STOCK PURCHASE AGREEMENT
dated as of
September 1, 1995
by and between
TPG COMMUNICATIONS, INC.
and
ST. XXX INDUSTRIES, INC.
TABLE OF CONTENTS
Section Page
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE PRICE AND CLOSING
2.01 Purchase Price . . . . . . . . . . . . . . . . . . . . . 13
2.02 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 13
2.03 Deliveries at the Closing. . . . . . . . . . . . . . . . 14
2.04 Purchase Price Adjustment. . . . . . . . . . . . . . . . 16
2.05 The Closing Schedule . . . . . . . . . . . . . . . . . . 16
2.06 Resolution of Net Worth Disputes . . . . . . . . . . . . 17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.01 Corporate Existence and Power, Etc.. . . . . . . . . . . 18
3.02 Capital Stock. . . . . . . . . . . . . . . . . . . . . . 19
3.03 Corporate Authorization. . . . . . . . . . . . . . . . . 22
3.04 Consents and Approvals; No Violation . . . . . . . . . . 22
3.05 Financial Statements . . . . . . . . . . . . . . . . . . 23
3.06 Absence of Certain Changes . . . . . . . . . . . . . . . 24
3.07 Title to Properties. . . . . . . . . . . . . . . . . . . 26
3.08 Litigation . . . . . . . . . . . . . . . . . . . . . . . 27
3.09 Certain Agreements . . . . . . . . . . . . . . . . . . . 28
3.10 Compliance with Laws . . . . . . . . . . . . . . . . . . 29
3.11 Tariffs; FCC Licenses; Non-FCC Authorizations. . . . . . 29
3.12 Access Lines and Exchanges . . . . . . . . . . . . . . . 31
3.13 Finders' Fees. . . . . . . . . . . . . . . . . . . . . . 31
3.14 No Implied Representation. . . . . . . . . . . . . . . . 32
3.15 Corporate Records. . . . . . . . . . . . . . . . . . . . 32
3.16 Condition of Tangible Assets . . . . . . . . . . . . . . 33
3.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 33
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section Page
4.01 Organization and Existence . . . . . . . . . . . . . . . 34
4.02 Corporate Authorization. . . . . . . . . . . . . . . . . 35
4.03 Consents and Approvals; No Violation . . . . . . . . . . 35
4.04 Finders' Fees. . . . . . . . . . . . . . . . . . . . . . 36
4.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . 37
4.06 Funding. . . . . . . . . . . . . . . . . . . . . . . . . 37
4.07 Investor Status. . . . . . . . . . . . . . . . . . . . . 37
ARTICLE V
COVENANTS OF THE PARTIES
5.01 Conduct of the Business. . . . . . . . . . . . . . . . . 38
5.02 Access to Information. . . . . . . . . . . . . . . . . . 42
5.03 Efforts; Further Assurances; Permits . . . . . . . . . . 43
5.04 Books and Records. . . . . . . . . . . . . . . . . . . . 44
5.05 Governmental Regulatory Approval . . . . . . . . . . . . 45
5.06 FCC Consents . . . . . . . . . . . . . . . . . . . . . . 46
5.07 HSR Act Review . . . . . . . . . . . . . . . . . . . . . 46
5.08 Effect of Due Diligence and Related Matters. . . . . . . 47
5.09 Interests. . . . . . . . . . . . . . . . . . . . . . . . 47
5.10 Intercompany Payables and Receivables. . . . . . . . . . 48
5.11 Environmental Evaluation . . . . . . . . . . . . . . . . 48
5.12 Real Property. . . . . . . . . . . . . . . . . . . . . . 48
5.13 Capital Expenditures . . . . . . . . . . . . . . . . . . 48
5.14 Dividends/Distributions. . . . . . . . . . . . . . . . . 49
5.15 FCC Filings. . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI
TAX MATTERS
6.01 Pre-Closing Tax Periods; Post-Closing Tax Periods;
Bridge Tax Periods . . . . . . . . . . . . . . . . . . . 50
6.02 Refunds or Credits . . . . . . . . . . . . . . . . . . . 55
6.03 Mutual Cooperation . . . . . . . . . . . . . . . . . . . 56
6.04 Tax Audits . . . . . . . . . . . . . . . . . . . . . . . 56
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Section Page
6.05 Section 338 Election . . . . . . . . . . . . . . . . . . 58
6.06 No Offset. . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE VII
EMPLOYEE BENEFITS
7.01 Employee Benefit Plans . . . . . . . . . . . . . . . . . 61
7.02 Benefit Plan Compliance. . . . . . . . . . . . . . . . . 63
7.03 Employees of the Subsidiaries. . . . . . . . . . . . . . 65
7.04 Subsidiary Benefit Plans . . . . . . . . . . . . . . . . 66
7.05 Buyer Benefit Plans. . . . . . . . . . . . . . . . . . . 67
7.06 Seller's 401(k) Plan . . . . . . . . . . . . . . . . . . 67
7.07 No Third Party Beneficiaries . . . . . . . . . . . . . . 69
7.08 Severance. . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Conditions to the Obligations of Each Party. . . . . . . 71
8.02 Conditions to Obligation of Buyer. . . . . . . . . . . . 72
8.03 Conditions to Obligation of Seller . . . . . . . . . . . 73
ARTICLE IX
TERMINATION AND ABANDONMENT
9.01 Termination. . . . . . . . . . . . . . . . . . . . . . . 74
9.02 Effect of Termination. . . . . . . . . . . . . . . . . . 75
ARTICLE X
SURVIVAL; INDEMNIFICATION
10.01 Survival. . . . . . . . . . . . . . . . . . . . . . 75
10.02 Indemnification . . . . . . . . . . . . . . . . . . 76
10.03 Procedures. . . . . . . . . . . . . . . . . . . . . 76
10.04 Tax, Insurance and Other Benefits . . . . . . . . . 79
10.05 Environmental Indemnification . . . . . . . . . . . 79
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ARTICLE XI
MISCELLANEOUS
Section Page
11.01 Notices . . . . . . . . . . . . . . . . . . . . . . 80
11.02 Amendments; No Waivers. . . . . . . . . . . . . . . 82
11.03 Expenses. . . . . . . . . . . . . . . . . . . . . . 82
11.04 Assignment; Parties in Interest . . . . . . . . . . 82
11.05 Governing Law; Jurisdiction; Forum. . . . . . . . . 82
11.06 Counterparts; Effectiveness . . . . . . . . . . . . 83
11.07 Entire Agreement. . . . . . . . . . . . . . . . . . 83
11.08 Publicity . . . . . . . . . . . . . . . . . . . . . 84
11.09 Captions. . . . . . . . . . . . . . . . . . . . . . 84
11.10 Severability. . . . . . . . . . . . . . . . . . . . 84
11.11 Knowledge . . . . . . . . . . . . . . . . . . . . . 84
11.12 Purchase Price Adjustment . . . . . . . . . . . . . 85
EXHIBITS
A. Net Worth. . . . . . . . . . . . . . . . . . . . . . . .A-1
B. Opinion of Counsel to Buyer. . . . . . . . . . . . . . .B-1
C. Opinion of Counsel to Seller . . . . . . . . . . . . . .C-1
iv
STOCK PURCHASE AGREEMENT
AGREEMENT (this "Agreement") dated as of the 1st day of
September, 1995 between St. Xxx Industries, Inc., a Florida
corporation (the "Seller"), and TPG Communications, Inc., a Delaware
corporation (the "Buyer");
W I T N E S S E T H :
WHEREAS, Seller is the beneficial and record owner of all the
issued and outstanding shares of the capital stock of St. Xxx
Communications, Inc. ("SJC"); and
WHEREAS, Seller desires to sell, convey, assign, transfer and
deliver to Buyer, and Buyer desires to purchase and accept from
Seller, such shares of capital stock of SJC; and
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions.
(a) The following terms, as used herein, have the following
meanings:
"Act" has the meaning set forth in Section 5.15.
"APSC" shall mean the Alabama Public Service Commission.
"Affiliate" shall mean, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common
control with such other Person; "Buyer Affiliates" shall mean the
Affiliates of Buyer and "Seller Affiliates" shall mean the Affiliates
of Seller.
"Agreement" has the meaning set forth in the introductory paragraph
hereof.
"Assumed Taxes" shall mean (a) all of the following Taxes to the
extent allocable to periods after the Closing Date: payroll Taxes in
respect of employees of the Subsidiaries (including all Taxes under
the Federal Insurance Contributions Act and the Federal Unemployment
Tax Act and other Taxes or contributions related to compensation paid
to employees of the Subsidiaries), real and personal property Taxes,
capital Taxes, sales, use and purchase Taxes and value added Taxes
and all similar Taxes imposed by any Governmental Entity and (b) all
Transfer Taxes which aggregate less than $10,000 and one-half of the
amount in excess thereof.
"Audit" has the meaning set forth in Section 2.05.
"Benefit Plan" has the meaning set forth in Section 7.01(a).
"Books and Records" means all of the Subsidiaries' customer or
subscriber lists and records, accounts and billing records (including
a copy of the detailed general ledger and the summary trial balances,
where available), detailed continuing property records, equipment
records, plans, blueprints, specifications,
2
designs, drawings, surveys, engineering reports, personnel records
(where applicable) and all other documents, computer data and records
(including records and files on computer disks or stored
electronically) relating to the Subsidiaries.
"Bridge Tax Period" has the meaning set forth in Section 6.01(l).
"Buyer" has the meaning set forth in the introductory paragraph
hereof.
"Buyer's Plan" has the meaning set forth in Section 7.06.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Closing" shall mean the closing of the sale and purchase of the
Common Stock pursuant to this Agreement.
"Closing Date" shall mean the date of the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreement" has the meaning set forth in
Section 7.01(c).
"Common Stock" shall mean the common stock, par value $1.00 per
share, of SJC.
"Confidentiality Agreement" has the meaning set forth in Section
5.02.
"Consent(s)" has the meaning set forth in Section 3.04.
"Disclosure Schedule" shall mean the Disclosure Schedule annexed
hereto, including the Introduction thereto.
3
"Dispute Notice" has the meaning set forth in Section 6.01(l).
"Environmental Conditions" shall mean any and all acts, omissions,
events, circumstances, and conditions, including any pollution,
contamination, degradation, damage, or injury caused by, related to,
or arising from or in connection with the generation, use, handling,
treatment, storage, disposal, discharge, emission or release of
Hazardous Materials.
"Environmental Evaluation" has the meaning set forth in Section 5.11.
"Environmental Laws" shall mean all federal, state, local or
municipal laws, rules, regulations, statutes, and ordinances and
orders of any Governmental Entity relating to (a) the control of any
potential pollutant, or protection of the air, water or land, (b)
solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation, and (c) exposure to hazardous,
toxic or other substances alleged to be harmful.
"Environmental Laws" shall include the Clean Air Act, the Clean Water
Act, the Resource Conservation and Recovery Act, the Superfund
Amendments and Reauthorization Act, the Toxic Substances Control Act,
the Safe Drinking Water Act, and the CERCLA, and shall also include
all state, local and municipal laws, rules, regulations, statutes,
ordinances and orders dealing with the subject matter of the above
listed federal statutes or promulgated by any governmental or
4
quasi-governmental agency thereunder in order to carry out the
purposes of any federal, state, local or municipal law.
"Environmental Liabilities" shall mean any and all liabilities,
responsibilities, claims, suits, losses, costs (including remedial,
removal, response, abatement, clean-up, investigative and/or
monitoring costs and any other related costs and expenses), other
causes of action recognized now or at any later time, damages,
settlements, expenses, charges, assessments, liens, penalties, fines,
pre-judgment and post-judgment interest, attorneys' fees and other
legal costs incurred or imposed (a) pursuant to any agreement, order,
notice of responsibility, directive (including directives embodied in
Environmental Laws), injunction, judgment or similar documents
(including settlements) arising out of, in connection with, or under
Environmental Laws, (b) pursuant to any claim by a Governmental
Entity or other Person for personal injury, property damage, damage
to natural resources, remediation, or payment or reimbursement of
response costs incurred or expended by such Governmental Entity or
Person pursuant to common law or statute, or (c) as a result of
Environmental Conditions.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any person, firm or entity (whether or
not incorporated) which, by reason of its relationship with any of
the Subsidiaries, is required to be aggregated with any
5
of the Subsidiaries under Sections 414(b), (c) or (m) of the Code or
which, together with any of the Subsidiaries, is a member of a
controlled group within the meaning of Section 4001(a) of ERISA.
"Execution Date" shall mean the date of execution of this Agreement.
"FCC" means the Federal Communications Commission.
"FCC Consents" has the meaning set forth in Section 5.06.
"FCC Licenses" means all licenses, certificates, permits or other
authorizations granted to the Subsidiaries by the FCC that are used
in the conduct of the business of the Subsidiaries.
"Final Order" means an action or decision as to which: 1) no request
for a stay is pending, no stay is in effect, and any deadline for
filing such request that may be designated by statute or regulation
has passed; 2) no petition for rehearing or reconsideration or
application for review is pending and the time for filing any such
petition or application has passed; 3) the FCC (or comparable body
exercising jurisdiction) does not have the action or decision under
reconsideration on its own motion and the specified time for
initiating such reconsideration has passed; 4) no appeal is pending
or in effect and any deadline for filing any such appeal that may be
designated by statute or rule has passed; and 5) no action has been
commenced or threatened.
"Financial Statements" has the meaning set forth in Section 3.05(a).
6
"Florala" shall mean The Florala Telephone Company, Inc., an
Affiliate of SJC and Seller.
"FPSC" shall mean the Florida Public Service Commission.
"401(k) Plan" shall mean the St. Xxx Paper Company Employee Salary
Deferral Plan.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"GPSC" shall mean the Georgia Public Service Commission.
"Governmental Entity" has the meaning set forth in Section 3.04.
"Group" shall mean a Person and such Person's Affiliates and their
respective directors, officers, employees, representatives,
stockholders, controlling persons and agents and each of the heirs,
executors, successors and assigns of any of the foregoing.
"Gulf" shall mean Gulf Telephone Company, a wholly owned subsidiary
of SJC.
"Hazardous Materials" shall mean any (a) petroleum or petroleum
products, (b) hazardous substances as defined by 101(14) of CERCLA
and (c) any other chemical, substance or waste that is regulated by
any Governmental Entity under any Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
7
"Indemnified Parties" has the meaning set forth in Section 10.02.
"Indemnifying Party" has the meaning set forth in Section 10.03.
"Intercompany" shall mean a transaction, obligation or account
between Seller, any Seller Affiliate other than the Subsidiaries, or
their divisions, on the one hand, and any of the Subsidiaries or
their divisions, on the other hand.
"Intercompany Payables" shall mean all Intercompany accounts payable
of whatever nature outstanding as of the Closing Date.
"Intercompany Accounts Receivable" shall mean all Intercompany
accounts receivable of whatever nature, other than those relating to
telephone service, outstanding as of the Closing Date.
"Interests" shall mean those certain interests set forth in
Confidential Section 1.01 of the Disclosure Schedule.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset.
"Listed Employee" has the meaning set forth in Confidential Section
7.08(a) of the Disclosure Schedule.
"Losses and Damages" has the meaning set forth in Section 10.02.
8
"Material Adverse Effect" shall mean an adverse effect on the
financial condition, assets or results of operations of the
Subsidiaries, taken as a whole, in an amount exceeding $1,000,000.
"Multiemployer Plan" shall mean each Benefit Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"Net Worth" shall have the meaning and be calculated in accordance
with Exhibit A hereto at and as of any date.
"Net Worth Dispute Notice" has the meaning set forth in Section 2.06.
"Non-FCC Authorizations" means all licenses, certificates, permits,
franchises, or other authorizations (other than FCC Licenses) granted
to the Subsidiaries by Governmental Entities that are used in or
relate to the conduct of the business of the Subsidiaries, including,
without limitation those from the FPSC, GPSC and APSC and including,
without limitation, those that are listed or required to be listed on
Schedule 3.11(c).
"Other Employee" has the meaning set forth in Confidential Section
7.08(b) of the Disclosure Schedule.
"Permitted Lien" shall mean (a) mechanics', carriers', workers',
repairers', purchase money security interests and other similar Liens
arising or incurred in the ordinary course of business related to
obligations as to which there is both (i) no default on the part of
any of the Subsidiaries and (ii) none of the Subsidiaries has
received notice of the commencement of foreclosure actions with
regard thereto; (b) other Liens, imperfections in
9
title, charges, easements, restrictions and encumbrances; and (c)
Liens for Taxes not yet due and payable in the case of each of (a),
(b) and (c) which, individually or in the aggregate, do not detract
from the value, or interfere with the present use (or use planned by
Seller), of the property subject thereto or affected thereby, other
than in any de minimis respect and (d) applicable zoning laws and
ordinances and municipal regulations and rights reserved to or vested
in any municipality or governmental, statutory or public authority to
control or regulate real property and realty rights.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"Post-Closing Tax Periods" has the meaning set forth in Section
6.01(k).
"Pre-Closing Tax Periods" has the meaning set forth in Section
6.01(j).
"Purchase Price" has the meaning set forth in Section 2.01.
"Purchase Price Adjustment" has the meaning set forth in Section
2.04.
"Real Property" shall mean those tracts or parcels of land described
by metes and bounds in Section 1.02 of the Disclosure Schedule and
all buildings and other improvements of every kind and nature
thereon, including fixtures and personalty of a permanent nature.
10
"Realty Rights" shall mean those certain easements, privileges,
right-of-way agreements, surface use rights, servitudes, and other
real property interests located outside the Real Property necessary
for access to or which are ancillary or appurtenant to the use and
enjoyment of the Real Property or the operation of the businesses of
the Subsidiaries.
"Regulatory Approvals" has the meaning set forth in Section 5.05.
"Reviewing Accountant" has the meaning set forth in Section 2.06.
"SJC" has the meaning set forth in the introductory recitals hereof.
"SJTT" shall mean St. Xxxxxx Telephone & Telegraph Company, a wholly
owned subsidiary of SJC.
"Securities Act" has the meaning set forth in Section 4.07.
"Seller" has the meaning set forth in the introductory paragraph
hereof.
"Subsidiaries" shall mean SJC, Florala, Gulf and SJTT.
"Subsidiary Benefit Plan" shall mean each Benefit Plan presently
maintained or contributed to for the benefit of any current or former
employee of any of the Subsidiaries.
"Tax" shall mean all taxes, and tax-related charges, liabilities,
fees, levies or other assessments, including, without limitation,
income, gross receipts, alternative minimum, excise, property, real
estate, sales, purchase, use, payroll (including
11
required withholdings), and franchise taxes imposed or imputed by any
Governmental Entity on the Seller or any Seller Affiliate (including
the Subsidiaries) with respect to or in connection with the
Subsidiaries, but excluding Transfer Taxes. Such term shall include
any interest, penalties or additions payable in connection with such
taxes, charges, fees, levies or other assessments.
"Tax Returns" shall mean all returns, declarations, reports,
statements and other documents required to be filed with any
Governmental Entity in respect of any Tax and "Tax Return" shall mean
one of the foregoing Tax Returns.
"338 Allocation" has the meaning set forth in Section 6.05(b).
"338 Election" has the meaning set forth in Section 6.05(b).
"Telephone Exchanges" shall mean the telephone exchanges served by
the Subsidiaries including without limitation those listed in Section
1.03 of the Disclosure Schedule.
"Transfer Taxes" shall mean all sales, transfer, use, gross receipts,
value added, recording, registration, stamp and similar taxes or fees
(including recording fees) imposed by any Governmental Entity in
connection with the transfer by Seller to Buyer of shares of Common
Stock pursuant to this Agreement.
"WARN" has the meaning set forth in Section 7.08.
12
ARTICLE II
PURCHASE PRICE AND CLOSING
2.01 Purchase Price. Upon the terms and subject to the
conditions of this Agreement and in consideration of the sale,
conveyance, assignment and transfer of the Common Stock to be sold to
Buyer hereunder, Buyer will pay and deliver to Seller on the Closing
Date, the sum of one hundred twenty two million five hundred thousand
dollars ($122,500,000) (consisting of assumption of long term
indebtedness and the current portion thereof outstanding at the
Closing Date and the remainder in cash) minus (a) dividends or
distributions by SJC to Seller in the form of cash after June 30,
1995 and made on or before December 31, 1995, assumed to be no less
than $7,500,000 (other than any cash proceeds distributed pursuant to
Section 5.09) and (b) the net of amounts (i) paid for any reason to
SJC by the cellular partnerships in which the Interests are held and
(ii) the capital contributions made to the cellular partnerships in
which the Interests are held in each case after June 30, 1995, by
wire transfer of immediately available funds in U.S. dollars to an
account designated by Seller at least two (2) Business Days prior to
the Closing Date (the "Purchase Price").
2.02 Closing. The Closing of the sale and purchase of the
Common Stock hereunder shall take place at the offices of Seller in
Jacksonville, Florida at 10:00 a.m. EDT (a) on or before the seventh
Business Day following the date on which all conditions to
13
the parties' respective obligations under Article VIII have been
satisfied; or (b) at such other place, date and time as the parties
hereto may mutually agree.
2.03 Deliveries at the Closing.
(a) At the Closing, Buyer shall deliver the following to
xxxxx:
(i) the Purchase Price as provided for in Section
2.01;
(ii) certified copies of resolutions duly adopted by
Buyer constituting all necessary corporate
authorization for the consummation by Buyer of the
transactions contemplated by this Agreement;
(iii) the certificate required by Section 8.03(c);
(iv) certificates of incumbency for all relevant
officers or directors of Buyer executing this
Agreement and any other documents pursuant to this
Agreement;
(v) an opinion or opinions of counsel to Buyer
substantially in the form of and as to those matters
referenced in Exhibit B hereto; and
(vi) such other documents, instruments, certificates
and writings as reasonably may be requested by Seller
at least three (3) Business Days prior to the Closing.
(b) At the Closing, Seller shall deliver the following to
Buyer:
14
(i) the certificates for all the issued and
outstanding shares of Common Stock, duly assigned to
Buyer;
(ii) certified copies of resolutions duly adopted by
the Board of Directors of Seller and any Seller
Affiliates constituting all necessary corporate
authorization for the consummation by Seller and such
Seller Affiliates of the transactions contemplated by
this Agreement;
(iii) the certificate required by Section 8.02(c);
(iv) certificates of incumbency for all relevant
officers and directors of Seller executing this
Agreement and any other documents pursuant to this
Agreement;
(v) the written resignations effective as of the
Closing Date of all directors and officers of the
Subsidiaries;
(vi) the minute books, corporate seals and stock
ledgers of each of the Subsidiaries;
(vii) an opinion or opinions of counsel to the Seller
substantially in the form of and as to those matters
referenced in Exhibit C hereto, any of which opinions
as to Florida law (other than FPSC matters) which may
be given by inside counsel to St. Xxx Paper Company;
and
(viii) such other documents, instruments, certificates
and writings as reasonably may be requested by Buyer
at least three (3) Business Days prior to the Closing.
15
2.04 Purchase Price Adjustment. In the event the closing occurs
after December 31, 1995, the Purchase Price shall be adjusted such
that Buyer shall pay to Seller an amount in cash equal to the
Purchase Price Adjustment if the Purchase Price Adjustment is a
positive number and Seller shall pay to Buyer an amount equal to the
Purchase Price Adjustment if the Purchase Price Adjustment is a
negative number, such amount to be payable in either event within ten
(10) days after final determination of the Purchase Price Adjustment
pursuant to Section 2.06, in U.S. dollars by wire transfer of
immediately available funds to the account or accounts established by
the recipient at a bank or banks specified by the recipient.
"Purchase Price Adjustment" shall mean the difference between Net
Worth at and as of the Closing Date and at and as of December 31, 1995.
2.05 The Closing Schedule. As soon as practicable after
December 31, 1995 and the Closing Date, Seller shall cause SJC's
accountants to conduct an audit of the consolidated financial
statements for SJC as at December 31, 1995 and the Closing Date
(each, an "Audit"). Seller shall deliver to Buyer each Audit and a
schedule of the Purchase Price Adjustment within sixty (60) days of
Closing. In this regard, Buyer agrees to permit Seller and its
representatives (including Seller's independent accountants) during
normal business hours to have after the Closing Date reasonable
access to the books, records, schedules, work papers and programs of
SJC. In this regard, Seller agrees to permit Buyer and its
16
representatives (including Buyer's independent accountants, if
applicable), during normal business hours to have before the Closing
Date reasonable access to the books, records, schedules, work papers
and programs of SJC and SJC's independent accountants and access to
representatives of SJC's independent accountants.
2.06 Resolution of Net Worth Disputes. In the event Buyer
disputes the Seller's calculation of the Purchase Price Adjustment,
it shall, within thirty (30) days of delivery thereof, deliver a
notice to Seller (the "Net Worth Dispute Notice") setting forth in
reasonable detail the basis of such dispute. If the Dispute Notice
is not delivered within such thirty (30) day period, then the
Purchase Price Adjustment, as determined by Seller, shall be final.
In the event that the Dispute Notice is so delivered, the parties
shall negotiate to attempt to resolve the portion which is in
dispute. If the parties fail to resolve any such dispute within
forty-five (45) days after receipt by Seller of the Dispute Notice,
the parties shall select a firm of independent certified public
accountants of national standing (the "Reviewing Accountant") to
review the portions of the Buyer's calculation which are subject to
dispute or, if the parties fail to agree upon a Reviewing Accountant
within twenty (20) days after receipt by Seller of the Dispute
Notice, such firm shall be selected by lot from among all so-called
"Big Six" firms not having (and not having announced a pending
combination with another firm having) a disqualifying interest with
respect to either party. The performance of any such
17
firm under this or any other provision of this Agreement, except
under Section 2.05 hereof in connection with either Audit, shall not
constitute a disqualifying interest. The parties shall make
available to the Reviewing Accountant all work papers and all other
information and material in their possession relating to the matters
asserted in the Dispute Notice. The Reviewing Accountant shall be
instructed by the parties to use its best efforts to deliver to the
parties its determination as promptly as practicable after such
submission of the dispute to the Reviewing Accountant. The
determination of the Reviewing Accountant shall be final and binding
on the parties. Each party shall bear its own expenses and the fees
and expenses of its own representatives and experts, including its
independent accountant, in connection with the preparation, review,
dispute (if any) and final determination of the Purchase Price
Adjustment. The parties shall share equally in the costs, expenses
and fees of the Reviewing Accountant.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that:
3.01 Corporate Existence and Power, Etc.
(a) Each of Seller and each of the Subsidiaries is a
corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation as shown in
Section 3.01 of the Disclosure Schedule, and has all
18
required corporate power and authority to carry on its business as
now conducted by it. Each of Seller and each of the Subsidiaries is
duly qualified or licensed to do business and is in good standing in
each jurisdiction shown in Section 3.01 of the Disclosure Schedule,
such jurisdictions constituting all of the jurisdictions where the
character of the property owned or leased by it or the nature of its
activities make such qualification necessary, except where failure to
be so qualified would not, individually or in the aggregate,
materially adversely affect Seller's or any of such Subsidiaries
compliance with this Agreement or ability to transact its business as
now conducted.
3.02 Capital Stock.
(a) The authorized capital of SJC consists of 1,000 shares
of Common Stock, par value, $1.00 per share, of which, as of the
Execution Date, 1,000 shares were issued and outstanding. Seller is
the record and beneficial owner of all the issued and outstanding
shares of Common Stock free and clear of all Liens. SJC has not
issued any warrants, options or rights or debentures, notes or other
evidence of indebtedness or other securities, instruments or
agreements upon the exercise or conversion of which or pursuant to
the terms of which additional shares of Common Stock may become
issuable. The holder of Common Stock has no preemptive rights or
contractual rights of first refusal. There are no agreements
pursuant to the terms of which SJC may repurchase or redeem any
shares of Common Stock. All of the issued and
19
outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable.
(b) The authorized capital stock of Florala consists of
(i) 560 shares of common stock, par value $100 per share, 557 shares
of which were issued and outstanding on the Execution Date and (ii)
1200 shares of preferred stock, par value $25 per share, 402 shares
of which were issued and outstanding on the Execution Date. SJC is
the record and beneficial owner of all the issued and outstanding
shares of common stock of Florala free and clear of all Liens and of
none of the preferred stock of Florala. Florala has not issued any
warrants, options or rights or debentures, notes or other evidence of
indebtedness or other securities, instruments or agreements upon the
exercise or conversion of which or pursuant to the terms of which
additional shares of capital stock of Florala may become issuable.
The holder of common stock but not the holders of preferred stock of
Florala have preemptive rights, and the holders of capital stock of
Florala have no contractual rights of first refusal to which Florala
is a party. There are no agreements pursuant to the terms of which
Florala may repurchase or redeem any shares of common stock of
Florala. All of the issued and outstanding shares of capital stock
of Florala have been duly and validly authorized and issued and are
fully paid and nonassessable. There are no accumulated, unpaid
dividends on the preferred stock of Florala.
20
(c) The authorized capital stock of Gulf consists of
12,000 shares of common stock, par value $100 per share, 3,120 shares
of which were issued and outstanding on the Execution date. SJC is
the record and beneficial owner of all the issued and outstanding
shares of common stock of Gulf free and clear of all Liens. Gulf has
not issued any warrants, options or rights or debentures, notes or
other evidence of indebtedness or other securities, instruments or
agreements upon the exercise or conversion of which or pursuant to
the terms of which additional shares of common stock of Gulf may
become issuable. The holder of common stock of Gulf has preemptive
rights but no contractual rights of first refusal to which Gulf is a
party. There are no agreements pursuant to the terms of which Gulf
may repurchase or redeem any shares of common stock of Gulf. All of
the issued and outstanding shares of common stock of Gulf have been
duly and validly authorized and issued and are fully paid and
nonassessable.
(d) The authorized capital stock of SJTT consists of
25,000 shares of common stock, par value $100 per share, 14,890
shares of which were issued and outstanding on the Execution Date.
SJC is the record and beneficial owner of all the issued and
outstanding shares of common stock of SJTT free and clear of all
Liens. SJTT has not issued any warrants, options or rights or
debentures, notes or other evidence of indebtedness or other
securities, instruments or agreements upon the exercise or conversion
of which or pursuant to the terms of which additional
21
shares of common stock of SJTT may become issuable. The holder of
common stock of SJTT has preemptive rights but no contractual rights
of first refusal to which SJTT is a party. There are no agreements
pursuant to the terms of which SJTT may repurchase or redeem any
shares of common stock of SJTT. All of the issued and outstanding
shares of common stock of SJTT have been duly and validly authorized
and issued and are fully paid and nonassessable.
3.03 Corporate Authorization. The execution and delivery of
this Agreement by Seller and the performance by Seller of this
Agreement and the consummation by Seller of the transactions
contemplated hereby are within Seller's corporate powers and have
been duly authorized by all necessary corporate action on the part of
Seller. This Agreement constitutes the valid and binding agreement
of Seller enforceable against it in accordance with its terms except
that (a) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or other
similar laws now or hereafter in effect relating to creditor's rights
generally and (b) 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.
3.04 Consents and Approvals; No Violation. Except for the
applicable requirements of the HSR Act and each of the consents set
forth in Section 3.04 of the Disclosure Schedule (each such consent,
a "Consent" and together the "Consents"), no notice to or
22
filing with, and no permit, authorization, consent or approval of,
any Person, or any public body or authority, including courts of
competent jurisdiction, domestic or foreign (a "Governmental
Entity"), is necessary for the execution, delivery and performance of
this Agreement and the consummation by Seller of the transactions
contemplated by this Agreement. Neither the execution and delivery
of this Agreement by Seller, nor the consummation by Seller of the
transactions contemplated hereby, nor compliance by Seller with any
of the provisions hereof, will (i) conflict with or result in any
breach of any provision of the certificate of incorporation or by-
laws of Seller or any of the Subsidiaries; (ii) assuming the
obtaining of all Consents, result in a default (with or without due
notice or lapse of time or both), or give rise to any right of
termination, cancellation or acceleration, under any note, bond,
mortgage, indenture, license, contract, agreement or other instrument
or obligation to which Seller or any of the Subsidiaries is a party
or by which Seller or any of its Subsidiaries is bound; or
(iii) assuming the obtaining of all Consents, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to
Seller or any of the Subsidiaries.
3.05 Financial Statements.
(a) Each of the Subsidiaries other than SJC has delivered
to Buyer a copy of financial statements, consisting of a balance
sheet, income statement and related statement of cash flows as of and
for the periods ended December 31, 1994, 1993, 1992, 1991
23
and 1990 together with the auditor's report thereon and unaudited balance
sheets and income statements as of and for the periods ended March
31, 1995 and June 30, 1995, and SJC has delivered to Buyer a copy of
unaudited consolidated financial statements consisting of a balance
sheet, income statement and related statement of cash flows as of and
for the periods ended December 31, 1994, 1993, 1992, 1991 and 1990 and
unaudited consolidated balance sheets and income statements as of and
for the periods ended March 31, 1995 and June 30, 1995 (the "Financial
Statements"). The Financial Statements were prepared based upon the books
and records of each of the Subsidiaries, and fairly present in all material
respects the financial condition, assets and liabilities as of the dates so
indicated and the financial results for the periods so indicated of
each of the Subsidiaries as of the appropriate periods and the
results of operations for the periods then ended, in each case in
conformity with GAAP.
3.06 Absence of Certain Changes. Except as set forth in Section
3.06 of the Disclosure Schedule, as of the date hereof since
January 1, 1995, the Subsidiaries have conducted each of their
businesses in the ordinary course consistent with past practices and
there has not been (a) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or
property) with respect to any of SJC's or Florala's capital stock;
(b) any amendment of any term of any outstanding security of any of
the Subsidiaries; (c) any repurchase, redemption
24
or other acquisition by any of the Subsidiaries of any outstanding
shares of its capital stock; (d) any incurrence, assumption or
guarantee by any of the Subsidiaries of any indebtedness for borrowed
money other than (i) by and between the Subsidiaries or (ii) in the
ordinary course of business and in amounts and on terms consistent
with past practices; (e) any creation or assumption by any of the
Subsidiaries of any Lien (other than Permitted Liens) on any asset
other than in the ordinary course of business consistent with past
practices; (f) any making of any material loan, advance or capital
contributions to or any material investment in any person other than
loans, advances or capital contributions to or any material
investments in any of the Subsidiaries or in the cellular
partnerships represented by the Interests; (g) any material change in
any method of accounting or accounting practice by any of the
Subsidiaries, except for any such change required by reason of a
concurrent change in applicable requirements of GAAP; (h) except in
the ordinary course of business consistent with past practice, any
(i) grant of any severance or termination pay to any director,
officer or employee of any of the Subsidiaries, (ii) entering into of
any employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any director,
officer or employee of any of the Subsidiaries, (iii) increase in
benefits payable under any existing severance or termination pay
policies or employment agreements or (iv) increase in compensation,
bonus or other benefits payable to directors,
25
officers or employees of any of the Subsidiaries; or (v) any material
labor dispute, other than routine individual grievances, or any
material proceeding by a labor union or representative thereof to
organize any employees of any of the Subsidiaries, which employees
were not subject to a collective bargaining agreement at December 31,
1994, or any material lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to such employees; (i) any sale or
transfer of, or agreement to sell, transfer, or otherwise dispose of,
any property or asset, real, personal or mixed, which has a sales
price in any case in excess of $50,000, except in the ordinary course
of business; (j) any receipt of a notice, or actual knowledge, that
any supplier or customer has taken any steps which could reasonably
be expected to result in a Material Adverse Effect; (k) submitted or
filed with or otherwise participated as a party to any stipulation,
pleading, filing or other proceeding with the FCC, APSC, FPSC, GPSC
or any other regulatory authority with jurisdiction over the
Subsidiaries where such stipulation, pleading, filing or other
proceeding could reasonably be expected to have a Material Adverse
Effect; or (l) entered into any contract, agreement, commitment or
other binding arrangement that would result in a liability or
financial commitment which in the aggregate exceeds $500,000, other
than items reflected on any Subsidiary's capital or operating
budgets.
3.07 Title to Properties. Each of the Subsidiaries has good,
valid and marketable title to all of their respective
26
personal properties and assets, including all of the properties and
assets reflected on the Financial Statements and those acquired since
December 31, 1994 (except in each case for properties and assets sold
or otherwise disposed of since December 31, 1994, in the ordinary
course of business consistent with past practice), free and clear of
all Liens, except for Permitted Liens and those items disclosed in
Section 3.07 of the Disclosure Schedule. To Seller's knowledge and
subject to Section 5.12 hereof, each of the Subsidiaries has good,
valid and marketable title to the Real Property, except for Permitted
Liens and those items disclosed in Section 3.07 of the Disclosure
Schedule. Notwithstanding anything to the contrary herein, Seller
makes no representation or warranty as to title to Realty Rights.
3.08 Litigation. Except as set forth in Sections 3.08, 3.11(a),
3.11(b) and 6.01 of the Disclosure Schedule and in Section 5.15 of
this Agreement, (a) there is no action, suit, claim, arbitration,
investigation or proceeding pending against, or to the knowledge of
Seller, threatened against (i) any of the Subsidiaries before any
court or arbitrator or any Governmental Entity as of the Execution
Date or which could reasonably be expected to have a Material Adverse
Effect as of the Closing Date or (ii) against Seller which in any
manner challenges or seeks to prevent or enjoin the transactions
contemplated hereby; (b) none of Seller or the Subsidiaries is a
party to or, to Seller's knowledge, is directly bound by any
judgment, injunction, or award of any Governmental
27
Entity, arbitrator or any other Person which would bind the Buyer
after the Closing Date; and (c) none of Seller or the Subsidiaries is
a party to, or to Seller's knowledge, is directly bound by any order
of any Governmental Entity, arbitrator or any other Person which
would bind the Buyer after the Closing Date and which could
reasonably be expected to have a Material Adverse Effect. No
representation or warranty is made with respect to those matters set
forth in Section 8.01(b).
3.09 Certain Agreements.
(a) Section 3.09 of the Disclosure Schedule sets forth a
list of the following agreements (including leases) to
which any of the Subsidiaries is a party as of the
Execution Date:
(i) each agreement which involves the receipt or
payment of more than fifty thousand dollars ($50,000)
per annum; and
(ii) any other agreement that is material to the
Subsidiaries.
(b) To Seller's knowledge, each agreement required to be
disclosed pursuant to Section 3.09(a) is in full force
and effect as of the Execution Date and, where the
terms of such agreement so contemplate, as of the
Closing Date, and none of the Subsidiaries is in
default under the terms of any such agreement in any
manner which could reasonably be expected to have a
Material Adverse Effect.
28
3.10 Compliance with Laws. Except as otherwise set forth in
this Agreement, to Seller's knowledge, the Subsidiaries are
conducting their respective businesses in compliance with all
applicable laws, statutes, ordinances, regulations, decrees and
orders, including Environmental Laws, except for violations that have
not had and would not reasonably be expected to have a Material
Adverse Effect.
3.11 Tariffs; FCC Licenses; Non-FCC Authorizations.
(a) Section 3.11(a) of the Disclosure Schedule lists each
tariff applicable to the Subsidiaries as of the Execution Date, which
list shall be updated as of the Closing Date, a true and correct copy
of each of which has been or will be provided to Buyer. Except as
otherwise set forth in Section 3.11(a) of the Disclosure Schedule, to
Seller's knowledge, such tariffs stand in full force and effect, and
there is no outstanding notice of cancellation or termination or, to
Seller's knowledge, any threatened cancellation or termination in
connection therewith, nor is any of the Subsidiaries subject to, any
restrictions or conditions applicable to such tariffs that limit or
would limit the operation of its business (other than restrictions or
conditions generally applicable to tariffs of that type). To
Seller's knowledge, none of the Subsidiaries is in violation under
the terms and conditions of any of its tariffs in any manner which
could reasonably be expected to have a Material Adverse Effect.
Except as set forth in Section 3.11(a) of the Disclosure Schedule, there
29
are no applications by any of the Subsidiaries or to Seller's
knowledge, complaints, filings, orders or petitions by others or
proceedings pending or threatened before the appropriate regulatory
authority relating to the business or operations or regulatory
tariffs of any of the Subsidiaries as of the Execution Date or which
could reasonably be expected to have a Material Adverse Effect as of
the Closing Date.
(b) Section 3.11(b) of the Disclosure Schedule lists each
FCC License held by the Subsidiaries as of the Execution Date which
list shall be updated as of the Closing Date. Except as otherwise
set forth in Section 3.11(b) of the Disclosure Schedule, such FCC
Licenses constitute all FCC Licenses necessary for the conduct of the
business of any of the Subsidiaries. Except as otherwise set forth
in Section 3.11(b) of the Disclosure Schedule, each such FCC License
is in full force and effect, and there is no outstanding notice of
cancellation or termination or, to Seller's knowledge, any threatened
cancellation or termination in connection therewith. None of such
FCC licenses is subject to any restrictions or conditions that limit
the operations of any of the Subsidiaries (other than restrictions or
conditions generally applicable to licenses of that type). Subject
to the Communications Act of 1934, as amended, and the regulations
thereunder, the FCC Licenses are free from all security interests,
liens, claims, or encumbrances of any nature whatsoever. Except as
set forth in Section 3.11(b) of the Disclosure Schedule, there are
30
no applications by any of the Subsidiaries or, to Seller's knowledge,
complaints or petitions by others or proceedings pending or
threatened before the FCC relating to the business or FCC Licenses of
any of the Subsidiaries as of the Execution Date or which could
reasonably be expected to have a Material Adverse Effect as of the
Closing Date.
(c) To Seller's knowledge, listed on Section 3.11(c) of the
Disclosure Schedule lists all Non-FCC Authorizations materially
necessary for the conduct of the business of any of the Subsidiaries
as of the Execution Date which list shall be updated as of the
Closing Date. Except as otherwise set forth in Section 3.11(c) of
the Disclosure Schedule, each such Non-FCC Authorization is in full
force and effect. To Seller's knowledge, no event has occurred with
respect to any materially necessary Non-FCC Authorization which
(i) permits, or after notice or lapse of time or both would permit,
revocation or termination thereof, or (ii) would result in any other
impairment of the rights of the holder of such Non-FCC Authorization
which could reasonably be expected to have a Material Adverse Effect.
3.12 Access Lines and Exchanges. Section 3.12 of the Disclosure
Schedule sets forth the access lines of each of the Subsidiaries by
category and exchange, in service as of June 30, 1995.
3.13 Finders' Fees. Except for Xxxxxx, Read & Co. Inc. whose
fees related thereto, if any, will be paid by Seller, there
31
is no investment banker, broker, finder or other intermediary which
has been retained by or is authorized to act on behalf of Seller or
any of its Affiliates who would be entitled to any fee or commission
upon consummation of or in connection with the transactions
contemplated by this Agreement.
3.14 No Implied Representation. It is the explicit intent of
each party hereto that Seller is not making any representation or
warranty whatsoever, express or implied, except those representations
and warranties of Seller explicitly set forth in this Agreement, the
Disclosure Schedule or in any certificate contemplated hereby and
delivered by or on behalf of any Seller in connection herewith.
3.15 Corporate Records. The minute books of each of the
Subsidiaries are current and contain correct and complete copies of
all charter documents of the respective Subsidiaries, including all
amendments thereto and restatements thereof, and all minutes of
meetings, resolutions and other actions and proceedings of their
respective shareholders and boards of directors and all committees
thereof which in reasonable detail accurately and fairly reflect the
same, duly signed by the secretary or an assistant secretary, all
directors or all shareholders, as required by applicable law; and the
stock ledgers of each of the Subsidiaries are current, correct and
complete and reflect the issuance of all previously or presently
issued and outstanding equity securities of the respective
Subsidiaries.
32
3.16 Condition of Tangible Assets. Except as set forth in
Section 3.16 of the Disclosure Schedule, all buildings, structures,
facilities, automobiles, trucks, other vehicles, machinery, equipment
and other material items of tangible personal property owned or used
by any of the Subsidiaries are in good operating condition and
repair, subject to normal wear and maintenance, and are usable in the
regular and ordinary course of business of the Subsidiaries.
3.17 Insurance. Each of the Subsidiaries maintains insurance
coverage on its structures, facilities, machinery, equipment and
other assets and properties and with respect to its employees and
operations, which insurance covers liabilities and risks of an
insurable nature and of a character and in such amounts as are
customarily insured by companies with operations and properties
similar to the Subsidiaries. Section 3.17 of the Disclosure Schedule
contains a correct and complete list as of the Execution Date of all
such policies of insurance held by or on behalf of any of the
Subsidiaries or relating to their respective businesses or any of
their assets or properties (specifying the insurer, the amount of
coverage, the type of insurance, the risks insured and any pending
claims thereunder). To Seller's knowledge, the policies and binders
of insurance listed in Section 3.17 of the Disclosure Schedule are
valid and enforceable in accordance with their respective terms as of
the Execution Date and, except as otherwise provided in
Section 5.01(l), as of the Closing Date. To
33
Seller's knowledge, there is no default with respect to any provision
contained in any such policy or binder, and there has not been any
failure to give any notice or present any claim under such policy or
binder in a timely fashion or in the manner or detail required in all
material respects by such policy or binder. Except as set forth in
Section 3.17 of the Disclosure Schedule, there are no delinquent
unpaid premiums or installments therefor or, as of the Execution
Date, outstanding claims. No notices of cancellation or non-renewal
with respect to, or, as of the Execution Date, disallowance of any
claim under, any such policy or binder has been received by any of
the Subsidiaries. Section 3.17 of the Disclosure Schedule also
contains a true and complete list as of the Execution Date of all
outstanding bonds and other surety arrangements issued or entered
into in connection with the business and operations of any of the
Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
4.01 Organization and Existence. Buyer is a corporation duly
incorporated, validly existing and in good standing under the
laws of Delaware and has all required corporate power and authority
and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. Buyer is duly
qualified or licensed to do business and is in good
34
standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such
qualification necessary, except where failure to be so qualified
would not, individually or in the aggregate, materially adversely
affect Buyer's compliance with this Agreement.
4.02 Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer
of the transactions contemplated hereby are within Buyer's corporate
powers and have been duly authorized by all necessary corporate
action on the part of Buyer. This Agreement constitutes the valid
and binding agreements of Buyer enforceable against it in accordance
with its terms except that (a) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium (whether general
or specific) or other similar laws now or hereafter in effect
relating to creditor's rights generally and (b) 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.
4.03 Consents and Approvals; No Violation. Except for the
applicable requirements of the HSR Act and, to the knowledge of
Buyer, each of the Consents set forth in Section 3.04 of the
Disclosure Schedule, no notice to or filing with, and no permit,
authorization, consent or approval of, any Person or Governmental
Entity is necessary for the execution, delivery and performance of
35
this Agreement and the consummation by Buyer of the transactions
contemplated by this Agreement. Neither the execution and delivery
of this Agreement by Buyer nor the consummation by Buyer of the
transactions contemplated hereby nor compliance by Buyer with any of
the provisions hereof will (i) conflict with or result in any breach
of any provision of the certificate of incorporation or by-laws (or
other similar charter documents) of Buyer; (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of
time or both) a default or give rise to any right of termination,
cancellation or acceleration under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which Buyer is a party
or by which Buyer or its assets may be bound; or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation
applicable to Buyer or Buyer's assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which will not, in the
aggregate, have a material adverse effect on Buyer.
4.04 Finders' Fees. Except for Rural Link Communications, whose
fees will be paid by Buyer, there is no investment banker, broker,
finder or other intermediary which has been retained by or is
authorized to act on behalf of Buyer or any of its Affiliates who
would be entitled to any fee or commission from Seller or any of its
Affiliates upon consummation of the transactions contemplated by this
Agreement.
36
4.05 Litigation. There is no action, suit, claim, arbitration,
investigation or proceeding pending against Buyer, or to the
knowledge of Buyer, threatened against Buyer before any court or
arbitrator or any Governmental Entity which (a) would be reasonably
likely to have a material adverse effect on Buyer or (b) in any
manner challenges or seeks to prevent or enjoin the transactions
contemplated hereby.
4.06 Funding. Buyer has sufficient, non-contingent funding to
enable Buyer to deliver the Purchase Price at Closing and has
provided Seller copies of written commitments for same.
4.07 Investor Status. Buyer is an accredited investor within
the meaning of Rule 501 of the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"),
has the financial ability to bear the economic risk of the investment
in the Common Stock, can afford to sustain a complete loss of such
investment, and has no need for liquidity in the investment in the
Common Stock. Buyer is acquiring the Common Stock for investment and
not with a view to the sale or distribution thereof, for its own
account and not with a view to the subsequent distribution thereof
and not on behalf of or for the benefit of others and has not granted
any other person any right or option or any participation or
beneficial interest in any of the securities. Buyer acknowledges
that the shares of Common Stock constitute restricted securities
within the meaning of Rule 144 under the Securities Act, and that
none of such securities may be
37
sold except pursuant to an effective registration statement under the
Securities Act or in a transaction exempt from registration under the
Securities Act, and acknowledges that it understands the meaning and
effect of such restriction. Buyer is aware that no Federal or state
regulatory agency or authority has passed upon the sale of the Common
Stock or the terms of the sale or the accuracy or adequacy of any
material being provided to Buyer and that the purchase price thereof
was negotiated between the Seller and Buyer and does not necessarily
bear any relationship to the underlying assets or value of SJC.
ARTICLE V
COVENANTS OF THE PARTIES
5.01 Conduct of the Business. From the date hereof until the
Closing Date, except as otherwise contemplated by this Agreement or
disclosed in the Disclosure Schedule, Seller shall cause each of the
Subsidiaries to conduct their respective businesses in the ordinary
course consistent with past practice and in such manner that, at the
Closing, the representations and warranties of Seller shall be true
and correct in all material respects. Without limiting the
generality of the foregoing, except as otherwise contemplated by this
Agreement, from the date hereof until the Closing Date, without the
prior written consent of Buyer, Seller will not permit any of the
Subsidiaries to:
38
(a) issue, deliver, sell, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, sale, disposition or
pledge or other encumbrance of (x) any additional shares of its
capital stock of any class, or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for any
shares of its capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or
acquire any shares of its capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of its capital stock, or (y) any other
securities in respect of, in lieu of, or in substitution for, shares
outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding
securities;
(c) split, combine, subdivide or reclassify any shares of its
capital stock;
(d) (i) grant any material increases in the compensation of any
of its directors, officers or employees, except in the ordinary
course of business, (ii) pay or agree to pay any pension, retirement
allowance or other material employee benefit not required or
contemplated by any of the existing benefit, severance, pension or
employment plans, agreements or arrangements as in effect on the
Execution Date to any such director, officer or key employees,
whether past or present, (iii) enter into any new or
39
materially amend any existing employment agreement with any such
director, officer or key employee, except for employment agreements
with new employees entered into in the ordinary course of business,
(iv) enter into any new or materially amend any existing severance
agreement with any such director, officer or key employee, or (v)
except as may be required to comply with applicable law, become
obligated under any new pension plan or arrangement, welfare plan or
arrangement, multi-employer plan or arrangement, employee benefit
plan or arrangement, severance plan or arrangement, benefit plan or
arrangement, or similar plan or arrangement, which was not in
existence on the Execution Date or amend any such plan or arrangement
in existence on the Execution Date if the affect thereof would be to
materially enhance benefits thereunder;
(e) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of any of the Subsidiaries;
(f) make any acquisition by means of merger, consolidation or
otherwise;
(g) adopt any amendments to its Certificate of Incorporation or
By-Laws;
(h) other than borrowings under existing credit facilities,
other borrowings in the ordinary course not to exceed one hundred
thousand dollars ($100,000), borrowings made for the purpose of
making capital contributions to the cellular partnerships in which
the Interests are held or borrowings by and
40
between the Subsidiaries, incur any indebtedness for borrowed money
or guarantee any such indebtedness or, except in the ordinary course
consistent with past practice, make any loans, advances or capital
contributions to, or investments in, any other Person (other than to
any of the Subsidiaries or to the cellular partnerships in which the
Interests are held);
(i) engage in the conduct of any business other than
telecommunications and related businesses;
(j) enter into any agreement providing for acceleration of
payment or performance or other consequence as a result of a change
of control of any of the Subsidiaries;
(k) except as otherwise contemplated in this Agreement, fail to
maintain all authorizations and licenses materially necessary for the
conduct by the Subsidiaries of their respective businesses;
(l) fail to maintain all insurance policies and binders shown
in Section 3.17 of the Disclosure Schedule unless new or replacement
insurance policies or binders with similar coverage are obtained;
(m) submit or file with, except as otherwise contemplated in
this Agreement, or otherwise voluntarily participate as a party to
any stipulation, pleading, filing or other proceeding with the FCC,
APSC, FPSC, GPSC or any other regulatory authority with jurisdiction
over the Subsidiaries where such stipulation, pleading, filing or
other proceeding could reasonably be expected
41
to have a Material Adverse Effect or fail to notify buyer promptly of
any involuntary participation in any of the foregoing;
(n) enter into any contract, agreement, commitment or other
binding arrangement that would result in a liability or financial
commitment which in the aggregate exceeds $500,000, other than
amounts reflected on any Subsidiary's capital or operating budgets;
(o) prepay any long-term indebtedness of any of the
Subsidiaries other than long-term indebtedness by and between the
Subsidiaries; or
(p) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
5.02 Access to Information. Subject to applicable law and
restrictions contained in any confidentiality agreements to which
Seller or any of the Subsidiaries is subject, Seller will give Buyer,
its counsel, financial advisors, auditors and other authorized
representatives reasonable access during business hours to the
offices, properties, books and records of any of the Subsidiaries and
will instruct the employees, counsel and financial advisors of Seller
to cooperate with Buyer in its investigation of the Subsidiaries;
provided that any investigation pursuant to this Section shall be
conducted on commercially reasonable prior notice and in such manner
as not to interfere unreasonably with the conduct of the business of
the Subsidiaries and in accordance with
42
such reasonable procedures as Seller may require to protect the
confidentiality of proprietary information. All such information
shall be kept confidential pursuant to the terms of the
Confidentiality Agreement dated March 30, 1995 between Buyer and TPG
Partners, L.P. (the "Confidentiality Agreement") the terms of which
the Buyer agrees to comply with as if it were an original signatory
thereto.
5.03 Efforts; Further Assurances; Permits.
(a) Subject to the terms and conditions of this Agreement,
each party will use its commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under applicable laws and regulations
to consummate the transactions contemplated by this Agreement,
including, without limitation, preparing and making any filings
required to be made under applicable law. Each party shall furnish
to the other party such necessary information and reasonable
assistance as such other party may request in connection with the
foregoing.
(b) In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of Seller, Buyer, and
the Subsidiaries shall on the written request of any of them take all
such necessary or desirable action.
(c) Upon Buyer's request, Seller will use, and will cause
the Subsidiaries to use, commercially reasonable efforts (not
43
including the payment of money, incurring of third party costs or
providing any guarantees) to assist Buyer in obtaining any permits,
licenses or other authorizations necessary for Buyer's operation of
the Subsidiaries consistent with past practice after the Closing
Date.
(d) In the event that at any time, any order, decree or
injunction shall be entered which prevents or delays the consummation
of any of the transactions contemplated by this agreement, each party
shall promptly use its best efforts to cause such order, decree or
injunction to be reversed, vacated or modified in order to permit
such transactions to proceed as expeditiously as possible.
5.04 Books and Records. Buyer and Seller agree to retain, for
a period of five (5) years or longer if otherwise required by law
after the Closing Date, any and all books and records (hard copy,
electronic or otherwise) related to the Subsidiaries for all periods
through the Closing Date or related to the transactions contemplated
hereby, provided that upon expiration of such period, the party with
custody of such books and records shall give written notice to the
other party and an opportunity to such other party to ship such books
and records at such other party's cost, expense and risk to a
location chosen by it. Notwithstanding the foregoing, either party
may notify the other of its desire to discontinue retention of
specified documents in accordance with applicable record retention
requirements during such period upon thirty (30)
44
days written notice and such party may elect to assume custody
thereof. In the event either party needs access to such books and
records for purposes of verifying any representations and warranties
contained in this Agreement, responding to inquiries from
Governmental Entities, indemnifying, defending and holding harmless
the Seller Group or the Buyer Group, as the case may be, in
accordance with applicable provisions of this Agreement or any other
legitimate business purpose, each party will allow representatives of
the other party access to such books and records upon reasonable
notice during regular business hours for the sole purpose of
obtaining information for use as aforesaid and will permit such other
party to make such extracts and copies thereof as may be necessary or
convenient and, if required for such purpose, to have access to and
possession of original documents. As an accommodation to Buyer,
Seller agrees to allow Buyer to maintain custody of Seller's Books
and Records relating to the Subsidiaries at Buyer's expense, but may,
at any time elected in its sole discretion, assume custody thereof.
Buyer further agrees to permit Seller access, upon reasonable terms
and conditions to be agreed, to Messrs. Xxxx Xxxxxxx and Xxx Xxxxxx
and officers of Buyer and the Subsidiaries as to matters pertaining
to the Subsidiaries prior to the Closing Date.
5.05 Governmental Regulatory Approval. As promptly as
practicable after the Execution Date, Buyer shall file the required
applications and notices with the appropriate Governmental Entities
45
as necessary for consummation of the transactions contemplated by
this Agreement (the "Regulatory Approvals"). To the extent
transferable, Seller will transfer the Non-FCC Authorizations to
Buyer. Each party agrees to use its best efforts to obtain the
Regulatory Approvals and the parties agree to cooperate fully with
each other and with all Governmental Entities to obtain the
Regulatory Approvals at the earliest practicable date.
5.06 FCC Consents. As promptly as practicable after the
Execution Date, Buyer shall file all appropriate applications and
requests with the FCC seeking, and shall use its best efforts to
obtain, (i) the FCC's consent to the transfer of control of the
licensee Subsidiaries to Buyer under the FCC Licenses (as listed in
Schedule 3.11(b)), (ii) any necessary FCC waivers (excluding price
cap waivers), and (iii) any necessary tariffs for interstate
access/traffic sensitive (all such consents or waivers are
collectively referred to as the "FCC Consents").
5.07 HSR Act Review. As promptly as practicable after the
Execution Date, the parties will make such filings as may be required
by the HSR Act with respect to the sale contemplated by this
Agreement. Thereafter, the parties will file as promptly as
practicable any supplemental information that may be requested by the
U.S. Federal Trade Commission or the U.S. Department of Justice
pursuant to the HSR Act. The parties agree to cooperate in seeking
early termination of the waiting periods under the HSR Act.
5.08 Effect of Due Diligence and Related Matters. Buyer
represents that it is a sophisticated entity that was advised by
knowledgeable counsel and financial advisors and, to the extent it
deemed necessary, other advisors in connection with this Agreement
and by the Closing Date will have conducted its own independent
review, evaluation and inspection of the Subsidiaries. Accordingly,
Buyer covenants and agrees that (i) except for the representations
and warranties set forth in this Agreement and the Disclosure
Schedule and any other written communication signed and delivered by
an executive officer of Seller, Buyer has not relied and will not
rely upon any document or written or oral information furnished to or
discovered by it or its representatives, including, without
limitation, any financial statements or data, (ii) there are no
representations or warranties by or on behalf of Seller or its
Affiliates or their representatives except for those expressly set
forth in this Agreement and in any other written agreement entered
into with Seller or any of its Affiliates in connection with this
Agreement, and (iii) to the fullest extent permitted by law, Buyer's
rights and obligations with respect to all of the foregoing matters
will be solely as set forth in this Agreement or in such other
written agreements.
5.09 Interests. Seller shall cause SJC prior to the Closing
Date to distribute the Interests or aggregate cash proceeds from the
sale thereof to Seller.
47
5.10 Intercompany Payables and Receivables. Seller and the
Subsidiaries shall settle prior to the Closing Date Intercompany
Payables and Receivables.
5.11 Environmental Evaluation. Buyer may (at its option and
expense) retain a qualified and recognized environmental audit and
compliance review firm to perform an environmental evaluation of the
properties of the Subsidiaries (the "Environmental Evaluation"). The
scope of the Environmental Evaluation shall generally be that of a
Phase One study. Buyer must complete such Environmental Evaluation
no later than September 15, 1995.
5.12 Real Property. Within fifteen (15) days after the
Execution Date, Buyer may (at its option and expense) order a
preliminary title binder (on a standard form reasonably acceptable to
Buyer), issued by a title insurance company reasonably acceptable to
Buyer, with respect to the Real Property. If a preliminary title
binder indicates an exception other than a Permitted Lien or those
items set forth in Section 3.07 of the Disclosure Schedule that would
impair marketability in any material respect, Seller shall, upon
written notice thereof from Buyer not later than sixty (60) days
before the Closing Date, cause such exception to be removed on or
before the Closing Date.
5.13 Capital Expenditures. Recognizing that Seller is not
currently on schedule with respect to any Subsidiary's capital
budget, Seller shall use commercially reasonable efforts to make
capital expenditures in the aggregate in accordance with the
48
capital budget set forth in Section 5.13 of the Disclosure Schedule.
Seller shall also provide prior to December 1, 1995 a copy of its
proposed 1996 capital budget for continuing the operations of the
Subsidiaries consistent with past practice to Buyer for its review
and approval, which approval shall not be unreasonably withheld or
delayed.
5.14 Dividends/Distributions. Notwithstanding anything to the
contrary herein, SJC shall be entitled, subject to Sections 5.13 and
8.02(d) to continue to make dividends and distributions to Seller
prior to the Closing Date.
5.15 FCC Filings. Seller agrees to cause each of Florala and
SJTT to file and diligently prosecute an application or applications
pursuant to Section 63.01 et seq. of the FCC regulations in order to
obtain from the FCC such certificates as are required by Section 214
of the Communications Act of 1934, as amended (the "Act"), for the
extension of lines and/or discontinuance, reduction, outage and
impairment of service, relating to all lines currently in existence
and all services currently offered by Florala and/or SJTT that are
subject to such statutory provisions. Provided that all required
certificates as described above are granted and/or the requirements
of Section 214 of the Act are waived by the FCC in response to such
applications as of the Closing Date, and notwithstanding anything to
the contrary contained in this Agreement, the absence of Section 214
certificates at any time and any consequences thereof shall not be
49
deemed to constitute a breach of the representations and warranties
in Article III or the covenants in Article V of this Agreement or a
failure of any closing conditions in Article VIII hereof.
ARTICLE VI
TAX MATTERS
6.01 Pre-Closing Tax Periods; Post-Closing Tax Periods; Bridge
Tax Periods.
(a) Except as otherwise set forth in Section 6.01 of the
Disclosure Schedule, there have been properly completed and filed on
a timely basis and in correct form all Tax Returns required to be
filed with respect to the Subsidiaries on or prior to the date
hereof. As of the time of filing, all such Tax Returns are correct
in all material respects with respect to the Subsidiaries and the
amounts shown as owing thereon have been paid. Other than with
respect to fiscal year 1994, no extension of time to file any Tax
Return with respect to the Subsidiaries that has not been filed has
been requested or granted.
(b) As of the Closing no tax sharing agreements will be in
effect with respect to Seller, the Subsidiaries, or the Seller
Affiliates.
(c) No waivers of applicable statutes of limitation with
respect to the Tax Returns have been directly given by or requested
from the Subsidiaries. Section 6.01 of the Disclosure Schedule sets
forth (a) the taxable years of the Subsidiaries to
50
which the respective statutes of limitations with respect to any Tax
have not expired, and (b) with respect to such taxable years, those
years for which examinations have been completed, those years for
which examinations are presently being conducted, and those years for
which examinations have not been initiated.
(d) There are no Liens for any Tax (other than for any
current Tax not yet due and payable) on the assets of the
Subsidiaries.
(e) There have been no material elections or consents with
respect to any Tax affecting the Subsidiaries as of the date hereof.
After the date hereof, no election or consent with respect to any Tax
affecting the Subsidiaries will be made without the written consent
of Buyer.
(f) None of the Subsidiaries has agreed to make or is
required to make any adjustment under Section 481(a) of the Code by
reason of a change in accounting method or otherwise.
(g) None of the Subsidiaries is a party to any agreement,
contract, arrangement, or plan that has resulted or would result,
separately or in the aggregate, in the payment of any excess
parachute payments within the meaning of Section 280G of the Code.
(h) Other than the cellular partnerships in which the
Interests are held, none of the Subsidiaries is a party to any joint
venture, partnership, or other arrangement or contract that could be
treated as a partnership for federal income tax purposes.
51
(i) Seller is eligible to make an election under Section
338(h)(10) of the Code (and any comparable election under state,
local or foreign tax law) with respect to SJC.
(j) Seller shall be liable for, and shall indemnify and
hold the Buyer Group harmless from and against, all Taxes (other than
Assumed Taxes) with respect to all Tax periods ending on or before
the Closing Date ("Pre-Closing Tax Periods"), including, but not
limited to, the Federal income Tax liability and the state and local
Tax liability, arising out of the treatment of certain transactions
contemplated by this Agreement as a sale of assets pursuant to
section 338(h)(10) of the Code, after application of any allowed net
operating losses, net operating loss carryovers or carrybacks, Tax
credits, Tax credit carryforwards and carrybacks and similar Tax
losses or credits attributable to the Subsidiaries and arising out of
Pre-Closing Tax Periods and in existence on the Closing Date. Seller
shall be responsible for preparing and filing all Tax returns with
respect to Taxes relating to the Subsidiaries for Pre-Closing Tax
Periods. Seller shall also be liable for, and shall indemnify and
hold the Buyer Group (including the Subsidiaries) harmless from and
against, all Taxes asserted or claimed to be due by a Governmental
Entity from any of the Subsidiaries by reason of any of such
Subsidiaries being included in any Federal, state, local or foreign,
consolidated or combined income tax return for all periods ending on
or before the
52
Closing Date, and the portion of any Bridge Tax Period through the
Closing Date.
(k) Buyer shall be liable for, and shall indemnify and
hold the Seller Group harmless from and against, all (i) Assumed
Taxes and (ii) Taxes with respect to the Subsidiaries for all Tax
periods commencing on or after the Closing Date ("Post-Closing Tax
Periods"). Buyer shall be responsible for preparing and filing all
Tax Returns with respect to Transfer Taxes and with respect to Taxes
relating to the Subsidiaries for Post-Closing Tax Periods.
(l) For any taxable period which includes (but does not
end on) the Closing Date (a "Bridge Tax Period"), there shall be
apportioned between Seller and Buyer as of the Closing Date based on
the number of days of such Bridge Tax Period before and including the
Closing Date and the number of days after the Closing Date,
respectively, all Taxes (other than Assumed Taxes and Taxes based on
income) levied with respect to the Subsidiaries for such Bridge Tax
Period. Seller shall be liable for, and shall defend and indemnify
the Buyer Group from and against, the proportionate amount of all
such Taxes that are attributable to all periods before and including
the Closing Date (including without limitation the portion of any
Bridge Tax Period ending on the Closing Date) after application of
any allowed net operating losses, net operating loss carryovers and
carrybacks, Tax credits, Tax credit carryforwards and carrybacks and
similar Tax losses or credits
53
attributable to Seller and arising during such period or during the
Pre-Closing Tax Period and in existence on the Closing Date, and
Buyer shall be liable for, and shall defend and indemnify the Seller
Group from and against, the proportionate amount of all such Taxes
that are attributable to the period after the Closing Date. Buyer
shall be responsible for preparing and filing all Tax Returns for any
Bridge Tax Period in a manner consistent with past practices
(including accounting principles, methods and elections) followed by
Seller; provided, however, that Seller shall consent to the
preparation and filing by Buyer of any Tax Return for any Bridge Tax
Period in a manner which is not consistent with past practices if the
inconsistent practice has no material adverse impact on the Seller.
Buyer shall submit all Tax Returns for any Bridge Tax Period to
Seller for review and approval at least thirty (30) days prior to the
filing thereof. Seller shall review all such Tax Returns within ten
(10) Business Days of their receipt and inform Buyer in writing of
any item(s) with which Seller does not agree (the "Dispute Notice").
Seller and Buyer shall negotiate in good faith to resolve all
disputed items. Any unresolved dispute between Seller and Buyer
shall be resolved in favor of the Seller if the net effect of such
disputed item(s) is not in excess of $25,000 for any one such Tax
Return. If the parties fail to resolve any such dispute within
forty-five (45) days after receipt by Buyer of the Dispute Notice,
the Reviewing Accountant shall be
54
selected and shall resolve and dispute in accordance with the
procedures set forth in Section 2.06 hereof.
(m) If Seller is obligated to pay Buyer any amount pursuant to
this Article 6, Seller shall also be obligated to pay Buyer's
reasonable attorney's fees, professional fees, and related costs
incurred by Buyer with respect to that amount.
6.02 Refunds or Credits. Any refunds or credits of Taxes, to
the extent that such refunds or credits are attributable to Taxes
(other than Assumed Taxes) for Pre-Closing Tax Periods or to Federal
income Taxes arising out of the treatment of certain transactions
contemplated by this Agreement as a sale of assets pursuant to
Section 338(h)(10) of the Code shall be for the account of Seller
and, to the extent that such refunds or credits are attributable to
Taxes for Post-Closing Tax Periods or, to Assumed Taxes which are
paid or payable by Buyer they shall be for the account of Buyer. To
the extent that such refunds or credits are attributable to Taxes for
a Bridge Tax Period, such refunds or credits shall be for the account
of the party who bears responsibility for such Taxes pursuant to
Section 6.01(l). In the event Buyer or any of the Subsidiaries has
any discretion to designate whether any credit or refund is
attributable to a Pre-Closing Tax Period, a Bridge Tax Period or a
Post-Closing Tax Period, the credit or refund shall be treated for
purposes of this Agreement as attributable to the earliest taxable
period to which it may be attributed. Each party shall promptly
notify the other
55
of any refund or credit which it receives or expects to receive which
is for the account of the other party. Buyer shall promptly forward
to Seller or reimburse Seller for any refunds or credits due Seller
hereunder after receipt thereof by or on behalf of Buyer with
interest from the date of receipt by Buyer, and Seller shall promptly
forward to Buyer or reimburse Buyer for any refunds or credits due
Buyer hereunder after receipt thereof by or on behalf of Seller with
interest from the date of receipt by Seller.
6.03 Mutual Cooperation. As soon as practicable, but in any
event within fifteen (15) days after a party's request, the other
party shall deliver to it such information and other data relating to
Tax Returns and Taxes with respect to the Subsidiaries and shall make
reasonably available at no cost such of its knowledgeable employees
as the other party may reasonably request, including providing the
information and other data customarily required, to cause the
completion and filing of all Tax Returns for which it has
responsibility or liability under this Agreement or to respond to
audits by any Taxing authorities with respect to any Tax Returns or
taxable periods for which it (or any of its Affiliates) has any
responsibility or liability under this Agreement or to otherwise
enable it (or any of its Affiliates) to satisfy its reasonable
accounting or Tax requirements.
6.04 Tax Audits. Within thirty (30) days after Buyer or any of
the Subsidiaries has received written notice (but in any event not
less than thirty (30) days before any response to any
56
Governmental Entity is due) that any Governmental Entity is auditing
or investigating, or intends to audit or investigate, any taxable
period for which Seller may be liable, in whole or in part, to Buyer
or any of the Subsidiaries under this Agreement, Buyer shall give to
Seller written notice of such audit or investigation, and shall
tender to Seller the defense of such audit or investigation in whole
with respect to Taxes for which Seller may be liable in whole under
this Article VI or in part with respect to those Taxes for which
Seller may be liable in part under this Article VI. If Seller
accepts the tendered defense of such audit or investigation, in the
case of any taxable period for which Seller may be liable in whole or
in part, (a) Buyer shall execute and deliver to Seller all documents
necessary or appropriate (including powers of attorney) (i) to enable
Seller to act, at its sole cost and expense, on behalf of Buyer in
defending against such audit or investigation, in the case of periods
for which Seller may be liable in whole and in the case of any audit
or investigation of Federal Income Taxes resulting from the 338
Election, or (ii) to enable Seller to defend against those issues
raised in such audit or investigation for which Seller may be liable,
in the case of any taxable period or Taxes for which Seller may be
liable in part and in the case of state or local Taxes resulting from
the 338 Allocation, and (b) Seller shall determine, in its reasonable
discretion, the manner in which such audit or investigation (in the
case of periods for which Seller may be liable in whole) will be
57
defended or settled and in the case of any audit or investigation of
Federal Income Taxes resulting from the 338 Election or such issues
(in the case of periods for which Seller may be liable in part) and
in the case of state or local Taxes resulting from the 338 Allocation
will be defended or settled and Seller shall defend or settle such
audit or investigation in good faith with respect to future taxes of
the Buyer, provided, however, that Buyer may reject any settlement
(or portion thereof) proposed by Seller, in which case Seller will
have no obligation to indemnify Buyer with respect to the taxable
period or Taxes under audit or investigation for any amount in excess
of the settlement proposed by Seller, reduced by the actual
settlement amount, if any, of the items the proposed settlement of
which was not rejected by Buyer. Notwithstanding anything in this
Agreement to the contrary, Seller shall not be liable to Buyer or any
of the Subsidiaries with respect to any Taxes for which Seller's
defense or settlement of the audit or investigation has been
materially and adversely affected by Buyer's failure to give the
timely written notice required by this Section 6.04.
6.05 Section 338 Election.
(a) Notwithstanding any provision to the contrary
contained in this Agreement, Seller shall be liable for, and shall
defend and indemnify the Buyer Group from and against, all Taxes for
all pre-Closing tax periods arising or resulting from, directly or
indirectly, any election or deemed election pursuant to Section
58
338 of the Code made with respect to or in connection with the
purchase by Buyer of the Common Stock.
(b) Buyer shall make an election for Federal Tax purposes
under Section 338(h)(10) of the Code with respect to the Common Stock
and with respect to the stock of each of the other Subsidiaries (the
"338 Election") and Seller shall join with Buyer in making such
election. Buyer shall be responsible for the preparation and timely
filing of all election forms for Federal purposes, including, without
limitation, Form 8023, and shall submit all such forms to Seller at
least thirty (30) days prior to the date required for filing same for
Seller's review and approval. Seller shall be responsible for filing
any Federal Tax Returns relating to and for payment of any Federal
Taxes resulting from the 338 Election. All such election forms and
Tax Returns filed by Buyer and Seller shall be filed in a manner
consistent with the allocation of the Purchase Price to be agreed
between Buyer and Seller prior to the filing of any such election
forms and Federal Tax Returns (the "338 Allocation").
(c) Seller shall be responsible for filing any state and
local Tax Returns relating to the 338 Election. Seller shall be
liable for, and shall indemnify and hold the Buyer Group harmless
from and against, all state and local Taxes resulting from the 338
Election referred to in Section 6.05(b).
(d) Buyer and Seller agree that for state Tax purposes,
the purchase and sale of the Common Stock shall be
59
treated as a purchase and sale of the assets of the Subsidiaries to
the greatest extent permitted by applicable law. Buyer and Seller
agree to make timely all elections necessary to carry out the
provisions of this Section 6.05(d) and to report the purchase and
sale of the Common Stock consistent with the preceding sentence and
in accordance with the provisions of this Agreement. Buyer agrees to
cooperate with Seller to help minimize Seller's state Tax liabilities
arising as a result of the provisions of this Section 6.05(d),
provided that any such cooperation does not have any adverse
financial or economic impact on Buyer or any Subsidiary.
(f) Seller shall not file, or permit to be filed, any Tax
Returns in which Seller or any of the Subsidiaries takes any
positions which are inconsistent with the 338 Allocation. Buyer
shall not file, or permit to be filed, any Tax Returns in which Buyer
or any of its Affiliates takes any positions which are inconsistent
with the 338 Allocation. Buyer and Seller will notify each other as
soon as reasonably practicable of any audit adjustment or proposed
audit adjustment by any taxing authority which might affect the 338
Election or any allocation of purchase price pursuant to the 338
Election.
6.06 No Offset. To the extent that any party hereto is
responsible for any Tax pursuant to this Article VI or to receive or
remit any refund or credit in respect of any Tax, such party shall
not offset its obligation to pay any such Tax or to remit any
60
such refund or credit by any claim it may have against the other
party under this Agreement or otherwise.
ARTICLE VII
EMPLOYEE BENEFITS
7.01 Employee Benefit Plans.
(a) Section 7.01(a) of the Disclosure Schedule lists each
of the following plans, contracts, policies and arrangements which is
or, within six years prior to the Closing Date, was sponsored,
maintained or contributed to by, or otherwise binding upon any
Subsidiary or, in the case of an "employee pension plan" (as defined
in Section 3(2) of ERISA), an ERISA Affiliate for the benefit of any
current or former employee of any of the Subsidiaries: (i) any
"employee benefit plan," as such term is defined in Section 3(3) of
ERISA, whether or not subject to the provisions of ERISA, and (ii)
any other employment, consulting, stock option, stock bonus, stock
purchase, phantom stock, incentive, bonus, deferred compensation,
severance, vacation, dependent care, employee assistance, fringe
benefit, medical, dental, sick leave, death benefit or other
compensatory plan, contract, policy or arrangement which is not an
employee benefit plan as defined in Section 3(3) of ERISA (each such
plan, contract, policy and arrangement described in the foregoing
provisions of this Section 7.01(a) being herein referred to as a
"Benefit Plan"). With respect to each Subsidiary Benefit Plan,
Seller has provided
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or made available to Buyer (where applicable) a true and complete
copy of the governing documents and of the most recently distributed
summary material(s) (including summary plan descriptions and
summaries of material modifications). No Subsidiary Benefit Plans
will continue to be sponsored by any of the Subsidiaries after the
Closing.
(b) Neither the Subsidiaries nor any ERISA Affiliate has
incurred any withdrawal liability (either as a contributing employer
or as part of a controlled group which includes a contributing
employer) which has not been satisfied or which will not be satisfied
prior to the Closing Date to any Multiemployer Plan in connection
with any complete or partial withdrawal from such plan occurring on
or before the Closing Date; and no Subsidiary or ERISA Affiliate has
incurred or expects to incur any unpaid liability under Title IV of
ERISA in connection with a termination of or withdrawal from any
other funded pension plan (within the meaning of Section 3(2) of
ERISA). None of the Subsidiary Benefit Plans is a Multiemployer
Plan.
(c) Section 7.01(c) of the Disclosure Schedule lists each
collective bargaining agreement to which any of the Subsidiaries is
a party and which covers any employee of any of the Subsidiaries
("Collective Bargaining Agreement"). Seller has provided or made
available to Buyer true and complete copies of each Collective
Bargaining Agreement.
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7.02 Benefit Plan Compliance.
(a) With respect to each Benefit Plan, (i) the Benefit
Plan has been maintained and administered in all material respects in
accordance with its terms and the provisions of applicable law; (ii)
all contributions, insurance premiums, benefits and other payments
required to be made to or under each Benefit Plan have been made
timely and in accordance with the governing documents and applicable
law; (iii) no action, suit, proceeding or claim (other than routine
claims for benefits) is pending or, to the knowledge of Seller,
threatened; and (iv) to the knowledge of Seller, no facts exist which
could give rise to any such action, suit, proceeding or claim which,
if asserted, could reasonably be expected to result in a Material
Adverse Effect.
(b) The Seller, each of the Subsidiaries or each
Subsidiary Benefit Plan which is an "employee benefit plan" within
the meaning of Section 3(3) of ERISA or which is a "plan" within the
meaning of Section 4975(e) of the Code, has not engaged in a
transaction which is prohibited by Section 406 of ERISA or which
constitutes a "prohibited transaction" under Section 4975(c) of the
Code has occurred which could reasonably be expected to result in a
Material Adverse Effect.
(c) With respect to each funded Subsidiary Benefit Plan
which is an employee pension plan within the meaning of Section 3(2)
of ERISA (other than a Multiemployer Plan) (i) the plan is a
qualified plan under Section 401(a) or 403(a) of the
63
Code, and its related trust is exempt from federal income taxation
under Section 501(a) of the Code; (ii) the plan has been (or within
the applicable remedial amendment period, will be) amended to reflect
the requirements of the Tax Reform Act of 1986 and subsequent
legislation through and including the Omnibus Reconciliation Act of
1993, and an application for a determination letter has been filed
(or, within the applicable remedial amendment period, will be filed)
with the Internal Revenue Service; (iii) with respect to each such
plan (as well as any other Benefit Plan) which is covered by Section
412 of the Code, there has been no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302(a)((2) of
ERISA or Section 412 of the Code, and there has been no failure to
make a required installment by its due date under Section 412(m) of
the Code; and (iv) with respect to each such plan which is covered by
Title IV of ERISA, (1) no notice of intent to terminate the plan has
been provided to participants or filed with PBGC under Section 4041
of ERISA, nor has PBGC instituted or to Seller's knowledge,
threatened to institute any proceeding under Section 4042 of ERISA to
terminate the plan; (2) no liability has been incurred under Title IV
of ERISA to PBGC or otherwise and, to Seller's knowledge, there is no
material risk of incurring any such liability (except for the payment
of PBGC premiums); and (3) in the case of a defined benefit pension
plan, the value of the plan assets exceeds the total present value of
the plan's benefit liabilities on a plan termination basis based upon
64
actuarial assumptions and asset valuation principles applied by PBGC.
None of the Subsidiaries nor any ERISA Affiliate has ceased
operations at a facility so as to become subject to the provisions of
Section 4062(e) of ERISA, withdrawn as a substantial employer so as
to become subject to the provisions of Section 4063 of ERISA or
ceased making contributions on or before the Closing Date to any
Benefit Plan which is a pension plan subject to Section 4064(a) of
ERISA.
(d) The Subsidiaries have complied in all material
respects with the provisions of Section 4980(B) of the Code with
respect to any Benefit Plan which is a group health plan within the
meaning of Section 5001(b)(1) of the Code and which covers any
employee of any of the Subsidiaries. None of the Subsidiaries
maintains, contributes to, or is obligated under any plan, contract,
policy or arrangement providing health or death benefits (whether or
not insured) to current or former employees of any of the
Subsidiaries or other personnel of any of the Subsidiaries beyond the
termination of their employment or other services.
7.03 Employees of the Subsidiaries. Set forth in Sections
7.08(a) and 7.08(b) of the Disclosure Schedule is a complete list of
all employees of each of the Subsidiaries as of June 30, 1995,
together with their annualized base pay and 1994 bonus, if any.
Seller will update the list for Buyer to reflect additions and
deletions prior to the Closing. Prior to the Closing, Seller, the
Subsidiaries and Seller Affiliates will not terminate the
65
employment of or transfer any employee of any of the Subsidiaries to
another business of Seller other than in the ordinary course of
business. Buyer shall cause the non-union employees of the
Subsidiaries to receive post-Closing employee benefits which are at
least as favorable on an overall basis to those provided generally to
other similarly situated non-union employees of Buyer or of Buyer
Affiliates which are engaged in the local telephone business and, for
not less than one year from the Closing, to those provided to other
non-union employees of the Subsidiaries prior to the Closing Date
(except that any preexisting condition restrictions actually imposed
by the Subsidiary Benefit Plans with respect to one or more non-union
employees of the Subsidiaries under the disability, life or health
coverage provided to such employees prior to the Closing may be
imposed with respect to such coverage after the Closing), without any
gap in coverage and without the imposition of pre-existing conditions
restrictions with respect to disability, life or health coverage.
7.04 Subsidiary Benefit Plans.
(a) Accrued benefits or account balances of employees of
any of the Subsidiaries under the Subsidiary Benefit Plans which are
funded employee pension plans under Section 3(2) of ERISA shall be
fully vested as of the Closing Date.
(b) As of the Closing Date, Seller will cause the
Subsidiaries to withdraw from and cease participation in all
Subsidiary Benefit Plans which are also maintained, contributed to
66
or sponsored by Seller or any Seller Affiliate other than the
Subsidiaries, and no additional benefits will thereafter be accrued
or provided thereunder for the employees of any of the Subsidiaries,
and their dependents, spouses and beneficiaries. Buyer will cause
the Subsidiaries to adopt new plans and arrangements (or to become
participating employers under existing plans and arrangements of
Buyer and Buyer Affiliates) to the extent necessary to satisfy its
obligations under Section 7.03 hereof. Except to the extent funded
under the applicable Subsidiary Benefit Plan, all benefit liabilities
accrued and unpaid under a Subsidiary Benefit Plan shall be a
continuing liability of the Subsidiaries.
7.05 Buyer Benefit Plans. Buyer and Buyer Affiliates will
recognize all service of the employees of any of the Subsidiaries
including service with Seller, any of the Subsidiaries or any Seller
Affiliates, for purposes of eligibility to participate and vesting
(but not for benefit accrual purposes) in the employee benefit plans
(within the meaning of Section 3(3) of ERISA) of Buyer or any Buyer
Affiliates, and for determining the period of employment under any
vacation, sick leave or other paid time off plan of Buyer or Buyer
Affiliates.
7.06 Seller's 401(k) Plan. As soon as practicable after the
Closing, Seller will give or will cause to be given to each employee
of any of the Subsidiaries the following choices with respect to the
disposition of his or her account balance under the 401(k) Plan: (a)
an immediate payout from the 401(k) Plan, (b) a
67
deferred payout from the 401(k) Plan, or (c) if Buyer or Buyer
Affiliate maintains a qualified plan (under Section 401(a) of the
Code) with a 401(k) arrangement (the "Buyer's Plan"), an immediate
plan-to-plan transfer of the assets and related liability for payment
of the employee's accrued benefit to an existing or new qualified
plan (under Section 401(a) of the Code) to be maintained by the
Subsidiaries in a transfer which satisfies the requirements of
Section 414(l) of the Code. If an employee of any of the
Subsidiaries elects a plan-to-plan transfer of his or her 401(k) Plan
account balance, then the following provisions of this Section 7.06
will be applicable. Buyer and Seller shall make or cause to be made
any filings required of them in connection with the plan-to-plan
transfers. Each party may require, as a condition of making or
receiving the transfer, evidence reasonably satisfactory to such
party of the qualified status of Buyer's Plan and Seller's 401(k)
Plan, including without limitation, a copy of a favorable
determination letter from the Internal Revenue Service or a written
opinion of outside counsel that such a favorable determination letter
could be obtained without substantial plan changes. Each of the
parties shall pay its own expenses in connection with the plan-to-
plan transfer, and both parties will take or cause to be taken such
actions as may be required or reasonably requested by the other in
order to effectuate the plan-to-plan transfer. During the period
prior to the plan-to-plan transfer, Seller will cause the fiduciaries
of Seller's 401(k) Plan to process and distribute
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benefits with respect to the employees of any of the Subsidiaries
whose employment with Buyer and Buyer Affiliates is terminated, and
the amount to be transferred in the plan-to-plan transfer will be
reduced accordingly.
7.07 No Third Party Beneficiaries. No provision of this Article
VII or this Agreement shall create any third party beneficiary or
other rights in any employee or former employee (including any
beneficiary or dependent thereof) of any of the Subsidiaries, Seller
or Seller Affiliates, in respect of continued employment (or resumed
employment) with either Buyer, Seller, any of the Subsidiaries or any
Buyer or Seller Affiliates and no provision of this Article or this
Agreement shall create any such rights in any such employee or former
employee in respect of any benefits that may be provided, directly or
indirectly, under any Benefit Plan or any plan or arrangement which
may be established by any of the Subsidiaries, Buyer or Buyer
Affiliates.
7.08 Severance. Buyer shall have the sole responsibility for
making or causing to be made any applicable severance payments and
any other applicable similar payment (including any payment under the
Worker Adjustment and Retraining Act ("WARN"), or any similar law) to
employees of any of the Subsidiaries in the event their services are
terminated. The Subsidiaries shall be liable for any continuation
coverage (including any penalties, excise taxes or interest resulting
from the failure to provide continuation coverage) required by
Section 4980B of the Code due to
69
qualifying events which occur with respect to employees of any of the
Subsidiaries (or their dependents) on or after the Closing Date.
Notwithstanding anything to the contrary contained herein, if Buyer
or any of the Subsidiaries terminates or causes the termination of
the employment of (a) a "Listed Employee" at any time within one year
of the Closing Date, then, unless such Listed Employee's employment
is terminated for cause (defined below), Buyer shall pay or cause to
be paid to such terminated Listed Employee a lump sum severance
payment in an amount equal to the annual salary of any such Listed
Employee at the time of termination (or, if greater, immediately
prior to the Closing Date), and the prior year's bonus, if any,
subject to applicable income tax withholding; or (b) any "Other
Employee" within six months of the Closing Date, then, unless such
Other Employee's employment is terminated for cause, Buyer shall pay
or cause to be paid to such Other Employee a lump sum severance
payment in an amount equal to the gross weekly rate of pay of such
Other Employee at the time of termination (or, if greater,
immediately prior to the Closing Date) multiplied by the aggregate
number of years (including a fraction of a year) of such employee's
employment with Seller, any Seller Affiliate, Buyer and any Buyer
Affiliate, and the prior year's bonus, if any, subject to applicable
income tax withholding, with a minimum severance payment of four
weeks of the foregoing weekly rate of pay. In addition, any
terminated employee entitled to a lump sum severance payment under
this Section 7.08
70
shall also be entitled to receive the first six months of COBRA
continuation coverage at no cost to him or her. For the purpose of
this Section 7.08, the term "cause" shall mean (i) the failure or
refusal of an employee to perform the material duties of his or her
employment with Buyer, or any Buyer Affiliate, subject to a notice
and cure period of at least thirty days; (ii) commission by the
employee of a crime involving moral turpitude, (iii) material
alteration by Buyer or the Subsidiaries of his or her duties or
employment status without his or her consent, or (iv) the employee's
wilful engagement in conduct, which, in the case of (i), (ii) or (iv)
above, is materially injurious to the business of the Subsidiaries.
An employee shall be deemed to have been terminated by Buyer without
cause if he or she terminates employment because of a refusal to
accept an offer of employment by Buyer at a business location which
is more than one hundred miles from his or her present location of
employment or if his or her duties or employment status are
materially altered by Buyer or the Subsidiaries without his or her
consent.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Conditions to the Obligations of Each Party. The
obligations of Buyer and Seller to consummate the Closing are subject
to the satisfaction of the following conditions:
71
(a) all required waiting periods under the HSR Act shall
have expired or been terminated;
(b) all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations or terminations of
waiting periods imposed by, the FCC, FPSC, APSC, GPSC or other
Governmental Entities necessary to effect the transactions
contemplated by this Agreement shall have occurred, been filed or
been obtained and become Final Orders; and
(c) no judgment, injunction, order or decree of any court,
arbitrator or Governmental Entity shall restrain or prohibit the
consummation of the Closing.
8.02 Conditions to Obligation of Buyer. The obligation of Buyer
to consummate the Closing is subject to the satisfaction of the
following further conditions any of which may be waived by Buyer:
(a) Each of the representations and warranties of Seller
in this Agreement shall be true and correct in all material respects
as of the date hereof and (except for the representation in Section
3.08(a)(ii) which shall be superseded by Section 8.01(c)) at and as
of the Closing Date with the same effect as though such
representations and warranties had been made at and as of the Closing
Date, other than representations and warranties that speak as of a
specific date or time (which need only be true and correct as of such
date or time).
72
(b) Seller shall have performed in all material respects
all obligations and complied in all material respects with all
covenants required to be performed or complied with by it under this
Agreement at or prior to the Closing.
(c) Buyer shall have received at the Closing a certificate
to the effect of (a) and (b) above, dated the Closing Date and duly
executed on behalf of Seller.
(d) The aggregate cash held by the Subsidiaries as of the
Closing shall be not less than $1,450,000.
(e) There shall have been no material adverse change in
the financial condition or results of operations of the Subsidiaries
taken as a whole.
8.03 Conditions to Obligation of Seller. The obligation of
Seller to consummate the Closing is subject to the satisfaction of
the following further conditions any of which may be waived by
Seller:
(a) The representations and warranties of Buyer in this
Agreement shall be true and correct in all material respects as of
the date hereof and (except for the representation in Section 4.05(b)
which shall be superseded by Section 8.01(c)) at and as of the
Closing Date with the same effect as though such representations and
warranties had been made at and as of such time, other than
representations and warranties that speak as of a specific date or
time (which need only be true and correct as of such date or time).
73
(b) Buyer shall have performed in all material respects
all obligations and complied in all material respects with all
covenants required to be performed or complied with by it under this
Agreement at or prior to the Closing.
(c) Seller shall have received at the Closing a
certificate to the effect of (a) and (b) above, dated the Closing
Date and duly executed on behalf of Buyer.
ARTICLE IX
TERMINATION AND ABANDONMENT
9.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual consent of Seller and Buyer;
(b) by either Seller or Buyer if the Closing shall not
have occurred on or before September 1, 1996 (unless the failure to
consummate the Closing by such date shall be due to the action or
failure to act of the party seeking to terminate this Agreement in
violation of its covenants pursuant to this Agreement, in which case
the foregoing date shall be extended by the period of delay due to
such action or failure to act); or
(c) by Buyer no later than September 15, 1995 if the
Environmental Evaluation indicates a condition which could reasonably
be expected to result in a Material Adverse Effect and Seller has
failed to make arrangements with respect thereto reasonably
satisfactory to Buyer.
74
9.02 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.01 hereof:
(a) Each party will redeliver all documents, work papers
and other materials of the other party relating to the transactions
contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same; and
(b) Neither party hereto shall have any liability or
further obligation of any nature to the other party to this agreement
except as provided in the last sentence of Sections 5.02, and in
Section 11.03 and except for any breach of this Agreement prior to
such date.
ARTICLE X
SURVIVAL; INDEMNIFICATION
10.01 Survival. All representations and warranties of the
parties contained in this Agreement or in the Disclosure Schedule
shall survive the Closing Date and shall expire on the date one (1)
year after the Closing Date. No action or proceeding may be brought
with respect to any of the representations and warranties unless
written notice thereof, setting forth in reasonable detail the nature
of the claimed misrepresentation or breach of warranty, shall have
been delivered to the party alleged to be in breach prior to the
Closing. The covenants and agreements of the parties hereto shall
not be subject to the foregoing limitation.
75
Notwithstanding the foregoing, the representations and warranties set
forth in Article VI shall expire contemporaneously with the
applicable statute of limitations to which they relate.
10.02 Indemnification. Subject to the other provisions of
this Article X, from and after the Closing (a) Seller shall indemnify
and hold harmless the Buyer Group from and against any costs or
expenses (including reasonable attorneys' fees), judgments, fines,
amounts paid in settlement, losses, claims and damages (collectively,
"Losses and Damages") to the extent they are the direct result of any
breach of a representation or warranty by Seller or nonfulfillment of
or failure to perform any covenant or agreement made by or on behalf
of Seller under this Agreement, and (b) Buyer shall indemnify and
hold harmless the Seller Group from and against any Losses and
Damages to the extent they are the direct result of any breach of a
representation or warranty by Buyer or nonfulfillment of or failure
to perform any covenant or agreement made by or on behalf of Buyer
under this Agreement. The Seller Group or the Buyer Group, as the
case may be, are referred to herein as the "Indemnified Parties."
10.03 Procedures. If an Indemnified Party intends to seek
indemnity under this Article X, such Indemnified Party shall promptly
notify Seller or Buyer, as the case may be (the "Indemnifying
Party"), in writing of such claims setting forth the basis for and
the amount of such claims in reasonable detail, provided that the
failure to provide such notice shall not affect
76
the obligations of the Indemnifying Party unless it is actually
prejudiced thereby, subject, however, to the time period in Section
10.01 hereof. In the event such claim involves a claim by a third
party against the Indemnified Party, the Indemnifying Party shall
have thirty (30) days after receipt of such notice to decide whether
it will undertake, conduct and control, through counsel of its own
choosing and at its own expense, the settlement or defense thereof,
and if it so decides, the Indemnified Party shall cooperate with it
in connection therewith, provided that the Indemnified Party may
participate (subject to the Indemnifying Party's control) in such
settlement or defense through counsel chosen by it, and provided
further that the fees and expenses of such Indemnified Party's
counsel shall be borne by the Indemnified Party; provided, however,
that any Indemnified Party is hereby authorized prior to any notice
from the Indemnifying Party of its undertaking of the defense, to
file any motion, answer or other pleading which the Indemnified Party
shall deem necessary to protect its interests and which shall
otherwise have become due. The Indemnifying Party may, without the
consent of the Indemnified Party, settle or compromise or consent to
the entry of any judgment in any action involving only the payment of
money which includes as an unconditional term thereof the delivery by
the claimant or plaintiff to the Indemnified Party of a duly executed
written release of the Indemnified Party from all liability in
respect of such action which written release shall be reasonably
satisfactory
77
in form and substance to counsel for the Indemnified Party. The
Indemnifying Party shall not, without the written consent of the
Indemnified Party settle or compromise any action involving relief
other than the payment of money in any manner that, in the reasonable
judgment of the Indemnified Party, would materially and adversely
affect the Indemnified Party; provided, however, that if the
Indemnified Party shall fail or refuse to consent to a settlement,
compromise or judgment proposed by the Indemnifying Party and
approved by the third Person in any such action and a judgment
thereafter shall be entered or a settlement or compromise thereafter
shall be effected on terms less favorable in the aggregate to the
Indemnified Party than the settlement, compromise or judgment
proposed by the Indemnifying Party, the Indemnifying Party shall have
no liability hereunder with respect to any Losses and Damages in
excess of those that were provided for in the settlement, compromise
or judgment proposed by the Indemnifying Party or any costs or
expenses related to such claim arising after the date such
settlement, compromise or judgment was so proposed. If the
Indemnifying Party does not notify the Indemnified Party within
thirty (30) days after the receipt of the Indemnified Party's notice
of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the Indemnified Party shall have the right to
contest, settle or compromise the claim but shall not thereby waive
any right to indemnity therefor pursuant to this Agreement. So long
as the Indemnifying Party is contesting any
78
such claim in good faith, the Indemnified Party shall not pay or
settle any such claim, unless such settlement includes as an
unconditional term thereof the delivery by the claimant or plaintiff
and by the Indemnified Party to the Indemnifying Party of duly
executed written releases of the Indemnifying Party from all
liability in respect of such claim which written releases shall be
reasonably satisfactory in form and substance to counsel for the
Indemnifying Party. The Indemnified Party shall cooperate fully in
all aspects of any investigation, defense, pre-trial activities,
trial, compromise, settlement or discharge of any claim in respect of
which indemnity is sought pursuant to Article X.
10.04 Tax, Insurance and Other Benefits. The amount of any
claim by an Indemnified Party shall be reduced by any Tax, insurance
or other benefits which such party or its Group receives in respect
of or as a result of such claim or the facts or circumstances
relating thereto. If any Losses and Damages for which
indemnification is provided hereunder are subsequently reduced by any
Tax benefit, insurance payment or other recovery from a third party,
the amount of such reduction shall be remitted to the Indemnifying
Party.
10.05 Environmental Indemnification. With respect to
Environmental Liabilities and in lieu of any other indemnification
provided in this Agreement that could be read to apply to
Environmental Liabilities, Buyer shall indemnify, defend and hold
harmless the Seller Group from and against all Environmental
79
Liabilities that may be imposed upon, asserted against, or incurred
by Seller, Seller Affiliates or the Subsidiaries with respect to the
Subsidiaries, and are caused by or related to the acts or omissions
of any Person.
ARTICLE XI
MISCELLANEOUS
11.01 Notices. All notices, requests, demands, consents and
other communications required or permitted hereunder shall be in
writing and shall be delivered personally or mailed by certified or
registered mail (return receipt requested), postage prepaid, provided
that any notice delivered by certified or registered mail shall also
be delivered by telecopy or by hand at the time that it is mailed. If
such telecopy is sent, notices shall be deemed given upon
confirmation at the sender's telecopy machine of receipt at the
recipient's telecopy machine. If the notice is delivered by hand, it
shall be deemed given when so delivered to a responsible
representative of the addressee. All communications hereunder shall
be delivered to the respective parties at the following addresses (or
to such other person or at such other address for a party as shall be
specified by like notice, provided that notices of a change of
address shall be effective only upon receipt thereof):
80
(a) If to Buyer, to in care of:
TPG Communications, Inc.
c/o Texas Pacific Group
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxxx Xxxxxxx
and by telecopy to: 000-000-0000
with copy to:
Xxxxxx & Xxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxx, Esq.
and by telecopy to: 202-942-5999
and to:
Rural Link Communications, LLC
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
and by telecopy to: 000-000-0000
(b) If to Seller, to:
Xxxxxxx X. Xxxxxxxx
St. Xxx Paper Company
duPont Center Xxxxx 000
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
and by telecopy to: 000-000-0000
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
Market Square
000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxx, Esq.
and by telecopy to: (000) 000-0000
81
11.02 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Buyer and Seller, or in the
case of a waiver, by the party against whom the waiver is to be
effective.
(b) No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by
law.
11.03 Expenses. Except as otherwise provided herein, all
costs, fees and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost, fee or expense.
11.04 Assignment; Parties in Interest. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and
thereto and their respective successors and assigns. Neither party
may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the written consent of the
other party hereto or thereto.
11.05 Governing Law; Jurisdiction; Forum. The parties
hereto agree that all of the provisions of this Agreement and any
questions concerning its interpretation and enforcement shall be
82
governed by the laws of the State of Florida without regard to any
applicable principles of conflicts of law. Each of the parties
irrevocably and unconditionally consents that any suit, action or
proceeding relating to this Agreement may be brought in a court of
the United States sitting in the State of Florida or, if jurisdiction
is lacking in such a court, in a court of record in the State of
Florida, and each party hereby irrevocably waives, to the fullest
extent permitted by law, any objection that it may have, whether now
or in the future, to the laying of the venue in, or to the
jurisdiction of, any and each of such courts for the purpose of any
such suit, action, proceeding or judgment and further waives any
claim that any such suit, action, proceeding or judgment has been
brought in an inconvenient forum, and each party hereby submits to
such jurisdiction.
11.06 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received a counterpart
hereof signed by the other party hereto.
11.07 Entire Agreement. This Agreement and the Schedules
hereto and thereto constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede
all/other prior agreements, understandings and negotiations, both
written and oral, between the parties with respect to the subject
83
matter of this Agreement, except for the Confidentiality Agreement
and any amendments or letter agreements relating to the subject
matter referred to herein that may be entered into in writing by
Seller and Buyer. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been
made or relied upon by either party hereto.
11.08 Publicity. Except as otherwise required by law or the
rules of any national securities exchange, neither the Buyer Group
nor the Seller Group shall issue or cause the publication of any
press release or other public announcement (other than as required
pursuant to Sections 5.05 and 5.06 hereof) with respect to this
Agreement or the transactions contemplated by this Agreement without
the express written prior approval of the parties hereto.
11.09 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
11.10 Severability. This Agreement shall be deemed
severable; the invalidity or unenforceability of any term or
provision of this Agreement shall not affect the validity or
enforceability of this Agreement or of any other term hereof.
11.11 Knowledge. Whenever information provided herein is
based on "knowledge," such term means the actual knowledge of any
person presently holding the position of General Manager, Operations
Manager or Accounting Manager of any Subsidiary, or General Manager
or Vice President or higher of Seller or SJC.
84
11.12 Purchase Price Adjustment. Any indemnity payment made
pursuant to the terms of this Agreement, including without limitation
pursuant to Articles VI and X, shall be treated by Buyer and Seller
as an adjustment to the Purchase Price.
85
IN WITNESS WHEREOF, the parties hereto here caused this
Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
ST. XXX INDUSTRIES, INC.
By:
Name: Xxxxxx X. Xxxxxx
Title: President
TPG COMMUNICATIONS, INC.
By:
Name:
Title:
86
EXHIBIT A
NET WORTH
Net Worth shall mean the aggregate of
(1) Common Stock
(2) Paid in Capital; and
(3) Retained Earnings
shown in the consolidated financial statements of SJC as of a given
date. It shall be determined as described below and in accordance
with generally accepted accounting principles consistently applied,
subject to the following which represents the historic practice of
SJC:
(1) Depreciation expense will be determined using
depreciation rates currently in effect (attached
hereto), as adjusted in accordance with any FPSC or
APSC orders if issued within the time periods for
determination of the final Purchase Price Adjustment
specified in Section 2.06.
(2) Bad debt expense for St. Xxxxxx Telephone & Telegraph
Company will be determined using the reserve method.
Bad debt expense for St. Xxx Communications, Inc.,
Gulf Telephone Company and The Florala Telephone
Company will be determined using the direct write-off
method.
(3) Income tax expense will be determined using statutory
rates without regard to exemptions and
A-1
will be reduced by the amortization of investment tax
credits calculated using the depreciation rates
mentioned in item 1 above.
(4) For purposes of determining Net Worth at and as of
December 31, 1995, monthly interim settlements from
the interstate access pool will be based on the cost
study for 1994, as adjusted for changes known prior to
December 31, 1995. For purposes of determining Net
Worth at and as of the Closing Date, monthly interim
settlements from the interstate access pool will be
based on the cost study for 1995, as adjusted
retroactive to January 1, 1996 for the final pool
true-up for 1995 if available within the time periods
for determination of the final Purchase Price
Adjustment specified in Section 2.06.
A-2
EXHIBIT B
_______________ __, 1995
St. Xxx Industries, Inc.
duPont Center Suite 400
1650 Prudential Drive
Jacksonville, FL 32207
Gentlemen:
We have served as counsel to TPG Communications, Inc. ("TPG"),
in connection with the purchase by TPG from St. Xxx Industries, Inc.
("SJI"), of all of the issued and outstanding stock of St. Xxx
Communications, Inc. ("SJCI"). SJCI owns all of the issued and
outstanding common stock of Gulf Telephone Company, Florala Telephone
Company, Inc. and St. Xxxxxx Telephone & Telegraph Company
(collectively with SJCI, the "Subsidiaries"). This opinion is
delivered to you pursuant to Section 2.03(a)(v) of that certain Stock
Purchase Agreement dated as of September 1, 1995, between SJI and TPG
(the "Purchase Agreement").
In connection with rendering this opinion, we have examined such
documents and records and have made such inquiries and investigations
as we deem to be necessary and appropriate. We are of the opinion
that:
1. TPG is duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the nature of its business or
B-1
St. Xxx Industries, Inc.
_______________ __, 1995
Page 2
its ownership or use of property requires such qualification. TPG has
full corporate power to conduct its business as presently conducted
and to own and/or operate the assets and properties now owned or
operated by it.
2. TPG (as opposed to the Subsidiaries) possesses all of the
material licenses, franchises, permits or other authorizations issued
or issuable by federal, state, local or other governmental or quasi-
governmental agencies, authorities or other entities necessary for
the operation of its current businesses and, to the best of our
knowledge and belief, all such licenses, franchises, permits and
other authorizations are in full force and effect.
3. TPG has the full corporate power and lawful authority to
execute and deliver the Purchase Agreement and to consummate and
perform the transactions contemplated thereby in the manner therein
provided. The execution and delivery by TPG of the Purchase
Agreement and the consummation and performance of the transactions
contemplated thereby in the manner therein provided have been duly
and validly authorized by all necessary corporate or other action.
4. The execution and delivery by TPG of the Purchase Agreement
and the consummation and performance by TPG of the transactions
contemplated thereby in the manner therein provided do
B-2
St. Xxx Industries, Inc.
_______________ __, 1995
Page 3
not or will not (i) require the approval, consent or authorization of, or
any filing with or notice to, any federal, state, local or other
governmental agency or body or any other third party, other than
approvals, consents, authorizations, filings or notices which have
been obtained, made or given, or (ii) conflict with or result in the
uncured and unwaived breach or violation of any term or provision of,
or constitute a default under or cause the acceleration of any
payments pursuant to (A) the charter or by-laws of TPG, (B) to the
best of our knowledge and belief, any indenture, mortgage, deed of
trust, lease, contract note or note agreement or any other agreement
or instrument to which TPG is a party or by which TPG or any of its
respective assets or properties is bound, (C) any governmental
license, franchise, permit or other authorization held by TPG or
(D) any law, rule or regulation or, to the best of our knowledge and
belief, any judgment, order, writ, injunction, decree or award, of
any court, arbitrator or governmental agency or body to which TPG is
a party.
5. The Purchase Agreement constitutes the valid and binding
obligation of TPG, and is enforceable against TPG in accordance with
its terms, except that such enforcement may be subject to bankruptcy,
reorganization or other laws of general applicability to the rights
of creditors and to general equitable principles.
B-3
St. Xxx Industries, Inc.
_______________ __, 1995
Page 4
This opinion may be relied upon by St. Xxx Industries, Inc. and
its lenders and by their respective counsel.
Very truly yours,
B-4
EXHIBIT C
_______________ __, 1995
TPG Communications, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Gentlemen:
We have served as counsel to St. Xxx Industries, Inc. ("SJI"),
in connection with the sale of all of the issued and outstanding
stock of St. Xxx Communications, Inc. ("SJCI") to TPG Communications,
Inc. ("TPG"). SJCI owns all of the issued and outstanding common
stock of Gulf Telephone Company ("Gulf"), Florala Telephone Company,
Inc. ("Florala") and St. Xxxxxx Telephone & Telegraph Company
("SJTT," collectively, with SJCI, Gulf and Florala, the
"Subsidiaries"). This opinion is delivered to you pursuant to
Section 2.03(b)(vii) of that certain Stock Purchase Agreement dated
as of September 1, 1995, between SJI and TPG (the "Purchase
Agreement").
In connection with rendering this opinion, we have examined such
documents and records and have made such inquiries and investigations
as we deem to be necessary and appropriate. We are of the opinion
that:
1. SJI and each of the Subsidiaries other than Florala is duly
incorporated, validly existing and in good standing under the laws of
the State of Florida and that Florala is duly incorporated, validly
existing and in good standing under the laws of the State of Alabama.
Each of the Subsidiaries is duly qualified to do
C-1
TPG Communications, Inc.
______________ __, 1995
Page 2
business as a foreign corporation and is in good standing in each
jurisdiction where the nature of its business or its ownership or
use of property requires such qualification. SJI and each of the
Subsidiaries has full corporate power to conduct its business as
presently conducted and to own and/or operate the assets and properties
now owned or operated by it.
2. Each of the Subsidiaries possesses all of the material
licenses, franchises, permits or other authorizations issued or
issuable by federal, state, local or other governmental or quasi-
governmental agencies, authorities or other entities necessary for
the operation of its current businesses and, to the best of our
knowledge and belief, all such licenses, franchises, permits and
other authorizations are in full force and effect.
3. SJI has the full corporate power and lawful authority to
execute and deliver the Purchase Agreement and to consummate and
perform the transactions contemplated thereby in the manner therein
provided. The execution and delivery by SJI of the Purchase
Agreement and the consummation and performance of the transactions
contemplated thereby in the manner therein provided have been duly
and validly authorized by all necessary corporate or other action.
4. The execution and delivery by SJI of the Purchase Agreement
and the consummation and performance by SJI of the
C-2
TPG Communications, Inc.
______________ __, 1995
Page 3
transactions contemplated thereby in the manner therein provided do not
or will not (i) require the approval, consent or authorization of, or any
filing with or notice to, any federal, state, local or other
governmental agency or body or any other third party, other than (A)
approvals, consents, authorizations, filings or notices of a
character such that a failure to obtain, file or give them would not
singly or in the aggregate have a material adverse effect on SJI or
any of the Subsidiaries or otherwise impair or affect in any
materially adverse manner the validity of the Purchase Agreement or
prevent or hinder the consummation of the transactions contemplated
thereby and (B) approvals, consents, authorizations, filings or
notices which have been obtained, made or given, or (ii) conflict
with or result in the uncured and unwaived breach or violation of any
term or provision of, or constitute a default under or cause the
acceleration of any payments pursuant to (A) the charter or by-laws
of SJI or any of the Subsidiaries, (B) to the best of our knowledge
and belief, any material indenture, mortgage, deed of trust, lease,
contract note or note agreement or any other material agreement or
instrument to which SJI or any of the Subsidiaries is a party or by
which SJI or any of the Subsidiaries or any of their respective
assets or properties is bound, (C) any material governmental license,
franchise, permit or other authorization held by SJI or any of the
Subsidiaries or (D) any law, rule or regulation or, to the best of
our knowledge and belief, any judgment, order, writ, injunction,
decree or award, of any court,
C-3
TPG Communications, Inc.
______________ __, 1995
Page 4
arbitrator or governmental agency or body to which SJI or any of the
Subsidiaries is a party, noncompliance with which would have a material
adverse effect on SJI or any of the Subsidiaries.
5. The Purchase Agreement constitute the valid and binding
obligation of SJI, and is enforceable against SJI in accordance with
its terms, except that such enforcement may be subject to bankruptcy,
reorganization or other laws of general applicability to the rights
of creditors and to general equitable principles.
6. The authorized capital stock of SJCI consists of 1,000
shares of common stock, all of which stock at the date of this letter
has been issued and is outstanding and is owned by SJI of record, and
to our knowledge, beneficially, free and clear, to our knowledge, of
all liens, pledges, claims, security interests or other encumbrances
of any nature whatsoever. All such shares are duly authorized,
validly issued, fully paid and nonassessable. There are no
preemptive rights with respect to any such shares pursuant to any
statute, or the articles of incorporation or by-laws of SJCI. There
are no outstanding agreements, subscriptions, options, warrants,
convertible securities, calls, commitments or rights of any kind
(contingent or otherwise) pertaining to the issuance by SJCI or
purchase from SJCI of any securities of SJCI.
C-4
TPG Communications, Inc.
______________ __, 1995
Page 5
7. The authorized capital stock of Gulf consists of 12,000
shares of common stock, 3,120 shares of which at the date of this
letter have been issued and are outstanding and are owned by SJCI of
record, and to our knowledge, beneficially, free and clear, to our
knowledge, of all liens, pledges, claims, security interests or other
encumbrances of any nature whatsoever. All such outstanding shares
are duly authorized, validly issued, fully paid and nonassessable.
There are no preemptive rights with respect to any shares of common
stock pursuant to any statute, or the articles of incorporation or
by-laws of Gulf. There are no outstanding agreements, subscriptions,
options, warrants, convertible securities, calls, commitments or
rights of any kind (contingent or otherwise) pertaining to the
issuance by Gulf or purchase from Gulf of any securities of Gulf.
8. The authorized capital stock of Florala consists of 560
shares of common stock and 1200 shares of preferred stock. At the
date of this letter, (i) 557 shares of common stock have been issued
and are outstanding, all of which are owned by SJCI of record, and to
our knowledge, beneficially, free and clear, to our knowledge, of all
liens, pledges, claims, security interests or other encumbrances of
any nature whatsoever, and (ii) 402 shares of preferred stock are
issued and are outstanding. All such outstanding shares are duly
authorized, validly issued, fully paid and nonassessable. There are
no preemptive rights with respect to
C-5
TPG Communications, Inc.
______________ __, 1995
Page 6
such shares of preferred stock pursuant to any statute, or the articles
of incorporation or by-laws of Florala. There are no outstanding
agreements, subscriptions, options, warrants, convertible securities, calls,
commitments or rights of any kind (contingent or otherwise) pertaining to
the issuance by Florala or purchase from Florala of any securities of
Florala. Such preferred stock may be redeemed in accordance with the
terms of the charter of Florala without, to our knowledge, the
payment of sums or the undertaking of actions other than as
specifically provided therein.
9. The authorized capital stock of SJTT consists of 25,000
shares of common stock, 14,890 of which at the date of this letter
have been issued and are outstanding and are owned by SJCI of record,
and to our knowledge, beneficially, free and clear, to our knowledge,
of all liens, pledges, claims, security interests or other
encumbrances of any nature whatsoever. All such outstanding shares
are duly authorized, validly issued, fully paid and nonassessable.
There are no preemptive rights with respect to any such shares
pursuant to any statute, or the articles of incorporation or by-laws
of SJTT. There are no outstanding agreements, subscriptions,
options, warrants, convertible securities, calls, commitments or
rights of any kind (contingent or otherwise) pertaining to the
issuance by SJTT or purchase from SJTT of any securities of SJTT.
C-6
TPG Communications, Inc.
______________ __, 1995
Page 7
This opinion may be relied upon by TPG and its lenders and by
their respective counsel.
Very truly yours,
