Exhibit 2.5
STOCK PURCHASE AGREEMENT
among
MJD VENTURES, INC.,
XXXXX XXXXXXX XXXXX
XXXXX XXXXXX XXXXX
XXXX XXXX XXXXX,
XXXXX XXXXXXX XXXXX AND XXXXX XXXXXX XXXXX
BEING AND AS TRUSTEES OF THE GRANTOR RETAINED
ANNUITY TRUST CREATED BY XXXX XXXX XXXXX,
and
XXXX XXXX XXXXX
BEING AND AS TRUSTEE OF THE
XXXX XXXX XXXXX REVOCABLE TRUST
and
XXXXXXXX AND SCENERY HILL TELEPHONE COMPANY
dated as of May 7, 2001
TABLE OF CONTENTS
ARTICLE I
PURCHASE OF STOCK............................................................1
Section 1.1 PURCHASE AND SALE..........................................1
Section 1.2 PURCHASE PRICE.............................................2
Section 1.3 POST-CLOSING ADJUSTMENTS TO THE ADJUSTED PURCHASE PRICE....3
Section 1.4 EXCLUDED ASSETS AND LIABILITIES............................3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS................................4
Section 2.1 CORPORATE ORGANIZATION.....................................4
Section 2.2 AUTHORIZATION..............................................4
Section 2.3 NO VIOLATION...............................................4
Section 2.4 SUBSIDIARIES AND INVESTMENTS...............................5
Section 2.5 STOCK RECORD BOOK..........................................5
Section 2.6 CORPORATE BOOKS............................................5
Section 2.7 TITLE TO STOCK.............................................6
Section 2.8 OPTIONS AND RIGHTS.........................................6
Section 2.9 FINANCIAL STATEMENTS.......................................6
Section 2.10 EMPLOYEES..................................................7
Section 2.11 ABSENCE OF CERTAIN CHANGES.................................8
Section 2.12 CONTRACTS..................................................8
(a) Generally........................................................8
(b) Compliance.......................................................9
Section 2.13 TRUE AND COMPLETE COPIES..................................10
Section 2.14 TITLE AND RELATED MATTERS.................................10
(a) Owned Property, Liens...........................................10
(b) Leased Property.................................................10
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(c) Regulatory/Zoning Compliance....................................10
(d) Utilities.......................................................11
(e) Condition.......................................................11
Section 2.15 LITIGATION................................................11
Section 2.16 TAX MATTERS...............................................11
(a) Generally.......................................................11
(b) Good Faith......................................................12
(c) Claims..........................................................12
(d) Course of Business..............................................12
(e) Withholdings....................................................12
(f) Partnerships....................................................12
(g) Accounting Method Adjustments...................................12
(h) Tax Exemptions..................................................13
(i) Tax Return Reviews..............................................13
(j) Power of Attorney...............................................13
(k) True and Complete Copies........................................13
(l) Subchapter "S" Election.........................................13
Section 2.17 BANK AND BROKERAGE ACCOUNTS...............................13
Section 2.18 COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS AND ORDERS...13
Section 2.19 EMPLOYEE BENEFIT PLANS....................................13
Section 2.20 INTELLECTUAL PROPERTY.....................................17
Section 2.21 ENVIRONMENTAL MATTERS.....................................17
(a) Generally.......................................................17
(b) Property........................................................18
(c) Transportation..................................................18
(d) Notification of Release.........................................18
(e) Liens...........................................................18
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(f) Site Assessments................................................18
Section 2.22 CAPITAL EXPENDITURES AND INVESTMENTS......................18
Section 2.23 DEALINGS WITH AFFILIATES..................................19
Section 2.24 INSURANCE.................................................19
Section 2.25 COMMISSIONS...............................................19
Section 2.26 PERMITS AND REPORTS.......................................19
Section 2.27 ABSENCE OF UNDISCLOSED LIABILITIES........................20
Section 2.28 YEAR 2000 COMPLIANCE......................................21
Section 2.29 DISCLOSURE................................................21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............................21
Section 3.1 CORPORATE ORGANIZATION....................................21
Section 3.2 AUTHORIZATION.............................................21
Section 3.3 NO VIOLATION..............................................21
Section 3.4 INVESTMENT INTENT.........................................22
ARTICLE IV
COVENANTS OF THE SELLERS AND THE COMPANY....................................22
Section 4.1 REGULAR COURSE OF BUSINESS................................22
(a) Generally.......................................................22
(b) Compensation....................................................22
(c) Insurance.......................................................23
(d) Claims..........................................................23
(e) Supplement......................................................23
Section 4.2 AMENDMENTS................................................23
Section 4.3 CAPITAL CHANGES...........................................23
Section 4.4 DIVIDENDS.................................................23
Section 4.5 CAPITAL EXPENDITURES; TRANSACTIONS WITH AFFILIATES........23
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Section 4.6 BORROWING.................................................23
Section 4.7 PROPERTY..................................................23
Section 4.8 OTHER COMMITMENTS.........................................24
Section 4.9 INTERIM FINANCIAL INFORMATION, INVESTMENT K-1S............24
Section 4.10 CONSENTS AND AUTHORIZATIONS...............................24
Section 4.11 ACCESS....................................................24
Section 4.12 NOTICE OF TRANSFER........................................24
Section 4.13 PAYMENT OF STAMP TAX......................................24
Section 4.14 DISCLOSURE................................................24
Section 4.15 COOPERATION WITH PURCHASER................................25
Section 4.16 INCOME TAX................................................25
Section 4.17 TRANSFER OF EXCLUDED ASSETS...............................25
ARTICLE V
COVENANTS OF THE PURCHASER..................................................25
Section 5.1 CONSENTS AND AUTHORIZATIONS...............................25
Section 5.2 EMPLOYEES.................................................25
Section 5.3 TELEPHONE AND CABLE SERVICE...............................25
ARTICLE VI
OTHER AGREEMENTS............................................................26
Section 6.1 AGREEMENT TO DEFEND.......................................26
Section 6.2 FURTHER ASSURANCES........................................26
Section 6.3 CONSENTS..................................................26
Section 6.4 NO SOLICITATION OR NEGOTIATION............................26
Section 6.5 NO TERMINATION OF THE OBLIGATIONS BY SUBSEQUENT DISSOLUTION27
Section 6.6 PUBLIC ANNOUNCEMENTS......................................27
Section 6.7 RECORDS AND INFORMATION...................................27
(a) Retention of Records............................................27
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(b) Access to Information...........................................27
(c) Delivery of Corporate Records...................................28
(d) Witnesses.......................................................28
Section 6.8 INSURANCE POLICIES AND CLAIMS ADMINISTRATION..............28
(a) Insurance Coverage Prior to the Closing Date....................28
(b) Insurance Coverage After the Closing Date.......................28
Section 6.9 OTHER TAX MATTERS.........................................29
(a) Tax Returns.....................................................29
(b) Information.....................................................29
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER..............................29
Section 7.1 REPRESENTATIONS AND WARRANTIES............................29
Section 7.2 CONSENTS AND APPROVALS....................................30
Section 7.3 NO MATERIAL ADVERSE CHANGE................................30
Section 7.4 NO PROCEEDING OR LITIGATION...............................30
Section 7.5 SECRETARY'S CERTIFICATE...................................30
Section 7.6 CERTIFICATES OF GOOD STANDING.............................30
Section 7.7 OPINION OF SELLERS' COUNSEL...............................31
Section 7.8 RESIGNATIONS..............................................31
Section 7.9 OTHER DOCUMENTS...........................................31
Section 7.10 LIENS.....................................................31
Section 7.11 DELIVERY OF MINUTE BOOKS..................................31
Section 7.12 DELIVERY OF FINANCIAL STATEMENTS..........................31
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS................................31
Section 8.1 REPRESENTATIONS AND WARRANTIES............................31
Section 8.2 CONSENTS AND APPROVALS....................................32
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Section 8.3 NO PROCEEDING OR LITIGATION...............................32
Section 8.4 SECRETARY'S CERTIFICATE...................................32
Section 8.5 OPINION OF PURCHASER'S COUNSEL............................32
ARTICLE IX
CLOSING.....................................................................32
Section 9.1 CLOSING...................................................32
Section 9.2 CLOSING DATE PAYMENT AND RECEIPT OF SHARES................32
ARTICLE X
TERMINATION AND ABANDONMENT.................................................33
Section 10.1 METHODS OF TERMINATION....................................33
(a) Mutual Consent..................................................33
(b) Sellers' Failure to Perform.....................................33
(c) Purchaser's Failure to Perform..................................33
(d) Failure to Close by December 31, 2001...........................33
(e) Material Adverse Change.........................................33
(f) Remedies........................................................34
Section 10.2 PROCEDURE UPON TERMINATION................................34
(a) Return of Records...............................................34
(b) Confidentiality.................................................34
ARTICLE XI
SURVIVAL OF TERMS; INDEMNIFICATION..........................................34
Section 11.1 Survival; Limitations.....................................34
Section 11.2 ESCROW OF LIQUID ASSETS...................................34
Section 11.3 INDEMNIFICATION BY THE SELLERS............................35
(a) Misrepresentation or Breach.....................................35
(b) Taxes...........................................................35
(c) Other Claims....................................................35
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(d) Related Expenses................................................35
Section 11.4 INDEMNIFICATION BY THE PURCHASER..........................35
(a) Misrepresentation or Breach.....................................35
(b) Taxes...........................................................36
(c) Other Claims....................................................36
(d) Related Expenses................................................36
Section 11.5 THIRD PARTY CLAIMS........................................36
(a) Generally.......................................................36
(b) Counsel.........................................................37
Section 11.6 OTHER CLAIMS..............................................37
Section 11.7 CONTINUED LIABILITY FOR INDEMNITY CLAIMS..................38
Section 11.8 BASKET AMOUNT.............................................38
(a) Indemnification by the Sellers..................................38
(b) Indemnification by the Purchaser................................38
(c) Aggregation.....................................................39
Section 11.9 LIMITATIONS ON INDEMNIFICATIONS...........................39
Section 11.10 EXCLUSIVE REMEDY..........................................39
ARTICLE XII
GENERAL PROVISIONS..........................................................39
Section 12.1 AMENDMENT AND MODIFICATION................................39
Section 12.2 WAIVER....................................................39
Section 12.3 CERTAIN DEFINITIONS.......................................39
Section 12.4 NOTICES...................................................43
Section 12.5 ASSIGNMENT................................................44
Section 12.6 GOVERNING LAW.............................................45
Section 12.7 COUNTERPARTS..............................................45
Section 12.8 HEADINGS..................................................45
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Section 12.9 ENTIRE AGREEMENT..........................................45
Section 12.10 NO BENEFIT................................................45
Section 12.11 DELAYS OR OMISSIONS.......................................45
Section 12.12 SEVERABILITY..............................................45
Section 12.13 EXPENSES..................................................45
Section 12.14 TIME OF THE ESSENCE.......................................46
Section 12.15 INJUNCTIVE RELIEF.........................................46
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EXHIBITS
7.7 Opinion of Sellers' Counsel
8.5 Opinion of Purchaser's Counsel
11.2 Escrow Agreement
SCHEDULES
1.4 Excluded Assets and Liabilities
2.3 No Violations
2.4 Subsidiaries and Investments
2.5 Capital Stock
2.6 Corporate Books
2.7 List of Shareholders/No Liens on Shares
2.10 Employees
2.11 Certain Changes
2.12 Contracts
2.14(a) Owned Property, Liens
2.14(b) Leased Property
2.14(c) Regulatory/Zoning Compliance
2.14(e) Condition
2.15 Litigation
2.16 Tax Matters
2.17 Bank and Brokerage Accounts
2.19 Employee Benefit Plans
2.20 Intellectual Property
2.21 Environmental Matters
2.22 Capital Expenditures and Investments
2.23 Dealings with Affiliates
2.24 Insurance
2.25 Brokerage Commission
2.26 Permits
2.27 Absence of Undisclosed Liabilities/Corporate Debt
3.3 Consents and Authorizations of Purchaser
4.9 Interim Financial Information
4.14 Article IV Disclosure Statement
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AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of the
7th day of May, 2001, among MJD VENTURES, INC., a Delaware corporation (the
"PURCHASER"), and XXXXX XXXXXXX XXXXX, a Pennsylvania resident ("X. X. XXXXX"),
in his individual capacity, XXXXX XXXXXX XXXXX, a Florida resident ("X. X.
XXXXX"), in her individual capacity, XXXX XXXX XXXXX, a Pennsylvania resident
("X. XXXXX"), in her individual capacity, X.X. XXXXX AND X.X. XXXXX BEING AND AS
TRUSTEES OF THE GRANTOR RETAINED ANNUITY TRUST CREATED BY X. XXXXX BY HER
IRREVOCABLE DEED OF TRUST, DATED DECEMBER 24, 1998 (the "XXXXX XXXX"), in their
capacity as Trustees of the Xxxxx XXXX, and X. XXXXX TRUSTEE OF THE REVOCABLE
TRUST CREATED BY HER DEED OF TRUST DATED JULY 28, 1993 (the "M. H. TRUST"), in
her capacity as Trustee of the M.H. Trust (X. X. Xxxxx, X. X. Xxxxx, M. Xxxxx,
X. X. Trust and Xxxxx XXXX collectively referred to hereinafter as the
"SELLERS"), and XXXXXXXX AND SCENERY HILL TELEPHONE COMPANY, a Pennsylvania
corporation ("MSH").
RECITALS
WHEREAS, X.X. Xxxxx owns 139 shares of the common stock of MSH, X. X.
Xxxxx owns 27 shares of the common stock of MSH, M.H. Trust owns 20 shares of
the common stock of MSH and the Xxxxx XXXX owns 120 shares of the common stock
of MSH, such 306 shares of common stock, each with a $25.00 par value,
constituting all of the issued and outstanding shares of capital stock of MSH
(the "MSH CAPITAL STOCK");
WHEREAS, MSH owns one hundred (100) shares of $10 par value common stock
of Xxxxxxxx Tel, Inc., a Pennsylvania corporation ("MT") (MSH and MT and all
subsidiaries and all Affiliates thereof hereinafter referred to collectively as
the "COMPANY"), constituting all of the issued and outstanding shares of capital
stock of MT (the "MT CAPITAL STOCK") (any and all shares, options, warrants,
rights and interests, legal or equitable, in or with respect to the MSH Capital
Stock and/or the MT Capital Stock hereinafter referred to collectively as the
"SHARES").
WHEREAS, Company is an operating telephone company that provides wireline
telecommunications services and Internet services in two (2) exchanges in the
Commonwealth of Pennsylvania, Xxxxxxxx and Scenery Hill, serving the boroughs of
Xxxxxxxx and Deemston and several townships, in Washington County, Pennsylvania,
with approximately 2,914 access lines and 331 Internet subscribers
(collectively, the "EXCHANGES") (the business of MSH is hereinafter referred to
as the "COMMUNICATIONS BUSINESS", the "BUSINESS" or the "BUSINESS");
ARTICLE I
PURCHASE OF STOCK
Section 1.1 PURCHASE AND SALE. At the Closing Date, on the terms and
subject to the conditions set forth in this Agreement, the Sellers agree to sell
to the Purchaser, and the Purchaser agrees to purchase from the Sellers, the MSH
Capital Stock.
Section 1.2 PURCHASE PRICE.
(a) The Purchaser shall purchase the shares of MSH Capital Stock
from the Sellers, at a price per share of MSH Capital Stock (the "PRICE PER
SHARE") equal to the Adjusted Purchase Price (as defined below) divided by 306
(being the total number of shares of MSH Capital Stock issued and outstanding as
of the Closing Date). The Adjusted Purchase Price (as defined in accordance with
Section 1.2(d) below) shall be the sum of Eleven Million Four Hundred Thousand
and No/100 Dollars ($11,400,000) (the "Base Purchase Price"), minus the
Company's "TOTAL LONG TERM DEBT" as of the Closing Date as defined in accordance
with Section 1.2(b) below, and plus or minus "NET WORKING CAPITAL" as defined in
accordance with Section 1.2(c) below. The Adjusted Purchase Price shall be
payable in accordance with this Article I, subject to the provisions of Section
9.2 hereof.
(b) The Base Purchase Price shall be adjusted by subtracting from it
the Total Long Term Debt on the Closing Date. For the purposes hereof, Total
Long Term Debt shall be defined as the Company's current Total Long Term Debt on
the Closing Date, computed in accordance with GAAP, consistently applied (on a
consolidated basis) and shall not include any portion of the Company's debt
included as a current liability in the computation of Net Working Capital. The
Base Purchase Price shall be decreased, dollar for dollar, to the extent of the
Company's Total Long Term Debt on the Closing Date. The Total Long Term Debt of
the Company shall be based on an estimated closing balance sheet of the Company,
which shall be delivered to the Purchaser at least twenty (20) days prior to the
Closing Date, prepared in good faith by the Company with the assistance of Xxxxx
Xxxxxx Company LLP, subject to the Purchaser's review and approval thereof,
which shall not be unreasonably withheld.
(c) The Base Purchase Price shall be adjusted by adding to it or
subtracting from it, as the case may be, the Net Working Capital on the Closing
Date. For the purposes hereof, Net Working Capital shall be defined as the
Company's current assets minus current liabilities, computed in accordance with
GAAP, consistently applied (on a consolidated basis). To the extent the
Company's current assets exceed the Company's current liabilities on the Closing
Date, the Base Purchase Price shall be increased, dollar for dollar. To the
extent the Company's current liabilities exceed the Company's current assets on
the Closing Date, the Base Purchase Price shall be decreased, dollar for dollar.
The Net Working Capital of the Company shall be based on an estimated closing
balance sheet of the Company, which shall be delivered to the Purchaser at least
twenty (20) days prior to the Closing Date, prepared in good faith by the
Company with the assistance of Xxxxx Xxxxxx Company LLP, subject to the
Purchaser's review and approval thereof, which shall not be unreasonably
withheld. Sellers shall include in their taxable income all of the income
attributable to the Company through and including the day immediately prior to
the Closing Date and shall make all such elections that are necessary to achieve
or accomplish this result.
(d) The sum of the Base Purchase Price minus the Total Long Term
Debt, plus or minus the Net Working Capital, all as determined above, shall be
referred to herein as the "ADJUSTED PURCHASE PRICE."
(e) Any net deferred income tax asset or liability arising from the
difference in basis of assets and liabilities between financial statement
reporting and federal income tax
2
reporting of MSH arising from the termination of the MSH S election as a result
of Purchaser's acquisition of the MSH Capital Stock, which will be included in
the estimated closing balance sheet and the Closing Balance Sheet, (as defined
in accordance with Section 1.3 below) shall not be considered long term debt in
the computation of Total Long Term Debt nor an addition or a deduction in the
computation of Net Working Capital.
Section 1.3 POST-CLOSING ADJUSTMENTS TO THE ADJUSTED PURCHASE PRICE. The
Adjusted Purchase Price payable by the Purchaser to the Sellers on the Closing
Date pursuant to Sections 1.2 and 9.2 hereof may be adjusted as follows. Within
ninety (90) days after the Closing Date, the Purchaser shall prepare and submit
to the Sellers a Closing balance sheet for the Company as of the close of
business on the day immediately prior to the Closing Date (the "CLOSING BALANCE
SHEET"), which shall be prepared in accordance with GAAP and consistent with the
Company's past practices, and mutually acceptable to the Sellers and the
Purchaser and their respective independent public accountants. If the parties
are unable to agree upon a mutually acceptable Closing Balance Sheet, the issue
shall be submitted to an independent certified public accounting firm acceptable
to the parties which shall prepare the Closing Balance Sheet in accordance with
GAAP and the cost thereof shall be borne by the parties equally. Upon the
Sellers' and the Purchaser's mutual agreement as to the form and content of the
Closing Balance Sheet, the amount of the Adjusted Purchase Price shall be
increased or decreased, as the case may be, by the difference, if any, between
the Net Working Capital and the Total Long Term Debt determined in good faith as
of the Closing Date and the Net Working Capital and the Total Long Term Debt as
such is determined based on the Closing Balance Sheet. If as a result of the
foregoing post-Closing adjustment the Adjusted Purchase Price is increased, the
Purchaser shall pay the Sellers the amount of such increase by wire transfer of
same-day funds within ten (10) business days of the date on which the parties
agree on the Closing Balance Sheet. If as a result of the post-Closing
adjustment the Adjusted Purchase Price is decreased, the Sellers shall refund to
the Purchaser the amount of such decrease by wire transfer of same-day funds
within ten (10) business days of the date on which the parties agree on the
Closing Balance Sheet.
Section 1.4 EXCLUDED ASSETS AND LIABILITIES. Notwithstanding that this
Agreement relates to the purchase of capital stock from the Sellers by the
Purchaser, which results in the Company retaining any and all of its assets and
liabilities, it is understood and agreed that the Sellers shall remove from the
Company's premises prior to the day immediately prior to the Closing Date
and/or, as appropriate, remove from the Company's books and records, only those
particular assets set forth on Schedule 1.4 hereto (the "Excluded Assets").
Further, the Sellers shall assume any and all liabilities set forth on Schedule
1.4 hereto (the "Excluded Liabilities"). The Purchaser agrees that it shall
cause the Company to execute, and the Sellers agree to execute, any and all such
bills of sale, deeds, assignments and/or agreements as may be necessary to
transfer title to the Excluded Assets to the Sellers and to assign and/or
transfer the Excluded Liabilities to the Sellers. The parties hereto further
agree that no other assets of the Company, whether tangible or intangible, shall
have been or shall be removed from the Company's premises or from the Company's
books and records except in the ordinary course of the Company's Business as
provided herein from and after December 31, 2000 through the Closing Date.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby represent and warrant to the Purchaser as follows (to
the extent a representation is modified by a knowledge requirement, it shall
speak to the knowledge of any or all of the Sellers and the officers, directors,
managers and bookkeeper of the Company), with respect to each of MSH, MT and all
subsidiaries and Affiliates thereof (in other words, if any representation or
warranty or covenant or agreement would be untrue as to any of MSH, MT or any of
their subsidiaries or Affiliates then the Sellers must so disclose any such
untruth):
Section 2.1 CORPORATE ORGANIZATION. Both MSH and MT are corporations duly
organized, validly existing and in good standing with perpetual duration under
the laws of their respective jurisdiction of incorporation, with full corporate
power and authority to own, operate and lease their properties and to conduct
their business as presently conducted. No adverse effect will occur to the
Company as a result of (i) the failure of either MSH or MT or their Shareholders
to hold Shareholders' meetings, (ii) the failure of either MSH or MT or their
Shareholders to properly elect the members of the Board of Directors, (iii) or
the failure of the MSH Board of Directors to authorize the redemption of MSH
Capital Stock. No adverse effect will occur to the Company as a result of the
incorporation of or the existence of Xxxxxxxx and Scenery Hill Systems, Inc.
Each Seller is a resident or a trust of the state set forth with respect to such
Sellers on Schedule 2.7 hereto. There are no Shareholder Agreements in place
among any of the Sellers and/or the Company. MSH and MT are qualified to do
business and are in good standing in every jurisdiction in which the conduct of
their business, the ownership or lease of their properties, or the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby requires them to be so qualified. True, complete and correct copies of
the Company's charters and bylaws (and all amendments thereto) as presently in
effect have been delivered to the Purchaser.
Section 2.2 AUTHORIZATION. The Sellers and the Company each have full
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors (and as appropriate,
the shareholders) of MSH has duly authorized the execution, delivery and
performance of this Agreement, and no other corporate proceedings on its part
are necessary to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement constitutes a legal, valid and binding obligation of each of the
Sellers and MSH enforceable against each such party in accordance with its
terms, subject to equitable considerations and the effect of bankruptcy and
other laws affecting the rights of creditors generally. The Sellers will, at the
Closing, have full power and authority to deliver the MSH Capital Stock and the
certificates evidencing the MSH Capital Stock to the Purchaser free and clear of
all Liens as provided for herein. MSH is the owner, free and clear of all Liens,
of the MT Capital Stock
Section 2.3 NO VIOLATION. Except as set forth on Schedule 2.3, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by each of the Sellers and MSH do not and
will not (a) conflict with or result in a breach of the terms, conditions or
provisions of, (b) constitute a default or event of default under (with
4
due notice, lapse of time or both), (c) result in the creation of any Lien upon
the Company or its capital stock or assets pursuant to, (d) give any third party
the right to accelerate any obligation under, (e) result in a violation of, or
(f) require any authorization, consent, approval, exemption or other action by,
or notice to, any Person pursuant to (i) the charter or bylaws of the Company,
(ii) any applicable Regulation, (iii) any Order to which either the Sellers or
the Company or any of their properties are subject, or (iv) any Contract to
which the Sellers or the Company or any of their properties are subject. The
Sellers and the Company have complied with all applicable Regulations and Orders
in connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby, subject to the requirements which are
conditions to the Closing.
Section 2.4 SUBSIDIARIES AND INVESTMENTS. Except as set forth on Schedule
2.4, the Company has no subsidiaries or investments in any Person. Attached as
set forth on Schedule 2.4 is a true and complete corporate organizational chart
for the Company. Except as set forth on Schedule 2.4, the transactions
contemplated by this Agreement will not conflict with or result in a breach of
the terms, conditions or provisions of any agreement to which the Company is a
party with respect to any such subsidiaries or investments, nor, with respect to
the Sellers and the Company, shall the transactions contemplated by this
Agreement trigger any purchase, put, call or right of first refusal rights in
any Person, nor shall the transactions contemplated by this Agreement result in
a violation of, or require any authorization, consent, approval, exemption or
other action by or notice to any Person. Any such investments constitute an
asset of the Company and the Company is the only Person with any rights thereto.
Except as set forth on Schedule 2.4, the Company does not owe any indebtedness
to or on account of any of such subsidiaries or investments, nor has the Company
guaranteed any indebtedness on behalf of, or have any other contingent
obligations with respect to, any such subsidiaries or investments, and the
Company has not pledged any such subsidiaries or investments or any other of its
assets in connection with any obligations relating to any such investment or
subsidiary. The Company is not a general partner in any of its investments, nor
is any employee of the Company an officer or director of any such investment
entity. Except as set forth on Schedule 2.4 hereto, the Company is not a party
to any Partnership, Operating, Shareholders' or Stockholders' Agreements with
respect to any of the entities discussed on Schedule 2.4 hereto. Also set forth
on Schedule 2.4 hereto is a listing of all dividends and/or distributions made
with respect to any such subsidiaries and/or investments since December 31,
1996.
Section 2.5 STOCK RECORD BOOK. The stock record books of the Company are
complete and correct in all material respects regarding transactions since 1956.
No shares of capital stock of the Company are currently reserved for issuance
for any purpose or upon the occurrence of any event or condition. The Shares
constitute all of the outstanding capital stock of the Company and the Sellers
own all of the outstanding capital stock of MSH. MSH is the true and lawful
owner of all of the outstanding capital stock of MT. Schedule 2.5 sets forth the
total number of authorized and issued shares of capital stock for each of MSH
and MT.
Section 2.6 CORPORATE BOOKS. The corporate minute books of the Company and
of each of its subsidiaries are complete and correct in all material respects
since 1985 and contain signed minutes of all of the proceedings of the
shareholders and directors of the Company and of each of its subsidiaries since
1985. To the best of the Sellers' knowledge, the corporate minute books of the
Company and each of its subsidiaries are complete and correct in all material
5
respects since incorporation until 1985 and contain signed minutes of all of the
proceedings of the shareholders and directors of the Company and of each of its
subsidiaries since incorporation until 1985. A true and complete list of the
directors and officers of the Company and of each of its subsidiaries as of the
date hereof is set forth on Schedule 2.6.
Section 2.7 TITLE TO STOCK. The Shares are owned of record by those
shareholders and only such shareholders in such amounts as are set forth on
Schedule 2.7 hereto. No shares of preferred stock or other class of capital
stock are authorized, issued or outstanding with respect to the Company or any
of its subsidiaries. The Shares have been duly authorized and validly issued and
are fully paid and non-assessable. The Shares were issued pursuant to applicable
exemptions from registration under Federal securities laws and the securities
laws of the Commonwealth of Pennsylvania, are owned by the Sellers and will be
sold pursuant hereto free and clear of all Liens. Upon payment of the Adjusted
Purchase Price to the Sellers in accordance with this Agreement, the Sellers
will convey to the Purchaser good and marketable title to the MSH Capital Stock
and thereby in the MT Capital Stock, free and clear of all Liens whatsoever. The
assignments, endorsements, stock powers and other instruments of transfer
delivered by the Sellers to the Purchaser at the Closing will be sufficient to
transfer the Sellers' entire interest, and all of the interests, legal and
beneficial, of Sellers and of all other Persons, in and to the MSH Capital Stock
and thereby in the MT Capital Stock and in the capital stock of each other
subsidiary of the Company. No dividends or other distributions are owed by the
Company in connection with any of the Shares and, except as specifically set
forth on the Financial Statements or on Schedule 2.7 hereto, none have been made
to any shareholder of the Company or to any of the Sellers since at least
December 31, 1996.
Section 2.8 OPTIONS AND RIGHTS. There are no outstanding subscriptions,
options, warrants, rights, puts, calls or other Contracts by which the Company
is bound to issue or to repurchase or otherwise acquire shares of its capital
stock, or pursuant to which any Person has a right to purchase or to acquire,
through conversion or otherwise, shares of the Company's capital stock.
Section 2.9 FINANCIAL STATEMENTS. The Sellers have delivered to the
Purchaser correct and complete copies of (i) the audited consolidated balance
sheets of the Company as of December 31, 1997, December 31, 1998, December 31,
1999 and December 31, 2000 and the related statements of income, cash flow and
retained earnings for the fiscal year reporting periods then ended, together
with all notes and schedules thereto (the "FINANCIAL STATEMENTS") and (ii) the
unaudited balance sheet of the Company as of the period ending February 28, 2001
and the related statement of income for such period then ended (the foregoing
unaudited statements, with all monthly unaudited statements delivered hereafter,
the "UNAUDITED FINANCIAL STATEMENTS"). The Financial Statements have been
audited without qualification by Xxxxx Xxxxxx Company LLP, independent auditors
for the Company. The Financial Statements and the Unaudited Financial Statements
(a) have been prepared in accordance with the books and records of the Company
and (b) fairly present the financial condition and results of operations and
cash flows of the Company as of, and for the respective periods ended on, such
dates, all in conformity with GAAP consistently applied, except, with respect to
the Unaudited Financial Statements, for adjustments and notes that would result
from an audit. Since December 31, 2000 and except as fully set forth in the
Financial Statements and the Unaudited Financial Statements, the Company has no
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
6
whether due or to become due, whether known or unknown, and regardless of when
asserted) arising out of transactions or events heretofore entered into or any
action or inaction or state of facts existing, with respect to, or based upon
transactions or events heretofore occurring.
Section 2.10 EMPLOYEES.
(a) Schedule 2.10 sets forth a list of all of the Company's
employees, officers, directors, consultants and independent contractors,
together with a description of any Contract regarding the terms of service and
the rate and basis for total compensation of such persons.
(b) Except as set forth on Schedule 2.10 hereto, the Company has
paid or made provision for the payment of all salaries and accrued wages,
accrued vacation and sick leave, and any other form of accrued, but unpaid,
compensation, and has complied in all material respects with all applicable
laws, rules and regulations relating to the employment of labor, including those
relating to wages, hours, collective bargaining and the payment and withholding
of taxes, and has withheld and paid to the appropriate governmental authority,
or is holding for payment not yet due to such authority, all amounts required by
law or agreement to be withheld from the wages or salaries of its employees. No
amounts have been accrued on the Company's books for vacation or sick leave in
excess of the current year's obligations and no such obligations exist. No
contracts or provisions exist that would obligate the Company to pay any
severance compensation to any employee should his or her employment with the
Company be terminated for any reason from and after the date hereof. No
contracts or provisions exist that would obligate the Company to pay any amounts
to any Person upon the change of control of the Company.
(c) Except as set forth on Schedule 2.10 hereto, the Company is not
a party to any (i) outstanding employment agreements or contracts with officers
or employees that are not terminable at will, or that provide for payment of any
bonus or commission or severance compensation, (ii) agreement, policy or
practice that requires it to pay termination or severance pay to salaried,
exempt, non-exempt or hourly employees, (iii) collective bargaining agreement or
other labor union contract applicable to persons employed by the Company, nor do
the Sellers or the officers, directors, managers or bookkeeper of the Company
know of any activities or proceedings of any labor union to organize any such
employees. The Company has furnished to the Purchaser complete and correct
copies of all such agreements, if any ("EMPLOYMENT AND LABOR AGREEMENTS"). The
Company has not breached or otherwise failed to comply with any provisions of
any Employment or Labor Agreement.
(d) Except as set forth on Schedule 2.10 hereto, (i) there is no
unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB"), (ii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or, to the Sellers' or the
Company's officers', directors', managers' or bookkeeper's knowledge,
threatened, against or affecting the Company, and the Company has not
experienced any strike, material slowdown or material work stoppage, lockout or
other collective labor action by or with respect to employees of the Company,
(iii) there are no charges with respect to or relating to the Company pending
before the Equal Employment Opportunity Commission, the Department of Labor or
any state, local or foreign agency responsible for the prevention of unlawful
employment practices, and (iv) the Company has not received formal notice from
any
7
Federal, state, local or foreign agency responsible for the enforcement of labor
or employment laws of an intention to conduct an investigation of the Company
and, to the knowledge of the Sellers and/or the officers, directors, managers or
bookkeeper of the Company, no such investigation is in progress.
Section 2.11 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule
2.11, since December 31, 2000, there has been no (a) Material Adverse Change in
the business, properties, financial statements, business prospects, condition
(financial or otherwise) or results of operations of the Company, (b) theft,
damage, destruction, removal or loss of assets or properties, whether covered by
insurance or not, having a Material Adverse Effect on the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company, (c) declaration, setting aside or payment of any dividend or
distribution (whether in cash, stock or property) in respect of the Shares, or
any redemption of the Shares, (d) increase in the compensation payable to or to
become payable by the Company to its employees, officers, directors, consultants
or independent contractors except in the ordinary course of business, (e) entry
by the Company into any Contract not in the ordinary course of business,
including, without limitation, Contracts relating to any borrowing or capital
expenditures, (f) change in accounting methods or principles used by the
Company, except for any such change which is necessitated by a change in GAAP,
or required by the FCC or Pennsylvania Public Utility Commission ("PPUC") (which
such changes shall be set forth on Schedule 2.11 hereto), (g) operation of the
Company's business other than in the ordinary course, (h) sale, assignment or
transfer of any assets or properties of the Company except in the ordinary
course of business, or as permitted by Section 1.4 of this Agreement, (i)
amendment or termination of any of the Company's Permits or Contracts, (j)
waiver or release of any material right or claim of the Company, (k) labor
dispute or union activity which affects the operation of the Company, and (l)
agreement by either the Sellers or the Company to take any of the actions
described in the preceding clauses (a) through (k), except as contemplated by
this Agreement.
Section 2.12 CONTRACTS.
(a) Generally. Except as listed on Schedule 2.12, the Company is
not a party to any Contract relating to:
(i) Bonus, pension, profit sharing, retirement, stock option,
employee stock purchase or other plans providing for deferred
compensation.
(ii) Collective bargaining agreements or any other Contract
with any labor union.
(iii) Hospitalization or medical insurance or other welfare
benefit plans or practices.
(iv) Loans to its employees, officers, directors, shareholders
or Affiliates.
(v) The borrowing or loaning of money to or from any Person or
the mortgaging, pledging or otherwise placing a Lien on any asset of the
Company, including, but not limited to, any Contract with respect to the
Company's indebtedness.
8
(vi) A guarantee of any obligation.
(vii) The ownership, lease (whether as lessee or lessor) or
operation of any property, real or personal.
(viii) Intangible property (including Proprietary Rights).
(ix) Warranties with respect to its services rendered or its
products sold or leased.
(x) Registration or preemptive rights with respect to any
securities.
(xi) Prohibitions preventing it from freely engaging in any
business.
(xii) The purchase, acquisition, disposition or supply of
inventory and/or other property and assets.
(xiii) Employees, independent contractors, consultants, or
other agents.
(xiv) Sales, commissions, advertising or marketing.
(xv) Unconditional purchase or payment obligations.
(xvi) Agreements between the Sellers and customers of the
Business.
(xvii) Agreements pertaining to the providing of Internet
access or service by the Company.
(xviii) Leases, licenses, easements, rights of way, pole
attachment agreements, and license agreements for joint use of poles and
other agreements regarding property rights to earth stations, utility
poles, real property, fixtures and other similar items used in the
operation of the Business.
(xix) The grant or franchise of telephone franchise rights.
(xx) Any investment or subsidiary of the Company, including,
but not limited to, those shown on Schedule 2.4 hereto.
(xxi) Any other Contract not of the type covered by any of the
foregoing items of this Section 2.12(a) requiring total payments by the
Company in excess of ten thousand dollars ($10,000).
(b) Compliance. The Company has performed all material obligations
required to be performed by it, and is not in receipt of any claim of default or
breach or notice of audit, under any Contract to which it is subject (including,
without limitation, those required to be disclosed on Schedule 2.12). Except as
disclosed on Schedule 2.12, no event has occurred which with the passage of time
or the giving of notice or both would result in a material default, breach or
event of non-compliance by the Company under any Contract to which it is
subject. Except as disclosed on Schedule 2.12, the Company has no present
expectation or intention of
9
not fully performing all of its obligations under any Contract to which it is
subject and has no knowledge of any breach or anticipated breach by any other
party to any Contract to which it is subject.
Section 2.13 TRUE AND COMPLETE COPIES. The Sellers and the Company have
delivered to the Purchaser true and complete copies of all Contracts and
documents listed in the Schedules to this Agreement, as well as of all minute
books and stock books of the Company and of each of its subsidiaries. The stock
books are current and contain the true and complete records kept of such
companies since 1956. The minute books are current and contain the true and
complete records kept of such companies since 1985 and to the best of the
Seller's knowledge, the minute books contain true and complete records kept of
such companies from incorporation until 1985.
Section 2.14 TITLE AND RELATED MATTERS.
(a) Owned Property, Liens. Set forth on Schedule 2.14(a) is a
description of all real and personal property owned or used by the Company. The
Company has valid and marketable title to all such property, free and clear of
all Liens, except Permitted Liens. All properties used in the Company's business
operations as of December 31, 2000 are reflected in the Financial Statements in
accordance with and to the extent required by GAAP and, as of the date hereof,
are fully set forth on Schedule 2.14(a) hereto. Sellers and the Company have
delivered, with respect to any real property owned by the Company, true and
complete copies of all deeds, title policies, environmental assessments,
surveys, and other title documents relating to such real property. Further, the
Company has valid, good and marketable title to each of its investments set
forth on Schedule 2.4 hereto, free and clear of all Liens, except as set forth
on Schedule 2.14(a) hereto.
(b) Leased Property. Set forth on Schedule 2.14(b) is a description
of all real and personal property leased by the Company. Except as otherwise set
forth on Schedule 2.14(b), the Company's leases are in full force and effect and
are valid and enforceable in accordance with their respective terms. There
exists no event of default or event which constitutes or would constitute (with
notice or lapse of time or both) a default by the Company or any other Person
under any such lease, and neither the Sellers nor the Company have received
notice of such default or event. All rent and other amounts due and payable with
respect to each of the Company's leases have been paid through the date of this
Agreement. Except as set forth on Schedule 2.14(b), neither the Sellers nor the
Company have received notice that the landlord with respect to any real property
or personal property lease would refuse to renew such lease upon expiration of
the period thereof upon substantially the same terms, except for rent increases
consistent with past experience or current market rates. The Sellers have
delivered to the Purchaser, with respect to any leased real or personal
property, true and complete copies of all such leases and all amendments,
supplements thereto or memoranda thereof.
(c) Regulatory/Zoning Compliance. Except as set forth on Schedule
2.14(c), the real property owned or leased by the Company and the buildings,
structures and improvements included within such real property (collectively,
the "IMPROVEMENTS") comply with all material applicable restrictions, building
ordinances and zoning ordinances and all Regulations of the applicable health
and fire departments. No alteration, repair, improvement or other work which
could give rise to a Lien has been performed with respect to such
10
Improvements within the last four (4) months. The Company's owned or leased real
property and its continued use, occupancy and operation as currently used,
occupied and operated does not constitute a nonconforming use under any
Regulation or Order affecting such real property, and the continued existence,
use, occupancy and operation of such Improvements is not dependent on any
special permit, exception, approval or variance. There is no pending or, to the
Sellers' knowledge or the knowledge of the Company's officers, directors,
managers and bookkeeper, threatened or proposed action or proceeding by any
Authority to modify the zoning classification of, to condemn or take by the
power of eminent domain (or to purchase in lieu thereof), to classify as a
landmark, to impose special assessments on or otherwise to take or restrict in
any way the right to use, develop or alter all or any part of the Company's
owned or leased real property.
(d) Utilities. The real property owned or leased by the Company has
access, sufficient for the conduct of the Company's Business as presently
conducted and proposed to be conducted, to public roads and to all utilities,
including electricity, sanitary and storm sewer, potable water, natural gas and
other utilities used in the operation of the Company's Business as presently
conducted.
(e) Condition. Except as set forth on Schedule 2.14(e), since
December 31, 2000, the Company has not sold, transferred, leased, distributed or
disposed of any of its assets or properties, except for (i) transactions in the
ordinary and regular course of business, or (ii) as otherwise consented to in
writing by the Purchaser. The Company owns, or has all rights necessary to use,
all properties and assets necessary for the conduct of its business as presently
conducted. The assets and properties owned, leased or used by the Company in the
conduct of the Business are in good condition (reasonable wear and tear
excepted), are suitable for their respective uses, and comply with all
applicable Regulations. Further such assets and properties constitute all of the
assets and properties necessary for the Company to conduct its Business as now
conducted.
Section 2.15 LITIGATION. Except as set forth on Schedule 2.15, there is
(a) no Claim pending or, to the Sellers' knowledge, threatened against the
Company, (b) no Claim by the Company pending or threatened against any Person,
(c) no outstanding Order relating to the Company, and (d) no Claim by any Person
relating to the Shares.
Section 2.16 TAX MATTERS.
(a) Generally. Except as set forth on Schedule 2.16, MSH, MT and all
their subsidiaries have timely filed all Federal, state, local and foreign tax
reports, returns, information returns and any other documents required to be
filed by each (collectively, "TAX RETURNS") and have duly paid all Taxes shown
to be due and payable on such Tax Returns and all estimated or advance payments
required by law. All Taxes for periods ending on or prior to or including the
Closing Date have been or will be as of the Closing Date fully paid or reserved
against on the Unaudited Financial Statements and on the books of MSH, MT and
all their subsidiaries, as appropriate, in accordance with GAAP. All Taxes which
are required to be withheld or collected by MSH, MT and all their subsidiaries
have been duly withheld or collected and, to the extent required, have been paid
to the proper Federal, state, local or foreign authorities or properly
segregated or deposited as required by applicable Regulations. There are no
Liens for Taxes
11
upon any property or assets of MSH, MT or any of their subsidiaries except for
Liens for Taxes not yet due and payable or for Taxes being contested in a manner
permitted by applicable law (all as disclosed on Schedule 2.16 hereto). Since
1985, except as disclosed on Schedule 2.16, neither MSH, MT nor any of their
subsidiaries have requested an extension of time within which to file any Tax
Return and none have waived the statute of limitations on the right of the IRS
or any other taxing authority to assess or collect additional Taxes or to
contest the information reported on any Tax Return. All Taxes owed by any
affiliated group of which MSH, MT or any of their subsidiaries has at any time
been a member (whether or not shown on any Tax Return) have been paid for each
taxable period during which MSH, MT or any of their subsidiaries was a member of
the affiliated group. Neither MSH, MT nor any of their subsidiaries has any
liability for the unpaid Taxes of any Person under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise.
(b) Good Faith. All Tax Returns described in Section 2.16(a) have
been prepared in good faith and are correct and complete in all respects, and
there is no basis for assessment of any addition to the Taxes shown thereon.
(c) Claims. Except as disclosed on Schedule 2.16, (i) there are no
proceedings, examinations or claims currently pending by any taxing Authority in
connection with any Tax Returns described in Section 2.16(a) nor with respect to
the periods to which such Tax Returns relate, and (ii) there are no unresolved
issues or unpaid deficiencies or outstanding or proposed assessments relating to
any such proceedings, examinations, claims or Tax Returns. None of the Tax
Returns described in Section 2.16(a) currently is under audit or has been
audited. The items relating to the Business, properties and operations of the
Company on the Tax Returns filed by the Company (including the supporting
schedules filed therewith), copies of which have been supplied to the Purchaser,
state accurately, in all respects, the information requested with respect to
MSH, MT and their subsidiaries, which information was derived from the books and
records of the Company.
(d) Course of Business. The Company has not taken any action in
anticipation of the Closing that would have the effect of deferring any
liability for Taxes of MSH, MT or any of their subsidiaries to any period (or
portion thereof) ending after the Closing Date.
(e) Withholdings. All payments for withholding Taxes, unemployment
insurance and other amounts required to be withheld and deposited or paid to any
relevant taxing Authorities have been so withheld, deposited or paid by or on
behalf of MSH, MT and all of their subsidiaries, as appropriate.
(f) Partnerships. Except as disclosed on Schedule 2.16, the Company
is not subject to or party to any joint venture, partnership or other
arrangement or Contract which is treated as a partnership for Federal income tax
purposes. Any tax-sharing agreement between the Company and any other Person
shall terminate as of the Closing Date and any such tax-sharing agreement is
fully disclosed on Schedule 2.16 hereto.
(g) Accounting Method Adjustments. Except as disclosed on Schedule
2.16, the Company will not be required to recognize after the Closing Date any
taxable income in
12
respect of accounting method adjustments required to be made under any
Regulation relating to Taxes, including without limitation, the Tax Reform Act
of 1986 and the Revenue Act of 1987.
(h) Tax Exemptions. None of the assets of the Company constitutes
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the IRC, and the Company is not subject to a lease, safe
harbor lease or other arrangement as a result of which the Company is treated as
the owner of leased property for Federal income tax purposes.
(i) Tax Return Reviews. An accurate and complete description of the
most recent review, if any, of the Tax Returns of the Company by the IRS or any
other taxing Authority is set forth on Schedule 2.16.
(j) Power of Attorney. Except as set forth on Schedule 2.16 hereto,
no power of attorney has been granted by the Company with respect to any matter,
including, without limitation, the payment of Taxes, which is currently in
force.
(k) True and Complete Copies. The Sellers and the Company have
delivered to the Purchaser true and complete copies of all Tax Returns filed by
the Company with respect to its 1995, 1996, 1997, 1998, 1999 and 2000 fiscal
years.
(l) Subchapter S Election. The Company, effective January 1, 1998,
with the consent of the Sellers (who were then all of the shareholders of MSH),
elected to be taxed as an S corporation under applicable provisions of federal
and Pennsylvania income tax laws. The Company timely made valid S elections
effective for the Company's fiscal year beginning January 1, 1998, which
elections have remained in effect for its fiscal years thereafter and will
remain in effect through the day immediately prior to the Closing Date. During
the period of time the Company's S elections have been in effect, all taxable
income of the Company has been and will be taxable to the Sellers and the
Sellers have paid or will pay all of the income taxes associated with the
Company's income from January 1, 1998, through the day immediately prior to the
Closing Date.
Section 2.17 BANK AND BROKERAGE ACCOUNTS. Set forth on Schedule 2.17
hereto is a list of all of the bank and brokerage accounts maintained by the
Company and the authorized signatories for each such account.
Section 2.18 COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS AND ORDERS. The
Company has been and is presently in material compliance with all laws,
ordinances, codes, rules, Regulations and Orders applicable to the conduct of
its Business, including, without limitation, all Regulations relating to health,
sanitation, fire, zoning, building and occupational safety.
Section 2.19 EMPLOYEE BENEFIT PLANS.
(a) Set forth on Schedule 2.19 hereto is a true and complete list
of:
(i) each employee pension benefit plan, as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"),
maintained by the
13
Company or to which the Company or the Sellers are required to make
contributions ("PENSION BENEFIT PLAN"); and
(ii) each employee welfare benefit plan, as defined in Section
3(1) of ERISA, maintained by the Company or to which the Company or the
Sellers are required to make contributions ("WELFARE BENEFIT PLAN").
True and complete copies of all Pension Benefit Plans and Welfare Benefit
Plans (collectively, "ERISA PLANS") have been delivered to Purchaser together
with, as applicable with respect to each such ERISA Plan, trust agreements,
summary plan descriptions, all IRS determination letters or applications
therefor with respect to any Pension Benefit Plan intended to be qualified
pursuant to Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"CODE"), and valuation or actuarial reports, accountant's opinions, financial
statements, IRS Form 5500s (or 5500-C or 5500-R) and summary annual reports for
the last three years.
(b) With respect to the ERISA Plans, except as set forth on Schedule
2.19:
(i) there is no ERISA Plan which is a "multi-employer" plan as
that term is defined in Section 3(37) of ERISA ("MULTI-EMPLOYER PLAN");
(ii) no event has occurred or (to the knowledge of the Sellers
or Company) is threatened or about to occur which would constitute a
prohibited transaction under Section 406 of ERISA or under Section 4975 of
the Code which could have an adverse effect on the Company or on the
Company's participation, the participation of the Company's employees and
the participation of the fiduciaries of the ERISA Plan with respect to the
Company's participation;
(iii) with respect to the Company's participation, the
participation of the Company's employees and the participation of the
fiduciaries of the ERISA Plan in connection with the Company's
participation, each ERISA Plan has operated since its inception in
accordance with the reporting and disclosure requirements imposed under
ERISA and the Code and has timely filed Form 5500 (or 5500-C or 5500-R)
and predecessors thereof; and
(iv) no ERISA Plan is liable for any Federal, state, local or
foreign Taxes.
(c) Each Pension Benefit Plan intended to be qualified under Section
401(a) of the Code:
(i) has been qualified, from its inception, under Section
401(a) of the Code, and the trust established thereunder has been exempt
from taxation under Section 501(a) of the Code and with respect to the
Company's participation, the participation of the Company's employees and
the participation of the fiduciaries of the Pension Benefit Plan in
connection with the Company's participation, each Pension Benefit Plan is
currently in compliance with applicable Federal laws;
14
(ii) has been operated, since its inception, in accordance
with its terms and there exists no fact which would adversely affect its
qualified status; and
(iii) is not currently under investigation, audit or review by
the IRS and (to the knowledge of the Sellers or of the officers,
directors, managers or bookkeeper of the Company) no such action is
contemplated or under consideration and the IRS has not asserted that any
Pension Benefit Plan is not qualified under Section 401(a) of the Code or
that any trust established under a Pension Benefit Plan is not exempt
under Section 501(a) of the Code.
(d) With respect to each Pension Benefit Plan which is a defined
benefit plan under Section 414(j) and each defined contribution plan under
Section 414(i) of the Code:
(i) no liability to the Pension Benefit Guaranty Corporation
("PBGC") under Sections 4062-4064 of ERISA has been incurred by the
Company since the effective date of ERISA and all premiums due and owing
to the PBGC by the Company have been timely paid;
(ii) the PBGC has not notified the Company or any Pension
Benefit Plan of the commencement of proceedings under Section 4042 of
ERISA to terminate any such plan;
(iii) no event has occurred since the inception of any Pension
Benefit Plan or (to the knowledge of the Sellers or of the officers,
directors, managers or bookkeeper of the Company) is threatened or about
to occur which would constitute a reportable event within the meaning of
Section 4043(b) of ERISA;
(iv) No Pension Benefit Plan ever has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code); and
(v) if any of such Pension Benefit Plans were to be terminated
on the Closing Date (A) no liability under Title IV of ERISA would be
incurred by the Company and (B) all benefits accrued with respect to the
Company's participation and the participation of the Company's employees
to the day prior to the Closing Date (whether or not vested) would be
fully funded in accordance with the actuarial assumptions and method
utilized by such plan for valuation purposes.
(e) With respect to each Pension Benefit Plan, Schedule 2.19
contains a list of all Pension Benefit Plans to which ERISA has applied which
have been or are being terminated, or for which a termination is contemplated,
and a description of the actions taken by the PBGC and the IRS with respect
thereto.
(f) The aggregate of the amounts of contributions by the Company
to be paid or accrued under Pension Benefit Plans is $69,622.22 for the 2000
fiscal year and is not expected to exceed approximately $70,856.00 for the 2001
fiscal year, all of which has been properly paid for the fiscal year 2000 and
has been or will be properly accrued or reserved for on the Financial Statements
and Unaudited Financial Statements for the fiscal year 2001. The foregoing
estimate
15
for fiscal year 2001 and the amounts accrued or reserved for on the Unaudited
Financial Statements for fiscal year 2001 do not take into account any
contributions which may be required as a result of overtime pay and/or benefits
which may be paid to employees of the Company; in particular, there could be
significant overtime compensation paid as a result of bad weather conditions. To
the extent required in accordance with GAAP, the Company's Financial Statements
reflect in the aggregate an accrual of all amounts of employer contributions
accrued but unpaid by the Company under the ERISA Plans as of the date of the
Financial Statements.
(g) With respect to any Multi-employer Plan (1) the Company has
not, since its formation, made or suffered a "complete withdrawal" or "partial
withdrawal" as such terms are respectively defined in Sections 4203 and 4205 of
ERISA; (2) there is no withdrawal liability of the Company under any
Multi-employer Plan, computed as if a "complete withdrawal" by the Company had
occurred under each such Plan as of December 31, 2000; and (3) the Company has
not received notice to the effect that any Multi-employer Plan is either in
reorganization (as defined in Section 4241 of ERISA) or insolvent (as defined in
Section 4245 of ERISA).
(h) With respect to the Welfare Benefit Plans:
(i) There are no liabilities of the Company under Welfare
Benefit Plans with respect to any condition which relates to a claim filed
on or before the Closing Date.
(ii) No claims for benefits are in dispute or in litigation
with respect to the participation of the Company or the participation of
the Company's employees.
(i) Set forth on Schedule 2.19 hereto is a true and complete list
of:
(i) each employee stock purchase, employee stock option,
employee stock ownership, deferred compensation, performance, bonus,
incentive, vacation pay, holiday pay, insurance, severance, retirement,
excess benefit or other plan, trust or arrangement which is not an ERISA
Plan whether written or oral, which the Company maintains or is required
to make contributions to; and
(ii) each other agreement, arrangement, and commitment of any
kind, whether written or oral, with any current or former employee,
officer, director or consultant of the Company pursuant to which payments
may be required to be made at any time following the date hereof
(including, without limitation, any employment, deferred compensation,
severance, supplemental pension, termination or consulting agreement or
arrangement).
(j) True and complete copies of all of the written plans,
arrangements and agreements referred to on Schedule 2.19 ("COMPENSATION
COMMITMENTS") have been provided to Purchaser together with, where prepared by
or for the Company, any valuation, actuarial or accountant's opinion or other
financial reports with respect to each Compensation Commitment for the last
three years. There are no unwritten agreements in the nature of Compensation
Commitments in effect.
(k) Each Compensation Commitment:
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(i) since its inception, has been implemented in all material
respects in accordance with its terms;
(ii) is not currently under investigation, audit or review by
the IRS or any other Federal or state agency and (to the knowledge of the
Sellers and Company) no such action is contemplated or under
consideration;
(iii) has no liability for the Company for any Federal, state,
local or foreign Taxes;
(iv) has no claims subject to dispute or litigation;
(v) has met all applicable requirements, if any, of the Code;
and
(vi) has been implemented since its inception in material
compliance with the reporting and disclosure requirements imposed under
ERISA and the Code.
Section 2.20 INTELLECTUAL PROPERTY. Schedule 2.20 sets forth a
complete and accurate list of the Proprietary Rights owned or used by the
Company. The Company has no written documents or oral arrangements relating to
the Company's ownership or use of the Proprietary Rights other than as listed on
Schedule 2.20. No other Person has any rights to such Proprietary Rights, except
pursuant to agreements or licenses specified on Schedule 2.20. To the Sellers'
and Company's knowledge, no other Person is infringing, violating or
misappropriating any such Proprietary Right. If necessary, the Company owns or
holds valid licenses to use all Proprietary Rights used in the operation of its
business as presently conducted and proposed to be conducted, with all such
licenses being specified on Schedule 2.20.
Section 2.21 ENVIRONMENTAL MATTERS. The Company has obtained all
Environmental Permits required in connection with the operation of its business.
The Company is and has been, and is capable of continuing to be, in compliance
in all respects with (i) the terms and conditions of all such Environmental
Permits and (ii) all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables of any
applicable Environmental Law or Regulation, Order, code, plan, decree, judgment,
injunction or demand letter issued, entered, promulgated or approved thereunder.
The Company currently possesses and maintains such Environmental Permits in its
name, and no amendments or modifications to such Environmental Permits or
filings with any permitting Authority are required to permit the acquisition of
the Shares as contemplated hereby. In addition, except as set forth on Schedule
2.21:
(a) Generally. No notice, notification, demand, request for
information, citation, summons or Order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending
or, to the Sellers' and Company's knowledge, threatened by any Authority or
other entity with respect to the Company relating to any Environmental Permit,
license or authorization required in connection with the conduct of the business
of the Company or with respect to the generation, treatment, storage, recycling,
transportation, disposal or Release of any substance regulated under
Environmental Laws ("HAZARDOUS MATERIALS").
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(b) Property.
(i) The Company has not handled any Hazardous Material on any
property now or previously owned or leased by the Company.
(ii) No PCB or asbestos is or has been present at any property
now or previously owned or leased by the Company.
(iii) There are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now or previously owned or
leased by the Company.
(iv) There has been no Release of Hazardous Materials at, on
or under any property now or previously owned or leased by the Company.
(c) Transportation. The Company has not (i) transported or
arranged for the transportation of any Hazardous Material to any location which
is listed on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended "CERCLA"), listed
for possible inclusion on the National Priorities List by the Environmental
Protection Agency in the Comprehensive Environmental Response and Liability
Information System ("CERCLIS") or on any similar state list or which is the
subject of Federal, state or local enforcement actions or other investigations
or (ii) stored, treated, transported or disposed, or arranged for storage,
treatment, transport or disposal of any Hazardous Materials, other than in
compliance with Environmental Law.
(d) Notification of Release. No oral or written notification of a
Release of a Hazardous Material has been filed by or on behalf of the Company,
and no property now or previously owned or leased by the Company is listed or
proposed for listing on the National Priorities List under CERCLA, on CERCLIS or
on any similar state list of sites requiring investigation or clean-up.
(e) Liens. There are no Liens arising under or pursuant to any
Environmental Laws on any of the real property owned or leased by the Company,
and no government actions have been taken or are threatened which could subject
any of such properties to such Liens. The Company is not required to place any
notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(f) Site Assessments. Except as set forth on Schedule 2.21, there
have been no Phase I or Phase II environmental site assessments conducted by or
which are in the possession of the Sellers or the Company in relation to any
property or facility now or previously owned or leased by the Company.
Section 2.22 CAPITAL EXPENDITURES AND INVESTMENTS. The Company has no
outstanding Contracts or commitments for capital expenditures and investments,
except as set forth on Schedule 2.22 attached hereto, which Schedule includes a
list of all disbursements on account of capital expenditures and investments by
the Company since December 31, 2000. There has been no order or ruling from the
PPUC or any other regulatory body and none is threatened or expected by the
Company requiring or recommending that the Company undertake any capital
expenditures or investments. Attached to Schedule 2.22 are copies of the
Company's 2001 and
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2002 fiscal years capital expenditures budgets (by project) and, with respect to
the 2001 budget, a comparison of the actual expenditures to budget (by project)
year to date.
Section 2.23 DEALINGS WITH AFFILIATES. Schedule 2.23 sets forth a complete
and accurate list of all oral or written Contracts between the Company and any
one or more of its Affiliates. Except as set forth on Schedule 2.23, since
December 31, 2000, the Company has not made any payments, loaned any funds or
property or made any credit arrangement with any Affiliate or employee except
for the payment of employee salaries in the ordinary course of business.
Section 2.24 INSURANCE. The Company currently is covered by insurance
policies which provide for coverages that are usual and customary as to amount
and scope in the business of the Company. Descriptions of all such policies,
including the names of the insurer and the insured, the amount of premiums, and
the types and amounts of coverage, are set forth on Schedule 2.24. All of such
policies are in full force and effect, all premiums with respect thereto have
been paid or accrued therefor, and no notice of cancellation or termination has
been received with respect to any such policy. Such policies are sufficient for
compliance with (i) all applicable Regulations and (ii) all Contracts to which
the Company is a party. The Company has not breached or otherwise failed to
perform its obligations under any of such policies, nor has the Company received
any adverse notice from any of the insurers party to such policies with respect
to any alleged breach or failure in connection with any of such policies which
would have a Material Adverse Effect on the Company. Such policies will not
terminate or lapse by reason of the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby. Except as set forth on
Schedule 2.24, there are no pending or, to the Sellers' knowledge or to the
knowledge of the officers, directors, managers or bookkeeper of the Company,
threatened claims under any policy relating to the Company. Also set forth on
Schedule 2.24 is a true and complete listing of any and all claims made by the
Company under any policy since December 31, 1996.
Section 2.25 COMMISSIONS. Except as set forth on Schedule 2.25 hereto,
there are and will be no claims for brokerage commissions, finder's fees, fees
for fairness opinions or financial advisory services or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Sellers, the Company, or
any of their Affiliates (collectively, "Commissions"). Any and all such
Commissions shall be paid solely by the Sellers, and not by MSH, MT or the
Purchaser.
Section 2.26 PERMITS AND REPORTS. Schedule 2.26 hereto sets forth a list
of all permits, licenses, registrations, certificates, franchises, Orders,
approvals or other authorizations from any Authority or other Person including,
without limitation, the FCC and the PPUC and any regulatory or governmental
authorities or municipalities ("PERMITS") issued to or held by the Company in
connection with its operations or the Business. Such Permits are the only
Permits that are required for the Company to conduct its business as presently
conducted. Each such Permit is in full force and effect, and the Company has not
received notice that any suspension, cancellation or modification of the terms
of any such Permit is threatened. The Company is in full compliance with the
terms of each such Permit, and neither the Company nor the Sellers have received
any notice or notification of any reason that any such Permit will not be
renewed, upon substantially the same terms as currently exist, upon expiration
of such Permit. The Company has no franchises, licenses, authorizations or
Orders from any county or municipality,
19
and no franchises, licenses, authorizations or Orders from any county or
municipality are required for the Company to conduct its business as presently
conducted and to the knowledge of the Sellers' and the knowledge of the
officers, directors, managers and bookkeeper of the Company, no franchises,
licenses, authorizations or Orders will be required following the Closing Date
for the Company to conduct its business as presently conducted from any county
or municipality. Except to the extent set forth on Schedule 2.26 hereto, no
other Person is currently operating or providing telephone service within the
Business' telephone exchange area and, to the Sellers' knowledge and knowledge
of the Company's officers, directors, managers and bookkeeper, no Person is
anticipating or contemplating doing so. Except as set forth on Schedule 2.26, no
authorization, consent or notification of or filing with any Authority is
necessary in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, and each Permit issued
to or held by the Company will continue in full force and effect following the
Closing Date. Except as set forth on Schedule 2.26, (i) all returns, reports,
applications, statements and other documents required to be filed by the Company
with the FCC, the PPUC and any other regulatory or governmental authority or
municipality (including taxing authorities) with respect to the Business on or
before the date hereof have been duly filed or properly extended as permitted by
law (details of such extensions, if any, are set forth on Schedule 2.26 hereto)
and are true and complete in all material respects, and (ii) all reporting
requirements of the FCC, the PPUC and other regulatory or governmental
authorities or municipalities (including taxing authorities) having jurisdiction
thereof have been complied with in all material respects. A listing of all
returns, reports, applications, statements and other documents which are unique
to the Business and which were filed by the Company within the past three (3)
years with the FCC, the PPUC and any other regulatory or governmental authority
(including taxing authorities) or municipality is set forth on Schedule 2.26;
true and complete copies of all such returns, reports, applications, statements
and other documents set forth on Schedule 2.26 have been previously provided to
the Purchaser by the Sellers. The transactions contemplated by this Agreement
shall not cause the Business' study area to change. MSH is currently an average
schedule company and neither the Company nor the Sellers have received any
notice or notification of any reason that such study area or average schedule
company status should not continue to be available to the Company after the
Closing Date.
Section 2.27 ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not have
any liability of any nature whatsoever (whether known or unknown, due or to
become due, accrued, absolute, contingent or otherwise), including, without
limitation, any unfunded obligation under employee benefit plans or arrangements
as described in Section 2.19 hereof or liabilities for Taxes (as defined in
Section 2.16 hereof) or liabilities for under-reporting, under-billing or
under-collection of revenues or underpayment of revenues to a third party or
liabilities relating to investments or subsidiaries, except for (i) liabilities
stated or reserved against in the Financial Statements, (ii) current liabilities
incurred in the ordinary course of business and consistent with past practice
after the date of the Financial Statements which, individually and in the
aggregate, do not have, and cannot reasonably be expected to have, a Material
Adverse Effect, and (iii) liabilities disclosed on Schedule 2.27 hereto. All
obligations and liabilities relating in any way to the Company's investments and
subsidiaries (including future capital contributions or guaranty commitments)
are set forth on Schedule 2.4 hereto, setting forth the maximum amount of the
Company's potential obligations and the expected payment schedule therefor. The
Company is not a party to any Contract, or subject to any articles of
incorporation or bylaw provision, any
20
other corporate limitation or any legal requirement which has, or can reasonably
be expected to have, a Material Adverse Effect. Any and all long-term
obligations and liabilities of the Company as of the date hereof are set forth
on Schedule 2.27 hereto.
Section 2.28 YEAR 2000 COMPLIANCE. The Company has reviewed and assessed
all areas within its Business and operations that could be adversely affected by
the "Year 2000 Problem" (that is, the risk that computer applications used by
the Company may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to, including and any date after
December 31, 1999), and has addressed and corrected any Year 2000 Problems. All
computer applications that are material to the Company's Business and operations
are able to perform properly date-sensitive functions for all dates before,
including and after January 1, 2000. The Company has not, as of the date hereof,
experienced any Year 2000 Problems.
Section 2.29 DISCLOSURE. Neither this Agreement nor any of the
attachments, Schedules, Exhibits, written statements, documents, certificates or
other items prepared for or supplied to the Purchaser by or on behalf of the
Sellers or the Company with respect to the transactions contemplated hereby
contains any untrue statement of a material fact or omits any material fact
necessary to make each statement contained herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Sellers as follows:
Section 3.1 CORPORATE ORGANIZATION. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to own,
operate and lease its properties and to conduct its business as presently
conducted and proposed to be conducted. The Purchaser is qualified to do
business and is in good standing in every jurisdiction in which the conduct of
its business, the ownership or lease of its properties, or the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby requires it to be so qualified.
Section 3.2 AUTHORIZATION. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors of the Purchaser has or
will prior to Closing duly authorize the execution, delivery and performance of
this Agreement, and no other corporate proceedings on its part are necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement constitutes
a legal, valid and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms, subject to equitable considerations and
the effect of bankruptcy and other laws affecting the rights of creditors
generally.
Section 3.3 NO VIOLATION. Except as set forth on Schedule 3.3 hereto, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by the Purchaser do not and will not (a)
conflict with or result in a breach
21
of the terms, conditions or provisions of, (b) constitute a default or event of
default under (with due notice, lapse of time or both), (c) result in the
creation of any Lien upon the Purchaser or its capital stock (except upon the
Shares as part of Purchaser's financing of this transaction) or assets pursuant
to, (d) give any third party the right to accelerate any obligation under, (e)
result in a violation of or (f) require any authorization, consent, approval,
exemption or other action by, or notice to, any Person pursuant to the charter
or bylaws of the Purchaser, any applicable Regulation (including, without
limitation, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976), any Order
to which the Purchaser is subject or any Contract to which the Purchaser or any
of its properties are subject. The Purchaser has complied with all applicable
Regulations and Orders in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated hereby, subject
to the requirements which are conditions to the Closing.
Section 3.4 INVESTMENT INTENT. The Purchaser represents and warrants to
the Sellers that it is purchasing the Shares for investment purposes and not
with a view to distribution thereof and agrees that it shall not make any sale,
transfer, or other disposition of the Shares in violation of the Securities Act
of 1933, as amended, or the Regulations thereunder or under any other applicable
securities laws.
ARTICLE IV
COVENANTS OF THE SELLERS AND THE COMPANY
Subject to the provisions of Section 4.14 hereof, from and after December
31, 2000 until the Closing Date, each of the Sellers and the Company agree that
they shall have acted and shall act, or refrain from acting where so required,
to comply (and in the case of the Sellers, to cause the Company to comply) with
the following:
Section 4.1 REGULAR COURSE OF BUSINESS.
(a) Generally. Subject to the provisions of Section 1.4 the Company
shall operate its business diligently and in good faith, consistent with past
management practices, shall maintain all of its properties in customary repair,
order and condition, shall maintain (except for expiration due to lapse of time
or cancellation by another party pursuant to the terms thereof) in the ordinary
course of business all leases and Contracts in effect without change except as
expressly provided herein and shall comply with the provisions of all
Regulations, Orders and Permits applicable to the Company and the conduct of its
business. The Company shall maintain its financial and accounting records in a
manner consistent with that employed at December 31, 2000.
(b) Compensation. The Company shall not hire any employee other than
in the ordinary course of business, consistent with past management practices,
and with contemporaneous written notice of the same to the Purchaser, and shall
not grant any increase in the compensation of any employee, officer, board
member, consultant or independent contractor except in the ordinary course of
business consistent with past management practices and with contemporaneous
written notice of the same to the Purchaser. The Company shall be entitled to
pay, but not obligated to pay, on or before the last business day prior to the
Closing Date, a
22
bonus in amounts not in excess of six (6) months compensation, at current rates
to each employee.
(c) Insurance. The Company shall maintain current its insurance
policies with the coverage and in the amounts set forth on Schedule 2.24.
(d) Claims. The Company shall promptly notify the Purchaser of any
Claims that may be commenced against it, as well as of any threatened, suspected
or expected Claims of which the Company or the Sellers may be aware.
(e) Supplement. From time to time prior to the Closing Date, the
Sellers shall promptly notify the Purchaser of any changes with respect to the
information set forth in this Agreement or the Schedules hereto and of any
matters hereafter arising which, if in existence at the date hereof, would have
been required to be set forth in this Agreement or the Schedules hereto.
Section 4.2 AMENDMENTS. No change or amendment shall be made to the
charter or bylaws of the Company, and the Company shall not merge into or
consolidate with any other Person or change the character of its Business.
Section 4.3 CAPITAL CHANGES. The Company shall not issue, sell, purchase
or redeem any Shares of its capital stock of any class or issue or sell any
securities convertible into, or options, warrants or other rights to subscribe
for, any Shares of its capital stock. The Company shall not pledge or otherwise
encumber any Shares of its capital stock, nor shall the Company allow the
transfer of any Shares of its capital stock on its stock transfer ledger or
other books and records.
Section 4.4 DIVIDENDS. The Company shall not declare, pay or set aside for
payment any dividend or other distribution in respect of its capital stock
without contemporaneous written notice of the same to the Purchaser.
Section 4.5 CAPITAL EXPENDITURES; TRANSACTIONS WITH AFFILIATES. The
Company shall not make any capital expenditures, or commitments with respect
thereto, except as provided on Schedule 2.22. Further, the Company shall timely
make the capital expenditures set forth on Schedule 2.22 or discuss with the
Purchaser, after written notice of the Company's proposed changes, its reasons
for not so performing. The Company shall also make capital expenditures in the
ordinary course consistent with past practices. The Company shall not make or
accept any loan or advance to or from any of its Affiliates or Affiliates of the
Sellers.
Section 4.6 BORROWING. The Company shall not incur, assume or guarantee
any indebtedness or obligation not reflected on either the Financial Statements
or on Schedule 2.22, except for amounts not to exceed ten thousand dollars
($10,000) in the ordinary course of business. Further, the Company shall not
incur, assume or guarantee any indebtedness or obligation of any of its
subsidiaries or investments.
Section 4.7 PROPERTY. Except as permitted under Section 1.4, the Company
shall not sell, transfer, or dispose of any of its assets and properties, other
than in the ordinary course of business, or allow any of its assets and
properties to become subject to a Lien.
23
Section 4.8 OTHER COMMITMENTS. Except as set forth in this Agreement or
permitted in writing by the Purchaser from and after the date hereof, the
Company shall not enter into any transaction, make any commitment or incur any
obligation other than in the ordinary course of business.
Section 4.9 INTERIM FINANCIAL INFORMATION, INVESTMENT K-1S. Except as set
forth in Schedule 4.9 hereof, from and after the date hereof, the Company shall
supply the Purchaser with a copy of its internal monthly Unaudited Financial
Statements within forty-five (45) days after the end of each month. Further, the
Company shall provide the Purchaser with any and all financial statements, K-1s
and/or reports received with respect to investments set forth on Schedule 2.4
hereto promptly following receipt thereof by the Company or the Sellers.
Section 4.10 CONSENTS AND AUTHORIZATIONS. The Sellers and the Company
shall, promptly after the date hereof, commence efforts to obtain the consents,
waivers and authorizations listed on Schedules 2.3 and 2.26 hereto. The Sellers
and the Company shall diligently pursue and use their best efforts to obtain
such consents, waivers and authorizations as promptly as practicable prior to
the Closing Date.
Section 4.11 ACCESS. Each of the Sellers and the Company shall afford to
the Purchaser and its counsel, accountants, agents and other authorized
representatives and to financial institutions specified by the Purchaser
reasonable access during business hours to the Company's plants, properties,
books and records in order that the Purchaser may have full opportunity to make
such reasonable investigations as it shall desire to make of the affairs of the
Company. The Company shall cause its officers, employees and auditors to furnish
such additional financial and operating data and other information as the
Purchaser or its lender shall from time to time reasonably request.
Section 4.12 NOTICE OF TRANSFER. Each of the Sellers and the Company shall
cooperate in providing any required notices to the appropriate Authority
regarding any issues of ownership or control or change thereof (including,
without limitation, any such issues relating to the Permits).
Section 4.13 PAYMENT OF STAMP TAX. All transfer (including any real estate
transfer tax), documentary, sales, use, stamp, registration and other such Taxes
and fees (including any penalties and interest) incurred in connection with this
Agreement shall be borne one-half (1/2) by the Sellers (collectively) and
one-half (1/2) by the Purchaser when due, and the parties will file on a timely
basis all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees,
and, if required by applicable Regulation, will, and will cause its Affiliates
to, join in the execution of any such Tax Returns and other documentation.
Section 4.14 DISCLOSURE. To the extent the Company shall have taken any
actions contrary to any of the covenants set forth in this Article IV, from and
after December 31, 2000 and prior to the date hereof, such actions are set forth
on Schedule 4.14 hereto. From and after the date hereof, the Company shall not
take any actions contrary to any of the covenants set forth in this Article IV
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld.
24
Section 4.15 COOPERATION WITH PURCHASER. Each of the Sellers and the
Company shall cooperate with Purchaser as shall be necessary for Purchaser to
consummate this transaction and to obtain financing therefor, including giving
access to the Company's properties and business records as shall be necessary
for Purchaser to, among other things, obtain surveys of the real property, a
title commitment with respect to the real property and/or environmental
assessments.
Section 4.16 INCOME TAX. Each of the Sellers shall include in their
taxable income all of the income attributable to the Company through and
including the day immediately prior to the Closing Date and shall make all such
elections that are necessary to achieve or accomplish this result. On or before
the day immediately prior to the Closing Date, the Company shall have liquidated
all of its temporary investments, bonds, and securities other than the MT
Capital Stock and the Associated Network Partners, Inc. capital stock.
Section 4.17 TRANSFER OF EXCLUDED ASSETS. All Excluded Assets shall be
transferred by the Company to the Sellers prior to the day immediately prior to
the Closing Date.
ARTICLE V
COVENANTS OF THE PURCHASER
Section 5.1 CONSENTS AND AUTHORIZATIONS. The Purchaser shall, promptly
after the date hereof, commence efforts to obtain the consents, waivers and
authorizations listed on Schedule 3.3. The Purchaser shall diligently pursue and
use its best efforts to obtain such consents, waivers and authorizations as
promptly as practicable prior to the Closing Date. Purchaser shall, at its
expense, manage the process of obtaining, with the Sellers and the Company's
assistance, all government consents and approvals required to carry out the
transactions contemplated by this Agreement.
Section 5.2 EMPLOYEES. For a period of six (6) months following the
Closing, the Purchaser shall cause the Company to continue to employ all of
those employees set forth on Schedule 2.10 hereto with the exception of X.X.
Xxxxx, who shall not be employed, and Xxxxx Xxxxxx who shall continue to be
employed through July 1, 2002 (the "RETAINED EMPLOYEES"); provided, however,
that the Company shall retain the right to terminate any employee at any time
for cause. Xxxxx Xxxxxx while employed by the Company shall be eligible to
participate as an employee in the group health insurance coverage that is
offered by the Purchaser to its employees. Upon her retirement from the Company,
if applicable, Xxxxx Xxxxxx shall be eligible at her sole expense until her
sixty-fifth (65) birthday to participate in the group health insurance coverage
that is offered by Purchaser to its employees. X.X. Xxxxx and X. Xxxxx shall be
eligible, at their sole expense, for benefits offered pursuant to the
Consolidated Omnibus Reconciliation Act of 1985 through the group health
insurance coverage provided by the Purchaser to its employees for the eighteen
(18) month period immediately following the Closing. The Company's former
employee, Xxxx Xxxxxx, shall be eligible, at his sole expense, to participate as
a retiree, in the group health insurance coverage that is offered by the
Purchaser to its employees after the Closing.
Section 5.3 TELEPHONE AND CABLE SERVICE. X.X. Xxxxx shall receive basic
local telephone service from MSH without cost for so long as X.X. Xxxxx is a
resident in the service
25
area and all of the MSH Capital Stock is owned by Purchaser or its Affiliate.
X.X. Xxxxx shall receive cable television service for as long as the local cable
companies agree or provide MSH with at least two free hookups and X.X. Xxxxx is
a resident in the MSH service area.
ARTICLE VI
OTHER AGREEMENTS
The parties hereto further agree as follows:
Section 6.1 AGREEMENT TO DEFEND. In the event any claim of the nature
specified in Section 7.4 or Section 8.3 hereof is commenced, whether before or
after the Closing Date, the parties hereto agree to cooperate and use all
reasonable efforts to defend against and respond thereto.
Section 6.2 FURTHER ASSURANCES. On the terms and subject to the conditions
of this Agreement, the parties hereto shall use all reasonable efforts at their
own expense, subject to the provisions of Section 12.13, to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable Regulations to consummate and make effective as
promptly as possible the transactions contemplated by this Agreement, and to
cooperate with each other in connection with the foregoing, including, without
limitation, using all reasonable efforts (a) to obtain all necessary waivers,
consents and approvals from other parties to loan agreements, leases, mortgages
and other Contracts, (b) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any Regulations or in
connection with any Permits, (c) to lift or rescind any injunction or
restraining order or other Order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby and (d) to fulfill all
conditions to the obligations of the parties under this Agreement. Each of the
parties hereto further covenants and agrees that it shall use all reasonable
efforts to prevent a threatened or pending preliminary or permanent injunction
or other Order.
Section 6.3 CONSENTS. Without limiting the generality of Section 6.2, each
of the parties hereto shall use all reasonable efforts to obtain all waivers,
Permits, authorizations, consents and approvals of, or notice to, all Persons
and Authorities necessary, proper or advisable in connection with the
consummation of the transactions contemplated by this Agreement prior to the
Closing Date.
Section 6.4 NO SOLICITATION OR NEGOTIATION. Unless and until this
Agreement is terminated, neither the Sellers nor the Company shall, and each
shall use best efforts to cause its Affiliates, and the directors, officers,
employees, representatives, agents, advisors, accountants, shareholders and
attorneys of each of them, not to initiate or solicit, directly or indirectly,
any inquiries or the making of any proposal with respect to, or engage in
negotiations concerning, or provide any confidential information or data to any
Person with respect to, or have any discussions with any Person relating to, any
acquisition, business combination or purchase of all or any significant asset
of, or any equity interest in, directly or indirectly, the Company, or otherwise
facilitate any effort or attempt to do or seek any of the foregoing and shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
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Section 6.5 NO TERMINATION OF THE OBLIGATIONS BY SUBSEQUENT DISSOLUTION.
Each of the parties hereto specifically agrees that its obligations hereunder,
including, without limitation, obligations pursuant to this Article VI, shall
not be terminated by the dissolution of such party, whether by operation of law,
Regulations or otherwise.
Section 6.6 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, no party
hereto nor any Affiliate, representative or shareholder of such party, shall
disclose any of the terms of this Agreement to any third party, except as
required hereunder by law or in connection with a securities filing, or to
obtain the consents, waivers and authorizations listed on Schedules 2.3, 2.26
and 3.3 and in connection with the Purchaser's financing of the transactions
contemplated hereby, without the other parties' prior written consent. Prior to
the Closing Date, the form, content and timing of all press releases, public
announcements or publicity statements (but excluding disclosures necessitated by
any securities filing) with respect to this Agreement and the transactions
contemplated hereby shall be subject to the prior approval of both the Sellers
and the Purchaser, which approval shall not be unreasonably withheld; provided,
however, that either party may withhold such approval in its sole discretion
with respect to any of the foregoing which discloses any of the financial terms
of this transaction. Prior to the Closing Date, no press releases, public
announcements or publicity statements shall be released by either party without
such prior mutual agreement. Notwithstanding the foregoing, prior to the Closing
Date, except as otherwise required by law or in connection with a securities
filing, no party hereto will disclose the Purchase Price or the manner in which
the Purchase Price is calculated, without the prior written consent of the
Purchaser and the Sellers. Additionally, the parties agree that the Company may,
following the execution of this Agreement, announce the existence of the pending
sale transaction contemplated by this Agreement to the Company's employees. The
Purchaser shall, at the request of the Sellers and the Company, participate in
any such announcement to the Company's employees as the Sellers and the Company
determines appropriate.
Section 6.7 RECORDS AND INFORMATION.
(a) Retention of Records. Except as otherwise required by Regulation
or agreed to in writing, the Sellers and the Purchaser shall each retain, and
shall cause their respective Affiliates to retain, for a period of at least four
(4) years, or, if greater, the period required by applicable Regulation,
following the Closing Date, all records, books, contracts, instruments, computer
data and other data and information (collectively, "INFORMATION") relating to
the Company.
(b) Access to Information. From and after the Closing Date, the
Sellers shall afford to the Purchaser and its authorized accountants, counsel
and other designated representatives reasonable access (including using
reasonable efforts to give access to Persons or firms possessing Information)
and duplicating rights during normal business hours to all Information within
the Sellers' possession relating to the Company, insofar as such access is
reasonably required by the Purchaser. Similarly, the Purchaser shall afford to
the Sellers and their authorized accountants, counsel, and other designated
representatives reasonable access (including reasonable efforts to give access
to Persons or firms possessing Information) and duplicating rights during normal
business hours to Information within the Purchaser's possession
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relating to the Company or its business as conducted prior to the Closing Date,
insofar as such access is reasonably required by the Sellers.
(c) Delivery of Corporate Records. The Sellers shall arrange, as
soon as practicable following the Closing Date, to the extent not previously
delivered in connection with the transactions contemplated herein, for
transportation at the Sellers' cost to the Purchaser of the records in the
Sellers' possession relating to the Company, including, without limitation, the
corporate minute books, stock ledgers and certificates and corporate seals of
the Company, and all Contracts and litigation files relating to the Company,
except to the extent (i) such items are already in the possession of the
Purchaser or the Company or (ii) it is necessary or appropriate for the Sellers
to retain such records for use in preparation of Tax Returns under the
provisions hereof. The Sellers may make and retain copies of all or any of such
records or documents at the Sellers' expense.
(d) Witnesses. At all times from and after the Closing Date, each of
the Sellers and the Purchaser shall use reasonable efforts to make available to
the other, upon written request, its and its Affiliates' officers, directors,
employees and agents as witnesses to the extent that such Persons may reasonably
be required in connection with any legal, administrative or other proceedings in
which the requesting party may from time to time be involved, at no cost;
provided, however, that a party producing such witnesses shall be entitled to
receive from the requesting party, upon presentation therefor, payment for such
out-of-pocket costs and disbursements as may be reasonably incurred in producing
such witnesses.
Section 6.8 INSURANCE POLICIES AND CLAIMS ADMINISTRATION.
(a) Insurance Coverage Prior to the Closing Date. The Sellers shall
be responsible for the administration of all claims under the Company's
insurance policies relating to periods prior to the Closing Date. If any claim
is asserted against the Company relating to periods prior to the Closing Date,
the Sellers shall, if requested by the Purchaser, cooperate with the Purchaser
in assisting and pursuing coverage and payment for such claim with the
appropriate insurance carrier. The Purchaser shall, upon request by Sellers,
cause the Company to file all necessary claims and take all such other action as
may reasonably be requested by Sellers to pursue such coverage. As between the
Sellers, on the one hand, and the Purchaser and the Company, on the other hand,
the Purchaser and the Company shall be entitled to recover all insurance
proceeds with respect to any claim, except to the extent the Sellers have
previously provided indemnification therefor to the Purchaser or the Company
under this Agreement. If the Purchaser shall pursue coverage and payment for any
claim relating to periods prior to the Closing Date on behalf of the Company,
then the Sellers shall provide reasonable cooperation and assistance to the
Company and the Purchaser.
(b) Insurance Coverage After the Closing Date. Each party shall be
responsible for establishing and maintaining its own property and casualty
insurance (including, without limitation, primary and excess general liability,
automobile, workers' compensation, property, director and officer liability,
fire, crime, surety and other similar insurance policies) for the activities and
claims of such party and its Affiliates on and after the Closing Date; provided,
however, the Purchaser shall, if it so desires, continue the Company's policies
in place as at the
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Closing Date and the Sellers shall be obligated to obtain new insurance policies
on any of the operations and assets distributed to any of them as Excluded
Assets as provided herein.
Section 6.9 OTHER TAX MATTERS.
(a) Tax Returns. The Purchaser, the Sellers, the Company and their
successors shall cooperate in the preparation of all Tax Returns and reports and
shall make available all necessary records and timely take all action necessary
to allow for the preparation and filing of all Tax Returns and reports. Within
ten (10) days following the Closing, the Sellers shall deliver or shall cause to
be delivered to the Purchaser all books, records, returns, schedules, work
papers, and other documents (including without limitation, appraisals and other
background information) which are in the possession of the Sellers or which are
not on the Company premises, and which relate to any Taxes of the Company for
any taxable period. Prior to the delivery of the materials described in the
preceding sentence, the Sellers shall cooperate with the Purchaser in providing
access to such materials as is reasonably required by the Purchaser.
The parties hereto agree that the Sellers shall prepare, and pay (but only
to the extent not fully paid or reserved against on the Financial Statements or
the Unaudited Financial Statements) all Taxes arising therefrom, all Tax Returns
for the Company for the periods before the Closing Date and for all Taxes of the
Sellers or the Company arising as a result of the transactions contemplated by
this Agreement (except as provided in Section 4.13 hereof). Upon mutual
agreement between the Sellers and the Purchaser, the Company may prepare any
such required Tax Returns. The Purchaser shall prepare, and pay all Taxes
arising therefrom, all Tax Returns for the Company for the periods after the
Closing Date.
(b) Information. The Purchaser and the Sellers agree to furnish or
cause to be furnished to each other, as promptly as practicable, such
information (including access to books and records) and assistance relating to
the Company as is reasonably requested for the filing of any Tax Return, in
determining a Tax liability or right to refund, for the preparation of any audit
or other proceeding, and for the prosecution of any claim, suit or proceeding
relating to a proposed Tax adjustment. The Purchaser and the Sellers shall
cooperate with each other in the conduct of any Tax audit or other Tax
proceedings involving the Company. The parties shall execute and deliver such
powers of attorney and other documents as are reasonably requested to carry out
the administration of the Tax provisions of this Agreement.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser under this Agreement shall be subject to
the satisfaction of each of the following conditions unless waived in writing by
the Purchaser:
Section 7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers and the Company contained in Article II hereof and
elsewhere in this Agreement and all information contained in any Exhibit,
Schedule or attachment hereto shall be true and correct in all material respects
when made and on the Closing Date as though then made, except as
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expressly provided herein or therein. The Sellers and the Company shall have
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed and complied with by
them prior to and on the Closing Date. The Sellers shall have delivered to the
Purchaser a certificate, dated the Closing Date, in a form reasonably
satisfactory to the Purchaser, certifying to the foregoing, and providing such
supplemental information, agreements and disclosures as shall be necessary to
make such representations and warranties as accurate on the Closing Date as on
the date originally given. The Sellers shall deliver to the Purchaser all of the
certificates, stock powers and other documentation referenced in Section 9.2
hereof, evidencing the transfer to the Purchaser of clear title to all of the
Shares at the Closing.
Section 7.2 CONSENTS AND APPROVALS. The Sellers, the Company and the
Purchaser shall have obtained all consents, approvals, Orders, qualifications,
licenses, Permits, regulatory approvals (including but not limited to any
necessary consent, approval, exemption or notice as required by (A) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, and (B) the Pennsylvania
Public Utility Commission) and other authorizations, whether specified on
Schedules 2.3, 2.26 and 3.3 hereto or not, and shall have given all notices,
required by all applicable Regulations, Orders and Contracts binding on any of
the Sellers, the Company or the Purchaser or any of their respective properties
and assets, with respect to the execution, delivery and performance of this
Agreement, the financing and consummation of the transactions contemplated
herein and the conduct of the Business of the Company in the same manner after
the Closing Date as before the Closing Date.
Section 7.3 NO MATERIAL ADVERSE CHANGE. There shall have been no Material
Adverse Change in the business, properties, Financial Statements, Unaudited
Financial Statements, Schedules to this Agreement, business prospects,
regulatory climate, condition (financial or otherwise) or results of operations
of the Company since December 31, 2000 through the Closing Date. The Purchaser
shall have received a certificate, dated the Closing Date, from the Sellers, in
a form reasonably satisfactory to the Purchaser, certifying to the foregoing.
Section 7.4 NO PROCEEDING OR LITIGATION. No Order or Regulation shall be
in effect and no litigation shall have been consummated or threatened which
would prevent the consummation of the transactions contemplated hereby.
Section 7.5 SECRETARY'S CERTIFICATE. The Purchaser shall have received a
certificate, signed by the Secretaries of MSH and MT dated the Closing Date, as
to the charter (attaching a Secretary of State certified copy thereof, with all
amendments) and bylaws of MSH and MT, respectively, and the resolutions adopted
by the shareholders and directors of MSH and MT in connection with this
Agreement in a form reasonably satisfactory to the Purchaser.
Section 7.6 CERTIFICATES OF GOOD STANDING. At the Closing, the Company
shall have delivered to the Purchaser certificates issued by the appropriate
governmental authorities evidencing the good standing of MSH, MT and each of
their subsidiaries in their respective jurisdictions of incorporation and in
each jurisdiction in which each is qualified to do business as a foreign
corporation as of a date not more than fifteen (15) days prior to the Closing
Date.
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Section 7.7 OPINION OF SELLERS' COUNSEL. The Sellers shall deliver at
Closing an opinion of counsel to the Sellers addressed to the Purchaser and the
Purchaser's lender in substantially the form attached hereto as Exhibit 7.7.
Section 7.8 RESIGNATIONS. The Sellers shall have caused all directors and
officers of MSH and MT and all of their subsidiaries to have resigned. Further,
all Sellers who are employees of the Company shall resign.
Section 7.9 OTHER DOCUMENTS. The Purchaser shall have been furnished with
such other and further documents and certificates, including certificates of the
Sellers, MSH and MT officers, directors and others, as the Purchaser shall
reasonably request to evidence compliance with the conditions set forth in this
Agreement.
Section 7.10 LIENS. The Sellers shall have removed all Liens on the Shares
and/or on the assets and properties of the Company other than Permitted Liens.
Section 7.11 DELIVERY OF MINUTE BOOKS. The Sellers shall have delivered at
Closing all original minute books, corporate seals and stock transfer records of
MSH, MT and of all their direct and indirect subsidiaries, as well as original
evidence of all their respective investments.
Section 7.12 DELIVERY OF FINANCIAL STATEMENTS. The Sellers shall have
delivered the Unaudited Financial Statements on a monthly basis from and after
the date hereof as soon as such Unaudited Financial Statements shall have been
prepared, all as provided in Section 4.9 hereof.
Section 7.13 AMENDMENT OF CONTRACT. The Sellers shall have caused the
contract dated as of December 14, 1999 by and between Info Avenue(R) Internet
Services, LLC and MT to have been amended by causing the deletion of Article 11
thereof or causing such other waiver of or amendment to Article 11 as is
satisfactory to Purchaser in its sole discretion.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
The obligations of the Sellers under this Agreement shall be subject to
the satisfaction of each of the following conditions unless waived in writing by
Sellers:
Section 8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Article III hereof and elsewhere in
this Agreement and all information contained in any Exhibit, Schedule or
attachment hereto shall be true and correct in all material respects when made
and on the Closing Date as though then made, except as expressly provided herein
or therein. The Purchaser shall have performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement to be performed and complied with by it prior to and on the Closing
Date. An officer of the Purchaser in his capacity as such shall have delivered
to the Sellers a certificate, dated the Closing Date, in a form reasonably
satisfactory to the Sellers, certifying to the foregoing, and providing such
supplemental information, agreements and disclosures as shall be necessary to
make such representations and warranties as accurate on the Closing Date as on
the date originally given.
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Section 8.2 CONSENTS AND APPROVALS. The Purchaser, the Sellers and the
Company shall have obtained all consents, approvals, orders, qualifications,
licenses, Permits, regulatory approvals, (including but not limited to any
necessary consent, approval, exemption or notice as required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976), the Pennsylvania Public
Utility Commission and other authorizations, whether specified on Schedules 2.3,
2.26 and 3.3 hereto or not, and shall have given all notices, required by all
applicable Regulations, Orders and Contracts binding on the Purchaser, the
Sellers or the Company or any of their respective properties and assets with
respect to the execution, delivery and performance of this Agreement.
Section 8.3 NO PROCEEDING OR LITIGATION. No Order or Regulation shall be
in effect and no litigation shall have been consummated or threatened which
would prevent the consummation of the transactions contemplated hereby.
Section 8.4 SECRETARY'S CERTIFICATE. The Sellers shall have received a
certificate, signed by the Secretary of the Purchaser, dated the Closing Date,
as to the charter and bylaws of the Purchaser and the resolutions adopted by the
directors of the Purchaser in connection with this Agreement in a form
reasonably satisfactory to the Sellers and a certificate issued by the
appropriate governmental authority evidencing the good standing of the Purchaser
in its jurisdiction of incorporation as of a date not more than fifteen (15)
days prior to the Closing Date.
Section 8.5 OPINION OF PURCHASER'S COUNSEL. The Purchaser shall deliver at
Closing an opinion of counsel to the Purchaser addressed to the Sellers in
substantially the form attached hereto as Exhibit 8.5.
ARTICLE IX
CLOSING
Section 9.1 CLOSING. Unless this Agreement shall have been terminated or
abandoned pursuant to the provisions of Article X hereof, a closing of the
transactions contemplated by this Agreement (the "CLOSING") shall be held on or
before September 1, 2001 (or on such date either before or after September 1,
2001 as the parties hereto shall mutually agree, which shall be on the first day
of the month which is at least ten (10) days after receipt of all PPUC, FCC,
Xxxx-Xxxxx-Xxxxxx and other approvals required as a precondition to Closing and
which is at least ten (10) days after approval or agreement with respect to the
estimated Closing Balance Sheet) (the "CLOSING DATE") in the offices of the
Sellers' counsel; provided, that the Closing shall occur as soon as practicable
after the satisfaction of the conditions contained in Articles VII and VIII
hereof.
Section 9.2 CLOSING DATE PAYMENT AND RECEIPT OF SHARES. On the Closing
Date (i) the Sellers will assign and transfer to the Purchaser good and valid
title in and to the Shares, free and clear of all Liens, by delivering to the
Purchaser stock certificates representing the Shares, duly endorsed for transfer
and accompanied by duly executed stock powers endorsed in blank with requisite
stock transfer tax stamps, if any, attached; (ii) the Purchaser shall, by wire
transfer of same-day funds, deposit in an escrow account the amount of Five
Hundred Seventy Thousand
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Dollars ($570,000) ("ESCROW FUNDS"), all as provided in Section 11.2 hereof;
(iii) the Purchaser shall, by wire transfer of same-day funds, pay to the
Sellers, the amount of the Adjusted Purchase Price for all of the Shares, less
the Escrow Funds; and (iv) the parties shall deliver to each other the documents
required under this Agreement to be delivered at the Closing.
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1 METHODS OF TERMINATION. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time:
(a) Mutual Consent. By mutual written consent of the Purchaser and
the Sellers.
(b) Sellers' Failure to Perform. By the Purchaser if as of the
Closing Date any of the conditions specified in Article VII hereof have not been
satisfied (and remain so unsatisfied for more than twenty (20) days after the
Purchaser has notified the Sellers in writing thereof) or if any of the Sellers
or the Company are otherwise in default in any material respect under this
Agreement (and remains in default for more than twenty (20) days after the
Purchaser has notified the Sellers in writing of such default) or if at any time
prior to the Closing Date it becomes apparent to the Purchaser (on reasonable
grounds) that any of the Sellers or the Company will be unable to satisfy one or
more of the representations and warranties in Article II hereof or one or more
of the covenants or agreements in Articles IV, VI or VII hereof,
(c) Purchaser's Failure to Perform. By the Sellers if as of the
Closing Date any of the conditions specified in Article VIII hereof have not
been satisfied (and remain so unsatisfied for more than twenty (20) days after
the Sellers have notified the Purchaser in writing thereof) or if the Purchaser
is otherwise in default in any material respect under this Agreement (and
remains in default for more than twenty (20) days after the Sellers have
notified the Purchaser in writing of such default) or if at any time prior to
the Closing Date it becomes apparent to the Sellers (on reasonable grounds) that
the Purchaser will be unable to satisfy one or more of its representations and
warranties in Article III hereof or one or more of the covenants or agreements
in Articles V, VI or VIII hereof.
(d) Failure to Close by December 31, 2001. By either party in the
event the Closing has not occurred by December 31, 2001, unless such failure to
close shall be due to a breach of this Agreement by the party seeking to
terminate the Agreement, or such failure to close shall be due to the
non-receipt of approval from the PPUC, which approval has been diligently
sought, in which last case this date shall be extended for one hundred twenty
(120) days automatically.
(e) Material Adverse Change. By the Purchaser if a Material Adverse
Change shall be shown or indicated (in the sole discretion of the Purchaser) in
any of the Unaudited Financial Statements delivered after the date hereof or
otherwise with respect to any of the conditions to Closing set forth in Section
7.3 hereof, and written notice of termination of this Agreement shall have been
given by the Purchaser within thirty (30) business days of the
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Purchaser's receipt of such Unaudited Financial Statements or the Purchaser's
discovery of such Material Adverse Change.
(f) Remedies. In the event of any failure to perform as described in
this Section 10.1, the non-breaching party shall have such remedies for breach
of contract as are allowed by law in addition to or in substitution of the right
of termination.
Section 10.2 PROCEDURE UPON TERMINATION. If this Agreement is terminated
as provided herein:
(a) Return of Records. Each party shall as promptly as practicable
redeliver to the party furnishing the same, all data, information and other
written material (including all copies thereof) of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof.
(b) Confidentiality. All information received by any party hereto
with respect to the business of any other party (other than information which is
a matter of public knowledge or which has heretofore been or is hereafter
published in any publication for public distribution or filed as public
information with any governmental authority) shall not at any time be used by
such party, or disclosed to third parties.
ARTICLE XI
SURVIVAL OF TERMS; INDEMNIFICATION
Section 11.1 SURVIVAL; LIMITATIONS. All of the terms and conditions of
this Agreement, together with the representations, warranties and covenants
contained herein or in any instrument or document delivered or to be delivered
pursuant to this Agreement and the agreements of the parties to indemnify each
other as set forth in this Article XI shall survive the execution of this
Agreement and the Closing Date notwithstanding any investigation heretofore or
hereafter made by or on behalf of any party hereto and shall continue for, and
all claims with respect thereto shall be made three (3) years from the Closing
Date (the "INDEMNIFICATION PERIOD") provided, however, that with respect to the
representations set forth in Sections 2.7, 2.8 and 2.21 hereof, the
Indemnification Period shall survive in perpetuity and provided further that
with respect to any income tax liability of MSH, MT or any of their subsidiaries
or Affiliates attributable to any activities or transactions occurring by any of
them on or prior to the Closing Date, the agreement of the Sellers to indemnify
the Purchaser and its Affiliates shall survive until, and all claims with
respect thereto shall be made prior to, the expiration of the applicable statute
of limitations prescribed by Section 6501 of the IRC, as such statutes of
limitations may have been or be extended by agreement from time to time.
Section 11.2 ESCROW OF LIQUID ASSETS. Five Hundred Seventy Thousand
Dollars ($570,000) of the Adjusted Purchase Price otherwise payable to Sellers
for their Shares (the "Escrow Funds") shall be maintained in an escrow account
(the "Escrow Account") in National City Bank pursuant to the terms and
provisions of an Escrow Agreement to be executed at Closing substantially in the
form attached hereto as Exhibit 11.2 (the "Escrow Agreement"). In addition to
seeking indemnification directly from Sellers under the provisions of Section
11.3
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hereof, the Purchaser may make a claim from the Escrow Account for payment of
and indemnity payment due under Section 11.3 in the manner provided in the
Escrow Agreement.
Section 11.3 INDEMNIFICATION BY THE SELLERS. After the Closing Date,
subject to the limitations set forth in Sections 11.1 and 11.8 hereof, the
Purchaser and its Affiliates (including, without limitation, MSH and MT) and
their respective officers, directors, employees, shareholders, representatives
and agents shall be indemnified and held harmless jointly and severally by the
Sellers, their respective heirs, successors, representatives and assigns,
against and in respect of any and all damage, loss, liability, cost or expense
(including, unless otherwise provided herein, the reasonable fees and expenses
of counsel and any Tax liability resulting from any indemnity payment made
hereunder) resulting from, or in respect of, any of the following:
(a) Misrepresentation or Breach. Any misrepresentation or breach of
warranty of any of the Sellers or the Company other than those disclosed
pursuant to the certificate provided for in Section 7.1 hereof, or
nonfulfillment of any obligation on the part of the Company, (to be performed on
or prior to the Closing) or any of the Sellers under this Agreement, or
contained in any Schedule or Exhibit to this Agreement or from any
misrepresentation in or omission from any certificate, Schedule, Exhibit,
related agreement, Financial Statement, Unaudited Financial Statement, or
instrument delivered by or on behalf of the Sellers or the Company hereunder.
(b) Taxes. All Taxes of the Sellers, of MSH, MT or any of their
subsidiaries or Affiliates or with respect to their investments or income,
including but not limited to any and all income earned or realized or
investments sold or otherwise disposed of prior to the Closing Date,
attributable to any period prior to or on the Closing Date.
(c) Other Claims. Any Claim of a third party arising out of the
business or operations of the Company prior to or on the Closing Date or any
Claim relating to the Excluded Liabilities or Excluded Assets either prior to or
after the Closing Date, or any Claim resulting from or arising out of the
ownership, management or use of the Shares and/or the business of the Company
prior to or on the Closing Date.
(d) Related Expenses. All expenses and costs, including but not
limited to reasonable legal fees, paid or incurred in connection with any such
indemnified Claim.
Section 11.4 INDEMNIFICATION BY THE PURCHASER. After the Closing Date,
subject to the limitations set forth in Sections 11.1 and 11.8 hereof, the
Sellers and their respective heirs, successors, representatives and assigns
shall be indemnified and held harmless by the Purchaser against and in respect
of any and all damage, loss, liability, cost or expense (including, unless
otherwise provided herein, the reasonable fees and expenses of counsel and any
Tax liability resulting from any indemnity payment made hereunder) resulting
from, or in respect of, any of the following:
(a) Misrepresentation or Breach. Any misrepresentation or breach of
warranty of the Purchaser, or nonfulfillment of any obligation on the part of
the Company (to be performed after the Closing) or the Purchaser under this
Agreement, or contained in any Schedule or Exhibit to this Agreement or from any
misrepresentation in or omission from any
35
certificate, Schedule, Exhibit, related agreement or instrument delivered by or
on behalf of the Purchaser hereunder.
(b) Taxes. All Taxes of the Purchaser or of the Company attributable
to any period on or after the Closing Date.
(c) Other Claims. Any Claim of a third party arising out of the
business or operations of the Company after the Closing Date, or any Claim
resulting from or arising out of the ownership, management or use of the Shares
and/or the Business of the Company after the Closing Date.
(d) Related Expenses. All expenses and costs, including but not
limited to legal fees, reasonably paid or incurred in connection with any such
indemnified Claim.
Section 11.5 THIRD PARTY CLAIMS.
(a) Generally. Except as otherwise provided in this Agreement, the
following procedures shall be applicable with respect to indemnification for
third party Claims. Promptly after receipt by the party seeking indemnification
hereunder (hereinafter referred to as the "INDEMNITEE") of notice of the
commencement of any action or the assertion of any Claim, liability or
obligation by a third party (whether by legal process or otherwise), against
which Claim, liability or obligation another party to this Agreement
(hereinafter the "INDEMNITOR") is, or may be, required under this Agreement to
indemnify such Indemnitee, the Indemnitee shall, if a claim thereon is to be, or
may be, made against the Indemnitor, immediately notify the Indemnitor in
writing of the commencement or assertion thereof and give the Indemnitor a copy
of such Claim or process and all legal pleadings. The Indemnitee's failure to
give timely notice as required by this Section 11.5(a) shall not serve to
eliminate or limit the Indemnitor's obligation to indemnify the Indemnitee
unless such failure prejudices the rights of the Indemnitor, and then only to
the extent of such prejudice. Moreover, the Indemnitee shall have the right to
take any actions or steps it deems reasonable to avoid the occurrence of any
prejudice to the rights of the Indemnitee. The Indemnitor shall have the right
to assume the defense of such action with counsel of reputable standing unless
with respect to such action (A) injunctive or equitable remedies have been
sought therein in respect of the Indemnitee or its business or (B) such action
is for an alleged amount of less than Five Thousand Dollars ($5,000); provided,
that the Indemnitee and counsel to the Indemnitee shall have the right to
participate in the defense of any and all Claims pursuant to the provisions of
Section 11.5(b) hereof. The Indemnitor and the Indemnitee shall reasonably
cooperate in the defense of such Claims. If the Indemnitee shall be required by
judgment or a settlement agreement to pay any amount in respect of any
obligation or liability against which the Indemnitor has agreed to indemnify the
Indemnitee under this Agreement, the Indemnitor shall immediately pay such
amount to the Indemnitee in order to enable the Indemnitee to make such payment,
and otherwise shall promptly reimburse the Indemnitee in an amount equal to the
amount of such payment, in either case, plus all reasonable out-of-pocket
expenses (including legal fees and expenses) incurred by such Indemnitee at the
specific request of the Indemnitor, as provided above, or as otherwise
authorized by Section 11.5(b) hereof, in connection with such obligation or
liability subject to this Article XI. No Indemnitor, in the defense of any such
Claim, shall, except with the consent of the Indemnitee, consent to entry of any
judgment or enter into any settlement which does not include as an
36
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability with respect to such Claim. In the
event that the Indemnitor does not accept the defense of any matter for which it
is entitled to assume such defense as provided in this Section 11.5(a), the
Indemnitee shall have the full right to defend against any such Claim and shall
be entitled to settle or agree to pay in full such Claim in its sole discretion.
With respect to any matter as to which the Indemnitor is not entitled to assume
the defense pursuant to the terms of this Section 11.5(a), the Indemnitee shall
not enter into any settlement for which an indemnification Claim will be made
hereunder without the approval of the Indemnitor, which shall not be
unreasonably withheld.
(b) Counsel. An Indemnitee shall have the right to employ its own
counsel, but the fees and expenses of such counsel shall be at the expense of
the Indemnitee, unless (i) the employment of such counsel shall have been
authorized in writing by the Indemnitor in connection with the defense of such
Claim and the Indemnitor has agreed in writing to pay such fees and expenses, or
(ii) the Indemnitor shall not have employed counsel in the defense of such Claim
(which counsel may be in-house counsel unless and until a lawsuit has been
commenced). In either of which events, such fees and expenses of not more than
one additional counsel for the Indemnitee shall be borne by the Indemnitor.
Section 11.6 OTHER CLAIMS.
(a) In the event an Indemnitee should have a claim under this
Article XI against an Indemnitor that does not involve a third party Claim, the
Indemnitee shall promptly give notice (the "INDEMNITEE NOTICE") and the details
thereof, including copies of all relevant information and documents, to the
Indemnitor within a period of thirty (30) days following the discovery of the
claim by the Indemnitee (the "CLAIM NOTICE PERIOD"). The failure by any
Indemnitee to give the Indemnitee Notice within the Claim Notice Period shall
not impair the Indemnitee's rights hereunder except to the extent that the
Indemnitor demonstrates that it has been prejudiced thereby. The Indemnitor will
notify the Indemnitee within a period of twenty (20) days after the receipt of
the Indemnitee Notice by the Indemnitor (the "INDEMNITY RESPONSE PERIOD")
whether the Indemnitor disputes its liability to the Indemnitee under this
Article XI with respect to such Claim. If the Indemnitor notifies the Indemnitee
that it does not dispute the Claim described in such Indemnitee Notice or fails
to notify the Indemnitee within the Indemnity Response Period whether the
Indemnitor disputes the claim described in such Indemnitee Notice, the actual
damages as finally determined will be conclusively deemed to be a liability of
the Indemnitor under this Article XI and the Indemnitor shall pay the amount of
such damages to the Indemnitee on demand. If the Indemnitor notifies the
Indemnitee within the Indemnity Response Period that the Indemnitor disputes its
liability with respect to such Claim, the Indemnitor and the Indemnitee will
proceed in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within a period of thirty (30) days from the date
of such notice or such longer period as may be agreed to by the parties in
writing, such dispute shall be resolved by arbitration in accordance with
Section 11.6(b) hereof.
(b) Any dispute required to be submitted to arbitration pursuant to
this Section 11.6 shall be finally and conclusively determined in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
(the "RULES OF ARBITRATION") then in effect by the decision of three (3)
arbitrators (the "BOARD OF ARBITRATION") selected in accordance with the
37
Rules of Arbitration. The Board of Arbitration shall meet in Charlotte, North
Carolina and shall render a decision in writing (concurred in by a majority of
the members of the Board of Arbitration) with respect to and stating the amount,
if any, which the Indemnitor is required to pay to the Indemnitee in respect of
the claim made by the Indemnitee. The decision of the Board of Arbitration shall
be rendered as soon as practical following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to the Indemnitee and the Indemnitor. Any decision made by the Board
of Arbitration shall be final, binding and conclusive on the Indemnitee and the
Indemnitor and entitled to be enforced to the fullest extent permitted by law
and entered in any court of competent jurisdiction.
The parties hereto hereby consent to the jurisdiction of the foregoing
Board of Arbitration and to the jurisdiction of any local, state or Federal
court located in the State of North Carolina for the purpose of enforcing the
decision or award of the Board of Arbitration or otherwise. The parties hereto
agree that all service of process may be made on any such party by personal
delivery or by registered or certified mail addressed to the appropriate party
at the address for such party set forth in this Agreement.
All fees, costs and expenses of the prevailing party in any arbitration,
including, but not limited to, attorneys' fees, shall be paid by the losing
party and shall be awarded to the prevailing party as part of the decision of
the Board of Arbitration. For purposes hereof, a "PREVAILING PARTY" shall mean
the party which substantially prevails in its position in arbitration. Each and
every arbitration proceeding commenced pursuant to this Section 11.6(b) shall be
consolidated with any arbitration proceedings simultaneously or previously
commenced (but not concluded) under this Section 11.6(b).
Section 11.7 CONTINUED LIABILITY FOR INDEMNITY CLAIMS. The liability of
any Indemnitor hereunder with respect to claims hereunder shall continue for so
long as any Claims for indemnification may be made hereunder pursuant to this
Article XI and, with respect to any such indemnification Claims duly and timely
made, thereafter until the Indemnitor's liability therefore is finally
determined and satisfied.
Section 11.8 BASKET AMOUNT.
(a) Indemnification by the Sellers. Notwithstanding anything to the
contrary herein, Sellers will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 11.3 of this
Agreement until the total of all damages suffered by the Purchaser and/or its
Affiliates exceeds One Hundred Thousand Dollars ($100,000.00) (the "BASKET
AMOUNT"), and then only for the amount by which such damages exceed the Basket
Amount.
(b) Indemnification by the Purchaser. Further, notwithstanding
anything to the contrary herein, Purchaser will have no liability (for
indemnification or otherwise) with respect to the matters described in Section
11.4 of this Agreement (other than the nonfulfillment, in whole or in part, of
any obligation on the part of the Purchaser under this Agreement which relates
to Section 5.2 or the payment of the Adjusted Purchase Price) until the total of
all damages suffered by the Sellers and/or their Affiliates exceeds the Basket
Amount and then only for the amount by which such damages exceed the Basket
Amount.
38
(c) Aggregation. Notwithstanding the foregoing, to the extent
indemnification is sought under Sections 11.3 or 11.4 of this Agreement, any and
all claims shall be aggregated for purposes of determining if the Basket Amount
has been met. By way of example, and not by way of limitation, if Sellers shall
have failed to perform three (3) obligations of the type referred to in Section
2.12(b) hereof, each causing damages of Forty Thousand Dollars ($40,000.00),
then payment in the amount of Twenty Thousand Dollars ($20,000.00) shall be made
to Purchaser as provided herein (representing the excess of such damages over
the Basket Amount of One Hundred Thousand Dollars ($100,000.00).
Section 11.9 LIMITATIONS ON INDEMNIFICATIONS. Notwithstanding anything to
the contrary contained in this Agreement, the aggregate liability of the Sellers
under this Article XI shall not exceed any amount equal to (i) the Adjusted
Purchase Price, minus (ii) the amount of cash and cash equivalents held by the
Company on the Closing Date.
Section 11.10 EXCLUSIVE REMEDY. Each Indemnitee's rights under and subject
to the provisions of this Article XI shall be the Indemnitee's sole and
exclusive remedy with respect to any claim against any Indemnitor based upon (i)
those matters set forth in Section 11.3(a) through (d) inclusive, in the case of
Claims by the Purchaser and/or their Affiliates, and (ii) those matters set
forth in Section 11.4(a) through (d) inclusive, in the case of Claims by the
Sellers and/or their Affiliates, and the parties hereby waive and relinquish any
and all other applicable rights and remedies, if any, to which they may
otherwise at any time be entitled; provided, however, that all Indemnitees shall
retain their legal and equitable remedies with respect to Claims arising from
fraud or from misrepresentations that are knowingly or intentionally made, with
respect to Claims arising from Section 6.4 and Section 10.1 hereof and with
respect to covenants and agreements to be performed and complied with by
Indemnitors subsequent to the Closing Date.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 AMENDMENT AND MODIFICATION. Subject to applicable
Regulations, this Agreement may be amended, modified and supplemented at any
time with respect to any of the terms contained herein, by a written agreement
signed by all of the parties hereto.
Section 12.2 WAIVER. The failure of any party hereto to comply with any
obligation, covenant, agreement or condition herein may be waived in writing by
the other parties hereto, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing.
Section 12.3 CERTAIN DEFINITIONS.
"ADJUSTED PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 1.2 hereof.
"AFFILIATE" shall mean, with regard to any Person, any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person and, with
39
respect to any Person who is an individual, the spouse, ancestors and
descendants (lineal or by marriage) thereof. "CONTROL" (including, with
correlative meaning, the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"),
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
Contract or otherwise.
"AGREEMENT" shall have the meaning ascribed to such term in the preamble
hereof.
"AUTHORITY" shall mean any governmental authority, including, without
limitation, the FCC and the PPUC and all municipalities in which MSH, MT and/or
any of their subsidiaries or Affiliates engage in business, and any other
governmental, regulatory or administrative body, agency, commission, board of
arbitrators, or any court or judicial authority, whether Federal, state, local
or foreign.
"BASE PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 1.2 hereof.
"BUSINESS DAY" shall mean any day that is not a Saturday or Sunday and
that in Pittsburgh, Pennsylvania, or Charlotte, North Carolina, is not a day on
which banking institutions are generally authorized or obligated by Regulation
to close.
"CERCLA" shall have the meaning ascribed to such term in Section 2.21(c)
hereof.
"CERCLIS" shall have the meaning ascribed to such term in Section 2.21(c)
hereof.
"CLAIM" shall mean any action, written claim, complaint, lawsuit, written
demand, suit, notice of a violation, litigation, proceeding, arbitration or
other dispute noticed in writing, or otherwise, whether civil, criminal,
administrative or otherwise, by any Authority or other Person.
"CLOSING" shall have the meaning ascribed to such term in Section 9.1
hereof.
"CLOSING DATE" shall have the meaning ascribed to such term in Section 9.1
hereof.
"CLOSING BALANCE SHEET" shall have the meaning ascribed to such term in
Section 1.3 hereof.
"COMPANY" shall have the meaning ascribed to such term in the preamble
hereof.
"CONTRACT" shall mean any agreement, contract, commitment, instrument or
other binding arrangement or understanding, whether written or oral.
"ENVIRONMENTAL LAW" shall mean any Regulation or Order, including, but not
limited to, any term or condition included in a validly issued Permit to
construct or operate a facility subject to any Regulation or Order, which
relates to or otherwise imposes liability or standards of conduct concerning
environmental matters, mining or reclamation of mined land, discharges,
emissions, releases or threatened releases of noises, odors or any pollutants,
contaminants or hazardous or toxic wastes, substances or materials, whether as
matter or energy, into ambient air,
40
water or land or otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or handling
of pollutants, contaminants or hazardous wastes, substances or materials,
including (but not limited to) CERCLA, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Resource Conservation and Recovery
Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended,
the Federal Water Pollution Control Act Amendments of 1972, the Clean Water Act
of 1977, as amended, any so-called "SUPERLIEN" law and any other similar
Regulation by any Authority in effect on or before the Closing Date.
"ENVIRONMENTAL PERMIT" shall mean a Permit relating to or required by any
Environmental Law.
"ERISA" shall have the meaning ascribed to such term in Section 2.19
hereof.
"ERISA PLANS" shall have the meaning ascribed to such term in Section 2.19
hereof.
"FCC" shall mean the Federal Communications Commission.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to such term in
Section 2.9 hereof.
"GAAP" shall mean United States generally accepted accounting principles,
consistently applied, as in existence at the date hereof and/or at the Closing
Date.
"HAZARDOUS MATERIALS" shall have the meaning ascribed to such term in
Section 2.21(a) hereof.
"IMPROVEMENTS" shall have the meaning ascribed to such term in Section
2.14(c) hereof.
"INDEMNITEE" shall have the meaning ascribed to such term in Section
11.5(a) hereof.
"INDEMNITOR" shall have the meaning ascribed to such term in Section
11.5(a) hereof.
"IRC" or the "CODE" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"LIEN" shall mean any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, claim, easement, restriction (on transfer or
otherwise) or interest of another Person of any kind or nature.
"MATERIAL ADVERSE CHANGE" shall mean any developments or changes which
would have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, any
circumstances, state of facts or matters which could reasonably be expected,
either individually or in conjunction with any other circumstance, state of
facts or matter, to have a material adverse
41
effect in respect of such Person's business, business prospects, properties,
assets, regulatory climate, condition (financial or otherwise) or results of
operations.
"NET WORKING CAPITAL" shall have the meaning ascribed to such term in
Section 1.2 hereof.
"ORDER" shall mean any judgment, decree (consent or otherwise), order,
injunction (preliminary or permanent), stipulation, ruling, decree or consent of
or by an Authority.
"PCB" shall mean polychlorinated biphenyls.
"PRICE PER SHARE" shall have the meaning ascribed to such term in Section
1.2 hereof.
"PERMITS" shall have the meaning ascribed to such term in Section 2.26
hereof.
"PERMITTED LIENS" shall mean (i) statutory Liens for Taxes not yet due and
payable, (ii) such imperfections or irregularities of title, liens, easements,
charges or encumbrances as do not interfere with the present use of the
properties or assets subject thereto or affected thereby, do not otherwise
impair present business operations at such properties, or do not have a Material
Adverse Effect on the value of such properties and assets and (iii) Liens
existing at the Closing Date with respect to the Total Long Term Debt and the
Total Long Term Debt's associated current liability, but only to the extent such
particular items of Total Long Term Debt are accounted for in determining the
Adjusted Purchase Price, and such Liens are fully disclosed on Schedule 2.14(a)
hereto.
"PERSON" shall mean any corporation, partnership, joint venture,
organization, entity, Authority or natural person, together with any and all
heirs, successors, representatives and assigns thereof.
"PENSION BENEFIT PLAN" shall have the meaning ascribed to such term in
Section 2.19 hereof.
"PPUC" shall mean the Pennsylvania Public Utility Commission.
"PROPRIETARY RIGHTS" shall mean all (i) patents, patent applications,
patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, reexamination, utility, model, certificate of invention and
design patents, registrations and applications for registrations, (ii)
trademarks, service marks, logos, trade names and corporate names and
registrations and applications for registration thereof and (iii) copyrights and
registrations and applications for registration thereof.
"PURCHASER" shall have the meaning ascribed to such term in the preamble
hereof.
"REGULATION" shall mean any law, statute, regulation, ordinance,
requirement, rule, executive order or binding action of or by an Authority.
"RELEASE" shall have the meaning ascribed to such term in Section 9601(22)
of Title 42 of the United States Code.
42
"SELLER" or "SELLERS" shall have the meaning ascribed to such term in the
preamble hereof.
"SHARES" shall have the meaning ascribed to such term in the recitals
hereof.
"TAX RETURNS" shall have the meaning ascribed to such term in Section
2.16(a) hereof.
"TAX" or "TAXES" means any income, gross receipt, net proceeds,
alternative or add-on minimum, ad valorem, value added, estimated, turnover,
sales, use, property, personal property (tangible and intangible), stamp,
leasing, lease, user, excise, duty, franchise, transfer, license, withholding,
payroll, employment, foreign, fuel, excess profits, occupational and interest
equalization, windfall profits, severance and other taxes, charges, fees, levies
or other assessments of any kind whatsoever (including interest, penalties,
fines and additions thereto) imposed by any taxing Authority, Federal, state,
local or foreign.
"TOTAL LONG TERM DEBT" shall have the meaning defined in the Financial
Statements, computed in accordance with GAAP, consistently applied.
"UNAUDITED FINANCIAL STATEMENTS" shall have the meaning ascribed to such
term in Section 2.9 hereof.
"WELFARE BENEFIT PLAN" shall have the meaning ascribed to such term in
Section 2.19 hereof.
Section 12.4 NOTICES. All notices, claims, requests, demands or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, by first class certified
mail, return receipt requested, with postage paid, or by receipted overnight
courier service to the intended recipient at the address specified below or at
such other address as shall be designated by such party in any notice to the
other parties.
NOTICES TO PURCHASER: WITH COPIES TO:
MJD Ventures, Inc. Rosenman & Colin LLP
000 Xxxx Xxxxxxxx Xxxxxx 000 X. Xxxxx Xxxxxx
Xxxxx 000 Xxxxx 0000
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxx, Vice Chairman ATTN: Xxxxx X. Xxxxxx, Esq.
and Executive Vice President (000) 000-0000 (Phone)
(000) 000-0000 (Phone) (000) 000-0000 (Fax)
(000) 000-0000 (Fax) xxxxxxxx@xxxxxxxx.xxx (E-Mail)
xxxxxxxx@xxxxxxxxx.xxx (E-Mail)
And
FairPoint Communications, Inc.
43
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
ATTN: Xxxxxxx X. Xxxx, Vice
President and General Counsel
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
xxxxx@xxxxxxxxx.xxx (E-mail)
NOTICES TO THE COMPANY WITH COPIES TO:
AND TO SELLERS:
Xxxxx X. Xxxxx Barley, Snyder, Xxxxx & Xxxxx, LLC
000 Xxxxx Xxxx Xxxx 000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxx Xxxxxx Xxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
(000) 000-0000 (phone)
(000) 000-0000 (Fax)
xxxxxx@xxxxxx.xxx
And
Xxxxxxxxxx Capital Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
ATTN: W. Xxxxx Xxxxx
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
Section 12.5 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties
hereto; provided, that the Purchaser may, without the prior written consent of
the Sellers or any other party hereto, assign its rights and obligations
hereunder and under any other Contracts or documents executed or delivered in
connection herewith to (i) an Affiliate of the Purchaser, including but not
limited to FairPoint Communications, Inc. or MJD Services Corp. or (ii) its
lenders as collateral in connection with the financing of the transactions
contemplated hereby. No such assignment shall relieve the assignor of such
assignor's liability for any and all continuing obligations hereunder, however.
44
Section 12.6 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of North Carolina, without regard to its principles of conflict of
laws.
Section 12.7 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 12.8 HEADINGS. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 12.9 ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding of the parties hereto with regard to the subject
matter hereof and supersedes all prior agreements, representations, warranties,
promises, covenants, arrangements and understandings, oral or written, express
or implied, among the parties with respect to such subject matter. There are no
agreements, representations, warranties, promises, covenants, arrangements or
understandings among the parties with respect to such subject matter other than
those expressly set forth or referred to herein.
Section 12.10 NO BENEFIT. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the signatories to this
Agreement and each of their respective successors and permitted assigns.
Section 12.11 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party hereto upon any breach or default
of another party hereto under this Agreement shall impair any such right, power
or remedy of such party nor shall it be construed to be a waiver of any such
breach or default or an acquiescence therein or of or in any similar breach or
default thereafter occurring. All remedies, whether under this Agreement, by
Regulation or otherwise, afforded to any party shall be cumulative and not
alternative.
Section 12.12 SEVERABILITY. Unless otherwise provided herein, if any
provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 12.13 EXPENSES. Each of the parties hereto shall bear its own
expenses, including, without limitation, legal fees, taxes and expenses, with
respect to this Agreement and the transactions contemplated hereby (which, with
respect to such expenses incurred by or on behalf of the Sellers or the Company,
shall be paid by the Sellers and not by the Company). Notwithstanding the
foregoing, in the event a breach of Section 6.4 hereof occurs and the
transactions contemplated hereby are not consummated, the Sellers shall pay to
the Purchaser the Purchaser's out-of-pocket fees, including, without limitation,
legal fees and expenses, incurred in connection with the transactions
contemplated hereby. Additionally, notwithstanding the foregoing, (A) with
respect to any Xxxx-Xxxxx-Xxxxxx filing necessitated by the transactions
contemplated herein, (1) the Purchaser shall pay any and all applicable filing
fees, and (2) each of the parties shall bear its own fees and expenses otherwise
incurred in connection with the preparation of such filing, and (B) with respect
to compliance with any notice and/or approval requirements of the Pennsylvania
Public Utilities Commission necessitated by the transactions
45
contemplated herein, any and all legal fees, filing fees and expenses of
regulatory counsel incurred in connection therewith shall be paid one-half (1/2)
by the Purchaser and one-half (1/2) by the Sellers (collectively).
Section 12.14 TIME OF THE ESSENCE. Time is strictly of the essence with
respect to the provisions of this Agreement.
Section 12.15 INJUNCTIVE RELIEF. The parties hereby agree that any remedy
at law for any breach of the provisions of this Agreement shall be inadequate
and that the nonbreaching party shall be entitled to injunctive relief in
addition to any other remedy which such nonbreaching party might have at law or
in equity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
46
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MJD VENTURES, INC.
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
By: Xxxxxx Xxxxxxx
Title: Executive Vice President
XXXXX XXXXXXX XXXXX
/s/ Xxxxx Xxxxxxx Xxxxx
--------------------------------------------
XXXXX XXXXXX XXXXX
/s/ Xxxxx Xxxxxx Xxxxx
--------------------------------------------
XXXX XXXX XXXXX
/s/ Xxxx Xxxx Xxxxx
--------------------------------------------
XXXX XXXX XXXXX REVOCABLE TRUST
/s/ Xxxx Xxxx Xxxxx
--------------------------------------------
By: XXXX XXXX XXXXX
Title: TRUSTEE
47
XXXX XXXX XXXXX GRANTOR
RETAINED ANNUITY TRUST
/s/ Xxxxx Xxxxxxx Xxxxx
--------------------------------------------
/s/ Xxxxx Xxxxxx Xxxxx
--------------------------------------------
By: XXXXX XXXXXXX XXXXX
By: XXXXX XXXXXX XXXXX
Title: TRUSTEES
XXXXXXXX AND SCENERY HILL
TELEPHONE COMPANY
/s/ Xxxxx X. Xxxxx
--------------------------------------------
By: XXXXX X. XXXXX
Title: PRESIDENT
48
Exhibit 7.7
Opinion of Sellers' Counsel
[LETTERHEAD OF BARLEY, SNYDER, XXXXX & XXXXX, LLC]
_____________, 2001
MJD Ventures, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
[LENDERS TO BE DETERMINED.]
--------------------------------
--------------------------------
--------------------------------
Re: Xxxxxxxx and Scenery Hill Telephone Company, Inc.
Ladies and Gentlemen:
We have served as special counsel to Xxxxxxxx and Scenery Hill Telephone
Company ("MSH") and its subsidiary, Xxxxxxxx Tel, Inc. ("MT") (collectively, the
"Company"), Xxxx Xxxx Xxxxx ("X. Xxxxx"), in her individual capacity, and the
shareholders of MSH, Xxxxx X. Xxxxx and Xxxxx X. Xxxxx, in their individual
capacities, Xxxxx X. Xxxxx and Xxxxx X. Xxxxx, Trustees of the Grantor Retained
Annuity Trust created by Xxxx Xxxx Xxxxx, and Xxxx Xxxx Xxxxx, Trustee of the
Xxxx Xxxx Xxxxx Revocable Trust, in connection with the preparation, execution
and delivery of the Stock Purchase Agreement dated as of May 7, 2001, among MJD
Ventures, Inc. ("MJD"), MSH, X. Xxxxx, and the above referenced shareholders of
MSH (such shareholders referred to collectively herein as the "Shareholders"),
relating to the purchase of all of the shares of the capital stock of MSH owned
by the Shareholders. Such Stock Purchase Agreement, together with all Schedules
thereto and all Exhibits executed by MSH and/or any or all of the Shareholders
and X. Xxxxx in connection therewith are referred to collectively herein as the
"Agreement". This opinion is delivered to you pursuant to Section 7.7 of the
Agreement. All capitalized terms used herein have the meaning assigned to them
in the Agreement except as otherwise provided herein.
In connection with the opinions expressed below, we have examined and are
familiar with originals or copies, certified or otherwise, identified to our
satisfaction, of such documents, corporate records and other writings of the
Company, certificates of public officials or officers of the Company, and such
other documents and writings as were deemed necessary or appropriate for the
opinions hereinafter expressed.
In making such examination and rendering the opinions set forth below, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as
certified, conformed or photostatic copies, and the authenticity of the
originals of such documents and the legal capacity of all natural persons.
For purposes of our opinion, we have assumed that the Agreement and all
other instruments and documents executed and delivered pursuant thereto have
been duly authorized, executed and delivered by all of the parties thereto other
than the Company, X. Xxxxx and the Shareholders. In addition, we have assumed
that our clients who are natural persons and all persons acting on behalf of the
Company and all other parties to the Agreement are sui juris. We have no
knowledge that any of such clients or such persons are not sui juris.
Whenever a statement herein is qualified by the phrases "known to us" or
"to our knowledge", or similar phrases, it is intended to indicate that during
the course of our representation of the Company, X. Xxxxx and the Shareholders
and the transactions contemplated by the Agreement, and having made inquiry of
the Shareholders, and X. Xxxxx as to such matters, no information that would
give our Designated Transaction Lawyers (defined below) actual knowledge of the
inaccuracy of such statement has come to their attention. However, we have not
undertaken any independent investigation or review to determine the accuracy of
any such statement, except that, with respect to our opinion in Paragraph (f),
we have reviewed the appropriate dockets for the Court of Common Pleas in
Washington County, Pennsylvania and the United States District Court for the
Western District of Pennsylvania. No inference as to our knowledge of any
matters bearing on the accuracy of any such statement should be drawn from our
representation of the Company, X. Xxxxx and the Shareholders. The term
"Designated Transaction Lawyers" means Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxx, and
Xxxxx X. Xxxxxxxx. In addition, for purposes of our opinion, we have relied upon
factual representations made by the Company, X. Xxxxx, and the Shareholders in
Article II of the Agreement and in a Reliance Certificate delivered by them to
us in connection with this opinion, a copy of which is attached hereto (the
"Reliance Certificate"). We have no knowledge that such Reliance Certificate
contains any material misrepresentations.
Our opinions as hereinafter expressed are subject to the following
qualifications:
1. Our opinions are subject to the effect of bankruptcy, fraudulent
conveyance, insolvency, reorganization, arrangement, moratorium and other
similar laws;
2. Our opinions are subject to limitations imposed by laws and judicial
decisions relating to or affecting the rights of creditors or secured creditors
generally or general principles of equity (regardless of whether enforcement is
considered in proceedings at law or in equity) upon the enforceability of any of
the remedies, covenants and other provisions of the Agreement and upon the
availability of injunctive relief or other equitable remedies;
3. We express no opinion as to the creation or enforceability of security
interests or as to the recoverability of attorneys' fees and legal expenses;
4. We express no opinion as to the laws or the effect or applicability of
the laws of any jurisdiction other than the laws of the United States and the
Commonwealth of Pennsylvania;
5. We express no opinion as to matters involving regulatory approvals or
consents of, or proceedings pending with, the Pennsylvania Public Utility
Commission (the "PPUC") or
2
the Federal Communications Commission and we note that you are relying upon the
opinion of Xxxxxxxxx Xxxxx & XxXxxx LLP with respect to regulatory approvals of,
and proceedings pending with, the PPUC.
6. The opinions expressed herein are as of the date hereof, and we
undertake no responsibility to advise you of changes occurring after the date of
this letter.
Based upon the foregoing and subject to further assumptions, limitations
and qualifications set forth below, we are of the opinion that:
(b) MSH is a corporation duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania with full
corporate power and authority to carry on the business in which it is presently
engaged and to own, lease and operate its properties as now being conducted and
to perform its obligations under the Agreement. Xxxxxxxx Tel, Inc. ("MT"), a
subsidiary of MSH, is a corporation duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania with full
corporate power and authority to carry on the business in which it is presently
engaged and to own, lease and operate its properties as now being conducted and
to perform its obligations under the Agreement. To our knowledge, and based upon
the Reliance Certificate, Xxxxx X. Xxxxx and X. Xxxxx are residents of
Pennsylvania, Xxxxx X. Xxxxx is a resident of Florida, and each of the Trusts
which are Shareholders have as their situs the Commonwealth of Pennsylvania.
(c) The execution and delivery of the Agreement has been duly
authorized and approved by MSH's board of directors, X. Xxxxx and the
Shareholders. The Agreement is a valid and binding obligation of MSH and the
Shareholders, enforceable in accordance with its terms, subject to the
limitations and qualifications noted above. All persons who have executed the
Agreement on behalf of MSH have been duly authorized to do so by all necessary
action of the MSH and its Shareholders.
(d) The authorized capital stock of MSH consists of 2,400 shares of
$25 par value common stock, of which 306 shares are issued and outstanding (the
"MSH Common Stock") and 400 shares of $100 par value preferred stock, none of
which is issued and outstanding. MSH has no other class of stock authorized or
issued and outstanding. We have no knowledge that any of the issued and
outstanding shares of the MSH Capital Stock were other than duly and validly
issued and outstanding, fully paid and non-assessable, or issued in compliance
with all state and federal laws. The delivery by the Shareholders to the
Purchaser at the Closing of duly endorsed certificates representing and
evidencing the MSH Capital Stock with appropriate language of assignment,
together with the execution and delivery of the other documents required for
Closing, will pass to the Purchaser such title as such Shareholders then have in
and to such MSH Capital Stock. Based on the stock records of MSH, each
Shareholder is the owner of the number of shares of the MSH Capital Stock
reported in the Agreement. To our knowledge, based upon our review of the stock
records of MSH and the Reliance Certificate, there are no outstanding warrants,
options, rights, puts, calls or other commitments of any nature relating to the
MSH Capital Stock, and there are no outstanding securities or debt obligations
of the Company convertible into shares of MSH Capital Stock. To our knowledge,
based upon our
3
review of the stock records of MSH and the Reliance Certificate, there are 194
shares of the common stock of MSH held in the treasury of MSH.
(e) The opinions expressed in Paragraph (c) are equally applicable
to the capital stock of MT (the "MT Capital Stock"), except that the authorized,
issued and outstanding shares of the MT Capital Stock is as follows:
Issued and
Authorized Outstanding
Corporation Capital Stock Capital Stock
----------- ------------- -------------
Xxxxxxxx Tel, Inc. 100 shares, $10 par 100 shares issued to
value common stock MSH on March 1, 1997
by Certificate No. 1
(f) The execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated by the Agreement will not: (i)
violate or result in a breach of or default or acceleration under the Articles
of Incorporation or Bylaws of the Company, as such have been amended, or, to our
knowledge, any instrument or agreement to which the Company or the Shareholders
or X. Xxxxx are a party or are bound which would have a material adverse effect
on the Company's properties or operations; (ii) to our knowledge, violate any
judgment, order, injunction, decree or award against or binding upon the Company
or upon the MSH Capital Stock or other securities, property or business of the
Company which would have a material adverse effect on the Company's properties
or operations; (iii) to our knowledge, result in the creation of any material
lien, charge or encumbrance upon the properties or assets of the Company or the
MSH Capital Stock; or (iv) violate any law or regulation relating to the Company
or the MSH Capital Stock or other securities, property or business of the
Company, assuming all required regulatory approvals have been obtained in
connection with the transactions contemplated by the Agreement as provided in
the Agreement.
(g) To our knowledge, there is no litigation, claim or proceeding,
pending or threatened against the Company, the Shareholders, or X. Xxxxx, or
against any of their respective assets or properties, or relating to the
ownership of any or all of the MSH Capital Stock or the capital stock of
Xxxxxxxx Tel, Inc. ("MT Capital Stock"), or which questions the validity or
enforceability of the Agreement, or which could prevent, hinder or delay
consummation of the Agreement or any of the transactions contemplated thereby,
except for those matters referenced in Schedule 2.15 of the Agreement.
(h) To our knowledge, there is not pending any threatened or
existing claim, unsatisfied judgment, litigation, governmental investigation or
proceeding before any court, arbitrator or Federal, state or other governmental
commission, board or other agency by or against the Company, X. Xxxxx or the
Shareholders adversely affecting the operations or financial condition of the
Company or its business, property, business prospects or assets, except for
those matters referenced in Schedule 2.15 of the Agreement.
(i) To our knowledge, the Shareholders, X. Xxxxx and the Company
have given all notices to and have obtained from all local, state and Federal
regulatory authorities any and all approvals, consents, permits and
authorizations required in order to consummate the
4
transactions contemplated in the Agreement. We refer you to the qualification of
this opinion contained in paragraph number 5. above.
The opinions expressed herein are solely for your benefit in connection
with the Agreement and, without our express written consent, neither our
opinions nor this opinion letter may be assigned, quoted or relied upon for any
other purpose. No other person or entity may rely upon or claim reliance upon
this opinion, and it is not to be quoted in whole or in part or otherwise
referred to by any governmental agency or other person or entity without prior
written consent of this firm.
Very truly yours,
BARLEY, SNYDER, XXXXX & XXXXX, LLC
By:_________________________________
Name: Xxxxxxx X. Xxxxx
5
_____________________, 2001
Barley, Snyder, Xxxxx & Xxxxx, LLC
000 Xxxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
Re: RELIANCE CERTIFICATE
Gentlemen:
Reference is hereby made to the
Stock Purchase Agreement of even date
herewith (the "AGREEMENT") among MJD Ventures, Inc., a Delaware corporation (the
"Purchaser"), Xxxxxxxx and Scenery Hill Telephone Company, a Pennsylvania
corporation ("MSH"), Xxxx Xxxx Xxxxx, and the shareholders of MSH, Xxxxx X.
Xxxxx and Xxxxx X. Xxxxx, in their individual capacities, and Xxxxx X. Xxxxx and
Xxxxx X. Xxxxx, Trustees of the Grantor Retained Annuity Trust created by Xxxx
Xxxx Xxxxx, and Xxxx Xxxx Xxxxx, Trustee of the Xxxx Xxxx Xxxxx Revocable Trust.
MSH, Xxxx Xxxx Xxxxx, and the above-referenced shareholders of MSH (such
shareholders being collectively referred to herein as the "Shareholders") are
sometimes referred to herein together as the "Sellers". Capitalized terms
defined in the Agreement and not otherwise defined herein shall be used herein
as defined in the Agreement.
The Sellers have engaged you to serve as their special counsel in
connection with the Agreement and the transactions contemplated thereby. A
condition precedent to the obligations of the Purchaser under the Agreement is
the delivery of an opinion of the Sellers' counsel to the Purchaser and the
Purchaser's lender. The Sellers hereby request you to provide such an opinion on
our behalf.
The Sellers understand and acknowledge that you are relying upon this
certification as to certain factual matters in rendering your legal opinion of
even date herewith in connection with the Agreement. Thus, the Sellers hereby
certify to you, as of the date hereof, as follows:
1. Xxxxx X. Xxxxx and Xxxx Xxxx Xxxxx are residents and domiciliaries of
the Commonwealth of Pennsylvania.
2. Xxxxx X. Xxxxx is a resident and domiciliary of the state of Florida.
3. Each of the trusts which are Shareholders has the Commonwealth of
Pennsylvania as its situs.
4. The Three Hundred Six (306) shares of the common stock of MSH
collectively owned by the Shareholders are the only shares of the common stock
of MSH currently issued and outstanding and none of the shares of the preferred
stock of MSH are currently issued and outstanding.
5. MSH owns all of the issued and outstanding capital stock of Xxxxxxxx
Tel, Inc. ("MT"), a Pennsylvania corporation and MT is the sole subsidiary of
MSH.
6. The execution and delivery of the Agreement by each of the Sellers as a
party thereto, and compliance by each such Person with the terms and provisions
thereof, will not violate any of the provisions of the corporate charter or
bylaws or other organizational documents, as the case may be, of any such
corporate Person, any law, rule or regulation applicable to such Person, or any
order, writ, injunction or decree of any court, arbitration panel or
governmental or administrative authority or agency applicable to such Person.
7. The execution and delivery of the Agreement by each of the Sellers will
not result in a breach of, constitute a default under, require any consent
under, or result in the acceleration or required prepayment of any indebtedness
pursuant to, the terms of any agreement or instrument to which any of the
Sellers is a party or by which it is bound or to which its property is subject.
8. There are no legal or arbitral proceedings pending or threatened
against any of the Sellers, nor any judgments presently outstanding and
unsatisfied against any of the Sellers, nor any proceeding or investigation
involving any of the Sellers before any court, or by or before any governmental
or administrative authority or agency, federal, state or local, which: (i)
might, if adversely determined, result in any Material Adverse Effect; or (ii)
questions the validity or enforceability of the Agreement or the transactions
contemplated thereby.
9. There are no outstanding warrants, options, rights, puts, calls or
other commitments of any nature relating to the authorized capital stock of MSH
or MT, and there are no outstanding securities or debt obligations of MSH or MT
convertible into shares of MSH capital stock.
10. One Hundred Ninety-four (194) shares of common stock of MSH are held
in the treasury of MSH. No shares of capital stock of MT are held in the
treasury of MT
11. All of the representations and warranties made by the Sellers in
Article II of the Agreement are true and correct as of the date of this letter.
Very truly yours,
Xxxxxxxx and Scenery Hill Telephone Company
By:
-------------------------------------
-------------------------------------
Xxxx Xxxx Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
2
Grantor Retained Annuity Trust
By:
------------------------------------
Xxxxx X. Xxxxx, Trustee
By:
------------------------------------
Xxxxx X. Xxxxx, Trustee
Xxxx Xxxx Xxxxx Revocable Trust
By:
------------------------------------
Xxxx Xxxx Xxxxx, Trustee
3
Exhibit 8.5
Opinion of Purchaser's Counsel
[Rosenman & Colin LLP Letterhead]
----------------, ------
Shareholders of Xxxxxxxx and Scenery Hill Telephone DIRECT DIAL
Company (000) 000-0000
E-MAIL ADDRESS
Xxxxxxxx@xxxxxxxx.xxx
------------------------------------
------------------------------------
------------------------------------
Ladies and Gentlemen:
We have acted as counsel to MJD Ventures, Inc., a Delaware corporation
("MJD" or the "Purchaser"), in connection with the purchase by the Purchaser of
all of the capital stock of Xxxxxxxx and Scenery Hill Telephone Company
(collectively with Xxxxxxxx Tel, Inc. and all subsidiaries and affiliates of
either, the "Company") from Xxxxx Xxxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxx, Xxxx Xxxx
Xxxxx, Xxxxx Xxxxxxx Xxxxx and Xxxxx Xxxxxx Xxxxx being and as Trustees of the
Grantor Retained Annuity Trust created by Xxxx Xxxx Xxxxx by her Irrevocable
Deed of Trust, dated December 24, 1998 and Xxxx Xxxx Xxxxx being and as Trustee
of the Revocable Trust created by her Deed of Trust dated July 28, 1993
(collectively, the "Shareholders" or the "Sellers"), pursuant to a
Stock
Purchase Agreement entered into as of May 7, 2001 by, between and among the
Purchaser, the Company and the Sellers (such
Stock Purchase Agreement, together
with all Schedules thereto and all Exhibits executed by the Company and/or MJD
in connection therewith, referred to collectively hereinafter as the
"Agreement").
This opinion is being delivered to you pursuant to Section 8.5 of the
Agreement. Capitalized terms used herein which are not otherwise defined herein
shall have the meanings set forth in the Agreement.
In connection with this transaction, we have reviewed the Articles of
Incorporation and Bylaws (the "Organizational Documents") of the Purchaser, the
Agreement and such other instruments and documents as are executed and delivered
pursuant to the Agreement, and have examined such other records and information
and have conducted such other investigations as we have deemed necessary to
render the opinion set forth below. As to facts material to our opinion, we have
relied upon the factual representations of the Purchaser in the Agreement,
certificates from certain state authorities and on those certificates delivered
at Closing.
We have assumed the conformity of all copies to the originals of all
documents reviewed by us, the genuineness of all signatures (other than those of
the shareholders, directors and
officers of the Purchaser) and the authenticity of all documents submitted to us
(whether originals or copies).
For the purposes of our opinion, we have assumed that the Agreement and
all other instruments and documents executed and delivered pursuant thereto have
been duly authorized, executed and delivered by all of the parties thereto other
than the Purchaser.
Whenever a statement herein is qualified by the phrases "known to us" or
"to our knowledge", or similar phrases, it is intended to indicate that during
the course of our representation of the Purchaser and the transactions
contemplated by the Agreement, and having made inquiry of certain officers of
the Purchaser as to such matters, no information that would give us actual
knowledge of the inaccuracy of such statement has come to our attention.
However, we have not undertaken any independent investigation or review to
determine the accuracy of any such statement. No inference as to our knowledge
of any matters bearing on the accuracy of any such statement should be drawn
from our representation of the Purchaser.
Based upon the foregoing, and subject to the assumptions and
qualifications herein set forth, it is our opinion that:
1. MJD is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to carry on the business in which it is engaged, to own, lease and
operate its properties, and to enter into and to perform its obligations under
the Agreement.
2. The execution and delivery of the Agreement was duly authorized and
approved by the Board of Directors of MJD. The Agreement is a valid and binding
obligation of MJD enforceable in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect relating to creditors' rights in the
event of future bankruptcy, insolvency or reorganization of the Purchaser, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. All persons who
have executed the Agreement on behalf of MJD have been duly authorized to do so
by all necessary corporate action.
3. To our knowledge, MJD has given all notices to and has obtained from
all local, state and Federal regulatory authorities any approvals, consents,
permits and authorizations required in order to consummate the transactions
contemplated in the Agreement.
The opinions expressed herein are based upon and limited to matters
governed by the laws of the State of
North Carolina and the State of Delaware,
and we express no opinion as to any matter governed by the laws of any other
jurisdiction. We are not authorized to practice law in the State of Delaware and
the opinions set forth herein are rendered solely upon our review of applicable
provisions of Delaware corporation law as currently published in standard
compilations and such consultations with Delaware local counsel as we have
deemed necessary or appropriate.
This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our
2
attention or any changes in laws which may hereafter occur. This opinion is
limited to matters herein, and no opinion may be inferred or implied beyond the
matters expressly stated herein.
This opinion is being furnished to you in connection with the transactions
contemplated by the Agreement. This opinion is solely for your benefit and is
not to be used, circulated, quoted or otherwise referred to for any other
purpose nor relied upon by any other person or entity without our prior written
consent.
Finally, the opinions expressed herein represent our reasonable judgment
as to the matters of law addressed herein, based upon the facts presented or
assumed, and are not, and should not be construed or considered as, a guaranty.
Very truly yours,
3
Exhibit 11.2
Escrow Agreement
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Escrow Agreement") is made as of
______________, 2001, between XXXXX XXXXXXX XXXXX ("X. X. Xxxxx") a resident of
the Commonwealth of Pennsylvania, in his individual capacity, XXXXX XXXXXX XXXXX
("X. X. Xxxxx") a resident of the State of Florida, in her individual capacity,
XXXX XXXX XXXXX ("X. Xxxxx") a resident of the Commonwealth of Pennsylvania, in
her individual capacity, X.X. Xxxxx and X.X. Xxxxx being and as Trustees of the
Grantor Retained Annuity Trust (the "Xxxxx XXXX") created by X. Xxxxx by her
Irrevocable Deed of Trust, dated December 24, 1998, in their capacity as
Trustees of the Xxxxx XXXX, and X. Xxxxx Trustee of the Revocable Trust (the "M.
H. Trust") created by her Deed of Trust dated July 28, 1993 in her capacity as
Trustee of the M.H. Trust (X. X. Xxxxx, X. X. Xxxxx, M. Xxxxx, X. X. Trust and
Xxxxx XXXX collectively referred to hereinafter as the "Sellers"), MJD VENTURES,
INC., a Delaware corporation ("Purchaser") and National City Bank, a National
Banking corporation (the "Escrow Agent").
STATEMENT OF PURPOSE
On or about May 7, 2001, the Sellers and Purchaser, among others, entered
into a
Stock Purchase Agreement (the "Purchase Agreement"), and pursuant to the
provisions of Section 9.2 of the Purchase Agreement, the Sellers and Purchaser
agreed that Five Hundred Seventy Thousand Dollars ($570,000) (the "Escrow
Funds") of the total purchase price otherwise payable to the Sellers would be
deposited with Escrow Agent to secure the Sellers' agreement to indemnify
Purchaser as set forth in Sections 11.2 and 11.3 of the Purchase Agreement all
in accordance with the terms of this Escrow Agreement.
The Escrow Agent has agreed to serve as escrow agent under this Escrow
Agreement and to accept delivery of the Escrow Funds in accordance with the
terms and conditions set out in this Escrow Agreement.
AGREEMENT
In consideration of the premises, and the agreements set out below, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties enter into the following Escrow Agreement:
1. DEPOSIT WITH ESCROW AGENT. At Closing of the sale and purchase of the
Shares as provided in the Purchase Agreement, Purchaser shall deliver to the
Escrow Agent the sum of Five Hundred Seventy Thousand Dollars ($570,000) to be
held, administered and distributed by the Escrow Agent pursuant to the terms of
this Escrow Agreement.
2. ESCROW FUNDS. Upon receipt of the Escrow Funds, the Escrow Agent shall
deposit the Escrow Funds in an escrow account (the "Escrow Account") and shall
hold, administer, invest and distribute the Escrow Funds in accordance with the
terms of this Escrow Agreement. All references in this Escrow Agreement to
Escrow Funds shall include any investment of such funds and all investment
earnings thereon.
3. PURPOSES OF ESCROW. The Escrow Funds shall be used solely for the
purposes set forth in Sections 11.2 and 11.3 of the Purchase Agreement. The
Escrow Funds shall not
constitute an asset of the Sellers until the distribution thereof to the Sellers
in accordance with the terms of the Purchase Agreement and of this Escrow
Agreement.
4. TERM. The term of this Escrow Agreement ("Escrow Period") shall be for
a period of twelve months after the Closing date, except that the Escrow Period
shall be automatically extended as necessary to provide for the disposition of
any Claims filed by Purchaser with the Escrow Agent during such period, in
accordance with the procedures set forth in Section 5 hereof.
5. DISBURSEMENT OF ESCROW FUNDS.
(a) In the event Purchaser determines that it is entitled to all or
any portion of the Escrow Funds pursuant to Sections 11.2 or 11.3 of the
Purchase Agreement, Purchaser shall deliver written notice to the Escrow Agent
and the Sellers, stating the factual basis for, and the amount of, such
entitlement ("Claim"). Within fifteen (15) days following such delivery of the
Claim, the Sellers may deny all or any portion of the Claim by delivering
written notice to the Escrow Agent and Purchaser, indicating the amount or
portion of the Claim which is denied and the factual basis for such denial
("Denial").
(b) In the event that the Sellers fail to timely deliver a Denial to
the Escrow Agent and Purchaser, the Escrow Agent shall immediately release and
distribute to Purchaser an amount equal to the Claim.
(c) In the event the Escrow Agent receives a timely Denial from the
Sellers as to all or any portion of a Claim, the Escrow Agent shall immediately
distribute to Purchaser an amount, if any, equal to the portion of the Claim
that the Sellers have not denied. If the Denial does not state the amount or
portion of the Claim denied, the total amount of the Claim shall be deemed
denied. The Sellers and the Purchaser shall resolve their disagreement with
respect to the denied portion of the Purchaser's Claim pursuant to the
arbitration provisions of Section 11.6(b) of the Purchase Agreement (copies of
these Sections 11.2, 11.3, and 11.6(b) are attached hereto as Exhibit A and made
a part hereof). Upon the resolution of such disagreement, the Escrow Agent shall
promptly take such action, if any, as is necessary for it to comply with the
terms of such resolution.
(d) The Escrow Agent shall distribute to the Sellers any portion of
the Escrow Funds remaining in the Escrow Agent's possession, after reservation
for any and all still outstanding Claims, immediately upon the expiration of the
Escrow Period, free and discharged from any further obligation with respect to
the same hereunder. Such distribution shall be made to the Sellers in
proportions based upon their respective interests in the Purchase Price payable
under the Purchase Agreement.
(e) Notwithstanding anything herein to the contrary, during the
Escrow Period, the Escrow Agent shall distribute so much of the Escrow Funds to
the Sellers as provided in a written joint instruction received by the Escrow
Agent from the Sellers and the Purchaser and signed by all of them.
6. RELEASE FROM ESCROW. As and when all of the Escrow Funds are either
distributed as provided hereunder or deposited with the registry of the court in
interpleader, the Escrow Agent shall be released and discharged from any further
obligation hereunder without further action of any party. Compliance by the
Escrow Agent with any final, non-appealable order or a judgment of a court
concerning the subject matter of any such dispute or agreement shall
2
thereupon release and relieve the Escrow Agent from all obligations and
responsibility with respect to the Escrow Funds to which such order or judgment
relates.
7. INVESTMENT OF ESCROW FUNDS. The Escrow Agent shall hold the Escrow
Funds delivered to it under the terms of this Escrow Agreement and shall invest
the Escrow Funds held by it (i) in interest bearing demand deposit accounts with
commercial banks whose accounts are insured by the Federal Deposit Insurance
Corporation, or (ii) in any other investment upon which the Sellers and the
Purchaser shall agree.
8. AGREEMENT OF ESCROW AGENT. The Escrow Agent hereby agrees to receive
the Escrow Funds and hold the same intact, and to deposit the Escrow Funds in
accordance with the terms of this Escrow Agreement, and shall not permit any
withdrawal except under the terms of this Escrow Agreement. The Escrow Agent
shall be responsible only for the safekeeping and the deposit of the Escrow
Funds and the disbursements or delivery in accordance with the terms of this
Escrow Agreement. The Escrow Agent shall not be responsible for the
appropriateness, sufficiency or accuracy of information contained in any written
notice.
9. PERFORMANCE OF ESCROW AGENT.
(a) There are no implied duties under this Escrow Agreement. The
duties, obligations and acts of the Escrow Agent shall be construed as purely
ministerial in nature. Escrow Agent shall be responsible for only those duties
expressly set forth in this Escrow Agreement. In performing any of its duties
under this Escrow Agreement, or upon the claimed failure to perform its duties
under this Escrow Agreement, Escrow Agent shall not be liable to anyone for any
damages, losses, or expenses which they may incur as a result of the Escrow
Agent so acting or failing to act; provided, however, Escrow Agent shall be
liable for damages arising out of its willful misconduct or gross negligence
under this Escrow Agreement. Accordingly, Escrow Agent shall not incur any such
liability with respect to (i) any action taken or omitted to be taken in good
faith upon advice of its counsel or counsel for any other party to this Escrow
Agreement given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent hereunder, or (ii) any action taken or
omitted to be taken in reliance upon any document, including any written notice
or instructions provided for in this Escrow Agreement, not only as to its due
execution and to the validity and effectiveness of its provisions but also as to
the truth and accuracy of any information contained in any notice or document,
which the Escrow Agent shall in good faith believe to be genuine, to have been
signed or presented by a proper person or persons and to conform with the
provisions of this Escrow Agreement.
(b) The Sellers and the Purchaser agree to indemnify and hold
harmless Escrow Agent against any and all losses, claims, damages, liabilities
and expenses, including without limitation, reasonable costs of investigation
and counsel fees and disbursements which may be imposed by Escrow Agent or
incurred by it in connection with its acceptance of this appointment as Escrow
Agent or the performance of its duties, including, without limitation,
reasonable attorneys fees and costs attributable to any interpleader action
commenced by the Escrow Agent or any other litigation arising from this Escrow
Agreement or involving the subject matter of this Escrow Agreement; provided,
however, that if Escrow Agent shall be found guilty of willful misconduct or
gross negligence under this Escrow Agreement, then, in that event, Escrow Agent
shall itself bear all such losses, claims, damages, liabilities and expenses.
3
10. FEES OF ESCROW AGENT. For its ordinary services hereunder (which shall
include receipt, investment and disbursement of the Escrow Funds in the manner
described in this Escrow Agreement), the Escrow Agent shall receive compensation
of Two Thousand Dollars ($2,000.00) to be paid one-half by the Purchaser and
one-half by the Sellers upon the termination of this Escrow Agreement as is
commensurate with its services provided hereunder as Escrow Agent.
11. RESIGNATION OF ESCROW AGENT. The Escrow Agent or successor at any time
may resign by giving thirty (30) business days written notice to the parties
hereto, and such resignation shall take effect at the end of such thirty (30)
business days, or upon the earlier appointment, with the approval of the Sellers
and the Purchaser, of a successor. From and after the effective date of such
resignation or appointment of a successor, the Escrow Agent shall not be
obligated to perform any of the duties of the Escrow Agent hereunder and will
not be liable for any nonperformance thereof nor for any act or failure to act
whatsoever on the part of any successor Escrow Agent. If the Sellers and the
Purchaser are unable to agree upon a successor Escrow Agent within thirty (30)
days following notice of the Escrow Agent's resignation, the Escrow Agent shall
commence an action in interpleader and deposit the Escrow Funds with the
registry or custody of a Pennsylvania court, unless a joint instruction is
received by the Escrow Agent from the Sellers and the Purchaser as to the
disposition of the Escrow Funds.
12. SUCCESSOR TO ESCROW AGENT. Any corporation resulting from any merger
or consolidation to which the Escrow Agent or any successor to it shall be a
party, or any corporation in any manner succeeding to all or substantially all
of the business of the Escrow Agent or any successor, shall be the successor
escrow agent hereunder without the execution or filing of any paper or any
further acts on the part of any of the parties hereto. In the event of a
resignation of the Escrow Agent pursuant to paragraph 11 of this Escrow
Agreement, any person(s) or corporation hereafter agreed upon by the parties
shall be the successor escrow agent hereunder.
13. INSTRUCTIONS AND NOTICES. In executing and performing its duties
hereunder, except as otherwise provided, the Escrow Agent shall be entitled to
rely upon instructions of the Sellers and the Purchaser. For all purposes
hereunder, the Sellers shall be required to act with unanimity, and X. X. Xxxxx
shall act as spokesperson for the Sellers for purposes of all notices,
communications, decisions and determinations. Any notice, payment, demand,
instruction or communication required or permitted to be given by this Escrow
Agreement shall be in writing and shall be given by hand delivery, overnight
messenger or courier service or certified mail, return receipt requested,
addressed to the appropriate party at the address stated below:
If to the Sellers:
Xxxxx Xxxxxxx Xxxxx
000 Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Copy to:
4
Barley, Snyder, Xxxxx & Xxxxx, LLC
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
(000) 000-0000 (phone)
(000) 000-0000 (Fax)
xxxxxx@xxxxxx.xxx
If to Purchaser:
MJD Ventures, Inc.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
ATTN: Xx. Xxxxxx X. Xxxxxxx
Executive Vice President
Copy to:
Rosenman & Colin LLP
000 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
ATTN: Xxxxx X. Xxxxxx, Esq.
and
FairPoint Communications, Inc.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
ATTN: Xxxxxxx X. Xxxx
Vice President and General Counsel
If to Escrow Agent:
National City Bank
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
ATTN: Xxxxxxx Xxxxxxxxx
Any notice sent by overnight messenger or courier service or hand delivery
shall be deemed made on the date received, and any notice sent by certified mail
shall be deemed made three (3) days after mailing.
5
14. GOVERNING LAW. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of
North Carolina.
15. HEADINGS. The headings in this Escrow Agreement are inserted for
convenience and identification only and are in no way intended to interpret,
define or limit the scope, extent or intent of this Escrow Agreement or any
provision of this Escrow Agreement.
16. SEVERABILITY. Each provision of this Escrow Agreement is intended to
be severable. If any term or provision of this Escrow Agreement is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity or enforcement of the remainder of this Escrow Agreement.
17. COUNTERPARTS. This Escrow Agreement and any amendment hereto may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
18. AMENDMENT. No modification or amendment to this Escrow Agreement shall
be valid unless produced in writing and signed by all of the parties hereto.
19. SUCCESSORS. This Escrow Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective assigns and transferees,
as the case may be. Escrow Agent shall not be bound by or incur any liability
with respect to this Escrow Agreement or any other agreement or understanding
between the Sellers and the Purchaser, except as in this Escrow Agreement
expressly provided.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed as of the date first above written.
XXXXX XXXXXXX XXXXX
------------------------------------------
XXXXX XXXXXX XXXXX
------------------------------------------
XXXX XXXX XXXXX
------------------------------------------
XXXX XXXX XXXXX REVOCABLE TRUST
------------------------------------------
By: XXXX XXXX XXXXX
Title: TRUSTEE
7
XXXX XXXX XXXXX GRANTOR
RETAINED ANNUITY TRUST
------------------------------------------
------------------------------------------
By: XXXXX XXXXXXX XXXXX
By: XXXXX XXXXXX XXXXX
Title: TRUSTEES
MJD VENTURES, INC.
------------------------------------------
By: ______________________________
Its: _____________________________
ESCROW AGENT
NATIONAL CITY BANK
By: ______________________________
Its: _____________________________
8
Schedule 1.4
Excluded Assets and Liabilities
Assets:
1992 Ford Explorer VIN No. 0XXXX00X0XXX00000
Stack of Lumber located in the MSH garage.
Personal and historical photographs.
1977 Wheelhorse Tractor
Liabilities:
None.
Schedule 2.3
No Violations
PPUC approval required.
Amendment to the contract dated December 14, 1999 by and between Info Avenue(R)
Internet Services, LLC and MT is needed to delete Article 11.
Schedule 2.4
Subsidiaries and Investments
SUBSIDIARIES:
MT
INVESTMENTS:
MT owns one share of Associated Network Partners, Inc.
ORGANIZATIONAL CHART
MSH is the parent company/sole stockholder of MT. Attached is the employee
organizational chart for MSH.
CONSENTS/APPROVALS FOR TRANSACTION:
PPUC approval required.
INDEBTEDNESS TO/ON ACCOUNT OF SUBSIDIARIES:
None.
SHAREHOLDERS', ETC. AGREEMENTS
None.
DIVIDENDS/DISTRIBUTIONS SINCE 12/31/96:
Capital Contributions to MT
1997 $22,500
1998 1,292
2000 60,000
-------
$83,792
SCHEDULE 2.4
Xxxxx X. Xxxxx, President & General Manager
Xxxxx X. Xxxx, Manager Xxxxx X. Xxxxxxxx
Manager
Xxxxxxx X. Xxxxx (Outside Construction, Maintenance & Repair) Xxxxx X. Xxxxxxx (Central Office
Xxxxx X. Xxxxx (Outside Construction, Maintenance & Repair) Xxxxxxx X. Xxxxxx Technician)
Xxxxxxx X. Xxxx (Outside Construction, Maintenance & Repair) (CABS & Customer Billing) Xxxxx X. Xxxxxx (Bookkeeper)
Xxxxx X. Xxxxxxxx (Outside Construction, Maintenance & Repair) Xxxxxxxx X. Xxxxx (Customer
Service)
Xxxxxxx X. Xxxxxxxx (Customer
Service)
Xxxxx X. Xxxxx (Central Office
Technician)
Schedule 2.5
Capital Stock
MSH
Total number of Authorized Shares: 2,400 shares of $25 par value common stock
and 400 shares of $100 par value preferred stock.
Issued Shares: 306 shares of common stock as disclosed on Schedule 2.7.
MT
Total number of Authorized Shares: 100 shares of $10 par value common stock.
Issued Shares: 100 shares of common stock as disclosed on Schedule 2.7.
Schedule 2.6
Corporate Books
Directors and Officers for MSH:
Directors: Xxxxx X. Xxxxx, Xxxx X. Xxxxx, Xxxxx X. Xxxxx
Officers: Xxxxx X. Xxxxx, President and General Manager
Xxxx X. Xxxxx, Secretary/Treasurer
Directors and Officers for MT:
Directors: Xxxxx X. Xxxxx, Xxxx X. Xxxxx
Officers: Xxxxx X. Xxxxx, President and General Manager
Xxxx X. Xxxxx, Secretary/Treasurer
Schedule 2.7
List of Shareholders/No Liens on Shares
MSH
1. Irrevocable Deed of Trust of Xxxx X. Xxxxx dated December 24, 1998 ("Xxxxx
XXXX").
Settlor: Xxxx X. Xxxxx
Trustees: Xxxxx Xxxxxxx Xxxxx and Xxxxx Xxxxxx Xxxxx
No. of Shares: 120 shares common stock
2. Deed of Trust dated July 28, 1993 ("MH Trust").
Settlor: Xxxx Xxxxx
Trustee: Xxxx Xxxxx
No. of Shares: 20 shares common stock
3. Xxxxx Xxxxxxx Xxxxx: 139 shares common stock
4. Xxxxx Xxxxxx Xxxxx: 27 shares common stock
MSH DIVIDENDS:
1997 $ 45,900.00
1998 114,750.00
1999 888,600.00
2000 540,988.00
MT:
1. MSH 100 shares common stock
Schedule 2.10
Employees
MSH
Xxxxx X. Xxxxx President and General Manager, Director
Xxxx X. Xxxxx Secretary, Treasurer, Director
Xxxxx X. Xxxxx Director
FULL-TIME EMPLOYEES:
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxx
Xxxxx X. Xxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxx
Xxxxx X. Xxxxx
INDEPENDENT CONTRACTORS:
Xxxxxx and Xxxx Xxxxxx, (Cleans all office buildings, grass cutting
Xxxxxxxx)
d/b/a Inside Out & Home & Lawn Care
Contact: 000-000-0000
Xxxxxx Xxxxxxxxx (Grass cutting Cokeburg C.O.)
Contact: 000-000-0000
Xxxxxxx & XxXxx (Line Construction, used on an as needed basis)
Contact: Xxxxxx Xxxxx
0-000-000-0000 (Pa Only)
Xxxxx Tree Service (Brush cutting, used on an as needed basis)
Contact: Xxxx Xxxxx
000-000-0000
Alternative Power Sources, Inc. (Emergency Generator Repair)
Contact: Xxxxxx X. Xxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
CONSULTANTS:
ICORE (NECA & FCC Filing requirements, used on an as needed basis)
Contact: Xxxxxx Xxxxxxx
610-928-3944
COMMUNICATIONS CONSULTING SERVICE (CCS) (Cad drawings, staking
Contact: Xxx Laffado sheets, maps, used on an
570-945-7024 as needed basis.)
VACATION AND SICK TIME
The following persons who will remain Company employees post-Closing have the
following sick time and vacation time as of March 31, 2001 (expressed in hours):
Sick Hours Total Available Vacation Hours
Carried Sick Hours Remaining
Name Over From 2000 Remaining in 2001* Available in 2001
---- -------------- ----------------- -----------------
Xxxxxxx Xxxx Xxxxxx 40.0 84.0 80.0
Xxxxx X. Xxxx 34.5 70.5 112.0
Xxxxx X. Xxxxx 36.0 68.0 120.0
Xxxxx X. Xxxxxxxx 4.5 44.5 120.0
Xxxxx X. Xxxxxxx 27.0 71.5 120.0
Xxxxx X. Xxxxxx 0 42.5 72.0
Xxxxxxxx X. Xxxxx 0 46.0 120.0
Xxxxxxx X. Xxxxx 56.0 168.0 119.5
Xxxxx X. Xxxxxxxx 0 32.0 112.0
Xxxxxxx X. Xxxxxxxx 0 44.0 120.0
Xxxxxxx X. Xxxx 43.0 49.0 120.0
Xxxxx X. Xxxxx 4.5 24.5 79.0
------ ------ --------
TOTAL 233.5 744.5 1,294.5
*Amounts include hours from Column 1 carried over from 2000.
2
Schedule 2.11
Absence of Certain Changes
(a) It is the intention of AT&T Communications of Pennsylvania, Inc. and TGC
Pittsburgh to supply facilities-based competitive local exchange services within
the MSH service area. See description in Section A.3. of Schedule 2.15.
(c) See dividends paid on Schedule 2.7.
(h) MSH transferred a tract of real estate adjacent to its main office in the
Borough of Xxxxxxxx and granted an easement over its remaining land from
Magnolia Avenue to such tract to Xxxxx X. Xxxxx in 2001.
(i) MSH gave notice of termination of its contract with Illuminet for billing
and collection services in December, 2000, such termination to be effective in
March of 2001.
See also list of cancelled or terminated contracts in Schedule 2.12.
Schedule 2.12
Contracts
1. See Attached List of Written Contracts.
2. Employee Benefit plans disclosed on Schedule 2.19.
3. Rural Electrification Administration Telephone Loan Contract Amendments
and related documents:
REA Project Designation: Pennsylvania 525-E8 Xxxxxxxx
(a) Telephone Loan Contract Amendment Dated as of June 3, 1974 between
Xxxxxxxx And Scenery Hill Telephone Company and United States of America. No. 2
(b) Same as above except marked No. A
(c) Mortgage Note made by Xxxxxxxx And Scenery Hill Telephone Company to
United States of America (No. A) ($665,000)
(d) Supplemental Mortgage made by Xxxxxxxx And Scenery Hill Telephone Company
to United States of America.
(e) Amendment Dated as of September 2, 1971 to Telephone Loan Contract Dated
as of February 26, 1958, as amended between Xxxxxxxx And Scenery Hill Telephone
Company and United States of America
(f) Mortgage Dated as of May 17, 1958 made by Xxxxxxxx And Scenery Hill
Telephone Company to United States of America No. 2 (with recording references
MBV 1779 Page 358 et seq.)
(g) Uniform Commercial Code of Pennsylvania Continuation Statement to Recorder
of Deeds, Washington County, Pennsylvania dated April 22, 1963
(h) Supplemental Mortgage made by Xxxxxxxx And Scenery Hill Telephone Company
to United States of America and Financing Statement under Uniform Commercial
Code of Pennsylvania No. 2 (with recording references MBV 1781 Page 319 et seq.)
(i) Uniform Commercial Code of Pennsylvania Continuation Statement to Recorder
Washington County dated February 23, 1971
(j) Supplemental Mortgage made by Xxxxxxxx And Scenery Hill Telephone Company
to United States of America No. A (with recording references MBV 1792 Page 338
et seq.)
4. Bethlehem Mines Lease Agreement for pole yard dated April 1, 1982
disclosed on Schedule 2.14(b).
5. Purchase Order No. 99029 dated March 24, 1999 issued to Nortel Networks
for 3 year switch upgrade.
6. Miscellaneous agreements which cannot be located or have not been reduced
to writing:
(a) Guardian Protection Service (Burglar Alarm four buildings) - no
written contract;
(b) Waste Management Services (garbage pickup) - no written contract;
(c) Xxxxx Xxxxxx Company LLP (audit);
(d) Collection Service Center (bad debt collection of customer accounts);
(e) Pitney Xxxxx (postage meter - quarterly rental);
(f) Nextel Communications (communications dispatch equipment - month to
month rental); and
(g) Cane Business Forms and Supplies (billing forms and paper) - no
written contract.
7. Designation by letter of Kraskin, Lesse & Xxxxxx, LLP as agent for MT in
the District of Columbia.
8. Letter Agreement to Amend Contract dated September 8, 1986 between MSH and
The United Telephone Company of Pennsylvania and United Telephone Company of New
Jersey, Inc. for provision of customer name and address information for
compliance with customer confidentiality regulations of the PA PUC.
9. Power of Attorney granted to Icore, Inc. (pay phone clearing house) dated
July 21, 1997.
10. Contract for Administrative Operating Company (AOC) Services with Lockheed
Xxxxxx IMS Corporation.
11. Interim Traffic Interconnection Agreement between MSH and TCG Xxxxxxxxxx.
00. ILLUMINET contracts (formerly U.S. Intel Co.).
13. Agreement for the Sharing of Infrastructure under Section 259 of The
Telecommunications Act of 1996.
14. Split Dollar Agreement between MSH and Xxxxx Xxxxx dated June 8, 1990.
15. Agreement for computer hardware maintenance with COMPAQ Computer Services
with a term commencing March 1, 2001, and continuing to February 28, 2002.
16. Agreement for ISP services between MT and Bethlehem Center School District
to be dated April 9, 2001.
2
17. Agreement to provide billing and collecting services for AT&T for customer
name and address changes and denial and restoration of toll services (copy not
found).
18. See attached list of Xxxx Telephone contracts.
3
SCHEDULE 2.12
XXXXXXXX AND SCENERY HILL TELEPHONE COMPANY
1. LIST OF WRITTEN CONTRACTS
--------- --------------------------------------- -----------------------------------------------------
NO. TITLE PARTIES
--------- --------------------------------------- -----------------------------------------------------
1 General Joint Pole Agreement West Penn Power Company
Xxxxxxxx and Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
2 Operation Routine for the General West Penn Power Company
Joint Agreement Xxxxxxxx and Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
3 Agreement for Disclosure of Technical Xxxx Telephone Company of Pennsylvania
and Other Information Xxxxxxxx & Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
4 Jointly Provided Interstate Access The Xxxx Telephone Company of Pennsylvania
Compensation Agreement Xxxxxxxx and Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
5 Single Xxxx/Multiple Tariff Option Xxxxxxxx and Scenery Hill Telephone Company
Agreement for Jointly Provided The Xxxx Telephone Company of Pennsylvania
Switched Access
--------- --------------------------------------- -----------------------------------------------------
6 Telecommunications Services and Xxxx Telephone Company of Pennsylvania
Facilities Agreement Xxxxxxxx and Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
7 Compensation for intraLATA Operator Xxxx of Pennsylvania
Functions Xxxxxxxx and Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
8 Memorandum of Understanding For Xxxx of Pennsylvania
Feature Group A Compensation Agreement Xxxxxxxx and Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
9 Memorandum of Understanding of Xxxx Telephone Company of Pennsylvania
Billing of Jointly Provided Xxxxxxxx &Scenery Hill Telephone Company
Interexchange Access Facilities
--------- --------------------------------------- -----------------------------------------------------
10 Voice Service Agreement Xxxxxxxx and Scenery Hill Telephone Company
Pennsylvania One Call System, Inc.
--------- --------------------------------------- -----------------------------------------------------
11 Memorandum of Understanding Covering Xxxx of Pennsylvania
890 Compensation Xxxxxxxx & Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
12 Single Xxxx/Multiple Tariff Option Xxxxxxxx and Scenery Hill Telephone Company
Agreement for Jointly Provided The Xxxx Telephone Company of Pennsylvania
Switched Access
--------- --------------------------------------- -----------------------------------------------------
--------- --------------- ------------------------------------------------------------
NO. DATE CONTENT SUMMARY
--------- --------------- ------------------------------------------------------------
1 Granting right of joint use of each other's poles in the
12/15/1966 territory now held or may in the future acquire franchises
for installation and maintenance of poles.
--------- --------------- ------------------------------------------------------------
2 Establish uniform practice and procedures applying to
12/15/1966 joint pole work under the General Joint Agreement
--------- --------------- ------------------------------------------------------------
3 Disclosure and furnishing of technical or other
8/11/1975 information in the joint provision of telecommunications
service.
--------- --------------- ------------------------------------------------------------
4 Provision to The Xxxx Telephone Company of Pennsylvania of
6/28/1984 compensation relative to Jointly Provided Intrastate
Access.
--------- --------------- ------------------------------------------------------------
5 8/22/1985 Terms, methods, and procedures associated with the
application of Single Xxxx/Multiple Tariff Option
governing the Meet Point Billing of Jointly Provided
Switched Access Services
--------- --------------- ------------------------------------------------------------
6 Terms and Conditions for the joint provision of
1/1/1986 telecommunications services and facilities.
--------- --------------- ------------------------------------------------------------
7 No charge for access to IntraLATA BLV and CRI.
7/22/1986
--------- --------------- ------------------------------------------------------------
8 Compensation methodology for sharing of Interstate and
12/8/1986 Intrastate Feature Group A (FGA) revenue.
--------- --------------- ------------------------------------------------------------
9 Agreement that Meet Point billing of local transport
9/16/1987 revenue associated with Jointly provided Interexchange
Access facilities.
--------- --------------- ------------------------------------------------------------
10 Application for telephonic underground location request
12/15/1988 notification and membership.
--------- --------------- ------------------------------------------------------------
11 Compensation arrangement covering 890 message totals and
12/19/1988 minute totals.
--------- --------------- ------------------------------------------------------------
12 4/1/1990 Terms, methods, and procedures associated with the
application of Single Xxxx/Multiple Tariff Option
governing the Meet Point Billing of Jointly Provided
Switched Access Services
--------- --------------- ------------------------------------------------------------
--------- --------------------------------------- -----------------------------------------------------
NO. TITLE PARTIES
--------- --------------------------------------- -----------------------------------------------------
13 Reciprocal Agreement for Billing Xxxxxxxx and Scenery Hill Telephone Company
Verification Service Xxxx Atlantic Network Services, Inc.
--------- --------------------------------------- -----------------------------------------------------
14 CATV Pole Attachment Agreement Xxxxxxxx and Scenery Hill Telephone Company
Bentleyville Telephone Company
--------- --------------------------------------- -----------------------------------------------------
15 CATV Pole Attachment Agreement Xxxxxxxx and Scenery Hill Telephone Company
Times Mirror Cable Television of Washington, Inc.
--------- --------------------------------------- -----------------------------------------------------
16 CATV Pole Attachment Agreement Xxxxxxxx and Scenery Hill Telephone Company
Helicon Cabletelevision
--------- --------------------------------------- -----------------------------------------------------
17* Non-Disclosure Agreement Xxxxxxxx and Scenery Hill Telco
Xxxx Atlantic Corporation
--------- --------------------------------------- -----------------------------------------------------
18 Agreement for Digital Database Load Xxxx of Pennsylvania (Xxxx Atlantic)
Xxxxxxxx and Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
19 Agreement Xxxxxxxx and Scenery Hill Telephone Company
Xxxx Atlantic Network Services, Inc.
--------- --------------------------------------- -----------------------------------------------------
20 Purchase Agreement Xxxxxxxx and Scenery Hill Telephone Company
FUJITSU Network Transmission Systems, Inc.
--------- --------------------------------------- -----------------------------------------------------
21 ITORP Table Change Xxxx Atlantic
Xxxxxxxx & Scenery Hill Telephone Company
--------- --------------------------------------- -----------------------------------------------------
22 Agreement Xxxxxxxx and Scenery Hill Telephone Company
Yellow Book MID-Atlantic, L.P.
--------- --------------------------------------- -----------------------------------------------------
23 Designation of Agent in the District Xxxxxxxx Tel., Inc.
of Columbia Federal Communications Commission
--------- --------------------------------------- -----------------------------------------------------
24 Participation Agreement Associated Network Partners, Inc.
Xxxxxxxx Tel., Inc.
--------- --------------------------------------- -----------------------------------------------------
25 License Agreement Info Avenue Internet Services, LLC
Xxxxxxxx Tel., Inc. d/b/a Roadlynx
--------- --------------------------------------- -----------------------------------------------------
26 Master Purchase and License Agreement Xxxxxxxx and Scenery Hill Telephone Company
Nokia High Speed Access Products, Inc.
--------- --------------------------------------- -----------------------------------------------------
27 A Binder of Insurance Coverages Xxxxxxxx and Scenery Hill Telephone Company
Xxxxxxxx Telephone, Inc.
d/b/a Xxxxxxxx and Scenery Hill Long Distance
Xxxxxxxx and Scenery Hill Cellular
Telcom Insurance Services Corporation
--------- --------------------------------------- -----------------------------------------------------
--------- --------------- ------------------------------------------------------------
NO. DATE CONTENT SUMMARY
--------- --------------- ------------------------------------------------------------
13 Provide telephone end-users name and address information.
9/3/1991
--------- --------------- ------------------------------------------------------------
14 Granting permission to make attachments of cable and
5/1/1992 necessary facilities to poles.
--------- --------------- ------------------------------------------------------------
15 Granting permission to make attachments of cable and
10/2/1992 necessary facilities to poles.
--------- --------------- ------------------------------------------------------------
16 Granting permission to make attachments of cable and
10/15/1992 necessary facilities to poles.
--------- --------------- ------------------------------------------------------------
17* Confidential technical and business information concerning
11/13/1992 Common Channel Signaling node point code assignments.
--------- --------------- ------------------------------------------------------------
18 Exchange carriers directory database load to International
2/1/1993 Computaprint Corporation for their format conversion.
--------- --------------- ------------------------------------------------------------
19 Provide manual and automated intra-LATA toll, assistance
11/14/1994 and miscellaneous operator services for the Independent
Dial Offices utilizing TOPS serving switches.
--------- --------------- ------------------------------------------------------------
20 Purchase of multiphexers, light xxxx transmission
10/1/1995 equipment, regenerators, and other equipment, software and
services.
--------- --------------- ------------------------------------------------------------
21 Update ITORP tables to reflect tandem switch.
2/20/1996
--------- --------------- ------------------------------------------------------------
22 Granting exclusive right to solicit and sell all
1/31/1999 advertising for publication in classified directories; and
exclusive right to compile and publish classified
directories.
--------- --------------- ------------------------------------------------------------
23 Designation of Kraskin, Lesse & Xxxxxx, XX as Agent in
5/20/1999 District of Columbia for Service
--------- --------------- ------------------------------------------------------------
24 Right to acquire non-facilities based intraLATA,
6/9/1999 interLATA, interstate and international toll and related
operator services.
--------- --------------- ------------------------------------------------------------
25 Provide access to Internet with other rights and services.
12/14/1999
--------- --------------- ------------------------------------------------------------
26 Purchase of high speed DSL access technology and related
1/28/2000 products and services.
--------- --------------- ------------------------------------------------------------
27 Blanket insurance: Deluxe Property, Energy Max Coverage,
6/29/2000 Commercial Crime, Commercial General Liability, Auto
to Liability and Physical Damage, Catastrophe Umbrella
6/29/2001 Coverage, Workers Compensation
--------- --------------- ------------------------------------------------------------
2
--------- --------------------------------------- -----------------------------------------------------
NO. TITLE PARTIES
--------- --------------------------------------- -----------------------------------------------------
28 Pole Attachment Agreement Xxxxxxxx and Scenery Hill Telephone Company
Allegheny Communications Connect, Inc.
--------- --------------------------------------- -----------------------------------------------------
29 Application for Special Permission Federal Communications Commission
ICORE, INC.
--------- --------------------------------------- -----------------------------------------------------
30 SR-Ten Program Terms and Conditions Xxxxxxxx and Scenery Hill Telephone Company
Nortel Networks, Inc.
--------- --------------------------------------- -----------------------------------------------------
--------- --------------- ------------------------------------------------------------
NO. DATE CONTENT SUMMARY
--------- --------------- ------------------------------------------------------------
28 Granting permission to make attachments of cable and
8/23/2000 necessary appurtenant facilities to poles.
--------- --------------- ------------------------------------------------------------
29 Waiver of Sections of the Commission's Rules for Carriers.
12/2/2000
--------- --------------- ------------------------------------------------------------
30 Purchase of Hardware and generics.
Not Dated
--------- --------------- ------------------------------------------------------------
3
XXXXXXXX SCENERY HILL TELEPHONE
18. CONTRACTS XXXX TELEPHONE COMPANY, XXXX OF PA,
XXXX ATLANTIC OR XXXX ATLANTIC NETWORK SERVICES Effective Executed
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
1. Table of Contents
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
2. Telecommunications Service and Facilities Agreement August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
3. Exhibit A Index of Appendices January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
4. Exhibit B Routing and Connection of Facilities January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
5. Exhibit C Time Line for ITORP Data Processing January 1, 1986
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
6. Appendix 1 Intralata Telecommunications Services January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
7. Amendment to Exhibit A Appendix 1 January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
8. Amendment 1 to Exhibit A January 1, 1991 June 30, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
9. Schedule 1 Appendix 1 Rates for Toll Switching, Toll Terminals,
Intertoll Trunking Facilities January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
10. Schedule 2 Appendix 1 Rates for Toll Switching, Toll Terminals,
Intertoll Trunking Facilities No Dates
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
11. Attachment 1 to Exhibit A to Appendix 1 No Dates
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
12. Appendix 2 Ancillary Services January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
13. Exhibit A, Appendix 2 Recording, Message Processing (Rating) Message Prov. January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
14. Exhibit B, Appendix 2 Collection and Remittance of Revenues January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
15. Exhibit C, Appendix 2 Billing, Collection and Transmission of Wide Area
Telecommunications Service (WATS) and 8 January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
16. Exhibit D, Appendix 2 Administration of the Intralata Toll Originating
Resp. Plan (ITORP) January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
17. Exhibit E, Appendix 2 Directory Assistance and Intercept Services January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
18. Exhibit E Attachment 1 Cancelled Cancelled
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
19. Exhibit E Attachment 2 Basis for Compensation for Directory Assistance January 1, 1986 August 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
20. Exhibit E Attachment 3 Basis for Compensation for Intercept Services Cancelled Cancelled
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
21. Exhibit G, Appendix 2 Provision of Cellular Billing January 1, 1991 December 18, 1992
--------- ---------------------------------------------------------------------------- ---------------------------------------------
22. Exhibit G, Appendix 2 Attachment 1 January 1, 1991 December 18, 1992
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
23. Exhibit H, Appendix 2 Common Channel Signaling Service Agreement January 1, 1986 August 11, 1997
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
24. Appendix 5 Jointly Provided Feature Group A Compensation July 24, 1986 June 15, 1988
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
*25. Exhibit A Basis of Compensation Appendix 5 (Jointly Provided FG-A
Compensation) Cancelled Cancelled
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
26. Amended Exhibit A Basis of Compensation Appendix 5 (Jointly Provided
FG-A Compensation) January 1, 1987 March 22, 1990
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
*27. Appendix 6 Jointly Provided Feature Group B Compensation Cancelled Cancelled
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
*28. Exhibit A, Appendix 6 (Jointly Provided FG-B Compensation) Cancelled Cancelled
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
29. Exhibit B, Appendix 6 Independent Company End Offices and Associated
Xxxx XX-B Tandems January 1, 1987 June 6, 1989
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
++30. Xxxxxxxx 0 Xxxxxxxx Xxxx Service Cancelled Cancelled
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
31. Exhibit A, Appendix 7 Exhibit A Basis of Compensation October 1, 1993 January 5, 1996
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
32. Attachment 1 Exhibit A Appendix 7
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
33. Appendix 8 800 Number Data Base Access Services May 1, 1993 January 22, 1999
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
34. New Operator Services Policy September 1, 1984 June 30, 1995
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+35. Operator Services Agreement Appendix A, B, D October 15, 1994
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+36. Single Xxxx/Multiple Tariff Option Agreement for Jointly Provided
Switched Access April 1, 1990 May 6, 1991
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+37. Exhibit A Basis of Compensation Single Xxxx/Multiple Tariff Option
Agreement for Jointly Provided Switched Access April 1, 1990 May 6, 1991
--------- ------------------------------------------------------------------ ------------------------- -------------------
+38. Reciprocal Agreement for Billing Verification Service September 3, 1991
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
39. Busy Line Verification and Customer Request Interrupt (Concurrence Letter) July 23, 1986
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+40. Digital Database Load February 1, 1993 January 1, 1993
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+41. Memorandum of Understanding of Billing of Jointly Provided
Interexchange Access Facilities September 11, 1987
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+42. Jointly Provided Intrastate Access Compensation January 1, 1984 June 28, 1994
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+43. Memorandum of Understanding for Feature Group A Compensation Cancelled Cancelled
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+44. Jointly Provided Access Points of Connection Approval August 22, 1985 May 6, 1991
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
45. Disclosure Letter Dated August 11, 1975
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+46. 890 Service Memorandum of Understanding December 8, 1988
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+47. ITORP Table Change (Letter Dated February 20, 1996)
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
+48. Non-Disclosure Agreement Dated November 13, 1992 (Exhibits A and B) November 13, 1992
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
49. Authorization Letter (to provide terminating trunk blocking data) March 27, 1989
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
50. Appendix 6 Jointly Provided Feature Group B Compensation Amended
Exhibit A April 1, 1989 March 22, 1990
--------- ---------------------------------------------------------------------------- ------------------------- -------------------
----------
*Cancelled
+Also listed on List of Written Contracts (Item No. 1) of Schedule 2.12)
++Parties are still operating under this agreement on a month-to-month basis.
2
Schedule 2.14(a)
Owned Property, Liens
A. REAL PROPERTY:
1. STORAGE BUILDING: Xxxxxx Xxxxxx Xxxx, Xxxxxxx Xxxx, XX 00000 (North
Bethlehem Township). Deed from Xxxxxxx X. Home and Xxxx Virginia Home to
Xxxxxxxx And Scenery Hill Telephone Company, dated August 25, 1955, recorded in
Deed Book 948, Page 318, Washington County Records.
2. GARAGE PROPERTY: 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, XX 00000 (West
Bethlehem Township). Deed from Xxxxxxxx X. Home to Marianna And Scenery Hill
Telephone Company, dated April 3, 1962, recorded in Deed Book 1126, Page 514,
Washington County Records.
3. LOT 1, MARIANNA BUSINESS OFFICE: 00 Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000
(Xxxxxxxx Borough). Deed from Xxxxx Xxxxxx to Marianna And Scenery Hill
Telephone Company, Inc., dated April 30, 1969, recorded in Deed Book 1297, Page
1119, Washington County Records.
4. TRIANGULAR PIECE OF LOT 1: 00 Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000
(Xxxxxxxx Borough). Deed from Xxxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx, dated May
19, 1958, recorded in Deed Book 1020, Page 454, Washington County Records.
5. MARIANNA CENTRAL OFFICE: 00 Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000 (West
Bethlehem Township). Deed from Xxxxxxx X. Xxxxx and Xxxx Xxxxxxxx Xxxxx to
Xxxxxxxx-Scenery Hill Telephone Company, dated June 17, 1955, recorded in Deed
Book 932, Page 404, Washington County Records.
6. XXXX 00, 00, 00: Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000 (West Bethlehem
Township). Deed from Xxxxxx X. Xxxxx to Marianna And Scenery Hill Telephone
Company, Inc., dated September 26, 1984, recorded in Deed Book 2226, Page 307,
Washington County Records.
7. COKEBURG CENTRAL OFFICE: 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000
(Cokeburg Borough). Deed from The School District of the Borough of Cokeburg, PA
to Xxxxxxxx and Scenery Hill Telephone Company, dated May 11, 1964, recorded in
Deed Book 1176, Page 330, Washington County Records.
B. PERSONAL PROPERTY:
Listed in "Continuing Property Record" maintained at Marianna Business
Office, access to which has been provided to MJD Ventures, Inc.
C. MORTGAGE LIENS
1. Mortgage from MSH to United States of America dated May 18, 1958
recorded in Mortgage Book 531, Page 391, Washington County Records.
2. Supplemental Mortgage from MSH to United States of America dated April
24, 1966 recorded in Mortgage Book 679, Page 519, Washington County Records.
3. Supplemental Mortgage from MSH to United States of America dated
October 25, 1974 recorded in Mortgage Book 847, Page 77, Washington County
Records.
2
Schedule 2.14(b)
Leased Property
Bethlehem Mines Lease Agreement for pole yard dated April 1, 1982.
Schedule 2.14(c)
Regulatory/Zoning Compliance
None.
Schedule 2.14(e)
Condition
The following assets have been taken out of use as of December 31, 2000.
(Journal entries for each asset have been delivered to Purchaser.)
General Journal/Asset No. Account No. Amount
------------------------- ----------- ------
1. GJ16 - 1977 Wheelhorse 2116.01.0 $ 2,243.28
Lawn Xxxxxxx
0. XX00 - 0000 Xxxxx/Xxxx 2121.01.0 510.30
3. GJ16 - 1976 Fencing 2121.01.0 209.00
4. GJ16 - 1977 Fencing 2121.01.0 137.50
5. GJ16 - 1991 TMX Radios (2) 2123.02 3,492.17
6. GJ16 - 1991 TMX Radios (3) 2123.02 2,130.60
7. GJ16 - RT40 - 24 Channel Rem 2232.01.0 12,690.05
Rem. DLC (94) (Cokeburg)
8. GJ16 - D3 Channel Bank Cards (2) 2232.01.0 3,582.10
FXO Channel Units (96) (Cokeburg)
9. GJ16 - Westcom Rack (80) 2232.01.0 444.52
(Marianna)
10. GJ16 - Xxxxxxxx Remote (89) 2232.01.0 30,767.30
(Marianna)
11. GJ16 - Repeater Housing 2232.01.0 541.20
(Xxxxxxxx) (89) (Marianna)
12. GJ16 - Channel Units - 2232.01.0 1,220.91
Integra Bank (94) (Marianna)
13. GJ16 -TBMDS 160815M 2232.02.0 438.00
Cable (4) (97) (Marianna)
14. GJ16 - Input/Output Cables (97) 2232.02.0 949.00
(Marianna)
15. GJ16 - 2 Party 2TO7AA (82)
(Nortel) 2212.01.0 1,891.22
(Cokeburg)
16. Poles Year Quantity 2411.01.0 794.92 - 25' poles
----- ---- --------
25' 59 2
25' 67 1
25' 69 1
25' 70 1
25' 80 5
25' 88 1
30' 69 2
30' 80 1
30' 85 1
30' 87 1
30' 88 1
30' 92 1
30' 93 2 1,350.35 - 30' poles
Anchors 80 1 203.65
-------
2
Schedule 2.15
Litigation
A. OUTSTANDING REGULATORY LITIGATION
1. PTA ASSESSMENT. Objections Of The Pennsylvania Telephone Association On
Behalf Of Its Members, And Individually To The Fiscal Year July 1, 1997 Through
June 30, 1998 General Assessment Objections Of The Pennsylvania Telephone
Association On Behalf Of Its Members, And Individually To The Fiscal Year July
1, 1998 Through June 30, 1999 General Assessment Docket Nos. M-00970994 Through
M-00971031 Docket Nos. M-000981120 Through M-00981156. MSH is involved in
litigation brought by the Pennsylvania Telephone Associations of behalf of its
members against AT&T Communications of Pennsylvania, wherein it (and other local
exchange carriers in Pennsylvania) are seeking a refund of assessments overpaid
to the PPUC during the two fiscal years noted above due to misreporting by AT&T.
The matter was recently the subject of a Motion at Public Meeting. It is not
anticipated that MSH has any liability in this proceeding. Rather, it is likely
that MSH will receive a credit on its next PPUC Assessment xxxx in the nature of
a refund.
2. AT&T ASSESSMENT. Objections of AT&T Communications of Pennsylvania to
Fiscal Year July 1, 1999 through June 30, 2000 General Assessment, Docket No.
M-00991304. This is an objection brought by AT&T against MSH and other local
exchange carriers, seeking a refund of its assessment paid for the PPUC fiscal
year indicated in the above caption. Based upon the recent motions included
above relative to the PTA Assessment case, it is not anticipated that MSH will
have liability in this proceeding.
3. AT&T APPLICATION. In Re Application of AT&T Communications of
Pennsylvania, Inc. and TCG Pittsburgh to Amend their Certificates of Public
Convenience to begin to offer, render, furnish, or supply Facilities-Based
Competitive Local Exchange Telecommunications Services in the Service
Territories of ALLTEL Pennsylvania, Inc., Xxxxxxxxx Telephone
Company-Pennsylvania, The Bentleyville Telephone Company, Citizens Telephone
Company of Kecksburg, Hickory Telephone Company, Marianna & Scenery Hill
Telephone Company, North Pittsburgh Telephone Company, Yukon-Waltz Telephone
Company, Docket Nos. A-310125F0002, A-310213F0002. AT&T has filed an application
to provide local exchange service in an area surrounding Pittsburgh, which
includes the service territory of MSH. The application was approved at a recent
Public Meeting.
4. OCA DIRECTORY ASSISTANCE COMPLAINT. Office of Consumer Advocate v.
ALLTEL Pennsylvania, Inc., et al.; Docket No. P-00981397C001. Two years ago, MSH
filed a revised directory assistance rate, consistent with an order entered by
the PPUC. The Office of Consumer Advocate ("OCA") filed a complaint shortly
thereafter and recently amended that complaint. The original OCA complaint was
filed on February 26, 1999 and is still pending before the Commission.
5. WEST PENN POLE CASE. ALLTEL Pennsylvania, Inc., Xxxx
Atlantic-Pennsylvania, Inc., The Citizens Telephone Company of Kecksburg,
Marianna & Scenery Hill Telephone Company, North Pittsburgh Telephone Company,
and The United Telephone Company of
Pennsylvania (t/d/b/a Sprint) v. West Penn Power Company, Docket No. C-00992532.
The basis of this action is West Penn's assertion that MSH is liable to it for
trimming charges for rights of way that West Penn allegedly has performed on
behalf of Marianna & Scenery Hill. MSH has claimed before the PPUC that it does
not owe the money. The matter is pending before the PPUC.
6. CHAPTER 30 PLAN. MSH is participating in a consolidated Chapter 30
proceeding filed by a group of small, rural exchange carriers. The matter has
been fully litigated before the Commission and is in the compliance stage.
Objection to the compliance filing made by MSH and other members of the group
was filed on a narrow set of issues.
7. APPLICATION OF ADELPHIA BUSINESS SOLUTIONS. Application of Adelphia
Business Solutions Operations, Inc. for Approval to Offer, Render, Furnish or
Supply Telecommunication Services as Competitive Local Exchange Carrier to the
Public in the Commonwealth of Pennsylvania; Docket No. A-310923F0002, AMA, AMB
and AMC. Adelphia Business Solution Operations, Inc. has filed an application to
be a local exchange carrier throughout Pennsylvania, including the territories
served by MSH. MSH has filed a protest and the matter has been in negotiations
between the parties. No hearings have been held. Based upon settlement
discussions, it appears that Adelphia Business Solutions is willing to withdraw
MSH from its proposed service area.
B. OTHER MATTERS
1. GLOBAL PROCEEDING. On September 30, 1999, the PPUC issued its decision
in the so-called Global Proceeding, which was the consolidation of numerous
generic dockets then pending at the PUC. There were several compliance
requirements of local exchange carriers.
2
Schedule 2.16
Tax Matters
Tax Returns: See attached summary.
Tax Liens: None.
Requested Filing Extensions: Automatic extensions for state and federal returns
for 1995, 1996 and 1997 were obtained and automatic extensions were obtained for
most years prior thereto.
Proceedings, Examinations, Claims and Audits:
1. For the years 1999 and 2000, the IRS asserted several alleged
underpayments and credited several alleged overpayments of MSH's federal excise
tax deposits (Form 720) and imposed some deposit penalties, all of which have
been paid, as described in copies of correspondence delivered to Purchaser. A
transcript of payments has been received by MSH from the IRS showing its excise
tax deposit account to be in balance as of December 31, 2000.
2. Successful appeal of claim relating to Pennsylvania Public Utility
Realty Tax which Department of Revenue's records do not yet reflect.
As of December 31, 2000, MSH has recorded $1,624.00 of deferred taxes related to
potential built-in gains taxes on investments.
See attached Subchapter S Earnings Account as of December 31, 2000.
Upon completion of the stock purchase and the revocation of the MSH S election,
a liability account will be required on the MSH balance sheet for deferred
income taxes arising from the difference in basis of assets and liabilities
between financial statement reporting and federal income tax reporting of MSH.
Power of Attorney granted to Xxxxx Xxxxxx on U.S. Treasury Department Form 2848
Schedule 2.17
Bank and Brokerage Accounts
MSH
Bank Name Account No. Type of Account Authorized Signatures
--------- ----------- --------------- ---------------------
Northwest Savings Bank 974200198 Checking Xxxxx X. Xxxxx
Xxxx X. Xxxxx
Northwest Savings Bank 00000000 Insured Money Xxxxx X. Xxxxx
Market Xxxx X. Xxxxx
National City Bank UG46 5822 9762 Resource Account Xxxxx X. Xxxxx
Xxxx X. Xxxxx
Northwest Savings Bank 1973001736 CD Xxxxx X. Xxxxx
Xxxx X. Xxxxx
Northwest Savings Bank 1973002213 CD Xxxxx X. Xxxxx
Xxxx X. Xxxxx
First Union Securities R102 5822 9765 Brokerage Xxxxx X. Xxxxx
Xxxx X. Xxxxx
First Union Securities R102 5822 9760 Brokerage Xxxxx X. Xxxxx
Xxxx X. Xxxxx
MT
Northwest Savings Bank 974200081 Checking Xxxxx X. Xxxxx
Xxxx X. Xxxxx
Schedule 2.19
Employee Benefit Plans
The Retirement and Security Program of the National
Telephone Cooperative Association and its
Member Systems Company contributions only.
The Savings Plan of the National Telephone
Cooperative Association and its Member
Systems Employee contributions only.
Single A Plan of the Group Health Program
of the National Telephone Cooperative
Association and its Members Company contributions only.
Includes:
Employee Group Life Insurance
Director Group Life Insurance
Long Term Disability Insurance
Group Health Program
Hi Limit Business Travel and Accident
Personal Telephone Service See Employee handbook, a
copy of which has been delivered
to Purchaser
UNDOCUMENTED BENEFITS
Incentive Bonus At President's discretion.
Christmas Bonus $50.00 + 1% of
salary for first full year of
service; additional $10.00 for
each year thereafter plus 1% of
salary.
Schedule 2.20
Intellectual Property
1. Trade name used by MT: "Marianna-Scenery Hill Long Distance Company"
Fictitious name registration filed December 13, 1996 as amended
Febraury 18, 1997.
2. Domain Name and Trade Name used by MT: "Roadlynx"
Schedule 2.21
Environmental Matters
MSH identified the following two (2) underground storage tanks (USTs) at
its garage property located in Xxxxxxxx Borough, Washington County, PA:
one (1) 1,000 gallon steel underground gasoline storage tank;
one (1) 1,500 gallon steel underground gasoline storage tank;
The USTs and all associated piping were removed by a certified tank
removal firm and scrapped and disposed of at an EPA approved disposal facility.
81.5 tons of petroleum contaminated soils were removed and disposed of at an EPA
approved disposal facility. Open excavation was backfilled using clean
compactible materials. Certain monitoring xxxxx were installed for analysis
and/or treatment of migrate contaminants.
All appropriate personnel, including the Pennsylvania DEP, Washington
County Fire Xxxxxxxx, Commonwealth of Pennsylvania Fire Xxxxxxxx and the
Pennsylvania One-Call System, were notified in accordance with all local, state
and federal regulations.
The Pennsylvania DEP issued a No Further Closure/Remediation/Assessment
Activities Letter dated March 21, 1997 (the "No Further Action Letter"). A copy
of the No Further Action Letter, the Underground Storage Tank Closure Report
prepared by American Environmental Industries, Inc., Washington, Pennsylvania,
and all related reports and correspondence and related materials have been
provided to Purchaser.
MSH is a party to a General Joint Pole Agreement (disclosed on Schedule
2.12) with West Penn Power Company pursuant to which the parties have granted
each other reciprocal use of each other's poles. Certain of these poles may have
been treated with hazardous materials by their manufacturers. In addition,
certain of these poles may have attached to them transformers owned by the West
Penn Power Company, which transformers may contain hazardous material including
PCBs.
Schedule 2.22
Capital Expenditures and Investments
Commitments for Capital Expenditures:
1. Purchase Order No. 99029 dated March 24, 1999 issued to Nortel Networks
for 3 year switch upgrade disclosed at 5 on Schedule 2.12.
2. Commitment to Capital Expenditures for a broadband network under
Chapter 30 Plan discussed at A.6 of Schedule 2.15.
See attached description of Capital Expenditures and Investments since
December 31, 2000.
See attached copies of 2001 and 2002 Capital Expenditures Budgets.
Schedule 2.23
Dealings with Affiliates
MSH provides all customer billing services for MT. Attached is a list of
all revenue collected by MSH for MT and paid to MT for 2000. Comparable payments
have been made in 2001.
MSH provides technical, bookkeeping and administrative services to MT via
its employees.
MSH contributed capital to MT as referenced in Schedule 2.4
Schedule 2.24
Insurance
DESCRIPTION OF POLICIES:
1. DIRECTORS, OFFICERS, MANAGERS LIABILITY*
Federal Insurance Company
Policy No.: 8156-09-98
Amount of Premium: $1,350
Limit: $2,000,000
2. FIDUCIARY LIABILITY*
Federal Insurance Company
Policy No.: 8156-10-00
Amount of Premium: $384
Limit: $2,000,000
3. OUTSIDE DIRECTORSHIP LIABILITY*
Federal Insurance Company
Policy No.: 8156-10-00
Amount of Premium: $0
Limit: $2,000,000
4. COMMERCIAL GENERAL LIABILITY; DELUXE PROPERTY COVERAGE; DELUXE BUSINESS
INCOME COVERAGE; EARTHQUAKE; BROAD FORM FLOOD, ETC.**
Telecom Insurance Group/The Travelers Insurance Companies+
NOTE: The policies listed as Items 1, 2 and 3 above will terminate as a result
of changes in the identity of the insured officers and directors.
*Declarations provided to Purchaser.
**Premium Summary, Limits, Restrictions, etc. provided to Purchaser.
+ Detailed Loss Run is attached.
Schedule 2.25
Brokerage Commission
Xxxxxxxxxx Capital Corporation will have a claim for a sales commission on the
sale of stock of MSH pursuant to an engagement letter dated July 19, 2000, a
copy of which is attached. Sellers will pay this commission.
Schedule 2.26
Permits
CERTIFICATES
1. LOCAL EXCHANGE CARRIER AUTHORITY. MSH operates as a local exchange
carrier in Pennsylvania. Its service territory is defined in tariff by
description and also by map. Generally speaking, certificates to provide local
exchange service for the incumbents are numerous years old. The Company does not
possess a copy of MSH's local exchange carrier original certificate, if one
exists.
2. INTRALATA, INTEREXCHANGE CARRIER/RESELLER CERTIFICATE. On July 17,
1997, the PPUC issued a Certificate of Public Convenience to MT to operate as an
interexchange reseller.
3. UNITED STATES POSTAL SERVICE POSTAGE PERMIT.
4. COMMONWEALTH OF PENNSYLVANIA/DEPARTMENT OF REVENUE. Certificate of
Registration of Sales Tax License.
5. MT LONG DISTANCE TARIFF. MT has an interexchange reseller
telecommunication tariff, approved by the PPUC. A copy has been delivered to
Purchaser.
6. MSH TARIFFS.
Toll Intralata Supplement No. 469-Telephone-PPUC Toll No. 10.
Access Service Intrastate PPUC Tariff No. 11.
Access Service Interstate Tariff FCC No. 5.
Local Tariff Telephone PPUC Toll No. 6.
Schedule 2.26
Reports
See attached
SCHEDULE 2.26
REPORTS
MARIANNA SCENERY HILL TELEPHONE
No. Report Name Reported To Period Ending
-------- ----------------------------------------------------------- ------------------------ -----------------------
1. CALEA Compliance Manual FCC
-------- ----------------------------------------------------------- ------------------------ -----------------------
2. CALEA: final Notice of capacity compliance date FCC
-------- ----------------------------------------------------------- ------------------------ -----------------------
3. CALEA Section 103 capability requirements FCC
-------- ----------------------------------------------------------- ------------------------ -----------------------
4. FCC Form 502 (number Reports) FCC January, 2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
5. FCC Report on Slamming FCC
-------- ----------------------------------------------------------- ------------------------ -----------------------
6. CALEA Technical Requirements FCC
-------- ----------------------------------------------------------- ------------------------ -----------------------
7. Eligible Telecom Carrier Certification FCC PPUC
-------- ----------------------------------------------------------- ------------------------ -----------------------
8. Payphone Provider Report ICORE and Payphone 1997 - 09/2000
Clearing House
-------- ----------------------------------------------------------- ------------------------ -----------------------
9. Billing and Collection Report Illuminet 1997 - 02/15/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
10. FCC Form 496 NANPA Funding Worksheet NANP Funding 1998 - 1999
-------- ----------------------------------------------------------- ------------------------ -----------------------
11. FCC Regulatory FEE NECA 1997 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
12. FCC Form 431 TRS Fund Worksheet NECA 1995 - 1999
-------- ----------------------------------------------------------- ------------------------ -----------------------
13. NECA Data Month Adjustment (DMA) - AS1000-1 NECA 03/1999 - 02/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
14. NECA Data Month Estimate (DME) - AS1000-1 NECA 03/1999 - 02/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
15. NECA Monthly Settlement Certification NECA 03/1999 - 02/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
16. FCC Form 487 LNP Worksheet Neustar (Lockheed) 1998
-------- ----------------------------------------------------------- ------------------------ -----------------------
17. PA Corporation Decennial Filings PA Dept. of Rev.
-------- ----------------------------------------------------------- ------------------------ -----------------------
18. PPUC Assessment Report PPUC 1997 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
19. PPUC Annual Report - Form M PPUC 1995 - 1999
-------- ----------------------------------------------------------- ------------------------ -----------------------
20. STAS Calculations PPUC 1995 - 2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
21. PUC Earning Report (rate of return) PPUC 1995 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
22. Local Exchange Carrier Report (64.201) PPUC 1995 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
23. 711/Telecommuniations Relay Report PPUC 1995 - 03/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
24. Lifeline Tracking Report PPUC 1999 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
25. Single xxxx Multiple tariff (Intrastate Access) Verizon 1998 - 2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
No. Comment
-------- -----------------------------------------------------------
1.
-------- -----------------------------------------------------------
2.
-------- -----------------------------------------------------------
3.
-------- -----------------------------------------------------------
4.
-------- -----------------------------------------------------------
5. new report due August 15, 2001
-------- -----------------------------------------------------------
6.
-------- -----------------------------------------------------------
7.
-------- -----------------------------------------------------------
8.
-------- -----------------------------------------------------------
9.
-------- -----------------------------------------------------------
10. information reported on FCC 499A/S for 2000
-------- -----------------------------------------------------------
11.
-------- -----------------------------------------------------------
12. information reported on FCC 499A/S for 2000
-------- -----------------------------------------------------------
13.
-------- -----------------------------------------------------------
14.
-------- -----------------------------------------------------------
15.
-------- -----------------------------------------------------------
16. information reported on FCC 499A/S for 2000
-------- -----------------------------------------------------------
17. due 12/31/2001
-------- -----------------------------------------------------------
18.
-------- -----------------------------------------------------------
19. due date for 2000 has been extended due to a new report
format by PPUC
-------- -----------------------------------------------------------
20.
-------- -----------------------------------------------------------
21.
-------- -----------------------------------------------------------
22.
-------- -----------------------------------------------------------
23.
-------- -----------------------------------------------------------
24. new form pending for 2000, due 06/30/2001
-------- -----------------------------------------------------------
25. Verizon's portion of Intrastate access jointly provided
transport from MSH boundary to the IXC's POP
-------- -----------------------------------------------------------
-------- ----------------------------------------------------------- ------------------------ -----------------------
26. PPUC informal complaints Bureau of Consumer 1995 - 2000
Services
-------- ----------------------------------------------------------- ------------------------ -----------------------
27. Annual Report for ETC PPUC & FCC 1999
-------- ----------------------------------------------------------- ------------------------ -----------------------
28. Consumer Education Campaign Worksheets PPUC 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
29. Universal Service Advertising of Basic Services PPUC 1999 - 2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
30. Biennial NMP Updates PPUC
-------- ----------------------------------------------------------- ------------------------ -----------------------
31. Annual Access Line Summary Report PPUC 1986 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
32. RUS Form 268 - Compliance & Participation RUS 1995 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
33. RUS Form 479 Annual Report RUS 1995 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
34. FCC Form 473 Service Provider Annual Certification Schools & Libraries 1998 and 1999
Corp.
-------- ----------------------------------------------------------- ------------------------ -----------------------
35. FCC Form457 - Universal Service Worksheet USAC 1997 - 1998
-------- ----------------------------------------------------------- ------------------------ -----------------------
36. FCC Form 499A - Telecommunications Rpt USAC 1999 - 2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
37. FCC Form 499S - Telecommunications Rpt USAC 1999 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
38. FCC Form 471/472 Schools and Library Fund USAC 1999 - 2000
-------- ----------------------------------------------------------- ------------------------ -----------------------
39. FCC Form 497 Lifeline & Linkup Worksheets USAC 8/1998 - 03/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
40. Billing & Collection AT&T 03/1999 - 02/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
41. Pa. Relay Service First Union National 1997 - 03/2001
Bank
-------- ----------------------------------------------------------- ------------------------ -----------------------
-------- -----------------------------------------------------------
26. customer informal complaints
-------- -----------------------------------------------------------
27.
-------- -----------------------------------------------------------
28.
-------- -----------------------------------------------------------
29.
-------- -----------------------------------------------------------
30. new report, form pending
-------- -----------------------------------------------------------
31.
-------- -----------------------------------------------------------
32.
-------- -----------------------------------------------------------
33.
-------- -----------------------------------------------------------
34. 2000 is not in file
-------- -----------------------------------------------------------
35.
-------- -----------------------------------------------------------
36.
-------- -----------------------------------------------------------
37.
-------- -----------------------------------------------------------
38.
-------- -----------------------------------------------------------
39. form submitted to NECA, NECA submits form to USAC on MSH
Telco's behalf
-------- -----------------------------------------------------------
40. fees billed to AT&T for customer name and address changes
and denial and restoral of toll services
-------- -----------------------------------------------------------
41. check mailed monthly
-------- -----------------------------------------------------------
2
-------- ----------------------------------------------------------- ------------------------ -----------------------
42. Carrier Charge per Minute Rate Calculation ITORP Administrator 03/2000 through
(VERIZON) 03/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
43. Carrier Charge True-up per Minute Rate Calculation ITORP Administrator due April 30, 2001
(VERIZON)
-------- ----------------------------------------------------------- ------------------------ -----------------------
44. Tandem Switched Termination Equivalent Rate Calculation ITORP Administrator 03/2000 through
(VERIZON) 03/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
45. 911 Report - Xxxxxx County Xxxxxx County 04/1997 - 03/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
46. 911 Report - Washington County Washington County 911 1997 - 03/2001
-------- ----------------------------------------------------------- ------------------------ -----------------------
47. CALEA Letter from FBI approving deployment schedule FBI
-------- ----------------------------------------------------------- ------------------------ -----------------------
48. Pa. USF Unadjusted Intrastate end user telecom retail rev. PPUC 1999
-------- ----------------------------------------------------------- ------------------------ -----------------------
49. FCC form 498 USAC
-------- ----------------------------------------------------------- ------------------------ -----------------------
50. Rural Carrier Certification
-------- ----------------------------------------------------------- ------------------------ -----------------------
51. FCC Form 457 - Universal Service Worksheet USAC 1997-1998
-------- ----------------------------------------------------------- ------------------------ -----------------------
-------- -----------------------------------------------------------
42. report is used to calculate a fixed Seven Dollars ($7.00)
per line carrier charge into a per minute rate and then
true-up over or under collection from LEC's and IXC's on
an annual basis per PPUC order. Initial report submitted
03/2000.
-------- -----------------------------------------------------------
43. report is used to calculate a fixed Seven Dollars ($7.00)
per line carrier charge into a per minute rate and then
true-up over or under collection from LEC's and IXC's on
an annual basis per PPUC order. Initial report submitted
03/2000.
-------- -----------------------------------------------------------
44. report is used to calculate a fixed Seven Dollars ($7.00)
per line carrier charge into a per minute rate and then
true-up over or under collection from LEC's and IXC's on
an annual basis per PPUC order. Initial report submitted
03/2000.
-------- -----------------------------------------------------------
45.
-------- -----------------------------------------------------------
46.
-------- -----------------------------------------------------------
47.
-------- -----------------------------------------------------------
48. one time report
-------- -----------------------------------------------------------
49. one time report
-------- -----------------------------------------------------------
50. no longer required as of 2000
-------- -----------------------------------------------------------
51.
-------- -----------------------------------------------------------
3
Schedule 2.26
Other Service Providers
Verizon Mobile
ATT Wireless
ATT Broadband
Nextel
See attached
Schedule 2.26
Required Reports Not Filed
MSH and MT have informal arrangements which provide for the sharing of
certain backroom services including, for example, billing services, and the
sharing of certain employees, costs, etc. MSH has failed to file an Affiliated
Interest Agreement as required under Pennsylvania law, 66 Pa. C.S.A. Section
2102(b), in situations where a regulated entity has such arrangements with a
non-regulated affiliate.
Schedule 2.27
Absence of Undisclosed Liabilities/Corporate Debt
1. Capital expenditures commitment under Chapter 30 Plan described in A.6. of
Schedule 2.15
2. Nortel Networks contract for required switching equipment upgrades
described in Schedule 2.22
3. Upon completion of the stock purchase and the revocation of the MSH S
election, a liability account will be required on the MSH balance sheet for
deferred taxes relating to timing differences for tax deductions of MSH compared
to its accounting deductions.
4. Any liability related to failure to file Affiliated Interest Agreement as
referenced in Schedule 2.26
Schedule 3.3
Consents and Authorizations of Purchaser
PPUC approval is required.
Amendment to the contract dated December 14, 1999 by and between Info Avenue(R)
Internet Services, LLC and MT is needed to delete Article 11.
Schedule 4.9
Interim Financial Information
Schedule 4.14
Article IV Disclosure Statement
