EXHIBIT 4.8
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT is made as of November 27, 1996, among
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC., a South Dakota cooperative
corporation ("Dakota"), and XXXX X. XXXXX, XXXX X. XXXXXX, XXXXXXX X.
XXXXXX, XXXXXX X. XXXXXX, XXXX XXXXXXXXX, XXXX XXXX and XXXXXXX ENGLISH
(collectively "Sellers"). Capitalized terms used in this Agreement and not
otherwise defined are defined in the Merger Agreement (the "Merger
Agreement") to which this Agreement is an exhibit.
Pursuant to the Merger Agreement, Sellers will receive shares of
Dakota Preferred Stock in connection with the merger of I-Way Partners,
Inc. with and into Dakota Acquisition Corp. #2, a wholly-owned subsidiary
of Dakota. The Dakota Preferred Stock is automatically convertible into
shares of Dakota common stock upon the occurrence of certain events
specified in the Agreement attached as Exhibit B to the Merger Agreement.
As a condition to the execution of the Merger Agreement and the
consummation of the transactions contemplated thereby, Dakota has requested
Sellers to enter into this Standstill Agreement (the "Standstill
Agreement"), and this Standstill Agreement is part of the consideration for
the Merger Agreement.
NOW, THEREFORE, Dakota and Sellers represent, warrant, covenant
and agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For the purposes of this Standstill
Agreement, the following terms have the meanings indicated:
(a) "Common Stock" shall mean the common stock into
which the Dakota Preferred Stock is convertible in the
Conversion (as defined below). For purposes of this
definition, the term Common Stock shall include any
Stockholder Purchase Rights ("Rights") or other rights, if
any, evidenced by the certificates for such Common Stock.
(b) "Option" shall mean either the First Purchase
Option or the Tender Offer Option, as such terms are defined
in Section 4.1 and 4.2 hereof, respectively.
(c) "Separated Rights" shall mean any Purchase Rights
which are no longer evidenced by certificates for Common
Stock, but are evidenced by separate Rights certificates.
(d) "Conversion" means the conversion of the Dakota
Preferred Stock into Common Stock as provided in EXHIBIT B to
the Merger Agreement.
(e) "Conversion Date" means the date of the Conversion,
as more particularly defined in Section 9 of the Agreement
attached as EXHIBIT B to the Merger Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers represent and warrant to Dakota as follows:
SECTION 2.1. The execution, delivery and performance of
this Standstill Agreement by Sellers does not and will not
result in violation of, be in conflict with, or constitute a
default under (a) any decree, judgment, ruling or order
applicable to Sellers, or (b) any instrument, contract, or
other agreement to which Sellers are a party or by which
Sellers are bound.
SECTION 2.2. The terms of this Standstill Agreement are
contractual, not merely recital; this Standstill Agreement is
the result of negotiations between the parties; Sellers agree
that the principle of contract construction against the
drafter shall not apply to the interpretation, construction
or enforcement of this Standstill Agreement.
SECTION 3. COVENANTS OF SELLERS. Sellers, and each of them,
covenant as follows:
SECTION 3.1. Sellers, without the prior written consent
of the Board of Directors of Dakota, will not, prior to five
(5) years following the Conversion Date, directly or
indirectly, (a) acquire or agree to acquire, by purchase or
otherwise, any Common Stock or other voting securities of
Dakota in excess of five percent (5%) of the Common Stock at
any time outstanding during the term of this Standstill
Agreement, except in connection with and as a result of (i)
the declaration of a dividend upon, or the making of a
distribution in respect of, the Common Stock payable in
Common Stock or other voting securities of Dakota, (ii) the
subdivision of the outstanding Common Stock into a greater
number of shares, (iii) the reclassification of the
outstanding Common Stock, (iv) the exercise by Sellers of
Separated Rights, or (v) the sale and transfer of Common
Stock among Sellers; (b) make, or in any manner participate
in (other than in conjunction with all other directors of
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Dakota), any "solicitation" of "proxies" (as such terms are
defined in Regulation 14A of the Securities Exchange Act of
1934); (c) form, join or in any way participate in a "group"
(as such term is defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) with respect to any Common
Stock or other voting securities of Dakota; (d) initiate any
proposal to be voted upon or consented to by Dakota's
shareholders or convene any meeting of Dakota's shareholders
or influence or attempt to influence or in any manner assist
any other Person with respect to the initiation of such a
proposal or the convening of such a meeting; (e) deposit any
Common Stock or other voting securities of Dakota into a
voting trust or subject any Common Stock or other voting
securities of Dakota to any arrangement or agreement (other
than this Standstill Agreement) with respect to the voting of
such Common Stock or other voting securities; or (f)
otherwise act, alone or in concert with others, to seek to
control the management, Board of Directors or policies of
Dakota (except in accordance with this Standstill Agreement
or any other written agreement hereafter entered into between
Dakota and Sellers).
SECTION 3.2. Sellers will be present (in person or by
proxy) at all meetings of Dakota's shareholders so that all
Common Stock owned by Sellers may be counted for the purpose
of determining the presence of a quorum at such meetings.
SECTION 3.3. Sellers will not, prior to three (3) years
following the Conversion Date, directly or indirectly, sell,
transfer or otherwise dispose of, or offer or agree to sell,
transfer or otherwise dispose of, any Common Stock or other
voting securities of Dakota other than in the manner set
forth in Section 4 hereof; PROVIDED, HOWEVER, that the
foregoing restriction shall not apply to sales, transfers or
dispositions of Common Stock or other voting securities of
Dakota, together with any related Rights, made:
(a) pursuant to a merger or subsidiary merger
between Dakota and a third party following which the
Common Stock or other voting securities of Dakota shall
no longer be outstanding;
(b) on a recognized securities market in
compliance with Rule 144 of the Securities Act of 1933,
which shall for purposes of this Standstill Agreement be
deemed applicable to Sellers, PROVIDED, HOWEVER, that
Sellers shall not engage in market transactions that
would adversely affect the market price of the Common
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Stock, but will sell their Common Stock, if at all, in a
gradual manner to facilitate widespread distribution;
(c) to immediate family members or otherwise
pursuant to testamentary dispositions, provided that the
transferee, and any subsequent transferee, of such
Common Stock shall, prior to such transfer, agree to be
bound by the terms and conditions of this Standstill
Agreement; and
SECTION 4. FIRST PURCHASE OPTION; TENDER OFFER OPTION; TERMS
AND CONDITIONS.
SECTION 4.1. FIRST PURCHASE OPTION. Sellers shall sell
to Dakota (or its designee), at Dakota's option (the "First
Purchase Option"), all, but not less than all, of the Common
Stock owned by Sellers which such Sellers desire to sell,
transfer or otherwise dispose of, other than pursuant to a
tender or exchange offer for the Common Stock which is
governed by Section 4.2 hereof or pursuant to the provisos
set forth in section 3 hereof. The First Purchase Option
shall apply to, and may be exercised in connection with, each
sale, transfer or other disposition of Common Stock desired
to be made by Sellers prior to three (3) years following the
Conversion Date. The First Purchase Option shall be
exercisable on the following terms and conditions:
(a) In the event Sellers desire to sell, transfer
or otherwise dispose of any Common Stock, other than
pursuant to a tender or exchange offer covered by
Section 4.2 hereof (such shares being known as the
"First Purchase Option Shares"), Sellers shall promptly
deliver or cause to be delivered a written notice to
Dakota of Sellers' desire to sell, transfer or otherwise
dispose of such Common Stock (the "Sales Notice"), which
Sales Notice shall specify the number of Common Stock
Sellers' desire to sell, transfer or otherwise dispose
of, whether such Common Stock is to be sold on the over-the-counter
market, on a national securities exchange or to a private
purchaser, and if to a private purchaser, the name of such
private purchaser and the purchase price for the Common Stock.
(b) The First Purchase Option shall remain open
and exercisable by Dakota for thirty (30) days following
the receipt by Dakota of a Sales Notice. The First
Purchase Option may be exercised with respect to all,
but not less than all, of the First Purchase Option
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Shares specified in such Sales Notice at the private
sales price, if such Common Stock were to be sold in a
private sale, or if such Common Stock were to be sold on
the over- the-counter market or on a national securities
exchange, the market price on the date that the Election
Notice is given by Dakota. Dakota shall provide written
notice to Sellers of its intent to exercise the First
Purchase Option (an "Election Notice") prior to the
thirtieth (30th) day following the receipt by Dakota of
the Sales Notice.
(c) The closing of any purchase of First Purchase
Option Shares by Dakota upon exercise of the First
Purchase Option shall take place within ten (10) days
following the day that the Election Notice is provided
to Sellers by Dakota (unless a later date is agreed to
by Sellers), on which closing date delivery of such
First Purchase Option Shares will be accepted and
payment made therefor as specified in Section 4.4
hereof.
(d) In the event that Dakota fails to timely
exercise the First Purchase Option, Sellers shall be
free to sell, transfer or otherwise dispose of the
number of First Purchase Option Shares specified in the
Sales Notice to Dakota at a price per share, in the case
of a private sale, not less than the price specified in
the Sales Notice; PROVIDED HOWEVER, that if the Sellers
fail to close any sale to be made pursuant to this
Section 4.1(d) within sixty (60) days following the
thirtieth (30th) day after the receipt of the Sales
Notice by Dakota, such First Purchase Option Shares
shall again become subject to the restrictions set forth
in this Standstill Agreement and such shares may not be
sold, transferred or otherwise disposed of unless the
Sellers provide a new Sales Notice and afford Dakota a
new First Purchase Option with respect to such shares.
(e) The First Purchase Option shall extend to and
cover any and all Separated Rights owned by the Sellers
such that, for each Common Stock purchased by Dakota
upon exercise of a First Purchase Option after the
Distribution Date (as defined in the Rights Agreement),
Dakota shall be entitled to purchase at the market
price, if any, one (1) Separated Right.
SECTION 4.2. TENDER OFFER OPTION. Notwithstanding the
provisions of Section 4.1 hereof and subject to Section 4.2(e)
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hereof, Sellers shall sell to Dakota (or its designee), at
Dakota's option (the "Tender Offer Option"), all, but not less
than all, of the Common Stock owned by Sellers which such
Sellers desire to tender or sell pursuant to a bona fide
tender or exchange offer for the Common Stock (a "Tender Offer"),
other than a Tender Offer made by Dakota pursuant to Rule 13e-4
under the Securities Exchange Act of 1934. The Tender Offer
Option shall apply to, and may be exercised in connection with,
each Tender Offer announced prior to three (3) years following
the Conversion Date. The Tender Offer Option shall be exercisable
on the following terms and conditions:
(a) In the event Sellers desire to tender or sell
Common Stock pursuant to a Tender Offer (such shares
being known as the "Tender Offer Option Shares"),
Sellers shall promptly, but in any event at least five
(5) days prior to the first date specified in the Tender
Offer on which the offeror therein may accept Common
Stock for payment or exchange (the "Tender Offer
Termination Date"), deliver or cause to be delivered a
written notice to Dakota of Sellers' desire to tender
Tender Offer Option Shares pursuant to a Tender Offer
(the "Tender Notice"), which Tender Notice shall specify
the number of Tender Offer Option Shares Sellers' desire
to tender pursuant to such Tender Offer, the name of the
offeror, the Tender Offer Termination Date and the
Tender Offer price per share of Common Stock.
(b) Subject to the other provisions of this
Standstill Agreement, the Tender Offer Option may be
exercised by written notice by Dakota to Sellers of
Dakota's election to exercise the Tender Offer Option
(an "Exercise Notice") delivered to Sellers at least
twenty-four (24) hours prior to the Tender Offer
Termination Date. The Tender Offer Option may be
exercised with respect to all, but not less than all, of
the Tender Offer Option Shares specified in the Tender
Notice.
(c) Subject to Section 4.2(b) hereof, the closing
of any sale of Tender Offer Option Shares upon exercise
by Dakota of the Tender Offer Option shall take place
not later than five (5) days following the date on which
Sellers would have been paid if they had tendered such
Common Stock to the offeror in the Tender Offer (unless
a later date is agreed to by Sellers), on which closing
date delivery of such Tender Offer Option Shares will be
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accepted and payment made therefor as specified in
Section 4.4 hereof; PROVIDED, HOWEVER, that in the event
a competing Tender Offer is made prior to such closing
date at a price per share higher than a price offered in
the Tender Offer described in the Tender Notice
previously delivered to Dakota, Sellers shall have the
right to withdraw such Tender Notice and, subject to the
Tender Offer Option and upon compliance with the
provisions of this Section 4.2, to tender, or cause to
be tendered, Common Stock into such competing Tender
Offer.
(d) The purchase price of the Tender Offer Option
Shares purchased by Dakota pursuant to the Tender Offer
Option shall be the product of (i) the number of such
Tender Offer Option Shares upon which Dakota has
exercised its Tender Offer Option multiplied by (ii) the
Tender Offer price per share of Common Stock as in
effect on the last date specified in the Tender Offer on
which the offeror therein may accept Common Stock for
payment or exchange. For purposes of the preceding
clause (ii), if the Tender Offer price is payable in
whole or in part in property other than cash, the price
allocable to such property shall be equal to the fair
market value of such property on the date Dakota
receives the related Tender Notice.
(e) In the event that Dakota fails to timely
exercise the Tender Offer Option in connection with any
Tender Offer, Sellers shall be free to tender and sell
in such Tender Offer up to the number of Tender Offer
Option Shares specified in the Tender Notice at a price
per share of Common Stock not less than the Tender Offer
price specified in the Tender Notice.
(f) The Tender Offer Option shall extend to and
cover any and all Separated Rights owned by Sellers such
that, for each Common Stock purchased by Dakota upon
exercise of a Tender Offer Option after the Distribution
Date (as defined in the Rights Agreement), Dakota shall
be entitled to purchase at the market price, if any, one
(1) Separated Right.
SECTION 4.3. CLOSING. Subject to the other provisions
of this Standstill Agreement, the closing of the purchase of
Common Stock pursuant to any exercise of an Option shall take
place on the applicable closing date at the principal
executive offices of Dakota or at such other place as shall
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be mutually acceptable to the parties. At such closing,
Sellers shall deliver, or cause to be delivered, to Dakota
(a) all of the certificates evidencing the Common Stock with
respect to which such Option is being exercised, duly
endorsed to Dakota or accompanied by appropriate stock
powers, and (b) all of the certificates evidencing the
Separated Rights, if any, which Dakota is entitled to receive
pursuant to Section 4.1 or 4.2 hereof, as the case may be,
and Dakota shall deliver to Sellers the purchase price for
such Common Stock in immediately available funds.
SECTION 4.4. PAYMENT. All sums and amounts payable or
to be payable pursuant to the provisions of this Standstill
Agreement shall be payable by wire transfer or certified
check.
SECTION 4.5. ADJUSTMENT OF PURCHASE PRICE. The
purchase price payable for each Common Stock purchased
pursuant to Section 4.1 or 4.2 hereof shall be appropriately
adjusted in the event Dakota, prior to the closing date on
which such purchase price is payable, (a) pays a stock
dividend or otherwise makes a distribution in Common Stock or
other voting securities of Dakota (other than Separated
Rights), (b) subdivides the outstanding Common Stock into a
greater number of Common Stock, (c) combines the outstanding
Common Stock into a smaller number of Common Stock, or (d)
issues by reclassification any Common Stock.
SECTION 4.6. ASSIGNABILITY OF OPTIONS. Dakota may
assign either or both of the Options in whole or part in its
sole discretion. Dakota may designate in an Exercise Notice
any Person or Persons to take title to all or any part of the
Common Stock and Separated Rights, if any, being purchased in
connection with the exercise described in such Exercise
Notice.
SECTION 4.7. OPTIONS NOT MUTUALLY EXCLUSIVE. Neither
the existence of the Tender Offer Option nor its
exercisability in any set of circumstances shall restrict
Dakota's ability to exercise the First Purchase Option in the
same set of circumstances with respect to Common Stock other
than the Tender Offer Option Shares relating to a Tender
Offer as to which Dakota has been delivered a Tender Notice,
provided that the conditions precedent to the exercise of the
First Purchase Option have been met.
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SECTION 5. SPECIFIC ENFORCEMENT. Sellers and Dakota
acknowledge and agree that irreparable damage would occur to the other
party in the event any of the provisions of this Standstill Agreement
were not performed in accordance with their specific terms or were
otherwise breached and agree that Sellers and Dakota shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of
this Standstill Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United
States or any state thereof, in addition to any other remedy to which
Dakota may be entitled at law or in equity.
SECTION 6. LEGENDS AND STOP TRANSFER ORDERS. The
certificates representing Common Stock which Sellers shall receive
pursuant to the Conversion and all certificates representing Separated
Rights associated with such Common Stock, which Sellers may receive at
or subsequent to such time, shall bear the following legend, which shall
remain thereon as long as such Common Stock or Separated Rights are
subject to the restrictions contained in this Standstill Agreement:
The securities represented by this certificate are
subject to the provisions of an Agreement, dated as of
November 27, 1996, between Dakota Telecommunications, Inc.
and Xxxx X. Xxxxx, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx
X. Xxxxxx and Xxxx Xxxxxxxxx, and may not be sold or
transferred except in accordance therewith. A copy of the
Agreement is on file at the corporate office of Dakota
Telecommunications, Inc.
Dakota may enter a stop transfer order with the transfer agent or agents
of the Common Stock or Separated Rights to enforce compliance with the
requirements of this Standstill Agreement. Dakota agrees, if requested
to do so by Sellers, to remove promptly any stop transfer order with
respect to, and issue promptly unlegended certificates in substitution
for, certificates for any Common Stock or Separated Rights that have
been sold or otherwise transferred by Sellers in compliance with
Section 4 hereof.
SECTION 7. IMPLEMENTATION OF STANDSTILL AGREEMENT; REFERENCE
TO SELLERS. Dakota and Sellers each agree that they will take or cause
to be taken all such action and will execute and deliver or cause to be
executed and delivered all such documents as the other may reasonably
request in order to carry out and implement the terms and provisions of
this Standstill Agreement. Reference in this Standstill Agreement to
Sellers shall mean all Sellers collectively and each Seller
individually.
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SECTION 8. SEVERABILITY. If any part of this Standstill
Agreement is held to be invalid, void or unenforceable, the remaining
terms and provisions of the Standstill Agreement will remain in full
force and effect.
SECTION 9. GOVERNING LAW. This Standstill Agreement will be
governed by and construed in accordance with the laws of the State of
South Dakota.
SECTION 10. NOTICES. Unless otherwise specified herein, all
notices to any Party hereunder shall be in writing and shall be given to
such Party at its address provided in the Merger Agreement. Each such
notice shall be effective when it is received.
SECTION 11. SUCCESSORS AND ASSIGNS. This Standstill
Agreement shall be binding upon and inure to the benefit of Sellers and
their successors and assigns and Dakota and its successors and assigns.
SECTION 12. AMENDMENT. This Standstill Agreement may not be
amended except by an instrument in writing signed by Dakota and each of
the parties to be bound by such amendment.
SECTION 13. COUNTERPARTS; HEADINGS. This Standstill
Agreement may be executed in two or more counterparts, each of which
will be an original, but all of which taken together will constitute one
and the same agreement. The headings contained in this Standstill
Agreement are for reference only and shall not affect in any way the
meaning or interpretation of this Standstill Agreement.
SECTION 14. ENTIRE AGREEMENT. This Standstill Agreement
embodies the entire agreement and understanding between the parties with
respect to its subject matter. This Standstill Agreement may not be
modified, amended, altered or supplemented except by a written agreement
signed by Dakota and Sellers.
IN WITNESS WHEREOF, the parties have executed and
delivered this Standstill Agreement as of the date first above written.
DAKOTA COOPERATIVE
TELECOMMUNICATIONS, INC.
By /S/ XXXXX X. XXXXXXXX
Its VICE PRESIDENT
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/S/ XXXX X. XXXXX
Xxxx X. Xxxxx
/S/ XXXX X. XXXXXX
Xxxx X. Xxxxxx
/S/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
/S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
/S/ XXXX XXXXXXXXX
Xxxx Xxxxxxxxx
/S/ XXXX XXXX
Xxxx Xxxx
/S/ XXXXXXX ENGLISH
Xxxxxxx English
"Sellers"
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