Exhibit 2.11
STOCK PURCHASE AGREEMENT
EXHIBITS
Exhibit A............. List of Shareholders
Exhibit B............. List of Excluded Assets
Exhibit C............. Form of Transition Services Agreement
Exhibit D............. Form of Noncompetition Agreement
Exhibit E............. Opinion of Buyer's Counsel
Exhibit F............. Opinion of the Shareholders', Armour's and
Bridgewater's Counsel
SCHEDULES
Schedule 4.6.......... Armour Financial Statements
Schedule 4.7.......... Material Changes
Schedule 4.9.......... Litigation
Schedule 4.11......... Employee Benefit Plans
Schedule 4.14......... Subsidiaries and Investments
Schedule 4.15......... Insurance Policies
Schedule 4.16......... Employees and Employment Agreements
Schedule 4.17......... Material Contracts
Schedule 4.19......... Description of Real and Personal Property Owned
...................... or Leased
Schedule 4.22......... Environmental Matters
Schedule 4.23......... Affiliate Transactions
Schedule 4.25......... Permits and Reports
Schedule 4.26......... Liabilities
Schedule 5.0 ......... Exceptions to Covenants
This Stock Purchase Agreement (the "Agreement") is made as of December
24, 1998, among MJD Services Corp., a Delaware corporation (the "Buyer");
Armour Independent Telephone Co., a South Dakota corporation ("Armour");
Bridgewater-Canistota Independent Telephone Co., a South Dakota corporation
("Bridgewater"); and Xxxxxxx X. Xxxxxx, Xx., Xxxxxxx X. Xxxxxx, and Xxxxxxx
X. Xxxxxx, Xx., individuals and the holders of all of the outstanding stock
of Armour (collectively, the "Shareholders").
WHEREAS, the Shareholders own 100 percent of the issued and outstanding
shares of the common stock of Armour (the "Armour Stock"), with the number of
shares and percentages set forth on Exhibit A hereto; and
WHEREAS, Armour is the beneficial owner of 100 percent of Bridgewater's
issued and outstanding common stock; and
WHEREAS, Buyer desires to purchase the Armour Stock from the Shareholders,
and the Shareholders desire to sell the Armour Stock to Buyer upon terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
Article I.
AGREEMENT TO PURCHASE AND SELL
1.1 Purchase and Sale. At Closing (as defined below), Buyer shall purchase
the Armour Stock from the Shareholders, and the Shareholders shall sell the
Armour Stock to Buyer. The conveyance of the Armour Stock shall be made by the
Shareholders to Buyer free and clear of all options, liens, claims, restrictions
and encumbrances of any nature whatsoever (collectively, "Liens"). Exhibit B to
this Agreement sets forth a list of assets to be sold by Armour or distributed
to the Shareholders prior to Closing, and excluded from the assets to be owned
by Armour as of the Closing Date. The parties hereto acknowledge, without way of
limiting the foregoing, that Armour shall sell, prior to the Closing, all of its
16.57% partnership interest in the South Dakota RSA 7 Limited Partnership (the
"Cellular Interest"), and shall sell, transfer or otherwise divest itself of all
of its interest or assets held pursuant to that certain joint venture known as
the ABS LMDS Joint Venture (the "LMDS Interest"), and that the Shareholders
shall assume any and all liabilities arising from the ownership of the Cellular
Interest or the LMDS Interest, both prior to and subsequent to the Closing, as
well as those liabilities resulting from the transfer of the Cellular Interest
or the LMDS Interest, and shall indemnify Buyer with respect to such
liabilities, as provided in Section 6.1(e) hereof.
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1.2 Closing. The consummation of the transactions contemplated herein (the
"Closing") shall take place at the offices of Union Telephone Company, 116 North
Main Avenue, Hartford, South Dakota, at 10:00 a.m. local time, on the first
business day of the calendar month, immediately following the calendar month in
which all required regulatory approvals, notices and consents have been given
and obtained, so long as such day is at least ten (10) calendar days after
receipt of such regulatory approvals, or at such other time and place as Buyer
and the Shareholders may mutually agree (the "Closing Date").
1.3 Shareholders' Representative. Xxxxxxx X. Xxxxxx, Xx. shall be the
"Shareholders' Representative" or, in the event of his death or inability to so
act, Xxxxxxx X. Xxxxxx, Xx. shall be the Shareholders' Representative. The
Shareholders, by execution of this Agreement, authorize the Shareholders'
Representative to take such action on their behalf as the Shareholders'
Representative is herein authorized to take or as such Shareholders'
Representative may deem necessary or advisable in order to carry out the
purposes and intents of this Agreement.
Article 2
PURCHASE PRICE
2.1 Purchase Price. (a) Buyer shall purchase the Armour Stock from the
Shareholders for an aggregate purchase price of $2,000,000 (the "Base Purchase
Price"), plus the "Increase in Stockholders' Equity" as defined in accordance
with Section 2.1(b) below, which amount shall be payable in accordance with this
Article 2.
(b) The Base Purchase Price shall be adjusted by adding to it the
"Increase in Stockholders' Equity", determined as follows:
(i) Buyer and the Shareholders acknowledge that as of December 31,
1997, Armour's balance sheet reflected total stockholders' equity of $1,353,753.
The "Increase in Stockholders' Equity" shall be determined by:
(I) Subtracting the total Stockholders' Equity as of December 31,
1997 ($1,353,753) from the Total Stockholders' Equity of Armour (on a
consolidated basis) as of the Closing Date, and
(II) Adding Armour's investment in the Cellular Interest
as reflected on the December 31, 1997, balance sheet, which is
$908,967.
(ii) The sum of the Base Purchase Price and the Increase in
Stockholders' Equity as determined above, shall be referred to herein as the
Adjusted Purchase Price. The Adjusted Purchase Price shall be based on an
estimated closing balance sheet of Armour prepared in good faith by the Armour
accountants/consultants,
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subject to Buyer's review and approval thereof, which shall not be unreasonably
withheld.
2.2 Closing Date Payment and Receipt of Shares. On the Closing Date, (i)
the Shareholders will assign and transfer to Buyer good and valid title in and
to the Armour Stock, free and clear of all Liens, by delivering to Buyer stock
certificates representing the Armour Stock, duly endorsed for transfer or
accompanied by duly executed stock powers endorsed in blank with requisite stock
transfer tax stamps, if any, attached; (ii) Buyer shall, by wire transfer of
same-day funds, pay to the Shareholders in accordance with the percentage
interests shown on Exhibit A attached hereto (the "Percentage Interests") the
amount of the Adjusted Purchase Price, as determined in accordance with Section
2.1 above; (the "Closing Payment"); and (iii) the parties shall deliver to each
other the documents required under this Agreement to be delivered at or prior to
the Closing.
2.3 Post-Closing Adjustments to the Purchase Price. The Closing Payment
payable by Buyer to the Shareholders on the Closing Date pursuant to Section 2.2
hereof may be adjusted as follows. Within sixty (60) days after the Closing
Date, Buyer and the Shareholders shall prepare a closing balance sheet for
Armour as of the close of business on the Closing Date (the "Closing Balance
Sheet"), which shall be mutually acceptable to the Shareholders and Buyer and
their respective independent public accountants. The Closing Balance Sheet shall
be prepared in accordance with GAAP and consistent with Armour's past practices.
The amount of the Adjusted Purchase Price shall be increased or decreased, as
the case may be, by the difference, if any, between the Adjusted Purchase Price
determined in good faith as of the Closing Date and the Adjusted Purchase Price
as such is determined based on the Closing Balance Sheet. If, as a result of the
foregoing adjustment, the Adjusted Purchase Price is increased, Buyer shall pay
the Shareholders, in accordance with their Percentage Interests, the amount of
such increase by wire transfer of same-day funds within ten (10) business days
of the date on which the parties agree on the Closing Balance Sheet. If, as a
result of the post-closing adjustment, the Purchase Price is decreased, the
Shareholders shall refund to Buyer, in accordance with their Percentage
Interests, the amount of such decrease by wire transfer of same-day funds within
ten (10) business days of the date on which the parties agree on the Closing
Balance Sheet.
Article 3
REPRESENTATIONS AND WARRANTIES OF BUYER
For the purpose of inducing Armour, Bridgewater and the Shareholders to
enter into this Agreement, Buyer hereby makes the following representations and
warranties:
3.1 Organization of Buyer. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with full
corporate power and authority to carry on the business in which it is engaged,
to own, lease and operate its properties and to enter into and perform its
obligations under this Agreement.
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3.2 Authorization of Agreement. The execution and delivery of this
Agreement has been duly authorized and approved by the board of directors of
Buyer. This Agreement is a valid and binding obligation of Buyer enforceable in
accordance with its terms, subject to limitations imposed by laws and judicial
decisions relating to or affecting the rights of creditors or secured creditors
generally or general principles of equity (regardless of whether enforcement is
considered in proceedings at law or in equity), upon enforceability of any of
the remedies, covenants or other provisions of this Agreement and the
availability of injunctive relief or other equitable remedies. All persons who
have executed this Agreement on behalf of Buyer have been duly authorized to do
so by all necessary corporate action.
3.3 Regulatory Approvals. At Closing, Buyer shall have given all notices
to and have obtained from all local, state and federal regulatory authorities
any approvals, consents, permits and authorizations required in order to
consummate the transactions contemplated in accordance with this Agreement, all
as more particularly provided in Section 7.1 hereof.
3.4 Access to Books and Records. Buyer has carefully reviewed this
Agreement and in deciding to purchase the Armour Stock has reviewed and is
continuing to review information set forth in the books and records of Armour
and Bridgewater. Buyer acknowledges and agrees that, to the best of its
knowledge, all documents, records and books pertaining to this transaction
requested to date have been made available for inspection by Buyer and its
representatives. Buyer has had and continues to have a reasonable opportunity to
ask questions of and receive answers from the Shareholders and Armour concerning
all aspects of the business of Armour and Bridgewater, including, without
limitation, their assets and liabilities, and, to the best of its knowledge, all
such questions to date have been answered to the full satisfaction of Buyer and
its representatives. Buyer further represents that its management has such
knowledge and experience in financial and business matters that management is
capable of evaluating the merits and risks of purchasing the Armour Stock and to
make an informed investment decision with respect thereto.
3.5 Investment Intent. Buyer is acquiring the Armour Stock for investment
and not with a view to distribution thereof, and Buyer will not make any
distribution or transfer thereof except in accordance with the Securities Act of
1933, as amended, and the rules and regulations thereunder and applicable
exemptions therefrom.
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Article 4
REPRESENTATIONS AND WARRANTIES OF ARMOUR, BRIDGEWATER
AND THE SHAREHOLDERS
For the purpose of inducing Buyer to enter into this Agreement, Armour,
Bridgewater, and the Shareholders, jointly and severally, hereby make the
following representations and warranties:
4.1 Organization and Qualification of Armour and Bridgewater. Armour is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of South Dakota with full corporate power and authority to
carry on the business in which it is presently engaged and to own, lease and
operate its properties and to perform its obligations hereunder. The
Shareholders are residents of the State of South Dakota. Armour is the owner of
100 percent of the issued and outstanding capital stock of Bridgewater, except
for directors' qualifying shares (all of which shall be assigned at Closing,
without additional consideration, to one or more directors nominated by Buyer).
(b) Bridgewater is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of South Dakota with full
corporate power and authority to carry on the business in which it is presently
engaged and to own, lease and operate its properties and to perform its
obligations hereunder.
4.2 Organizational Documents. Armour has delivered to Buyer a true and
correct copy of the Articles of Incorporation of Armour and the Articles of
Incorporation of Bridgewater, together with all amendments thereto, as certified
by the Secretary of State of South Dakota, and a true and correct copy of the
Bylaws of Armour and Bridgewater as currently in effect, as certified by the
Secretary of Armour and Bridgewater, respectively.
4.3 Regulatory Approvals. At Closing, Armour and Bridgewater shall have
given all notices to and have obtained from all local, state and federal
regulatory authorities any approvals, consents, permits and authorizations
required in order to consummate the transactions contemplated in accordance with
this Agreement, all as more particularly provided in Section 7.1 hereof.
4.4 Authorization of Agreement. The execution and delivery of this
Agreement has been duly authorized and approved by Armour's board of directors
and the Shareholders. This Agreement is a valid and binding obligation of
Armour, Bridgewater and the Shareholders, enforceable in accordance with its
terms, subject to limitations imposed by laws and judicial decisions relating to
or affecting the rights of creditors or secured creditors generally or general
principles of equity (regardless of whether enforcement is considered in
proceedings at law or in equity), upon the enforceability of any of the
remedies, covenants or other provisions of this Agreement and the availability
of injunctive relief or other equitable remedies. All persons who have executed
this Agreement on behalf of Armour, Bridgewater, and/or the Shareholders have
been duly authorized to do so by all necessary action of Armour, Bridgewater,
and its Shareholders.
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4.5 Capital Stock of Armour and Bridgewater.
(a) The authorized capital stock of Armour consists of 6,000 shares of
$100.00 par value common stock and 400 shares of preferred stock with a par
value of $1,000 per share. The Shareholders are the beneficial owners of all of
the Armour Stock, which constitutes 100 percent of Armour's issued and
outstanding common stock (other than directors' qualifying shares). Directors'
qualifying shares of Armour Stock which are issued and outstanding are set forth
on Schedule 4.5. Two hundred (200) shares of preferred stock are issued and
outstanding, and except as set forth on Schedule 4.5, are owned of record, free
and clear of all Liens, by Union Telephone Company, a South Dakota corporation.
All of the issued and outstanding shares of the Armour Stock are duly and
validly issued and outstanding, are fully paid and nonassessable, were issued in
compliance with all state and federal laws and are held by the Shareholders. The
delivery by the Shareholders to Buyer of a certificate or certificates
representing the Armour Stock, as provided in Section 10.5 of this Agreement,
will pass good and marketable title to the Armour Stock to Buyer free and clear
of all Liens. There are no outstanding warrants, options, rights, calls or other
commitments of any nature relating to the Armour Stock, and there are no
outstanding securities or debt obligations of any kind convertible into shares
of capital stock of Armour. None of the issued and outstanding shares of capital
stock of Armour was issued in violation of preemptive rights.
(b) The authorized capital stock of Bridgewater consists of 10,000 shares
of common stock, $10.00 per share par value. Armour is the beneficial owner of
100 percent of Bridgewater's issued and outstanding common stock (other than
directors' qualifying shares) (the "Bridgewater Stock"). There are 10,000 shares
of Bridgewater Stock issued and outstanding. All of the issued and outstanding
shares of the Bridgewater Stock are duly and validly issued and outstanding, are
fully paid and nonassessable, were issued in compliance with all state and
federal laws and are held by Armour. The purchase by Buyer of the Armour Stock
pursuant to the terms of this Agreement will pass good and marketable title to
the Bridgewater Stock to Buyer, free and clear of all Liens. There are no
outstanding warrants, options, rights, calls or other commitments of any nature
relating to the Bridgewater Stock, and there are no outstanding securities or
debt obligations of any kind convertible into shares of capital stock of
Bridgewater. None of the issued and outstanding shares of capital stock of
Bridgewater was issued in violation of preemptive rights.
4.6 Financial Statements of Armour. Armour has delivered to Buyer copies
of the audited consolidated financial statements of Armour for the years ended
December 31, 1997 and 1996 (the "Armour Financial Statements"), which are true
and correct in all material respects and set forth all known liabilities,
whether contingent or otherwise, accurately and fully as of the dates thereof.
Copies of the Armour Financial Statements are contained in Schedule 4.6. The
Armour Financial Statements were prepared in accordance with generally accepted
accounting principles applied on a consistent basis and fairly present the
financial condition of Armour as of their respective dates and the results of
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operations of Armour for the periods ended December 31, 1997, and December 31,
1996, respectively. Armour and Bridgewater will supply to Buyer any and all
interim financial statements of Armour and Bridgewater as shall be available,
including, without limitation, those for the 12-month period ending December 31,
1998 (the "Interim Financial Statements"). The Interim Financial Statements
shall be prepared in accordance with generally accepted accounting principles
applied on a consistent basis, subject to customary year-end adjustments, and
shall present fairly the financial condition of Armour and Bridgewater for the
period(s) covered thereby.
4.7 Absence of Material Changes. Since December 31, 1997, except as
disclosed on Schedule 4.7, and excluding Armour's cellular and LMDS businesses,
Armour and Bridgewater have each operated its business in the ordinary course
and there has not been:
(a) Any change in the financial condition, assets, liabilities or
operations of Armour or Bridgewater other than changes in the ordinary
course of business, none of which has individually or in the aggregate
been materially adverse to the financial condition, properties, assets,
liabilities or operations of Armour or Bridgewater, respectively;
(b) Any damage, destruction or loss, whether or not covered by
insurance, resulting in a material adverse effect on the properties,
operations or financial condition of Armour or Bridgewater;
(c) Any issuance or sale or agreement to issue or sell any stock,
bonds, notes or other corporate securities or long-term debt of Armour or
Bridgewater;
(d) Any granting of options, warrants or other rights calling for
the issuance of stock or other corporate securities of Armour or
Bridgewater;
(e) Any merger or consolidation involving Armour or Bridgewater or
any agreement to merge or consolidate with any other corporation; or any
acquisition of or agreement to acquire any stock or substantially all of
the assets of any business of any person, firm, association, partnership,
corporation or other business entity or organization;
(f) Any dispute or any event or condition of any character that
materially and adversely affects, or could be reasonably expected to
materially and adversely affect, the business or property of Armour or
Bridgewater;
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(g) Any material transaction entered into by Armour or Bridgewater
other than in the ordinary course of business or any transaction or series
of related transactions in the ordinary course of business (including a
capital expenditure) in excess of $25,000;
(h) Any material change in the accounting methods or practices of
Armour or Bridgewater or any material change in depreciation or
amortization or rates theretofore adopted by Armour or Bridgewater, except
for those changes affecting the telephone industry generally;
(i) Any payment of a dividend or payment in the form of a
distribution to the Shareholders or any member of their family; or
(j) Any agreement or commitment by Armour or Bridgewater (or any
understanding between Armour or Bridgewater and any third party) to do or
to take any of the actions referred to in paragraphs (a) through (j) of
this Section 4.7.
4.8 Indebtedness. All of the indebtedness of Armour and Bridgewater is
accurately reflected on the Armour Financial Statements, except for: (i)
accounts payable incurred in the ordinary course of business since December 31,
1997, and (ii) changes reflecting payments made by Armour or Bridgewater of its
long-term indebtedness, all of which shall be accurately reflected on the
Interim Financial Statements. Neither Armour nor Bridgewater are in default with
respect to any material indebtedness or in the performance, observance or
fulfillment of any material covenant or condition relating thereto, and no event
has occurred and is continuing that would constitute such a default or event of
default with the giving of notice or lapse of time or both.
4.9 Litigation and Claims. Except as disclosed on Schedule 4.9, there are
no judgments unsatisfied against Armour or Bridgewater or against the Armour
Stock or Bridgewater Stock or the Shareholders, or consent decrees or
injunctions to which Armour or Bridgewater or the Armour Stock or Bridgewater
Stock or the Shareholders are subject, and there is no litigation, claim or
proceeding pending, or to the knowledge of the Shareholders, Armour or
Bridgewater threatened, against or relating to Armour or Bridgewater or against
the Armour Stock or Bridgewater Stock or the Shareholders or the properties or
businesses of Armour or Bridgewater, nor do the Shareholders, Armour or
Bridgewater know or have reasonable grounds to know of any basis for any such
action or of any governmental investigation relating to the Shareholders, Armour
or Bridgewater or the properties or operations of Armour or Bridgewater.
4.10 Compliance With Laws. Armour and Bridgewater have each complied in
all material respects with all laws, regulations and orders applicable to it or
its businesses and has obtained all governmental permits, licenses, franchises
or the like required in order to conduct its business, and the present uses of
its properties and the conduct of its businesses do not violate in any material
respect any law, regulation, ordinance or order. Neither Armour, Bridgewater nor
the Shareholders have received any notice or warning from any governmental
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authority with respect to any failure or alleged failure of Armour, Bridgewater
or any of the Shareholders to comply with any applicable law, regulation or
order and, to the best knowledge of Armour, Bridgewater and the Shareholders, no
such notice or warning has been proposed or threatened.
4.11 Benefit Plans. All employee benefit plans to which Armour or
Bridgewater pays benefits or premiums on behalf of its employees are listed on
Schedule 4.11 (the "Plans"). Except as disclosed on Schedule 4.11, Armour and
Bridgewater do not have in effect and have not agreed to institute any bonus,
deferred compensation, pension, profit sharing, retirement, stock options,
employee stock ownership, group insurance, death benefit, welfare or other
fringe benefit plan, trust agreement or arrangement, nor is Armour or
Bridgewater paying or obligated to pay any bonus, deferred compensation,
pension, profit sharing, severance, retirement allowance or other fringe benefit
to any party whatsoever. All Plans comply in all material respects with all
applicable laws, regulations or orders, are fully funded and no circumstances
exist with respect to the Plans which could reasonably be expected to have a
material adverse effect on the properties or operations of Armour or
Bridgewater.
4.12 No Breach of Agreement. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated by this
Agreement will not (i) violate or result in a breach of or default or
acceleration under the Articles of Incorporation or Bylaws of Armour or
Bridgewater or any instrument or agreement to which Armour, Bridgewater or the
Shareholders are a party or are bound which would have a material adverse effect
on Armour's or Bridgewater's properties or operations; (ii) violate any
judgment, order, injunction, decree or award against or binding upon Armour or
Bridgewater or upon the Armour Stock or Bridgewater Stock or other securities,
property or business of Armour or Bridgewater which would have a material
adverse effect on Armour's or Bridgewater's properties or operations; (iii)
result in the creation of any material lien, charge or encumbrance upon the
properties or assets of Armour or Bridgewater or the Armour Stock or the
Bridgewater Stock; or (iv) violate any law or regulation of any jurisdiction
relating to Armour or Bridgewater or the Armour Stock or the Bridgewater Stock
or other securities, property or business of Armour or Bridgewater, assuming all
required regulatory approvals have been obtained in connection with the
transactions contemplated hereby.
4.13 Books and Records. The books, stock record books, minute books and
other corporate records of Armour and Bridgewater are true and correct in all
material respects and have been maintained in accordance with ordinary business
practices and applicable law. The minute books of Armour and Bridgewater as made
available to Buyer and its representatives contain accurate and complete records
of all meetings of and corporate actions or written consents by the shareholders
and the board of directors of Armour and Bridgewater, and all issuances,
redemptions, transfers and cancellations of capital stock of each. True and
correct copies of the foregoing have been made available to Buyer.
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4.14 Subsidiaries and Investments. Except for Bridgewater and except as
disclosed on Schedule 4.14, Armour has no subsidiaries or any investments in any
other corporation, association, partnership or other business entity and does
not own any shares of capital stock or other securities of any other entity or
any general or limited partnership interest. Except as disclosed on Schedule
4.14, Bridgewater has no subsidiaries or any investments in any other
corporation, association, partnership or other business entity and does not own
any shares of capital stock or other securities of any other entity or any
general or limited partnership interest.
4.15 Insurance. Attached hereto as Schedule 4.15 is a complete list of all
insurance policies currently maintained by Armour or Bridgewater, and, with
respect to each of such policies, a general description of the risks covered and
claims insured; copies of all such policies have been furnished or will be made
available to Buyer prior to Closing. All such policies are in full force and
effect, and consummation of the transactions contemplated herein shall not
prevent Armour or Bridgewater from continuing such policies on substantially
similar terms in the future.
4.16 Employees.
(a) List of Employees. Schedule 4.16 sets forth a list of all of the
Armour and Bridgewater employees, officers, directors, consultants and
independent contractors, together with a description of any contract
regarding the terms of service and the rate and basis for total
compensation of such persons.
(b) Accruals and Taxes. Schedule 4.16 sets forth the policies
followed by Armour and Bridgewater with respect to vacation and sick-leave
for employees of such entities. Armour and Bridgewater each has paid or
made provision for the payment of all salaries and accrued wages, and any
other form of accrued, but unpaid, compensation, and has complied in all
material respects with all applicable laws, rules and regulations relating
to the employment of labor, including those relating to wages, hours,
collective bargaining and the payment and withholding of Taxes, and has
withheld and paid to the appropriate governmental authority, or is holding
for payment not yet due to such authority, all amounts required by law or
agreement to be withheld from the wages or salaries of its employees.
(c) Employment Agreement. Except as set forth on Schedule 4.16
hereto, neither Armour nor Bridgewater is a party to any (i) outstanding
employment agreements or contracts with officers or employees that are not
terminable at will without penalty, premium or continuing obligation, or
that provide for payment of any bonus or commission, (ii) agreement,
policy or practice that requires it to pay termination or severance pay to
salaried, non-exempt or hourly employees, (iii) collective bargaining
agreement or other labor union contract applicable to persons employed by
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Armour or Bridgewater, nor do the Shareholders, Armour or Bridgewater know
of any activities or proceedings of any labor union to organize any such
employees. Armour and Bridgewater have furnished to Buyer complete and
correct copies of all such agreements, if any ("Employment and Labor
Agreements"). Neither Armour nor Bridgewater has breached or otherwise
failed to comply with any provisions of any Employment or Labor Agreement.
(d) Employment Claims. There are no charges with respect to or
relating to Armour or Bridgewater pending before the Equal Employment
Opportunity Commission or any state or local agency responsible for the
prevention of unlawful employment practices, and neither the Shareholders,
Armour nor Bridgewater has received notice from any federal, state or
local agency responsible for the enforcement of labor or employment laws
of an intention to conduct an investigation of Armour or Bridgewater and,
to the knowledge of the Shareholders, Armour and Bridgewater, no such
investigation is in progress or threatened.
4.17 Contracts.
(a) Generally. Except as listed in Schedule 4.17, neither
Armour nor Bridgewater is a party to any written contract relating to:
(i) Bonus, pension, profit sharing, retirement, stock option,
employee stock purchase or other plans providing for deferred
compensation;
(ii) Collective bargaining agreements or any other contract
with any labor union;
(iii) Hospitalization insurance or other welfare benefit plans
or practices;
(iv) Loans to its employees, officers, directors or
Affiliates;
(v) The borrowing or loaning of money to or from any person or
the mortgaging, pledging or otherwise placing a lien on any asset of
Armour or Bridgewater;
(vi) A guarantee of any obligation;
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(vii) The lease (whether as lessee or lessor) or operation of
any leased property, real or personal, requiring total annual
payments in excess of $25,000;
(viii) Intangible property (including proprietary rights),
requiring total annual payments in excess of $25,000;
(ix) Express warranties given by Armour or Bridgewater with
respect to its services rendered or its products sold or leased;
(x) Registration or preemptive rights with respect to any
securities;
(xi) Prohibitions (other than applicable laws or regulations)
preventing it from freely engaging in any business;
(xii) The purchase, acquisition, disposition or supply of
inventory and other property and assets, requiring total annual
payments in excess of $25,000;
(xiii) Employees, independent contractors, consultants, or
other agents;
(xiv) Sales, commissions, advertising or marketing; or
(xv) Any other written contract not of the type covered by any
of the foregoing items of this Section 4.17 requiring total annual
payments by Armour or Bridgewater in excess of $25,000.
(b) Compliance. Armour and Bridgewater have each performed all
material obligations required to be performed by it, and is not in receipt
of any claim of default or breach or notice of audit, under any contract
required to be disclosed on Schedule 4.17. Except as disclosed in Schedule
4.17, to the best of the Shareholders', Armour's and Bridgewater's
knowledge, no event has occurred which with the passage of time or the
giving of notice or both would result in a material default, breach or
event of non-compliance by the Shareholders, Armour or Bridgewater under
any contract required to be disclosed on Schedule 4.17. Except as
disclosed in Schedule 4.17, neither the Shareholders, Armour nor
Bridgewater has any present expectation or intention of not fully
performing all of its obligations under any contract required to be
disclosed on Schedule 4.17 and has no knowledge of any breach or
anticipated breach by any other party to any contract required to be
disclosed on Schedule 4.17.
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4.18 True and Complete Copies. The Shareholders have delivered or made
available to Buyer true and complete copies of all contracts and documents
listed in the Schedules to this Agreement.
4.19 Title and Related Matters.
(a) Owned Property. Set forth in Schedule 4.19 is a description of
all real property and a list of personal property owned and used by Armour
and Bridgewater in the operation of their respective businesses and a list
of real and personal property to be excluded from the transactions
contemplated by this Agreement. Armour and Bridgewater each have good and
merchantable title to all real and personal property used in the operation
of their respective businesses, free and clear of all liens, except
Permitted Liens. For purposes of this Agreement, "Permitted Liens" shall
mean (i) statutory liens for Taxes not yet due and payable, (ii) such
imperfections or irregularities of title, liens, easements, charges or
encumbrances as do not materially interfere with the present use of the
properties or assets subject thereto or affected thereby, do not otherwise
impair present business operations at such properties, or do not have a
material adverse effect on the value of such properties and assets and
(iii) liens specifically disclosed in the footnotes to the Armour
Financial Statements. All properties used in Armour's and Bridgewater's
respective business operations as of December 31, 1997 are reflected in
the Armour Financial Statements in accordance with and to the extent
required by GAAP. Seller has delivered, with respect to any real property
owned by the Company, true and complete copies of all deeds and other
title documents relating to such real property. Shareholders will
cooperate in furnishing materials and/or allowing such surveys and/or
inspections as may be necessary in connection with Buyer's financing.
(b) Leases. Except as set forth on Schedule 4.19, neither Armour nor
Bridgewater are lessee under any lease for personal or real property.
(c) Liens. The real property owned by Armour or Bridgewater and the
buildings, structures and improvements included within such real property
(collectively, the "Improvements") comply in all material respects with
all applicable restrictions, building ordinances and zoning ordinances and
all regulations of the applicable health and fire departments. No
alteration, repair, improvement or other work which could reasonably be
expected to give rise to a lien has been performed with respect to such
Improvements within the past one hundred twenty (120) days. Armour's and
Bridgewater's owned real property and its use, occupancy and operation as
currently used, occupied and operated does not constitute a nonconforming
use under any regulation or order affecting such real property, and the
continued existence, use, occupancy and operation of such Improvements is
not currently dependent on any special permit, exception, approval or
variance. There is no pending or, to the Shareholders', Armour's or
Bridgewater's knowledge, threatened or proposed action or proceeding by
any authority to modify the zoning classification of, to condemn or take
by the power of eminent domain (or to purchase in lieu thereof), to
classify as a landmark, to impose special assessments on or otherwise to
take or restrict in any way the right to use, develop or alter all or any
part of Armour's or Bridgewater's owned real property.
16
(d) Utilities. Except as set forth on Schedule 4.19, the real
property owned by Armour or Bridgewater has access, sufficient for the
conduct of its business as presently conducted, to public roads and to all
utilities, including electricity, sanitary and storm sewer, potable water
and other utilities used in the operation of its business as presently
conducted.
(e) Condition. Since December 31, 1997, neither Armour nor
Bridgewater has sold, transferred, leased, distributed or disposed of any
of its assets or properties, except for (i) transactions in the ordinary
and regular course of business, (ii) transactions otherwise consented to
in writing by Buyer, or (iii) transactions disclosed on Schedule 4.19.
Armour and Bridgewater each owns, leases or has all rights necessary to
use, all properties and assets necessary for the conduct of its business
as presently conducted. The assets and properties owned, leased or used by
Armour or Bridgewater in the conduct of its business are in good condition
(reasonable wear and tear excepted), are suitable for their respective
uses, and comply, in all material respects, with all applicable
regulations, and constitute all of the assets necessary for Buyer to
conduct the businesses of Armour and Bridgewater as presently conducted.
4.20 Tax Matters.
(a) Generally. Armour has timely filed all federal, state and local
tax reports, returns, information returns and any other documents required
to be filed by it, including returns covering Bridgewater (collectively,
"Tax Returns") and has duly paid all Taxes shown to be due and payable on
such Tax Returns and all estimated or advance payments required by law.
For purposes of this Agreement, "Tax" or "Taxes" means any income, gross
receipt, net proceeds, alternative or add-on minimum, ad valorem, value
added, estimated turnover, sales, use, property, personal property
(tangible and intangible), stamp, leasing, lease, user, excise, duty,
franchise, transfer, license, withholding, payroll, employment, foreign,
fuel, excess profits, occupational and interest equalization, windfall
profits, service, severance and other taxes, charges, fees, levies or
17
other assessments of any kind whatsoever (including interest, penalties,
fines and additions thereto) imposed by any taxing authority, federal,
state or local. All Taxes for periods ending on or prior to the Closing
Date have been fully paid or reserved against on the Armour Financial
Statements and on the Closing Balance Sheet and on the books and records
of Armour in accordance with GAAP. All Taxes which are required to be
withheld or collected by Armour or Bridgewater have been duly withheld or
collected and, to the extent required, have been paid to the proper
federal, state or local authorities or properly segregated or deposited as
required by applicable regulations. There are no liens for Taxes upon any
property or assets of Armour or Bridgewater, except for liens for Taxes
not yet due and payable. Except as set forth on Schedule 4.20, Armour or
Bridgewater has not requested an extension of time within which to file
any Tax Return and has not waived the statute of limitations on the right
of the IRS or any other taxing authority to assess or collect additional
Taxes or to contest the information reported on any Tax Return. Any and
all tax refunds owed to Armour or Bridgewater, including those set forth
on the Armour Financial Statements, have been properly received by Armour
or Bridgewater and/or credited toward the payment of future Tax
obligations.
(b) Good Faith. All Tax Returns described in Section 4.20(a) have
been prepared in good faith and to the best of the Shareholders', Armour's
and Bridgewater's knowledge are correct and complete in all material
respects, and to the best of the Shareholders', Armour's and Bridgewater's
knowledge, there is no basis for assessment of any addition to the Taxes
shown thereon.
(c) Claims. There are no proceedings, examination or, to the best of
the Shareholders', Armour's and Bridgewater's knowledge, claims currently
pending by any taxing authority in connection with any Tax Returns
described in Section 4.20(a) nor with respect to the periods to which such
Tax Returns relate, and there are no unresolved issues or unpaid
deficiencies or outstanding or proposed assessments relating to any such
proceedings, examinations, claims or Tax Returns. None of the Tax Returns
described in Section 4.20(a) currently is under audit or has been audited
in the past five years.
(d) True and Complete Copies. The Shareholders and Armour have
delivered to Buyer true and complete copies of all Tax Returns filed by
Armour and/or Bridgewater with respect to its 1994, 1995, 1996 and 1997
fiscal years.
4.21 Intellectual Property. Neither Armour nor Bridgewater owns or has
applied for any registered patents, copyrights, trademarks or service marks. If
necessary, Armour and Bridgewater each holds valid licenses to use all
proprietary rights used in the operation of its business as presently conducted.
4.22 Environmental Matters. Armour and Bridgewater each has obtained all
environmental permits required in connection with the operation of its business.
Armour and Bridgewater each is and has been in compliance in all material
respects with (i) the terms and conditions of all such environmental permits and
(ii) all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables of any applicable
environmental law or regulation, order, code, plan, decree, judgment, injunction
or demand letter issued, entered, promulgated or approved thereunder. Armour and
Bridgewater each currently possesses and maintains such environmental permits in
18
its respective name, and no amendments or modifications to such environmental
permits or filings with any permitting authority are required to permit the
acquisition of the Armour Stock or Bridgewater Stock as contemplated hereby. In
addition, except as set forth in Schedule 4.22:
(a) Generally. No notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending or, to the Shareholders', Armour's and Bridgewater's knowledge,
threatened by any authority or other entity with respect to Armour or
Bridgewater relating to any environmental permit, license or authorization
required in connection with the conduct of business of Armour or
Bridgewater or with respect to the generation, treatment, storage,
recycling, transportation, disposal or release of any substance regulated
under environmental laws ("Hazardous Materials").
(b) Property. To best of the Shareholders', Armour's and
Bridgewater's knowledge, in connection with the real property used, owned
or leased by Armour or Bridgewater, except as set forth in Schedule 4.22.
(i) Neither Armour nor Bridgewater has handled any Hazardous
Material on any property now or previously owned or leased by Armour
or Bridgewater.
(ii) No PCB or asbestos is or has been present at any property now
or previously owned or leased by Armour or Bridgewater.
(iii) There are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now or previously
owned or leased by Armour or Bridgewater.
(iv) There has been no release of Hazardous Materials at, or under
any property now or previously owned or leased by Armour or
Bridgewater.
(c) Transportation. Neither Armour nor Bridgewater has (i)
transported or arranged for the transportation of any Hazardous Material
to any location which is listed on the National Priorities List under the
Comprehensive Environmental Response Compensation and Liability Act of
1980, as amended ("CERCLA"), listed for possible inclusion on the National
Priorities List by the Environmental Protection Agency in the
Comprehensive Environmental Response and Liability Information System
("CERCLIS") or on any similar state list or which is the subject of
federal, state or local enforcement actions or other investigations or
(ii) stored, treated, transported or disposed, or arranged for storage,
treatment, transport or disposal of any Hazardous Materials, other than in
compliance with environmental law.
19
(d) Notification of Release. No oral or written notification of a
"Release" (as defined in Section 9601(22) of Title 42 of the United States
Code) of a Hazardous Material has been filed by or on behalf of Armour or
Bridgewater, and no property now or previously owned or leased by Armour
or Bridgewater is listed or proposed for listing on the National
Priorities List under CERCLA, on CERCLIS or on any similar state list of
sites requiring investigation or clean-up.
(e) Liens. There are no Liens arising under or pursuant to any
environmental laws on any of the real property owned or leased by Armour
or Bridgewater, and no government actions have been taken or are
threatened which could subject any of such properties to such Liens.
Neither Armour nor Bridgewater is required to place any notice or
restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(f) Site Assessments. Except as set forth in Schedule 4.22, there
have been no Phase I or Phase II environmental site assessments conducted
by or which are in the possession of the Shareholders, Armour or
Bridgewater in relation to any property or facility now or previously
owned or leased by Armour or Bridgewater.
4.23 Dealings with Affiliates. Schedule 4.23 sets forth a complete and
accurate list of all written contracts between Armour or Bridgewater and any one
or more of its Affiliates. For purposes of this Agreement, "Affiliate" shall
mean, with regard to any person or entity, any person or entity which, directly
or indirectly, controls, is controlled by, or is under common control with, such
person or entity and, with respect to any individual, the spouse, ancestors and
descendants (lineal or by marriage) thereof. "Control" (including, with
correlative meaning, the terms "controlled by" and "under common control with"),
as used with respect to any person or entity, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise. Except as set forth in Schedule 4.23,
since December 31, 1997, neither Armour nor Bridgewater has made any payments,
loaned any funds or property or made any credit arrangement with any Affiliate
or employee except for the payment of employee salaries in the ordinary course
of business.
4.24 Commissions. There are and will be no claims for brokerage
commissions, finder's fees, fees for fairness opinions or financial advisory
services or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Shareholders, Armour, Bridgewater or any of their Affiliates.
20
4.25 Permits and Reports. Schedule 4.25 hereto sets forth a list of all
permits, licenses, registrations, certificates, orders, approvals or other
authorizations from any authority or other person including, without limitation,
the FCC and the SDPUC ("Permits") issued to or held by Armour or Bridgewater in
connection with its operations. Such Permits are the only Permits that are
required for Armour or Bridgewater to conduct its business as presently
conducted. Each such Permit is in full force and effect, and neither the
Shareholders, Armour nor Bridgewater has received notice that any suspension,
cancellation or modification of the terms of any such Permit is threatened.
Armour and Bridgewater is each in full compliance in all material respects with
the terms of each such Permit, and the Shareholders, Armour and Bridgewater are
not aware of any reason not set forth in said Permit why any such Permit would
not be renewed, upon substantially the same terms as currently exist, upon
expiration of such Permit. Except as set forth on Schedule 4.25, to the best of
Shareholders', Armour and Bridgewater's knowledge, (i) all returns, reports,
applications, statements and other documents required to be filed by Armour or
Bridgewater with the FCC, the SDPUC and any other regulatory or governmental
authority or municipality (including taxing authorities) with respect to the
business on or before the date hereof have been duly filed or properly extended
as permitted by law and are true and complete in all material respects, (ii) all
reporting requirements of the FCC, the SDPUC and other regulatory or
governmental authorities or municipalities (including taxing authorities) having
jurisdiction thereof have been complied with in all material respects, and (iii)
no other person or entity is currently operating or providing telephone service
within the exchange boundaries served as of the date hereof by Armour and
Bridgewater, and, to the best of the Shareholders', Armour's and Bridgewater's
knowledge, no other person or entity is anticipating or contemplating doing so.
4.26 Absence of Undisclosed Liabilities. Neither Armour nor Bridgewater
has any liability of any nature whatsoever (whether known or unknown, due or to
become due, accrued, absolute, contingent or otherwise), including, without
limitation, any unfunded obligation under employee benefit plans or compensation
arrangements or liabilities for Taxes or liabilities for under-reporting,
under-billing or under-collection of revenues or underpayment of revenues to a
third party, except for (i) liabilities stated or reserved against in full in
the Armour Financial Statements, (ii) current liabilities incurred in the
ordinary course of business and consistent with past practice after the date of
the Armour Financial Statements which, individually and in the aggregate, do not
have, and cannot reasonably be expected to have, a material adverse effect, and
which shall be fully set forth in the Interim Financial Statements with respect
to the periods covered thereby, and (iii) liabilities disclosed on Schedule 4.26
hereto.
4.27 Disclosure. Neither this Agreement nor any of the attachments,
written statements, documents, certificates or other items prepared for or
supplied to Buyer pursuant hereto by or on behalf of the Shareholders, Armour or
Bridgewater with respect to the transactions contemplated hereby contains any
untrue statement of a material fact or omits any material fact necessary to make
each statement contained herein or therein, in light of the circumstances under
which they were made, not misleading.
21
Article 5
COVENANTS AND AGREEMENTS OF THE SHAREHOLDERS, ARMOUR AND BRIDGEWATER
Armour, Bridgewater and the Shareholders, jointly and severally, covenant
and agree with Buyer as follows, that from the date of this Agreement through
the Closing Date, except as disclosed on Schedule 5.0 hereto:
5.1 Changes in Articles of Incorporation or Bylaws. There shall be no
change in the Articles of Incorporation or Bylaws of Armour or Bridgewater or in
the authorized or issued capital stock of Armour or Bridgewater, and Armour and
Bridgewater shall each maintain its corporate existence and powers and shall use
its reasonable best efforts to maintain the goodwill and employees of its
business.
5.2 Issuance or Purchase of Securities. Neither Armour nor Bridgewater
shall (i) issue any additional capital stock or other security, (ii) directly or
indirectly redeem, exchange, purchase or otherwise acquire any shares of its
capital stock; or (iii) issue to any person or entity any options, warrants or
other rights to acquire any security of Armour or Bridgewater, respectively.
5.3 Conduct of Business. Except with the prior written approval of
Buyer or as shown on Schedule 5.0 hereto:
(a) The business of Armour and Bridgewater shall be conducted in the
same manner as presently being conducted and Armour and Bridgewater shall
refrain from entering into any transaction or contract other than in the
ordinary course of business and shall not make any change in its methods
of management, marketing, accounting or operation, except to the extent
required by federal or state regulatory authorities (which changes shall
be specifically described on Schedule 5.0 hereto), excluding actions taken
with respect to the cellular and LMDS businesses as contemplated in this
Agreement;
(b) No written employment agreement or commitment to employees
(including any commitment to pay retirement, severance or other benefits)
shall be entered into by Armour or Bridgewater;
(c) No increase shall be made in the compensation or compensation
plans (including bonuses, commissions, severance pay and fringe benefits)
payable or to become payable to any officer, director or employee of
Armour or Bridgewater, except for those routine salary increases granted
to employees in the ordinary course of business and consistent with the
respective prior practices of Armour or Bridgewater, and provided with
respect to this Section 5.3(c), the approval of Buyer shall not be
unreasonably withheld;
22
(d) Neither Armour nor Bridgewater shall (i) create or incur any
indebtedness for borrowed money or create or incur any other indebtedness
except in the normal and ordinary course of business; (ii) enter into or
terminate any lease of real estate; (iii) create any subsidiary; (iv)
release or create any liens or other security interest except for purchase
money security interests granted in the normal and ordinary course of
business; (v) declare or pay a dividend, whether in cash or in-kind,
except for such cash distributions mutually agreed to by the parties
hereto and made on or before the Closing Date, or (vi) authorize or make
any change in the capital structure of Armour or Bridgewater,
respectively;
(e) Neither Armour nor Bridgewater shall make any capital
expenditure or capital expenditure commitment, or enter into any lease, as
lessee, of capital equipment, except in the normal and ordinary course of
business or as may be required by the SDPUC; and
(f) Neither Armour nor Bridgewater shall sell any asset or make any
commitment relating to its assets other than in the normal and ordinary
course of business, and in an amount not exceeding $25,000, excluding
actions taken with respect to the cellular and LMDS businesses as
contemplated in this Agreement.
5.4 Access to Properties. At all times prior to the Closing Date, Armour
and Bridgewater shall allow Buyer's employees, attorneys, accountants, agents
and other authorized and designated representatives full access during
reasonable business hours and after reasonable notice to Armour's and
Bridgewater's properties, books and records, including, without limitation,
deeds, title commitments, leases, insurance policies, minute books, share
certificate books, share registers, accounts, financial records and all other
data that are reasonably required for Buyer to make such investigation as it may
desire of the properties and financial condition and businesses of Armour and
Bridgewater. In order to maintain confidentiality, Buyer may have access to
Armour's and Bridgewater's offices and properties only upon the prior approval
of Xxxxxxx X. Xxxxxx, Xx., Vice President of Armour.
5.5 Directors, Officers, Operations. Armour and Bridgewater shall
each deliver to Buyer prior to Closing a list showing:
(a) The names of the Armour and Bridgewater directors and
officers, registered agent and registered office;
23
(b) The banks and financial institutions in which Armour or
Bridgewater has an account or safe deposit box and the names of all
persons authorized to draw thereon or to have access thereto; and
(c) The names of all persons holding powers of attorney from Armour
or Bridgewater with copies thereof attached thereto.
5.6 Privileges. As of the Closing Date, Armour, Bridgewater and the
Shareholders shall terminate any "calling card" or other special privileges,
benefits or rights provided by Armour or Bridgewater to the Shareholders.
5.7 CommNet Cellular Numbers. From and after the Closing Date, Buyer
agrees that the Shareholders shall be entitled to receive five of the free
CommNet cellular telephone numbers and services received by Armour in its sales
of assets to CommNet Cellular, Inc. Shareholders shall pay any charges with
respect to such CommNet cellular telephone numbers to the extent Armour is
charged for such cellular telephone numbers after Closing Date. Notwithstanding
anything in this Agreement or otherwise to the contrary, Shareholders agree that
their obligations to pay any such charges owed by shareholders pursuant to this
Section 5.7 shall not be subject to the "Minimum Amount", or the "Maximum
Amount" indemnification limitations set forth in Section 6.1 below, and shall
survive the "Indemnification Period" set forth in Section 6.2 below.
5.8 Transfer of Cellular Interest and LMDS Interest. Notwithstanding
anything to the contrary herein, the parties acknowledge and agree that on or
prior to the Closing Date Armour shall transfer all of the Cellular Interest and
all of the LMDS Interest, in full compliance with all applicable contracts,
agreements, regulations, statutes and ordinances applicable to the ownership,
transfer or other disposition thereof, and shall provide Buyer with written
evidence thereof to the satisfaction of Buyer and its counsel. The Shareholders
shall indemnify Buyer with respect to any and all liabilities arising in
connection with the ownership or transfer of the Cellular Interest or the
ownership or transfer of the LMDS Interest, as more particularly provided in
Section 6.1 (e) hereof. The Shareholders shall obtain all necessary consents,
approvals, permits, authorizations and waivers pertaining to the transfer of the
Cellular Interest and the LMDS Interest, including, without way of limitation,
all necessary approvals of the South Dakota Public Utilities Commission, Federal
Communications Commission, and the Federal Trade Commission, if any, prior to
effectuating such transfer. Provided that the Shareholders comply with the
provisions of this Section, the transfers of the Cellular Interest and the LMDS
Interest shall not be deemed a breach of any representation or warranty
contained in this Agreement.
24
Article 6
INDEMNIFICATION OBLIGATIONS
6.1 Matters Covered by Indemnification. The Shareholders, jointly and
severally, hereby covenant and agree that they shall defend and indemnify Buyer
and hold harmless Buyer at all times after the Closing Date from and against and
in respect to any and all losses, liabilities, claims, costs (including, without
limitation, court costs and reasonable attorneys' fees), damages, expenses or
deficiencies arising out of or due to:
(a) Any breach of any representation, warranty or any agreement,
covenant or obligation on the part of Armour, Bridgewater or the
Shareholders made in this Agreement;
(b) All Taxes of the Shareholders or of Armour or Bridgewater
attributable to any period which ends prior to or on the Closing Date to
the extent such liability was not fully accrued for in the Armour
Financial Statements or Closing Balance Sheet;
(c) Any undisclosed liability of Armour or Bridgewater;
(d) Any actions, suits, proceedings, costs, expenses and legal fees
incident to any of the foregoing items listed under this Section 6.1.
(e) Any and all claims in any way relating to or arising out of the
ownership or the transfer of the Cellular Interest or the ownership or transfer
of the LMDS Interest, or the business or operations of the South Dakota 7 Sully
Limited Partnership, the Missouri Valley Cellular of South Dakota Limited
Partnership, Missouri Valley Cellular, Inc., or the ABS LMDS Joint Venture,
whether arising or made before or after the Closing Date, specifically
including, without way of limitation, claims arising in connection with the
transfer of the Cellular Interest or the transfer of the LMDS Interest.
Notwithstanding anything in this Agreement or otherwise to the contrary, the
parties specifically agree that the indemnification obligation of the
Shareholders with respect to any and all indemnifiable claims or events under
this Section 6.1(e) shall not be subject the "Minimum Amount" or the "Maximum
Amount" limitations set forth below, and shall survive the "Indemnification
Period" set forth in Section 6.2 below. It is the intent and agreement of the
parties that the Shareholders shall fully indemnify Buyer, Armour and
Bridgewater with respect to any and all damages, expenses, fees, costs and
claims pertaining to or arising from the Cellular Interest, the LMDS Interest or
the transfer thereof, and that such indemnification obligation survive and
continue until the expiration of all applicable statutes of limitations relating
thereto.
Liability shall arise pursuant to the foregoing indemnity obligations only if
the losses, liabilities, claims, costs, damages, expenses or deficiencies
arising therefrom exceed in the aggregate $25,000 (the "Minimum Amount"), and
only with respect to such amount in excess thereof. For purposes of determining
25
the Minimum Amount, such amount shall include the losses, liabilities, claims,
costs, damages, expenses or deficiencies arising under the agreements of
Shareholders with Buyer to sell the Shareholders' shares of Union Telephone
Company and the Shareholders' shares of WMW Cable TV Co., as well as this
transaction. If such claims exceed the Minimum Amount, the Shareholders shall
indemnify Buyer for the excess amount of the claims pursuant to this section;
provided, however, that the Shareholders' total obligations to indemnify Buyer
pursuant to this Article 6 shall not exceed the lesser of: (i) $600,000, or (ii)
$600,000 minus any indemnification payments (including payment by set off) made
by Shareholders to Buyer pursuant to Shareholders' agreements with Buyer to sell
the Shareholders' shares of Union Telephone Company and the Shareholders' shares
of WMW Cable TV Co. (the "Maximum Amount").
6.2 Procedure for Indemnification. Buyer shall assert any claim or claims
for indemnification under the provisions of Section 6.1 above by giving written
notice of such claim or claims to the Shareholders' Representative within the
later of (i) twelve (12) months after the Closing Date, or (ii) four (4) months
after the close of Buyer's first audit period following the Closing Date (the
"Indemnification Period"). Each such notice shall set forth in reasonable detail
the factual basis giving rise to the claim or claims and the amount of the
damages and expenses incurred by Buyer as a result of such claim or claims. Such
notice shall be given within a reasonable time after receipt of actual notice of
such claim or the incurring of such damages and expenses by Buyer. The
Shareholders agree that they shall promptly reimburse and pay Buyer for such
damages and expenses to which Buyer is entitled under this Article 6. If any
claim for indemnification hereunder is based upon an action or claim filed or
made against Buyer, Armour or Bridgewater by a third party, then the
Shareholders shall have the right to negotiate a settlement or compromise of any
such action or claim or to defend any such action or claim at the sole cost and
expense of, and with counsel selected by, the Shareholders; provided, however,
that neither the Shareholders, Armour nor Bridgewater shall, expect with the
prior written consent of Buyer, consent to the entry of any judgment or enter
into any settlement or compromise which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to Buyer of a release from
all liability with respect to the subject claim. With respect to all such third
party claims, Buyer shall have the right to take any actions or steps it deems
reasonable to avoid the occurrence of any prejudice to the rights of Buyer.
Buyer shall have the right to assume the defense of any such action with counsel
of Buyer's choosing, subject to Shareholders' consent, which shall not be
unreasonably withheld, at the Shareholders' sole cost, in the event such action
(i) includes a demand for injunctive or equitable relief in respect of Buyer,
Armour or Bridgewater, or (ii) is for an alleged amount of more than Fifty
Thousand Dollars ($50,000). With respect to all other claims by third parties
which may result in indemnification by the Shareholders hereunder, Buyer may
participate with counsel of its choosing at its cost.
6.3 Set Off Under Noncompetition Agreements. From and after the date of
this Agreement through the longer of (a) the Indemnification Period or (b) so
long as any claim made during the Indemnification Period is still outstanding
and unresolved as set forth in this Article 6, Buyer shall have the right to set
off against any payments due from Buyer to the Shareholders under their
respective Noncompetition Agreements any amount for which Buyer is entitled to
indemnification by Shareholders under this Article 6. Any set off against such
payments shall be divided equally among payments to each of the Shareholders.
26
Article 7
REGULATORY APPROVALS
7.1 Regulatory Approvals. Buyer shall manage, at its expense, the process
of obtaining and shall use its best efforts to obtain in an expeditious manner,
with the Shareholders' assistance, all governmental consents and approvals
required to carry out the transactions contemplated by this Agreement,
including, without limitation, any necessary consents and approvals from the
Federal Communications Commission, the South Dakota Public Utilities Commission,
the Federal Trade Commission under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement
Act, and any other local, state or federal agency or municipality. Buyer shall
use its best efforts to prepare and file all necessary regulatory notices,
applications, requests and petitions within thirty (30) days after the date of
this Agreement. Armour, Bridgewater and the Shareholders agree to cooperate with
Buyer in obtaining such consents and approvals.
Article 8
OTHER OBLIGATIONS
8.1 Tax Return Preparation and Audit. The parties acknowledge that Armour
will be required to prepare and file a tax return for a shortened year ending as
of the Closing Date. Subject to the Shareholders' obligation to indemnify Buyer
pursuant to Section 6.1(b) hereof, Buyer shall be responsible for accurately and
timely preparing and filing such return and for the timely payment of all taxes
stated therein as due and provided that Buyer shall, upon the written request of
the Shareholders' Representative, permit Armour's accountant to review and
participate in preparing such tax returns. Buyer shall not make, or fail to
make, any elections in connection with the preparation or filing of such tax
returns that would have a material adverse effect on Armour's tax liability on
such return. The parties agree that the tax return shall be prepared on the same
basis as tax returns for prior years without regard to the fact that Armour will
be a member of a consolidated group for tax purposes. The Shareholders agree to
cooperate with the Buyer in the preparation of such tax return.
8.2 No Shopping. Armour, Bridgewater and the Shareholders agree that,
subject to compliance with any fiduciary duty, and excluding the actions taken
with respect to the cellular and LMDS businesses as contemplated in this
Agreement, neither they nor any of their agents or Affiliates will, during the
period beginning on the date hereof and ending on the first to occur of (a) the
Closing or (b) the termination of this Agreement, either (i) sell or arrange for
27
the sale of the Armour Stock or the Bridgewater Stock; (ii) negotiate, solicit,
encourage or authorize any person to solicit from any third party any proposals
relating to the disposition of the business or assets of Armour or Bridgewater
or the acquisition of the Armour Stock or the Bridgewater Stock; or (iii) make
any information concerning Armour or the Armour Stock or Bridgewater or the
Bridgewater Stock available to any person for the purpose of affecting or
causing a disposition of Armour assets or the Armour Stock, or Bridgewater
assets or the Bridgewater Stock.
Article 9
CONDITIONS PRECEDENT TO OBLIGATIONS
OF ARMOUR, BRIDGEWATER AND THE SHAREHOLDERS
The obligations of Armour, Bridgewater and the Shareholders under this
Agreement are subject to the fulfillment prior to or on the Closing Date of the
following conditions:
9.1 Representations and Warranties. Each of the representations and
warranties of Buyer contained in this Agreement shall be accurate in all
material respects as of the date hereof and as of the Closing Date, and Buyer
shall have performed all covenants and agreements required to be performed by it
and shall not be in default under any of the provisions of this Agreement at or
prior to the Closing Date.
9.2 Certificate. A certificate, dated the Closing Date, signed by an
officer of Buyer covering the provisions of Section 9.1 hereof shall have been
provided.
9.3 Certified Copy of Resolutions. Buyer shall have delivered a copy,
certified by the duly qualified and acting secretary or assistant secretary of
Buyer, of resolutions adopted by the board of directors of Buyer approving this
Agreement and the consummation of the transactions contemplated by this
Agreement.
9.4 Consents and Approvals. All consents, approvals, authorizations,
permits, certificates and orders with respect to the transactions contemplated
by this Agreement required from any person, entity, court or governmental agency
or instrumentality (federal, state or local), including without way of
limitation, all regulatory approvals contemplated by Section 7.1 hereof, shall
have been obtained and shall be valid and in full force and effect, and no
conditions, requirements or qualifications shall have been imposed by such
consents, approvals, authorizations, permits, certificates or orders that, in
the reasonable opinion of Armour, Bridgewater and the Shareholders, materially
adversely impact the financial condition of Armour or Bridgewater.
28
9.5 Payment. Buyer shall pay the Adjusted Purchase Price in
accordance with Article 2.
9.6 No Litigation. No claim, suit, action, or other proceeding shall
be pending before any court or governmental body to restrain or prohibit the
consummation of the transactions hereunder.
9.7 Deliveries by Buyer. On or before the Closing Date, Buyer shall have
executed and delivered to Armour, Bridgewater and the Shareholders the
following:
(a) Transition Services Agreements for each Shareholder in
substantially the form attached hereto as Exhibit C; and
(b) Noncompetition Agreements for each Shareholder in
substantially the form attached hereto as Exhibit D.
9.8 Related Transactions. Armour, Bridgewater and the Shareholders shall
have evidence reasonably satisfactory to them that on or before the Closing Date
the transactions contemplated in the following agreements have been consummated
or are being consummated concurrently with closing under this Agreement: (i)
Stock Purchase Agreement, dated ______________, 1998, among Union Telephone
Company, the Shareholders and MJD Services Corp., as buyer; and (ii) Stock
Purchase Agreement, dated _____________________, 1998, among WMW Cable TV Co.,
the Shareholders and MJD Services Corp., as buyer; and (iii) the sale or
transfer of Armour's Cellular Interest and LMDS Interest, as contemplated in
this Agreement.
9.9 Opinion of Counsel. Buyer shall deliver at Closing an opinion of
counsel to Buyer in substantially the form attached hereto as Exhibit E.
Article 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
fulfillment prior to or on the Closing Date of the following conditions:
10.1 Representations and Warranties. Each of the representations and
warranties of Armour, Bridgewater and the Shareholders contained in this
Agreement shall be accurate in all material respects as of the date hereof and
as of the Closing Date (except to the extent that such representations and
warranties shall be incorrect as of the Closing Date because of events or
changes occurring after the date hereof in the ordinary course of business of
Armour or Bridgewater as contemplated in this Agreement); Armour, Bridgewater or
Shareholders shall advise Buyer in writing of any such resulting inaccuracies,
and Armour, Bridgewater and the Shareholders shall have performed all covenants
and agreements required to be performed by them and shall not be in default
under any of the provisions of this Agreement at or prior to the Closing Date.
29
10.2 Certificate. Buyer shall have received a certificate, dated the
Closing Date, signed by Armour, Bridgewater and the Shareholders covering the
provisions of Section 10.1 hereof.
10.3 Certified Copy of Resolutions. Armour and Bridgewater shall each have
delivered to Buyer a copy, certified by the duly qualified and acting secretary
or assistant secretary of Armour and Bridgewater, respectively of resolutions
adopted by the board of directors and shareholders of Armour and Bridgewater
approving this Agreement and the consummation of the transactions contemplated
by this Agreement.
10.4 Consents and Approvals. All consents, approvals, authorizations,
permits, certificates and orders with respect to the transactions contemplated
by this Agreement required from any person, entity, court or governmental agency
or instrumentality (federal, state or local), including, without way of
limitation, all regulatory approvals contemplated by Section 7.1 hereof, shall
have been obtained and shall be valid and in full force and effect, and no
conditions, requirements or qualifications shall have been imposed by such
consents, approvals, authorizations, permits, certificates or orders that, in
the reasonable opinion of Buyer, materially adversely impact the financial
condition of Armour or Bridgewater; provided that Buyer agrees that the
imposition of conditions of sale by the South Dakota Public Utilities Commission
which are similar to those imposed in the purchase of Kadoka Telephone Co. by an
affiliate of Buyer (Notice of Entry of Order TC96-167) shall not be deemed to
materially adversely impact the financial condition of Armour or Bridgewater.
10.5 Surrender of Certificates. The Shareholders shall have surrendered to
Buyer the certificates representing all of the issued and outstanding shares of
Armour Stock, and such certificates shall be duly endorsed in blank or shall
have duly executed blank stock powers attached thereto. Additionally, the
Shareholders shall have caused to be delivered to Buyer the certificates
representing all of the issued and outstanding shares of Bridgewater Stock, and
all of the issued and outstanding directors' shares (duly endorsed in blank or
with duly executed blank stock powers attached thereto).
10.6 Resignations. Buyer shall have received from each director and
officer of Armour and Bridgewater a written resignation from all Armour and
Bridgewater offices and directorships held, respectively, effective as of the
Closing Date, and shall have received from each of the Shareholders their
resignation as an employee of Armour and Bridgewater.
10.7 Deliveries by Shareholders. On or before the Closing Date,
Shareholders shall have executed and delivered to Buyer the following:
30
(a) Transition Services Agreements for each Shareholder in substantially
the form attached hereto as Exhibit C; and
(b) Noncompetition Agreements for each Shareholder in substantially the
form attached hereto as Exhibit D.
10.8 No Material Adverse Change. Since December 31, 1997 and through the
Closing Date, there shall not have occurred any material adverse change in the
business, operations, assets, liabilities or condition (financial or otherwise)
of Armour on a consolidated basis.
10.9 Delivery of Corporate Records. At Closing the Shareholders shall
deliver to Buyer the Armour and Bridgewater minute books and stock registers.
10.10 No Litigation. No claim, suit, action or other proceeding shall be
pending before any court or governmental body to restrain or prohibit the
consummation of the transactions contemplated hereunder.
10.11 Opinion of Counsel. The Shareholders shall deliver at Closing an
opinion of counsel to the Shareholders, Armour and Bridgewater in substantially
the form attached hereto as Exhibit F.
10.12 Related Transactions. The Buyer shall have evidence reasonably
satisfactory to it that on or before the Closing Date the transactions
contemplated in the following agreements have been consummated or are being
consummated concurrently with Closing under this Agreement: (i) Stock Purchase
Agreement, dated _____________________, 1998, among Union Telephone Company, the
Shareholders and MJD Services Corp., as buyer; and (ii) Stock Purchase
Agreement, dated _________________, 1998, among WMW Cable TV Co., the
Shareholders and MJD Services Corp., as buyer, and (iii) the sale or transfer of
Armour's Cellular Interest and LMDS Interest, as contemplated in this Agreement.
Article 11
TERMINATION
11.1 Right of Termination. This Agreement and the transactions
contemplated herein may be terminated at any time prior to Closing:
(a) By mutual written consent of Buyer and each of the Shareholders;
or
(b) By the Shareholders if Buyer breaches its obligations under
Article 7 of this Agreement and the Shareholders shall have cooperated
fully with Buyer in preparation of all required applications for approval;
or
31
(c) By the Shareholders in the event that any of the conditions set
forth in Article 9 of this Agreement shall not have been satisfied or
waived and Closing shall not have occurred on or before July 31, 1999, or
such later date as shall be agreed upon pursuant to Section 1.2 of this
Agreement; or
(d) By Buyer in the event that any of the conditions set forth in
Article 10 of this Agreement shall not have been satisfied or waived and
Closing shall not have occurred on or before July 31, 1999, or such later
date as shall be agreed upon pursuant to Section 1.2 of this Agreement.
11.2 Notice of Termination. Notice of termination of this Agreement as
provided for in this Article 11 shall be given by the party or parties so
terminating to the other parties hereto in accordance with the provisions of
Section 12.4 of this Agreement.
Article 12
MISCELLANEOUS
12.1 Entire Agreement. This Agreement, together with the exhibits and
attachments hereto, constitutes the entire agreement among the parties and
supersedes all prior agreements, oral or written. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Buyer may assign its rights and obligations
hereunder to a direct or indirect wholly-owned subsidiary of Buyer or to an
Affiliate of Buyer; provided that Buyer shall remain liable for all its
obligations hereunder if Buyer's assignee fails to perform such obligations.
12.2 Severability. If any severable provision of this Agreement is held to
be invalid or unenforceable by any judgment of a court of competent
jurisdiction, the remainder of this Agreement shall not be affected by such
judgment, and the Agreement shall be carried out as nearly as possible according
to its original terms and intent.
12.3 Expenses. Whether or not the Closing occurs, each party shall pay its
own expenses incident to the preparation and performance of this Agreement and
the transactions contemplated hereby.
12.4 Notice. Any notice, demand or other communication required or
permitted by any provision of this Agreement shall be deemed to have been
sufficiently given or served for all purposes when delivered in person or sent
by facsimile transmission with telephone confirmation of receipt, overnight
courier or registered or certified mail, return receipt requested, all postage
and other charges prepaid, as follows:
32
If to Buyer: If to Armour, Bridgewater
or Shareholders:
MJD Services Corp. x/x Xxxxx Xxxxxxx, Xxx.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000 Xxxxxxxxx Law Firm
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 X.X. Xxx 0000
Fax #: (000) 000-0000 000 Xx. Xxxx Xxxxxx
Xxxxxxxxx: Xxxxxx Xxxxxxx Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Executive Vice President Fax #: (000) 000-0000
with a copy to: with a copy to:
Underwood, Kinsey, Xxxxxx & Xxxxxx, P.A. Xxxxxx X. Xxxxxxx Esq.
000 Xxxxx Xxxxxxx Xxxxxx Xxxxx, Xxxx Law Xxxxxx
0000 Xxxxxxxxx Xxxxx Xxxxxxxx 0000 Xxxxxxx Tower
Charlotte, North Carolina 28244 Xxxxx, Xxxxxxxx 00000
Fax #: (000) 000-0000 Fax #: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
or at such other address as may be designated by notice pursuant to this Section
12.4 from such party to the other party. Notice sent by overnight courier shall
be deemed delivered on the business day immediately following deposit with such
courier. Notice sent by facsimile transmission shall be deemed delivered on the
day of transmission if a business day or if not a business day the first
business day following the day of transmission. Notice sent by certified or
registered mail shall be deemed delivered on the fifth day after deposit with
the United States postal service.
12.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of South Dakota.
12.6 Captions. The captions appearing herein are for the convenience of
the parties only and shall not be construed to affect the meaning of the
provisions of this Agreement.
12.7 Amendment. This Agreement may be amended, modified, superseded or
cancelled, and any of the terms, provisions, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by the parties hereto or, in the case of a waiver, by the party waiving
compliance.
12.8 Waiver. The failure to enforce or to require the performance at any
time of any of the provisions of this Agreement shall in no way be construed to
be a waiver of such provisions and shall not affect either the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every provision in accordance with the terms of this Agreement.
33
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same Agreement. This
Agreement shall become effective when one or more counterparts shall have been
signed by each of the parties and delivered to the other parties.
12.10 Incorporation by Reference. The exhibits and schedules referred to
in this Agreement are hereby incorporated in this Agreement as a part hereof as
if set forth in full herein.
12.11 Damages; Specific Performance. No party hereto shall be liable to
the other for any indirect, consequential, special, punitive or any other
similar damages of any kind or nature arising in any manner from this Agreement
and the performance or nonperformance of obligations hereunder. In the event of
a breach of this Agreement, the parties acknowledge and agree that each of them
shall, in addition to any other remedies available at law or in equity, have the
right to seek specific performance by the other parties of their respective
obligations hereunder.
12.12 Confidential Information.
(a) The parties hereby acknowledge and agree that on and after the
date hereof, and provided that the party seeking to enforce the provisions
of this Section 12.12 is not then in default of its obligations hereunder,
each party shall hold in the strictest confidence, and shall not use or
disclose to any person, firm or corporation (other than on a need-to-know
basis), without the written authorization of the other party, any
Confidential Information in its possession pertaining to the other party,
except (i) as may be ordered by a court of competent jurisdiction of a
claim involving the subject matter of such Confidential Information, (ii)
as otherwise required by applicable law or regulation, or (iii) as
otherwise provided under Section 12.14 hereof. As used in this Agreement,
"Confidential Information" means the terms and conditions contained in
this Agreement, including the consideration payable hereunder, and all
information, documents and materials not generally available to the public
which have been provided by one party to the other in connection with the
transactions contemplated hereby or which otherwise relate to, this
Agreement. Armour and Buyer each acknowledge and agree that any breach of
this section would cause the other party irreparable harm. Accordingly,
the non-breaching party may seek and obtain injunctive relief against the
breach or threatened breach of this Section 12.12, in addition to any
other remedies to which such party may be entitled at law or in equity. If
the transactions contemplated by this Agreement shall not be consummated,
such confidence shall be maintained and such information shall not be used
in competition with Armour or the Buyer.
(b) Notwithstanding anything in this Agreement to the contrary, the
parties shall not be under any obligation to maintain in confidence any
portion of the information it has received in connection with the
transactions contemplated hereby which (i) is now, or which hereafter,
through no act or failure to act on the part of either party, becomes
generally known or available to the public, (ii) is known by the recipient
party at the time of the disclosure of such information, (iii) is
furnished to the other without restriction on disclosure, or (iv) is
hereafter furnished to a party by a third party, as a matter of right and
without restriction of disclosure.
34
(c) Notwithstanding the foregoing, any party hereto may disclose the
nature and terms of this Agreement to any third party without the prior
written consent of any other party or parties hereto (i) as required to
obtain the consents, waivers and authorizations referenced in Sections
3.3, 4.3, 4.12, 7.1, 9.4 and 10.4 hereof, (ii) in connection with the
Buyer's financing of the transactions contemplated hereby, (iii) as
required by applicable law, and (iv) in connection with any securities law
filing.
12.13 Further Actions. Following the Closing Date, at the request of
Buyer, the Shareholders shall deliver such further instruments of transfer and
take all reasonable action as may be necessary or appropriate to effectuate this
Agreement and the transactions contemplated hereby. Each party will promptly
notify the other party of any information delivered to or obtained by such party
which would prevent the consummation of the transactions contemplated by this
Agreement, or would indicate a breach of the representations, warranties or
covenants of any of the parties to this Agreement.
12.14 Joint Publicity. No party to this Agreement shall issue any press
release or make a public announcement prior to or on the Closing Date concerning
this Agreement or the transactions contemplated hereby without the prior
approval of Buyer and each of the Shareholders, which approval shall not be
unreasonably withheld.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
MJD SERVICES CORP.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Title: Vice President
ARMOUR INDEPENDENT TELEPHONE CO.,
a South Dakota corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Title: President
35
BRIDGEWATER-CANISTOTA INDEPENDENT
TELEPHONE CO.,
a South Dakota corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Title: President
/s/ Xxxxxxx X. Xxxxxx, Xx.
---------------------------------
XXXXXXX X. XXXXXX, XX.
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx, Xx.
---------------------------------
XXXXXXX X. XXXXXX, XX.
36
EXHIBIT A
Percentage of
Shareholder Number of Shares Owned Outstanding Common Stock
----------- ---------------------- ------------------------
Xxxxxxx X. Xxxxxx, Xx. 33_%
Xxxxxxx X. Xxxxxx ____ 33_%
Xxxxxxx X. Xxxxxx, Xx. ____ 33_%
==== =====
TOTAL: ______ 100%*
*Does not include 2 shares held as directors' qualifying shares.
EXHIBIT B
EXCLUDED ASSETS
(1) Real Property: The East 16 feet of the South 34 feet (E 16' of S
34') of Xxx 00, Xxxxx 00 in the City of Armour, South Dakota (vacant
lot, site of pre-1989 business office).
(2) Vehicles: 1994 Dodge Dakota SLT (Xxxxxxx X. Xxxxxx, Xx. personal
vehicle)
(3) Machinery:
(a) International Harvester Crawler Tractor, early 1950 vintage,
came with the company, collector value only;
(b) Case Vibratory Pull Plow, age unknown, came with the company,
collector value only.
(4) Miscellaneous:
(a) Various pictures and plaques which are located at the Armour
office.
(5) The Cellular Interest
(6) The LMDS Interest
