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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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FRONTIER CORPORATION
(Exact name of registrant as specified in its charter)
New York 4813 16-0613330
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classifi- Identification
incorporation or cation Code Number) No.)
organization)
180 South Clinton Avenue
Rochester, New York 14646-0700
(716) 777-1000
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(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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Josephine S. Trubek, Esq.
Corporate Secretary
Frontier Corporation
180 South Clinton Avenue
Rochester, New York 14646-0700
(716) 777-6713
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
Cordell J. Overgaard, Esq. John T. Pattison, Esq.
Hopkins & Sutter General Attorney
Three First National Plaza Frontier Corporation
Chicago, Illinois 60602 180 South Clinton Avenue
Rochester, New York 14646-0700
Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable after this
Registration Statement becomes effective.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box. ----
If any of the securities being registered on this Form are
being offered on a continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check
the following box. X
---
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CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Amount Maximum Maximum
Securities to be Offering Aggregate Amount of
Being Regi- Registered Price Per Offering Registration
stered (1) Unit (2) Price (3) Fee (4)
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Common Stock
par value
$1.00 873,188 $ .000075 $66 $100
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(1) The number of shares of the registrant's common stock is
based upon (a) the number of shares of MLD Minnesota 10, Inc.
Common Stock outstanding on December 15, 1994, (100 shares), plus
(b) the number of shares of MLD Minnesota 10, Inc. Common Stock
to be exchanged in the Merger for the registrant's common stock,
which registrant's common stock may subsequently be reoffered
hereunder by persons or parties deemed to be underwriters
pursuant to Rule 145 (100 shares) multiplied by 4365.44 which
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represents the exchange ratio for the registrant's common stock
in the Merger. Accordingly, 436,544 shares of the registrant's
common stock would be registered for primary distributions and
the same 436,544 shares would be registered for secondary
distributions under such conditions.
(2) Since there is an accumulated capital deficit in MLD
Minnesota 10, Inc. on December 31, 1994, pursuant to Rule
457(f)(2), the presumed book value is one-third of the principal
amount, par value of the MLD Minnesota 10, Inc. common stock
($0.33) divided by 4365.44, the exchange ratio of the
registrant's common stock.
(3) Based upon the book value per common share of MLD Minnesota
10, Inc. Common Stock referred to in footnote (2) hereof,
multiplied by the total number of shares of MLD Minnesota 10,
Inc. Common Stock referred to in footnote (1) hereof.
(4) The minimum filing fee pursuant to Section 6(b) of the
Securities Act of 1933.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933, or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said section 8(a), may determine.
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( 2 )
FRONTIER CORPORATION
Cross Reference Sheet Required by Item 50l(b) of Regulation S-K
Caption in Proxy
Caption Statement-Prospectus
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration
Statement and Outside
Front Cover Page of
Prospectus .................Facing Page of Registration
Statement; Outside Front
Cover Page of Proxy
Statement-Prospectus
2. Inside Front and Outside
Back Cover Pages of
Prospectus .................Available Information;
Incorporation of Certain
Documents by Reference;
Table of Contents
3. Risk Factors, Ratio of
Earnings to Fixed
Charges and Other
Information ................Summary of the Proxy
Statement-Prospectus;
Actual and Pro Forma
Per Share Data; Summary
Financial Data; MLD Special
Meeting
4. Terms of the Transaction .....Summary of the Proxy
Statement-Prospectus; Terms
and Conditions of the
Proposed Merger; Description
of Capital Stock
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( 3 )
5. Pro Forma Financial
Information.................Not Applicable
6. Material Contracts with
the Company Being
Acquired ....................Not Applicable
7. Additional Information
Required for Reoffering
by Persons and Parties
Deemed to be Underwriters ...Summary of the Proxy
Statement-Prospectus; Resale
of FC Common Stock by MLD
Affiliates; Plan of
Distribution
8. Interests of Named
Experts and Counsel .........Legal Matters
9. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities .................Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect
to S-3 Registrants ..........Summary of the Proxy
Statement-Prospectus;
Summary Financial Data;
Frontier Corporation
11. Incorporation of Certain
Information by Reference ....Incorporation of Certain
Documents by Reference;
Description of Capital Stock
12. Information with Respect
to S-2 or S-3 Registrants ...Not Applicable
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( 4 )
13. Incorporation of Certain
Information by Reference ....Not Applicable
14. Information with Respect
to Registrants Other Than
S-3 or S-2 Registrants ......Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to
S-3 Companies ...............Not Applicable
16. Information with Respect to
S-2 or S-3 Companies ........Not Applicable
17. Information with Respect to
Companies Other Than
S-2 or S-3 Companies ........Summary of the Proxy
Statement-Prospectus; Market
Price and Dividend Data;
Summary Financial Data; MLD
Minnesota 10, Inc.; MLD's
Discussion and Analysis of
its Financial Condition and
Results of Operations;
MSCTC's Discussion and
Analysis of its Financial
Condition and Results of
Operations; Index to MLD
Minnesota 10, Inc. and
Minnesota Southern Cellular
Telephone Company Financial
Statements
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D. VOTING AND MANAGEMENT INFORMATION
18. Information If Proxies,
Consents or Authorizations
Are To Be Solicited .........Incorporation of Certain
Documents by Reference;
Summary of the Proxy
Statement-Prospectus; MLD
Special Meeting; Terms and
Conditions of the Proposed
Merger; Management of MLD;
Description of Capital Stock
19. Information If Proxies,
Consents or Authorizations
Are Not To Be Solicited or
in an Exchange Offer ........Not Applicable
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February , 1995
Dear Shareholder,
We are pleased to invite you, on behalf of the Board of
Directors, to a Special Meeting of the sole Shareholder of MLD
Minnesota 10, Inc. which is to be held on March , 1995 at 180
South Clinton Avenue, Rochester, New York 14646 at 10:00 AM,
local time.
Only shareholders of record on February , 1995 will be
entitled to vote at the Special Meeting.
At the Special Meeting, you will be asked to consider and
vote upon a proposal to approve a Plan of Merger providing for
the merger of Rochester Subsidiary Twenty-Six Inc., a
newly-formed, wholly-owned subsidiary of Frontier
Telecommunications Holding Inc. ("Subsidiary's Parent"), a
subsidiary of Frontier Corporation, with and into MLD Minnesota
10, Inc. Upon the consummation of the merger, each of the 100
shares of MLD Minnesota 10, Inc. stock will be exchanged for
4365.44 shares of Common Stock of Frontier Corporation, or an
aggregate of 436,544 shares in exchange for all of the MLD stock.
Since no fractional shares are involved, the Sole Shareholder
will not receive any cash payment in lieu of fractional shares.
The Board of Directors of MLD Minnesota 10, Inc. recommends
that you vote FOR approval of the merger.
A Notice of Meeting, a Proxy Statement-Prospectus and a
proxy card accompany this letter. We urge you to read the
enclosed material carefully and to complete, date, sign and mail
the proxy card promptly, even if you expect to attend this
meeting.
Very truly yours,
Mary L. Demetree
President
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NOTICE OF SPECIAL MEETING OF THE SOLE SHAREHOLDER
TO BE HELD ON MARCH , 1995
TO OUR SHAREHOLDER:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Sole
Shareholder of MLD Minnesota 10, Inc. ("MLD") has been called by
the Board of Directors and will be held at 180 South Clinton
Avenue, Rochester, New York 14646 on March , 1995 at 10:00 AM,
local time, TO CONSIDER AND VOTE UPON a proposal to approve the
Plan of Merger, a copy of which is attached as Appendix A to the
accompanying Proxy Statement-Prospectus, which is incorporated
herein by reference, providing for the merger of Rochester
Subsidiary Twenty-Six Inc., a newly-formed, wholly-owned
subsidiary of Frontier Telecommunications Holding Inc.
("Subsidiary's Parent"), a wholly-owned subsidiary of Frontier
Corporation ("FC" or "the Company"), with and into MLD (the
"Merger"), pursuant to which each of the 100 outstanding shares
of Common Stock, Par Value $.01, of MLD, would be converted into
4365.44 shares of common stock, par value $1.00 per share, of FC,
for an aggregate of 436,544 shares in exchange for all of the MLD
stock. Since no fractional shares are involved, the Sole
Shareholder will not receive any cash payment in lieu of
fractional shares.
Under Sections 607.1301, 607.1302 and 607.1320 of the
Florida Business Corporation Act (the "Act"), you are entitled to
dissent from the Merger and obtain payment for your MLD shares.
The procedure for dissent is set forth in those Sections of the
Act. To assert your dissenters' rights you must deliver a
written demand for payment to MLD before the vote is taken to
approve the Merger and you must not vote in favor of the Merger.
A copy of the relevant Sections of the Act are attached to the
Proxy Statement-Prospectus as Appendix C.
The close of business on February , 1995 has been fixed
as the record date for the determination of shareholders entitled
to notice of, and to vote at, the Special Meeting and at any
adjournment thereof. Only the holders of record of MLD Common
Stock at such time will be entitled to vote at the Special
Meeting. To assert your dissenter's rights, you must deliver
written notice of your intent to demand payment for your shares
to MLD before the vote is taken to approve the merger and you
must not vote in favor of the merger. An affirmative vote of one
hundred percent (100%) of the shareholders entitled to vote at
the Special Meeting is required to approve the Merger.
By Order of the Board of Directors
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Secretary
February , 1995
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MLD MINNESOTA 10, INC.
3348 Edgewater Drive
Orlando, Florida 32804
(407) 422-8191
and
FRONTIER CORPORATION
180 South Clinton Avenue
Rochester, New York 14646
(7l6) 777-1000
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PROXY STATEMENT-PROSPECTUS
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This Proxy Statement-Prospectus and the accompanying form
of Proxy are being furnished in connection with the solicitation
of proxies by the Board of Directors of MLD Minnesota 10, Inc.
("MLD") to be used at a Special Meeting of its sole shareholder
("Special Meeting") to be held on March , 1995 to consider and
vote upon a Plan of Merger (the "Plan of Merger") providing for
the merger of Rochester Subsidiary Twenty-Six Inc.
("Subsidiary"), a wholly-owned subsidiary of Frontier
Telecommunications Holding Inc. ("Subsidiary's Parent"), which is
a wholly-owned subsidiary of Frontier Corporation ("FC" or the
"Company"), with and into MLD (the "Merger"). Upon consummation
of the Merger, each outstanding share of MLD Common Stock, $.01
Par Value (the "MLD Common Stock"), will be converted into
4365.44 shares of Common Stock, par value $1.00 per share, of FC
(the "FC Common Stock") or an aggregate of 436,544 shares in
exchange for all of the MLD Common Stock. Since no fractional
shares are involved, the sole holder of MLD Common Stock will not
be entitled to receive a cash payment in lieu of fractional
shares. The Merger is conditioned upon the simultaneous
acquisition by FC of the other corporate partner in Minnesota
Southern Cellular Telephone Company ("MSCTC"), the business to be
acquired. See "Terms and Conditions of the Proposed Merger --
Conditions of Closing".
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THIS PROXY STATEMENT-PROSPECTUS, WHICH IS BEING FURNISHED
TO THE SHAREHOLDER OF MLD FOR PURPOSES OF VOTING ON THE MERGER,
ALSO CONSTITUTES THE PROSPECTUS OF FC FOR THE ISSUANCE OF FC
COMMON STOCK IN CONNECTION WITH THE MERGER AND THE PUBLIC
REOFFERING OR RESALE OF THE FC COMMON STOCK TO BE ACQUIRED BY
AFFILIATES OF MLD IN CONNECTION WITH THE MERGER.
All proxies that are properly executed and received prior
to the Special Meeting will be voted in accordance with the
instructions noted thereon. Any proxy that does not specify to
the contrary will be voted IN FAVOR OF the Merger. Shareholders
who submit a proxy have the right to revoke it at any time before
it is voted by execution of a subsequently dated proxy, or by
written notice to MLD, or by attendance at the Special Meeting if
verbal or written notice of such revocation is given prior to the
vote. This Proxy Statement-Prospectus will be mailed to the
shareholder of MLD on or about February , 1995.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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[ All In Red Ink, along the binding ]
Subject To Completion
February , 1995
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission.
These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
---------------------------------------
No person is authorized to give any information or to make
any representations other than those contained herein and, if
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given or made, such information must not be relied upon as having
been authorized by MLD or FC. This document does not constitute
an offer or solicitation by anyone in any state in which such
offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to
any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Proxy
Statement-Prospectus nor any distribution of the shares of FC
Common Stock hereunder shall, under any circumstances, create any
implication that there has not been any change in the affairs of
MLD or FC since the date hereof.
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The date of this Proxy Statement-Prospectus is February ,
1995.
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( ii )
AVAILABLE INFORMATION
FC is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in accordance therewith files reports, proxy statements, and
other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other
information filed by FC may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, or at the following
regional offices of the Commission: New York Regional Office, 7
World Trade Center, Suite 1300, New York, New York 10048 and
Chicago Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of these filings may also be
obtained from the Commission at prescribed rates by writing to
the Commission's Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549. Such reports, proxy statements and
other information concerning FC may also be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005. FC Common Stock is listed and traded on
the New York Stock Exchange and quoted under the symbol "FRO".
FC has filed with the Commission a registration statement
on Form S-4 under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the shares of FC Common Stock
to be issued in connection with the Merger and the public
reoffering or resale of such shares to be acquired by affiliates
of MLD in connection with the Merger. This Proxy
Statement-Prospectus does not contain all of the information set
forth in the registration statement, certain parts of which are
omitted in accordance with the rules and regulations of the
Commission. For further information pertaining to the Merger, FC
and the FC Common Stock, reference is made to the registration
statement, including the exhibits filed therewith.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
FC's Annual Report on Form 10-K for the year ended December
31, 1993, as amended, and its Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1994, June 30, 1994 and September
30, 1994, as well as its Current Reports on Form 8-K dated
January 19, 1994, May 17, 1994, July 1, 1994, July 14, 1994,
October 11, 13, 14 and 15, 1994, November 18 and 30, 1994,
December 28, 1994 and February 13, 1995, and its Proxy Statement,
dated November 18, 1994 for the Special Meeting of Shareowners
held on December 19, 1994, and all other reports filed by FC
pursuant to Section 13a or 15d of the Exchange Act since December
31, 1993, are hereby incorporated by reference into this Proxy
Statement-Prospectus.
All documents filed by FC with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date hereof and prior to the date of termination of resales by
affiliates of MLD pursuant to this Proxy Statement-Prospectus
shall be deemed to be incorporated by reference into this Proxy
Statement-Prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference shall be
deemed to be modified or superseded for purposes of this Proxy
Statement-Prospectus to the extent that a statement contained
herein or in any other subsequently filed document (which also is
or is deemed to be incorporated by reference) modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Proxy
Statement-Prospectus.
This Proxy Statement-Prospectus incorporates documents by
reference which are not presented herein or delivered herewith.
FC hereby undertakes to provide without charge to each person to
whom this Proxy Statement- Prospectus has been delivered, on the
written or oral request of such person, or any beneficial owner,
a copy of any or all of the documents referred to above which
have been or may be incorporated into this Proxy
Statement-Prospectus and deemed to be part hereof, other than
exhibits to such documents, unless such exhibits are specifically
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incorporated by reference in such documents. Such documents are
available upon request from Louis L. Massaro, Corporate Vice
President-Finance, Frontier Corporation, 180 South Clinton
Avenue, Rochester, New York 14646-0700, telephone number (716)
777-1000. In order to ensure timely delivery of the documents,
any request of FC for the documents should be made by February ,
1995.
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TABLE OF CONTENTS
Page
AVAILABLE INFORMATION..............................ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....ii
SUMMARY OF THE PROXY STATEMENT-PROSPECTUS...........v
The Companies.....................................v
Special Meeting of MLD Shareholders.............viii
Terms of the Merger..............................x
Market Price....................................xiii
ACTUAL AND PRO FORMA PER SHARE DATA.................1
SUMMARY FINANCIAL DATA..............................3
MLD SPECIAL MEETING.................................5
Introduction......................................5
Purpose of the Special Meeting ...................5
Vote Required; Shares Entitled to Vote;
Principal Shareholders............................6
Voting and Revocation of Proxies..................7
Solicitation of Proxies...........................7
MARKET PRICE AND DIVIDEND DATA......................7
TERMS AND CONDITIONS OF THE PROPOSED MERGER.........9
Background and Reasons for the Merger............10
Recommendation...................................11
Effective Date and Consequences..................11
Conversion of MLD Shares.........................12
No Fractional Shares.............................12
Delivery of Shares...............................12
Certain Federal Income Tax Consequences..........13
Conduct Pending Merger; Representations
and Warranties................................15
Conditions of Closing............................16
Termination......................................17
Accounting Treatment.............................17
Interests of Certain Persons in the
Merger and Other Transactions.................17
Regulatory Matters...............................18
Rights of Dissenting Shareholders................18
RESALE OF FC COMMON STOCK BY MLD AFFILIATES;
PLAN OF DISTRIBUTION...........................20
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TABLE OF CONTENTS (Cont'd)
Page
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FRONTIER CORPORATION...............................23
Background of the Open Market Plan...............30
The Open Market Plan Agreement...................31
Pending Acquisitions.............................41
MLD MINNESOTA 10, INC..............................42
Introduction.....................................42
MLD'S DISCUSSION AND ANALYSIS OF ITS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS....42
MANAGEMENT OF MLD.................................43
Directors of MLD.................................43
Beneficial Ownership of MLD Common Stock.........43
Executive Compensation...........................44
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY......45
Introduction.....................................45
MSCTC'S DISCUSSION AND ANALYSIS OF ITS FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..............45
Operating Revenues...............................46
Operating Expenses...............................46
Other Items......................................47
Liquidity and Capital Resources..................47
Effects of Inflation.............................48
MANAGEMENT OF MSCTC................................48
Directors of MSCTC...............................48
Beneficial Ownership of MSCTC....................49
Executive Compensation...........................49
DESCRIPTION OF CAPITAL STOCK.......................49
Description of FC Common Stock...................50
Description of MLD Common Stock..................52
Comparison of Rights of Securities Holders.......53
CERTAIN INFORMATION REGARDING SUBSIDIARY...........53
LEGAL MATTERS......................................54
EXPERTS............................................54
MISCELLANEOUS......................................55
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TABLE OF CONTENTS (Cont'd)
Page
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INDEX TO MLD AND MSCTC FINANCIAL STATEMENTS........F
APPENDIX A - PLAN OF MERGER
APPENDIX B - AGREEMENT WITH RESPECT TO A MERGER
APPENDIX C - FLORIDA BUSINESS CORPORATION
ACT SECTIONS 607.1301, 607.1302 and 607.1320
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- v -
SUMMARY OF THE PROXY STATEMENT-PROSPECTUS
The following is a brief summary of certain of the
information contained elsewhere in this Proxy
Statement-Prospectus. This summary does not purport to be
complete and reference is made to, and this summary is qualified
in its entirety by, the more detailed information contained in
this Proxy Statement-Prospectus, the Appendices hereto and the
documents referred to or incorporated by reference herein.
Shareholders are urged to carefully read this Proxy
Statement-Prospectus, including the Appendices hereto.
The Companies:
Frontier Corporation .....
Until January 1, 1995, FC (previously known as Rochester
Telephone Corporation) was a local service telephone
operating company regulated by the New York State Public
Service Commission ("NYPSC") which, together with four of
its regulated telephone operating company subsidiaries,
Frontier Communications of New York , Inc., Frontier
Communications of Sylvan Lake, Inc., Frontier
Communications of AuSable Valley, Inc. and Frontier
Communications of Seneca-Gorham, Inc. provided telephone
service within New York State. On January 1, 1995, FC
dropped its local exchange company business into a wholly-
owned subsidiary, Rochester Telephone Corp., and its
lightly regulated businesses into Frontier Communications
of Rochester, Inc. In addition, FC, either directly or
through intervening subsidiaries, is sole equity owner of
Frontier Communications of Oswayo River, Inc., located in
Shinglehouse, Pennsylvania; Frontier Communications of
Breezewood, Inc. headquartered in Breezewood, Pennsylvania;
Frontier Communications of Pennsylvania, Inc. of New
Holland, Pennsylvania; Frontier Communications of Canton,
Inc., located in Canton, Pennsylvania; Frontier
Communications of Lakewood, Inc. in Barnesville,
Pennsylvania; Frontier Communications of Michigan, Inc.
located in Jackson, Michigan; Ontonagon County Telephone
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- vi -
Company of Ontonagon, Michigan; a majority equity owner of
Midway Telephone Company of Watton, Michigan; sole equity
owner of Frontier Communications of Indiana, Inc. of
Fairmount, Indiana; Frontier Communications of Thorntown,
Inc. of Thorntown, Indiana; Frontier Communications of
Wisconsin, Inc. of Clintonville, Wisconsin; Frontier
Communications - Lakeshore, Inc. of Cecil, Wisconsin;
Frontier Communications of Mondovi, Inc. of Mondovi,
Wisconsin; Frontier Communications -St. Croix, Inc. of New
Richmond, Wisconsin; Frontier Communications of Viroqua,
Inc. of Viroqua, Wisconsin; Frontier Communications of
Illinois, Inc. of Champaign, Illinois; Frontier
Communications - Midland, Inc. of Champaign, Illinois;
Frontier Communications of Lakeside, Inc. Champaign,
Illinois; Frontier Communications - Prairie, Inc. of
Champaign, Illinois; Frontier Communications of Mt.
Pulaski, Inc. of Mt. Pulaski, Illinois; Frontier
Communications - Schuyler, Inc. of Rushville, Illinois;
Frontier Communications of Orion, Inc. of Orion, Illinois;
Frontier Communications of DePue, Inc. of DePue, Illinois;
Frontier Communications of the South, Inc. of Atmore,
Alabama; Frontier Communications of Lamar County, Inc. of
Millport, Alabama; Frontier Communications of Alabama, Inc.
of Monroeville, Alabama; Frontier Communications of
Mississippi, Inc. of Rienzi, Mississippi; Frontier
Communications of Fairmount, Inc. of Fairmount, Georgia;
Frontier Communications of Georgia, Inc. of Statesboro,
Georgia; Frontier Communications of Iowa, Inc. located in
Fort Dodge, Iowa; and Frontier Communications of Minnesota,
Inc. located in Burnsville, Minnesota. The principal area
served by Rochester Telephone Corp. is the City of
Rochester and adjacent areas. FC also owns 9 operating
"unregulated" subsidiaries which are engaged in various
telecommunications-related businesses, including long
distance and cellular. Frontier Communications
International Inc. is FC's flagship long distance company.
The Open Market Plan Agreement, approved by the NYPSC and
FC shareholders (on December 19, 1994) reorganized FC into
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- vii -
an unregulated parent holding company as of January 1,
1995, which directly or indirectly owns all of the stock
of:
1. Rochester Telephone Corp. (also known as R-Net), a
regulated telephone and network transport corporation,
which offers retail services to existing customers and
sells and markets wholesale network services and other
services to retailers of telecommunication services in the
Rochester Market;
2. Frontier Communications of Rochester, Inc. (also
known as R-Com) which is a lightly regulated retail
provider of telecommunication services to residential and
business customers located, initially, in the Rochester
Market;
3. Frontier Information Technologies Inc., an
unregulated subsidiary of the Company, which provides
computer, billing and other information processing services
to the Company's affiliates and to third parties; and
4. The Company's other existing subsidiaries,
including those that provide local exchange services
outside the Rochester Market as well as telecommunication
equipment and services in the Rochester Market and other
markets.
FC is organized as a New York business corporation whose
businesses outside of New York State is not subject to
NYPSC regulation. FC is entitled, among other actions, to
issue securities and effect acquisitions or
enter new lines of business without obtaining the approval
of the NYPSC, subject to certain exceptions. As a result,
the Company should be able to respond more quickly to
customer needs and new opportunities.
There are uncertainties related to the Open Market Plan.
These include increased competition in the Rochester
market, the risk of the Rate Stabilization Plan, restraints
on FC's control of Rochester Telephone Corp., the holding
company structure, potential diversification risk, the
royalty dispute, overlap of retail services, potential
diversification risk, and compliance costs. For a more
complete description of the business of FC, its
subsidiaries and the Open Market Plan Agreement, see
"Frontier Corporation." FC has its principal executive
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- viii -
offices at 180 South Clinton Avenue, Rochester, New York
14646-0700. Its telephone number is (7l6) 777-1000.
MLD Minnesota, Inc. -
MLD is a Florida business corporation which is a 50%
partner in the operating cellular partnership MSCTC, which
is the underlying business being acquired. MLD has no
other businesses. For a more complete description of the
business of MLD and MSCTC see "MLD Minnesota 10, Inc." and
"Minnesota Southern Cellular Telephone Company". MLD and
MSCTC each has its principal office at 3348 Edgewater
Drive, Orlando, Florida 32804. Its telephone number is
(407) 422-8191.
Special Meeting of MLD Shareholders:
Time, Date and Place -
The Special Meeting will be held on March , 1995 at
10:00 AM local time at 180 South Clinton Avenue, Rochester,
New York 14646.
Purpose of Special Meeting -
To consider and vote upon a Plan of Merger which provides
for the merger of Subsidiary, a newly-formed, wholly-owned
subsidiary of Subsidiary's Parent, with and into MLD. A
copy of the Plan of Merger is attached hereto as Appendix
A.
Record Date; Required Vote for the Merger -
The record date for determining the MLD shareholders
entitled to vote at the Special Meeting is February ,
1995 ("Record Date"). Approval of the Merger requires the
affirmative vote of the holders of one-hundred percent
<PAGE>
<PAGE>
- ix -
(100%) of the shares of MLD Common Stock, par value $.01
per share, outstanding as of the close of business on the
Record Date, with each holder being entitled to one vote
per share. See "MLD Special Meeting -- Vote Required;
Shares Entitled to Vote; Principal Shareholders."
Common Stock of MLD -
As of the Record Date, MLD had outstanding 100 shares of
its Common Stock.
Beneficial Ownership by Directors and Executive Officers -
As of the Record Date, MLD directors and executive officers
beneficially owned an aggregate of 100 shares (or 100%) of
MLD Common Stock. Such persons, including their
affiliates, have indicated that they intend to vote the MLD
Common Stock over which they have voting authority in favor
of approval and adoption of the Plan of Merger.
Accordingly, the Merger will be approved if all 100 shares
of MLD Common Stock are voted in favor of the Plan of
Merger. See "MLD Special Meeting -- Vote Required; Shares
Entitled to Vote; Principal Shareholders."
Terms of the Merger:
Conversion of MLD Shares -
Upon consummation of the Merger, each outstanding share of
MLD Common Stock will be converted into 4365.44 shares of
FC $1.00 par value Common Stock, for an aggregate of
436,544 shares in exchange for all of the MLD Common Stock.
Since no fractional shares are involved in the transaction,
the sole holder of MLD Common Stock will not receive a cash
payment in lieu of fractional shares. See "Terms and
Conditions of the Proposed Merger - Federal Income Tax
Consequences". Also see "Terms and Conditions of the
Proposed Merger -- Conversion of MLD Shares".
<PAGE>
<PAGE>
- x -
Merger -
Upon the date and time of filing of the Articles of Merger
with the Secretary of State of the State of Florida
("Effective Date"), Subsidiary, a wholly-owned subsidiary
of Subsidiary's Parent, which is wholly-owned by FC, will
be merged with and into MLD, with Subsidiary ceasing to
exist as a separate entity. It is contemplated that the
Merger will be consummated as soon as practicable after the
approval and adoption of the Plan of Merger by the MLD
shareholder, and the receipt of all required regulatory
approvals. See "Terms and Conditions of the Proposed
Merger - Effective Date and Consequences".
Certain Federal Income Tax Consequences -
The Merger is conditioned, in part, upon receipt of an
opinion of tax counsel for the benefit of MLD's shareholder
to the general effect, among other things, that for federal
income tax purposes, no gain or loss will be recognized by
the MLD shareholder upon the conversion of MLD Common Stock
for FC Common Stock. The Federal income tax consequences
set forth in this Proxy Statement-Prospectus are for
general information only.
Neither MLD nor FC has sought nor do they intend to seek a
ruling from the Internal Revenue Service as to the Federal
income tax consequences of the merger. See "Terms and
Conditions of the Proposed Merger -- Federal Income Tax
Consequences." ALTHOUGH MLD'S SHAREHOLDER MAY RELY ON THE
OPINION OF TAX COUNSEL DESCRIBED ABOVE, THE SOLE
SHAREHOLDER IS URGED TO CONSULT HER OWN TAX ADVISORS AS TO
THE SPECIFIC CONSEQUENCES TO HER OF THE MERGER UNDER
FEDERAL, STATE, LOCAL AND ANY OTHER APPLICABLE TAX LAWS.
Rights of Dissenting Shareholders -
If the Plan of Merger is approved, and the Merger is
consummated, stockholders who dissent from the Merger will
have the right to obtain payment of the fair value of their
shares if they comply with the procedures of Sections
<PAGE>
<PAGE>
- xi -
607.1301, 607.1302 and 607.1320 of the Florida Business
Corporation Act. See "Terms and Conditions of the Proposed
Merger - Rights of Dissenting Shareholders."
Accounting -
The Merger will be accounted for as a pooling of interests,
subject to the related acquisition of the other 50%
corporate partner in MSCTC. See "Terms and Conditions of
the Proposed Merger -- Accounting Treatment."
Resale of FC Common Stock by MLD Affiliates; Plan of
Distribution -
Shareholders of MLD who, at the time of the Special
Meeting, may be deemed to control, or be controlled by, or
be under common control with MLD ("Affiliates") will be
subject to certain restrictions with respect to the resale
of the shares of FC Common Stock received by them in the
Merger. Shareholders of MLD who are not Affiliates may
resell the FC Common Stock acquired by them in connection
with the Merger without restriction. See "Resale of FC
Common Stock by MLD Affiliates; Plan of Distribution."
MLD Board Recommendation -
The Board of Directors of MLD believes that the Plan of
Merger is in the best interests of and is fair to MLD and
its shareholders and recommends that MLD shareholders vote
to approve the Plan of Merger. For a description of the
interests of members of the Board of Directors and
Executive Officers of MLD in the Merger see "Terms and
Conditions of the Proposed Merger -- Interests of Certain
Persons in the Merger."
Regulatory Approvals -
Consummation of the Merger requires, among other
conditions, the approval of the FCC. Filings have been
made with the FCC as deemed necessary in order to obtain
its consent. There is no assurance that FCC approvals will
be granted or that any conditions which may be imposed in
connection with any such approvals will be acceptable to
<PAGE>
<PAGE>
- xii -
MLD and FC. Shareholders of MLD should be aware that
regulatory approval of the Merger may be based upon
different considerations than those which would be
important to such shareholders in determining whether or
not to approve the Merger. Such approval should in no
event be construed by a shareholder as a recommendation by
any regulatory agency with respect to the Merger. See
"Terms and Conditions of the Proposed Merger -- Regulatory
Matters."
Conditions of the Merger -
Consummation of the Merger is subject to the simultaneous
acquisition of the other corporate partner in MSCTC, the
business to be acquired, the approval of the Plan of Merger
by the requisite vote of MLD shareholders, receipt of all
regulatory approvals and the satisfaction of various
conditions set forth in a certain Agreement with Respect to
a Merger, dated effective as of July 6, 1994 among MLD, FC,
Subsidiary's Parent and Subsidiary ("Merger Agreement"), a
copy of which, without Exhibits or Schedules, is attached
hereto as Appendix B. See "Terms and Conditions of the
Proposed Merger -- Conditions of Closing."
Right to Terminate -
The Merger Agreement may be terminated and the Merger may
be abandoned at any time before or after the Special
Meeting of MLD stockholders but not later than the
Effective Date by the mutual action of the Board of
Directors of MLD and the Board of Directors (or the
Executive Committee thereof) of FC. In addition, either
the Board of Directors of MLD or the Board of Directors (or
Executive Committee thereof) of FC alone may terminate the
Merger Agreement and abandon the Merger if the Merger has
not, for any reason, been consummated by March 31, 1995.
See "Terms and Conditions of the Proposed Merger --
Termination."
<PAGE>
<PAGE>
- xiii -
Exchange of Certificates -
After the vote to approve the Merger, the MLD shareholder
will receive in the mail the instructions for exchanging
certificates representing shares of MLD Common Stock for
certificates representing the shares of FC Common Stock to
be issued therefor in the Merger. Shareholders should not
surrender their certificates until they receive these
instructions. Holders of shares of MLD Common Stock are
urged to NOTIFY Cindy Magliula at MLD NOW at (407) 422-
8191, if their certificates are lost, stolen, destroyed or
not properly registered, in order to begin the process of
issuing replacement certificates. See "Terms and
Conditions of the Proposed Merger -- Conversion of MLD
Shares."
Market Price:
FC Common Stock is listed and traded on the New York Stock
Exchange ("NYSE") and quoted under the symbol "FRO". MLD
Common Stock is not listed on any exchange, nor is it
traded in the over-the-counter market. The following table
presents for July 27, 1994, the last trading date prior to
the public announcement of the proposed Merger, and
February , 1995, the market price per share of FC
Common Stock as reported on the NYSE composite tape and the
equivalent per share price of MLD Common Stock.
MLD
FC Closing Equivalent Per
Date Price Share Price
July 27, 1994 $ 23.75 $ 103,679.20 (1)
February , 1995 $ $ (1)
(1) Computed by multiplying the FC Common Stock NYSE closing
price by 4365.44, the exchange ratio of FC Common Stock for
MLD Common Stock on the dates indicated.
<PAGE>
<PAGE>
ACTUAL AND PRO FORMA PER SHARE DATA
The following table sets forth data relating to net book
value, cash dividends and net income of FC Common Stock and
Minnesota Southern Cellular Telephone Company (MSCTC), on an
actual pro forma and equivalent pro forma basis.
MSCTC is an independent company operating a cellular non-
wireline facility in the Minnesota 10 rural service area located
in south central Minnesota. MSCTC is owned equally by two
holding company partnerships, MLD and Dowdy Minnesota 10, Inc.
("DOWDY"). FC is acquiring each holding company in a stock for
stock exchange. FC's acquisition agreements for MLD and DOWDY
require the approval and sale of the entire interest of the MSCTC
partnership. As such, the per share data below is calculated
using the financial statements of MSCTC. This registration
statement is for FC's acquisition of MLD. A related registration
statement for the acquisition of DOWDY's interest in MSCTC was
filed with the SEC on Form S-4 on February 16, 1995.
The actual per share data for MSCTC has been derived from
its historical financial statements. The actual per share data
for FC includes its historical financial statements combined with
the financial statements of the pending acquisitions of WCT, Inc.
and American Sharecom, Inc. as filed on Form 8-K on February 13,
1995 due to the significance of these acquisitions. The per
share data of FC includes WCT, Inc. for the year ended December
31, 1994 as this acquisition is to be accounted for under the
purchase method of accounting, while the per share data for FC
includes American Sharecom, Inc. for all periods presented as
this acquisition is to be accounted for under the pooling of
interests method of accounting.
The pro forma share amounts are calculated by multiplying
the pro forma income (loss), pro forma book value per share, and
dividends per share of FC by the exchange ratio so that the per
share amounts are equated to the respective values for one share
of MSCTC. The most recent three years and the twelve month
period ended December 31, 1994 are presented based on the
expected use of the pooling of interests method of accounting for
this transaction.
The data presented is not necessarily indicative of the
results which would actually have been attained if the Merger had
been consummated in the past or the results which may be attained
in the future.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
1991 1992 1993 1994
<S> <C> <C> <C> <C>
Book Value Per Common Share: (2) (2) (1) (1)
FC historical 8.73 8.99 9.60 10.94
FC historical restated for
pending acquisitions
(1)(2) 7.73 7.96 8.63 9.90
MSCTC historical (3) (2,490.00)(7,690.00)(10,595.00)(11,810.00)
FC pro forma 7.63 7.84 8.51 9.77
MSCTC equivalent pro
forma 33,309.88 34,244.96 37,143.62 42,643.66
Cash Dividends Per
Common Share:
FC historical .76 .78 .80 .82
MSCTC historical (3) -- -- -- --
MSCTC equivalent pro
forma (3) 3,295.91 3,383.22 3,470.52 3,579.66
Income Before Extraordinary
Item, Accounting Changes
Per Share:
FC historical 1.15 1.04 1.21 1.50
FC historical restated
for pending
acquisitions(1)(2) 1.06 .96 1.02 1.31
MSCTC historical (3) (2,480.00)(5,200.00) (5,840.00) (3,160.00)
FC pro forma 1.04 .93 1.00 1.29
MLD equivalent pro forma 4,525.11 4,070.71 4,352.97 5,628.13
(1) FC historical restated for pending acquisitions for the years
ended December 31, 1993 and December 31, 1994 includes the
financial results of American Sharecom, Inc. and WCT, Inc. as
filed on Form 8-K on February 13, 1995.
(2) FC historical restated for pending acquisitions for the years
ended December 31, 1992 and 1991 include the financial results of
American Sharecom, Inc. as filed on Form 8-K on February 13, 1995.
(3) The MSCTC historical and equivalent pro forma per share amounts
were calculated using the shares owned by each partner in its
holding company which FC is exchanging its shares for.
</TABLE>
<PAGE>
<PAGE>
SUMMARY FINANCIAL DATA
Set forth below are summaries of financial data regarding
FC, MLD and the underlying operating company, Minnesota Southern
Cellular Telephone Company ("MSCTC") of which MLD is a 50% equity
owner. The information is derived in part from, and should be
read in conjunction with, the consolidated financial statements
and other information and data of FC contained in or incorporated
by reference herein (see "Incorporation of Certain Documents by
Reference") and the Financial Statements of MLD and MSCTC
presented elsewhere in this Proxy Statement-Prospectus.
<PAGE>
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
(In thousands, except per share data)
<CAPTION>
Year Ended December 31
----------------------------------------------------
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Frontier Corporation (2)
(Consolidated)
Earnings Data:
Revenue and sales $1,106,282 $995,195 $866,287 $753,674 $652,801 $630,354
Income before taxes
and extraordinary
items, accounting
change 192,308 142,143 116,836 127,188 86,961 89,979
Income before
extraordinary
items, accounting
change 121,053 87,992 73,303 78,175 54,376 60,241
Income per common
share before
extraordinary
items, accounting
change (1) 1.47 1.14 0 .96 1.06 0.78 0.89
Balance Sheet Data:
Total assets 1,787,028 1,532,520 1,538,150 1,509,805 1,210,321 1,132,562
Long-term debt 578,600 494,407 529,139 591,244 363,168 356,861
Share owners'
equity 833,422 681,027 622,251 604,958 487,244 452,635
Book value per
common share (1) 9.90 8.59 7.96 7.73 6.69 6.43
Cash dividends
declared per
common share (1) $0.82 $0.80 $0.78 $0.76 $0.74 $0.72
Minnesota Southern Cellular Telephone Company
Earnings Data: (4)
Revenue and sales 2,547 1,382 766 31 - -
Net loss (632) (1,168) (1,040) (496) - -
<PAGE>
<PAGE>
Net loss allocated
to each partner (316) (584) (520) (248) - -
MLD net loss per
share (3) (3,160.00)(5,840.00)(5,200.00)(2,480.00) - -
Balance Sheet Data:
Total assets 3,026 4,252 3,830 3,661 - -
Long-term debt 3,814 5,376 4,711 4,115 - -
Partner's deficit (2,362) (2,119) (1,538) (498) - -
Book value per
common share
(3) (11,810.00)(10,595.00)(7,690.00)(2,490.00) - -
(1) Per share data restated for 2-for-1 common stock split distributed
during April 1994.
(2) Represents Frontier Corporation historical financial statements,
restated to include American Sharecom, Inc. (ASI). FC Entered into
an agreement to exchange its shares for all of the shares of ASI on
November 29, 1994. The transaction is expected to be accounted for
using the pooling of interests method. See the related Form 8-K filed
on February 13, 1995.
(3) See Footnote (3) on page 2.
(4) Amounts were derived from unaudited financial statements.
</TABLE>
<PAGE>
<PAGE>
MLD SPECIAL MEETING
Introduction
- ------------
This Proxy Statement-Prospectus is being furnished in
connection with the solicitation by the Board of Directors of MLD
of proxies to be voted at the Special Meeting of the sole
Shareholder of MLD Minnesota 10, Inc. ("MLD") to be held on March ,
1995 at 10:00 a.m. local time and at any and all adjournments
thereof ("Special Meeting"). The Special Meeting will be held at
the offices of Frontier Corporation, located at 180 South Clinton
Avenue, Rochester, New York 14646. This Proxy
Statement-Prospectus and the enclosed form of proxy are being
sent to shareholders of MLD on or about February , 1995.
Purpose of the Special Meeting
- ------------------------------
At the Special Meeting, shareholders of MLD will be asked
to approve a Plan of Merger ("Plan of Merger") which provides for
the merger of Rochester Subsidiary Twenty-Six Inc.
("Subsidiary"), a newly-formed, wholly-owned subsidiary of
Frontier Telecommunications Holding Inc. ("Subsidiary's Parent"),
a wholly-owned subsidiary of Frontier Corporation ("FC"), with
and into MLD (the "Merger"). See "Terms and Conditions of the
Proposed Merger."
Pursuant to the Plan of Merger, each share of MLD common
stock, $.01 par value ("MLD Common Stock") outstanding on the
Effective Date of the Merger ("Effective Date") will be converted
into 4365.44 shares of FC Common Stock, par value $1.00 per share
("FC Common Stock") for an aggregate of 436,544 shares in
exchange for all of the MLD Common Stock. Since no fractional
shares are involved in the transaction, the Sole Shareholder will
not receive a cash payment in lieu of fractional shares. See
"Terms and Conditions of the Proposed Merger -- Conversion of MLD
Shares."
Vote Required; Shares Entitled to Vote; Principal Shareholders
- --------------------------------------------------------------
The presence, either in person or by properly executed
proxy, of the holders of a majority of the outstanding shares of
MLD Common Stock entitled to vote will constitute a quorum for
the transaction of business at the Special Meeting. APPROVAL OF
THE MERGER WILL REQUIRE THE AFFIRMATIVE VOTE OF ONE HUNDRED
PERCENT (100%) OF THE OUTSTANDING SHARES OF MLD COMMON STOCK.
<PAGE>
<PAGE>
The Board of Directors of MLD has fixed the close of business on
February , 1995 as the record date ("Record Date") for the
determination of holders of outstanding shares of MLD Common
Stock entitled to receive notice of, and to vote at, the Special
Meeting. As of the date of this Proxy Statement-Prospectus,
there are 100 shares of MLD Common Stock outstanding, held by one
(1) shareholder of record. Each holder of shares of MLD Common
Stock on the Record Date will be entitled to one vote for each
share held of record by said holder.
The following table sets forth certain information
regarding the number of shares of MLD Common Stock beneficially
owned on the Record Date by the only person known by MLD to
beneficially own more than 5% of MLD Common Stock.
Name and address of Number of Shares Percentage of MLD
Beneficial Owner Beneficially Owned Common Stock
------------------- ------------------- -----------------
Mary L. Demetree 100 shares of 100%
common stock
As of the Record Date, the directors and executive officers
and their affiliates of MLD beneficially owned, in the aggregate,
100 shares of MLD Common Stock (representing 100% percent of the
outstanding shares of MLD Common Stock). Such persons have
indicated that they intend to vote their shares for approval of
the Plan of Merger. Accordingly, the Merger will be approved if
no additional shares are voted in favor of the Merger at the
Special Meeting.
Voting and Revocation of Proxies
- --------------------------------
Shares represented by proxies properly signed and returned
will be voted at the Special Meeting in accordance with the
instructions contained thereon, unless previously revoked. If a
proxy is properly signed and returned without voting
instructions, the shares represented thereby will be voted IN
FAVOR OF the Merger. Shareholders who submit a proxy have the
right to revoke it at any time before it is voted by execution of
a subsequently dated proxy, or by written notice to MLD, or by
attendance at the Special Meeting if verbal or written notice
of such revocation is given prior to the vote. Notice of
revocation may be given to the Secretary of MLD at 3348 Edgewater
Drive, Orlando, Florida 32804.
<PAGE>
<PAGE>
Solicitation of Proxies
- -----------------------
Solicitation of proxies will be primarily by mail. In
addition, following the mailing of proxy soliciting materials,
directors, officers, employees and agents of MLD may solicit
proxies by telephone, telegraph and personal interview. Such
directors, officers, employees and agents will not receive
additional compensation for such solicitation but may be
reimbursed for out-of-pocket expenses incurred in connection
therewith. MLD will bear the expense of proxy solicitation,
including reimbursement of reasonable out-of-pocket expenses
incurred by brokerage houses and other custodians, nominees and
fiduciaries in forwarding proxy solicitation material to the
beneficial owners of stock held of record by such persons.
Printing and cost of filing and registration costs, however, will
be paid by FC.
MARKET PRICE AND DIVIDEND DATA
FC Common Stock is listed and traded on the New York Stock
Exchange ("NYSE") and is quoted under the symbol "FRO". The
following table sets forth in per share amounts, for the
quarterly periods indicated, the high and low trading prices of
FC Common Stock on the NYSE, as reported on the NYSE Composite
Tape and the quarterly cash dividends declared thereon adjusted
for the FC Common Stock two-for-one stock split in the form of a
stock dividend with a record date of April 15, 1994.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FC Common Stock
--------------------------
High Low Dividends
<S> <C> <C> <C>
Year Ended December 31, 1991:
First Quarter................ $15.19 $13.00 .1875
Second Quarter............... 15.75 14.50 .1875
Third Quarter................ 15.69 14.13 .1875
Fourth Quarter .............. 17.00 14.88 .1925
Year Ended December 31, 1992:
First Quarter ............... $17.00 $15.07 .1925
Second Quarter .............. 16.88 14.57 .1925
Third Quarter ............... 16.44 15.13 .1925
Fourth Quarter .............. 17.88 15.32 .1963
Year Ended December 31, 1993:
First Quarter ............... $19.44 $17.32 .1963
Second Quarter .............. 21.75 18.25 .1963
Third Quarter ............... 24.38 20.50 .1963
Fourth Quarter .............. 25.13 21.69 .2025
Year Ended December 31, 1994:
First Quarter ............... $22.44 20.25 .2025
Second Quarter............... 25.25 20.81 .2025
Third Quarter ............... 24.75 21.63 .2025
Fourth Quarter .............. 24.63 20.50 .2075
</TABLE>
On July 27, 1994, the last full trading day prior to the
public announcement by MLD and FC of the proposed Merger, the
reported closing price per share of FC Common Stock on the NYSE
was $23.75. On February , 1995, the latest practicable day
prior to the mailing of this Proxy Statement-Prospectus, the
closing price per share of FC Common Stock on the NYSE was $ .
MLD SHAREHOLDERS ARE URGED TO CONSULT THE FINANCIAL PAGES
OF STATE AND NATIONAL NEWSPAPERS AVAILABLE LOCALLY AND THEIR
BROKERS OR FINANCIAL ADVISORS REGARDING CURRENT MARKET QUOTATIONS
FOR FC COMMON STOCK.
<PAGE>
<PAGE>
FC pays dividends on its Common Stock out of funds legally
available therefor as determined by its Board of Directors from
time to time; provided, however, that no dividends may be paid on
FC Common Stock until all accrued and unpaid dividends on FC's
outstanding series of preferred stock have been paid or declared
and funds set apart for the payment thereof. It has been the
policy of FC's Board of Directors to declare dividends on a
quarterly basis. As of December 31, 1994, there were
approximately 23,000 owners of record of FC Common Stock. For
further information regarding FC Common Stock, see "Description
of Capital Stock - Description of FC Common Stock."
MLD Common Stock is held by one (1) shareholder as of the
date of this Proxy Statement-Prospectus. MLD Common Stock is not
listed on any exchange nor is it regularly traded in the
over-the-counter market. MLD has not declared dividends on the
MLD Common Stock for the last thirteen fiscal quarters.
For further information regarding MLD Common Stock, see
"Description of Capital Stock - Description of MLD Common Stock".
TERMS AND CONDITIONS OF THE PROPOSED MERGER
The following description contains, among other
information, summaries of certain provisions of the Plan of
Merger and of the Agreement with Respect to a Merger, dated as of
July 6, 1994, among FC (formerly Rochester Telephone
Corporation), MLD, Subsidiary's Parent and Subsidiary (the
"Merger Agreement"). Such summaries do not purport to be
complete and are qualified in their entirety by reference to the
full text of such documents, copies of which (without Exhibits or
Schedules) are attached as Appendix A and Appendix B to this
Proxy Statement-Prospectus, and which are hereby incorporated by
reference into this Proxy Statement-Prospectus.
Background and Reasons for the Merger
- -------------------------------------
The terms of the proposed Merger are the result of
arms-length negotiations between representatives of FC and MLD
which were initiated by MLD in September of 1993. The MLD Board
of Directors approved the proposed Merger on June 24, 1994, with
the Executive Committee of the FC Board of Directors approval
taking place on July 28, 1994.
<PAGE>
<PAGE>
Based upon a review of all material considerations, the
directors of MLD, have concluded that the merger fairly reflects
the actual value of MLD Common Stock and is in the best interests
of its investors, its employees and its customers. As indicated
elsewhere herein, the MLD Common Stock is not readily marketable.
The exchange of MLD Common Stock for FC Common Stock will give
the MLD shareholders an equity security listed on the New York
Stock Exchange with a history of cash dividend payments.
There are various factors indicating that MLD can be a more
efficient and effective business competitor as part of a large
telecommunications firm, such as FC.
MLD and its partner face extreme market challenges in the
Minnesota 10, RSA as it is difficult for smaller companies such
as theirs to compete with larger cellular providers.
Accordingly, the Board of MLD believes that this transaction with
a company of sufficient size to compete is its best option.
The Board of Directors of FC believes that its shareholders
will benefit from the Merger. FC's investment in MLD is expected
to increase the wealth of FC's shareholders because the returns
from its investment in MLD are expected to exceed the cost of
capital employed to make the investment. FC's ability to
generate such returns results from its experience in the cellular
communications business and the operating synergies that the
combined companies will enjoy.
Recommendation
- --------------
THE BOARD OF DIRECTORS OF MLD HAS UNANIMOUSLY APPROVED THE
MERGER AND RECOMMENDS A VOTE IN FAVOR OF THE MERGER.
For a description of the interests of members of the MLD
Board of Directors in the Merger, see "Terms and Conditions of
the Proposed Merger - Interests of Certain Persons in the
Merger."
Effective Date and Consequences
- -------------------------------
Provided that all conditions to the consummation of the
Merger contained in the Merger Agreement have been satisfied or
waived, the Merger will become effective at the time and date
that the Articles of Merger are filed with the Secretary of State
of the State of Florida. It is anticipated that such filing will
be made and the Merger consummated as soon as practicable after
the approval and adoption of the Plan of
<PAGE>
<PAGE>
Merger by the shareholder of MLD and the receipt of all
regulatory approvals, although no assurance can be given in this
regard. MLD and FC each have the right, but not the obligation,
to terminate the Merger Agreement if the Effective Date does not
occur on or before March 31, 1995.
On the Effective Date, Subsidiary, a newly-formed,
wholly-owned subsidiary of Subsidiary's Parent, which is a
wholly-owned subsidiary of FC, will merge with and into MLD,
which will continue in existence as the surviving corporation.
Immediately thereafter, Subsidiary's Parent will transfer the
stock of MLD to Subsidiary's Parent's wholly-owned subsidiary,
Frontier Cellular Holding Inc. ("FCHI"), so that MLD will be a
wholly-owned subsidiary of FCHI. All properties and assets of
every kind held by Subsidiary on the Effective Date will become
property and assets of MLD and MLD will become liable for all of
the debts, liabilities and other obligations of Subsidiary. MLD
will continue to conduct its business pursuant to its Articles of
Incorporation, as amended to date. The Board of Directors of MLD
will resign and be replaced by Directors elected by FC.
Conversion of MLD Shares
- ------------------------
On the Effective Date, each authorized, issued and
outstanding share of MLD Common Stock will be converted into
4365.44 shares of FC $1.00 par value Common Stock, or an
aggregate of 436,544 shares issued to MLD's sole shareholder.
No Fractional Shares
- --------------------
Neither fractional shares of FC Common Stock nor scrip
certificates thereof will be issued in connection with the
Merger. If fractional shares were to be issued, cash based on a
$23 per share value would be delivered in lieu of fractional
shares or scrip certificates.
Delivery of Shares
- ------------------
Following the vote to approve the Merger, each MLD
shareholder will be mailed instructions, a form of letter of
transmittal and other materials to be used to surrender
certificates representing MLD Common Stock in exchange for
certificates representing the FC Common Stock (and cash in lieu
of fractional shares) which such holder is entitled to receive
pursuant to the Plan of Merger. All certificates so surrendered
will be cancelled and certificates for FC Common Stock will be
promptly issued.
<PAGE>
<PAGE>
Dividends or other distributions on FC Common Stock which
are declared or made after the Effective Date will be withheld
with respect to shares of FC Common Stock issued pursuant to the
Merger, until the certificates or lost-certificate affidavits for
the MLD Common Stock which were converted into said shares of FC
Common Stock have been surrendered and replaced with FC
Certificates. Dividends and other distributions so withheld will
not bear interest.
No transfer taxes will be payable by MLD shareholders in
connection with the exchange of certificates representing MLD
Common Stock for certificates representing FC Common Stock except
that if any certificate is to be issued in a name other than that
in which the certificate of MLD Common Stock surrendered in
exchange therefor is registered, it will be a condition of such
exchange that the person requesting such exchange pay FC any
transfer or other taxes required in connection therewith or
satisfy FC that such tax has been paid or is not applicable.
MLD shareholders should not surrender their MLD Common
Stock certificates for exchange until they have received
instructions and other materials. However, MLD shareholders are
urged to notify Cindy Magliula at MLD at (407) 422-8191, if their
certificates are lost, stolen or destroyed, in order to begin the
process of issuance of replacement certificates.
Certain Federal Income Tax Consequences
- ---------------------------------------
General
-------
It is intended that the Merger will constitute a
reorganization under Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), resulting in the following effects
for Federal income tax purposes:
(1) The acquisition of MLD will constitute a
reorganization within the meaning of Section 368(a)(1)(B) of the
Code.
(2) No gain or loss will be recognized to MLD, FC,
Subsidiary's Parent or Subsidiary as a result of the Merger.
(3) No gain or loss will be recognized to holders of
shares of MLD Common Stock who exchange their shares solely for
FC Common Stock.
<PAGE>
<PAGE>
(4) The basis of the FC Common Stock to be received by the
holders of shares of MLD Common Stock will be the same as the
basis of the MLD shares surrendered in exchange therefor.
(5) The holding period of the FC Common Stock to be
received by the holders of shares of MLD Common Stock will
include the holding period of the MLD shares surrendered in
exchange therefor, provided such shares are held as a capital
asset at the time of the exchange.
Receipt of Opinion of Counsel as Condition to the Merger
- --------------------------------------------------------
Receipt of an opinion of counsel, for the benefit of MLD's
shareholders regarding the Federal income tax effects of the
Merger is a condition to the consummation of the Merger. Such
opinion has been rendered by Hopkins & Sutter, special tax
counsel to MLD.
An opinion of counsel as to the Federal income tax effects
of the Merger is not binding in any way upon the Internal Revenue
Service. There is no assurance that, upon review of the
transaction, the Internal Revenue Service will accept the
conclusions in tax counsel's opinion.
Set forth below is a description of certain of the Federal
income tax effects of the Merger that may directly affect
shareholders of MLD.
Consequences to Holders of MLD Common Stock
- -------------------------------------------
A shareholder of MLD who exchanges MLD Common Stock solely
for FC Common Stock will not recognize gain or loss in the
exchange, subject to the discussion below concerning receipt of
cash for fractional shares. The basis of the FC Common Stock
received by the shareholders of MLD will be the same as the basis
of the MLD Common Stock surrendered and, provided that the MLD
Common Stock is held as a capital asset, the holding period of
the FC Common Stock will include the holding period of the MLD
Common Stock surrendered.
Receipt of Cash in Lieu of Fractional Shares
- --------------------------------------------
Although it is contemplated that the number of shares of FC
Common Stock to be acquired in the Merger will be a whole number
and that therefore no cash in lieu of fractional shares of FC
Common Stock will be paid, if there is such a payment, it should,
subject to the provisions and limitations of Section 302
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<PAGE>
of the Code, be treated as having been received in part or full
payment in exchange for the fractional share interest.
General Advice
- --------------
The Federal income tax discussion set forth above
pertaining to MLD shareholders is included herein for general
information only, does not purport to address all federal income
tax consequences of the Merger to the MLD shareholders, and is
based upon the opinion of Hopkins & Sutter, special tax counsel
for MLD, whose opinion is Exhibit 8 to the Registration Statement
of which this Proxy Statement-Prospectus is a part. Shareholders
of MLD are cautioned that the foregoing discussion is based in
large part upon principles adopted by the Internal Revenue
Service in published rulings which have been stated to be
applicable in transactions of this type. Although each
shareholder may rely on the opinion of Hopkins & Sutter, each
shareholder of MLD is advised to consult with such shareholder's
own tax advisor regarding the tax consequences of the Merger.
The tax consequences of the Merger will depend on the facts and
circumstances applicable to each shareholder. With respect to
the tax consequences, if any, of the Merger under applicable
foreign, State or local law, no information is provided herein
and shareholders are advised to consult their tax advisors.
Conduct Pending Merger; Representations and Warranties
- ------------------------------------------------------
MLD has agreed, among other things, that prior to the
Effective Date, it will carry on its business diligently and that
it will give to FC and its representatives full access to its
property, documents, contracts and records and such information
with respect to its business affairs and properties as FC may
reasonably request. MLD has further agreed that, without FC's
written consent, it will not, among other things, (i) declare or
pay any extraordinary dividends; (ii) issue, sell, purchase or
redeem any shares of capital stock; (iii) enter into any contract
or incur any liability not in the ordinary course of business; or
(iv) adopt or modify any bonus, pension, profit sharing or other
compensation plan or enter into any contract of employment. FC
and MLD have also made various representations and warranties to
each other with respect to financial and other matters.
<PAGE>
<PAGE>
Conditions of Closing
- ---------------------
The Plan of Merger must be approved by the affirmative vote
of one hundred percent (100%) of the outstanding shares of MLD
Common Stock and of the Common Stock of Subsidiary. The Merger
is also subject to the approval of the Federal Communications
Commission ("FCC"). (See "Terms and Conditions of the Proposed
Merger -- Regulatory Matters".)
The obligation of FC to consummate the Merger is further
subject to various other conditions set forth in the Merger
Agreement, including, but not limited to, the simultaneous
acquisition by FC of the other corporate partner of MSCTC, the
continued truth and accuracy on the Effective Date of the
representations made by MLD in the Merger Agreement; the absence
on the Effective Date of notice of any pending investigation by
any state or federal agency seeking to restrain or prohibit the
Merger; and receipt of an agreement from the Affiliates of MLD to
the effect that the shares of FC Common Stock received by them in
the Merger will not be resold except in accordance with the terms
of said agreement and applicable securities laws and regulations.
The obligation of MLD to consummate the Merger is also subject to
various conditions set forth in the Merger Agreement, including,
but not limited to, the continued truth and accuracy on the
Effective Date of the representations made by FC in the Merger
Agreement and the absence on the Effective Date of notice of any
pending investigation by any state or federal agency seeking to
restrain or prohibit the Merger.
Both of the Boards of Directors of MLD and FC may, at their
option, waive compliance of any condition to their obligations to
consummate the Merger.
Termination
- -----------
The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Date, notwithstanding
approval of the Merger by MLD shareholders at the Special Meeting by,
among other things: (a) the mutual consent of the Board of Directors
of MLD and the Board of Directors (or Executive Committee
thereof) of FC; or (b) either the Board of Directors of MLD or
the Board of Directors (or Executive Committee
<PAGE>
<PAGE>
thereof) of FC, if the Merger has not become effective on or
before March 31, 1995.
Accounting Treatment
- --------------------
It is anticipated that the Merger will be accounted for as
a "pooling of interests". In such case, at the date of
consummation of the Merger, the recorded assets and liabilities
of FC and MLD will be retroactively combined and the revenues and
expenses for the current and prior periods will be added together
as though FC and MLD had always been combined.
Interests of Certain Persons in the Merger and Other Transactions
- -----------------------------------------------------------------
The Merger Agreement provides that prior to the Effective
Date, MLD will obtain the resignation, effective automatically
upon the Effective Date of the Merger, of all of the existing
directors of MLD.
Set forth below in tabular form is a list of the directors
of MLD together with their anticipated 1994 annual compensation
as officers and members of the Board of Directors of MLD.
Director Compensation
Mary L. Demetree $ -0-
Total Compensation $ -0-
* For a description of the number of shares of MLD Common
Stock beneficially held by each director of MLD, see
"Management of MLD - Directors of MLD" and "Sale of FC
Common Stock by MLD Affiliates; Plan of Distribution."
Regulatory Matters
- ------------------
The Merger is subject to the prior approval of the FCC.
Application for such approval was made to the FCC on May 13,
1994.
<PAGE>
<PAGE>
Rights of Dissenting Shareholders
- ---------------------------------
Pursuant to Sections 607.1302 and 607.1320 of the Florida
Business Corporation Act, shareholders of MLD that properly
dissent from the Merger will be entitled to obtain payment of the
fair value of their shares. The Board of Directors of MLD
believes that the 4365.44 per share exchange ratio of FC Common
Stock for MLD Common Stock represents a fair price to
shareholders and that the Merger is in the best interests of
shareholders of MLD.
Any shareholder of MLD may assert dissenters' rights if the
shareholder delivers to MLD before the vote is taken on the
proposed Merger a written notice of his intent to demand payment
for his or her shares if the proposed Merger is consummated, and
the shareholder does not vote in favor of the proposed Merger.
If the proposed Merger is approved, MLD shall, within 10 days
after such approval, give written notice of adoption of the Plan
of Merger to each shareholder who filed a notice of intent to
demand payment for his shares. Within 20 days after the giving
of such notice, any shareholder electing to dissent must file
with MLD a notice of such election, stating his name, address,
the number, classes, and series of shares as to which he dissents
and a demand for payment. Any shareholder filing an election to
dissent must deposit the certificate or certificates, or other
evidence of ownership, with respect to his shares with MLD
simultaneously with the filing of such election.
Within 10 days after the expiration of the period in which
shareholders may file their notice of election to dissent, or
within 10 days after the Merger is effected, whichever is later
(but no later than 90 days after the approval of the Plan of
Merger) MLD will send each shareholder who has delivered a
written demand for payment a written offer to pay an amount that
MLD estimates to be the fair value of the shares, accompanied by
MLD's balance sheet as of December 31, 1994, together with MLD's
statement of income for that year and the latest available
interim financial statements.
If MLD fails to make such offer or if any dissenting
shareholder does not accept the offer within 30 days, then MLD,
within 30 days after receipt of written demand from any
dissenting shareholder given within 60 days after the Merger is
<PAGE>
<PAGE>
effected, shall, or at its election at any time within such 60
day period may, file an action in any court of competent
jurisdiction in Orange County, Florida requesting the court to
determine the fair value of the shares. MLD will make all
dissenters, whether or not residents of Florida, whose demands
remain unsettled parties to the proceeding as an action against
their shares and will serve all parties with a copy of the
initial pleadings in such proceeding.
The court may appoint one or more persons as appraisers to
receive evidence and recommend a decision on the question of fair
value. MLD shall pay each dissenter made a party to the
proceeding the amount which the court finds to be due him within
10 days after final determination of the proceedings. The
judgment may, at the discretion of the court, include a fair rate
of interest to be determined by the court.
The foregoing summary of the rights of dissenting
shareholders is qualified in its entirety by reference to
Appendix C setting forth in full the provisions of Sections
607.1301, 607.1302 and 607.1320 of the Florida Business
Corporation Act.
In view of the complexity of these provisions of Florida
law, shareholders who wish to avail themselves of their
dissenter's rights should consult their own legal counsel.
RESALE OF FC COMMON STOCK BY MLD AFFILIATES;
PLAN OF DISTRIBUTION
Shareholders of MLD who are not affiliates of MLD may
resell the shares of FC Common Stock acquired by them in
connection with the Merger without restriction. The FC Common
Stock to be issued pursuant to the Merger has also been
registered under the Securities Act to cover the resale of FC
Common Stock by holders of MLD Common Stock who may be deemed to
control, or be controlled by, or be under common control with,
MLD at the Effective Date ("Affiliates"). Each person who may be
deemed by MLD to be an Affiliate of MLD will be required to
execute and deliver to FC at or prior to the Effective Date an
agreement (the "Securities Agreement") that such person will not
sell, transfer or otherwise dispose of any shares of FC Common
Stock acquired by such person in the Merger except in compliance
<PAGE>
<PAGE>
with the terms and provisions of said agreement and applicable
provisions of the Securities Act and rules and regulations
thereunder.
The following table sets forth the names of the Affiliates,
the number of shares of MLD Common Stock beneficially owned by
them as of the Record Date, the number of shares of FC Common
Stock which will be beneficially owned by each of them as of the
Effective Date, if the Plan of Merger is adopted at the Special
Meeting, the number of shares of FC Common Stock all or a part of
which may be reoffered by each Affiliate, and the number of
shares of FC Common Stock each Affiliate will beneficially own if
all of the shares of FC Common Stock offered hereby by each such
Affiliate are sold as described herein.
*FC Common FC Common
MLD Stock to *FC Stock
Common Stock be Owned Common Benefi-
Beneficially Beneficially Stock cially
Owned as of as of the Offered Owned if
January 1, Effective Hereby Offering
Name of Affiliate 1995 Date Completed
----------- ----------- ------- ---------
Mary L. Demetree 100 436,544 436,544 - 0 -
*Based on the 4365.44 exchange ratio of FC
Common Stock for MLD Common Stock.
The Affiliate, Mary L. Demetree, has been a shareowner and
member of MLD's Board of Directors for a period of at least three
(3) years prior to the date of the Proxy Statement-Prospectus.
Mary L. Demetree is not now an affiliate of or officer or
director of FC or any other affiliate of FC.
MLD Affiliates have advised FC that the shares of FC Common
Stock issued to them and covered hereby may be sold in
transactions involving a broker which is a member of the NYSE.
Once the financial reporting requirements for "pooling"
accounting treatment have been met, under the terms set forth in
the Securities Agreement sales through such brokers may be made,
<PAGE>
<PAGE>
from time to time, by any method of trading authorized by the
NYSE or any other stock exchange on which such stock may be
listed, including block trading in negotiated transactions.
Without limiting the foregoing, such brokers may act as dealers
by purchasing any or all of the shares covered by this Proxy
Statement-Prospectus, either as agents for others or as
principals for their own accounts and reselling such shares
pursuant to this Proxy Statement-Prospectus. The shares covered
by this Proxy Statement/Prospectus may also be sold pursuant to
Rule 145 under the Securities Act.
In reoffering or reselling the shares of FC Common Stock
covered by this Proxy Statement-Prospectus, the Affiliates and
any broker/dealers who execute sales for them, may be considered
to be statutory "underwriters" within the meaning of the
Securities Act.
The engagement of a broker for the reoffering or resale of
any of the FC Common Stock covered by this Proxy
Statement-Prospectus may be terminated at any time by either the
Affiliates or the broker. Each of the Affiliates is acting
independently of the others (and FC) in making decisions with
respect to the timing, manner and size of each reoffering or
resale.
Each of the Affiliates has advised FC that, during such
time as he or she may be engaged in a distribution of the FC
Common Stock included herein, such person will (i) comply with
the rules and regulations promulgated by the Securities and
Exchange Commission under the 1934 Act, (ii) not engage in any
stabilization activity in connection with FC securities, (iii)
comply with the prospectus delivery requirements with regard to
each sale or offer of sale of the FC Common Stock with respect to
which delivery of a prospectus is required, and (iv) not bid for
or purchase any securities of FC or attempt to induce any person
to purchase any FC securities except as permitted under the 1934
Act. The Affiliates have also agreed to inform FC when the
distribution of the shares held by each of them is completed. In
making such agreements, each Affiliate specifically disclaims any
responsibility for the acts or omissions of any other Affiliate.
Each of the Affiliates has represented to FC that he or she
purchased the FC Common Stock for his or her own account,
<PAGE>
<PAGE>
and that no other person or entity had or has any beneficial
interest in such FC Common Stock, except as set forth in this
Proxy Statement-Prospectus. In addition, Mary L. Demetree has
represented, in connection with the tax opinion from Hopkins &
Sutter, that she has no plan or intention to sell or otherwise
dispose of shares of FC Common Stock received in an amount that
would reduce her ownership of such FC Common Stock to a number of
shares having a value, as of the date of the Merger, of less than
50 percent of the value of all the formerly outstanding shares of
MLD Common Stock as of the same date.
FRONTIER CORPORATION
FC, incorporated as Rochester Telephone Corporation in 1920
under the laws of New York State, was formed to take over and
unify the properties of a predecessor Rochester, New York area
telephone company and a portion of the properties of New York
Telephone Company located in the same general territory. Until
January 1, 1995, FC was an independent telephone operating
company regulated by the New York Public Service Commission
("NYPSC") and, together with four of its regulated telephone
operating company subsidiaries, Frontier Communications of New
York, Inc. Frontier Communications of Sylvan Lake, Inc., Frontier
Communications of AuSable Valley, Inc. and Frontier
Communications of Seneca-Gorham, provided telephone service
within New York State to 581,257 access lines. On January 1,
1995, FC dropped its local exchange company business into a
wholly-owned subsidiary, Rochester Telephone Corp., and its
lightly regulated businesses into Frontier Communications of
Rochester, Inc. The principal area served by Rochester Telephone
Corp. is the City of Rochester and adjacent areas. FC has its
principal executive offices at 180 South Clinton Avenue,
Rochester, New York 14646. Its telephone number is (716)
777-1000.
In addition, FC owns, through an intervening subsidiary,
five telephone company subsidiaries in Pennsylvania: Frontier
Communications of Oswayo River, Inc. ("Oswayo"), Frontier
Communications of Breezewood, Inc. ("Breezewood"), Frontier
Communications of Pennsylvania, Inc. ("FC-PA"), Frontier
<PAGE>
<PAGE>
Communications of Canton, Inc. ("Canton") and Frontier
Communications of Lakewood, Inc. ("Lakewood"). Oswayo serves
Potter and McKean Counties with 2,062 access lines, Breezewood
serves Bedford and Fulton Counties with 3,787 access lines, and
FC-PA serves Lancaster and Berks Counties with 23,310 access
lines and provides paging services in York and Dauphin Counties.
Canton serves Bradford, Lycoming and Tioga Counties with 3,476
access lines. Lakewood serves Schuylkill County with 1,402
access lines.
In Michigan, FC, through an intervening subsidiary, owns
two telephone company subsidiaries: Frontier Communications of
Michigan, Inc. ("FC-MI") and Ontonagon County Telephone Company
("Ontonagon"). FC-MI serves Hillsdale, Jackson, Lenawee,
Washtenaw, Calhoun and Branch Counties with 21,054 access lines
and also serves a portion of Williams County, Ohio with
approximately 400 access lines. Ontonagon serves Ontonagon
County and Ontonagon's majority-owned subsidiary, Midway
Telephone Company ("Midway"), serves Iron, Houghton, Ontonagon
and Baraga Counties. Ontonagon and Midway have 5,228 access
lines.
In Indiana, FC, through an intervening subsidiary, owns two
telephone company subsidiaries: Frontier Communications of
Thorntown, Inc. ("Thorntown") and Frontier Communications of
Indiana, Inc. ("FC-IN"). Thorntown serves Boone, Tippecanoe,
Clinton and Montgomery Counties with 2,351 access lines.
FC-IN serves Grant, Madison and Delaware Counties with 2,299
access lines.
Through an intervening subsidiary, FC owns five telephone
subsidiaries in Wisconsin: Frontier Communications of Wisconsin,
Inc. ("FC-WI"), Frontier Communications of Mondovi, Inc.
("Mondovi"), Frontier Communications - Lakeshore, Inc.
("Lakeshore"), Frontier Communications - St. Croix, Inc. ("St.
Croix"), and Frontier Communications of Viroqua, Inc.
("Viroqua"). FC-WI serves Menominee, Outagamie, Shawano and
Waupaca Counties with 20,740 access lines. Mondovi serves Pepin,
Eau Claire and Buffalo Counties with 2,291 access lines. St.
Croix serves St. Croix and Polk Counties with 7,205 access lines.
Lakeshore serves Shawano and Oconto Counties with 1,845 access
lines. Viroqua serves Vernon County with 3,364 access lines.
<PAGE>
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Additionally, FC owns eight telephone company subsidiaries
in Illinois, also through an intervening subsidiary. In 1989, FC
acquired Frontier Communications - Midland, Inc. ("Midland"),
Frontier Communications of Illinois, Inc. ("FC-IL"), Frontier
Communications - Prairie, Inc. ("Prairie") and Frontier
Communications of Lakeside, Inc. ("Lakeside"). In January 1990,
FC acquired Frontier Communications of Mt. Pulaski, Inc. ("Mt.
Pulaski"). FC acquired Frontier Communications - Schuyler, Inc.
("Schuyler") and Frontier Communications of Orion, Inc. ("Orion")
in 1990 and Frontier Communications of DePue, Inc. ("DePue") in
March 1991. Midland serves Cass, Morgan, Macoupin, Shelby,
Fayette, Montgomery, Bond, Clinton, Greene and Madison Counties
with 4,108 access lines. FC-IL serves McLean, Livingston, Ford,
Woodford, Tazewell, Iroquois, Shelby, Christian and Macon
Counties with 4,334 access lines. Lakeside serves Shelby and
Moultrie Counties with 813 access lines. Prairie serves
Livingston and Woodford Counties with 989 access lines. Mt.
Pulaski serves Logan, Macon, Dewitt and Sangamon Counties with
2,001 access lines. Schuyler serves Schuyler and Brown Counties
with 2,830 access lines, together with an additional 924 access
lines serving Boone and Dallas Counties, Iowa. Orion serves
Henry, Rock Island and Mercer Counties with 1,701 access lines.
DePue serves Bureau County with 773 access lines.
Through an intervening subsidiary, FC owns three telephone
company subsidiaries in Alabama: Frontier Communications of
Alabama, Inc. ("FC-AL"), Frontier Communications of the South
("FC-South"), and Frontier Communications of Lamar County, Inc.
("Lamar"). FC-AL serves Monroe, Clarke, Wilcox, Baldwin and
Conecuh Counties with 11,979 access lines. FC-South serves
Escambia, Monroe, Wilcox and Clarke Counties in Alabama and
Escambia County in Florida with 14,024 access lines. Lamar
serves portions of Lamar, Pickens and Fayette Counties with 1,981
access lines.
In Georgia, through an intervening subsidiary, FC owns two
subsidiaries: Frontier Communications of Fairmount, Inc.
("Fairmount") and Frontier Communications of Georgia, Inc. ("FC-
GA"). Fairmount serves Bartow, Cherokee, Gerdon, Murray and
Pickens Counties with 1,920 access lines. FC-GA, which was
acquired in 1992, serves Bulloch County with 18,821 access lines.
<PAGE>
<PAGE>
In Mississippi, through an intervening subsidiary, FC owns
Frontier Communications of Mississippi, Inc. ("FC-MS"), which
serves Alcorn, Calhoun, Chickasaw, Lee, Pontotoc, Prentiss and
Tishomingo Counties with 5,187 access lines.
FC acquired the Minnesota telephone properties of Centel
Corporation in June 1991 which was recently renamed Frontier
Communications of Minnesota, Inc. ("FC-MN"). FC-MN, which is
held through an intervening subsidiary, serves 99,512 access
lines in Nobles, Rock, Dakota, Sibley, Murray, Lyon, Carver,
LeSueuer, Scott, Lac Qui Parle, Lincoln, Yellow Medicine, Martin,
Pipestone, Waseca, Blue Earth, Rice, Jackson and Watonwan
Counties, Minnesota.
In August 1991, FC acquired the Iowa telephone properties
of Centel Corporation and recently renamed it Frontier
Communications of Iowa, Inc. ("FC-IA"). FC-IA, which is held
through an intervening subsidiary, serves 50,847 access lines in
Franklin, Wright, Lyon, O'Brien, Osceola, Crawford, Ida,
Woodbury, Taylor, Hancock, Plymouth, Pottawattomie, Adams, Sac,
Webster, Sioux, Cherokee, Ringgold, Cerro Gordo, Buena Vista and
Calhoun Counties, Iowa.
All of the above figures for access lines are as of July,
1994 unless otherwise noted.
In addition to its telephone operations, FC is the parent
company, either directly or through intervening wholly-owned
subsidiaries, of nine telecommunications-related companies:
Frontier Network Systems Inc. ("Network Systems"), Frontier
Communications of the Mid Atlantic, Inc. ("Mid Atlantic"), Budget
Call Long Distance, Inc. ("Budget Call"), Frontier
Communications International Inc. ("FCI"), RCI Long Distance
Canada Ltd. ("RCI Canada"), Frontier Communications of New
England, Inc. ("FCI New England"), Taconic Long Distance Service
Corp. ("Taconic"), and Rochester Telephone Mobile Communications
("RTMC").
Network Systems operates the Network Business Systems
division, which sells and maintains business telecommunications
equipment and systems, and provides expert management and
technical expertise related to telecommunications operations,
administration and engineering.
<PAGE>
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In April 1986, Rotelcom and Anixter Bros., Inc. formed a
joint venture, Anixter-Rotelcom, to distribute wire, cable,
telecommunications and CATV products in the Northeast.
FCI, a facilities-based interexchange carrier, sells voice
and data services in 48 states, excluding Alaska and Hawaii.
Mid Atlantic, a regional interexchange carrier, sells voice
and data services in eight states, primarily in the mid-Atlantic
region.
Budget Call, an interexchange carrier, sells casual calling
services in 21 states.
RCI Canada, a regional interexchange carrier, sells voice
and data services in the Montreal metropolitan area in the
Province of Quebec, Canada and buys terminating access from Bell
CA for CN-bound FCI traffic.
FCI New England, doing business as Long Distance North,
provides reseller service in Vermont, New Hampshire, Maine and
western Massachusetts and is qualified to do business in Rhode
Island and New York.
Taconic is a New York long distance reseller operating
primarily in the Albany, New York area. Taconic leases network
capacity primarily from Eastern Microwave and Network Systems.
RTMC is a limited partnership that provides cellular
telephone service in a five-county area in Western-Central New
York. FC is the general partner, with an 85 percent interest and
RTMC is now a part of the cellular supersystem mentioned below.
On March 12, 1993, FC signed a definitive agreement with a
subsidiary of NYNEX Corporation to form a cellular supersystem
joint venture in upstate and western New York State to provide
cellular telephone customers with expanded geographic coverage.
The supersystem, known as Upstate Cellular Network, which began
operations on July 1, 1994, initially includes the cellular
markets in Buffalo, Rochester, Syracuse, Utica-Rome and New York
Rural Service Area #1, which includes Jefferson, St. Lawrence and
Lewis counties. The supersystem is a 50/50 joint venture
partnership, with RTMC as the manager. FC's share of the joint
venture earnings will be accounted for under the equity method.
On December 21, 1993, FC and NYNEX announced their intention to
include the Binghamton and Elmira areas in the supersystem,
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following receipt of the necessary approvals and satisfaction of
other preconditions.
Before implementation of the Open Market Plan
referenced below, the NYPSC issued an order on July 6, 1993 which
imposed a royalty on FC in the amount of two percent of the total
capitalization of Rochester's unregulated operations. Based upon
an initial interpretation of the Order, FC estimated that the
effect was in the range of $2.0 million per year. FC filed a
legal challenge to the Commission's action on the royalty
proposal in the courts. On June 30, 1994, the Appellate Division
of the New York State Supreme Court upheld the NYPSC decision of
July 6, 1993. FC filed, on July 29, 1994, a Notice of Appeal and
Motion for Leave To Appeal with the New York Court of Appeals.
That Motion was recently granted. Absent effectiveness of the
Open Market Plan, and if ultimately upheld in the courts, the
royalty would be treated as an offset to the Rochester, New York
operating company's regulated revenue requirement from regulated
intrastate telephone operations. FC is vigorously contesting
this case but cannot predict the outcome with any certainty at
this time. FC's Open Market Plan, discussed in the following
paragraphs, resolves the royalty issue for the duration of the
Open Market Plan Agreement.
In February 1993, FC filed a petition for reorganization
with the NYPSC. The petition became known as FC's Open Market
Plan and Corporate Restructuring Proposal. The request was
twofold, first establishing two new subsidiary companies to be
constituted from the operating assets of the existing Rochester
operating telephone company. One company would be a competitive
telecommunications company which would provide an array of
services on a retail basis in the Rochester marketplace. This
company would have the flexibility to price and introduce
services as necessary to compete. The second company would be a
wholesale network company which would be regulated and would
provide services to the new competitive subsidiary company and
all other telecommunications providers on an equal basis. This
configuration, unique in the telecommunications industry, was
being proposed to better meet the current and emerging
competition in the marketplace.
The second aspect of the petition involved FC's request to
reorganize into a holding company structure. Under this
<PAGE>
<PAGE>
approach, FC would create a new unregulated holding company for
the consolidated organization. This structure would provide the
financing flexibility to continue the acquisition and
diversification efforts necessary for the long-term growth of the
business. On May 17, 1994 FC reached a Joint Stipulation and
Agreement with the Staff of the NYPSC, Time Warner Communications
and the Communications Workers of America on the terms of this
Open Market Plan and Corporate Restructuring. Subsequently, on
August 1, 1994 the New York State Department of Economic
Development also officially endorsed the Plan. The Joint
Stipulation and Agreement included operational modifications to
FC's original proposal as well as a rate reduction of $21
million over seven years and a form of price cap regulation for
at least five years. After pursuing final approval by the NYPSC,
the NYPSC adopted a hearing and briefing schedule running through
August 1994. On November 10, 1994 the NYPSC issued its Order
approving the Open Market Plan and Corporate Restructuring.
The Open Market Plan and Corporate Restructuring was
presented to shareholders of FC for their approval on December
19, 1994. They voted to approve several proposals (all
recommended by management) to implement the Plan which was
implemented on January 1, 1995 and is described as follows:
Background of the Open Market Plan
- ----------------------------------
Over the past decade FC has evolved from being primarily a
provider of local exchange and access services in the Rochester,
New York market (the "Rochester Market") to become a diversified
telecommunication company. The Company now provides (1) local
telephone services inside and outside New York State and (2) long
distance, wireless and other telecommunication services. This
evolution has been a product of the Company's strategy to become
a leading provider of integrated telecommunication products and
services to its customers. The Company intends to pursue
continued growth through expansion of its existing businesses,
development of value-added products and selected acquisitions.
The Company, in addition to expanding its scale, also seeks
to respond to customers' needs for simple, integrated,
communications solutions. The Company believed that its ability
<PAGE>
<PAGE>
to do this was constrained by its old corporate structure which,
among other things, subjected it to more extensive and burdensome
regulation than its competitors. The New York State Public
Service Commission (the "NYPSC") regulates the rates charged by
providers of local exchange services in New York State and the
ability of such providers to make acquisitions or investments, to
enter into certain new lines of business or geographic areas, to
issue equity securities and to incur long-term indebtedness.
Accordingly, while the nature and scope of the Company's business
had changed substantially over the past ten years, the NYPSC
continued to regulate not only the Company's local exchange
services in the Rochester Market but also, directly or
indirectly, all of the Company's other businesses through its
regulation of the Company's ability to finance or expand those
businesses. This disadvantaged the Company in the marketplace
because many of the Company's competitors are structured as
holding companies whose financing, diversification and expansion
activities are subject to comparatively less regulation. Although
the Company had been able to diversify by negotiating interim
arrangements with the NYPSC, the Company believed that this was a
difficult, costly and uncertain process.
Accordingly, on May 16, 1994, the Company, the Staff and
certain intervening parties entered into the Open Market Plan
Agreement to implement a plan (the "Open Market Plan") to enable
the Company to respond to the changing competitive environment.
As required by the Open Market Plan Agreement, the NYPSC
approved the Open Market Plan Agreement on November 10, 1994.
The Open Market Plan became effective on January 1, 1995 (the
"Implementation Date"),as a result of shareowner approval of the
proposals presented to the shareowners at a Special Meeting, on
December 19, 1994.
The Open Market Plan Agreement
Restructuring of the Company -
- -----------------------------------
The Open Market Plan Agreement provides that FC is
reorganized into an unregulated parent holding company, which
directly or indirectly owns all of the stock of:
1. R-Net, a regulated telephone and network transport
corporation, formed immediately prior to the "Implementation
<PAGE>
<PAGE>
Date", which offers retail services to existing customers and
sells and markets wholesale network services and other services
to retailers of telecommunication services in the Rochester
Market, and bears the name Rochester Telephone Corp.;
2. R-Com, a corporation formed immediately prior to the
"Implementation Date", which is a lightly regulated retail
provider of telecommunication services to residential and
business customers located, initially, in the Rochester Market
(currently known as Frontier Communications of Rochester, Inc.);
3. Frontier Information Technologies Inc., an existing
unregulated subsidiary of FC, which provides computer, billing
and other information processing services to FC's affiliates and
to third parties ("FIT"); and
4. FC's other existing subsidiaries, including those that
provide local exchange services outside the Rochester Market as
well as telecommunication equipment and services in the Rochester
Market and other markets.
FC, the resulting holding company, is organized as a New
York business corporation whose businesses outside of New York
State are not subject to NYPSC regulation. The holding company is
entitled, among other actions, to issue securities and effect
acquisitions or enter new lines of business without obtaining the
approval of the NYPSC, subject to certain exceptions. As a
result, FC should be able to respond more quickly to customer
needs and new opportunities.
As a provider of local exchange services in the Rochester
Market, R-Net will be subject to regulation by the NYPSC. As
described below, the Open Market Plan Agreement provides the
basis for NYPSC regulation of R-Net's service offerings, R-Net's
rates, transactions between R-Net and its affiliates and R-Net's
relationship with other carriers. Similarly, Frontier
Communications of AuSable Valley, Inc. (AuSable), Frontier
Communications of New York, Inc. ("FC-NY"), Frontier
Communications of Seneca-Gorham, Inc. ("Seneca-Gorham") and
Frontier Communications of Sylvan Lake, Inc. ("Sylvan Lake"), the
Company's other subsidiaries which currently provide local
exchange services in New York State (the "Other NY Telcos"), are
also subject to NYPSC regulation. Unlike R-Net and the Other NY
Telcos, however, R-Com is lightly regulated as a local service
resale operator in the same manner as similarly situated
providers. Neither the rates charged by R-Com nor its rate of
<PAGE>
<PAGE>
return are regulated, although R-Com is required to file tariffs
containing its rates with the NYPSC. In addition, local service
resale operators are subject to certain NYPSC billing and
collection rules, although to a lesser extent than facilities-
based providers of local exchange services.
The businesses transferred pursuant to the Open Market Plan
to R-Net and R-Com, represent approximately 25% and 4%,
respectively, of the Company's consolidated revenues as of the
Implementation Date, and 37% and less than 1%, respectively, of
the Company's consolidated operating assets as of such date.
FIT's revenues and operating assets represent less than 1% of
FC's consolidated revenues and consolidated operating assets.
Service Offerings by R-Net
--------------------------
R-Net is using the "Rochester Telephone" name and is
subject to the ongoing authority of the NYPSC. It provides the
retail service offerings in the Rochester Market previously
provided by the Company with the exception of the services that
are now considered to be competitive by the NYPSC. These
competitive services, consisting principally of Centrex, private
line service and voice mail, are provided by R-Com. In addition,
to the extent reasonable and upon request, R-Net will unbundle
and offer the services or network elements available from its
network facilities, on a tariff basis, for wholesale purchase by
R-Com, by other carriers certified by the NYPSC to offer
telephone service or by other bona fide service providers. R-Net
will continue (1) to provide retail services until such services
are considered competitive by the NYPSC, at which time they may
be transferred to R-Com, and (2) to offer White and Yellow pages
directories for the Rochester Market.
Service Offerings by R-Com
--------------------------
R-Com provides integrated communications services by means
of buying network access from R-Net or other carriers and
packaging these services with R-Com's own and others' product
lines such as voice mail, data services, long distance and
wireless. Initially, however, R-Com's customer base is only those
customers for the retail services transferred to R-Com on the
Implementation Date, consisting principally of Centrex, private
line services and voice mail. Customers purchasing any
<PAGE>
<PAGE>
services other than those transferred to R-Com initially will be
served by R-Net.
R-Com and the other providers compete for customers from
R-Net's customer base through direct marketing efforts. R-Com
may compete for new customers or for R-Net's customers by
reselling services purchased from R-Net or from another vendor or
by selling services provided through R-Com's own facilities. In
the future, R-Com will receive R-Net's customer base with respect
to other services that are deemed to be competitive by the NYPSC
and are transferred to R-Com or are developed by R-Com. While R-
Com's services are initially limited to customers in the
Rochester Market, the Company anticipates that R-Com may
eventually offer its services outside the Rochester Market.
Rate Stabilization Plan
-----------------------
The Open Market Plan Agreement provides for a total of $21
million in rate reductions for R-Net (the "Rate Stabilization
Plan") over a seven year period beginning January 1, 1995,
subject to termination by either the Company or the NYPSC after
five years (the "Rate Period"). The Rate Stabilization Plan also
precludes R-Net from increasing basic residential and business
telephone service rates during the Rate Period. In consideration
of the rate reductions, the Rate Stabilization Plan subjects R-
Net's local exchange services to price-cap regulation rather than
incentive earnings or rate-of-return regulation to which the
Company's local exchange services in the Rochester Market were
previously subject. While the Rate Stabilization Plan requires R-
Net to reduce its rates during the Rate Period, the Company
cannot predict the effect of the Rate Stabilization Plan on the
Company's results of operations because such effect is also
dependent on the extent of usage of R-Net's network and on R-
Net's costs. The rates provided in the Rate Stabilization Plan
were designed to permit R-Net to recover its costs and to earn a
reasonable rate of return, calculated using the methodology
utilized by the NYPSC to set the rate of return earned by
providers of local exchange services in New York State. There is
no assurance, however, that R-Net will recover its costs or earn
a reasonable rate of return.
During the Rate Period, depreciation of R-Net's assets will
be increased by an aggregate of $17 million. R-Net can decide
when to increase the depreciation provided that, by the
<PAGE>
<PAGE>
end of the first year, the amount shall be at least $5 million
and, by the end of the fifth year, the cumulative amount shall be
at least $15 million.
Termination of the Rate Stabilization Plan
------------------------------------------
Although the Rate Stabilization Plan is scheduled to expire
on December 31, 2001, it may be terminated by either R-Net or the
NYPSC upon the filing of a rate proceeding seeking permanent or
temporary rates to be effective on January 1, 2000. Even if the
Rate Stabilization Plan is terminated, however, the other terms
of the Open Market Plan Agreement will remain in effect unless
specifically modified by the NYPSC, except that the NYPSC may not
modify any of the provisions relating to the restructuring of the
Company into an unregulated holding company.
Royalty Dispute
---------------
The Open Market Plan Agreement addresses issues arising out
of the NYPSC order issued on July 6, 1993 (the "Royalty Order")
imposing an annual royalty on the Company in the amount of 2% of
the total capitalization of the Company's unregulated operations.
The NYPSC justified its decision in the Royalty Order on, among
other reasons, the benefit to the Company's unregulated
operations from their use of the Rochester Telephone name and
reputation. Under the Open Market Plan Agreement, the NYPSC will
not impute a royalty on either the Company or R-Net during the
Rate Period or for any prior period, subject to limited
exceptions. Upon the termination of the Rate Period, however, the
NYPSC may impute a royalty for the period beginning on the
termination date, subject to the outcome of any litigation
regarding the royalty. The Company can continue to pursue the
litigation it instituted to challenge the Royalty Order. The
Company has filed a motion with the New York State Court of
Appeals seeking leave to appeal a decision of the Appellate
Division of the New York State Supreme Court which ruled that the
Royalty Order was valid.
Restrictions on Affiliate Transactions
--------------------------------------
The Open Market Plan Agreement provides that any
transaction between R-Net and FC, or between R-Net and any of its
affiliates, will be conducted at arm's length. Transactions
between R-Net and its affiliates are generally limited to
tariffed purchases and sales subject to certain exceptions.
<PAGE>
<PAGE>
R-Net's Relationship with Other Carriers
----------------------------------------
The Open Market Plan Agreement contains certain provisions
to ensure that similarly situated third party carriers can use R-
Net's network on a nondiscriminatory basis. All competing
providers of local exchange services will have the same access to
R-Net's network functionalities, services and data bases, upon
the same terms and conditions as R-Net provides such
functionalities and data bases to any affiliate or other entity.
Moreover, R-Net is precluded from providing a competitive
information advantage to any affiliate, including R-Com.
Upon implementation of the Open Market Plan, customers'
current telephone numbers remained the same, no matter which
telephone reseller was chosen. If a customer changes network
carriers, however, the customer's telephone number will be
retained only at the election of the competing carrier.
On December 19, 1994 the shareholders also voted to change
the name of the Company to "Frontier Corporation". The Board of
Directors believed that the Rochester Tel company name should be
changed to one that is more reflective of the Company's strategic
direction, geographies served and businesses operated. Moreover,
the Open Market Plan Agreement prohibits the Company or any other
entity (other than R-Net) from using the "Rochester Telephone"
name, except on a transitional basis relating to the
implementation of the Open Market Plan.
Certain Considerations Related to the Open Market Plan
There are uncertainties associated with the Company's Open
Market Plan and corporate restructuring. A summary of these
items is as follows:
1. Increased Competition in Rochester Market. The Open
market Plan is designed to remove barriers to and may hasten
local telephone competition in the Rochester market by providing
for (a) the full interconnection of competing local networks,
including reciprocal compensation for terminating traffic, (b)
equal access to network databases, (c) access to local telephone
numbers and (d) telephone number portability. Time Warner
Communications and other potential local and national
<PAGE>
<PAGE>
competitors of the Company have already announced an intention to
provide basic local exchange services in the Rochester market.
The inherent risk associated with opening the Rochester market to
competition is that some customers will purchase services from
competitors, which would reduce the number of customers of the
Company and potentially cause a decrease in the Company's
revenues and profitability. The Company believes, however, that
usage of its network following implementation of the Open Market
Plan will increase, thereby offsetting, to some extent, the loss
of revenues from end-user customers. Increased competition may
also result in price decreases which are not offset by cost
reductions. The Company believes, however, that Rochester
Telephone Corp. and Frontier Communications of Rochester will be
able to compete profitably in the Rochester market, especially
because (1) the Open Market Plan enables the Company to broaden
the scope and quality of its competitive offerings and (2) price-
cap regulation will not require Rochester Telephone Corp. to
rebate earnings achieved through operating efficiencies that
previously would have been shared with customers. Moreover,
local exchange services in the Rochester market are already
subject to competition from alternative transmission media which
provide access services to long distance companies. This trend
will probably continue with or without the Open Market Plan. The
Open Market Plan allows the Company to anticipate the inevitable
erosion of its market share in local exchange services on terms
that the Company believes will be in the best interests of its
customers, employees and shareowners.
2. Risk of Rate Stabilization Plan. The Rate
Stabilization Plan incorporated in the Open Market Plan Agreement
provides for a total of $21 million in rate reductions for
Rochester Telephone Corp. over the next seven years. During this
time, the rates charged by Rochester Telephone Corp. for basic
residential and business telephone service may not be increased
for any reason. Accordingly, Rochester Telephone Corp.'s rate of
return may be less than the rate of return permitted in current
rate proceedings by the NYPSC to other providers of local
exchange services in New York State. Since the Rate
Stabilization Plan requires Rochester Telephone Corp. to reduce
its rates over the next seven years, the effect on the
<PAGE>
<PAGE>
Company's results of operations cannot be predicted because of
uncertainty about Rochester Telephone Corp.'s network usage and
its costs. Even though the rates provided in the Rate
Stabilization Plan were designed to permit the Company to recover
its costs and to earn a reasonable rate of return, there is no
assurance that this will occur.
3. Restraints on the Company's Control of Rochester
Telephone Corp. The Company's ability to control the management
and operations of Rochester Telephone Corp. are restricted by
various provisions of the Open Market Plan Agreement, including,
but not limited to, the outside director makeup of the Board of
Directors of Rochester Telephone Corp. and the relationship of
its profitability to compensation of officers and employees.
The Open Market Plan Agreement contains the following
financial covenants:
(a) dividends will not be paid by Rochester Telephone
Corp. to Frontier Corporation if (i) Rochester Telephone Corp.'s
senior debt has been downgraded to "BBB" by Standard & Poor's
("S&P") or the equivalent rating by other rating agencies or is
placed on credit watch for such a downgrade or (ii) a service
quality penalty is imposed under the Open Market Plan Agreement;
and
(b) dividends also will not be paid unless Rochester
Telephone Corp.'s directors certify that such dividends will
neither impair Rochester Telephone Corp.'s service quality nor
its ability to finance its short and long term capital needs on
reasonable terms while maintaining an S&P debt rating target of
"A". The maintenance of certain other financial covenants which
are intended to ensure that the company will not lack the
financial strength to provide quality service are also included.
4. Holding Company Structure. The Company no longer
directly owns any material assets other than its interest in the
capital stock of its subsidiaries, and dividends from Rochester
Telephone Corp. are subject to the conditions described in the
previous paragraph.
<PAGE>
<PAGE>
5. Potential Diversification Risk. The Company is now
able to make acquisitions and investments, enter into new lines
of business and geographic areas, issue equity securities and
incur long-term indebtedness without NYPSC approval, subject to
certain exceptions. The Company may pursue opportunities with
both greater potential profits and greater business risk than it
could pursue as a telephone company subject to the authority of
the NYPSC. While this may conceivably result in increased
volatility of the Company's securities, it may also result in
potentially greater returns to the Company and its shareowners,
although there is no assurance of greater returns. There can be
no assurance that any expansion of the Company's business will be
successful or, if unsuccessful, that it will not have a direct or
indirect adverse effect on the Company as a whole. It is the
current intention of the Company to engage only in
telecommunication-related businesses.
6. Royalty Dispute. While the NYPSC has agreed that no
royalty will be imposed against the Company or Rochester
Telephone Corp. for the seven year duration of the Open Market
Plan Agreement, the NYPSC will not be precluded from seeking
royalties after the expiration of the Agreement if the NYPSC is
found to have the legal authority to do so. This matter is
currently in litigation and the Company intends to continue its
challenge to the royalty order.
7. Overlap of Retail Services. To the extent that
Rochester Telephone Corp. provides certain services to the same
retail customers who may be served by Frontier Communications of
Rochester for other services, the Company will, in the aggregate,
incur certain sales and service related expenses that are
duplicated. As more services are deemed competitive by the
NYPSC, such services are expected to be offered only by Frontier
Communications of Rochester and the duplication of such costs
will no longer exist. In addition, Frontier Communications of
Rochester can compete for the customers of Rochester Telephone
Corp. to the same extent as any other competitor.
8. Compliance Costs. Under the Open Market Plan
Agreement, Rochester Telephone Corp. and its affiliates will be
obligated to furnish various periodic reports to the NYPSC to
demonstrate compliance with the terms of the Agreement, which
will represent an incremental cost to the Company. However, the
Company does not believe such costs will be material to the
Company as a whole.
<PAGE>
<PAGE>
Pending Acquisitions
--------------------
On November 10, 1994, the Boards of Directors of both the
Company and WCT Communications, Inc. ("WCT") approved a
definitive agreement on the terms of FC's acquisition of the
California-based long distance company. Under the definitive
agreement, all shareowners will receive $6.50 per share pursuant
to a cash merger, with the exception of Richard Frockt, WCT's
chairman and 24 percent shareholder, who has separately agreed to
sell his shares to Rochester Tel for $6.00 per share in cash
immediately prior to the merger. Mr. Frockt has agreed to vote
his shares in favor of the merger. Under the terms of the
agreement, the total cash consideration to be paid by FC for all
the outstanding shares of WCT will be approximately $96 million.
The transaction is still subject to a vote of WCT shareowners, as
well as regulatory approvals, including the FCC and a number of
public service commissions in states in which WCT does business,
which may include the New York State Public Service Commission.
The transaction is subject to the completion of additional due
diligence by FC. WCT is a facilities-based long distance carrier
headquartered in Santa Barbara, California. In its fiscal year
ending June 30, 1994, WCT had revenues of approximately $102
million.
On November 30, 1994 FC announced an agreement to acquire
all of the outstanding shares of American Sharecom, Inc. ("ASI"),
a long distance company headquartered in Minneapolis, Minnesota.
ASI is one of the largest privately owned long distance companies
in the country with annual revenues of approximately $125
million. ASI's sales operations are concentrated in the Midwest,
Northwest and California. A definitive agreement with the
shareholders of ASI has been approved by FC's Board of Directors
subject to some final due diligence items and regulatory
approvals in the states in which ASI does business. Under the
agreement, FC will acquire all of the outstanding shares of ASI
in exchange for FC common stock. FC will account for the
transaction as a pooling of interests and expects closing in the
first quarter of 1995.
The Company filed its Current Report on Form 8-K with the
SEC with respect to these pending acquisitions on February 13,
1995. That Form 8-K is incorporated by reference into this Proxy
Statement-Prospectus.
<PAGE>
<PAGE>
MLD MINNESOTA 10, INC.
Introduction
- ------------
MLD Minnesota 10, Inc. (MLD) was incorporated in Florida on
August 17, 1990. MLD holds a fifty percent interest in a Florida
general partnership (Minnesota Southern Cellular Telephone
Company) organized in 1990 to hold the Federal Communications
Commission authorization for the cellular non-wireline facility
in the Minnesota 10 rural service area and to construct and
operate that facility. MLD's office is located at 3348 Edgewater
Drive, Orlando, Florida 32804. Its telephone number is (407)
422-8191.
MLD'S DISCUSSION AND ANALYSIS OF ITS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is presented to assist in
assessing the changes in financial condition and performance of
MLD over the three most recent fiscal years and the twelve month
period ended December 31, 1994. The following information should
be read in conjunction with the financial statements and related
notes and other detailed information regarding MLD included
elsewhere in this Proxy Statement-Prospectus, and should not be
construed to imply management's belief that the results, causes
or trends presented will necessarily continue in the future.
Fiscal Years 1991-1993 and Period Ending December 31, 1994 -
MLD is a non operating entity. MLD has not had any operating
income since its inception. Accumulated partnership losses
passed through the partnership to MLD have been funded by capital
contributions from the shareholder of MLD and the long term debt
issued by the partnership. MLD's entire interest in the MSCTC
partnership has been pledged as collateral on the long term debt
of the partnership.
<PAGE>
<PAGE>
MANAGEMENT OF MLD
Directors of MLD
- ----------------
The following table sets forth, as to each Director of MLD,
her age, principal occupation or employment during the past five
years, the year in which she first became a Director and any
other directorships held by her:
Name, Age and Year Principal Occupation Other
First Became Director During the Past Five Years Directorships
- --------------------- -------------------------- -------------
Mary L. Demetree Real Estate Development Security
35 and Cellular Communications National Bank
1990
Beneficial Ownership of MLD Common Stock
- ----------------------------------------
The following table sets forth information regarding the
beneficial ownership of MLD's Common Stock owned by each Director
of MLD and by all Directors and Officers as a group, and their
affiliates, as of the Record Date. Except as otherwise denoted,
the named persons possess sole voting and investment power with
respect to the shares.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class
- ------------------------ -------------------- --------
Mary L. Demetree 100 shares of common 100%
stock
Executive Compensation
- ----------------------
The following table sets forth the aggregate cash
compensation paid or accrued by MLD during 1993 to any officer
of MLD whose total compensation for 1993 exceeded $40,000 and all
Directors and Executive Officers of MLD as a group.
Names of Individual Capacities In Cash Compensation,
or Number in Group Which Served Directors' Fees & Bonus
- ------------------- ------------- -----------------------
None.
All Directors and Executive Officers as
a group (0 persons, including those
persons named above)........................ $ -0-
<PAGE>
<PAGE>
On July 29, 1994 MSCTC entered into an arms-length Cellular
Consulting and Other Services Agreement ("Consulting Agreement")
with FC's affiliate Frontier Cellular Holding Inc., to provide
consulting services and to perform certain acts associated with
the planning, design, construction and operation of the Minnesota
10 cellular operating system and its retail operations, all
subject to the control, supervision and approval of MSCTC. The
Consulting Agreement will remain effective until the Closing or
termination of the transaction.
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Introduction
- ------------
Minnesota Southern Cellular Telephone Company (MSCTC) is an
independent telephone company operating a cellular non-wireline
facility in the Minnesota 10 rural service area located in south
central Minnesota. MSCTC's principal office is located in
Mankato, Minnesota. MSCTC is managed from offices located at
3348 Edgewater Drive, Orlando, Florida 32804. Its telephone
number is (407) 872-7815.
MSCTC was organized as a Florida general partnership on
August 15, 1990 by two Florida Subchapter S corporations (MLD
Minnesota 10, Inc. and DOWDY Minnesota 10, Inc.). MSCTC
officially commenced its operations in February, 1992. At
October 31, 1994, MSCTC serviced approximately 2,800 customers.
<PAGE>
<PAGE>
MSCTC'S DISCUSSION AND ANALYSIS OF ITS FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion is presented to assist in
assessing the changes in financial condition and performance of
MSCTC over the three most recent fiscal years and the twelve
month period ended December 31, 1994. The following information
should be read in conjunction with the financial statements and
related notes and other detailed information regarding MSCTC
included elsewhere in this Proxy Statement-Prospectus, and should
not be construed to imply management's belief that the results,
causes or trends presented will necessarily continue in the
future.
MSCTC was in the development stage prior to February, 1992,
substantially all of MSCTC's efforts during this period were
devoted to establishing a new business. MSCTC did not generate
any significant revenues during the development stage. The
December 31, 1991 audited financial statements reflect
development stage activities from inception (August 15, 1990)
through December 31, 1991.
Fiscal Years 1991-1994
- ----------------------
Net losses were $495,535, $1,040,106, $1,167,646 and
$632,170 for the years ending 1991, 1992, 1993 and 1994,
respectively. This reflects an increase in loss of 110% and 12%
in 1992 and 1993, respectively. For December 31, 1994 the net
loss was $632,170, which reflects a decrease of 46%. MSCTC began
in 1991 with virtually no subscribers. The losses incurred in
1992 and 1993 were a result of the low volume of subscriber
activity. The decrease in net loss for 1994 is a result of the
continuing development of the market resulting in significant
growth of MSCTC's subscriber base.
Operating Revenues
- ------------------
In the years ended 1991, 1992, 1993 and 1994, operating
revenues totaled $30,760, $766,380, $1,382,431 and $2,546,620,
respectively. These figures reflect increases of 2,391%, 80% and
84% in 1992, 1993 and 1994, respectively. 1992 was the first
full year of operations. The increase in operating revenues in
each of the above periods is a result of continued
development of the local market resulting in growth of the
subscriber base.
<PAGE>
<PAGE>
Operating Expenses
- ------------------
Total operating expenses were $526,295, $1,806,486,
$2,550,077 and $3,178,790 for the years 1991, 1992, 1993 and
1994, respectively. These figures reflect increases of 243%, 41%
and 25% in 1992, 1993 and 1994, respectively. The increases in
operating expenses in 1992 and 1993 were a result of increases in
virtually all categories of operating expenses from the increase
in business activity and growth of MSCTC's subscriber base. The
increase in operating expenses in 1994 as compared to 1993 is
primarily due to increases in marketing (i.e., commissions) and
administrative expenses.
Other Items
- -----------
Interest expenses in 1991, 1992, 1993 and 1994 were
$63,432, $354,196, $378,057 and $431,120, respectively. $73,737
and $30,000 of interest was capitalized and not included in
interest expense in 1991 and 1992, respectively. Interest
expense increased each year as MSCTC financed its operations and
the purchase and installation of its cellular equipment and other
fixed assets. The increase in interest expense in 1994 compared
to 1993 is attributable to the increase in the interest rates as
most of MSCTC's debt has adjustable interest rates.
Liquidity and Capital Resources
- -------------------------------
Current assets were $658,770, $196,594, $1,291,913 and
$547,490 for 1991, 1992, 1993 and 1994, respectively. Current
liabilities were $43,855, $657,089, $994,266 and $1,574,985 for
1991, 1992, 1993 and 1994, respectively.
The decrease in current assets in 1992 was primarily due to
the reclassification of amounts due from affiliates from current
assets in 1991 to non-current assets in 1992 -- the 1991 balance
of "Due to Affiliates" was $526,917.
The increase in current assets in 1993 was attributable to
a loan of $886,301 to MSCTC from a Partner.
The decrease in current assets in 1994 is attributable to a
decrease in cash as a result of a repayment of a loan to one of
the partners. Trade accounts receivable, inventories, accounts
payable and accrued expenses increased as the business
<PAGE>
<PAGE>
activity has developed. Current maturities of long term debt
significantly increased in 1993 and 1994 due to the relatively
short amortization term of the debt.
Proceeds from the issuance of debt were $4,122,465,
$652,704, and $249,689 in 1991, 1992, and 1993, respectively.
The debt financed the purchase of facilities and equipment and
the initial operations of MSCTC.
Partners' capital contributions were $43,250, $0,
$587,084 and $388,502 for 1991, 1992, 1993 and 1994,
respectively. $45,602 was distributed to the partners in 1991.
MSCTC has been incurring substantial losses while
developing its subscriber base since its inception. These losses
and the resulting negative cash flow will require external
funding to sustain the operations of the Company. The Partners
intend to provide such funding in the form of loans and/or
capital contributions or possibly restructure the long term debt
of the Company if the intended acquisition of its partners'
interest is not consummated by FC.
Effects of Inflation
- --------------------
Inflation in 1991, 1992, 1993 and 1994 did not have a major
impact on MSCTC's financial condition or financial results.
MANAGEMENT OF MSCTC
Directors of MSCTC
- ------------------
The following table sets forth, as to each Director of
MSCTC, his or her age, principle occupation or employment during
<PAGE>
<PAGE>
the past five years, the year in which he or she first became a
Director and any other directorships held by him or her:
Name, Age and Year Principal Occupation Other
First Became Director During the Past Five Years Directorships
- --------------------- --------------------------- -------------
Mary L. Demetree Real estate development and Security
35 1990 cellular communications National Bank
Orlando, FL
Ronald E. Dowdy Real estate development and None
50 1990 cellular communications
Beneficial Ownership of MSCTC
- -----------------------------
The following table sets forth information regarding the
beneficial ownership interest of MSCTC:
Amount of
Name of Beneficial Owner Beneficial Ownership
MLD Minnesota 10, Inc. 50%
Co-Managing General Partner
Dowdy Minnesota 10, Inc. 50%
Co-Managing General Partner ----------------
100%
Executive Compensation
- ----------------------
The general partners and shareholders of the general
partners receive no compensation related to services provided to
MSCTC.
DESCRIPTION OF CAPITAL STOCK
Upon the consummation of the Merger, holders of outstanding
MLD Common Stock will receive shares of FC Common Stock. The
rights of holders of FC Common Stock are governed by FC's
Restated Certificate of Incorporation and by New York law
<PAGE>
<PAGE>
while the right of holders of MLD Common Stock are governed by
MLD's Articles of Incorporation ("MLD Articles") and Bylaws ("MLD
Bylaws") and by Florida law. The following is a summary of the
rights of holders of FC Common Stock and MLD Common Stock.
The following discussion does not purport to be complete
and is qualified in its entirety by the provisions of the FC
Certificate and FC Bylaws, the MLD Articles and MLD Bylaws and
New York and Florida law.
Description of FC Common Stock
- ------------------------------
FC's authorized capitalization presently consists of (i)
300,000,000 shares of Common Stock, par value $1.00 per share, of
which 73,160,833 shares were issued and outstanding at December
31, 1994, (ii) 850,000 shares of Cumulative Preferred Stock
("Cumulative Preferred Stock") par value $100.00 per share,
issuable in series, of which, as of December 31, 1994, a total of
200,000 shares, constituting three series, were issued and
outstanding, and 4,000,000 shares of Class A Preferred Stock
("Class A Preferred Stock") which, when issued, will rank junior
to the Cumulative Preferred Stock as to dividends or
distributions, and upon the liquidation, dissolution and winding
up of FC. As of January 1, 1995, no shares of Class A Preferred
Stock ($100.00 par value) were issued and outstanding.
Dividend Rights
- ---------------
Dividends may be declared and paid on the Common Stock out
of legally available surplus. However, no dividends may be paid
on the Common Stock until accrued and unpaid dividends on FC's
outstanding series of Cumulative Preferred Stock have been paid
or declared and funds set aside for their payment.
Voting Rights
- -------------
The holders of FC Common Stock have exclusive voting rights
of one vote for each share held, subject to the voting rights of
the outstanding Cumulative Preferred Stock described below. The
holders of the FC Common Stock are not entitled to cumulative
voting in the election of directors.
When four or more quarterly dividends on the Cumulative
Preferred Stock are in arrears, and until such arrearages at full
dividend rates have been paid or declared and set apart for
payment, the holders of the Cumulative Preferred Stock as a class
have the right to elect a majority of the Board of
<PAGE>
<PAGE>
Directors. In such event, the holders of the FC Common Stock
have the right to elect only the remaining directors.
In addition, the affirmative vote of various proportions of
the Cumulative Preferred Stock is required to (1) increase the
authorized amount of the Cumulative Preferred Stock; (2) create
shares having preferential rights equal or superior to the
Cumulative Preferred Stock; (3) issue any shares of Cumulative
Preferred Stock or any shares having preferential rights equal or
superior to the Cumulative Preferred Stock without compliance
with certain requirements as to earnings; and (4) create, alter
or abolish any voting rights or preferential rights or redemption
provisions affecting the Cumulative Preferred Stock adversely.
The Board of Directors of FC determines the respective
rights of the holders of one or more series of the Class A
Preferred Stock, which might include: (1) restrictions on
dividends on Common Stock if dividends on the Class A Preferred
Stock are in arrears; (2) dilution of the voting power of the
Common Stock; and (3) the holders of Common Stock not being
entitled to share in FC's assets upon liquidation until
satisfaction of any liquidation preference granted to the Class A
Preferred Stock.
Liquidation Rights
- ------------------
On any liquidation of FC, the holders of the Cumulative
Preferred Stock are entitled to their full value per share plus
accumulated dividends. After satisfaction of outstanding
liabilities and of the preferential liquidation rights of the
Cumulative Preferred Stock, the holders of FC Common Stock are
entitled to share ratably in the distribution of all remaining
assets.
Preemptive Rights
- -----------------
Holders of FC Common Stock have no preemptive rights to
purchase any stock issued by FC, any securities convertible into
such stock, or any rights or options to acquire such stock.
Liability to Further Calls or Assessment
- ----------------------------------------
The outstanding shares of FC Common Stock are, and the
shares issuable to MLD shareholders in connection with the Merger
will be, fully paid and nonassessable.
<PAGE>
<PAGE>
Transfer Agents and Registrars
- ------------------------------
The transfer agent and registrar for the FC Common Stock is
The First National Bank of Boston, 150 Royall Street, Canton,
Massachusetts 02021.
Description of MLD Common Stock
- -------------------------------
MLD's authorized Common Stock consists of 1,000,000 shares,
par value $.01 per share, of which 100 shares were issued and
outstanding on December 31, 1994 and on the Record Date. All
shares of MLD Common Stock are entitled to participate equally in
dividends which may be declared by the Board of Directors out of
legally available funds. Holders of MLD Common Stock are
entitled to one vote for each share held. MLD has a Board of one
director. Directors are elected for one (1) year. Holders of
MLD Common Stock do not have preemptive rights to purchase any
stock issued by MLD, any securities convertible into such stock,
or any rights or options to acquire such stock.
Comparison of Rights of Securities Holders
- ------------------------------------------
Other than as set forth above, there are no material
differences between the rights of holders of MLD Common Stock and
FC Common Stock.
CERTAIN INFORMATION REGARDING SUBSIDIARY
Subsidiary is a newly-formed Florida corporation and a
wholly-owned subsidiary of Subsidiary's Parent, a wholly-owned
subsidiary of FC organized for the sole purpose of effecting the
Merger. It is anticipated that Subsidiary will not have any
significant assets or liabilities (other than its rights and
obligations under the Merger Agreement) or engage in any
activities other than those incidental to its formation and the
Merger. Because Subsidiary is newly incorporated and has minimal
assets, no meaningful financial information is available.
As of the date hereof, the authorized capital stock of
Subsidiary consists of 200 shares of Common Stock, par value
$0.01 per share, 100 of which shares are outstanding and held by
Subsidiary's Parent. On the Effective Date, each outstanding
share of Subsidiary stock shall be converted into one share of
Common Stock of MLD.
<PAGE>
<PAGE>
The principal executive offices of Subsidiary are located
at 180 South Clinton Avenue, Rochester, New York 14646-0700.
The Boards of Directors of Subsidiary and Subsidiary's
Parent unanimously approved and adopted the Merger Agreement, and
FC, as the sole shareholder of Subsidiary's Parent, has approved
the transaction described in the Plan of Merger.
LEGAL MATTERS
The validity of the FC Common Stock to be issued to MLD
stockholders and certain other legal matters in connection with
the Merger will be passed upon for FC by John T. Pattison, its
General Attorney. As of December 31, 1994, John T. Pattison was
the beneficial owner of 2,166 shares of FC Common Stock.
Hopkins & Sutter, Chicago, Illinois, Special Tax Counsel to
MLD, has rendered its opinion with respect to certain federal
income tax consequences of the Merger to MLD, and the
shareholders of MLD.
EXPERTS
The financial statements of FC incorporated in this Proxy
Statement- Prospectus by reference to the Annual Report on Form
10-K of FC and its subsidiaries for the year ended December 31,
1993 have been so incorporated in reliance on the report of Price
Waterhouse, LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The Financial Statements of MSCTC as of December 31, 1993
and MLD as of December 31, 1993, 1992 and 1991 in this Proxy
Statement-Prospectus, and for the fiscal years then ended, have
been examined by Thomas P. Osborne, Certified Public Accountant.
The Financial Statements of MSCTC as of December 31, 1992 and
1991 in this Proxy Statement-Prospectus, and for the year ended
December 31, 1992 and for the period from inception (August 17,
1990) to December 31, 1991, have been examined by Arthur
Andersen, LLP, Certified Public Accountants. The Financial
Statements of the above-referenced accountants are included
herein in reliance upon the authority of said firms as experts in
accounting and auditing in giving said reports. A representative
of Thomas P. Osborne will be available by telephone at the time
of the Special Meeting to respond to appropriate shareholder
questions and to make statements if they wish to do so.
MISCELLANEOUS
No other business may come before the Special Meeting of
the holders of the MLD Common Stock which is not referred to in
the accompanying Notice of Meeting.
<PAGE>
<PAGE>
F
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Financial Statements of MLD - December 31, 1994
and 1993 (unaudited)................................F-1
Balance Sheet......................................F-2
Statement of Operations............................F-3
Statement of Changes in Stockholder's Deficit......F-4
Statement of Cash Flows............................F-5
Notes to Financial Statements (unaudited)..........F-6
Audited Financial Statements of MLD - December 31,
1993, 1992 and 1991...................................F-8
Independent Auditor's Report........................F-9
Balance Sheet.......................................F-10
Statement of Operations.............................F-11
Statement of Changes in Stockholder's Deficit.......F-12
Statement of Cash Flows.............................F-13
Notes to Financial Statements.......................F-14
Financial Statements of MSCTC - December 31,
1994 and 1993 (unaudited).............................F-16
Balance Sheet.......................................F-17
Statement of Operations.............................F-18
Statement of Changes in Partners' Capital (Deficit).F-19
Statement of Cash Flows.............................F-20
Notes to Financial Statements (unaudited) F-21
Audited Financial Statements of MSCTC - December 31,
1993..................................................F-25
Independent Auditor's Report........................F-26
Balance Sheet.......................................F-27
Statement of Operations.............................F-28
Statement of Changes in Partners' Capital (Deficit).F-29
Statement of Cash Flows.............................F-30
Notes to Financial Statements.......................F-31
<PAGE>
<PAGE>
F -- INDEX TO FINANCIAL STATEMENTS (Cont'd)
- ---------------------------------------------------
Audited Financial Statements of MSCTC - December 31,
1992..................................................F-37
Independent Auditors' Report........................F-38
Balance Sheet.......................................F-39
Statement of Operations.............................F-40
Statement of Changes in Partners' Capital (Deficit).F-41
Statement of Cash Flows.............................F-42
Notes to Financial Statements.......................F-43
Audited Financial Statements of MSCTC - December 31,
1991..................................................F-48
Independent Auditors' Report........................F-49
Balance Sheet.......................................F-50
Statement of Operations.............................F-51
Statement of Changes in Partners' Capital (Deficit).F-52
Statement of Cash Flows.............................F-53
Notes to Financial Statements.......................F-54
<PAGE>
<PAGE>
F-1
FINANCIAL STATEMENTS
MLD MINNESOTA 10, INC.
For the twelve month period ended
December 31, 1994 (unaudited)
<PAGE>
<PAGE>
<TABLE>
BALANCE SHEET (UNAUDITED) F-2
MLD MINNESOTA 10, INC.
December 31,
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
ASSET
Note receivable $ 886,301
===========
LIABILITY AND STOCKHOLDER'S DEFICIT
Note payable $ 886,301
Losses in excess of investment
in Partnership $ 1,182,291 $1,033,607
STOCKHOLDER'S DEFICIT
Common stock - $.01 par value,
1,000,000 shares authorized,
100 shares issued and
outstanding 1 1
Paid-in capital 485,437 318,036
Accumulated deficit (1,667,729) (1,351,644)
------------ ------------
(1,182,291) (1,033,607)
------------ ------------
$ - ) $ 886,301
============ ============
See accompanying notes.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS (UNAUDITED) F-3
MLD MINNESOTA 10, INC.
Year Ended December 31,
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Loss on investment in
Partnership $ (316,085) $ (583,823)
------------ -------------
NET LOSS $ (316,085) $ (583,823)
============ =============
See accompanying notes.
</TABLE>
<PAGE>
F-4
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN STOCKHOLDER'S DEFICIT (UNAUDITED)
MLD MINNESOTA 10, INC.
Year Ended December 31, 1994
<CAPTION>
Common Paid-in Accumulated
Stock Capital Deficit Total
-------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Balance at
January 1,
1994 $ 1 $ 318,036 $(1,351,644)$(1,033,607)
Net loss - - (316,085) (316,085)
Capital contri-
butions - 167,401 - 167,401
---------- ---------- ----------- -----------
Balance at
December 31,
1994 $ 1 $ 485,437 $(1,667,729)$(1,182,291)
========== ========== =========== ============
See accompanying notes.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CASH FLOWS (UNAUDITED) F-5
MLD MINNESOTA 10, INC.
Year Ended December 31,
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (316,085) $ (583,823)
Adjustment to reconcile net loss to
net cash provided by operating
activities:
Loss on investment in Partnership 316,085 583,823
------------ -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES - -
------------ -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS - -
CASH AND CASH EQUIVALENTS AT
JANUARY 1, - -
------------ -----------
CASH AND CASH EQUIVALENTS AT
DECEMBER 31, $ - $ -
============ ============
See accompanying notes.
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) F-6
MLD MINNESOTA 10, INC.
NOTE A - ORGANIZATION AND OPERATIONS
General
MLD Minnesota 10, Inc. (Company), was incorporated in Florida on
August 17, 1990.
The Company's sole purpose is to own a fifty percent interest in
a Florida general partnership (Partnership) organized in 1990 to
hold the Federal Communications Commission (FCC) authorization
for the cellular non-wireline facility in the Minnesota 10 rural
service area (RSA) and to construct and operate that facility.
Partnership profits, losses and capital contributions are
generally shared ratably or as otherwise determined by the
Partnership agreement.
Operations
The Company does not incur any significant operating costs.
Nominal operating expenses attributable to the Company (i.e. tax
preparation fees, state filing fees, and etc.) are included with
the operations of the Partnership.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment in Partnership
The Company's interest in the Partnership is carried at cost
adjusted for the Company's share of undistributed earnings or
losses, capital contributions and distributions.
Income Taxes
The Company, with consent of its stockholder, has elected under
the Internal Revenue Code to be taxed as an S corporation. In
lieu of corporation income taxes, the stockholder is taxed on her
proportionate share of the Company's taxable income.
<PAGE>
<PAGE>
F-7
Therefore, no provision or liability for federal income taxes
has been included in these financial statements.
Statement of Cash Flows
The Company did not have any cash balances during the period.
None of the transactions of the Company involved cash.
Other
In the opinion of management, the unaudited financial statements
for the twelve month period ending December 31, 1994 reflect all
adjustments necessary for a fair presentation. There have been
no adjustments made in the unaudited financial statements which
are not of a normal recurring nature.
NOTE C - CONTINGENCIES
The Company's entire interest in the Partnership has been pledged
as collateral on the long-term debt of the Partnership.
The stockholder of the Company is involved in negotiations to
sell the stock of the Company which will result in a merger with
the acquiring entity. Anticipated proceeds from the proposed
merger significantly exceed the Company's basis in its
partnership investment.
Should the sale not materialize, the Company and its stockholder
will continue to fund the operations of the Partnership.
Management of the Partnership has projected positive operating
cash flows for years subsequent to 1994.
<PAGE>
<PAGE>
F-8
AUDITED FINANCIAL STATEMENTS
MLD MINNESOTA 10, INC.
December 31, 1993, 1992 and 1991
<PAGE>
<PAGE>
F-9
THOMAS P. OSBORNE
CERTIFIED PUBLIC ACCOUNTANT
61 North Ferncreek Avenue
P.O. Box 531039
Orlando, Florida 32853-1039
(407) 894-1970
INDEPENDENT AUDITOR'S REPORT
Board of Directors
MLD Minnesota 10, Inc.
Orlando, Florida
I have audited the accompanying balance sheets of MLD Minnesota
10, Inc. as of December 31, 1993, 1992, and 1991 and the related
statements of operations and cash flows for the years ended
December 31, 1993 and 1992 and the period from inception (August
17, 1990) through December 31, 1991. These financial statements
are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of MLD
Minnesota 10, Inc. as of December 31, 1993, 1992 and 1991 and the
results of its operations and its cash flows for the periods then
ended in conformity with generally accepted accounting
principles.
/s/ Thomas P. Osborne
- ---------------------
Orlando, Florida
June 27, 1994
<PAGE>
<PAGE>
<TABLE>
BALANCE SHEET F-10
MLD MINNESOTA 10, INC.
December 31,
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
ASSET
Note receivable $ 886,301 $ - $ -
=========== =========== ===========
LIABILITIES AND
STOCKHOLDER'S DEFICIT
Note payable $ 886,301 $ - $ -
Losses in excess of
investment in
Partnership 1,033,607 770,175 250,122
STOCKHOLDER'S DEFICIT
Common stock - $.01
par value, 1,000,000
shares authorized,
100 shares issued and
outstanding 1 1 1
Paid-in capital 318,036 (2,355) (2,355)
Accumulated deficit (1,351,644) (767,821) (247,768)
------------ ----------- -----------
(1,033,607) (770,175) (250,122)
------------ ----------- -----------
$ 886,301 $ - $ -
============ =========== ===========
See notes to financials.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS F-11
MLD MINNESOTA 10, INC.
Years ended December 31, 1993 and 1992 and
For the Period From Inception (August 17, 1990)
Through December 31, 1991
<CAPTION>
1993 1992 1991
------------ ----------- -----------
<S> <C> <C> <C>
Loss on investment in
Partnership $ (583,823) $ (520,053) $ (247,768)
------------ ------------ ------------
NET LOSS $ (583,823) $ (520,053) $ (247,768)
============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN STOCKHOLDER'S DEFICIT F-12
MLD MINNESOTA 10, INC.
Years ended December 31, 1993 and 1992 and
For the Period From Inception (August 17, 1990)
Through December 31, 1991
<CAPTION>
Common Paid-in Accumulated
Stock Capital Deficit Total
--------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCE AT INCEPTION $ - $ - $ - $ -
Stock issued 1 20,446 - 20,447
Net loss - - (247,768) (247,768)
Distribution to
stockholder - (22,801) - (22,801)
--------- ----------- ---------- -----------
BALANCE AT DECEMBER 31,
1991 1 (2,355) (247,768) (250,122)
Net loss - - (520,053) (520,053)
--------- ----------- ---------- -----------
BALANCE AT DECEMBER 31,
1992 1 (2,355) (767,821) (770,175)
Capital contributions - 320,391 - 320,391
Net loss - - (583,823) (583,823)
--------- ----------- ---------- -----------
BALANCE AT DECEMBER 31,
1993 $ 1 $ 318,036 $(1,351,644) $(1,033,607)
========== ========== ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CASH FLOWS F-13
MLD MINNESOTA 10, INC.
Years ended December 31, 1993 and 1992 and
For the Period From Inception (August 17, 1990)
Through December 31, 1991
<CAPTION>
1993 1992 1991
---------- ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(583,823) $(520,053) $(247,768)
Adjustment to reconcile net
loss to net cash provided
by operating activities:
Loss on investment in
Partnership 583,823 520,053 247,768
---------- ---------- ----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES - - -
---------- ---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS - - -
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD - - -
----------- --------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ - $ - $ -
=========== ========= ==========
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS F-14
MLD MINNESOTA 10, INC.
NOTE A - ORGANIZATION AND OPERATIONS
General
MLD Minnesota 10, Inc. (Company), was incorporated in Florida on
August 17, 1990.
The Company's sole purpose is to own a fifty percent interest in
a Florida general partnership (Partnership) organized in 1990 to
hold the Federal Communications Commission (FCC) authorization
for the cellular non-wireline facility in the Minnesota 10 rural
service area (RSA) and to construct and operate that facility.
Partnership profits, losses and capital contributions are
generally shared ratably or as otherwise determined by the
Partnership agreement.
Operations
The Company does not incur any significant operating costs.
Nominal operating expenses attributable to the Company (i.e. tax
preparation fees, state filing fees, and etc.) are included with
the operations of the Partnership.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment in Partnership
The Company's interest in the Partnership is carried at cost
adjusted for the Company's share of undistributed earnings or
losses, capital contributions and distributions.
Income Taxes
The Company, with consent of its stockholder, has elected under
the Internal Revenue Code to be taxed as an S corporation. In
lieu of corporation income taxes, the stockholder is taxed on
<PAGE>
<PAGE>
F-15
her proportionate share of the Company's taxable income.
Therefore, no provision or liability for federal income taxes
has been included in these financial statements.
Statement of Cash Flows
The Company did not have any cash balances during the periods
presented in these financial statements. None of the
transactions of the Company involved cash. Capital
contributions, notes payable and receivable reflected in the
Company's financial statements were paid directly to the
Partnership by the shareholder of the Company.
NOTE C - NOTE RECEIVABLE/NOTE PAYABLE
The note receivable is due from the Partnership, is non-interest
bearing and due on demand. The note payable is due to the
stockholder, is also non-interest bearing and due on demand. The
note payable funded the note receivable. Subsequent to December
31, 1993, both notes were paid in full.
NOTE D - CONTINGENCIES
The Company's entire interest in the Partnership has been pledged
as collateral on the long-term debt of the Partnership.
The stockholder of the Company is involved in negotiations to
sell the stock of the Company which will result in a merger with
the acquiring entity. Anticipated proceeds from the proposed
merger significantly exceed the Company's basis in its
partnership investment.
Should the sale not materialize, the Company and its stockholder
will continue to fund the operations of the Partnership.
Management of the Partnership has projected positive operating
cash flows for years subsequent to 1994.
<PAGE>
<PAGE>
F-16
FINANCIAL STATEMENTS
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
For the twelve months ended December 31, 1994
(unaudited)
<PAGE>
<PAGE>
<TABLE>
BALANCE SHEET (UNAUDITED) F-17
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
December 31,
<CAPTION>
ASSETS 1994 1993
CURRENT ASSETS ------------- -----------
<S> <C> <C>
Cash and cash equivalents $ 51,522 $ 966,380
Trade accounts receivable - net of
allowance for uncollectible
accounts of $3,015 and $10,000 354,272 257,026
Inventory 134,104 65,318
Other current assets 8,042 3,189
------------ ------------
Total current assets 547,940 1,291,913
PROPERTY AND EQUIPMENT
Cellular equipment 3,513,120 3,317,547
Vehicle, furniture and equipment 126,407 110,379
Leasehold improvements 103,751 103,751
------------ ------------
3,743,278 3,531,677
Less accumulated depreciation 1,310,008 840,348
------------ ------------
2,433,270 2,691,329
OTHER ASSETS
Due from affiliates - 204,397
Intangible assets - net of accumulated
amortization of $28,132 and $18,484 30,948 40,596
Note receivable 8,866 18,071
Other assets 5,460 5,460
---------- ------------
45,274 268,524
------------ ------------
$ 3,026,484 $ 4,251,766
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued
expenses $ 792,411 $ 460,763
Current portion of long-term debt 676,032 471,667
Unearned revenue and customer deposits 106,542 61,836
------------ ------------
Total current liabilities 1,574,985 994,266
<PAGE>
<PAGE>
F-17
(cont'd)
LONG-TERM DEBT 3,813,722 4,489,754
NOTE PAYABLE - PARTNER - 886,301
PARTNERS' CAPITAL (DEFICIT) (2,362,223) (2,118,555)
------------ ------------
$ 3,026,484 $ 4,251,766
============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS (UNAUDITED) F-18
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Year Ended December 31,
<CAPTION>
1994 1993
---------- -----------
<S> <C> <C>
REVENUES
Service $2,235,136 $ 1,135,916
Equipment sales and installation 283,560 237,464
Other 27,924 9,051
----------- -----------
2,546,620 1,382,431
EXPENSES
Cost of service 1,195,343 874,083
Cost of equipment sales and
installation 396,055 300,018
Selling, general and administrative 1,156,272 997,919
Interest 431,120 378,057
---------- -----------
3,178,790 2,550,077
---------- ----------
NET LOSS $(632,170) $(1,167,646)
=========== ============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
F-19
<TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)(UNAUDITED)
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Year Ended December 31, 1994
<CAPTION>
MLD Dowdy
Minnesota Minnesota
10, Inc. 10, Inc. Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1993 $(1,033,607) $(1,084,948) $(2,118,555)
Net loss (316,085) (316,085) (632,170)
Capital contributions 167,401 221,101 388,502
------------ ------------ ------------
Balance at December 31, 1994 $(1,182,291) $(1,179,932) $(2,362,223)
============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CASH FLOWS (UNAUDITED) F-20
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Year Ended December 31,
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES: 1994 1993
------------ -----------
<S> <C> <C>
Net loss $ (632,170) $(1,167,646)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Bad debts - 20,622
Depreciation 469,660 445,070
Amortization 9,648 9,648
(Increase) in trade accounts receivable (97,246) (166,729)
(Increase) in inventory (68,786) (33,227)
(Increase) in other current assets (4,853) (3,189)
(Increase) in other assets - (660)
Decrease in due from affiliates 204,397 178,047
Increase in accounts payable and
accrued expenses 331,648 52,443
Increase in unearned revenue and
customer deposits 44,706 48,142
------------- ------------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 257,004 (617,479)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of note receivable - (18,071)
Payment of Note Receivable 9,205
Acquisition of equipment (211,601) (111,291)
------------- ------------
NET CASH (USED) BY INVESTING ACTIVITIES (202,396) (129,362)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt - 249,689
Principal payments on long-term debt and
note payable (1,357,968) (63,437)
Proceeds from note payable - Partner - 886,301
Capital contributions 388,502 587,084
------------- ------------
<PAGE>
<PAGE>
F-20 (cont'd)
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES (969,466) 1,659,637
------------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (914,858) 912,796
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 966,380 53,584
----------- ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 51,522 $ 966,380
============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) F-21
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
NOTE A - ORGANIZATION AND OPERATIONS
General
Minnesota Southern Cellular Telephone Company (Partnership), a
Florida general partnership, was organized in August, 1990 by MLD
Minnesota 10, Inc. and Dowdy Minnesota 10, Inc., two Florida
Subchapter S corporations, to hold the Federal Communications
Commission (FCC) authorization for the cellular non-wireline
facility in the Minnesota 10 rural service area (RSA) and to
construct and operate that facility. The Partnership was formed
pursuant to an agreement between competing applicants in the
lottery held by the FCC to determine the recipient of the non-
wireline cellular license in the Minnesota 10 RSA.
Partners' Interest
Net profits and net losses are generally allocated to MLD
Minnesota 10, Inc. and Dowdy Minnesota 10, Inc. (the Partners)
ratably in accordance with the partnership agreement. Each
Partner owned 50 percent at December 31, 1994.
Additional contributions made to fund the Partnership's capital
expenditures and operating losses are to be made based on the
Partners' pro rata share of such expenditures as determined by
the interest held in the Partnership. Should a Partner not make
all or a portion of a required contribution, that Partner's
interest is subject to dilution as determined by the Partnership
agreement.
Operations
The Partnership has been building its subscriber base since its
inception, consequently it has incurred substantial losses.
These losses resulted in negative cash flows from operations and
a cumulative deficit in Partners' capital (see Note C).
<PAGE>
<PAGE>
F-22
These losses and the resulting negative cash flow will require
external funding to sustain the operations of the Partnership.
The Partners intend to provide such funding in the form of loans
and/or capital contributions as necessary to ensure the continued
operations of the Partnership.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Cellular air time is recorded as revenue when earned. Sales of
equipment and related services are recorded as revenue when the
goods and services are delivered. Cellular access charges are
billed in advance and recognized as revenue when the services are
provided.
Trade Accounts Receivable
The Partnership grants credit to customers, most of whom are
located in south central Minnesota. The risk of loss on the
unsecured accounts receivable is the balance owed at the time of
default.
The allowance for uncollectible accounts has been established by
management based upon their estimate of potential uncollectible
balances.
Inventory
Inventory consists of cellular telephones and related
accessories. Inventory is stated at the lower of cost or market.
Cost is determined by using the first-in, first-out (FIFO)
method.
<PAGE>
<PAGE>
F-23
Property and Equipment
Property and equipment are recorded at cost. Depreciation and
amortization are computed on the straight-line method based on
estimated useful lives which are 31 years on leasehold
improvements, 5 - 10 years on furniture and equipment.
Intangible Assets
The Partnership incurred pre-opening costs of $46,073 and
cellular licensing costs of $13,007 which have been capitalized
and are being amortized over five and thirty years, respectively.
Income Taxes
The results of Partnership operations are included on the income
tax returns of each Partner. Accordingly, no provision for
income taxes is included in these financial statements.
Statement of Cash Flows
For purposes of the statement of cash flows, the Partnership
considers all highly liquid debt instruments purchased with a
maturity of three months or less at the date of purchase to be
cash equivalents.
Other
In the opinion of management, the unaudited financial statements
for the twelve month period ending December 31, 1994 reflect all
adjustments necessary for a fair presentation. There have been
no adjustments made in the unaudited financial statements which
are not of a normal recurring nature.
NOTE C - CONTINGENCIES
The shareholders of the Partners of the Partnership are
<PAGE>
<PAGE>
F-24
negotiating to sell the stock of MLD Minnesota 10, Inc. and Dowdy
Minnesota 10, Inc. which will result in a merger with the
acquiring entity. As part of the proposed agreement, the
acquiring entity has agreed to retire substantially all of the
Partnership's long-term debt and will fund continuing operations.
If the merger does not take place, the Partnership will continue
to rely on funding from the Partners, possibly restructure its
long-term debt and continue to build its subscriber base.
Management has projected positive operating cash flows for years
subsequent to 1994.
<PAGE>
<PAGE>
F-25
AUDITED FINANCIAL STATEMENTS
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
December 31, 1993
<PAGE>
<PAGE>
F-26
THOMAS P. OSBORNE
CERTIFIED PUBLIC ACCOUNTANT
61 North Ferncreek Avenue / P.O. Box 531039
Orlando, Florida 32853-1039 / (407) 894-1970
INDEPENDENT AUDITOR'S REPORT
To the Partners
Minnesota Southern Cellular Telephone Company
Orlando, Florida
I have audited the accompanying balance sheet of Minnesota
Southern Cellular Telephone Company (a Florida general
partnership) as of December 31, 1993, and the related statements
of operations, changes in partners' capital (deficit) and cash
flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Minnesota Southern Cellular Telephone Company as of December 31,
1993, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted
accounting principles.
/s/ Thomas P. Osborne
- ---------------------
Orlando, Florida
June 27, 1994
<PAGE>
<PAGE>
<TABLE>
BALANCE SHEET F-27
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
December 31,
<CAPTION>
ASSETS 1993
CURRENT ASSETS ------------
<S> <C>
Cash and cash equivalents $ 966,380
Trade accounts receivable - net of
allowance for uncollectible
accounts of $10,000 257,026
Inventory 65,318
Other current assets 3,189
Total current assets 1,291,913
PROPERTY AND EQUIPMENT ------------
Cellular equipment 3,317,547
Vehicle, furniture and equipment 110,379
Leasehold improvements 103,751
------------
3,531,677
Less accumulated depreciation 840,348
------------
2,691,329
OTHER ASSETS
Due from affiliates 204,397
Intangible assets - net of accumulated
amortization of $18,484 40,596
Note receivable 18,071
Other assets 5,460
------------
268,524
------------
$ 4,251,766
============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 460,763
Current portion of long-term debt 471,667
Unearned revenue and customer deposits 61,836
------------
Total current liabilities 994,266
<PAGE>
<PAGE>
F-27 (cont'd)
LONG-TERM DEBT 4,489,754
NOTE PAYABLE - PARTNER 886,301
PARTNERS' CAPITAL (DEFICIT) (2,118,555)
------------
$ 4,251,766
============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS F-28
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Year Ended December 31,
<CAPTION>
1993
-----------
<S> <C>
REVENUES
Service $ 1,135,916
Equipment sales and installation 237,464
Other 9,051
-----------
1,382,431
EXPENSES
Cost of service 874,083
Cost of equipment sales and installation 300,018
Selling, general and administrative 997,919
Interest 378,057
----------
2,550,077
----------
NET LOSS $(1,167,646)
============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
F-29
<TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Year Ended December 31, 1993
<CAPTION>
MLD Dowdy
Minnesota Minnesota
10, Inc. 10, Inc. Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1992 $ (770,175) $ (767,818) $(1,537,993)
Net loss (583,823) (583,823) (1,167,646)
Capital contributions 320,391 266,693 587,084
------------- ------------ ------------
Balance at December 31, 1993 $(1,033,607) $(1,084,948) $(2,118,555)
============= ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CASH FLOWS F-30
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Year Ended December 31,
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES: 1993
------------
<S> <C>
Net loss $(1,167,646)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Bad debts 20,622
Depreciation 445,070
Amortization 9,648
(Increase) in trade accounts receivable (166,729)
(Increase) in inventory (33,227)
(Increase) in other current assets (3,189)
(Increase) in other assets (660)
Decrease in due from affiliates 178,047
Increase in accounts payable and
accrued expenses 52,443
Increase in unearned revenue and
customer deposits 48,142
------------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (617,479)
CASH FLOWS FROM INVESTING ACTIVITIES: ------------
Issuance of note receivable (18,071)
Payment of Note Receivable
Acquisition of equipment (111,291)
------------
NET CASH (USED) BY INVESTING ACTIVITIES (129,362)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 249,689
Principal payments on long-term debt and
note payable (63,437)
Proceeds from note payable - Partner 886,301
Capital contributions 587,084
------------
<PAGE>
<PAGE>
F-30 (cont'd)
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 1,659,637
------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 912,796
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 53,584
------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 966,380
============
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS F-31
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
NOTE A - ORGANIZATION AND OPERATIONS
General
Minnesota Southern Cellular Telephone Company (Partnership), a
Florida general partnership, was organized in August, 1990 by MLD
Minnesota 10, Inc. and Dowdy Minnesota 10, Inc., two Florida
Subchapter S corporations, to hold the Federal Communications
Commission (FCC) authorization for the cellular non-wireline
facility in the Minnesota 10 rural service area (RSA) and to
construct and operate that facility. The Partnership was formed
pursuant to an agreement between competing applicants in the
lottery held by the FCC to determine the recipient of the non-
wireline cellular license in the Minnesota 10 RSA.
Partners' Interest
Net profits and net losses are generally allocated to MLD
Minnesota 10, Inc. and Dowdy Minnesota 10, Inc. (the Partners)
ratably in accordance with the partnership agreement. Each
Partner owned 50 percent at December 31, 1993.
Additional contributions made to fund the Partnership's capital
expenditures and operating losses are to be made based on the
Partners' pro rata share of such expenditures as determined by
the interest held in the Partnership. Should a Partner not make
all or a portion of a required contribution, that Partner's
interest is subject to dilution as determined by the Partnership
agreement.
Operations
The Partnership has been building its subscriber base since its
inception, consequently it has incurred substantial losses.
<PAGE>
<PAGE>
F-32
These loss resulted in negative cash flows from operations and a
cumulative deficit in Partners' capital (see Note H). These
losses and the resulting negative cash flow will require external
funding to sustain the operations of the Partnership. The
Partners intend to provide such funding in the form of loans
and/or capital contributions as necessary to ensure the continued
operations of the Partnership.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Cellular air time is recorded as revenue when earned. Sales of
equipment and related services are recorded as revenue when the
goods and services are delivered. Cellular access charges are
billed in advance and recognized as revenue when the services are
provided.
Trade Accounts Receivable
The Partnership grants credit to customers, most of whom are
located in south central Minnesota. The risk of loss on the
unsecured accounts receivable is the balance owed at the time of
default.
The allowance for uncollectible accounts has been established by
management based upon their estimate of potential uncollectible
balances.
Inventory
Inventory consists of cellular telephones and related
accessories. Inventory is stated at the lower of cost or market.
Cost is determined by using the first-in, first-out (FIFO)
method.
Property and Equipment
Property and equipment are recorded at cost. Depreciation and
amortization are computed on the straight-line method based on
estimated useful lives which are 31 years on leasehold
improvements, 5 - 10 years on furniture and equipment.
<PAGE>
<PAGE>
F-33
Intangible Assets
The Partnership incurred pre-opening costs of $46,073 and
cellular licensing costs of $13,007 which have been capitalized
and are being amortized over five and thirty years, respectively.
Income Taxes
The results of Partnership operations are included on the income
tax returns of each Partner. Accordingly, no provision for
income taxes is included in these financial statements.
Statement of Cash Flows
For purposes of the statement of cash flows, the Partnership
considers all highly liquid debt instruments purchased with a
maturity of three months or less at the date of purchase to be
cash equivalents.
Cash paid for interest during the year was $350,663.
During the year ended December 31, 1993, the Partnership
negotiated a credit of $171,030 for equipment capitalized in the
prior year. Accordingly, this non-cash item is not reflected in
the statement of cash flows.
Other
Significant accounting policies not referred to above are
reflected in the notes to the financial statements that follow.
NOTE C - OPERATING LEASES
The Partnership conducts its activities from leased office
facilities. The Partnership is also obligated under leases for
equipment and cell sites. Leases in effect have remaining terms
of eight years or less, with options to renew for up to thirty
<PAGE>
<PAGE>
F-34
years, and require monthly payments which are adjusted annually
by fixed percentages or changes in the consumer price index.
Rent expense for the year ended December 31, 1993 was
$74,918.Minimum rental commitments under noncancellable operating
leases are as follows:
Year Ending Amounts
December 31, Due
------------ ----------
1994 $ 79,353
1995 78,568
1996 47,224
1997 26,808
1998 24,420
Thereafter 46,069
----------
$ 302,442
===========
NOTE D - NOTE RECEIVABLE
The note receivable is unsecured, bears interest payable
quarterly at 2 percent above the prime rate (6% at December 31,
1993) and is due January 1, 1997.
NOTE E - RELATED PARTY TRANSACTIONS
During the year ended December 31, 1993, $17,731 for office rent
was paid to an entity affiliated through common ownership.
The note payable to a Partner is non-interest bearing and is due
on demand. Subsequent to December 31, 1993 the balance was
repaid.
Due from affiliates represents unsecured advances to the
shareholders of the Partners.
<PAGE>
<PAGE>
F-35
NOTE F - LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1993:
Notes payable to NovAtel Finance, Inc.
collateralized by all of the
Partnership's assets, interest is due
monthly at prime (6% at December 31, 1993)
plus 2%, principal payments are due
quarterly through October, 2000. $ 4,835,011
Unsecured note payable to NovAtel
Communications, Inc. with interest at 10%
due upon the sale of the Partner's interest
in the Partnership (Note H). 113,348
Note payable, collateralized by a vehicle
with a carrying value of $12,695,
interest at 11%, with installments
of $431 payable monthly through December,
1996. 13,062
------------
4,961,421
Less - current maturities 471,667
------------
$ 4,489,754
============
Future maturities of long-term debt are as follows:
Year ended December 31,
1994 $ 471,667
1995 676,032
1996 1,002,891
1997 1,324,364
1998 1,290,764
Thereafter 195,703
------------
$ 4,961,421
============
<PAGE>
<PAGE>
F-36
NOTE G - CONCENTRATION OF CREDIT RISK
The Partnership has cash deposits in excess of federally insured
limits. Such deposits total $914,017 at December 31, 1993.
NOTE H - CONTINGENCIES
The shareholders of the Partners of the Partnership are
negotiating to sell the stock (merger) of MLD Minnesota 10, Inc.
and Dowdy Minnesota 10, Inc. which will result in merger with the
acquiring entity. As part of the proposed agreement, the
acquiring entity has agreed to retire substantially all of the
Partnership's long-term debt and will fund continuing operations.
If the merger does not take place, the Partnership will continue
to rely on funding from the Partners, possibly restructure its
long-term debt and continue to build its subscriber base.
Management has projected positive operating cash flows for years
subsequent to 1994.
<PAGE>
<PAGE>
F-37
ARTHUR ANDERSEN, LLP
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
FINANCIAL STATEMENTS
As of December 31, 1992
Together with Report of Independent
Certified Public Accounts
<PAGE>
<PAGE>
F-38
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of Minnesota
Southern Cellular Telephone Company:
We have audited the accompanying balance sheet of Minnesota
Southern Cellular Telephone Company (a Florida general
partnership) as of December 31, 1992, and the related statements
of operations, changes in partners' capital (deficit) and cash
flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Minnesota Southern Cellular Telephone Company as of December
31, 1992, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen, LLP
- -------------------------
Orlando, Florida,
March 16, 1993<PAGE>
<PAGE>
<TABLE>
BALANCE SHEET F-39
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
December 31, 1992
<CAPTION>
ASSETS (Note 5)
<S> <C>
CURRENT ASSETS
Cash $ 53,584
Trade accounts receivable 110,919
Cellular telephone inventory (Note 2) 32,091
-----------
Total current assets 196,594
-----------
PROPERTY AND EQUIPMENT, net (Notes 2 and 3) 3,196,138
DUE FROM AFFILIATES (Note 4) 382,445
INTANGIBLE ASSETS, net of accumulated
amortization of $8,837 (Note 2) 50,243
OTHER NONCURRENT ASSETS 4,800
-----------
$3,830,220
===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 579,350
Current portion of long-term debt (Note 5) 64,045
Unearned revenue and customer deposits 13,694
------------
Total current liabilities 657,089
------------
LONG-TERM DEBT (Note 5) 4,711,124
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT) (1,537,993)
------------
$ 3,830,220
============
The accompanying notes are an integral part
of this balance sheet.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS F-40
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Year Ended December 31, 1992
<CAPTION>
<S> <C>
REVENUES
Service $ 637,675
Equipment sales and installations 78,463
Other 50,242
----------
766,380
EXPENSES
Cost of service 194,676
Cost of equipment sales and installations 67,324
Selling, general and administrative (Note 7) 1,190,290
Interest, net of capitalized interest of
of $30,000 354,196
-----------
1,806,486
-----------
NET LOSS $1,040,106
===========
The accompanying notes are an integral part
of this statement.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) F-41
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Year Ended December 31, 1992
<CAPTION>
Balance, Balance,
December 31, December 31,
1991 Net Loss 1992
----------- ------------ ------------
<S> <C> <C> <C>
MLD Minnesota 10, Inc. $(250,122) $ (520,053) $ (770,175)
Dowdy Minnesota 10, Inc. (247,765) (520,053) (767,818)
----------- ------------ ------------
$(497,887) $(1,040,106) $(1,537,993)
=========== ============ ============
The accompanying notes are an integral part
of this statement.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CASH FLOWS F-42
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
Year Ended December 31, 1992
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,040,106)
Adjustments to reconcile net loss to
net cash provided by operating
activities -
Depreciation and amortization 404,114
Trade accounts receivable (87,953)
Due from affiliates 144,472
Cellular telephone inventory (5,231)
Prepaids and other current assets 5,900
Accounts payable and accrued expenses 543,270
Unearned revenue and customer deposits 13,159
Intangible and other noncurrent assets (4,416)
------------
1,013,315
------------
NET CASH USED IN OPERATING ACTIVITIES (26,791)
------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (648,457)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of debt 652,704
------------
CHANGE IN CASH (22,544)
CASH, beginning of year 76,128
------------
CASH, end of year $ 53,584
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for interest $ 352,077
============
The accompanying notes are an integral part
of this statement.
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS F-43
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
1. ORGANIZATION, PARTNERS' INTEREST AND OPERATIONS
Organization
Minnesota Southern Cellular Telephone Company (MSCTC or the
Partnership), a Florida general partnership, was organized in
August 1990 by MLD Minnesota 10, Inc. and Dowdy Minnesota 10,
Inc., two Florida Subchapter S corporations, to hold the Federal
Communications Commission (FCC) authorization for the cellular
non-wireline facility in the Minnesota 10 rural service area
(RSA) and to construct and operate that facility. The
Partnership was formed pursuant to an agreement between competing
applicants in the lottery held by the FCC to determine the
recipient of the non-wireline cellular license in the Minnesota
10 RSA.
The Partnership was in the development stage in 1991 and began
its initial year of operations in 1992.
Partners' Interest
Net profits and net losses are generally allocated to MLD
Minnesota 10, Inc. and Dowdy Minnesota 10, Inc. (the Partners)
ratably in accordance with the partnership agreement. The
Partners' percentage interests at December 31, 1992 were 50
percent each.
Additional contributions made to fund the Partnership's capital
expenditures and operating losses are to be made based on the
Partner's pro rata share of such expenses as determined by the
interest held in the Partnership. Should a Partner not make all
or a portion of a required contribution, that Partner's interest
is subject to dilution as determined by the partnership
agreement.
Operations
The Partnership has incurred a loss for the year ended December
31, 1992. This loss resulted in negative cash flow and a
<PAGE>
<PAGE>
F-44
cumulative deficit in partners' capital. Furthermore,
management's projections anticipate additional losses will be
incurred in 1993. These losses and the resulting negative cash
flow will require external funding to sustain the operations of
the Partnership. The Partners intend to provide such funding in
the form of loans and/or capital contributions as necessary to
ensure the continued operations of the Partnership (see Note 5).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Cellular air time is recorded as revenue when earned. Sales of
equipment and related services are recorded as revenue when the
goods and services are delivered. Cellular access charges are
billed in advance and recognized as revenue when the services are
provided.
Cellular Telephone Inventory
Cellular telephone inventory, including items used for
demonstration, is stated at the lower of cost or market. Cost is
determined by using the first-in, first-out (FIFO) method.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed using the straight-line method over the estimated useful
lives of the assets which are 31 years for building, 10 years for
cellular equipment and 5 years for other property and equipment.
Intangible Assets
The Partnership incurred pre-opening costs of $46,073 which will
be amortized over five years and cellular licensing costs of
$13,007 which represent the cost of obtaining the FCC license
necessary for operating as a cellular carrier. These costs are
amortized over 30 years using the straight-line method.
<PAGE>
<PAGE>
F-45
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1992, consisted of the
following:
Cellular equipment $3,396,700
Building 103,489
Office and computer equipment 70,032
Vehicles 20,586
Shop tools and equipment 608
-----------
3,591,415
Less Accumulated depreciation (395,277)
-----------
$3,196,138
===========
4. TRANSACTIONS WITH RELATED PARTIES
Due from Affiliates
In addition to the interest in MSCTC, the Partners have an
interest in a second partnership which operates another cellular
non-wireline facility in Montana. Subject to the terms of the
debt agreement, borrowings of these partnerships have been cross-
collateralized. The amount due from affiliates represents the
amount due from the second partnership plus approximately
$204,000 owed the Partnership for funds advanced to the Partners.
5. LONG-TERM DEBT
Long-term debt consisted of the following:
Loan payable to NovAtel Finance, Inc.
collateralized by all the Partnership's
assets, interest is due monthly at prime
(6.0% at December 31, 1992) plus 2%,
principal payments due quarterly
commencing January 1993 through July 1999 $4,758,659
<PAGE>
<PAGE>
F-46
Note payable to bank, collateralized by a
vehicle, interest at 11.5%, with
installments payable monthly through
December 1996 16,510
-----------
4,775,169
Less Current maturities 64,045
-----------
$4,711,124
===========
On September 27, 1990, the Partnership entered into a Security
Agreement (the Agreement) with NovAtel Finance, Inc. (the
Creditor), pursuant to which it borrowed $2,803,709 for capital
equipment and $1,954,950 for working capital. The Creditor has
agreed to lend up to $4,895,000 and has stipulated that total
borrowings available for working capital shall not exceed 40
percent of the total loans outstanding. At December 31, 1992,
borrowings for working capital were in excess of 40 percent of
total borrowings and the Partnership was not in compliance with
the Agreement. A waiver was obtained by the Partnership which
waived this requirement at December 31, 1992.
In accordance with the Agreement, the Partners have agreed to
finance any shortfall of working capital needed to operate the
facility.
Scheduled reductions of the above debt, by year, were as follows
at December 31, 1992:
December 31, Amount
1993 $ 64,045
1994 360,266
1995 677,979
1996 995,749
1997 1,308,132
Thereafter 1,368,998
-----------
$4,775,169
===========
<PAGE>
<PAGE>
F-47
6. INCOME TAXES
Income taxes have not been recorded in the accompanying financial
statements because they are obligations of the Partners. The tax
returns, the qualification of the Partnership as such for tax
purposes and the amount of distributable Partnership income or
loss are subject to examination by taxing authorities. If such
examinations result in changes with respect to the income or
loss, the tax liability of the partners would likely be changed
accordingly.
7. COMMITMENTS AND CONTINGENCIES
The Partnership is committed under operating leases and
agreements, principally for facilities, office space and cell
sites, with remaining terms ranging from one to 10 years.
Certain cell site leases include options for additional periods.
Certain leases provide payment by the lessee of taxes,
maintenance and insurance.
The minimum lease payments under these operating leases are as
follows:
1993 $ 62,296
1994 62,493
1995 62,693
1996 34,024
1997 13,608
Thereafter 55,021
----------
$ 290,135
----------
The Company is subject to litigation brought by a former
management company previously under contract to the Company.
This litigation is subject to uncertainties, and the outcome is
not predictable. It is management's position that these suits
will not result in liabilities that would have a material adverse
effect upon the Company's financial position or results of
operations.
<PAGE>
<PAGE>
F-48
ARTHUR ANDERSEN, LLP
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
(A FLORIDA PARTNERSHIP IN THE DEVELOPMENT STAGE)
FINANCIAL STATEMENTS
As of December 31, 1991
Together with Report of Independent
Certified Public Accountants
<PAGE>
<PAGE>
F-49
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of Minnesota
Southern Cellular Telephone Company:
We have audited the accompanying balance sheet of Minnesota
Southern Cellular Telephone Company (a Florida partnership in the
development stage) as of December 31, 1991, and the related
statements of operations, changes in partners' capital (deficit)
and cash flows for the period from inception (August 15, 1990)
through December 31, 1991. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Minnesota Southern Cellular Telephone Company as of December
31, 1991, and the results of its operations and its cash flows
for the period then ended in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
- -----------------------
Arthur Andersen, LLP
Orlando, Florida,
March 17, 1992
<PAGE>
<PAGE>
<TABLE>
BALANCE SHEET F-50
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
(A Florida partnership in the development stage)
December 31, 1991
<CAPTION>
<S> <C>
ASSETS (Note 5)
CURRENT ASSETS
Cash $ 76,128
Trade accounts receivable 22,965
Due from affiliates (Note 4) 526,917
Cellular telephone inventory (Note 2) 26,860
Prepaids and other current assets 5,900
-----------
Total current assets 658,770
PROPERTY AND EQUIPMENT (Notes 2 and 3) 2,942,958
INTANGIBLE ASSETS (Note 2) 55,088
OTHER NONCURRENT ASSETS 4,375
-----------
$3,661,191
===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 36,080
Current portion of long-term debt (Note 5) 7,242
Unearned revenue and customer deposits 533
------------
Total current liabilities 43,855
LONG-TERM DEBT (Note 5) 4,115,223
COMMITMENTS (Note 7)
PARTNERS' CAPITAL (DEFICIT) (497,887)
------------
$ 3,661,191
============
The accompanying notes are an integral part
of this balance sheet.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS F-51
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
(A Florida partnership in the development stage)
For the Period from Inception (August 15, 1990)
Through December 31, 1991
<CAPTION>
<S> <C>
REVENUES
Service $ 23,107
Equipment sales and installations 4,091
Other 3,562
-----------
30,760
EXPENSES
Cost of service 83,758
Cost of equipment sales and installations 3,543
Selling, general and administrative
(Notes 4 and 7) 375,562
Interest, net of capitalized interest of
of $73,737 63,432
-----------
526,295
-----------
NET LOSS $ (495,535)
===========
The accompanying notes are an integral part
of this statement.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) F-52
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
(A Florida partnership in the development stage)
For the Period from Inception (August 15, 1990)
Through December 31, 1991
<CAPTION>
Contri- Distri- Balance
Balance Net Loss butions butions 12/31/91
--------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
MLD Minnesota
10, Inc. $ - $(247,768) $ 20,447 $(22,801) $(250,122)
Dowdy Minnesota
10, Inc. - (247,767) 22,803 (22,801) (247,765)
------- ---------- --------- --------- ----------
$ - $(495,535) $ 43,250 $(45,602) $(497,887)
======= ========== ========= ========= ==========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CASH FLOWS F-53
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
For the Period from Inception (August 15, 1990)
Through December 31, 1991
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (495,535)
Adjustments to reconcile net loss to
net cash provided by operating
activities -
Trade accounts receivable (22,965)
Due from affiliates (526,917)
Cellular telephone inventory (26,860)
Prepaids and other current assets (5,900)
Accounts payable and accrued expenses 36,080
Unearned revenue and customer deposits 533
Intangible and other noncurrent assets (59,463)
------------
(605,492)
------------
NET CASH USED IN OPERATING ACTIVITIES (1,101,027)
------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (2,942,958)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from issuance of debt 4,122,465
Contributions from partners 43,250
Distributions to partners (45,602)
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,120,113
------------
CHANGE IN CASH 76,128
CASH, beginning of year -
------------
CASH, end of year $ 76,128
============
<PAGE>
<PAGE>
F-53 (cont'd)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for interest $ 35,784
============
The accompanying notes are an integral part
of this statement.
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS F-54
MINNESOTA SOUTHERN CELLULAR TELEPHONE COMPANY
1. ORGANIZATION, PARTNERS' INTEREST AND OPERATIONS
Organization
Minnesota Southern Cellular Telephone Company (MSCTC or the
Partnership), a Florida general partnership, was organized in
August 1990 by MLD Minnesota 10, Inc. and Dowdy Minnesota 10,
Inc., two Florida Subchapter S corporations, to hold the FCC
authorization for the cellular non-wireline facility in the
Minnesota 10 rural service area (RSA) and to construct and
operate that facility. The Partnership was formed pursuant to an
agreement between competing applicants in the lottery held by the
Federal Communications Commission to determine the recipient of
the non-wireline cellular license in the Minnesota 10 RSA.
As substantially all of its efforts have been devoted to
establishing a new business and the Partnership has yet to
generate significant revenue, it is considered to be in the
development stage. The Partnership officially commenced its
operations in February 1992.
Partners' Interest
Net profits and net losses are generally allocated to MLD
Minnesota 10, Inc. and Dowdy Minnesota 10, Inc. (the Partners)
ratably in accordance with the partnership agreement. The
Partners' percentage interests at December 31, 1991 were 50
percent each.
Additional contributions made to fund the Partnership's capital
expenditures and operating losses are to be made based on the
Partner's pro rata share of such expenses as determined by the
interest held in the Partnership. Should a Partner not make all
or a portion of a required contribution, that Partner's interest
is subject to dilution as determined by the partnership
agreement.
<PAGE>
<PAGE>
F-55
Operations
The Partnership has incurred a loss for the year ended December
31, 1991. This loss resulted in negative cash flow and a
cumulative deficit in partners' capital. Furthermore,
management's projections anticipate additional losses will be
incurred in 1992. These losses, and the resulting negative cash
flow will require external funding to sustain the operations of
the Partnership. The Partners intend to provide such funding in
the form of loans and/or capital contributions as necessary to
ensure the continued operations of the Partnership (see Note 5).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Cellular air time is recorded as revenue when earned. Sales of
equipment and related services are recorded as revenue when the
goods and services are delivered. Cellular access charges are
billed in advance and recognized as revenue when the services are
provided.
Cellular Telephone Inventory
Cellular telephone inventory is stated at the lower of cost or
market. Cost is determined by using the first-in, first-out
(FIFO) method.
Property and Equipment
Property and equipment are stated at cost. No depreciation was
charged to expense in 1991 as the fixed assets had not yet been
placed in service. Depreciation will be computed using the
straight-line method over the estimated useful lives of the
assets which are 31 years for building, 10 years for cellular
equipment and 5 years for other property and equipment.
Intangible Assets
The Partnership incurred pre-opening costs of $46,073 which will
be amortized over one year and cellular licensing costs of
<PAGE>
<PAGE>
F-56
$9,015 which represent the cost of obtaining the FCC license
necessary for operating as a cellular carrier. These costs are
amortized over 30 years using the straight-line method.
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1991, consisted of the
following:
Cellular equipment $2,753,543
Building 101,589
Office and computer equipment 66,632
Vehicles 20,586
Shop tools and equipment 608
-----------
$2,942,958
===========
4. TRANSACTIONS WITH RELATED PARTIES
Due from Affiliates
In addition to the interest in MSCTC, the Partners have an
interest in a second partnership which operates another cellular
non-wireline facility in Montana. Subject to the terms of the
debt agreement, borrowings of these partnerships have been cross-
collateralized. The amount due from affiliates represents the
amount due from the second partnership plus approximately
$204,000 owed the Partnership for funds advanced to the Partners.
Consulting Services
The Partnership has a contractual agreement with a consulting
company to manage and promote the operation of the Partnership.
The chief executive officer of the Partnership is the president
of the consulting company. Monthly payments to the consulting
company are based on the terms of the agreement. This agreement
is terminable at will by either party.
<PAGE>
<PAGE>
F-57
5. LONG-TERM DEBT
Long-term debt consisted of the following:
Loan payable to NovAtel Finance, Inc.
collateralized by all the Partnership's
assets, interest is due monthly at prime
(6.5% at December 31, 1991) plus 2%,
principal payments due quarterly
commencing December 1992 through
September 1998 $4,102,880
Note payable to bank, collateralized by a
vehicle, interest at 11.5%, with
installments payable monthly through
December 1996 19,585
-----------
4,122,465
Less-current maturities 7,242
-----------
$4,115,223
===========
On September 27, 1990, the Partnership entered into a Security
Agreement (the Agreement) with NovAtel Finance, Inc. (the
Creditor), pursuant to which it borrowed $2,633,532 for capital
equipment and $1,469,348 for working capital. The Creditor has
agreed to lend up to $4,895,000 and has stipulated that total
borrowings available for working capital shall not exceed 40
percent of the total loans outstanding. The Partnership was in
compliance with these requirements at December 31, 1991.
In accordance with the NovAtel debt agreement, the Partners have
agreed to finance any shortfall of working capital needed to
operate the facility.
Scheduled reductions of the above debt, by year, were as follows
at December 31, 1991:
<PAGE>
<PAGE>
F-58
December 31, Amount
------------ ------------
1992 $ 7,242
1993 68,060
1994 336,034
1995 615,998
1996 890,049
Thereafter 2,205,082
-----------
$4,122,465
===========
6. INCOME TAXES
Income taxes have not been recorded in the accompanying financial
statements because they are obligations of the partners. The tax
returns, the qualification of the Partnership as such for tax
purposes and the amount of distributable Partnership income or
loss are subject to examination by taxing authorities. If such
examinations result in changes with respect to the income or
loss, the tax liability of the partners would likely be changed
accordingly.
7. COMMITMENTS
The Partnership is committed under operating leases and
agreements, principally for facilities, office space and cell
sites, with remaining terms ranging from one to ten years.
Certain cell site leases include options for additional periods.
Certain leases provide payment by the lessee of taxes,
maintenance and insurance.
The minimum lease payments under these operating leases are as
follows:
1992 $ 59,750
1993 62,296
1994 62,493
1995 62,693
1996 34,024
Thereafter 68,883
----------
$ 350,139
==========
<PAGE>
<PAGE>
F-59
The Partnership has a contractual agreement with a management
company for the construction, supervision and management of the
cellular non-wireline system. The agreement is for a five-year
period concluding December 2, 1996. Monthly service fees of
$8,500 are paid for services provided by the management company.
<PAGE>
<PAGE>
Appendix A
Exhibit A-1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Plan"), dated as
of , 1994, by and among MLD MINNESOTA 10, INC.
("MLD"), a corporation duly organized and in good standing under
the laws of the State of Florida, ROCHESTER SUBSIDIARY TWENTY-SIX
INC. ("Subsidiary") a corporation duly organized and in good
standing under the laws of the State of Florida, ROCHESTER TEL
TELECOMMUNICATIONS HOLDING CORPORATION ("Subsidiary's Parent"), a
corporation duly organized and in good standing under the laws of
the State of Delaware, and ROCHESTER TELEPHONE CORPORATION
("Rochester"), a corporation duly organized and in good standing
under the laws of the State of New York, (MLD and Subsidiary
being hereinafter called the "Constituent Corporations") provides
as follows:
WHEREAS, all of the issued and outstanding stock of
Subsidiary is owned by Subsidiary's Parent, which is wholly-owned
by Rochester; and
WHEREAS, Rochester intends to issue to the common
shareholders of MLD the consideration specified in Section 1.04
of this Plan and to consummate the merger of Subsidiary with and
into MLD as contemplated by this Plan (the "Merger"); and
WHEREAS, MLD has an authorized capital stock consisting of
(i) 1,000,000 shares of common stock, $.01 par value ("MLD Common
Stock"), of which, as of the date hereof, 100 are issued and
outstanding, and all of which are entitled to one vote per share
on the Merger contemplated by this Plan; and
WHEREAS, Subsidiary has an authorized capital stock
consisting of 200 shares of common stock, par value $.01 per
share ("Subsidiary Common Stock"), of which, as of the date
hereof, 100 shares are issued and outstanding and all of which
are entitled to one vote per share on the Merger; and
<PAGE>
<PAGE>
WHEREAS, the Boards of Directors of Subsidiary and MLD have
determined that it is desirable that the Merger be accomplished
in accordance with the applicable statutes of the State of
Florida , all upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, Subsidiary shall be merged into MLD and
MLD shall be the surviving corporation under the name MLD
Minnesota 10, Inc., and the terms and conditions of the Merger
and the Plan and the mode of carrying the same into effect and
the manner and basis of converting common shares of MLD Common
Stock into shares of Rochester Common Stock (as hereinafter
defined), shall be as hereinafter set forth.
ARTICLE I
THE MERGER AND ITS EFFECT
Section 1.01 Merger, Surviving Corporation and Effective Date.
This Plan, upon its approval by the Board of Directors of
Rochester, Subsidiary and MLD, adoption by the shareholders of
Subsidiary and MLD, the satisfaction of all of the conditions set
forth in the Agreement with Respect to a Merger ("Merger
Agreement"), dated of even date herewith, by and among Rochester
and Subsidiary's Parent and the Constituent Corporations, and
upon the execution and filing of such documents, including the
filing of the Articles of Merger with the Secretary of State of
the State of Florida , and the doing of such acts and things as
shall be required for accomplishing the Merger under the
provisions of the applicable statutes of the State of Florida ,
shall become effective. The "Effective Date" as herein referred
to shall be the date of the filing of the aforesaid Articles of
Merger with the Secretary of State of the State of Florida or the
delayed effective date therein.
Upon the Effective Date, the separate existence of
Subsidiary shall cease, Subsidiary shall be merged into MLD,
which shall be the surviving corporation (sometimes called the
"Surviving Corporation").
<PAGE>
<PAGE>
Section 1.02 Articles of Incorporation of Surviving
Corporation.
The Articles of Incorporation of MLD, as in effect
immediately prior to the Effective Date, shall, from and after
the Effective Date, be the Articles of Incorporation of the
Surviving Corporation, until altered or amended as provided by
law.
Section 1.03 Bylaws.
The Bylaws of MLD, in effect immediately prior to the
Effective Date shall, from and after the Effective Date, be the
Bylaws of the Surviving Corporation, until altered or amended as
provided by such Bylaws and applicable law.
Section 1.04 Conversion and Exchange of Shares.
On the Effective Date, by virtue of the Merger and without
any action on the part of any holder thereof:
(a) Each share of Subsidiary Common Stock outstanding
immediately prior to the Effective Date shall, on the Effective
Date, automatically be converted into and shall become one fully
paid and non-assessable share of Common Stock of the Surviving
Corporation;
(b) Subject to the fractional share provisions of
subsection (c), the objecting shareholder provisions of
subsection (e) and the provisions of subsection (f) of this
Section 1.04, each share of MLD Common Stock outstanding
immediately prior to the Effective Date, shall automatically be
converted into and exchanged for the number of shares of fully
paid and non-assessable New York Stock Exchange ("NYSE") listed
shares of Rochester's $1.00 par value common stock (the
"Rochester Common Stock") determined by adding (i) 433,217, plus
(ii) the quotient of the dollar value of the Additional Capital
Contributions as defined in Article 5.14 of the Merger Agreement
divided by twenty-three (23) and then dividing that sum by 100,
<PAGE>
<PAGE>
which is the number of shares of MLD Stock authorized, issued and
outstanding;
(c) Neither a fractional share of Rochester Common Stock
nor any scrip certificate therefor will be issued to the holder
of MLD Common Stock. In lieu thereof, Rochester shall pay cash
for the fractional share equal to the fraction of a share to
which the holder of MLD Common Stock would otherwise be entitled,
multiplied by Twenty-Three (23).
(d) Each holder of MLD Common Stock, upon surrender for
cancellation of one or more certificates representing such
shares, shall be entitled to receive, on the Effective Date,
certificates representing the number of whole shares of Rochester
Common Stock into which such shares of MLD Common Stock are
convertible pursuant to the Merger. Until surrender as provided
above, each outstanding certificate, which prior to the Effective
Date represented shares of MLD Common Stock, shall be deemed for
all corporate purposes to evidence ownership of the number of
whole shares of Rochester Common Stock into which such shares of
MLD Common Stock shall have been converted as
provided above. Unless and until any such outstanding
certificate of MLD Common Stock shall be so surrendered, no
dividend payable, and no certificates representing split share
deliverable, in the event any such split shall be declared, to
holders of Rochester Common Stock of record as of any date
subsequent to the Effective Date, shall be paid or delivered to
the holder of any certificate, which, prior to the Effective
Date, represented MLD Common
<PAGE>
<PAGE>
Stock. Upon such surrender, however, there shall be paid or
delivered to the holder of record of the certificates of
Rochester Common Stock issued in exchange therefor, the amount of
any such cash dividend (without interest thereon), or the
certificates for the number of whole shares resulting from any
such splits which shall have theretofore become payable or
deliverable with respect to such whole shares of Rochester Common
Stock;
(e) Notwithstanding anything in this Section 1.04 to the
contrary, shares of MLD Common Stock which are outstanding
immediately prior to the Effective Date and which are held by
shareholders who have not voted such shares in favor of the
Merger and who have delivered to MLD a timely written objection
to this plan ("Objecting Shares"), shall not be converted into
shares of Rochester Common Stock, but instead, the holders
thereof shall be entitled only to such dissenters' rights as are
granted by applicable Florida law; provided, however, that if any
holder of Objecting Shares shall withdraw, lose or forfeit his or
her dissenter's rights under applicable Florida law, such
Objecting Shares shall thereupon be converted into Rochester
Common Stock in accordance with the terms of this Section 1.04.
(f) Notwithstanding the foregoing, in the event that on or
after the date of the Merger Agreement and prior to the Effective
Date, the Rochester Common Stock shall have been split-up,
converted, exchanged, reclassified, combined or in any way
substituted for, or if a stock dividend, an extraordinary
dividend or spin-off shall have occurred (hereinafter, a
"Diluting Event"), each holder of MLD Common Stock shall be
entitled to receive, under the same terms otherwise applicable to
its receipt of the shares of Rochester Common Stock pursuant to
this Plan of Merger, the following: (A) if the Diluting Event
results in an exchange of the Rochester Common Stock for other
property, each holder of MLD Common Stock shall be entitled to
receive, in lieu of shares of Rochester Common Stock, such shares
of stock, securities or other property as such holder would have
received if, as of the record date for
<PAGE>
<PAGE>
such Diluting Event, if any, or if none, the effective date of
such Diluting Event, such holder had been the holder of the
number of shares of Rochester Common Stock which such holder
would have received under this Plan of Merger if the Effective
Date hereunder had occurred on the date prior to the effective
date of such Diluting Event, (B) if the Diluting Event is a
combination of the Rochester Common Stock into a smaller number
of such Rochester Common Stock or a subdivision of the Rochester
Common Stock into a larger number of such Rochester Common Stock,
appropriate and proportionate adjustments shall be made to the
number of shares of Rochester Common Stock which each holder of
MLD Common Stock would, but for this clause (B), have received
under this Plan of Merger and (C) if the Diluting Event results
in a dividend, issuance or payment with respect to Rochester
Common Stock, each holder of MLD Common Stock shall be entitled
to receive, in addition to the number of shares of Rochester
Common Stock otherwise contemplated by this Plan of Merger, such
shares of stock, securities or other property as such holder
would have received if, as of the record date for such Diluting
Event, if any, or if none, the effective date of such Diluting
Event, such holder had been the holder of the number of shares of
Rochester Common Stock which such holder would have received
under this Plan of Merger if the Effective Date hereunder had
occurred on the date prior to the effective date of such Diluting
Event.
ARTICLE II
VESTING OF PROPERTIES, ETC.
Upon the Merger, all the rights, privileges, powers and
franchises and all property and assets of every kind and
description of MLD and Subsidiary, including (without limitation)
title to real properties, franchises, licenses, easements,
permits, rights, privileges, powers, immunities, choses in
action, contracts, patents, trademarks, trade names, licenses and
registrations, shall be vested in and be held and
<PAGE>
<PAGE>
enjoyed by the Surviving Corporation, without further act or
deed, and all the estates and interests of every kind of MLD and
Subsidiary, including all debts due to either of them on whatever
account, shall be the property of the Surviving Corporation as
they were of the respective Constituent Corporations and the
title to any real estate vested by deed or, otherwise in MLD and
Subsidiary shall not revert or be in any way impaired by reason
of the Merger; and all rights of creditors and all liens upon any
property of MLD and Subsidiary, shall be preserved and
unimpaired; and all debts, liabilities and duties of MLD and
Subsidiary shall henceforth attach to the Surviving Corporation
and may be enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by
it.
ARTICLE III
AMENDMENT OF PLAN
The Constituent Corporations may, by mutual written
agreement approved by their respective Boards of Directors or
Executive Committee, from time to time (and whether before or
after the shareholders of MLD and Subsidiary have approved this
Plan), amend this Plan to facilitate the performance thereof or
to comply with applicable law of any jurisdiction or any
applicable regulation of any public agency or authority, or for
any other purposes; provided, however, that no such amendment
shall be made subsequent to the approval of this Plan by the
shareholders of either of the Constituent Corporations if such
amendment would change the terms set forth in Articles I or II
hereof in the manner described in Section 607.1103(8) of the
Florida General Corporation Law.
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<PAGE>
ARTICLE IV
ABANDONMENT OF MERGER
The Merger may be abandoned, and this Plan terminated, at
any time before or after approval or adoption hereof by the sole
shareholder of MLD, but not later than the Effective Date, in the
manner provided for in the Merger Agreement.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 Headings.
The Article and Section headings herein are for convenience
of reference only and shall not be deemed to affect any provision
of this Plan.
IN WITNESS WHEREOF, MLD, Rochester, Subsidiary's Parent
and Subsidiary have caused this Plan to be executed in their
respective corporate names by their duly authorized officers as
of the day and year first above written.
MLD MINNESOTA 10, INC.
By:
-------------------
Name:
Its:
<PAGE>
<PAGE>
ROCHESTER TELEPHONE CORPORATION
By:
-------------------
Name:
Its:
ROCHESTER TEL TELECOMMUNICATIONS
HOLDING CORPORATION
By:
-------------------
Name:
Its:
ROCHESTER SUBSIDIARY TWENTY-SIX, INC.
By:
-------------------
Name:
Its:
<PAGE>
<PAGE>
STATE OF )
COUNTY OF ) SS:
On , 1994, before me personally came
to me known, who, being by me duly sworn, did depose and
say that deponent resides at , ; deponent
is the of MLD Minnesota 10,
Inc., the corporation described in and which executed, the
foregoing Agreement; deponent knows the seal of said corporation;
that the seal affixed to said Agreement is such corporate seal;
that it was so affixed by order of the Board of Directors of said
corporation; deponent signed deponent's name thereto by like
order.
-------------------
Notary Public
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On , 1994, before me personally came
to me known, who, being by me duly sworn, did depose and
say that deponent resides at , New York; deponent is the
of Rochester Telephone
Corporation, the corporation described in and which executed, the
foregoing Agreement; deponent knows the seal of said
corporation; that the seal affixed to said Agreement is such
corporate seal; that it was so affixed by order of the Board of
Directors of said corporation; deponent signed deponent's name
thereto by like order.
-------------------
Notary Public
<PAGE>
<PAGE>
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On , 1994, before me personally came
to me known, who, being by me duly sworn, did depose and
say that deponent resides at , New York; deponent is the
of Rochester Tel
Telecommunications Corporation, the corporation described in and
which executed, the foregoing Agreement; deponent knows the seal
of said corporation; that the seal affixed to said Agreement is
such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation; deponent signed deponent's name
thereto by like order.
-------------------
Notary Public
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On , 1994, before me personally came
to me known, who, being by me duly sworn, did depose and
say that deponent resides at , New York; deponent is the
of Rochester Subsidiary Twenty-Six Inc., the corporation
described in and which executed, the foregoing Agreement;
deponent knows the seal of said corporation; that the seal
affixed to said Agreement is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation;
deponent signed deponent's name thereto by like order.
-------------------
Notary Public
<PAGE>
<PAGE>
Appendix B
AGREEMENT WITH RESPECT TO A MERGER
OF
ROCHESTER SUBSIDIARY TWENTY-SIX INC.
(a Florida corporation)
into
MLD MINNESOTA 10, INC.
(a Florida corporation)
Under the Name
MLD MINNESOTA 10, INC.
THIS AGREEMENT WITH RESPECT TO A MERGER ("Agreement"), is
dated as of July 6, 1994, by and among Rochester Telephone
Corporation, a New York transportation corporation ("Rochester"),
MLD MINNESOTA 10, INC., a Florida corporation, ("MLD"), Mary L.
Demetree ("Seller"), Rochester Subsidiary Twenty-Six Inc., a
Florida corporation, ("Subsidiary") and Rochester Tel
Telecommunications Holding Corporation, a Delaware corporation
("Subsidiary's Parent").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Rochester, MLD,
Subsidiary, and Subsidiary's Parent have or will shortly have
approved and by appropriate resolutions have or will shortly have
authorized, the merger of Subsidiary with and into MLD ("the
Merger"), upon the terms and conditions set forth in this
Agreement, which includes the Agreement and Plan of Merger ("Plan
of Merger"), in the form of Exhibit A-1, attached hereto and made
a part hereof; and
WHEREAS, the consummation of the Merger pursuant to the
Plan of Merger is conditioned, among other things, upon the
fulfillment or performance on or before the Effective Date (as
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<PAGE>
hereinafter defined) of the conditions set forth in this
Agreement; and
WHEREAS, the Seller is the sole shareholder of record of
100 shares (100%) of the $.01 par value common stock of MLD,
which is a 50% general partner in Minnesota Southern Cellular
Telephone Company ("MSCTC") which is the FCC-licensed
non-wireline cellular telecommunications service provider in
Minnesota RSA #10, and by her signature below Seller intends,
inter alia, to agree to vote all of her shares in favor of the
Merger and the Plan of Merger.
NOW, THEREFORE, the parties hereto hereby represent,
warrant, covenant and agree as follows:
ARTICLE I
MERGER
1.1 Effective Date. Subject to the terms and conditions
provided in this Agreement, MLD, Subsidiary's Parent and
Subsidiary agree to file Articles of Merger on behalf of MLD,
Subsidiary's Parent and Subsidiary (hereinafter the "Articles of
Merger"), substantially in the form of Exhibit A-2 attached
hereto, with the Secretary of State of the State of Florida
pursuant to the relevant statutes of the State of Florida and to
comply with all other procedures necessary and appropriate for
the consummation of the Merger, all as provided in the relevant
statutes of the State of Florida and upon filing of the Articles
of Merger by the Secretary of State of the State of Florida
("Secretary of State"), the Merger shall become effective (the
"Effective Date"). Pursuant to, and in accordance with, the
terms of the Plan of Merger, the outstanding shares of common
stock of MLD will be exchanged for Rochester Common Stock in the
merger on the Effective Date.
1.2 Surviving Corporation. On the Effective Date,
Subsidiary shall be merged into MLD and MLD shall be the
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<PAGE>
surviving corporation (sometimes called the "Surviving
Corporation") in the Merger and continue its corporate existence
under the laws of the State of Florida.
ARTICLE II
CLOSING
2.1 Closing Date. Subject to the terms and conditions of
this Agreement, unless otherwise mutually agreed upon by the
parties, the closing of the Merger (the "Closing") shall take
place at Rochester Telephone Corporation's Headquarters Building,
180 South Clinton Avenue, Rochester, New York 14646 at 10:00 a.m.
on the date (the "Closing Date") which is the twentieth (20th)
business day after the later of:
2.1.1 The earlier of:
(a) The date action by the Federal Communications
Commission (the "FCC") granting its consent (the "FCC Consent")
to the transfer to Rochester of control of the mobile radio
authorization issued by the FCC for the non-wireline cellular
radio telephone system for the Minnesota RSA #10, Call Sign KNKN
572, shall have become a Final Order, as that term is defined in
Section 9.2, hereof, or
(b) The date subsequent to the FCC Consent on which
Rochester and Seller shall have waived, in writing, the necessity
of the FCC Consent becoming a Final Order, and
2.1.2 The earlier of:
(a) The date action by the Public Service Commission of
the State of New York (the "NYPSC") approving the transactions
contemplated hereby (the "NYPSC Consent") shall have become a
Final Order, or
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<PAGE>
(b) The date subsequent to the NYPSC Consent on which
Rochester and Seller shall have waived, in writing, the necessity
of the NYPSC Consent becoming a Final Order.
2.2 Filing of Articles of Merger. On the Closing Date
the parties hereto shall cause the Articles of Merger to be
delivered to the Secretary of State in accordance with the
relevant statutes of the State of Florida and shall take all
other lawful actions and do any and all other lawful things
necessary to cause the Merger to become effective, and on the
Effective Date Rochester shall deliver to the Seller stock
certificates representing the number of shares of common stock of
Rochester or such other securities into which such common stock
has been split-up, converted, reclassified, combined or
substituted (the "Rochester Common Stock") into which the shares
of common stock of MLD have been converted pursuant to the Plan
of Merger.
2.3 Closing Cooperation. Counsel for the parties shall
use their reasonable efforts to agree upon a closing agenda and
the form and substance of the deliverables of each party well in
advance of the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND MLD
As an inducement for Rochester to enter into this
Agreement, Seller and MLD, without qualification, hereby jointly
and severally represent and warrant to Rochester, Subsidiary and
Subsidiary's Parent as follows:
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<PAGE>
3.1 Incorporation. MLD is a corporation duly organized
and validly existing and in good standing under the laws of the
State of Florida, having been incorporated in said State on
August 17, 1990. MLD has full corporate power and authority to
carry on its business as it is now being conducted and to own and
operate its assets, business and properties. Annexed hereto as
Exhibit A and made a part hereof is a complete and correct copy
of the Articles of Incorporation (together with all amendments
thereto and restatements thereof) of MLD.
3.2 Capitalization of MLD; Corporate Documents. MLD has
an authorized capital stock consisting of 1,000,000 shares of
common stock, of which, One Hundred (100) are issued and
outstanding, with $.01 par value (the "MLD Stock"), none of which
are held in the treasury of MLD. There are no other classes of
MLD equity authorized, issued or outstanding.
3.3 Title to MLD Stock. The Seller represents and
warrants that she has good and marketable title to, and owns free
and clear of all claims, liens, pledges, options and other
encumbrances, all of the MLD Stock. All of the MLD Stock is
validly issued, fully paid and non-assessable.
3.4 Status of MLD Stock. None of the MLD Stock is
subject to any voting trust or any other agreement regarding the
voting of such shares. Full right, title and interest in and to
the MLD Stock will remain with Seller until the Closing.
3.5 Capacity of MLD Stock Owner. The Seller is not under
any present legal disability to enter into and perform this
Agreement and will have full power and authority to perform all
of her obligations under this Agreement as of the Closing.
3.6 No Violation of Obligation. The Seller warrants that
neither she nor MLD is a party to or restricted by or obligated
under any contract or agreement which might be violated by making
or performing any part of this Agreement.
<PAGE>
<PAGE>
3.7 Financial Statements. The audited balance sheet of
MSCTC as of December 31, 1992 and the related Statement of
Operations, Statement of Changes in Partners' Capital and
Statement of Cash Flows for the twelve months then ended and the
draft audited balance sheet of MSCTC as of December 31, 1993 and
related draft Statement of Operations, Statement of Changes in
Partners' Capital and Statement of Cash Flows for the twelve
months then ended are correct and complete in all material
respects, are in accordance with the books and records of MSCTC,
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and, to the
extent applicable, the accounting regulations of the Minnesota
Public Utilities Commission ("MPUC"), and present fairly the
financial position of MSCTC as of December 31, 1992 and 1993 and
the results of its operations for the years then ended. The
draft audited balance sheets of MLD as of December 31, 1992 and
1993, Statements of Changes in Retained Earnings and Statements
of Cash Flows and Operations, copies of which have been delivered
to Rochester, are correct and complete in all material respects
and are in accordance with the books and records of MLD, and
present fairly the financial position of MLD as of such dates and
the results of its operations as of the years then ended in
accordance with generally accepted principles of accounting
consistently applied (subject to the absence of footnotes) and,
to the extent applicable, the accounting regulations of the MPUC.
For purposes of this Agreement, the draft audited balance sheet
of MLD as of December 31, 1993 and the draft audited balance
sheet of MSCTC as of such date are sometimes referred to as the
"Balance Sheets" and the date thereof is referred to as the
"Balance Sheet Date."
As provided in Section 5.12, hereof, MLD will deliver to
Rochester an interim unaudited compiled balance sheet and
statement of income of MSCTC for each month beginning with the
month ending January 30, 1994. Such interim unaudited compiled
financial statements will be correct and complete in all material
respects and in accordance with the books and records of MSCTC,
and will be prepared in conformity with the applicable
regulations of the MPUC, if any, and in accordance with
generally accepted accounting principles applied on a consistent
basis with the 1993 statements.
<PAGE>
<PAGE>
3.8 Business Since December 31, 1993. Except as set
forth on Schedule 1, attached hereto and made a part hereof,
since the Balance Sheet Date, there has not been:
3.8.1 Any material adverse change in the financial
condition, operations or business of MLD or MSCTC;
3.8.2 Any material physical damage or destruction, whether
or not covered by insurance, adversely affecting the properties,
business or operations of MLD or MSCTC;
3.8.3 Any labor dispute or threat known to Seller or MLD
materially affecting the business or assets of MLD or MSCTC or
any attempt made known to Seller or MLD to organize the employees
of MLD or MSCTC for the purpose of collective bargaining;
3.8.4 Any direct or indirect redemption, purchase or other
acquisition by MLD of any of its capital stock, or any
declaration, payment or distribution to any of its shareholders
of any dividend or other distribution with respect to its stock;
3.8.5 Any oral or written employment or consulting
contract entered into by MLD or MSCTC with any director, officer
or employee except for contracts "at will" and in the ordinary
course of business, or any increase of compensation payable or to
become payable to any of its officers, employees or agents except
in the normal course of business in accordance with past
practices, but in no event at a rate in excess of four percent
(4%) per annum, unless MLD or MSCTC, as the case may be, shall
have requested approval from Rochester in a letter sent pursuant
to Section 12.6 hereof and Rochester shall have (i) consented to
such excess (which consent shall not be unreasonably withheld)
or (ii) failed to deny such excess within ten (10) business days
of its receipt of such request;
<PAGE>
<PAGE>
3.8.6 Any satisfaction or discharge of any lien by MLD or
MSCTC or payment by MLD or MSCTC of any obligation or liability,
other than a lien obligation or liability included in the Balance
Sheets or incurred in the ordinary course of business, current
liabilities incurred since that date arising in the ordinary
course of business, liabilities incurred in carrying out the
transactions contemplated by this Agreement, obligations and
liabilities under the contracts and agreements listed in Schedule
6 hereof, and obligations and contracts entered into in the
ordinary course of business;
3.8.7 Any guaranty, endorsement or indemnification by MLD
or MSCTC of the obligations of any third person, firm or
corporation except endorsements of financial instruments in the
ordinary course of business and except guaranty or
indemnification by MLD of obligations of MSCTC, but only upon the
prior written consent of Rochester;
3.8.8 Any sale or transfer by MLD or MSCTC of any assets
having a value, in the aggregate, of more than $5,000 or
cancellation by MLD or MSCTC of debts or claims having a value,
in the aggregate, of more than $5,000, except in each case in the
ordinary course of business;
3.8.9 Any knowing waiver by MLD or MSCTC of any rights of
a material value;
3.8.10 Any transaction entered into by MLD or MSCTC having
a value equal to or exceeding $20,000 except for this Agreement
and contracts and agreements listed in Schedule 5 or 6 hereof;
3.8.11 Any mortgage, pledge or lien or other encumbrance
of any of MLD's or MSCTC's assets, tangible or intangible other
than liens for taxes not yet due and payable and mechanics liens
or other statutory liens arising in the ordinary course of
business and other than as set forth in item 3 on Schedule 7
hereto; or
<PAGE>
<PAGE>
3.8.12 Any assignment, sale or transfer of any good will,
patent, trademark, trade name, trade secret, copyright or other
intellectual property of MLD or MSCTC; or
3.8.13 Except as otherwise disclosed in this Agreement and
the Schedules hereto, any change in the amounts due to or owing
from affiliates of MLD or MSCTC.
3.9 MLD and MSCTC Litigation. Except as set forth in
Schedule 2 annexed hereto and made a part hereof, there are no
actions, suits, proceedings or investigations (whether or not
purportedly on behalf of MLD or MSCTC) pending, to MLD's
knowledge, or threatened against MLD or MSCTC of any type before
or by any federal, state, municipal or other governmental
department, commission, board, agency or instrumentality,
domestic or foreign, nor has any such action, suit, proceeding or
investigation been pending during the twelve-month period
preceding the date of this Agreement. Neither MLD nor MSCTC is
operating under or subject to, or in default with respect to, any
writ, injunction or decree of any court or federal, state,
municipal or other governmental department, commission, board,
agency or instrumentality, domestic or foreign.
3.10 Compliance with Laws. Except as set forth on
Schedule 2, within the five (5) year period preceding the date of
this Agreement, neither MLD nor MSCTC has received notice of any
material violation of laws, regulations and orders from the
governmental entity having authority to enforce such laws,
regulations and orders, or any requirements of insurance
carriers, applicable to its business.
<PAGE>
<PAGE>
3.11 Uses, Approvals. Except as set forth on Schedule 2,
the present uses by MLD and MSCTC of their properties do not in
any material respects violate any laws, regulations, orders or
requirements. With the exception of Federal Communications
Commission ("FCC") and NYPSC consents and, if required,
compliance with the Hart-Scott-Rodino Antitrust Improvements Act,
no consent or approval by any governmental or quasi-governmental
authority is required in connection with the execution, delivery
and performance of this Agreement by Seller or MLD.
3.12 Patents, Trademarks and Miscellaneous Intellectual
Property. Schedule 3, which is annexed hereto and made a part
hereof, sets forth a correct and complete list of all copyrights,
patents, trademarks, trade names, processes, inventions and
formula applied for, issued to or owned by MLD or MSCTC or under
which MLD or MSCTC is licensed or franchised, all of which are
valid, in good standing and uncontested, except as set forth in
item 4 on Schedule 1 hereto. Except as set forth in item 4 on
Schedule 1 hereto, MLD and MSCTC possess adequate rights,
licenses or other authority to use all copyrights, patents,
inventions, formula, processes (secret or otherwise), trademarks
and trade names necessary to conduct their businesses as
presently conducted or presently proposed to be conducted.
3.13 Intellectual Property Interests. None of MLD or
MSCTC has received any notice with respect to any alleged
infringement or unlawful use by it of any software license,
copyright, patent, trademark, trade name, process, invention or
formula or other intangible property right owned by others. No
director, officer, employee or partner of MLD or MSCTC has any
ownership interest in any copyright, patent, trademark, trade
name, process, invention or formula listed on Schedule 3. None
of MLD or MSCTC has granted any outstanding licenses or other
rights or has any obligations to grant licenses or other rights
with respect to any copyright, patent, invention, formula,
process, trademark or trade name listed in Schedule 3.
<PAGE>
<PAGE>
3.14 Insurance. Schedule 4, which is annexed hereto and
made a part hereof, is a correct and complete list of all
insurance held by MLD and MSCTC including the policy number, name
of carrier, coverage, term, expiration date and premium. Such
insurance coverage, renewals thereof or comparable coverage
acceptable to Rochester will be continued in full force and
effect through the Closing. Neither MLD nor MSCTC has been
refused any insurance by an insurance carrier to which it has
applied for insurance during the past three years.
There has not been during the past five (5) years, nor is
there now pending, any causes of action against any person in his
or her capacity as either a director, officer, employee or
partner of MLD or MSCTC except as set forth on Schedule 4.
Except as set forth on Schedule 4, hereto, neither MLD, MSCTC nor
the Seller has been involved in any situations which would give
rise to a civil or criminal violation of:
(i) Anti-trust, copyright or patent laws;
(ii) Federal or state securities laws or regulations;
(iii) Federal or state antitrust or fair trade laws; or
(iv) Laws which could give rise to representative actions,
class actions or derivative suits.
3.15 Indebtedness. Schedule 5, which is annexed hereto
and made a part hereof, is a correct and complete list of all
instruments, agreements or arrangements pursuant to which MLD
and/or MSCTC has borrowed any money, incurred any indebtedness
other than trade indebtedness incurred in the normal course of
business or established any line of credit which represents any
liability, contingent or otherwise, of MLD or MSCTC on the date
hereof. Except as noted on Schedule 5, true and complete copies
of all such written instruments, agreements or arrangements have
been delivered to Rochester prior to the date of this Agreement.
None of the payments from Seller to MLD which have been accounted
for as equity contributions were, are or shall be deemed to be
intercompany advances or properly added to any other type of
liability account.
<PAGE>
<PAGE>
3.16 Stock Rights. MLD has not granted, and there do not
exist any outstanding subscriptions, options, warrants or rights
to anyone to purchase or acquire any of the capital stock of MLD.
3.17 Correct Records. The financial records, ledgers,
account books, minute books, stock certificate books, stock
registers, and other corporate or partnership records, as the
case may be, of MLD and MSCTC are current, correct and complete
in all material respects and all signatures therein are the true
signatures of the persons who are purported to have signed.
3.18 Contracts. Except for the contracts, plans,
agreements and leases listed in Schedule 6, which is annexed
hereto and made a part hereof, true and complete copies of which
have been furnished to Rochester as of the date hereof, neither
MLD nor MSCTC is a party to any (i) contracts for the future
purchase of materials, supplies or equipment involving a
consideration of more than $10,000.00; (ii) contracts not made
in the ordinary and usual course of business; (iii) oral or
written employment or consulting contracts not terminable at will
without payment or penalty; (iv) contracts with any labor union
or other labor organization; (v) guarantees or financial
accommodations other than with respect to endorsements made in
the ordinary course of business; (vi) licenses or franchises
relating to the business of MLD or MSCTC; (vii) leases of
personal property providing for the payment of rentals in excess
of $1,000 for any such lease; or (viii) contracts continuing for
a period of more than three months from their respective dates.
Except as set forth on Schedule 6, MLD and MSCTC have performed
in all material respects all obligations required to be performed
by them to date and have not breached and are not in default
under any agreement listed in Schedule 6 or to which they are a
party or by which they are bound, and all of the same are
enforceable in accordance with their terms, subject to the
availability of equitable remedies. For purposes of this Section
3.18, MLD or MSCTC shall not be deemed to have performed
<PAGE>
<PAGE>
a contract "in all material respects" if, inter alia, as a result
of MLD's or MSCTC's action or inaction, such contract is
cancelable by the other party without notice and a reasonable
opportunity to cure. As of March 31, 1994, MSCTC had binding
contractual commitments for "roamer" service with the parties
listed on Schedule 6 -"Roamer", attached hereto and made a part
hereof.
3.19 Employee Benefit Plans.
3.19.1 Annexed hereto as Exhibit B and made a part hereof
is a list of all pension, retirement, bonus, profit-sharing,
deferred compensation, workers' compensation insurance, group
insurance and other employee pension or welfare benefit plans of
any type whatsoever entered into or maintained by MLD or MSCTC.
None of such plans is an employee pension benefit plan within the
meaning of Section 3(2) of the Employee Retirement Income
Security Act of 1979 ("ERISA") or is intended to be qualified
with the Internal Revenue Service ("IRS"). Neither MLD nor MSCTC
contributes to any multi-employer pension benefit plan, subject
to Title IV of ERISA.
3.19.2 MLD and MSCTC are in compliance in all material
respects with and have filed, published and disseminated all
reports, documents, statements and communications required to be
filed, published or disseminated under ERISA, and the rules and
regulations promulgated under ERISA, and there is no employee
benefit plan funding requirement for any reason, including but
not limited to, amendments or terminations of any employee
benefit plan of MLD or MSCTC, not disclosed in Exhibit B or
properly reflected on the financial statements of MLD or MSCTC
referred to in Section 3.7, hereof.
3.19.3 None of the plans contained in Exhibit B nor any
fiduciary thereof has engaged in transactions which might subject
any of the plans or any fiduciary thereof, of any party dealing
with them, to the tax or penalty on prohibited
transactions imposed by Section 4975 of the Internal Revenue Code
or to a civil penalty imposed by Section 502 of ERISA.
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<PAGE>
3.19.4 No such plan has been completely or partially
terminated since September 2, 1974.
3.19.5 None of the plans or trusts has incurred any
accumulated funding deficiency, as such term is defined in
Section 412 of the Internal Revenue Code, whether or not such
deficiency has been waived.
3.20 Titles, Real Property Matters. Schedule 7, which is
annexed hereto and made a part hereof, contains descriptions by
categories of all real property owned or leased by MLD or MSCTC
as of the date of this Agreement. Except as set forth in
Schedule 7, each of MLD and MSCTC has good and marketable title
in fee simple to such properties designated as owned by it, free
and clear of all liens and encumbrances and use restrictions of
record. Each of MLD or MSCTC owns or leases all the tangible
assets which are used by it which are located in the structures
referred to in Schedule 7 and which are designated to it. All
assets and property reflected in the Balance Sheets, or acquired
by MLD or MSCTC after the Balance Sheet Date (other than in each
case assets or property sold or otherwise disposed of in the
ordinary course of business subsequent to the Balance Sheet Date)
are in each case free and clear of all security interests,
mortgages, pledges, liens, conditional sales, agreements or
encumbrances or charges of any nature whatsoever except for liens
for taxes not yet due and owing, mechanics liens or other
statutory liens arising in the ordinary course of business, or as
expressly stated in Schedule 7. All of the aforesaid real
estate, plants, structures, appurtenances and leasehold
improvements substantially comply with all applicable ordinances
and regulations and building, zoning or other laws. The
buildings, machinery and equipment of MLD and MSCTC are in good
and serviceable condition, reasonable wear and tear excepted.
3.21 No Defaults. Except as set forth on Schedule 5
hereto, neither the execution and delivery of this Agreement by
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the Seller and MLD, nor the consummation of the transactions
contemplated hereby is an event which, of itself or with the
giving of notice or the passage of time, or both, would
constitute a violation of or conflict with or result in any
breach of, or default under the terms, conditions or provisions
of, any judgment, law or regulation (assuming receipt of the
approvals of various governmental agencies as contemplated
herein), or the Articles of Incorporation of MLD, any agreement
or instrument to which MLD or MSCTC is a party or by which it is
bound, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever on the property or
assets of MLD or MSCTC, and, except with respect to the items
set forth on Schedule 5 hereto, no such event of itself or with
the giving of notice or the passage of time, or both, will result
in the acceleration of the due date of any obligation of MLD or
MSCTC.
3.22 Qualification/Subsidiaries and Other Interests/No
Rights of First Refusal. Neither the nature of MLD's nor
MSCTC's businesses nor the location of their properties require
that it be duly licensed or qualified to do business in any state
or jurisdiction other than the State of Minnesota. Neither MLD
nor MSCTC has any subsidiary corporations or any other interests
in any corporations, partnerships, associations or joint
ventures.
MLD is the sole owner of a fifty percent (50%) undivided
equity interest in MSCTC. MSCTC is the FCC-licensed,
non-wireline cellular telecommunications provider in Minnesota
RSA #10. Except as set forth in item 3.B. of Schedule 7 hereto,
MLD owns such interests for itself only, and has good and
marketable title to, and owns free and clear of any claims,
liens, pledges, options and other encumbrances, such interest of
MSCTC. All of the documentation constituting the formation of
(including oral and written amendments to the partnership
agreements) and all other binding written agreements among the
parties regarding the continued existence of MSCTC are attached
hereto as Exhibit D. Exhibit D does not provide for any rights
to other MSCTC partners, including but not limited to rights of
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first refusal to purchase MLD's equity interest in MSCTC, as a
result of the transactions contemplated by this Agreement.
3.23 Brokers. Except as set forth on Schedule 8, there
is no broker or finder or other person who would have any valid
claim against the Seller or MLD or MSCTC for a commission or
brokerage in connection with this Agreement or the transactions
contemplated hereby and neither Seller, MLD nor MSCTC has
retained or employed any such broker, finder or person as such,
nor taken any action which would give any person any valid claim
against any party hereto for such a commission or brokerage. The
fee, commission or brokerage payable to Falkenberg Capital
Corporation pursuant to the Agreement described on Schedule 8 in
the amount of Two Hundred Twenty-Five Thousand Dollars
($225,000.00) is the only such amount payable as contemplated by
this Article 3.23 and shall be paid in full by Seller, out of
Seller's funds and by the sole shareholder of MLD's partner in
MSCTC out of such sole shareholder's funds, at the Closing.
3.24 Employees. Schedule 9, which is annexed hereto and
made a part hereof, sets forth the names, and present annual rate
of compensation of all persons employed by MLD or MSCTC. Such
Schedule also sets forth the names of all directors and officers
of MLD and a description of any agreement with respect to the
election or tenure of any of them as such.
3.25 Corporate and Seller's Action. This Agreement has
been duly and validly executed and delivered by MLD and the
Seller for which it is a legally binding agreement (subject to
the fulfillment of certain conditions provided for herein) and is
enforceable in accordance with its terms subject to the
availability of equitable relief.
3.26 Liabilities. Except as shown on Schedule 10, which
is annexed hereto and made a part hereof, as of December 31,
1993, MLD and MSCTC, individually, had no material liabilities,
absolute or contingent, which are not shown on the Balance
Sheets, except those incurred in the ordinary course of business
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which are of a type not ordinarily reflected on a balance sheet
prepared in accordance with generally accepted accounting
principles. All liabilities, absolute or contingent, of MLD and
MSCTC, individually, incurred subsequent to December 31, 1993,
will have been incurred only in the ordinary course of business
and, except as set forth on Schedule 11, hereto, MLD and MSCTC
will, prior to the Closing, have obtained the consent of
Rochester to incur any single such liability incurred subsequent
to the date of this Agreement in excess of $20,000.00. Except
for items 28 and 31 on Schedule 6, no debt or other obligation of
Montana Cellular Telephone Company, or of Dowdy Cellular
Partners, each a current or former affiliate of MSCTC, MLD and
Seller, in any way continues to bind or create liability for MLD
or MSCTC.
3.27 Accounts Receivable and Non-Current Receivables.
The accounts, notes and other receivables, whether current or
non-current, of MLD or MSCTC shown on the most recent balance
sheets before the Closing, and all such receivables of MLD or
MSCTC as at the Closing will be accounted for in accordance with
generally accepted accounting principles, consistently applied,
and will be collectible, subject to the allowance for doubtful
accounts accounted for in a manner consistent with past practice,
and will have arisen in the ordinary course of business.
3.28 Tax Returns. All federal income tax returns, and
other federal tax returns of every nature, and all state, county
and local tax returns and declarations of estimated tax or
estimated tax deposit forms required to be filed by MLD or MSCTC,
have been duly filed, and accurately state all items of income
and loss correctly. MLD or MSCTC has paid all taxes which have
become due pursuant to such returns or pursuant to any assessment
received by it and has paid all installments of estimated tax
due. The amounts shown as provisions for payment of all such
taxes as shown on the Balance Sheets of MLD and MSCTC are now
sufficient for all such taxes which may be payable for any fiscal
period prior to and through the Balance Sheet
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Date, including all taxes imposed before or after the Closing
which are attributable to such fiscal periods. The amounts shown
as provisions for payment of all such taxes as shown on the most
recent interim, unaudited balance sheets or annual audited
balance sheets (as the case may be) of MLD and MSCTC prior to
closing shall be sufficient for all such taxes which may be
payable for any fiscal period ending on or prior to the date of
such balance sheets including all taxes imposed before OR after
the Closing which are attributable to such fiscal periods. Where
such returns and reports have not been audited and approved or
settled, there has not been any waiver or extension of any
applicable statute of limitations, and MLD or MSCTC has not
received any notice of deficiency or adjustment.
All taxes and other assessments and levies which MLD or
MSCTC is required by law to withhold or to collect have been duly
withheld and collected, and have been paid over to the proper
governmental authorities or are held in cash by MLD or MSCTC in
appropriate bank accounts for such payment. All statements and
reports required to be filed under any Chapter of the Internal
Revenue Code of 1986, as amended, by MLD or MSCTC have been duly
filed. To the extent not reflected or adequately reserved for in
the balance sheets of MLD and MSCTC as of or prior to the Balance
Sheet Date, the Seller agrees to indemnify Rochester and MLD on
an after tax basis for any federal, state, local or foreign tax
assessment or claim found to be due by MLD or MSCTC for any tax
period ending on or prior to the Closing, resulting from an audit
or other review by the assessing tax authority. Rochester and
MLD shall use reasonable efforts to contest any deficiency
alleged to be due as a result of such audit if, in Rochester's
judgment, a basis for such a contest exists. The Seller shall be
entitled to participate in such defense and shall have access to
the books and records of MLD or MSCTC in order to make such
defense. Neither Rochester nor MLD shall waive any defense or
appeal of an alleged deficiency without the Seller's prior
written consent.
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3.29 Banks. Schedule 12, which is annexed hereto and
made a part hereof, is a correct and complete list setting forth
the name of each bank in which MLD or MSCTC has an account or
safe deposit box, the names of all persons authorized to draw
thereon or to have access thereto, and the name of each person
holding a power of attorney from MLD or MSCTC.
3.30 Disclosure by the Seller and MLD. No representation
or warranty made by the Seller or MLD in this Agreement,
including its Exhibits and Schedules, and no statement made in
any certificate or other document to be furnished by the Seller
or MLD at the Closing contains or will contain any untrue
statement of a material fact or omits or will omit to state any
material fact necessary to make such representation or warranty
or any such statement not misleading to a prospective purchaser
of the MLD Stock who is seeking full information with respect to
MLD. No disclosure of information with respect to any warranty
or representation contained in this Agreement, or other matters
contemplated by this Agreement, shall be deemed to have been made
or given unless it expressly appears in this Agreement, including
its Exhibits and Schedules, or in any certificate or document
furnished at the Closing.
3.31 Conflicts of Interest. Except as set forth on
Schedule 13, neither the Seller nor any director, officer, or
employee of MLD or any relative of any of them, has any interest
in any property, real or personal, tangible or intangible,
including, but not limited to, inventions, patents, trade names
or trademarks used in connection with or pertaining to the
business of MLD or any lender, supplier, customer, sales
representatives or distributor of MLD; provided, however, that
the Seller or such director, officer, or employee or relative
thereof shall not be deemed to have such interest solely by
virtue of the ownership of less than five percent (5%) of any
stock or indebtedness of any publicly-held company, the stock or
indebtedness of which is traded on a recognized stock exchange,
or over-the-counter.
3.32 Securities Law Reporting. Neither MLD nor MSCTC is
now or has ever been subject to the reporting requirements of
the United States Securities and Exchange Commission ("SEC").
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3.33 Environmental Matters. MLD and MSCTC are in
material compliance with all applicable laws and regulations
related to the environment, health and safety, all required
governmental permits have been obtained and are in effect, and no
on-site storage, treatment or disposal of hazardous waste or
material has been made (except in compliance with applicable laws
and regulations). There are no pending actions, proceedings, or
notices of potential action received by MLD and MLD has no
knowledge of any facts that may lead to actions, proceedings, or
notices of potential action from any governmental agency
regarding the condition of the properties of MLD or MSCTC under
environmental, health or safety laws, which would have a
materially adverse affect on MLD's or MSCTC's business. MLD and
MSCTC have lawfully disposed of their waste and no pending or, to
MLD's knowledge, threatened proceedings exist concerning waste
disposal by MLD or MSCTC. There are no underground storage
tanks, PCBs, asbestos, radon gas, harmful nuclear radiation, or
hazardous wastes present on the properties of MLD or MSCTC.
3.34 Seller as an Accredited Investor. Seller is an
"accredited investor" as that term is defined in Regulation
Section 230.501(a) under the Securities Act of 1933, as amended.
Seller has had an opportunity to investigate the terms of the
Rochester Common Stock, the business and financial condition of
Rochester and to obtain such information as she may require from
the officers of Rochester.
3.35 No Agreements to Distribute Rochester Common Stock.
Seller represents and warrants that, as of the date hereof,
Seller has not and that Seller will not hereafter (i) enter into
any understanding, agreement or commitment, whether written or
oral, whereunder Seller has or will alter Seller's fifty percent
(50%) interest in MSCTC as held by MLD, nor (ii) transfer or
otherwise distribute any portion of the Rochester Common Stock
deliverable to the Seller pursuant to the Plan of Merger to the
sole shareholder of MLD's partner in MSCTC or to any affiliate,
family member or designee of such shareholder.
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3.36 Contribution of Debt to Capital. Prior to the date
of this Agreement, Seller irrevocably contributed to the capital
of MLD all of the outstanding indebtedness of MLD to Seller, in
the previous form of multiple promissory notes of MLD to Seller
in the aggregate amount of $463,991, which amount includes all
principal and interest due as of the date of such contribution
with respect to such promissory notes. From the date of this
Agreement until the Closing, Seller shall make no further loans
to MLD or to MSCTC.
3.37 True at Closing. The representations and warranties
of the Seller and MLD as set forth in this Article III (except
for those set forth in Sections 3.8.1, 3.8.2, 3.8.3, 3.8.6, 3.9,
3.10, 3.13, 3.14, 3.15, 3.18, 3.24 and 3.29, which are
represented and warranted to be true only on and as of the date
of this Agreement) are and will be true both on the date of this
Agreement and on and as of the Closing.
ARTICLE IV
ROCHESTER'S REPRESENTATIONS AND WARRANTIES
As an inducement for the Seller and MLD to enter into this
Agreement, Rochester without qualification represents and
warrants to the Seller and MLD as follows:
4.1 Incorporation and Capitalization. Rochester is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New York. The location of
Rochester's properties and its business activities do not require
that it qualify as a foreign corporation in any other
jurisdiction except Minnesota and Pennsylvania, where it is so
qualified. Rochester has an authorized capital stock consisting
of (i) 100,000,000 shares of Common Stock, par value $1.00 per
share, of which, as of December 31, 1993, a total of 34,029,646
shares were issued and outstanding, and (ii) 850,000 shares of
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Preferred Stock, par value $100 per share, issuable in series, of
which, as of December 31, 1993, a total of 200,000 shares,
constituting three series, were issued and outstanding.
4.2 Power and Authority. Each of Rochester and
Subsidiary has full corporate power and authority to enter into
and carry out the terms of this Agreement and to consummate the
Merger contemplated hereby.
4.3 Financial Statements. The Balance Sheets of
Rochester at December 31, 1991, 1992 and 1993 and the Statements
of Income, Retained Earnings, and of Changes in Financial
Position of Rochester for the fiscal years then ended, together
with related Notes to Financial Statements, examined and reported
upon by Price Waterhouse, copies of which have been delivered by
Rochester to MLD, and all financial information contained in
filings with the SEC, are correct and complete in all material
respects and present fairly the financial position of Rochester
as of December 31, 1991, 1992 and 1993, and the results of its
operations for the fiscal years then ended. Those Balance Sheets
and said Statements have been prepared in all material respects
in conformity with generally accepted accounting principles
applied on a consistent basis and all SEC rules and regulations,
as the case may be.
4.4 Stock Issuable to the Seller. The shares of
Rochester Common Stock to be delivered to the Seller at the
Closing pursuant to this Agreement, when delivered as herein
provided, will be validly issued and outstanding shares of $1.00
par value voting Common Stock of Rochester, fully paid and
(except as provided in Section 630 of the New York Business
Corporation Law) non-assessable, and will not be subject to
preemptive rights of any shareholder of Rochester.
4.5 Business Since December 31, 1993. Except as
described on Schedule 14, which is annexed hereto and made a part
hereof, since December 31, 1993, there has been no materially
adverse change in the business or in the condition,
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financial or otherwise, of Rochester and its subsidiaries, taken
as a whole.
4.6 Rochester Litigation. Except as set forth in
Schedule 15, which is annexed hereto and made a part hereof,
there are no material actions, suits, proceedings or
investigations (whether or not purportedly on behalf of
Rochester) pending or threatened against or affecting Rochester,
at law or in equity or admiralty, or before or by any federal,
state, municipal or other governmental department, commission,
board, agency or instrumentality, domestic or foreign, which
could have a materially adverse effect upon Rochester, and
Rochester is not operating under or subject to, or in default
with respect to, any writ, injunction or decree of any court or
federal, state, municipal or other governmental department,
commission, board, agency or instrumentality, domestic or
foreign.
4.7 No Defaults. Neither the execution and delivery of
this Agreement nor the consummation of the transaction
contemplated hereby is an event which of itself or with the
giving of notice or the passage of time, or both, could
constitute a violation of or conflict with or result in any
breach of, or default under the terms, conditions or provisions
of, any judgment, law or regulation (assuming receipt of the
approvals referenced in this Agreement) or Rochester's
Certificate of Incorporation or Bylaws, or any agreement or
instrument to which Rochester is a party or by which it is bound
or could result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever on the property or assets
of Rochester, and no such event of itself or with the giving of
notice or the passage of time, or both, will result in the
acceleration of the due date of any obligation of Rochester.
4.8 Corporate Action of Rochester, Subsidiary and
Subsidiary's Parent. This Agreement is being signed by the
officers of Rochester, Subsidiary and Subsidiary's Parent prior
to approval by their respective Boards of Directors. Such
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signing is for convenience only and will not and should not be
deemed to legally bind any such party hereunder. After it is
duly considered and approved by action of the Boards of Directors
(or the Executive Committee of the Boards of Directors) of each
of Rochester, Subsidiary and Subsidiary's Parent, and only after
such approval, this Agreement will have been duly and validly
executed and delivered by Rochester, Subsidiary and Subsidiary's
Parent and constitute a valid and legally binding agreement of
Rochester, Subsidiary and Subsidiary's Parent (subject to the
fulfillment of certain conditions provided for herein)
enforceable in accordance with its terms.
4.9 Subsidiary Legal Status. Subsidiary is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Florida, and on the Effective Date,
Subsidiary will have full power and authority to carry out the
transactions contemplated by this Agreement to be carried out by
it.
4.10 Subsidiary Capital Stock. At the Closing, the
authorized capital stock of Subsidiary will consist of 200 shares
of common stock, par value $.01 per share, 100 of which shares as
of the date hereof are validly issued, fully paid and
non-assessable, and are owned by Subsidiary's Parent free and
clear of all liens and encumbrances.
4.11 Disclosure by Rochester. No representation or
warranty made by Rochester in this Agreement, including its
Exhibits and Schedules, or no statement made in any certificate
or other document to be furnished by Rochester at the Closing,
contains or will contain any untrue statement of a material fact
or omits or will omit a material fact necessary to make the
statements contained therein or herein not misleading. No
disclosure of information with respect to any warranty or
representation contained in this Agreement, or other matters
contemplated by this Agreement, shall be deemed to have been made
or given unless it expressly appears in this Agreement,
including its Exhibits and Schedules, or in any certificate or
document furnished at the Closing.
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4.12 Securities and Exchange Commission Filings.
Rochester has filed, published and disseminated all reports,
notices, documents and information required to be filed,
published or disseminated pursuant to the Securities Exchange Act
of 1934, as amended, and pursuant to the rules and regulations of
the SEC and the New York Stock Exchange ("NYSE").
4.13 Brokerage Fee. Rochester has not entered into any
agreement for payment of any fee, commission or brokerage in
connection with this Agreement or the transactions contemplated
hereunder. Any such fee, commission or brokerage payable under
any agreement made by Rochester or claimed by any party from
Rochester, shall be the sole responsibility of Rochester.
4.14 True at Closing. The representations and warranties
of Rochester set forth in this Article IV (except for those set
forth in Sections 4.1 (last two sentences only), 4.5 and 4.6,
which are represented and warranted to be true only on and as of
the date of this Agreement), are and will be true both on the
date of this Agreement and on and as of the Closing.
ARTICLE V
COVENANTS OF THE SELLER AND MLD PENDING CLOSING
The Seller and MLD jointly and severally covenant and agree
that from the date hereof to and including the Closing:
5.1 Maintenance of Business. MLD shall continue to carry
on its business, maintain its plants and equipment and keep its
books of account, records and files in substantially the same
manner as heretofore, and shall cause MSCTC to do likewise,
except that MLD shall consult with and obtain the approval of
Rochester regarding any network construction at MSCTC. MLD shall
remain a non-operating entity used solely as the vehicle for
Seller's ownership of MSCTC. MLD will maintain in full
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force and effect insurance policies now in effect or renewals
thereof or comparable coverage acceptable to Rochester, and shall
cause MSCTC to do likewise. If Rochester shall request in
writing that MLD increase the amount of insurance coverage for
any property of MSCTC, within 20 days of receipt of such request,
MLD shall cause MSCTC to increase the amount of its insurance
coverage on such property to such amount as shall be reasonably
requested by Rochester up to the amount it would cost to fully
repair or replace such property.
5.2 Negative Covenants. Without the prior written
consent of Rochester or except as otherwise provided elsewhere in
this Agreement MLD and MSCTC shall not, and the Seller shall do
all things and take all reasonable and proper action to provide
that MLD shall not, and MSCTC shall not, as applicable:
5.2.1 Issue, sell, purchase or redeem, or grant options to
purchase or otherwise agree to sell, purchase or redeem any
shares of its capital stock or any other securities of MLD or any
of the partnership interests of MSCTC;
5.2.2 Amend its Articles of Incorporation or Bylaws or
partnership agreement, as the case may be;
5.2.3 Prepay any liability for borrowed money;
5.2.4 Pay or satisfy any obligation or liability other
than obligations or liabilities reflected in the Balance Sheets,
when due, liabilities incurred since the Balance Sheet Date in
the ordinary course of business and obligations under contracts
and agreements referred to in Schedules annexed hereto;
5.2.5 Adopt or modify any bonus, pension, profit sharing
or other compensation plan or enter into any contract of
employment not terminable at will without payment or penalty;
5.2.6 Enter into any contract or commitment, incur any
liability, absolute or contingent, waive any right or enter into
any other transaction having a value equal to or exceeding
$20,000;
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5.2.7 Have made or become obligated to make any dividend
payment or other distribution to its stockholders or partners.
5.2.8 Increase the rate of compensation of or grant any
employee bonus or other employee benefit to any employee, or
commit itself to or announce the granting of any such increase,
bonus or benefit to become effective on or after the Closing,
except in each case, in the ordinary course of business in
accordance with past practice but, in any event, no more than a
four percent (4%) increase in compensation or benefit levels and
a four percent (4%) increase in bonuses, unless MLD or MSCTC, as
the case may be, shall have requested approval from Rochester in
a letter sent pursuant to Section 12.6 hereof and Rochester shall
have consented to such increase (which consent shall not be
unreasonably withheld).
5.3 Organization, Good Will. MLD shall use reasonable
efforts to preserve its business organization intact and the
business and organization of MSCTC, retain the services of its
present officers and use reasonable efforts to retain
substantially as at present its and MSCTC's employees, and
preserve the good will of its suppliers, customers and others
having business relations with it. Prior to the Closing, Seller
and MLD will obtain the resignation, effective automatically upon
consummation of the transactions contemplated hereby, of all
directors and officers of MLD.
5.4 Access to Plants, Files and Records. At the
reasonable request of Rochester, MLD shall, from time to time,
give or cause to be given to Rochester, its officers, employees,
accountants, counsel and accredited representatives (i)
reasonable access to all of the plants, property, accounts,
books, minute books, deeds, title papers, insurance policies,
licenses, agreements, contracts, commitments, tax returns,
records and files of every character, employees, equipment,
machinery, fixtures, furniture, vehicles, notes and accounts
payable and receivable and inventories of MLD and MSCTC; and (ii)
all such other information concerning the affairs of MLD and
MSCTC as Rochester may reasonably request.
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5.5 Consummation of Agreement. Subject to the provisions
of Articles VII and IX hereof, MLD and the Seller shall use their
reasonable efforts to perform and fulfill all conditions and
obligations on their part to be performed and fulfilled under
this Agreement, to the end that the transactions contemplated by
this Agreement shall be fully carried out.
5.6 Consents to Leases, Contracts. With respect to all
leases, licenses and other contracts and instruments and rights
of MLD or MSCTC which require the consent of another party to the
transaction contemplated herein, MLD will use all reasonable
efforts to obtain or cause to be obtained such consents.
5.7 Securities Laws. The Seller and MLD will cooperate
fully with Rochester to permit the transactions contemplated
herein to be consummated without violating the securities laws of
the United States or of any state or commonwealth.
5.8 Notice of Proceedings. The Seller and MLD will, upon
becoming aware of any of the matters set forth in Section 3.9
hereof or any other order or decree or any complaint praying for
an order or decree restraining or enjoining the consummation of
the Agreement or the transactions contemplated hereunder, or
upon receiving any notice from any governmental department,
court, agency or commission of its intention to institute an
investigation into, or institute a suit or proceeding to restrain
or enjoin the consummation of this Agreement or such
transactions, or to nullify or render ineffective this Agreement
or such transactions if consummated, promptly notify Rochester in
writing of such order, decree, complaint or notice.
5.9 Delivery of MLD's Shareholder List. The statement
regarding shareholders in Article 3.3 hereof is a true and
complete list setting forth the identity of all of the common
shareholders of MLD and their holdings of all of the stock of
MLD. In making the exchange of certificates provided for in this
Agreement, Rochester may rely completely on such list of
shareholders.
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5.10 Confidential Information. If, for any reason, the
transaction contemplated by this Agreement is not consummated,
MLD shall not disclose to third parties any confidential
information received from Rochester in the course of
investigating, negotiating and performing the transactions
contemplated by this Agreement; provided, however, that this
provision shall be applicable only with respect to information
received from Rochester and clearly identified as confidential
information, and that nothing shall be deemed to be confidential
information which:
5.10.1 Is known to MLD at the time of disclosure by
Rochester;
5.10.2 Becomes publicly known or available;
5.10.3 Is rightfully received by MLD from a third party;
or
5.10.4 Is independently developed by MLD.
5.11 MLD and MSCTC Employees. On or before the Closing
Date, MLD shall deliver to Rochester a list of MLD's and MSCTC's
employees as of the end of the fiscal quarter immediately
preceding the Closing, indicating the following information for
each employee as of the end of such quarter:
5.11.1 rate of pay;
5.11.2 whether remunerated on an hourly, weekly, or
monthly basis;
5.11.3 date of most recent commencement of service with
MLD or MSCTC; and
5.11.4 accrued holiday, vacation, sick leave, long service
entitlement (if any) and permitted time-off due as compensation
for additional time worked.
5.12 Interim Financial Statements. Seller shall deliver
to Rochester, on or before the thirtieth (30th) day after the end
of each month ("Due Date"), interim (monthly) unaudited
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balance sheets of MLD and MSCTC, the first to be as of January
30, 1994, and unaudited income statements and statements of cash
flows of MLD and MSCTC for each month then ended, until the
Closing Date, all of which will be current in all material
respects and prepared from the books and records of MLD and MSCTC
pursuant to generally accepted accounting principles consistently
applied except for normal, routine year-end adjustments and the
absence of footnotes.
5.13 Seller's Shareholder Status. Seller shall not at
any time prior to the Effective Date transfer or otherwise
alienate all or any portion of her equity interest in MLD.
5.14 Further Cash Infusions to MSCTC/No Loans. From the
date of this Agreement until the Closing, if any amounts are
reasonably required by MSCTC, from time to time, for the
effective competitive continuation of the business of MSCTC,
one-half of such amounts shall be paid in cash by Seller (but
only if an identical cash payment is made by the sole shareholder
of MLD's partner in MSCTC) and such amounts shall be (i) paid
first to MSCTC to pay off the Two Hundred and Four Thousand Three
Hundred and Ninety-Seven Dollar ($204,397) Account Receivable
from affiliates currently due, one-half from the Seller and
one-half from the sole shareholder of MLD's partner in MSCTC and,
after such payoff (ii) contributed to the capital of MLD. All
amounts so contributed to the capital of MLD after payment in
full of the $204,397 Account Receivable from affiliates, are
hereinafter referred to as "Additional Capital Contributions".
All cash so contributed by Seller to MLD shall be promptly loaned
to MSCTC as working capital. No loans shall be made by Seller to
MSCTC or from MSCTC or MLD to Seller.
ARTICLE VI
COVENANTS OF ROCHESTER AND SUBSIDIARY PENDING MERGER
Rochester covenants and agrees that, from the date hereof
to and including the Closing:
6.1 Subsidiary's Parent as Sole Shareholder of Subsidiary.
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Rochester will continue to be the sole shareholder of
Subsidiary's Parent. Subsidiary's Parent will continue to be the
sole shareholder of Subsidiary, and will adopt and approve at a
special meeting of the shareholder of Subsidiary, or by written
consent, the Plan of Merger.
6.2 Federal Securities and Blue Sky Filings. Rochester
will make or obtain all necessary federal securities and Blue Sky
filings or permits required to carry out the transactions
contemplated by this Agreement prior to or as of the Closing.
6.3 Corporate Action. Subject to the provisions of this
Agreement, Rochester will, and will cause Subsidiary to, take all
necessary corporate and other action required of them to carry
out the transactions contemplated by this Agreement. Rochester
will promptly notify Seller in writing when this Agreement has
been duly considered and approved by action of the Boards of
Directors (or the Executive Committees of the Boards of
Directors) of each of Rochester, Subsidiary and Subsidiary's
Parent.
6.4 Confidential Information. If, for any reason, the
transactions herein contemplated are not consummated, Rochester
shall not disclose to third parties any confidential information
received from Seller, MLD or MSCTC in the course of
investigating, negotiating and performing the transactions
contemplated by this Agreement; provided, however, that this
provision shall be applicable only with respect to information
received from Seller, MLD or MSCTC, and that nothing shall be
deemed to be confidential information which:
6.4.1 Is known to Rochester at the time of its disclosure
by MLD;
6.4.2 Becomes publicly known or available;
6.4.3 Is rightfully received by Rochester from a third
party; or
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6.4.4 Is independently developed by Rochester.
6.5 Consummation of Agreement. Subject to the provisions
of Articles VIII and IX hereof, Rochester shall use its
reasonable efforts to perform and fulfill all conditions and
obligations on its part to be performed and fulfilled under this
Agreement, to the end that the transactions contemplated by this
Agreement shall be fully carried out.
6.6 Notice of Proceedings. Rochester will, upon becoming
aware of any order or decree or any complaint praying for an
order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereunder, or upon
receiving any notice from any governmental department, court,
agency or commission of its intention to institute an
investigation into, or institute a suit or proceeding to restrain
or enjoin the consummation of this Agreement or such transactions
if consummated, promptly notify MLD in writing of such order,
decree, complaint or notice.
6.7 Changes in Capitalization. Rochester will provide
Seller with copies of any amendments to its certificate of
incorporation which result in any changes in its name or capital
structure and will send to Seller all information or proxy
statements which relate to or describe such change in capital
structure promptly after distribution of such information to the
shareowners of Rochester Common Stock.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE SELLER AND MLD
The obligations of the Seller and MLD under this Agreement
are, at the option of the Seller and MLD, subject to the
fulfillment of the following conditions prior to or at the
Closing:
7.1 Representations, Warranties, Covenants.
7.1.1 Subject to Section 4.14 of this Agreement, all
representations and warranties of Rochester contained in this
Agreement, including the related Exhibits and Schedules hereto,
and any statements or descriptions made in any certificate or
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other document to be delivered by Rochester, Subsidiary's Parent
or Subsidiary at the Closing shall be true and accurate as of the
date when made and shall be deemed to be made again at and as of
the Closing and shall then be true and accurate;
7.1.2 Each of Rochester, Subsidiary's Parent and
Subsidiary shall have performed and complied with each and every
covenant, agreement and condition required by this Agreement to
be performed or complied with by it prior to or at the Closing;
7.1.3 Rochester shall have delivered to MLD a certificate
of an officer of Rochester, dated as of the Closing, certifying
to the fulfillment of the conditions set forth in this Article
7.1.
7.2 Proceedings. No action or proceeding shall have been
instituted against Rochester which could materially and adversely
affect its business; no action or proceeding shall have been
instituted or threatened against any of the parties to this
Agreement, or their directors and officers, before any court or
governmental department, agency or commission to restrain or
prohibit, or to obtain substantial damages in respect of this
Agreement or the consummation of the transactions contemplated
hereby; and, in either case, the Seller and MLD shall have given
written notice to Rochester and Subsidiary of their intent not to
complete the transactions contemplated by this Agreement within
twelve (12) business days after they first informed or were first
informed by Rochester or Subsidiary, in writing, of the
institution or threat of any such action or proceeding described
in this Section 7.2; and neither Rochester nor MLD shall have
received written notice from any court or governmental
department, agency or commission of its intention to enjoin or
commence any investigation (other than a routine letter of
inquiry) into the consummation of this Agreement and the
transactions contemplated hereby or to nullify or render
ineffective this Agreement or such transactions if consummated,
which in the opinion of MLD would make it inadvisable to
consummate such transactions; provided that in the event such an
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inquiry) is instituted, this Agreement may not be abandoned by
MLD for such reason, but the consummation of the transactions
provided for in this Agreement shall be delayed for such period,
not in excess of 120 days, as may be necessary to determine
whether such investigation is likely to result in an action or
proceeding of the type described in the second clause of this
Article 7.2.
7.3 Opinion of Counsel. MLD shall have received an
opinion of John T. Pattison, Managing Attorney for Rochester,
dated as of the Closing, in form and substance in substantially
the form of Exhibit F, attached hereto and made a part hereof.
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7.4 Delivery of Rochester Common Stock. At the Closing,
Rochester shall have delivered to the Seller certificates
representing the Rochester Common Stock to be delivered
hereunder.
7.5 Representations and Warranties Respecting Certain
Matters Made at Closing. At the Closing, Rochester and
Subsidiary, without qualification, shall have jointly and
severally represented in a certificate to be duly signed by their
appropriate officers that as of the Closing Date all of the
matters set forth in Sections 4.1, 4.5 and 4.6 of this Agreement,
including the related Exhibits and Schedules hereto, are true and
correct as if originally made on and as of the Closing Date, or
if not true and correct (and such falsity or incorrectness is
waived by the Seller as a condition precedent to Closing) the
true and correct representations and warranties. Notwithstanding
the foregoing sentence, the representations and warranties of the
second and third sentences of Section 4.1 need only be such as
are true and correct as of the date of this Agreement.
7.6 Proceedings and Instruments Satisfactory. All
proceedings, corporate or otherwise, to be taken in connection
with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in
form and substance to Seller and Rochester shall have furnished
the Seller with certified copies of such proceedings and such
other instruments and documents as the Seller shall have
reasonably requested.
7.7 Certificate of Incumbency. Rochester shall have
furnished to the Seller a Certificate of the Secretary of
Rochester, certified as of the Effective Date, as to the
incumbency and signatures of the officers of Rochester,
Subsidiary's Parent and Subsidiary executing this Agreement and
any document contemplated or delivered under this Agreement.
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7.8 Unduly Burdensome Final Order. Notwithstanding any
other provision of this Agreement, Seller shall have satisfied
herself, in her sole discretion, that any Final Order, as defined
in Section 9.2 hereof, contains no term, condition or provision
which is unduly burdensome.
7.9 Tax Representation Certificate. Rochester shall have
delivered to the Seller an executed certificate substantially in
the form of Exhibit H, hereto.
7.10 Shareholder Authorization. The Plan of Merger shall
have been approved by the affirmative vote of the holders of one
hundred percent (100%) of the outstanding shares of MLD common
stock entitled to vote thereon; which means that none of the
holders of MLD Stock shall have filed written objections pursuant
to Section 607.1320 of the Florida General Corporation Act.
7.11 Effectiveness of Registration Statement. The
Registration Statement to register the sale of the Rochester
Common Stock shall be effective and no stop order suspending such
effectiveness shall have been entered, instituted or threatened.
7.12 Tax Opinion. Seller shall have received a favorable
opinion from Hopkins & Sutter that Rochester's acquisition of all
of the outstanding stock of MLD by the merger of Subsidiary into
MLD will constitute a tax deferred reorganization within the
meaning of Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF ROCHESTER
The obligations of Rochester, Subsidiary and Subsidiary's
Parent under this Agreement are, at the option of Rochester,
subject to the fulfillment of the following conditions prior to
or at the Closing:
8.1 Representations, Warranties, Covenants.
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8.1.1 Subject to Section 3.37 of this Agreement, all
representations and warranties of the Seller and MLD contained in
this Agreement, including the related Exhibits and Schedules
hereto, and any statements or descriptions made in any
certificate or other document to be delivered by MLD or the
Seller at the Closing shall be true and accurate as of the date
when made and shall be deemed to be made again at and as of the
Closing and shall then be true and accurate;
8.1.2 The Seller and MLD shall have performed and complied
with each and every covenant, agreement and condition required by
this Agreement to be performed or complied with by them prior to
or at the Closing;
8.1.3 The Seller and MLD shall deliver to Rochester at the
Closing a certificate, certifying to the fulfillment of the
conditions set forth in this Article 8.1.
8.2 Proceedings. No action or proceeding shall have been
instituted or threatened against MLD or MSCTC or the Seller which
could materially and adversely affect the business of MLD or
MSCTC; except as set forth in Schedule 2, no action or proceeding
shall have been instituted or threatened against any of the
parties to this Agreement or their directors or officers, before
any court or governmental department, agency or commission to
restrain or prohibit, or to obtain substantial damages in respect
of, this Agreement or the consummation of the transactions
contemplated hereby and, in either case, Rochester shall have
given written notice to the Seller and MLD of its intent not to
complete the transactions contemplated by this Agreement within
twelve (12) business days after it first informed, or was first
informed by the Seller and MLD, in writing, of the institution or
threat of any such action or proceeding described in this Section
8.2; and neither MLD nor Rochester shall have received written
notice from any court or governmental department, agency or
commission of its intention to institute any action or proceeding
to restrain or enjoin or commence any investigation (other than a
routine letter of inquiry) into the consummation of this Agreement
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and the transactions contemplated hereby or to nullify or render
ineffective this Agreement or such transactions if consummated,
which in the opinion of Rochester would make it inadvisable to
consummate such transaction; provided that in the event such an
investigation (other than a routine letter of inquiry) is
instituted, this Agreement may not be abandoned by Rochester for
such reason but the consummation of the transactions provided for
in this Agreement shall be delayed for such period, not in excess
of 120 days, as may be necessary to determine whether such
investigation is likely to result in an action or proceeding of
the type described in the second clause of this Article 8.2.
8.3 Opinion of Counsel of the Seller and MLD. Rochester
shall have received an opinion of counsel for the Seller and MLD
dated as of the Closing in substantially the form of Exhibit G.
8.4 Blue Sky Filings. Rochester shall have received an
opinion from its outside counsel, to the effect that all
necessary Blue Sky filings and permits, which in the opinion of
such counsel are required to carry out the transactions
contemplated by this Agreement, have been made or obtained.
8.5 MLD Agreements. Neither the execution of this
Agreement nor the performance of the obligations of the Seller or
MLD hereunder shall be prohibited or restricted by any agreement
or instrument to which MLD or MSCTC is a party (including, but
not limited to, the MSCTC documents attached as Exhibit D); if so
prohibited or restricted, MLD or MSCTC (as the case may be) shall
have obtained, at no cost or expense to Rochester or MLD, such
consents, waivers or releases as may be required to remove or
waive such prohibitions or restrictions prior to the Closing.
8.6 Interim Financial Statements. Rochester shall have
received interim unaudited compiled financial statements of MLD
and MSCTC, dated as of the end of the most recent fiscal month,
if the Due Date with respect thereto has occurred, and, if the
Closing has not occurred by February 28, 1995, Rochester shall
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have received audited annual financial statements for MSCTC as of
December 31, 1994, prepared in accordance with generally accepted
accounting principles, consistently applied which shall be
accompanied by an unqualified opinion of MSCTC's independent
certified public accountants.
8.7 No Casualty. Prior to the Closing, there shall not
have occurred any damage, destruction or loss not covered by
insurance, exceeding $20,000, materially and adversely affecting
the products, properties, business or operations of MLD or MSCTC.
8.8 Proceedings and Instruments Satisfactory. All
proceedings, corporate or otherwise, to be taken by Seller or MLD
in connection with the transactions contemplated by this
Agreement and all documents incident thereto shall be reasonably
satisfactory in form and substance to Rochester and the Seller
shall have furnished Rochester with certified copies of such
proceedings and such other instruments and documents as Rochester
shall have reasonably requested.
8.9 Delivery of MLD Common Stock. At the Closing, the
Seller shall have delivered certificates representing all of the
MLD Stock, into which the shares of stock of Subsidiary have been
converted pursuant to the Merger, free and clear of all liens and
encumbrances, duly endorsed in blank with guaranteed signatures
and all required transfer stamps, if any. Alternatively, if a
MLD shareholder has lost his or her certificate(s), such
shareholder shall deliver an affidavit attesting such fact in a
form acceptable to Rochester, together with an assignment
separate from such certificate and a lost certificate bond
insuring Rochester and MLD for thefull value of any loss
occasioned by such lost certificate.
8.10 No Change in MLD's Capitalization. MLD's authorized
and issued and outstanding capital stock shall be as stated in
Article 3.2 and MLD shall have no agreement, obligation or
commitment of any character to issue shares of its capital stock,
or debentures, bonds, or other evidences of indebtedness
convertible, in whole or in part, into shares of its capital
stock.
8.11 Acquisition of Affiliated Company. At the Closing,
Rochester or Subsidiary's Parent shall have acquired, in a
simultaneous similar transaction, all of the voting equity shares
of Dowdy Minnesota 10, Inc., pursuant to a definitive acquisition
agreement dated concurrently herewith.
8.12 Resolutions and Resignation of MLD's Directors. MLD
shall have delivered to Rochester at the Closing certified copies
of resolutions adopted by the Board of Directors of MLD adopting
and approving this Agreement. The Seller and MLD shall have
delivered to Rochester resignations of all directors and officers
of MLD as requested by Rochester effective as of the Closing.
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8.13 Certificates of Good Standing. The Seller shall
have delivered to Rochester Certificates of Good Standing (or its
equivalent) issued by the Secretary of State of the State of
Florida to the effect that MLD is duly incorporated and in good
standing under the laws of the State of Florida, as of a date
reasonably near the Closing.
8.14 Shareholder Authorization. The Plan of Merger shall
have been approved by the affirmative vote of the holders of one
hundred percent (100%) of the outstanding shares of MLD common
stock entitled to vote thereon; which means that none of the
holders of MLD Stock shall have filed written objections pursuant
to Section 607.1320 of the Florida General Corporation Act.
8.15 Certified Articles. MLD shall have furnished to
Rochester a copy of its Articles of Incorporation, including all
amendments thereto, which shall have been certified by the
Florida Secretary of State as of a date reasonably near the
Effective Date.
8.16 Certified Bylaws. MLD shall have furnished to
Rochester a copy of the Bylaws of MLD which shall have been
certified by the Secretary of MLD as of the Effective Date.
8.17 Certificate of Incumbency. MLD shall have furnished
to Rochester a Certificate of the Secretary of MLD, certified as
of the Effective Date, as to the incumbency and signatures of the
officers of MLD executing this Agreement and any document
contemplated or delivered under this Agreement.
8.18 Audited Financial Statements of MLD and MSCTC as of
December 31, 1992 and 1993. On or before June 30, 1994, Seller
shall deliver to Rochester (i) the audited Balance Sheets of MLD
as of December 31, 1992 and 1993 and of MSCTC as of December 31,
1993, and (ii) the related Statements of Operations, Statement of
Changes in Retained Earnings or Partners' Capital, as the case
may be, and Statements of Cash Flows for the years then ended of
MSCTC, certified without
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qualification by the independent certified public accountants of
MSCTC and to be relied upon by Rochester pursuant to this
Agreement. Such statements shall be correct and complete in all
material respects, in accordance with the books and records of
MLD and MSCTC and present fairly the financial condition of MLD
and MSCTC as of December 31, 1992 and 1993 in the case of MLD and
as of December 31, 1993 in the case of MSCTC and the results of
its operations for the years then ended ("Audited 1992 and 1993
MLD and MSCTC Financials"). The Audited 1992 and 1993 MLD and
MSCTC Financials (i) will have been prepared in conformity with
the applicable regulations of the MPUC, if any, and in accordance
with generally accepted accounting principles applied on a
consistent basis, and (ii) will contain no line item varying more
than 5% from the same line item in the draft financial statements
of MLD for 1992 and 1993 and of MSCTC for 1993 previously
delivered to Rochester, as indicated in Article 3.7 hereof.
8.19 Representations and Warranties Respecting Certain
Matters Made at Closing. At the Closing the Seller and MLD,
without qualification, shall have jointly and severally
represented in a certificate to be duly signed by their
appropriate officers that as of the Closing Date all of the
matters set forth in Sections 3.8.1, 3.8.2, 3.8.3, 3.8.6, 3.9,
3.10, 3.13, 3.14, 3.15, 3.18, 3.24 and 3.29 of this Agreement,
including the related Exhibits and Schedules hereto, are true and
correct as if originally made on and as of the Closing Date. If
such unqualified joint and several representations cannot be
made, in whole or in part, this condition precedent shall not
have been met. If at the sole option of Rochester such failure
of this condition precedent is waived, the Seller and MLD shall
represent in a certificate to be duly signed by the appropriate
officers the then true and correct representations and
warranties. All representations and warranties made in
certificates pursuant to this Section 8.19 shall survive the
Closing pursuant to Section 11.1 hereof. Notwithstanding the
foregoing provisions of this Section, (i) the Exhibits and
Schedules related to all waived representations and warranties
may be updated to the Closing Date, and (ii) the representations
and warranties of Seller and MLD and the Schedules attached
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hereto solely as they relate to only the first sentence of
Section 3.24 and all of Sections 3.15 and 3.29 may be updated so
that they are true and correct as of the Closing Date and in no
event shall Seller's or MLD's representations and warranties
related to only the first sentence of Section 3.24 and all of
Sections 3.15 and 3.29 create any rights in Rochester (A) related
to damages or (B) to avoid its obligations under this Agreement.
8.20 Title Insurance. At least thirty (30) days before
the Closing Date, the Seller and MLD shall have obtained title
insurance policies on all of the real property owned by MLD and
MSCTC which is listed on Schedule 7. Except as set forth on
Schedule 7, all such policies shall not recite title
qualifications or restrictions deemed by Rochester to interfere
with the property or business of MLD or MSCTC.
8.21 Environmental Audit. Rochester, at its own cost and
expense, shall have completed a Phase I environmental audit of
the properties of MLD and MSCTC and such audit shall have failed
to provide any basis for concern as to the presence of
environmental hazards on such properties. Such audit shall be
instituted within forty-five (45) days after this Agreement is
approved by Rochester's Board of Directors. A copy of such audit
will be delivered promptly to Seller and Seller shall be afforded
an opportunity to undertake a Phase II audit, if necessary, to
prove to Rochester's satisfaction that no such hazards exist.
Seller shall be afforded a ninety (90) day period after discovery
to cure any such hazards and Rochester shall keep confidential
all information regarding any such hazards unless legally
required to disclose it.
8.22 Adverse Change. Between the date hereof and the
Closing, no regulatory, legislative, or competitive event shall
have occurred which has, or within two years from the date hereof
could reasonably be expected to have, a material adverse effect
on the cellular telephone industry.
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8.23 Unduly Burdensome Final Order. Notwithstanding any
other provisions of this Agreement, Rochester, acting through its
Board of Directors or the Executive Committee thereof, shall have
satisfied itself, in its sole discretion, that any Final Order,
as defined in Section 9.2 hereof, contains no term, condition or
provision which is unduly burdensome.
8.24 Pooling. On or before the Closing, Rochester shall
have received a written opinion of Price Waterhouse, in form and
substance satisfactory to Rochester, in its sole discretion, to
the effect that the transaction contemplated by this Agreement
and the Agreement referred to in Article 8.11 hereof fully
qualifies for "pooling of interests" accounting treatment.
8.25 Effectiveness of Registration Statement. The
Registration Statement to register the sale of the Rochester
Common Stock shall be effective and no stop order suspending such
effectiveness shall have been entered, instituted or threatened.
8.26 Securities Agreement of Seller. On or before the
Closing, Rochester shall have received a fully executed copy of
the Securities Agreement executed by the Seller in substantially
the form of Exhibit C attached hereto.
8.27 Consents. MSCTC shall have received all consents,
waivers and approvals required under the agreements set forth as
items 16, 17 and 18 on Schedule 6 hereto in order to consummate
the Merger contemplated by the Plan of Merger, in form and
substance reasonably satisfactory to Rochester, which consents,
waivers and approvals shall not (a) result in the acceleration of
MSCTC's obligations under such agreements, (b) cause any
terminations of such agreements, or (c) require the payment of
any additional consideration by MSCTC to any party to such
agreement.
8.28 Cellular One Status. Notwithstanding the disclosure
of Schedule 1, item 4, hereto, all customer satisfaction surveys
from the date hereof through the Closing instituted by Cellular
One Group shall show MSCTC at customer satisfaction levels which
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preclude the cancellation by Cellular One Group of the Cellular
One License Agreement, as the same may be amended and which is
identified as item 16 on Schedule 6; provided, however, that if
Cellular One Group agrees, in writing, that notwithstanding the
failure of MSCTC to satisfy the required customer satisfaction
levels the License Agreement will continue in effect for a period
of at least one year from the Closing Date (subject to any right
which Cellular One Group may have by reason of a breach of such
agreement by MSCTC subsequent to the Closing), this condition
shall be deemed to be satisfied. In addition, no other breach by
MSCTC of the Cellular One License Agreement shall have occurred
or be continuing at the Closing.
8.29 Release of Lien of NovAtel. On or before the
Closing, Rochester shall have received written confirmation from
NovAtel Finance, Inc. or its successors in interest ("NovAtel")
that (i) the security interests granted to NovAtel by MLD, and
its partner in MSCTC, in their partnership interests in MSCTC and
the security interest granted by MSCTC to NovAtel in all of
MSCTC's assets shall be fully released upon payment in full at
the Closing of the balance due as of the Closing to NovAtel
pursuant to (a) the Loan and Security Agreement dated October 25,
1990 (see Schedule 6, item 21) and (b) the Promissory Note dated
October 27, 1993 (see Schedule 6, item 24), which aggregate
amount due, including interest to June 20, 1994, is Four Million
Nine Hundred and Forty-One Thousand Two Hundred and Seventy-Three
Dollars ($4,941,273) as of the date hereof, and (ii) title to the
assets purchased from NovAtel shall pass free and clear of any
and all liens and encumbrances to MSCTC at the Closing.
8.30 Payment of One-Half of Account Receivable from
Affiliates. On or before the Closing, Seller shall have paid in
cash to MSCTC, one-half of the balance of the Account Receivable
from Affiliates owed to MSCTC as of the Closing Date.
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ARTICLE IX
MUTUAL COVENANTS AND CONDITIONS TO
OBLIGATIONS OF MLD, ROCHESTER AND THE SELLER
9.1 Application to the NYPSC. On or before August 5,
1994, Rochester shall mail (by express delivery) for filing an
application to the NYPSC, requesting NYPSC approval and
authorization of the transactions contemplated by this Agreement.
Thereafter the Seller, MLD and Rochester shall cooperate with
each other and shall take such actions as are reasonably
necessary and proper to obtain expeditious, favorable action by
the NYPSC. Rochester shall bear all fees of the NYPSC charged in
connection with or incidental to the filing and processing of the
aforesaid application, as well as the cost of filing and
processing. All other fees of legal counsel and accountants and
other "out-of-pocket" expenses shall be borne by the party
incurring them.
9.2 Necessity for FCC and NYPSC Approvals. The
obligations of the Seller, MLD, Subsidiary's Parent, Subsidiary
and Rochester under this Agreement are subject to the receipt
prior to the Closing of "Final Orders" of the FCC and NYPSC
approving and authorizing the transactions contemplated herein.
Rochester, Subsidiary, Subsidiary's Parent, Seller and MLD shall
not be obligated to consummate such transactions if, in the sole
discretion of Rochester's Board of Directors or its Executive
Committee of the Board of Directors or in the sole discretion of
the Board of Directors of the Seller, there is contained in such
Final Order a term, condition or provision which is unduly
burdensome. For the purposes of this Agreement, the term "Final
Order" shall mean an action by the FCC or the NYPSC as to which:
(i) no stay of such action is in effect, no request for such stay
has been filed, and, if any deadline for filing any such request
is designated by statute or regulation, it has passed; (ii) no
appeal, petition for rehearing or reconsideration or application
for review of the action is pending before the FCC or the NYPSC
and the time for filing any such action has passed; (iii) neither
the FCC nor the NYPSC has the action under reconsideration on its
own motion and the time for such
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reconsideration has passed; and (iv) no appeal or petition for
review to a court, or request for stay by a court, of the FCC's
or the NYPSC's action is pending and, if any deadline for filing
any such appeal or request is designated by statute or rule, such
deadline has passed. If no third party intervenes in the
proceeding and the NYPSC issues an order approving this
transaction which is acceptable to Rochester and the Seller,
then, notwithstanding the preceding sentence, such order shall be
deemed a "Final Order" for the purposes of this Agreement.
Each of the parties to this Agreement agrees that if
Rochester, using its reasonable judgment, determines that an
application to any other state or federal agency for its approval
and authorization of the transactions contemplated herein is
required, then Rochester shall file such application at its sole
expense and the Seller and MLD shall join in such application
with Rochester and otherwise act in accordance with the
provisions of Article 9.1 of this Agreement with respect to such
application, and the obligations of the Seller, MLD, Subsidiary,
Subsidiary's Parent and Rochester under this Agreement shall be
subject to the receipt prior to the Closing of a Final Order of
such state or federal agency as described in this Section 9.2.
9.3 Other Filings. Within thirty (30) days after the
execution and approval of Rochester's Executive Committee of this
Agreement, MLD, Subsidiary, Subsidiary's Parent and Rochester, if
necessary, shall apply, file or give notice to the FCC, the
Federal Trade Commission and the Department of Justice, Antitrust
Division, of the transactions contemplated herein. Prior to the
Closing Date, any applicable waiting period, under the
Hart-Scott-Rodino Act shall have expired or been terminated, and
any necessary consent of the FCC shall have been obtained and be
in full force and effect. The filings and related expenses of
all such filings shall be made and borne by the party making or
incurring them.
9.4 Meeting of MLD Shareholder, Proxy Materials. MLD
covenants that it will call and hold a meeting of MLD's
shareholder for the purpose of approving the Plan of Merger.
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Rochester and MLD contemplate that Rochester will file
a registration statement on Form S-4 (or any successor form
thereto), which will contain proxy materials of MLD prepared and
distributed in accordance with legal requirements (together with
any and all amendments thereto, the "Registration Statement")
with the SEC under the Securities Act of 1933, as amended ("1933
Act") for the registration of (a) the issuance of the Rochester
Common Stock to be issued to the holder of MLD common stock, in
connection with the Merger (the "Registrable Shares") and (b) the
secondary resale of the Registrable Shares by the Seller. In
connection with the preparation of the Registration Statement to
be mailed to the shareholder of MLD, Rochester and MLD shall
cooperate with each other in the preparation of the Registration
Statement and any related filings as shall be necessary under the
securities laws of any state. Rochester covenants to prepare and
to file the Registration Statement prior to the Closing so as to
cause it to become effective prior to, and be effective on, the
Effective Date.
Rochester and MLD will furnish all information relating
to Rochester or MLD, as the case may be, necessary or desirable
in order to prepare the Registration Statement. Rochester shall
indemnify Seller and her successors, assigns, heirs, agents and
attorneys against any liability, damage, cost, loss or expense to
them or any of them, or to which any of them may become subject,
arising out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or (ii) any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii)
any violation of any federal or state securities law, rule or
regulation thereunder committed by Rochester; and Rochester will
reimburse Seller and her successors, assigns, heirs, agents and
attorneys for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss,
claim, damage or liability; provided, however, that Rochester
will not be liable
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in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon any actual or
alleged statement in, or actual or alleged omission from, the
Registration Statement made by Rochester in reliance upon and in
conformity with written information furnished to Rochester by or
on behalf of such Seller for use in connection with the
preparation of the Registration Statement or for any other
violation of any federal or state securities laws, rules or
regulations committed by Seller and/or her successors, assigns,
heirs, agents and attorneys; provided, however, that Rochester
shall have no obligation of indemnification with respect to any
such liability, damage, cost, loss or expense unless (a) prompt
written notice is given to Rochester of the making of any claim
and the commencement of any suit, action or proceeding from which
any such liability, damage, loss, cost or expense may arise, and
(b) Rochester is permitted at its own expense to participate in
the defense of such claim, suit, action or proceeding through
attorneys of its own choosing, or, if it so elects, to assume the
defense thereof, with counsel who shall be satisfactory to the
indemnified defendants in such action, and upon notice from
Rochester to the indemnified defendants of its election to assume
the defense thereof and the retaining of such counsel, Rochester
shall not be liable to the indemnified defendants for any legal
or other expenses subsequently incurred by such indemnified
defendants in connection with the defense thereof other than
reasonable costs of investigation.
Rochester will advise MLD promptly after it receives notice
thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the
issuance of any stop order by the SEC or by any securities
regulatory commission of any state, of the suspension of the
qualification of Registrable Shares for offering and sale in any
jurisdiction, or the initiation or threat of any proceeding for
any such purpose, or any request by the SEC or any such state
commission for the amendment or supplement of the Registration
Statement or for additional information.
Rochester will cause the Registrable Shares to be listed as
of the Effective Date on the NYSE. Rochester will cooperate
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with the Seller in connection with the registration or
qualification of the Registrable Shares for offering and sale by
the Seller under the securities or Blue Sky laws of such states
as the Seller may reasonably request, including, without
limitation, the filing of any necessary registration statements
or applications in any such state; provided, however, that
Rochester shall not be required to do so in states which (i)
decline to qualify the Registrable Shares after reasonable
efforts to qualify such shares have been taken in such states;
(ii) would require of Rochester a general consent to the
jurisdiction of the state; or (iii) would require that Rochester
qualify as a foreign corporation or as a dealer in securities in
such states (except that the provisions contained in clauses
(ii) and (iii) above shall not apply in states in which Rochester
has already so consented or qualified and Rochester shall inform
the Seller of the identity of such states).
Rochester shall pay all expenses incurred by Rochester in
connection with any registration or qualification of the
Registrable Shares including, without limitation, all
registration or filing fees, all fees and expenses for qualifying
the Registrable Shares for listing on the NYSE, fees and expenses
of compliance with state securities laws, printing expenses, fees
and disbursements of counsel for Rochester and fees and expenses
in connection with any special audits incident to or required by
any such registration; provided, however, Seller shall pay any of
her own legal fees, brokerage discounts, commissions or similar
fees attributable to the sale of the Registrable Shares for her
accounts.
MLD shall represent and warrant to Rochester, in writing,
that any written information submitted by MLD to Rochester for
inclusion in the Registration Statement does not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading.
9.5 Tax Matters. Prior to the later of (i) the date one
and one half months after Closing or (ii) the date 30 days prior
to the due date of the return including any extensions of time
(which shall be filed at Seller's direction), Seller shall
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prepare and submit to Rochester federal and state income tax
returns of MLD for taxable periods ending subsequent to December
31, 1993 and on or before the Closing for which returns have not
been filed prior to Closing. Rochester shall review such returns
and promptly notify Seller of any changes thereto desired by
Rochester. Rochester shall make such changes as Seller
reasonably agrees with and cause the returns to be timely filed
(which timely filing may include all extensions to file as may be
legally obtained by Rochester), and a copy thereof to be
delivered to Seller. Rochester and Seller shall fully cooperate
in the preparation and filing of such returns, including by
providing access to books, records, employees or other
information sources reasonably necessary for preparing or
examining such returns. To the extent permitted by law,
Rochester and Seller agree to take a consistent reporting
position to cause all taxable income or loss for the year of the
Closing from MSCTC that is allocable to MLD to be included in
Rochester's consolidated income tax return for such year.
Rochester shall, or shall cause MLD to, retain all tax returns,
books, records, workpapers, or other paper or computer
information related to a taxable period ending on or before the
Closing until the later of (i) ten (10) years after the Closing
or (ii) the expiration of the applicable statute of limitations
with respect to such period; thereafter, Rochester or MLD may
dispose of the information provided it has first notified Seller
in writing and given Seller an opportunity to take possession.
9.6 Payment of Indebtedness at Closing. In a transaction
which shall occur simultaneously with the Closing, Rochester
shall cause MLD to cause MSCTC to pay to NovAtel the aggregate
indebtedness (including interest) of MSCTC then outstanding to
NovAtel.
9.7 Management Agreement. MSCTC and Rochester or its
appropriate affiliate shall use all reasonable and good faith
efforts to enter into an agreement on or before July 31, 1994
whereby Rochester or such affiliate will manage the business of
MSCTC for and on behalf of MLD and its partner in MSCTC from such
date until the Closing or abandonment of the transaction
contemplated hereby.
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9.8 Skyline Mall Lease. MLD shall use its reasonable
efforts to (a) terminate that certain lease identified as item
2.H. on Schedule 7 hereto on or before July 1, 1994 and (b)
assuming such lease has been terminated, enter into another lease
reasonably acceptable to Rochester to replace such terminated
lease.
9.9 Payment of Seller's Counsel Fees. At the Closing,
Seller shall pay all amounts due to Hopkins & Sutter in
connection with its representation of Seller and MLD in
connection with this transaction.
ARTICLE X
INDEMNITY AGREEMENTS
10.1 Seller's Potential Contract Litigation and Litigation
Indemnity Agreements. The Seller shall forever indemnify
Rochester and its affiliates (including, after the Closing, MLD
and MSCTC), on an after-tax basis against, and hold Rochester and
its affiliates harmless from any and all claims, actions, suits,
liabilities, losses, damages, and expenses of every nature and
character (including, but not by way of limitation all reasonable
attorneys' fees, including such fees incurred in the enforcement
of this Article X, and all amounts paid in settlement of any
claim, action or suit) which arise or result directly or
indirectly from the scheduled potential contract claim of Cooper
Cellular Management Corp. regarding the terms of that certain
Management Agreement (and related Addendum), dated June 1, 1990
between Dowdy Cellular Partners and Cooper Cellular Management
Corp. (see Schedule 2, item 3) and the other potential or pending
lawsuit(s) listed on Schedule 2, attached hereto and made a part
hereof including, but not limited to, that certain lawsuit
entitled Fact Investment, Inc. vs. Minnesota Southern Cellular
Telephone Company, and MLD Minnesota 10, Inc. and Dowdy Minnesota
10, Inc. as its partners (Case No. CI 92-8873). Seller hereby
waives any right to indemnification pursuant to the Partnership
Agreement of MSCTC with respect to any loss, expenses, damages or
injury suffered or sustained by Seller as a result of such
claims.
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At all times before and after the Closing, Seller shall
have the right at Seller's expense and with counsel selected by
Seller to defend against the claims set forth on Schedule 2
hereto (and to pursue any counterclaim with respect thereto) in
the name of MLD or MSCTC. Rochester shall have the right, if it
elects, to participate in the defense against any such claim
through counsel of its own choice and at its own expense,
provided, however, that Seller shall bear the expense of counsel
for Rochester if Seller at any time shall not have assumed or
vigorously pursued the defense against any such claim, or if
counsel for Seller will have any conflict of interest in
representing Rochester and/or its affiliates. At all times after
the Closing, Rochester agrees to cooperate with Seller regarding
any such claim and to make all books, records and documents
relating to such claims in its possession or in possession of
MLD, MSCTC or any other affiliate of Rochester available to
Seller, or her representatives, upon request, for inspection and
copying. Rochester or any of its affiliates may not enter into
any settlement arrangements regarding any such claim without
first obtaining the written consent of Seller.
10.2 Seller's Other Indemnity Agreements. All
representations, warranties, covenants and agreements made in
this Agreement by the Seller are made to and for the benefit of
both Rochester and MLD. With respect to all such
representations, warranties, covenants or agreements in this
Agreement (and/or in the Exhibits or Schedules attached hereto
and the documents to be delivered by the Seller at the Closing),
the Seller shall indemnify Rochester and MLD against and hold
Rochester and MLD harmless on an after-tax basis from any and all
claims, actions, suits, liabilities, losses, damages, and
expenses of every nature and character (including, but not by way
of limitation all reasonable attorneys' fees, including such fees
incurred in the enforcement of this Article X, and all amounts
paid in settlement of any claim, action or suit) which constitute
or which arise or result directly or indirectly from any error,
misstatement or omission in any such representation, warranty,
covenant or agreement, or any breach thereof, provided, however,
that:
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<PAGE>
10.2.1 Seller shall not be liable for any damages for
the breach of any such representations, warranties, covenants or
agreements unless (i) the aggregate amount of damages sustained
by MLD or Rochester for all such breaches exceeds the sum of
$30,000, and (ii) written notice of each such breach is given to
Seller prior to the expiration of five (5) years after the
Closing Date or in the case of breaches involving taxes, prior to
the later of (x) the expiration six (6) years after the Closing
Date or (y) one (1) year following the termination or expiration
of any extension of time to assess tax or any waiver of the
statute of limitations with regard to any tax; and 10.2.2
The liability of the Seller for any damages arising by reason of
the breach of any of such representations, warranties, covenants
or agreements relating to MSCTC shall in no event exceed the
percentage of the total of such damages multiplied by the
percentage interest in MSCTC beneficially owned by Seller.
10.3 Rochester's Indemnity Agreements. With respect to
all representations, warranties, covenants or agreements made by
Rochester, Subsidiary's Parent or Subsidiary in this Agreement
(and/or in the Exhibits and Schedules attached hereto and the
documents to be delivered by Rochester at the Closing), Rochester
shall indemnify Seller against and save Seller harmless on an
after-tax basis from any and all claims, actions, suits,
liabilities, losses, damages and expenses of every nature and
character (including, but not by way of limitation, all
reasonable attorneys' fees, including such fees incurred in
connection with the enforcement of this Article X, and all
amounts paid in settlement of any claims, actions or suits) which
constitute or which arise or result directly or indirectly from
any error, misstatement or omission in any such representation,
warranty, covenant or agreement, or any breach thereof, provided,
however, that Rochester shall not be liable for any damages for
the breach of any such representations, warranties, covenants and
agreements unless the aggregate amount of such damages to Seller
for all such breaches exceeds $30,000, and written notice of each
such breach is given to Rochester prior to the expiration of five
(5) years after the Closing Date or in the case of breaches
involving the representations made
in Exhibit H, prior to the expiration of six (6) years after the
Closing.
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<PAGE>
10.4 Seller's Tax Estoppel. The parties understand and
agree that Subsidiary's Parent is acquiring all the outstanding
stock of MLD by the merger of Subsidiary, a wholly-owned
subsidiary of Subsidiary's Parent, into MLD and intend that such
transaction qualify as a tax deferred reorganization within the
meaning of Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended (the "Code"). MLD shall receive an opinion of
counsel to such effect, which opinion will be based in part on
representations made by Rochester. Those representations shall
be in the form of Exhibit H, attached hereto and made a part
hereof. The parties further understand and agree that Rochester
plans and intends, in its sole discretion, after the consummation
of the Merger to cause Subsidiary's Parent to transfer all the
stock of MLD to a corporation all of the stock of which is owned
by Subsidiary's Parent. Seller is relying upon their own counsel
for assurances that such "drop down" is permitted by Section
368(a)(2)(C) of the Code and will not negate the tax deferred
nature of the exchange of MLD stock for Rochester stock
accomplished in the Merger, and counsel will rely on
representations from Rochester as to the facts surrounding the
"drop down". Accordingly, Seller hereby agrees that she is and
her successors and assigns forever shall be estopped from
claiming or asserting in any fashion whatsoever that the Seller
was in any way damaged by the actions of Rochester and its
subsidiaries as described above, unless the actions are
inconsistent with representations made by Rochester or such
representations are otherwise untrue, incomplete or incorrect.
10.5 Liquidated Damages for Violation of Article 3.35 and
Pooling of Interests Provisions of Securities Agreement. Since
Rochester, Subsidiary and Subsidiary's Parent are relying upon
the representations, warranties and covenants of the Seller in
Article 3.35, and in the Securities Agreement to be executed at
the Closing, in order to proceed with and account for the
transactions described in this Agreement using "pooling of
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<PAGE>
interests" accounting treatment, and since the parties hereto
agree that it would be difficult to quantify damages if a breach
by Seller and/or the sole shareholder of MLD's partner in MSCTC
of Article 3.35 or the pooling-related covenants in the
Securities Agreement shall occur and as a result of such breach
the transaction does not qualify as a "pooling of interests", the
parties hereto agree that liquidated damages of Five Hundred
Thousand Dollars ($500,000.00) shall be payable by Seller to
Rochester upon the occurrence of such a breach and lack of
qualification.
10.6 No Limitation. Except as to certain limitations set
forth in Sections 10.2.1, 10.2.2 and 10.3, the indemnity
agreements in this Article X shall not constitute a limitation on
any of the warranties, representations, covenants or agreements
herein.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
11.1 Survival. Subject to the limitations set forth in
Sections 10.2.1, 10.2.2 and 10.3, the several representations and
warranties of the parties contained in or made pursuant to this
Agreement shall survive the Closing and remain in full force and
effect, regardless of any investigation or statement as to the
results thereof, made by or on behalf of any such party.
ARTICLE XII
MISCELLANEOUS
12.1 Abandonment of Transaction. The transaction may be
abandoned, and this Agreement terminated, at any time after the
date of this Agreement, but not later than the Closing, by:
12.1.1 The mutual consent of the Board of Directors of MLD
and the Board of Directors or the Executive Committee of such
Board of Rochester; or
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<PAGE>
12.1.2 The Seller or the Board of Directors of MLD if, at
the Closing, any of the conditions provided in Article VII and IX
of this Agreement have not been met and have not been waived
(unless such condition has not been met because of a breach by
Seller or MLD of any of their obligations hereunder); or
12.1.3 The Board of Directors or the Executive Committee
of such Board of Rochester if, at the Closing, any of the
conditions provided in Article VIII and IX of this Agreement have
not been met and have not been waived unless such condition has
not been met because of a breach by Rochester, Subsidiary or
Subsidiary's Parent of any of their obligations hereunder; or
12.1.4 The Board of Directors of MLD or the Board of
Directors or the Executive Committee of such Board of Rochester
if the transaction contemplated herein shall not have become
effective on or before March 31, 1995, unless the transaction
contemplated herein shall have not become effective solely
because of a breach by Seller or MLD, in the case of the Board of
Directors of MLD, or solely because of a breach by Rochester,
Subsidiary or Subsidiary's Parent, in the case of the Board of
Directors of Rochester; or
12.1.5 The Board of Directors of MLD or Seller if by
August 1, 1994 the Board of Directors, or Executive Committee
thereof, of Rochester shall not have approved this Agreement as
executed by the parties hereto.
12.1.6 The Board of Directors of MLD or Seller or the
Board of Directors of Rochester or the Executive Committee of
such Board of Rochester if either the Seller and MLD pursuant to
Section 7.2 hereof or Rochester pursuant to Section 8.2 hereof
shall have given notice of their (or, in the case of Rochester,
its) intent not to complete the transactions contemplated by this
Agreement; or
12.1.7 The Board of Directors of Seller or MLD or the
Board of Directors of Rochester or the Executive Committee of
such Board of Rochester if the Phase I environmental audit
<PAGE>
<PAGE>
described in Section 8.21 hereof evidences environmental hazards
on the property of MLD or MSCTC and within ninety (90) days of
delivery of such audit to Seller, either Seller shall not have
proven to Rochester's satisfaction that no such hazards exist, or
Seller shall not have cured such hazards.
12.2 Return of Documents; Confidentiality. If for any
reason the transaction contemplated hereby shall not become
effective, all written schedules and other information and all
copies of material from the books and records of any party
heretofore furnished to any other party shall be destroyed by the
party in possession. In such event, the provisions of this
Agreement relating to confidential information shall survive the
termination of this Agreement and the abandonment of the
reorganization.
12.3 Liabilities. In the event this Agreement is
terminated and the contemplated reorganization is abandoned
pursuant to Article 12.1 hereof, no party hereto shall have any
duty or liability to the other either for costs, expenses, loss
of anticipated profits or otherwise, except as provided in
Article 12.2.
12.4 Assignment. This Agreement shall not be assigned by
MLD, Rochester, Subsidiary, Subsidiary's Parent or the Seller.
In no event may the Seller or MLD assign any of their rights and
their obligations hereunder to their shareholders through a
spin-off of its MLD Stock or otherwise.
12.5 Further Assurances. From time to time prior to, at
and after the Closing, MLD, Seller, Subsidiary, Subsidiary's
Parent and Rochester will and will cause their respective
directors and officers to execute all such instruments and take
all such actions as Rochester, MLD or Seller, being advised by
counsel, shall reasonably request in connection with the carrying
out and effectuating of the intent and purpose hereof and all
transactions and things contemplated by this Agreement including,
without limitation, the execution and delivery of any and all
confirmatory and other instruments in addition to those
<PAGE>
<PAGE>
to be delivered on the Closing, and any and all actions which may
reasonably be necessary or desirable to complete the transactions
contemplated hereby.
12.6 Notices. All notices, demands and other
communications which may or are required to be given hereunder or
with respect hereto shall be given by MLD on behalf of itself and
the Seller, and by Rochester on behalf of itself, Subsidiary or
Subsidiary's Parent. All such notices, demands and other
communication shall be in writing, shall be given either by
personal delivery or by mail or telegraph, and shall be deemed to
have been given or made when personally delivered, when deposited
in the mail, first class air mail postage prepaid, or when
delivered to a telegraph company, charges prepaid, addressed as
follows:
(i) If to Rochester or its directors:
Mr. John K. Purcell
Corporate Vice President
Rochester Telephone Corporation
180 South Clinton Avenue
Rochester, New York 14646-0700
with a copy to:
John T. Pattison, Esq.
Managing Attorney
Rochester Telephone Corporation
180 South Clinton Avenue
Rochester, New York 14646-0995
or to such other address as Rochester may from time to time
designate by written notice to the Seller and MLD;
<PAGE>
<PAGE>
(ii) If to the Seller and MLD:
Mary L. Demetree
President
Minnesota Southern Telephone Company
3348 Edgewater Drive
Orlando, Florida 32804
with a copy thereof to:
Cordell J. Overgaard, Esq.
Hopkins & Sutter
Suite 3800
Three First National Plaza
Chicago, Illinois 60602
or to such other address as the Seller and MLD may from time to
time designate by written notice to Rochester.
12.7 Entire Agreement. This Agreement constitutes the
entire agreement between the parties and supersedes and cancels
any and all prior agreements between the parties relating to the
subject matter hereof.
12.8 Captions. The captions of Articles hereof are for
convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
12.9 Law Governing. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State
of New York.
12.10 Waiver of Provisions. The terms, covenants,
representations, warranties or conditions of this Agreement may
be waived only by a written instrument executed by the party
waiving compliance. Such waiver shall be authorized solely by
the individual or his personal representative, if a Seller, or
the majority vote of the Board of Directors or the Executive
Committee of the corporate party waiving compliance or by
<PAGE>
<PAGE>
officers authorized by such Board or Committee. The failure of
any party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later
time to enforce the same. No waiver by any party of any
condition, or the breach of any provision, term covenant,
representation or warranty contained in this Agreement, whether
by conduct or otherwise, in any one or more instances shall be
deemed to be or construed as a further or continuing waiver of
any such condition or of the breach of any other provision, term,
covenant, representation or warranty of this Agreement.
12.11 Successors. All of the terms and conditions of
this Agreement shall be binding upon and inure to the benefit of
the successors of Rochester and the Seller. For the purpose of
this Agreement, the term "successors" shall include but not be
limited to donees.
12.12 Counterparts. This Agreement may be executed in
several counterparts, and all so executed shall constitute one
agreement, binding on all of the parties hereto, notwithstanding
that all parties are not signatory to the original or the same
counterpart.
12.13 Severability. In the event that any provision in
this Agreement be held invalid or unenforceable, by a court of
competent jurisdiction, such provision shall be severable from,
and such invalidity or unenforceability shall not be construed to
have any effect on, the remaining provisions of this Agreement,
unless such provision goes to the essence of this Agreement in
which case the entire Agreement may be declared invalid and not
binding upon any of the parties.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed effective as of the day and year first
above written.
SELLER
By: /s/ Mary L. Demetree
------------------------
Mary L. Demetree
<PAGE>
<PAGE>
ROCHESTER TELEPHONE CORPORATION
By: /s/ John K. Purcell
----------------------------
Name: John K. Purcell
Title: Corporate Vice President
ROCHESTER TEL TELECOMMUNICATIONS
HOLDING CORPORATION
By: /s/ Dale M. Gregory
---------------------------
Name: Dale M. Gregory
Title: President and Chief
Operating Officer
ROCHESTER SUBSIDIARY TWENTY-SIX INC.
By: /s/ Dale M. Gregory
---------------------------
Name: Dale M. Gregory
Title: President and Chief
Operating Officer
MLD MINNESOTA 10, INC.
By: /s/ Mary L. Demetree
----------------------
Mary L. Demetree
Title: President
<PAGE>
<PAGE>
STATE OF FLORIDA )
COUNTY OF ORANGE ) SS:
On June 24, 1994, before me personally came Mary L.
Demetree to me known, who, being by me duly sworn, did depose and
say that deponent resides at 1250 Melissa Court Winter Park,
Florida; deponent has executed the Agreement in my presence.
/s/ Andrea B. Dinkins
----------------------
[Notary Seal here]
Notary Public, State of Florida
Commission No. CC322486
My Commission Expires 10/31/97
Bonded Through Florida Notary
Service & Bonding Company
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On July 28, 1994, before me personally came John K. Purcell
to me known, who, being by me duly sworn, did depose and say that
deponent resides at Rochester, New York; deponent is the
Corporate Vice President of Rochester Telephone Corporation, the
corporation described in and which executed the foregoing
Agreement; deponent has executed the Agreement by order of the
Board of Directors of the corporation.
/s/ Alexis A. Spinelli
-------------------------
[Notary Seal]
Notary Public - State of New York
Certified in Monroe County
Commission Expires Oct. 31, 1994
<PAGE>
<PAGE>
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On July 28, 1994, before me personally came Dale M. Gregory
to me known, who, being by me duly sworn, did depose and say that
deponent resides at Boca Raton, Florida; deponent is the
President and Chief Operating Officer of Rochester Tel
Telecommunications Holding Corporation, the corporation described
in and which executed the foregoing Agreement; deponent has
executed the Agreement by order of the Board of Directors of the
corporation.
/s/ Alexis A. Spinelli
------------------------
[Notary Seal]
Notary Public - State of New York
Certified in Monroe County
Commission Expires Oct. 31, 1994
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On July 28, 1994, before me personally came Dale M. Gregory
to me known, who, being by me duly sworn, did depose and say that
deponent resides at Boca Raton, Florida; deponent is the
President and Chief Operating Officer of Rochester Subsidiary
Twenty-Six Inc., the corporation described in and which executed
the foregoing Agreement; deponent has executed the Agreement by
order of the Board of Directors of the corporation.
/s/ Alexis A. Spinelli
------------------------
[Notary Seal]
Notary Public - State of New York
Certified in Monroe County
Commission Expires Oct. 31, 1994
<PAGE>
<PAGE>
STATE OF FLORIDA )
COUNTY OF ORANGE ) SS:
On June 24, 1994, before me personally came Mary L.
Demetree to me known, who, being by me duly sworn, did depose and
say that deponent resides at 1250 Melissa Court, Winter Park, FL;
deponent is the President of MLD MINNESOTA 10, INC., the
corporation described in and which executed the foregoing
Agreement; deponent has executed the Agreement by order of the
Board of Directors of the corporation.
/s/ Andrea B. Dinkins
----------------------
[Notary Seal here]
Notary Public, State of Florida
Commission No. CC322486
My Commission Expires 10/31/97
Bonded Through Florida Notary
Service & Bonding Company
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page No.
I. Merger ............................................ 2
1.1 Effective Date .................................... 2
1.2 Surviving Corporation ............................. 2
II. Closing .................................. ........ 2
2.1 Closing Date ...................................... 2
2.2 Filing of Articles of Merger ...................... 3
2.3 Closing Cooperation ............................... 3
III. Representations and Warranties of the
Seller and MLD ................................. 4
3.1 Incorporation ..................................... 4
3.2 Capitalization of MLD; Corporate Documents ........ 4
3.3 Title to MLD Stock ................................ 4
3.4 Status of MLD Stock ............................... 4
3.5 Capacity of MLD Stock Owner ....................... 4
3.6 No Violation of Obligation ........................ 4
3.7 Financial Statements .............................. 5
3.8 Business Since December 31, 1993 .................. 5
3.9 MLD and MSCTC Litigation .......................... 8
3.10 Compliance With Laws .............................. 8
3.11 Uses, Approvals ................................... 8
3.12 Patents, Trademarks and Miscellaneous Intellectual
Property .... .................................. 8
3.13 Intellectual Property Interests ................... 9
3.14 Insurance ......................................... 9
3.15 Indebtedness ...................................... 9
3.16 Stock Rights ......................................10
3.17 Correct Records ................................ 10
3.18 Contracts. ........................................10
3.19 Employee Benefit Plans ............................11
3.20 Titles, Real Property Matters .....................12
3.21 No Defaults .................................... 12
3.22 Qualification/Subsidiaries and Other Interests/
No Rights of First Refusal .................. 13
3.23 Brokers ...........................................13
3.24 Employees .........................................13
3.25 Corporate and Seller's Action .....................14
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3.26 Liabilities .......................................14
3.27 Accounts Receivable and Non-Current Receivables ...14
3.28 Tax Returns .......................................14
3.29 Banks .............................................15
3.30 Disclosure by the Seller and MLD ..................16
3.31 Conflicts of Interest .............................16
3.32 Securities Law Reporting ..........................16
3.33 Environmental Matters .............................16
3.34 Seller as an Accredited Investor...................17
3.35 No Agreements to Distribute Rochester Common Stock.17
3.36 Contributions of Debt to Capital ..................17
3.37 True at Closing ...................................17
IV. Rochester's Representations and Warranties ..........18
4.1 Incorporation and Capitalization ..................18
4.2 Power and Authority ...............................18
4.3 Financial Statements ..............................18
4.4 Stock Issuable to the Seller.......................18
4.5 Business Since December 31, 1993 ..................19
4.6 Rochester Litigation ..............................19
4.7 No Defaults .......................................19
4.8 Corporate Action of Rochester, Subsidiary and
Subsidiary's Parent..............................19
4.9 Subsidiary Legal Status ...........................20
4.10 Subsidiary Capital Stock ..........................20
4.11 Disclosure by Rochester ...........................20
4.12 Securities and Exchange Commission Filings ........20
4.13 Brokerage Fee .....................................20
4.14 True at Closing ...................................21
V.Covenants of the Seller and MLD Pending Closing..........21
5.1 Maintenance of Business ...........................21
5.2 Negative Covenants ................................21
5.3 Organization, Good Will ...........................23
5.4 Access to Plants, Files and Records ...............23
5.5 Consummation of Agreement .........................23
5.6 Consents to Leases, Contracts .....................23
5.7 Securities Laws ...................................23
5.8 Notice of Proceedings .............................23
5.9 Delivery of MLD's Shareholder List ................24
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5.10 Confidential Information ..........................24
5.11 MLD and MSCTC Employees ...........................24
5.12 Interim Financial Statements ......................25
5.13 Seller's Shareholder Status .......................25
5.14 Future Cash Infusions to MSCTC / No Loans .........25
VI. Covenants of Rochester and Subsidiary Pending Merger .26
6.1 Subsidiary's Parent as Sole Shareholder of
Subsidiary ......................................26
6.2 Federal Securities and Blue Sky Filings............26
6.3 Corporate Action ..................................26
6.4 Confidential Information ..........................26
6.5 Consummation of Agreement .........................27
6.6 Notice of Proceedings .............................27
6.7 Changes in Capitalization .........................27
VII. Conditions to the Obligations of the Seller
and MLD ......................................27
7.1 Representations, Warranties, Covenants ............27
7.2 Proceedings .......................................28
7.3 Opinion of Counsel ................................29
7.4 Delivery of Rochester Common Stock ................29
7.5 Representations and Warranties Respecting Certain
Matters Made at Closing .........................29
7.6 Proceedings and Instruments Satisfactory ..........29
7.7 Certificate of Incumbency ........................29
7.8 Unduly Burdensome Final Order ....................29
7.9 Tax Representation Certificate ...................30
7.10 Shareholder Authorization ........................30
7.11 Effectiveness of Registration Statement ..........30
7.12 Tax Opinion ......................................30
VIII. Conditions to the Obligations of Rochester........30
8.1 Representations, Warranties, Covenants ............30
8.2 Proceedings .......................................31
8.3 Opinion of Counsel of the Seller and MLD ..........31
8.4 Blue Sky Filings ..................................32
8.5 MLD Agreements ....................................32
8.6 Interim Financial Statements ......................32
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8.7 No Casualty .......................................32
8.8 Proceedings and Instruments Satisfactory ..........32
8.9 Delivery of MLD Common Stock ......................32
8.10 No Change in MLD's Capitalization .................33
8.11 Acquisition of Affiliated Company .................33
8.12 Resolutions and Resignation of MLD's Directors ....33
8.13 Certificates of Good Standing .....................33
8.14 Shareholder Authorization .........................33
8.15 Certified Articles ................................33
8.16 Certified Bylaws ..................................34
8.17 Certificate of Incumbency .........................34
8.18 Audited Financial Statements of MLD and MSCTC
as of December 31, 1992 and 1993 ................34
8.19 Representations and Warranties Respecting Certain
Matters Made at Closing .........................34
8.20 Title Insurance ...................................35
8.21 Environmental Audit ...............................35
8.22 Adverse Change ....................................35
8.23 Unduly Burdensome Final Order .....................35
8.24 Pooling ...........................................36
8.25 Effectiveness of Registration Statement ...........36
8.26 Securities Agreement of Seller ....................36
8.27 Consents ..........................................36
8.28 Cellular One Status ...............................36
8.29 Release of Lien of NovAtel ........................37
8.30 Payment of One-Half of Account Receivable from
Affiliates .......................................37
IX. Mutual Covenants and Conditions to Obligations of MLD,
Rochester and the Seller ..............................37
9.1 Application to the NYPSC ..........................37
9.2 Necessity for FCC and NYPSC Approvals .............38
9.3 Other Filings .....................................38
9.4 Meeting of MLD Shareholder, Proxy Materials .......39
9.5 Tax Matters .......................................41
9.6 Payment of Indebtedness at Closing ................42
9.7 Management Agreement ..............................42
9.8 Skyline Mall Lease ................................42
9.9 Payment of Seller's Counsel Fees ..................42
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X. Indemnity Agreements.............................42
10.1 Seller's Potential Contract Litigation
and Litigation Indemnity Agreements .............42
10.2 Seller's Other Indemnity Agreements ...............43
10.3 Rochester's Indemnity Agreements ..................44
10.4 Seller's Tax Estoppel .............................45
10.5 Liquidated Damages for Violation of Article 3.35 ..45
10.6 No Limitation .....................................46
XI. Survival of Representations and Warranties.........46
11.1 Survival ..........................................46
XII. Miscellaneous .....................................46
12.1 Abandonment of Transaction ........................46
12.2 Return of Documents; Confidentiality ..............47
12.3 Liabilities .......................................48
12.4 Assignment ........................................48
12.5 Further Assurances ................................48
12.6 Notices ...........................................48
12.7 Entire Agreement ..................................49
12.8 Captions ..........................................49
12.9 Law Governing .....................................50
12.10 Waiver of Provisions ..............................50
12.11 Successors ........................................50
12.12 Counterparts ......................................50
12.13 Severability ......................................50
Signatures...............................................51
Corporate Acknowledgements...............................52
EXHIBITS AND SCHEDULES:
Exhibit A - MLD Certificate of Incorporation
Exhibit A-1 -Agreement and Plan of Merger
Exhibit A-2 -Form of Articles of Merger
Exhibit B - MLD and MSCTC Employee Benefit Plans
Exhibit C - Form of Securities Agreement
Exhibit D - MLD and MSCTC Agreements
Exhibit E - (None)
Exhibit F - Form of RTC Opinion of Counsel
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EXHIBITS AND SCHEDULES (CONT'D)
Exhibit G - Form of Seller and MLD Opinion of Counsel
Exhibit H - Form of RTC Tax Representations Certificate
Schedule 1 - MLD and MSCTC Business Since December 31, 1991
Schedule 2 - MLD and MSCTC Litigation
Schedule 3 - MLD and MSCTC Patents, Trademarks and
Miscellaneous Property
Schedule 4 - MLD and MSCTC Insurance
Schedule 5 - MLD and MSCTC Indebtedness
Schedule 6 - MLD and MSCTC Contracts, Etc.
Schedule 7 - MLD and MSCTC Real Property
Schedule 8 - MLD and MSCTC Brokers
Schedule 9 - MLD and MSCTC Employees
Schedule 10- MLD and MSCTC Liabilities
Schedule 11- MLD and MSCTC Liabilities After 12/31/93
Over $20,000
Schedule 12- MLD and MSCTC Names of Banks/Authorized Persons
Schedule 13- MLD and MSCTC Conflicts of Interest
Schedule 14- RTC Business Since December 31, 1993
Schedule 15- RTC Litigation
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Appendix C
PROVISIONS OF THE FLORIDA BUSINESS CORPORATION ACT
607.1301. Dissenters' Rights; Definitions
The following definitions apply to ss. 607.1302 and
607.1320:
(1) "Corporation" means the issuer of the shares held by a
dissenting shareholder before the corporate action or the
surviving or acquiring corporation by merger or share exchange of
that issuer.
(2) "Fair value," with respect to a dissenter's shares,
means the value of the shares as of the close of business on the
day prior to the shareholders' authorization date, excluding any
appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on
which the shareholders' vote authorizing the proposed action was
taken, the date on which the corporation received written
consents without a meeting from the requisite number of
shareholders in order to authorize the action, or, in the case of
a merger pursuant to s. 607.1104, the day prior to the date on
which a copy of the plan of merger was mailed to each shareholder
of record of the subsidiary corporation.
607.1302. Right of Shareholders to Dissent
(1) Any shareholder of a corporation has the right to
dissent from, and obtain payment of the fair value of his shares
in the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the
corporation is a party:
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1. If the shareholder is entitled to vote on the merger,
or
2. If the corporation is a subsidiary that is merged with
its parent under s. 607.1104, and the shareholders would have
been entitled to vote on action taken, except for the
applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation, other than
in the usual and regular course of business, if the shareholder
is entitled to vote on the sale or exchange pursuant to s.
607.1202, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds of the
sale will be distributed to the shareholders within 1 year after
the date of sale;
(c) As provided in s. 607.0902(11), the approval of a
control-share acquisition;
(d) Consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which
will be acquired, if the shareholder is entitled to vote on the
plan;
(e) Any amendment of the articles of incorporation if the
shareholder is entitled to vote on the amendment and if such
amendment would adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights attached
to any of his shares;
2. Altering or abolishing the voting rights pertaining to
any of his shares, except as such rights may be affected by the
voting rights of new shares then being authorized of any existing
or new class or series of shares;
3. Effecting an exchange, cancellation, or
reclassification of any of his shares, when such exchange,
cancellation, or reclassification would alter or abolish his
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voting rights or alter his percentage of equity in the
corporation, or effecting a reduction or cancellation of accrued
dividends or other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his
redeemable shares, altering or abolishing any provision relating
to any sinking fund for the redemption or purchase of any of his
shares, or making any of his shares subject to redemption when
they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of
any of his preferred shares which had theretofore been
cumulative;
6. Reducing the stated dividend preference of any of his
preferred shares; or
7. Reducing any stated preferential amount payable on any
of his preferred shares upon voluntary or involuntary
liquidation; or
(f) Any corporate action taken, to the extent the articles
of incorporation provide that a voting or nonvoting shareholder
is entitled to dissent and obtain payment for his shares.
(2) A shareholder dissenting from any amendment specified
in paragraph (1)(e) has the right to dissent only as to those of
his shares which are adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the
shares registered in his name. In that event, his rights shall
be determined as if the shares as to which he has dissented and
his other shares were registered in the names of different
shareholders.
(4) Unless the articles of incorporation otherwise
provide, this section does not apply with respect to a plan of
merger or share exchange or a proposed sale or exchange of
property, to the holders of shares of any class or series which,
on the record date fixed to determine the shareholders entitled
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to vote at the meeting of shareholders at which such action is to
be acted upon or to consent to any such action without a meeting,
were either registered on a national securities exchange or held
of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment
for his shares under this section may not challenge the corporate
action creating his entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
607.1320. Procedure for Exercise of Dissenters' Rights
(1)(a) If a proposed corporate action creating dissenters'
rights under s. 607.1302 is submitted to a vote at a
shareholders' meeting, the meeting notice shall state that
shareholders are or may be entitled to assert dissenters' rights
and be accompanied by a copy of ss. 607.1301, 607.1302, and
607.1320. A shareholder who wishes to assert dissenters' rights
shall:
1. Deliver to the corporation before the vote is taken
written notice of his intent to demand payment for his shares if
the proposed action is effectuated, and
2. Not vote his shares in favor of the proposed action. A
proxy or vote against the proposed action does not constitute
such a notice of intent to demand payment.
(b) If proposed corporate action creating dissenters' rights
under s. 607.1302 is effectuated by written consent without a
meeting, the corporation shall deliver a copy of ss. 607.1301,
607.1302, and 607.1320 to each shareholder simultaneously with
any request for his written consent or, if such a request is not
made, within 10 days after the date the corporation received
written consents without a meeting from the requisite number of
shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date,
the corporation shall give written notice of such authorization
or consent or adoption of the plan of merger, as the case may
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<PAGE>
be, to each shareholder who filed a notice of intent to demand
payment for his shares pursuant to paragraph (1)(a) or, in the
case of action authorized by written consent, to each
shareholder, excepting any who voted for, or consented in writing
to, the proposed action.
(3) Within 20 days after the giving of notice to him, any
shareholder who elects to dissent shall file with the corporation
a notice of such election, stating his name and address, the
number, classes, and series of shares as to which he dissents,
and a demand for payment of the fair value of his shares. Any
shareholder failing to file such election to dissent within the
period set forth shall be bound by the terms of the proposed
corporate action. Any shareholder filing an election to dissent
shall deposit his certificates for certificated shares with the
corporation simultaneously with the filing of the election to
dissent. The corporation may restrict the transfer of
uncertificated shares from the date the shareholder's election to
dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the
shareholder shall thereafter be entitled only to payment as
provided in this section and shall not be entitled to vote or to
exercise any other rights of a shareholder. A notice of election
may be withdrawn in writing by the shareholder at any time before
an offer is made by the corporation, as provided in subsection
(5), to pay for his shares. After such offer, no such notice of
election may be withdrawn unless the corporation consents
thereto. However, the right of such shareholder to be paid the
fair value of his shares shall cease, and he shall be reinstated
to have all his rights as a shareholder as of the filing of his
notice of election, including any intervening preemptive rights
and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed,
in lieu thereof, at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time
of such expiration or completion, but without prejudice otherwise
to any corporate proceedings that may have been taken in the
interim, if:
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(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or
the shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value
by a court has been made or filed within the time provided in
this section; or
(d) A court of competent jurisdiction determines that such
shareholder is not entitled to the relief provided by this
section.
(5) Within 10 days after the expiration of the period in which
shareholders may file their notices of election to dissent, or
within 10 days after such corporate action is effected, whichever
is later (but in no case later than 90 days from the
shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand
as provided in this section to pay an amount the corporation
estimates to be the fair value for such shares. If the corporate
action has not been consummated before the expiration of the
90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such
action. Such notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and
not more than 12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the
12-month period ended on the date of such balance sheet or, if
the corporation was not in existence throughout such 12-month
period, for the portion thereof during which it was in existence.
(6) If within 30 days after the making of such offer any
shareholder accepts the same, payment for his shares shall be
made within 90 days after the making of such offer or the
consummation of the proposed action, whichever is later. Upon
<PAGE>
<PAGE>
payment of the agreed value, the dissenting shareholder shall
cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the
period specified therefor in subsection (5) or if it makes the
offer and any dissenting shareholder or shareholders fail to
accept the same within the period of 30 days thereafter, then the
corporation, within 30 days after receipt of written demand from
any dissenting shareholder given within 60 days after the date on
which such corporate action was effected, shall, or at its
election at any time within such period of 60 days may, file an
action in any court of competent jurisdiction in the county in
this state where the registered office of the corporation is
located requesting that the fair value of such shares be
determined. The court shall also determine whether each
dissenting shareholder, as to whom the corporation requests the
court to make such determination, is entitled to receive payment
for his shares. If the corporation fails to institute the
proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders
(whether or not residents of this state), other than shareholders
who have agreed with the corporation as to the value of their
shares, shall be made parties to the proceeding as an action
against their shares. The corporation shall serve a copy of the
initial pleading in such proceeding upon each dissenting
shareholder who is a resident of this state in the manner
provided by law for the service of a summons and complaint and
upon each nonresident dissenting shareholder either by registered
or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and
exclusive. All shareholders who are proper parties to the
proceeding are entitled to judgment against the corporation for
the amount of the fair value of their shares. The court may, if
it so elects, appoint one or more persons as appraisers to
receive evidence and recommend a decision on the question of fair
value. The appraisers shall have such power and authority as is
specified in the order of their appointment or an amendment
thereof. The corporation shall pay each dissenting shareholder
the amount found to be due him within 10 days after final
determination of the proceedings.
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<PAGE>
Upon payment of the judgment, the dissenting shareholder shall
cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a
fair rate of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be
determined by the court and shall be assessed against the
corporation, but all or any part of such costs and expenses may
be apportioned and assessed as the court deems equitable against
any or all of the dissenting shareholders who are parties to the
proceeding, to whom the corporation has made an offer to pay for
the shares, if the court finds that the action of such
shareholders in failing to accept such offer was arbitrary,
vexatious, or not in good faith. Such expenses shall include
reasonable compensation for, and reasonable expenses of, the
appraisers, but shall exclude the fees and expenses of counsel
for, and experts employed by, any party. If the fair value of
the shares, as determined, materially exceeds the amount which
the corporation offered to pay therefor or if no offer was made,
the court in its discretion may award to any shareholder who is a
party to the proceeding such sum as the court determines to be
reasonable compensation to any attorney or expert employed by the
shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of
the agreed value thereof or pursuant to payment of the judgment
entered therefor, as provided in this section, may be held and
disposed of by such corporation as authorized but unissued shares
of the corporation, except that, in the case of a merger, they
may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the
shares of such dissenting shareholders would have been converted
had they assented to the merger shall have the status of
authorized but unissued shares of the surviving corporation.
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II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Business Corporation Law of the State of New York ("BCL")
provides that if a derivative action is brought against a
director or officer, FC may indemnify him or her against amounts
paid in settlement and reasonable expenses, including attorneys'
fees incurred by him or her in connection with the defense or
settlement of such action, if such director or officer acted in
good faith for a purpose which he or she reasonably believed to
be in the best interests of FC, except that no indemnification
shall be made without court approval in respect of a threatened
action, or a pending action settled or otherwise disposed of, or
in respect of any matter as to which such director or officer has
been found liable to FC. In a nonderivative action or threatened
action, the BCL provides that FC may indemnify a director or
officer against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees incurred by him or
her in defending such action if such director or officer acted in
good faith for a purpose which he or she reasonably believed to
be in the best interests of FC.
Under the BCL, a director or officer who is successful,
either in a derivative or nonderivative action, is entitled to
indemnification as outlined above. Under any other
circumstances, such director or officer may be indemnified only
if certain conditions specified in the BCL are met. The
indemnification provisions of the BCL are not
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II-2
exclusive of any other rights to which a director or officer
seeking indemnification may be entitled pursuant to the
provisions of the certificate of incorporation or the bylaws of a
corporation or, when authorized by such certificate of
incorporation or the bylaws of a corporation or, when authorized
by such certificate of incorporation or bylaws, pursuant to a
shareholders' resolution, a directors' resolution or an agreement
providing for such indemnification.
The above is a general summary of certain provisions of the BCL
and is subject, in all cases, to the specific and detailed
provisions of Sections 721-725 of the BCL.
Article II, Section 12, of FC's Bylaws contains provisions
authorizing indemnification by FC of directors and officers
against certain liabilities and expenses which they may incur as
directors and officers of FC or of certain other entities. In
addition, the Merger Agreement dated as of July 6, 1994, set
forth as Exhibit B to the Proxy Statement-Prospectus provides for
the indemnification of FC, its directors and officers, by MLD
against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
Section 726 of the BCL also contains provisions authorizing FC to
obtain insurance on behalf of any such director and officer
against liabilities, whether or not FC would have the power to
indemnify against such liabilities. FC maintains Executive
Liability and Defense coverage under which the directors and
officers of FC are insured, subject to the limits of the policy,
against certain losses, as defined in the policy, arising from
claims made against such directors and officers by reason of any
wrongful acts as defined in the policy, in their respective
capacities as directors or officers.
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II-3
Item 21. List of Exhibits
Exhibit
Number Exhibit
- ------ --------------
2 Agreement with Respect to a Merger, dated as of July 6,
1994, between MLD, FC, Subsidiary's Parent and Subsidiary,
is set forth as Appendix B to the Proxy
Statement-Prospectus. Exhibit A-1 to the Agreement, the
Plan of Merger, is set forth as Appendix A to the Proxy
Statement-Prospectus. Upon the request of the Commission,
FC agrees to furnish a copy of Schedules 1 through 13 to
the Agreement, described as follows:
Exhibit A - MLD Articles of Incorporation and Bylaws
Exhibit A-2 - Articles of Merger
Exhibit B - MLD List of Shareholders
Exhibit C - MLD Employee Benefit Plans
Exhibit D - Securities Agreement
Exhibit E - Cellular Partnership Agreement
Schedule 1 - MLD Business Since December 31, 1991
Schedule 2 - MLD Pending or Threatened Actions, Etc.
Schedule 3 - MLD Patents, Trademarks and
Miscellaneous Property
Schedule 4 - MLD Insurance
Schedule 5 - MLD Borrowed Money
Schedule 6 - MLD Contracts, Etc.
Schedule 7 - MLD Real Property
Schedule 8 - MLD Employees/Directors and Officers
Schedule 9 - MLD Liabilities Not Shown
Schedule 10 - MLD Names of Banks/Authorized Persons
Schedule 11 - Rochester Material Adverse Changes Since
December 31, 1993
Schedule 12 - Rochester Litigation
Schedule 13 - MLD Conflicts of Interest
3(a) Bylaws of RTC, as amended
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II-4
3(b) Restated Certificate of Incorporation of RTC, as amended,
is incorporated by reference to Exhibit 3 to Form 10-Q for
the quarter ended September 30, 1980 [File No. 1-4166]
3(c) Certificate of Amendment to Restated Certificate of
Incorporation of RTC is incorporated by reference to
Exhibit 3-2 to Form 10-K for the year ended December 31,
1984 File No. 1-4166]
3(d) Certificate of Change to Restated Certificate of
Incorporation of RTC is incorporated by reference to
Exhibit 3-4 to Form 10-K for the year ended December 31,
1988 [File No. 1-4166]
3(e) Certificates of Amendment to Restated Certificate of
Incorporation of RTC is incorporated by reference to
Exhibit 3-5 to Form 10-K for the year ended December 31,
1990 [File No. 1-4166]
3(f) Certificate of Amendment to Restated Certificate of
Incorporation of FC is incorporated by reference to Exhibit
3-2 to form 8-K dated February 13, 1995 [File No. 1-4166]
3(g) Certificate of Amendment to Restated Certificate of
Incorporation of FC is incorporated by reference to Exhibit
3-3 to Form 8-K dated February 13, 1995 [File No. 1-4166]
5 Opinion of John T. Pattison re: legality
8 Opinion of Hopkins & Sutter re: tax matters
21 Subsidiaries of FC
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II-5
23(a) Consent of Price Waterhouse, LLP
23(b) Consents of Thomas P. Osborne and Arthur Andersen, LLP
23(c) Consent of John T. Pattison (included in Exhibit 5)
23(d) Consent of Hopkins & Sutter (included in Exhibit 8)
24(a) Powers of Attorney of Directors
24(b) Certified Resolutions of FC authorizing execution by an
officer by power of attorney
27 Financial Data Schedule
99 Articles of Incorporation of MLD
99 Bylaws of MLD
99 Form of Proxy
99 Rights of Dissenting Shareholders of MLD is set forth as
Appendix C to the Proxy Statement-Prospectus
99 Form of Securities Agreement
Item 22. Undertakings
(a) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
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II-6
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form,
within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(d) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
(e) The undersigned Registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to
<PAGE>
<PAGE>
II-7
be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other Items of
the applicable form.
(f) The Registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (e) above, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used
in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(g)The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to this
registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933:
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) To include any material information with respect to a
plan of distribution not previously disclosed in the registration
<PAGE>
<PAGE>
II-8
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
<PAGE>
<PAGE>
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Frontier Corporation certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-4 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Rochester, and the State of New York, on the 13th day
of February, 1995.
FRONTIER CORPORATION
By: /s/ Louis L. Massaro
----------------------
Louis L. Massaro
Corporate Vice President -
Finance
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities indicated on the 13th day of February,
1995.
Signature Title
President and Chief Executive Officer,
Director, (Principal Executive Officer)
/s/ R. L. Bittner
- -------------------
Ronald L. Bittner
Corporate Vice President
(Principal Financial and Accounting
Officer)
/s/ Louis L. Massaro
- --------------------
Louis L. Massaro
<PAGE>
<PAGE>
II-10
Patricia C. Barron
Ronald L. Bittner
John R. Block
Brenda E. Edgerton
Jairo A. Estrada
Daniel E. Gill Directors
Alan C. Hasselwander
Douglas H. McCorkindale
Leo J. Thomas, Ph.D.
By: /s/ Louis L. Massaro
-----------------------
Louis L. Massaro
(Attorney-in-Fact)
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Method of Filing
2 Agreement with Respect to a Merger, Appendices B and A to
dated as of July 6, 1994, and the Proxy Statement-
Plan of Merger, between MLD, Prospectus,
FC and Subsidiary respectively
3(a) Bylaws of FC, as amended Incorporated by
reference to
Exhibit 3-1 to Form 8-K
dated February 13, 1995
[File No. 1-4166]
3(b) Restated Certificate of Incorporated by reference
Incorporation of FC, as amended to Exhibit 3 to Form 10-Q
for the quarter ended
September 30, 1980
[File No. 1-4166]
3(c) Certificate of Amendment to Incorporated by reference
Restated Certificate of to Exhibit 3-2 to Form
Incorporation of FC 10-K for the year ended
December 31, 1984
[File No. 1-4166]
3(d) Certificate of Change to Restated Incorporated by reference
Certificate of Incorporation of FC to Exhibit 3-4 to Form
10-K for the year ended
December 31, 1988
[File No. 1-4166]
3(e) Certificates of Amendment to Incorporated by reference
Restated Certificate of to Exhibit 3-5 to Form
Incorporation of FC 10-K for the year ended
December 31, 1990
[File No. 1-4166]
<PAGE>
<PAGE>
EXHIBIT INDEX (Cont'd.)
Exhibit
Number Exhibit Method of Filing
- ------ ---------------------------- -----------------
3(f) Certificate of Amendment to Incorporated by reference
Restated Certificate of to Exhibit 3-2 to Form
Incorporation of FC 8-K dated February 13,
1995 [File No. 1-4166]
3(g) Certificate of Amendment to Incorporated by reference
Restated Certificate of to Exhibit 3-3 to Form 8-K
Incorporation of FC dated February 13, 1995
[File No. 1-4166]
5 Opinion of John T. Pattison Herewith
re: legality
8 Opinion of Hopkins & Sutter Herewith
re: tax matters
21 Subsidiaries of FC Herewith
23(a) Consent of Price Waterhouse, LLP Herewith
23(b) Consents of Thomas P. Osborne
and Arthur Andersen, LLP Herewith
23(c) Consent of John T. Pattison Included in Exhibit 5
23(d) Consent of Hopkins & Sutter Included in Exhibit 8
24(a) Powers of Attorney of Directors Herewith
<PAGE>
<PAGE>
EXHIBIT INDEX (Cont'd.)
Exhibit
Number Exhibit Method of Filing
- ------- ---------------------------- -----------------
24(b) Certified Resolutions of FC Herewith
authorizing execution by an
officer by power of attorney
27 Financial Data Schedule Herewith
99 Articles of Incorporation Herewith
of MLD
99 Bylaws of MLD Herewith
99 Form of Proxy Herewith
99 Rights of Objecting Shareholders Appendix C to the
of MLD Proxy Statement-
Prospectus
99 Form of Securities Agreement Herewith
<PAGE>
EXHIBIT 5
, 1995
--------------
TO: Persons Receiving Shares of $1.00 Par Value Common Stock of
Frontier Corporation Pursuant to:
a Certain Plan of Merger Among Frontier Corporation and,
Rochester Subsidiary Twenty-Six Inc. and MLD
Minnesota 10, Inc.,
Pursuant to a Certain Registration Statement of
Frontier Corporation on Form S-4 to be Filed February 15,
1995.
I am General Attorney of Frontier Corporation, the
registrant pursuant to the above-referenced Registration
Statement. In my opinion, the shares of Common Stock to be
issued pursuant to the above-referenced transaction, when
delivered as described in such Registration Statement, will be
legally issued, fully paid and non-assessable shares of Common
Stock, par value $1.00 of Frontier Corporation. I consent to the
inclusion of this opinion letter as an Exhibit to such
Registration Statement on Form S-4 and to the making of
statements with respect to me under the heading "Legal Matters"
in such Registration statement.
Very truly yours,
/s/ John T. Pattison
--------------------
John T. Pattison
General Attorney
<PAGE>
EXHIBIT 8
OPINION OF HOPKINS & SUTTER RE: TAX MATTERS
HOPKINS & SUTTER
(A Partnership Including Professional Corporations)
THREE FIRST NATIONAL PLAZA CHICAGO 60602 (312) 558-6600
FAX (312) 558-6538 (312) 558-6676
WASHINGTON, D.C. OFFICE 333 SIXTEENTH STREET, N.W. 20006
DALLAS OFFICE 1717 MAIN STREET SUITE 3700 75201
January 16, 1995
Mary L. Demetree
3348 Edgewater Drive
Orlando, Florida 32804
Re: Federal Income Tax Consequences of Acquisition
of MLD Minnesota 10, Inc. by Frontier Corporation
Dear Mary:
This letter is to provide you with our opinion as to certain
federal income tax consequences of the merger of Rochester
Subsidiary Twenty-Six Inc. ("Subsidiary") with and into MLD
Minnesota 10, Inc. ("MLD"), pursuant to the Agreement with
Respect to a Merger of Rochester Subsidiary Twenty-Six Inc. into
MLD Minnesota 10, Inc. Under the Name MLD Minnesota 10, Inc.,
dated as of July 6, 1994 (the "Agreement"). Our opinion is based
on our understanding of the facts set forth below and as set
forth in the Form S-4 Registration Statement (the "Registration
Statement") filed by Frontier Corporation ("Frontier") under the
Securities Act of 1933 for the issuance of Frontier Common Stock
in the Merger, and upon the representations set forth as Exhibits
A, B, and C hereto that we assume will be executed and delivered
to us at or prior to closing. Capitalized terms not defined in
this letter have the meaning given them in the Agreement.
FACTS
Present Operations
- ------------------
MLD is a Florida corporation which was organized on August 17,
1990. Since its formation, Mary L. Demetree ("Seller") has
<PAGE>
<PAGE>
owned all the outstanding stock of MLD and MLD has been a 50%
general partner of Minnesota Southern Cellular Company ("MSCC"),
a general partnership. MSCC was formed on August 15, 1990, and
since then has been engaged in business as an FCC-licensed non-
wireline cellular telecommunications service provider in
Minnesota RSA #10. MLD is an S corporation under the Internal
Revenue Code of 1986, as amended (the "Code").
Since the beginning of the business in 1990, the other 50%
partner of MSCC has been Dowdy Minnesota 10, Inc. ("Dowdy"), an S
corporation all the stock of which has been owned by Ronald E.
Dowdy. There has never been a shareholder, voting, tag-along,
buy-sell or other agreement, arrangement or by-law linking the
stock of Dowdy and MLD. The structure of having a partnership
between S corporations, rather than a single S corporation, was
adopted for valid business reasons unrelated to taxes.
Frontier is a holding company organized as a New York
business corporation. Its stock is traded on the New York Stock
Exchange. Until January 1, 1995, Frontier (previously known as
Rochester Telephone Corporation) was a local service telephone
operating company which provided telephone service within New
York State, principally in the Rochester market. On January 1,
1995, Frontier dropped its local Rochester exchange company
business into a wholly-owned subsidiary, Rochester Telephone
Corp., and its lightly regulated retail telecommunications
business in Rochester into Frontier Communications of Rochester,
Inc. Frontier also has a number of other direct and indirect
subsidiaries, both regulated and unregulated, including
subsidiaries that provide local exchange services outside the
Rochester market as well as telecommunications equipment and
services, cellular services, and information processing services
in the Rochester market and other markets.
Frontier Telecommunications Holding Inc. ("Subsidiary's
Parent" (formerly named Rochester Tel Telecommunications Holding
Corporation)) is a Delaware corporation and a wholly-owned
subsidiary of Frontier. Subsidiary's Parent owns all the
outstanding stock of Subsidiary, a Florida corporation.
Subsidiary was recently formed solely for the purpose of
effecting the acquisition of MLD and has not engaged in any
activities unrelated to such purpose.
<PAGE>
<PAGE>
The Merger
- ----------
Pursuant to the Agreement, Subsidiary will merge with and
into MLD under the Florida General Corporation Law. MLD will be
the surviving corporation and the separate corporate existence of
Subsidiary will cease. The Merger will be effective on the date
the Certificate of Merger is filed with the Secretary of State of
the State of Florida.
In the Merger, Seller's MLD Common Stock will be
automatically converted into and exchanged for shares of Frontier
$1.00 par value common stock having normal voting rights. The
total number of shares of Frontier Common Stock received will
equal the sum of (i) 433,217, plus (ii) the quotient of the
dollar amount of Additional Capital Contributions divided by 23.
Although the Agreement provides that Frontier will pay cash in
lieu of issuing fractional shares, the amount of Additional
Capital Contributions will be evenly divisible by 23, so no
fractional share will arise. Each outstanding share of
Subsidiary Common Stock will be automatically converted into one
share of MLD Common Stock. As a result of the Merger, Seller
will receive solely Frontier Common Stock in exchange for all the
MLD Common Stock, and MLD will become a wholly-owned subsidiary
of Subsidiary's Parent.
Under the Agreement, Frontier is filing the Registration
Statement with the Securities and Exchange Commission to register
its common stock issued in the Merger under the Securities Act of
1933 and will also comply with state Blue Sky laws, and will
cause the stock to be listed on the New York Stock Exchange.
Frontier will pay all expenses incurred by Frontier in connection
with the registration and listing of the Stock, including
registration or filing fees, printing expenses, and its counsel's
fees.
Additionally, under the Agreement, Frontier will pay the
expenses for an environmental audit of the properties of MLD, and
fees of the New York Public Service Commission ("NYPSC") charged
in connection with the filing and processing of an application
for NYPSC approval of the Merger, along with the cost of filing
and processing.
<PAGE>
<PAGE>
The Merger is being undertaken for valid business reasons.
Seller views the Merger as an attractive opportunity to invest in
Frontier stock, which has a history of paying cash dividends.
Various factors indicate MLD can be a more efficient and
effective business competitor as part of a large
telecommunications firm, and the Board of MLD believes the merger
with Frontier--a company of sufficient size to compete--is its
best option. Frontier believes that the Merger will benefit its
shareholders because the returns from its investment in MLD, as a
result of operating synergies and Frontier's experience in
cellular communications, will exceed the cost of the common stock
issued in the Merger.
In addition, it is assumed that on or prior to closing,
Rochester and Seller will execute and deliver to us the
representation certificate and letter relating to the Merger
which are attached hereto as Exhibits A and B, respectively.
Other Transactions
- ------------------
Drop-down. Following the Merger, Subsidiary's Parent may
transfer all the stock of MLD to Frontier Cellular Holding Inc.,
a corporation all the stock of which is owned by Subsidiary's
Parent.
Simultaneous acquisition of Dowdy. Simultaneously with the
acquisition of MLD, Subsidiary's Parent will also acquire all the
stock of Dowdy in an identical transaction. It is assumed that
on or prior to closing, Ronald E. Dowdy will execute and deliver
to us the representation letter relating to such acquisition
which is attached hereto as Exhibit C.
DISCUSSION
The Merger will be tax-free if it qualifies as a
"reorganization" as defined in section 368(a)(1) of the Code.
Section 368(a)(1)(B) defines the term "reorganization" to include
"the acquisition by one corporation, in exchange solely for all
or a part of its voting stock (or in exchange solely for all or a
part of the voting stock of a corporation which is in control of
the acquiring corporation), of stock of another corporation if,
immediately after the acquisition, the acquiring corporation has
control of such other corporation . . . ." In addition to
<PAGE>
<PAGE>
meeting the statutory definition, a transaction will qualify as a
tax-free reorganization only if it also satisfies certain
judicial and regulatory requirements. Such requirements are that
the transaction be undertaken for a valid business purpose, that
the former shareholders of the acquired corporation maintain
continuity of shareholder interest in the acquiring corporation,
and that the business enterprise of the acquired corporation be
continued. Treas. Reg. Section 1.368-1. As discussed hereafter,
the Merger will meet all requirements for treatment as a
reorganization within the meaning of section 368(a)(1)(B).
Initially, it is well-settled that the merger of a
transitory subsidiary, newly formed solely for the purpose of
effecting the merger, into a target corporation will be
disregarded for federal income tax purposes and the transaction
will be treated as a direct acquisition of the shares of the
target in exchange for the consideration provided to the target
shareholder. Rev. Rul. 90-95, 1990-2 C.B. 67 (merger of
transitory subsidiary into target for cash treated as "qualified
stock purchase" under section 338); Rev. Rul. 67-448, 1967-2 C.B.
144 (merger of transitory subsidiary into target for voting stock
treated as section 368(a)(1)(B) reorganization). In this case,
Subsidiary should be viewed as transitory and its existence
disregarded. As a result, Subsidiary's Parent will be treated as
acquiring all the MLD stock in exchange for Frontier voting
stock.
Control requirement. As the acquiring corporation,
Subsidiary's Parent must be in "control" of MLD immediately after
the acquisition. After the acquisition, Subsidiary's Parent will
own all the outstanding shares of MLD's only class of outstanding
stock, and such ownership will constitute control. See IRC
Section 368(c) ("control" means ownership of stock possessing 80%
of the total voting power and of 80% of the shares in each class
of nonvoting stock). As discussed further below, under section
368(a)(2)(C) satisfaction of the "control" requirement would not
be affected by a subsequent drop-down of the stock of MLD.
Accordingly, the "control" requirement will be met.
Solely-for-voting-stock requirement. The parenthetical in
section 368(a)(1)(B) permits the acquisition by Subsidiary's
Parent of the MLD stock to be made in exchange for voting stock
<PAGE>
<PAGE>
of Frontier, "a corporation which is in control of the acquiring
corporation." See also IRC Section 368(c).
However, the acquisition must be made solely in exchange for
Frontier stock. Under the Agreement, Seller's MLD Common Stock
will be converted solely into Frontier Common Stock, which will
be voting stock. Frontier's payment of its stock registration,
environmental audit, and NYPSC filing fees will not violate the
"solely" requirement as such expenses should be viewed as
legitimate transaction costs, and an acquiring corporation's
payment of such expenses is not considered disqualifying "boot."
See Rev. Rul. 73-54, 1973-1 C.B. 187 (the payment or assumption
by the acquiring corporation of the valid reorganization
expenses, such as legal and accounting expenses, appraisal fees,
administrative costs of the acquired corporation directly related
to the reorganization, security underwriting and registration
fees and expenses, transfer taxes (not imposed on the target
shareholder), and transfer agents' fees and expenses, does not
violate the "solely" requirement). The fact that Frontier will
register its stock with the SEC does not constitute a payment of
disqualifying boot. See Rev. Rul. 67-275, 1967-2 C.B. 142 (costs
paid by the acquiring corporation to register stock issued to the
target shareholders do not violate the "solely" requirement).
Accordingly, Subsidiary's Parent should be considered to
acquire all the outstanding stock of MLD solely in exchange for
Frontier voting stock.
Business purpose. The transaction is occurring between
unrelated parties based on arm's length negotiations. Frontier
is acquiring MLD to expand its cellular operations. Seller views
the Merger as an attractive opportunity to invest in Frontier
stock. Clearly, there is a valid business purposes for the
transaction.
Continuity of shareholder interest. Continuity of
shareholder interest requires that the stockholders of the
acquired corporation continue as owners of its business through
maintaining a substantial continuing stock interest in the
combined enterprise. The requirement is satisfied if the
shareholders of the acquired corporation receive, and do not at
the time of the transaction intend to sell or otherwise dispose
of, stock of the acquiring corporation representing more than
<PAGE>
<PAGE>
half the value of the target's stock. Here, it is assumed that
Seller and Ronald E. Dowdy will have both represented on Exhibits
B and C that they have no such plan or intention. Accordingly,
the continuity of shareholder interest requirement is satisfied.
Continuity of business enterprise. Continuity of business
enterprise is an extension of the continuity of shareholder
interest requirement, applied at the corporate level to ensure
that the former shareholders of the acquired corporation have a
continuing interest in its business. It requires that the
acquiring corporation continue the historic business of the
acquired corporation, or use a significant portion of the
acquired corporation's historic business assets in a business.
Treas. Reg. Section 1.368-1(d). Frontier will have represented
on Exhibit A that following the Merger, MLD will continue as 50%
general partner of MSCC, which will continue to operate its
cellular business. Thus, continuity of business enterprise will
be present.
Subsequent drop-down. As noted, following the acquisition,
Subsidiary's Parent may transfer the MLD stock to a subsidiary
wholly-owned by Subsidiary's Parent. Section 368(a)(2)(C) states
that a transaction that qualifies as a reorganization under
section 368(a)(1)(B) "shall not be disqualified by reason of the
fact that part or all of the assets or stock which were acquired
in the transaction are transferred to a corporation controlled by
the corporation acquiring such assets or stock." This provision
clearly permits Subsidiary's Parent to make the contemplated
drop-down. See LTR 9104026 (Oct. 30, 1990) (revoked based on a
change in circumstances by LTR 9151036 (Sep. 25, 1991)); LTR
8808044 (Nov. 30, 1987); LTR 8934019 (May 24, 1989); 9041086
(July 19, 1990). 1
OPINION
Based on our examination of the Agreement and the
Registration Statement, our understanding of the facts as set
- ---------------------
1 Under section 6110(j)(3) of the Code, private letter
rulings are not binding on the Internal Revenue Service and
cannot be cited as precedent. However, their rationale may be
authoritative, and the ruling does indicate the National Office's
acceptance of the rationale and results of the ruling.
<PAGE>
<PAGE>
forth above, the representations to be made to us by Frontier,
Seller and Ronald E. Dowdy in Exhibits A, B and C attached
hereto, and our reading of the Code, Treasury regulations issued
thereunder, caselaw, and administrative authorities, it is our
opinion that:
1. The merger of Subsidiary into MLD, resulting in
Subsidiary's Parent's acquisition of all the MLD Common Stock
solely in exchange for Frontier Common Stock, will qualify as a
reorganization under section 368(a)(1)(B) of the Code. Frontier,
Subsidiary's Parent, and MLD each will be a "party to a
reorganization" under Code section 368(b).
2. The transaction will not be disqualified from treatment
as a reorganization under Code section 368(a)(1)(B) by reason of
the fact that Subsidiary's Parent transfers the MLD Common Stock
to a corporation controlled by Subsidiary's Parent (Code section
368(a)(2)(C)).
3. Seller will not recognize any gain or loss on the
exchange of her MLD Common Stock solely for Frontier Common Stock
(Code section 354(a)(1)).
4. Seller's basis for the Frontier Common Stock received
in the exchange will equal the basis of the MLD Common Stock
surrendered therefor (Code section 358(a)(1)).
5. Seller's holding period for the Frontier Common Stock
received in the exchange will include her holding period for the
MLD Common Stock surrendered therefor, provided the MLD Common
Stock is held as a capital asset on the date of the exchange
(Code section 1223(1)).
Our opinion is effective as of the date hereof and will
remain effective as of the Effective Date of the Merger provided
that (i) the facts set forth above and in the Registration
Statement are true, accurate and complete in all material
respects as of the Effective Date of the Merger, (ii) Exhibits A,
B and C are executed and delivered to us at or prior to closing
and the representations therein are true, accurate and complete
in all material respects at the Effective Date of the Merger,
(iii) the Merger is completed in accordance with the present
terms of the Agreement, including all schedules and exhibits <PAGE>
<PAGE>
attached thereto, and (iv) there are no relevant changes in the
Code, Treasury Regulations, or other authorities.
This opinion is intended solely for the use of and may be
relied upon only by Mary L. Demetree, and is limited to the
matters specifically addressed in the numbered paragraphs above.
This opinion is not binding on the Internal Revenue Service.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement for the Merger and to the
reference to our firm appearing under the caption "Terms and
Conditions of the Proposed Merger -- Certain Federal Income Tax
Consequences" in the Proxy/Prospectus forming a part of the
Registration Statement; provided, however, that by so consenting
we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of
1933, as amended, or under the rules and regulations of the
Securities and Exchange Commission.
Very truly yours,
HOPKINS & SUTTER
BY: /s/ George R. Goodman
-----------------------
GEORGE R. GOODMAN
<PAGE>
<PAGE>
EXHIBIT A
Exhibit H to MLD
Merger Agreement
Frontier Corporation
Tax Representation Certificate
As provided in Section 7.9 of the Agreement With Respect to
a Merger of Rochester Subsidiary Twenty-Six Inc. into MLD
Minnesota 10, Inc. under the Name MLD Minnesota 10, Inc., the
undersigned, on behalf of Frontier Corporation ("Frontier"
(formerly Rochester Telephone Corporation)), Rochester Subsidiary
Twenty-Six Inc. ("Subsidiary"), and Frontier Telecommunications
Holding Inc. ("Subsidiary's Parent" (formerly Rochester Tel
Telecommunications Holding Corporation)), hereby represents and
agrees as follows with respect to the acquisition of MLD
Minnesota 10, Inc. ("MLD") by merger of Subsidiary into MLD (the
"Merger"):
1. Frontier owns and at the time of the Merger will own
all the outstanding stock and equity of Subsidiary's Parent.
2. Subsidiary has been formed solely for the purpose of
merging into MLD, and has not conducted and will not conduct any
activity other than those required for the Merger. As a result
of the Merger, Subsidiary's Parent will acquire all the
outstanding stock of MLD.
3. After the Merger, Subsidiary's Parent may transfer the
stock of MLD to a corporation all the outstanding stock and
equity of which is owned by Subsidiary's Parent, such controlled
corporation hereinafter being referred to as "Transferee."
4. There is no plan or intention for MLD to issue
additional shares of its stock that would result in Subsidiary's
Parent or Transferee ceasing to own all the outstanding stock and
equity of MLD.
5. Subsidiary's Parent has no plan or intention to issue
additional shares of its stock that would result in Frontier
<PAGE>
<PAGE>
ceasing to own all the outstanding stock and equity of
Subsidiary's Parent.
6. Transferee has no plan or intention to issue additional
shares of its stock that would result in Subsidiary's Parent
ceasing to own all the outstanding stock and equity of
Transferee.
7. There is no plan or intention to liquidate MLD; to
merge MLD with or into another corporation; to cause MLD to sell
or otherwise dispose of any of its assets, except for
dispositions made in the ordinary course of business; or to sell
or otherwise dispose of any of the MLD stock acquired in the
transaction, except for a transfer of MLD stock by Subsidiary's
Parent to Transferee.
8. Frontier has no plan or intention to liquidate
Subsidiary's Parent; to merge Subsidiary's Parent with or into
another corporation; to cause Subsidiary's Parent to sell or
otherwise dispose of any of its assets, except for dispositions
made in the ordinary course of business and a transfer of MLD
stock to Transferee; or to sell or otherwise dispose of any of
the stock of Subsidiary's Parent.
9. Subsidiary's Parent has no plan or intention to
liquidate Transferee; to merge Transferee with or into another
corporation; to cause Transferee to sell or otherwise dispose of
any of its assets, except for dispositions made in the ordinary
course of business; or to sell or otherwise dispose of any of the
stock of Transferee.
10. Except for fractional share interests, Frontier has no
plan or intention to redeem or otherwise reacquire any of its
stock to be issued in the transaction.
11. Frontier, Subsidiary's Parent, MLD and Mary L.
Demetree ("Seller") will each pay their respective expenses, if
any, incurred in connection with the transaction.
12. At the time of the transaction, Subsidiary's Parent
will not have outstanding any warrants, options, convertible
<PAGE>
<PAGE>
securities, or any other type of right pursuant to which any
person could acquire stock in Subsidiary's Parent that, if
exercised or converted, would cause Frontier to cease to own all
the outstanding stock and equity of Subsidiary's Parent.
13. At the time of the transaction, Transferee will not
have outstanding any warrants, options, convertible securities,
or any other type of right pursuant to which any person could
acquire stock in Transferee that, if exercised or converted,
would cause Subsidiary's Parent's to cease to own all the
outstanding stock and equity of Transferee.
14. Neither Frontier, Subsidiary's Parent, nor Transferee
owns, directly or indirectly, nor have they owned during the past
five years, directly or indirectly, any stock of MLD.
15. Following the transaction, MLD will continue as a 50%
general partner in the Minnesota Southern Cellular Telephone
Company, which will continue to conduct its cellular business.
16. None of Frontier, Subsidiary's Parent or Transferee is
an investment company as defined in Section 368(a)(2)(F)(iii) and
(iv) of the Internal Revenue Code.
17. The payment of cash in lieu of fractional shares of
Frontier stock is solely for the purpose of avoiding the expense
and inconvenience to Frontier of issuing fractional shares and
does not represent separately bargained-for consideration. The
total cash consideration that will be paid in the Merger to
Seller instead of issuing fractional shares of Frontier stock
will not exceed one percent of the total consideration that will
be issued in the Merger to Seller in exchange for her shares of
MLD stock. Any fractional share interests of Seller will be
aggregated, and Seller will not receive cash in an amount equal
to or greater than the value of one full share of Frontier stock.
Frontier represents that the foregoing statements are now, and as
of the closing of the Merger will be, true, accurate and
complete, and acknowledges and agrees that such representations
are being relied upon by Seller and her counsel, Hopkins &
Sutter, in the determination that the acquisition of MLD will <PAGE>
<PAGE>
qualify as a tax-free reorganization as defined in Section
368(a)(1)(B) of the Code.
Date: Frontier Corporation
------------------
By:
-------------------
Frontier Telecommunications
Holding Inc.
By:
----------------------
<PAGE>
<PAGE>
EXHIBIT B
Mary L. Demetree
3348 Edgewater Drive
Orlando, Florida 32804
Hopkins & Sutter
Three First National Plaza
Chicago, IL 60602
Re: Agreement With Respect to a Merger of Rochester
Subsidiary Twenty-Six Inc. into MLD Minnesota 10, Inc.
under the Name MLD Minnesota 10, Inc. (the "Agreement")
Gentlemen:
This letter is being furnished to you in connection with the
preparation of your tax opinion to be included as an exhibit to
the Form S-4 Registration Statement to be filed by Frontier
Corporation ("Frontier") under the Securities Act of 1933 for the
issuance of Frontier common stock pursuant to the merger of
Rochester Subsidiary Twenty-Six Inc. ("Subsidiary") with and into
MLD Minnesota 10, Inc. ("MLD"), by which Frontier
Telecommunications Holding Inc. ("Subsidiary's Parent"), a
wholly-owned subsidiary of Frontier, will acquire all the
outstanding stock of MLD (the "Transaction"). Capitalized terms
used herein have the meaning defined in the Agreement.
The following facts and representations are being made
available to you for use in the preparation of your opinion, and
we understand that you will be relying on such facts and
representations in delivering your opinion:
1. The fair market value of the Frontier stock received by
Mary L. Demetree ("Seller") in the Transaction will be
approximately equal to the fair market value of the MLD stock
surrendered in the Transaction.
2. Seller has no plan or intention to sell, exchange, or
otherwise dispose of a number of shares of Frontier stock
<PAGE>
<PAGE>
received in the Transaction that would reduce her ownership of
Frontier stock to a number of shares having a value, as of the
date of the Transaction, of less than 50% percent of the value of
all the formerly outstanding stock of MLD as of the same date.
3. MLD and Seller will pay their respective expenses, if
any, incurred in connection with the Transaction.
4. MLD has no plan or intention to issue additional shares
of its stock.
5. At the time of the Transaction, MLD will not have
outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire
stock in MLD.
7. Frontier does not own, nor has it owned during the past
five years, directly or indirectly, any stock of MLD.
8. MLD is not an investment company as defined in section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986,
as amended (the "Code"). 1
- ----------------------
1 An "investment company" is defined to mean a regulated
investment company, a real estate investment trust, or a
corporation 50 percent or more of the value of whose total assets
are stock and securities and 80 percent or more of the value of
whose total assets are held for investment. MLD is not an
investment company because its interest in the Minnesota Southern
Cellular Telephone Company is an active business rather than a
passive investment and because MLD has a 50 percent interest in
the partnership's income and capital, and in reliance on Prop.
Reg. Section 1.368-4, under which MLD's ownership of the
partnership interest is disregarded and MLD is considered to own
a ratable share of each partnership asset.
<PAGE>
<PAGE>
9. On the date of the Transaction, the fair market value
of the assets of MLD will exceed the sum of its liabilities plus
the liabilities, if any, to which the assets are subject.
10. No liabilities of Seller will be assumed or paid by
Frontier in the Transaction, nor will any shares of MLD stock be
subject to any liabilities at the time of the Transaction.
Seller will not enter into any employment, consulting, non-
competition or other agreement pursuant to which Seller could
receive any payments or other consideration from Frontier.
11. The amount, if any, of Additional Capital
Contributions as defined in Article 5.14 of the Agreement made by
Seller to MLD will be a multiple of twenty-three (23), i.e., will
be evenly divisible by twenty-three (23), so that there will be
no payment of cash in lieu of fractional shares in the
Transaction.
Seller represents that the foregoing statements will be
true, accurate and complete as of the Effective Date of the
Merger. Seller acknowledges and agrees that in rendering your
opinion you are relying on the foregoing representations as well
as the representations made by Frontier in the Tax Representation
Certificate provided pursuant to Section 7.12 of the Agreement,
and that your tax opinion will not apply if any of such
representations are not true, accurate and complete in all
respects.
Date: Very truly yours,
------------------
MLD Minnesota 10, Inc.
By:
---------------------
Mary L. Demetree, as Seller
---------------------------
<PAGE>
<PAGE>
EXHIBIT C
Ronald E. Dowdy
One Dowdy Plaza
7209 International Drive
Orlando, Florida 32819
Hopkins & Sutter
Three First National Plaza
Chicago, IL 60602
Re: Agreement With Respect to a Merger of Rochester
Subsidiary Twenty-Seven Inc. into Dowdy Minnesota 10, Inc.
under the Name Dowdy Minnesota 10, Inc. (the "Agreement")
Gentlemen:
This letter is being furnished to you in connection with the
preparation of your tax opinion to be included as an exhibit to
the Form S-4 Registration Statement to be filed by Frontier
Corporation ("Frontier") under the Securities Act of 1933 for the
issuance of Frontier common stock pursuant to the merger of
Rochester Subsidiary Twenty-Seven Inc. ("Subsidiary") with and
into Dowdy Minnesota 10, Inc. ("Dowdy"), by which Frontier
Telecommunications Holding Inc. ("Subsidiary's Parent"), a
wholly-owned subsidiary of Frontier, will acquire all the
outstanding stock of Dowdy (the "Transaction"). Capitalized
terms used herein have the meaning defined in the Agreement.
The following facts and representations are being made
available to you for use in the preparation of your opinion, and
we understand that you will be relying on such facts and
representations in delivering your opinion:
1. The fair market value of the Frontier stock received by
Ronald E. Dowdy ("Seller") in the Transaction will be
approximately equal to the fair market value of the Dowdy stock
surrendered in the Transaction.
2. Seller has no plan or intention to sell, exchange, or
otherwise dispose of a number of shares of Frontier stock
received in the Transaction that would reduce his ownership of
<PAGE>
<PAGE>
Frontier stock to a number of shares having a value, as of the
date of the Transaction, of less than 50% percent of the value of
all the formerly outstanding stock of Dowdy as of the same date.
3. Dowdy and Seller will pay their respective expenses, if
any, incurred in connection with the Transaction.
4. Dowdy has no plan or intention to issue additional
shares of its stock.
5. At the time of the Transaction, Dowdy will not have
outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire
stock in Dowdy.
7. Frontier does not own, nor has it owned during the past
five years, directly or indirectly, any stock of Dowdy.
8. Dowdy is not an investment company as defined in
section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code
of 1986, as amended (the "Code"). 1
9. On the date of the Transaction, the fair market value
of the assets of Dowdy will exceed the sum of its liabilities
plus the liabilities, if any, to which the assets are subject.
- ----------------------
1 An "investment company" is defined to mean a regulated
investment company, a real estate investment trust, or a
corporation 50 percent or more of the value of whose total assets
are stock and securities and 80 percent or more of the value of
whose total assets are held for investment. Dowdy is not an
investment company because its interest in the Minnesota Southern
Cellular Telephone Company is an active business rather than a
passive investment and because Dowdy has a 50 percent interest in
the partnership's income and capital, and in reliance on Prop.
Reg. Section 1.368-4, under which Dowdy's ownership of the
partnership interest is disregarded and Dowdy is considered to
own a ratable share of each partnership asset.
<PAGE>
<PAGE>
10. No liabilities of Seller will be assumed or paid by
Frontier in the Transaction, nor will any shares of Dowdy stock
be subject to any liabilities at the time of the Transaction.
Seller will not enter into any employment, consulting, non-
competition or other agreement pursuant to which Seller could
receive any payments or other consideration from Frontier.
11. The amount, if any, of Additional Capital Contributions
as defined in Article 5.14 of the Agreement made by Seller to
Dowdy will be a multiple of twenty-three (23), i.e., will be
evenly divisible by twenty-three (23), so that there will be no
payment of cash in lieu of fractional shares in the Transaction.
Seller represents that the foregoing statements will be
true, accurate and complete as of the Effective Date of the
Merger. Seller acknowledges and agrees that in rendering your
opinion you are relying on the foregoing representations as well
as the representations made by Frontier in the Tax Representation
Certificate provided pursuant to Section 7.12 of the Agreement,
and that your tax opinion will not apply if any of such
representations are not true, accurate and complete in all
respects.
Date: Very truly yours,
------------------
Dowdy Minnesota 10, Inc.
By:
--------------------------
Ronald E. Dowdy, as Seller
--------------------------
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF FRONTIER CORPORATION
AS OF January 23, 1995
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
- ------------------ ------------- -------------------
Frontier Communications of AL Monroeville Telephone
Alabama, Inc. Company, Inc.;
(A subsidiary of Frontier
Frontier Subsidiary Telco Inc.)
Frontier Communications of AL Lamar County Telephone
Lamar County, Inc. Company, Inc.;
(A subsidiary of Frontier
Frontier Subsidiary Telco Inc.)
Frontier Communications of AL Southland Telephone
the South, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Montel Communications, Inc. AL Montel Communications,
(A subsidiary of Frontier Inc.
Communications of Alabama, Inc.)
Southland Rural Cellular AL Southland Rural
Company, Inc. Cellular Company, Inc.
(A subsidiary of Frontier
Communications of the South, Inc.)
RCI Long Distance Ontario, RCI Long Distance
Canada Ltd. Canada Canada Ltd.
(A subsidiary of
Frontier Telecommunications Inc.)
Binghamton MSA Corp. DE Binghamton MSA Corp.
(A subsidiary of
Frontier Cellular Holding Inc.)
Budget Call Long Distance, DE Budget Call Long
Inc. Distance, Inc.
(A subsidiary of Frontier
Communications International Inc.)
<PAGE>
<PAGE>
Frontier Cellular DE Rochester Tel Cellular
Holding Inc. Holding Corporation;
(A subsidiary of Frontier RTCHC; FCHI
Telecommunications Holding Inc.
Frontier Communications DE RCI Long Distance,
International Inc. Inc.; Budget Call;
(A subsidiary of Mid Atlantic
Frontier Telecommunications Inc.) Telecom; Frontier
Frontier Communications of DE RCI Long Distance New
New England, Inc. England, Inc.; Long
(A subsidiary of Distance North; LDN;
Frontier Telecommunications Inc.) Mid Atlantic Telecom;
Frontier
Frontier Communications of DE Frontier Communications
Rochester, Inc. F-Com
(A subsidiary of Frontier
Corporation)
Frontier Information DE Distributed Solutions;
Technologies, Inc. DSI; FIT
(A subsidiary of Frontier
Corporation)
Frontier InfoServices Inc. DE Visions Publishing
(A subsidiary of Inc.; Visions Inc.;
Frontier Subsidiary Telco Inc.) Frontier InfoServices
Frontier Long Distance of DE Visions Long Distance
America, Inc. America Inc; Breezewood
(A subsidiary of Tel Long Distance;
Frontier Subsidiary Telco Inc.) Canton Tel Long
Distance; Vista Tel
Long Distance; C,C&S
Tel Long Distance;
St. Croix Tel Long
Distance; Statesboro
Tel Long Distance;
Frontier
Frontier Network Systems Inc. DE Rotelcom Inc.; Anixter-
(A subsidiary of Rotelcom; Rotelcom
Frontier Telecommunications Inc.) Network Systems; SGT
Business Systems;
Frontier
<PAGE>
<PAGE>
Frontier Subsidiary DE Rochester Tel
Telco Inc. Subsidiary Telco, Inc.;
(A subsidiary of
Frontier Corporation) RTSTI; FSTI
Frontier Telecommunications DE Rochester Tel
Inc. Telecommunications
(A subsidiary of Frontier Corporation; RTTC; FTI
Telecommunications Holding Inc.)
Frontier Telecommunications DE Rochester Tel
Holding Inc. Telecommunications
(A subsidiary of Frontier Holding Corporation;
Corporation) RTTHC; FTHI
NY RSA 4 Inc. DE NY RSA 4 Inc.
(A subsidiary of
Frontier Cellular Holding Inc.)
PAGECO, Inc. DE PAGECO, Inc.
(A subsidiary of
Frontier Cellular Holding Inc.)
Rochester Subsidiary D Rochester Subsidiary
Twenty-Eight, Inc. Twenty-Eight, Inc.
(A subsidiary of Frontier
Telecommunications Inc.)
RTC Main Street, Inc. DE RTC Main Street, Inc.
(A subsidiary of
Frontier Corporation)
RTMC Holding, Inc. DE RTMC Holding, Inc.
(A subsidiary of
Frontier Cellular Holding Inc.)
Rochester Holding Corporation DE Rochester Holding
(A subsidiary of Corporation
Frontier Corporation)
Rochester Tel Mobile RSA 2, DE Rochester Tel Mobile
Inc. RSA 2, Inc.
(A subsidiary of
Frontier Cellular Holding Inc.)
<PAGE>
<PAGE>
Rochester Telephone DE RTMC, Inc.
Mobile Communications, Inc.
(A subsidiary of
Frontier Cellular Holding Inc.)
Rochester Tel Subsidiary DE Rochester Tel
Capital Services Inc. Subsidiary Capital
(A subsidiary of Services Inc.
Frontier Corporation)
Rochester Tel Subsidiary FL Rochester Tel
Twenty-Six, Inc. Subsidiary Twenty-Six,
(A subsidiary of Frontier Inc.
Telecommunications Holding Inc.)
Rochester Tel Subsidiary FL Rochester Tel
Twenty-Seven, Inc. Subsidiary Twenty-
(A subsidiary of Frontier Seven, Inc.
Telecommunications Holding Inc.)
Fairmount Cellular Inc. GA Fairmount Cellular Inc.
(A subsidiary of Frontier
Communications of Fairmount,Inc.)
Frontier Communications of GA Fairmount Telephone
Fairmount, Inc. Company, Inc.;
(A subsidiary of Frontier
Frontier Subsidiary Telco Inc.)
Frontier Communications of GA Statesboro Telephone Georgia,
Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Telecommunications IA Vista Telephone of Iowa,
Inc. Company of Iowa;
(A subsidiary of Frontier
Frontier Subsidiary Telco Inc.)
DePue Communications, Inc. IL DePue Communications, (A
subsidiary of Frontier Inc.
Communications of DePue, Inc.)
Frontier Communications - IL Midland Telephone Midland,
Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
<PAGE>
<PAGE>
Frontier Communications - IL Prairie Telephone
Prairie, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications - IL Schuyler Telephone Schuyler,
Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of IL DePue Telephone Company
DePue, Inc. Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of IL Inland Telephone Illinois,
Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of IL Lakeside Telephone Lakeside,
Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of IL Mt. Pulaski Telephone Mt.
Pulaski, Inc. and Electric Company; (A
subsidiary of Mt. Pulaski Telephone Frontier
Subsidiary Telco Inc.) Company; Frontier
Frontier Communications of IL Orion Telephone
Orion, Inc. Exchange Association;
(A subsidiary of Frontier
Frontier Subsidiary Telco Inc.)
O. T. Cellular Telephone IL O. T. Cellular
Company Telephone Company
(A subsidiary of
Frontier Communications of
Orion, Inc.)
Schuyler Cellular, Inc. IL Schuyler Cellular, Inc.
(A subsidiary of Frontier
Communications - Schuyler, Inc.)
<PAGE>
<PAGE>
Frontier Communications of IN Citizens Telephone
Indiana, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of IN Thorntown Telephone
Thorntown, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
TDCI, Ltd. IN Thorntown Development
(A subsidiary of Company, Inc.; TDCI,
Frontier Communications of Ltd.
Thorntown, Inc.)
C, C & S Service Corp. MI C, C & S Service Corp.
(A subsidiary of
C, C & S Systems, Inc.)
C, C & S Systems, Inc. MI C, C & S Systems, Inc.
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of MI C, C & S Telco, Inc.;
Michigan, Inc. Frontier
(A subsidiary of
C, C, & S Systems, Inc.)
Ontonagon Communications, Inc. MI Ontonagon
(A subsidiary of Communications, Inc.
Ontonagon County Telephone Company)
Ontonagon County Telephone MI Ontonagon County
Company Telephone Company
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Super Com, Inc. MI Super Com, Inc.
(A subsidiary of Ontonagon
County Telephone Company)
Frontier Communications MN Vista Telephone Company
of Minnesota, Inc. of Minnesota; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
<PAGE>
<PAGE>
Frontier Telemanagement Inc. MN Visions Telemanagement
(A subsidiary of Services, Inc.;
Frontier Subsidiary Telco Inc.) Frontier Telemanagement
Frontier Communications of MS Mid-South Telephone
Mississippi, Inc. Company, Inc.;
(A subsidiary of Frontier
Frontier Subsidiary Telco Inc.)
Mid-South Cablevision MS Mid-South Cablevision
Company, Inc. Company, Inc.
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of NY AuSable Valley
AuSable Valley, Inc. Telephone Company;
(A subsidiary of Frontier
Frontier Corporation)
Frontier Communications of NY Highland Telephone
New York, Inc. Company; Frontier
(A subsidiary of
Frontier Corporation)
Frontier Communications of NY Seneca-Gorham Telephone
Seneca-Gorham, Inc. Corporation; Frontier
(A subsidiary of
Frontier Corporation)
Frontier Communications of NY Sylvan Lake Telephone
Sylvan Lake, Inc. Company, Inc.; Frontier
(A subsidiary of
Frontier Corporation)
Frontier Long Distance of NY Visions Long Distance
New York, Inc. New York Inc.;
(A subsidiary of Highland Tel Long
Frontier Subsidiary Telco Inc.) Distance; Sylvan Lake
Tel Long Distance;
AuSable Valley Tel Long
Distance; Frontier
New York Independent Cellular NY NYICS
Systems, Inc. (Part of Utica-Rome
(A subsidiary of Cellular Partnership)
Frontier Cellular Holding Inc.)
<PAGE>
<PAGE>
Oneida County Cellular NY Oneida County Cellular
Systems, Inc. (Part of Utica-Rome
(A subsidiary of Cellular Partnership)
Frontier Cellular Holding Inc.)
Phoncom Inc. NY Phoncom Inc.
(A subsidiary of (Part of Utica-Rome
Frontier Cellular Holding Inc.) Cellular Partnership)
Rochester Telephone Corp. NY Rochester Telephone
(A subsidiary of Corp.; RTC
Frontier Corporation)
Taconic Long Distance NY Taconic Long Distance
Service Corp. Service Corp.
(A subsidiary of
Frontier Telecommunications Inc.)
Vernon Cellular Inc. NY Vernon Cellular Inc.
(A subsidiary of Part of the Utica-Rome
Frontier Cellular Holding Inc.) Cellular Partnership
Enterprise Marketing Services PA Enterprise Marketing
Inc. Services Inc.
(A subsidiary of Frontier
Communications of Pennsylvania, Inc.)
Frontier Communications of PA Breezewood Telephone
Breezewood, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of PA Canton Telephone
Canton, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of PA Lakewood Rural Lakewood,
Inc. Telephone Company;
(A subsidiary of Lakewood Telephone
Frontier Subsidiary Telco Inc.) Company; Frontier
Frontier Communications of PA Oswayo River Telephone
Oswayo River, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
<PAGE>
<PAGE>
Frontier Communications of PA Enterprise Telephone
Pennsylvania, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of VA Mid Atlantic Telecom, the Mid
Atlantic, Inc. Inc.; Frontier
(A subsidiary of Frontier
Telecommunications Inc.)
Frontier Communications - WI Lakeshore Telephone
Lakeshore, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications - WI St. Croix Telephone
St. Croix, Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of WI Mondovi Telephone Mondovi,
Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of WI Viroqua Telephone Viroqua,
Inc. Company; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
Frontier Communications of WI Urban Telephone Wisconsin,
Inc. Corporation; Frontier
(A subsidiary of
Frontier Subsidiary Telco Inc.)
New Richmond Cable WI New Richmond Cable
Company, Inc. Company, Inc.
(A subsidiary of Frontier
Communications - St. Croix, Inc.)
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on
Form S-4 of our report dated January 17, 1994, which appears on
page 32 of the 1993 Annual Report to the shareowners of Frontier
Corporation, which is incorporated by reference in Frontier
Corporation's Annual Report on Form 10-K (as amended) for the
year ended December 31, 1993. We also consent to the
incorporation by reference of our report on the Financial
Statement Schedules, which appears on page 23 of such Annual
report on Form 10-K (as amended). We also consent to the
incorporation by reference of our report dated January 16, 1995
which appears on page 28 of the current report on Form 8-K dated
February 13, 1995.
/S/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Rochester, New York
February 15, 1995
<PAGE>
EXHIBIT 23(B)
-------------
CONSENTS OF THOMAS P. OSBORNE
AND ARTHUR ANDERSEN LLP
THOMAS P. OSBORNE
CERTIFIED PUBLIC ACCOUNTANTS
601 North Ferncreek Avenue
P.O. Box 531039
Orlando, Florida 32853-1039
(407) 894-1970
Board of Directors
MLD Minnesota 10, Inc.
Orlando, Florida
Consent of Independent Accountant
I hereby consent to the use in the Prospectus constituting part
of this Registration Statement of Form S-4 of Frontier
Corporation of my report dated June 27, 1994 relating to the
financial statements of MLD Minnesota 10, Inc., which appear in
such prospectus. I also consent to the references to me under
the heading "Experts" in such prospectus.
/s/ Thomas P. Osborne
- ---------------------
Thomas P. Osborne
Orlando, Florida
February 10, 1995
<PAGE>
<PAGE>
THOMAS P. OSBORNE
CERTIFIED PUBLIC ACCOUNTANTS
601 North Ferncreek Avenue
P.O. Box 531039
Orlando, Florida 32853-1039
(407) 894-1970
To the Partners
Minnesota Southern Cellular Telephone Company
Orlando, Florida
Consent of Independent Accountant
I hereby consent to the use in the Prospectus constituting part
of this Registration Statement of Form S-4 of Frontier
Corporation of my report dated June 27, 1994 relating to the
financial statements of Minnesota Southern Cellular Telephone
Company, which appear in such prospectus. I also consent to the
references to me under the heading "Experts" in such prospectus.
/s/ Thomas P. Osborne
- ---------------------
Thomas P. Osborne
Orlando, Florida
February 10, 1995
<PAGE>
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use
of our reports dated March 17, 1992 and March 16, 1993 (and all
references to our Firm) included in or made a part of this Form
S-4 Registration Statement dated February 13, 1995.
/s/ Arthur Andersen LLP
- -----------------------
Arthur Andersen LLP
Orlando, Florida,
February 10, 1995
<PAGE>
Exhibit 24(a)
POWER OF ATTORNEY
The undersigned directors and/or officers of Rochester
Telephone Corporation, a New York transportation corporation
("Company"), hereby constitute and appoint Ronald L. Bittner,
Louis L. Massaro and Josephine S. Trubek, or any one of them, his
or her true and lawful attorneys and agents, each with full power
and authority to act as such without the other, to do any and all
acts and things and to execute any and all instruments which any
of said attorneys and agents may deem necessary or advisable in
connection with this Company's indirect acquisition of one
hundred percent (100%) of the equity partnership interests in the
Minnesota Southern Cellular Telephone Company ("MSCTC") to enable
this Company to comply with the Securities Act of 1933, as
amended, and with any regulations, rules or requirements of the
Securities and Exchange Commission thereunder in connection with
the registration, or safe harbor exemption from registration, as
the case may be, under said Act of the Company's $1.00 par value
Common Stock, including specifically, but without limitation of
the foregoing, power and authority, to sign the names of the
undersigned to the Registration Statement(s) on Form S-4 and/or
on Form S-3 or such other forms as may be appropriate to be filed
with the Securities and Exchange Commission in respect of the
Agreements with Respect to a Merger or other definitive
acquisition agreements whereby MSCTC will be acquired by the
Company or a subsidiary, and to any amendment or amendments
thereto filed with said Commission under said Act in such
connection, the undersigned hereby ratifying and confirming all
that said attorneys and agents, or any of them shall do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, this instrument has been signed and
delivered by the undersigned.
/s/ Patricia C. Barron
-------------------------
Patricia C. Barron
/s/ Ronald L. Bittner
-------------------------
Ronald L. Bittner<PAGE>
<PAGE>
/s/ John R. Block
-------------------------
John R. Block
/s/ Brenda E. Edgerton
-------------------------
Brenda E. Edgerton
/s/ Jairo A. Estrada
-------------------------
Jairo A. Estrada
/s/ Daniel E. Gill
-------------------------
Daniel E. Gill
/s/ Alan C. Hasselwander
-------------------------
Alan C. Hasselwander
/s/ Douglas H. McCorkindale
-------------------------
Douglas H. McCorkindale
/s/ Leo J. Thoms, Ph.D.
-------------------------
Leo J. Thomas, Ph.D.
<PAGE>
Exhibit 24(b)
FRONTIER CORPORATION
SECRETARY'S CERTIFICATE
I, the undersigned Barbara J. LaVerdi, Assistant Secretary of
Frontier Corporation (formerly Rochester Telephone Corporation),
a New York corporation, do hereby certify that the following
resolutions were approved via a Unanimous Written Consent of the
Executive Committee of the Board of Directors of Rochester
Telephone Corporation as of July 22, 1994, and I further certify
that such resolutions are still in full force and effect.
RESOLVED: That this Executive Committee hereby approves and
authorizes the indirect acquisition of 100% of the equity
partnership interests in the Minnesota Southern Cellular
Telephone Company ("MSCTC"), subject to the conditions of the
Letter of Intent dated as of January 26, 1994, between this
Corporation and the two partners of MSCTC, and the issuance to
the sellers of 866,434 newly issued shares of the $1.00 par value
Common Stock of this Corporation (as may be adjusted for certain
extraordinary events) together with (i) an additional amount of
such Common Stock as is equal to the additional capital
contributions of the sellers between the date of the definitive
agreement and the closing, divided by 23, and (ii) cash
infusions, as appropriate, to make full payment of the debt owed
to NovAtel, and this Committee authorizes and directs and fully
empowers the proper officers of this Corporation to do all
things, including but not limited to granting them full authority
to negotiate all relevant provisions of and to execute all
agreements, applications, petitions and filings on behalf of this
Corporation as they, in their sole discretion and with advice of
counsel, shall deem to be necessary or advisable and proper in
order to effect such acquisition; and it is
FURTHER RESOLVED: That this Committee hereby authorizes the
preparation of a registration statement or registration
statements on Form S-4 and/or Form S-3, or such other forms as
shall then be deemed appropriate to be filed for registration, or
exemption from registration, under the Securities Act of 1933, as
amended, of this Corporation's $1.00 par value Common Stock
("Registration Statement(s)"), in an amount sufficient to acquire
MSCTC and, when a majority of the members of the Board of
Directors have executed the necessary signature pages to such
<PAGE>
<PAGE>
Registration Statement(s), this Committee hereby authorizes and
directs Ronald L. Bittner, its President, Louis L. Massaro, its
Corporate Vice President and Treasurer, and Josephine S. Trubek,
its Corporate Secretary, ("The Officers") and each of them (with
full power to each of them to act alone), to execute and to file
with the Securities and Exchange Commission ("SEC"), such
Registration Statement(s), or exemptions from registration, and
any amendments or supplements, including post-effective
amendments to such Registration Statement(s) as they, in their
discretion, shall deem necessary, and to do all such other acts
and things as they, in their discretion, shall deem necessary in
connection with the registration, or exemption therefrom,
including expending funds of this Corporation; and it is
FURTHER RESOLVED: That each officer and director of this
Corporation who may be required or permitted to execute such
Registration Statement(s) or any amendment thereto is hereby
authorized to execute a power of attorney appointing The Officers
and each of them severally, his/her true and lawful attorneys or
attorney to execute in his/her name, place and stead in any such
capacity such Registration Statement(s) and any and all
amendments and supplements thereto, and to file the same with the
SEC, each of said attorneys to have power to act with or without
the others and to have full power and authority to perform in the
name and on behalf of each of the said officers and directors
every act necessary or advisable to be done as fully as, and to
do to the same extent that, each officer or director might or
could do in person; and it is
FURTHER RESOLVED: That this Committee hereby authorizes and
directs The Officers to prepare, execute and deliver, file and
record all instruments, documents and other papers, and to do all
such other acts and things as they, in their discretion may deem
necessary to effect the intent of the foregoing resolutions,
including, but not limited to, filing an application for listing
the Common Stock to be registered with the New York Stock
Exchange and filing all documents necessary to qualify the Common
Stock to be registered for sale, or exempt it from registration,
in each of the United States of America in which any such
registration is required.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
seal of said corporation this 23rd day of December, 1994.
/s/ Barbara J. LaVerdi
----------------------
Barbara J. LaVerdi
Assistant Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FRONTIER CORPORATION'S FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000084567
<NAME> FRONTIER CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 317,137
<SECURITIES> 9,047
<RECEIVABLES> 168,542
<ALLOWANCES> 0
<INVENTORY> 8,585
<CURRENT-ASSETS> 528,507
<PP&E> 1,759,677
<DEPRECIATION> 789,813
<TOTAL-ASSETS> 1,760,951
<CURRENT-LIABILITIES> 201,605
<BONDS> 578,600
<COMMON> 73,161
0
22,777
<OTHER-SE> 727,186
<TOTAL-LIABILITY-AND-EQUITY> 1,760,951
<SALES> 0
<TOTAL-REVENUES> 985,492
<CGS> 18,850
<TOTAL-COSTS> 762,228
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,594
<INCOME-PRETAX> 173,777
<INCOME-TAX> 63,843
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (7,197)
<CHANGES> 0
<NET-INCOME> 102,737
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 1.40
</TABLE>
<PAGE>
EXHIBIT 99
STATE OF FLORIDA
Department of State
I certify that the attached is a true and correct copy of the
Articles of Incorporation of MLD MINNESOTA 10, INC., a
corporation organized under the Laws of the State of Florida,
filed on August 17, 1990, as shown by the records of this office.
The document number of this corporation is L94088.
Given under my hand and the Great Seal of the State of Florida at
Tallahassee, the Capital, this the 17th day of August, 1990.
(Great Seal of the State
of Florida here)
Jim Smith
Secretary of State
<PAGE>
<PAGE>
ARTICLES OF INCORPORATION
OF
MLD MINNESOTA 10, INC.
The undersigned, being of legal age and desiring to form a
corporation (hereinafter referred to as the "Corporation")
pursuant to the provisions of the Florida General Corporation
Act, as amended (such Act, as amended from time to time), in
hereinafter referred to as the "Act"), executes the following
Articles of Incorporation.
ARTICLE I
Name
------------
The name of this corporation is MLD MINNESOTA 10, INC.
ARTICLE II
Commencement of Corporate Existence
------------------------------------
This Corporation shall commence its existence immediately
upon the filing of these Articles of Incorporation and shall have
perpetual duration unless sooner dissolved according to law.
ARTICLE III
Purpose and General Powers
----------------------------
The general purpose of this Corporation shall be the
transaction of any or all lawful business for which corporations
may be incorporated under the Act. This Corporation shall have
all of the powers enumerated in the Act and all such other powers
as are not specifically prohibited to corporations for profit
under the laws of the State of Florida.
<PAGE>
<PAGE>
ARTICLE IV
Capital Stock
--------------
A. Number and Class of Shares Authorized: Par Value.
--------------------------------------------------
The aggregate number of shares which the Corporation shall
have authority to issue is 1,000,000 shares of common stock
having a par value of $.01 per share, which shall be designated
"Common Stock."
B. Voting Rights
-------------
The Common Stock shall possess and exercise exclusive voting
rights and at all meetings of the shareholders each record holder
of such stock shall be entitled to one vote for each share held.
Shareholders holding Common Stock shall have no cumulative voting
rights in any election of directors of the Corporation.
C. No Preemptive Rights
--------------------
No holder of shares of any class of the capital stock of the
Corporation shall have as a matter of right any preemptive or
preferential right to subscribe for, purchase, receive, or
otherwise acquire any part of any new or additional issue of
stock of any class, whether now or hereafter authorized, or any
bonds, debentures, notes, or other securities of the Corporation,
whether or not convertible into shares of stock of the
Corporation.
ARTICLE V
Initial Registered Office and Agent
------------------------------------
The initial registered office of this Corporation shall be
located at the City of Orlando, County of Orange, and State of
Florida, and its address there shall be 3348 Edgewater Drive,
Orlando, Florida 32804, and the initial registered agent of the
Corporation at that address shall be Mary L. Demetree. The
Corporation may change its registered agent or the location of
its registered office, or both, from time to time without
amendment of these Articles of Incorporation.
<PAGE>
<PAGE>
ARTICLE VI
Initial Board of Directors
---------------------------
The initial Board of Directors of the Corporation shall
consist of one director. The name and street address of the
initial director of this Corporation is:
Mary L. Demetree
3348 Edgewater Drive
Orlando, FL 32804
The number of Directors of this Corporation shall be the
number from to time fixed by the Shareholders, or by the
Directors, in accordance with the terms and conditions of the
Bylaws, but at no time shall said number of Directors be less
than one.
ARTICLE VII
Incorporator
---------------
The name and street address of the person signing these
Articles of Incorporation as Incorporator is:
Mary L. Demetree
3348 Edgewater Drive
Orlando, FL 32804
ARTICLE VIII
Bylaws
------------
The power to adopt, alter, amend or repeal bylaws shall be
vested in the Board of Directors.
ARTICLE IX
Amendment
-----------
This Corporation reserves the right to amend or repeal any
provisions contained in these Articles of Incorporation, or any
amendment hereto, and any right conferred upon the Shareholders
is subject to this reservation.
<PAGE>
<PAGE>
ARTICLE X
Headings and Captions
-----------------------
The headings or captions of these various Articles of
Incorporation are inserted for convenience and none of them shall
have any force or effect, and the interpretation of the various
Articles shall not be influenced by any of said headings or
captions.
IN WITNESS WHEREOF, the undersigned does hereby make and
file these Articles of Incorporation, declaring and certifying
that the facts stated herein are true, and hereby subscribes
thereto and hereunto sets his hand and seal, this 16th day of
August, 1990.
/s/ Mary L. Demetree
---------------------
Mary L. Demetree
STATE OF FLORIDA
COUNTY OF ORANGE
BEFORE ME, personally appeared MARY L. DEMETREE, to me well
known and known to be the individual described in and who
executed the foregoing Articles of Incorporation, and she
acknowledged before me that she executed the said Articles of
Incorporation for the purposes therein expressed.
WITNESS my hand and official seal in the county and state
last aforesaid this 16th day of August, 1990.
/s/ Donald E. Gevency
------------------------
Notary Public, State of Florida
My Commission Expires: Sept. 1, 1992
(NOTARIAL SEAL)
<PAGE>
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS FOR THE
SERVICE OF PROCESS WITHIN THE STATE OF FLORIDA AND
REGISTERED AGENT UPON WHOM PROCESS MAY BE SERVED
-------------------------------------------------------
In compliance with Sections 48.091 and 607.325, Florida
Statutes, the following is submitted:
MLD MINNESOTA 10, INC. (the "Corporation") desiring to
organize as a domestic corporation or qualify under the laws of
the State of Florida, has named and designated Mary L. Demetree
as its Registered Agent to accept service of process within the
State of Florida with its registered office located at 3348
Edgewater Drive, Orlando, Florida 32804.
ACKNOWLEDGEMENT
-----------------
Having been named as Registered Agent for the Corporation at
the place designated in this Certificate, I hereby agree to act
in this capacity; and I am familiar with and accept the
obligations of Section 607.325, Florida Statutes, as the same may
apply to the Corporation; and I further agree to comply with the
provisions of Florida Statutes, Section 48.091 and all other
statutes, all as the same may apply to the Corporation relating
to the proper and complete performance of my duties as Registered
Agent.
Dated this 16th day of August, 1990.
/s/ Mary L. Demetree
----------------------
Mary L. Demetree,
Registered Agent
<PAGE>
BYLAWS
OF
MLD MINNESOTA 10, INC.
ARTICLE I
Offices
--------
Section 1. The registered office of the corporation in the
State of Florida shall be located in the City of Orlando, County
of Orange. The corporation may have such other offices, either
within or without the State of Florida as the Board of Directors
may designate or as the business of the corporation may from time
to time require.
ARTICLE II
Meetings of Shareholders
------------------------
SECTION 1. ANNUAL MEETING. The annual meeting of the
shareholders of this corporation shall be held on the first day
of July of each year. The annual meeting of the shareholders for
any year shall be held no later than thirteen months after the
last preceding annual meeting of the shareholders. Business
transacted at the annual meeting shall include the election of
directors of the corporation.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
shareholders shall be held when directed by the President, the
Board of Directors, or when requested in writing by the holders
of not less than ten percent of all the shares entitled to vote
at the meeting. A meeting requested by shareholders shall be
called for a date not less than ten nor more than sixty days
after the request is made, unless the shareholders requesting the
meeting designate a later date. The call for the meeting shall
be issued by the Secretary, unless the President, Board of
Directors, or shareholders requesting the meeting shall designate
another person to do so.
<PAGE>
<PAGE>
SECTION 3. PLACE. Meetings of shareholders may be held
within or without the State of Florida. If no designation is
made, the place of the meeting shall be the registered office of
the corporation.
SECTION 4. NOTICE. Written notice stating the place, day
and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is
called, shall be delivered not less than ten nor more than sixty
days before the meeting, either personally or by first class
mail, by or at the direction of the President, the Secretary, or
the officer or persons calling the meeting to each shareholder of
record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United
States Mail addressed to the shareholder at his address as it
appears on the stock transfer books of the corporation, with
postage thereon prepaid.
SECTION 5. NOTICE OF ADJOURNED MEETINGS. When a meeting is
adjourned to another place or time, it shall not be necessary to
give any notice of the adjourned meeting if the place and time to
which the meeting is adjourned are announced at the meeting at
which the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted on the
original date of the meeting. If however, after the adjournment
the Board of Directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given as
provided in this section to each shareholder of record on the new
record date entitled to vote at such meeting.
SECTION 6. CLOSING OF TRANSFER BOOKS AND FIXING RECORD
DATE. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for
any other purpose, the Board of Directors may provide that the
stock transfer books shall be closed for a stated period but not
to exceed, in any case, sixty days. If the stock transfer books
shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders,
such books shall be closed for at least ten days immediately
preceding such meetings
<PAGE>
<PAGE>
In lieu of closing the stock transfer books, the Board of
Directors may fix in advance a date as the record date for any
determination of shareholders, such date in any case to be not
more than sixty days and, in case of a meeting of shareholders,
not less than ten days prior to the date on which the particular
action requiring such determination of shareholders is to be
taken.
If the stock transfer books are not closed and no record
date is fixed for determination of shareholders entitled to
notice or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
determination of shareholders.
When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment
thereof unless the Board of Directors fixes a new record date for
the adjourned meeting
SECTION 7. VOTING RECORD. The officer or agent having
charge of the stock transfer books for shares of the corporation
shall make, at least ten days before each meeting of the
shareholders, a complete list of the shareholders entitled to
vote at such meetings or any adjournment thereof, with the
address of each shareholder and the number and class and series,
if any, of shares held by each. The list, for a period of ten
days prior to such meeting, shall be kept on file at the
registered office of the corporation, at the principal place of
business of the corporation, or at the office of the transfer
agent or registrar of the corporation, and any shareholder shall
be entitled to inspect the list at any time during usual business
hours. The list shall also be produced and kept open at the time
and place of the meeting and shall be subject to the inspection
of any shareholder at any time during the meeting.
If the requirements of this section have not been
substantially complied with, the meeting, on demand of any
<PAGE>
<PAGE>
shareholder in person or by proxy, shall be adjourned until the
requirements are complied with. If no such demand is made,
failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting .
SECTION 8. SHAREHOLDER QUORUM AND VOTING. A majority of
the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders.
If a quorum is present, the affirmative vote of the majority
of the shares represented at the meeting and entitled to vote on
the subject matter shall be the act of the shareholders unless
otherwise provided by law.
After a quorum has been established at a shareholders'
meeting, the subsequent withdrawal of shareholders, so as to
reduce the number of shareholders entitled to vote at the meeting
below the number required for a quorum, shall not affect the
validity of any action taken at the meeting or any adjournment
thereof.
SECTION 9. VOTING OF SHARES. Each shareholder entitled to
vote in accordance with the terms and provisions of the Articles
of Incorporation and these Bylaws shall be entitled to one vote
for each share of stock owned by such shareholder. Upon the
demand of any shareholder, the vote for directors shall be by
ballot. All other requirements as to voting, voting trusts and
shareholders' agreements shall be in accordance with the laws of
the State of Florida.
<PAGE>
<PAGE>
SECTION 10. PROXIES. Every shareholder entitled to vote at
a meeting of shareholders or to express consent or dissent
without a meeting, or a shareholder's duly authorized attorney-
in-fact, may authorize another person or persons to act for him
by proxy.
Every proxy must be signed by the shareholder or his
attorney-in-fact. No proxy shall be valid after the expiration
of eleven months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of
the shareholder executing it, except as otherwise provided by
law.
The authority of the holder of a proxy to act shall not be
revoked by the incompetence or death of the shareholder who
executed the proxy unless, before the authority is exercised,
written notice of an adjudication of such incompetence or of such
death is received by the corporate officer responsible for
maintaining the list of shareholders.
If a proxy for the same shares confers authority upon two or
more persons and does not otherwise provide, a majority of them
present at the meeting, or if only one is present then that one,
may exercise all the powers conferred by the proxy; but if the
proxy holders present at the meeting are equally divided as to
the right and manner of voting in any particular case, the voting
of such shares shall be prorated.
If a proxy expressly provides, any proxy holder may appoint,
in writing, a substitute to act in his place.
SECTION 11. ACTION BY SHAREHOLDERS WITHOUT A MEETING. Any
action required by law, these Bylaws, or the Articles of
Incorporation of this corporation to be taken at any annual or
special meeting of shareholders of the corporation, or any action
which may be taken at any or special meeting of such
shareholders, may be taken without a meeting, without prior
notice and without a vote, if consent in writing, setting forth
the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at
a meeting at which all shares entitled to vote thereon were
<PAGE>
<PAGE>
present and voted. If any class of shares is entitled to vote
thereon as a class, such written consent shall be required of the
holders of a majority of the shares of each class of shares
entitled to vote as a class thereon and of the total shares
entitled to vote thereon.
Within ten days after obtaining such authorization by
written consent, notice shall be given to those shareholders who
have not consented in writing. The notice shall fairly summarize
the material features of the authorized action and, if the action
be a merger, consolidation or sale or exchange of assets for
which dissenters' rights are provided under this act, the notice
shall contain a clear statement of the right of shareholders
dissenting therefrom to be paid the fair market value of their
shares upon compliance with further provisions of this act
regarding the rights of dissenting shareholders.
ARTICLE III
Directors
------------
SECTION 1. FUNCTION. All corporate powers shall be
exercised by or under the authority of, and the business and
affairs of this corporation shall be managed under the direction
of the Board of Directors.
SECTION 2. QUALIFICATION. Directors need not be residents
of this state or shareholders of this corporation.
SECTION 3. COMPENSATION. The Board of Directors shall have
authority to fix the compensation of directors.
SECTION 4. DUTIES OF DIRECTORS. A director shall perform
his duties as a director, including his duties as a member of any
committee of the board upon which he may serve, in good faith, in
a manner he reasonably believes to be in the best interests of
the corporation, and with such care as an ordinary prudent person
in a like position would use under similar circumstances.
In performing his duties, a director shall be entitled to
rely on information, opinions, reports or statements, including
<PAGE>
<PAGE>
financial statements and other financial data, in each case
prepared or presented by:
(a) one or more officers or employees of the corporation
whom the director reasonably believes to be reliable and
competent in the matters presented,
(b) counsel, public accountants or other persons as to
matters which the director reasonably believes to be within such
person's professional or expert competence, or
(c) a committee of the board upon which he does not serve,
duly designated in accordance with a provision of the Articles of
Incorporation or the Bylaws, as to matters within its designated
authority, which committee the director reasonably believes to
merit confidence.
A director shall not be considered to be acting in good
faith if he has knowledge concerning the matter in question that
would cause such reliance described above to be unwarranted.
A person who performs his duties in compliance with this
section shall have no liability by reason of being or having been
a director of the corporation.
SECTION 5. PRESUMPTION OF ASSENT. A director of the
corporation who is present at a meeting of its directors at which
action on any corporate matter is taken shall be presumed to have
assented to the action taken unless he votes against such action
or abstains from voting in respect thereto because of an asserted
conflict of interest.
SECTION 6. NUMBER. This corporation shall be managed by a
board of at least one director. The number of directors may be
increased or decreased from time to time by amendment to these
Bylaws, but no decrease shall have the effect of shortening the
term of any incumbent director.
SECTION 7. ELECTION AND TERM. At the first annual meeting
of shareholders, and at each annual meeting thereafter, the
shareholders shall elect directors to hold office until the next
<PAGE>
<PAGE>
succeeding annual meeting, or until a successor shall have been
elected and qualified or until the earlier resignation, removal
from office, or death.
SECTION 8. VACANCIES. Any vacancy occurring in the Board
of Directors, including any vacancy created by reason of an
increase in the number of directors, may be filled by the
affirmative vote of a majority of the remaining directors though
less than a quorum. A director elected to fill a vacancy shall
hold office only until the next election of directors by the
shareholders.
SECTION 9. REMOVAL OF DIRECTORS. At a meeting of
shareholders called expressly for that purpose, any director or
the entire Board of Directors may be removed, with or without:
cause, by a vote of the holders of a majority of the shares then
entitled to vote at an election of directors.
SECTION 10. QUORUM AND VOTING. A majority of the number of
directors fixed by these Bylaws shall constitute a quorum for the
transaction of business. The action of the majority of the
directors present at a meeting at which a quorum is present shall
be the act of the Board of Directors.
SECTION 11. EXECUTIVE AND OTHER COMMITTEES. The directors,
by resolution adopted by a majority of the full Board of
Directors, may designate from among its members an executive
committee and other committees, and each such committee shall
serve at the pleasure of the Board with the authority contained
in the Florida Statutes. The Board, by resolution, may
designate one or more directors as alternate members of any such
committee, who may act in the place and stead of any absent
member or members at any meeting of such committee.
SECTION 12. REGULAR MEETINGS. A regular meeting of the
directors shall be held without other notice than this Bylaw,
immediately after and at the same place as the annual meeting of
the shareholders.
SECTION 13. SPECIAL MEETINGS. Special meetings of the
directors may be called by the President or by any two directors.
<PAGE>
<PAGE>
The person or persons authorized to call special meetings of the
directors may fix the place for holding any special meeting of
the directors called by them. Members of the Board of Directors
may participate in a meeting of such board by means of a
conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each
other at the same time. Participation by such means shall
constitute presence in person at a meeting.
SECTION 14. NOTICE. Written notice of the time and place
of special meetings of directors shall be given to each director
either by personal delivery or by mail, telegram or cablegram at
least two days before the meeting. Notice need not be given to
any director who signs a waiver of notice either before or after
the meeting. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting and waiver of any
and all objections to the place of the meeting and any objection
to the transaction of business because the meeting is not
lawfully called or convened. The business to be transacted at or
the purpose of any special meeting of the directors shall be
specified in the written waiver of notice.
SECTION 15. ACTION WITHOUT A MEETING. Any action required
to be taken at a meeting of the directors of the corporation, or
any action which may be taken at a meeting of the directors or a
committee thereof, may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, signed by all
of the directors, or all the members of the committee, as the
case may be, is filed in the minutes of the proceedings of the
board or of the committee. Such consent shall have the same
effect as a unanimous vote.
ARTICLE IV
Officers
------------
SECTION 1. OFFICERS. The officers of this corporation
shall consist of a president, vice president, secretary, and
treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers and agents
<PAGE>
<PAGE>
as may be deemed necessary may be elected or appointed by the
Board of Directors from time to time. Any two or more offices
may be held by the same person. The directors shall elect
officers of the corporation annually at the meeting of the
directors held after each annual meeting of the shareholders.
Each officer shall hold office until his successor shall have
been duly elected and shall have qualified or until his death,
resignation, or until he shall have been removed in the manner
provided herein.
SECTION 2. DUTIES OF OFFICERS. The officers of this
corporation shall have the following duties:
THE PRESIDENT shall be the chief executive officer of the
corporation, shall have general and active management of the
business and affairs of the corporation subject to the directions
of the Board of Directors, and shall preside at all meetings of
the shareholders and the Board of Directors.
THE VICE PRESIDENT shall be delegated executive duties by
the President and serve in his place and stead in his absence.
THE SECRETARY shall have custody of, and maintain, all of
the corporate records except the financial records; shall record
the minutes of all meetings of the shareholders and Board of
Directors, send out all notices of meetings, and perform such
other duties as may be prescribed by the Board of Directors or
the President.
THE TREASURER shall have custody of the corporate funds and
financial records, shall keep full and accurate accounts of
receipts and disbursements and render accounts thereof at the
annual meetings of the shareholders and whenever else required by
the Board of Directors or the President, and shall perform such
other duties as may be prescribed by the directors or the
President.
SECTION 3. REMOVAL. Any officer or agent elected or
appointed by the directors may be removed whenever, in their
judgment, the best interests of the corporation would be served <PAGE>
<PAGE>
thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.
ARTICLE V
Certificates for Shares
------------------------
SECTION 1. ISSUANCE. Every holder of shares in this
corporation shall be entitled to have a certificate, representing
all shares to which he is entitled. No certificate shall be
issued for any share until such share is fully paid.
SECTION 2. FORM. Certificates representing shares of the
corporation shall be signed by the President and Secretary or by
such other officers authorized by the directors under the laws of
the State of Florida, and may be sealed with the seal of the
corporation or a facsimile thereof. All certificates shall be
consecutively numbered or otherwise identified. All
certificates representing shares shall state upon the face
thereof: The name of the corporation; that the corporation is
organized under the laws of this State; the name of the person or
persons to whom issued; the number and class of shares and
designation of series, if any, which such certificate represents;
the par value of each share represented by such certificate, or a
statement that the shares are without par value .
SECTION 3. LOST, STOLEN OR DESTROYED CERTIFICATES. The
corporation shall issue a new stock certificate in place of any
certificate previously issued if the holder of record of the
certificate (a) makes proof in affidavit form that it has been
lost, destroyed or wrongfully taken; (b) requests the issuance of
a new certificate before the corporation has notice that the
certificate has been acquired by a purchaser for value in good
faith and without notice of any adverse claim; (c) gives bond, in
such form as the corporation may direct, to indemnify the
corporation, the transfer agent, and registrar against any claim
that may be made on account of the alleged loss, destruction, or
theft of a certificate; and (d) satisfies any other reasonable
requirements imposed by the corporation.
<PAGE>
<PAGE>
SECTION 4. TRANSFER OF SHARES. Upon surrender to the
corporation or the transfer agent of the corporation of a
certificate of shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it
shall be the duty of the corporation to issue a new certificate
to the person entitled thereto, and cancel the old certificate;
every such transfer shall be entered on the transfer book of the
corporation which shall be kept at its principal office.
The corporation shall be entitled to treat the holder of
record of any share as the holder in fact thereof, and
accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other
person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this State.
ARTICLE VI
Books and Records
-------------------
This corporation shall keep correct and complete books and
records of account and shall keep minutes of the proceedings of
its shareholders, directors and committees of directors upon the
terms and conditions provided by law.
ARTICLE VII
Dividends
-----------
The directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares upon the
terms and conditions provided by law.
ARTICLE VIII
Fiscal Year
--------------
The fiscal year of the corporation shall begin on the first
day of January of each year, and end on the 31st day of December
of each year.
<PAGE>
<PAGE>
ARTICLE IX
Corporate Seal
------------------
The directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the
corporation, state of incorporation, year of incorporation, and
the words "CORPORATE SEAL."
ARTICLE X
Amendment
--------------
These Bylaws may be repealed or amended, and new Bylaws
adopted by either the directors or the shareholders, but the
directors may not amend or repeal any Bylaw adopted by
shareholders if the shareholders specifically provide such Bylaw
not subject to amendment or repeal by the directors.
<PAGE>
Exhibit 28(c)
Page 1 of 2
(Front of Proxy Card)
This Proxy is Solicited on Behalf of
the Board of Directors of MLD Minnesota 10, Inc.
PROXY
The undersigned hereby appoints Mary L. Demetree and Cordell
J. Overgaard as Proxies, each with the power to appoint his or
her substitute, and hereby authorizes them to represent and to
vote, as designated below, all the shares of common stock of MLD
Minnesota 10, Inc. held on record by the undersigned on
, 1995 at the Special Meeting of the
shareholders to be held , 1995 or any adjournment
thereof.
PROPOSAL TO APPROVE THE MERGER OF ROCHESTER SUBSIDIARY TWENTY-SIX
INC. into and with MLD Minnesota 10, Inc. and for the conversion
of MLD Common Stock into Common Stock of Rochester Telephone
Corporation.
For Against Abstain
---- ---- ----
---- ---- ----
<PAGE>
<PAGE>
Page 2 of 2
(Back of Proxy Card)
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction
is made, this proxy will be voted for the Merger and stock
conversion.
Please sign exactly as name appears below. When shares are held
by joint tenants, all should sign.
When signing as executor, administrator, trustee, or guardian,
please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If
a partnership, please sign in partnership name by authorized
person.
DATED: , 1995
--------------- --------------------------
Signature
- ------------------------ --------------------------
PLEASE MARK, SIGN, DATE Signature if held jointly
AND RETURN THE PROXY
CARD PROMPTLY USING THE --------------------------
ENCLOSED ENVELOPE. Additional Signature (if
required)
<PAGE>
Exhibit C
Page 1 of 8
SECURITIES AGREEMENT
THIS SECURITIES AGREEMENT ("Agreement") is made effective on
, 1994, by MARY L. DEMETREE (the "New Shareowner") and
ROCHESTER TELEPHONE CORPORATION ("Rochester").
1. Background.
----------
The New Shareowner is exchanging all of his or her common
stock of MLD Minnesota 10, Inc. for shares of the common stock,
par value $1.00, of Rochester ("Rochester Stock"), and cash for
fractional shares, under the terms of an Agreement with Respect
to a Merger of Rochester Subsidiary Twenty-Six Inc., into MLD
Minnesota 10, Inc. under the name of MLD Minnesota 10, Inc. (the
"Merger Agreement").
The purpose of this Agreement is to address the rights and
obligations between the parties hereto with respect to certain of
the securities laws issues arising in relation to the Merger
Agreement.
2. Registration of the Rochester Stock.
------------------------------------
Because the New Shareowner is deemed an "affiliate" of MLD
Minnesota 10, Inc. as that term is contemplated by Rule 145
promulgated by the Securities and Exchange Commission under the
terms of the Securities Act of 1933 and the General Rules and
Regulations of the Commission, and because the New Shareowner is
to receive shares pursuant to the Merger Agreement that are
freely transferable to the fullest extent allowable, Rochester
shall, pursuant to the Merger Agreement, timely file with the
Securities and Exchange Commission a registration statement on
Form S-4 (or any successor form thereto) registering (a) the
original issuance by Rochester to the New Shareowner of all of
the Rochester Stock and (b) secondary sales of such Rochester
Stock by the New Shareowner.
3. Expenses of Registration.
------------------------
All registration expenses and any expenses involved with
post effective amendments and reports and any filing fees with
<PAGE>
<PAGE>
Exhibit C
Page 2 of 8
respect thereto incurred in connection with the registration as
set forth herein of the Rochester Stock, maintaining such
registration in effect for two (2) years, and complying with
Rochester's other obligations hereunder, shall be borne by
Rochester. All expenses incident to the sales by the New
Shareowner of Rochester Stock (such as brokerage fees) shall be
borne by the New Shareowner.
4. Representations and Warranties of the New Shareowner.
-----------------------------------------------------
The New Shareowner hereby represents and warrants, subject
to the provisions of paragraph 6, as follows:
(a) The New Shareowner shall make all sales during the
period of the effectiveness of the secondary registration only in
accordance with the terms of the Plan of Distribution to be set
forth therein, provided however that said Plan of Distribution
shall specifically allow sales by the New Shareowner pursuant to
exemption from registration as permitted by the Federal
Securities Laws and rules and regulations promulgated thereunder,
including pursuant to Rule 145(d) promulgated under the
Securities Act of 1933, as amended.
(b) The shares of Rochester Stock covered by the prospectus
will be (i) shares being issued by Rochester to the New
Shareowner and (ii) outstanding shares being offered by the New
Shareowner who will be entitled to the proceeds of any such
secondary sales. No part of the proceeds of any secondary
offering will be received by Rochester.
(c) The New Shareowner agrees not to sell his or her
Rochester Stock until the lapse of the time period set out in
paragraph 5(h) unless the pooling determination referred to
therein shall be sooner obtained, however the New Shareowner
shall be free during such period to make bona fide gifts of the
Rochester Stock to members of the New Shareowner's immediate
family.
(d) The New Shareowner covenants that he or she will not
take any action with regard to his or her sale of the Rochester
Stock that violates the Federal Securities Laws and rules and
<PAGE>
<PAGE>
Exhibit C
Page 3 of 8
regulations thereunder, specifically including but not limited
to, any deceptive practices, any market manipulation or
stabilization activities.
(e) The New Shareowner shall prepare or cause to be
prepared and appropriately filed any form or report required of
the New Shareowner by federal securities law with respect to any
secondary sale of the Rochester Stock.
(f) The New Shareowner shall comply with the prospectus
delivery requirements with regard to each sale or offer of sale
of Rochester Stock for which the delivery of a prospectus is
required (a "Registered Sale Transaction").
(g) The New Shareowner agrees, during the period after the
secondary registration has lapsed, and to the extent required by
federal securities laws, to sell his or her Rochester Stock only
in transactions involving a broker which is a member of the New
York Stock Exchange, and not to pay any consideration for sales
of his or her Rochester Stock beyond the usual and customary
broker's commissions, provided the New Shareowner shall at all
times be free to enter into negotiated transactions unless
otherwise prohibited by federal securities laws.
(h) The New Shareowner shall inform Rochester when the
distribution of the Rochester Stock held by him or her is
completed.
(i) The New Shareowner shall provide to Rochester all of
the information as may be in his possession with respect to the
New Shareowner (and not in Rochester's possession) as may be
necessary or required to fulfill the disclosure requirements of
Item 7a of the S-4 Registration Statement and Item 507 of
Regulation S-K as the same may be amended, from time to time,
throughout the effective period of the S-4 Registration Statement
that may be necessary to reflect any material changes, and the
New Shareowner shall provide such information in a manner that
does not materially misstate or fail to include any material
information required under such provisions.
<PAGE>
<PAGE>
Exhibit C
Page 4 of 8
(j) At any time after the Effective Date of the
registration statement, on written notice from Rochester that it
requires the suspension by the New Shareowner of any Registered
Sale Transactions, the New Shareowner immediately shall cease
such transactions for a period of time in the reasonable judgment
of Rochester, not to exceed 120 days (a "Blackout Period"), if
Rochester reasonably determines that any such Registered Sale
Transactions would impede, delay or interfere with any financing,
offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving
Rochester or any of its affiliates, or require disclosure of
material information which, if disclosed at that time, would be
harmful to the interests of Rochester and its shareowners. Upon
notice by Rochester to the New Shareowner of such determination,
the New Shareowner covenants that he shall (i) keep the fact of
any such notice strictly confidential, (ii) promptly halt any
offer, sale, trading or transfer by it or any of its affiliates
of any of the Rochester Stock for the duration of the Blackout
Period set forth in such notice (or until earlier terminated by
Rochester) other than such transactions as are exempt from
registration and under the Securities Act of 1933 and otherwise
permitted under the Federal Securities Laws (including pursuant
to Rule 145(d) promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), and (iii) promptly halt any use,
publication, dissemination or distribution of the registration
statement, each prospectus included therein, and any amendment or
supplement thereto by it and any of its affiliates for the
duration of the Blackout Period set forth in such notice (or
until earlier terminated by Rochester).
5. Representations and Warranties of Rochester.
-------------------------------------------
Rochester hereby makes the following representations and
warranties to the New Shareowner:
(a) Rochester will take all actions necessary to deliver to
the New Shareowner at the closing under the Merger Agreement a
new stock certificate or certificates representing the Rochester
Stock to be delivered to the New Shareowner pursuant to the
Merger Agreement in exchange for the stock held by the New
Shareowner in MLD Minnesota 10, Inc.
<PAGE>
<PAGE>
Exhibit C
Page 5 of 8
(b) Rochester shall make all filings necessary and take all
further action to assure the effectiveness of (i) the
registration under the Securities Act of the original issuance by
Rochester to the New Shareowner of the Rochester Stock to be
received by her hereunder and (ii) the secondary registration for
the Rochester Stock to be received by the New Shareowner
hereunder to be effective no later than the date of the receipt
by the New Shareowner of the Rochester Stock.
(c) Rochester will timely prepare and file all
post-effective amendments or supplements and any and all reports,
required to be filed with the Securities Exchange Commission and
any other agency or exchange to ensure that the secondary
registration shall remain effective for a period of at least two
(2) years from the date of receipt by the New Shareowner of his
or her Rochester Stock. The New Shareowner recognizes that
subsequent events could require Rochester to request that
Registered Sale Transactions by the New Shareowner be suspended
for a time so that post effective amendments or supplements can
be drafted, filed and delivered, to New Shareowner. In such
event New Shareowner agrees to comply with such request and
Rochester agrees to take all action necessary to lift any such
stop sale request at the earliest practicable date.
(d) During the period of effectiveness of the secondary
registration all of the Rochester Stock owned by New Shareowner
will be freely tradeable, subject only to the prospectus delivery
requirements set forth in paragraph 4(f), if applicable, and the
pooling delay requirements of paragraphs 4(c) and 5(h).
(e) Rochester will maintain an adequate supply of accurate
and effective prospectuses and will deliver a reasonable number
of such prospectuses either directly to the New Shareowner, to a
broker designated by the New Shareowner in writing or to any
prospective purchaser within five (5) days of written request
therefore by the New Shareowner, and the cost of maintaining such
prospectuses for this purpose shall be borne by Rochester.
Rochester agrees that it shall use all best efforts to provide
such prospectuses in a shorter time frame that set forth above
provided that the New Shareowner shall bear any additional
expense involved in expediting the delivery of such prospectuses.
<PAGE>
<PAGE>
Exhibit C
Page 6 of 8
(f) The Plan of Distribution included in the form of
registration for the original issuance and the secondary
distribution shall not include any additional restrictions on the
sale of Rochester Stock by the New Shareowner beyond those
specifically set forth herein unless the New Shareowner shall
consent to such restrictions in writing in advance.
(g) That after the expiration of two (2) years from the
date of the acquisition of the Rochester Stock by the New
Shareowner, Rochester will continue to file on a timely basis all
of the reports required to allow the New Shareowner to take
advantage of the exemption allowing sales of the New Shareowner's
Rochester Stock pursuant to Rule 145 and Rule 144, and will do so
in such manner that there shall be no lapse or delay in the
effectiveness or availability of such reports and information
that would preclude the New Shareowner from any sale of the
Rochester Stock.
(h) Rochester shall take all action necessary to preserve
treatment of the transaction described in the Merger Agreement as
a "pooling" for financial reporting purposes within twenty (20)
business days after the termination of the first full calendar
month after the closing of the Merger Agreement and receipt by
the New Shareowner of his or her Rochester Stock.
(i) Rochester acknowledges the New Shareowner's right to
transfer a portion of his or her Rochester Stock by gift, subject
to the terms of this Agreement. Rochester will allow the New
Shareowner to make such transfers provided any such donee shall
personally execute a copy of this Agreement and thereby be
subject to, and benefit from, its provisions. If required by
securities laws, rules or regulations Rochester will disclose
such type of transfers in the Plan of Distribution in the
Registration Statement. Notwithstanding the foregoing, it is
agreed that during the time period necessary for the
determination of pooling treatment as referred to in paragraphs
4(c) and 5(h), Rochester shall not be required to allow any
transfer by gift to any donee except bona fide gifts to members
of the immediate family of the New Shareowner.
<PAGE>
<PAGE>
Exhibit C
Page 7 of 8
6. Available Exemptions.
---------------------
The parties hereto agree, notwithstanding anything herein to
the contrary, that in the event any foregoing restrictions shall
not be required with respect to any proposed sale by the New
Shareowner by virtue of the existence of any other exemption
pursuant to the Federal Securities Laws or any rule or
regulations adopted by the Securities and Exchange Commission
thereunder, the New Shareowner shall not be restricted thereby,
provided however that the New Shareowner may be required to
provide counsel for Rochester with a statement of the exemption
to be relied upon and reasonable evidence of its applicability to
the proposed sale.
7. Binding Effect.
--------------
The provisions of this Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators,
personal representatives and assigns of the parties hereto,
provided however that in the event of the death of the New
Shareowner any restriction on the New Shareowner under this
Agreement that shall not otherwise be required by federal
securities laws shall no longer be binding upon any individual
receiving the Rochester stock thereby.
8. Unconditional Indemnification.
------------------------------
In the event of any breach of any warranty, representation
or other provision of this Agreement, the non-breaching party
shall be indemnified and held harmless from and against any and
all claims, actions, suits, liabilities, losses, damages and
expenses of every nature and character (including, but not by way
of limitation all reasonable attorneys' fees and amounts paid in
settlement of any claim, action or suit) which constitute or
which arise or result directly or indirectly from such breach or
default, provided however, that Rochester shall make no claim for
recovery from New Shareowner hereunder unless an aggregate of
$30,000.00 in indemnifiable claims is reached where each
individual indemnifiable claim equals or exceeds the amount of
$5,000.00.
<PAGE>
<PAGE>
Exhibit C
Page 8 of 8
IN WITNESS WHEREOF, the New Shareowner and Rochester have
executed this Agreement this day of , 1994.
NEW SHAREOWNER ROCHESTER TELEPHONE CORPORATION
By:
- ------------------------- --------------------------
MARY L. DEMETREE Louis L. Massaro
Corporate Vice President -
