AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 25, 1999 (the
"Agreement") by and among Central ▇▇▇▇▇ Telephone Company, an Iowa corporation
(the "Seller"), Brighton Communications Corporation, a Delaware corporation (the
"Company") and Brighton Iowa Acquisition Corporation, an Iowa corporation and a
wholly owned subsidiary of the Company (the "Subsidiary").
WHEREAS, the Boards of Directors of the Company and the Seller have
each determined that it is fair to and in the best interests of their respective
stockholders for the Subsidiary to merge with and into the Seller (the "Merger")
upon the terms and subject to the conditions set forth herein and in accordance
with the Iowa Business Corporation Law (the "IBCL");
WHEREAS, the respective Boards of Directors of the Company, the
Subsidiary, and the Seller have each approved the Merger of the Subsidiary with
and into the Seller, upon the terms and subject to the conditions set forth in
this Agreement; and
WHEREAS, the Company and the Seller desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth in this Agreement, the parties agree as follows:
ARTICLE I--THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the IBCL, at the Effective Time (as
defined in Section 1.2) the Subsidiary shall be merged with and into the Seller.
As a result of the Merger, the separate corporate existence of the Subsidiary
shall cease and the Seller shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
1.2 Effective Time. As promptly as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article VI, the
parties shall cause the Merger to be consummated by filing articles of merger
(the "Articles of Merger") with the State of Iowa, in such form as required by
and executed in accordance with the relevant provisions of the IBCL (the date
and time of such filing is referred to as the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as
-10-
provided in this Agreement and the applicable provisions of the IBCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided in this Agreement, all the property, rights,
privileges, powers and franchises of the Subsidiary and the Seller shall vest in
the Surviving Corporation and all debts, liabilities and duties of the
Subsidiary and the Seller shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 Articles of Incorporation and Bylaws. At the Effective Time, the
Articles of Incorporation of the Subsidiary (the "Subsidiary Articles") and the
Bylaws of the Subsidiary ("Subsidiary Bylaws") as in effect immediately prior to
the Effective Time shall be the Articles of Incorporation and the Bylaws of the
Surviving Corporation.
1.5 Directors and Officers. At the Effective Time, the directors and
officers of the Surviving Corporation shall be as set forth on Schedule 1.5,
each to hold office in accordance with the Articles of Incorporation and Bylaws
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed.
1.6 Conversion of Securities. By virtue of the Merger and without any
action on the part of the holder of the following securities, the Company, the
Subsidiary or the Seller:
(a) Each share of the common stock, $50 par value per share, of the
Seller (the "Seller Common Shares"), issued and outstanding immediately prior to
the Effective Time (collectively referred to as the "Shares"), other than Seller
Common Shares held by Seller or any Seller Subsidiary (as defined in Section
2.1(a)) for its own account, shall cease to be outstanding and shall be
converted into and become the right to receive an amount equal to $396.95 per
share payable in cash (the "Merger Consideration").
(b) Each of Seller Common Shares held as treasury stock shall be
canceled and extinguished without payment therefor.
1.7 Payment.
(a) Payment Procedures. As soon as practicable after the Effective
Time, the Company shall mail to each holder of record of a certificate or
certificates (a "Certificate" or "Certificates") which immediately prior to the
Effective Time represented outstanding Shares which Shares were converted into
the right to receive the Merger Consideration pursuant to Section 1.6, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Company) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Company together with such
letter of transmittal, duly executed, the holder of such Certificate shall be
entitled to payment of the product of the number of Shares represented by such
Certificate and the Merger Consideration, and the Certificate so surrendered
shall forthwith be canceled. In the event any Certificate shall have been lost,
stolen or
-11-
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and the posting by such person
of a bond in such amount as the Company may direct as indemnity against any
claim that may be made against it or the Exchange Agent with respect to such
Certificate, the Exchange Agent will pay to such person the Merger
Consideration. Until surrendered as contemplated by this Section 1.7, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration. No
interest shall accrue or be payable with respect to the Merger Consideration.
(b) No Further Rights in the Shares. All cash paid upon conversion of
the Shares in accordance with the terms hereof shall be deemed to have been paid
in full satisfaction of all rights pertaining to such Shares.
(c) No Liability. Neither the Company nor the Seller shall be liable to
any former holder of Shares for any such Shares (or dividends or distributions
with respect thereto) or cash or other payment delivered to a public official
pursuant to any abandoned property, escheat or similar laws.
1.8 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Seller shall be closed and there shall be no further registration
of transfers of shares of the Seller Common Shares thereafter on the records of
the Seller. From and after the Effective Time, the holders of Certificates shall
cease to have any rights with respect to such Shares except as otherwise
provided herein or by law.
1.9 Treatment of Common Stock of Subsidiary. Each issued and
outstanding share of common stock, par value $.01 per share, of the Subsidiary
shall be converted into one fully paid and nonassessable share of common stock,
par value $.01 per share, of the Surviving Corporation.
1.10 Further Assurances. At and after the Effective Time, the officers
and directors of the Surviving Corporation and the Company will be authorized to
execute and deliver, in the name and on behalf of the Seller, any deeds, bills
of sale, assignments or assurances and to take and do, in the name and on behalf
of the Seller, any other actions and things to vest, perfect or conform of
record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in the Disclosure Schedule delivered by the Seller
to the Company prior to the execution of this Agreement (the "Seller Disclosure
Schedule"), which Seller Disclosure Schedule shall reference disclosure items by
section, the Seller represents and warrants to the Company that:
-12-
2.1 Organization and Qualification: Subsidiaries
(a) The Seller is a corporation validly existing and in good standing
under the laws of the State of Iowa. Each subsidiary of the Seller ("Seller
Subsidiary" or collectively, "Seller Subsidiaries") is a corporation validly
existing and in good standing under the laws of the state of its incorporation.
Each of the Seller and the Seller Subsidiaries has the requisite corporate power
and authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Seller Approvals") necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted, and neither the Seller nor
any Seller Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Seller Approvals.
(b) The Seller and each Seller Subsidiary is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except where such failures to be so duly qualified or licensed and in
good standing would not, either individually or in the aggregate, have a
Material Adverse Effect with respect to the Seller or the Seller Subsidiary.
(c) A list of all of the Seller Subsidiaries, together with (i) the
Seller's percentage ownership of each Seller Subsidiary and (ii) laws under
which the Seller Subsidiary is incorporated, is set forth on Section 2.1(c) of
the Seller Disclosure Schedule. The Seller and/or one or more of the Seller
Subsidiaries owns beneficially and of record substantially all of the
outstanding shares of capital stock of each of the Seller Subsidiaries. The
Seller does not directly or indirectly own any equity or similar interests in,
or any interests convertible into or exchangeable or exercisable for any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity other than in the ordinary course of business,
and in no event in excess of 5% of the outstanding equity securities of such
entity.
(d) As used in this Agreement, the term "Material Adverse Effect"
means, with respect to the Seller or a Seller Subsidiary, as the case may be,
(i) any adverse effect on the business, assets, properties, liabilities, results
of operations or financial condition of, and which is material with respect to,
the Seller and the Seller Subsidiaries taken as a whole, or (ii) any effect that
materially impairs the ability of the Seller to consummate the transactions
contemplated hereby.
(e) The minute books of the Seller and each of the Seller Subsidiaries
since December 31, 1995 contain true, complete and accurate records in all
material respects of all meetings and other corporate actions held or taken of
their respective stockholders and Boards of Directors (including committees of
their respective Boards of Directors).
2.2 Articles of Incorporation and Bylaws. The Seller previously has
furnished to the Company a copy of its current Articles of
Incorporation and the Bylaws, as amended or restated
-13-
("Seller Articles" or "Seller Bylaws") and each Seller Subsidiary. Such Articles
of Incorporation and Bylaws of the Seller and each Seller Subsidiary are in full
force and effect. Neither the Seller nor any Seller Subsidiary is in violation
of any of the provisions of its Articles of Incorporation or Bylaws.
2.3 Capitalization. The authorized capital stock of the Seller consists
of 200,000 shares of Seller Common Shares. As of the date of this Agreement, (i)
70,790 shares1 of Seller Common Shares are issued and outstanding (of which none
are restricted shares under employee benefit plans which have not and will not
be awarded), all of which are duly authorized, validly issued, fully paid and
non-assessable, and were not issued in violation of any preemptive right of any
Seller stockholder and (ii) no Seller Common Shares are held in the treasury of
the Seller. There are no options, warrants or other rights, agreements,
arrangements or commitments of any character, including without limitation
voting agreements or arrangements, relating to the issued or unissued capital
stock of the Seller or any Seller Subsidiary or obligating the Seller or any
Seller Subsidiary to issue or sell any shares of capital stock of the Seller or
any Seller Subsidiary. There are no obligations of the Seller or any Seller
Subsidiary to repurchase, redeem or otherwise acquire any Seller Common Shares
or the capital stock of any Seller Subsidiary. Each of the outstanding shares of
capital stock of each Seller Subsidiary are duly authorized, validly issued,
fully paid and nonassessable, and were not issued in violation of any preemptive
rights of any Seller Subsidiary stockholder.
2.4 Authority. The Seller has the requisite corporate power and
authority to execute and deliver this Agreement to perform its obligations
hereunder and to consummate the transactions contemplated hereby (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
Seller's stockholders in accordance with the applicable law and the Seller
Articles and Seller Bylaws). The execution and delivery of this Agreement by the
Seller and the consummation by the Seller of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
and no other corporate proceedings on the part of the Seller are necessary to
authorize this Agreement or to consummate the transactions so contemplated
hereby (other than, with respect to the Merger, the approval and adoption of
this Agreement by the Seller's stockholders in accordance with applicable law
and the Seller Articles and Seller Bylaws). This Agreement has been duly
executed and delivered by, and constitutes a valid and binding obligation of the
Seller and, assuming due authorization, execution and delivery by the Company,
is enforceable against the Seller in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
--------
1Includes 144 shares issued as set forth as Item 4.2(d) of the Seller
Disclosure Schedule.
-14-
2.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Seller does
not, and the performance of this Agreement and the transactions contemplated
hereby by the Seller shall not, (i) conflict with or violate the Seller Articles
or Seller Bylaws or the Articles of Incorporation or Bylaws of any Seller
Subsidiary, (ii) conflict with or violate any federal or state law, statute,
ordinance, rule, regulation, order, judgment or decree (collectively, "Laws")
applicable to the Seller or any Seller Subsidiary or by which its or any of
their respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration, cancellation of, or result in rights of payment,
compensation or other rights or the creation of a lien or encumbrance on any of
the properties or assets of the Seller or any Seller Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Seller or any Seller
Subsidiary is a party or by which the Seller or any Seller Subsidiary or its or
any of their respective properties is bound or affected.
(b) The execution and delivery of this Agreement by the Seller does
not, and the performance of this Agreement by the Seller shall not, require any
consent, approval, authorization or permit of, or filing with or notification to
any governmental or regulatory authority except (i) for applicable requirements,
if any, of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (ii) the consents or approvals of the Iowa State Utility Board
("IUB") or the Federal Communications Commission ("FCC") listed on the Seller
Disclosure Schedule and (iii) the filing of the appropriate Articles of Merger
or other documents as required by the IBCL.
2.6 Compliance: Permits. Neither the Seller nor any Seller Subsidiary
is in conflict with, or in default or violation of, (i) any Law applicable to
the Seller or any Seller Subsidiary or by which its or any of their respective
properties is bound or affected, or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Seller or any Seller Subsidiary is a party or by which
the Seller or any Seller Subsidiary or its or any of their respective properties
is bound or affected.
2.7 Reports; Financial Statements.
(a) The Seller and each Seller Subsidiary have filed all forms, reports
and documents required to be filed with the IUB and FCC, and as of the date of
this Agreement has delivered to the Company copies of its Annual Report to the
IUB for the years ended December 31, 1997 and 1998 (the "Seller Reports"). The
Seller Reports, including all Seller Reports filed after the date of this
Agreement and prior to or at the Effective Time, (i) were or will be prepared in
all material respects in accordance with the requirements of applicable Law and
(ii) did not at the time they were filed, or will not at the time they are
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
-15-
(b) Seller has heretofore furnished the Company with the audited and
unaudited financial statements for the periods and as of the period endings
listed as Item 2.7 (b) of the Seller Disclosure Statement (the "Financial
Statements"). The Financial Statements (and the financial statements ("Section
4.1(i) Financial Statements") to be furnished the Company pursuant to Section
4.1(i) hereof), including the footnotes thereto, except as indicated therein,
have been prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP") and the uniform system of accounts of the Federal
Communications Commission as set forth in 47. C.F.R. Part 32 and fairly present
in all material respects the financial condition and results of the operations
of entities included therein and the changes in their financial position at such
dates and for such periods; provided however, that the Section 4.1(i) Financial
Statements shall be subject to normal year end adjustments. The term "Balance
Sheet" shall mean, as the context requires, either or both of (i) the balance
sheets of Seller and its consolidated subsidiaries as of December 31, 1998 and
(ii) the balance sheets of Seller and its consolidated subsidiaries to be
included in the Section 4.1(i) Financial Statements.
(c) There are no material liabilities or obligations of any nature,
whether absolute, accrued, fixed, contingent, matured or unmatured, against,
relating to or affecting Seller, or any Seller Subsidiary, except (i) as and to
the extent reflected or reserved against on the Balance Sheet, (ii) incurred
since the date of the latest Balance Sheet in the ordinary course of business
consistent with prior practice and consistent with Sections 4.1 and 4.2 hereof
and which individually or in the aggregate do not have and are not expected to
have a Material Adverse Effect on Seller or any Seller Subsidiary.
(d) The revenues attributable to long distance network access that are
included in the revenues stated in the Financial Statements (and in the Section
4.1(i) Financial Statements) have been calculated in a manner consistent with
prior years, as modified by and in accordance with, all applicable federal and
state rules and regulations; (ii) the cost separation studies for the exchanges
of Seller and any Seller Subsidiary upon which the access settlement revenues
set forth in the Financial Statement (and in the Section 4.1(i) Financial
Statements) have been prepared in a manner consistent with prior years, as
modified by and in accordance with, all applicable federal and state tariffs;
and (iv) all local service rates currently utilized by Seller and all of Seller
Subsidiaries are in compliance with tariffs, to the extent such tariffs are
applicable.
2.8 Absence of Certain Changes or Events. Since December 31, 1998 to
the date of this Agreement, the Seller and the Seller Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since December 31, 1998, there has not been
(i) any change in the financial condition, results of operations or business of
the Seller or any of the Seller Subsidiaries having a Material Adverse Effect
with respect to the Seller, (ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to any assets of the Seller or any of the
Seller Subsidiaries having a Material Adverse Effect with respect to Seller or
any Seller Subsidiary, (iii) any declaration, setting aside or payment of any
dividends or distributions in respect of Seller Common Shares or any redemption,
purchase or other acquisition of any of its securities or any of the securities
of any Seller Subsidiary, (iv) any strike, work stoppage, slow-down or other
-16-
labor disturbance suffered by the Seller or the Seller Subsidiaries, (v) any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or organization to which the Seller or any of the Seller
Subsidiaries has been a party (vi) any union organizing activities relating to
employees of the Seller or the Seller Subsidiaries, (vii) any incurrence of debt
for money borrowed or any lease of any property or assets, (viii) any action,
which if taken subsequent to the execution of this Agreement and prior to the
Effective Time, would constitute a breach of Seller's agreements set forth in
Article IV (other than Section 4.2(e)) or (ix) any transaction not in the
ordinary course of business consistent with past practice..
2.9 Absence of Litigation.
(a) Neither the Seller nor any of the Seller Subsidiaries is a party to
any, and there are no pending or, to the best of the Seller's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against the
Seller or any of the Seller Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement.
(b) There is no injunction, order, judgment, decree or regulatory
restriction imposed upon the Seller, any of the Seller Subsidiaries or the
assets of the Seller or any of the Seller Subsidiaries which has had a Material
Adverse Effect with respect to the Seller.
2.10 Employee Benefit Plans.
(a) Plans of the Seller. Section 2.10(a) of the Seller Disclosure
Schedule lists (i) all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and all
bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all material
employment, termination, severance or other employment contracts or employment
agreements, with respect to which the Seller or any Seller Subsidiary has any
obligation (collectively, the "Plans"). The Seller has furnished or made
available to the Company a copy of each Plan (or a description of the Plans, if
the Plans are not in writing) and a copy of each material document prepared in
connection with each such Plan, including, without limitation, and where
applicable, a copy of (i) each trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the three
most recently filed IRS Forms 5500 and related schedules, (iv) the most recently
issued IRS determination letter for each such Plan and (v) the three most
recently prepared actuarial and financial statements in connection with each
such Plan.
(b) Absence of Certain Types of Plans. No member of the Seller's
"controlled group," within the meaning of Section 4001(a)(14) of ERISA,
maintains or contributes to, or within the five years preceding the date of this
Agreement has maintained or contributed to, an employee pension benefit plan
subject to Title IV of ERISA ("Title IV Plan"). No Title IV Plan is a
"multiemployer
-17-
pension plan" as defined in Section (3)37 of ERISA. None of the Plans obligates
the Seller or any of the Seller Subsidiaries to pay material separation,
severance, termination or similar-type benefits solely as a result of any
transaction contemplated by this Agreement or as a result of a "change in
ownership or control," within the meaning of such term under regulations adopted
pursuant to Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code").
(c) Compliance with Applicable Law. Each Plan has been operated in all
respects in accordance with the requirements of all applicable Laws and all
persons who participate in the operation of such Plans and all Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have acted in
accordance with the provisions of all applicable Laws, except where such
violations of applicable Laws would not, individually or in the aggregate, have
a Material Adverse Effect with respect to the Seller. The Seller and the Seller
Subsidiaries have performed all obligations required to be performed by any of
them under, are not in any respect in default under or in violation of, and the
Seller and the Seller Subsidiaries have no knowledge of any default or violation
by any party to, any Plan, except where such failures, defaults or violations
would not, individually or in the aggregate, have a Material Adverse Effect with
respect to the Seller.
(d) Qualification of Certain Plans. Each Plan that is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code
(including each trust established in connection with such a Plan that is
intended to be exempt from Federal income taxation under Section 501(a) of the
Code) has received a favorable determination letter from the IRS (as defined
herein) that it is so qualified, and the Seller is not aware of any fact or
event that has occurred since the date of such determination letter from the IRS
to adversely affect the qualified status of any such Plan. No trust maintained
or contributed by the Seller or any of the Seller Subsidiaries is intended to be
qualified as a voluntary employees' beneficiary association or is intended to be
exempt from federal income taxation under Section 501(c)(9) of the Code.
(e) Absence of Certain Liabilities and Events. There has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan. The Seller and each of the Seller
Subsidiaries has not incurred any liability for any excise tax arising under
Section 4972 or 4980B of the Code that would individually or in the aggregate
have a Material Adverse Effect with respect to the Seller, and, to the knowledge
of the Seller or the Seller Subsidiaries, no fact or event exists that could
give rise to any such liability.
(f) Plan Contributions. All contributions, premiums or payments
required to be made prior to the Effective Time with respect to any Plan have
been made on or before the Effective Date.
(g) Funded Status of Plans and Rights to Terminate. With respect to
each Title IV Plan, the present value of all accrued benefits under each such
Plan, based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by each such Plan's actuary with respect to
each such Plan did not exceed, as of the most recent valuation date, the then
current value of assets of such Plan, allocable to each accrued benefit. No
provision of any such
-18-
Plan, nor any amendment thereto, would result in any limitation on the rights of
the Seller or the Seller Subsidiaries to terminate each such Plan and to receive
any residual amounts under Section 4044 of ERISA.
(h) Employment Contracts. Neither the Seller nor any Seller Subsidiary
is a party to any employment, consulting, severance or other similar contracts
with present or former employees, consultants, officers or directors of the
Seller or any of the Seller Subsidiaries. Neither the Seller nor any Seller
Subsidiary is a party to any collective bargaining agreements.
2.11 Proxy Statement. The information included by the Seller in the
proxy statement ("Proxy Statement") to be sent to the stockholders of the Seller
in connection with the meeting of the Seller's stockholders to consider the
Merger (the "Seller Stockholders' Meeting") shall not at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
stockholders, at the time of the Seller Stockholders' Meeting or at the
Effective Time, be false or misleading with respect to any material fact
required to be stated therein, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading.
2.12 Title to Property. The Seller and each of the Seller Subsidiaries
has good and indefeasible title to all of their respective properties and
assets, real (listed as Item 2.12(a) of the Seller Disclosure Schedule) and
personal (any items or groups of similar items in excess of $1,000 are listed as
Item 2.12(b) of the Seller Disclosure Schedule), free and clear of all mortgage
liens, and free and clear of all other liens, charges and encumbrances except
liens for taxes not yet due and payable, pledges to secure deposits and such
minor imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use or marketability of the property
affected thereby; and all leases (listed as Section 2.12(c) of the Seller
Disclosure Schedule) pursuant to which the Seller or any of the Seller
Subsidiaries lease from others material amounts of real or personal property are
in good standing, valid and effective in accordance with their respective terms.
Substantially all of the Seller's and each of the Seller Subsidiaries' buildings
and equipment in regular use have been reasonably maintained and are in good and
serviceable condition, reasonable wear and tear excepted.
2.13 Environmental Matters. The Seller represents and warrants that:
(i) each of the Seller, the Seller Subsidiaries and properties owned, leased or
operated by the Seller or the Seller Subsidiaries, is in compliance with all
applicable Environmental Laws; (ii) there is no asbestos or ureaformaldehyde
materials in or on any property owned, leased or operated by the Seller or
Seller Subsidiaries and no electric transformers or capacitors, other than those
owned by public utility companies, on any such properties contain any PCBs;
(iii) there are no underground or aboveground storage tanks located on, in or
under any properties currently or formerly owned or operated by the Seller or
any of the Seller Subsidiaries; (iv) the Seller or the Seller Subsidiaries have
not received any notice, formal or informal from any governmental agency or
third party notifying the Seller or the Seller Subsidiaries of any Environmental
Claim (as defined herein); (v) neither the Seller nor any
-19-
Seller Subsidiary has been notified by any governmental agency or any third
party that either Seller or any Seller Subsidiary may be a potentially
responsible party for environmental contamination or any Release (as defined
below) of Hazardous Materials (as defined below); (vi) Seller and each Seller
Subsidiary has obtained and holds all permits, licenses and authorizations
required under applicable Environmental Laws relating to the ownership or
operations of the Seller or any Seller Subsidiary ("Environmental Permits");
(vii) Seller and each Seller Subsidiary is in material compliance with all
terms, conditions and provisions of all applicable Environmental Permits; (viii)
no Releases of Hazardous Materials have occurred at, from, in, on, to or under
any property owned, operated or leased by Seller or any Seller Subsidiary that
violate any Environmental Law and no Hazardous Materials are present in, on or
about or migrating to or from any such property that would give rise to an
Environmental Claim by a third party against Seller or any Seller Subsidiary;
(ix) neither Seller nor any Seller Subsidiary has nor any predecessors thereof
have transported or arranged for the treatment, storage, handling, disposal or
transportation of any Hazardous Material to any location which could result in
an Environmental Claim against or liability to Seller or any Seller Subsidiary;
and (x) neither Seller nor any Seller Subsidiary has any environmental report or
statement prepared by or on its behalf or in its possession or control relating
to any of its present or former properties. Items (i), (ii), (viii), and (ix) of
the preceding representation and warranty are made to the best of Seller's
knowledge after due inquiry.
For purposes of this Section, "Environmental Claims: shall mean any and
all administrative, regulatory, judicial or private actions, suits, demands,
notices, claims, liens, investigations, injunctions or similar proceedings that
result in the Company being liable for: (i) a violation of any Environmental
Law; (ii) the release and ordered remediation of any Hazardous Material,
including without limitation, any investigation, monitoring abatements, removal,
remedial, corrective or other response action in connection with the release of
any Hazardous Material or order or notice of liability or violation of a
governmental authority or Environmental Law; or (iii) any actual or alleged
damage, injury, threat or harm to the environment.
"Hazardous Materials" shall mean any and all chemicals, pollutants,
contaminants, wastes, toxic substances, compounds, products, solid, liquid, gas,
petroleum, asbestos, asbestos-containing materials, polychlorinated biphenyls or
other regulated substances or materials which are hazardous, toxic or otherwise
harmful to the environment.
"Environmental Law: shall mean any and all federal and state civil and
criminal laws, statutes, ordinances, orders, codes, rules or regulations of any
governmental or regulatory authority relating to the protection of health, the
environment, natural resources, worker health and safety and/or governing the
handling, use, generation, treatment, storage, transportation, disposal,
manufacture, distribution, formulation, packaging, labeling, or Release of
Hazardous Materials, including but not limited to: the Clean Air Act, 42 U.S.C.
ss.7401 et seq.; the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. ss.9601 et seq.; the Federal Water Pollution
Control Act, 33 U.S.C. ss.1251 et seq.; the Hazardous Material Transportation
Act 49 U.S.C. ss.1801 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act
-20-
7 U.S.C. ss.136 et seq.; the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. ss.6901 et seq.; the Toxic Substances Control Act, 15 U.S.C.
ss.2601 et seq.; the Occupational Safety & Health Act of 1970, 29 U.S.C. ss.651
et seq.; the Oil Pollution Act of 1990, 33 U.S.C. ss.2701 et seq.; and the state
analogies thereto, all as amended or superceded from time to time, on or before,
but not after, the date of Closing.
"Release: shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of a
Hazardous Material into the environment.
2.14 Absence of Agreements. Neither the Seller nor any Seller
Subsidiary is a party to any agreement, order, directive, memorandum of
understanding or similar arrangement with any governmental authority that
restricts materially the conduct of its business (other than restrictions
imposed by the IUB or FCC on telephone companies generally, which do not,
individually or collectively, adversely affect the businesses of the Seller and
the Seller Subsidiaries as currently conducted or proposed to be conducted), nor
has the Seller or any Seller Subsidiary been advised that any governmental
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such agreement, order, directive,
memorandum of understanding or similar arrangement.
2.15 Taxes.
(a) The Seller and the Seller Subsidiaries have timely filed all
material Tax Returns (as defined below) required to be filed by them or will
duly and timely file (including any extension periods) such Tax Returns, and the
Seller and the Seller Subsidiaries have timely paid and discharged all Taxes (as
defined below) due in connection with or with respect to the filing of such Tax
Returns and have timely paid all other Taxes as are due, except such as are
being contested in good faith by appropriate proceedings and with respect to
which the Seller is maintaining reserves adequate for their payment as set forth
as Item 2.15(a) on Seller's Disclosure Schedule. The liability for Taxes set
forth on each such Tax Return adequately reflects the Taxes required to be
reflected on such Tax Return. For purposes of this Agreement, "Tax" or "Taxes"
shall mean taxes, charges, fees, levies, and other governmental assessments and
impositions of any kind, payable to any federal, state, local or foreign
governmental entity or taxing authority or agency, including, without
limitation, (i) income, franchise, profits, gross receipts, estimated, ad
valorem, value added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, disability, employment, social security,
workers compensation, unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes,
(ii) customs duties, imposts, charges, levies or other similar assessments of
any kind, and (iii) interest, penalties and additions to tax imposed with
respect thereto; and "Tax Returns" shall mean returns, reports, and information
statements with respect to Taxes required to be filed with the United States
Internal Revenue Service (the "IRS") or any other governmental entity or taxing
authority or agency, domestic or foreign, including, without limitation,
consolidated, combined and unitary tax returns. Neither the IRS nor
-21-
any other governmental entity or taxing authority or agency is now asserting,
either through audits, administrative proceedings or court proceedings, any
deficiency or claim for additional Taxes. Neither the Seller nor any of the
Seller Subsidiaries has granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any Tax. Except
for statutory liens for current taxes not yet due, there are no material tax
liens on any assets of the Seller or any of the Seller Subsidiaries. Neither the
Seller nor any of the Seller Subsidiaries has received a ruling or entered into
an agreement with the IRS or any other taxing authority that would have a
Material Adverse Effect with respect to the Seller, after the Effective Time. No
agreements relating to allocating or sharing of Taxes exist among the Seller and
the Seller Subsidiaries.
(b) The Balance Sheet includes due and sufficient accruals for Taxes in
accordance with GAAP in all material respects with respect to any period for
which tax returns for Seller or any Seller Subsidiary were not filed or for
which Taxes were not then due and owing.
(c) True and complete copies of any and all Tax Returns for the last
five years and all tax audit reports with respect to Seller and any Seller
Subsidiary have been furnished to the Company. Any deficiencies proposed in tax
audits have been duly and fully paid, settled, or reserved against in the
Financial Statements. Tax Returns have been audited through the tax years as
provided in Item 2.15(c) of the Seller Disclosure Statement.
(d) No election under Section 338 (or any predecessor provision) of the
Internal Revenue Code of 1986 (the "Code") has been made or filed by or with
respect to Seller or any Seller Subsidiary. No consent to the application of
Section 341(f)(2) of the Code (or any predecessor provision) has been made or
filed by or with respect to Seller or any Seller Subsidiary or any of its assets
or properties. None of the assets or properties of Seller or any Seller
Subsidiary is an asset or property that Seller is or will be required to treat
as being (i) owned by any other person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect before
the enactment of the Tax Reform Act of 1986, or (ii) tax-exempt use property
within the meaning of Section 168(h)(1) of the Code. No closing agreement
pursuant to Section 7121 of the Code (or any predecessor provision) or any
similar provision of any state, local, or, if applicable, foreign Law has been
entered into by or with respect to Seller or any Seller Subsidiary or any of its
assets or properties.
(e) Neither Seller nor any Seller Subsidiary has agreed to make any
adjustment pursuant to Section 481(a) of the Code (or any predecessor provision)
by reason of any change in any accounting method of Seller or any Seller
Subsidiary, and neither Seller nor any Seller Subsidiary has any application
pending with any governmental authority requesting permission for any changes in
any accounting method of Seller or any Seller subsidiary. To the knowledge of
Seller, the Internal Revenue Service has not proposed any such adjustment or
change in accounting method.
(f) Neither Seller nor any Seller Subsidiary has been or is in
violation (with or without notice or lapse of time or both) of any applicable
law relating to the payment or withholding of
-22-
Taxes. Seller and each Seller Subsidiary have duly and timely withheld from
employee salaries, wages, and other compensation and paid over to the
appropriate taxing authorities all amounts required to be so withheld and paid
over for all periods due and payable under all applicable Laws.
(g) No audit is pending or, to the knowledge of Seller, threatened with
respect to any Taxes due from, or Tax Return filed by or relating to, Seller or
any Seller Subsidiary.
(h) Neither Seller nor any Seller Subsidiary is party to any agreement,
contract, or arrangement that would require Seller or any Seller Subsidiary to
make any gross-up payments with respect to any Taxes or otherwise indemnify or
hold harmless any employee with respect to Taxes.
(i) Prior to the Effective Date, Seller shall notify the Company in
writing of any power of attorney granted by Seller or any Seller Subsidiary
concerning any Tax matter that will be in force as of the Effective Time.
(j) Seller and Seller Subsidiaries have no deferred intercompany gains
or losses (as such term is defined in Treas. Reg. ss. 1.1502-13).
2.16 Insurance. Item 2.16 of the Seller Disclosure Schedule lists all
material policies of insurance of the Seller and the Seller Subsidiaries
currently in effect. Neither the Seller nor any of the Seller Subsidiaries has
any liability for unpaid premiums or premium adjustments not properly reflected
on the Seller's Financial Statements.
2.17 Broker/Expenses. No broker, finder, consultant or investment
banker is entitled to any brokerage, finder's, consultant's, or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Seller, except as provided in
that certain letter agreement (a copy of which has been delivered to the
Company) between the Seller and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as consultant, regarding such
fees. Seller and Seller Subsidiaries have not paid, or agreed to pay, in the
aggregate in excess of $462,000 in connection with the possible sale of Seller
or of this transaction since January 1, 1998.
2.18 Material Adverse Effect. Since December 31, 1998, there has been
no Material Adverse Effect with respect to the Seller.
2.19 Material Contracts/License.
(a) Except as set forth in Item 2.19 of Seller Disclosure Document,
neither the Seller nor any Seller Subsidiary is a party to or obligated under
any material contract, agreement or other instrument or understanding that is
not terminable by the Seller or the Seller Subsidiary without additional payment
or penalty within 90 days. Each contract disclosed on the Seller Disclosure
Schedule is in full force and effect and constitutes a legal, valid, and binding
obligation of Seller or a Seller Subsidiary, and (to the knowledge of Seller)
each other party in accordance with its terms,
-23-
except as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws affecting the enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in law or in equity). Neither
Seller or any Subsidiary nor (to the knowledge of Seller) any other party to any
such contract is in violation or breach of or default under any such contract
(with or without notice or lapse of time or both). Since December 31, 1997, no
such contract has been amended or supplemented in any material respect. For
purposes of this Section 2.19, the term "material contract" shall include any
agreement, contract, instrument or understanding involving the payment or
receipt by Seller or any Seller Subsidiary of $10,000 ($25,000 in the case of
billing and collecting agreements) or more per year or $25,000 ($100,000 in the
case of billing and collecting agreements) or more in the aggregate through the
life of the contract.
(b) Material Licenses. Item 2.19(b) of the Seller Disclosure Statement
contains a true and complete list and brief description of all franchises,
permits, licenses, approvals, and other authorizations that are necessary for
the business, operations, and affairs of Seller or any Seller Subsidiary as
currently being or contemplated to be conducted. Seller or a Seller Subsidiary
owns or validly holds each such franchise, permit, license, approval, and other
authorization. Each such franchise, permit, license, approval, and other
authorization is valid, in good standing, and in full force and effect. To the
knowledge of Seller, no basis exists for the termination, suspension,
restriction, or limitation of any such franchise, permit, license, approval, or
other authorization.
(b) PCS. Seller or a Seller Subsidiary has contractual rights to
acquire (i) a 10 Megahertz A or D Block personal communications services ("PCS")
license for the land line exchange area of the Seller located in ▇▇▇▇▇ County,
Iowa, and (ii) an approximately 14.3% interest in an entity which has a
contractual right to acquire a 10 Megahertz A or D Block PCS license for a
majority of Clinton and ▇▇▇▇▇▇▇ Counties, Iowa. The specifics of such rights,
including the parties, cost, POPs, and principal terms are described as Item
2.19(c) of the Seller Disclosure Statement.
2.20 Vote Required. The affirmative vote of a majority of all the votes
that holders of the outstanding shares of Seller Common Stock are entitled to
cast is the only vote of the holders of any class or series of the Seller
capital stock necessary to approve the Merger.
2.21 Intangible Property. The Seller or Seller Subsidiaries are the
owners of all right, title and interest in and to each item of intangible
personal property and each other invention, process, design, formula, license,
royalty arrangement, trade secret, know how and proprietary technique necessary
for the conduct of their respective businesses, which are listed as Item 2.21 of
the Seller Disclosure Schedule. The Seller or Seller Subsidiaries have the right
and authority to use each item of intangible personal property and each other
invention, process, design, formula, license, royalty arrangement, trade secret,
know how and proprietary technique necessary for the conduct of the business of
the Seller and/or the Subsidiaries and such use does not conflict with, infringe
upon or violate any patent, trademark, trade name, trademark or trade name
registration, copyright, copyright registration or any pending application
relating thereto of any other person, firm or corporation.
-24-
2.22 State Takeover Statutes; Absence of Supermajority Provision. No
provision of the IBCL or the Seller's Articles or Bylaws or other governing
instruments of the Seller Subsidiaries or the terms of any rights plan or other
takeover defense mechanism of the Seller would, directly or indirectly, restrict
or impair the ability of the Seller or the Company to consummate the Merger nor
will any such provisions restrict or impair the ability of the stockholders of
the Company to exercise the same rights to vote or otherwise exercise the same
rights as the other stockholders of the Seller in the event that the
stockholders of the Company were to acquire securities of the Seller.
2.23 Easements Rights of Way. Each of Seller and each Seller Subsidiary
has a valid leasehold interest in or right to use, free and clear of all liens
and payments, each real property easement, right of way, and lease that is
required for its business, operations, and affairs as currently being or
contemplated to be conducted. Each such easement, right of way, and lease is set
forth as Item 2.23 on the Seller Disclosure Schedule, is in full force and
effect and constitutes a legal, valid, and binding obligation of Seller or a
Seller Subsidiary and (to the knowledge of Seller) each other party thereto,
enforceable against the parties thereto in accordance with the terms thereof.
There have been no disputes concerning rights of way in which Seller or any
Seller Subsidiary has been involved during the last five years. To the knowledge
of Seller there are no events or circumstances that would materially and
adversely affect Seller or any Seller Subsidiary's rights of way for its
telephone and cables and lines to conduct its business as presently conducted.
2.24 Transactions with Affiliates. Neither Seller nor any Seller
Subsidiary has made since December 31, 1997, any payments or distributions to
any present or former director, officer or person holding in excess of 1% of
outstanding common stock, of Seller or any Seller Subsidiary, or any affiliate
of any such person, other than normal directors fees, normal retirement benefits
under the Plans, normal salary and other employee compensation, and normal
dividends, and there have been and are no outstanding liabilities or contracts
between or among Seller or any Seller Subsidiary and any such person or
affiliate of such person.
2.25 Year 2000 Representation. No technology owned, developed or
licensed by the Seller or any Seller Subsidiary or used in connection with their
business (including, but not limited to, information systems and technology,
commercial and noncommercial hardware and software, firmware, mechanical or
electrical products, embedded systems, or any other electro-mechanical or
processor-based system, whether as part of a desktop system, office system,
building system or otherwise) (collectively, the "Technology") will experience
any malfunctions, premature cancellation or expiration of contractual rights or
deletion of data, or any other problems in connection with (i) the year 2000
(and all subsequent years) as distinguished from 1900 years, (ii) the date
February 29, 2000, and all subsequent leap years, or (iii) the date September 9,
1999. Insofar as this representation and warranty relates to services to be
provided by a third party, it is based upon written assurances received by
Seller from such party.
-25-
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SUBSIDIARY
Except as set forth in the Disclosure Schedule delivered by the Company
to the Seller prior to the execution of this Agreement (the "Company Disclosure
Schedule"), which Company Disclosure Schedule shall reference disclosure items
by section, the Company and the Subsidiary represent and warrant to the Seller
that:
3.1 Organization and Qualification.
(a) Each of the Company and the Subsidiary is a corporation validly
existing and in good standing under the laws of the states of Delaware and Iowa,
respectively.
(b) Each of the Company and the Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to the Company.
3.2 Authority. The Company and the Subsidiary have the requisite
corporate power and authority to execute and deliver this Agreement and to
perform their respective obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the Subsidiary and the consummation by the Company and the
Subsidiary of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company and the
Subsidiary and no other corporate proceedings on the part of the Company and the
Subsidiary are necessary to authorize this Agreement or to consummate the
transactions so contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and the Subsidiary and constitutes the
valid and binding obligation of the Company and the Subsidiary and assuming the
authorization, execution and delivery by the Seller, is enforceable against the
Company and the Subsidiary in accordance with its terms, except as enforcement
may be limited by general principles of equity, whether applied in a court of
law or a court of equity, and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
3.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company and the
Subsidiary does not, and the performance of this Agreement by the Company and
the Subsidiary shall not, (i) conflict with or violate the Articles of
Incorporation or Bylaws of the Company or the Subsidiary, (ii) conflict with or
violate any Laws applicable to the Company or the Company Subsidiary or by
-26-
which any of their respective properties is bound or affected, or (iii) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or the Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or the Subsidiary is a party or by which the
Company or the Subsidiary or its or any of their respective properties is bound
or affected.
(b) The execution and delivery of this Agreement by the Company and the
Subsidiary does not, and the performance of this Agreement by the Company shall
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, except the HSR Act, the consents or approvals of the IUB or FCC listed
on the Seller Disclosure Schedule, and the filing of appropriate Articles of
Merger or other documents as required by applicable law.
ARTICLE IV--COVENANTS OF THE SELLER
4.1 Affirmative Covenants. The Seller covenants and agrees with the
Company that from and after the date of this Agreement and prior to the
Effective Time, unless the prior written consent of the Company shall have been
obtained and except as otherwise contemplated herein, it will and it will cause
each Seller Subsidiary to:
(a) operate its business only in the ordinary course consistent with
past practices or as described as Item 4.1(a) of the Seller Disclosure Schedule;
(b) use reasonable efforts to preserve intact its business organization
and assets, maintain its rights and franchises, retain the services of its
officers and key employees and maintain its relationships with and the good will
of regulators and customers;
(c) maintain and keep its properties in as good repair and condition as
at present, ordinary wear and tear excepted;
(d) keep in full force and effect insurance and bonds comparable in
amount and scope of coverage to that now maintained by it;
(e) perform in all material respects all obligations required to be
performed by it under all material contracts, leases, and documents relating to
or affecting its assets, properties, and business;
(f) maintain in good standing all franchises, permits, licenses,
approvals and other authorizations owned or held by Seller or any Seller
Subsidiary;
-27-
(g) comply in all material respects with all laws and regulations
applicable to the business operations and affairs of Seller and Seller
Subsidiaries;
(h) take such reasonable actions as are requested by the Company to
satisfy the conditions to and complete the Merger; and
(i) provide to the Company Seller's monthly financial statements
promptly upon their completion.
4.2 Negative Covenants. Except as specifically contemplated by this
Agreement, from the date of this Agreement until the Effective Time, the Seller
shall not do, or permit any Seller Subsidiary to do, without the prior written
consent of the Company, any of the following:
(a) except as required by applicable Laws or to maintain qualification
pursuant to the Code or set forth as Item 4.2(a) on the Seller Disclosure
Statement, adopt, amend, renew or terminate any Plan or any agreement,
arrangement, plan or policy between the Seller or any Seller Subsidiary and one
or more of its current or former directors, officers or employees, or except as
required by applicable law, increase in any manner the base salary, bonus,
incentive compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan or agreement as in effect as of the
date hereof;
(b) declare or pay any dividend on, or make any other distribution in
respect of, its outstanding shares of capital stock, except for dividends by a
Seller Subsidiary to the Seller;
(c)(i) redeem, purchase or otherwise acquire any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, or any options, warrants, conversion or other
rights to acquire any shares of its capital stock or any such securities or
obligations; (ii) merge with or into any other corporation, permit any other
corporation to merge into it or consolidate with any other corporation, or
effect any reorganization or recapitalization; (iii) purchase or otherwise
acquire any substantial portion of the assets, or more than 5% of any class of
stock, of any corporation or other business other than in the ordinary course of
business and consistent with past practice; (iv) liquidate, sell, dispose of, or
encumber any assets or acquire any assets, other than in the ordinary course of
its business consistent with past practice; or (v) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock;
(d) except as set forth as Item 4.2(d)of the Seller Disclosure
Statement, issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale of, any shares of any class of capital
stock of the Seller or any Seller Subsidiary (including shares held in treasury)
or any rights, warrants or options to acquire, any such shares;
(e) directly or indirectly through any director, officer, shareholder,
employee, agent,
-28-
adviser or otherwise, orally or in writing, initiate, solicit, encourage,
respond to, discuss, negotiate or accept any inquiries, indications of interest,
proposals or offers from, or make any inquiries, indications of interest,
proposals, offers, counter proposals or counteroffers to, or furnish any
information to, any other person with respect to (i) an acquisition of shares of
the Seller or any Seller Subsidiary, (ii) additional equity or convertible debt
financing for Seller or any Seller Subsidiary, (iii) an acquisition of all or
part of the assets of Seller or any Seller Subsidiary, or (iv) a merger,
consolidation or any other transaction which would result in a change in control
in Seller or any Seller Subsidiary or a substantial change in the business of
Seller or any Seller Subsidiary, or (v) provide third parties with any nonpublic
information relating to any such inquiry or proposal;
(f) propose or adopt any amendments to its Articles of Incorporation or
any Bylaws in any way adverse to the Company;
(g) change any of its methods of accounting in effect at December 31,
1997 or change in any material respect its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax returns for the taxable year ended
December 31, 1997, except as may be required by Law or GAAP;
(h) change in any material respect any material policies concerning the
business or operations of the Seller or any of the Seller Subsidiaries (except
as required by Law or as set forth as Item 4.2 (h)(iii), (v), (vi) and (vii) in
the Seller Disclosure Statement) including, without limitation taking any action
to: (i) sell, assign, transfer, pledge, mortgage or otherwise encumber any of
its assets, except for those (other than pledges, mortgages or encumbrances)
incurred in individual amounts of less than $15,000 incurred in the ordinary
course of business consistent with past practice subject to an aggregate maximum
of $100,000; (ii) make any investment except in Permitted Investments with a
maturity of six months or less; (iii) enter into any agreement with respect to
any acquisition of or acquire assets except in individual amounts of less than
$15,000 incurred in the ordinary course of business consistent with past
practice subject to an aggregate maximum of $100,000, or any discharge, waiver,
satisfaction, release or relinquishment of any material contract rights, liens,
encumbrances, debt or claims, except in individual amounts of less than $1,000
in the ordinary course of business consistent with past practice subject to an
aggregate maximum of $10,000; (iv) settle any claim, action, suit, litigation,
proceeding, arbitration, investigation or controversy of any kind, for any
amount in excess of $10,000, net of any insurance proceeds, or in any manner
which would restrict the operations or business of the Seller or any of the
Seller Subsidiaries; (v) make any capital expenditure, except in individual
amounts of less than $10,000 incurred in the ordinary course of business
consistent with past practice subject to an aggregate maximum of $50,000; (vi)
enter into any transaction with a present or former director, officer, employee
or stockholder of Seller or any Seller Subsidiary or any affiliate of any such
person; (vii) incur any indebtedness for money borrowed or lease any property or
assets; (viii) lower any current prices or rates with respect to telephone or
other services provided by Seller or any Seller Subsidiary except for changes in
the ordinary course of business or as otherwise required by regulatory
authorities; or (ix) take any action or fail to take any action which
individually or in the aggregate is
-29-
likely to have a Material Adverse Effect with respect to the Seller;
(i) agree in writing or otherwise to do any of the foregoing.
4.3 Access and Information.
(a) From the date of this Agreement until the Effective Time and upon
reasonable notice, the Seller shall, and shall cause each Seller Subsidiary to,
afford to the Company's officers, employees, accountants, legal counsel and
other representatives of the Company, access, during normal business hours, to
all its properties, books, contracts, commitments and records, excluding any
books, contracts, commitments and records in any way related to the sale of the
Seller. From the date of this Agreement and until the Effective Time, the Seller
shall (and shall cause each Seller Subsidiary to) furnish promptly (as soon as
available or received by the Seller or any Seller Subsidiary) to the Company (i)
a copy of each Seller Report filed by it or received by it after the date of
this Agreement and prior to the Effective Time pursuant to the requirements of
the HSR Act or any other applicable Laws promptly after such documents are
available, (ii) a copy of any action, including all minutes, taken by the Board
of Directors, or any committee thereof, of the Seller and the Seller
Subsidiaries and any documents or other materials of any kind provided to such
Boards or committees promptly after such action, minutes, materials or other
documents become available without further request by the Company, (iii) a copy
of each Tax Return filed by the Seller and each Seller Subsidiary for the three
most recent years available, a copy of any correspondence received from the IRS
or any other governmental entity or taxing authority or agency and any other
correspondence relating to Taxes, and any other documents relating to Taxes as
the Company may reasonably request, and (iv) all other information concerning
its business, properties and personnel as the Company may reasonably request.
(b) Unless otherwise required by Law, the parties will hold any such
information which is nonpublic in confidence until such time as such information
becomes publicly available through no wrongful act of either party, and in the
event of termination of this Agreement for any reason each party shall promptly
return all nonpublic documents obtained from any other party, and any copies
made of such documents, to such other party or destroy such documents and
copies.
4.4 Update Disclosure; Breaches.
(a) From and after the date of this Agreement until the Effective Time,
the Seller shall update the Company on a regular basis by written notice to the
Company to reflect any matters which have occurred from and after the date of
this Agreement which, if existing on the date of this Agreement, would have been
required to be described on the Seller Disclosure Statement.
(b) The Seller shall, in the event it becomes aware of the impending or
threatened occurrence of any event or condition which would cause or constitute
a material breach (or would have caused or constituted a material breach had
such event occurred or been known prior to the date
-30-
of this Agreement) of any of its representations or agreements contained or
referred to herein, give prompt written notice thereof to the Company and use
its best efforts to prevent or promptly remedy the same; provided, however, that
the delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available hereunder to the Company. If, however, the Company
consummates the Merger, it shall be deemed to have waived any breach of a
representation, warranty or covenant which has been corrected by amendment by
the information disclosed by Seller pursuant to this Section prior to the
satisfaction of the conditions to the Merger set out in Article VI.
4.5 Expenses. All Expenses (as defined below) incurred by the Company
and the Seller shall be borne solely and entirely by the party which has
incurred the same. "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
the party and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation and execution of this
Agreement, the solicitation of stockholder approvals and all other matters
related to the closing of the transactions contemplated hereby. Neither Seller
nor Sellers Subsidiaries shall pay or agree to pay in the aggregate in excess of
$100,000 in connection with the consummation of the transactions contemplated in
Agreement except with the prior written consent of the Company.
4.6 Delivery of Stockholder List. The Seller shall arrange to have its
transfer agent deliver to the Company or its designee, from time to time prior
to the Effective Time, a true and complete list or computer tape setting forth
the names and addresses of the Seller stockholders, their holdings of stock as
of the latest practicable date, and such other stockholder information as the
Company may reasonably request.
ARTICLE V--ADDITIONAL AGREEMENTS
5.1 Meeting of the Seller's Stockholders. The Seller shall promptly
after the date of this Agreement take all action necessary in accordance with
the IBCL and Seller Articles and the Seller Bylaws to convene the Seller
Stockholders' Meeting. The Seller shall use its best efforts to solicit from
stockholders of the Seller proxies in favor of the Merger and shall take all
other action necessary or advisable to secure the vote or consent of
stockholders required by the IBCL to approve the Merger. The Board of Directors
will recommend the merger to stockholders and will vote all Shares owned or held
by them in favor of the Merger.
5.2 Appropriate Action; Consents; Filings. The Seller and the Company
shall use all reasonable efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law to consummate and make effective the transactions
contemplated by this Agreement, (ii) obtain all consents, licenses, permits,
waivers, approvals, authorizations or orders required under Law required in
connection with the authorization, execution and delivery of this Agreement and
the consummation by them of the transactions contemplated hereby, and (iii) make
all necessary filings, and thereafter make any other required
-31-
submissions, with respect to this Agreement and the Merger required under any
applicable Law; provided that, the Company and the Seller shall cooperate with
each other in connection with the making of all such filings, including
providing copies of all such documents to the non-filing party and its advisors
prior to filing and, if requested, to accept all reasonable additions, deletions
or changes suggested in connection therewith. The Seller and the Company shall
furnish all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law in connection with
the transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use all reasonable efforts to take all such necessary
action.
5.3 Notification of Certain Matters. The Seller shall give prompt
notice to the Company, and the Company shall give prompt notice to the Seller,
of (i) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate and (ii) any failure of
the Seller or the Company, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice. If, however, the parties consummate the Merger,
they (including the shareholders of Seller) shall be deemed to have waived any
breach of a representation, warranty or covenant which has been corrected by
amendment by the information disclosed pursuant to this Section prior to the
satisfaction of the conditions of the Merger set out in Article VI.
5.4 Public Announcements. The Company and the Seller shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by Law or any listing agreement with or rule of the American Stock
Exchange.
ARTICLE VI--CONDITIONS OF MERGER
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the Seller.
(b) No Order. No federal or state governmental or regulatory authority
or other agency or commission, or federal or state court of competent
jurisdiction, shall have enacted, issued,
-32-
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect restricting, preventing or prohibiting consummation of the
transactions contemplated by this Agreement.
(c) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. If filing under the HSR Act is required to
be made prior to consummation of the Merger, early termination shall have been
granted or applicable waiting periods shall have expired under the HSR Act.
6.2 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger are also subject to the
following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Seller contained in this Agreement, without giving effect to
any update to the Seller Disclosure Schedule or notice to the Company under
Section 4.4, shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Effective Time as though made on and as of the Effective Time.
(b) Agreements and Covenants. The Seller shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time.
(c) Consents Obtained. All Seller Approvals (which shall be deemed to
include all items referred to in Section 2.5 or 2.6 of this Agreement and Items
2.5(a), 2.5(b) or Item 2.6 of the Seller Disclosure Statement or should have set
forth in such Items to the Seller Disclosure Statement and the release of the
filing referred to in Item 2.12 of the Seller Disclosure Statement) and all
filings required to be made by the Seller for the authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been made by Seller and obtained in form and
substance satisfactory to the Company in its sole discretion and, if the Company
deems it advisable, shall have become final and non-appealable. The Seller
Approvals and filings shall include the right to transfer control of Seller from
▇▇▇▇▇ Corporation to ▇▇▇▇▇ Interactive Corporation upon the spin off to ▇▇▇▇▇
Corporation shareholders of the stock of ▇▇▇▇▇ Interactive Corporation.
(d) No Challenge. There shall not be pending or threatened any action,
proceeding or investigation before any court or administrative agency or by a
government agency (i) challenging or seeking material damages in connection
with, the Merger or (ii) seeking to restrain, prohibit or limit the exercise of
full rights of ownership or operation by the Company or the Company Subsidiaries
of all or any portion of the business or assets of the Seller, which in either
case is reasonably likely to have a Material Adverse Effect with respect to the
Seller or the Company.
(e) No Material Adverse Changes. Since the date of the Agreement, there
has not been any change in the financial condition, results of operations or
business of the Seller and the Seller
-33-
Subsidiaries, taken as a whole, that either individually or in the aggregate
would have a Material Adverse Effect with respect to the Seller.
(f) Adjusted Working Capital. Seller shall have Adjusted Working
Capital at the Effective Time of at least $4.1 million less up to $611,000 of
cash paid or payable for investments made subsequent to December 31, 1998, and
prior to Effective Time of the Merger by Seller in personal communication
services ("PCS") whether owned directly or through capital contributions or
loans to Wapsi Wireless, L.L.C. Adjusted Working Capital shall mean current
assets plus investments in United States Treasury Notes classified as a
non-current asset on Seller's balance sheet, less current liabilities (including
Seller's consultant's cost and other transaction expenses), all calculated in
accordance with GAAP.
(g) Environmental Investigation. The Environmental Investigation of
Seller and Seller Subsidiaries' properties and operations conducted on behalf of
the Company shall be satisfactory in all material respects to the Company and to
any person providing financing to the Company or the Subsidiary.
(h) Title Insurance. Seller shall have procured and provided to the
Company a policy of title insurance, dated as of or prior to the Effective Date
and issued by First American Title Insurance Company insuring the owner or
tenant of the applicable parcels of real property or real property subject to a
real property lease listed on Schedule 6.2(h) free of all liens except as set
forth in the Seller Disclosure Schedule, reasonably acceptable to the Company.
(i) Opinion of Counsel.
(a) The Company shall have received from ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
S.C., independent counsel to the Seller ("Seller's Counsel") an opinion dated
the Effective Time, in form and substance reasonably satisfactory to the
Company, covering such matters as the Company may reasonably request, which
opinion shall be based on such assumptions and containing such qualifications
and limitations as are appropriate and reasonably satisfactory to the Company.
Seller's Counsel may rely as to certain matters of Iowa law on the opinion of
Iowa Counsel referred to in (i)(b) below. Seller's Counsel may rely as to
Federal Communications Commission matters on an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇ and as
to ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ and securities matters on an opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇,
whose opinions shall be in form and substance reasonably satisfactory to the
Company.
(b) The Company shall have received from Dickson, Mackman,
Tyler & ▇▇▇▇▇, independent Iowa counsel to the Company ("Iowa Counsel") an
opinion dated the Effective Time in form and substance reasonably satisfactory
to the Company, covering such matters as the Company may reasonably request,
including without limitation Iowa regulatory, merger and corporate law and real
estate matters, which opinion shall be based on such assumptions and containing
such qualifications and limitations as are appropriate and reasonably
satisfactory to the Company.
-34-
(j) Officers Certificate. The Company shall have received a certificate
of the Chief Executive Officer or President and the Chief Financial Officer of
the Seller to the effects set forth in Sections 6.2(a), (b), (e) and (f).
Any certificates or opinions given pursuant to this Section 6.2 shall,
at the Company's request, be made to and given to any person providing financing
to the Company or the Subsidiary.
6.3 Additional Conditions to Obligations of the Seller. The obligation
of the Seller to effect the Merger is also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement, without giving effect to
any notice to the Seller under Section 5.3, shall be true and correct as of the
date of this Agreement and (except to the extent such representation and
warranties speak as of an earlier date) as of the Effective Time, as though made
on and as of the Effective Time. The Seller shall have received a certificate
signed on behalf of the Company by the Chief Executive Officer or President and
the Chief Financial Officer of the Company to the foregoing effect and to the
effect in 6.3(b).
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time.
(c) Consents Under Agreements. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made by the Company for the authorizations, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by the Company.
(d) Opinion of Counsel. The Seller shall have received from ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, counsel to the Company ("Company Counsel") an opinion dated the
Effective Time, in form and substance reasonably satisfactory to the Seller,
covering such matters as the Seller shall reasonably request, which opinion
shall be based on such assumptions and contain such qualifications and
limitations as are appropriate and reasonably satisfactory to the Seller.
Company Counsel may rely as to certain matters of Iowa law on the opinion of
Iowa Counsel referred to in Section 6.2(i)(b).
ARTICLE VII--TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective
Time:
(a) by mutual written consent of the Company and the Seller;
(b) by either the Company or the Seller if any approval of
the stockholders of the Seller
-35-
required for the consummation of the Merger shall not have been obtained by
reason of the failure to obtain the required vote at a duly held meeting of such
stockholders or at any adjournment or postponement thereof;
(c) by the Seller or the Company (i) if there has been a breach in any
material respect (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall have
been breached in any respect) of any representation, warranty, covenant or
agreement on the part of Seller, on the one hand, or the Company, on the other
hand, set forth in this Agreement, or (ii) if any representation or warranty of
Seller, on the one hand, or the Company, on the other hand, shall be discovered
to have become untrue in any material respect (except that where any statement
in a representation or warranty expressly includes a standard of materiality,
such statement shall have become untrue in any respect), in either case (i) or
(ii) which breach or other condition has not been cured within 10 business days
following receipt by the nonterminating party of notice of such breach or other
condition, or which breach or other condition by its nature, cannot be cured
prior to the Closing Date; provided, however, that this Agreement may not be
terminated pursuant to this clause (c) by the breaching party or party making
any representation or warranty which shall have become untrue in any material
respect;
(d) by either the Company or the Seller if any permanent injunction
preventing the consummation of the Merger shall have become final and
nonappealable;
(e) by the Company at any time prior to the holding of Seller's
stockholders meeting if additional due diligence by the Company reveals
information relating to or affecting Seller or any Seller Subsidiary which in
the opinion of the Company is materially adverse.
(f) by either the Company or the Seller if the Merger shall not have
been consummated by October 31, 1999, for a reason other than the failure of the
party seeking termination to comply with its obligations under this Agreement;
or
(g) by either the Company or the Seller if any regulatory authority has
denied approval of the Merger, and neither the Company nor the Seller has,
within 30 days after the entry of such order denying approval, filed a petition
seeking review of such order as provided by applicable law.
7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void
and all rights and obligations of any party shall cease except that nothing
herein shall relieve any party from liability for any breach of this Agreement
or any representation, warranty, covenant or agreement contained in this
Agreement or shall restrict either party's rights in the case thereof.
7.3 Waiver. At any time prior to the Effective Time, the parties may
(a) extend the time for the performance of any of the obligations or other acts
of the other party, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered
-36-
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE VIII--GENERAL PROVISIONS
8.1 Notices. All Notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation), mailed by register or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice) and shall be effective upon receipt:
(a) If to the Company:
Brighton Communications Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Seller:
Central ▇▇▇▇▇ Telephone Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Mr. W. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, S.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
8.2 Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any partnership
or joint venture in which any person (either
-37-
alone, or though or together with any other subsidiary) has, directly or
indirectly, an interest of 5% or more;
(b) "business day" means any day other than a day on which
federally-chartered banks are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "Permitted Investment" means investments issued or fully guaranteed
as to principal and interest by the United States (or any money market mutual
fund which invests solely in such investments) or certificates of deposits or
accounts fully insured by the Federal Deposit Insurance Corporation;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of Seller, the Company, the
Surviving Corporation, or any other person, means any corporation, partnership,
joint venture or other legal entity of which the Seller, the Company, the
Surviving Corporation or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
50% or more of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
8.3 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.4 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
8.5 Entire Agreement. This Agreement constitutes the entire agreement
of the parties and supersedes all prior agreements and undertakings, both
written and oral, between the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided
-38-
herein, is not intended to confer upon any other person any rights or remedies
hereunder.
8.6 Assignment. This Agreement shall not be assigned by operation of
law or otherwise, except that the Company may assign all or any of its rights
hereunder to any affiliate provided that no such assignment shall relieve the
assigning party of its obligations hereunder. In addition, the Company may
insert one or more additional subsidiaries between the Company and the
Subsidiary.
8.7 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
8.8 Governing Law; Venue. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law. All actions relating to disputes arising out of this Agreement shall be
brought in a state or federal court whose jurisdiction includes New York City or
Rye, New York.
8.9 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
8.10 Amendment. This Agreement may be amended by the parties by action
taken by or on behalf of their respective Boards of Directors at any time prior
to the Effective Time; provided, however, that, after approval of the Merger by
the stockholders of the Seller, no amendment may be made, without further
approval of such stockholders which would reduce the amount or change the type
of consideration into which each share of Seller Common Stock shall be converted
pursuant to this Agreement upon consummation of the Merger. This Agreement may
not be amended except by an instrument in writing signed by the parties.
IN WITNESS WHEREOF, the Seller, the Company and the Subsidiary have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
CENTRAL ▇▇▇▇▇ TELEPHONE COMPANY ("Seller")
By:
Name:
Title:
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇ ACQUISITION CORPORATION
("Subsidiary")
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
BRIGHTON COMMUNICATIONS CORPORATION
("Company")
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
-40-
CROSS REFERENCES TO SELLER DISCLOSURE SCHEDULE
-1-
