As filed with the Securities and Exchange Commission on July 13, 1995
Registration No. 33-__________
===========================================================================
Securities and Exchange Commission
Washington, D.C. 20549
_______________
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_______________
Telephone and Data Systems, Inc.
(Exact name of Registrant as specified in its charter)
Iowa 6749 36-2669023
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification
Number)
30 North LaSalle Street, Suite 4000
Chicago, Illinois 60602
(312) 630-1900
(Address, including Zip Code, and telephone number,
including area code, of registrant's principal executive offices)
____________________
With copies to:
LeRoy T. Carlson, Chairman David J. Boyd
Telephone and Data Systems, Inc. Sidley & Austin
30 North LaSalle Street, Suite 4000 One First National Plaza
Chicago, Illinois 60602 Chicago, Illinois 60603
(312) 630-1900 (312) 853-7444
(Names, addresses, including Zip Codes, and telephone numbers,
including area codes, of agents for service)
____________________
Approximate date of commencement of proposed sale to the public:
Upon the Effective Date of the merger of TDS-Camden Acquisition Corp. with
and into Camden Telephone Company, Inc., as set forth in Section 1.2 of
the Agreement and Plan of Merger included as Annex A to the Proxy
Statement-Prospectus forming a part of this Registration Statement.
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:
_______________________________
CALCULATION OF REGISTRATION FEE
================================================================================
Title of each Proposed Proposed
class of Amount to maximum maximum Amount of
securites be registered offering price aggregate registration
registered per unit offering price fee
________________________________________________________________________________
Common Shares, 175,000 Shares(1) N/A $1,743,280(2) $601.13
par value $1.00
================================================================================
(1) Estimated maximum number of shares which may be issued in the Merger
assuming a price per share of approximately $32.00 in exchange for 100%
of the Common Stock, without par value, of Camden Telephone Company, Inc.
(2) Because there is no market for the shares of Camden Telephone Company,
Inc., which are to be received by the Registrant in the Merger, pursuant
to Rule 457(F)(2), the fee is to be calculated based on the aggregate
book value of such shares which is $1,743,280 as of March 31, 1995.
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.
================================================================================
<PAGE>
TELEPHONE AND DATA SYSTEMS
Cross-Reference Sheet
--------------------
Location in
Item Number and Caption Prospectus
----------------------- ------------
A. Information About the Transaction
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus. . . . . . . . . . . . . Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . Available Information;
Documents Incorporated
by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Information Summary; General Information
4. Terms of the Transaction . . . . . Summary; General Information;
The Merger; Description of
Camden Shares; Description of
TDS Securities; Comparative
Rights of TDS Shareholders
and Camden Shareholders
5. Pro Forma Financial Information . . Summary-Selected Financial
Information
6. Material Contacts with the Company
Being Acquired . . . . . . . . . . The Merger
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters . . . . . *
8. Interests of Named Experts and
Counsel . . . . . . . . . . . . . Legal Matters; Experts
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities . . . . . . . . . . *
B. Information About the Registrant
10. Information with Respect to S-3
Registrants . . . . . . . . . . . Business of TDS
11. Incorporation of Certain
Information by Reference . . . . Documents Incorporated by
Reference
12. Information with Respect to S-2
or S-3 Registrants . . . . . . . . *
13. Incorporation of Certain
Information by Reference . . . . . *
14. Information with Respect to
Registrants Other Than S-3 or S-2
Registrants . . . . . . . . . . . . *
C. Information About the Company Being Acquired
15. Information with Respect to S-3
Companies . . . . . . . . . . . . . *
16. Information with Respect to S-2 or
S-3 Companies . . . . . . . . . . . *
17. Information with Respect to
Companies Other Than S-2 or S-3
Companies . . . . . . . . . . . . Summary -Selected Financial
Information; Information with
Respect to Camden; Camden
Management's Discussion and
Analysis of Financial Condition
and Results of Operations;
Financial Statements of Camden
D. Voting and Management Information
18. Information If Proxies, Consents or
Authorizations Are to be Solicited General Information; The Merger
Shareholders; The Merger -
Interests of Certain Persons in
the Merger; Information with
Respect to Camden-Directors and
Executive Officers, and
-Compensation of Directors
19. Information If Proxies, Consents
or Authorizations Are Not to be
Solicited or in an Exchange Offer *
_______________
* Not applicable or answer negative
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
170 West Main Street
Camden, Indiana 46917-0066
Dear Shareholder:
You are invited to attend a special meeting of shareholders of
Camden Telephone Company, Inc. ("Camden"), at ____ p.m. on __________,
1995 at _______________________________________________.
At the special meeting, holders of Common Shares, without par
value, of Camden will be asked to consider and approve an Agreement and
Plan of Merger, as amended, among Telephone and Data Systems, Inc.
("TDS"), TDS-Camden Acquisition Corp. ("Sub") and Camden (the "Merger
Agreement"), and the Merger of Sub with and into Camden (the "Merger").
If approved, the Merger is expected to occur on or about ___________, 1995
if all regulatory approvals have been received by such date or as soon as
practicable thereafter following the receipt of all required regulatory
approvals. In the Merger, Camden will become a wholly-owned subsidiary of
TDS and the Camden shares held by the shareholders will be converted into
common shares of TDS, as described in the accompanying Proxy Statement-
Prospectus.
Your Board of Directors believes that the Merger is in the best
interests of all Camden shareholders and unanimously recommends that you
vote your shares for the Merger. The terms of the Merger, as well as other
important information, are contained in the enclosed Proxy Statement-
Prospectus. Also being delivered herewith in connection with the offer by
TDS is the TDS Annual Report on Form 10-K and the TDS Annual Report to
Shareholders for the year ended December 31, 1994, the TDS Notice of
Annual Meeting and Proxy Statement for the 1995 Annual Meeting of
Shareholders and the TDS Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1995. You are urged to read the Proxy Statement-
Prospectus and the accompanying documents carefully.
Approval of the Merger requires an affirmative vote of the holders
of a majority (51%) of the outstanding Camden Shares entitled to vote on
the proposal. CONSEQUENTLY, THE EFFECT OF FAILING TO VOTE ANY CAMDEN
SHARES AT OUR SPECIAL MEETING OF SHAREHOLDERS WILL BE THE SAME AS A
NEGATIVE VOTE WITH RESPECT TO THE MERGER. ACCORDINGLY, WHETHER OR NOT YOU
PLAN TO ATTEND OUR SPECIAL SHAREHOLDERS MEETING, WE REQUEST THAT YOU
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS SOON AS
POSSIBLE IN THE ENCLOSED PREPAID ENVELOPE. PLEASE DO NOT SEND IN ANY
CERTIFICATES FOR YOUR SHARES AT THIS TIME. If, after voting your shares
through the mail, you decide you would rather vote them in person, you may
do so at the meeting. We thank you for your prompt attention to this
matter and appreciate your support.
Very truly yours,
James R. Sullivan,
President
___________, 1995
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
Notice of Special Meeting of Shareholders to be Held on __________, 1995
To the Shareholders of
Camden Telephone Company, Inc.:
A special meeting of the shareholders of Camden Telephone Company,
Inc., an Indiana corporation ("Camden"), will be held on __________, 1995
at ____ p.m. at ______________________________, ___________, Camden,
Indiana, for the following purposes:
1. To consider and vote upon approval of an Agreement and Plan of
Merger, as amended, among Telephone and Data Systems, Inc. ("TDS"), TDS-
Camden Acquisition Corp. ("Sub") and Camden (the "Merger Agreement")
providing for the merger (the "Merger") of Sub with and into Camden
pursuant to which Camden will become a wholly-owned subsidiary of TDS. In
the Merger, the Camden Shares held by the shareholders will be converted
into Common Shares of TDS, as described in the accompanying Proxy
Statement-Prospectus.
2. To transact such other business as may properly come before
the meeting and any adjournment or adjournments thereof.
The Board of Directors of Camden has fixed the close of business
on ___________, 1995 as the record date for the Special Meeting. Only
shareholders of record at such date will be entitled to notice of and to
vote at the Special Meeting and any adjournment or adjournments thereof.
Approval of the Merger Agreement will require the affirmative vote
of a majority (51%) of the issued and outstanding Camden Shares.
Consequently, the effect of failing to vote any Camden Share at the
Special Meeting will be the same as a negative vote with respect to the
Merger. On ___________, 1995, there were 280 shares of Common Stock
outstanding.
A copy of the provisions of Indiana law that establishes the right
of shareholders to dissent from approval of the Merger Agreement, and the
procedures required to exercise such rights, and obtain court determined
appraised value for their shares is also enclosed.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY BUT NOT LATER THAN __________, 1995 IN THE ENCLOSED ENVELOPE
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING. IF, AFTER VOTING
YOUR SHARES THROUGH THE MAIL, YOU DECIDE YOU WOULD RATHER VOTE THEM IN
PERSON, YOU MAY DO SO AT THE MEETING.
By order of the Board of
Directors
JoAnn Johnson,
Secretary - Treasurer
___________, 1995
<PAGE>
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.
SUBJECT TO COMPLETION, DATED JULY 13, 1995
CAMDEN TELEPHONE COMPANY, INC. TELEPHONE AND DATA SYSTEMS, INC.
170 West Main Street 30 North LaSalle, 40th Floor
Camden, Indiana 46917-0066 Chicago, Illinois 60602
PROXY STATEMENT-PROSPECTUS
For the Special Meeting of Shareholders of Camden Telephone Company, Inc.
to be held __________, 1995
_______________
Telephone and Data Systems, Inc. ("TDS") has filed a Registration
Statement on Form S-4 with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, covering its
Common Shares, par value $1.00 per share (the "TDS Common Shares"), to be
issued in connection with the proposed merger (the "Merger") described in
this Prospectus. Also being delivered herewith are TDS' Annual Report to
the Commission on Form 10-K for the year ended December 31, 1994, the TDS
Annual Report to Shareholders for the year ended December 31, 1994, the
TDS Notice of Annual Meeting and Proxy Statement for the 1995 Annual
Meeting of Shareholders and TDS' Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995. This Prospectus of TDS also
constitutes the Proxy Statement of Camden Telephone Company, Inc.
("Camden") to be used in soliciting proxies of Camden shareholders for a
Special Meeting of Shareholders to be held on __________, 1995, including
any adjournments thereof, to consider and vote upon the Merger of a
wholly-owned subsidiary of TDS into Camden pursuant to which Camden will
become a wholly-owned subsidiary of TDS.
This Proxy Statement-Prospectus is first being sent to shareholders
of Camden on or about ___________, 1995.
THE TELEPHONE AND DATA SYSTEMS, INC. COMMON SHARES TO BE ISSUED IN THE
MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------
No person has been authorized to give any information or to make
any representations, other than those contained in this Proxy Statement-
Prospectus in connection with the offer contained herein, and if given or
made, such information or representations must not be relied upon as
having been authorized by TDS or Camden. This Proxy Statement-Prospectus
does not constitute an offer of any securities other than the securities
to which it relates to any person to whom it is unlawful to make such
offer or solicitation in any state or other jurisdiction. Neither the
delivery of this Proxy Statement-Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent to the
date hereof.
The date of this Proxy Statement-Prospectus is ____________ 1995.
<PAGE>
AVAILABLE INFORMATION
TDS 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
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; New York
Regional Office, Seven World Trade Center, New York, New York 10048; and
Chicago Regional Office, 500 W. Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Pubic
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. TDS's Common Shares are listed on the
American Stock Exchange, and reports, proxy statements and other
information concerning TDS may be inspected at the office of the American
Stock Exchange, Inc., 86 Trinity Place, New York, New York 10006. 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 SEC. The Registration
Statement and any amendments thereto, including exhibits filed as a part
thereof, are available for inspection and copying as set forth above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents heretofore filed by TDS with the Commission
under the Exchange Act are incorporated herein by reference: (a) Annual
Report on Form 10-K for the year ended December 31, 1994, (b) Notice of
Annual Meeting of Shareholders and Proxy Statement dated April 14, 1995;
(c) Current Reports on Form 8-K dated March 15, 1995 and May 19, 1995;
(d) Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 and
(e) Report on Form 8-A/A-2, dated December 20, 1994, which includes a
description of TDS' Common Shares.
All documents filed by TDS pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement-
Prospectus and prior to the date of the Special Meeting of Shareholders of
Camden, and any and all adjournments thereof, shall be deemed to be
incorporated by reference in this Proxy Statement-Prospectus and to be a
part hereof from the date of filing of such documents. Any statements
contained in a document incorporated by reference herein shall be deemed
to be modified or superseded for purposes hereof to the extent that a
statement contained herein (or in any other subsequently filed document
which also is incorporated by reference herein) modifies or supersedes
such statement. Any statement so modified or superseded shall not be
deemed to constitute a part hereof except as so modified or superseded.
All information appearing in this Proxy Statement-Prospectus is qualified
in its entirety by the information and financial statements (including
notes thereto) appearing in the documents incorporated herein by
reference.
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS
(OTHER THAN EXHIBITS THERETO) ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN
OR ORAL REQUEST BY ANY PERSON TO WHOM THIS PROXY STATEMENT-PROSPECTUS HAS
BEEN DELIVERED, FROM INVESTOR RELATIONS, TELEPHONE AND DATA SYSTEMS, INC.,
30 NORTH LASALLE STREET, 40TH FLOOR, CHICAGO, ILLINOIS 60602 (TELEPHONE
312-630-1900). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BEFORE __________, 1995.
-2-
<PAGE>
TABLE OF CONTENTS
Page
----
Available Information . . . . . . . . . . . . . . . . . . . . . . 2
Documents Incorporated by Reference . . . . . . . . . . . . . . . 2
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Summary Selected Financial Information . . . . . . . . . . . . . 8
General Information . . . . . . . . . . . . . . . . . . . . . . . 10
The Merger 11
Merger Consideration . . . . . . . . . . . . . . . . . . . . . 11
Price Range of TDS Common Shares . . . . . . . . . . . . . . 11
Background of the Merger . . . . . . . . . . . . . . . . . . . 12
Camden's Reasons for the Merger; Recommendation of Camden's
Board of Directors . . . . . . . . . . . . . . . . . . . . . 13
TDS's Reasons for the Merger . . . . . . . . . . . . . . . . . 13
Effective Date of the Merger . . . . . . . . . . . . . . . . . 13
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . 13
Conversion of Shares in the Merger . . . . . . . . . . . . . . 14
Exchange of Certificates . . . . . . . . . . . . . . . . . . . 14
Fractional Shares . . . . . . . . . . . . . . . . . . . . . . 14
Representations and Warranties . . . . . . . . . . . . . . . . 14
Business of Camden Pending Completion of the Merger . . . . . 15
Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Amendment; Termination . . . . . . . . . . . . . . . . . . . . 16
Operation of Camden Following the Merger; Interests of Certain
Persons in the Merger . . . . . . . . . . . . . . . . . . . 17
Indemnification . . . . . . . . . . . . . . . . . . . . . . . 17
Registration and Listing . . . . . . . . . . . . . . . . . . . 18
Certain Federal Income Tax Consequences . . . . . . . . . . . 18
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . 19
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . 19
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . 19
Business of TDS . . . . . . . . . . . . . . . . . . . . . . . . . 20
Information with Respect to Camden . . . . . . . . . . . . . . . 21
Business of Camden . . . . . . . . . . . . . . . . . . . . . . 21
Property of Camden . . . . . . . . . . . . . . . . . . . . . . 22
Legal Proceedings of Camden . . . . . . . . . . . . . . . . . 22
Changes in and Disagreements with Accountants of Camden . . . 22
Authorized and Outstanding Securities of Camden . . . . . . . 22
Market for Shares and Dividends . . . . . . . . . . . . . . . 22
Security Ownership by Directors, Executive Officers and Management
Employees . . . . . . . . . . . . . . . . . . . . . . . . . 23
Directors, Executive Officers and Management Employees . . . . 23
Compensation of Directors, Executive Officers and Management
Employees . . . . . . . . . . . . . . . . . . . . . . . . . 23
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 24
Certain Relationships and Related Transactions . . . . . . . . 24
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . 24
Description of Camden Shares . . . . . . . . . . . . . . . . . . 27
Description of TDS Securities . . . . . . . . . . . . . . . . . . 28
Voting Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 28
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Dividend Rights and Restrictions . . . . . . . . . . . . . . . . 29
-3-
<PAGE>
Page
----
Conversion Rights . . . . . . . . . . . . . . . . . . . . . . . . 29
Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 29
General . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Comparative Rights of TDS Shareholders and Camden Shareholders . 30
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 30
Limitation of Director Liability . . . . . . . . . . . . . . . . 30
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . 30
TDS . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Camden . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Index to Camden Financial Statements . . . . . . . . . . . . . . F-1
Annex A - Agreement and Plan of Merger (including the First Supplemental
Agreement thereto)
Annex B - The Indiana Business Corporation Law - Sections 23-1-44-1 to 23-
1-44-20
-4-
<PAGE>
SUMMARY
The following is a summary of certain information contained
elsewhere in this Proxy Statement-Prospectus or in documents delivered
herewith. Certain capitalized terms are defined elsewhere in this Proxy
Statement-Prospectus. Reference is made to, and this Summary is qualified
in its entirety by, the more detailed information contained in this Proxy
Statement-Prospectus, the Annexes hereto and the documents delivered
herewith.
Telephone and Data Systems, Inc.
Telephone and Data Systems, Inc., an Iowa corporation ("TDS"), is
a diversified telecommunications service company with cellular telephone,
local telephone and radio paging operations. The principal executive
office of TDS is located at 30 North LaSalle Street, 40th Floor, Chicago,
Illinois 60602, and its telephone number is: (312) 630-1900. See
"Business of TDS."
Camden Telephone Company, Inc.
Camden Telephone Company, Inc., an Indiana corporation ("Camden"),
is engaged in the business of providing telephone service to customers in
Carrol and Cass Counties, Indiana. The principal executive office of
Camden is located at 170 West Main Street, Camden, Indiana 46917-0066 and
its telephone number is: (219) 686-2111. See "Information with Respect to
Camden-Business of Camden."
Merger Agreement
On April 27, 1995, TDS, TDS-Camden Acquisition Corp., an Indiana
corporation and wholly-owned subsidiary of TDS ("Sub"), and Camden signed
an Agreement and Plan of Merger (the "Original Merger Agreement")
providing for the merger of Sub into Camden as a result of which Camden
would become a wholly-owned subsidiary of TDS (the "Merger"). On June 29,
1995 TDS, Sub and Camden entered into a First Supplemental Agreement
amending the Original Merger Agreement in certain respects. The Original
Merger Agreement, as so amended, is herein referred to as the "Merger
Agreement."
Date, Time and Place of Camden Shareholders' Meeting
Camden's Special Meeting of Shareholders to consider and vote upon
approval of the Merger Agreement is to be held on __________, 1995 at ____
p.m., at ___________________________________, ___________, ______, Indiana
(the "Camden Meeting").
Record Date
Only holders of record of Common Shares of Camden, without par
value ("Camden Shares"), at the close of business on ___________, 1995
(the "Camden Record Date"), are entitled to vote at the Camden Meeting.
At the close of business on that date there were 280 Camden Shares
outstanding.
Purpose of the Camden Meeting
1. To consider and vote upon a proposal to approve the Merger
Agreement and the transactions contemplated thereby; and
2. To transact any other business that may properly come before
the Camden Meeting.
-5-
<PAGE>
Vote Required
The affirmative vote of the holders of a majority (51%) of the
outstanding Camden Shares entitled to vote at the Camden Meeting is
required to approve the Merger Agreement. Directors, officers and
management employees of Camden beneficially owned 35 Camden Shares on the
Camden Record Date (approximately 12.5% of the Camden Shares then
outstanding). See "Information With Respect to Camden-Security Ownership
of Directors, Executive Officers and Management Employees."
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY USING THE
ENCLOSED ENVELOPE TO MAKE SURE YOUR VOTE IS REPRESENTED AT THE CAMDEN
MEETING.
The Merger; Merger Consideration
Upon consummation of the Merger, Sub will be merged with and into
Camden and Camden will become a wholly-owned subsidiary of TDS. In the
Merger, each Camden Share issued and outstanding immediately prior to the
Merger (other than shares held by any shareholder who shall have perfected
his or her right to dissent under the Indiana Business Corporation Law
("IBCL")) will be converted into that number of Common Shares, $1.00 par
value, of TDS (the "TDS Common Shares") determined by dividing $20,000 by
the Average Closing Price (defined below) of the TDS Common Shares,
provided that if the Average Closing Price of the TDS Common Shares is
equal to or greater than $39.125, then each Camden Share shall be
converted into 511.4286 TDS Common Shares and if the Average Closing Price
is less than $36.00, TDS may, but shall not be required to, terminate the
Merger Agreement and not complete the Merger.
The term "Average Closing Price" means the arithmetical average of
the closing price for TDS Common Shares as reported in the American Stock
Exchange Composite Transaction section of The Wall Street Journal for the
five trading days ending on the third trading day prior to the effective
date of the Merger (the "Effective Date").
The total number of TDS Common Shares calculated in accordance
with the foregoing and issued in connection with the Merger is sometimes
referred to herein as the "Aggregate Merger Consideration." The number of
TDS Common Shares into which each Camden Share is converted is referred to
as the "Merger Consideration."
The closing price per TDS Common Share on _________, 1995 was
$_______. As a result, on such date the value of the Merger Consideration
was $________ per Camden Share. The value of the Merger Consideration may
be higher or lower on the Effective Date. The table set forth under the
caption "The Merger - Merger Consideration" indicates the value of the
Merger Consideration at different Average Closing Prices for TDS Common
Shares. See "The Merger - Price Range of TDS Common Shares" for
historical information concerning the selling prices of the TDS Common
Shares on the American Stock Exchange.
TDS will issue only whole TDS Common Shares in connection with the
Merger. Each holder of Camden Shares who otherwise would be entitled to
receive a fractional TDS Common Share will receive in lieu thereof an
amount of cash (without interest) determined by multiplying the closing
sale price of a TDS Common Share on the American Stock Exchange on the
effective date of the Merger (the "Effective Date"), by the fractional
share interest to which such holder would otherwise be entitled.
The Merger Agreement also provides that, if the Merger Agreement
is duly approved by the Camden Shareholders at the special meeting, Camden
shall be entitled to pay a dividend equal to $800 per Camden Share
immediately prior to the Effective Date of the Merger.
-6-
<PAGE>
Recommendation of Camden's Board of Directors
The Board of Directors of Camden believes that the Merger is in
the best interests of Camden and its shareholders. The Board of Camden
unanimously recommends that the shareholders of Camden approve the Merger
Agreement. The Board's recommendation is based upon factors discussed in
this Proxy Statement-Prospectus. See "The Merger - Camden Reasons for the
Merger; Recommendation of Camden's Board of Directors" and "-Operation of
Camden Following the Merger; Interests of Certain Persons in the Merger",
and "Information with Respect to Camden-Security Ownership of Directors,
Executive Officers and Management Employees".
Effective Date of the Merger
If the Merger Agreement is approved at the Camden Meeting, the
Merger is expected to become effective on or about ___________, 1995 or as
soon as practicable thereafter following the receipt of all required
regulatory approvals have been received by such date or as soon as
practicable thereafter following the receipt of all required regulatory
approvals.
Exchange of Certificates
If the Merger Agreement is approved, Camden shareholders will
receive instructions for exchanging certificates representing Camden
Shares for certificates representing TDS Common Shares. Shareholders
should not surrender their certificates until they receive such
instructions.
Conditions to the Merger; Termination
The consummation of the Merger is conditioned upon the fulfillment
of certain conditions set forth in the Merger Agreement, including the
regulatory approvals discussed below. See "The Merger - Conditions." The
Merger Agreement may be terminated by mutual consent of the Boards of
Directors of TDS and Camden, by either TDS or Camden if certain conditions
have not been satisfied or in certain other situations. See "The Merger -
Conditions" and "- Amendment; Termination."
Regulatory Approvals
The Merger is subject to approval by the Indiana Utility
Regulatory Commission ("IURC"). Also, the transfer of certain licenses
pursuant to the Merger is subject to the approval of the Federal
Communications Commission. See "The Merger - Regulatory Approvals."
Federal Income Tax Consequences
The Merger is intended to qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986,
as amended. Whether the transaction does qualify for tax-free treatment
by Camden shareholders will depend in part on circumstances occurring
after the Merger. For a discussion of the possible federal income tax
consequences of the Merger, see "The Merger - Certain Federal Income Tax
Consequences." Camden shareholders are urged to consult their own tax
advisors.
Dissenters' Rights of Appraisal
Under the IBCL, Camden shareholders will be entitled to dissent
from the Merger and, if the Merger is consummated, obtain cash in an
amount equal to the fair value of their Camden Shares which may be more or
less than the amount to be received under the Merger. Specific procedures
are required to be followed in order to exercise such rights. See "The
Merger - Dissenters' Rights." The Merger Agreement provides that if the
holders of more than 15 Camden Shares exercise such rights, TDS and Sub
shall have the right to refuse to consummate the Merger and terminate the
Merger Agreement.
-7-
<PAGE>
SUMMARY SELECTED FINANCIAL INFORMATION
The following tables present summary historical financial information
for TDS and Camden. This information is based upon the consolidated
financial statements of TDS and the financial statements of Camden
incorporated by reference or appearing elsewhere in this Proxy
Statement-Prospectus and should be read in conjunction therewith and
the notes thereto.
<TABLE>
<CAPTION>
Three Months Ended
March 31, (Unaudited) Year Ended December 31,
-------------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(Numbers represent thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
TDS Historical:
Operating Revenues . . . . . $209,975 $158,802 $730,810 $557,795 $432,740 $340,160 $286,743
Net income from continuing
operations (before extraordinary
items and cumulative effect
of change in accounting
principle) . . . . . . . 23,193 10,224 60,544 33,896 38,520 21,113 27,208
Extraordinary item . . . . . --- --- --- --- (769) --- ---
Cumulative effect of a change in
accounting principle(1) . . --- (723) (723) --- (6,866) (5,035) ---
Net income available to TDS
Common Shares . . . . . . . 22,701 8,937 58,012 31,510 28,648 14,390 26,047
Earnings per TDS Common Share:
Net income from continuing operations
(before extraordinary items and
cumulative effect of change in
accounting principle) . .39 .18 1.07 .67 .91 .59 .86
Extraordinary item . . . . . --- --- --- --- (.02) --- ---
Cumulative effect of a change in
accounting principle . . . --- (.01) (.01) --- (.17) (.15) ---
Net Income . . . . . . . . . .39 .17 1.06 .67 .72 .44 .86
Cash dividends per TDS Common Share .095 .09 .36 .34 .32 .30 .28
Total assets.. . . . . . 3,250,678 2,400,586 2,790,127 2,259,182 1,696,486 1,368,145 940,289
Long-term debt and redeemable
preferred stock . . . . . . 685,969 560,678 587,165 564,933 454,852 424,739 277,031
Book value per TDS Common Share $27.80 $25.82 $26.85 $24.15 $21.27 $18.42 $14.17
<CAPTION>
Three Months Ended
March 31, (Unaudited) Year Ended December 31,
-------------------- ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(Numbers represent thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Camden Historical:
Operating Revenues . . . . . $ 288 $ 294 $1,221 $1,084 $1,045 $ 956 $ 859
Net income . . . . . . . . . 86 125 449 350 368 275 235
Net income per Camden Share . 305 445 1,605 1,249 1,314 982 838
Cash dividends per Camden Share 800 --- 700 650 600 500 500
Total assets . . . . . . . . 2,739 3,343 2,922 3,165 3,417 3,273 3,150
Long-term debt . . . . . . . 405 1,005 432 1,025 1,394 1,457 1,517
Book value per Camden Share . 6,226 6,261 6,696 5,816 5,217 4,503 4,022
<CAPTION>
Three Months Ended Year Ended
TDS and Camden March 31, 1995 December 31,
PRO FORMA COMBINED (2): (Unaudited) (3) 1994 (Unaudited) (3)
----------------------- ------------------ --------------------
<S> <C> <C>
Net income before cumulative effect
of change in accounting principle
per TDS Common Share: .40 1.07
Pro Forma
Camden Share equivalent 204.57 574.23
Net income per TDS Common Share: .40 1.06
Pro Forma
Camden Share equivalent 204.57 542.11
Cash dividends per TDS Common Share: .095 .36
Pro Forma
Camden Share equivalent 48.59 184.11
Book value per TDS Common Share: 27.83 26.87
Pro Forma
Camden Share equivalent 14,233 13,742
<F1>
_______________
(1) Effective January 1, 1994, TDS adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" ("SFAS 112"). The cumulative effect of
the change on years prior to 1994 has been reflected in 1994 net
income. Prior years, financial information has not been
restated.
Effective January 1, 1993, TDS adopted SFAS 109, "Accounting for
Income Taxes." The cumulative effect of the change on years
prior to 1993 did not have a material effect on net income or
earnings per share. Prior years' financial information has not
been restated.
-8-
<PAGE>
Effective January 1, 1992, TDS adopted SFAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The
cumulative effect of the change on years prior to 1992 has been
reflected in 1992 net income. Prior years' financial
information has not been restated.
Effective January 1, 1991, TDS changed its method of accounting
for sales commission from capitalizing and amortizing these
costs to expensing as incurred. In addition, two of TDS's
equity-method investees made a similar change. The cumulative
effect of TDS's and the Investees' change on all prior years has
been reflected in 1991 results of operations. Prior years'
financial information has not been restated.
<F2>
(2) The pro forma combined financial information for TDS and Camden
has been prepared based on the purchase method of accounting
assuming 511.4286 TDS Common Shares are issued for each Camden
Share. The pro forma combined information reflects TDS's
acquisition of 100% of the Camden Common Shares, the elimination
of the Camden equity based on the purchase method of accounting
and the allocation of the purchase price to excess cost over the
book value. Excess cost is assumed to be amortized over 40
years.
<F3>
(3) Pro forma financial information for the three months ended
March 31, 1995 represents the combined results of TDS and Camden
for the three months ended March 31, 1995. Pro forma financial
information for the year ended December 31, 1994 represents the
combined results of TDS and Camden for the twelve months ended
December 31, 1994.
</TABLE>
-9-
<PAGE>
GENERAL INFORMATION
This Proxy Statement-Prospectus is furnished in connection with the
solicitation by the Board of Directors of Camden Telephone Company, Inc.,
an Indiana corporation ("Camden"), of proxies to be voted at a special
meeting of the shareholders of Camden (the "Camden Meeting") which will be
held on __________, 1995.
The purpose of the Camden Meeting is to consider and vote upon a
proposal to approve the Agreement and Plan of Merger, dated as of April
27, 1995, as amended by the First Supplemental Agreement, dated as of June
29, 1995 (the "Merger Agreement"), among Telephone and Data Systems, Inc.,
an Iowa corporation ("TDS"), TDS-Camden Acquisition Corp., an Indiana
corporation and a wholly-owned subsidiary of TDS ("Sub"), and Camden,
providing for the merger (the "Merger") of Sub into Camden as a result of
which Camden will become a wholly-owned subsidiary of TDS.
The Board of Directors of Camden has unanimously approved the
Merger Agreement. The Board of Directors of TDS has approved the issuance
of Common Shares, $1.00 par value ("TDS Common Shares"), in the Merger,
and TDS, the sole shareholder of Sub, has approved the Merger and the
Merger Agreement. A copy of the Merger Agreement is attached as Annex A
to this Proxy Statement-Prospectus and is incorporated herein by
reference.
The close of business on ___________, 1995 (the "Camden Record
Date") has been fixed as the record date for determination of the holders
of Common Shares without par value, of Camden ("Camden Shares") entitled
to notice of, and to vote at, the Camden Meeting. As of the Camden Record
Date, there were 280 Camden Shares outstanding. The holders of record on
the Camden Record Date of Camden Shares are entitled to one vote per share
on each matter submitted to a vote at the Camden Meeting. The affirmative
vote of the holders of a majority (51%) of the outstanding Camden shares
is required for approval of the Merger Agreement.
All properly executed proxies not revoked will be voted at the
Camden Meeting in accordance with the instructions contained therein.
Proxies containing no instructions regarding proposals specified in the
form of proxy will be voted in favor of the proposal. If any other
matters are brought before the Camden Meeting and submitted to a vote, all
proxies will be voted in accordance with the judgment of the persons
voting the proxies. A shareholder who has executed and returned a proxy
may revoke it at any time before it is voted, but only by executing and
returning a proxy bearing a later date, by giving written notice of
revocation to the Secretary of Camden or by attending the Camden Meeting
and voting in person.
If a quorum is not obtained, the Camden Meeting may be adjourned by
affirmative vote of a majority of the shareholders present, represented in
person and by proxy, for the purpose of obtaining additional proxies or
votes in favor of the proposal. At any subsequent reconvening of the
Camden Meeting, all proxies will be voted in the same manner as such
proxies would have been voted at the original meeting (except for any
proxies which have theretofore effectively been revoked or withdrawn).
Representatives of Kehlenbrink, Lawrence & Pauckner, Camden's
independent certified public accountants, are expected to be present at
the Camden Meeting, will have the opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate
questions.
This solicitation is being made on behalf of the Board of Directors
of Camden. The cost of solicitation of proxies from shareholders of
Camden will be paid by Camden. In addition to the solicitation of proxies
by use of mail, the directors, officers or other agents of Camden may
solicit proxies personally or by telephone or other telecommunications
media.
TDS's principal executive office is located at 30 North LaSalle
Street, 40th Floor, Chicago, Illinois 60602, and its telephone number is:
(312) 630-1900. Camden's principal executive office is located at 170
West Main Street, Camden, Indiana 46917-0066, and its telephone number is:
(219) 686-2111.
-10-
<PAGE>
TDS holds a 49% interest, and Camden holds the remaining 51%
interest, in Camden Cellular Telephone Company. Camden Cellular Telephone
Company is the general partner in Indiana RSA No. 4 Limited Partnership
which is the licensee (the "Licensee") for the Indiana RSA No. 4 FCC
cellular wireline authorization. TDS and Camden also hold limited
partnership interests in the Licensee in the amounts of 13.795% and
13.775%, respectively.
All information contained herein relating to TDS and to Camden has
been furnished by their respective managements.
The mailing of this Proxy Statement-Prospectus to shareholders of
Camden is expected to commence on or about ___________, 1995.
THE MERGER
Set forth below is a brief description of the material features of
the Merger. Such description does not purport to be complete and is
qualified in its entirety by reference to the Merger Agreement, which is
attached as Annex A to this Proxy Statement-Prospectus and is incorporated
by reference herein.
Merger Consideration
TDS, Sub and Camden have entered into the Merger Agreement, which
contemplates that Sub will be merged into Camden, with Camden surviving
the Merger as an Indiana corporation and becoming a wholly-owned
subsidiary of TDS, and that each outstanding Camden Share (other than
Dissenting Shares as described herein) will be converted on the Effective
Date into that number of fully paid and nonassessable TDS Common Shares
determined by dividing $20,000 by the Average Closing Price of the TDS
Common Shares, provided that if the Average Closing Price of the TDS
Common Shares is equal to or greater than $39.125, then each Camden Share
shall be converted into 511.4286 TDS Common Shares and if the Average
Closing Price is less than $36.00, TDS may, but shall not be required to,
terminate the Merger Agreement and not complete the Merger.
The following table illustrates the application of the formula
described above:
Each Camden Share would be
converted into the following
If the Average Closing Price is Number of TDS Common Shares
------------------------------- ----------------------------
$36.00 555.5556
$36.50 547.9452
$37.00 540.5405
$37.50 533.3333
$38.00 526.3158
$38.50 519.4805
$39.00 512.8205
$39.125 (or more) 511.4286
If TDS elects to complete the Merger at a time when the Average
Closing Price is less than $36.00, the number of TDS Shares will be
determined in accordance with the formula set forth above. See "The
Merger - Conversion of Shares in the Merger."
Price Range of TDS Common Shares
The high and low sales prices of the TDS Common Shares on the
American Stock Exchange, as reported by the Dow Jones News Service, were
as follows:
-11-
<PAGE>
TDS Common Shares
-----------------
Calendar Period High Low
---------------- ----- ----
1993
First Quarter . . . . . . . . . . . . . . . 40.50 33.25
Second Quarter . . . . . . . . . . . . . . 45.50 37.38
Third Quarter . . . . . . . . . . . . . . . 53.88 43.38
Fourth Quarter . . . . . . . . . . . . . . 57.00 46.00
1994
First Quarter . . . . . . . . . . . . . . . 51.50 36.75
Second Quarter . . . . . . . . . . . . . . 42.88 36.00
Third Quarter . . . . . . . . . . . . . . . 47.63 35.50
Fourth Quarter . . . . . . . . . . . . . . 49.88 39.50
1995
First Quarter . . . . . . . . . . . . . . . 46.38 36.13
Second Quarter . . . . . . . . . . . . . . 39.38 36.00
Background of the Merger
In consecutive meetings during September, October, and November
1994, the Board of Directors of Camden met and reviewed Camden's future as
a small company in an increasingly competitive and technologically
changing telephone business. With the telephone industry rapidly facing
an early end to the local-exchange monopoly franchise, the Camden Board
decided to explore a possible sale of the company.
At the December 7, 1994 Camden Board of Directors meeting, TDS
presented a written proposal to the Camden Board for a merger of Camden
with and into TDS through an exchange of shares. The Camden Board
discussed the proposal with the TDS representatives and recommended
numerous changes.
On January 27, 1995 TDS delivered to Camden a Letter Agreement (the
"Letter Agreement") setting forth the material terms pursuant to which TDS
offered to acquire Camden by means of a merger.
At the February 24, 1994 Camden Board of Directors meeting, the
Camden Board reviewed an evaluation of potential telephone industry buyers
for Camden that had prepared by Icore, a management consulting firm to the
telephone industry, located in Emmaus, Pennsylvania. The evaluation was
favorable to TDS as a potential purchaser. The Camden Board also met with
a representative of McDonald & Company, a national investment banking firm
headquartered in Cleveland, Ohio and commissioned it to conduct a market
evaluation for sale of Camden.
On Monday, March 6, 1995, the Camden Board, along with Dick N.
Bishop, Camden's counsel, reviewed McDonald & Company's following
conclusions: concurrence with the Icore evaluation of TDS, recommendation
against seeking additional bids for Camden and recommendation of further
negotiations with TDS.
On March 6, 1995 the Camden Board met with the TDS and, following
further negotiations, a Letter Agreement was executed which provided for a
merger in which each Camden Share would be converted into 511.4286 TDS
Common Shares. On April 27, 1995 the Board of Directors of Camden
approved the Merger Agreement, and on April 27, 1995, TDS, Sub and Camden
executed the Original Merger Agreement which provided for an $800 per
share dividend to be paid to each Camden Shareholder in addition to the
conversion of each Camden Share into 511.4286 TDS Common Shares.
On the date of the Letter Agreement, the closing price of the TDS
Common Shares on the
-12-
<PAGE>
American Stock Exchange was $44.25 per share. On April 27, 1995, the
closing price had declined to $36.750. Such decline followed an
announcement by the Company that one of its wholly-owned subsidiaries was
the successful bidder in eight broad band Personal Communications Services
("PCS") licenses at an auction conducted by the FCC. TDS currently
estimates that construction, development and introduction of PCS networks
and services in its new markets may involve expenditures of $400 million
to $500 million over the next five years. TDS is considering a variety of
financing options for these projected expenditures. No assurance can be
given as to the effects of this project or the results of operations of
TDS or the future market price of its Common Stock.
On June 29, 1995, TDS, Sub and Camden executed and delivered the
First Supplemental Agreement to the Original Merger Agreement which, as
described above, provides for the conversion of each Camden Share into a
variable number of TDS Common Shares depending on the Average Closing
Price of the TDS Common Shares. See "- Merger Consideration" above.
Camden's Reasons for the Merger; Recommendation of Camden's Board of
Directors
THE BOARD OF DIRECTORS OF CAMDEN BELIEVES THAT THE MERGER IS IN THE
BEST INTERESTS OF CAMDEN AND ITS SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS
TO ITS SHAREHOLDERS THAT THEY VOTE FOR THE APPROVAL OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
In reaching such determination, the Camden Board of Directors
considered, among other things, the Board's knowledge of the management,
business, operations, properties, assets, earnings and prospects of the
business of Camden and of the environment in which it operates, the
background of TDS and its plans regarding the operation of Camden, the
lack of liquidity and restrictions of the Camden Shares, the liquidity and
value of the TDS Common Shares, and the fact that the Merger would allow
Camden shareholders to acquire an equity interest in a larger, more
diversified company whose shares are publicly traded. In addition, the
Camden Board of Directors considered the Aggregate Merger Consideration to
Camden Shareholders as well as the $800 per Camden Share dividend
permitted to be declared by the Merger Agreement and payable to Camden
shareholders upon the Effective Date of the Merger to be of primary
significance.
TDS's Reasons for the Merger
TDS is acquiring Camden as part of its overall strategy of
acquiring independent telephone companies. TDS believes that the Merger
will enable TDS to expand its capabilities, provide it with the
opportunity to serve additional customers in Indiana, and position it to
meet emerging trends within the telephone industry.
Effective Date of the Merger
If the Merger Agreement is approved by the requisite vote of the
Camden shareholders, and the other conditions to the Merger are satisfied
or waived, the Merger will become effective upon the filing of Articles of
Merger together with the Plan of Merger with the Secretary of State of the
State of Indiana. It is presently contemplated that the Effective Date
will occur on or about ___________, 1995 if all required regulatory
approvals are received by such date or as soon as practicable thereafter
following the receipt of all required regulatory approvals.
Vote Required
Approval of the Merger Agreement requires the affirmative vote of
the holders of a majority (51%) of the outstanding Camden Shares. Each
holder of Camden Shares as of the Camden Record Date is entitled to one
vote for each Camden Share held. On the Camden Record Date, there were
280 Camden Shares outstanding.
-13-
<PAGE>
Approval of the Merger Agreement by TDS's shareholders is not
required. The Board of Directors of Sub and TDS, as the sole shareholder
of Sub, have approved the Merger and the Merger Agreement.
Conversion of Shares in the Merger
At the Effective Date, each Camden Share issued and outstanding
immediately prior thereto (other than Camden Shares held by any
shareholder who shall have perfected his or her right to dissent under the
IBCL) will be automatically converted into the right to receive the Merger
Consideration, as further described in "The Merger - Merger
Consideration."
Exchange of Certificates
Harris Trust and Savings Bank, Chicago, Illinois, as exchange agent
(the "Exchange Agent"), will provide transmittal forms to the Camden
shareholders to be used in forwarding their certificates for Camden Shares
for surrender and exchange for certificates representing the number of TDS
Common Shares into which their Camden Shares were converted in the Merger
and cash for fractional TDS Common Shares to which such holders otherwise
would be entitled. Until such surrender, certificates representing Camden
Shares will be deemed to represent the number of TDS Common Shares into
which such Camden Shares were converted in the Merger, except that the
holders of Camden certificates will not be entitled to receive dividends
or any other distributions from TDS until such certificates are so
surrendered. When such certificates are surrendered, the holders of TDS
certificates issued in the Merger will be paid, without interest, any
dividends or other distributions which may have become payable with
respect to such TDS Common Shares since the Effective Date.
Fractional Shares
No certificates representing fractional shares will be issued by
TDS in respect of TDS Common Shares issued pursuant to the Merger and no
TDS dividend, stock split or interest will relate to any fractional share.
No fractional share interests will entitle the owner thereof to vote or to
any rights of a shareholder of TDS. In lieu of any such fractional
shares, each holder of Camden Shares who otherwise would be entitled to
receive fractional TDS Common Shares in the Merger will receive an amount
of cash (without interest) determined by multiplying (i) the closing sale
price of a TDS Common Share on the American Stock Exchange on the
Effective Date, or if the TDS Common Shares are not traded on such day,
such closing sale price on the next preceding day on which such stock was
traded on the American Stock Exchange, by (ii) the fractional share
interest to which such holder would otherwise be entitled.
Representations and Warranties
The Merger Agreement contains various representations and
warranties of the parties thereto. These include representations and
warranties: by Camden as to (i) its organization and capital structure,
(ii) its subsidiaries and investments, (iii) its authority to execute and
perform the Merger Agreement and the lack of conflicts with any other
obligation of Camden, (iv) its financial statements, (v) the absence of
certain changes or events since December 31, 1994, (vi) the availability
of its assets and the legality of their use, (vii) title to property,
(viii) undisclosed liabilities, (ix) no defaults or litigation, except as
disclosed, (x) tax liabilities, (xi) patents, trade names, trademarks and
other rights, (xii) real estate, (xiii) contracts, (xiv) employee
agreements and employee relations, (xv) employee benefit plans, (xvi)
permits, (xvii) insurance, (xviii) environmental conditions, (xix) bank
accounts and powers of attorney, (xx) accounts receivable, (xxi)
inventories, (xxii) the accuracy of information provided by Camden for
this Proxy Statement-Prospectus, (xxiii) no obligation to any finder and
(xxiv) the lack of omissions in any disclosures to TDS; by TDS and Sub as
to (i) their organization and capital structure and (ii) their authority
to execute and perform the Merger Agreement and that such execution and
performance will not conflict with other obligations of TDS or Sub; and by
TDS as to (i) its Registration Statement and Prospectus; (ii) the accuracy
of information supplied by TDS and Sub for the Proxy Statement-Prospectus,
(iii) the TDS Common Shares and (iv) no obligation to any finder.
-14-
<PAGE>
Business of Camden Pending Completion of the Merger
Camden has agreed that, among other things, prior to consummation
of the Merger, unless TDS agrees otherwise, it will (i) refrain from
taking any action which would render any representation or warranty
contained in the Merger Agreement inaccurate in any material respect as of
the Effective Date; (ii) use its best efforts to maintain its business in
accordance with past practices and sound business judgment and to preserve
the goodwill of the suppliers, employees, customers and others having
business relations with it; and (iii) not make any material change in the
business or the operations of Camden, except as described below declare or
pay any dividends in cash on the issued and outstanding capital stock of
Camden or make any other distribution of any kind in respect thereof,
purchase or redeem any of the capital stock of Camden, issue, sell or
otherwise distribute any treasury shares or any stock of Camden to effect
any stock split or reclassification of any shares of its capital stock or
grant or commit to grant any option, warrant or other right to subscribe
for or purchase or otherwise acquire any shares of its capital stock or
securities convertible or exchangeable for such shares, effect any
amendments to the Articles of Incorporation or By-laws of Camden, except
pursuant to the Merger Agreement, authorize any director, or authorize or
permit any officer or employee or any attorney, accountant or other
representative retained by Camden, to solicit or encourage any inquiries
or the making of any proposal which it is reasonably expected may lead to
any takeover proposal, or enter into or amend any agreements with or for
the benefit of officers, directors or employees of Camden, amend any
employee benefit plan or grant any increases in compensation except as
permitted by the Merger Agreement.
The Merger Agreement provides that if the Camden Special Meeting is
held and the shareholders of Camden duly approve and authorize the Merger,
Camden shall have the right to declare and pay a cash dividend on each
Camden Share equal to $224,000 divided by the total number of Camden
Shares outstanding on the date of payment. There are presently
outstanding 280 Camden Shares. Assuming that that number of Camden
Shares is outstanding on the date of such dividend, the dividend would be
equal to $800 per Camden Share.
Camden has also agreed to afford to the officers, employees and
authorized representatives of TDS complete access to the offices,
properties, customers, suppliers, employees and business and financial
records of Camden to the extent TDS shall deem necessary or desirable, and
to furnish to TDS or its authorized representatives such additional
information concerning the operations, properties and business of Camden
as shall be reasonably requested, including all such information as shall
be necessary to enable TDS to determine whether the conditions set forth
in the Merger Agreement have been satisfied.
Conditions
The respective obligations of TDS, Sub and Camden to effect the
Merger are subject to the satisfaction of certain conditions, including,
among others:
(i) the approval by Camden shareholders of the Merger
Agreement;
(ii) the parties shall have received all governmental and
regulatory approvals and actions necessary to consummate the transactions
contemplated by the Merger Agreement, which are either required to be
obtained prior to the Effective Date by applicable law or regulation or
are necessary to prevent a material adverse change in the assets,
liabilities, business, properties, profits, prospects or condition of
Camden;
(iii) no stop order suspending the effectiveness of the
Registration Statement of which this Proxy Statement-Prospectus is a part
shall have been entered by the Commission; and
(iv) the TDS Common Shares to be issued pursuant to the
Merger Agreement shall have been approved for listing upon notice of
issuance by the American Stock Exchange.
In addition, the obligations of TDS and Sub to effect the Merger
are subject to the conditions that:
-15-
<PAGE>
(i) there shall have been no material breach by Camden in
the performance of any of its covenants and agreements in the Merger
Agreement; each of the representations and warranties of Camden contained
in the Merger Agreement shall be true and correct in all material respects
on the Effective Date as though made on the Effective Date except as
affected by transactions contemplated by the Merger Agreement; and there
shall have been delivered to TDS and Sub a certificate to such effect,
dated the Effective Date, signed on behalf of Camden by its President or
one of its Vice Presidents;
(ii) between the date of the Merger Agreement and the
Effective Date, there shall have been (a) no material adverse change in
the assets, liabilities, business, properties, profits, prospects or
conditions of Camden; (b) no material adverse federal or state legislative
or regulatory change affecting the products, services or business of
Camden; and (c) no material damage to the properties and assets of Camden
by fire, flood, casualty, act of God or the public enemy or other cause,
regardless of insurance coverage for such damage; and there shall have
been delivered to TDS and Sub a certificate or certificates to such
effect, dated the Effective Date, signed on behalf of Camden by its
President or its Vice President;
(iii) TDS and Sub shall have received from counsel for
Camden, an opinion, dated the Effective Date, in form and substance
satisfactory to TDS and its counsel, to the effect set forth as an exhibit
to the Merger Agreement;
(iv) No action, suit, investigation or proceeding shall have
been instituted or threatened to restrain or prohibit or challenge the
legality or validity of the Merger;
(v) Camden shall have received consents in form and
substance reasonably satisfactory to TDS, to the transactions contemplated
by the Merger Agreement from all appropriate governmental authorities and
from the other parties to all contracts, leases, agreements and permits to
which Camden is a party or by which it is affected and which require such
consent prior to the Effective Date or are necessary to prevent a material
adverse change in the assets, liabilities, business, properties, profits,
prospects or condition of Camden;
(vi) TDS and Sub shall have received comfort letters from
Camden's independent public accountants dated the date this Proxy
Statement-Prospectus was mailed and the Effective Date and addressed to
TDS and Sub, in each case in form and substance reasonably acceptable to
TDS and Sub, covering such matters reasonably requested by them and
customarily requested in transactions of this type; and
(vii) The holders of not more than 15 Camden Shares shall
have filed the written notice to demand payment contemplated by Section
23-1-94-11 of the IBCL and not voted in favor of the Merger at the Camden
Special Meeting.
The obligations of Camden to effect the Merger are subject to the
conditions that: (i) there shall have been no material breach by TDS or
Sub in their performance of any of their respective covenants and
agreements in the Merger Agreement; each of the representations and
warranties of TDS and Sub contained or referred to in the Merger Agreement
shall be true and correct in all material respects on the Effective Date
as though made on the Effective Date except as affected by transactions
contemplated by the Merger Agreement; and there shall have been delivered
to Camden a certificate or certificates to such effect, dated the
Effective Date, signed on behalf of TDS by its President or one of its
Vice Presidents; (ii) Camden shall have received from counsel for TDS and
Sub an opinion, dated the Effective Date, in form and substance
satisfactory to Camden and its counsel to the effect set forth as an
exhibit to the Merger Agreement; (iii) TDS and Sub shall have taken all
corporate action necessary to approve the transactions contemplated by the
Merger Agreement and there shall have been furnished to Camden certified
copies of resolutions adopted by the Boards of Directors of TDS and Sub
and by the sole shareholder of Sub, in form and substance satisfactory to
counsel for Camden, in connection with such transactions.
Amendment; Termination
If the Average Closing Price of the TDS Common Shares is less than
$36, TDS may, but shall not be required to, terminate the Merger Agreement
without incurring any liability to Camden or Camden's
-16-
<PAGE>
shareholders. In addition, the Merger Agreement may be terminated at any
time prior to the Effective Date, whether before or after approval of the
Merger Agreement, by mutual consent of the Boards of Directors of TDS and
Camden, by TDS or Camden if a federal or state court or agency permanently
restrains, enjoins or otherwise prohibits the Merger by a final and non-
appealable order, by TDS or Camden upon any material breach by the other
party of certain of the covenants in the Merger Agreement, or by TDS or
Camden if the shareholders of Camden do not approve the Merger at the
Camden Meeting.
In the event of such termination, all further obligations of the
parties under the Merger Agreement shall terminate without any liability
on the part of any party, except with respect to the treatment of all
confidential information furnished by each party and the payment of
certain expenses and except that nothing in the Merger Agreement shall
relieve any party from liability for its breach of the Merger Agreement.
Operation of Camden Following the Merger; Interests of Certain Persons in
the Merger
TDS has agreed that after the Effective Date it will continue to
operate Camden as an independent local telephone company maintaining the
present Board of Directors, management and employees and the existing
business office in Camden Indiana for at least ten years after the
Effective Date (with the exception of Mr. Jack Ford, as described below).
The existing Camden directors, officers and employees will receive annual
compensation, bonuses and benefits no less than they receive from Camden
on the Effective Date. In addition, TDS has agreed to cause Camden to
continue to provide, at Camden's expense, existing medical benefits for
three of the senior directors of Camden and their spouses, throughout
their respective lifetimes.
TDS has also agreed to cause to enter into employment agreements
with Mr. Jack Ford, General Manager of Camden; Mr. J. Robert McCain,
Assistant Manager of Camden; Ms. Brenda Elizelda, Public
Affairs/Subscriber Relations Representative of Camden; and Ms. Pamela
Brown, Service Order Coordinator. Mr. Ford's agreement provides for a
term of five years from the Effective Date; the agreements for Mr. McCain,
Ms. Elizelda and Ms. Brown provide for ten year terms. Generally, these
agreements provide for salaries at an annual rate determined by industry
standards for comparable positions. Generally, the agreements permit the
employee to elect to continue to participate in the Camden employee
benefit plans in existence on the Effective Date or to elect to be covered
by benefit plans offered by TDS.
Indemnification
The Merger Agreement provides for indemnification obligations of
Camden Shareholders and TDS in certain circumstances.
By their approval of the Merger Agreement and their receipt of the
Merger Consideration, the Camden Shareholders jointly and severally have
agreed to indemnify, hold harmless and defend TDS and each of its
officers, directors, employees, affiliates, subsidiaries, successors and
assigns (the "TDS Indemnitees"), against any claim, demand, loss, expense,
obligation or liability, including interest, penalties and reasonable
attorneys' fees (collectively, "Losses") incurred by any TDS Indemnitee
relating to, resulting from or arising out of (a) any breach by Camden or
the Camden Shareholders in the performance of their respective obligations
under the Merger Agreement, (b) the inaccuracy of any of the
representations or warranties made by Camden in the Merger Agreement, in
any exhibit or schedule thereto, or in any other instrument delivered in
accordance with the provisions thereof, or (c) any action, suit,
proceeding, assessment or judgment incident to any of the foregoing.
TDS has agreed to indemnify, hold harmless and defend the Camden
Shareholders, and each of Camden's officers, directors, employees
affiliates, subsidiaries, successors and assigns (the "Camden
Indemnitees"), against all Losses incurred by any of them relating to,
resulting from or arising out of (a) any breach by the TDS or Sub in the
performance of their respective obligations under the Merger Agreement,
(b) the inaccuracy of any of the representations made by TDS or Sub in the
Merger Agreement, in any schedule or exhibit thereto, or in any instrument
executed or delivered in accordance
-17-
<PAGE>
with the provisions thereof, or (c) any action, suit, proceeding,
assessment or judgment incident to any of the foregoing.
Registration and Listing
TDS has registered the TDS Common Shares issuable upon conversion
of the Camden Shares in the Merger pursuant to a filing with the
Commission of a Registration Statement on Form S-4 with respect to, and
will take any actions necessary under the state blue sky or securities
laws in connection with, the issuance of such shares. TDS will use its
best efforts to cause such shares to be approved for listing on the
American Stock Exchange, upon official notice of issuance, at or prior to
the Effective Date.
Certain Federal Income Tax Consequences
The following discussion summarizes certain federal income tax
considerations involved in the exchange of Camden Shares for TDS Common
Shares in the Merger. The Merger will constitute either a tax-free
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code") or a taxable exchange of
shares. Accordingly, the following discussion addresses the tax
consequences of the Merger in both circumstances.
Tax-Free Reorganization. If the Merger qualifies as a tax-free
reorganization within the meaning of section 368(a) of the Code, no gain
or loss will be recognized by a holder of Camden Shares upon the exchange
of Camden Shares solely for TDS Common Shares. The aggregate basis of the
TDS Common Shares received in the Merger by a holder of Camden Shares
(including any fractional TDS Common Share for which cash is received)
will be the same as the aggregate basis of Camden Shares surrendered in
exchange therefor. The holding period of the TDS Common Shares received
in the Merger by a holder of Camden Shares (including any fractional TDS
Common Share for which cash is received) will include the holding period
of Camden Shares surrendered in exchange therefor, provided that the
holder held Camden Shares as capital assets as of the Effective Date. A
holder of Camden Shares who receives cash in lieu of a fractional TDS
Common Share will be treated as if the holder received the fractional TDS
Common Share and then received cash from TDS in redemption thereof. The
holder will recognize gain or loss equal to the difference between the
amount of cash received and the tax basis allocable to the fractional TDS
Common Share. This gain or loss will be capital gain or loss provided
that the holder held his TDS Common Shares as capital assets as of the
Effective Date, and will be long-term capital gain or loss if the holding
period of the TDS Common Shares, as of the Effective Date, is more than
one year.
Taxable Exchange of Shares. If the Merger constitutes a taxable
exchange of shares, each holder of Camden Shares will recognize gain or
loss equal to the difference between the fair market value of the TDS
Common Shares and/or cash, if applicable, received in the Merger and the
holder's basis in the Camden Shares surrendered in exchange therefor.
This gain or loss will be capital gain or loss provided that the holder
held his Camden Shares as capital assets as of the Effective Date, and
will be long-term capital gain or loss if the holding period of Camden
Shares, as of the Effective Date, is more than one year.
Continuity of Interest Test. Although there are a number of
requirements that must be satisfied in order for the Merger to qualify as
a tax-free reorganization, one significant issue regarding whether the
Merger qualifies as tax-free relates to the continuity of interest test.
In order for this test to be satisfied, the holders of Camden Shares must
retain after the Merger a sufficient continuing interest in Camden through
ownership of TDS Common Shares. Under the interpretation of the
continuity of interest test used by the IRS for the purpose of issuing
advance rulings, the test will not be satisfied unless the holders of
Camden Shares prior to the Effective Date retain, in the aggregate, TDS
Common Shares with a value, as of the Effective Date, equal to at least
50% of the value of all of the Camden Shares as of the same date. Sales
or other dispositions of TDS Common Shares that are part of a plan of
reorganization will be considered in determining whether the continuity of
interest test is met. If the sales or other dispositions of TDS Common
Shares are sufficient to prevent the continuity of interest test from
being satisfied, the Merger will constitute a taxable transaction, with
the results described above.
-18-
<PAGE>
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
HEREIN FOR INFORMATIONAL PURPOSES ONLY AND IS BASED UPON CURRENT LAW AND
INTERPRETATIONS THEREOF. BECAUSE THE TAX CIRCUMSTANCES OF EACH HOLDER OF
CAMDEN SHARES MAY DIFFER, EACH HOLDER OF CAMDEN SHARES IS URGED TO CONSULT
HIS OR HER OWN TAX ADVISOR CONCERNING THE SPECIFIC TAX CONSEQUENCES OF THE
MERGER TO THE HOLDER, INCLUDING THE APPLICABILITY AND EFFECT OF STATE,
LOCAL AND OTHER TAX LAWS.
Accounting Treatment
The Merger will be accounted for under the purchase method for
accounting and financial reporting purposes.
Regulatory Approvals
The Merger must be approved by the IURC which regulates providers
of telephone service in Indiana. The transfer of control of certain
microwave radio licenses held by Camden to TDS pursuant to the Merger
requires the approval of the Federal Communications Commission. As of
June 23, 1995, the Federal Communications Commission had accepted for
filing TDS's application for this transfer of control.
TDS and Camden are aware of no other governmental or regulatory
approvals required for consummation of the Merger, other than compliance
with applicable securities and "blue sky" laws of Indiana.
Dissenters' Rights
Any holder of record of Camden Shares who follows the procedures
specified in Sections 23-1-44-1 through 23-1-44-20 of the IBCL (the
"Appraisal Provisions") is entitled to receive the "fair value" of such
shares in lieu of the Merger Consideration that such shareholder would
otherwise be entitled to receive pursuant to the Merger Agreement.
Reference is made to the Appraisal Provisions, copies of which are
attached to this Proxy Statement-Prospectus as Annex B, for a complete
statement of the appraisal rights of dissenting shareholders. The
following information is qualified in its entirety by reference to the
Appraisal Provisions.
If a holder of record of Camden Shares elects to exercise such
shareholder's right to an appraisal under the Appraisal Provisions, such
shareholder must satisfy ALL of the following conditions:
(i) such shareholder must deliver a written notice of intent to
demand the fair value of such shareholder's Camden Shares to Camden
prior to the vote with respect to the Merger Agreement;
(ii) such shareholder must not vote in favor of or consent in
writing to the proposal to approve the Merger Agreement. A failure to
vote will satisfy this condition, but voting in favor of or delivering a
proxy in favor of the proposal to approve the Merger Agreement or an
unmarked proxy will constitute a waiver or such shareholder's right to
appraisal and will nullify any written demand for appraisal; and
(iii) not less than 30 nor more than 60 days after receipt of the
notice of procedure for dissenting shareholders from Camden (which
Camden must send to all dissenting shareholders who properly file notice
of intent to assert dissenters' rights) such shareholder must demand
payment of the fair value of his or her Camden Shares (the "Initial
Demand"), certify whether he or she acquired their Camden Shares before
the date the Merger was first announced to the Camden Shareholders and
deposit their Camden Shares with Camden.
Under the Appraisal Provisions, record holders of Camden Shares are
entitled to appraisal rights as described above, and the procedures to
perfect such rights must be carried out by and in the name of such holders
of record. Persons who are beneficial but not record owners of Camden
Shares and
-19-
<PAGE>
who wish to exercise appraisal rights with respect to the Merger must
submit to Camden, at the time of or before the assertion of the right, a
written consent of the record holders of their shares.
After the Effective Date Camden shall remit to each dissenting
shareholder who has complied with the conditions set forth above an amount
which Camden estimates to be the fair value of the Camden Shares held by
each dissenting shareholder. Along with the remittance, Camden shall also
send: (i) a year end balance sheet and statements of income and changes
in shareholders' equity for any fiscal year of Camden ending 16 months or
less before the Effective Date, together with the latest available interim
financial statements; (ii) an estimate by Camden of the fair value of
Camden Shares; and (iii) a statement of the dissenting shareholder's right
to demand an additional payment, as described below. If a dissenting
shareholder believes that the fair value of Camden Shares is greater than
the amount remitted by Camden, then, within 30 days after Camden mails the
remittance, the dissenting shareholder may give written notice to Camden
of such shareholder's own estimate of the fair value of Camden Shares, and
demand payment of the difference (the "Supplemental Demand"). Within 60
days after receiving the Supplemental Demand, Camden shall either: (i)
pay the dissenting shareholder the amount demanded (or such other amount
agreed to by such shareholder), or (ii) file a petition requesting that
the Indiana state court located in County of Carroll (the "Court")
determine the fair value of the Camden Shares.
The Court may appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. Fair
value means the value of Camden Shares immediately before the effectuation
of the Merger, excluding appreciation or depreciation in anticipation of
the Merger, unless such exclusion would be inequitable. Dissenters will
be entitled to judgment for any amount by which the fair value of their
shares, plus interest, is found to exceed the amount previously remitted.
Fair value may be found by the Court to be more, less or the same as the
amount offered by Camden or the amount the shareholder would have received
had he or she not dissented from the Merger.
BUSINESS OF TDS
TDS is a diversified telecommunications service company with
cellular telephone, local telephone and radio paging operations. At March
31, 1995, TDS served approximately 1.6 million customer units in 37
states, including 478,000 cellular telephones, 410,000 telephone access
lines and 705,100 pagers. For the twelve months ended March 31, 1995,
cellular operations provided 47% of TDS' consolidated revenues; telephone
operations provided 41%; and paging operations provided 12%. TDS'
business development strategy is to expand its existing operations through
internal growth and acquisitions and to explore and develop other
telecommunications businesses that management believes will utilize TDS'
expertise in customer-based telecommunications services.
TDS conducts substantially all of its cellular operations through
its 81.1%-owned subsidiary, United States Cellular Corporation (American
Stock Exchange symbol "USM"), which is engaged through subsidiaries and
joint ventures primarily in the development and operation of an the
acquisition of interests in cellular markets. As of March 31, 1995 USM
owns, operates, invests in and has the right to acquire interests in
cellular telephone systems representing approximately 25.2 million
population equivalents in 210 markets in 36 states. USM owns a
controlling interest in and manages cellular systems serving 135 markets
("consolidated markets").
TDS conducts substantially all of its telephone operations through
its wholly owned subsidiary, TDS Telecommunications Corporation ("TDS
Telecom"). As of March 31, 1995 TDS Telecom operates 100 telephone
companies serving 410,000 access lines in 29 states. TDS Telecom is
expanding through the selective acquisition of local exchange telephone
companies serving rural and suburban areas and by offering additional
lines of telecommunications products and services to existing customers.
TDS conducts substantially all of its radio paging operations
through its 82.5%-owned subsidiary, American Paging, Inc. (American Stock
Exchange symbol "APP"). APP offers radio paging and related services
through its subsidiaries. As of March 31, 1995 APP provides service to
705,100 paging units through 36 sales and service operating centers in 14
states and the District of Columbia. APP's service areas cover a total
population of approximately 75 million.
-20-
<PAGE>
TDS was incorporated in Iowa in 1968. TDS' executive offices are
located at 30 North LaSalle Street, Chicago, Illinois 60602. Its
telephone number is 312-630-1900.
INFORMATION WITH RESPECT TO CAMDEN
Business of Camden
Camden Telephone Company, Inc. ("Camden") is an Indiana corporation
organized in 1958 for the purpose of constructing, maintaining and
operating a telephone plant and equipment to provide telephone service to
subscribers within its prescribed service area in the State of Indiana.
Camden currently has four full-time employees. The principal office of
Camden is located at 170 W. Main Street, Camden, Indiana, and its
telephone number is 219-686-2111.
Camden provides telephone service to approximately 1600 single
party line customers located in a 150 square mile area surrounding the
Town of Camden in the Counties of Carroll and Cass, Indiana. No
statistics are available as to the population of Camden's service area
which is restricted to the certificates of public convenience and
necessity issued by the IURC. The IURC will allow expansion of the
service area by application process, but only in the event an area has
been abandoned or is not served by another telephone company.
Digital switching, recording, equal access and a full array of
custom-calling features are provided to Camden customers using a single
Northern-Telecom DMS-10 digital central office switch installed in 1982.
Camden currently has contracts with long distance telephone
carriers for the transmission of long distance service by Camden to its
customers. Camden does not share in the proceeds of toll charges for long
distance service. Camden charges the subscriber a toll set by the long
distance carrier and remits all of the payment to the carrier. Camden is
compensated for the toll services it provides through access charges to
the carriers based on rates established by the Federal Communications
Commission for interstate calls and by the IURC for Camden's intrastate
calls. See "Management's Discussion and Analysis of Financial Condition
and Statement of Operations."
Camden's contracts with its long distance carriers remain in effect
unless cancelled by either party. If any of these contracts are
cancelled, other long distance carriers are available to provide long
distance service. In the unlikely event of a cancellation of any long
distance contract, no adverse impact upon Camden is anticipated.
Future growth and attendant increased revenues of Camden depend
principally on the future development of the area which it serves. Future
growth and increased indebtedness may also result from upgrades in service
and additional services made possible by advances in technology. See
"Management's Discussion and Analysis of Financial Condition and Statement
of Operations."
Camden's policy is to upgrade its plant and equipment as required
and to furnish to its customers technological advancements which are
economical. For example, Camden converted its exchange to digital
switching technology in 1982 and is currently replacing copper
transmission cable with fiber optic cable, which is easier to maintain.
Management believes that the current plant and equipment in use by
Camden are considered modern by accepted telephone industry standards.
Camden's current plant has the capacity to handle 2,500 access lines. As
of December 31, 1994, Camden had 1,598 access lines leaving a growth
potential of 902 access lines or an increase of 56% over its current level
of service. With the current level of its plant and equipment, Camden can
reasonably expect to meet its needs for future customer growth.
No material changes in the operation of the business of Camden are
expected from the date of the financial statements of Camden included in
this Proxy-Statement Prospectus.
-21-
<PAGE>
Property of Camden
Camden operates three telephone exchanges at its headquarters in
Camden, Indiana. The property of Camden consists principally of tangible
property, including telephone lines, central office equipment, telephone
instruments, land and buildings related to telephone operations and motor
vehicles and equipment. Telephone lines include buried cable, aerial
cable, poles and wire. Central office equipment consists of switching
equipment, carrier equipment and related facilities. Telephone
instruments and related equipment are located on the subscribers' premises
and include private branch exchanges. Included in land and buildings is a
2,800 square foot office building at 170 W. Main Street in Camden, Indiana
owned by Camden and maintained as its headquarters.
The plant and equipment of Camden are maintained in good operating
condition and are suitable and adequate for Camden's operations. Camden
does not lease a significant amount of plant or equipment. Camden
telephone lines are located either on private or public property by virtue
of easements or other arrangements.
In addition to its tangible property, Camden owns a 51% interest in
Camden Cellular Telephone Company. Camden Cellular Telephone Company is
the general partner in Indiana RSA No. 4 Limited Partnership (the
"Partnership") which is the Licensee for the Indiana RSA No. 4 FCC
cellular wireline authorization. Camden also owns a 13.775% limited
partnership interest in the Partnership.
Legal Proceedings of Camden
Camden does not have any material pending or threatened litigation.
Changes in and Disagreements with Accountants of Camden
There have been no changes in or disagreements with the independent
accountants of Camden during the two most recent fiscal years or any
subsequent interim period.
Authorized and Outstanding Securities of Camden
The only class of securities of Camden authorized by the Articles
of Incorporation of Camden consists of 560 shares of Capital Stock,
Common, without par value. Camden shareholders do not have the right to
vote their shares cumulatively for the election of directors or other
purposes and do not have preemptive rights to purchase additional
securities. On the record date set for the special meeting there were 280
shares of common stock of Camden outstanding held by 68 record holders.
Market for Shares and Dividends
There is no public or established private market for Camden common
stock. Camden paid dividends of $800 per share of common stock, an
aggregate of $224,000, on April 5, 1994 and March 10, 1995. Future
dividends will be subject to the discretion of the Board of Directors of
Camden and will depend on, among other things, future earnings, the
operating and financial condition, capital requirements and general
business conditions.
-22-
<PAGE>
Security Ownership of Directors, Executive Officers and Management
Employees
The following table sets forth as of the record date for this
meeting the beneficial ownership of the directors, officers and management
employees of Camden.
Number of
Camden Shares
Position(s) Beneficially Percent
Name and Office(s) Owned of Ownership
James Sullivan President and Director 5 1.78%
J. Robert McCain Vice President, Assistant
General Manager and Director 15 5.36%
Joann Johnson Secretary, Treasurer
and Director 5 1.78%
Lloyd Yerkes Director 5 1.78%
Joe B. Sullivan Director 5 1.78%
Jack Ford General Manager 0 0%
--- -----
All directors, officers and
management employees,
as a group (a total of 6) 35 12.50%
No director, officer or management employee of Camden owns more
than 5.36% of its outstanding voting shares.
Directors, Executive Officers and Management Employees
The directors, officers and management employees of Camden, the
positions and offices, the ages of such persons, and their term of office
as of the Camden Record Date are set forth below:
Date First Date Date First
Elected As Term Appointed as
Name: Age Director Expires Officer or Manager
James Sullivan 56 4/1986 4/1997 1995
J. Robert McCain 47 4/1986 4/1996 1971
Joann Johnson 70 12/1994 4/1998 1995
Lloyd Yerkes 79 4/1958 4/1996 1985
Joe B. Sullivan 76 5/1967 4/1997 --
Jack Ford 60 -- -- 1977
James Sullivan - President and Director
--------------
Graduated from Indiana College of Mortuary Science in 1958. Employed by
Fisher's Funeral Home, Logansport, Indiana from 1958 to 1960. Served in
United States Coast Guard from 1960 to 1964. Owner of Sullivan Funeral
Home, Inc., Camden, Indiana from 1964 to 1988. Employed by Hildebrand
Industries, Batesville, Indiana from 1988 to present. Received a Bachelor
Degree in Business Management in 1994.
J. Robert McCain - Vice President, Assistant General Manager and Director
----------------
Served in the U.S. Army from 1968 - 1971. Employed by Camden Telephone
Company, Inc. from 1971 to present.
JoAnn Johnson - Secretary, Treasurer and Director
-------------
Co-Owner of E.E. Johnson Plumbing Contractors Co., Camden, Indiana from
1946 to 1985. Currently retired.
-23-
Lloyd Yerkes - Director
------------
President of Yerkes Trucking Company, Inc., Camden, Indiana from 1948 to
1988. Currently retired.
Joe B. Sullivan - Director
---------------
Co-owner of Yeager & Sullivan, Inc. from 1952 to 1977. Currently
retired.
Jack Ford - General Manager
---------
Served in the U.S. Army from 1953 to 1956. Employed by Western Electric
Corporation, Los Angeles, California from 1956 to 1959. Employed by
I.T.T. Corporation as Senior Customer Service Engineer, Milan, Tennessee
from 1959 to 1977. Employed by Camden Telephone Company, Inc. Camden,
Indiana as General Manager from 1977 to present.
Compensation of Directors, Officers and Management Employees
The following table sets forth the cash compensation paid by Camden
for the fiscal year ended December 31, 1994, to James Sullivan, Camden's
Chief Executive Officer.
Name Cash Compensation Paid
----- ----------------------
James Sullivan $4,400
Benefit Plans
The Camden Telephone Company VIP Qualified Plan and Trust (the
"Qualified Plan") is a defined contribution plan designed to provide
retirement benefits for eligible employees of Camden. Under the Qualified
Plan, Camden makes annual contributions based upon actuarial assumptions
and a formula designed to fund a target pension benefit for each
participant commencing generally upon the participant's attainment of
retirement age. Individual accounts are maintained for all participants
in the Qualified Plan. A participant's retirement benefit is based solely
on amounts contributed to his account, as well as any income, expenses,
gains and losses attributable to his account, plus his allocated share of
forfeitures of other participants' accounts.
Certain Relationships and Related Transactions
Camden has no material business relationships with, did not engage
in any material transactions with and had no material indebtedness due
from, any of its directors and officers or any member of their families or
their affiliates.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion is presented to assist in assessing the
changes in financial condition and performance of Camden Telephone
Company, Inc. ("Camden") over the three most recent fiscal years and the
three month periods ended March 31, 1995 and 1994. The following
information should be read in conjunction with the financial statements
and related notes and other detailed information regarding Camden included
elsewhere in this Proxy Statement-Prospectus.
Camden is a supplier of telephone services to subscribers within
its prescribed service area. Its income is derived from subscriber fees
charged to its customers and from access charges imposed pursuant to
contracts with long-distance ("interexchange") telephone carriers. Both
the fees charged to Camden s customers for its services and the access
charges to interexchange carriers are based upon rates established by the
Indiana Utility Regulatory Commission ("IURC") for intrastate services and
the Federal Communications Commission ("FCC") for interstate services.
Generally, these fees are a function of a prescribed return on Camden s
investment in plant and equipment and its cost of services provided to its
subscribers.
-24-
<PAGE>
The audited financial statements for the years ended December 31,
1994, 1993, and 1992, and the unaudited financial statements for the
periods ended March 31, 1995 and 1994, included in this Proxy Statement-
Prospectus are stated to comply with the financial reporting requirements
mandated by generally accepted accounting principles reflecting practices
appropriate to the telephone industry. Camden uses a fiscal year ending
December 31.
Net income totaled $449,372, $349,614 and $367,832 for the three
fiscal years ended 1994, 1993 and 1992, respectively, reflecting an
increase of 28.5% in 1994 and an decrease of 5.0% in 1993. Net income
totaled $85,538 and $124,595 for the three month periods ended March 31,
1995 and 1994, respectively. See the analysis set forth in "Operating
Revenues," "Operating Expenses" and "Other Items" listed below.
Earnings per share were $1,605 in 1994, $1,249 in 1993 and $1,314
in 1992 based upon 280 shares outstanding in each year. Earnings per
share for the three month periods ended March 31, 1995 and 1994 were $305
and $445, respectively, based upon 280 shares outstanding in each period.
OPERATING REVENUES
In the years ended December 31, 1994, 1993, and 1992, operating
revenues totaled $1,220,607, $1,084,179 and $1,044,977, respectively.
This equates to increases of 12.6% in 1994 and 3.8% in 1993. Operating
revenues for the three month periods ended March 31, 1995 and 1994 totaled
$288,141 and $293,745, respectively, reflecting a decrease of 1.9%.
Local network service revenues are derived from providing local
telephone exchange service within Camden s franchise area. Local network
service revenues increased $5,534 (2.2%) and $6,945 (2.8%) in 1994 and
1993, respectively.
Network access service revenues result from charges assessed to
interexchange network to transmit long-distance communications ("toll
calls"). Such revenues are based upon the allocation of operating
expenses and telephone plant investment to interstate and intrastate
jurisdictions under cost separation procedures established by the FCC.
Revenues are designed to cover expenses and provide a rate of return on
plant investment. Charges to interexchange carriers for interstate
network usage are based on tariffs filed with the FCC by the National
Exchange Carriers Association ("NECA"), a service organization formed
after the AT&T divestiture for the purpose of administering collection and
distribution of revenues between its member local exchange carriers and
the interexchange carriers. Charges to interexchange carriers for
intrastate network usage are based on tariffs established by state
regulatory agencies. The interstate portion of these revenues is
initially received based on estimates of expenses, plant investment and
rates of return for the settlement period (usually a calendar year). The
intrastate portion of these revenues is received based on approved tariffs
and is influenced by changes in traffic levels as measured by minutes of
use.
Network access service revenues increased $118,759 (16.8%) in 1994
and $44,628 (6.8%) in 1993. The increase in 1994 resulted primarily from
an increase in message volume. The increase in 1993 was mainly due to a
switched access rate increase.
Billing and collection revenues increased $8,154 (7.8%) in 1994 and
decreased $1,373 (1.3%) in 1993. The increase in 1994 was due to an
increase in message volume.
Local network services revenues increased $5,126 (8.4%) for the
three months ended March 31, 1994. Network access revenues decreased
$8,590 (4.3%). Billing and collection revenues decreased by $1,358 (4.8%)
for the three months ended March 31, 1995.
The operating revenue of Camden will not be impacted if the pending
Merger with Sub is not consummated.
-25-
<PAGE>
OPERATING EXPENSES
Operating expenses totaled $584,072, $577,996 and $552,276 for the
years ended 1994, 1993 and 1992, respectively. This equates to increases
of 1.1% in 1994 and 4.7% in 1993. Operating expenses for the three month
periods ended March 31, 1995 and 1994 totaled $161,304 and $126,209,
respectively. This 27.8% increase resulted primarily from additional
plant repairs, additional wage expense, expenditures on meetings, and a
consultant report for management.
Plant specific operations expenses increased $1,561 (1.5%) in 1994
and $11,501 (12.0%) in 1993. The 12% increase in 1993 related mainly to
increased repair costs of central office switching and transmission
facilities.
Plant nonspecific operations expenses did not change in 1994 and
increased $1,860 (3.5%) in 1993.
Depreciation and amortization decreased $18,593 (11.9%) in 1994 and
increased $3,145 (2.1%) in 1993. The 11.9% decrease in 1994 was primarily
due to reduced depreciation from assets that were fully depreciated.
Customer operations expense increased $9,050 (11.8%) in 1994 and
$5,236 (7.3%) in 1993. The 11.8% increase in 1994 was mainly due to an
increase in the cost of call completion services and labor costs to
provide customer service while the 7.3% increase in 1993 was primarily due
to the increased costs of customer service.
Corporate operations expense increased $14,092 (7.7%) in 1994 and
$3,978 (2.2%) in 1993. The 7.7% increase in 1994 was primarily due to the
costs of billing additional interexchange carriers.
Operating taxes consist of federal and state income taxes as well
as property taxes. Total operating taxes increased $56,320 (29.9%) in
1994 and $18,281 (10.8%) in 1993. The 29.9% increase in 1994 was
primarily attributable to the $63,155 (58.3%) increase in federal income
taxes related to the increase in operating income. The 1993 increase was
attributable mainly to the adjustment of deferred taxes when the Company
adopted FASB Statement 109, "Accounting for Income Taxes".
The operating expenses of Camden will not be impacted if the
pending merger with Sub is not consummated.
OTHER ITEMS
Interest income totaled $46,370, $59,200 and $74,124 in 1994, 1993
and 1992, respectively, resulting in decreases of 21.7% in 1994 and 20.1%
in 1993. Interest income has steadily decreased over the past two years
primarily because of decreases in interest rates after reinvestment of
funds.
Partnership income was $69,566, $62,678 and $89,680 in 1994, 1993
and 1992, respectively, an increase of 11.0% in 1994 and a decrease of
30.1% in 1993. Partnership income for the three months ended March 31,
1994 was $30,994. No partnership income was received during the three
months ended March 31, 1995. Partnership income is recognized when it is
distributed by the partnership. Partnership distributions vary according
to the cash needs of the partnership. These distributions do not
necessarily correspond to income at the partnership level.
Federal and state income taxes - nonoperating generally reflect the
changes in the level of pretax nonoperating income.
Interest expense totaled $33,699, $59,604 and $67,854 in 1994, 1993
and 1992, respectively, resulting in decreases of 43.5% in 1994 and 12.2%
in 1993. This reduction in interest expense relates to the reduction in
long-term debt in each of the years.
-26-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents, temporary investments and government
securities were $1,063,264, $1,266,310 and $927,068 as of December 31,
1994, 1993 and 1992, respectively. This represents a 14.7% increase from
December 31, 1992 to December 31, 1994.
Cash flows from operating activities were $663,381 in 1994,
$478,004 in 1993 and $514,804 in 1992. The 38.8% increase in cash flows
from operating activities in 1994 primarily results from the increase in
net income and accounts payable offset by the reduction in depreciation
and deferred income taxes. The 7.1% decrease in 1993 was primarily due to
the reduction in net income and the change in working capital.
Cash flows from investing activities were $356,063 in 1994 and
$49,881 in 1993. Cash flows used in investing activities was $90,166 in
1992. The increase in 1994 was due primarily from the maturity of U.S.
Government securities offset by the purchase of plant and equipment and
municipal bonds. The increase in 1993 reflects the excess of proceeds
from the maturity of temporary cash investments and U.S. Government
securities over the purchases of these investments and other investments.
Cash flows used in financing activities were $788,655 in 1994,
$550,562 in 1993 and $230,980 in 1992. The primary reasons for the
increases in each year relate to the changes in principal payments on long
term debt and dividend payments.
In 1995 capital expenditures are expected to be approximately
$125,000. The money is to be used for an upgrade of central office
equipment and repair of outside plant cable. It is expected that
internally generated funds will be used to finance these improvements.
It is expected that internally generated funds will be adequate to
meet current and future operating needs of Camden. However, while cash
flows generated from operations are expected to be sufficient to meet the
future operating needs of Camden, future capital expenditures may require
additional borrowing. The specific means of obtaining the financing and
its resulting impact on the financial position and earnings capacity of
Camden have not been determined.
Inflation and changing prices did not have a material effect on
Camden s financial position or earnings during the three years ended
December 31, 1994.
Management of Camden believes that its liquidity and capital
operating resources are presently adequate for its anticipated needs and
will not be materially impacted if the pending merger with Sub is not
consummated.
Material Changes in Financial Condition from December 31, 1994 to March
31, 1995
Subsequent to the original issuance of Camden's financial
statements for the year ended December 31, 1994, Camden discovered that in
1994 excess billings to interexchange carriers had caused 1994 revenues to
be overstated by $125,260. The adjustment to revenues reduced reported
net income and shareholders' equity by $76,267.
There have been no other material changes in the financial
condition of Camden from December 31, 1994 to March 31, 1995 nor are any
material changes anticipated for the remainder of 1995.
DESCRIPTION OF CAMDEN SHARES
The only class of capital stock of Camden authorized by the
Articles of Incorporation of Camden, as amended, consists of Camden
Shares. The Articles of Incorporation of Camden authorized 560 Camden
Shares without par value. There were 280 Camden Shares issued and
outstanding on the Camden Record Date.
-27-
<PAGE>
Holders of Camden Shares are entitled to one vote for each Camden
Share held on all matters submitted to a vote of shareholders. Pursuant
to the Articles of Incorporation of Camden, in the election of directors,
shareholders are not permitted to cumulate their votes. All issued and
outstanding Camden Shares are fully paid and non-assessable.
Pursuant to Section 23-1-28-3 of the IBCL, the Board of Directors
of Camden may not make a distribution to its shareholders if, after giving
effect to such distribution (a) Camden would not be able to pay its debts
as they become due in the ordinary course of business or (b) its total
assets would be less than its total liabilities.
Upon liquidation of Camden, the holders of Camden Shares are
entitled to share ratably in the distribution of all assets remaining
after provision for the creditors of Camden.
DESCRIPTION OF TDS SECURITIES
The authorized capital stock of TDS consists of 100,000,000 TDS
Common Shares, $1.00 par value, 25,000,000 Series A Common Shares, $1.00
par value ("Series A Common Shares"), and 5,000,000 shares of Preferred
Stock, without par value ("Preferred Stock"). As of March 31, 1995,
50,252,919 TDS Common Shares (excluding 484,012 Common Shares held by a
subsidiary of TDS), 6,876,432 TDS Series A Common Shares and 452,553 TDS
Preferred Shares were outstanding and 31,431 TDS Common Shares were
issuable in connection with acquisitions.
Voting Trust
Over 90% of TDS's outstanding Series A Common Shares are held in a
voting trust which expires on June 30, 2009. The voting trust was created
to facilitate the long-standing relationships among the trustees'
certificate holders. By virtue of the number of shares held by them, the
voting trustees have the power to elect 75% of the Directors. The
trustees of the voting trust are LeRoy T. Carlson, Jr., a director and the
President of TDS, Walter C.D. Carlson, a director of TDS, Letitia G.
Carlson, Melanie J. Heald and Donald C. Nebergall, a director of TDS.
Preferred Stock
The Board of Directors of TDS is authorized by the Articles of
Incorporation of TDS to issue Preferred Stock from time to time in series
and to establish as to each series the designation and number of shares to
be issued, the dividend rate, the redemption price and terms, if any, the
amount payable upon voluntary or involuntary dissolution of TDS, sinking
fund provisions, if any, voting rights, if any, and the terms of
conversion into TDS Common Shares, if provided for. As of March 31, 1995,
an aggregate of 452,553 shares of Preferred Stock of TDS were outstanding,
all of which were issued in connection with acquisitions.
Voting Rights
With respect to the election of directors, the holders of TDS
Common Shares, and the holders of Preferred Stock issued before October
31, 1981 (an aggregate of 11,476 shares), voting as a class, are entitled
to elect 25% of the Board of Directors of TDS, rounded up to the nearest
whole number. The holders of Series A Common Shares, and the holders of
Preferred Stock issued after October 31, 1981 (an aggregate of 441,077
shares), voting as a class, are entitled to elect the remaining members of
the Board of Directors of TDS. Furthermore, the Articles of Incorporation
provide for the Board of Directors to be divided into three classes. Each
class is elected for a three-year term. The Board of Directors currently
consists of eleven directors. Accordingly, the holders of TDS Common
Shares, and the holders of Preferred Stock issued before October 31, 1981,
are entitled to elect three directors.
The holders of TDS Common Shares and the outstanding Preferred
Stock are entitled to one vote per share and the holders of Series A
Common Shares are entitled to ten votes per share. The holders of TDS
Common Shares, Series A Common Shares and Preferred Stock vote as a single
class, except with
-28-
<PAGE>
respect to the election of directors as discussed above and with respect
to certain amendments to the Articles of Incorporation (e.g., amendments
prejudicial to the holders of a class), as to which the Iowa Business
Corporation Act grants class voting rights.
If the number of Series A Common Shares issued and outstanding at
any time falls below 500,000 (because of the conversion of Series A Common
Shares or otherwise), the holders of Series A Common Shares would lose the
right to vote as a separate class (with the holders of Preferred Stock
issued after October 31, 1981) in the election of approximately 75% of the
directors, and thereafter the holders of Series A Common Shares (with ten
votes per share) would vote with the holders of TDS Common Shares and
Preferred Stock as a single class in the election of directors.
Management of TDS believes it is unlikely that the number of outstanding
Series A Common Shares will fall below 500,000, because more than
6,000,000 Series A Common Shares are held in the voting trust described
above, and the trustees of the voting trust have indicated that they have
no present intention of converting Series A Common Shares into TDS Common
Shares. However, if the number of outstanding Series A Common Shares
falls below 500,000 with the consequences described above, then the TDS
Common Shares listed on the American Stock Exchange may be delisted
because the holders of such shares would not have the right, voting as a
separate class, to elect approximately 25% of the Board of Directors.
Dividend Rights and Restrictions
Subject to the satisfaction of all Preferred Stock dividend
preference and redemption provisions, holders of TDS Common Shares are
entitled to receive such dividends as may be declared from time to time by
the Board of Directors. Unless the same, or greater, dividends, on a per
share basis, are declared and paid at the same time on the TDS Common
Shares, no dividends may be declared or paid on the Series A Common
Shares. As of March 31, 1995, the annual preferred dividend requirements
on all outstanding Preferred Stock aggregated $2,533,000.
In the case of stock dividends, the Board of Directors is
authorized to permit both the holders of TDS Common Shares and Series A
Common Shares to elect to receive cash in lieu of stock.
Under TDS's loan agreements, at December 31, 1994, all of TDS's
consolidated retained earnings were available for the payment of dividends
on TDS Common Shares and Series A Common Shares.
Conversion Rights
The TDS Common Shares have no conversion rights. The Series A
Common Shares are convertible, on a share-for-share basis, into TDS Common
Shares. An aggregate of 288,086 shares of Preferred Stock were
convertible into 944,057 TDS Common Shares as of March 31, 1995.
Other Rights
The TDS Common Shares and Series A Common Shares have no redemption
or sinking fund provisions. An aggregate of 156,988 shares of Preferred
Stock at March 31, 1995 had mandatory redemption features. An aggregate
of 295,565 shares of Preferred Stock were redeemable at the option of TDS
as of March 31, 1995.
Upon liquidation, holders of TDS Common Shares and Series A Common
Shares are entitled to receive a pro rata share of all assets available to
shareholders after payment to holders of the shares of Preferred Stock of
$100 per share (or, in the aggregate, $45,265,988 as of March 31, 1995),
plus a sum equal to the amount of all accumulated and unpaid dividends
thereon at the dividend rate fixed for each series of Cumulative Preferred
Stock by the Board of Directors. At March 31, 1995, there were no unpaid
or accumulated dividends payable on the shares of Preferred Stock.
The holders of Series A Common Shares have a preemptive right to
purchase any additional Series A Common Shares sold for cash, including
treasury shares. Holders of TDS Common Shares and Preferred Stock have no
preemptive rights.
-29-
<PAGE>
General
All issued and outstanding TDS Common Shares and Series A Common
Shares and shares of Preferred Stock are fully paid and nonassessable, and
all TDS Common Shares offered hereby will be fully paid and nonassessable
when issued.
The Transfer Agent and Registrar for the TDS Common Shares and
Series A Common Shares is Harris Trust and Savings Bank, Chicago,
Illinois. TDS transfers its Preferred Stock on its own books.
TDS has and will continue to distribute annual reports to its
shareholders which will contain its audited financial statements.
COMPARATIVE RIGHTS OF TDS SHAREHOLDERS AND CAMDEN SHAREHOLDERS
If the Merger is consummated, shareholders of Camden, an Indiana
corporation, will become shareholders of TDS, an Iowa corporation, and
their rights will be governed by the Iowa Business Corporation Act instead
of the IBCL, and by the Articles of Incorporation of TDS instead of the
Articles of Incorporation of Camden, which differ in many respects. In
addition to the matters described above under "Description of Camden
Shares" and "Description of TDS Securities," there are other differences
between the rights of shareholders in TDS, and those of shareholders in
Camden, certain of which are described below:
Preferred Stock
No dividends may be paid on the TDS Common Shares until all
dividends due on Preferred Stock have been paid. In addition, the rights
of holders of TDS Common Shares upon liquidation of TDS are subordinate to
the rights of preferred shareholders. Camden has no shares of capital
stock with any dividend, liquidation or other preference.
Limitation of Director Liability
As permitted by Iowa law, the Articles of Incorporation of TDS
includes a provision limiting or eliminating under certain circumstances
directors' liability for monetary damages for breach of the duty of care.
There is no similar provision in the Articles of Incorporation of Camden.
The above does not present an exhaustive listing of all such
differences and certain differences may exist which may be of significance
to particular shareholders. Any such shareholder should refer to the
respective Articles of Incorporation and state corporation statutes, which
are available in the offices of Camden.
LEGAL MATTERS
The validity of the TDS Common Shares offered hereby will be passed
upon for TDS by Sidley & Austin, Chicago, Illinois. Walter C.D. Carlson,
Michael G. Hron and William S. DeCarlo, a Director, Secretary and
Assistant Secretary, respectively, of TDS, are members of that law firm.
Mr. Carlson is also a trustee of a voting trust which controls TDS.
EXPERTS
TDS
The audited consolidated financial statements and schedules of TDS
incorporated by reference in this Proxy Statement-Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports incorporated by reference herein. The combined
financial statements of the Los Angeles SMSA Limited Partnership, the
Nashville/Clarksville MSA Limited Partnership and the Baton Rouge MSA
Limited Partnership incorporated by reference in this Proxy Statement-
Prospectus have been reviewed for compilation by Arthur Andersen LLP, as
indicated in their report
-30-
<PAGE>
incorporated by reference herein. Reference is made to this report which
includes an explanatory paragraph with respect to uncertainties discussed in
Note 7 of the Notes to Unaudited Combined Financial Statements. The reports
of other independent accountants on the underlying financial statements
which have been combined are incorporated by reference herein. The
financial statements and schedules referred to above have been incorporated
by reference in reliance upon the authority of such firms as experts in
accounting and auditing in giving said reports.
Camden
The balance sheets of Camden Telephone Company, Inc. as of December
31, 1994 and 1993 and the statements of income, changes in stockholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1994 have been audited by Kehlenbrink, Lawrence & Pauckner,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of such
firm as experts in accounting and auditing.
-31-
<PAGE>
INDEX TO CAMDEN FINANCIAL STATEMENTS
Interim Unaudited Statements:
Balance Sheets as of March 31, 1995 and December 31, 1994 . . . F-2
Statements of Income for the three month periods ended
March 31, 1995 and 1994 . . . . . . . . . . . . . . . F-4
Statements of Changes in Shareholders' Equity for the three
month periods ended March 31, 1995 and 1994 . . . . . F-5
Statements of Cash Flows for the three month periods ended
March 31, 1995 and 1994 . . . . . . . . . . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . . . . . F-7
Annual Audited Statements:
Independent Auditor's Report . . . . . . . . . . . . . . . . . F-8
Balance Sheets as of December 31, 1994 and 1993 . . . . . . . . F-9
Statements of Income for the years ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . F-11
Statements of Changes in Shareholders' Equity for
the years ended December 31, 1994, 1993 and 1992 . F-12
Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . F-13
Notes to Financial Statements . . . . . . . . . . . . . . . . F-14
F-1
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS March 31, December 31,
1995 1994
-------------- -------------
CURRENT ASSETS
Cash and cash equivalents $ 667,719 $ 849,552
Temporary cash investments - at cost 213,712 213,712
Telecommunications accounts receivable 128,505 127,643
Income tax refund 1,418 ---
Interest receivable 5,618 7,164
Material and supplies 12,450 12,155
Prepayments 12,492 6,024
Deferred income tax 3,757 3,757
-------------- -------------
Total current assets $ 1,045,671 $ 1,220,007
-------------- -------------
NONCURRENT ASSETS
Leased equipment, net of accumulated
depreciation of $27,620 and $26,130
respectively $ 14,234 $ 15,914
Investments, at cost 200,000 200,000
Investments, at fair value 61,837 48,880
Other investments 286,348 286,348
Unamortized debt issuance expense 86 101
-------------- -------------
$ 562,505 $ 551,243
-------------- -------------
TELECOMMUNICATIONS PLANT
Telecommunications plant in service $ 2,734,834 $ 2,899,377
Less - Accumulated depreciation 1,603,757 1,748,242
-------------- -------------
$ 1,131,077 $ 1,151,135
-------------- -------------
Total Assets $ 2,739,253 $ 2,922,385
============== =============
See selected information following these financial statements.
F-2
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31,
1995 1994
--------------- ------------
CURRENT LIABILITIES
Current maturities on long-term debt -
REA notes $ 110,850 $ 112,009
Accounts payable 153,832 136,628
Customer deposits 2,200 2,200
Income tax payable 29,622 81,498
Other accrued taxes 29,147 22,929
Other current liabilities 21,746 14,549
-------------- -------------
Total current liabilities $ 347,397 $ 369,813
-------------- -------------
LONG-TERM DEBT
REA Notes $ 293,830 $ 320,395
-------------- -------------
DEFERRED CREDITS
Unamortized investment tax credits $ 83,350 $ 85,940
Deferred income taxes 271,364 271,364
-------------- -------------
$ 354,714 $ 357,304
-------------- -------------
STOCKHOLDERS' EQUITY
Capital stock, common, without par
value; 560 shares authorized, 280
shares issued and outstanding $ 38,016 $ 38,016
Retained earnings 1,705,296 1,843,758
Net unrealized loss on marketable
securities --- (6,901)
-------------- -------------
$1,743,312 $ 1,874,873
-------------- -------------
Total Liabilities and
Stockholders' Equity $2,739,253 $ 2,922,385
============== =============
See selected information following these financial statements.
F-3
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
STATEMENTS OF INCOME
(UNAUDITED)
For The Three Months Ended
-----------------------------
March 31, March 31,
1995 1994
-------------- -------------
OPERATING REVENUES
Local network services $ 66,333 $ 61,207
Network access services 189,849 198,439
Billing and collection revenues 26,758 28,116
Miscellaneous revenues 5,201 5,276
Uncollectible revenues --- 707
-------------- -------------
Total operating revenues $ 288,141 $ 293,745
-------------- -------------
OPERATING EXPENSES
Plant specific operations $ 27,160 $ 20,680
Plant nonspecific operations 15,087 10,340
Depreciation and amortization 33,456 35,553
Customer operations 23,535 18,606
Corporate operations 62,066 41,030
-------------- -------------
Total operating expenses $ 161,304 $ 126,209
-------------- -------------
OPERATING TAXES
Federal income tax $ 33,913 $ 44,942
State income taxes 9,312 11,880
Property taxes 6,240 5,280
-------------- -------------
Total operating taxes $ 49,465 $ 62,102
-------------- -------------
Net operating income $ 77,372 $ 105,434
OTHER INCOME AND DEDUCTIONS
Interest income 11,811 12,917
Nonregulated income 7,013 7,665
Partnership income --- 30,994
Federal and state income taxes -
Nonoperating (5,891) (20,173)
-------------- -------------
Income before interest expense $ 90,305 $ 136,837
-------------- -------------
INTEREST AND RELATED ITEMS
Interest on long term debt $ 4,753 $ 12,228
Other interest 14 14
-------------- -------------
Total interest and related items $ 4,767 $ 12,242
-------------- -------------
NET INCOME $ 85,538 $ 124,595
============== =============
See selected information following these financial statements.
F-4
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(UNAUDITED)
Net Unrealized
Loss on
Common Marketable Retained
Stock Securities Earnings
-------------- --------------- -------------
Balance, December 31, 1993 $ 38,016 $ -0- $ 1,590,386
Net income 124,595
-------------- --------------- -------------
Balance, March 31, 1994 $ 38,016 $ -0- $ 1,714,981
============== =============== =============
Balance, December 31, 1994 $ 38,016 $ (6,901) $ 1,843,758
Net income 85,538
Dividends paid, $800 per share (224,000)
Decrease in unrealized loss
on marketable securities 6,901
-------------- --------------- -------------
Balance, March 31, 1995 $ 38,016 $ -0- $ 1,705,296
=============== =============== =============
See selected information following these financial statements.
F-5
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Three Months Ended
----------------------------
March 31, March 31,
1995 1994
--------------- -----------
OPERATING ACTIVITIES
Net income $ 85,538 $ 124,595
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 35,361 37,638
Investment tax credits (2,590) (2,596)
Changes in operating assets and liabilities:
Accounts receivable (862) (47,886)
Other current assets 6,635 2,352
Accounts payable 17,204 41,569
Other current liabilities 37,461 34,773
-------------- ------------
NET CASH PROVIDED FROM
OPERATING ACTIVITIES $ 89,555 $ 190,445
-------------- ------------
INVESTING ACTIVITIES
Additions to plant and equipment,
net of salvage $ (13,167) $ (615)
Maturity of U.S. Government securities ----- 447,547
Purchase of municipal bonds ----- (200,000)
Purchase of municipal bond fund (6,497) -----
-------------- ------------
NET CASH PROVIDED FROM (USED IN)
INVESTING ACTIVITIES $ (19,664) $ 246,932
-------------- ------------
FINANCING ACTIVITIES
Principal payments on long term debt $ (27,724) $ (20,465)
Dividends paid (224,000) -----
-------------- ------------
NET CASH USED IN FINANCING ACTIVITIES $(251,724) $ (20,465)
-------------- ------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $(181,833) $ 416,912
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD $ 849,552 $ 618,763
-------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 667,719 $ 1,035,675
============== ============
See selected information following these financial statements.
F-6
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
SELECTED INFORMATION-SUBSTANTIALLY ALL
DISCLOSURES REQUIRED BY GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES ARE NOT INCLUDED
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. Accordingly, they
do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of the management of Camden Telephone Company, Inc. (the Company),
all adjustments considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31,
1995, are not necessarily indicative of the results that may be expected
for the year ended December 31, 1995. For further information, refer to
the annual December 31, 1994, financial statements and notes thereto.
NOTE 2 - PROPOSED MERGER
On April 27, 1995, the Board of Directors of Camden Telephone Company,
Inc. met and approved a merger agreement ("Merger Agreement") with
Telephone and Data Systems, Inc. ("TDS") and TDS-Camden Acquisition Corp.,
a wholly owned subsidiary of TDS ("Sub"). The Merger Agreement, executed
on April 27, 1995, by TDS, Sub and Camden Telephone Company, Inc., was
amended by the First Supplemental Agreement on June 29, 1995. An
affirmative vote of the holders of a majority of the outstanding shares of
the Company s stock is required to approve the Merger Agreement, as
amended. In addition, the merger is subject to approval by the Indiana
Utility Regulatory Commission and the Federal Communications Commission.
The Merger Agreement, as amended, includes certain other closing
conditions precedent to consummation of the transaction.
F-7
<PAGE>
To the Board of Directors
Camden Telephone Company, Inc.
Independent Auditor's Report
We have audited the accompanying balance sheets of Camden Telephone
Company, Inc. as of December 31, 1994 and 1993, and the related statements
of income, changes in shareholders equity, and cash flows for the three
years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards and the Governmental Auditing Standards, issued by the
Comptroller General of the United States. 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 audits provide 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 Camden Telephone
Company, Inc. as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in Footnote 10, the financial statements have been restated
to adjust for excess billings previously included in the 1994 financial
report.
KEHLENBRINK, LAWRENCE & PAUCKNER
Indianapolis, Indiana
January 11, 1995
F-8
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
BALANCE SHEETS
ASSETS December 31, December 31,
1994 1993
-------------- -----------
CURRENT ASSETS
Cash and cash equivalents - Notes 1 and 2 $ 849,552 $ 618,763
Temporary cash investments - at cost 213,712 200,000
U.S. Government securities - Note 3 --- 447,547
Telecommunications accounts receivable -
Note 2 127,643 92,702
Interest receivable 7,164 13,435
Material and supplies - Note 1 12,155 7,296
Prepayments 6,024 5,666
Deferred income tax 3,757 3,459
------------- -----------
Total current assets $1,220,007 $1,388,868
------------- -----------
NONCURRENT ASSETS
Leased equipment, net of accumulated
depreciation of $26,130 and $27,916,
respectively - Note 1 $ 15,914 $ 20,725
Bank certificates of deposit, at cost --- 205,828
Investments, at cost - Note 3 200,000 ---
Investments, at fair value - Note 3 48,880 ---
Other investments - Notes 1 and 4 286,348 286,348
Unamortized debt issuance expense 101 157
Deferred retirements - Note 1 --- 3,823
------------- -----------
$ 551,243 $ 516,881
------------- -----------
TELECOMMUNICATIONS PLANT - Notes 1 and 6
Telecommunications plant in service $2,899,377 $2,895,341
Less - Accumulated depreciation 1,748,242 1,635,626
------------- -----------
$1,151,135 $1,259,715
------------- -----------
Total Assets $2,922,385 $3,165,464
============= ===========
The accompanying notes are in integral part of these financial statements.
F-9
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY December 31, December 31,
1994 1993
-------------- -----------
CURRENT LIABILITIES
Current maturities on long-term debt -
REA notes - Note 5 $ 112,009 $ 83,500
Accounts payable 136,628 17,142
Customer deposits 2,200 2,700
Income tax payable - Note 9 81,498 39,733
Other accrued taxes 22,929 21,101
Other current liabilities 14,549 18,934
------------- -----------
Total current liabilities $ 369,813 $ 183,110
------------- -----------
LONG-TERM DEBT
REA Notes - Note 5 $ 320,395 $ 941,559
------------- -----------
DEFERRED CREDITS
Unamortized investment tax credits -
Note 1 $ 85,940 $ 96,322
Deferred income taxes - Notes 1 and 9 271,364 316,071
------------- -----------
$ 357,304 $ 412,393
------------- -----------
STOCKHOLDERS' EQUITY - Note 8
Capital stock, common, without par
value; 560 shares authorized, 280
shares issued and outstanding $ 38,016 $ 38,016
Retained earnings 1,843,758 1,590,386
Net unrealized loss on marketable
securities - Note 3 (6,901) ---
------------- -----------
$ 1,874,873 $ 1,628,402
------------- -----------
Total Liabilities and
Stockholders' Equity $ 2,922,385 $ 3,165,464
============= ===========
The accompanying notes are in integral part of these financial statements.
F-10
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
STATEMENTS OF INCOME
For The Years Ended
----------------------------------------------
December 31, December 31, December 31,
1994 1993 1992
-------------- ------------ -------------
OPERATING REVENUES - NOTE 1
Local network service $ 259,712 $ 254,178 $ 247,233
Network access services 824,484 705,725 661,097
Billing and collection revenues 113,174 105,020 106,393
Miscellaneous revenues 22,316 21,129 28,415
Uncollectible revenues 921 (1,873) 1,839
--------------- ------------ ------------
Total operating revenues $ 1,220,607 $ 1,084,179 $ 1,044,977
=============== ============= ============
OPERATING EXPENSES
Plant specific operations $ 108,977 $ 107,416 $ 95,915
Plant nonspecific operations 54,524 54,558 52,698
Depreciation and amortization 137,475 156,068 152,923
Customer operations 85,932 76,882 71,646
Corporate operations 197,164 183,072 179,094
--------------- ------------ ------------
Total operating expenses $ 584,072 $ 577,996 $ 552,276
--------------- ------------ ------------
OPERATING TAXES - NOTES 1 and 9
Federal income tax $ 171,423 $ 108,268 $ 113,092
State income taxes 48,138 60,678 33,726
Property taxes 24,987 19,282 23,129
--------------- ------------ ------------
Total operating taxes $ 244,548 $ 188,228 $ 169,947
--------------- ------------ ------------
Net operating income $ 391,987 $ 317,955 $ 322,754
OTHER INCOME AND DEDUCTIONS
Interest income 46,370 59,200 74,124
Nonregulated income 27,444 28,012 21,674
Partnership income - Note 4 69,566 62,678 89,680
Federal and state income taxes -
Nonoperating - Note 9 (52,296) (58,627) (72,546)
--------------- ------------ ------------
Income before interest
expense $ 483,071 $ 409,218 $ 435,686
--------------- ------------ ------------
INTEREST AND RELATED ITEMS
Interest on long term
debt - Note 5 $ 33,642 $ 59,547 $ 67,797
Other interest 57 57 57
--------------- ------------ ------------
Total interest and
related items $ 33,699 $ 59,604 $ 67,854
--------------- ------------ ------------
NET INCOME $ 449,372 $ 349,614 $ 367,832
=============== ============ ============
EARNINGS PER SHARE $ 1,604.90 $ 1,248.62 $ 1,313.69
=============== ============ ============
The accompanying notes are in integral part of these financial statements.
F-11
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
Net Unrealized
Loss on
Common Marketable Retained
Stock Securities Earnings
------------- -------------- --------------
Balance, December 31, 1991 $ 38,016 $ -0- $1,222,940
Net Income 367,832
Dividends paid (168,000)
------------- -------------- --------------
Balance, December 31, 1992 $ 38,016 $ -0- $1,422,772
Net income 349,614
Dividends paid - $650 per share (182,000)
------------- -------------- ---------------
Balance, December 31, 1993 $ 38,016 $ -0- $1,590,386
Net income 449,372
Dividends paid, $700 per share (196,000)
Cumulative effect of accounting
change, net unrealized loss on
marketable securities - Note 3 (6,901)
------------ -------------- ---------------
Balance, December 31, 1994 $ 38,016 $(6,901) $1,843,758
============ ============== ===============
The accompanying notes are in integral part of these financial statements.
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
STATEMENTS OF CASH FLOWS
For The Years Ended
----------------------------------------
December 31, December 31, December 31,
1994 1993 1992
------------ ----------- -----------
OPERATING ACTIVITIES
Net income $ 449,372 $ 349,614 $ 367,832
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 145,089 164,418 161,583
Deferred income taxes (45,005) (11,935) (3,397)
Investment tax credits (10,382) (10,467) (10,607)
Changes in operating assets and
liabilities:
Accounts receivable (34,941) 13,660 (21,685)
Other current assets 1,054 543 3,628
Accounts payable 119,486 9,972 (8,408)
Other current liabilities 38,708 (37,801) 25,858
----------- ----------- ----------
NET CASH PROVIDED FROM
OPERATING ACTIVITIES $ 663,381 $ 478,004 $ 514,804
----------- ----------- ----------
INVESTING ACTIVITIES
Additions to plant and equipment,
net of salvage $ (27,819) $ (30,483) $ (22,454)
Purchase of temporary cash investments (7,884) (7,337) (312,697)
Maturity of temporary cash investments 200,000 84,976 279,070
Purchase of U.S. Government securities -- (797,275) --
Maturity of U.S. Government securities 447,547 800,000 251,615
Purchase of municipal bonds (200,000) -- --
Purchase of municipal bond fund (55,781) -- --
Investment in limited partnership -- -- (275,500)
Investment in Camden Cellular Telephone
Company, Inc. -- -- (10,200)
----------- ----------- ----------
NET CASH PROVIDED FROM
INVESTING ACTIVITIES $ 356,063 $ 49,881 $ (90,166)
----------- ----------- ----------
FINANCING ACTIVITIES
Principal payments on long term debt $ (592,655) $ (368,562) $ (62,980)
Dividends paid (196,000) (182,000) (168,000)
----------- ----------- ----------
NET CASH USED IN
FINANCING ACTIVITIES $ (788,655) $ (550,562) $ (230,980)
----------- ----------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 230,789 $ (22,677) $ 193,658
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 618,763 641,440 447,782
----------- ----------- ----------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 849,552 $ 618,763 $ 641,440
=========== =========== ==========
The accompanying notes are in integral part of these financial statements.
F-13
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company conform to generally accepted
accounting principles and reflect practices appropriate to the telephone
industry. The accounting records of the Company are maintained in
accordance with the uniform system of accounts prescribed by the Federal
Communications Commission.
Telephone plant is stated at original cost and includes expenditures for
items which substantially increase the useful lives of the property,
buildings and equipment. Renewals and betterments of units of property
are charged to telephone plant in service. The original cost of
depreciable property retired, together with removal cost less any salvage
realized is charged to accumulated depreciation. No gain or loss is
recognized in connection with ordinary retirements of depreciable
property. Maintenance, repairs and minor renewals are expensed as
incurred.
Depreciation on telephone plant for financial statement purposes is
computed by the use of the straight-line method which is estimated to
allocate the cost of depreciable plant equally over its estimated service
life. The annual composite rate was 4.6% in 1994, 5.1% in 1993 and 5.2%
in 1992. For income tax purposes, depreciation is computed by the use of
accelerated methods.
Deferred taxes are provided on temporary differences arising from assets
and liabilities whose bases are different for financial reporting and
income tax purposes, primarily due to depreciable assets, property taxes
and recognition of partnership income.
Investment tax credits are deferred and amortized over the estimated
average useful lives of the telephone plant.
All local and access revenues are recognized in the period in which they
are earned regardless of the period in which they are billed.
Materials and supplies are valued at cost.
Investments which are not readily marketable are valued at cost.
Debt issuance expense is being amortized over the life of the respective
debt issue on a straight-line basis.
F-14
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Retirements of telephone plant which have not reached its estimated
service life have been deferred for financial reporting purposes and are
being amortized over a five year period. For income tax purposes, the
plant was expensed in the year retired.
For purpose of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months
or less to be cash equivalents. Income taxes and interest paid were
$285,479 and $38,467 in 1994, $228,840 and $62,560 in 1993 and $204,337
and $68,142 in 1992, respectively.
Earnings per share have been calculated by dividing net income by the
weighted average number of shares outstanding during each year. The
weighted average shares outstanding were 280 for all years.
NOTE 2 - CONCENTRATIONS OF CREDIT RISK
The Company's business activity consists of providing local telephone
service to customers residing in north central Indiana and connecting
various long distance telephone carriers to said customers. Receivables
from long distance carriers as of December 31, 1994 and 1993 were
unsecured and totaled $118,782 and $70,930, respectively.
The Company maintains cash balances at several banks. Accounts at each
institution are insured by the Federal Deposit Insurance Corporation up to
$100,000. The Company's bank deposits are $568,791 in excess of the
amount insured.
NOTE 3 - INVESTMENTS IN MARKETABLE SECURITIES
In 1994, the Company adopted the provisions of SFAS 115 - Accounting for
Certain Investments in Debt and Equity Securities. Under the provisions
of SFAS 115, all securities classified as available-for-sale are reported
at fair value. The unrealized gain or loss on these securities is
reported as a separate component of stockholders equity. Investments
which are expected to be held until maturity are reported at cost. A
summary of the investments follows:
F-15
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 3 - INVESTMENTS IN MARKETABLE SECURITIES (CONTINUED)
Fair Unrealized
Value Cost Gain(Loss)
-------- --------- -----------
Investments held to maturity - 1994
-----------------------------------
Municipal bonds maturing 1-5 years $ 193,556 $ 200,000 $ (6,444)
Investments held to maturity - 1993
-----------------------------------
U.S. Government obligations maturing
within 1 year $ 447,872 $ 447,547 $ 325
Investments available for sale - 1994
-------------------------------------
Municipal bond fund $ 48,880 $ 55,781 $ (6,901)
Stockholders equity for 1994 includes an unrealized holding loss on
available-for-sale securities of $6,901.
NOTE 4 - INDIANA RSA NUMBER 4 LIMITED PARTNERSHIP
The Company has a 13.775% ownership interest as a limited partner in the
Indiana RSA Number 4 Limited Partnership. The Company owns a 51% interest
in Camden Cellular Telephone Company, Inc. which owns 1% of the
partnership. The financial transactions of the subsidiary have not been
consolidated in this financial statement due to the immaterial effect they
would have on the financial statements.
The partnership provides cellular service to a rural area with several
smaller cities in northern Indiana. At December 31, 1994, the Company had
made $275,638 in capital contributions to the partnership and paid a total
of $10,710 for Camden Cellular Telephone Company, Inc. stock. The fair
market value of the partnership interest may differ significantly from the
carrying value, however, a reasonable estimate of fair market value could
not be made without incurring excessive costs. Partnership income is
recognized when it is distributed by the partnership.
F-16
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 5 - ASSETS PLEDGED AND LONG TERM DEBT
Long-term debt consists of mortgage notes payable to the United States of
America, pursuant to the Rural Electrification Act of 1936, and are
secured by all assets of the company. The terms of the mortgage notes are
as follows:
1994 1993
---------- ----------
2% mortgage notes, payable in quarterly
installments of $6,702, including
principal and interest, through maturity.
Notes mature at various dates from
1995 through 1997. $ 52,621 $ 78,060
5% mortgage notes, payable in quarterly
installments of $26,079, including
principal and interest, through maturity.
Notes mature in 1999 379,783 946,999
---------- ----------
$ 432,404 $ 1,025,059
Less current maturities 112,009 83,500
--------- ----------
$ 320,395 $ 941,559
========= ==========
Maturities on long-term debt for years subsequent to December 31, 1994 are
as follows:
1995 112,009
1996 107,359
1997 107,322
1998 99,907
1999 5,807
F-17
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 6 - TELEPHONE PLANT IN SERVICE
The major classes of property are detailed below:
1994 1993
----------- ----------
Land $ 5,691 $ 5,691
Buildings 180,217 180,216
Telephone plant 2,527,158 2,515,433
Furniture and office equipment 66,113 66,113
Vehicles and other work equipment 120,198 127,888
----------- ----------
Total telephone plant
in service $ 2,899,377 $ 2,895,341
========== ==========
Depreciation for the years ended December 31, 1994, 1993 and 1992 was
$133,651, $148,421, and $153,879 respectively.
NOTE 7 - PENSION
The Company sponsors a defined contribution pension plan that covers all
employees. The plan is a target benefit plan. Contributions to the plan
are designed to provide a certain benefit at normal retirement age. The
amount of retirement expense for the years ended December 31, 1994, 1993,
and 1992 was $14,313, $14,178, and $12,098, respectively.
NOTE 8 - CAPITAL STOCK AND RETAINED EARNINGS
The long-term debt agreements contain restrictions regarding the payment
of dividends or redemption of capital stock. The restrictions are related
in general to the Company's adjusted net worth and assets (as defined).
At December 31, 1993 the Company qualified as to adjusted net worth and
assets; therefore a dividend of $700 per share totaling $196,000 was
approved and paid during 1994.
F-18
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 9 - INCOME TAXES
During 1993, the Company adopted FASB Statement 109, "Accounting for
Income Taxes", which changed the criteria for measuring the provision for
income taxes and recognizing deferred tax assets and liabilities on the
balance sheet. The change did not have a material effect on net income,
but had the effect of increasing state income tax expense and decreasing
federal tax expense for 1993. The Company s net deferred tax asset and
liability consists of:
1994 1993
-------- -------
Current
-------
Deferred tax asset $ 3,757 $ 3,459
Noncurrent
----------
Deferred tax asset $ 58,205 $ 19,960
Deferred tax liabilities (329,569) (336,031)
--------- --------
Net deferred tax liability $ (271,364) $ (316,071)
========= ========
The components of income tax expense from operations were as follows:
1994 1993 1992
---------------- ---------------- -----------------
Federal State Federal State Federal State
-------- -------- -------- ------- -------- -------
Current $ 259,965 $ 67,279 $ 200,033 $ 49,943 $ 184,730 $ 48,637
Deferred (36,222) (8,783) (34,282) 22,347 (2,855) (542)
Deferred ITC (10,382) --- (10,468) --- (10,606) ---
-------- ------- -------- ------- -------- -------
TOTAL $ 213,361 $ 58,496 $ 155,283 $ 72,290 $ 171,269 $ 48,095
======== ======= ======== ======= ======== =======
F-19
<PAGE>
CAMDEN TELEPHONE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 9 - INCOME TAXES - CONTINUED
The effective income tax rate differs from the federal statutory rate of
34% due to the following factors:
1994 1993 1992
------ ------ ------
Statuary federal income tax rate 34.0% 34.0% 34.0%
State income taxes net of federal
tax benefit 5.4 8.3 5.4
Amortization of investment credit (1.4) (1.8) (1.8)
Other differences ( .3) (1.1) ( .2)
------ ------ ------
Effective tax rate 37.7% 39.4% 37.4%
====== ====== ======
NOTE 10 - SUBSEQUENT CHANGES TO FINANCIAL STATEMENTS
Subsequent to the original issuance of the financial statements, the
company discovered that in 1994 excess billings to interexchange carriers
had caused revenues to be overstated by $125,260. The adjustment to
revenues reduced reported net income and shareholders equity by $76,267.
F-20
<PAGE>
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
Dated as of April 27, 1995
By and Among
Telephone and Data Systems, Inc.,
TDS - Camden Acquisition Corp.
and
Camden Telephone Company, Inc.
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. THE MERGER . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date of the Merger . . . . . . . . . 2
1.3 Articles of Incorporation; By-laws; Directors and
Officers . . . . . . . . . . . . . . . . . . 2
1.4 Conversion of Shares . . . . . . . . . . . . . 2
1.5 TDS to Make Certificates Available . . . . . . 3
1.6 Dividends; Transfer Taxes . . . . . . . . . . . 3
1.7 Dissenting Shares . . . . . . . . . . . . . . . 4
1.8 Non-Dilution . . . . . . . . . . . . . . . . . 4
1.9 Closing of Camden Transfer Books . . . . . . . 4
1.10 Closing . . . . . . . . . . . . . . . . . . . . 5
1.11 No Fractional Securities . . . . . . . . . . . 5
SECTION 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
CAMDEN . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Organization and Capital Structure of Camden . 5
2.2 Subsidiaries and Investments . . . . . . . . . 6
2.3 Authority; No Conflict . . . . . . . . . . . . 6
2.4 Financial Statements . . . . . . . . . . . . . 7
2.5 Absence of Certain Changes or Events Since Balance
Sheet Date . . . . . . . . . . . . . . . . . 7
2.6 Availability of Assets and Legality of Use . . 8
2.7 Title to Property . . . . . . . . . . . . . . . 8
2.8 Undisclosed Liabilities . . . . . . . . . . . . 8
2.9 No Default or Litigation . . . . . . . . . . . 8
2.10 Patents, Trade Names, Trademarks and Other Rights 9
2.11 Real Estate . . . . . . . . . . . . . . . . . . 10
2.12 Contracts . . . . . . . . . . . . . . . . . . . 10
2.13 Employee Agreements; Employee Relations . . . . 11
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . 13
2.15 Employee Benefit Plans . . . . . . . . . . . . 13
2.16 Permits . . . . . . . . . . . . . . . . . . . . 14
2.17 Insurance . . . . . . . . . . . . . . . . . . . 14
2.18 Environmental Conditions . . . . . . . . . . . 14
2.19 Bank Accounts; Powers of Attorney . . . . . . . 15
2.20 Accounts Receivable . . . . . . . . . . . . . . 15
2.21 Inventories . . . . . . . . . . . . . . . . . . 15
2.22 Information in Proxy Statement . . . . . . . . 15
2.23 Exchange Act; Investment Company Act . . . . . 16
2.24 No Finder . . . . . . . . . . . . . . . . . . . 16
2.25 No Omissions . . . . . . . . . . . . . . . . . 16
SECTION 3. REPRESENTATIONS AND WARRANTIES OF TDS . . . 16
3.1 Organization and Capital Structure of TDS . . . 16
3.2 Authority; No Conflict . . . . . . . . . . . . 17
3.3 Financial Statements . . . . . . . . . . . . . 17
3.4 TDS Registration Statement and Prospectus . . . 18
-i-
<PAGE>
3.5 Information in Proxy Statement . . . . . . . . 18
3.6 TDS Common Shares . . . . . . . . . . . . . . . 19
3.7 No Finder . . . . . . . . . . . . . . . . . . . 19
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SUB . . . 19
4.1 Organization and Capital Structure of Sub . . . 19
4.2 Authority . . . . . . . . . . . . . . . . . . . 19
SECTION 5. ACTION PRIOR TO EFFECTIVE DATE . . . . . . . 20
5.1 Regulatory Approvals . . . . . . . . . . . . . 20
5.2 Investigation of Business of Camden by TDS . . 20
5.3 Preserve Accuracy of Representations and
Warranties . . . . . . . . . . . . . . . . . 21
5.4 Maintain Business of Camden as a Going Concern 21
5.5 No Material Change in the Business of Camden . 21
5.6 Necessary Consents and Governmental Approvals . 22
5.7 No Public Announcement . . . . . . . . . . . . 22
5.8 Camden Shareholders' Meeting . . . . . . . . . 22
5.9 The Merger Registration Statement . . . . . . . 23
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF TDS AND
SUB. . . . . . . . . . . . . . . . . . . . . 23
6.1 No Misrepresentation or Breach of Covenants and
Warranties . . . . . . . . . . . . . . . . . 23
6.2 No Changes or Destruction of Property . . . . . 23
6.3 Opinion of Counsel for Camden . . . . . . . . . 23
6.4 No Restraint or Litigation . . . . . . . . . . 23
6.5 Necessary Governmental Approvals . . . . . . . 24
6.6 Necessary Consents . . . . . . . . . . . . . . 24
6.7 Approval by Camden Shareholders . . . . . . . . 24
6.8 No Stop Orders . . . . . . . . . . . . . . . . 24
6.9 Listing of TDS Common Shares . . . . . . . . . 24
6.10 Approval by TDS Board of Directors . . . . . . 24
6.11 Dissenting Shares . . . . . . . . . . . . . . . 24
6.12 Comfort Letter . . . . . . . . . . . . . . . . 24
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF CAMDEN 25
7.1 No Misrepresentation or Breach of Covenants and
Warranties . . . . . . . . . . . . . . . . . 25
7.2 Opinions of Counsel for TDS and Sub . . . . . . 25
7.3 Corporate Action . . . . . . . . . . . . . . . 25
7.4 No Restraint or Litigation . . . . . . . . . . 25
7.5 Necessary Governmental Approvals . . . . . . . 25
7.6 Approval by Camden Shareholders . . . . . . . . 26
7.7 No Stop Orders . . . . . . . . . . . . . . . . 26
7.8 Listing of TDS Common Shares . . . . . . . . . 26
SECTION 8. OPERATION OF CAMDEN FOLLOWING THE MERGER . . 26
8.1 Operation of Camden; Officers and Directors of
Camden . . . . . . . . . . . . . . . . . . . 26
-ii-
<PAGE>
SECTION 9. INDEMNIFICATION . . . . . . . . . . . . . . 27
9.1 By the Camden Shareholders to TDS . . . . . . . 27
9.2 By TDS to the Camden Shareholders . . . . . . . 27
SECTION 10. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11. TAXES . . . . . . . . . . . . . . . . . . . 28
11.1 Liability For Certain Taxes . . . . . . . . . . 28
11.2 Tax Returns . . . . . . . . . . . . . . . . . . 28
11.3 Assistance and Cooperation . . . . . . . . . . 28
11.4 Adjustment to Merger Consideration . . . . . . 29
11.5 Survival of Obligations . . . . . . . . . . . . 29
11.6 Definitions . . . . . . . . . . . . . . . . . . 29
SECTION 12. NOTICES . . . . . . . . . . . . . . . . . . 30
SECTION 13. CONFIDENTIAL NATURE OF INFORMATION . . . . . 30
SECTION 14. TERMINATION AND ABANDONMENT . . . . . . . . 30
SECTION 15. OTHER PROVISIONS . . . . . . . . . . . . . . 31
15.1 Expenses . . . . . . . . . . . . . . . . . . . 31
15.2 Governing Law . . . . . . . . . . . . . . . . . 31
15.3 Partial Invalidity . . . . . . . . . . . . . . 31
15.4 Successors and Assigns; Parties in Interest . . 31
15.5 Execution in Counterparts . . . . . . . . . . . 31
15.6 Titles and Headings . . . . . . . . . . . . . . 31
15.7 Schedules and Exhibits . . . . . . . . . . . . 31
15.8 Entire Agreement; Amendments and Waivers . . . 32
EXHIBITS
Exhibit A - Plan of Merger
Exhibit B - Form of Opinion of Counsel to Camden
Exhibit C - Form of Opinion of Counsel to TDS
Exhibit D - Form of Opinion of Special Indiana Counsel to
TDS and Sub
Exhibit E-1 - Consulting Agreement with Jack Ford
Exhibit E-2 - Employment Agreement with Jack Ford
Exhibit E-3 - Employment Agreement with J. Robert McCain
Exhibit E-4 - Employment Agreement with Brenda Elizelda
Exhibit E-5 - Employment Agreement with Pamela Brown
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement")
is made and entered into as of this 27th day of April, 1995 by
and among Telephone and Data Systems, Inc., an Iowa
corporation ("TDS"), TDS-Camden Acquisition Corp., an Indiana
corporation and indirect, wholly-owned subsidiary of TDS
("Sub"), and Camden Telephone Company, Inc., an Indiana
corporation ("Camden") (Sub and Camden being sometimes
referred to hereinafter together as the "Constituent
Corporations").
WHEREAS, TDS and Camden, through its Board of
Directors, have entered into a Letter Agreement dated January
27, 1995 (executed by Camden on March 6, 1995) providing for
the acquisition of Camden by TDS by means of the merger of Sub
with and into Camden (the "Merger");
WHEREAS, the Board of Directors of each of TDS, Sub
and Camden have approved the Merger of Camden and Sub upon the
terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, TDS and Camden intend that the Merger
constitute a reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, in consideration of the premises and
the agreements, representations and warranties hereinafter set
forth, TDS, Sub and Camden hereby agree as follows:
SECTION 1. THE MERGER
1.1 The Merger. On the Effective Date, Sub
shall be merged with and into Camden and the separate
existence of Sub shall thereupon cease. The name of Camden,
as the surviving corporation in the Merger (the "Surviving
Corporation"), shall by virtue of the Merger remain "Camden
Telephone Company, Inc." The Merger shall have the effect set
forth in Section 23-1-40 of the Indiana Business Corporation
Law; the Surviving Corporation shall possess all assets and
property of every description, and every interest in the
assets and property, wherever located, and the rights,
privileges, immunities, powers, franchises, and authority, of
a public as well as of a private nature, of each of the
Constituent Corporations, and all obligations belonging to or
due to each of the Constituent Corporations, all of which
shall be vested in the Surviving Corporation without further
act or deed; title to any real estate or any interest in the
real estate vested in either Constituent Corporation shall not
revert or in any way be impaired by reason of the Merger; the
Surviving Corporation shall thenceforth be liable for all the
pre-existing obligations of each Constituent Corporation,
including liability to dissenting shareholders. The parties
intend the Merger to qualify as a
-1-
<PAGE>
reorganization pursuant to Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code.
1.2 Effective Date of the Merger. As soon as is
practicable after the satisfaction or waiver of the conditions
hereinafter set forth, the parties hereto will cause the
Merger to become effective by filing, with the Secretary of
State of the State of Indiana, Articles of Merger, including
the Plan of Merger substantially in the form of Exhibit A
hereto, as required by, and executed in accordance with,
Section 24-1-40 of the Indiana Business Corporation Law. When
used in this Agreement, the term "Effective Date" shall mean
the date and time at which such Articles of Merger are so
filed.
1.3 Articles of Incorporation; By-laws; Directors
and Officers. The Articles of Incorporation of Camden, as
amended, shall be the Articles of Incorporation of the
Surviving Corporation after the Effective Date unless and
until amended in accordance with its terms and as provided by
law. The By-laws of Camden as in effect on the Effective Date
shall be the By-laws of the Surviving Corporation unless and
until amended in accordance with its terms or the Articles of
Incorporation of the Surviving Corporation and as provided by
the Indiana Business Corporation Law. The initial Board of
Directors of the Surviving Corporation shall consist of the
directors of Camden immediately prior to the Effective Date,
who shall serve until their respective successors are duly
elected and qualified. The officers of Camden immediately
prior to the Effective Date shall be the initial officers of
the Surviving Corporation until their respective successors
are duly elected and qualified.
1.4 Conversion of Shares. As of the Effective
Date, by virtue of the Merger and without any action on the
part of any of TDS, Sub, Camden, the Surviving Corporation or
any holder of any of the following securities:
(a) Each share of Camden common stock, without par
value, (each, a "Camden Share") held in the treasury of Camden
shall be cancelled;
(b) Each issued and outstanding share of capital
stock of Sub shall be converted into 100 validly issued, fully
paid and nonassessable shares of common stock, without par
value, of the Surviving Corporation; and
(c) Subject to Section 1.11, each Camden Share
issued and outstanding immediately prior to the Effective Date
(other than Dissenting Shares (as defined in Section 1.7))
shall be converted into the right to receive, from Sub, the
number of Common Shares, par value $1.00 per share, of TDS
(the "TDS Common Shares") equal to the quotient obtained by
dividing One Hundred Forty-Three Thousand, Two Hundred
(143,200) TDS Common Shares (such number of TDS Common Shares
is herein referred to as the "Aggregate Merger
-2-
<PAGE>
Consideration") by the total number of Camden Shares issued
and outstanding immediately prior to the Effective Date. (The
number of TDS Common Shares into which each Camden Share is
converted is hereinafter referred to as the "Merger
Consideration.")
1.5 TDS to Make Certificates Available. As soon as
practicable after the Effective Date, TDS shall make
available, and, subject to Sections 1.6 and 1.11, each holder
of a certificate which prior to the Effective Date represented
Camden Shares will be entitled to receive, following surrender
to TDS of one or more such certificates for cancellation,
certificates representing the number of TDS Common Shares into
which such Camden Shares were converted in the Merger. TDS
Common Shares into which Camden Shares shall be converted in
the Merger shall be deemed to have been issued at the
Effective Date, and certificates which prior to the Effective
Date represented Camden Shares shall, at and after the
Effective Date, be deemed to represent only the right to
receive, upon surrender of such certificates, the certificates
contemplated by the preceding sentence.
1.6 Dividends; Transfer Taxes. No dividends or
other distributions that are declared after the Effective Date
on TDS Common Shares or are payable to the holders of record
thereof after the Effective Date will be paid to persons
entitled by reason of the Merger to receive certificates
representing TDS Common Shares until such persons surrender
their certificates which prior to the Effective Date
represented Camden Shares. Upon such surrender, there shall
be paid to the person in whose name the certificates
representing such TDS Common Shares shall be issued, any
dividends or other distributions which shall have become
payable with respect to such TDS Common Shares between the
Effective Date and the time of such surrender. In no event
shall the person entitled to receive such dividends or other
distributions be entitled to receive interest on such
dividends or other distributions. If any cash or certificate
representing TDS Common Shares is to be paid to or issued in a
name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of
such exchange that the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange shall pay to TDS
any transfer or other Taxes required by reason of the issuance
of the certificate for such TDS Common Shares in a name other
than that of the registered holder of the certificate
surrendered, or shall establish to the satisfaction of TDS
that any such Tax has been paid or is not applicable.
Notwithstanding the foregoing, neither TDS nor any party
hereto shall be liable to a holder of Camden Shares for any
TDS Common Shares or dividends or other distributions thereon
delivered to a public official pursuant to applicable escheat
or unclaimed property laws. No fees or other charges shall be
assessed or imposed by TDS or any person acting for or on
behalf of TDS, upon holders of Camden Shares who surrender
such shares for exchange in connection with this Agreement.
-3-
<PAGE>
1.7 Dissenting Shares. The provisions of Sections
1.4 through 1.6 inclusive shall not apply to Camden Shares
(the "Dissenting Shares") held by Camden Shareholders who do
not vote such Camden Shares in favor of the approval and
adoption of this Agreement and the Merger and who deliver a
written notice to Camden in the manner required by Section 23-
1-44 of the Indiana Business Corporation Law, stating the
intention to demand payment of the fair value of such Camden
Shares if the Merger is effected, and if such holders of
Camden Shares take all other action required in the manner
provided in Section 23-1-44 of the Indiana Business
Corporation Law. Such holders shall be entitled to payment
for such Camden Shares in accordance with the provisions of
Section 23-1-44 of the Indiana Business Corporation Law if
applicable.
1.8 Non-Dilution. In the event that, at any time
after the date hereof and prior to the Effective Date, TDS
shall effect (a) a dividend upon TDS Common Shares payable in
TDS Common Shares or in the common stock, preferred stock or
other securities of TDS or any affiliated corporation, (b) a
split or combination of outstanding TDS Common Shares into a
greater or smaller number of TDS Common Shares, or (c) any
reorganization or reclassification of TDS Common Shares, or
any liquidation, or any consolidation or merger with another
corporation, or the sale of all or substantially all of its
assets to another person (collectively, any "Organic Change"),
in such a way that holders of outstanding TDS Common Shares
shall be entitled to receive (either directly, or upon
subsequent liquidation) cash, stock, securities, or other
property with respect to or in exchange for such TDS Common
Shares, then, as a condition of such dividend, split,
combination, or Organic Change, lawful and adequate provisions
shall be made whereby the Camden shareholders immediately
prior to the Effective Date, other than holders of Dissenting
Shares ("Camden Shareholders") shall be entitled, under the
same terms otherwise applicable to their receipt of the TDS
Common Shares in the Merger, to become entitled to receive on
the Effective Date, in lieu of or in addition to the TDS
Common Shares to which such Camden Shareholders are entitled
immediately prior to such dividend, split, combination or
Organic Change, such cash, stock, securities, or other
property which Camden Shareholders would have owned or been
entitled to receive if the Camden Shareholders had owned the
TDS Common Shares, immediately prior to the happening of such
event or the record date therefor, and in any such case
appropriate provisions shall also be made with respect to
Camden Shareholders' rights and interests to the end that the
provisions of this Section 1.8 shall thereafter be applicable
in relation to any stock, securities, or other property
thereafter payable or deliverable to Camden Shareholders
pursuant to the earlier application of the provisions of this
Section 1.8.
1.9 Closing of Camden Transfer Books. Upon the
Effective Date, the stock transfer books of Camden shall be
closed and no transfer of Camden Shares shall thereafter be
made. If, after the Effective Date, certificates which prior
to the Effective
-4-
<PAGE>
Date represented Camden Shares are presented to the Surviving
Corporation, they shall be cancelled and exchanged for
certificates representing TDS Common Shares as provided in
this Section 1.
1.10 Closing. The closing of the transactions
contemplated by this Agreement shall take place at the offices
of Camden, at 10:00 a.m., local time, on a date selected by
TDS which is no later than 10 business days after the last to
occur of (i) the IURC Approval (as such term is defined in
Section 5.1) or (ii) the holders of the Camden Shares shall
have duly approved the Merger as contemplated by Section 6.7
or at such other time and place as TDS and Camden shall agree.
1.11 No Fractional Securities. No certificates or
scrip representing fractional shares of TDS Common Shares
shall be issued upon the surrender for exchange of
certificates which prior to the Effective Date represented
Camden Shares pursuant to this Section 1 and no TDS dividend
or other distribution, stock split or interest shall relate to
any fractional security, and such fractional interests shall
not entitle the owner thereof to vote or to any rights of a
security holder of TDS. In lieu of any such fractional
securities, each holder of a Camden Share who would otherwise
have been entitled to a fraction of a TDS Common Share upon
surrender of stock certificates for exchange pursuant to this
Section 1 will be paid cash upon such surrender in an amount
equal to such fraction times the closing sale price of a TDS
Common Share on the American Stock Exchange on the Effective
Date, or if the TDS Common Shares are not traded on such day,
such closing sale price on the next preceding day on which
such stock was traded on the American Stock Exchange.
SECTION 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
CAMDEN.
As an inducement to TDS and Sub to enter into this
Agreement and to consummate the transactions contemplated
hereby, Camden represents and warrants to TDS, Sub and their
respective successors and assigns, and agrees as follows:
2.1 Organization and Capital Structure of Camden.
Camden is a corporation duly organized, validly existing and
in good standing under the laws of the State of Indiana, which
is the only jurisdiction in which the ownership or leasing of
its properties or the conduct of its business requires it to
be qualified to do business, and no other jurisdiction has
demanded, requested or otherwise indicated that Camden is
required so to qualify; and Camden has full power and
authority to own or lease and operate its properties and to
carry on its business as now conducted. Camden serves not
less than 1,606 telephone access lines.
The authorized capital of Camden consists of 560
shares of capital stock, Common, without par value, of which
280 shares
-5-
<PAGE>
have been issued and are outstanding and none of which are
held in Camden's treasury. Except for this Agreement, Camden
is not a party to or bound by any agreements, arrangements,
options, warrants, calls, rights or commitments of any
character relating to the issuance, sale, purchase or
redemption of any shares of capital stock of Camden. No
holder of Camden Shares has any preemptive, stock purchase or
other rights to acquire Camden Shares. All of the outstanding
Camden Shares are validly issued, fully paid and
non-assessable.
True and correct copies of Camden's Articles of
Incorporation and all amendments thereto and of its By-laws as
amended to date have been delivered to TDS.
2.2 Subsidiaries and Investments. Camden holds a
13.775% interest as a limited partner in the Indiana RSA
Number 4 Limited Partnership ("Indiana RSA Partnership") which
holds the FCC Cellular license for Indiana RSA #4. Camden
owns a 51% interest in Camden Cellular Telephone Company,
Inc., an Indiana corporation ("Camden Cellular"), which owns
1% of the Indiana RSA Partnership. Except for such interests
and except as set forth in Schedule 2.2 Camden does not own,
of record or beneficially, any outstanding securities or other
interest in any corporation, partnership, joint venture or
other entity.
2.3 Authority; No Conflict. Camden has full power
and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery
and performance by Camden of this Agreement and the
transactions contemplated hereby have been duly authorized by
its Board of Directors and, except for the approval by the
shareholders of Camden as provided in Section 5.8, do not
require further authorization or consent by Camden or its
board of directors or shareholders. This Agreement is the
legal, valid and binding agreement of Camden enforceable in
accordance with its terms. Camden shall furnish TDS with
certified copies of the resolutions adopted by the Board of
Directors of Camden in connection with the transactions
contemplated hereby.
Neither the execution or delivery of this Agreement
by Camden nor consummation of the transactions contemplated
hereby or compliance with or fulfillment of the terms and
provisions hereof or of any other agreement or instrument
contemplated hereby will (a) conflict with, result in a breach
of the terms, conditions or provisions of, or constitute a
default, an event of default or an event creating rights of
termination or cancellation under, the Articles of
Incorporation or the By-laws of Camden, as amended, any
instrument, agreement, mortgage, judgment, order, award,
decree or other restriction to which Camden or Camden
Cellular, is a party or to which any of their respective
properties is subject or by which Camden or Camden Cellular,
is bound or any statute, other law or regulatory provision
affecting Camden or Camden Cellular, or (b) require the
approval, consent or authorization of, or the making of
-6-
<PAGE>
any declaration, filing or registration with, any third party
or any foreign, federal, state or local court, governmental
authority or regulatory body, except as required by the
Indiana Business Corporation Law, by the regulations of the
Indiana Utility Regulatory Commission (the "IURC"), by the
regulations of the Federal Communications Commission ("FCC")
and as may be required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act").
2.4 Financial Statements. The balance sheet of
Camden at each of December 31, 1993 and 1994 and the related
statements of income, changes in shareholders' equity and of
cash flows for each of the fiscal years then ended,
accompanied by the report of Kehlenbrink, Lawrence & Pauckner
certified public accountants, have been prepared in accordance
with generally accepted accounting principles consistently
applied and present fairly the financial position of Camden as
of the date of such balance sheets and the results of its
operations and cash flows for the fiscal periods then ended.
True and correct copies of such financial statements are
included in Schedule 2.4.
2.5 Absence of Certain Changes or Events Since
Balance Sheet Date. Since December 31, 1994 there has been:
(a) no increase in the indebtedness for borrowed
money incurred by Camden and no incurrence of any other
obligation or liability (fixed or contingent) except for
obligations incurred in the ordinary course of business
consistent with past practice;
(b) no material adverse change in the assets,
liabilities, properties, business, profits, prospects or
condition of Camden and no occurrence of any fact or existence
of any condition (or the contemplation or threat of either
thereof) which might reasonably be expected to cause such a
change in the future;
(c) no damage, destruction, loss or claim to or
against any property or assets of Camden, whether or not
covered by insurance, which materially adversely affects the
assets, liabilities, properties, business, profits, prospects
or condition of Camden;
(d) no sale, transfer or other disposition by
Camden or mortgage or pledge of, or imposition of any lien,
charge or encumbrance on, any of its properties or assets,
other than transactions (including the sale of capital assets)
in the ordinary course of business consistent with past
practice;
(e) no contribution to the capital of Camden, no
dividend or other distribution or payment in respect of, and
no subdivision, consolidation or other recapitalization of,
the capital stock of Camden and no declaration or
authorization of any of the foregoing (except for a regular
annual dividend of $800 per
-7-
<PAGE>
share ($224,000 in the aggregate) declared on March 6, 1995 on
the issued and outstanding Camden Shares payable March 15,
1995); and
(f) no proceeding with respect to the merger,
consolidation, liquidation or reorganization of Camden, except
pursuant to this Agreement.
2.6 Availability of Assets and Legality of Use.
The assets owned or leased by Camden constitute all of the
assets which are being used in the business of Camden; such
assets constitute all of the assets necessary to continue the
operations of Camden; and such assets are in good and
serviceable condition (normal wear and tear excepted) and
suitable for the uses for which they are intended. Such
assets and their use conform in all material respects to all
applicable building, zoning, fire, environmental, health,
safety and other laws or ordinances or regulations in effect
on the date hereof (including, without limitation, all laws
and regulations in respect of the protection of the
environment and the regulation of the disposal of hazardous
waste and hazardous products), and no notice of any violation
of any such law, ordinance or regulation has been received by
Camden.
2.7 Title to Property. Camden has good and
marketable title to all of its assets reflected in the
financial statements of Camden referred to in Section 2.4 and
all of the assets thereafter acquired by it, except to the
extent that such assets have been disposed of for fair value
in the ordinary course of its business consistent with past
practice or as permitted by the express terms of this
Agreement, subject to no mortgage, lien, security interest or
other encumbrance or adverse interest of any kind except (a)
as set forth in Schedule 2.7 or (b) any lien for current Taxes
which are not yet due and payable.
2.8 Undisclosed Liabilities. Camden is not subject
to any liability (including, without limitation, all asserted
and unasserted claims arising from events occurring on or
prior to the date hereof, whether known or unknown to Camden),
absolute or contingent, which is not shown or which is
materially in excess of amounts shown or reserved for in the
balance sheet as of December 31, 1994 or referred to in the
notes thereto, or otherwise disclosed in this Agreement, other
than liabilities which are of the same nature as those set
forth in such balance sheet and notes and reasonably incurred
after December 31, 1994 in the ordinary course of business
consistent with past practice and other liabilities expressly
permitted by this Agreement.
2.9 No Default or Litigation. Except as described
in Schedule 2.9 hereto:
(a) Camden is not in default or violation under any
agreement, lease or other instrument to which it is a party,
or under any law, regulation, writ, injunction, order or
decree of any court or any foreign, federal, state, local or
other governmental
-8-
<PAGE>
department, commission, board, bureau, agency or
instrumentality (including, without limitation, applicable
laws, rules and regulations relating to environmental
protection, anti-trust, civil rights, health and occupational
health and safety matters);
(b) there are no actions at law, suits in equity or
claims pending or threatened against or affecting Camden or
its business or properties, nor is there any reasonable basis
therefor;
(c) there are no governmental proceedings or
investigations (including, without limitation, proceedings or
investigations before or by the Environmental Protection
Agency ("EPA") or any state or local agency responsible for
similar regulation) pending or threatened against or affecting
Camden or its business or properties, nor is there any
reasonable basis therefor; and
(d) no action, suit or proceeding has been
instituted or threatened to restrain or prohibit or otherwise
challenge the legality or validity of the transactions
contemplated hereby.
2.10 Patents, Trade Names, Trademarks and Other
Rights.
(a) Except as disclosed on Schedule 2.10, Camden
does not own or control, or have any right, license or
interest in, any United States or foreign patent or patent
application or any United States, state or foreign trade name,
trademark or servicemark registration or application or any
United States, foreign or state copyright registration.
Schedule 2.10 hereto contains a list and description of: (i)
all unregistered trade names, trademarks and, servicemarks (A)
owned or controlled by Camden or (B) under which Camden holds
any right, license or interest, (ii) all agreements,
commitments, contracts, understandings, licenses, assignments
and indemnities relating or pertaining to such registrations
to which Camden is a party showing in each case the parties
and the material terms; (iii) all licenses or agreements
pertaining to know-how, trade secrets, inventions, disclosures
or uses of ideas and intellectual property to which Camden is
a party, showing in each case the parties and the material
terms; and (iv) all registered assumed or fictitious names
under which Camden is conducting business.
(b) Except as disclosed in Schedule 2.10, Camden
owns or has the perpetual royalty free right to use all
patents, trademarks, servicemarks, copyrights, trade names,
improvements, processes, formulae, trade secrets, know-how and
proprietary or confidential information used in conducting its
business. No infringement of any patent, patent right,
trademark, servicemark, trade name, brand name or copyright or
registration thereof has occurred or resulted in any way from
the operation of the business of Camden. No claim or threat
of any such infringement has been made or implied in respect
of any of the foregoing, and no proceedings are pending or
threatened against Camden which
-9-
<PAGE>
challenge the validity or ownership of any trademark, trade
name or servicemark or the ownership of any other right or
property described in Schedule 2.10, and Camden knows of no
infringing use of any of the same by others. Camden has no
notice of, or knowledge of any basis for, a claim against
Camden that any of its operations, activities, products,
equipment, machinery or processes infringes the patents,
trademarks, servicemarks, trade names, copyrights or other
property rights of others.
2.11 Real Estate. Schedule 2.11 contains a list of
(a) each lease or agreement under which Camden is lessee of,
or holds or operates, any real estate owned by any third
party, and (b) each parcel of real estate owned by Camden and
each contract or agreement for the purchase, sale, or lease of
real estate. Except as disclosed in such Schedule, each of
the leases and agreements described therein (i) is in good
standing and in full force and effect and is the valid and
binding obligation of Camden and the other parties thereto in
accordance with its respective terms and (ii) will continue in
effect after the Effective Date without the consent, approval
or act of, or the making of any filing with, any other party.
Except as disclosed in Schedule 2.11, Camden is not in default
in any material respect under any of such leases or agreements
and Camden has not received any notice of default thereunder
which has not been cured. To the knowledge of Camden, no
other party to any such lease or agreement is in material
default thereunder. Except as described in such Schedule,
Camden has the right to quiet enjoyment of all such real
property described in such Schedule for the full term of each
such lease or similar agreement relating thereto, including
any related renewal option, and the leasehold or other
interest of Camden in such real property is not subject or
subordinate to any security interest, lien, claim, pledge,
mortgage, encumbrance or charge of any kind except for liens
for Taxes not yet due and payable and, in the case of real
estate owned by Camden, except for such easements,
restrictions, defects in title, covenants and similar charges
as do not render title to the property unmarketable or
uninsurable or detract from or interfere in any material
respect with the existing use of the property subject thereto.
True and correct copies of all leases or agreements identified
in Schedule 2.11 have heretofore been delivered to TDS.
2.12 Contracts. Except as set forth in Schedule
2.12, Camden is not a party to:
(a) any contract for the lease or sublease of
personal property from or to any third party which provides
for annual rentals in excess of $5,000, or any group of
contracts for the lease or sublease of similar kinds of
personal property from or to third parties which provides in
the aggregate for annual rentals in excess of $5,000;
(b) any contract for the purchase or sale of raw
materials, commodities, merchandise, supplies, other materials
or
-10-
<PAGE>
personal property or for the furnishing or receipt of services
which calls for performance over a period of more than ninety
(90) days and involves more than the sum of $5,000;
(c) any distributor, dealer, manufacturer's
representative, sales, agency, advertising or other contract
which is not terminable by Camden without penalty on notice of
thirty (30) days or less;
(d) any guarantee of the obligations of customers,
suppliers, officers, directors, employees or others;
(e) any loan or other indebtedness for borrowed
money, including, without limitation, loans owing to either
the Rural Electrification Administration or the Rural
Telephone Bank; or
(f) any other contract, whether or not made in the
ordinary course of business, which is material to the business
or assets of Camden.
True and correct copies of all contracts and
agreements identified in Schedule 2.12 have heretofore been
delivered to TDS. No purchase commitment by Camden is in
excess of its ordinary business requirements or at a price in
excess of fair market price at the date thereof. Except as
set forth in Schedule 2.12, (i) none of the contracts or
agreements listed in Schedule 2.12 will expire or be
terminated or be subject to any modification of terms or
conditions upon the consummation of the transactions
contemplated hereby; (ii) Camden is neither in default in any
material respect under the terms of any such contract or
agreement nor in default in the payment of any principal of or
interest on any indebtedness for borrowed money, and no event
has occurred which, with the passage of time or giving of
notice, or both, would constitute such a default by Camden;
and (iii) no other party to any such contract or agreement is
in default in any material respect thereunder, and no such
event has occurred with respect to such party. None of such
contracts or agreements contains terms unduly burdensome to
Camden or is harmful to its business.
2.13 Employee Agreements; Employee Relations.
(a) Except as disclosed on Schedule 2.13(a), there
are no plans, contracts and arrangements, oral or written,
including, but not limited to, union contracts and employee
severance plans, whereunder Camden has any obligations to its
officers, directors, employees or agents or whereunder any of
such persons owes money or any obligation to Camden. Except
as disclosed in Schedule 2.13(a), Camden is not a party to any
(i) agreement with any director, officer or employee of Camden
(A) the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a
transaction involving Camden of the nature of any of the
transactions contemplated by this Agreement, (B) providing any
term of employment or compensation guarantee, or (C) providing
-11-
<PAGE>
severance benefits or other benefits (which are conditioned
upon a change of control) after the termination of employment
of such employee regardless of the reason for such termination
of employment or (ii) agreement or plan, including, without
limitation, any incentive or bonus plan, stock option plan,
stock appreciation rights plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this
Agreement.
(b) Schedule 2.13(b) lists (i) the names and
positions of each of the officers, directors and employees of
Camden, and (ii) the base salary level as of the date hereof.
From the date hereof, through the Effective Date, there will
be no increase in the compensation payable to any of such
officers, directors or employees, except for budgeted
increases set forth in such Schedule.
(c) There are (i) no situations in which Camden is
involved with the personal interests of any officer, director
or shareholder of Camden which may be generally characterized
as a "conflict of interest," including, but not limited to,
direct or indirect interests in the business of competitors,
suppliers or customers of Camden, and (ii) no situations with
respect to Camden which involved or involves (A) the use of
any corporate funds or unlawful contributions, gifts or
entertainment or other unlawful expenses related to political
activity, (B) the making of any direct or indirect unlawful
payments to government officials or others from corporate
funds or the establishment or maintenance of any unlawful or
unrecorded funds, (C) the violation of any of the provisions
of The Foreign Corrupt Practices Act of 1977, or any rules or
regulations promulgated thereunder, (D) the receipt of any
illegal discounts or rebates or any other violation of the
antitrust laws, or (E) any investigation by the IURC, the
Securities and Exchange Commission ("SEC") or any other
foreign, federal, state, county or local government agency or
authority.
(d) Camden has not engaged in any unfair labor
practice, unlawful employment practice or unlawful
discriminatory practice in the conduct of its business and
Camden has complied in all material respects with all
applicable laws, rules and regulations relating to wages,
hours and collective bargaining and has withheld all amounts
required by agreement to be withheld from the wages or
salaries of employees; and Camden has not had notice of any
claim that Camden has engaged in any such practice or has
failed to so comply and withhold. The relations of Camden
with its employees are satisfactory from an operational point
of view. Camden is not a party to or adversely affected by or
threatened with any dispute or controversy with a union or
with respect to unionization or collective bargaining, whether
involving Camden or any supplier.
-12-
<PAGE>
(e) Camden employs fewer than 50 employees.
2.14 Taxes.
(a) Except as set forth on Schedule 2.14 attached
hereto, (i) Camden has filed on or before the date hereof (or
will timely file) all Tax Returns required to be filed on or
before the Effective Date; (ii) all such Tax Returns are
complete and accurate and disclose all Taxes required to be
paid by Camden for the periods covered thereby and all Taxes
shown to be due on such Tax Returns have been timely paid;
(iii) all Taxes (whether or not shown on any Tax Return) owed
by Camden and required to be paid on or before the Effective
Date have been (or will be) timely paid or, in the case of
Taxes which Camden is presently contesting in good faith,
Camden has established an adequate reserve for such Taxes on
the financial statements described in Section 2.4; (iv) Camden
has not waived or been requested to waive any statute of
limitations in respect of Taxes; (v) the Tax Returns referred
to in clause (i) have been examined by the Internal Revenue
Service or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect
of which such Tax Returns were required to be filed has
expired; (vi) there is no action, suit, investigation, audit,
claim or assessment pending or proposed or threatened with
respect to Taxes of Camden and, to the best of Camden's
knowledge, no basis exists therefor; (vii) all deficiencies
asserted or assessments made as a result of any examination of
the Tax Returns referred to in clause (i) have been paid in
full; (viii) there are no liens for Taxes upon the assets of
Camden except liens relating to current Taxes not yet due;
(ix) Camden has never made an election under Section 1362 of
the Code to be treated as an "S corporation"; and (x) Camden
has never been a member of an "affiliated group" (as defined
in Section 1504(a) of the Code without regard to the
limitations contained in Section 1504(b) of the Code) and has
never filed Tax Returns on a combined, consolidated or unitary
basis with any entity.
(b) Capitalized terms have the meanings set forth
in Section 11.6.
2.15 Employee Benefit Plans.
(a) Schedule 2.15 sets forth a list of all deferred
compensation plans, all supplemental death, disability, and
retirement plans, all medical reimbursement plans, all
employee welfare benefit plans (within the meaning of Section
3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), all pension plans (within the meaning of
Section 3(2) of ERISA), all severance plans, all bonus plans
and all other employee benefit plans of any kind or character,
whether written or oral, maintained by Camden ("Employee
Benefit Plans"). None of such Employee Benefit Plans is (i) a
multi-employer plan (as defined in Section 414(f) of the Code
or Section 4001(a) of ERISA), or (ii) a plan with respect to
which more than one employer makes
-13-
<PAGE>
contributions within the meaning of Sections 4063 and 4064 of
ERISA. Camden has delivered to TDS true and correct copies of
all written plans and descriptions of all oral plans listed on
Schedule 2.15.
(b) With respect to such Employee Benefit Plans:
(i) all contributions required for each Employee Benefit Plan
for the plan year most recently ended and for all prior years
have been made or reserved for; (ii) Camden is in compliance
in all material respects with the applicable provisions of
ERISA, including applicable ERISA reporting and disclosure
requirements, and applicable rules and regulations promulgated
under ERISA, (iii) there is no accumulated funding deficiency
or any additional funding requirement for any Employee Benefit
Plan for any period ending before the Effective Date; (iv)
none of the Employee Benefit Plans, any fiduciary thereof nor
Camden has engaged in transactions which might subject any of
the plans, any fiduciary thereof or Camden, or any party
dealing with them, to any tax or penalty imposed by the Code
or ERISA; (v) no Employee Benefit Plan has been completely or
partially terminated; and (vi) no reportable event, as such
term is defined in Section 4043(b) of ERISA, has occurred with
respect to any of such plans which are subject to Section
4043(b) of ERISA, other than those which might arise solely as
a result of the transactions contemplated by this Agreement.
2.16 Permits. Camden possesses all franchises,
permits, licenses, certificates, approvals and other
authorizations necessary to own or lease and operate its
properties and to conduct its business as now conducted, all
of which are hereinafter collectively called the "Permits."
All Permits are listed in Schedule 2.16.
All Permits are in full force and effect and will
continue in effect after the Effective Date without the
consent, approval or act of, or the making of any filing with,
any governmental body, regulatory commission or other party,
subject to the receipt of certain governmental and regulatory
approvals as set forth in Section 6.5 hereof. Camden is not
in default under the terms of any such Permit and has not
received notice of any default thereunder; and no other party
to any such Permit is in default thereunder.
2.17 Insurance. Schedule 2.17 sets forth a list and
brief description (including nature of coverage, limits,
deductibles and premiums with respect to each type of
coverage) of all policies of insurance maintained, owned or
held by Camden on the date hereof. Camden has complied with
each of such insurance policies and has not failed to give any
notice or present any claim thereunder in a due and timely
manner.
2.18 Environmental Conditions. Camden has no
liability under, and has not violated, any federal, state and
local environmental or health and safety-related laws,
regulations, rules
-14-
<PAGE>
and ordinances applicable to its facilities and operations, or
of any condition with respect to the environment, whether or
not yet discovered, which could or does result in any
liability, loss, cost, damages, fees or expenses to or against
Camden, Sub or TDS. Camden has not generated, manufactured,
refined, transported, treated, stored, handled, disposed,
transferred, produced or processed, and has no knowledge of
the actual or potential releasing, spilling, leaking or
discharging of, at or in the vicinity of the properties of
Camden, any pollutant, toxic substance, hazardous waste,
hazardous material, hazardous substance, solid waste or oil as
defined in or pursuant to the Resource Conservation and
Recovery Act, as amended, the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, the
Federal Clean Water Act, as amended, or any other federal,
state or local environmental law, regulation, ordinance or
rule.
2.19 Bank Accounts; Powers of Attorney. Schedule
2.19 contains a correct and complete list of all (a) accounts
or deposits of Camden with banks or other financial
institutions, (b) safe deposit boxes of Camden, (c) persons
authorized to sign or otherwise act with respect thereto as of
the date hereof, and (d) powers of attorney for Camden. No
change in such accounts or deposits, safe deposit boxes or
persons authorized to sign will be made prior to the Effective
Date other than changes in the ordinary course of business
consistent with past practice.
2.20 Accounts Receivable. All accounts receivable
of Camden have arisen from bona fide transactions in the
ordinary course of its business. All accounts receivable
reflected in the balance sheet dated December 31, 1994 are
good and collectible in the ordinary course of business at the
aggregate recorded amounts thereof, net of any applicable
allowance for doubtful accounts reflected in the balance sheet
dated December 31, 1994.
2.21 Inventories. The inventories of Camden (a) are
reflected in the balance sheet dated December 31, 1994 in
accordance with generally accepted accounting principles, (b)
are reflected in the books and records of Camden at the lower
of cost or market value and (c) are not known by Camden to be
obsolete and are in good, merchantable and useable condition.
2.22 Information in Proxy Statement. None of the
information to be supplied by Camden for inclusion in the
proxy statement to be distributed to shareholders of Camden in
connection with the meeting of shareholders of Camden to vote
upon the approval and adoption of this Agreement and the
Merger (the "Proxy Statement") or any amendment or supplement
thereto, will, at the time of the mailing of the Proxy
Statement and any amendments or supplements thereto, and at
the time of the meeting of shareholders of Camden to vote upon
this Agreement, the Merger and related transactions, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or
-15-
<PAGE>
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading or
necessary to correct any material statement in any earlier
communication (including the Proxy Statement or any amendment
or supplement thereto) to shareholders of Camden with respect
to the Merger. If at any time prior to the Effective Date any
event with respect to Camden, its officers and directors
should occur which is or should be described in an amendment
of, or a supplement to, the Proxy Statement, such event shall
be so described and disseminated to the shareholders of
Camden. The Proxy Statement will comply (with respect to
Camden) in all material respects with the provisions of the
Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations
promulgated thereunder, as though Camden were subject to the
Exchange Act and such rules and regulations.
2.23 Exchange Act; Investment Company Act. Camden
is not an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended. No securities of
Camden are required to be registered under Section 12 of the
Exchange Act.
2.24 No Finder. Neither Camden nor any party acting
on behalf of Camden has paid or become obligated to pay any
fee or commission to any broker, finder or intermediary for or
on account of the transactions contemplated hereby.
2.25 No Omissions. None of the representations or
warranties of Camden contained herein, none of the information
contained in the Schedules referred to in this Section 2, and
none of the other information or documents furnished to TDS or
its representatives by Camden in connection with this
Agreement, is false or misleading in any material respect or
omits to state a fact herein or therein necessary to make the
statements herein or therein not misleading in any material
respect. There is no fact which adversely affects or in the
future might reasonably be expected to adversely affect the
business, profits or financial condition of Camden, in any
material respect, which has not been set forth or referred to
in this Agreement or in the Schedules hereto.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF TDS.
As an inducement to Camden to enter into this
Agreement and to consummate the transactions contemplated
herein, TDS hereby represents and warrants to Camden and
agrees as follows:
3.1 Organization and Capital Structure of TDS. TDS
is a corporation duly organized and validly existing under the
laws of the State of Iowa. TDS is duly qualified as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such
qualification necessary, except
-16-
<PAGE>
where the failure to be so qualified will not, individually or
in the aggregate, have a material adverse effect on TDS and
its subsidiaries, taken as a whole, or except where the
failure to so qualify would not have a material adverse effect
on the transactions contemplated by this Agreement.
TDS has authorized capital consisting of 100,000,000
TDS Common Shares; 25,000,000 Series A Common Shares, $1.00
par value; and 5,000,000 shares of Preferred Stock, no par
value. As of February 28, 1995, a total of 50,147,231 TDS
Common Shares, 6,876,432 Series A Common Shares and 548,100
shares of Preferred Stock were issued and outstanding, all of
which are validly issued, fully paid and non-assessable and do
not have any preemptive rights except as disclosed in the
Prospectus (as hereinafter defined). The TDS Common Shares
are listed on the American Stock Exchange.
3.2 Authority; No Conflict. TDS has full power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. Subject to the approval of
this Agreement by the Board of Directors of TDS, the
execution, delivery and performance by TDS of this Agreement
and the transactions contemplated hereby will have been duly
authorized by all necessary corporate action and will not
require any further authorization or consent by TDS or its
shareholders. This Agreement is, and each other agreement or
instrument of TDS contemplated hereby will be, the legal,
valid and binding agreement of TDS enforceable in accordance
with its respective terms.
Neither the execution and delivery of this Agreement
by TDS nor the consummation of the transactions contemplated
hereby or compliance with or fulfillment of the terms and
provisions hereof or of any other agreement or instrument
contemplated hereby will (a) conflict with, result in a breach
of the terms, conditions or provisions of, or constitute a
default, an event of default or any event creating rights of
termination or cancellation under, the Articles of
Incorporation or the By-laws of TDS, as amended, or any
subsidiary of TDS, any instrument, agreement, mortgage,
judgment, order, award, decree or other restriction to which
TDS or any of its subsidiaries is a party or any of their
respective properties is subject or by which any of them is
bound or any statute, other law or regulatory provisions
affecting any of them, or (b) require the approval, consent or
authorization of, or the making of any declaration, filing or
registration with, any third party or any federal, state or
local court, governmental authority or regulatory body, except
as provided by the Indiana Business Corporation Law, the
regulations of the IURC, the regulations of the FCC, the HSR
Act, the Securities Act of 1933, as amended (the "Securities
Act"), the Exchange Act and the securities, blue sky or
takeover laws of applicable states.
3.3 Financial Statements. The consolidated balance
sheets of TDS and its subsidiaries at December 31, 1994 and
1993 and the related consolidated statements of income, of
shareholders'
-17-
<PAGE>
equity and of cash flows for each of the three years ended
December 31, 1994, together with appropriate notes to such
financial statements, all accompanied by the report thereon of
Arthur Andersen & Co., independent certified public
accountants, incorporated by reference in the TDS Registration
Statement (as hereinafter defined), have been prepared in
accordance with generally accepted accounting principles
consistently applied except as noted therein and present
fairly the consolidated financial position of TDS and its
subsidiaries as at the date of such balance sheets and the
consolidated results of their operations and changes in their
shareholders' equity and financial position for the fiscal
periods then ended.
3.4 TDS Registration Statement and Prospectus.
(a) TDS has filed a registration statement ("TDS
Registration Statement") on Form S-4 (Registration No.
33-68988) with respect to the TDS Common Shares to be
delivered in connection with acquisitions by TDS. Such TDS
Registration Statement has been declared effective by the SEC
and no stop order suspending the effectiveness of such TDS
Registration Statement has been entered by the SEC. The
Prospectus dated September 24, 1993 (the "Prospectus"),
accurately reflects the matters contained or incorporated by
reference therein as of the date thereof.
(b) TDS has delivered to Camden true and correct
copies of the Prospectus, the TDS Form 10-K and Annual Report
to shareholders for the year ended December 31, 1994, the TDS
Form 8-K dated March 15 1995, and the TDS Notice of Annual
Meeting and Proxy Statement dated April 14, 1995. The TDS
Common Stock to be delivered to holders of Camden Shares in
the Merger will be shares registered on a TDS registration
statement on Form S-4 (the "Merger Registration Statement")
which shall include the Proxy Statement and which TDS agrees
to file promptly under the Securities Act and use its best
efforts to cause to become effective in a timely manner
thereafter.
3.5 Information in Proxy Statement. None of the
information to be supplied by TDS or Sub for inclusion in the
Proxy Statement, or any amendment or supplement thereto, will,
at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of such
meeting of shareholders of Camden, contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they are made, not misleading or necessary to
correct any material statement in any earlier communication
(including the Proxy Statement or any amendment or supplement
thereto) to shareholders of Camden with respect to the Merger.
If at any time prior to the Effective Date any event with
respect to TDS, its officers and directors or any of its
subsidiaries (including Sub) shall occur which is required to
-18-
<PAGE>
be described in an amendment of, or a supplement to, the Proxy
Statement, such event shall be so described, such amendment or
supplement shall be promptly filed with the SEC, if required,
and as required by law, disseminated to the shareholders of
Camden. The Proxy Statement and any amendment or supplement
thereto will comply (with respect to TDS and TDS Sub) as to
form in all material respects with the provisions of the
Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder, as though Camden were
subject to the Exchange Act and such rules and regulations.
3.6 TDS Common Shares. The TDS Common Shares to be
issued in connection with the Merger, when issued and
delivered in accordance with the terms hereof, will be (a)
validly issued, fully paid and non-assessable and (b) listed
for trading on the American Stock Exchange.
3.7 No Finder. Neither TDS nor any party acting on
its behalf has paid or become obligated to pay any fee or any
commission to any broker, finder or intermediary for or on
account of the transactions contemplated herein.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SUB.
As an inducement to Camden to enter into this
Agreement and to consummate the transactions contemplated
herein, TDS and Sub hereby jointly and severally represent and
warrant to Camden and agree as follows:
4.1 Organization and Capital Structure of Sub. Sub
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Indiana. Sub has not
engaged in any business since it was incorporated, except as
contemplated by this Agreement.
The authorized capital of Sub consists of 1,000
common shares, without par value, of which 100 have been
issued and are outstanding. All of the outstanding common
shares of Sub are validly issued, fully paid and nonassessable
and are owned by TDS free and clear of all liens, claims and
encumbrances.
4.2 Authority. Sub has full power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance
of this Agreement by Sub have been duly authorized by the
Board of Directors of Sub and TDS as its sole shareholder and
do not require any further authorization or consent by Sub or
TDS as its sole shareholder. This Agreement is the legal,
valid and binding agreement of Sub enforceable in accordance
with its terms.
Neither the execution and delivery of this Agreement
by Sub nor consummation of the transactions contemplated
hereby or
-19-
<PAGE>
compliance with or fulfillment of the terms and provisions
hereof or of any other agreement or instrument contemplated
hereby will (a) conflict with, result in a breach of the
terms, conditions or provisions of, or constitute a default,
an event of default or an event creating rights of termination
or cancellation under, the Articles of Incorporation or the
By-laws of Sub, any instrument, agreement, mortgage, judgment,
order, award, decree or other restriction to which Sub is a
party or any of its properties is subject or by which it is
bound or any statute, other law or regulatory provision
affecting it, or (b) require the approval, consent or
authorization of, or the making of any declaration, filing or
registration with, any third party or any federal, state or
local court, governmental authority or regulatory body, except
as provided by the Indiana Business Corporation Law, the
regulations of the IURC, the regulations of the FCC, the
Securities Act, the Exchange Act and the securities, blue sky
or takeover laws of applicable states.
SECTION 5. ACTION PRIOR TO EFFECTIVE DATE.
The parties covenant to take, or to refrain from
taking, as appropriate, the following action between the date
hereof and the Effective Date:
5.1 Regulatory Approvals. TDS and Camden shall
jointly file and vigorously prosecute all documents and take
all action which may be necessary to obtain the authorization,
approval or consent of the IURC (the "IURC Approval") and any
other applicable regulatory authority to the transactions
contemplated by this Agreement, including, if necessary, any
filings required under the HSR Act. TDS and Camden will
cooperate in providing the IURC and any other applicable
regulatory authority with any additional information requested
by the IURC and any other applicable regulatory authority.
Each of TDS and Camden agree to make such amendments and
modifications to this Agreement as may be required to obtain
the approval of the IURC and any other applicable regulatory
authority, provided that such changes are permitted by Section
13.8.
5.2 Investigation of Business of Camden by TDS.
Camden shall afford to the officers, employees and authorized
representatives of TDS (including, without limitation,
independent public accountants and attorneys) complete access
during normal business hours to the offices, properties,
customers, suppliers, employees and business and financial
records (including computer files, retrieval programs and
similar documentation) of Camden to the extent TDS shall deem
necessary or desirable, and shall furnish to TDS or its
authorized representatives such additional information
concerning the operations, properties and business of Camden
as shall be reasonably requested, including all such
information as shall be necessary to enable TDS or its
authorized representatives to verify the accuracy of the
representations
-20-
<PAGE>
and warranties contained in Section 2, to verify the accuracy
of the financial statements referred to in Section 2.4 and to
determine whether the conditions set forth in Section 6 have
been satisfied. TDS agrees that such investigation shall be
conducted in such manner as not to interfere unreasonably with
the operation of the business of Camden.
5.3 Preserve Accuracy of Representations and
Warranties. Each of the parties hereto shall refrain from
taking any action which would render any representation or
warranty contained herein inaccurate in any material respect
as of the Effective Date. Camden shall notify TDS promptly of
any event which renders or would render any representation or
warranty of Camden contained herein to be inaccurate in any
material respect at any time on or prior to the Effective Date
or which would have been listed in the Schedules hereto if
such event had taken place prior to the date hereof. TDS
shall notify Camden promptly of any event which renders or
would render any representation of warranty of TDS or Sub
contained herein to be inaccurate in any material respect at
any time on or prior to the Effective Date.
5.4 Maintain Business of Camden as a Going Concern.
Camden shall use its best efforts to maintain its businesses
in accordance with past practices and sound business judgment
and to preserve the goodwill of the suppliers, employees,
customers and others having business relations with it.
5.5 No Material Change in the Business of Camden.
Without the written approval of TDS, except as otherwise
permitted by this Agreement, Camden shall not:
(a) make any material change in the business or
operations of Camden;
(b) declare or pay any dividends in cash on the
issued and outstanding capital stock of Camden or make any
other distribution of any kind in respect thereof (provided
that, in the event that Camden calls a meeting of its
shareholders in accordance with Section 5.8 and at such
meeting the shareholders of Camden duly approve and adopt this
Agreement and the Merger, Camden shall have the right, prior
to the Effective Date, to declare and pay a dividend on each
Camden Share equal to $224,000 divided by the total number of
Camden Shares outstanding on the date of payment thereof);
(c) purchase or redeem any of the capital stock of
Camden;
(d) issue, sell or otherwise distribute any
treasury shares or any stock of Camden or effect any stock
split or reclassification of any shares of its capital stock
or grant or commit to grant any option, warrant or other right
to subscribe for
-21-
<PAGE>
or purchase or otherwise acquire any shares of its capital
stock or security convertible or exchangeable for such shares;
(e) effect any amendment to the Articles of
Incorporation or By-laws of Camden, except pursuant to this
Agreement;
(f) authorize any director, or authorize or permit
any officer or employee or any attorney, accountant or other
representative retained by Camden, to solicit or encourage any
inquiries or the making of any proposal which it reasonably
expects may lead to any takeover proposal. As used in this
paragraph, "takeover proposal" shall mean any proposal for a
merger, tender offer or other business combination involving
Camden or for the acquisition of a substantial equity interest
in it or a substantial portion of the assets of Camden other
than as contemplated by this Agreement. Camden will promptly
communicate to TDS if it receives an inquiry or proposal and
will promptly communicate the terms of any such inquiry or
proposal in respect of a takeover proposal. Camden will
immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties
conducted heretofore in respect of any takeover proposals; or
(g) enter into or amend any agreements with or for
the benefit of any of the officers, directors or employees of
Camden, amend any employee benefit plan or arrangement or
grant any increases in the compensation or benefits of the
officers, directors and employees of Camden, except as
permitted by Section 2.13(b) or as specifically contemplated
in the Schedules hereto.
5.6 Necessary Consents and Governmental Approvals.
Camden shall use its best efforts promptly to obtain all
consents from parties to contracts, licenses, leases and other
agreements of Camden, and all consents or permits from
governmental authorities, which are required by the terms
thereof, this Agreement or otherwise for the due and punctual
consummation of the transactions contemplated by this
Agreement.
5.7 No Public Announcement. Neither TDS nor Camden
shall, without the approval of the other party, make any press
release or other public announcement concerning the
transactions contemplated by this Agreement except as and to
the extent that any party shall be so obligated by law, in
which case the other parties shall be advised and the parties
shall use their best efforts to cause a mutually agreeable
release or announcement to be issued.
5.8 Camden Shareholders' Meeting.
Camden shall promptly call, in accordance with the
Indiana Business Corporation Law and its Articles of
Incorporation and By-laws, a meeting of its shareholders for
the purpose of voting upon the approval and adoption of this
Agreement and the Merger and shall use its best efforts to
obtain shareholder
-22-
<PAGE>
approval of this Agreement and the Merger. Such meeting shall
be held as soon as practicable but not earlier than 20
business days after the Proxy Statement is sent to Camden
shareholders.
5.9 The Merger Registration Statement. TDS shall
also file with the Commission the Merger Registration
Statement on Form S-4 with respect to the TDS Common Shares to
be issued in connection with the Merger. TDS shall use its
best efforts to cause such Registration Statement to become
effective in a timely manner. TDS shall also take any action
required to be taken under any applicable state securities,
blue sky or takeover laws in connection with the issuance of
the TDS Common Shares pursuant to the Merger. Camden shall
furnish TDS all information concerning Camden and the Camden
shareholders and take such other action as TDS may reasonably
request in connection with the Merger Registration Statement.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF TDS AND
SUB.
The obligations of TDS and Sub to effect the Merger
shall, at the option of TDS, be subject to the satisfaction,
on or prior to the Effective Date, of the following
conditions:
6.1 No Misrepresentation or Breach of Covenants and
Warranties. There shall have been no material breach by
Camden in the performance of any of its covenants and
agreements herein; each of the representations and warranties
of Camden contained herein shall be true and correct in all
material respects on the Effective Date as though made on the
Effective Date except as affected by transactions contemplated
by this Agreement; and there shall have been delivered to TDS
and Sub a certificate to such effect, dated the Effective
Date, signed on behalf of Camden by its President or one of
its Vice Presidents.
6.2 No Changes or Destruction of Property. Between
the date hereof and the Effective Date, there shall have been
(a) no material adverse change in the assets, liabilities,
business, properties, profits, prospects or condition of
Camden; (b) no material adverse federal or state legislative
or regulatory change affecting the products, services or
business of Camden; and (c) no material damage to the
properties and assets of Camden by fire, flood, casualty, act
of God or public enemy or other cause, regardless of insurance
coverage for such damage; and there shall have been delivered
to TDS and Sub a certificate or certificates to such effect,
dated the Effective Date, signed on behalf of Camden by its
President or one of its Vice Presidents.
6.3 Opinion of Counsel for Camden. TDS and Sub
shall have received from Bishop, Bishop & Bishop of Flora,
Indiana, counsel for Camden, an opinion, dated the Effective
Date, in form and substance reasonably satisfactory to TDS and
its counsel, substantially to the effect set forth in Exhibit
B.
-23-
<PAGE>
6.4 No Restraint or Litigation. No action, suit,
investigation or proceeding shall have been instituted or
threatened to restrain or prohibit or otherwise challenge the
legality or validity of the transactions contemplated hereby.
6.5 Necessary Governmental Approvals. If
necessary, the waiting period under the HSR Act shall have
expired or been terminated, and the parties shall have
received the approval of the IURC and all other governmental
and regulatory approvals and actions necessary to consummate
the transactions contemplated hereby, which are either
required to be obtained prior to the Effective Date by
applicable law or regulation or are necessary to prevent a
material adverse change in the assets, liabilities, business,
properties, profits, prospects or condition of Camden.
6.6 Necessary Consents. Camden shall have received
consents, in form and substance reasonably satisfactory to
TDS, to the transactions contemplated hereby from all
appropriate governmental authorities and from the other
parties to all contracts, leases, agreements and permits to
which Camden is a party or by which it is affected and which
require such consent prior to the Effective Date or are
necessary to prevent a material adverse change in the assets,
liabilities, business, properties, profits, prospects or
condition of Camden.
6.7 Approval by Camden Shareholders. This
Agreement, the Merger and the other transactions contemplated
hereby shall have been approved by the requisite vote of the
holders of outstanding Camden Shares at a meeting duly called
and held, and there shall have been delivered to TDS and Sub a
certificate, dated the Effective Date, signed on behalf of
Camden by its Secretary or an Assistant Secretary to such
effect and to which is attached the resolution or resolutions
approved by such Camden Shares and a list of the shareholders
of record of Camden on the Effective Date, including holders
of any Dissenting Shares.
6.8 No Stop Orders. No stop order suspending the
effectiveness of the TDS Registration Statement or the Merger
Registration Statement shall have been entered by the SEC.
6.9 Listing of TDS Common Shares. The TDS Common
Shares to be issued in connection with the Merger shall
continue to be approved for listing upon notice of issuance by
the American Stock Exchange.
6.10 Approval by TDS Board of Directors. This
Agreement and the transactions contemplated hereby shall have
been approved by the Board of Directors of TDS.
6.11 Dissenting Shares. There shall be not more
than 15 Dissenting Shares.
-24-
<PAGE>
6.12 Comfort Letter. TDS and Sub shall have
received a comfort letter from Kehlenbrink, Lawrence &
Pauckner, certified public accountants, dated the date of
mailing the Proxy Statement and the Effective Date and
addressed to TDS and Sub, in each case in form and substance
reasonably acceptable to TDS and Sub, covering such matters
reasonably requested by them.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF CAMDEN.
The obligations of Camden to effect the Merger
shall, at the option of Camden, be subject to the
satisfaction, on or prior to the Effective Date, of the
following conditions:
7.1 No Misrepresentation or Breach of Covenants and
Warranties. There shall have been no material breach by TDS
or Sub in the performance of any of their respective covenants
and agreements herein; each of the representations and
warranties of TDS and Sub contained or referred to in this
Agreement shall be true and correct in all material respects
on the Effective Date as though made on the Effective Date
except as affected by transactions contemplated by this
Agreement; and there shall have been delivered to Camden a
certificate or certificates to such effect, dated the
Effective Date, signed on behalf of TDS by its President or
one of its vice presidents.
7.2 Opinions of Counsel for TDS and Sub. Camden
shall have received opinions, dated the Effective Date, in
form and substance reasonably satisfactory to Camden and its
counsel, from (i) Sidley & Austin, counsel for TDS and Sub, to
the effect set forth in Exhibit C, and (ii) from Barnes &
Thornburg, special Indiana counsel for TDS and Sub,
substantially to the effect set forth in Exhibit D.
7.3 Corporate Action. TDS and Sub shall have taken
all corporate action necessary to approve the transactions
contemplated by this Agreement, and there shall have been
furnished to Camden certified copies of resolutions adopted by
the Board of Directors of TDS and of Sub and by the sole
shareholder of Sub, in form and substance reasonably
satisfactory to counsel for Camden, in connection with such
transactions. The Consulting Agreement and each of the
Employment Agreements attached as Exhibits to this Agreement
(the "Employment Agreements") shall have been duly executed
and delivered by the parties thereto.
7.4 No Restraint or Litigation. No action, suit,
investigation or proceeding shall have been instituted or
threatened to restrain or prohibit or otherwise challenge the
legality or validity of the transactions contemplated hereby.
7.5 Necessary Governmental Approvals. If
necessary, the waiting period under the HSR Act shall have
expired or been terminated, and the parties shall have
received the approval of the
-25-
<PAGE>
IURC and all other governmental and regulatory approvals and
actions necessary to consummate the transactions contemplated
hereby which are required to be obtained prior to the
Effective Date by applicable law or regulation or are
necessary to prevent a material adverse change in the assets,
liabilities, business, properties, profits, prospects or
condition of Camden.
7.6 Approval by Camden Shareholders. This
Agreement, the Merger and the other transactions contemplated
hereby shall have been approved by the requisite vote of the
holders of outstanding Camden Shares.
7.7 No Stop Orders. No stop order suspending the
effectiveness of the TDS Registration Statement or the Merger
Registration Statement shall have been entered by the
Commission.
7.8 Listing of TDS Common Shares. The TDS Common
Shares to be issued in connection with the Merger shall
continue to be approved for listing upon notice of issuance by
the American Stock Exchange.
SECTION 8. OPERATION OF CAMDEN FOLLOWING THE MERGER
8.1 Operation of Camden; Officers and Directors of
Camden. (a) After the Effective Date, TDS intends to
continue to operate Camden as an independent local telephone
company with its Board of Directors, Management and employees
existing on the date hereof, provided that TDS shall have the
right to nominate and elect one member of the Camden Board.
TDS shall also keep the present business office open at Camden
for at least ten years following the Effective Date. So long
as such Camden directors continue to serve as directors, they
will receive annual compensation at a level no less than the
annual compensation and bonus now payable to such directors.
Subject to the Employment Agreements, annual compensation of
Camden's officers and employees on the date hereof will be
maintained at no less than the compensation now payable to
such officers and employees. During such ten-year period,
Camden's President and Vice President may, at their
discretion, attend the Annual Convention and spring and fall
District Meetings of the Indiana Telephone Association and the
USTA Annual Convention, accompanied by their spouses, with all
expenses to be paid by Camden.
(b) The Board of Directors of Camden may continue,
in its reasonable discretion, to utilize the services of those
local banks, accountants and attorneys currently utilized by
Camden. The Camden Board of Directors shall, in its
discretion, have the right to continue to make community
service donations to local school, library, Little League and
similar community institutions, activities and services at
levels equal to those paid by Camden in the past.
-26-
<PAGE>
(c) During such ten-year period each director of
Camden shall continue to receive a Christmas bonus of $500.
(d) TDS shall cause Camden to continue to provide,
at Camden's expense, existing medical benefits for Camden
Directors Lloyd Yerkes and Joe P. Sullivan and their
respective wives with Blue Cross and Blue Shield of Indiana
and for Jo Ann Johnson with Pipe Traders Industry Health &
Welfare Plan, Terre Haute, Indiana, throughout their
respective lifetimes.
(e) Subject to the foregoing provisions of this
Section 8 and to the Employment Agreements, TDS shall have the
right, no later than ten years following the Effective Date,
to convert all Camden employees on the date hereof then
employed by Camden to TDS wage and salary scales (but
compensation of any such employee shall not be reduced from
what he/she is actually earning at the time of such
conversion) and to TDS standard benefit plans, including, but
not limited to, pension, medical, dental and insurance
benefits.
(f) All new employees hired by Camden after the
date hereof shall come under TDS wage and salary scales and
participate only in TDS standard employee benefit plans.
SECTION 9. INDEMNIFICATION
9.1 By the Camden Shareholders to TDS. By their
approval of this Merger Agreement and their receipt of the
Merger Consideration, the Camden Shareholders, jointly and
severally, agree to indemnify, hold harmless and defend TDS
and each of its officers, directors, employees, affiliates,
subsidiaries, successors and assigns (the "TDS Indemnitees"),
against any claim, demand, loss, expense, obligation or
liability, including interest, penalties and reasonable
attorneys' fees (collectively, "Losses") incurred by any TDS
Indemnitee ("TDS Losses") relating to, resulting from or
arising out of (a) any breach by Camden or any Camden
Shareholder in the performance of their respective obligations
under this Agreement, (b) the inaccuracy of any of the
representations or warranties made by Camden or any Camden
Shareholder in this Agreement, in any exhibit or schedule
hereto, or in any other instrument delivered in accordance
with the provisions hereof, or (c) any action, suit,
proceeding, assessment or judgment incident to any of the
foregoing.
9.2 By TDS to the Camden Shareholders. TDS agrees
to indemnify, hold harmless and defend the Camden
Shareholders, and each of Camden's officers, directors,
employees, affiliates, subsidiaries, successors and assigns
(the "Camden Indemnitees"), against all Losses incurred by any
of them ("Camden Shareholder Losses") relating to, resulting
from or arising out of (a) any breach by TDS or Sub in the
performance of their respective obligations under this
Agreement, (b) the inaccuracy of any of the representations
made by TDS or Sub in this Agreement, in any
-27-
<PAGE>
schedule or exhibit hereto, or in any instrument executed or
delivered in accordance with the provisions hereof, or (c) any
action, suit, proceeding, assessment or judgment incident to
any of the foregoing.
SECTION 10. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. All representations, warranties and agreements
contained in this Agreement shall survive the Merger until
terminated by any applicable statute of limitations, except
for the representations, warranties and agreements contained
in Sections 2.14, 2.17 and 10, which shall survive the
Effective Date and never expire.
SECTION 11. TAXES.
11.1 Liability for Certain Taxes. The Camden
Shareholders will pay, and will indemnify TDS and Camden
against, any real property transfer or gains tax, stamp tax,
stock transfer tax, or other similar tax imposed on the
transfer of the Camden Shares pursuant to this Agreement,
together with any penalties or interest with respect to such
taxes.
11.2 Tax Returns. (a) Camden shall file or cause
to be filed when due all Tax Returns with respect to Taxes
that are required to be filed by or with respect to Camden for
taxable years or periods ending on or before the Effective
Date and shall remit any Taxes due in respect of such Tax
Returns, and TDS shall file or cause to be filed when due all
Tax Returns with respect to Taxes that are required to be
filed by or with respect to Camden for taxable years or
periods ending after the Effective Date and shall remit any
Taxes due in respect of such Tax Returns. All Tax Returns
which Camden is required to file or cause to be filed in
accordance with this Section 10.2(a) shall be prepared and
filed in a manner consistent with past practice and, on such
Tax Returns, no position shall be taken or method adopted that
is inconsistent with positions taken or methods used in
preparing and filing similar Tax Returns in prior periods.
(b) Camden will promptly deliver or cause to be
delivered to TDS true and complete copies of: (A) all income
Tax Returns of Camden requested by TDS; (B) any other Tax
Returns requested by TDS, as may be relevant to Camden or its
assets or operations; and (C) any workpapers or other
supporting data requested by TDS relating to income Taxes
reflected in the financial statements described in Section
2.4, relating to Tax Returns made available pursuant to (A) or
(B), or relating to Tax Returns not yet filed, in each case,
however, only to the extent in the possession of Camden.
11.3 Assistance and Cooperation. After the Closing
Date, each of the Camden Shareholders and TDS shall:
-28-
<PAGE>
(i) assist (and cause their respective affiliates to
assist) the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing in
accordance with Section 11.2;
(ii) cooperate fully in preparing for any audits of,
or disputes with taxing authorities regarding, any Tax
Returns of Camden;
(iii) make available to the other and to any taxing
authority as reasonably requested all information,
records, and documents relating to Taxes of Camden;
(iv) provide timely notice to the other in writing
of any pending or threatened Tax audits or assessments of
Camden for taxable periods for which the other may have a
liability under this Section 10; and
(v) furnish the other with copies of all
correspondence received from any taxing authority in
connection with any Tax audit or information request with
respect to any such taxable period.
11.4 Adjustment to Merger Consideration. Any
payment by TDS, Camden or the Camden Shareholders under this
Section 11 will be an adjustment to the Aggregate Merger
Consideration.
11.5 Survival of Obligations. Notwithstanding
anything to the contrary, the obligations of the parties set
forth in this Section 11 shall be unconditional and absolute
and shall remain in effect without limitation as to time.
11.6 Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Tax" (and, with correlative meaning, "Taxes" and
"Taxable") shall mean any federal, state, local or foreign
income, gross receipts, windfall profits, severance, property,
production, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add-on
minimum, ad valorem, transfer, excise, stamp, or environmental
tax, or any other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together
with any interest or penalty, addition to tax or additional
amount imposed by any governmental authority.
"Tax Return" shall mean any return, report or
similar statement required to be filed with respect to any Tax
(including any attached schedules), including, without
limitation, any information return, claim for refund, amended
return and declaration of estimated Tax.
"Tax Sharing Arrangement" shall mean any written or
unwritten agreement or arrangement for the allocation or
payment of
-29-
<PAGE>
Tax liabilities or payment for Tax benefits with respect to
a combined, consolidated or unitary Tax Return which Tax
Return includes Camden.
SECTION 12. NOTICES. All notices or other communications
required or permitted hereunder shall be in writing and shall
be given by hand or by registered mail, return receipt
requested, addressed, if to TDS or Sub, to: Telephone and Data
Systems, Inc., 30 North LaSalle Street, Suite 400, 60602,
Attention: Mr. LeRoy T. Carlson, Chairman, with a copy to
Sidley & Austin, One First National Plaza, Chicago, Illinois
60603, Attention: David J. Boyd, Esq., or, if to Camden, to:
Camden Telephone Company, Inc., 170 West Main Street, Camden,
Indiana 46917-0066, Attention: Mr. Jack Ford, with a copy to:
Dick N. Bishop, Esq., Bishop, Bishop & Bishop, 19 South Center
Street, Flora, Indiana 46929. Any party hereto may specify a
different address for such purpose by notice to the parties.
SECTION 13. CONFIDENTIAL NATURE OF INFORMATION. Each party
agrees that, except for the furnishing of the Proxy Statement
to shareholders of Camden and as otherwise required by law, it
will treat in strict confidence all documents, materials and
other information which it has obtained regarding the parties
during the course of the negotiations leading to the
consummation of the transactions provided for herein, and the
preparation of this Agreement. Each party hereto agrees that,
except for the furnishing of the Proxy Statement to
shareholders of Camden and as otherwise required by law, it
will not release or cause or permit to be released this
Agreement or any part thereof or any copy of the foregoing
without the express written consent of the other parties
hereto.
SECTION 14. TERMINATION AND ABANDONMENT. Anything contained
in this Agreement to the contrary notwithstanding, this
Agreement may be terminated and the Merger abandoned at any
time prior to the Effective Date:
(a) by mutual consent of TDS, Sub and Camden;
(b) by TDS, Sub or Camden if a United States
federal or state court of competent jurisdiction or United
States federal or state governmental, regulatory or
administrative agency or commission shall have issued an
order, decree or ruling or taken any other action permanently
restraining or enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and
nonappealable; or
(c) as otherwise set forth herein.
-30-
<PAGE>
In the event that this Agreement shall be terminated
and the Merger abandoned pursuant to this Section 14, all
further obligations of the parties under this Agreement (other
than Sections 11, 13 and 15) shall terminate without further
liability of any party to the others, provided that nothing
herein shall relieve any party from liability for any breach
of this Agreement.
SECTION 15. OTHER PROVISIONS.
15.1 Expenses. Each party hereto will pay all costs
and expenses incident to its negotiation and preparation of
this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be
performed or complied with.
15.2 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Indiana, without regard to the principles of conflict
of laws.
15.3 Partial Invalidity. In case any one or more of
the provisions contained herein shall, for any reason, be held
to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or
unenforceable provision or provisions had never been contained
herein.
15.4 Successors and Assigns; Parties in Interest.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their successors and assigns. TDS
shall have the right to assign its rights to a direct or
indirect wholly-owned subsidiary, but any such assignment
shall not change the obligations of TDS as provided herein.
Nothing in this Agreement, expressed or implied, is intended
or shall be construed to confer upon any person, other than
the parties and successors and assigns permitted by this
Section 15.4, any right, remedy or claim under or by reason of
this Agreement.
15.5 Execution in Counterparts. This Agreement may
be executed in one or more counterparts, each of which shall
be considered an original counterpart, and shall become a
binding agreement when TDS, Sub and Camden shall have each
executed and delivered one counterpart.
15.6 Titles and Headings. Titles and headings to
Sections herein are inserted for convenience of reference only
and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
15.7 Schedules and Exhibits. The Schedules and
Exhibits referred to in this Agreement shall be construed with
and are an
-31-
<PAGE>
integral part of this Agreement to the same extent as if the
same had been set forth verbatim herein.
15.8 Entire Agreement; Amendments and Waivers. This
Agreement, including the Schedules and Exhibits, contains the
entire understanding of the parties hereto with regard to the
subject matter contained herein and supersedes all prior
agreements and understandings, whether written or oral. The
parties hereto, by mutual agreement in writing, may amend,
modify and supplement this Agreement at any time before or
after the approval of this Agreement by the holders of Camden
shares to the extent permitted by applicable law. No waiver
of any breach of this Agreement shall be held to constitute a
waiver of any other or subsequent breach.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year first above written.
CAMDEN TELEPHONE COMPANY, INC.
_______________________________
Name: James R. Sullivan
Title: President
TELEPHONE AND DATA SYSTEMS, INC.
________________________________
Name: LeRoy T. Carlson
Title: Chairman
TDS-CAMDEN ACQUISITION CORP.
________________________________
Name: George L. Dienes
Title: Vice President
SIGNATURE PAGE OF THE AGREEMENT AND PLAN OF MERGER BY AND
AMONG CAMDEN TELEPHONE COMPANY, INC., TELEPHONE AND
DATA SYSTEMS, INC. AND TDS-CAMDEN ACQUISITION CORP.
-32-
<PAGE>
EXHIBIT A
PLAN OF MERGER
This PLAN OF MERGER, dated as of _________, 1995 is
made by and between Camden Telephone Company, Inc., a
corporation organized and existing under and by virtue of the
laws of the State of Indiana (herein called "Camden" or the
"Surviving Corporation"), and TDS-Camden Acquisition Corp., a
corporation organized and existing under and by virtue of the
laws of the State of Indiana (herein called "Sub"). (Camden
and TDS are hereinafter sometimes called the "Constituent
Corporations").
W I T N E S S E T H:
WHEREAS, the board of directors of each of the
Constituent Corporations, in consideration of the mutual
agreements of each Constituent Corporation set forth herein,
do deem it advisable and generally to the advantage and
welfare of the Constituent Corporations and their respective
shareholders that Sub be merged with and into Camden;
WHEREAS, Camden, Sub and Telephone and Data Systems,
Inc., an Iowa corporation ("TDS"), have entered into an
Agreement and Plan of Merger, (the "Merger Agreement"),
providing for the merger (the "Merger") of Sub with and into
Camden;
WHEREAS, Camden has authorized capital stock
consisting of 560 shares of common stock, without par value
(the "Camden Shares");
WHEREAS, Sub has authorized capital stock of 1,000
shares of common stock, without par value, of which 100 shares
are now issued and outstanding;
WHEREAS, Sub is a wholly-owned subsidiary of TDS,
and TDS has determined to issue its Common Shares, par value
one dollar ($1.00) per share (the "TDS Common Shares"), in
order to consummate the Merger of Sub with and into Camden, as
provided in the Merger Agreement (the "Merger Consideration");
and
WHEREAS, Section 23-1-40 of the Indiana Business
Corporation Law, as amended, authorizes the merger of
corporations organized under the Indiana Business Corporation
Law.
NOW, THEREFORE, the Constituent Corporations have
agreed and do hereby agree as follows:
1. The Merger. On the Effective Date, Sub shall
be merged into Camden and the separate existence of Sub shall
thereupon cease, and the name of Camden, as the surviving
<PAGE>
corporation in the Merger (the "Surviving Corporation"), shall
by virtue of the Merger remain "Camden Telephone Company,
Inc." Upon the Effective Date of the Merger, the Surviving
Corporation shall be possessed of all assets and property of
every description, and every interest therein, wherever
located, and the rights, privileges, immunities, powers,
franchises and authority of a public as well as of a private
nature, of each of the Constituent Corporations, and all
obligations belonging to or due to each of the Constituent
Corporations, shall be vested in the Surviving Corporation
without further act or deed. Title to any real estate or any
interest therein vested in any Constituent Corporation shall
not revert or in any way be impaired by reason of the Merger;
that whenever a conveyance, assignment, transfer, deed or
other instrument or act is necessary to vest property or
rights in the Surviving Corporation, the officers of the
Constituent Corporations shall execute, acknowledge and
deliver such instruments and do such acts.
The Surviving Corporation shall be liable for all
the obligations of each Constituent Corporation. All the
rights of creditors of each Constituent Corporation are
preserved unimpaired, and all liens upon the property of any
Constituent Corporation are preserved unimpaired, on only the
property affected by such liens immediately prior to the
Effective Date of the Merger.
2. Effective Date of the Merger. The Merger will
become effective upon the filing with the Secretary of State
of the State of Indiana this Plan of Merger together with
Articles of Merger as required by the Indiana Business
Corporation Law. When used in this Plan of Merger, the term
"Effective Date" shall mean the date and time at which this
Plan of Merger is so filed.
3. Articles of Incorporation; By-Laws; Directors
and Officers. The Articles of Incorporation of Camden as
amended shall be the Articles of Incorporation of the
Surviving Corporation after the Effective Date unless and
until amended in accordance with its terms and as provided by
law. The By-Laws of Camden as in effect on the Effective Date
shall be the By-Laws of the Surviving Corporation unless and
until amended in accordance with its terms or the Articles of
Incorporation of the Surviving Corporation and as provided by
law. The initial Board of Directors of the Surviving
Corporation shall consist of the directors of Sub immediately
prior to the Effective Date, who shall serve until their
respective successors are duly elected and qualified. The
officers of Sub immediately prior to the Effective Date shall
be the initial officers of the Surviving Corporation until
their respective successors are duly elected and qualified.
4. Conversion of Shares. As of the Effective
Date, by virtue of the Merger and without any action on the
part of Sub, Camden, the Surviving Corporation or any holder
of any of the following securities:
<PAGE>
(a) Any Camden Shares which are held in the
treasury of Camden shall be cancelled;
(b) All issued and outstanding shares of capital
stock of Sub shall be converted into 100 validly issued, fully
paid and nonassessable common shares, without par value, of
the Surviving Corporation; and
(c) The Camden Shares issued and outstanding
immediately prior to the Effective Date (other than Camden
Shares to be cancelled pursuant to Section 4(a) and Dissenting
Shares (as defined in Section 5)) shall be converted into the
Merger Consideration.
5. Dissenting Shares. The provisions of Section 4
shall not apply to Camden Shares (the "Dissenting Shares")
held by Camden Shareholders who do not vote such Camden Shares
in favor of the approval and adoption of this Agreement and
the Merger and who deliver a written notice to Camden in the
manner required by Section 23-1-44 of the Indiana Business
Corporation Law, stating the intention to demand payment of
the fair value of such Camden Shares if the Merger is
effected, and if such holders of Camden Shares take all other
action required in the manner provided in Section 23-1-44 of
the Indiana Business Corporation Law. Such holders shall be
entitled to payment for such Camden Shares in accordance with
the provisions of Section 23-1-44 of the Indiana Business
Corporation Law, if applicable.
6. Terms and Conditions. The obligations of each
Constituent Corporation under this Plan of Merger are subject
to the satisfaction or waiver of the terms and conditions of
the Merger Agreement prior to the Effective Time of the
Merger.
7. Termination and Abandonment. Anything
contained in this Plan of Merger to the contrary
notwithstanding, this Plan of Merger may be terminated and the
Merger abandoned at any time prior to the Effective Date if
the Merger Agreement is terminated.
8. Amendments. The parties hereto, by mutual
agreement in writing, may amend, modify and supplement this
Plan of Merger at any time before or after the approval of
this Plan of Merger by the holders of Camden Shares to the
extent permitted by applicable law.
9. Governing Law. This Plan of Merger shall be
governed by and construed in accordance with the laws of the
State of Indiana, without regard to the principles of conflict
of laws.
<PAGE>
IN WITNESS WHEREOF, the parties to this Plan of
Merger have caused this Plan of Merger to be executed on the
day and year first above written.
Attest: TDS-CAMDEN ACQUISITION CORP.
_________________________ By: ___________________________
Stephen P. Fitzell George L. Dienes
Secretary President
Attest: CAMDEN TELEPHONE COMPANY, INC.
_________________________ By: ___________________________
Jo Ann Johnson James R. Sullivan
Treasurer/Secretary President
<PAGE>
EXHIBIT B
[Opinion of Bishop, Bishop & Bishop]
___________, 1995
Telephone and Data Systems, Inc.
Suite 4000
30 North LaSalle Street
Chicago, Illinois 60602
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated
as of ________, 1995 (the "Agreement") by and among Camden
Telephone Company, Inc., an Indiana corporation ("Camden"),
Telephone and Data Systems, Inc., an Iowa corporation ("TDS"),
and TDS-Camden Acquisition Corp., an Indiana corporation and
wholly-owned subsidiary of TDS ("Sub"), providing for (i) the
merger of Sub with and into Camden (the "Merger") and (ii) the
conversion of each issued and outstanding share of common
stock, without par value, of Camden into the right to receive
Common Shares, par value $1.00 per share, of TDS, as set forth
in the Agreement. Unless otherwise defined herein,
capitalized terms have the meanings specified in the
Agreement.
We have acted as counsel to Camden in connection
with the preparation, execution and delivery of the Agreement
and the consummation of the transactions contemplated thereby.
For the purpose of rendering the opinions set forth herein, we
have relied, as to various questions of fact material to such
opinions, upon the representations made in the Agreement and
upon certificates of officers of Camden. We have also
examined originals, or copies of originals certified to our
satisfaction, of such agreements, documents, certificates and
other statements of governmental officials and other
instruments, have examined such questions of law and, subject
to the limitations set forth herein, have satisfied ourselves
as to such matters of fact as we have considered relevant and
necessary as a basis for this opinion. We have assumed the
authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of
<PAGE>
Telephone and Data Systems, Inc.
_________, 1995
Page 2
all natural persons and the conformity with the original
documents of any copies thereof submitted to us for our
examination.
Based upon the foregoing, subject to the exceptions,
qualifications and limitations set forth hereafter, we are of
the opinion that:
1. Camden is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Indiana, and has corporate power and authority to execute and
deliver the Agreement, to consummate the transactions
contemplated thereby (including the execution and delivery of
the Plan of Merger and Articles of Merger) and to perform its
obligations thereunder.
2. The execution, delivery and performance of the
Agreement by Camden has been duly authorized by all necessary
corporate action of Camden. Assuming due authorization,
execution and delivery by the other parties thereto, the
Agreement is a legal, valid and binding agreement of Camden,
enforceable against Camden in accordance with its terms,
except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights
and by the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in
equity or at law).
3. The authorized capital of Camden consists of
560 shares of common stock, without par value, of which 280
shares are issued and outstanding. Except for the Merger
Agreement, there are no agreements, arrangements, options,
warrants, calls, rights or commitments of any character
relating to the issuance, sale, purchase or redemption of any
shares of capital stock of Camden. All of the outstanding
Camden Shares are duly authorized, validly issued, fully paid
and nonassessable and were not issued in violation of any pre-
emptive of other rights.
4. The IURC Approval has been obtained and has
become final. Assuming all other necessary consents
contemplated by the Agreement have been obtained, the
execution and delivery of the Agreement by Camden do not and
will not result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or
any event creating rights of termination or cancellation under
(i) the articles of incorporation or by-laws of Camden or (ii)
to our knowledge, any material agreement, indenture, note,
mortgage, lease, license, franchise, permit, judgment, decree,
order, statute, rule or regulation to which Camden is a
<PAGE>
Telephone and Data Systems, Inc.
________, 1995
Page 3
party, by which it is bound, or to which any of its properties
are subject.
5. To our knowledge, no consent, authorization,
order or approval of or filing or registration with any
administrative agency, governmental authority or other person
or entity is required for the valid execution, delivery or
performance of the Agreement by Camden, except for the IURC
Approval, which has been obtained and has become final.
6. To our knowledge, there is no investigation,
claim, action, suit or other proceeding pending or threatened
against Camden which questions the legality or propriety of
the transactions contemplated by the Agreement.
7. On the date of mailing to Camden shareholders
and on the date of the Camden shareholders meeting, the Proxy
Statement (other than the financial statements, financial
data, statistical data and supporting schedules included
therein, and any information with respect to or supplied by
TDS or Sub, as to which we express no opinion) complied as to
form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC
thereunder, as though Camden were subject to such Act and such
rules and regulations.
In the course of the preparation of the Proxy
Statement we have considered the information set forth therein
in light of the matters required to be set forth therein, and
we have participated in conferences with officers and
representatives of Camden, during the course of which the
contents of the Proxy Statement and related matters were
discussed. We have not independently checked the accuracy or
completeness of, or otherwise verified, and accordingly are
not passing upon, and do not assume responsibility for, the
accuracy, completeness or fairness of the statements contained
in the Proxy Statement; and we have relied as to materiality,
to a large extent, upon the judgment of officers and
representatives of Camden. However, as a result of such
consideration and participation, nothing has come to our
attention which causes us to believe that the Proxy Statement
(other than the financial statements, financial data,
statistical data and supporting schedules included therein,
and any information with respect to or supplied by TDS or Sub,
as to which we express no belief), on the date of mailing to
Camden shareholders or on the date of the Camden shareholders'
meeting, included any untrue statement of a material fact or
omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading.
<PAGE>
Telephone and Data Systems, Inc.
________, 1995
Page 4
Any opinion or statement herein which is expressed
to be "to our knowledge" or is otherwise qualified by words of
like import means that the lawyers currently practicing law
with this Firm who have had an active involvement in
negotiating the Agreement have no current conscious awareness
of facts or information contrary to such opinion or statement.
Except as otherwise expressly stated in this letter, no
independent investigation with respect to such facts or
information has been undertaken by or on behalf of such
lawyers.
This opinion is limited to laws of the State of
Indiana. We are furnishing this opinion to you solely for
your benefit in connection with the above-described
transactions; accordingly, it is not to be used, circulated,
quoted, filed with any governmental authority or other
regulatory agency or otherwise referred to or utilized for any
other purpose without our prior written consent. We assume no
obligation to update or supplement this opinion to reflect any
facts or circumstances which may hereafter come to our
attention with respect to the opinions expressed above,
including any changes in applicable law which may hereafter
occur.
Very truly yours,
<PAGE>
EXHIBIT C
[Opinion of Sidley & Austin]
___________, 1995
The Stockholders of
Camden Telephone Company, Inc.
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated
as of ________, 1995 (the "Agreement") by and among Camden
Telephone Company, Inc., an Indiana corporation ("Camden"),
Telephone and Data Systems, Inc., an Iowa corporation ("TDS"),
and TDS-Camden Acquisition Corp., an Indiana corporation and a
wholly-owned subsidiary of TDS ("Sub"), providing for (i) the
merger of Sub with and into Camden (the "Merger") and (ii) the
conversion of each issued and outstanding share of common
stock, without par value, of Camden into the right to receive
Common Shares, par value $1.00 per share, of TDS, as set forth
in the Agreement. Unless otherwise defined herein,
capitalized terms have the meanings specified in the
Agreement.
We have acted as counsel to TDS in connection with
the preparation, execution and delivery of the Agreement and
the consummation of the transactions contemplated thereby.
For the purpose of rendering the opinions set forth herein, we
have relied, as to various questions of fact material to such
opinions, upon the representations made in the Agreement and
upon certificates of officers of TDS. We have also examined
originals, or copies of originals certified to our
satisfaction, of such agreements, documents, certificates and
other statements of governmental officials and other
instruments, have examined such questions of law and, subject
to the limitations set forth herein, have satisfied ourselves
as to such matters of fact as we have considered relevant and
necessary as a basis for this opinion. We have assumed the
authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of all
natural persons and the conformity with the original documents
of any copies thereof submitted to us for our examination.
<PAGE>
Stockholders of
Camden Telephone Company, Inc.
_________, 1995
Page 2
Based upon the foregoing, subject to the exceptions,
qualifications and limitations set forth hereafter, we are of
the opinion that:
1. TDS is a corporation duly incorporated and
validly existing under the laws of the State of Iowa, and has
corporate power and authority to execute and deliver the
Agreement, to consummate the transactions contemplated thereby
and to perform its obligations thereunder.
2. The execution, delivery and performance of the
Agreement by TDS have been duly authorized by all necessary
corporate action of TDS.
3. The TDS Common Shares being issued on the date
hereof in connection with the Agreement, when certificates
therefor have been duly executed, countersigned and registered
and delivered against payment of the agreed consideration
therefor, will be duly authorized and validly issued Common
Shares of TDS which are fully paid and nonassessable, and the
issuance of such TDS Common Shares pursuant to the Agreement
and the Merger have been registered with the Securities and
Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), and, subject to notice of
official issuance, will be listed for trading on the American
Stock Exchange.
4. Assuming the IURC Approval and all other
necessary consents contemplated by the Agreement have been
obtained, the execution and delivery of the Agreement by TDS
do not and will not result in a breach of the terms,
conditions or provisions of, or constitute a default, an event
of default or any event creating rights of termination or
cancellation under (i) the articles of incorporation or
by-laws of TDS or (ii) to our knowledge, any material
agreement, indenture, note, mortgage, lease, license,
franchise, permit, judgment, decree, order, statute, rule or
regulation to which TDS is a party, by which TDS is bound, or
to which any of its properties is subject.
5. To our knowledge, no consent, authorization,
order or approval of or filing or registration with any
administrative agency, governmental authority or other person
or entity is required for the valid execution, delivery or
performance of the Agreement by TDS, except for those duly
obtained or waived as contemplated by the Agreement on or
prior to the date hereof.
6. To our knowledge, there is no investigation,
claim, action, suit or other proceeding pending or threatened
against TDS
<PAGE>
Stockholders of
Camden Telephone Company, Inc.
_______,1995
Page 3
which questions the legality or propriety of the transactions
contemplated by the Agreement.
7. On the date of mailing to holders of Camden
Shares and on the date of the Camden shareholders' meeting,
the Proxy Statement (other than the financial statements,
financial data, statistical data and supporting schedules
included therein, and any information with respect to or
supplied by Camden, as to which we express no opinion)
complied as to form in all material respects with the
requirements of the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the rules and
regulations of the SEC thereunder.
In the course of the preparation of the Proxy
Statement we have considered the information set forth therein
in light of the matters required to be set forth therein, and
we have participated in conferences with officers and
representatives of TDS and Sub, during the course of which the
contents of the Prospectus and related matters were discussed.
We have not independently checked the accuracy or completeness
of, or otherwise verified, and accordingly are not passing
upon, and do not assume responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Prospectus; and we have relied as to materiality, to a large
extent, upon the judgment of officers and representatives of
TDS and Sub. However, as a result of such consideration and
participation, nothing has come to our attention which causes
us to believe that the Morser Registration Statement or the
Prospectus (other than the financial statements, financial
data, statistical data and supporting schedules included
therein, and any information with respect to or supplied by
Camden, as to which we express no belief), on the date of
mailing to Camden shareholders or on the date of the Camden
shareholders' meeting, included any untrue statement of a
material fact relating to TDS or Sub or omitted to state a
material fact relating to TDS or Sub necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading.
Any opinion or statement herein which is expressed
to be "to our knowledge" or is otherwise qualified by words of
like import means that the lawyers currently practicing law
with this Firm who have had an active involvement in
negotiating the Agreement have no current conscious awareness
of facts or information contrary to such opinion or statement.
Except as otherwise expressly stated in this letter, no
independent investigation with respect to such facts or
information has been undertaken by or on behalf of such
lawyers.
<PAGE>
Stockholders of
Camden Telephone Company, Inc.
________, 1995
Page 4
Except as expressly stated in the next sentence,
this opinion is limited to the Securities Act. Insofar as the
opinions expressed in paragraphs 1, 2, 3 and 4 above relate to
matters governed by the laws of the State of Iowa, we have not
made an independent examination of such laws, but have relied
exclusively, with your consent, as to such laws, upon the
attached opinion of Nyemaster, Goode, McLaughlin, Voigts,
West, Hansell & O'Brien, P.C., of Des Moines, Iowa, subject to
all the qualifications, exceptions and limitations stated
therein.
TDS is controlled by a voting trust. Walter C.D.
Carlson, a trustee and a beneficiary of such voting trust and
a director of TDS, Michael G. Hron, the Secretary of TDS, Sub
and certain other TDS subsidiaries, Stephen P. Fitzell, the
Secretary of certain TDS subsidiaries, and Sherry S. Treston,
the Assistant Secretary of certain TDS subsidiaries, are
partners of this Firm.
We are furnishing this opinion to you solely for
your benefit in connection with the above-described
transactions; accordingly, it is not to be used, circulated,
quoted, filed with any governmental authority or other
regulatory agency or otherwise referred to or utilized for any
other purpose without our prior written consent. We assume no
obligation to update or supplement this opinion to reflect any
facts or circumstances which may hereafter come to our
attention with respect to the opinions expressed above,
including any changes in applicable law which may hereafter
occur.
Very truly yours,
Sidley & Austin
<PAGE>
EXHIBIT D
[Opinion of Special Indiana Counsel to TDS and Sub]
___________, 1995
The Stockholders of
Camden Telephone Company, Inc.
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated
as of ________, 1995 (the "Agreement") by and among Camden
Telephone Company, Inc., an Indiana corporation ("Camden"),
Telephone and Data Systems, Inc., an Iowa corporation ("TDS"),
and TDS-Camden Acquisition Corp., an Indiana corporation and
wholly-owned subsidiary of TDS ("Sub"), providing for (i) the
merger of Sub with and into Camden (the "Merger") and (ii) the
conversion of each issued and outstanding share of common
stock, without par value, of Camden into the right to receive
Common Shares, par value $1.00 per share, of TDS, as set forth
in the Agreement. Unless otherwise defined herein,
capitalized terms have the meanings specified in the
Agreement.
We have acted as special Indiana counsel to TDS and
Sub in connection with the preparation, execution and delivery
of the Agreement and the consummation of the transactions
contemplated thereby. For the purpose of rendering the
opinions set forth herein, we have relied, as to various
questions of fact material to such opinions, upon the
representations made in the Agreement and upon certificates of
officers of TDS and Sub. We have also examined originals, or
copies of originals certified to our satisfaction, of such
agreements, documents, certificates and other statements of
governmental officials and other instruments, have examined
such questions of law and, subject to the limitations set
forth herein, have satisfied ourselves as to such matters of
fact as we have considered relevant and necessary as a basis
for this opinion. We have assumed the authenticity of all
documents submitted to us as originals, the genuineness of all
signatures, the legal capacity of all natural persons and the
conformity with the original documents of any copies thereof
submitted to us for our examination.
<PAGE>
Stockholders of
Camden Telephone Company, Inc.
________, 1995
Page 2
Based upon the foregoing, subject to the exceptions,
qualifications and limitations set forth hereafter, we are of
the opinion that:
1. Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Indiana, and has corporate power and authority to execute and
deliver the Agreement, to consummate the transactions
contemplated thereby (including the execution and delivery of
the Plan of Merger and Articles of Merger) and to perform its
obligations thereunder.
2. The execution, delivery and performance of the
Agreement by Sub has been duly authorized by all necessary
corporate action of Sub. Assuming due authorization,
execution and delivery by the other parties thereto, the
Agreement is a legal, valid and binding agreement of TDS and
Sub, enforceable against TDS and Sub in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights
and by the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in
equity or at law).
3. The IURC Approval has been obtained and has
become final. Assuming all other necessary consents
contemplated by the Agreement have been obtained, the
execution and delivery of the Agreement by TDS and Sub do not
and will not result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or
any event creating rights of termination or cancellation under
(i) the articles of incorporation or by-laws of Sub or (ii) to
our knowledge, any material agreement, indenture, note,
mortgage, lease, license, franchise, permit, judgment, decree,
order, statute, rule or regulation to which TDS or Sub is a
party, by which either of them is bound, or to which any of
their respective properties is subject.
4. To our knowledge, no consent, authorization,
order or approval of or filing or registration with any
administrative agency, governmental authority or other person
or entity is required for the valid execution, delivery or
performance of the Agreement by TDS and Sub, except for the
IURC Approval, which has been obtained and has become final.
5. To our knowledge, there is no investigation,
claim, action, suit or other proceeding pending or threatened
against TDS
<PAGE>
Stockholders of
Camden Telephone Company, Inc.
________, 1995
Page 3
or Sub which questions the legality or propriety of the
transactions contemplated by the Agreement.
Any opinion or statement herein which is expressed
to be "to our knowledge" or is otherwise qualified by words of
like import means that the lawyers currently practicing law
with this Firm who have had an active involvement in
negotiating the Agreement have no current conscious awareness
of facts or information contrary to such opinion or statement.
Except as otherwise expressly stated in this letter, no
independent investigation with respect to such facts or
information has been undertaken by or on behalf of such
lawyers.
This opinion is limited to the laws of the State of
Indiana. We are furnishing this opinion to you solely for
your benefit in connection with the above-described
transactions; accordingly, it is not to be used, circulated,
quoted, filed with any governmental authority or other
regulatory agency or otherwise referred to or utilized for any
other purpose without our prior written consent. We assume no
obligation to update or supplement this opinion to reflect any
facts or circumstances which may hereafter come to our
attention with respect to the opinions expressed above,
including any changes in applicable law which may hereafter
occur.
Very truly yours,
<PAGE>
EXHIBIT E-1
CONSULTING AGREEMENT
CONSULTING AGREEMENT made as of ___________, 1995,
by and between CAMDEN TELEPHONE COMPANY, INC., an Indiana
corporation (the "Company"), and Jack Ford ("Consultant").
WHEREAS, pursuant to that certain Agreement and Plan
of Merger, dated as of __________, 1995, by and among
Telephone and Data Systems, Inc. ("TDS"), TDS-Camden
Acquisition Corp. ("Sub") and the Company, TDS has on the date
hereof acquired all of the outstanding capital stock of the
Company pursuant to a merger of Sub with and into the Company;
WHEREAS, the Consultant has entered into an
Employment Agreement dated as of the date hereof (the
"Employment Agreement") pursuant to which he will serve as
General Manager of the Company for a term ending on the
earlier of (a) ___________, 2000 or (b) the date on which
Consultant elects to retire from the Company pursuant to
Section 6(b) of the Employment Agreement (the "Employment
Termination Date");
WHEREAS, the Consultant has considerable knowledge
and experience regarding the business, affairs, customers and
operations of the Company (the "Business"); and
WHEREAS, in consideration of such knowledge and
experience, the Company desires to provide for the services of
Consultant under the terms and conditions as hereinafter set
forth;
NOW THEREFORE, in consideration of the foregoing and
the mutual promises and undertakings hereinafter set forth,
the parties hereto agree as follows:
1. Engagement. The Company agrees to engage
Consultant and Consultant agrees to provide consulting
services to the Company in accordance with the terms and
conditions hereinafter contained.
2. Term. Consultant shall provide consulting
services to the Company for the term of five (5) years
commencing on the Employment Termination Date (the "Term").
3. Duties. Consultant shall undertake to provide
consulting and advisory services for and on behalf of, and in
the manner and to the extent reasonably requested by, the
Company or TDS. Such consulting services shall include (i)
being accessible, via phone or in person, to answer
operational questions relating to Camden, (ii) overseeing
special projects, such as community service
<PAGE>
or awareness projects of a short duration and with at least 30
days advance notice, (iii) representation of the Company and
TDS at Indiana Telephone Association meetings and on any
committee thereof which the Company's board recommends, and,
(iv) with appropriate advance notice, assisting TDS
Development Team members in their acquisition efforts with
respect to other independent telephone companies in Indiana.
Such services shall be performed in the geographic areas in
which Consultant has heretofore performed services for the
Company, and Consultant shall not be required to accept
assignments elsewhere without his consent.
Consultant shall at all times during the Term be an
independent contractor, rather than a co-venturer, agent,
employee or representative of the Company. The Company hereby
acknowledges and agrees that Consultant may render consulting,
employment or other services to other businesses during the
Term, subject to the condition that such services shall not be
detrimental to the interests of the Company or TDS. During
the Term hereunder, Consultant shall take no action which
would jeopardize or impair in any way the Business or the
interests of the Company or TDS.
4. Expense. Consultant's actual and reasonable
expenses incurred upon the specific request of the Company in
connection with the duties and responsibilities under this
Agreement shall be paid for by the Company upon presentment of
vouchers covering such expenses in accordance with standard
TDS policies.
5. Compensation.
(a) The Company shall pay to Consultant during the
Term hereunder a retainer at an annual rate equal to 40% of
the base annual salary being paid to him on the Employment
Termination Date pursuant to the Employment Agreement.
(b) The compensation payable pursuant to
paragraph (a) of this Section shall be deemed to accrue
ratably during the calendar year and shall be paid monthly.
(c) Except as provided in the Employment Agreement
with respect to benefits payable to Mr. Ford as a retired
employee of a TDS subsidiary, Consultant shall not be entitled
to any employee benefits hereunder, including, but not limited
to, medical, dental or life insurance, pension, vacation,
disability, sick pay or any other benefits under plans or
policies maintained from time to time by the Company or TDS.
6. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the Company
and any successor to the Company, and any such successor shall
be deemed substituted for the Company under the provisions of
this Agreement. For the purposes of the Agreement, the term
"successor" shall mean
<PAGE>
any person, firm, corporation or other business equity which
at any time, whether by merger, purchase, liquidation or
otherwise, shall acquire all or substantially all of the
assets or business of the Company. The Consultant's
obligations hereunder are hereby expressly declared to be
nonassignable and nontransferable.
7. Notices. Any notice given or required
hereunder may be served by personal delivery or by leaving the
same at or by sending the same by first-class post addressed
to:
(a) in the case of the Company, at its principal
executive office at the time being;
(b) in the case of the Consultant, at the
Consultant's address on the records of the Company; or
(c) in the case of either party, such other address
as shall have been notified in writing to the other party for
the purposes of service hereunder.
8. Termination of Existing Terms of
Service. Except for the Employment Agreement and as otherwise
provided herein, this Agreement is in substitution for all
previous contracts or arrangements, including terms of
employment (express or implied) between the Company and the
Consultant, which shall be deemed to have been terminated by
mutual consent as of the date of this Agreement.
9. Amendment. No modification, amendment or
waiver of any of the provisions of this Agreement shall be
effective unless in writing specifically referring hereto and
signed by both parties.
10. Entire Agreement. This instrument constitutes
the entire agreement of the parties hereto with respect to the
Consultant's duties and obligations and compensation therefor.
11. No Waiver. The failure to enforce at any time
any of the provisions of this Agreement or to require at any
time performance by the other party of any of the provisions
hereof shall in no way be construed as a wavier of such
provisions or to affect either the validity of this Agreement,
or any party hereof, or the right of either party thereafter
to enforce each and every such provision in accordance with
the terms of this Agreement.
12. Governing Law. All questions pertaining to the
validity, construction, execution, and performance of this
Agreement shall be construed in accordance with and governed
by the laws of the State of Indiana.
13. Severability. The invalidity or
unenforceability of any particular provision of this Agreement
shall not affect the
<PAGE>
other provisions of this Agreement and shall be construed in
all respects as if such invalid or unenforceable provisions
were omitted. While provisions of this Agreement are
considered by the parties to be fair and reasonable in all the
circumstances, it is agreed that if any of such provisions
shall be adjudged to be void or ineffective for whatever
reason, but would be adjudged to be valid and effective if
part of the wording thereof were deleted or the periods
thereof reduced or the area thereof reduced in scope, the said
restrictions shall apply with such modifications as may be
necessary to make them valid and effective.
14. Counterparts. This Agreement may be executed
in any number of counterparts and all such counterparts signed
in the aggregate by all parties hereto shall constitute a
single original instrument.
IN WITNESS WHEREOF, the parties hereof have caused
this instrument to be duly executed as of the day and year
first above written.
COMPANY: CAMDEN TELEPHONE COMPANY, INC.
By: ___________________________
Name:
Title:
CONSULTANT: ________________________________
Name: Jack Ford
SIGNATURE PAGE TO
CONSULTING AGREEMENT
JACK FORD
<PAGE>
EXHIBIT E-2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of ___________, 1995,
by and between CAMDEN TELEPHONE COMPANY, INC., an Indiana
corporation (the "Company"), and Jack Ford ("Employee").
WHEREAS, pursuant to that certain Agreement and Plan
of Merger, dated as of __________, 1995, by and among
Telephone and Data Systems, Inc. ("TDS"), TDS-Camden
Acquisition Corp. ("Sub") and the Company, TDS has on the date
hereof acquired all of the outstanding capital stock of the
Company pursuant to a merger of Sub with and into the Company;
WHEREAS, the Employee has been employed as General
Manager of the Company for __ years and accordingly has
considerable knowledge and experience regarding the business,
affairs, customers and operations of the Company (the
"Business"); and
WHEREAS, in consideration of such knowledge and
experience, the Company desires to provide for the employment
of Employee under the terms and conditions as hereinafter set
forth;
NOW THEREFORE, in consideration of the foregoing and
the mutual promises and undertakings hereinafter set forth,
the parties hereto agree as follows:
1. Employment. The Company agrees to employ
Employee and Employee agrees to accept employment with the
Company in accordance with the terms and conditions
hereinafter contained.
2. Term. Subject to the right of the Company
under Section 6(a) to terminate Employee's employment and to
Employee's rights under Section 6(b), Employee shall serve the
Company for the term of five (5) years commencing on the date
of this Agreement (the "Term") and thereafter at the will of
each of the Company and the Employee until such employment is
terminated by either party.
3. Duties. Employee shall continue to serve as
General Manager of the Company with substantially the same
duties and responsibilities as he currently has and shall have
such other responsibilities and shall perform such other
duties as shall be mutually established by the Company and the
Employee from time to time (the "Duties"). During employment
hereunder, Employee shall devote full time to the business and
affairs of the Company to perform such Duties, and shall take
no action, or fail to take any action, which would jeopardize
or impair in any way the Business
<PAGE>
and shall use such Employee's best efforts to advance the best
interests of the Company and TDS at all times.
4. Place of Performance. Except as mutually
agreed by Employee and the Company, Employee shall perform the
Duties hereunder at the offices of the Company but may be
required to travel and render services in different locations
from time to time, on a temporary basis only, in the
performance of such Duties.
5. Compensation and Benefits.
(a)(i) During the period from the date of this
Agreement until December 31, 1995, the Company shall pay to
Employee a salary at an annual rate equal to the annual rate
being paid by the Company to Employee on the date hereof.
(ii) During each calendar year during the Term
after December 31, 1995, the Company shall pay to Employee a
salary at an annual rate equal to the average compensation (as
reported in the annual National Telephone Company Association
("NTCA") survey) paid by reporting NTCA member companies
located in the Northeast Region to their General Managers
(NTCA Table No. 6) during the prior year.
(b) The salary payable pursuant to paragraph (a) of
this Section shall be deemed to accrue ratably during the
calendar year and shall be paid according to the normal
payroll periods of the Company. In the event Employee's
employment is terminated pursuant to Section 6, payment shall
be made for the portion of the payroll period during which
Employee was employed on a pro rata basis.
(c) Subject to Section 6(b), the salary
arrangements pursuant to paragraph (a) of this Section shall
terminate upon the retirement, termination, death or permanent
disability of Employee and no further payment thereof shall be
made.
(d) The Employee shall be entitled to elect either
(i) to continue to participate in the 100% Company paid group
medical, dental, long-term disability and term insurance plans
provided by Lincoln National Life Insurance Company to
employees of the Company on the date hereof or (ii) to be
covered by the group medical, dental, disability and life
insurance plans maintained from time to time by TDS and
available to employees of TDS' other telephone company
subsidiaries, subject to all other eligibility requirements
applicable to TDS employees generally. Any election by
Employee to be covered by such TDS plans shall be final and
Employee shall thereafter have no right to elect or reelect to
be covered by the Company plans referred to in (i) above.
(e) Employee shall be entitled to continue to
participate in the Company's pension benefit plan (the
"Existing Camden Plan") unless such participation or the
continuation of the
<PAGE>
Existing Camden Plan after the date hereof has the effect of
terminating the tax-qualified status (under Section 401(a) of
the Internal Revenue Code) of the Existing Camden Plan or the
TDS Plan (as defined below). In such event (i) Employee's
participation in the Existing Camden Plan shall be terminated
and Employee shall participate in the then current TDS pension
plan applicable to employees of TDS' other telephone company
subsidiaries (the "TDS Plan"); and (ii) TDS shall, if
necessary, supplement the benefits available to Employee upon
his retirement from the Company to the extent necessary to
make the aggregate retirement benefits payable to Employee at
least equal to those payable under the Existing Camden Plan.
Upon retirement, Employee shall be entitled to participate in
the TDS then existing retirement medical and insurance
benefits, subject to clause (g) below.
(f) Employee shall be entitled to participate in
TDS' 401(k) Tax-Deferred Savings Plan and Trust and TDS'
Employee Stock Purchase Plan.
(g) For the purposes of clauses (d), (e) and (f)
above, and participation by Employee in the TDS employee or
retiree benefit plans mentioned therein, (i) Employee's
participation shall be subject to all eligibility standards
applicable to such plans applicable to all employees of TDS
and its affiliates and (ii) Employee shall be credited with
his prior years of service with Camden to the extent permitted
by such plans and standards.
(h) During the Term, the Employee will be entitled
to receive the customary $500 Christmas bonus paid by the
Company in the past.
(i) During the Term, the Employee shall be entitled
to receive, at the cost of the Company, local exchange
telephone service so long as Employee lives within the Camden
exchange area.
(j) During the Term, Employee shall be entitled to
the number of vacation days and holiday periods as are in
accordance with applicable TDS policy for employees of its
other telephone company subsidiaries.
(k) During the Term, the Company's vehicle
replacement program, as it exists on the date hereof, shall be
applicable to Employee.
(l) Employee shall be entitled to reimbursement for
business travel and professional education related expenses in
accordance with TDS's standard company policy.
6. Termination. (a) Without prejudice to any
other rights it may have, the Company shall have the right by
notice in writing given to Employee to terminate this
Agreement and the Employee's employment hereunder if:
<PAGE>
(i) Employee shall be guilty of gross negligence in
connection with the Duties hereunder;
(ii) Employee fails to satisfactorily perform the
Duties hereunder or to comply with reasonable directions or
regulations of the Company or TDS, or Employee fails to
observe and perform the terms and provisions of this
Agreement; or
(iii) Employee shall be convicted of a crime
involving dishonesty or moral turpitude.
(b) At anytime after the first anniversary of the
execution of this Agreement, Employee shall have the right to
retire from the Company and receive (on the date of such
retirement) a single lump sum severance benefit equal to the
product obtained by multiplying (x) his average annual
compensation during the five calendar years immediately
preceding his retirement date, by (y) the lesser of (i) the
number of years remaining in the Term, or (ii) 2.99. The
foregoing severance payment shall be in lieu of and in full
satisfaction of all of the Company's remaining obligations
under this Agreement except for the payment of applicable
pension and retiree medical and insurance benefits.
7. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the Company
and any successor to the Company, and any such successor shall
be deemed substituted for the Company under the provisions of
this Agreement. For the purposes of the Agreement, the term
"successor" shall mean any person, firm, corporation or other
business equity which at any time, whether by merger,
purchase, liquidation or otherwise, shall acquire all or
substantially all of the assets or business of the
Company. The Employee's obligations hereunder are hereby
expressly declared to be nonassignable and nontransferable.
8. Notices. Any notice given or required
hereunder may be served by personal delivery or by leaving the
same at or by sending the same by first-class post addressed
to:
(a) in the case of the Company, at its principal
executive office at the time being;
(b) in the case of the Employee, at the Employee's
address on the records of the Company; or
(c) in the case of either party, such other address
as shall have been notified in writing to the other party for
the purposes of service hereunder.
9. Termination of Existing Terms of
Service. Except as otherwise provided herein, this Agreement
is in substitution for all previous contracts or terms of
employment (express or implied)
<PAGE>
between the Company and the Employee, which shall be deemed to
have been terminated by mutual consent as of the date of this
Agreement.
10. Amendment. No modification, amendment or
waiver of any of the provisions of this Agreement shall be
effective unless in writing specifically referring hereto and
signed by both parties.
11. Entire Agreement. This instrument constitutes
the entire agreement of the parties hereto with respect to the
Employee's duties and obligations and compensation therefor.
12. No Waiver. The failure to enforce at any time
any of the provisions of this Agreement or to require at any
time performance by the other party of any of the provisions
hereof shall in no way be construed as a wavier of such
provisions or to affect either the validity of this Agreement,
or any party hereof, or the right of either party thereafter
to enforce each and every such provision in accordance with
the terms of this Agreement.
13. Governing Law. All questions pertaining to the
validity, construction, execution, and performance of this
Agreement shall be construed in accordance with and governed
by the laws of the State of Indiana.
14. Severability. The invalidity or
unenforceability of any particular provision of this Agreement
shall not affect the other provisions of this Agreement and
shall be construed in all respects as if such invalid or
unenforceable provisions were omitted. While provisions of
this Agreement are considered by the parties to be fair and
reasonable in all the circumstances, it is agreed that if any
of such provisions shall be adjudged to be void or ineffective
for whatever reason, but would be adjudged to be valid and
effective if part of the wording thereof were deleted or the
periods thereof reduced or the area thereof reduced in scope,
the said restrictions shall apply with such modifications as
may be necessary to make them valid and effective.
15. Counterparts. This Agreement may be executed
in any number of counterparts and all such counterparts signed
in the aggregate by all parties hereto shall constitute a
single original instrument.
IN WITNESS WHEREOF, the parties hereof have caused
this instrument to be duly executed as of the day and year
first above written.
COMPANY: CAMDEN TELEPHONE COMPANY, INC.
By: ___________________________
Name:
<PAGE>
Title:
EMPLOYEE: ________________________________
Name: Jack Ford
SIGNATURE PAGE TO
EMPLOYMENT AGREEMENT
JACK FORD
<PAGE>
EXHIBIT E-3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of ___________, 1995,
by and between CAMDEN TELEPHONE COMPANY, INC., an Indiana
corporation (the "Company"), and Robert McCain ("Employee").
WHEREAS, pursuant to that certain Agreement and Plan
of Merger, dated as of __________, 1995, by and among
Telephone and Data Systems, Inc. ("TDS"), TDS-Camden
Acquisition Corp. ("Sub") and the Company, TDS has on the date
hereof acquired all of the outstanding capital stock of the
Company pursuant to a merger of Sub with and into the Company;
WHEREAS, the Employee has considerable knowledge and
experience regarding the business, affairs, customers and
operations of the Company (the "Business"); and
WHEREAS, in consideration of such knowledge and
experience, the Company desires to provide for the employment
of Employee under the terms and conditions as hereinafter set
forth;
NOW THEREFORE, in consideration of the foregoing and
the mutual promises and undertakings hereinafter set forth,
the parties hereto agree as follows:
1. Employment. The Company agrees to employ
Employee and Employee agrees to accept employment with the
Company in accordance with the terms and conditions
hereinafter contained.
2. Term. Subject to the right of the Company
under Section 6 to terminate Employee's employment, Employee
shall serve the Company for the term of ten (10) years
commencing on the date of this Agreement (the "Term") and
thereafter at the will of each of the Company and the Employee
until such employment is terminated by either party. If
Employee completes the full ten-year Term hereunder, and
suitable employment opportunities then no longer exist at the
Company, Employee shall be offered employment opportunities at
other TDS companies.
3. Duties. Employee shall continue to serve as
Assistant Manager of the Company with substantially the same
duties and responsibilities as he currently has and shall have
such other responsibilities and shall perform such other
duties as shall be mutually established by the Company and the
Employee from time to time (the "Duties"). During employment
hereunder, Employee shall devote full time to the business and
affairs of the Company to perform such Duties, and shall take
no action, or fail to take any action, which would jeopardize
or impair in any way the Business
<PAGE>
and shall use such Employee's best efforts to advance the best
interests of the Company and TDS at all times.
4. Place of Performance. Except as mutually
agreed by Employee and the Company, Employee shall perform the
Duties hereunder at the offices of the Company but may be
required to travel and render services in different locations
from time to time, on a temporary basis only, in the
performance of such Duties.
5. Compensation and Benefits.
(a)(i) During the period from the date of this
Agreement until December 31, 1995, the Company shall pay to
Employee a salary at an annual rate equal to the annual rate
being paid by the Company to Employee on the date hereof.
(ii) During each calendar year during the Term
after December 31, 1995, the Company shall pay to Employee a
salary at an annual rate equal to the average compensation (as
reported in the annual National Telephone Company Association
("NTCA") survey) paid by reporting NTCA member companies
located in the Northeast Region to their Assistant Managers
(NTCA Table No. 15) during the prior year; provided that, if
Employee is promoted to a new position within Camden during
the Term, Employee's salary thereafter shall be the average
compensation so reported on the NTCA Table which corresponds
to such new position.
(b) The salary payable pursuant to paragraph (a) of
this Section shall be deemed to accrue ratably during the
calendar year and shall be paid according to the normal
payroll periods of the Company. In the event Employee's
employment is terminated pursuant to Section 6, payment shall
be made for the portion of the payroll period during which
Employee was employed on a pro rata basis.
(c) The salary arrangements pursuant to paragraph
(a) of this Section shall terminate upon the termination,
death or permanent disability of Employee and no further
payment thereof shall be made.
(d) The Employee shall be entitled to elect either
(i) to continue to participate in the 100% Company paid
medical, dental, long-term disability and group term insurance
plans provided by Lincoln National Life Insurance Company to
employees of the Company on the date hereof or (ii) to be
covered by the group medical, dental, disability and life
insurance plans maintained from time to time by TDS and
available to employees of TDS' other telephone company
subsidiaries, subject to all other eligibility requirements
applicable to TDS employees generally. Any election by
Employee to be covered by such TDS plans shall be final and
Employee shall thereafter have no right to elect or reelect to
be covered by the Company plans referred to in (i) above.
<PAGE>
(e) Reference is made to the Employment Agreement
dated the date hereof between Mr. Jack Ford and the Company
(the "Ford Agreement"). For so long as Mr. Ford continues to
be the General Manager of the Company pursuant to the Ford
Agreement (but not after the 10th anniversary of this
Agreement), Employee shall be entitled to continue to
participate in the Company's pension benefit plan (the
"Existing Camden Plan") unless such participation or the
continuation of the Existing Camden Plan after the date hereof
has the effect of terminating the tax-qualified status (under
Section 401(a) of the Internal Revenue Code) of the Existing
Camden Plan or the TDS Plan (as such term is defined below).
In such event (i) Employee's participation in the Existing
Camden Plan shall be terminated and Employee shall participate
in the then current TDS pension plan applicable to employees
of TDS' other telephone company subsidiaries (the "TDS Plan");
and (ii), if Employee should retire from the Company on or
prior to the date (the "Ford Termination Date") on which Jack
Ford is no longer employed by the Company pursuant to the Ford
Agreement, TDS shall, if necessary, supplement the benefits
available to Employee upon such retirement from the Company to
the extent necessary to make the aggregate retirement benefits
payable to Employee at least equal to those payable under the
Existing Camden Plan. From and after the Ford Termination
Date, Employee shall participate in the TDS Plan and TDS shall
have no obligation to supplement the benefits provided
thereunder. Upon retirement, Employee shall be entitled to
participate in the then existing TDS retirement medical and
insurance benefit programs, subject to clause (g) below.
(f) Employee shall be entitled to participate in
TDS' 401(k) Tax-Deferred Savings Plan and Trust and TDS'
Employee Stock Purchase Plan.
(g) For the purposes of clauses (d), (e) and (f)
above, and participation by Employee in the TDS employee or
retiree benefit plans mentioned therein, (i) Employee's
participation shall be subject to all eligibility standards
applicable to such plans applicable to all employees of TDS
and its affiliates and (ii) Employee shall be credited with
his prior years of service with Camden to the extent permitted
by such plans and standards.
(h) During the Term, the Employee will be entitled
to receive the customary $500 Christmas bonus paid by the
Company in the past.
(i) During the Term, the Employee shall be entitled
to receive, at the cost of the Company, local exchange
telephone service so long as Employee lives within the Camden
exchange area.
(j) During the Term, Employee shall be entitled to
the number of vacation days and holiday periods as are in
accordance with applicable TDS policy for employees of its
other telephone company subsidiaries.
<PAGE>
(k) For the first five years of the Term, the
Company's vehicle replacement program, as it exists on the
date hereof, shall remain in effect if applicable to Employee.
(l) Employee shall be entitled to reimbursement for
business travel and professional education related expenses in
accordance with TDS's standard company policy.
6. Termination. Without prejudice to any other
rights it may have, the Company shall have the right by notice
in writing given to Employee to terminate this Agreement and
the Employee's employment hereunder if:
(a) Employee shall be guilty of gross negligence in
connection with the Duties hereunder;
(b) Employee fails to satisfactorily perform the
Duties hereunder or to comply with reasonable directions or
regulations of the Company or TDS, or Employee fails to
observe and perform the terms and provisions of this
Agreement; or
(c) Employee shall be convicted of a crime
involving dishonesty or moral turpitude.
7. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the Company
and any successor to the Company, and any such successor shall
be deemed substituted for the Company under the provisions of
this Agreement. For the purposes of the Agreement, the term
"successor" shall mean any person, firm, corporation or other
business equity which at any time, whether by merger,
purchase, liquidation or otherwise, shall acquire all or
substantially all of the assets or business of the
Company. The Employee's obligations hereunder are hereby
expressly declared to be nonassignable and nontransferable.
8. Notices. Any notice given or required
hereunder may be served by personal delivery or by leaving the
same at or by sending the same by first-class post addressed
to:
(a) in the case of the Company, at its principal
executive office at the time being;
(b) in the case of the Employee, at the Employee's
address on the records of the Company; or
(c) in the case of either party, such other address
as shall have been notified in writing to the other party for
the purposes of service hereunder.
9. Termination of Existing Terms of
Service. Except as otherwise provided herein, this Agreement
is in substitution for all previous contracts or terms of
employment (express or implied)
<PAGE>
between the Company and the Employee, which shall be deemed to
have been terminated by mutual consent as of the date of this
Agreement.
10. Amendment. No modification, amendment or
waiver of any of the provisions of this Agreement shall be
effective unless in writing specifically referring hereto and
signed by both parties.
11. Entire Agreement. This instrument constitutes
the entire agreement of the parties hereto with respect to the
Employee's duties and obligations and compensation therefor.
12. No Waiver. The failure to enforce at any time
any of the provisions of this Agreement or to require at any
time performance by the other party of any of the provisions
hereof shall in no way be construed as a wavier of such
provisions or to affect either the validity of this Agreement,
or any party hereof, or the right of either party thereafter
to enforce each and every such provision in accordance with
the terms of this Agreement.
13. Governing Law. All questions pertaining to the
validity, construction, execution, and performance of this
Agreement shall be construed in accordance with and governed
by the laws of the State of Indiana.
14. Severability. The invalidity or
unenforceability of any particular provision of this Agreement
shall not affect the other provisions of this Agreement and
shall be construed in all respects as if such invalid or
unenforceable provisions were omitted. While provisions of
this Agreement are considered by the parties to be fair and
reasonable in all the circumstances, it is agreed that if any
of such provisions shall be adjudged to be void or ineffective
for whatever reason, but would be adjudged to be valid and
effective if part of the wording thereof were deleted or the
periods thereof reduced or the area thereof reduced in scope,
the said restrictions shall apply with such modifications as
may be necessary to make them valid and effective.
15. Counterparts. This Agreement may be executed
in any number of counterparts and all such counterparts signed
in the aggregate by all parties hereto shall constitute a
single original instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereof have caused
this instrument to be duly executed as of the day and year
first above written.
COMPANY: CAMDEN TELEPHONE COMPANY, INC.
By: ___________________________
Name:
Title:
EMPLOYEE: ________________________________
Name: Robert McCain
SIGNATURE PAGE TO
EMPLOYMENT AGREEMENT
ROBERT MCCAIN
<PAGE>
EXHIBIT E-4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of ___________, 1995,
by and between CAMDEN TELEPHONE COMPANY, INC., an Indiana
corporation (the "Company"), and Brenda Elizalde ("Employee").
WHEREAS, pursuant to that certain Agreement and Plan
of Merger, dated as of __________, 1995, by and among
Telephone and Data Systems, Inc. ("TDS"), TDS-Camden
Acquisition Corp. ("Sub") and the Company, TDS has on the date
hereof acquired all of the outstanding capital stock of the
Company pursuant to a merger of Sub with and into the Company;
WHEREAS, the Employee has considerable knowledge and
experience regarding the business, affairs, customers and
operations of the Company (the "Business"); and
WHEREAS, in consideration of such knowledge and
experience, the Company desires to provide for the employment
of Employee under the terms and conditions as hereinafter set
forth;
NOW THEREFORE, in consideration of the foregoing and
the mutual promises and undertakings hereinafter set forth,
the parties hereto agree as follows:
1. Employment. The Company agrees to employ
Employee and Employee agrees to accept employment with the
Company in accordance with the terms and conditions
hereinafter contained.
2. Term. Subject to the right of the Company
under Section 6 to terminate Employee's employment, Employee
shall serve the Company for the term of ten (10) years
commencing on the date of this Agreement (the "Term") and
thereafter at the will of each of the Company and the Employee
until such employment is terminated by either party. If
Employee completes the full ten-year Term hereunder and
suitable employment opportunities then no longer exist at the
Company, Employee shall be offered employment opportunities at
other TDS companies.
3. Duties. Employee shall continue to serve as
Public Affairs/Subscriber Relations Representative of the
Company with substantially the same duties and
responsibilities as she currently has and shall have such
other responsibilities and shall perform such other duties as
shall be mutually established by the Company and the Employee
from time to time (the "Duties"). During employment
hereunder, Employee shall devote full time to the business and
affairs of the Company to perform such Duties, and shall take
no action, or fail to take any action, which would
<PAGE>
jeopardize or impair in any way the Business and shall use
such Employee's best efforts to advance the best interests of
the Company and TDS at all times.
4. Place of Performance. Except as mutually
agreed by Employee and the Company, Employee shall perform the
Duties hereunder at the offices of the Company but may be
required to travel and render services in different locations
from time to time, on a temporary basis only, in the
performance of such Duties.
5. Compensation and Benefits.
(a)(i) During the period from the date of this
Agreement until December 31, 1995, the Company shall pay to
Employee a salary at an annual rate equal to the annual rate
being paid by the Company to Employee on the date hereof.
(ii) During each calendar year during the Term
after December 31, 1995, the Company shall pay to Employee a
salary at an annual rate equal to the average compensation (as
reported in the annual National Telephone Company Association
("NTCA") survey) paid by reporting NTCA member companies
located in the Northeast Region to their Public
Affairs/Subscriber Relations Representative (NTCA Table No.
32) during the prior year; provided that, if Employee is
promoted to a new position within Camden during the Term,
Employee's salary thereafter shall be the average compensation
so reported on the NTCA Table which corresponds to such new
position.
(b) The salary payable pursuant to paragraph (a) of
this Section shall be deemed to accrue ratably during the
calendar year and shall be paid according to the normal
payroll periods of the Company. In the event Employee's
employment is terminated pursuant to Section 6, payment shall
be made for the portion of the payroll period during which
Employee was employed on a pro rata basis.
(c) The salary arrangements pursuant to paragraph
(a) of this Section shall terminate upon the termination,
death or permanent disability of Employee and no further
payment thereof shall be made.
(d) The Employee shall be entitled to elect either
(i) to continue to participate in the 100% Company paid
medical, dental, long-term disability and group term insurance
plans provided by Lincoln National Life Insurance Company to
employees of the Company on the date hereof or (ii) to be
covered by the group medical, dental, disability and life
insurance plans maintained from time to time by TDS and
available to employees of TDS' other telephone company
subsidiaries, subject to all other eligibility requirements
applicable to TDS employees generally. Any election by
Employee to be covered by such TDS plans shall be final and
<PAGE>
Employee shall thereafter have no right to elect or reelect to
be covered by the Company plans referred to in (i) above.
(e) Reference is made to the Employment Agreement
dated the date hereof between Mr. Jack Ford and the Company
(the "Ford Agreement"). For so long as Mr. Ford continues to
be the General Manager of the Company pursuant to the Ford
Agreement (but not after the 10th anniversary of this
Agreement), Employee shall be entitled to continue to
participate in the Company's pension benefit plan (the
"Existing Camden Plan") unless such participation or the
continuation of the Existing Camden Plan after the date hereof
has the effect of terminating the tax-qualified status (under
Section 401(a) of the Internal Revenue Code) of the Existing
Camden Plan or the TDS Plan (as such term is defined below).
In such event (i) Employee's participation in the Existing
Camden Plan shall be terminated and Employee shall participate
in the then current TDS pension plan applicable to employees
of TDS' other telephone company subsidiaries (the "TDS Plan");
and (ii), if Employee should retire from the Company on or
prior to the date (the "Ford Termination Date") on which Jack
Ford is no longer employed by the Company pursuant to the Ford
Agreement, TDS shall, if necessary, supplement the benefits
available to Employee upon such retirement from the Company to
the extent necessary to make the aggregate retirement benefits
payable to Employee at least equal to those payable under the
Existing Camden Plan. From and after the Ford Termination
Date, Employee shall participate in the TDS Plan and TDS shall
have no obligation to supplement the benefits provided
thereunder. Upon retirement, Employee shall be entitled to
participate in the then existing TDS retirement medical and
insurance benefit programs, subject to clause (g) below.
(f) Employee shall be entitled to participate in
TDS' 401(k) Tax-Deferred Savings Plan and Trust and TDS'
Employee Stock Purchase Plan.
(g) For the purposes of clauses (d), (e) and (f)
above, and participation by Employee in the TDS employee or
retiree benefit plans mentioned therein, (i) Employee's
participation shall be subject to all eligibility standards
applicable to such plans applicable to all employees of TDS
and its affiliates and (ii) Employee shall be credited with
his prior years of service with Camden to the extent permitted
by such plans and standards.
(h) During the Term, the Employee will be entitled
to receive the customary $500 Christmas bonus paid by the
Company in the past.
(i) During the Term, the Employee shall be entitled
to receive, at the cost of the Company, local exchange
telephone service so long as Employee lives within the Camden
exchange area.
<PAGE>
(j) During the Term, Employee shall be entitled to
the number of vacation days and holiday periods as are in
accordance with applicable TDS policy for employees of its
other telephone company subsidiaries.
(k) For the first five years of the Term, the
Company's vehicle replacement program, as it exists on the
date hereof, shall remain in effect if applicable to Employee.
(l) Employee shall be entitled to reimbursement for
business travel and professional education related expenses in
accordance with TDS's standard company policy.
6. Termination. Without prejudice to any other
rights it may have, the Company shall have the right by notice
in writing given to Employee to terminate this Agreement and
the Employee's employment hereunder if:
(a) Employee shall be guilty of gross negligence in
connection with the Duties hereunder;
(b) Employee fails to satisfactorily perform the
Duties hereunder or to comply with reasonable directions or
regulations of the Company or TDS, or Employee fails to
observe and perform the terms and provisions of this
Agreement; or
(c) Employee shall be convicted of a crime
involving dishonesty or moral turpitude.
7. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the Company
and any successor to the Company, and any such successor shall
be deemed substituted for the Company under the provisions of
this Agreement. For the purposes of the Agreement, the term
"successor" shall mean any person, firm, corporation or other
business equity which at any time, whether by merger,
purchase, liquidation or otherwise, shall acquire all or
substantially all of the assets or business of the
Company. The Employee's obligations hereunder are hereby
expressly declared to be nonassignable and nontransferable.
8. Notices. Any notice given or required
hereunder may be served by personal delivery or by leaving the
same at or by sending the same by first-class post addressed
to:
(a) in the case of the Company, at its principal
executive office at the time being;
(b) in the case of the Employee, at the Employee's
address on the records of the Company; or
<PAGE>
(c) in the case of either party, such other address
as shall have been notified in writing to the other party for
the purposes of service hereunder.
9. Termination of Existing Terms of
Service. Except as otherwise provided herein, this Agreement
is in substitution for all previous contracts or terms of
employment (express or implied) between the Company and the
Employee, which shall be deemed to have been terminated by
mutual consent as of the date of this Agreement.
10. Amendment. No modification, amendment or
waiver of any of the provisions of this Agreement shall be
effective unless in writing specifically referring hereto and
signed by both parties.
11. Entire Agreement. This instrument constitutes
the entire agreement of the parties hereto with respect to the
Employee's duties and obligations and compensation therefor.
12. No Waiver. The failure to enforce at any time
any of the provisions of this Agreement or to require at any
time performance by the other party of any of the provisions
hereof shall in no way be construed as a wavier of such
provisions or to affect either the validity of this Agreement,
or any party hereof, or the right of either party thereafter
to enforce each and every such provision in accordance with
the terms of this Agreement.
13. Governing Law. All questions pertaining to the
validity, construction, execution, and performance of this
Agreement shall be construed in accordance with and governed
by the laws of the State of Indiana.
14. Severability. The invalidity or
unenforceability of any particular provision of this Agreement
shall not affect the other provisions of this Agreement and
shall be construed in all respects as if such invalid or
unenforceable provisions were omitted. While provisions of
this Agreement are considered by the parties to be fair and
reasonable in all the circumstances, it is agreed that if any
of such provisions shall be adjudged to be void or ineffective
for whatever reason, but would be adjudged to be valid and
effective if part of the wording thereof were deleted or the
periods thereof reduced or the area thereof reduced in scope,
the said restrictions shall apply with such modifications as
may be necessary to make them valid and effective.
15. Counterparts. This Agreement may be executed
in any number of counterparts and all such counterparts signed
in the aggregate by all parties hereto shall constitute a
single original instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereof have caused
this instrument to be duly executed as of the day and year
first above written.
COMPANY: CAMDEN TELEPHONE COMPANY, INC.
By: ___________________________
Name:
Title:
EMPLOYEE: ________________________________
Name: Brenda Elizalde
SIGNATURE PAGE TO
EMPLOYMENT AGREEMENT
BRENDA ELIZALDE
<PAGE>
EXHIBIT E-5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of ___________, 1995,
by and between CAMDEN TELEPHONE COMPANY, INC., an Indiana
corporation (the "Company"), and Pamela Brown ("Employee").
WHEREAS, pursuant to that certain Agreement and Plan
of Merger, dated as of __________, 1995, by and among
Telephone and Data Systems, Inc. ("TDS"), TDS-Camden
Acquisition Corp. ("Sub") and the Company, TDS has on the date
hereof acquired all of the outstanding capital stock of the
Company pursuant to a merger of Sub with and into the Company;
WHEREAS, the Employee has considerable knowledge and
experience regarding the business, affairs, customers and
operations of the Company (the "Business"); and
WHEREAS, in consideration of such knowledge and
experience, the Company desires to provide for the employment
of Employee under the terms and conditions as hereinafter set
forth;
NOW THEREFORE, in consideration of the foregoing and
the mutual promises and undertakings hereinafter set forth,
the parties hereto agree as follows:
1. Employment. The Company agrees to employ
Employee and Employee agrees to accept employment with the
Company in accordance with the terms and conditions
hereinafter contained.
2. Term. Subject to the right of the Company
under Section 6 to terminate Employee's employment, Employee
shall serve the Company for the term of ten (10) years
commencing on the date of this Agreement (the "Term") and
thereafter at the will of each of the Company and the Employee
until such employment is terminated by either party. If
Employee completes the full ten-year Term hereunder and
suitable employment opportunities then no longer exist at the
Company, Employee shall be offered employment opportunities at
other TDS companies.
3. Duties. Employee shall continue to serve as
Service Order Coordinator of the Company with substantially
the same duties and responsibilities as she currently has and
shall have such other responsibilities and shall perform such
other duties as shall be mutually established by the Company
and the Employee from time to time (the "Duties"). During
employment hereunder, Employee shall devote full time to the
business and affairs of the Company to perform such Duties,
and shall take no action, or fail to take any action, which
would jeopardize or impair in any way the Business
<PAGE>
and shall use such Employee's best efforts to advance the best
interests of the Company and TDS at all times.
4. Place of Performance. Except as mutually
agreed by Employee and the Company, Employee shall perform the
Duties hereunder at the offices of the Company but may be
required to travel and render services in different locations
from time to time, on a temporary basis only, in the
performance of such Duties.
5. Compensation and Benefits.
(a)(i) During the period from the date of this
Agreement until December 31, 1995, the Company shall pay to
Employee a salary at an annual rate equal to the annual rate
being paid by the Company to Employee on the date hereof.
(ii) During each calendar year during the Term
after December 31, 1995, the Company shall pay to Employee a
salary at an annual rate equal to the average compensation (as
reported in the annual National Telephone Company Association
("NTCA") survey) paid by reporting NTCA member companies
located in the Northeast Region to their Service Order
Coordinator (NTCA Table No. 34) during the prior year;
provided that, if Employee is promoted to a new position
within Camden during the Term, Employee's salary thereafter
shall be the average compensation so reported on the NTCA
Table which corresponds to such new position.
(b) The salary payable pursuant to paragraph (a) of
this Section shall be deemed to accrue ratably during the
calendar year and shall be paid according to the normal
payroll periods of the Company. In the event Employee's
employment is terminated pursuant to Section 6, payment shall
be made for the portion of the payroll period during which
Employee was employed on a pro rata basis.
(c) The salary arrangements pursuant to paragraph
(a) of this Section shall terminate upon the termination,
death or permanent disability of Employee and no further
payment thereof shall be made.
(d) The Employee shall be entitled to elect either
(i) to continue to participate in the 100% Company paid
medical, dental, long-term disability and group term insurance
plans provided by Lincoln National Life Insurance Company to
employees of the Company on the date hereof or (ii) to be
covered by the group medical, dental, disability and life
insurance plans maintained from time to time by TDS and
available to employees of TDS' other telephone company
subsidiaries, subject to all other eligibility requirements
applicable to TDS employees generally. Any election by
Employee to be covered by such TDS plans shall be final and
Employee shall thereafter have no right to elect or reelect to
be covered by the Company plans referred to in (i) above.
<PAGE>
(e) Reference is made to the Employment Agreement
dated the date hereof between Mr. Jack Ford and the Company
(the "Ford Agreement"). For so long as Mr. Ford continues to
be the General Manager of the Company pursuant to the Ford
Agreement (but not after the 10th anniversary of this
Agreement), Employee shall be entitled to continue to
participate in the Company's pension benefit plan (the
"Existing Camden Plan") unless such participation or the
continuation of the Existing Camden Plan after the date hereof
has the effect of terminating the tax-qualified status (under
Section 401(a) of the Internal Revenue Code) of the Existing
Camden Plan or the TDS Plan (as such term is defined below).
In such event (i) Employee's participation in the Existing
Camden Plan shall be terminated and Employee shall participate
in the then current TDS pension plan applicable to employees
of TDS' other telephone company subsidiaries (the "TDS Plan");
and (ii), if Employee should retire from the Company on or
prior to the date (the "Ford Termination Date") on which Jack
Ford is no longer employed by the Company pursuant to the Ford
Agreement, TDS shall, if necessary, supplement the benefits
available to Employee upon such retirement from the Company to
the extent necessary to make the aggregate retirement benefits
payable to Employee at least equal to those payable under the
Existing Camden Plan. From and after the Ford Termination
Date, Employee shall participate in the TDS Plan and TDS shall
have no obligation to supplement the benefits provided
thereunder. Upon retirement, Employee shall be entitled to
participate in the then existing TDS retirement medical and
insurance benefit programs, subject to clause (g) below.
(f) Employee shall be entitled to participate in
TDS' 401(k) Tax-Deferred Savings Plan and Trust and TDS'
Employee Stock Purchase Plan.
(g) For the purposes of clauses (d), (e) and (f)
above, and participation by Employee in the TDS employee or
retiree benefit plans mentioned therein, (i) Employee's
participation shall be subject to all eligibility standards
applicable to such plans applicable to all employees of TDS
and its affiliates and (ii) Employee shall be credited with
his prior years of service with Camden to the extent permitted
by such plans and standards.
(h) During the Term, the Employee will be entitled
to receive the customary $500 Christmas bonus paid by the
Company in the past.
(i) During the Term, the Employee shall be entitled
to receive, at the cost of the Company, local exchange
telephone service so long as Employee lives within the Camden
exchange area.
(j) During the Term, Employee shall be entitled to
the number of vacation days and holiday periods as are in
accordance with applicable TDS policy for employees of its
other telephone company subsidiaries.
<PAGE>
(k) For the first five years of the Term, the
Company's vehicle replacement program, as it exists on the
date hereof, shall remain in effect if applicable to Employee.
(l) Employee shall be entitled to reimbursement for
business travel and professional education related expenses in
accordance with TDS's standard company policy.
6. Termination. Without prejudice to any other
rights it may have, the Company shall have the right by notice
in writing given to Employee to terminate this Agreement and
the Employee's employment hereunder if:
(a) Employee shall be guilty of gross negligence in
connection with the Duties hereunder;
(b) Employee fails to satisfactorily perform the
Duties hereunder or to comply with reasonable directions or
regulations of the Company or TDS, or Employee fails to
observe and perform the terms and provisions of this
Agreement; or
(c) Employee shall be convicted of a crime
involving dishonesty or moral turpitude.
7. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the Company
and any successor to the Company, and any such successor shall
be deemed substituted for the Company under the provisions of
this Agreement. For the purposes of the Agreement, the term
"successor" shall mean any person, firm, corporation or other
business equity which at any time, whether by merger,
purchase, liquidation or otherwise, shall acquire all or
substantially all of the assets or business of the
Company. The Employee's obligations hereunder are hereby
expressly declared to be nonassignable and nontransferable.
8. Notices. Any notice given or required
hereunder may be served by personal delivery or by leaving the
same at or by sending the same by first-class post addressed
to:
(a) in the case of the Company, at its principal
executive office at the time being;
(b) in the case of the Employee, at the Employee's
address on the records of the Company; or
(c) in the case of either party, such other address
as shall have been notified in writing to the other party for
the purposes of service hereunder.
9. Termination of Existing Terms of
Service. Except as otherwise provided herein, this Agreement
is in substitution for all previous contracts or terms of
employment (express or implied)
<PAGE>
between the Company and the Employee, which shall be deemed to
have been terminated by mutual consent as of the date of this
Agreement.
10. Amendment. No modification, amendment or
waiver of any of the provisions of this Agreement shall be
effective unless in writing specifically referring hereto and
signed by both parties.
11. Entire Agreement. This instrument constitutes
the entire agreement of the parties hereto with respect to the
Employee's duties and obligations and compensation therefor.
12. No Waiver. The failure to enforce at any time
any of the provisions of this Agreement or to require at any
time performance by the other party of any of the provisions
hereof shall in no way be construed as a wavier of such
provisions or to affect either the validity of this Agreement,
or any party hereof, or the right of either party thereafter
to enforce each and every such provision in accordance with
the terms of this Agreement.
13. Governing Law. All questions pertaining to the
validity, construction, execution, and performance of this
Agreement shall be construed in accordance with and governed
by the laws of the State of Indiana.
14. Severability. The invalidity or
unenforceability of any particular provision of this Agreement
shall not affect the other provisions of this Agreement and
shall be construed in all respects as if such invalid or
unenforceable provisions were omitted. While provisions of
this Agreement are considered by the parties to be fair and
reasonable in all the circumstances, it is agreed that if any
of such provisions shall be adjudged to be void or ineffective
for whatever reason, but would be adjudged to be valid and
effective if part of the wording thereof were deleted or the
periods thereof reduced or the area thereof reduced in scope,
the said restrictions shall apply with such modifications as
may be necessary to make them valid and effective.
15. Counterparts. This Agreement may be executed
in any number of counterparts and all such counterparts signed
in the aggregate by all parties hereto shall constitute a
single original instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereof have caused
this instrument to be duly executed as of the day and year
first above written.
COMPANY: CAMDEN TELEPHONE COMPANY, INC.
By: ___________________________
Name:
Title:
EMPLOYEE: ________________________________
Name: Pamela Brown
SIGNATURE PAGE TO
EMPLOYMENT AGREEMENT
PAMELA BROWN
<PAGE>
FIRST SUPPLEMENTAL AGREEMENT
The First Supplemental Agreement is made and entered
into this 29th day of June, 1995 by and among Telephone and
Data Systems, Inc., an Iowa corporation ("TDS"), TDS-Camden
Acquisition Corp., an Indiana corporation and indirect,
wholly-owned subsidiary of TDS ("SUB"), and Camden Telephone
Company, Inc., an Indiana corporation ("Camden").
W I T N E S S E T H
WHEREAS, the parties hereto have entered into the
Agreement and Plan of Merger dated as of April 27, 1995 (the
"Merger Agreement") providing for the acquisition of Camden by
TDS by means of the merger of Sub with and into Camden (the
"Merger");
WHEREAS, the parties hereto desire to amend and
supplement the Merger Agreement to reflect their understanding
regarding the conversion of shares which will take place by
virtue of the Merger; and
WHEREAS, the terms used in the First Supplemental
Agreement which are defined in the Merger Agreement shall have
the respective meanings set forth in the Merger Agreement,
unless otherwise defined herein.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements hereinafter set forth, the parties
hereto hereby agree as follows:
1. Section 1.4(c) of the Merger Agreement is hereby
amended and restated in its entirety to read as follows:
"(c) Subject to Section 1.11, each Camden Share
issued and outstanding immediately prior to the Effective Date
(other than Dissenting Shares (as defined in Section 1.7))
shall be converted into the right to receive, from Sub, the
number of Common Shares, par value $1.00 per share, of TDS
(the "TDS Common Shares") equal to the quotient obtained by
dividing $20,000 by the Average Closing Price of the TDS
Common Shares; provided that (i) if the Average Closing Price
of the TDS Common Shares is equal to or greater than $39.125,
then each Camden Share issued and outstanding immediately
prior to the Effective Date shall be converted into the right
to receive 511.4286 TDS Common Shares and (ii), if the Average
Closing Price of the TDS Common Shares is less than $36, TDS
may, but shall not be required to, terminate this Agreement
without incurring any liability to Camden or its shareholders.
-1-
<PAGE>
The number of TDS Common Shares calculated in
accordance with the foregoing multiplied by 280 is hereinafter
referred to as the "Aggregate Merger Consideration." The
number of TDS Common Shares into which each Camden Share is
converted is hereinafter defined as the "Merger
Consideration."
For purposes of this Agreement, the term "Average
Closing Price" means the arithmetical average of the closing
price for TDS Common Shares as reported in the American Stock
Exchange Composite Transactions section of The Wall Street
Journal for the five trading days ending on the third trading
day prior to the Effective Date.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this First
Supplemental Agreement as of the date and year first above
written.
CAMDEN TELEPHONE COMPANY, INC.
________________________________
Name: James R. Sullivan
Title: President
TELEPHONE AND DATA SYSTEMS, INC.
________________________________
Name: LeRoy T. Carlson
Title: Chairman
TDS-CAMDEN ACQUISITION CORP.
________________________________
Name: George L. Dienes
Title: Vice President
SIGNATURE PAGE OF THE FIRST SUPPLEMENTAL AGREEMENT
TO THE AGREEMENT AND PLAN OF MERGER BY AND AMONG
CAMDEN TELEPHONE COMPANY, INC., TELEPHONE AND
DATA SYSTEMS, INC. AND TDS-CAMDEN ACQUISITION CORP.
<PAGE>
ANNEX B
INDIANA Business Corporation Law
CHAPTER 44
DISSENTERS' RIGHTS
(Added by P.L. 149-1986, L. '86, eff. 4-1-86.)
23-1-44-1 ["CORPORATION"]. - As used in this chapter,
"corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or
acquiring corporation by merger or share exchange of that
issuer.
23-1-44-2 ["DISSENTER"]. - As used in this chapter,
"dissenter" means a shareholder who is entitled to dissent
from corporate action under section 8 of this chapter and who
exercises that right when and in the manner required by
sections 10 through 18 of this chapter.
23-1-44-3 ["FAIR VALUE"]. - As used in this chapter, "fair
value", with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the
corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable.
23-1-44-4 ["INTEREST"]. - As used in this chapter,
"interest" means interest from the effective date of the
corporate action until the date of payment, at the average
rate currently paid by the corporation on its principal bank
loans or, if none, at a rate that is fair and equitable under
all the circumstances.
23-1-44-5 ["RECORD SHAREHOLDER"]. - As used in this
chapter, "record shareholder" means the person in whose name
shares are registered in the records of a corporation or the
beneficial owner of shares to the extent that treatment as a
record shareholder is provided under a recognition procedure
or a disclosure procedure established under IC 23-1-30-4.
23-1-44-6 ["BENEFICIAL SHAREHOLDER"]. - As used in this
chapter, "beneficial shareholder" means the person who is a
beneficial owner of shares held by a nominee as the record
shareholder.
23-1-44-7 ["SHAREHOLDER"]. - As used in this chapter,
"shareholder" means the record shareholder or the beneficial
shareholder.
23-1-44-8 ["WHEN SHAREHOLDER MAY DISSENT]. -(a) A
shareholder is entitled to dissent from, and obtain payment of
the fair value of the shareholder's shares in the event of,
any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation
is a party if:
(A) shareholder approval is required for the merger by
IC 23-1-40-3 or the articles of incorporation; and
(B) the shareholder is entitled to vote on the merger.
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired, if the shareholder is entitled to vote on the plan.
(3) 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,
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 one (1)
year after the date of sale.
(4) The approval of a control share acquisition under IC 23-
1-42.
(5) Any corporate action taken pursuant to a shareholder vote
to the extent the articles of incorporation, bylaws, or a
resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain
payment for their shares.
(b) This section does not apply to the holders of shares of
any class or series if, on the date fixed to determine the
shareholders entitled to receive notice of and vote at the
meeting of shareholders at which the merger, plan of share
exchange, or sale or exchange of property is to be acted on,
the shares of that class or series were:
<PAGE>
(1) registered on a United States securities exchange
registered under the Exchange Act (as defined in IC 23-1-43-
9); or
(2) traded on the National Association of Securities Dealers,
Inc. Automated Quotations System Over-the-Counter Markets --
National Market Issues or a similar market.
(c) A shareholder:
(1) who is entitled to dissent and obtain payment for the
shareholder's shares under this chapter; or
(2) who would be so entitled to dissent and obtain payment
but for the provisions of subsection (b);
may not challenge the corporate action creating (or that, but
for the provisions of subsection (b), would have created) the
shareholder's entitlement. (Last amended by P.L. 107-1987, L.
'87, eff. 5-1-87.)
_____
P.L. 107-1987, L. '87, eff. 5-1-87, added matter in
italic.
.1 Determination of stock value. - In determining value
of corporate stock for purposes of consolidation, every fact
which has tendency to indicate value should be taken into
consideration - value of shares must be determined from value
of assets, tangible and intangible; stock market value may be
of assistance but is not criterion; book value may or may not
give assistance, depending upon method by which books are
kept; statement of assets and liabilities based upon
appraisals is of more value than statement based upon
arbitrary figures; good will value should be given
consideration. Dissenting stockholders are not given
advantage of an increase in value expected to result from
merger, nor should they be charged with expense of bringing
about merger. Republic Finance Co v Fenstermaker, 6 NE2d 541
(1937).
Court fixing appraised value of stock owned by those
dissenting from merger must use fair market value as standard,
not book value or liquidating value; also, dissenters are
entitled to interest only from date of judgment determining
value, not from date of merger itself. General Grain, Inc v
Goodrich, 221 NE2d 696 (Ct App 1966).
Dissenting stockholders' shares in consolidated
corporation were valued by looking at (1) corporation as a
viable, going concern; (2) shares' value prior to merger; and
(3) shares' fair market value. Pearlman v Permonite Mfg Co,
568 FSupp 222 (ND Ind 1983).
District court properly valued dissenting stockholders'
shares, at price lower than offered in corporation's own
appraisal, which had been rejected by stockholders as too low.
Pearlman v Permonite Mfg Co, 734 F2d 1283 (7th Cir 1984).
.2 Remedy of dissenters. - Dissenting stockholders'
remedies are available in courts of incorporating state only.
McGhee v General Finance Corp, 84 FSupp 24 (WD Va 1949);
Sheridan v American Motors Corp, 132 FSupp 121 (ED Pa 1955).
Dissenting stockholder loses right to payment for his
shares when he registers objection by telegram but fails to
make written demand for payment. Shaffer v General Grain,
Inc, 182 NE2d 461 (Ct App 1962).
Stockholder dissenting from merger must give notice and
demand for payment of his shares to his own corporation rather
than to surviving corporation; but this requirement is met
when that notice is served on resident agent who is same for
both corporations. Apartment Properties, Inc v Luley, 247
NE2d 71 (1969).
.3 Right to interest. - Stockholders dissenting from
merger are entitled to interest only from date of judgment
determining value, not from date of merger itself. General
Grain, Inc v Goodrich, 221 NE2d 696 (Ct App 1966).
.4 Standing. - Shareholders of a failing bank who had
filed suit alleging fraud and breach of fiduciary duty lost
standing to sue when bank was acquired on cash-for-shares
basis; any remedy would have involved a statutory demand for
fair valuation of their shares. United States Fidelity and
Guaranty v Griffin, 541 NE2d 553 (Ct App 1989).
<PAGE>
23-1-44-9 [DISSENTERS' RIGHTS WITH RESPECT TO FEWER THAN
ALL SHARES REGISTERED IN SHAREHOLDER'S NAME]. - (a) A record
shareholder may assert dissenters' rights as to fewer than all
the shares registered in the shareholder's name only if the
shareholder dissents with respect to all shares beneficially
owned by any one (1) person and notifies the corporation in
writing of the name and address of each person on whose behalf
the shareholder asserts dissenters' rights. The rights of a
partial dissenter under this subsection are determined as if
the shares as to which the shareholder dissents and the
shareholder's other shares were registered in the names of
different shareholders.
(b) A beneficial shareholder may assert dissenters'
rights as to shares on the shareholder's behalf only if:
(1) the beneficial shareholder submits to the
corporation the record shareholder's written consent to the
dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) the beneficial shareholder does so with respect to
all the beneficial shareholder's shares or those shares over
which the beneficial shareholder has power to direct the vote.
23-1-44-10 [NOTICE OF PROPOSED ACTION CREATING DISSENTERS'
RIGHTS]. - (a) If proposed corporate action creating
dissenters' rights under section 8 of this chapter is
submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to
assert dissenters' rights under this chapter.1
(b) If corporate action creating dissenters' rights
under section 8 of this chapter is taken without a vote of
shareholders, the corporation shall notify in writing all
shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice
described in section 12 of this chapter. (Last amended by
H.B. 1756, L. '87, eff. 5-1-87.)
_____
H.B. 1756, L. '87, eff. 5-1-87, added matter in italic
and deleted 1"and be accompanied by a copy of this chapter".
23-1-44-11 [NOTICE OF SHAREHOLDER'S INTENT TO ASSERT
DISSENTERS' RIGHTS]. - (a) If proposed corporate action
creating dissenters' rights under section 8 of this chapter is
submitted to a vote at a shareholders' meeting, a shareholder
who wishes to assert dissenters' rights:
(1) must deliver to the corporation before the vote is
taken written notice of the shareholder's intent to demand
payment for the shareholder's shares if the proposed action is
effectuated; and
(2) must not vote the shareholder's shares in favor of
the proposed action.
(b) A shareholder who does not satisfy the requirements
of subsection (a) is not entitled to payment for the
shareholder's shares under this chapter.
23-1-44-12 [DISSENTERS' NOTICE]. - (a) If proposed
corporate action creating dissenters' rights under section 8
of this chapter is authorized at a shareholders' meeting, the
corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of section 11 of
this chapter.
(b) The dissenters' notice must be sent no later than
ten (10) days after approval by the shareholders, or if
corporate action is taken without approval by the
shareholders, then ten (10) days after the corporate action
was taken. The dissenters' notice must:
(1) state where the payment demand must be sent and
where and when certificates for certificated shares must be
deposited;
(2) inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the
payment demand is received;
(3) supply a form for demanding payment that includes
the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action and
requires that the person asserting dissenters' rights certify
whether or not the person acquired beneficial ownership of the
shares before that date;
(4) set a date by which the corporation must receive the
payment demand, which date may not be fewer than thirty (30)
nor more than sixty (60) days after the date the subsection
(a) notice is delivered; and
(5) be accompanied by a copy of this chapter.
<PAGE>
23-1-44-13 [DEMAND]. - (a) A shareholder sent a dissenters'
notice described in IC 23-1-42-11 or in section 12 of this
chapter must demand payment, certify whether the shareholder
acquired beneficial ownership of the shares before the date
required to be set forth in the dissenters' notice under
section 12(b)(3) of this chapter, and deposit the
shareholder's certificates in accordance with the terms of the
notice.
(b) The shareholder who demands payment and deposits the
shareholder's shares under subsection (a) retains all other
rights of a shareholder until these rights are cancelled or
modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit
the shareholder's share certificates where required, each by
the date set in the dissenters' notice, is not entitled to
payment for the shareholder's shares under this chapter and is
considered, for purposes of this article, to have voted the
shareholder's shares in favor or the proposed corporate
action.
23-1-44-14 [TRANSFER OF UNCERTIFICATED SHARES]. - (a) The
corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until
the proposed corporate action is taken or the restrictions
released under section 16 of this chapter.
(b) The person for whom dissenters' rights are asserted
as to uncertificated shares retains all other rights of a
shareholder until these rights are cancelled or modified by
the taking of the proposed corporate action.
23-1-44-15 [PAYMENT OF FAIR VALUE]. - (a) Except as
provided in section 17 of this chapter, as soon as the
proposed corporate action is taken, or, if the transaction did
not need shareholder approval and has been completed, upon
receipt of a payment demand, the corporation shall pay each
dissenter who complied with section 13 of this chapter the
amount the corporation estimates to be the fair value of the
dissenter's shares.
(b) The payment must be accompanied by:
(1) the corporation's balance sheet as of the end of a
fiscal year ending not more than sixteen (16) months before
the date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year,
and the latest available interim financial statements, if any;
(2) a statement of the corporation's estimate of the
fair value of the shares; and
(3) a statement of the dissenter's right to demand
payment under section 18 of this chapter. 1 (Last amended by
H.B. 1756, L. '87, eff. 5-1-87.)
_____
H.B. 1756, L. '87, eff. 5-1-87, added matter in italic
and deleted 1 "; and (4) a copy of this chapter".
23-1-44-16 [RETURN OF DEPOSITED CERTIFICATES-RELEASE OF
TRANSFER RESTRICTIONS]. - (a) If the corporation does not
take the proposed action within sixty (60) days after the date
set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated
shares.
(b) If after returning deposited certificates and
releasing transfer restrictions, the corporation takes the
proposed action, it must send a new dissenters' notice under
section 12 of this chapter and repeat the payment demand
procedure.
23-1-44-17 [WITHHOLDING PAYMENT]. - (a) A corporation may
elect to withhold payment required by section 15 of this
chapter from a dissenter unless the dissenter was the
beneficial owner of the shares before the date set forth in
the dissenters' notice as the date of the first announcement
to news media or to the shareholders of the terms of the
proposed corporate action.
(b) To the extent the corporation elects to withhold
payment under subsection (a), after taking the proposed
corporate action, it shall estimate the fair value of the
shares and shall pay this amount to each dissenter who agrees
to accept it in full satisfaction of the dissenter's demand.
The corporation shall send with its offer a statement of its
estimate of the fair value of the shares and a statement of
the dissenters' right to demand payment under section 18 of
this chapter.
23-1-44-18 [DISSENTERS' ESTIMATE]. - (a) A dissenter may
notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and
demand payment of the dissenter's estimate (less any payment
under section 15 of this chapter), or reject the corporation's
offer under section 17 of this chapter and demand payment of
the fair value of the dissenter's shares, if:
<PAGE>
(1) the dissenter believes that the amount paid under
section 15 of this chapter or offered under section 17 of this
chapter is less than the fair value of the dissenter's shares;
(2) the corporation fails to make payment under section
15 of this chapter within sixty (60) days after the date set
for demanding payment; or
(3) the corporation, having failed to take the proposed
action, does not return the deposited certificates or release
the transfer restrictions imposed on uncertificated shares
within sixty (60) days after the date set for demanding
payment.
(b) A dissenter waives the right to demand payment under
this section unless the dissenter notifies the corporation of
the dissenter's demand in writing under subsection (a) within
thirty (30) days after the corporation made or offered payment
for the dissenter's shares.
23-1-44-19 [APPRAISAL PROCEEDING]. - (a) If a demand for
payment under IC 23-1-42-11 or under section 18 of this
chapter remains unsettled, the corporation shall commence a
proceeding within sixty (60) days after receiving the payment
demand and petition the court to determine the fair value of
the shares. If the corporation does not commence the
proceeding within the sixty (60) day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the
circuit or superior court of the county where a corporation's
principal office (or, if none in Indiana, its registered
office) is located. If the corporation is a foreign
corporation without a registered office in Indiana, it shall
commence the proceeding in the county in Indiana where the
registered office of the domestic corporation merged with or
whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters (whether
or not residents of this state) whose demands remain unsettled
parties to the proceeding as in an action against their shares
and all parties must be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or
by publication as provided by law.
(d) The jurisdiction of the court in which the
proceeding is commenced under subsection (b) is plenary and
exclusive. The court may appoint one (1) or more persons as
appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers
described in the order appointing them or in any amendment to
it. The dissenters are entitled to the same discovery rights
as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is
entitled to judgment:
(1) for the amount, if any, by which the court finds the
fair value of the dissenter's shares, plus interest, exceeds
the amount paid by the corporation; or
(2) for the fair value, plus accrued interest, of the
dissenter's after-acquired shares for which the corporation
elected to withhold payment under section 17 of this chapter.
23-1-44-20 [DETERMINATION OF COSTS OF APPRAISAL
PROCEEDING]. - (a) The court in an appraisal proceeding
commenced under section 19 of this chapter shall determine all
costs of the proceeding, including the reasonable compensation
and expenses of appraisers appointed by the court. The court
shall assess the costs against such parties and in such
amounts as the court finds equitable.
(b) The court may also asses the fees and expenses of
counsel and experts for the respective parties, in amounts the
court finds equitable:
(1) against the corporation and in favor of any or all
dissenters if the court finds the corporation did not
substantially comply with the requirements of sections 10
through 18 of this chapter; or
(2) against either the corporation or a dissenter, in
favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this chapter.
(c) If the court finds that the services of counsel for
any dissenter were of substantial benefit to other dissenters
similarly situated and that the fees for those services should
not be assessed against the corporation, the court may award
to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 4 of the Iowa Business Corporation Act, as amended,
provides for indemnification of directors and officers in a
variety of circumstances, which may include liabilities under
the Securities Act of 1933. Article VI-A of TDS's By-laws
provides for indemnification of TDS's directors and officers
(and those serving in such capacity with another corporation
at the request of TDS) in the circumstances, and to the
extent, covered by insurance.
TDS has directors' and officers' liability insurance which
provides, subject to certain policy limits, deductible amounts
and exclusions, coverage for all persons who have been, or may
in the future be, directors and officers of TDS, against
amounts which such persons must pay resulting from the claims
against them by reason of their being such directors or
officers during the policy period for certain breaches of
duty, omissions or other acts done or wrongfully attempted or
alleged.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
Exhibit
No. Description of Document
2(i) Agreement and Plan of Merger dated as of
April 27, 1995 by and among TDS, TDS-Camden
Acquisition Corp. and Camden Telephone
Company, Inc., including the First
Supplemental Agreement thereto dated as of
June 29, 1995 (included as Annex to the
Proxy Statement - Prospectus, except for
exhibits and schedules which will be
supplied supplementally to the Commission
upon request).
3(i) Articles of Incorporation, as amended, are
hereby incorporated by reference to an
exhibit to TDS's Report on Form 8-A/A-2
dated December 20, 1994.
3(ii) By-laws, as amended, are hereby
incorporated by reference to an exhibit to
TDS's Report on Form 8-A/A-2 dated December
20, 1994.
4(i) Specimen copy of certificate representing
TDS Common Shares is hereby incorporated by
reference to an exhibit to TDS's Report on
form 8-A/A-2 dated December 20, 1994.
5 Opinion of Sidley and Austin.
23.1 Consent of independent public accountants.
23.2 Consent of independent accounts.
23.3 Consent of Kehlebrink, Lawrence & Paukner
23.4 Consent of Sidley & Austin (included in
Exhibit 5).
99 Form of Proxy.
II-1
<PAGE>
(b) Schedules
Report of Independent Public Accountants on Financial
Statement Schedules*
Schedule I Condensed Financial Information of
Registrant - Balance Sheets as of
December 31, 1994 and 1993 and Statements
of Income and Statements of Cash Flows for
each of the Three Years in the Period Ended
December 31, 1994.*
Schedule II Valuation and Qualifying Accounts for each
of the Three Years in the Period Ended
December 31, 1994.*
All other schedules are omitted because they are not
applicable or not required or because the required information
is shown in the financial statements or notes thereto.
---------------------------
* Incorporated herein by referebce to TDS's Annual Report on
Form 10-K for the Year Ended December 31, 1994.
II-2
<PAGE>
Item 22. Undertakings
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to 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 such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes as
follows: prior to any public offering 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 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.
The registrant undertakes that every prospectus
(i) that is filed pursuant to the immediately preceding
paragraph or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in
connection with the 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 bona fide offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors and
officers of the registrant pursuant to the provisions
described pursuant to Item 20 above, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities 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 or
officer of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the registrant
by such director or officer 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 Securities Act and will be governed
by the final adjudication of such issue.
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.
The undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information
concerning a transaction, and the company is being acquired
involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, the Registrant has duly caused this
Registration Statement or Amendment to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of
Chicago, State of Illinois on the 5th day of July, 1995.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LeRoy T. Carlson
------------------------------
LeRoy T. Carlson, Chairman
Pursuant to the requirements of the Securities Act of
1933, as amended, this Registration Statement or Amendment has
been signed below by the following persons in the capacities
and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ LeRoy T. Carlson
----------------------------
LeRoy T. Carlson Chairman and Director July 5, 1995
/s/ LeRoy T. Carlson, Jr.
----------------------------
LeRoy T. Carlson, Jr. President and Director July 5, 1995
(chief executive officer)
/s/ Murray L. Swanson
----------------------------
Murray L. Swanson Executive Vice President- July 5, 1995
Finance and Director
(chief financial officer)
/s/ Rudolph E. Hornacek
----------------------------
Rudolph E. Hornacek Director July 5, 1995
/s/ James Barr III
----------------------------
James Barr III Director July 5, 1995
/s/ Lester O. Johnson
----------------------------
Lester O. Johnson Director July 5, 1995
/s/ Donald C. Nebergall
----------------------------
Donald C. Nebergall Director July 5, 1995
/s/ Herbert S. Wander
----------------------------
Herbert S. Wander Director July 5, 1995
/s/ Walter C.D. Carlson
----------------------------
Walter C.D. Carlson Director July 5, 1995
/s/ Donald R. Brown
----------------------------
Donald R. Brown Director July 5, 1995
/s/ Robert J. Collins
----------------------------
Robert J. Collins Director July 5, 1995
/s/ Gregory J. Wilkinson
----------------------------
Gregory J. Wilkinson Controller (principal July 5, 1995
accounting officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description of Documents
--------------------------------------------------------------
2(i) Agreement and Plan of Merger dated as
of April 27, 1995 by and among TDS,
TDS-Camden Acquisition Corp. and Camden
Telephone Company, Inc., including the
First Supplemental Agreement thereto
dated as of June 29, 1995 (included as
Annex to the Proxy Statement-
Prospectus, except for exhibits and
schedules which will be supplied
supplementally to the Commission upon
request).
3(i) Articles of Incorporation, as amended,
are hereby incorporated by reference to
an exhibit to TDS's Report on Form 8-A/
A-2 dated December 20, 1994.
3(ii) By-laws, as amended, are hereby
incorporated by reference to an exhibit
to TDS's Report on Form 8-A/A-2 dated
December 20, 1994.
4(i) Specimen copy of certificate
representing TDS Common Shares in
hereby incorporated by reference to an
exhibit to TDS's Report on form 8-A/A-2
dated December 20, 1994.
5 Opinion of Sidley and Austin.
23.1 Consent of independent public
accountants.
23.2 Consent of independent accounts.
23.3 Consent of Kehlebrink, Lawrence &
Paukner.
23.4 Consent of Sidley & Austin (included in
Exhibit 5).
99 Form of Proxy.
<PAGE>
EXHIBIT 5
SIDLEY & AUSTIN
One First National Plaza
Chicago, Illinois 60603
July 5, 1995
Telephone and Data Systems, Inc.
30 North LaSalle Street
40th Floor
Chicago, Illinois 60602
Re: 175,000 Common Shares, $1.00 par value
--------------------------------------
Ladies and Gentlemen:
We are counsel to Telephone and Data Systems, Inc., an Iowa
corporation (the "Company"), and have represented the Company
with respect to the Registration Statement on Form S-4 (the
"Registration Statement") being filed by the Company with the
Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Securities Act"), relating to the
registration of 175,000 Common Shares, $1.00 par value (the
"Shares"), of the Company.
In rendering this opinion, we have examined and relied upon
a copy of the Registration Statement. We have also examined
originals, or copies of originals certified to our satisfaction,
of such agreements, documents, certificates and other statements
of governmental officials and other instruments, and have
examined such questions of law and have satisfied ourselves as to
such matters of fact, as we have considered relevant and
necessary as a basis for this opinion. We have assumed the
authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the legal capacity of all natural
persons and the conformity with the original documents of any
copies thereof submitted to us for our examination.
Based on the foregoing, we are of the opinion that:
1. The Company is a duly incorporated and validly
existing under the laws of the State of Iowa.
2. The Shares will be legally issued, fully paid and
non-assessable when (i) the Registration Statement, as finally
amended, shall have become effective under the Securities Act,
(ii) the Shares shall have been duly issued and sold in the
manner contemplated by the Registration Statement and the
resolutions of the Board of Directors authorizing the issuance
and sale of the Shares and (iii) certificates representing the
Shares shall have been duly executed, countersigned and
registered and duly delivered to the purchasers thereof against
payment of the agreed consideration therefor.
We do not find it necessary for the purposes of this opinion
to cover, and accordingly we express as to, the application of
the securities or blue sky laws of the various states to the sale
of the Shares.
Except as expressly stated in the next sentence, this
opinion is limited to the laws of the State of Illinois and the
laws of the United States of America (excluding the Federal
Communications Act, as amended, and the rules and regulations
thereunder) to the extent applicable. Insofar as the opinions
expressed above relate to the laws of the State of Iowa, we have
not made an independent examination of such laws, but have relied
as to such laws upon the opinion of Nyemaster, Goode, McLaughlin,
Voigts, West, Hansell & O'Brien, P.C. of Des Moines, Iowa, which
is attached hereto.
<PAGE>
TDS is controlled by a voting trust. Walter C.D. Carlson, a
trustee and beneficiary of the voting trust which controls TDS
and a director of TDS, Michael G. Hron, the Secretary of TDS, and
William S. DeCarlo, the Assistant Secretary of TDS, are partners
of this Firm.
We hereby consent to the filing of this opinion as an
Exhibit to the Registration Statement and to all references to
our firm included in or made a part of the Registration
Statement.
Very truly yours,
<PAGE>
515-283-3166
July 5, 1995
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Re: Telephone and Data Systems, Inc.
S-4 Registration Statement
Ladies and Gentlemen:
We have acted as your Iowa counsel with respect to the
Registration Statement on Form S-4 (the "Registration
Statement") being filed by Telephone and Data Systems, Inc.
(the "Company") with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the registration of 175,000 Common Shares,
$1.00 par value (the "Shares"), of the Company to be issued in
connection with the Agreement and Plan of Merger dated as of
April 27, 1995, as amended on June 29, 1995, by and among the
Company, TDS-Camden Acquisition Corp. and Camden Telephone
Company, Inc.
We have examined such records, documents and questions of
law as we have considered relevant and necessary as a basis
for this opinion. As to matters of fact material to our
opinions, we have with your agreement relied upon certificates
of officers of the Company. We have assumed with your
agreement the authenticity of all documents submitted to us as
originals, the conformity with the original documents of any
copies submitted to us for our examination and the
authenticity of the original of any such copies..
Based on the foregoing, it is our opinion that:
1. The Company is duly incorporated and validly
existing under the laws of the State of Iowa.
2. The Shares will be legally issued, fully paid and
non-assessable when: (i) the Registration Statement, as
finally amended, shall have become effective under the
Securities Act; (ii)
<PAGE>
Sidley & Austin
July 5, 1995
Page 2
the Company's Board of Directors shall have duly adopted final
resolutions authorizing the issuance and sale of the Shares
and determining the adequacy of the consideration to be
received in exchange for the Shares; (iii) the Shares shall
have been duly issued and sold in the manner contemplated by
the Registration Statement; and (iv) certificates representing
the Shares shall have been duly executed, countersigned and
registered and duly delivered to the purchasers thereof
against payment of the agreed consideration therefor.
We are admitted to the Bar of the State of Iowa, and
express no opinion herein as to the laws of any other
jurisdiction, including the laws of the United States of
America.
Except as expressly set forth herein, we express no
opinion, and no opinion is implied or may be inferred, in
connection with the Registration Statement or the issuance of
the Shares. Without limiting the generality of the foregoing,
we express no opinion with respect to the securities or blue
sky laws of the various states.
This opinion is being delivered solely for the benefit of
the persons to whom it is addressed; accordingly, it may not
be quoted, filed with any governmental authority or other
regulatory agency or otherwise circulated or utilized for any
other purpose without our prior written consent. Sidley &
Austin may refer to or quote from this opinion in its
discretion in connection with opinions it may be requested or
required to give in connection with the Registration
Statement.
The undersigned law firm also hereby consents to the
filing of this opinion as an Exhibit to the Registration
Statement and to the use of its name in the Registration
Statement.
Very truly yours,
NYEMASTER, GOODE, McLAUGHLIN,
VOIGTS, WEST, HANSELL &
O'BRIEN, P.C.
By__________________________
Mark C. Dickinson
MCD:dkr
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent
to the incorporation by reference in this Form S-4
Registration Statement of Telephone and Data Systems, Inc. of
our report dated February 7, 1995 (except with respect to the
matters discussed in Note 12 and Note 14, as to which the date
is March 14, 1995), on the consolidated financial statements
of Telephone and Data Systems, Inc. and Subsidiaries,
incorporated by reference in the Telephone and Data Systems,
Inc. Form 10-K for the year ended December 31, 1994, to the
incorporation by reference in this Form S-4 Registration
Statement of our report dated February 7, 1995 (except with
respect to the matters discussed in Note 12 and Note 14, as to
which the date is March 14, 1995), on the financial statement
schedules of Telephone and Data Systems, Inc., included in the
Telephone and Data Systems, Inc. Form 10-K for the year ended
December 31, 1994, and to the incorporation by reference in
this Form S-4 Registration Statement of our compilation report
dated February 17, 1995, on the combined financial statements
of the Los Angeles SMSA Limited Partnership, the
Nashville/Clarksville MSA Limited Partnership and the Baton
Rouge MSA Limited Partnership, included in the Telephone and
Data Systems, Inc. Form 10-K for the year ended
December 31, 1994. We also consent to all references to our
Firm included in this Form S-4 Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
July 12, 1995
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Form S-4 Registration Statement of Telephone and Data
Systems, Inc. of our report, which includes explanatory
paragraphs relating to contingencies, dated February 17, 1995, on
our audits of the financial statements of the Los Angeles SMSA
Limited Partnership as of December 31, 1994 and 1993, and for each
of the three years in the period ended December 31, 1994,
included in the Telephone and Data Systems, Inc. Annual Report on
Form 10-K for the year ended December 31, 1994; such financial
statements were not included separately in such Form 10-K.
COOPERS & LYBRAND L.L.P.
Newport Beach, California
July 12, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Form S-4 Registration Statement of Telephone and Data
Systems, Inc. of our reports dated February 10, 1995, February
11, 1994 and February 11, 1993, on our audits of the financial
statements of the Nashville/Clarksville MSA Limited Partnership
as of December 31, 1994, 1993 and 1992 and for the years ended
December 31, 1994, 1993 and 1992, included in the Telephone and
Data Systems, Inc. Annual Report on Form 10-K for the year ended
December 31, 1994; such financial statements were not included
separately in such Form 10-K.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
July 12, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Form S-4 Registration Statement of Telephone and Data
Systems, Inc. of our reports dated February 10, 1995, February
11, 1994 and February 11, 1993, on our audits of
the financial statements of the Baton Rouge MSA Limited
Partnership as of December 31, 1994, 1993 and 1992 and for the
years ended December 31, 1994, 1993 and 1992, included in the
Telephone and Data Systems, Inc. Annual Report on Form 10-K for
the year ended December 31, 1994; such financial statements were
not included separately in such Form 10-K.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
July 12, 1995
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in the Proxy
Statement of Camden Telephone Company, Inc. and Prospectus of
Telephone and Data Systems, Inc. included in this Form S-4
Registration Statement of Telephone and Data Systems, Inc. of
our report dated January 11, 1995, on our audits of the
financial statements of Camden Telephone Company, Inc. as of
December 31, 1994 and 1993 and for the years ended
December 31, 1994, 1993 and 1992. We also consent to all
references to our Firm included in this Form S-4 Registration
Statement.
KEHLENBRINK, LAWRENCE & PAUCKNER
Indianapolis, Indiana
July 12, 1995
<PAGE>
EXHIBIT 99
PROXY
CAMDEN TELEPHONE COMPANY, INC.
170 West Main Street
Camden, Indiana 46917-0066
This Proxy is Solicited on Behalf of the Board of Directors.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY USING THE ENCLOSED
ENVELOPE.
The undersigned hereby appoints ____________ and
__________ and either of them as Proxies, each with the power to
appoint his or her substitute, and hereby authorizes them or
either of them to represent and to vote all the shares of capital
stock, Common, no par value, of Camden Telephone Company, Inc.,
held on record by the undersigned on ___________, 1995, at the
special meeting of shareholders to be held on __________, 1995,
and any adjournment or adjournments thereof, as described below
on the following Proposals and also, as such proxies may in their
discretion determine, upon all other matters of business as may
properly come before such meeting and any adjournment or
adjournments thereof.
PROPOSAL 1. The approval and adoption of the Agreement
and Plan of Merger dated as of April 27, 1995, as amended by the
First Supplemental Agreement dated June 29, 1995, by and among
Telephone and Data Systems, Inc. ("TDS"), TDS-Camden Acquisition
Corp. ("Sub") and Camden Telephone Company, Inc. ("Camden"),
providing for the merger of Sub with and into Camden, as set
forth in the accompanying Proxy Statement-Prospectus.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on reverse side)
<PAGE>
PROPOSAL 2. The adjournment or adjournments of the
special meeting of shareholders if a quorum is not obtained.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned. If no direction is
made, this proxy will be voted FOR the Proposal 1 and Proposal 2.
Please sign exactly as your name appears on your Camden stock
certificate. When shares are held by joint tenants, both should
sign. When signing as attorney, 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 the
partnership name by authorized person.
Date:____________________, 1995 ______________________________
Signature
______________________________
Signature(s), if held jointly
<PAGE>
