentages set out beside their names on Exhibit
"C." Such amounts shall be paid as follows: 50% at Closing, 40% one year after
the date of Closing, and 2% each year thereafter for the next 5 years.
11. INDEMNIFICATION OF TELECOM
Fronteer hereby indemnifies and saves Telecom harmless from and against any
and all costs, liability, or expenses, including reasonable attorneys' fees,
arising out of (i) any breach of warranty, covenant, agreement, or
representation made by Fronteer in this Agreement; (ii) any nonfulfillment of
any agreement of Fronteer under this Agreement or any misrepresentation in or
omission from this Agreement or from any certificates or other instrument
furnished or to be furnished to Telecom; (iii) any cause of action or expense
directly or indirectly related to Fronteer's sale, publication or distribution
of the editions of the Directories published by Fronteer; and (iv) all actions,
suits, proceedings, demands, assessments, judgments, costs, and expenses
incident to any of the foregoing.
12. INDEMNIFICATION OF FRONTEER
Telecom hereby indemnifies and saves Fronteer harmless from and against any
and all costs, liability, or expenses, including reasonable attorneys' fees,
arising out of (i) any breach
-7-
<PAGE>
of warranty, covenant, agreement, or representation made by Telecom in this
Agreement; (ii) any nonfulfillment of any agreement of Telecom under this
Agreement or any misrepresentation in or omission from this Agreement or from
any certificates or other instrument furnished or to be furnished to Fronteer;
and (iii) all actions, suits, proceedings, demands, assessments, judgments,
costs, and expenses incident to any of the foregoing.
13. CONFIDENTIAL INFORMATION
DEFINITION. For purposes of this Section, "Confidential Information" means
any information or compilation of information not generally known, which is
proprietary to the business, and includes, without limitation, trade
secrets, inventions, and information pertaining to development, marketing,
sales, accounting, and licensing of the business products and services,
customer information contained in customer records, working papers or
correspondence files, all financial information contained in federal and
state tax returns, and the financial terms of this transaction.
Information shall be treated as Confidential Information irrespective of
its source and all information that is identified as being "confidential",
"trade secret", or is identified or marked with any similar reference, or
any information that Fronteer treats as confidential or Telecom should know
is being treated by Fronteer as confidential, shall be presumed to be
Confidential Information.
COVENANTS BY PARTIES. Telecom and Fronteer agree and covenant with respect
to all Confidential Information received or learned by either of them as
follows:
A. that they will treat as confidential all Confidential Information
made available to them or any of their employees, agents or
representatives;
B. that they will maintain the same in a secure place and limit
access to the Confidential Information to those employees, agents
and representatives to whom it is necessary to disclose the
Confidential Information in furtherance of the transactions
contemplated by this Agreement;
C. that they and their employees, agents and representatives will
not copy any Confidential Information (unless authorized),
disclose any Confidential Information to any unauthorized party,
or use any Confidential Information for any purpose, including
competition with the other party or solicitation of the other
party's customers; and
D. that each party will assume liability for any breach of this
paragraph by it or any of its employees, agents or
representatives.
-8-
<PAGE>
14. MISCELLANEOUS
BROKER OR FINDER. Telecom and Fronteer represent that no person is
entitled to any brokerage commission, finder's fee, or any other like
payment in connection with any transaction contemplated by this Agreement
by reason of the action of any party to this Agreement.
SEVERABILITY. If any provision of this Agreement is held for any reason
to be unenforceable by a court of competent jurisdiction, the remainder
of this Agreement shall, nevertheless, remain in full force and effect.
APPLICABLE LAW. This Agreement shall be construed in accordance with the
laws of the State of Iowa. Venue for any action to enforce this Agreement
shall be in Iowa or in North Dakota at the option of the party filing such
action.
NOTICES. Any notices or other communications required or permitted under
this Agreement shall be sufficiently given if sent by certified mail,
return receipt requested, postage prepaid, addressed as follows:
TELECOM: Telecom USA Publishing Company
P.O. Box 3162
Cedar Rapids, IA 52406-3162
Attn: Arthur L. Christoffersen
FRONTEER: Fronteer Directory Company, Inc.
216 North 23rd Street
Bismarck, ND 58501
Attn: Dennis W. Olson
CAPTIONS. The captions in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
USE OF FACSIMILE. The parties hereto expressly consent to the use of
facsimile signatures and agree that such facsimile signatures shall be
binding as originals.
SURVIVAL. Each and every provision of this Agreement shall survive the
execution hereof and shall remain binding on the parties hereto until all
performance called for hereunder is complete.
BINDING EFFECT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns;
-9-
<PAGE>
provided, however, that no party hereto may make any assignment of this
Agreement or any interest herein without the prior written consent of the
other parties hereto. Assignments without such consent shall be void.
TELECOM USA PUBLISHING COMPANY
By: ___________________________________________________
Arthur L. Christoffersen, President
FRONTEER DIRECTORY COMPANY, INC.
By:____________________________________________________
Dennis W. Olson, President
By their signatures below, the undersigned agree to execute the Non-Competition
Agreements described in Section 10.
- ----------------------------------- -----------------------------------
Dennis W. Olson Marlow E. Lindblom
- ----------------------------------- -----------------------------------
Edwin Dressler Roland Haux
- ----------------------------------- -----------------------------------
Randall L. Gowin James B. Qualls
- ----------------------------------- -----------------------------------
Lance L. Olson Larry A. Scott
- -----------------------------------
Kelly Helgeson
-10-
<PAGE>
EXHIBIT "A" (to Exhibit "B")
DIRECTORY DISTRIBUTION DATE MINIMUM NUMBER DISTRIBUTED
- --------- ----------------- --------------------------
Badlands Consolidated
Bismarck/Mandan Metro
Durum Triangle
Fargo
Jamestown
Williston Basin
Souris River
Southeast
Valley City
<PAGE>
EXHIBIT "B" (to Exhibit "B")
AUDIOTEX EQUIPMENT
DESCRIPTION SERIAL NO.
- ----------- ----------
<PAGE>
EXHIBIT "C" (to Exhibit "B")
EMPLOYEES/OFFICERS/DIRECTORS TO SIGN
NON-COMPETITION AGREEMENT
NAME PERCENTAGE OF TOTAL
---- -------------------
Dennis W. Olson
Edwin Dressler
Randall L. Gowin
Lance L. Olson
Marlow E. Lindblom
Roland Haux
James B. Qualls
Larry A. Scott
Kelly Helgeson
<PAGE>
EXHIBIT "D" (to Exhibit "B")
EMPLOYEES/OFFICERS/DIRECTORS FORM OF
NON-COMPETITION AGREEMENT
COVENANT NOT TO COMPETE
AND
CONFIDENTIALITY AGREEMENT
FRONTEER DIRECTORY COMPANY, INC., a Colorado corporation ("Fronteer"), and
TELECOM USA PUBLISHING COMPANY, an Iowa corporation ("Telecom"), have entered
into a Sale and Purchase Agreement (the "Sale Agreement") for the purchase by
Telecom of certain telephone directory business of Fronteer.
The terms of the Sale Agreement provide that the undersigned, an officer
and/or director of Fronteer, shall enter into this Agreement. In fulfillment of
such provisions in the Sale Agreement, Telecom and the undersigned enter into
this Agreement, as follows:
1. For a period of ten (10) years from the date of this Agreement, the
undersigned will not, in the states of Iowa, Minnesota, Michigan, Missouri,
Nebraska, South Dakota, Colorado, Wyoming, Idaho, Montana, Utah, Illinois,
Indiana, Wisconsin, or North Dakota, directly or indirectly, either individually
or as a shareholder, proprietor, partner, consultant, employee, agent, officer,
director, associate, lender or in any other capacity, engage in the telephone
directory business in competition with Telecom; provided, however, this
Agreement shall not prohibit the undersigned from owning up to 5% of a publicly
traded company that competes with Telecom, or from continuing to be a
shareholder/officer/director of Fronteer in connection with Fronteer's rights
and obligations set out in the Sale Agreement.
2. The undersigned shall not disclose any Confidential Information to
others outside Telecom or use same for any purposes without written approval
from an officer of Telecom. "Confidential Information" means any information or
compilation of information not generally known, that is proprietary to the
business of Telecom, and includes, without limitation, trade secrets,
inventions, information pertaining to development, marketing, sales, accounting,
and licensing of the business products and services, customer information
containing customer records, or papers or correspondence, files and all
financial information contained in federal and state tax returns. Confidential
Information does not include information that is independently developed or
received from a third party unrelated to Telecom. In addition, the undersigned
shall not be in default under this Agreement if the undersigned's disclosure of
Confidential Information is pursuant to a subpoena or other court order.
Notwithstanding the above, the undersigned, solely in his capacity as an
employee, shareholder, officer, and/or director of Fronteer, may continue to use
the Confidential Information that was originally proprietary to the business of
Fronteer, in connection with Fronteer's rights and obligations set out in the
Sale
<PAGE>
Agreement, including Fronteer's right to contract for directory production
services as a third party independent vendor and to conduct CMR business, as set
out in the Sale Agreement.
3. The undersigned acknowledges that Telecom is paying Fronteer a
substantial sum of money to acquire its telephone directory business and is
paying the undersigned a substantial sum of money for this Agreement, and that
competition by the undersigned as herein prohibited would cause substantial loss
and expense, irreparable damage and harm to Telecom, its assignees or
successors, that cannot be fully compensated by monetary award. In addition,
the undersigned acknowledges that he is a employee/shareholder/officer/director
of Fronteer and as such, will benefit from the Sale Agreement.
4. As further consideration for this Agreement, Telecom agrees to pay the
undersigned the total sum of ___________________, payable as follows:
$_____________ on the date hereof, $______________ one year from the date
hereof, and thereafter, $________________ on or before the same date each year
for five consecutive years.
5. The undersigned agrees that upon a violation of this Agreement,
Telecom or an assignee or successor in interest to it, shall have the following
rights, which are cumulative, separate causes of action that may be asserted
against the undersigned. Telecom, its successors or assigns, in the event of
violation by the undersigned of the Agreement herein contained, may:
(a) Commence an action to secure an injunction to enjoin the
undersigned from violating this Agreement;
(b) Commence an action to require the undersigned to specifically
perform this Agreement;
(c) Commence an action to secure a judgment for monetary damages for
violation of this Agreement, including, if applicable, punitive
damages; or
(d) Commence an action to assert any and all of the rights that
Telecom, or its successor or assign, may have against the undersigned
at such time because of any breach of this Agreement.
In addition, Telecom, its successor or assign, may secure reasonable
attorney's fees and costs incurred as a result of judgment being rendered
against the undersigned.
6. No delay or omission by Telecom in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by Telecom on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on any other
occasion. In case any provision of this Agreement shall be invalid, illegal, or
otherwise unenforceable, the parties shall negotiate in good faith with respect
to a substitute provision.
<PAGE>
7. This Agreement shall be governed by and construed in accordance of the
laws of the State of Iowa.
Dated this day of ________________________, 199___.
TELECOM USA PUBLISHING COMPANY
By:
---------------------------------------------------------
Arthur L. Christoffersen, President
<PAGE>
EXHIBIT "D"
EMPLOYEES/OFFICERS/DIRECTORS TO SIGN
NON-COMPETITION AGREEMENT
NAME PERCENTAGE OF TOTAL
---- -------------------
Dennis W. Olson 31.25%
Edwin Dressler 21.25%
Randall L. Gowin 17.50%
Lance L. Olson 10.00%
Marlow E. Lindblom 6.25%
Roland Haux 6.25%
James B. Qualls 2.50%
Larry A. Scott 2.50%
Kelly Helgeson 2.50%
<PAGE>
EXHIBIT 3.0(i)
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
FRONTEER DIRECTORY COMPANY, INC.
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is FRONTEER DIRECTORY COMPANY, INC.
(the "Company").
SECOND: The following amendment to the Articles of Incorporation was duly
adopted by the directors on April 26, 1995:
RESOLVED, that pursuant to the authority expressly granted to this
Board by the terms of the Company's Articles of Incorporation, this Board
hereby creates a series of preferred stock, $0.10 par value per share, of
the Company, to consist of 87,500 shares, which shall be designated as
"Series A Voting Cumulative Preferred Stock" (collectively in this
Resolution referred as the "Series A Preferred Stock"). For purposes of
this Resolution, the stated value of the Series A Preferred Stock is $10.00
per share ("Stated Value"). The Board hereby does fix the voting powers,
preferences, and relative participating, optional, and other special rights
and qualifications, limitations, and restrictions thereof to those set
forth in the Company's Articles of Incorporation and as follows:
1. DIVIDEND RIGHTS.
(a) GENERAL OBLIGATION. The holders of outstanding Series A
Preferred Stock shall be entitled to receive, when and as declared by the
Board of Directors out of the funds legally available for such purpose,
cash dividends payable as provided in this Resolution. Cash dividends on
each share of Series A Preferred Stock will accrue cumulatively whether or
not such dividends have been declared and whether or not such dividends can
legally be declared under federal or state laws. The Board of Directors
will not declare or pay dividends on the Series A Preferred Stock at any
time that such dividends cannot be legally paid under federal or state
laws. The date on which the Company initially issues any share of Series A
Preferred Stock will be deemed to be its "Date of Issue" regardless of the
number of times such share of Series A Preferred Stock is transferred on
the stock register maintained by the Company. The Series A Preferred Stock
will be represented by stock certificates. Such 87,500 shares of Series A
Preferred Stock are being issued in connection with the acquisition of the
assets of RAFCO, Ltd. by the Company. The holders originally purchased
87,500 shares of preferred stock of RAFCO, Ltd. at a purchase price of
$10.00 per share. The Company will maintain a Series A Preferred Stock
register ("Register") containing the name and address of each owner of
Series A Preferred Stock and the number of shares owned,
- 1 -
<PAGE>
and the Company will be entitled to treat the registered owners of Series A
Preferred Stock as shown on the Register as the legal owners of the Series
A Preferred Stock for all purposes. Transfers of Series A Preferred Stock
may only be made on the Register maintained by the Company. Any owner of
Series A Preferred Stock may effect a change of address by sending written
notice thereof to the Company at its principal executive office by
certified mail.
(i) REGULAR DIVIDENDS. The registered owners of outstanding
Series A Preferred Stock will be entitled to receive when, as, and if
declared by the Board of Directors, out of funds of the Company
legally available therefor, regular cumulative cash dividends, payable
quarterly, at the rate of 9% per annum of the Stated Value of the
Series A Preferred Stock (equivalent to $0.90 per share of Series A
Preferred Stock) which regular dividend will hereinafter be referred
to as the "Regular Dividend." The Regular Dividend on the Series A
Preferred Stock will accrue from the Date of Issue or the first day of
the earliest calendar quarter for which Regular Dividends have not
been paid and will be payable when, as, and if declared by the
Company's Board of Directors on the 15th day of April, July, October,
and January, or if such day is a nonbusiness day, on the next business
day, in each year, commencing on July 15, 1995. Each Regular Dividend
will be payable to the registered owners as they appear on the
Register at the close of business on record dates which shall be the
last day of the last calendar quarter ending prior to the dividend
payment date. The Regular Dividend quarterly periods will commence on
and include the first day of each calendar quarter and will end on and
include the last day of each calendar quarter preceding the next
following dividend payment date. If declared by the Board of Directors
the first Regular Dividend payable July 15, 1995 will be computed from
the Date of Issue. If the Board of Directors fails to declare a
Regular Dividend payable on a dividend payment date in respect of the
Series A Preferred Stock, then the right of the registered owners of
the Series A Preferred Stock to receive a Regular Dividend in respect
of the dividend period ending prior to such payment date will not be
lost, and the Company will continue to have a cumulative obligation to
pay the Regular Dividend in respect of such dividend period. The
Company will have no obligation to pay interest on the Regular
Dividend unpaid for such payment period.
(ii) DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. If at any time
the Company pays any dividend with respect to the outstanding Series A
Preferred Stock, which in the aggregate is less than the total amount
of dividends then accrued with respect to the outstanding Series A
Preferred Stock, such payment will be distributed among the holders of
the outstanding Series A Preferred Stock so that an equal amount will
be paid with respect to each outstanding share of Series A Preferred
Stock.
(iii) OTHER DIVIDEND RESTRICTIONS. So long as any shares of
Series A Preferred Stock are outstanding and if dividends on the
Series A Preferred Stock have not
- 2 -
<PAGE>
been paid in full, no dividend shall be declared or paid or set aside
for payment or other distribution declared or made upon the
outstanding shares of Common Stock of the Company or upon any other
stock of the Company ranking junior to or on a parity with the Series
A Preferred Stock as to dividends or upon liquidation, nor shall funds
be set aside for the purchase or redemption of any such stock, through
a sinking fund or otherwise, unless and until the Company shall have
paid in full all dividends then due on the Series A Preferred Stock.
If the Company has declared and paid in full each dividend due on the
Series A Preferred Stock, the Company may pay dividends on its
outstanding Common Stock or upon any other stock of the Company
ranking junior to or on a parity with the Series A Preferred Stock.
2. LIQUIDATION RIGHTS.
Upon any liquidation, dissolution, or winding up of the Company,
whether voluntary or involuntary, the holders of the outstanding Series A
Preferred Stock will be entitled to receive, out of the assets of the
Company legally available for distribution to shareholders under the
Colorado Business Corporation Act, or the proceeds thereof, before any
distribution of assets is made with regard to the holders of any Junior
Stock, including Common Stock, an amount in cash equal to the Stated Value
per share plus an amount per share equal to any cumulative dividends
unpaid, if any, and no more, without interest, to the date fixed for such
liquidation, dissolution, or winding up. If the amounts available for
distribution with respect to the Series A Preferred Stock and any other
outstanding Parity Stock are not sufficient to satisfy the full liquidation
rights of all outstanding Series A Preferred Stock and such Parity Stock,
then the holders of such Series A Preferred Stock and such Parity Stock
will share ratably in such distribution of assets, in proportion to the
full respective preferential amounts to which they may be entitled. After
payment of the full amount of the liquidating distribution to which they
are entitled, the holders of Series A Preferred Stock will not be entitled
to any further participation in any distribution of assets of the Company.
Written notice of any such liquidation, dissolution, or winding up, stating
a payment date, and the amount to be paid on such date, and the place where
the amounts distributable shall be payable, shall be given by first class
mail to the holders of record of the outstanding Series A Preferred Stock,
not less than 60 days prior to the payment date stated therein, such notice
to be addressed to each holder of outstanding Series A Preferred Stock at
such holder's address as shown on the Register. A consolidation, merger, or
sale of all or substantially all of the assets of the Company will not be
considered a liquidation, dissolution, or winding up of the Company for
this purpose; provided, however, that if the aggregate amount of cash
receivable in exchange for or upon conversion of the Series A Preferred
Stock in connection with a cash merger or other cash transaction would be
less than the liquidation value of the outstanding Series A Preferred
Stock, then such cash merger or transaction will be considered a
liquidation, dissolution, or winding up of the Company and will be deemed
to provide the owners of the Series A
- 3 -
<PAGE>
Preferred Stock with the rights described in this paragraph as if a
liquidation, dissolution, or winding up of the Company is occurring.
3. PREEMPTIVE RIGHTS.
No owner of shares of Series A Preferred Stock will have any
preemptive right to subscribe for stock, obligations, warrants, rights to
subscribe to stock, or other securities of the Company of any class, now or
hereafter authorized.
4. REDEMPTION AND VOTING RIGHTS.
(a) REDEMPTION. The Company may redeem, at its option, shares of
Series A Preferred Stock, in whole or in part but on a pro rata basis out
of funds legally available therefor, upon 90 days prior written notice at
December 31, 1995, and at December 31 in each year thereafter so long as
any of the shares of Series A Preferred Stock are issued and outstanding.
Such notice must be sent by first class mail to the address of the owner on
the Register of Series A Preferred Stock owners maintained by the Company.
It shall be the obligation of each owner of Series A Preferred Stock to
notify the Company at its principal executive office of any change in such
owner's address. If the Company exercises its option to redeem any shares
of Series A Preferred Stock, the redemption price per share of Series A
Preferred Stock will be $11.00. In the event of a merger or consolidation
in which the Company is not the surviving corporation, or in the event of
the sale by the Company of all or substantially all of its assets, the
Series A Preferred Stock may be redeemed at the time of any such trans-
action by the Company in whole, but not in part, at the redemption price
equal to $11.00 per share. In addition, the Company may, at its option and
at any time, repurchase any outstanding Series A Preferred Stock at the
request of the owner thereof at prices and on terms negotiated between the
Company and such owner.
(b) DIVIDENDS AFTER REDEMPTION. On and after the date fixed for
redemption, provided that the redemption price (including any accrued and
unpaid dividends to and including the date fixed for redemption) has been
duly paid or provided for, dividends shall cease to accrue on the Series A
Preferred Stock redeemed, such shares shall no longer be deemed to be
outstanding, and all rights of the owners of such shares as shareholders of
the Company shall cease, except the right to receive the monies payable on
such redemption, without interest thereon. The redemption price will be
mailed by first class mail to the address of the shareholder contained on
the Register maintained by the Company.
(c) RESTRICTION. The Company shall not be entitled to redeem or set
aside funds for the redemption of any Parity Stock, unless prior to or
contemporaneous therewith, it redeems, or sets aside funds for the
redemption of, a number of shares of the Series A Preferred Stock whose
liquidation preference bears the same relationship to the aggregate
liquidation preference of all shares of preferred stock (Series A Preferred
- 4 -
<PAGE>
Stock and Parity Stock) then outstanding as the liquidation preference of
any such Parity Stock to be redeemed bears to the aggregate liquidation
preference of all Parity Stock then outstanding.
(d) ACCRUED DIVIDENDS. The Company shall not redeem or repurchase
any shares of Series A Preferred Stock unless all dividends upon all
outstanding shares of Series A Preferred Stock accrued through the date of
redemption or repurchase have been or are paid in full.
(e) VOTING RIGHTS.
(i) The Company will not, without the consent or approval of
the owners of at least 66-2/3% of the outstanding shares of Series A
Preferred Stock, voting separately as a class, amend, alter, or repeal
or otherwise change any provision of the Company's Articles of
Incorporation or this Resolution authorizing and creating the Series A
Preferred Stock, if such amendment, authorization, or repeal would
materially and adversely affect the rights, preferences, powers or
privileges of the Series A Preferred Stock; create, authorize or
issue, or increase the authorized or issued amount of any class or
series of any equity securities of the Company, or any warrants,
options or other rights convertible or exchangeable into any class or
series of equity securities of the Company, ranking either prior to,
or on a parity with, the Series A Preferred Stock either as to
dividend rights or rights on liquidation, winding up or dissolution of
the Company. Creation or issuance of Junior Stock, or an amendment
which increases the number of authorized shares of preferred stock,
will not be considered to be a material and adverse change requiring a
vote of the owners of the Series A Preferred Stock. In the event of
any consolidation, merger (other than a merger for the primary purpose
of effecting a change in the Company's state of incorporation that
does not result in any amendment, alteration, repeal, or other
material and adverse change in the rights, preferences, privileges, or
restrictions of the Series A Preferred Stock), sale of all or substan-
tially all of the assets of the Company, reclassification or
reorganization (other than any reorganization in which the Company
shall be the surviving or acquiring corporation if the rights, prefer-
ences, privileges, and restrictions granted are imposed on the Series
A Preferred Stock remain unchanged unless any amendment is made to the
Articles of Incorporation of the Company which would otherwise require
such approval), exchange or liquidation, the holders of the Series A
Preferred Stock will be entitled to vote as a separate class.
(ii) In addition to the special voting rights expressly provided
by law or set forth in paragraph 4(e)(i) hereof, each share of Series
A Preferred Stock outstanding shall be entitled to one vote on each
matter voted on at a meeting of shareholders of the Company.
- 5 -
<PAGE>
5. CERTAIN DEFINITIONS.
The following terms shall have the respective meanings set forth
below:
(a) "Common Stock" shall mean the Common Stock, $0.01 par value per
share of the Company.
(b) "Junior Stock" solely for the purpose of this Resolution means
shares of stock of any class issued by the Company which have rights which
are junior to the Series A Preferred Stock with respect to dividends and
upon liquidation.
(c) "Parity Stock" means shares of preferred stock of the Company
which are by their terms on a parity with the Series A Preferred Stock
either as to dividends or as to the distribution of assets on any voluntary
or involuntary liquidation, dissolution, or winding up of the Company.
6. RANKING.
The rights of the owners of the Series A Preferred Stock will be
senior to the owners of Junior Stock with respect to dividend rights and
distributions upon liquidation. The Company is not prohibited under this
Resolution from issuing Junior Stock. The Company is prohibited from
issuing Parity Stock unless approved by the owners of two thirds of the
outstanding shares of Series A Preferred Stock. The rights of the owners of
shares of Series A Preferred Stock will be subordinate to the rights of all
creditors of the Company, including the holders of subordinated debt.
7. MISCELLANEOUS PROVISIONS.
(a) SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Resolution by or on behalf of the Company or any owner of Series A
Preferred Stock will bind and inure to the benefit of the respective
successors and assigns of such persons whether so expressed or not.
(b) NOTICES AND PAYMENTS. Any notice provided for herein or any
payment required hereunder which is being made to the owner of shares of
Series A Preferred Stock may be sent by United States first class mail,
postage prepaid, and will be deemed to have been received four days after
such notice or payment is deposited in the United States mail.
- 6 -
<PAGE>
(c) AMENDMENT. Except as otherwise provided in this Resolution or
under the Colorado Business Corporation Act, this Resolution may not be
altered, amended, or repealed without the prior written consent of all of
the owners of outstanding Series A Preferred Stock.
Dated: April 28, 1995.
FRONTEER DIRECTORY COMPANY, INC.
a Colorado corporation
By:/s/ DENNIS W. OLSON
-----------------------------------------------
Dennis W. Olson, President
- 7 -
