STOCK PURCHASE AGREEMENT
among
MJD SERVICES CORP.,
XXXXX X. XXXXXXXX,
and
RAVENSWOOD COMMUNICATIONS, INC.
dated as of October 16, 1998
TABLE OF CONTENTS
This Table of Contents is not part of this Agreement but is attached for
convenience only.
ARTICLE I.
PURCHASE OF STOCK......................................................2
Section 1.1 Purchase and Sale.................................2
Section 1.2 Purchase Price....................................2
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE SELLER...........................2
Section 2.1 Corporate Organization............................2
Section 2.2 Authorization.....................................3
Section 2.3 No Violation......................................3
Section 2.4 Affiliates and Investments........................4
Section 2.5 Stock Record Book.................................4
Section 2.6 Corporate Books...................................4
Section 2.7 Title to Stock....................................5
Section 2.8 Options and Rights................................5
Section 2.9 Financial Statements..............................5
Section 2.10 Employees.........................................6
Section 2.11 Absence of Certain Changes........................7
Section 2.12 Contracts.........................................8
(a) Generally..................................8
(b) Compliance.................................9
Section 2.13 True and Complete Copies..........................9
Section 2.14 Title and Related Matters........................10
(a) Owned Property............................10
(b) Leased Property...........................10
(c) Liens.....................................10
(d) Utilities.................................11
(e) Condition.................................11
Section 2.15 Litigation.......................................11
Section 2.16 Tax Matters......................................12
(a) Generally.................................12
(b) Good Faith................................12
(c) Claims....................................12
(d) Course of Business........................13
(e) Withholdings..............................13
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(f) Partnerships..............................13
(g) Accounting Method Adjustments.............13
(h) Tax Exemptions............................13
(i) Tax Return Reviews........................13
(j) Power of Attorney.........................13
(k) True and Complete Copies..................14
Section 2.17 Bank and Brokerage Accounts......................14
Section 2.18 Compliance with Applicable Laws, Regulations
and Orders......................................14
Section 2.19 Employee Benefit Plans...........................14
Section 2.20 Intellectual Property............................18
Section 2.21 Environmental Matters............................18
(a) Generally.................................18
(b) Property..................................19
(c) Transportation............................19
(d) Notification of Release...................19
(e) Liens.....................................19
(f) Site Assessments..........................19
Section 2.22 Capital Expenditures and Investments.............20
Section 2.23 Dealings with Affiliates.........................20
Section 2.24 Insurance........................................20
Section 2.25 Commissions......................................20
Section 2.26 Permits and Reports..............................21
Section 2.27 Absence of Undisclosed Liabilities...............21
Section 2.28 Disclosure.......................................22
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......................22
Section 3.1 Corporate Organization...........................22
Section 3.2 Authorization....................................23
Section 3.3 No Violation.....................................23
Section 3.4 Investment Intent................................23
Section 3.5 Commissions......................................23
Section 3.6 Litigation.......................................23
Section 3.7 Disclosure.......................................24
ARTICLE IV.
COVENANTS OF THE SELLER AND THE COMPANY...............................24
Section 4.1 Regular Course of Business.......................24
(a) Generally.................................24
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(b) Compensation..............................24
(c) Insurance.................................25
(d) Claims....................................25
(e) Supplement................................25
Section 4.2 Amendments.......................................25
Section 4.3 Capital Changes..................................25
Section 4.4 Dividends........................................25
Section 4.5 Capital Expenditures.............................25
Section 4.6 Borrowing........................................25
Section 4.7 Property.........................................26
Section 4.8 Other Commitments................................26
Section 4.9 Financial Information............................26
Section 4.10 Consents and Authorizations......................26
Section 4.11 Access...........................................26
Section 4.12 Notice of Transfer...............................26
Section 4.13 Payment of Stamp Tax.............................27
Section 4.14 Disclosure.......................................27
Section 4.15 Cooperation with Purchaser.......................27
Section 4.16 Payment of Estate Tax Liability..................27
Section 4.17 Purchase Price Escrow Agreement..................27
ARTICLE V.
COVENANTS OF THE PURCHASER............................................28
Section 5.1 Consents and Authorizations......................28
Section 5.2 Insurance Continuation...........................28
Section 5.3 Filings..........................................28
Section 5.4 Notice of Transfer...............................28
Section 5.5 Cooperation with Seller and Company..............28
Section 5.6 Supplement.......................................29
ARTICLE VI.
OTHER AGREEMENTS......................................................29
Section 6.1 Agreement to Defend..............................29
Section 6.2 Further Assurances...............................29
Section 6.3 Consents.........................................29
Section 6.4 No Solicitation or Negotiation...................30
Section 6.5 No Termination of the Obligations by
Subsequent Dissolution..........................30
Section 6.6 Public Announcements.............................30
Section 6.7 Records and Information..........................30
(a) Retention of Records......................30
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(b) Access to Information.....................31
(c) Provisions of Corporate Records...........31
(d) Witnesses.................................31
Section 6.8 Insurance Policies and Claims Administration.....32
(a) Insurance Coverage Prior to the Closing
Date....................................32
(b) Insurance Coverage After the Closing
Date ...................................32
Section 6.9 Other Tax Matters................................33
(a) Tax Returns...............................33
(b) Information...............................33
(c) Amended Returns...........................33
ARTICLE VII.
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER........................34
Section 7.1 Representations and Warranties; Covenants
and Deliveries..................................34
Section 7.2 Consents and Approvals...........................35
Section 7.3 No Material Adverse Change.......................35
Section 7.4 No Proceeding or Litigation......................35
Section 7.5 Secretary's Certificate..........................35
Section 7.6 Certificates of Good Standing....................36
Section 7.7 Opinion of Seller's Counsel......................36
Section 7.8 Resignations.....................................36
Section 7.9 Other Documents..................................36
Section 7.10 Liens............................................36
Section 7.11 Delivery of Minute Books and Investment
Certificates....................................36
Section 7.12 Delivery of Unaudited Financial Statements ......36
ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF THE SELLER...........................36
Section 8.1 Representations and Warranties...................36
Section 8.2 Consents and Approvals...........................37
Section 8.3 No Proceeding or Litigation......................37
Section 8.4 Secretary's Certificate..........................37
Section 8.5 Opinion of Purchaser's Counsel...................38
Section 8.6 Certificates of Good Standing....................38
Section 8.7 Other Documents..................................38
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ARTICLE IX.
CLOSING...............................................................38
Section 9.1 Closing..........................................38
Section 9.2 Closing Date Payment and Receipt of Shares ......38
ARTICLE X.
TERMINATION AND ABANDONMENT...........................................40
Section 10.1 Methods of Termination...........................40
(a) Mutual Consent............................40
(b) Seller's Failure to Perform...............40
(c) Purchaser's Failure to Perform............40
(d) Failure to Close by July 31, 1999.........40
(e) Material Adverse Change...................40
(f) Remedies..................................40
Section 10.2 Procedure Upon Termination.......................41
(a) Return of Records.........................41
(b) Confidentiality...........................41
(c) Breakup Fee...............................41
Section 10.3 Exclusive Remedy.................................42
ARTICLE XI.
SURVIVAL OF TERMS; INDEMNIFICATION....................................42
Section 11.1 Survival; Limitations............................42
Section 11.2 Escrow of Liquid Assets..........................43
Section 11.3 Indemnification by the Seller....................43
(a) Misrepresentation or Breach...............43
(b) Taxes.....................................43
(c) Third Party Claims. .....................43
(d) Related Expenses..........................44
Section 11.4 Indemnification by the Purchaser.................44
(a) Misrepresentation or Breach...............44
(b) Taxes.....................................44
(c) Third Party Claims........................44
(d) Related Expenses..........................44
Section 11.5 Third Party Claims...............................44
(a) Generally.................................44
(b) Counsel...................................46
Section 11.6 Other Claims.....................................46
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Section 11.7 Continued Liability for Indemnity Claims ........48
Section 11.8 Exclusive Remedy.................................48
ARTICLE XII.
GENERAL PROVISIONS....................................................48
Section 12.1 Amendment and Modification.......................48
Section 12.2 Waiver...........................................48
Section 12.3 Certain Definitions..............................48
Section 12.4 Notices..........................................54
Section 12.5 Assignment.......................................55
Section 12.6 Governing Law....................................55
Section 12.7 Counterparts; Construction.......................55
Section 12.8 Headings.........................................55
Section 12.9 Entire Agreement.................................55
Section 12.10 No Benefit.......................................55
Section 12.11 Delays or Omissions..............................56
Section 12.12 Severability.....................................56
Section 12.13 Expenses.........................................56
Section 12.14 Time of the Essence..............................56
SCHEDULES
2.3 No Violations
2.4 Affiliates and Investments
2.5 Stock Record Books
2.6 Corporate Books
2.7 List of Shareholders/Liens on Shares
2.10(a) Employees, Officers, Directors, Consultants and
Independent Contractors
2.10(c) Employment and Labor Agreements
2.11 Absence of Certain Changes
2.12 Contracts - General
2.14(a) Title and Related Matters - Owned Property
2.14(b) Title and Related Matters - Leased Property
2.14(e) Title and Related Matters - Condition
2.15 Litigation
2.16 Tax Matters
2.17 Bank and Brokerage Accounts
2.19(a) Employee Benefit Plans
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2.19(i) Employee Benefit Plans - Other
2.20 Intellectual Property
2.21 Environmental Matters
2.22 Capital Expenditures and Investments
2.23 Dealings with Affiliates
2.24 Insurance
2.26 Permits and Reports
2.27 Absence of Undisclosed Liabilities
3.3 Consents and Authorizations of Purchaser
4.1(b) New Employees and Changes to Compensation
4.7 Assets to be Sold by the Company
4.14 Article IV Disclosure Statement
6.6 Public Announcements
EXHIBITS
A Other Stockholders
4.17 Purchase Price Escrow Agreement
7.7 Opinion of Seller's Counsel
8.5 Opinion of Purchaser's Counsel
11.2 Indemnity Escrow Agreement
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THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of the
16th day of October, 1998 ("Execution Date"), among MJD Services Corp., a
Delaware corporation (the "Purchaser"), Xxxxx X. Xxxxxxxx, an Illinois resident
("Xxxxxxxx" or the "Seller"), and Ravenswood Communications, Inc., an Illinois
corporation ("Ravenswood" or the "Company").
RECITALS
WHEREAS, Xxxxxxxx owns 405 shares of Ravenswood's no par value common
stock, which 405 shares constitute all of the issued and outstanding shares of
capital stock of Ravenswood (the "Ravenswood Capital Stock");
WHEREAS, Ravenswood owns all of the issued and outstanding shares of
capital stock of The El Paso Telephone Company, an Illinois corporation
("Telephone") (the "Telephone Capital Stock") and all of the issued and
outstanding shares of capital stock of El Paso Long Distance Company ("Long
Distance"), an Illinois corporation (the "Long Distance Capital Stock");
WHEREAS, Telephone owns all of the issued and outstanding shares of
capital stock of Gemcell, Inc.("Gemcell"), an Illinois corporation (the "Gemcell
Capital Stock") (any and all shares, options, warrants, rights and interests,
legal or equitable, in or with respect to the Ravenswood Capital Stock, the
Telephone Capital Stock, the Long Distance Capital Stock and/or the Gemcell
Capital Stock hereinafter referred to collectively as the "Shares");
WHEREAS, Ravenswood is a holding company, the assets of which as of the
Execution Date include the capital stock of Telephone and of Long Distance;
WHEREAS, Telephone, Long Distance and Gemcell directly or indirectly
provide local exchange, long distance, cellular and Internet services throughout
mid-central Illinois, and Telephone is an operating telephone company that
provides wireline telecommunications services, with at least 1,900 access lines
(collectively the businesses of Ravenswood, Telephone, Long Distance and Gemcell
are hereinafter referred to as the "Business" or the "business");
WHEREAS, the Seller desires to sell, and the Purchaser desires to
purchase, on the terms and subject to the conditions set forth in this
Agreement, the Shares;
WHEREAS, a dispute existed whereby certain Persons have claimed, as
beneficiaries of the estate of Xxxxxx X. Xxxxxx, ownership interests in and to a
portion of the shares of the Telephone Capital Stock; and
WHEREAS, the Seller has resolved and provided a mechanism for the
resolution of such dispute, and Seller has agreed to transfer to the Purchaser
title to all of the Shares, free and clear of all Liens other than Permitted
Liens.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I.
PURCHASE OF STOCK
Section 1.1 Purchase and Sale. At the Closing Date, on the terms and
subject to the conditions set forth in this Agreement, the Seller agrees to sell
to the Purchaser, and the Purchaser agrees to purchase from the Seller, the
Shares.
Section 1.2 Purchase Price. In consideration for the conveyance of the
Shares, the Purchaser shall pay to the Seller on the Closing Date, as provided
in Section 9.2 hereof, an amount per share of $24,691.36 for each of the 405
shares of Ravenswood Capital Stock (the "Purchase Price").
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows (to
the extent a representation is modified by a knowledge requirement, it shall
speak to the knowledge of Xxxxxxxx and the Company) with respect to each of
Ravenswood, Telephone, Long
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Distance, Gemcell and all Affiliates thereof even though such representation
and/or warranty shall use only the word Company (in other words, if any
representation or warranty or covenant or agreement would be untrue as to any of
Ravenswood, Telephone, Long Distance, Gemcell or any of their Affiliates then
Xxxxxxxx must so disclose any such untruth):
Section 2.1 Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing with perpetual duration under
the laws of its jurisdiction of incorporation, with full corporate power and
authority to own, operate and lease its properties and to conduct its business
as presently conducted. The Seller is a resident of Illinois. The Company is
qualified to do business and is in good standing in every jurisdiction in which
the conduct of its business, the ownership or lease of its properties, or the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby requires it to be so qualified. True, complete
and correct copies of the Company's charter and by-laws as presently in effect
have been delivered to the Purchaser. The reverse triangular merger effected by
the Company as of September 26, 1996 was duly authorized by the shareholders and
directors of each affected entity, and has been fully consummated and concluded
of record, all in accordance with Illinois law so as to establish Ravenswood as
a holding company owning all of the outstanding capital stock of Telephone.
True, complete and correct copies of all of the merger documents, the ICC order
approving same, and all of the replacement Share certificates as presently in
effect have been delivered to the Purchaser. All such replaced share
certificates have been cancelled and affixed in the appropriate stock transfer
records.
Section 2.2 Authorization. The Seller and Ravenswood each has full power
and authority to execute and deliver this Agreement and, subject to Sections 2.3
and 2.26, to consummate the transactions contemplated hereby. The Board of
Directors (and as appropriate, the stockholders) of Ravenswood has duly
authorized the execution, delivery and performance of this Agreement, and no
other corporate proceedings on its part are necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby. Assuming due execution of this Agreement
by the Purchaser, this Agreement constitutes a legal, valid and binding
obligation of each of the
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Seller and Ravenswood enforceable against each such party in accordance with its
terms, subject to equitable considerations and the effect of bankruptcy and
other laws affecting the rights of creditors generally. The Seller will, at the
Closing, have full power and authority to deliver the Shares and the
certificates evidencing the Shares to the Purchaser, free and clear of all Liens
as provided for herein except Permitted Liens.
Section 2.3 No Violation. Except as set forth on Schedule 2.3, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by each of the Seller and Ravenswood do not
and will not, subject to obtaining the consents and approvals referred to in
Schedules 2.3 and 2.26, (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) constitute a default or event of default under
(with due notice, lapse of time or both), (c) result in the creation of any Lien
upon the Company or its capital stock or assets pursuant to, (d) give any third
party the right to accelerate any obligation under, (e) result in a violation
of, or (f) require any authorization, consent, approval, exemption or other
action by, or notice to, any Person pursuant to (i) the charter or by-laws of
the Company, (ii) any applicable Regulation (including, without limitation, the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976), (iii) any Order to which
either the Seller or the Company is subject, or (iv) any Contract to which the
Seller or the Company or any of their properties are subject. The Seller and
Ravenswood have complied with all applicable Regulations and Orders in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby by each of Seller and Ravenswood, subject
to the requirements which are conditions to the Closing.
Section 2.4 Affiliates and Investments. Except as set forth in Schedule
2.4, the Company has no Affiliates or investments in any Person. Attached as
Schedule 2.4 is a true and complete corporate organizational chart for the
Company. Except as set forth on Schedule 2.4, the transactions contemplated by
this Agreement by each of Seller and Ravenswood will not conflict with or result
in a breach of the terms, conditions or provisions of any agreement to which the
Company is a party or with respect to any such Affiliates or investments, nor
shall the transactions contemplated by this Agreement trigger any purchase, put,
call or right of first refusal rights in any Person. Any such investments
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constitute an asset of the Company and the Company is the only Person with any
rights thereto. Except as set forth on Schedule 2.4, the Company does not owe
any indebtedness to or on account of any of such Affiliates or investments, nor
has the Company guaranteed any indebtedness on behalf of, or have any other
contingent obligations with respect to, any such Affiliates or investments, and
the Company has not pledged any such investments or Affiliates or any other of
its assets in connection with any obligations relating to any such investment or
Affiliate. Except as set forth in Schedule 2.4, the Company is not a general
partner in any of its investments, nor is any employee of the Company an officer
or director of any such investment entity. Except as set forth in Schedule 2.4,
the Company is not a party to any Shareholders' or Stockholders' Agreements with
respect to any of the entities discussed on Schedule 2.4 hereto. Also set forth
on Schedule 2.4 hereto is a listing of all dividends and/or distributions made
with respect to any such Affiliates and/or investments since December 31, 1990.
Section 2.5 Stock Record Book. Except as set forth in Schedule 2.5, the
stock record book of the Company is complete and correct in all material
respects. No shares of capital stock of the Company are currently reserved for
issuance for any purpose or upon the occurrence of any event or condition. The
Shares constitute all of the outstanding capital stock of the Company and the
Seller owns all outstanding capital stock of Ravenswood. Ravenswood is the true
and lawful owner of all of the outstanding capital stock of Telephone and of
Long Distance. Telephone is the true and lawful owner of all of the outstanding
capital stock of Gemcell. Schedule 2.7 sets forth the total number of authorized
shares of capital stock for each of Ravenswood, Telephone, Long Distance and
Gemcell.
Section 2.6 Corporate Books. Except as set forth in Schedule 2.6, the
corporate minute books of Ravenswood, Telephone, Long Distance and Gemcell are
complete and correct in all material respects and contain signed minutes of all
of the proceedings of the shareholders and directors of Ravenswood, Telephone,
Long Distance and Gemcell since incorporation. A true and complete list of the
directors and officers of Ravenswood, Telephone, Long Distance and Gemcell as of
the Execution Date is set forth in Schedule 2.6.
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Section 2.7 Title to Stock. The Shares are owned of record by the Seller,
Ravenswood and Telephone and only the Seller, Ravenswood and Telephone in such
amount as forth on Schedule 2.7 hereto. Schedule 2.7 additionally sets forth the
total number of authorized shares of capital stock for each of Ravenswood,
Telephone, Long Distance and Gemcell. No shares of preferred stock or other
class of capital stock are authorized, issued or outstanding. The Shares have
been duly authorized and validly issued and are fully paid and nonassessable.
The Shares were issued pursuant to applicable exemptions from registration under
Federal securities laws and the securities laws of the State of Illinois, are
owned by the Seller, Ravenswood and Telephone and will be sold pursuant hereto
free and clear of all Liens, except Permitted Liens. Upon payment of the
Purchase Price pursuant to the Assignment Agreements described in Schedule 2.7
(the "Assignment Agreements"), the Seller will convey to the Purchaser good and
marketable title to the Shares, free and clear of all Liens, except Permitted
Liens. The assignments, endorsements, stock powers and other instruments of
transfer delivered by the Seller to the Purchaser at the Closing will be
sufficient to transfer the Seller's entire interest and all of the interests,
legal and beneficial, of all other Persons in and to the Shares and thereby in
the Ravenswood Capital Stock, the Telephone Capital Stock, the Long Distance
Capital Stock, the Gemcell Capital Stock and in the capital stock of each other
Affiliate of the Company and in each investment of the Company. Except as set
forth in Schedule 2.4, no dividends or other distributions are owed by the
Company in connection with any of the Shares and none have been made to any
stockholder of the Company since at least December 31, 1990.
Section 2.8 Options and Rights. There are no outstanding subscriptions,
options, warrants, rights, puts, calls or other Contracts by which the Company
is bound to issue or to repurchase or otherwise acquire shares of its capital
stock, or pursuant to which any Person has a right to purchase or to acquire,
through conversion or otherwise, shares of the Company's capital stock.
Section 2.9 Financial Statements.
Subject to the third and fourth sentences of this Section, the Seller has
delivered to the Purchaser correct and complete copies of (i) the audited
balance sheets of Ravenswood and its subsidiaries (consolidated) as of December
31, 1997 and
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December 31, 1996 and of Telephone and its subsidiary (consolidated) as of
December 31, 1995 and December 31, 1996, and the related statements of income,
cash flow and retained earnings for the fiscal year reporting periods then
ended, together with all notes and schedules thereto (the "Financial
Statements"), and (ii) the unaudited monthly balance sheets of the Company as of
July 31, 1998 and the related monthly statements of income for the period then
ended (the July 31, 1998 statements, with all unaudited statements delivered
hereafter, the "Unaudited Financial Statements"). The Financial Statements have
been audited without qualification by Xxxxxxxx Associates LLP, independent
auditors for the Company. The Financial Statements (a) have been prepared in
accordance with the books and records of the Company and (b) fairly present the
financial condition and results of operations and cash flows of the Company as
of, and for the respective periods ended on, such dates, all in conformity with
GAAP consistently applied. The Unaudited Financial Statements (a) have been
prepared in accordance with the books and records of the Company, and (b) fairly
present the financial condition and results of operations of the Company as of,
and for the respective periods ended on, such dates, all in conformity with GAAP
consistently applied, except for adjustments and notes that would result from an
audit. Since December 31, 1997 and except as fully set forth in the Financial
Statements and the Unaudited Financial Statements, the Company has no
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, whether known or unknown, and regardless of when
asserted) arising out of transactions or events heretofore entered into or any
action or inaction or state of facts existing, with respect to, or based upon
transactions or events heretofore occurring.
Section 2.10 Employees.
(a) Schedule 2.10(a) sets forth a list of all of the Company's
employees, officers, directors, consultants and independent contractors,
together with a description of any Contract regarding the terms of service and
the rate and basis for total compensation of such persons.
(b) The Company has paid or made provision for the payment of all
salaries and accrued wages, accrued vacation and sick leave, and any other form
of accrued, but unpaid, compensation, and has complied in all material respects
with all
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applicable Regulations relating to the employment of labor, including those
relating to wages, hours, collective bargaining and the payment and withholding
of taxes, and has withheld and paid to the appropriate governmental authority,
or is holding for payment not yet due to such authority, all amounts required by
law or agreement to be withheld from the wages or salaries of its employees. No
amounts have been accrued on the Company's books for vacation or sick leave in
excess of the current year's obligations and no such obligations exist. No
contracts or provisions exist that would obligate the Company to pay any
severance compensation to any employee should his or her employment with the
Company be terminated for any reason from and after the Execution Date hereof.
No contracts or provisions exist that would obligate the Company to pay any
amounts to any Person upon the change of control of the Company.
(c) Except as set forth on Schedule 2.10(c) hereto, the Company is
not a party to any (i) outstanding employment agreements or contracts with
officers or employees that are not terminable at will, or that provide for
payment of any bonus or commission or severance compensation, (ii) agreement,
policy or practice that requires it to pay termination or severance pay to
salaried, exempt, non-exempt or hourly employees, (iii) collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company, nor do the Seller or the Company know of any activities or proceedings
of any labor union to organize any such employees. The Company has furnished to
Purchaser complete and correct copies of all such agreements, if any
("Employment and Labor Agreements"). The Company has not breached or otherwise
failed to comply with any provisions of any Employment or Labor Agreement.
(d) Except as set forth in Schedule 2.10 hereto, (i) there is no
unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB"), (ii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or, to the Seller's or
Company's knowledge, threatened, against or affecting the Company, and the
Company has not experienced any strike, material slow down or material work
stoppage, lockout or other collective labor action by or with respect to
employees of the Company, (iii) there are no charges with respect to or relating
to the Company pending before the Equal Employment Opportunity Commission or any
state or local
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agency responsible for the prevention of unlawful employment practices, and (iv)
the Company has not received formal notice from any federal, state, or local
agency responsible for the enforcement of labor or employment laws of an
intention to conduct an investigation of the Company and, to the knowledge of
the Seller and Company, no such investigation is in progress.
Section 2.11 Absence of Certain Changes. Except as set forth in Schedule
2.11, since December 31, 1997, there has been no (a) Material Adverse Change in
the business, properties, financial statements, business prospects, condition
(financial or otherwise) or results of operations of the Company, (b) theft,
damage, destruction, removal or loss of assets or properties, whether covered by
insurance or not, having a Material Adverse Effect on the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company, (c) declaration, setting aside or payment of any dividend or
distribution (whether in cash, stock or property) in respect of the Shares, the
Telephone Capital Stock, the Long Distance Capital Stock, or the Gemcell Capital
Stock or any redemption of the Shares, the Telephone Capital Stock, the Long
Distance Capital Stock, or the Gemcell Capital Stock, (d) increase in the
compensation payable to or to become payable by the Company to its employees,
officers, directors, consultants or independent contractors except in the
ordinary course of business, (e) entry by the Company into any Contract not in
the ordinary course of business, including, without limitation, any borrowing or
capital expenditure, (f) change in accounting methods or principles used by the
Company, except for any such change which is necessitated by a change in GAAP,
or required by the FCC, ICC or RTB (which such changes shall be set forth on
Schedule 2.11 hereto), (g) operation of the Company's business other than in the
ordinary course, (h) sale, assignment or transfer of any assets or properties of
the Company except in the ordinary course of business, (i) amendment or
termination of any of the Company's Permits or Contracts, (j) waiver or release
of any material right or claim of the Company, (k) labor dispute or union
activity which affects the operation of the Company, and (l) agreement by either
the Seller or the Company to take any of the actions described in the preceding
clauses (a) through (k), except as contemplated by this Agreement.
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Section 2.12 Contracts.
(a) Generally. Except as listed in Schedule 2.12, the Company is not
a party to any Contract relating to:
(i) Bonus, pension, profit sharing, retirement, stock option,
employee stock purchase or other plans providing for deferred
compensation.
(ii) Collective bargaining agreements or any other Contract
with any labor union.
(iii) Hospitalization insurance or other welfare benefit plans
or practices.
(iv) Loans to its employees, officers, directors, or
Affiliates.
(v) The borrowing or loaning of money to or from any Person or
the mortgaging, pledging or otherwise placing a Lien on any asset of the
Company, including, but not limited to, any Contract with respect to the
Company's indebtedness to Rural Telephone Bank (RTB).
(vi) A guarantee of any obligation.
(vii) The ownership, lease (whether as lessee or lessor) or
operation of any property, real or personal that includes expenditures or
receipts in excess of $10,000 on a per item or aggregate basis.
(viii) Intangible property (including Proprietary Rights).
(ix) Warranties with respect to its services rendered or its
products sold or leased.
(x) Registration or preemptive rights with respect to any
securities.
(xi) Prohibitions preventing it from freely engaging in any
business.
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(xii) The purchase, acquisition, disposition or supply of
inventory and other property and assets that involves on a per item or
aggregate basis, expenditures or receipts in excess of $10,000 or other
than in the ordinary course of business.
(xiii) Employees, independent contractors, consultants, or
other agents.
(xiv) Sales, commissions, advertising or marketing.
(xv) Unconditional purchase or payment obligations that
involves on a per item or aggregate basis, expenditures or receipts in
excess of $10,000.
(xvi) Any investment or Affiliate of the Company, including,
but not limited to, those shown on Schedule 2.4 hereto.
(xvii) Any other Contract not of the type covered by any of
the foregoing items of this Section 2.12(a) requiring total payments by
the Company in excess of ten thousand dollars ($10,000).
(b) Compliance. The Company has performed all obligations required
to be performed by it, and is not in receipt of any claim of default or breach
or notice of audit, under any Contract to which it is subject (including,
without limitation, those required to be disclosed on Schedule 2.12). Except as
disclosed in Schedule 2.12, no event has occurred which with the passage of time
or the giving of notice or both would result in a material default, breach or
event of non-compliance by the Company under any Contract to which it is
subject. Except as disclosed in Schedule 2.12, the Company has no present
expectation or intention of not fully performing all of its obligations under
any Contract to which it is subject and has no knowledge of any breach or
anticipated breach by any other party to any Contract to which it is subject.
Section 2.13 True and Complete Copies. Except as otherwise provided in
Sections 2.5, 2.6, 2.9, 2.14, 2.19(j), 2.26(i) and 2.28 hereof, the Seller and
the Company have delivered to the Purchaser true and complete copies of all
Contracts and documents listed in
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the Schedules to this Agreement, as well as of all minute books and stock books
of Ravenswood, Telephone, Long Distance and Gemcell.
Section 2.14 Title and Related Matters.
(a) Owned Property. Set forth in Schedule 2.14(a) is a description
of all real property and personal property owned or used by the Company. The
Company has good and marketable title to all such property, free and clear of
all Liens, except Permitted Liens and those liens shown on Schedule 2.14(a)
hereto. All properties used in the Company's business operations as of December
31, 1997 are reflected in the Financial Statements in accordance with and to the
extent required by GAAP and, as of the Execution Date, are fully set forth on
Schedule 2.14(a) hereto. The Seller has delivered, with respect to any real
property owned by the Company, true and complete copies of all deeds, title
policies, environmental assessments, surveys and other title documents relating
to such real property. Further, the Company has good and marketable title to
each of its investments set forth on Schedule 2.4 hereto, free and clear of all
Liens except Permitted Liens, except as set forth on Schedule 2.14(a) hereto.
(b) Leased Property. Set forth in Schedule 2.14(b) is a description
of all real and personal property leased or used by the Company. Except as
otherwise set forth in Schedule 2.14(b), the Company's leases are in full force
and effect and are valid and enforceable in accordance with their respective
terms. There exists no event of default or event which constitutes or would
constitute (with notice or lapse of time or both) a default by the Company or,
to Seller's knowledge, any other Person under any such lease, and neither the
Seller nor the Company have received notice of such default or event. All rent
and other amounts due and payable with respect to each of the Company's leases
have been paid through the Execution Date. Except as set forth in Schedule
2.14(b), neither the Seller nor the Company have received notice that the
landlord with respect to any real property or personal property lease would
refuse to renew such lease upon expiration of the period thereof upon
substantially the same terms, except for rent increases consistent with past
experience or market rentals. The Seller has delivered, with respect to any
leased real or personal property, true and complete copies of all such leases
and all amendments or supplements thereto.
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(c) Liens. Except as set forth in Schedule 2.14(c), the real
property owned or leased by the Company and the buildings, structures and
improvements included within such real property (collectively, the
"Improvements") comply in all material respects with all applicable
restrictions, building ordinances and zoning ordinances and all applicable
Regulations of the applicable health and fire departments. Except as set forth
in Schedule 2.14(c), no alteration, repair, improvement or other work which
could give rise to a Lien has been performed with respect to such Improvements
within the last one hundred twenty (120) days. The Company's owned or leased
real property and its continued use, occupancy and operation as currently used,
occupied and operated does not constitute a nonconforming use under any
Regulation or Order affecting such real property, and the continued existence,
use, occupancy and operation of such Improvements is not dependent on any
special permit, exception, approval or variance. There is no pending or, to the
Seller's or Company's knowledge, threatened or proposed action or proceeding by
any Authority to modify the zoning classification of, to condemn or take by the
power of eminent domain (or to purchase in lieu thereof), to classify as a
landmark, to impose special assessments on or otherwise to take or restrict in
any way the right to use, develop or alter all or any part of the Company's
owned or leased real property.
(d) Utilities. The real property owned or leased by the Company has
access, sufficient for the conduct of the Company's business as presently
conducted and proposed to be conducted after the Closing in substantially the
same manner as conducted prior to Closing, to public roads and to all utilities,
including electricity, sanitary and storm sewer, potable water, natural gas and
other utilities used in the operation of the Company's business as presently
conducted. To Seller's knowledge, access to all such public roads and utilities
will be available after the Closing Date in the same manner and to the same
extent as at the Closing Date.
(e) Condition. Except as set forth on Schedule 2.14(e), since
December 31, 1997, the Company has not sold, transferred, leased, distributed or
disposed of any of its assets or properties, except for (i) transactions in the
ordinary and regular course of business, or (ii) as otherwise consented to in
writing by the Purchaser. The Company owns, or has all rights necessary to use,
all properties and assets necessary for the conduct of its business as presently
conducted. The assets and properties owned, leased or
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used by the Company in the conduct of the Business as now conducted are in good
condition (reasonable wear and tear excepted), are suitable for their respective
uses, and comply in all material respects with all applicable Regulations.
Further such assets and properties constitute all of the assets and properties
necessary for the Company to conduct its Business as now conducted.
Section 2.15 Litigation. Except as set forth in Schedule 2.15, there is
(a) no Claim pending or, to the Seller's knowledge, threatened against the
Company, (b) no Claim by the Company pending or threatened against any Person,
(c) no outstanding Order relating to the Company and (d) no Claim by any Person
relating to the Shares. No Stockholder of the Company dissented to the Company's
merger/reorganization and the time to do so under Illinois law has expired.
Section 2.16 Tax Matters.
(a) Generally. Except as set forth in Schedule 2.16, Ravenswood,
Telephone, Long Distance and Gemcell have timely filed all federal, state and
local tax reports, returns, information returns and any other documents required
to be filed by each (collectively, "Tax Returns") and have duly paid all Taxes
shown to be due and payable on such Tax Returns and all estimated or advance
payments required by law. All Taxes for periods ending on or prior to or
including the Closing Date have been fully paid or reserved against on the
Unaudited Financial Statements and on the books of Ravenswood, Telephone, Long
Distance and Gemcell in accordance with GAAP. All Taxes which are required to be
withheld or collected by Ravenswood, Telephone, Long Distance and Gemcell have
been duly withheld or collected and, to the extent required, have been paid to
the proper federal, state and local authorities or properly segregated or
deposited as required by applicable Regulations. There are no Liens for Taxes
upon any property or assets of Ravenswood, Telephone, Long Distance or Gemcell
except for Liens for Taxes not yet due and payable or for Taxes being contested
in a manner permitted by applicable law (all as disclosed on Schedule 2.16
hereto). Except as disclosed in Schedule 2.16, neither Ravenswood, Telephone,
Long Distance nor Gemcell have requested an extension of time within which to
file any Tax Return and none have waived the statute of limitations on the right
of the IRS or any other taxing authority to assess or collect additional Taxes
or to contest the information reported on any Tax Return.
-14-
All Taxes owed by any affiliated group of which Ravenswood, Telephone, Long
Distance or Gemcell has at any time been a member (whether or not shown on any
Tax Return) have been paid for each taxable period during which Ravenswood,
Telephone, Long Distance or Gemcell was a member of the affiliated group.
Neither Ravenswood, Telephone, Long Distance nor Gemcell has any liability for
the unpaid Taxes of any Person under Treasury Regulation ss. 1.1502-6 (or any
similar provision of state and local law), as a transferee or successor, by
contract, or otherwise. The merger of the Company and Telephone referred to in
Section 2.1 hereof qualified as a tax-free reorganization pursuant to IRC
Section 368(a)(2)(E). All filings and/or notifications required to be made with
the Internal Revenue Service and/or with the Illinois Department of Revenue
and/or with the Illinois Secretary of State as a result of such
merger/reorganization have been fully and timely made.
(b) Good Faith. All Tax Returns described in Section 2.16(a) have
been prepared in good faith and are correct and complete in all respects, and
there is no basis for assessment of any addition to the Taxes shown thereon.
(c) Claims. Except as disclosed in Schedule 2.16, (i) there are no
proceedings, examinations or claims currently pending by any taxing Authority in
connection with any Tax Returns described in Section 2.16(a) nor with respect to
the periods to which such Tax Returns relate and (ii) there are no unresolved
issues or unpaid deficiencies or outstanding or proposed assessments relating to
any such proceedings, examinations, claims or Tax Returns. None of the Tax
Returns described in Section 2.16(a) currently is under audit or has been
audited. The items relating to the Business, properties and operations of the
Company on the Tax Returns filed by the Company (including the supporting
schedules filed therewith), copies of which have been supplied to the Purchaser,
state accurately, in all respects, the information requested with respect to the
Company, which information was derived from the books and records of the
Company.
(d) Course of Business. The Company has not taken any action in
anticipation of the Closing that would have the effect of deferring any
liability for Taxes of the Company to any period (or portion thereof) ending
after the Closing Date.
-15-
(e) Withholdings. All payments for withholding Taxes, unemployment
insurance and other amounts required to be withheld and deposited or paid to any
relevant taxing Authorities have been so withheld, deposited or paid by or on
behalf of the Company.
(f) Partnerships. Except as disclosed in Schedule 2.16, the Company
is not subject to any joint venture, partnership or other arrangement or
Contract which is treated as a partnership for federal income tax purposes. Any
tax-sharing agreement between the Company and any other Person shall terminate
as of the Closing Date, except as disclosed on Schedule 2.16, and any such
tax-sharing agreement is fully disclosed on Schedule 2.16 hereto.
(g) Accounting Method Adjustments. Except as disclosed in Schedule
2.16, the Company will not be required to recognize after the Closing Date any
taxable income in respect of accounting method adjustments required to be made
under any Regulation relating to Taxes, including without limitation, the Tax
Reform Act of 1986 and the Revenue Act of 1987.
(h) Tax Exemptions. None of the assets of the Company constitutes
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the IRC, and the Company is not subject to a lease, safe
harbor lease or other arrangement as a result of which the Company is not
treated as the owner of leased property for federal income tax purposes.
(i) Tax Return Reviews. An accurate and complete description of the
most recent review, if any, of the Tax Returns of the Company by the IRS or any
other taxing Authority is set forth in Schedule 2.16.
(j) Power of Attorney. Except as set forth in Schedule 2.16 hereto,
no power of attorney has been granted by the Company with respect to any matter,
including, without limitation, the payment of Taxes, which is currently in
force.
(k) True and Complete Copies. The Seller and the Company have
delivered to the Purchaser true and complete copies of all Tax Returns filed by
the Company with respect to its 1992, 1993, 1994, 1995, 1996 and 1997 fiscal
years.
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Section 2.17 Bank and Brokerage Accounts. Set forth in Schedule 2.17
hereto is a list of all of the bank and brokerage accounts maintained by the
Company and the authorized signatories for each such account.
Section 2.18 Compliance with Applicable Laws, Regulations and Orders. The
Company has been and is presently in material compliance with all laws,
ordinances, codes, rules, Regulations and Orders applicable to the conduct of
its Business, including, without limitation, all applicable Regulations relating
to health, sanitation, fire, zoning, building and occupational safety.
Section 2.19 Employee Benefit Plans.
(a) Set forth on Schedule 2.19 hereto is a true and complete list
of:
(i) each employee pension benefit plan, as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"),
maintained by the Company or to which the Company or the Seller is
required to make contributions ("Pension Benefit Plan"); and
(ii) each employee welfare benefit plan, as defined in Section
3(1) of ERISA, maintained by the Company or to which the Company or the
Seller is required to make contributions ("Welfare Benefit Plan").
True and complete copies of all Pension Benefit Plans and Welfare
Benefit Plans (collectively, "ERISA Plans") have been delivered to or made
available to Purchaser together with, as applicable with respect to each such
ERISA Plan, trust agreements, summary plan descriptions, all IRS determination
letters or applications therefor with respect to any Pension Benefit Plan
intended to be qualified pursuant to Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "IRC"), and valuation or actuarial reports,
accountant's opinions, financial statements, IRS Form 5500s (or 5500-C or
5500-R) and summary annual reports for the last three years.
(b) With respect to the ERISA Plans, except as set forth on Schedule
2.19:
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(i) there is no ERISA Plan which is a "multiemployer" plan as
that term is defined in Section 3(37) of ERISA ("Multiemployer Plan");
(ii) no event has occurred or (to the knowledge of the Seller
or the Company) is threatened or about to occur which would constitute a
prohibited transaction under Section 406 of ERISA or under Section 4975 of
the IRC;
(iii) each ERISA Plan has operated since its inception in
accordance with the reporting and disclosure requirements imposed under
ERISA and the IRC and has timely filed Form 5500 (or 5500-C or 5500-R) and
predecessors thereof; and
(iv) no ERISA Plan is liable for any federal, state or local
Taxes.
(c) Each Pension Benefit Plan intended to be qualified under Section
401(a) of the IRC:
(i) has been qualified, from its inception, under Section
401(a) of the IRC, and the trust established thereunder has been exempt
from taxation under Section 501(a) of the IRC and is currently in
compliance with applicable federal laws;
(ii) has been operated, since its inception, in accordance
with its terms and there exists no fact which would adversely affect its
qualified status; and
(iii) is not currently under investigation, audit or review by
the IRS or (to the knowledge of the Seller or Company) no such action is
contemplated or under consideration and the IRS has not asserted that any
Pension Benefit Plan is not qualified under Section 401(a) of the IRC or
that any trust established under a Pension Benefit Plan is not exempt
under Section 501(a) of the IRC.
(d) With respect to each Pension Benefit Plan which is a defined
benefit plan under Section 414(j) and each defined contribution plan under
Section 414(i) of the IRC:
-18-
(i) no liability to the Pension Benefit Guaranty Corporation
("PBGC") under Sections 4062-4064 of ERISA has been incurred by the
Company since the effective date of ERISA and all premiums due and owing
to the PBGC have been timely paid;
(ii) the PBGC has not notified the Company or any Pension
Benefit Plan of the commencement of proceedings under Section 4042 of
ERISA to terminate any such plan;
(iii) no event has occurred since the inception of any Pension
Benefit Plan or (to the knowledge of the Seller or the Company) is
threatened or about to occur which would constitute a reportable event
within the meaning of Section 4043(b) of ERISA;
(iv) No Pension Benefit Plan ever has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the IRC); and
(v) if any of such Pension Benefit Plans were to be terminated
on the Closing Date (A) no liability under Title IV of ERISA would be
incurred by the Company, and (B) all benefits accrued to the day prior to
the Closing Date (whether or not vested) would be fully funded in
accordance with the actuarial assumptions and method utilized by such plan
for valuation purposes.
(e) With respect to each Pension Benefit Plan, Schedule 2.19
contains a list of all Pension Benefit Plans to which ERISA has applied which
have been or are being terminated, or for which a termination is contemplated,
and a description of the actions taken by the PBGC and the IRS with respect
thereto.
(f) The aggregate of the amounts of contributions by the Company to
be paid or accrued under ERISA Plans is not expected to exceed approximately
$130,000.00 for the time period commencing January 1, 1998 and ending December
31, 1998 (which amount consists of the following components: $26,311 of
anticipated SEPP contributions, $93,634 of anticipated premium expenses for
health, life, disability and dental insurance, and $10,055 for miscellaneous
adjustments to such amounts), all of which has been properly accrued or reserved
for on the Financial Statements and Unaudited Financial Statements. To the
extent required in
-19-
accordance with GAAP, the Company's Financial Statements reflect in the
aggregate an accrual of all amounts of employer contributions accrued but unpaid
by the Company under the ERISA Plans as of the date of the Financial Statements.
(g) With respect to any Multiemployer Plan (1) the Company has not,
since its formation, made or suffered a "complete withdrawal" or "partial
withdrawal" as such terms are respectively defined in Sections 4203 and 4205 of
ERISA; (2) there is no withdrawal liability of the Company under any
Multiemployer Plan, computed as if a "complete withdrawal" by the Company had
occurred under each such Plan as of December 31, 1997; and (3) the Company has
not received notice to the effect that any Multiemployer Plan is either in
reorganization (as defined in Section 4241 of ERISA) or insolvent (as defined in
Section 4245 of ERISA).
(h) With respect to the Welfare Benefit Plans:
(i) There are no liabilities of the Company under Welfare
Benefit Plans with respect to any condition which relates to a claim filed
on or before the Closing Date; and
(ii) No claims for benefits are in dispute or in litigation.
(i) Set forth on Schedule 2.19 hereto is a true and complete list
of:
(i) each employee stock purchase, employee stock option,
employee stock ownership, deferred compensation, performance, bonus,
incentive, vacation pay, holiday pay, insurance, severance, retirement,
excess benefit or other plan, trust or arrangement which is not an ERISA
Plan whether written or oral, which the Company maintains or is required
to make contributions to; and
(ii) each other agreement, arrangement, commitment and
understanding of any kind, whether written or oral, with any current or
former employee, officer, director or consultant of the Company pursuant
to which payments may be required to be made at any time following the
Execution Date (including, without limitation, any employment, deferred
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compensation, severance, supplemental pension, termination or consulting
agreement or arrangement).
(j) True and complete copies of all of the written plans,
arrangements and agreements referred to on Schedule 2.19 ("Compensation
Commitments") have been provided to Purchaser together with, where prepared by
or for the Company, any valuation, actuarial or accountant's opinion or other
financial reports with respect to each Compensation Commitment for the last
three years. An accurate and complete written summary has been provided to
Purchaser with respect to any Compensation Commitment which is unwritten.
(k) Each Compensation Commitment:
(i) since its inception, has been implemented in all material
respects in accordance with its terms;
(ii) is not currently under investigation, audit or review by
the IRS or any other federal or state agency and (to the knowledge of the
Seller and Company) no such action is contemplated or under consideration;
(iii) has no liability for any federal, state, local or
foreign Taxes;
(iv) has no claims subject to dispute or litigation;
(v) has met all applicable requirements, if any, of the IRC;
and
(vi) has been implemented since its inception in material
compliance with the reporting and disclosure requirements imposed under
ERISA and the IRC.
Section 2.20 Intellectual Property. Schedule 2.20 sets forth a complete
and accurate list of the Proprietary Rights owned or used by the Company. The
Company has no written documents relating to the Company's ownership or use of
the Proprietary Rights listed in Schedule 2.20, except as listed therein. No
other Person has any rights to such Proprietary Rights, except pursuant to
agreements or licenses specified in Schedule 2.20. To the Seller's and Company's
knowledge, no other Person is infringing,
-21-
violating or misappropriating any such Proprietary Right. If necessary, the
Company owns or holds valid licenses to use all Proprietary Rights used in the
operation of its business as presently conducted, with all such licenses
specified in Schedule 2.20.
Section 2.21 Environmental Matters. The Company has obtained all
Environmental Permits required in connection with the operation of its business.
The Company is and has been, and is capable of continuing to be in compliance in
all respects with (i) the terms and conditions of all such Environmental
Permits, and (ii) all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables of any
applicable Environmental Law or Regulation, Order, code, plan, decree, judgment,
injunction or demand letter issued, entered, promulgated or approved thereunder.
The Company currently possesses and maintains such Environmental Permits in its
name, and no amendments or modifications to such Environmental Permits or
filings with any permitting Authority are required to permit the acquisition of
the Shares as contemplated hereby. In addition, except as set forth in Schedule
2.21:
(a) Generally. No notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending
or, to the Seller's and Company's knowledge, threatened by any Authority or
other entity with respect to the Company relating to any Environmental Permit,
license or authorization required in connection with the conduct of the business
of the Company or with respect to the generation, treatment, storage, recycling,
transportation, disposal or Release of any substance regulated under
Environmental Laws ("Hazardous Materials").
(b) Property.
(i) The Company has not handled any Hazardous Material on any
property now or previously owned or leased by the Company.
(ii) No PCB or asbestos is or has been present at any property
now or previously owned or leased by the Company.
-22-
(iii) There are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now or previously owned or
leased by the Company.
(iv) There has been no Release of Hazardous Materials at, on
or under any property now or previously owned or leased by the Company.
(c) Transportation. The Company has not (i) transported or arranged
for the transportation of any Hazardous Material to any location which to
Company's knowledge is listed on the National Priorities List under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), listed for possible inclusion on the National Priorities
List by the Environmental Protection Agency in the Comprehensive Environmental
Response and Liability Information System ("CERCLIS") or on any similar state
list or which is the subject of federal, state or local enforcement actions or
other investigations, or (ii) stored, treated, transported or disposed, or
arranged for storage, treatment, transport or disposal of any Hazardous
Materials, other than in compliance with Environmental Law.
(d) Notification of Release. No oral or written notification of a
Release of a Hazardous Material has been filed by or on behalf of the Company,
and no property now or to Company's or Seller's knowledge previously owned or
leased by the Company is listed or to Company's or Seller's knowledge proposed
for listing on the National Priorities List under CERCLA, on CERCLIS or on any
similar state list of sites requiring investigation or clean-up.
(e) Liens. There are no Liens arising under or pursuant to any
Environmental Laws on any of the real property owned or leased by the Company,
and no government actions have been taken or are threatened which could subject
any of such properties to such Liens. The Company is not required to place any
notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(f) Site Assessments. There have been no Phase I or Phase II
environmental site assessments conducted by or which are in the possession of
the Seller or the Company in relation to any property or facility now or
previously owned or leased by the Company.
-23-
Section 2.22 Capital Expenditures and Investments. The Company has no
outstanding Contracts or commitments for capital expenditures and investments,
except as set forth in Schedule 2.22 attached hereto, which schedule includes a
list of all disbursements on account of capital expenditures and investments by
the Company since December 31, 1997. There has been no order or ruling from the
ICC or any other regulatory body and, to Seller's knowledge, none is threatened
or expected by the Company requiring or recommending that the Company undertake
any capital expenditures or investments.
Section 2.23 Dealings with Affiliates. Schedule 2.23 sets forth a complete
and accurate list of all oral or written Contracts between the Company and any
one or more of its Affiliates. Except as set forth in Schedule 2.23, since
December 31, 1997, the Company has not made any payments, loaned any funds or
property or made any credit arrangement with any Affiliate or employee except
for the payment of employee salaries in the ordinary course of business.
Section 2.24 Insurance. The Company currently is covered by insurance
policies which provide for coverages that are usual and customary as to amount
and scope in the business of the Company, descriptions of which policies,
including the names of the insurer and the insured, the amount of premiums, and
the types and amounts of coverage, are set forth on Schedule 2.24. All of such
policies are in full force and effect, all premiums with respect thereto have
been paid or accrued therefor, and no notice of cancellation or termination has
been received with respect to any such policy. Such policies are sufficient for
compliance with (i) all applicable Regulations and (ii) all Contracts to which
the Company is a party. The Company has not breached or otherwise failed to
perform its obligations under any of such policies, nor has the Company received
any adverse notice from any of the insurers party to such policies with respect
to any alleged breach or failure in connection with any of such policies. Such
policies will not terminate or lapse by reason of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
Except as set forth on Schedule 2.24, there are no pending or, to the Seller's
or Company's knowledge, threatened claims under any policy relating to the
Company. Also set forth on Schedule 2.24 is a true and complete listing of any
and all claims made by the Company under any policy since December 31, 1993.
-24-
Section 2.25 Commissions. There are and will be no claims for brokerage
commissions, finder's fees, fees for fairness opinions or financial advisory
services or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Seller, the Company, or any of their Affiliates.
Section 2.26 Permits and Reports. Schedule 2.26 hereto sets forth a list
of all permits, licenses, registrations, certificates, orders, approvals or
other authorizations from any Authority or other Person including, without
limitation, the FCC and the ICC and all applicable municipalities ("Permits")
issued to or held by the Company in connection with its operations as presently
conducted. Such Permits are the only Permits that are required for the Company
to conduct its business as presently conducted. Each such Permit is in full
force and effect, and the Company has not received notice that any suspension,
cancellation or modification of the terms of any such Permit is threatened. The
Company is in full compliance with the terms of each such Permit, and the Seller
is not aware of any reason not set forth in said Permit why any such Permit
would not be renewed, upon substantially the same terms as currently exist, upon
expiration of such Permit. The El Paso, Illinois territory served by Telephone
constitutes one (1) entire study area. Except as set forth in Schedule 2.26,
upon receipt of authorization, consent, approval or exemption from or notice to
the applicable Person, as set forth in Schedule 2.3 hereto, each Permit issued
to or held by the Company will continue in full force and effect following the
Closing Date. Except as set forth on Schedule 2.26, (i) all returns, reports,
applications, statements and other documents required to be filed by the Company
with the FCC, the ICC and any other Authority or municipality (including taxing
authorities) with respect to the Business on or before the Execution Date have
been duly filed or properly extended as permitted by law (details of such
extensions, if any, are set forth on Schedule 2.26 hereto) and are true and
complete in all material respects, and (ii) all reporting requirements of the
FCC, the ICC and other Authorities or municipalities (including taxing
authorities) having jurisdiction thereof have been complied with in all material
respects. A listing of all returns, reports, applications, statements and other
documents filed by the Company within the past five (5) years with the FCC, the
ICC and any other Authority or municipality (including taxing authorities) is
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attached hereto as Schedule 2.26; true and complete copies of all such returns,
reports, applications, statements, Permits and other documents set forth on
Schedule 2.26 have been previously provided to Purchaser by the Seller.
Section 2.27 Absence of Undisclosed Liabilities. The Company does not have
any liability of any nature whatsoever (whether known or unknown, due or to
become due, accrued, absolute, contingent or otherwise), including, without
limitation, any unfunded obligation under employee benefit plans or arrangements
as described in Section 2.19 hereof or liabilities for Taxes (as defined in
Section 2.16 hereof) or liabilities for under-reporting, under-billing or
under-collection of revenues or underpayment of revenues to a third party or
liabilities relating to investments or subsidiaries, except for (i) liabilities
stated or reserved against in the Financial Statements or Unaudited Financial
Statements, (ii) current liabilities incurred in the ordinary course of business
and consistent with past practice after the date of the Financial Statements or
Unaudited Financial Statements or which, individually and in the aggregate, do
not have, and cannot reasonably be expected to have, a Material Adverse Effect,
and (iii) liabilities disclosed on Schedule 2.27 hereto. All obligations and
liabilities relating in any way to the Company's investments and Affiliates are
set forth on Schedule 2.4 hereto, setting forth the maximum amount of the
Company's potential obligations and the expected payment schedule therefor. The
Company is not a party to any Contract, or subject to any articles of
incorporation or bylaw provision, any other corporate limitation or any legal
requirement which has, or can reasonably be expected to have, a Material Adverse
Effect. Any and all long term obligations and liabilities of the Company as of
the Execution Date and not otherwise set forth in the Financial Statements or
Schedule 2.12 are set forth on Schedule 2.27 hereto.
Section 2.28 Disclosure. Neither this Agreement nor any of the
attachments, schedules, exhibits, written statements, documents, certificates or
other items prepared for or supplied to the Purchaser by or on behalf of the
Seller or the Company with respect to the transactions contemplated hereby
contains any untrue statement of a material fact or omits any material fact
necessary to make each statement contained herein or therein not misleading.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller with respect to
itself and its Assignee as follows even though such representation and/or
warranty shall only use the word Purchaser (in other words, if any
representation or warranty or covenant or agreement would be untrue as to
Purchaser or Assignee then Purchaser must so disclose any such untruth:
Section 3.1 Corporate Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing with perpetual duration under
the laws of its jurisdiction of incorporation, with full corporate power and
authority to own, operate and lease its properties and to conduct its business
as presently conducted and proposed to be conducted. The Purchaser is qualified
to do business and is in good standing in every jurisdiction in which the
conduct of its business, the ownership or lease of its properties, or the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby requires it to be so qualified. True, complete
and correct copies of the Purchaser's charter and by-laws as presently in effect
have been delivered to the Seller.
Section 3.2 Authorization. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors of the Purchaser has
duly authorized the execution, delivery and performance of this Agreement, and
no other corporate proceedings on its part are necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement constitutes a legal, valid
and binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, subject to equitable considerations and the effect of
bankruptcy and other laws affecting the rights of creditors generally.
Section 3.3 No Violation. Except as set forth on Schedule 3.3 hereto, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by the Purchaser do not and will not (a)
conflict with or result in a breach of the terms, conditions or
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provisions of, (b) constitute a default or event of default under (with due
notice, lapse of time or both), (c) result in the creation of any Lien upon the
Purchaser or its capital stock or assets pursuant to, (d) give any third party
the right to accelerate any obligation under, (e) result in a violation of or
(f) require any authorization, consent, approval, exemption or other action by,
or notice to, any Person pursuant to the charter or by-laws of the Purchaser,
any applicable Regulation (including, without limitation, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976), any Order to which the Purchaser is subject
or any Contract to which the Purchaser or any of its properties are subject. The
Purchaser has complied with all applicable Regulations and Orders in connection
with the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, subject to the requirements which are
conditions to the Closing.
Section 3.4 Investment Intent. The Purchaser represents and warrants to
the Seller that it is purchasing the Shares for investment purposes and not with
a view to distribution thereof and agrees that it shall not make any sale,
transfer, or other disposition of the Shares in violation of the Securities Act
of 1933, as amended, or the Regulations thereunder or under any other applicable
securities laws.
Section 3.5 Commissions. There are and will be no claims for brokerage
commissions, finder's fees, fees for fairness opinions or financial advisory
services or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Purchaser or any of its Affiliates.
Section 3.6 Litigation. Except as set forth in Schedule 3.6, there is (a)
no Claim pending or, to Purchaser's knowledge, threatened against Purchaser
relating to the transactions contemplated by this Agreement, (b) no Claim by
Purchaser pending or threatened against any Person relating to the transactions
contemplated by this Agreement, (c) no outstanding Order relating to Purchaser
and to the transactions contemplated by this Agreement, and (d) no Claim by any
person relating to the transactions contemplated by this Agreement.
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Section 3.7 Disclosure. Neither this Agreement nor any of the attachments,
schedules, exhibits, written statements, documents, certificates or other items
prepared for or supplied to the Seller or the Company by or on behalf of the
Purchaser with respect to the transactions contemplated hereby contains any
untrue statement of a material fact or omits any material fact necessary to make
each statement contained herein or therein not misleading.
ARTICLE IV.
COVENANTS OF THE SELLER AND THE COMPANY
Subject to the provisions of Section 4.14 hereof, from and after December
31, 1997 until the Closing Date, the Seller and Ravenswood agree that they shall
have acted and shall act, or refrain from acting where so required, to comply
(and in the case of the Seller, to cause the Company to comply) with the
following (the term "Company" as used in this Article IV shall mean and include
Ravenswood, Telephone, Long Distance, Gemcell and any and all of their
Affiliates):
Section 4.1 Regular Course of Business.
(a) Generally. The Company shall operate its business diligently and
in good faith, consistent with past management practices, shall maintain all of
its properties in customary repair, order and condition, shall maintain (except
for expiration due to lapse of time or cancellation by another party pursuant to
the terms thereof) in the ordinary course of business all leases and Contracts
in effect without material change except as expressly provided herein or as
agreed to by the Purchaser and shall comply with the provisions of all
Regulations, Orders and Permits applicable to the Company and the conduct of its
business. The Company shall comply, without material modification, with all
Contracts and commitments relating to capital expenditures as set forth on
Schedule 2.22. The Company shall maintain its financial and accounting records
in a manner consistent with that employed at December 31, 1997, except for
changes required by reason of a concurrent change in GAAP or required by the
FCC, ICC or RTB, all of which changes are set forth on Schedule 2.11 hereto.
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(b) Compensation. The Company shall not hire any employee and shall
not grant any increase in the compensation of any employee, officer, board
member, consultant or independent contractor, other than as required by law or
in the ordinary course and consistent with past practices, and only to the
extent set forth in Schedule 4.1(b) hereto.
(c) Insurance. The Company shall maintain current its insurance
policies with the coverage and in the amounts set forth in Schedule 2.24.
(d) Claims. The Company shall promptly notify the Purchaser of any
Claims that may be commenced against it, as well as of any threatened, suspected
or expected Claims of which the Company or the Seller may be aware.
(e) Supplement. From time to time prior to the Closing Date, the
Seller shall promptly notify the Purchaser of any changes with respect to the
information set forth in this Agreement or the Schedules hereto and of any
matters hereafter arising which, if in existence at the Execution Date, would
have been required to be set forth in this Agreement or the Schedules hereto.
Section 4.2 Amendments. No change or amendment shall be made to the
charter or by-laws of the Company, and the Company shall not merge into or
consolidate with any other Person or change the character of its business.
Section 4.3 Capital Changes. The Company shall not issue, sell, purchase
or redeem any shares of its capital stock of any class or issue or sell any
securities convertible into, or options, warrants or other rights to subscribe
for, any shares of its capital stock. The Company shall not pledge or otherwise
encumber any shares of its capital stock, nor shall the Company allow the
transfer of any shares of its capital stock on its stock transfer ledger or
other books and records.
Section 4.4 Dividends. The Company shall not declare, pay or set aside for
payment any dividend or other distribution in respect of its capital stock,
except for dividends normally declared and paid consistent in amounts with past
practices on Ravenswood Capital Stock, Telephone Capital Stock, Long Distance
Capital Stock or Gemcell Capital Stock.
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Section 4.5 Capital Expenditures. The Company shall not make any capital
expenditures, or commitments with respect thereto, except as provided in
Schedule 2.22 or if less than $10,000 for any individual or aggregate unbudgeted
project or matter. Except with respect to a $500,000 loan from Ravenswood to
Seller, the Company shall not make or accept any loan or advance to or from any
of its Affiliates or Affiliates of the Seller.
Section 4.6 Borrowing. The Company shall not incur, assume or guarantee
any indebtedness or obligation not reflected on the Financial Statements, except
for amounts not to exceed ten thousand dollars ($10,000) per occurrence or
$50,000 in the aggregate in the ordinary course of business or under existing
borrowing facilities set forth on Schedule 2.12 hereto. Further, the Company
shall not incur, assume or guarantee any indebtedness or obligation of any of
its Affiliates or investments.
Section 4.7 Property. The Company shall not sell, transfer, or dispose of
any of its assets and properties, other than in the ordinary course of business
or as described in Schedule 4.7, or allow any of its assets and properties to
become subject to a Lien other than a Permitted Lien.
Section 4.8 Other Commitments. Except as set forth in this Agreement or
permitted in writing by the Purchaser from and after the Execution Date, the
Company shall not enter into any transaction, make any commitment or incur any
obligation other than (a) in the ordinary course of business, (b) the
distribution and loan described in Sections 4.4 and 4.5, respectively, (c) the
payment of expenses set forth in Section 12.13, and (d) the transactions
described in Schedule 4.7.
Section 4.9 Financial Information. From and after the Execution Date, the
Company shall supply the Purchaser with a copy of its internal monthly Unaudited
Financial Statements within forty-five (45) days after the end of each month.
Section 4.10 Consents and Authorizations. The Seller and the Company
shall, promptly after the Execution Date, commence efforts to obtain the
consents, waivers and authorizations listed in Schedules 2.3 and 2.26. The
Seller and the Company shall diligently pursue and use their reasonable efforts
to obtain such
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consents, waivers and authorizations as promptly as practicable prior to the
Closing Date, provided, however, that this provision shall not require Seller or
the Company to waive any conditions to its obligations hereunder.
Section 4.11 Access. The Seller and the Company shall afford to the
Purchaser and its counsel, accountants, agents and other authorized
representatives and to financial institutions specified by the Purchaser
reasonable access during business hours to the Company's plants, properties,
books and records in order that the Purchaser may have full opportunity to make
such reasonable investigations (including any environmental assessment) as it
shall desire to make of the affairs of the Company. The Company shall cause its
officers, employees and auditors to furnish such additional financial and
operating data and other information as the Purchaser shall from time to time
reasonably request.
Section 4.12 Notice of Transfer. The Seller and the Company shall act and
cooperate jointly with Purchaser in providing any required notices to the
appropriate Authority regarding any issues of ownership or control or change
thereof (including, without limitation, any such issues relating to the
Permits).
Section 4.13 Payment of Stamp Tax. All transfer (including any real estate
transfer tax), documentary, sales, use, stamp, registration and other such Taxes
and fees (including any penalties and interest) incurred in connection with this
Agreement shall be borne equally by the Seller and the Purchaser when due, and
the parties will file on a timely basis all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by applicable
Regulation, will, and will cause its Affiliates to, join in the execution of any
such Tax Returns and other documentation.
Section 4.14 Disclosure. To the extent the Company shall have taken any
actions contrary to any of the covenants set forth in this Article IV, from and
after December 31, 1997 and prior to the Execution Date, such actions are set
forth on Schedule 4.14 hereto. From and after the Execution Date, the Company
shall not take any actions contrary to any of the covenants set forth in this
Article IV without the prior written consent of the Purchaser.
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Section 4.15 Cooperation with Purchaser. Each of the Seller and the
Company shall cooperate with Purchaser as shall be reasonably necessary for
Purchaser to consummate this transaction, including, subject to Section 4.11,
giving access to the Company's properties and business records as shall be
necessary for Purchaser to, among other things, obtain surveys of the real
property, a title commitment with respect to the real property and/or
environmental assessments.
Section 4.16 Payment of Estate Tax Liability. On or before the Closing
Date, Seller shall pay the outstanding balance due of any federal estate taxes
due and owing on the Estate of Xxxxxx X. Xxxxxx and shall cause the removal of
any and all liens relating thereto.
Section 4.17 Purchase Price Escrow Agreement. On or before the Closing
Date, Seller and those Persons listed on Schedule 6.6, subheading A(1-7) shall
by mutual agreement execute the escrow agreement in substantially the form
attached hereto as Exhibit 4.17 (the "Purchase Price Escrow Agreement") (or with
such changes as are approved in writing by Purchaser), to effectuate the payment
of the Purchase Price as described in Sections 1.2 and 9.2. Seller shall furnish
Purchaser with an original of the fully executed Purchase Price Escrow
Agreement.
ARTICLE V.
COVENANTS OF THE PURCHASER
From and after the Execution Date until the Closing Date, the Purchaser
agrees that it shall have acted and shall act, or refrain from acting where so
required, to comply with the following (the term "Purchaser" as used in this
Article V shall mean and include any Assignee).
Section 5.1 Consents and Authorizations. The Purchaser shall, promptly
after the Execution Date, commence efforts to obtain the consents, waivers and
authorizations listed in Schedule 3.3. The Purchaser shall diligently pursue and
use its reasonable efforts to obtain such consents, waivers and authorizations
as promptly as practicable prior to the Closing Date, provided, however, that
this provision shall not require Purchaser to waive any condition to its
obligations hereunder.
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Section 5.2 Insurance Continuation. The Purchaser shall provide Seller and
Xxxxx X. Xxxxxxxx, each as a retired director of Ravenswood, coverage, at the
Company's expense, under such health, medical, dental and/or similar plan as the
Company has in effect from time to time, until the third (3rd) anniversary of
the Closing; provided, however, the Purchaser or the Seller may at any time
elect to satisfy this obligation by the payment of a lump sum sufficient to fund
such coverage. Additionally, the Purchaser shall provide the Company's officers
and directors who resign in connection with this transaction with continuing
directors' and officers' liability insurance coverage as provided in Section
6.8(b) hereof.
Section 5.3 Filings. Seller, Company and Purchaser shall cooperate with
one another in jointly preparing, applying for and making the filings and
authorizations or regulatory approvals required in connection with the
execution, delivery and performance of this Agreement, including, without
limitation, approval of the ICC. Purchaser assumes the economic burden of such
applications and filings, including, without limitation, the filing fee
associated with the ICC filing.
Section 5.4 Notice of Transfer. The Purchaser shall cooperate with the
Seller and the Company in providing any required notices to the appropriate
Authority regarding any issues of ownership or control or change thereof
(including, without limitation, any such issues relating to the Permits).
Section 5.5 Cooperation with Seller and Company. Purchaser shall cooperate
with each of Seller and Company as shall be reasonably necessary for Seller and
Company to consummate this transaction, and shall provide Company with any and
all reports produced pursuant to any environmental assessment undertaken
pursuant to Section 4.11 hereof.
Section 5.6 Supplement. From time to time prior to the Closing Date, the
Purchaser shall promptly notify the Seller and the Company of any changes with
respect to the information set forth in this Agreement or the Schedules attached
hereto and of the other matters hereafter arising which, if in existence at the
Execution Date, would have been required to be set forth in this Agreement or
the Schedules hereto.
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ARTICLE VI.
OTHER AGREEMENTS
The parties hereto further agree as follows:
Section 6.1 Agreement to Defend. In the event any claim of the nature
specified in Section 7.4 or Section 8.3 hereof is commenced, whether before or
after the Closing Date, the parties hereto agree to cooperate and use all
reasonable efforts to defend against and respond thereto.
Section 6.2 Further Assurances. On the terms and subject to the conditions
of this Agreement, the parties hereto shall use all reasonable efforts at their
own expense (except as otherwise provided herein) to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Regulations to consummate and make effective as
promptly as possible the transactions contemplated by this Agreement, and to
cooperate with each other in connection with the foregoing, including, without
limitation, using all reasonable efforts (a) to obtain all necessary waivers,
consents and approvals from other parties to loan agreements, leases, mortgages
and other Contracts, (b) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any Regulations or in
connection with any Permits, (c) to lift or rescind any injunction or
restraining order or other Order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby, and (d) to fulfill all
conditions to the obligations of the parties under this Agreement, provided,
however, that this provision shall not require Seller, Company or Purchaser to
waive any conditions to its obligations hereunder. Each of the parties hereto
further covenants and agrees that it shall use all reasonable efforts to prevent
a threatened or pending preliminary or permanent injunction or other Order.
Section 6.3 Consents. Without limiting the generality of Section 6.2, each
of the parties hereto shall use all reasonable efforts to obtain all waivers,
Permits, authorizations, consents and approvals of all Persons and Authorities
necessary, proper or
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advisable in connection with the consummation of the transactions contemplated
by this Agreement prior to the Closing Date.
Section 6.4 No Solicitation or Negotiation. Unless and until this
Agreement is terminated, neither the Seller nor the Company shall, and each
shall use reasonable efforts to cause its Affiliates, and the directors,
officers, employees, representatives, agents, advisors, accountants,
shareholders and attorneys of each of them, not to initiate or solicit, directly
or indirectly, any inquiries or the making of any proposal with respect to, or
engage in negotiations concerning, or provide any confidential information or
data to any Person with respect to, or have any discussions with any Person
relating to, any acquisition, business combination or purchase of all or any
significant asset of, or any equity interest in, directly or indirectly, the
Company, or otherwise facilitate any effort or attempt to do or seek any of the
foregoing and shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
Section 6.5 No Termination of the Obligations by Subsequent Dissolution.
Each of the parties hereto specifically agrees that its obligations hereunder,
including, without limitation, obligations pursuant to this Article VI, shall
not be terminated by the dissolution of such party, whether by operation of law,
Regulations or otherwise.
Section 6.6 Public Announcements. Prior to the Closing Date, no party
hereto nor any Affiliate, representative or shareholder of such party shall
disclose any of the terms of this Agreement to any third party without the prior
written consent of the other parties hereto, except (i) to those persons listed
in Schedule 6.6, (ii) as required to obtain the consents, waivers and
authorizations listed in Schedules 2.3, 2.26 and 3.3, (iii) in connection with
the Purchaser's financing of the transactions contemplated hereby, (iv) as
required by applicable law, and (v) in connection with any securities law
filing. Subject to the forgoing sentence, prior to the Closing Date, the form,
content and timing of all press releases, public announcements or publicity
statements with respect to this Agreement and the transactions contemplated
hereby shall be subject to the prior approval of both the Seller and the
Purchaser, which approval shall not be unreasonably
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withheld; provided, however, that either party may withhold such approval in its
sole discretion with respect to any of the foregoing which discloses any of the
financial terms of this transaction.
Section 6.7 Records and Information.
(a) Retention of Records. Except as otherwise required by Regulation
or agreed to in writing, each of the Seller and the Purchaser shall retain, and
shall cause its Affiliates to retain, for a period of at least four (4) years,
or the period required by applicable Regulation, following the Closing Date, all
records, books, contracts, instruments, computer data and other data and
information (collectively, "Information") relating to the Company.
(b) Access to Information. From and after the Closing Date, the
Seller shall afford to the Purchaser and its authorized accountants, counsel and
other designated representatives reasonable access (including using reasonable
efforts to give access to Persons or firms possessing Information) and
duplicating rights during normal business hours to all Information within the
Seller's possession relating to the Company, insofar as such access is
reasonably required by the Purchaser. Similarly, the Purchaser shall afford to
the Seller and its authorized accountants, counsel, and other designated
representatives reasonable access (including reasonable efforts to give access
to Persons or firms possessing Information) and duplicating rights during normal
business hours to Information within the Purchaser's possession relating to the
Company or its business as conducted prior to the Closing Date, insofar as such
access is reasonably required by the Seller.
(c) Provisions of Corporate Records. The Seller shall arrange, as
soon as practicable following the Closing Date, to the extent not previously
delivered in connection with the transactions contemplated herein, for
transportation at the Seller's cost to the Purchaser of the records in the
Seller's possession relating to the Company, the corporate minute books, stock
ledgers and certificates and corporate seals of the Company, and all Contracts
and litigation files relating to the Company, except to the extent (i) such
items are already in the possession of any of the Purchaser or the Company, (ii)
it is necessary or appropriate for the Seller to retain such records for use in
preparation of Tax Returns under the provisions hereof, or (iii) it is with
respect to any Claim
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concerning the Estate of Xxxxxx X. Xxxxxx. The Seller may make and retain copies
of all or any such records or documents at her expense.
(d) Witnesses. At all times from and after the Closing Date, each of
the Seller, the Company and the Purchaser shall use reasonable efforts to make
available to the other, upon written request, its and its Affiliates' officers,
directors, employees and agents as witnesses to the extent that such Persons may
reasonably be required in connection with any legal, administrative or other
proceedings in which the requesting party may from time to time be involved, at
no cost; provided, however, that a party producing such witnesses shall be
entitled to receive from the requesting party, upon presentation therefor,
payment for such out-of-pocket costs and disbursements as may be reasonably
incurred in producing such witnesses.
Section 6.8 Insurance Policies and Claims Administration.
(a) Insurance Coverage Prior to the Closing Date. The Seller shall
be responsible for the administration of all claims under the Company's
insurance policies relating to periods prior to the Closing Date. The Purchaser
will, if requested by the Seller, assist the Seller in performing this
obligation, at no cost to the Seller. If any claim is asserted against the
Company relating to periods prior to the Closing Date, the Seller shall, if
requested by the Purchaser, promptly assert and pursue coverage and payment for
such claim with the appropriate insurance carrier, and the Purchaser shall, and
shall cause the Company to, provide reasonable cooperation and assistance to the
Seller in asserting and pursuing such coverage. In particular, the Purchaser
shall, upon request by the Seller, cause the Company to file all necessary
claims and take all such other action as may reasonably be requested by the
Seller to pursue such coverage. As between the Seller, on the one hand, and the
Purchaser and the Company, on the other hand, the Purchaser and the Company
shall be entitled to recover all insurance proceeds with respect to any claim,
except to the extent the Seller has previously provided indemnification therefor
to the Purchaser or the Company under Article XI of this Agreement. If the
Purchaser shall pursue coverage and payment for any claim relating to periods
prior to the Closing Date on behalf of the Company, then the Seller shall
provide reasonable cooperation and assistance to the Company and the Purchaser.
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(b) Insurance Coverage After the Closing Date. The Purchaser shall
be responsible for establishing and maintaining the Company's property and
casualty insurance (including, without limitation, primary and excess general
liability, automobile, workers' compensation, property, director and officer
liability, fire, crime, surety and other similar insurance policies) for the
activities and claims of the Company and its Affiliates on and after the Closing
Date, either through the continuation of the Company's policies in place as at
the Closing Date, or the establishment of new policies, in the Purchaser's sole
discretion. Notwithstanding the foregoing, it is the intent of the parties that
those persons who served in the capacity of officer or director of the Company
prior to the Closing, and who resign from such positions in connection with the
transaction contemplated by this Agreement, be provided with continuing director
and officer liability insurance at the Company's expense and that Seller and
Xxxxx X. Xxxxxxxx be provided with the insurance contemplated by Section 5.2, at
Company's expense. The Purchaser therefore agrees to cause the Company, at the
Company's expense, to provide "tail" insurance coverage for such individuals,
from the date of Closing until the third (3rd) anniversary thereof.
Section 6.9 Other Tax Matters.
(a) Tax Returns. The Purchaser, the Seller, the Company and their
successors shall cooperate in the preparation of all Tax Returns and reports and
shall make available all necessary records and timely take all action necessary
to allow for the preparation and filing of all Tax Returns and reports. Within
ten (10) days following the Closing, the Seller shall deliver or shall cause to
be delivered to the Purchaser all books, records, returns, schedules, work
papers, and other documents (including without limitation, appraisals and other
background information) which are in the possession of the Seller or the Company
and which relate to any Taxes of the Company for any taxable period. Prior to
the delivery of the materials described in the preceding sentence, the Seller
shall cooperate with the Purchaser in providing access to such materials as is
reasonably required by the Purchaser.
The parties hereto agree that the Seller shall prepare, and pay (or have
fully reserved for on the Company's Audited and Unaudited Financials) all taxes
arising therefrom, all Tax Returns
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for the Company for the periods ending on or before the Closing Date and for all
taxes arising as a result of the transactions contemplated by this Agreement.
Upon mutual agreement between the Seller and the Purchaser, the Company may
prepare any such required tax returns. The Purchaser shall prepare, and pay all
taxes arising therefrom, all Tax Returns for the Company for the periods ending
after the Closing Date.
(b) Information. The Purchaser and the Seller agree to furnish or
cause to be furnished to each other, as promptly as practicable, such
information (including access to books and records) and assistance relating to
the Company as is reasonably requested for the filing of any Tax Return, in
determining a Tax liability or right to refund, for the preparation of any audit
or other proceeding, and for the prosecution of any claim, suit or proceeding
relating to a proposed Tax adjustment. The Purchaser and the Seller shall
cooperate with each other in the conduct of any Tax audit or other Tax
proceedings involving the Company. The parties shall execute and deliver such
powers of attorney and other documents as are reasonably requested to carry out
the administration of the Tax provisions of this Agreement.
(c) Amended Returns. From and after the Closing Date, Purchaser may
file an amended Tax Return for any period ending on or prior to the Closing Date
without the consent of the Seller. Any additional Taxes resulting from such an
amended Tax Return shall be the responsibility of, and shall be paid solely
by(i) the Seller (through indemnification pursuant to Article XI hereof), to the
extent such Taxes result from an amended Tax Return filed to correct any
"understatement," as such term is defined in Section 6662 of the IRC, by the
Seller or the Company with respect to all reporting periods ending on or before
the Closing Date, and (ii) the Company in all other events. The Purchaser shall
provide the Seller with notice of and a reasonable opportunity to participate in
the preparation of any such amended Tax Return, and the Seller agrees to provide
the Purchaser with reasonable cooperation and assistance in connection
therewith. Notwithstanding the foregoing, any and all determinations regarding
any and all such Tax Returns shall ultimately be made by the Purchaser, in its
sole discretion.
ARTICLE VII.
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CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser under this Agreement shall be subject to
the satisfaction of each of the following conditions unless waived in writing by
the Purchaser:
Section 7.1 Representations and Warranties; Covenants and Deliveries. The
representations and warranties of the Seller and the Company contained in
Article II hereof and elsewhere in this Agreement and all information contained
in any Exhibit, Schedule or attachment hereto shall be true and correct in all
material respects when made and on the Closing Date as though then made except
for such representations or warranties that are expressly made as of another
date, which shall be true and correct in all material respects as of such other
date. The Seller and the Company shall have performed and complied in all
material respects with all agreements, covenants and conditions required by this
Agreement to be performed and complied with by them prior to the Closing Date.
The Seller shall have delivered to the Purchaser a certificate, dated the
Closing Date, in a form reasonably satisfactory to the Purchaser, certifying to
the foregoing, and providing such supplemental information, agreements and
disclosures as shall be necessary to make such representations and warranties as
accurate on the Closing Date as on the date originally given or specifying those
respects in which particular covenants have not been performed in all material
respects or in which such representations and warranties are not true and
correct in all material respects (in which event, if the Closing occurs, any
claim (including any claim for indemnification) with respect to matters so
specified shall be thereafter waived by Purchaser). The Purchaser agrees and
acknowledges that any federal or state regulation or deregulation, or any
changes in Regulations applicable to federal or state regulation of the
Business, occurring between the Execution Date and the Closing Date, even if
such changes have or are reasonably expected to have a negative effect on the
Business and its results of operations, shall not constitute a breach of the
representations and warranties contained in Section 2.11 or any other Section
and shall not constitute a failure of a condition precedent to the Purchaser's
obligations hereunder. The Seller shall deliver to the Purchaser all of the
certificates, stock powers, settlement and release agreements and other
documentation referenced in Section 9.2 hereof, evidencing the transfer to the
Purchaser of clear title to all of the Shares
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at the Closing, all in form and substance satisfactory to the Purchaser and its
counsel in their sole discretion.
Section 7.2 Consents and Approvals. The Seller, the Company and the
Purchaser shall have obtained all consents, approvals, Orders, qualifications,
licenses, Permits or other authorizations specified in Schedules 2.3, 2.26 and
3.3 hereto and, to the extent not listed in Schedules 2.3, 2.26 and 3.3 hereto,
required by all applicable Regulations, Orders and Contracts binding on any of
the Seller, the Company or the Purchaser or any of their respective properties
and assets, with respect to the execution, delivery and performance of this
Agreement, the financing and consummation of the transactions contemplated
herein and the conduct of the business of the Company in the same manner after
the Closing Date as before the Closing Date, free of any special terms,
conditions or restrictions which Purchaser determines, in good faith and
following consultation with Seller, will materially and adversely affect the
actual, prospective operational and financial benefits to Purchaser of the
transactions contemplated by this Agreement. For purposes of this Agreement, all
such approvals and consents shall be deemed to have been obtained after the
grant thereof has become final, non-appealable and not subject to
reconsideration.
Section 7.3 No Material Adverse Change. There shall have been no Material
Adverse Change in the Business, properties (not otherwise covered by insurance),
Financial Statements, Unaudited Financial Statements, business prospects,
condition (financial or otherwise) or results of operations of the Company since
December 31, 1997 through the Closing Date. The Purchaser shall have received a
certificate, dated the Closing Date, from the Seller, in a form reasonably
satisfactory to the Purchaser, certifying to the foregoing.
Section 7.4 No Proceeding or Litigation. No proceeding, litigation or
Order (exclusive of Orders promulgated by or pertaining to the FCC, the ICC or
any similar regulatory Authority, the existence or occurrence of which shall be
governed by Section 7.2 hereof) shall be in effect which would prevent the
consummation of the transactions contemplated hereby.
Section 7.5 Secretary's Certificate. The Purchaser shall have received
certificates, signed by the Secretary of Ravenswood
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and the Secretary of Telephone, Long Distance and Gemcell, each dated the
Closing Date, as to the charter and by-laws of Ravenswood and of Telephone, Long
Distance and Gemcell and as to the resolutions adopted by the shareholders and
directors of each in connection with this Agreement in a form reasonably
satisfactory to the Purchaser.
Section 7.6 Certificates of Good Standing. At the Closing, the Company
shall have delivered to the Purchaser certificates issued by the appropriate
governmental authorities evidencing the good standing of the Company and each of
its Affiliates in their respective jurisdictions of incorporation and in each
jurisdiction in which each is qualified to do business as a foreign corporation
as of a date not more than fifteen (15) days prior to the Closing Date.
Section 7.7 Opinion of Seller's Counsel. The Seller shall deliver at
Closing an opinion of counsel to the Seller addressed to Purchaser and
Purchaser's lender in substantially the form attached hereto as Exhibit 7.7.
Section 7.8 Resignations. The Seller shall have caused all directors and
officers of the Company and of all of its Affiliates to have resigned from all
such positions.
Section 7.9 Other Documents. The Purchaser shall have been furnished with
such other and further documents and certificates, including evidence of the
payment of the estate tax liability contemplated by Section 4.16, execution of
the Purchase Price Escrow Agreement, and certificates of the Seller, the Company
or the Company's officers, directors and others, as the Purchaser shall
reasonably request to evidence compliance with the conditions set forth in this
Agreement.
Section 7.10 Liens. The Seller shall have removed all Liens on the Shares
and on the assets and properties of the Company other than Permitted Liens.
Section 7.11 Delivery of Minute Books and Investment Certificates. The
Seller shall deliver at Closing all original minute books and stock transfer
records of Ravenswood, Telephone, Long Distance and Gemcell, as well as any and
all original certificates, if any, evidencing the Company's investments.
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Section 7.12 Delivery of Unaudited Financial Statements. The Seller shall
have delivered Unaudited Financial Statements to the Purchaser as provided in
Section 4.9 hereof.
ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement shall be subject to the
satisfaction of each of the following conditions unless waived in writing by the
Seller:
Section 8.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Article III hereof and elsewhere in
this Agreement and all information contained in any Exhibit, Schedule or
attachment hereto shall be true and correct in all material respects when made
and on the Closing Date as though then made, except for such representations or
warranties that are expressly made as of another date, which shall be true and
correct in all material respects as of such other date. The Purchaser shall have
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed and complied with by
it prior to the Closing Date. An officer of the Purchaser in his capacity as
such shall have delivered to the Seller a certificate, dated the Closing Date,
certifying to the foregoing, and providing such supplemental information,
agreements and disclosures as shall be necessary to make such representations
and warranties as accurate on the Closing Date as on the date originally given
or specifying those respects in which particular covenants have not been
performed in all material respects or in which such representations and
warranties are not true and correct in all material respects (in which event, if
the closing occurs, any claim (including any claim for indemnification) with
respect to matters as specified shall be thereafter waived by Seller).
Section 8.2 Consents and Approvals. The Purchaser, the Seller and the
Company shall have obtained all consents, approvals, orders, qualifications,
licenses, Permits or other authorizations specified in Schedules 2.3, 2.26 and
3.3 hereto and, to the extent not listed in Schedules 2.3, 2.26 and 3.3 hereto,
required by all
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applicable Regulations, Orders and Contracts binding on the Purchaser, the
Seller or the Company or any of their respective properties and assets, with
respect to the execution, delivery and performance of this Agreement, free of
any special terms, conditions or restrictions which Seller determines, in good
faith and following consultation with Purchaser, will materially and adversely
affect the actual, prospective operational and financial benefits to Seller of
the transactions contemplated by this Agreement. For purposes of this Agreement,
all such approvals and consents shall be deemed to have been obtained after the
grant thereof has become final, non-appealable and not subject to
reconsideration.
Section 8.3 No Proceeding or Litigation. No proceeding, litigation or
Order (exclusive of Orders promulgated by or pertaining to the FCC, the ICC or
any similar regulatory Authority, the existence or occurrence of which shall be
governed by Section 8.2 hereof) shall be in effect which would prevent the
consummation of the transactions contemplated hereby.
Section 8.4 Secretary's Certificate. The Seller shall have received a
certificate, signed by the Secretary or the Assistant Secretary of the
Purchaser, dated the Closing Date, as to the charter and by-laws of the
Purchaser and the resolutions adopted by the directors of the Purchaser in
connection with this Agreement in a form reasonably satisfactory to the Seller.
Section 8.5 Opinion of Purchaser's Counsel. Purchaser shall deliver at
Closing an opinion of counsel to Purchaser addressed to Seller in substantially
the form attached hereto as Exhibit 8.5.
Section 8.6 Certificates of Good Standing. At the Closing, Purchaser shall
have delivered to Seller certificates issued by the appropriate governmental
authorities evidencing the good standing of Purchaser in its jurisdiction of
incorporation, as of a date not more than fifteen (15) days prior to the Closing
Date.
Section 8.7 Other Documents. The Seller and Company shall have been
furnished with such other and further documents and certificates, including
certificates of Purchaser's officers, directors and others, as Seller or Company
shall reasonably request
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to evidence compliance with the conditions set forth in this Agreement.
ARTICLE IX.
CLOSING
Section 9.1 Closing. Unless this Agreement shall have been terminated or
abandoned pursuant to the provisions of Article X hereof, a closing of the
transactions contemplated by this Agreement (the "Closing") shall be held on or
before January 4, 1999 (effective as of 12:01 A.M. on January 1, 1999) (or on
such date either before or after January 4, 1999 as the parties hereto shall
mutually agree, which shall occur and be effective at least ten (10) days after
receipt of all ICC and other approvals required as a precondition to Closing,
and which shall, to the extent reasonably feasible, occur and be effective on
the first day of a month) (the "Closing Date") in the offices of the Purchaser's
counsel, or at such other location as the parties hereto shall mutually agree;
provided, that the Closing shall occur as soon as practicable after the
satisfaction of the conditions contained in Articles VII and VIII hereof.
Section 9.2 Closing Date Payment and Receipt of Shares. On the Closing
Date:
(a) the Seller will assign and transfer to the Purchaser good and
valid title in and to the Shares, free and clear of all Liens except Permitted
Liens, by delivering to the Purchaser (i) stock certificates representing the
Shares, duly endorsed for transfer or accompanied by duly executed stock powers
endorsed in blank with requisite stock transfer tax stamps, if any, attached,
(ii) a fully executed original of the Purchase Price Escrow Agreement, and duly
executed settlement and release agreements, in form and substance satisfactory
to the Purchaser and its counsel, in their sole discretion, on behalf of the
persons listed in Schedule 6.6, subheading A(1-7) (if not otherwise contained
within said escrow agreement) and any and all other third parties who or which
claim, or have claimed an interest, legal or equitable, in any of the Shares as
beneficiaries of the estate of Xxxxxx X. Xxxxxx (including, without way of
limitation, Xxxx Beach, Xxxxx Xxxx, Xxxxxxx Xxxx, Xxxxxx Xxxx, the Alpha Iota
Chapter of Sigma
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Chi Fraternity at Illinois Wesleyan University, and Illinois Wesleyan
University), waiving and forever releasing any and all such Claims, and (iii)
any and all such additional documentation as is deemed necessary by the
Purchaser and its counsel, in their sole discretion, to evidence the transfer to
the Purchaser of title to the Shares at the Closing, free and clear of all Liens
except Permitted Liens;
(b) the Purchaser shall, by wire transfer of same-day funds, deposit
in an escrow account at First Federal Savings and Loan Association the amount of
One Million Dollars ($1,000,000.00) (the "Indemnity Escrow Funds"), all as
provided in the Indemnity Escrow Agreement referred to in Section 11.2 hereof;
(c) the Purchaser shall, by wire transfer of same-day funds, pay to
the escrow account established under Section 4.17, the aggregate amount of the
Purchase Price for all of the Shares, less the Indemnity Escrow Funds, less
$500,000 (from the amount otherwise payable to the Seller) with respect to
payment of the principal of Seller's promissory note to Ravenswood as provided
in Section 4.5 hereof, and concurrently therewith Seller shall pay to Purchaser
the accrued interest on such promissory note, said accrued interest amount to be
determined by the parties at least two (2) days before Closing;
(d) the parties shall deliver to each other the documents required
under this Agreement to be delivered at or prior to the Closing; and
(e) Upon delivery of the remainder of the Purchase Price to the
escrow account as provided in Section 9.2(c), the Purchaser shall have no
further obligation whatsoever with respect to the maintenance, investment or
distribution of such funds or the determination of the Person or Persons
entitled thereto, and the Purchaser shall be deemed to have completely fulfilled
all of its duties hereunder with respect thereto and any and all Shares shall be
deemed paid for in full by Purchaser.
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ARTICLE X.
TERMINATION AND ABANDONMENT
Section 10.1 Methods of Termination. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time:
(a) Mutual Consent. By mutual written consent of the Purchaser and
the Seller.
(b) Seller's Failure to Perform. By the Purchaser if as of the
Closing Date any of the conditions specified in Article VII hereof have not been
satisfied (and remain so unsatisfied for more than ten (10) days after the
Purchaser has notified the Seller in writing thereof) or waived by Purchaser or
if either the Seller or the Company is otherwise in default in any material
respect under this Agreement (and remains in default for more than ten (10)
business days after the Purchaser has notified the Seller in writing in
reasonable detail of such default).
(c) Purchaser's Failure to Perform. By the Seller if as of the
Closing Date any of the conditions specified in Article VIII hereof have not
been satisfied (and remain so unsatisfied for more than ten (10) days after the
Seller has notified the Purchaser in writing thereof) or waived by Seller or if
the Purchaser is otherwise in default in any material respect under this
Agreement (and remains in default for more than ten (10) business days after the
Seller has notified the Purchaser in writing in reasonable detail of such
default).
(d) Failure to Close by July 31, 1999. By either party in the event
the Closing has not occurred by July 31, 1999, unless such failure to close
shall be due to a breach of this Agreement by the party seeking to terminate the
Agreement.
(e) Material Adverse Change. By the Purchaser if a Material Adverse
Change shall be shown (in the sole discretion of Purchaser) in the Financial
Statements made as of December 31, 1997 or in any of the Unaudited Financial
Statements and written notice of termination of this Agreement shall have been
given by the Purchaser within thirty (30) business days of Purchaser's receipt
of such Financial Statements or Unaudited Financial Statements.
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(f) Remedies. In the event of any failure to perform as described in
this Section 10.1, the nonbreaching party shall have such remedies for breach of
contract as are allowed by law in addition to or in substitution of the right of
termination; provided, however, that in the event the parties hereto (singly or
collectively) are unable to obtain all satisfactory and necessary approvals,
consents, authorizations, waivers and Permits from each applicable Authority in
connection with the transactions contemplated by this Agreement, following good
faith efforts to do so, or in the event of a Material Adverse Change or any
proceeding, litigation or Order as described in Sections 7.4 or 8.3 hereof which
result from actions, events or circumstances which are beyond the control of the
party affected by such Material Adverse Change, then in such event the sole and
exclusive remedy of the parties hereto shall be termination of this Agreement,
and the parties hereto shall specifically not have, and hereby waive, all such
other remedies as may be allowed by law or equity. In the event the transactions
contemplated hereby are not consummated following a breach by the Seller or the
Company of the provisions of Section 6.4 hereof, the Purchaser's sole and
exclusive remedy shall be the Breakup Fee, as provided in Section 10.2(c)
hereof, and the Purchaser shall specifically not have, and hereby waives, all
such other remedies as may be afforded by law or equity.
(g) Notwithstanding Sections 10.1(b) and 10.1(c), a party shall not
be deemed to be in default in any material respect under this Agreement where
such default (a "Resulting Default") is caused directly or primarily by the
other party, and such Resulting Default shall be abated day-for-day for the time
period such Resulting Default was caused or continues to be caused by the other
party.
Section 10.2 Procedure Upon Termination. If this Agreement is terminated
as provided herein:
(a) Return of Records. Each party shall as promptly as practicable
redeliver to the party furnishing the same, all data, information and other
written material (including all copies thereof) of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof.
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(b) Confidentiality. All information received by any party hereto
with respect to the business of any other party (other than information which is
a matter of public knowledge or which has heretofore been or is hereafter
published in any publication for public distribution or filed as public
information with any Authority) shall not at any time be used by such party, or
disclosed to third parties, all as provided in the Confidentiality Agreement.
(c) Breakup Fee. In the event the transactions contemplated hereby
are not consummated following a breach by the Seller or the Company of the
provisions of Section 6.4 hereof, the Seller and the Company shall jointly and
severally pay to the Purchaser, within ten (10) business days following the
termination of this Agreement, a "Breakup Fee" in the amount of Four Hundred
Thousand and No/100 Dollars ($400,000.00), in readily available funds. Such
amount shall be considered liquidated damages and not a penalty.
Section 10.3 Exclusive Remedy. The parties hereby expressly agree that if
the closing of the transactions contemplated by this Agreement does not occur,
the remedies provided under this Article X shall be the sole and exclusive
remedies for any and all Claims by either party against the other for matters
arising under this Agreement. In the event the closing of the transactions
contemplated by this Agreement does occur, this Article X shall be superseded by
Article XI and Article X shall have no further legal effect.
ARTICLE XI.
SURVIVAL OF TERMS; INDEMNIFICATION
Section 11.1 Survival; Limitations.
(a) All of the terms and conditions of this Agreement, together with
the representations, warranties and covenants contained herein or in any
instrument or document delivered or to be delivered pursuant to this Agreement
and the agreements of the parties to indemnify each other as set forth in this
Article XI, shall survive the execution of this Agreement and the Closing Date
for two (2) years from such date (the "Indemnification Period"),
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notwithstanding any investigation heretofore or hereafter made by or on behalf
of any party hereto and shall continue for, and all claims with respect thereto
shall be made prior to the end of, the Indemnification Period; provided,
however, that with respect to any income tax liability of the Company, Telephone
or any of their Affiliates attributable to any activities or transactions
occurring by any of them on or prior to the Closing Date, the agreement of the
Seller to indemnify Purchaser and its Affiliates shall survive until, and all
claims with respect thereto shall be made prior to, the expiration of the
applicable statute of limitations prescribed by Section 6501 of the IRC.
(b) Notwithstanding anything in this Agreement to the contrary, each
of the parties hereto shall be required to indemnify one another pursuant to the
provisions of this Article XI only to the extent that Claims indemnifiable by
such party exceed Twenty-Five Thousand Dollars ($25,000) in the aggregate, and
only with respect to such excess. Additionally, the liability of each of the
parties hereto with respect to indemnity pursuant to any provision contained in
this Article XI shall be limited to One Million Dollars ($1,000,000) in the
aggregate and, with respect to Seller's obligation, shall be satisfied only from
the funds held in the Escrow Account described in Section 11.2. Except as
provided in this Article XI, neither party shall be liable to or obligated to
indemnify the other party for any consequential, special, punitive or exemplary
damage.
Section 11.2 Escrow of Liquid Assets. One Million Dollars ($1,000,000.00)
of the Purchase Price otherwise payable to the Seller for her Shares shall be
maintained in an escrow account (the "Indemnity Escrow Account"), in First
Federal Savings and Loan Association, pursuant to the terms and provisions of an
Indemnity Escrow Agreement to be executed at Closing substantially in the form
attached hereto as Exhibit 11.2 (the "Indemnity Escrow Agreement"). In the event
of a claim for indemnity against Seller pursuant to Article XI, the Purchaser's
sole recourse shall be to make a claim directly from the Indemnity Escrow
Account for payment of any such indemnity in the manner provided in the
Indemnity Escrow Agreement.
Section 11.3 Indemnification by the Seller. After the Closing Date,
subject to the limitations set forth in Sections 11.1 and 11.2 hereof, the
Purchaser and its subsidiaries and Affiliates
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(including, without limitation, Ravenswood, Telephone, Long Distance and
Gemcell) and their respective officers, directors, employees, shareholders,
representatives and agents shall be indemnified and held harmless by the Seller,
her heirs, successors, representatives and assigns, against and in respect of
any and all damage, loss, liability, cost or expense (including, the reasonable
fees and expenses of counsel and any Tax liability resulting from any indemnity
payment made hereunder) resulting from, or in respect of, any of the following:
(a) Misrepresentation or Breach. Any misrepresentation or breach of
warranty of the Seller or the Company under this Agreement, or contained in any
Schedule or Exhibit to this Agreement or from any misrepresentation in or
omission from any certificate, Schedule, Exhibit, related agreement, Financial
Statement, Unaudited Financial Statement or instrument delivered by or on behalf
of the Seller or the Company hereunder.
(b) Taxes. All Taxes of the Seller or the Company, or any of their
Affiliates attributable to any period beginning or ending prior to or on the
Closing Date, including but not limited to any Taxes that may result should the
reverse triangular merger of the Company consummated as of September 26, 1996
not be held to be tax-free under the IRC, provided, however, that Seller's
indemnity obligation with respect to Taxes resulting from amended returns filed
by Purchaser shall be governed by the provisions of Section 6.9(c) hereof.
(c) Third Party Claims. Any Claim of a third party arising out of
the business or operations of the Company prior to or on the Closing Date,
including, without way of limitation, any and all Claims arising from or
pertaining to in any way the real property formerly owned by the Company and
located at the corner of Central and First Streets and/or known as 00 Xxxxx
Xxxxxxx Xxxxxx, Xx Xxxx, Xxxxxxxx, which property formerly housed the Xxxxxxx
Hotel, or any Claim resulting from or arising out of the ownership, management
or use of the Shares and/or the business of the Company prior to or on the
Closing Date, including, without way of limitation, any and all such Claims by
or on behalf of any and all Persons who or which claim any right, title or
interest, legal or equitable, as beneficiaries of the estate or otherwise of
Xxxxxx X. Xxxxxx, in or to any of the Shares, including, without way of
limitation, the Ravenswood Capital Stock or the Telephone Capital
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Stock, or the proceeds thereof (including, without way of limitation, claims of
improper, incorrect or incomplete payment by the Escrow Agent pursuant to the
terms of the Purchase Price Escrow Agreement).
(d) Related Expenses. All expenses and costs, including but not
limited to legal fees, reasonably paid or incurred in connection with any such
indemnified Claim.
Section 11.4 Indemnification by the Purchaser. After the Closing, subject
to the limitation set forth in Section 11.1, the Seller, her heirs, successors,
representatives and assigns shall be indemnified and held harmless by the
Purchaser against and in respect of any and all damage, loss, liability, cost or
expense (including, unless otherwise provided herein, the reasonable fees and
expenses of counsel and any Tax liability resulting from any indemnity payment
made hereunder) resulting from, or in respect of, any of the following:
(a) Misrepresentation or Breach. Any misrepresentation or breach of
warranty of the Purchaser, or nonfulfillment of any obligation on the part of
the Company (to be performed after the Closing) or the Purchaser under this
Agreement, or contained in any Schedule or Exhibit to this Agreement or from any
misrepresentation in or omission from any certificate, Schedule, Exhibit,
related agreement or instrument delivered by or on behalf of the Purchaser
hereunder.
(b) Taxes. All Taxes of the Purchaser or of the Company attributable
to any period which begins after the Closing Date.
(c) Third Party Claims. Any Claim of a third party arising out of
the business or operations of the Company after the Closing Date.
(d) Related Expenses. All expenses and costs, including but not
limited to legal fees, reasonably paid or incurred in connection with any such
indemnified Claim.
Section 11.5 Third Party Claims.
(a) Generally. Subject to the limitations of Section 11.1, the
following procedures shall be applicable with respect to
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indemnification for third party Claims. Promptly after receipt by the party
seeking indemnification hereunder (hereinafter referred to as the "Indemnitee")
of notice of the commencement of any action or the assertion of any Claim,
liability or obligation by a third party (whether by legal process or
otherwise), against which Claim, liability or obligation another party to this
Agreement (hereinafter the "Indemnitor") is, or may be, required under this
Agreement to indemnify such Indemnitee, the Indemnitee shall, if a claim thereon
is to be, or may be, made against the Indemnitor, immediately notify the
Indemnitor in writing of the commencement or assertion thereof and give the
Indemnitor a copy of such Claim or process and all legal pleadings. Subject to
the limitations of Section 11.1, the Indemnitee's failure to give timely notice
as required by this Section 11.5(a) shall not serve to eliminate or limit the
Indemnitor's obligation to indemnify the Indemnitee unless such failure
prejudices the rights of the Indemnitor, and then only to the extent of such
prejudice. Moreover, the Indemnitee shall have the right to take any actions or
steps it deems reasonable to avoid the occurrence of any prejudice to the rights
of the Indemnitee. The Indemnitor shall have the right to assume the defense of
such action with counsel of reputable standing unless with respect to such
action (A) injunctive or equitable remedies have been sought therein in respect
of the Indemnitee or its business or (B) such action is for an alleged amount of
less than Five Thousand Dollars ($5,000); provided, that the Indemnitee and
counsel to the Indemnitee shall have the right to participate in the defense of
any and all Claims pursuant to the provisions of Section 11.5(b) hereof. The
Indemnitor and the Indemnitee shall reasonably cooperate in the defense of such
Claims. Subject to the limitations of Section 11.1 hereof, if the Indemnitee
shall be required by judgment or a settlement agreement to pay any amount in
respect of any obligation or liability against which the Indemnitor has agreed
to indemnify or reimburse the Indemnitee under Article XI of this Agreement, the
Indemnitor shall immediately pay such amount to the Indemnitee in order to
enable the Indemnitee to make such payment, or otherwise shall promptly
reimburse the Indemnitee in an amount equal to the amount of such payment, in
either case, plus all out-of-pocket expenses (including legal fees and expenses)
incurred by such Indemnitee at the specific request of the Indemnitor, as
provided above, or as otherwise authorized by Section 11.5(b) hereof, in
connection with such obligation or liability subject to this Article XI;
provided, however, that in the event the Seller is the Indemnitor with
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respect to such Claim, then such payment and reimbursement (plus out-of-pocket
expenses, as provided above) shall be made from and solely out of the Indemnity
Escrow Funds, and the Indemnitor and the Indemnitee shall jointly instruct the
Indemnity Escrow Agent, in writing, to make such payment and reimbursement from
and out of the Indemnity Escrow Account. No Indemnitor, in the defense of any
such Claim, shall, except with the consent of the Indemnitee, consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability with respect to such Claim. In the
event that the Indemnitor does not accept the defense of any matter for which it
is entitled to assume such defense as provided in this Section 11.5(a), the
Indemnitee shall have the full right to defend against any such Claim and shall
be entitled to settle or agree to pay in full such Claim in its sole discretion.
With respect to any matter as to which the Indemnitor is not entitled to assume
the defense pursuant to the terms of this Section 11.5(a), the Indemnitee shall
not enter into any settlement for which an indemnification Claim will be made
hereunder without the approval of the Indemnitor, which shall not be
unreasonably withheld.
(b) Counsel. An Indemnitee shall have the right to employ its own
counsel, but the fees and expenses of such counsel shall be at the expense of
the Indemnitee unless (i) the employment of such counsel shall have been
authorized in writing by the Indemnitor in connection with the defense of such
Claim and the Indemnitor has agreed in writing to pay such fees and expenses,
(ii) the Indemnitor shall not have employed counsel in the defense of such Claim
(which counsel may be in-house counsel unless and until a lawsuit has been
commenced) or (iii) the Claim in any manner relates to or arises from any
dispute as to the ownership of the Shares or the entitlement to the proceeds
thereof. In either of which events, such fees and expenses of not more than one
additional counsel for the Indemnitee shall be borne by the Indemnitor, subject
to the limitations of Section 11.1(b).
Section 11.6 Other Claims.
(a) Subject to the limitations of Sections 7.1, 8.1 and 11.1, in the
event an Indemnitee should have a claim under this Article XI against an
Indemnitor that does not involve a third party Claim, the Indemnitee shall
promptly give notice (the
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"Indemnitee Notice") and the details thereof, including copies of all relevant
information and documents, to the Indemnitor within a period of thirty (30) days
following the discovery of the claim by the Indemnitee (the "Claim Notice
Period"). The failure by any Indemnitee to give the Indemnitee Notice within the
Claim Notice Period shall not impair the Indemnitee's rights hereunder except to
the extent that the Indemnitor demonstrates that it has been prejudiced thereby.
The Indemnitor will notify the Indemnitee within a period of twenty (20) days
after the receipt of the Indemnitee Notice by the Indemnitor (the "Indemnity
Response Period") whether the Indemnitor disputes its liability to the
Indemnitee under this Article XI with respect to such Claim. Subject to the
limitations of Section 11.1, if the Indemnitor notifies the Indemnitee that it
does not dispute the Claim described in such Indemnitee Notice or fails to
notify the Indemnitee within the Indemnity Response Period whether the
Indemnitor disputes the claim described in such Indemnitee Notice, the actual
damages as finally determined will be conclusively deemed to be a liability of
the Indemnitor under this Article XI and the Indemnitor shall pay the amount of
such damages to the Indemnitee on demand; provided, however, that in the event
the Seller is the Indemnitor with respect to such claim, then such payment shall
be made from and solely out of the Indemnity Escrow Funds. If the Indemnitor
notifies the Indemnitee within the Indemnitee Response Period that the
Indemnitor disputes its liability with respect to such Claim, the Indemnitor and
the Indemnitee will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within a period of thirty (30)
days from the date of such notice or such longer period as may be agreed to by
the parties in writing, such dispute shall be resolved by arbitration in
accordance with Section 11.6(b) hereof.
(b) Any dispute required to be submitted to arbitration pursuant to
this Section 11.6(b) shall be finally and conclusively determined in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
(the "Rules of Arbitration") then in effect by the decision of three (3)
arbitrators (the "Board of Arbitration") selected in accordance with the Rules
of Arbitration. The Board of Arbitration shall meet in Charlotte, North Carolina
and shall render a decision in writing (concurred in by a majority of the
members of the Board of Arbitration) with respect to and stating the amount, if
any, which the Indemnitor,
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subject to the limitations of Section 11.1, is required to pay to the Indemnitee
in respect of the claim made by the Indemnitee. The decision of the Board of
Arbitration shall be rendered as soon as practical following commencement of
proceedings with respect thereto. The Board of Arbitration shall cause its
written decision to be delivered to the Indemnitee and the Indemnitor and, to
the extent the Indemnity Escrow Account is still in existence, to the Escrow
Agent. Any decision made by the Board of Arbitration shall be final, binding and
conclusive on the Indemnitee and the Indemnitor and entitled to be enforced to
the fullest extent permitted by law and entered in any court of competent
jurisdiction.
The parties hereto hereby consent to the jurisdiction of the
foregoing Board of Arbitration and to the jurisdiction of any local, state or
federal court located in the State of North Carolina for the purpose of
enforcing the decision or award of the Board of Arbitration or otherwise. The
parties hereto agree that all service of process may be made on any such party
by personal delivery or by registered or certified mail addressed to the
appropriate party at the address for such party set forth in this Agreement.
Subject to the limitations of Section 11.1, all fees, costs and
expenses of the prevailing party in any arbitration, including, but not limited
to, attorneys' fees, shall be paid by the losing party and shall be awarded to
the prevailing party as part of the decision of the Board of Arbitration. For
purposes hereof, a "Prevailing Party" shall mean the party which substantially
prevails in its position in arbitration. Each and every arbitration proceeding
commenced pursuant to this Section 11.6(b) shall be consolidated with any
arbitration proceedings simultaneously or previously commenced (but not
concluded) under this Section 11.6(b).
Section 11.7 Continued Liability for Indemnity Claims.
The liability of any Indemnitor hereunder with respect to claims
hereunder shall continue for so long as any claims for indemnification may be
made hereunder pursuant to this Article XI and, with respect to any such
indemnification claims duly and timely made, thereafter until the Indemnitor's
liability therefore is finally determined and satisfied.
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Section 11.8 Exclusive Remedy. The parties hereby expressly agree that if
the closing of the transactions contemplated by this Agreement does occur the
indemnification to be provided under and pursuant to Article XI shall be the
sole and exclusive remedy for any and all Claims by either party against the
other for matters arising under this Agreement.
ARTICLE XII.
GENERAL PROVISIONS
Section 12.1 Amendment and Modification. Subject to applicable
Regulations, this Agreement may be amended, modified and supplemented at any
time with respect to any of the terms contained herein, by a written agreement
signed by all of the parties hereto.
Section 12.2 Waiver. The failure of any party hereto to comply with any
obligation, covenant, agreement or condition herein may be waived in writing by
the other parties hereto, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits approvals or consent by or on behalf of any party
hereto, such approval or consent shall be given in writing, and except where
specifically stated to be in a party's sole discretion, shall not be
unreasonably withheld, conditioned or delayed.
Section 12.3 Certain Definitions.
"Affiliate" shall mean, with regard to any Person, any Person which,
directly or indirectly controls, is controlled by, or is under common control
with, such Person and, with respect to any Person who is an individual, the
spouse, ancestors and descendants (lineal or by marriage) thereof. "Control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by Contract or otherwise. Neither Associated Network Partners, Inc.,
Illinois Valley Cellular RSA 2, Inc., Illinois Valley Cellular RSA 2-I
Partnership, Illinois Valley Cellular RSA 2-II Partnership, nor
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Illinois Valley Cellular RSA 2-III Partnership shall be deemed an Affiliate for
purposes of this definition, but all such entities shall be deemed investments
for purposes of this Agreement.
"Agreement" shall have the meaning ascribed to such term in the preamble
hereof, as the same may be amended from time to time.
"Authority" shall mean any governmental authority, including, without
limitation, the FCC and the ICC and any other governmental, regulatory or
administrative body, agency, commission, board of arbitrators, or any court or
judicial authority, whether federal, state, or local.
"Business Day" shall mean any day that is not a Saturday or Sunday and
that in El Paso, Illinois, or Charlotte, North Carolina, is not a day on which
banking institutions are generally authorized or obligated by Regulation to
close.
"CERCLA" shall have the meaning ascribed to such term in Section 2.21(c)
hereof.
"CERCLIS" shall have the meaning ascribed to such term in Section 2.21(c)
hereof.
"Claim" shall mean any action, written claim, complaint, lawsuit, written
demand, suit, notice of a violation, litigation, proceeding, arbitration or
other dispute noticed in writing, or otherwise, whether civil, criminal,
administrative or otherwise, by any Authority or other Person, including, by way
of example and not limitation, any of the foregoing brought by or on behalf of a
Person asserting any right, title or interest, legal or equitable, as
beneficiaries of the estate of Xxxxxx X. Xxxxxx, in or to any of the Shares,
including, without way of limitation, the Ravenswood Capital Stock or the
Telephone Capital Stock, or the proceeds thereof.
"Closing" shall have the meaning ascribed to such term in Section 9.1
hereof.
"Closing Date" shall have the meaning ascribed to such term in Section 9.1
hereof.
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"Company" shall have the meaning ascribed to such term in the preamble
hereof, but with respect to all representations, warranties, covenants and
agreements contained herein or in any Exhibit or Schedule hereto shall mean
Ravenswood Communications, Inc., The El Paso Telephone Company, El Paso Long
Distance Company and Gemcell, Inc.
"Confidentiality Agreement" shall mean that confidentiality agreement
signed by the parties hereto and dated December 6, 1996.
"Contract" shall mean any agreement, contract, commitment, instrument or
other binding arrangement or understanding, whether written or oral.
"Environmental Law" shall mean any Regulation or Order, including, but not
limited to, any term or condition included in a validly issued Permit to
construct or operate a facility subject to any Regulation or Order, which
relates to or otherwise imposes liability or standards of conduct concerning
environmental matters, mining or reclamation of mined land, discharges,
emissions, releases or threatened releases of noises, odors or any pollutants,
contaminants or hazardous or toxic wastes, substances or materials, whether as
matter or energy, into ambient air, water or land or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants or
hazardous wastes, substances or materials, including (but not limited to)
CERCLA, the Superfund Amendments and Reauthorization Act of 1986, as amended,
the Resource Conservation and Recovery Act of 1976, as amended, the Toxic
Substances Control Act of 1976, as amended, the Federal Water Pollution Control
Act Amendments of 1972, the Clean Water Act of 1977, as amended, any so-called
"superlien" law and any other similar Regulation by any Authority in effect on
or before the Closing Date.
"Environmental Permit" shall mean a Permit relating to or required by any
Environmental Law.
"ERISA" shall have the meaning ascribed to such term in Section 2.19
hereof.
"ERISA Plans" shall have the meaning ascribed to such term in Section 2.19
hereof.
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"Execution Date" shall have the meaning ascribed to such term in the
preamble hereof.
"FCC" shall mean the Federal Communications Commission.
"Financial Statements" shall have the meaning ascribed to such term in
Section 2.9 hereof.
"GAAP" shall mean United States generally accepted accounting principles,
consistently applied, as in existence at the Execution Date and/or at the
Closing Date.
"Hazardous Materials" shall have the meaning ascribed to such term in
Section 2.21(a) hereof.
"Improvements" shall have the meaning ascribed to such term in Section
2.14(c) hereof.
"ICC" shall mean the Commerce Commission of the State of Illinois.
"Indemnitee" shall have the meaning ascribed to such term in Section
11.5(a) hereof.
"Indemnitor" shall have the meaning ascribed to such term in Section
11.5(a) hereof.
"Indemnity Escrow Account" shall have the meaning ascribed to such term in
Section 11.2 hereof.
"Indemnity Escrow Agreement" shall have the meaning ascribed to such term
in Section 11.2 hereof.
"Indemnity Escrow Funds" shall have the meaning ascribed to such term in
Section 9.2 hereof.
"Information" shall have the meaning ascribed to such term in Section
6.7(a) hereof.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
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"Knowledge," "known," or "know" shall mean knowledge of a particular fact
or matter of an individual if such individual is actually aware of such fact or
other matter, or if such individual is serving or has served as an officer
and/or director of the entity to which such representation or warranty pertains
and should have been actually aware of such fact or other matter, given the
level of responsibility and supervisory authority generally associated with such
position(s).
"Lien" shall mean any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, claim, easement, restriction (on transfer or
otherwise) or interest of another Person of any kind or nature, including,
without way of limitation, any and all of the foregoing which in any manner
relate to or arise from Claims by or on behalf of any Person who or which claims
any right, title or interest, legal or equitable, as beneficiary of the estate
of Xxxxxx X. Xxxxxx, in or to any of the Shares, including, without way of
limitation, the Ravenswood Capital Stock or the Telephone Capital Stock, or the
proceeds thereof.
"Material Adverse Change" shall mean any developments or changes which
would have a Material Adverse Effect.
"Material Adverse Effect" shall mean, with respect to any Person, any
circumstances, state of facts or matters which could reasonably be expected,
either individually or in conjunction with any other circumstance, state of
facts or matter, to have a material adverse effect in respect of such Person's
business, business prospects, properties, assets, condition (financial or
otherwise) or results of operations; provided, however, that Material Adverse
Effect shall not include any federal or state regulation or deregulation, or any
changes in Regulations applicable to federal or state regulation of the
Business, occurring between the Execution Date and the Closing Date, and any
actions agreed to by the Purchaser.
"Order" shall mean any judgment, decree (consent or otherwise), order,
injunction (preliminary or permanent), stipulation, ruling, decree or consent of
or by an Authority that is adopted or otherwise takes effect on or before the
Closing Date.
"Ordinary Course of Business," "ordinary course," or "ordinary and
regular" shall mean action consistent with past practice and
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taken in the ordinary course of the normal day-to-day operations of such Person.
"PCB" shall mean polychlorinated biphenyls.
"Permits" shall have the meaning ascribed to such term in Section 2.26
hereof.
"Permitted Liens" shall mean (i) statutory Liens for Taxes not yet due and
payable, or being contested in good faith to the extent set forth in Schedule
2.16 hereto, (ii) such imperfections or irregularities of title, easements,
charges or encumbrances as do not interfere with the present use of the
properties or assets subject thereto or affected thereby, do not otherwise
impair present business operations at such properties, and do not have a
Material Adverse Effect on the value of such properties and assets, (iii) Liens
reflected in the Financial Statements, (iv) Liens imposed by law and incurred in
the ordinary course of business for obligations not yet due to carriers,
warehousemen, laborers and materialmen, (v) exceptions of record and standard
exceptions contained in title insurance policies or commitments for issuances
thereof as delivered to Purchaser by Seller, (vi) ownership interest of
Ravenswood in Telephone and Long Distance, and of Telephone in Gemcell, (vii)
limitations imposed pursuant to the Regulations of any applicable Authority, and
(viii) prior to the Closing Date, statutory Liens for Taxes due from the Estate
of Xxxxxx X. Xxxxxx (all of which statutory Tax Liens will be removed and
cancelled of record prior to the Closing Date).
"Person" shall mean any corporation, partnership, joint venture,
organization, entity, Authority or natural person, together with any and all
heirs, successors, representatives and assigns thereof, and shall specifically
include, without way of limitation, the city of El Paso, Illinois.
"Pension Benefit Plan" shall have the meaning ascribed to such term in
Section 2.19 hereof.
"Proprietary Rights" shall mean all (i) patents, patent applications,
patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, reexamination, utility, model, certificate of invention and
design patents, registrations and applications for registrations, (ii)
trademarks, service marks,
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logos, trade names and corporate names and registrations and applications for
registration thereof and (iii) copyrights and registrations and applications for
registration thereof.
"Purchase Price" shall have the meaning ascribed to such term in Section
1.2 hereof.
"Purchase Price Escrow Agreement" shall have the meaning ascribed to such
term in Section 4.17 hereof.
"Purchaser" shall have the meaning ascribed to such term in the preamble
hereof, but with respect to all representations, warranties, covenants and
agreements contained herein or in any Exhibit or Schedule hereto shall mean the
Purchaser and any Assignee described in Section 12.5.
"Regulation" shall mean any law, statute, regulation, ordinance,
requirement, rule, executive order or binding action of or by an Authority that
is adopted or otherwise takes effect on or before the Closing Date.
"Release" shall have the meaning ascribed to such term in Section 9601(22)
of Title 42 of the United States Code.
"Seller" shall have the meaning ascribed to such term in the preamble
hereof.
"Shares" shall have the meaning ascribed to such term in the recitals.
"Tax Returns" shall have the meaning ascribed to such term in Section
2.16(a) hereof.
"Tax" or "Taxes" means any income, gross receipt, net proceeds,
alternative or add-on minimum, ad valorem, value added, estimated, turnover,
sales, use, property, personal property (tangible and intangible), invested
capital, stamp, leasing, lease, user, excise, duty, franchise, transfer,
license, withholding, payroll, employment, fuel, excess profits, occupational
and interest equalization, windfall profits, severance and other taxes, charges,
fees, levies or other assessments of any kind whatsoever (including interest,
penalties, fines and additions thereto) imposed by any taxing Authority,
federal, state or local.
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"Unaudited Financial Statements" shall have the meaning ascribed to such
term in Section 2.9 hereof.
"Welfare Benefit Plan" shall have the meaning ascribed to such term in
Section 2.19 hereof.
Section 12.4 Notices. All notices, claims, requests, demands or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, by first class certified
mail, return receipt requested, with postage paid, or by receipted overnight
courier service to the intended recipient at the address specified below or at
such other address as shall be designated by such party in any notice to the
other parties.
Notices to Purchaser: With a Copy to:
--------------------- ---------------
MJD Services Corp. Xxxxxxxxx Xxxxxx Xxxxxx &
000 Xxxx Xxxxxxxx Xxxxxx Xxxxxx, P.A.
Suite 250 000 X. Xxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000 Suite 2020
ATTN: Xxxxxx X. Xxxxxxx, Xxxxxxxxx, XX 00000
Executive Vice President ATTN: Xxxxxxx X. Xxxx, Esq.
(000) 000-0000 (Phone) (000) 000-0000 (Phone)
(000) 000-0000 (Fax) (000) 000-0000 (Fax)
Notices to the Seller,
or the Company With a Copy to:
---------------------- ---------------
Xxxxx X. Xxxxxxxx, President Xxxxx X. Reader, Esq.
Ravenswood Communications, Inc. Kraskin, Lesse & Xxxxxx, L.L.P.
0000 X. 0000 Xxxx 0000 X. Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
(000) 000-0000 (Phone) (000) 000-0000 (Phone)
(000) 000-0000 (Fax) (000) 000-0000 (Fax)
And
Xxxx X. Xxxxx, Esq.
Law Offices of Xxxxxxx X. Xxxxx
000 Xxxxx Xxxxx Xxxxxx
-00-
Xxxxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
Section 12.5 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties
hereto; provided, that the Purchaser may, without the prior written consent of
the Seller or any other party hereto, assign its rights and obligations
hereunder and under any other Contracts or documents executed or delivered in
connection herewith to (i) an Affiliate of the Purchaser, including but not
limited to MJD Holdings Corp. or MJD Ventures, Inc. ("Assignee"), or (ii) its
lenders as collateral in connection with the financing of the transactions
contemplated hereby, provided, however, that Purchaser shall remain liable to
perform the obligations of Purchaser under this Agreement, and provided,
further, however, that Purchaser shall notify Seller of the Assignee within five
(5) days of the assignment.
Section 12.6 Governing Law. This Agreement shall be governed by the laws
of the State of North Carolina, without regard to its principles of conflict of
laws.
Section 12.7 Counterparts; Construction. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. No rule of construction
requiring interpretation against the drafting party hereof will apply in the
interpretation of this Agreement.
Section 12.8 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 12.9 Entire Agreement. This Agreement and the Confidentiality
Agreement embody the entire agreement and understanding of the parties hereto
with regard to the subject matter hereof and supersedes all prior agreements,
representations,
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warranties, promises, covenants, arrangements and understandings, oral or
written, express or implied, among the parties with respect to such subject
matter. There are no agreements, representations, warranties, promises,
covenants, arrangements or understandings among the parties with respect to such
subject matter other than those expressly set forth or referred to herein.
Section 12.10 No Benefit. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the signatories to this
Agreement and each of their respective successors and permitted assigns.
Section 12.11 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party hereto upon any breach or default
of another party hereto under this Agreement shall impair any such right, power
or remedy of such party nor shall it be construed to be a waiver of any such
breach or default or an acquiescence therein or of or in any similar breach or
default thereafter occurring.
Section 12.12 Severability. Unless otherwise provided herein, if any
provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 12.13 Expenses. Except as otherwise provided herein, each of the
parties hereto shall bear its own expenses, including, without limitation, legal
fees, taxes and expenses, with respect to this Agreement and the transactions
contemplated hereby (which, with respect to such expenses incurred by or on
behalf of the Seller or the Company, shall be paid by the Seller and not by the
Company); provided, however, that the first Fifty Thousand Dollars ($50,000) of
such of Seller's expenses may be paid by the Company and on behalf of Seller
(and provided further, however, that notwithstanding the foregoing, the Seller
shall be solely responsible for the payment of any and all fees, costs and
expenses, including without limitation, attorneys fees, arising in connection
with claims with respect to title to and ownership of the Shares and with
respect to the Estate of Xxxxxx X. Xxxxxx). Further the parties hereto agree
that the Company shall pay the fees and expenses of its ICC and its FCC counsel
with respect to the transactions contemplated by this Agreement, that Purchaser
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shall pay the fees and expenses, including filing fees, of any filings made with
any Authority including filings with the ICC and FCC, and that Purchaser shall
bear the cost of any environmental assessment and/or environmental consultant.
Section 12.14 Time of the Essence. Time is strictly of the essence with
respect to the provisions of this Agreement.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Execution Date.
MJD SERVICES CORP.
_________________________________
By:______________________________
Title:___________________________
______________________________(SEAL)
XXXXX X. XXXXXXXX
RAVENSWOOD COMMUNICATIONS, INC.
_________________________________
By:______________________________
Title:___________________________
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Exhibit A
Other Stockholders
None.
Exhibit 4.17
Purchase Price Escrow Agreement
Exhibit 7.7
Opinion of Seller's Counsel
Exhibit 8.5
Opinion of Purchaser's Counsel
XXXXXXXXX XXXXXX XXXXXX & XXXXXX, P.A.
ATTORNEYS AT LAW
XXXXXXXXX XXXXX XXXXXXXX, XXXXX 0000
000 XXXXX XXXXXXX XXXXXX
XXXXXXXXX, XXXXX XXXXXXXX 00000-0000
XXXXXXX X. XXXXX
XXXXXXXXX XXXXXXXX XXXXXXXXX
XXXXXXX X. XXXXXX
C. XXXXX XXXXXX, XX. TELEPHONE
XXXXXXX X. XXXX 000-000-0000
XXXX X. XXXXXXX III
XXXXXXX X. XXXXXXXX III
XXXXXXX X. XXXXXXX, XX. FACSIMILE
XXXXXXX X. XXXXXX, XX. 000-000-0000
XXXXX X. XXXXXX
XXXXXX X. XXXXXX, XX.
XXXXXXX X. XXXXXXXXX, XX.
XXXXXX XXXXXX III
[Closing Date]
Xx. Xxxxx X. Xxxxxxxx
0000 X. 0000 Xxxx
Xxxxxxxx, XX 00000
Dear Xx. Xxxxxxxx:
We have acted as counsel to MJD Services Corp., a Delaware corporation
("MJD" or "Purchaser"), in connection with the purchase by Purchaser of all of
the capital stock of Ravenswood Communications, Inc. (the "Company") from you
("Seller"), pursuant to a Stock Purchase Agreement entered into as of October
16, 1998 (the "Purchase Agreement") by, between and among Purchaser, the
Company, and Seller.
This opinion is being delivered to you pursuant to Section 8.5 of the
Purchase Agreement. Capitalized terms used herein which are not otherwise
defined herein shall have the meanings set forth in the Purchase Agreement.
In connection with this transaction, we have reviewed the Articles of
Incorporation and Bylaws (the "Organizational Documents") of the Purchaser, the
Purchase Agreement and such other instruments and documents as are executed and
delivered pursuant to the Purchase Agreement, and have examined such other
records and information and have conducted such other
Xx. Xxxxx X. Xxxxxxxx
[Closing Date]
Page 2
investigations as we have deemed necessary to render the opinion set forth
below. As to facts material to our opinion, we have relied upon the factual
representations of Purchaser in the Purchase Agreement, certificates from
certain state authorities and on those certificates delivered at Closing.
We have assumed the conformity of all copies to the originals of all
documents reviewed by us, the genuineness of all signatures (other than those of
the shareholders, directors and officers of Purchaser) and the authenticity of
all documents submitted to us (whether originals or copies).
For the purposes of our opinion, we have assumed that the Purchase
Agreement and all other instruments and documents executed and delivered
pursuant thereto have been duly authorized, executed and delivered by all of the
parties thereto other than Purchaser.
Whenever a statement herein is qualified by the phrases "known to us" or
"to our knowledge", or similar phrases, it is intended to indicate that during
the course of our representation of Purchaser and the transactions contemplated
by the Purchase Agreement, and having made inquiry of certain officers of
Purchaser as to such matters, no information that would give us actual knowledge
of the inaccuracy of such statement has come to our attention. However, we have
not undertaken any independent investigation or review to determine the accuracy
of any such statement. No inference as to our knowledge of any matters bearing
on the accuracy of any such statement should be drawn from our representation of
Purchaser.
Based upon the foregoing, and subject to the assumptions and
qualifications herein set forth, it is our opinion that:
1. MJD is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to carry on the business in which it is engaged, to own, lease and
operate its properties,
Xx. Xxxxx X. Xxxxxxxx
[Closing Date]
Page 3
and to enter into and to perform its obligations under the Purchase Agreement.
2. The execution and delivery of the Purchase Agreement was duly
authorized and approved by the Board of Directors of MJD. The Purchase Agreement
is a valid and binding obligation of MJD enforceable in accordance with its
terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights in the event of future bankruptcy,
insolvency or reorganization of Purchaser, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. All persons who have executed this Purchase
Agreement on behalf of MJD have been duly authorized to do so by all necessary
corporate action.
3. To our knowledge, MJD has given all notices to and has obtained from
all state and federal regulatory authorities any approvals, consents, permits
and authorizations required in order to consummate the transactions contemplated
in the Purchase Agreement.
The opinions expressed herein are based upon and limited to matters
governed by the laws of the State of North Carolina and the State of Delaware,
and we express no opinion as to any matter governed by the laws of any other
jurisdiction. We are not authorized to practice law in the State of Delaware and
the opinions set forth herein are rendered solely upon our review of applicable
provisions of Delaware corporation law as currently published in standard
compilations and such consultations with Delaware local counsel as we have
deemed necessary or appropriate.
This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in laws which may hereafter
occur. This opinion
Xx. Xxxxx X. Xxxxxxxx
[Closing Date]
Page 4
is limited to matters herein, and no opinion may be inferred or implied beyond
the matters expressly stated herein.
This opinion is being furnished to you in connection with the transactions
contemplated by the Purchase Agreement. This opinion is solely for your benefit
and is not to be used, circulated, quoted or otherwise referred to for any other
purpose nor relied upon by any other person or entity without our prior written
consent.
Finally, the opinions expressed herein represent our reasonable judgment
as to the matters of law addressed herein, based upon the facts presented or
assumed, and are not, and should not be construed or considered as, a guaranty.
Very truly yours,
XXXXXXXXX XXXXXX XXXXXX & XXXXXX, P.A.
Exhibit 4.17
PURCHASE PRICE ESCROW AGREEMENT
Exhibit 11.2
INDEMNITY ESCROW AGREEMENT
Exhibit 11.2
INDEMNITY ESCROW AGREEMENT
THIS INDEMNITY ESCROW AGREEMENT (the "Indemnity Escrow Agreement") is made
as of ____________ ___, _____, between XXXXX X. XXXXXXXX, a resident of the
State of Illinois ("Xxxxxxxx"), MJD SERVICES CORP., a Delaware corporation
("Purchaser") and FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION, a
__________________ (the "Indemnity Escrow Agent").
STATEMENT OF PURPOSE
On or about October 16, 1998, Ravenswood Communications, Inc., Xxxxxxxx
and Purchaser, entered into a Stock Purchase Agreement (the "Purchase
Agreement"), and pursuant to the provisions of Section 9.2 of the Purchase
Agreement, Xxxxxxxx and Purchaser agreed that One Million Dollars ($1,000,000)
(the "Indemnity Escrow Funds") of the total purchase price otherwise payable to
Xxxxxxxx would be deposited with Indemnity Escrow Agent to secure Xxxxxxxx'x
agreement to indemnify Purchaser as set forth in Sections 11.1, 11.2 and 11.3 of
the Purchase Agreement, all in accordance with the terms of this Indemnity
Escrow Agreement.
The Indemnity Escrow Agent has agreed to serve as escrow agent under this
Indemnity Escrow Agreement and to accept delivery of the Indemnity Escrow Funds
in accordance with the terms and conditions set out in this Indemnity Escrow
Agreement.
AGREEMENT
In consideration of the premises, and the agreements set out below, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties enter into the following Indemnity Escrow
Agreement:
1. Deposit with Indemnity Escrow Agent. At Closing of the sale and
purchase of the Shares from Xxxxxxxx as provided in the Purchase Agreement,
Purchaser shall deliver to the Indemnity
Escrow Agent the sum of One Million Dollars ($1,000,000) to be held,
administered and distributed by the Indemnity Escrow Agent pursuant to the terms
of this Indemnity Escrow Agreement.
2. Indemnity Escrow Funds. Upon receipt of the Indemnity Escrow Funds, the
Indemnity Escrow Agent shall deposit the Indemnity Escrow Funds into an escrow
account (the "Indemnity Escrow Account") and shall hold, administer, invest and
distribute the Indemnity Escrow Funds in accordance with the terms of this
Indemnity Escrow Agreement. All references in this Indemnity Escrow Agreement to
Indemnity Escrow Funds shall include any investment of such funds and all
investment earnings thereon.
3. Purposes of Indemnity Escrow. The Indemnity Escrow Funds shall be used
solely for the purposes set forth in Sections 11.1, 11.2 and 11.3 of the
Purchase Agreement. The Escrow Funds shall not constitute an asset of Xxxxxxxx
until the distribution thereof to Xxxxxxxx in accordance with the terms of the
Purchase Agreement and of this Escrow Agreement.
4. Term. The term of this Indemnity Escrow Agreement ("Indemnity Escrow
Period") shall expire on the expiration of the Indemnification Period, as
defined in Section 11.1 of the Purchase Agreement, except that it shall be
automatically extended as necessary to provide for the disposition of any Claims
filed by Purchaser with the Indemnity Escrow Agent during such period, in
accordance with the procedures set forth in Section 5 hereof.
5. Disbursement of Indemnity Escrow Funds.
(a) In the event Purchaser determines that it is entitled to all or
any portion of the Indemnity Escrow Funds pursuant to Sections 11.1, 11.2
or 11.3 of the Purchase Agreement, Purchaser shall deliver written notice
to the Indemnity Escrow Agent and Xxxxxxxx, stating the factual basis for,
and the amount of, such entitlement ("Claim"). The written notice from
Purchaser to Xxxxxxxx shall include copies of all relevant information and
documents and shall be given within a period of thirty (30) days following
the discovery of the Claim by the Purchaser, provided however the failure
by Purchaser to give written notice within such
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time period shall not impair the Purchaser's rights hereunder except to
the extent that Xxxxxxxx demonstrates that she is prejudiced thereby.
Within twenty (20) days following receipt by Xxxxxxxx of such written
notice of the Claim, Xxxxxxxx may deny all or any portion of the Claim by
delivering written notice to the Indemnity Escrow Agent and Purchaser,
indicating the amount or portion of the Claim which is denied and the
factual basis for such denial ("Denial").
(b) In the event that Xxxxxxxx fails to timely deliver a Denial to
the Indemnity Escrow Agent, the Indemnity Escrow Agent shall immediately
release and distribute to Purchaser an amount equal to the Claim.
(c) In the event the Indemnity Escrow Agent receives a timely Denial
from Xxxxxxxx as to all or any portion of a Claim, the Indemnity Escrow
Agent shall (i) immediately distribute to Purchaser an amount, if any,
equal to the portion of the Claim that Xxxxxxxx has not denied, and (ii)
within sixty (60) days of receipt of such Denial, file an action in
interpleader with any Illinois court of competent jurisdiction to resolve
such disagreement and deposit with the registry of the court an amount
equal to the denied portion of the Claim, unless a joint instruction is
received by the Indemnity Escrow Agent from Xxxxxxxx and the Purchaser as
to the disposition of the denied portion of the Claim prior to the
expiration of such sixty (60) day period. If the Denial does not state the
amount or portion of the Claim denied, the entire Claim shall be deemed
denied. Purchaser and Xxxxxxxx agree to thereafter apply to such court for
an order submitting the matter to arbitration pursuant to Section 11.6(b)
of the Purchase Agreement.
(d) The Indemnity Escrow Agent shall distribute any portion of the
Indemnity Escrow Funds remaining in the Indemnity Escrow Agent's
possession, which are not the subject of a pending Claim, immediately upon
the expiration of the Indemnity Escrow Period to the escrow account
established under Section 4.17 of the Purchase Agreement, as Xxxxxxxx has
so instructed, for distribution in accordance with the provisions of the
agreement governing such account (the "Purchase Price Escrow Agreement"),
free and discharged
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from any further obligation with respect to the same hereunder.
6. Release From Indemnity Escrow. As and when all of the Indemnity Escrow
Funds are either distributed as provided hereunder or deposited with the
registry of the court in interpleader, the Indemnity Escrow Agent shall be
released and discharged from any further obligation hereunder without further
action of any party. Compliance by the Indemnity Escrow Agent with any final,
non-appealable order or a judgment of a court concerning the subject matter of
any such dispute or agreement shall thereupon release and relieve the Indemnity
Escrow Agent from all obligations and responsibility with respect to the
Indemnity Escrow Funds to which such order or judgment relates.
7. Investment of Indemnity Escrow Funds. The Indemnity Escrow Agent shall
hold the Indemnity Escrow Funds delivered to it under the terms of this
Indemnity Escrow Agreement and shall invest the Indemnity Escrow Funds held by
it (i) in interest bearing demand deposit accounts with commercial banks whose
accounts are insured by the Federal Deposit Insurance Corporation or another
appropriate and comparable authority (for example, the Federal Home Loan Bank
Board), or (ii) in any other investment upon which Xxxxxxxx and the Purchaser
shall agree.
8. Agreement of Indemnity Escrow Agent. The Indemnity Escrow Agent hereby
agrees to receive the Indemnity Escrow Funds and hold the same intact, and to
deposit the Indemnity Escrow Funds in accordance with the terms of this
Indemnity Escrow Agreement, and shall not permit any withdrawal except under the
terms of this Indemnity Escrow Agreement. The Indemnity Escrow Agent shall be
responsible only for the safekeeping and the deposit of the Indemnity Escrow
Funds and the disbursements or delivery in accordance with the terms of this
Indemnity Escrow Agreement. The Indemnity Escrow Agent shall not be responsible
for the appropriateness, sufficiency or accuracy of information contained in any
written notice.
9. Performance of Indemnity Escrow Agent.
(a) There are no implied duties under this Indemnity Escrow
Agreement. The duties, obligations and acts of the Indemnity Escrow Agent
shall be construed as purely
-4-
ministerial in nature. Indemnity Escrow Agent shall be responsible for
only those duties expressly set forth in this Indemnity Escrow Agreement.
In performing any of its duties under this Indemnity Escrow Agreement, or
upon the claimed failure to perform its duties under this Indemnity Escrow
Agreement, Indemnity Escrow Agent shall not be liable to anyone for any
damages, losses, or expenses which they may incur as a result of the
Indemnity Escrow Agent so acting, or failing to act; provided, however,
Indemnity Escrow Agent shall be liable for damages arising out of its
willful default or gross negligence under this Indemnity Escrow Agreement.
Accordingly, Indemnity Escrow Agent shall not incur any such liability
with respect to (i) any action taken or omitted to be taken in good faith
upon advice of its counsel given with respect to any questions relating to
the duties and responsibilities of the Indemnity Escrow Agent hereunder or
(ii) any action taken or omitted to be taken in reliance upon any
document, including any written notice or instructions provided for in
this Indemnity Escrow Agreement, not only as to its due execution and to
the validity and effectiveness of its provisions but also as to the truth
and accuracy of any information contained in any notice or document, which
the Indemnity Escrow Agent shall in good faith believe to be genuine, to
have been signed or presented by a proper person or persons and to conform
with the provisions of this Indemnity Escrow Agreement.
(b) Xxxxxxxx and the Purchaser agree to indemnify and hold harmless
Indemnity Escrow Agent against any and all losses, claims, damages,
liabilities and expenses, including without limitation, reasonable costs
of investigation and counsel fees and disbursements which may be imposed
by Indemnity Escrow Agent or incurred by it in connection with its
acceptance of this appointment as Indemnity Escrow Agent or the
performance of its duties, including, without limitation, reasonable
attorneys fees and costs attributable to any interpleader action commenced
by the Indemnity Escrow Agent or any other litigation arising from this
Indemnity Escrow Agreement or involving the subject matter of this
Indemnity Escrow Agreement; provided, however, that if Indemnity Escrow
Agent shall be found guilty of willful default or gross negligence under
this Indemnity Escrow Agreement, then, in that event, Indemnity Escrow
Agent shall
-5-
itself bear all such losses, claims, damages, liabilities and expenses.
10. Fees of Indemnity Escrow Agent. For its ordinary services hereunder
(which shall include receipt, investment and disbursement of the Indemnity
Escrow Funds in the manner described in this Indemnity Escrow Agreement), the
Indemnity Escrow Agent shall receive compensation of one thousand eight hundred
seventy-five dollars ($1,875.00) to be paid equally by Purchaser and Xxxxxxxx
upon execution of this Indemnity Escrow Agreement and shall receive such
additional reasonable compensation during the term hereof as is commensurate
with its services provided hereunder as Indemnity Escrow Agent; any such
additional compensation to be similarly paid equally by Purchaser and Xxxxxxxx.
11. Resignation of Indemnity Escrow Agent. The Indemnity Escrow Agent or
successor at any time may resign by giving thirty (30) business days written
notice to the parties hereto, and such resignation shall take effect at the end
of such thirty (30) business days if all of the Indemnity Escrow Funds have been
tendered into the registry or custody of an Illinois court in the manner
provided in Section 5 hereof, or upon the earlier appointment, with the approval
of Xxxxxxxx and the Purchaser, of a successor. From and after the effective date
of such resignation or appointment of a successor, the Indemnity Escrow Agent
shall not be obligated to perform any of the duties of the Indemnity Escrow
Agent hereunder and will not be liable for any nonperformance thereof nor for
any act or failure to act whatsoever on the part of any successor Indemnity
Escrow Agent. If Xxxxxxxx and the Purchaser are unable to agree upon a successor
Indemnity Escrow Agent within thirty (30) days following notice of the Indemnity
Escrow Agent's resignation, the Indemnity Escrow Agent shall commence an action
in interpleader and deposit the Indemnity Escrow Funds with the registry of the
court in the manner provided in Section 5 hereof.
12. Successor to Indemnity Escrow Agent. Any corporation resulting from
any merger or consolidation to which the Indemnity Escrow Agent or any successor
to it shall be a party, or any corporation in any manner succeeding to all or
substantially all of the business of the Indemnity Escrow Agent or any
successor, shall be the successor escrow agent hereunder without the
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execution or filing of any paper or any further acts on the part of any of the
parties hereto. In the event of a resignation of the Indemnity Escrow Agent
pursuant to paragraph 11 of this Indemnity Escrow Agreement, any person(s) or
corporation hereafter agreed upon by the parties shall be the successor escrow
agent hereunder.
13. Instructions and Notices. In executing and performing its duties
hereunder, except as otherwise provided, the Indemnity Escrow Agent shall be
entitled to rely upon instructions of Xxxxxxxx and the Purchaser. Any notice,
payment, demand, instruction or communication required or permitted to be given
by this Indemnity Escrow Agreement shall be in writing and shall be given by
hand delivery, overnight messenger or certified mail, return receipt requested,
addressed to the appropriate party at the address stated below:
If to Xxxxxxxx:
Xx. Xxxxx X. Xxxxxxxx
0000 X. 0000 Xxxx
Xxxxxxxx, XX 00000
If to Purchaser:
MJD Services Corp.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx,
Executive Vice President
If to Indemnity Escrow Agent:
First Federal Savings and Loan Association
000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx, President
Any notice sent by overnight messenger or hand delivery shall be deemed
made on the date received, and any notice sent by certified mail shall be deemed
made three (3) days after mailing.
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14. Governing Law. This Indemnity Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of North Carolina.
15. Headings. The headings in this Indemnity Escrow Agreement are inserted
for convenience and identification only and are in no way intended to interpret,
define or limit the scope, extent or intent of this Indemnity Escrow Agreement
or any provision of this Indemnity Escrow Agreement.
16. Severability. Each provision of this Indemnity Escrow Agreement is
intended to be severable. If any term or provision of this Indemnity Escrow
Agreement is illegal or invalid for any reason whatsoever, such illegality or
invalidity shall not affect the validity or enforcement of the remainder of this
Indemnity Escrow Agreement.
17. Counterparts. This Indemnity Escrow Agreement and any amendment hereto
may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
18. Amendment. No modification or amendment to this Indemnity Escrow
Agreement shall be valid unless produced in writing and signed by all of the
parties hereto.
19. Successors. This Indemnity Escrow Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors, legal representatives, assigns and transferees, as the case may be.
Indemnity Escrow Agent shall not be bound by or incur any liability with respect
to this Indemnity Escrow Agreement or any other agreement or understanding
between Xxxxxxxx and the Purchaser, except as in this Indemnity Escrow Agreement
expressly provided.
IN WITNESS WHEREOF, the parties hereto have caused this Indemnity Escrow
Agreement to be executed as of the date first above written.
____________________________(SEAL)
XXXXX X. XXXXXXXX
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MJD SERVICES CORP.
__________________________________
By: ______________________________
Its: _____________________________
Indemnity Escrow Agent
FIRST FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: _______________________________
Its: ______________________________
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Schedule 2.3
No Violations
Approval of the ICC to the change of control and reorganization
contemplated by this transaction.
Schedule 2.4
Subsidiaries and Investments
[Please confirm and supplement all of the following:]
1. Illinois Valley Cellular RSA 2, Inc. Illinois Valley Cellular RSA 2, Inc. is
a switching company for the three RSA 2 Partnerships referred to below. It
provides switching services and microwave links for the three cellular
partnerships. The El Paso Telephone Company is the record owner of 12.5% (700
shares of common stock, evidenced by share certificates _________) of the
currently issued and outstanding stock of Illinois Valley Cellular RSA 2, Inc.,
an Illinois corporation ("XXX XXX 0, Xxx."). The El Paso Telephone Company paid
$_____________ for its shares. There is no Shareholders' Agreement with respect
to the stock of IVC RSA 2, Inc.
The El Paso Telephone Company is the guarantor of a loan in the amount of
$1,035,000.00 made by the Rural Telephone Finance Cooperative ("RTFC"), to IVC
RSA 2, Inc., pursuant to the terms of a Guaranty as dated ________________
(August 3, 1992?), by The El Paso Telephone Company (the "Guaranty"). The El
Paso Telephone Company's maximum liability pursuant to the Guaranty is limited
in amount to $140,000.00. The maturity date of such note is five (5) years from
its date of execution. [Has it accordingly expired?] Although the note is
unexecuted, the executed Loan Agreement is dated October 30, 1992.
Additionally, Illinois Valley Cellular RSA 2, Inc. borrowed $317,393.00
from the RTFC pursuant to the terms of that certain Secured Promissory Note as
dated October 1, 1994. Said loan [was/was not] guaranteed by The El Paso
Telephone Company.
There exists an unexecuted, undated copy of an agreement between IVC RSA
2, Inc. and nine local independent telephone companies (one of which includes
The El Paso Telephone Company (the nine independents are referred to as
"Telco's") regarding what appears to be an indemnification by IVC RSA 2, Inc.
should any of the Telco's have to pay on a $125,000 guaranty of certain RTFC
debt. It is believed that the $125,000 guaranty referenced in such agreement is
an earlier version of the $140,000 guaranty.
Pursuant to the terms of an Indemnity Agreement with respect thereto, if IVC RSA
2, Inc. can't reimburse a particular Telco, the others will do so pro rata.
The El Paso Telephone Company was paid a $_____________ dividend from
Illinois Valley Cellular RSA 2, Inc. in 1996, and a $____________ dividend in
1997.
Gemcell, Inc. is a general partner holding a 62/3% interest in each of the
following partnerships (Gemcell, Inc.'s original investment in these three
partnerships was $_________.):
A. Illinois Valley Cellular RSA 2-I Partnership ("XXX XXX 0-X"), pursuant to
that certain Partnership Agreement as dated November 8, 1989 (the "IVC RSA
2-I Partnership Agreement").
Gemcell, Inc.'s interest in IVC RSA 2-I is subject to dilution in
the event of an additional capital call, as provided in Paragraph 5.2 of
the IVC RSA 2-I Partnership Agreement. The Operating Partner can make a
capital call pursuant to certain guidelines set forth in the Partnership
Agreement. Marsailles Telephone Company was elected as the operating
partner for IVC RSA 2-I in August 1991. It is believed that subsequent
thereto Marsailles Telephone Company transferred its partnership interest
to Marsailles Cellular, Inc., which has been recognized as operating
partner since such time. Marsailles Cellular, Inc. is also the operating
partner of IVC RSA 2-II and IVC RSA 2-III. Additionally, Paragraphs 7.5
and 7.6 of said Partnership Agreement contain restrictions on Gemcell,
Inc.'s rights to compete with IVC RSA 2-I in the business of sales or
resales of cellular service and equipment.
Regarding the transferability of Gemcell, Inc.'s partnership
interest, Article X of the IVC RSA 2-I Partnership Agreement contains
transfer restrictions. Specifically, Paragraph 10.1 provides a right of
first
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refusal in favor of all other partners prior to any transfer of Gemcell,
Inc.'s partnership interest. Per said paragraph, an assignment is deemed
to have occurred if in any single transaction or any series of
transactions, controlling interest in Gemcell, Inc. is transferred.
Notwithstanding the foregoing, Paragraph 10.1 goes on to provide that an
"assignment shall not be deemed to have occurred due to the transfer of
any or all of the outstanding capital stock of any corporate Partner or
its direct or indirect parent except in the instance where the cellular
interest hereunder is the only substantial asset in such company." This
provision appears to negate the existence of any right of first refusal
requirements under the circumstances. Unauthorized transfers can result,
among other things, in a declaration of default and mandatory withdrawal,
pursuant to the provisions of Article XI of said Partnership Agreement.
Regarding potential liability, Gemcell, Inc. has unlimited liability
as a general partner pursuant to the provisions of Illinois law.
Additionally, the IVC RSA 2-I Partnership Agreement requires, at Paragraph
12.3, that partners make additional capital contributions in the event
deficit capital accounts exist at liquidation of either the partnership or
of a partner's interest. Additionally, the IVC RSA 2-I partners are
required under Paragraph 13.2 of said Partnership Agreement to indemnify
the Operating Partner, the Network Partner, and any officers, directors,
employees or agents of the foregoing against certain losses and damages.
IVC RSA 2-I is a party to a switching contract with Illinois Valley
Cellular RSA 2, Inc.
B. Illinois Valley Cellular RSA 2-II Partnership ("IVC RSA 2-II"), pursuant
to that certain Partnership Agreement as dated November ____, 1989 (the
"IVC RSA 2-II Partnership Agreement").
The IVC RSA 2-II Partnership Agreement contains provisions regarding
capital calls, dilution, restoration of deficit balances, restricted
competition, transferability of partnership interests, liability and
indemnification
-3-
identical to those discussed above with respect to the IVC RSA 2-I
Partnership Agreement.
IVC RSA 2-II is a party to a switching contract with Illinois Valley
Cellular RSA 2, Inc.
C. Illinois Valley Cellular RSA 2-III Partnership ("IVC RSA 2-III"), pursuant
to that certain Partnership Agreement as dated November 6, 1989 (the "IVC
RSA 2-III Partnership Agreement").
The IVC RSA 2-III Partnership Agreement contains provisions
regarding capital calls, dilution, restoration of deficit balances,
restricted competition, transferability of partnership interests,
liability and indemnification identical to those discussed above with
respect to the IVC RSA 2-I Partnership Agreement.
IVC RSA 2-III is a party to a switching contract with Illinois
Valley Cellular RSA 2, Inc.
Each of the foregoing three (3) partnerships is a party to three (3)
separate loans from the Rural Telephone Finance Cooperative ("RTFC").
Specifically:
(i) IVC RSA 2-I
(1) Loan 1: $4,033,333.00, as evidenced by that certain
Secured Promissory Note as dated November 25, 1992.
(2) Loan 2: $873,111.00, as evidenced by that certain Secured
Promissory Note as dated February 4, 1993.
(3) Loan 3: $836,020.00, as evidenced by that certain Secured
Promissory Note as dated October 1, 1994.
(ii) IVC RSA 2-II
(1) Loan 1: $501,111.00, as evidenced by that certain Secured
Promissory Note as dated March 12, 1992.
-4-
(2) Loan 2: $418,788.00, as evidenced by that certain Secured
Promissory Note as dated ______________(December 9, 1992?).
(3) Loan 3: $874,458.00, as evidenced by that certain Secured
Promissory Note as dated October 1, 1994.
(iii) IVC RSA 2-III
(1) Loan 1: $1,361,111.00, as evidenced by that certain
Secured Promissory Note as dated March 12, 1992.
(2) Loan 2: $583,444.00, as evidenced by that certain Secured
Promissory Note as dated December 7, 1992.
(3) Loan 3: $1,281,802.00, as evidenced by that certain
Secured Promissory Note as dated October 1, 1994.
With respect to the loan described as "Loan 2" to IVC RSA 2-I,
Gemcell, Inc. pledged its partnership interests in IVC RSA 2-II and IVC
RSA 2-III to the RTFC, pursuant to the provisions of that certain
Partnership Interest Pledge and Security Agreement as dated February 4,
1993, and as subsequently amended October 1, 1994, to include the loan
described above as "Loan 3" to IVC RSA 2-I.
With respect to the loan described as "Loan 2" to IVC RSA 2-II,
Gemcell, Inc. pledged its partnership interest in IVC RSA 2-III to the
RTFC, pursuant to the provisions of that certain Partnership Interest
Pledge and Security Agreement as dated December 9, 1992, and as
subsequently amended October 1, 1994, to include the loan described above
as "Loan 3" to IVC RSA 2-II.
With respect to the loan described as "Loan 2" to IVC RSA 2-III,
Gemcell, Inc. pledged its partnership interest in IVC RSA 2-II to the
RTFC, pursuant to the provisions of that certain Partnership Interest
Pledge and Security Agreement as dated December 7, 1992, and as
subsequently amended October 1, 1994, to include the loan described above
as "Loan 3" to IVC RSA 2-III.
-5-
See Schedule 2.14(a) for recording information relating to such
pledged partnership interests.
IVC RSA 2-I is owned 40% by Contel Cellular of Illinois, Inc. (now
GTE), as a general partner, and 60% by the subsidiaries or affiliates of
nine (9) independent telephone companies (the Company's subsidiary,
Gemcell, Inc. owns a 6.66% general partnership interest.) The same
information is also true as to RSA 2-II and RSA 2-III, except that in RSA
2-II Centel Cellular Company (now Sprint) is the 40% general partner and
in RSA 2-III Illinois SMSA Limited Partnership and Chicago SMSA Limited
Partnership, both of which are controlled by Ameritech Mobile
Communications, Inc., are each a 20% general partner.
2. See Schedule 2.17 for listing of checking and money market accounts, as well
as Certificates of Deposit held by the Company.
3. ANPI membership (Associated Network Partners, Inc.). Associated Network
Partners, Inc. ("ANPI") is a C corporation started by a number of independent
LECs in the State of Illinois to act as a buyers club for interexchange
telephone capacity so that the participating LECs or their affiliates could pool
their minutes in order to get volume discounts. Ravenswood Communications, Inc.
is a "Participant" under contract with ANPI and, separately, a shareholder of
ANPI. Like each other participant, its single share of common stock is
non-transferable, has no appurtenant rights to board membership and is, by
agreement, worth $100 if Ravenswood Communications, Inc. ceases being a
Participant. As a Participant, Ravenswood Communications, Inc. has a monthly
commitment to ANPI to purchase at least $__________ worth of toll services (this
amount is basically based on ___% of a Participant's historical usage). Under
certain limited circumstances, that commitment could rise to $_____________ per
month. (ANPI, in turn, has a much larger monthly commitment to its facilities
providers, which commitment is less than the overall participant commitment to
ANPI.) There are certain penalties if Ravenswood Communications, Inc. does not
purchase at least its minimum worth of toll services. Basically, it would be
required to pay for such toll services, whether it purchases them or not. ANPI
is not subject to net profits since the toll services it purchases are sold to
-6-
its participants at cost with an administrative charge assessed to match ANPI's
administrative costs. As can be more fully determined from the Participation
Agreement, so long as ANPI's participants meet their contractual commitments,
ANPI is not subject to a net loss. As also can be more fully determined from the
Participation Agreement, while Ravenswood Communications, Inc. does not have
contingent liabilities for the actions of ANPI, it does indemnify ANPI for any
injury caused to ANPI by the actions of Ravenswood Communications, Inc. There is
no annual or recurring fee for being a Participant.
-7-
Schedule 2.6
Corporate Books
Directors and Officers for Ravenswood Communications, Inc.:
Directors:
Officers: President
Vice President
Secretary
Treasurer
Directors and Officers for The El Paso Telephone Company:
Directors:
Officers: President
Vice President
Secretary
Treasurer
Directors and Officers for El Paso Long Distance Company:
Directors:
Officers: President
Vice President
Secretary
Treasurer
Directors and Officers for Gemcell, Inc.:
Directors:
Officers: President
Vice President
Secretary
Treasurer
Schedule 2.7
List of Shareholders/Liens on Shares
Xxxxx X. Xxxxxxxx 405 Shares, as evidenced by stock
certificate(s) __________________,
issued __________________________.
Schedule 2.10
Employees
a. Ravenswood Communications, Inc.
Employees:
Full-time Employees:
Part-time Employees:
b. The El Paso Telephone Company
Employees:
Full-time Employees:
Part-time Employees:
c. El Paso Long Distance Company
Employees:
Full-time Employees:
Part-time Employees:
d. Gemcell, Inc.
Employees:
Full-time Employees:
Part-time Employees:
Schedule 2.10
Employees
(Continued)
Vacation Schedule
Schedule 2.11
Certain Changes
Schedule 2.12
Contracts
Schedule 2.14(a)
Owned Property/Liens
A. Real Property:
B. Personal Property:
C. Liens:
1. [Please provide information regarding any REA/RUS/RTB Liens on real and
personal property:]
2. Liens on capital stock of the Company or any subsidiaries as collateral:
Gemcell, Inc. has pledged its partnership interests (and certain rights
pertaining thereto) in Illinois Valley Cellular RSA 2-II Partnership and
Illinois Valley Cellular RSA 2-III Partnership to the Rural Telephone Finance
Cooperative, as more particularly detailed in that Uniform Commercial Code
Financing Statement filed with the Illinois Secretary of State on _____________,
bearing File No. __________. Additional information is set forth under Item 1 of
Schedule 2.4.
3. Other:
Except as expressly provided above, no other Liens exist.
Schedule 2.14(b)
Leased Property
Schedule 2.14(e)
Condition
Schedule 2.15
Litigation
Schedule 2.16
Tax Matters
Schedule 2.17
Bank and Brokerage Accounts
[Please provide pertinent account information, including name and address of
bank, contact persons authorized signatories and account numbers]
Ravenswood Communications, Inc.
The El Paso Telephone Company
El Paso Long Distance Company
Gemcell, Inc.
Schedule 2.19
Employee Benefit Plans
Schedule 2.20
Intellectual Property
Schedule 2.21
Environmental Matters
Schedule 2.22
Capital Expenditures and Investments
Schedule 2.23
Dealings with Affiliates
Schedule 2.24
Insurance
Schedule 2.26
Permits
The contemplated transaction would effect a transfer of control in The El
Paso Telephone Company ("Telephone"). Since Telephone is an Illinois public
utility, any changes in control require the prior approval of the ICC, for which
provision has been made in Sections 7.2 and 8.2 of this Agreement.
Schedule 2.27
Absence of Undisclosed Liabilities/Corporate Debt
Schedule 3.3
Consents and Authorizations of Purchaser
Approval of the Board of Directors and shareholders of Ravenswood, of Telephone,
of Long Distance and of Gemcell was obtained on _________________________.
Approval of the Board of Directors of MJD Ventures, Inc. was obtained on
___________________.
Schedule 4.14
Article IV Disclosure Statement
