SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event report) October 30, 1995
(October 18, 1995)
Conestoga Enterprises, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 33-30715 23-256-5087
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No)
202 East First Street, Birdsboro, Pennsylvania 19508
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code 610-582-8711
(Former name or former address, if changed since last report.)
Item 5. Other Events
Conestoga Enterprises, Inc. (CEI) signed a definitive agreement
for the acquisition of all outstanding shares of common stock of Buffalo
Valley Telephone Company (BVT) for $65 per share, payable in cash,
convertible preferred stock of CEI or common stock of CEI. The total
value of the transaction is approximately $58,500,000. Although the
shareholders of BVT will have the opportunity to indicate their preferences
for cash, convertible preferred stock or common stock, their elections
shall be subject to an allocation so that no more than 50% of the aggregate
consideration paid by CEI will be in cash.
Pursuant to the merger agreement, BVT would become a subsidiary
of CEI. The closing of the transaction is subject to regulatory approvals,
BVT and CEI shareholder approvals, a registration statement (with respect
to the convertible preferred stock and the common stock being offered to
BVT shareholders) being declared effective by the Securities and Exchange
Commission and other conditions. Accordingly, there can be no assurance
that a transaction will be consummated. The convertible preferred stock
and common stock will be offered only by means of a prospectus.
Item 7. Exhibits
(c) Exhibits
10.1 Agreement and Plan of Merger among Buffalo Valley
Telephone Company, Conestoga Enterprises, Inc. and
CB Merger Corporation
99 Press release of Conestoga Enterprises, Inc. dated
as of October 18, 1995, announcing the signing of a
definitive merger agreement with Buffalo Valley
Telephone Company
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CONESTOGA ENTERPRISES, INC.
By: /s/ Albert H. Kramer
Name: Albert H. Kramer
Title: Vice President, Finance and Administration
Date: October 31, 1995
EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
Among
BUFFALO VALLEY TELEPHONE COMPANY,
CONESTOGA ENTERPRISES, INC.
and
CB MERGER CORPORATION
Dated as of October 18, 1995
TABLE OF CONTENTS
Page No.
ARTICLE I
PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . 1
1.2 Effects of the Merger. . . . . . . . . . . . . . 1
1.3 Conversion of Target Common Shares . . . . . . . 2
1.4 Timing . . . . . . . . . . . . . . . . . . . . . 4
1.5 Dissenters' Rights . . . . . . . . . . . . . . . 5
1.6 Surrender and Exchange of Target Certificates. . 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TARGET . . . . . . . . . 8
2. Representations and Warranties of Target . . . . 8
2.1 Organization, Powers and Qualifications. . . . . 8
2.2 Subsidiaries . . . . . . . . . . . . . . . . . . 8
2.3 Capital Stock. . . . . . . . . . . . . . . . . . 8
2.4 Authority. . . . . . . . . . . . . . . . . . . . 9
2.5 Conflict with Other Agreements; Consents and Approvals 9
2.6 Compliance with Law. . . . . . . . . . . . . . . 10
2.7 Financial Statements . . . . . . . . . . . . . . 10
2.8 Absence of Undisclosed Liabilities . . . . . . . 11
2.9 Absence of Adverse Changes . . . . . . . . . . . 11
2.10 Tax and Other Returns and Reports. . . . . . . . 11
2.11 Dividends and Stock Purchases. . . . . . . . . . 12
2.12 Assets . . . . . . . . . . . . . . . . . . . . . 12
2.13 Contracts. . . . . . . . . . . . . . . . . . . . 13
2.14 Litigation . . . . . . . . . . . . . . . . . . . 14
2.15 Insurance. . . . . . . . . . . . . . . . . . . . 14
2.16 Labor Matters. . . . . . . . . . . . . . . . . . 15
2.17 Employee Benefit Plans . . . . . . . . . . . . . 15
2.18 Franchises, Licenses, Permits, Etc.. . . . . . . 16
2.19 Patents and Trademarks . . . . . . . . . . . . . 16
2.20 Ordinary Course. . . . . . . . . . . . . . . . . 17
2.21 Brokerage and Other Fees . . . . . . . . . . . . 18
2.22 Opinion of Financial Advisor . . . . . . . . . . 19
2.23 Information Supplied.. . . . . . . . . . . . . . 19
2.24 Disclosure . . . . . . . . . . . . . . . . . . . 19
2.25 Tax Free Reorganization Matters. . . . . . . . . 20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND SUB. . . . . . 20
3. Representations and Warranties of Buyer. . . . . 21
3.1 Organization, Powers and Qualifications. . . . . 21
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . 21
3.3 Authority. . . . . . . . . . . . . . . . . . . . 21
3.4 Capital Stock. . . . . . . . . . . . . . . . . . 22
3.5 Valid Issuance of Buyer Stock. . . . . . . . . . 22
3.6 Conflict with Other Agreements; Consents and Approvals 23
3.7 Financial Statements . . . . . . . . . . . . . . 23
3.8 Brokerage. . . . . . . . . . . . . . . . . . . . 24
3.9 Reports. . . . . . . . . . . . . . . . . . . . . 24
3.10 Information Supplied.. . . . . . . . . . . . . . 24
3.11 Disclosure . . . . . . . . . . . . . . . . . . . 25
3.12 Tax Matters. . . . . . . . . . . . . . . . . . . 25
3.13 Available Funds. . . . . . . . . . . . . . . . . 25
3.14 Opinion of Financial Advisor . . . . . . . . . . 26
ARTICLE IV
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Conduct of Business Prior to Closing . . . . . . 26
4.2 Updating of Schedules. . . . . . . . . . . . . . 28
4.3 Access . . . . . . . . . . . . . . . . . . . . . 28
4.4 Proxy Material, Registration Statement,
Other Filings and Applications . . . . . . . . . 28
4.5 Shareholder Meeting. . . . . . . . . . . . . . . 30
4.6 Third Party Consents . . . . . . . . . . . . . . 30
4.7 Satisfaction of Conditions . . . . . . . . . . . 30
4.8 Public Announcements . . . . . . . . . . . . . . 30
4.9 Employees and Employee Benefit Plans . . . . . . 30
4.10 Director and Officer Indemnification . . . . . . 32
4.11 Other Proposals. . . . . . . . . . . . . . . . . 33
4.12 Intentionally Omitted. . . . . . . . . . . . . . 34
4.13 Buyer Shareholder Approval . . . . . . . . . . . 34
4.14 Affiliates . . . . . . . . . . . . . . . . . . . 34
ARTICLE V
CONDITIONS TO OBLIGATIONS OF BUYER AND SUB . . . . . . . . 35
5. Conditions To Obligations of Buyer and Sub To
Consummate the Merger . . . . . . . . . . . . . 35
5.1 Representations, Warranties, and Covenants of
Target . . . . . . . . . . . . . . . . . . . . .35
5.2 Target Shareholder Approval. . . . . . . . . . . 35
5.3 Buyer Shareholder Approval . . . . . . . . . . . 35
5.4 Intentionally Omitted. . . . . . . . . . . . . . 35
5.5 No Injunctions . . . . . . . . . . . . . . . . . 36
5.6 No Antitrust Litigation. . . . . . . . . . . . . 36
5.7 Filings. . . . . . . . . . . . . . . . . . . . . 36
5.8 NASDAQ Listing . . . . . . . . . . . . . . . . . 36
5.9 Securities Laws. . . . . . . . . . . . . . . . . 36
5.10 Affiliate Letters. . . . . . . . . . . . . . . . 37
5.11 Dissenters Rights. . . . . . . . . . . . . . . . 37
5.12 Tax Opinion or Tax Ruling. . . . . . . . . . . . 37
5.13 Legal Opinion. . . . . . . . . . . . . . . . . . 38
5.14 Resignations . . . . . . . . . . . . . . . . . . 38
5.15 Fairness Opinion . . . . . . . . . . . . . . . . 38
ARTICLE VI
CONDITIONS TO OBLIGATION OF TARGET . . . . . . . . . . . . 38
6. Conditions To Obligation of Target To
Consummate the Merger . . . . . . . . . . . . . 38
6.1 Representations, Warranties, and Covenants of
Buyer and Sub . . . . . . . . . . . . . . . . . 38
6.2 Target Shareholder Approval. . . . . . . . . . . 39
6.3 Buyer Shareholder Approval . . . . . . . . . . . 39
6.4 Intentionally Omitted. . . . . . . . . . . . . . 39
6.5 No Injunctions . . . . . . . . . . . . . . . . . 39
6.6 No Antitrust Litigation. . . . . . . . . . . . . 39
6.7 Filings. . . . . . . . . . . . . . . . . . . . . 39
6.8 NASDAQ Listing . . . . . . . . . . . . . . . . . 39
6.9 Securities Laws. . . . . . . . . . . . . . . . . 39
6.10 Fairness Opinion . . . . . . . . . . . . . . . . 40
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT. . . . . . . . . . . . . 40
7.1 Termination. . . . . . . . . . . . . . . . . . . 40
7.2 Effect of Termination. . . . . . . . . . . . . . 42
7.3 Waiver of Terms. . . . . . . . . . . . . . . . . 42
7.4 Amendment of Agreement . . . . . . . . . . . . . 42
7.5 Fees and Expenses. . . . . . . . . . . . . . . . 43
7.6 Failure of Buyer Shareholder Approval. . . . . . 44
ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . 44
8.1 Cooperation. . . . . . . . . . . . . . . . . . . 44
8.2 Counterparts . . . . . . . . . . . . . . . . . . 45
8.3 Contents of Agreement, Etc . . . . . . . . . . . 45
8.4 No Survival of Representations and Warranties. . 45
8.5 Section Headings, Gender and "Person." . . . . . 45
8.6 Notices. . . . . . . . . . . . . . . . . . . . . 45
8.7 Governing Law. . . . . . . . . . . . . . . . . . 46
LIST OF EXHIBITS
A. Buyer Preferred Stock Terms
B. Affiliate Agreement
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 18, 1995, among
BUFFALO VALLEY TELEPHONE COMPANY, a Pennsylvania corporation ("Target"),
CONESTOGA ENTERPRISES, INC., a Pennsylvania corporation ("Buyer"), and CB
MERGER CORPORATION, a Pennsylvania corporation and a wholly owned subsidiary
of Buyer ("Sub").
Background
The Boards of Directors of Buyer, Sub and Target deem it advisable
and in the best interests of the shareholders of their respective corporations
that Target be acquired by Buyer through the merger of Target with and into
Sub (the "Merger") pursuant to the Pennsylvania Business Corporation Law (the
"Corporation Law") in accordance with the provisions of this Agreement
(together with the Schedules attached hereto, the "Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and intending to be legally bound
hereby, the parties hereto do hereby agree that they will carry out and
consummate the following Agreement.
ARTICLE I
PLAN OF MERGER
1.1 The Merger. At the Effective Time (as hereinafter defined),
Target shall be merged with and into Sub pursuant to this Agreement and the
separate existence of Target shall cease. For federal income tax purposes,
it is intended that the Merger shall constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
1.2 Effects of the Merger. Sub shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and the separate corporate existence of Sub with all its
rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The shares of common stock of Sub issued and
outstanding immediately prior to the Effective Time shall remain outstanding
and unchanged after the Merger, and shall thereafter constitute all of the
issued and outstanding shares of the capital stock of the Surviving
Corporation. The articles of incorporation and bylaws of Sub in effect
immediately prior to the Merger shall remain in effect as the articles of
incorporation and bylaws of the Surviving Corporation, except that Article 1
of the articles of incorporation of Sub shall be amended to read as follows:
"The name of the corporation is Buffalo Valley Telephone Company." The
directors and officers of Sub immediately prior to the Merger shall remain
in office as the directors and officers of the Surviving Corporation.
1.3 Conversion of Target Common Shares.
(a) Conversion of Shares. At the Effective Time (defined below),
by virtue of the Merger and without any action on the part of any holder
thereof, subject to the provisions of Section 1.5 hereof with respect to
dissenters' rights, if any, each share of common stock, no par value, of
Target (the "Target Common Stock") issued and outstanding at the Effective
Time (other than (i) shares the holders of which (each a "Dissenting
Shareholder") are exercising dissenters rights pursuant to the Corporation
Law (the "Dissenters' Shares"), and (ii) shares held directly or indirectly
by Buyer which are not held in a fiduciary capacity or in satisfaction of
a debt previously contracted) shall become and be converted into the right
to receive the cash and/or shares of stock of Buyer constituting the Per
Share Merger Consideration (as defined in paragraph (b) below). As of the
Effective Time, each share of Target Common Stock held directly or indirectly
by Buyer, other than shares held in a fiduciary capacity or in satisfaction
of a debt previously contracted, and each share held as treasury stock of
Target, shall be cancelled and retired and cease to exist, and no exchange
or payment shall be made with respect thereto.
(b) Per Share Merger Consideration Defined. As used herein, the
term "Per Share Merger Consideration" shall mean, at the election of the
holder of the share of Target Common Stock in accordance with Schedule 1.3
hereto and subject to proration in accordance with Schedule 1.3 hereto,
either:
(i) $65.00 in cash (the "Cash Merger Consideration");
(ii) one fully paid and nonassessable share of the Buyer's
Series A Convertible Preferred Stock, par value $65.00 per share ("Buyer
Preferred Stock") (the "Preferred Stock Merger Consideration"); or
(iii) subject to the adjustments provided in paragraph (c)
below, that number of shares (the "Common Stock Exchange Ratio") of the
Buyer's common stock, par value $5.00 per share ("Buyer Common Stock";
Buyer Common Stock and Buyer Preferred Stock are collectively referred to
herein as "Buyer Stock"), specified in the following subparagraphs:
(A) 2.4 shares of Buyer Common Stock so long as the Market
Value (defined below) of Buyer Common Stock is between $24.50 and $30.00
per share, inclusive;
(B) in the event that the Market Value of Buyer Common
Stock is less than $24.50 but not less than $22.50 per share, that number
of shares of Buyer Common Stock determined by dividing $58.80 by the Market
Value, carried out to five decimal places, but in no event more than 2.61333
(the "Maximum Common Stock Exchange Ratio"); or
(C) in the event that the Market Value of Buyer Common
Stock is more than $30.00 but not more than $32.70 per share, that number
of shares of Buyer Common Stock determined by dividing $72.00 by the Market
Value, carried out to five decimal places, but in no event less than 2.20183
(the "Minimum Common Stock Exchange Ratio").
(c) Adjustments to Common Stock Exchange Ratio. In the event that
the Market Value of Buyer Common Stock is less than $22.50 per share, the
Maximum Common Stock Exchange Ratio may be increased, at the option of Buyer,
to the number determined by dividing $58.80 by the Market Value, carried
out to five decimal places. In the event that the Market Value of Buyer
Common Stock is more than $32.70, the Minimum Common Stock Exchange Ratio
may be decreased, at the option of Target, to the number determined by
dividing $72.00 by the Market Value, carried out to five decimal places.
The option of Buyer to increase the Maximum Common Stock Exchange Ratio,
and the option of Target to decrease the Minimum Common Stock Exchange Ratio,
must be exercised by notice to the other party received no later than
5:00 p.m. on the second business day prior to the Closing Date. As provided
in Article VII hereof, if the Market Value is less than $22.50 and Buyer
does not exercise its option to increase the Maximum Common Stock Exchange
Ratio, Target shall have the right to terminate this Agreement; if the
Market Value is more than $32.70 and Target does not exercise its option to
decrease the Minimum Common Stock Exchange Ratio, Buyer shall have the
right to terminate this Agreement. In addition, if prior to the Closing
Date the outstanding shares of Buyer Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares
or securities through a stock dividend, stock split or reverse stock split,
appropriate adjustment shall be made to the Common Stock Exchange Ratio and
the Market Value dollar amounts specified in Section 1.3(b) and Section
1.3(c).
(d) Market Value Defined. As used herein, the term "Market Value"
shall mean (i) the sum of the average of the last reported bid and ask
prices per share of Buyer Common Stock quoted by each of the four principal
market makers for Buyer Common Stock for each of the last 10 NASDAQ trading
days immediately preceding the fourth business day prior to the Closing Date,
(ii) divided by 10.
(e) Shareholder Elections. All holders of Target Common Stock
electing to receive Preferred Stock Merger Consideration or Common Stock
Merger Consideration shall receive the type of consideration requested.
Holders of Target Common Stock making no election shall receive Common
Stock Merger Consideration. As more fully described on Schedule 1.3 hereto,
holders of Target Common Stock electing to receive Cash Merger Consideration
shall receive cash, however, only to the extent that the aggregate percentage
of the outstanding Target Common Stock receiving Cash Merger Consideration
(the "Cash Percentage") does not exceed 50% or, if lower, the maximum
possible percentage which would permit the Merger to qualify as a tax-free
exchange for federal income tax purposes. As more fully described on
Schedule 1.3 hereto, if the number of holders of Target Common Stock electing
to receive Cash Merger Consideration exceeds the Cash Percentage, such
holders would receive a combination of Preferred Stock Merger Consideration
and Cash Merger Consideration to the extent necessary so that no more than
the permitted amount of cash would be paid in the Merger.
1.4 Timing.
(a) Shareholder Approval. Target shall submit this Agreement to
its shareholders for approval as provided in Section 4.5 hereof. In
connection with such meeting, Target and Buyer shall each take, as promptly
as practical, such reasonable steps as shall be necessary for the preparation
and filing by Buyer of a registration statement under the Securities Act
of 1933 (the "1933 Act") on Form S-4 (the "Registration Statement") with
the Securities and Exchange Commission ("SEC") and shall use its reasonable
best efforts to cause the Registration Statement to become effective as soon
as practicable.
(b) Closing and Effective Time. The parties shall hold a closing
(the "Closing") on a mutually agreeable date (the "Closing Date") no later
than the fifth business day after the satisfaction or waiver of the
conditions set forth in Article V and Article VI of this Agreement, at
10:00 A.M., local time, at the offices of Buyer, or at such other place or
time as the parties agree upon. On the Closing Date or as soon thereafter
as practicable, the parties shall execute and file in the offices of the
Corporation Bureau of the Commonwealth of Pennsylvania appropriate Articles
of Merger in accordance with the provisions of the Corporation Law. The
"Effective Time" shall be the date of filing the Articles of Merger, or the
effective date specified therein, whichever is later.
1.5 Dissenters' Rights. Any Dissenting Shareholder who shall be
entitled to be paid the "fair value" of his or her Dissenters' Shares, as
provided in the Corporation Law, shall not be entitled to the Per Share
Merger Consideration unless and until the holder thereof shall have failed
to perfect or shall have effectively withdrawn or lost such holder's right
to dissent from the Merger under the Corporation Law, and shall be entitled
to receive only the payment to the extent provided for by the Corporation
Law. If any such holder shall fail to perfect or shall have effectively
withdrawn or lost the right to dissent, the Dissenters' Shares held by
such Dissenting Shareholder shall thereupon be treated as though such shares
had been converted into the right to receive the Per Share Merger
Consideration pursuant to Section 1.3, and unless such holder shall have
made a valid and timely election in accordance with this Agreement, such
shares shall be deemed to be Non-Election Shares as described on Schedule
1.3 hereto.
1.6 Surrender and Exchange of Target Certificates.
(a) Election and Transmittal Materials. Within five business days
after the Effective Time, Buyer shall cause to be sent to each person who
immediately prior to the Effective Time was a holder of record of Target
Common Stock (i) a form for purposes of making elections for the kind of
Per Share Merger Consideration desired by such holder and containing
instructions with respect thereto, and (ii) transmittal materials and
instructions for surrendering certificates for Target Common Stock ("ach
Holder shall be reduced pro rata by multiplying the number of Cash Election
Shares of such Holder by a fraction, the numerator of which is the number of
Target Common Shares equal to (x) the Cash Percentage times (y) the Aggregate
Shares minus the aggregate number of Dissenters' Shares and the denominator
of which is the aggregate number of Cash Election Shares, and (ii) the shares
of such Holder representing the difference between such Holder's initial Cash
Election and such Holder's reduced Cash Election pursuant to clause (i) shall
be converted into and be deemed to be Preferred Stock Election Shares.
B. Procedures.
1. Target and Buyer shall prepare the Election Form for purposes of
making elections and containing instructions with respect thereto. The
Election Form shall be distributed to each Holder at such time as Target
and Buyer shall determine and shall specify the date by which all such
elections must be made (the "Election Deadline"), which date shall be
determined by Target and Buyer but shall be not earlier than the 20 calendar
days following the Effective Time.
2. Elections shall be made by Holders by mailing to such bank or entity
as may be mutually acceptable to Buyer and Target as the exchange agent
("Exchange Agent"), a duly completed Election Form. To be effective, an
Election Form must be properly completed, signed and submitted to the
Exchange Agent accompanied by certificates representing the Target Common
Shares as to which the election is being made (or by an appropriate guaranty
of delivery by a commercial bank or trust company in the United States or
a member of a registered national security exchange or the National
Association of Security Dealers, Inc.), or by evidence that such certificates
have been lost, stolen or destroyed accompanied by such security or indemnity
as shall be reasonably requested by Buyer. An Election Form and accompanying
share certificates must be received by the Exchange Agent by the close of
business on the Election Deadline. An election may be changed or revoked
but only by written notice received by the Exchange Agent prior to the
Election Deadline including, in the case of a change, a properly completed
revised Election Form. Any share certificates which were submitted in
connection with an election shall be returned to the holder thereof in the
event such election is revoked as aforesaid and such holder requests in
writing the return of such certificates.
3. Buyer will have the discretion, which it may delegate in whole or in
part to the Exchange Agent, to determine whether the Election Forms have been
properly completed, signed and submitted or changed or revoked and to
disregard immaterial defects in Election Forms. The decision of Buyer (or
the Exchange Agent) in such matters shall be conclusive and binding. Neither
Buyer nor the Exchange Agent will be under any obligation to notify any
person of any defect in an Election form submitted to the Exchange Agent.
Either Buyer (or the Exchange Agent) shall also make all computations
contemplated by Part A of this Schedule 1.3.
4. For the purposes hereof, a Holder who does not submit an effective
Election Form to the Exchange Agent prior to the Election Deadline shall be
deemed to have made a Non-Election. If Buyer or the Exchange Agent shall
determine that any purported Cash Election, Preferred Stock Election or
Common Stock Election was not effectively made, such purported elections
shall be deemed to be of no force and effect and the Holder making such
purported election shall, for purposes hereof, be deemed to have made a
Non-Election.
5. In the event that this Agreement is terminated pursuant to the
provisions hereof and any shares have been transmitted to the Exchange Agent
pursuant to the provisions hereof, Buyer and Target shall cause the Exchange
Agent to promptly return such shares to the person submitting the same.
Attachments: Rules 144 and 145
Exhibit A
RESOLUTION OF THE BOARD OF DIRECTORS OF
CONESTOGA ENTERPRISES, INC.
ESTABLISHING AND DESIGNATING
SERIES A CONVERTIBLE PREFERRED STOCK
AS A CLASS OF CAPITAL STOCK
RESOLVED, that the articles of incorporation of Conestoga Enterprises,
Inc. (herein called the "Corporation") be amended to authorize and establish, as
a class of the corporation's authorized capital stock, the Series A
Convertible Preferred Stock having a par value of $65.00 per share (such
class being herein called the "Series A Stock"), having the following voting
rights, designations, preferences, limitations and special rights under and
subject to the following provisions:
Section 1. Designation. There shall be a class of capital stock
which shall consist of 900,000 shares and shall be designated as Series A
Convertible Preferred Stock. The Series A Stock is being issued in
connection with the transactions contemplated by that certain Agreement and
Plan of Merger dated as of October 18, 1995 among Conestoga Enterprises,
Inc., CB Merger Corporation and Buffalo Valley Telephone Company which
transactions closed on _______________, 1996.
Section 2. Definitions.
(a) The term "Common Stock" as used in this resolution shall be
deemed to mean stock of the Corporation of any class, whether now or
hereafter authorized, which has the right to participate in the distribution
of either earnings or assets of the Corporation without limit as to the
amount or percentage; except that Common Stock issuable upon conversion of
Series A Stock as provided in this resolution shall mean only Common Stock
authorized at the time of original issue of Series A Stock and stock of any
other class into which the then authorized Common Stock shall thereafter have
been changed by reclassification or otherwise.
(b) The term "Dividend Parity Stock" as used in this resolution
with respect to Series A Stock shall be deemed to mean all other stock of the
Corporation ranking equally therewith as to the payment of dividends. The
term "Liquidation Parity Stock" as used in this resolution with respect to
Series A Stock shall be deemed to mean all other stock of the Corporation
ranking equally therewith as to distribution of assets upon liquidation.
(c) The term "Junior Stock" as used in this resolution with
respect to Series A Stock shall be deemed to mean the Common Stock and all
other stock of the Corporation ranking junior to the Series A Stock as to the
payment of dividends and the distribution of assets upon liquidation. The
term "Dividend Junior Stock" as used in this resolution with respect to
Series A Stock shall be deemed to mean the Common Stock and all other stock
of the Corporation ranking junior to the Series A Stock as to the payment of
dividends. The term "Liquidation Junior Stock" as used in this resolution
with respect to Series A Stock shall be deemed to mean the Common Stock and
all other stock of the Corporation ranking junior to the Series A Stock as
to distribution of assets upon liquidation.
(d) The term "Senior Stock" as used in this resolution with
respect to Series A Stock shall be deemed to mean all other stock of the
Corporation ranking senior thereto as to the payment of dividends or
distribution of assets upon liquidation.
Section 3. Dividends.
(a) The holders of record of Series A Stock shall be entitled
to receive, as and if declared by the board of directors, cumulative cash
dividends thereon of $3.42 per annum, and no more, but only out of funds
legally available for the payment of such distributions under 15 Pa.C.S.
Sec.1551 (relating to distributions to shareholders) or under any corresponding
superseding provision of law. Dividends on the Series A Stock shall be
payable semi-annually on _____________ and _____________ in each year.
Dividends shall accrue from ____________. Accumulations of dividends shall
not bear interest. Unless full cumulative dividends on outstanding shares of
Series A Stock have been paid, no dividend or other distribution (except in
Junior Stock) shall be declared or paid on Common Stock or on other Dividend
Junior Stock and no amount shall be set aside or applied to the redemption,
purchase or other acquisition of Common Stock or other Dividend Junior Stock
other than by exchange therefor of Junior Stock or, with respect to
redemptions, purchases or other acquisitions of Dividend Junior Stock other
than Common Stock, out of the proceeds of a substantially concurrent sale of
shares of Junior Stock.
(b) In the event that full cumulative dividends upon the Series
A Stock and stated dividends on all Dividend Parity Stock are not paid in full,
all shares of Series A Stock and all shares of Dividend Parity Stock shall
participate ratably in the payment of dividends, including accumulations, if
any, in accordance with the sums which would be payable thereon if all
dividends thereon were declared and paid in full.
Section 4. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, the holders of Series A Stock shall be entitled to
receive from the assets of the Corporation payment in cash of $65.00 per
share, plus a further amount equal to unpaid cumulative dividends on Series A
Stock accrued to the date when such payments shall be made available to the
holders thereof, and no more, before any amount shall be paid or set aside
for, or any distribution of assets shall be made to the holders of Common
Stock or other Liquidation Junior Stock. If, upon such liquidation,
dissolution or winding up, the amounts available for distribution to the
holders of Series A Stock and all Liquidation Parity Stock, shall be
insufficient to permit the payment in full to such holders of the
preferential amounts to which they are entitled, then such amounts shall
be paid ratably among the shares of Series A Stock and Liquidation Parity
Stock in accordance with the respective preferential amounts (including
unpaid cumulative dividends, if any) payable with respect thereto if paid
in full.
(b) None of the following shall be considered a liquidation,
dissolution or winding up of the Corporation within the meaning of this
section:
(1) a consolidation of the Corporation with any other
corporation;
(2) a merger of the Corporation into any other corporation
or a merger of any other corporation into the Corporation;
(3) a reorganization of the Corporation;
(4) the purchase or redemption of all or part of the
outstanding shares of any class or classes of the Corporation;
(5) a sale or transfer of all or any part of the assets
of the Corporation;
(6) a share exchange to which the Corporation is a party;
or
(7) a division of the Corporation.
Section 5. Redemption at the Option of the Corporation. Commencing
on the fourth anniversary of the Closing Date, the Series A Stock may be called
for redemption and redeemed at the option of the Corporation by resolution
of the board of directors, in whole at any time or in part at any time or
from time to time upon the notice hereinafter provided for in section 7, by
the payment in cash of a redemption price equal to the applicable percentage
of $65.00 per share specified below, plus an amount equal to the accrued and
unpaid cumulative dividends thereon to the date fixed by the board of
directors as the redemption date:
If redeemed during the period
(dates inclusive) Applicable percentage
____________, 2000 through ___________, 2001 103.00%
____________, 2001 through ___________, 2002 102.00%
____________, 2002 through ___________, 2003 101.00%
From and after _________________, 2003 100.00%
Section 6. Redemption at the Option of the Holders. Commencing on
the second anniversary of the Closing Date and at any time or from time to
time thereafter in accordance with this section 6, each holder of Series A
Stock shall have the right, at such holder's option, to require the
Corporation to redeem all or a portion of such holder's shares of Series A
Stock at a redemption price of $65.00, plus an amount equal to the accrued
and unpaid cumulative dividends thereon to the redemption date. To exercise
the redemption right provided for in this section 6, a holder must provide
to the Corporation (i) an irrevocable written notice of the holder's exercise
of such right, which notice shall set forth the name of the holder of the
Series A Stock, the number of shares to be redeemed and a statement that the
election to exercise the redemption right is being made thereby; and (ii) the
shares of Series A Stock with respect to which such redemption right is being
exercised, duly endorsed for transfer to the Corporation. Such written
notice shall be irrevocable and (unless the Corporation shall default in
making the requested redemption) shall terminate all conversion rights of
the holder under section 11 with respect to the shares of Series A Stock to
be redeemed pursuant to this section 6. Holders may not exercise the
redemption right pursuant to this section 6 for less than 100 shares of
Series A Stock (or, if less than 100, all shares of Series A Stock owned by
such holder). Subject to the last sentence of this section 6, the
Corporation as of each March 31, June 30, September 30 and December 31 shall
redeem all shares (if any) of Series A Stock for which a notice of redemption
under this section 6 has been received by the Corporation prior to the close
of business on the immediately preceding February 15, May 15, August 15 or
November 15, respectively. The Corporation shall also redeem all shares (if
any) of Series A Stock for which a notice of redemption under this section 6
has been received by the Corporation during the 30 day period following the
date of mailing by the Corporation pursuant to paragraphs 11(g)(3) and
11(g)(4) of notice of a reclassification, capital reorganization, merger,
consolidation, share exchange, division, sale, lease, exchange or other
disposition of assets, liquidation, dissolution or winding-up; any shares
submitted for redemption during such 30 day period shall be redeemed no later
than 60 days following the mailing date of such notice.
Section 7. Manner of Redemption of Series A Stock
(a) If less than all of the outstanding shares of Series A Stock
shall be called for redemption under section 5, the particular shares to be
redeemed shall be selected by lot or by such other equitable manner as may be
prescribed by resolution of the board of directors.
(b) Notice of redemption under section 5 of any shares of
Series A Stock shall be given by the Corporation by first-class mail, not
less than 30 nor more than 60 days prior to the date fixed by the board of
directors of the Corporation for redemption (the "redemption date"), to the
holders of record of the shares to be redeemed at their respective addresses
then appearing on the records of the Corporation. The notice of the
redemption shall state:
(1) the redemption date;
(2) the redemption price;
ction (b) of
section 3 above, upon conversion of any shares of Series A Stock, the
Corporation shall deliver to the holder of the shares, together with the
certificates for the Common Stock issued upon conversion, payment (but
only out of funds legally available for the payment of such distributions
under 15 Pa.C.S. Sec. 1551) for all accrued and unpaid cumulative dividends
on such shares through the date of conversion as determined in accordance
with subsection (h) below.
(f) Whenever the conversion prices shall be adjusted as
provided in subsection (b), the Corporation, as soon as practicable and
in no event later than ten business days thereafter, shall file with each
transfer agent and conversion agent for Series A Stock a statement, signed
by the president, any vice president or the treasurer of the Corporation,
stating the adjusted conversion prices determined as therein provided and
setting forth in reasonable detail the facts requiring such adjustment,
and shall promptly mail a copy of such statement to each holder of Series
A Stock at the address of such holder then appearing on the record books
of the Corporation. Each transfer and conversion agent shall be fully
protected in relying on such statement and shall be under no duty to
examine into the truth or accuracy thereof. If any question shall at
any time arise with respect to the adjusted conversion prices, it shall
be resolved by a firm of independent public accountants selected by the
Corporation, who may be the Corporation's auditors, and such determination
shall be binding upon the Corporation and the holders of such shares.
(g) If the Corporation shall propose:
(1) to pay any dividend in stock upon its Common
Stock or to make any other distribution, other than a cash
dividend payable out of retained earnings, to the holders of
its Common Stock;
(2) to offer to the holders of its Common Stock
rights to subscribe to any additional shares of any class or
any other rights or options;
(3) to effect any reclassification of its Common
Stock (other than a reclassification involving merely the
subdivision or combination of outstanding Common Stock), or
to effect any capital reorganization, or to engage in any
merger, consolidation, share exchange, division or sale,
lease, exchange or other disposition of all or substantially
all of its property and assets in a transaction in which
approval of any holders of the Common Stock or Series A Stock
is required; or
(4) to liquidate, dissolve or wind-up;
then, in each such case, the Corporation shall file with each transfer agent
for Series A Stock and shall mail to the holders of record of Series A Stock
at their respective addresses then appearing on the record books of the
Corporation notice of such proposed action, such notice to be filed and
mailed at least ten days, if the proposed action is that referred to in
paragraph (1) or (2), and at least 30 days, if the proposed action is that
referred to in paragraph (3) or (4), prior to the record date for the
purpose of determining holders of the Common Stock entitled to the benefits
of the action referred to in paragraph (1) or (2) or to vote with respect
to the action referred to in paragraph (3) or (4) or, if no record date is
taken for any such purpose, the date of the taking of such proposed action.
Such notice shall specify the record date for such stock dividend,
distribution of such rights or options, or the date on which such
reclassification, reorganization, merger, consolidation, share exchange,
division, sale, lease, exchange or other disposition, liquidation,
dissolution or winding up shall take place, as the case may be, and the
date of participation therein by the holders of Common Stock if any such
date is to be fixed. If such notice relates to any proposed action referred
to in paragraph (3) or (4), it shall set forth facts with respect thereto
as shall be reasonably necessary to inform each transfer agent and the
holders of such shares as to the effect of such action upon their
conversion rights. Failure to file any certificate or notice, or to mail
any notice, or any defect in any certificate or notice, pursuant to this
subsection, shall not affect the legality or validity of any adjustment,
dividend, distribution or right referred to in this subsection.
(h) In order to convert shares of Series A Stock into
Common Stock the holder thereof shall surrender at the office of any
transfer or conversion agent for the Series A Stock the certificate or
certificates therefor, duly endorsed to the Corporation or in blank, and
give written notice to the Corporation at such office that the holder
elects to convert such shares and shall state in writing therein the name
or names (with addresses) in which such holder wishes the certificate or
certificates for Common Stock to be issued. Shares of Series A Stock shall
be deemed to have been converted immediately prior to the close of business
on the date of the receipt by the transfer or conversion agent of such
certificate or certificates for shares for conversion as provided in this
subsection, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock after such date of receipt.
As soon as practicable on or after the date of conversion, the Corporation
shall issue and deliver at such office a certificate or certificates for
the number of full shares of Common Stock issuable upon such conversion,
together with (x) a scrip certificate for, or cash in lieu of, any fraction
of a share, as provided in subsection (j), and (y) all accrued and unpaid
cumulative dividends on the converted shares of Series A Stock through
the date of conversion as provided in subsection (e), to the person or
persons entitled to receive the same.
(i) The Corporation shall pay any and all federal or
state original issue taxes that may be payable in respect of the issue or
delivery of shares of Common Stock on conversion of shares of Series A Stock
pursuant to this resolution. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock in a name
other than that in which the shares of Series A Stock so converted were
registered, and no issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any
such tax, or has established to the satisfaction of the Corporation either
that such tax has been paid or that no such tax is payable.
(j) The Corporation shall not issue fractional shares of
Common Stock upon any conversion of shares of Series A Stock. As to any
final fraction of a share which the holder of one or more shares of Series A
Stock would be entitled to receive upon exercise of such shareholder's
conversion right, the Corporation shall, at its option as to any such
exercise, either:
(1) deliver a scrip certificate of the Corporation
in respect of such final fraction; or
(2) pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction times the
closing price per share of Common Stock on the business day
which next precedes the day of exercise.
The closing price for such day shall be, in the event that the Common Stock
is listed on any national securities exchange, the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the last reported bid and asked prices regular way, in either
case as reported on the composite tape for issues traded on the principal
national securities exchange on which the Common Stock is listed or admitted
to trading, or, if the Common Stock is not listed or admitted to trading on
any national securities exchange, the average of the last reported bid and
asked prices in the over-the-counter market as furnished by any national
quotation system or, if not available, any New York Stock Exchange member
firm selected from time to time by the Corporation for the purpose.
(k) The Corporation shall at all times have authorized
and unissued a number of shares of Common Stock sufficient for the
satisfaction of any scrip certificates and the conversion of all shares
of Series A Stock at the time outstanding.
(l) For so long as the Common Stock is listed or
included for quotation or trading on any securities exchange or market or
trading system, the Company agrees to list or include on any such exchange,
market or system all shares of Common Stock issuable upon conversion of the
Series A Stock.
Section 12. Shareholder Rights as to Dividends and Redemptions.
It shall be the mandatory and not discretionary duty of the board of
directors to (i) declare and cause to be paid all dividends relating to
the Series A Stock and (ii) make redemptions of shares of Series A Stock
in accordance with the terms of such stock, so long as such dividends or
redemptions are not then prohibited by 15 Pa.C.S. Sec. 1551(b) (or any
successor provision). The rights of a holder to the declaration and
payment of dividends on, and the redemption of, shares of Series A Stock
shall be specifically enforceable by a holder to the maximum extent
permitted by 15 Pa.C.S. Sec. 1521(b) (or any successor provision).
Section 13. Financial Statements and Information. For so long as
any shares of Series A Stock shall be outstanding, the Corporation shall
furnish to the holders of record of the Series A Stock at their respective
addresses then appearing on the record books of the Corporation, copies of
all annual and quarterly reports, proxy statements and all other information
and reports furnished by the Corporation to the holders of Common Stock.
Such information shall be furnished in the same manner and by the same means
as furnished to the holders of Common Stock. If at any time the Corporation
shall cease to be required, under the Securities Exchange Act of 1934, as
amended, to furnish reports and proxy statements to the holders of the
Common Stock, then the Corporation shall in lieu of such information
furnish the holders of Series A Stock the financial reports required by,
within the time period specified in, Pa.C.S. Sec. 1554 (or any successor
provision).
EXHIBIT B
_______________, 1996
Conestoga Enterprises, Inc.
202 E. First Street
Birdsboro, PA 19508
Attention: Executive Vice President
Dear Sir:
This letter is delivered to you in compliance with Section 5.10 of
the Agreement and Plan of Merger, dated October 18, 1995 (the "Agreement"),
between Buffalo Valley Telephone Company ("Target"), Conestoga Enterprises,
Inc. ("Buyer") and CB Merger Corporation ("Sub"), providing for the merger
(the "Merger") of Target with and into Sub.
(a) The undersigned hereby acknowledges, solely for the purpose of
this undertaking, that it may be deemed to be an "affiliate" of Target as
that term is used in paragraph (c) of Rule 145 under the Securities Act of
1933, as amended (the "Act").
(b) The undersigned represents and warrants to you that the shares
of Series A Convertible Preferred Stock ("Series A Preferred") of Buyer
and the shares of common stock of the Buyer issued as Common Stock Merger
Consideration or issuable upon the conversion of shares of Series A
Preferred ("Buyer Common Stock", and together with the Series A Preferred,
"Merger Stock") which the undersigned shall receive in exchange for any
shares of common stock of Target are not being acquired by the undersigned
with a view to their distribution except to the extent and in the manner
provided for in paragraph (d) of Rule 145 under the Act.
(c) The undersigned acknowledges that it has been advised by
counsel for Target of the provisions of the federal securities laws which
relate to resales of Merger Stock to be received by it in connection with
the Merger, and the undersigned hereby undertakes to comply fully with
such provisions. The undersigned also agrees that Buyer may place the
legend set forth below on the certificate or certificates for any or all
Merger Stock to be received by the undersigned in connection with the
Merger, may file stop-transfer instructions with respect to such shares
with the transfer agent for such shares and may refuse to transfer such
shares except upon delivery to Buyer of an opinion, in form and substance
satisfactory to Buyer, of counsel acceptable to Buyer to the effect that
the proposed transfer of some or all of such shares does not violate
federal securities laws.
(d) Pursuant to the provisions of the preceding paragraph, the
certificate or certificates evidencing Merger Stock received by me may
bear the following legend:
"The shares represented by this certificate are transferable
only upon, and are otherwise subject to, certain conditions
specified in a certain letter dated ______________, 1996 from the
registered owner hereof to Conestoga Enterprises, Inc. (a copy of
which is on file with the Secretary of Conestoga Enterprises, Inc.),
and no transfer of such shares shall be valid or effective until
such conditions have been fulfilled."
(e) It is understood that Buyer is required to file certain
periodic reports under the Securities Exchange Act of 1934, as amended,
with the Securities and Exchange Commission and that no sales of Merger
Stock received by the undersigned in the Merger may be made under Rule
145(d) unless Buyer has informed the undersigned that it has filed all
such reports required to be filed during the 12 months preceding a
proposed sale. It is further understood that Buyer will promptly respond
to requests by the undersigned as to the filing of such reports.
Very truly yours,
___________________
Signature
___________________
Print Name of Shareholder
EXHIBIT 99
CONESTOGA ENTERPRISES, INC. NEWS RELEASE
FOR IMMEDIATE RELEASE OCTOBER 19, 1995
Birdsboro, Pennsylvania, October 19, 1995 -- Conestoga Enterprises,
Inc. (NASDAQ - CENI) and Buffalo Valley Telephone Company (OTC - BUFF) today
announced that they had entered into a definitive merger agreement relating
to the acquisition of Buffalo Valley Telephone Company (BVT) by Conestoga
Enterprises, Inc. (CEI).
Pursuant to the merger agreement, BVT would become a subsidiary of
CEI. The consideration to be paid for each outstanding BVT share is
either (i) $65.00 in cash, (ii) one share of $65.00 convertible preferred
stock of CEI, or (iii) 2.4 shares of CEI common stock, subject to certain
adjustments. At CEI's current market price of $27 5/8, the common stock
portion of the transaction has a market value of $66.30, and the total
consideration to be paid for BVT would be approximately $58 million.
BVT shareholders will have the opportunity to elect whether they wish
to receive cash, convertible preferred stock, common stock, or a combination
thereof in exchange for their BVT shares. BVT shareholders electing convertible
preferred stock or common stock will receive the consideration requested. No
more than 50% of the aggregate consideration to be paid in the transaction by
CEI may be cash. If cash elections made by BVT shareholders exceed the amount
of cash permitted to be paid in the transaction, BVT shareholders electing
cash will receive a pro rata portion of their consideration in the form of
convertible preferred stock.
The 2.4 shares of CEI common stock to be exchanged for a BVT share
have a current dividend rate of $2.88, a 60% increase over the current BVT
common stock dividend rate of $1.80. The CEI convertible preferred will pay
a dividend of 5.25%, or $3.42 annually, a 90% increase over the current BVT
common stock dividend rate of $1.80.
The CEI convertible preferred may be redeemed at the option of the
holder at $65.00 per share beginning two years after issuance. The convertible
preferred is also subject to redemption, in whole or in part, at the option of
CEI beginning four years after issuance at a redemption price of 103% of par
($66.95) plus accrued interest, declining to par seven years after issuance.
The CEI convertible preferred will be convertible, at the option of the
holder at any time, into shares of Conestoga common stock. The conversion
price will be fixed at 25% over the market price of CEI common stock at the
time the transaction is closed.
The closing of the transaction is subject to SEC review, regulatory
approvals, BVT shareholder approval, CEI shareholder approval, and other
conditions. Accordingly, there can be no assurance that a transaction will be
consummated. The transaction will be accounted for as a purchase for accounting
purposes. It is anticipated that receipt of CEI common or preferred stock by
BVT shareholders in the proposed transaction would qualify as a tax-free
exchange for federal income tax purposes.
BVT also announced that its prior merger agreement with C-TEC
Corporation has been terminated, and that its October 28 shareholders meeting
to consider the C-TEC transaction has been canceled. BVT expects to hold its
delayed 1995 annual shareholders meeting in December.
Conestoga Enterprises, Inc., President, F.M. Brown, stated "We
are particularly pleased to have one of the finest independent telephone
companies in Pennsylvania join forces with us. We feel that Buffalo Valley
Telephone Company's customers, employees, and shareholders will benefit by the
combination of the two companies."
James G. Apple, Chairman of Buffalo Valley Telephone Company,
commented, "We are pleased to become a team member of a top caliber company
like Conestoga Enterprises, Inc. With their operations in telephone, cellular,
and paging, they are especially well qualified to help us to provide the
highest quality telecommunications services to our Buffalo Valley community."
Conestoga Enterprises, Inc., is a Birdsboro, Pennsylvania based
telecommunications company with subsidiaries providing local telephone service,
telephone equipment sales and leasing, the resale of long distance services,
and radio paging services. With the completion of this acquisition, Conestoga
Enterprises, Inc., will provide service to more than 67,000 access lines.
Buffalo Valley Telephone Company is a Lewisburg, Pennsylvania
based independent telephone company providing local telephone service in
Union and Northumberland Counties in central Pennsylvania, with approximately
17,300 access lines at September 1995.
FOR FURTHER INFORMATION CONTACT:
John R. Bentz
Executive Vice President
Conestoga Enterprises, Inc.
202 E. First St.
Birdsboro, PA 19508
Telephone 610-582-6203
