Exhibit 4(c)
================================================================================
HICKORY TECH CORPORATION
$40,000,000
7.11% Senior Notes due April 1, 2012
--------------
NOTE PURCHASE AGREEMENT
-------------
Dated as of April 1, 1997
================================================================================
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
Section 1. Authorization of Notes...................................... 1
Section 2. Sale and Purchase of Notes.................................. 1
Section 3. Closing..................................................... 2
Section 4. Conditions to Closing....................................... 2
Section 4.1. Representations and Warranties.................. 2
Section 4.2. Performance; No Default......................... 2
Section 4.3. Compliance Certificates......................... 2
Section 4.4. Opinions of Counsel............................. 3
Section 4.5. Purchase Permitted By Applicable Law, Etc....... 3
Section 4.6. Sale of Other Notes............................. 3
Section 4.7. Payment of Special Counsel Fees................. 3
Section 4.8. Private Placement Number........................ 3
Section 4.9. Changes in Corporate Structure.................. 3
Section 4.10. Completion of Acquisition....................... 3
Section 4.11. Proceedings and Documents....................... 4
Section 5. Representations and Warranties of the Company............... 4
Section 5.1. Organization; Power and Authority............... 4
Section 5.2. Authorization, Etc.............................. 4
Section 5.3. Disclosure...................................... 4
Section 5.4. Organization and Ownership of Shares of
Subsidiaries; Affiliates........................ 5
Section 5.5. Financial Statements............................ 5
Section 5.6. Compliance with Laws, Other Instruments, Etc.... 5
Section 5.7. Governmental Authorizations, Etc................ 6
Section 5.8. Litigation; Observance of Agreements, Statutes
and Orders...................................... 6
Section 5.9. Taxes........................................... 6
Section 5.10. Title to Property; Leases....................... 7
Section 5.11. Licenses, Permits, Etc.......................... 7
Section 5.12. Compliance with ERISA........................... 7
Section 5.13. Private Offering by the Company................. 8
Section 5.14. Use of Proceeds; Margin Regulations............. 8
Section 5.15. Existing Debt; Future Liens..................... 8
Section 5.16. Foreign Assets Control Regulations, Etc......... 9
Section 5.17. Status under Certain Statutes................... 9
Section 5.18. Environmental Matters........................... 9
Section 5.19. Notes to Rank Pari Passu........................ 10
i
Section 6. Representations of the Purchaser............................ 10
Section 6.1. Purchase for Investment......................... 10
Section 6.2. Source of Funds................................. 10
Section 7. Information as to Company................................... 12
Section 7.1. Financial and Business Information.............. 12
Section 7.2. Officer's Certificate........................... 14
Section 7.3. Inspection...................................... 15
Section 8. Prepayment of the Notes..................................... 16
Section 8.1. Required Prepayments............................ 16
Section 8.2. Optional Prepayments with Make-Whole Amount..... 16
Section 8.3. Change in Control............................... 16
Section 8.4. Allocation of Partial Prepayments............... 18
Section 8.5. Maturity; Surrender, Etc........................ 19
Section 8.6. Purchase of Notes............................... 19
Section 8.7. Make-Whole Amount............................... 19
Section 9. Affirmative Covenants....................................... 20
Section 9.1. Compliance with Law............................. 20
Section 9.2. Insurance....................................... 21
Section 9.3. Maintenance of Properties....................... 21
Section 9.4. Payment of Taxes and Claims..................... 21
Section 9.5. Corporate Existence, Etc........................ 21
Section 10. Negative Covenants......................................... 22
Section 10.1. Transactions with Affiliates.................... 22
Section 10.2. Merger, Consolidation, Etc...................... 22
Section 10.3. Sale of Assets, Etc............................. 23
Section 10.4. Liens........................................... 23
Section 10.5. Consolidated Net Worth.......................... 25
Section 10.6. Limitations on Priority Debt.................... 25
Section 10.7. Consolidated Funded Debt to EBITDA Ratio........ 25
Section 10.8. Line of Business................................ 25
Section 11. Events of Default.......................................... 26
Section 12. Remedies on Default, Etc................................... 28
Section 12.1. Acceleration.................................... 28
Section 12.2. Other Remedies.................................. 29
Section 12.3. Rescission...................................... 29
Section 12.4. No Waivers or Election of Remedies,
Expenses, Etc................................... 29
Section 13. Registration; Exchange; Substitution of Notes.............. 29
Section 13.1. Registration of Notes........................... 29
Section 13.2. Transfer and Exchange of Notes.................. 30
ii
Section 13.3. Replacement of Notes............................ 30
Section 14. Payments on Notes.......................................... 31
Section 14.1. Place of Payment................................ 31
Section 14.2. Home Office Payment............................. 31
Section 15. Expenses, Etc.............................................. 31
Section 15.1. Transaction Expenses............................ 31
Section 15.2. Survival........................................ 31
Section 16. Survival of Representations and Warranties; Entire
Agreement.................................................. 32
Section 17. Amendment and Waiver....................................... 32
Section 17.1. Requirements.................................... 32
Section 17.2. Solicitation of Holders of Notes................ 32
Section 17.3. Binding Effect, Etc............................. 33
Section 17.4. Notes Held by Company, Etc...................... 33
Section 18. Notices.................................................... 33
Section 19. Reproduction of Documents.................................. 34
Section 20. Confidential Information................................... 34
Section 21. Substitution of Purchaser.................................. 35
Section 22. Miscellaneous.............................................. 35
Section 22.1. Successors and Assigns.......................... 35
Section 22.2. Payments Due on Non-Business Days............... 35
Section 22.3. Severability.................................... 36
Section 22.4. Construction.................................... 36
Section 22.5. Counterparts.................................... 36
Section 22.6. Governing Law................................... 36
iii
SCHEDULE A -- Information Relating To Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.7 -- Governmental Authorizations
SCHEDULE 5.15 -- Existing Indebtedness and Liens
EXHIBIT 1 -- Form of 7.11% Senior Note due April 1, 2012
EXHIBIT 4.4(a)-1 -- Form of Opinion of Special Counsel for the
Company
EXHIBIT 4.4(a)-2 -- Form of Opinion of Special Counsel for the
Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the
Purchasers
iv
HICKORY TECH CORPORATION
000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
7.11% Senior Notes due April 1, 2012
Dated as of April 1, 1997
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Hickory Tech Corporation, a Minnesota corporation (the "COMPANY"),
agrees with you as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $40,000,000
aggregate principal amount of its 7.11% Senior Notes due April 1, 2012 (the
"NOTES", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement or the Other Agreements (as
hereinafter defined)). The Notes shall be substantially in the form set out
in Exhibit 1, with such changes therefrom, if any, as may be approved by you
and the Company. Certain capitalized terms used in this Agreement are defined
in Schedule B; references to a "SCHEDULE" or an "EXHIBIT" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing provided for in Section 3, Notes in the principal amount specified
opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this
Agreement, the Company is entering into separate Note Purchase Agreements
(the "OTHER AGREEMENTS") identical with this Agreement with each of the other
purchasers named in Schedule A (the "OTHER PURCHASERS"), providing for the
sale at such Closing to each of the Other Purchasers of Notes in the
principal amount specified opposite its name in Schedule A. Your obligation
thereunder, and the obligations of the Other Purchasers under the Other
Agreements, are several and not joint obligations, and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or nonperformance by any Other Purchaser thereunder.
1
SECTION 3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Xxxxxxx and Xxxxxx, 000 X.
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, at 11:00 a.m., Central time, at a
closing (the "CLOSING") on April 8, 1997 or on such other Business Day
thereafter on or prior to April 9, 1997 as may be agreed upon by the Company
and you and the Other Purchasers. At the Closing the Company will deliver to
you the Notes to be purchased by you in the form of a single Note (or such
greater number of Notes in denominations of at least $100,000 as you may
request) dated the date of the Closing and registered in your name (or in the
name of your nominee), against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by
wire transfer of immediately available funds for the account of the Company
to account number 144551001148 at First Bank National Association - Mankato,
Minnesota, ABA 000000000. If at the Closing the Company shall fail to tender
such Notes to you as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such non fulfillment.
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you
at the Closing is subject to the fulfillment to your satisfaction, prior to
or at the Closing, of the following conditions:
SECTION 4.1. REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company in this Agreement shall be correct when made
and at the time of the Closing.
SECTION 4.2. PERFORMANCE; NO DEFAULT. The Company shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Section 5.14) no
Default or Event of Default shall have occurred and be continuing. Neither
the Company nor any Subsidiary shall have entered into any transaction since
the date of the Memorandum that would have been prohibited by Sections 10.1,
10.4 or 10.6 hereof had such Sections applied since such date.
SECTION 4.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to you
an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) SECRETARY'S CERTIFICATE. The Company shall have delivered to
you a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery
of the Notes and the Agreements.
2
SECTION 4.4. OPINIONS OF COUNSEL. You shall have received
opinions in form and substance satisfactory to you, dated the date of the
Closing (a) from Xxxxxx & Whitney LLP and Xxxxxxx, Xxxx & Xxxxxx, counsel for
the Company, covering the matters set forth in Exhibits 4.4(a)-1 and
4.4(a)-2, respectively, and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such opinion
to you) and (b) from Xxxxxxx and Xxxxxx, your special counsel in connection
with such transactions, substantially in the form set forth in Exhibit 4.4(b)
and covering such other matters incident to such transactions as you may
reasonably request.
SECTION 4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the
date of the Closing your purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (b) not violate
any applicable law or regulation (including, without limitation, Regulation
G, T or X of the Board of Governors of the Federal Reserve System) and (c)
not subject you to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably
specify to enable you to determine whether such purchase is so permitted.
SECTION 4.6. SALE OF OTHER NOTES. Contemporaneously with the
Closing, the Company shall sell to the Other Purchasers, and the Other
Purchasers shall purchase the Notes to be purchased by them at the Closing as
specified in Schedule A.
SECTION 4.7. PAYMENT OF SPECIAL COUNSEL FEES. Without limiting
the provisions of Section 15.1, the Company shall have paid on or before the
Closing the fees, charges and disbursements of your special counsel referred
to in Section 4.4 to the extent reflected in a statement of such counsel
rendered to the Company at least one Business Day prior to the Closing.
SECTION 4.8. PRIVATE PLACEMENT NUMBER. A Private Placement
Number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with
the Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Notes.
SECTION 4.9. CHANGES IN CORPORATE STRUCTURE. The Company shall
not have changed its jurisdiction of incorporation or been a party to any
merger or consolidation and shall not have succeeded to all or any
substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to in
Schedule 5.5.
SECTION 4.10. COMPLETION OF ACQUISITION. The Company shall have
consummated the Acquisition and shall have received all governmental and
regulatory approvals and consents with respect thereto and all such approvals
and consents shall be in full force and effect.
3
SECTION 4.11. PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions
shall be satisfactory to you and your special counsel, and you and your
special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
SECTION 5.1. ORGANIZATION; POWER AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has the corporate power and authority to own or hold under lease
the properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver this
Agreement and the Other Agreements and the Notes and to perform the
provisions hereof and thereof.
SECTION 5.2. AUTHORIZATION, ETC. This Agreement and the Other
Agreements and the Notes have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each Note will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
SECTION 5.3. DISCLOSURE. The Company, through its agent, First
Union Capital Markets Corp. has delivered to you and each Other Purchaser a
copy of a Confidential Private Placement Memorandum, dated February 1997 (the
"MEMORANDUM"), relating to the transactions contemplated hereby. The
Memorandum fairly describes, in all material respects, the general nature of
the business and principal properties of the Company and its Subsidiaries.
This Agreement, the Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which
they were made. Except as disclosed in the Memorandum or in the financial
statements listed in Schedule 5.5, since December 31, 1996, there has been no
change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually
or in the aggregate could not reasonably be expected to have a Material
Adverse Effect. There is no fact known to the Company that could reasonably
be expected to have a Material Adverse Effect that has not been set
4
forth herein or in the Memorandum or in the other documents, certificates and
other writings delivered to you by or on behalf of the Company specifically
for use in connection with the transactions contemplated hereby.
SECTION 5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF
SUBSIDIARIES; AFFILIATES. (a) Schedule 5.4 contains complete and correct
lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) of
the Company's Affiliates, other than Subsidiaries, and (iii) of the Company's
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned by
the Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and
clear of any Lien.
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly qualified as
a foreign corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or other
power and authority to own or hold under lease the properties it purports to
own or hold under lease and to transact the business it transacts and
proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to, any
legal restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate law
statutes) restricting the ability of such Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Company or
any of its Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Subsidiary.
SECTION 5.5. FINANCIAL STATEMENTS. The Company has delivered to
each Purchaser copies of the financial statements of the Company and its
Subsidiaries listed on Schedule 5.5. All of said financial statements
(including in each case the related schedules and notes) fairly present in
all material respects the consolidated financial position of the Company and
its Subsidiaries as of the respective dates specified in such financial
statements and the consolidated results of their operations and cash flows
for the respective periods so specified and have been prepared in accordance
with GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
SECTION 5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (a) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any
property of
5
the Company or any Subsidiary under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or by-laws, or
any other agreement or instrument to which the Company or any Subsidiary is
bound or by which the Company or any Subsidiary or any of their respective
properties may be bound or affected, (b) conflict with or result in a breach
of any of the terms, conditions or provisions of any order, judgment, decree,
or ruling of any court, arbitrator or Governmental Authority applicable to
the Company or any Subsidiary or (c) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.
SECTION 5.7. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent,
approval or authorization of, or registration, filing or declaration with,
any Governmental Authority is required in connection with the execution,
delivery or performance by the Company of this Agreement or the Notes or the
consummation of the Acquisition other than the consents described on Schedule
5.7, all of which have been obtained and are in full force and effect.
SECTION 5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND
ORDERS. (a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
SECTION 5.9. TAXES. The Company and its Subsidiaries have filed
all tax returns that are required to have been filed in any jurisdiction, and
have paid all taxes shown to be due and payable on such returns and all other
taxes and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (a) the amount of which is not individually or in the aggregate
Material or (b) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Company or a Subsidiary, as the case may be, has established
adequate reserves in accordance with GAAP. The Company knows of no basis for
any other tax or assessment that could reasonably be expected to have a
Material Adverse Effect. The charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of Federal, state or other taxes
for all fiscal periods are adequate. The Federal income tax liabilities of
the Company and its Subsidiaries have been determined by the Internal Revenue
Service and paid for all fiscal years up to and including the fiscal year
ended December 31, 1993.
6
SECTION 5.10. TITLE TO PROPERTY; LEASES. The Company and its
Subsidiaries have good and sufficient title to their respective properties,
including all such properties reflected in the most recent audited balance
sheet referred to in Section 5.5 or purported to have been acquired by the
Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear
of Liens prohibited by this Agreement. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.
SECTION 5.11. LICENSES, PERMITS, ETC. (a) the Company and its
Subsidiaries own or possess all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade
names, or rights thereto, that individually or in the aggregate are Material,
without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the
Company infringes in any Material respect any license, permit, franchise,
authorization, patent, copyright, service xxxx, trademark, trade name or
other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service xxxx, trademark,
trade name or other right owned or used by the Company or any of its
Subsidiaries.
SECTION 5.12. COMPLIANCE WITH ERISA. (a) The Company and each
ERISA Affiliate have operated and administered each Plan in compliance with
all applicable laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any
such liability by the Company or any ERISA Affiliate, or in the imposition of
any Lien on any of the rights, properties or assets of the Company or any
ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code,
other than such liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end
of such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent
actuarial valuation report, did not exceed the aggregate current value of the
assets of such Plan allocable to such benefit liabilities. The term "benefit
liabilities" has the meaning specified in section 4001 of ERISA and the terms
"current value" and "present value" have the meaning specified in Section 3
of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
7
(d) The expected post-retirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated
by section 4980B of the Code) of the Company and its Subsidiaries is not
Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first sentence of this Section
5.12(e) is made in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by you.
SECTION 5.13. PRIVATE OFFERING BY THE COMPANY. Neither the
Company nor anyone acting on its behalf has offered the Notes or any similar
securities for sale to, or solicited any offer to buy any of the same from,
or otherwise approached or negotiated in respect thereof with, any Person
other than you, the Other Purchasers and not more than 80 other Institutional
Investors, each of which has been offered the Notes at a private sale for
investment. Neither the Company nor anyone acting on its behalf has taken, or
will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act.
SECTION 5.14. USE OF PROCEEDS; MARGIN REGULATIONS. The Company
will apply the proceeds of the sale of the Notes to acquire eleven new
exchanges from US WEST representing 12,400 access lines in northern Iowa and
will use any excess proceeds for general corporate purposes. No part of the
proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve
System (12 CFR 207), or for the purpose of buying or carrying or trading in
any securities under such circumstances as to involve the Company in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 1% of the value of the consolidated
assets of the Company and its Subsidiaries and the Company does not have any
present intention that margin stock will constitute more than 1% of the value
of such assets. As used in this Section, the terms "margin stock" and
"purpose of buying or carrying" shall have the meanings assigned to them in
said Regulation G.
SECTION 5.15. EXISTING DEBT; FUTURE LIENS. (a) Schedule 5.15 sets
forth a complete and correct list of all outstanding Debt of the Company and
its Subsidiaries as of December 31, 1996, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Debt of the Company or its Subsidiaries.
Neither the Company nor any Subsidiary is in default and no waiver of default
is currently in effect, in the payment of any principal or interest on any
Debt of the Company or such Subsidiary and no event or condition exists with
respect to any Debt of the Company or any Subsidiary that would permit (or
that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.
8
(b) Neither the Company nor any Subsidiary has agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by Section 10.4.
SECTION 5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither
the sale of the Notes by the Company hereunder nor its use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any of
the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
SECTION 5.17. STATUS UNDER CERTAIN STATUTES. Neither the Company
nor any Subsidiary is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, or is
subject to regulation under the Public Utility Holding Company Act of 1935,
as amended, the Interstate Commerce Act, as amended, or the Federal Power
Act, as amended.
SECTION 5.18. ENVIRONMENTAL MATTERS. Neither the Company nor any
Subsidiary has knowledge of any claim or has received any notice of any
claim, and no proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or any of their respective real properties
now or formerly owned, leased or operated by any of them or other assets,
alleging any damage to the environment or violation of any Environmental
Laws, except, in each case, such as could not reasonably be expected to
result in a Material Adverse Effect. Except as otherwise disclosed to you in
writing:
(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has
stored any Hazardous Materials on real properties now or formerly
owned, leased or operated by any of them and has not disposed of any
Hazardous Materials in a manner contrary to any Environmental Laws in
each case in any manner that could reasonably be expected to result in
a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance
with applicable Environmental Laws, except where failure to comply
could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.19. NOTES TO RANK PARI PASSU. The obligations of the
Company with respect to the Notes and all other obligations under this
Agreement of the Company are direct and unsecured obligations of the Company
ranking PARI PASSU as against the assets of the Company and PARI PASSU with
9
all other present and future Debt of the Company which is not expressed to be
subordinate or junior in rank to any other Debt of the Company (except to the
extent that the foregoing is not true by virtue of, Liens expressly permitted
by this Agreement securing other Debt insofar as such Debt represents a prior
claim in respect of the property or assets secured by such permitted Lien).
SECTION 6. REPRESENTATIONS OF THE PURCHASER.
SECTION 6.1. PURCHASE FOR INVESTMENT. You represent that you are
purchasing the Notes for your own account or for one or more separate
accounts maintained by you or for the account of one or more pension or trust
funds and not with a view to the distribution thereof, PROVIDED that the
disposition of your or their property shall at all times be within your or
their control. You understand that the Notes have not been registered under
the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor
such an exemption is required by law, and that the Company is not required to
register the Notes.
SECTION 6.2. SOURCE OF FUNDS. You represent that at least one of
the following statements is an accurate representation as to each source of
funds (a "SOURCE") to be used by you to pay the purchase price of the Notes
to be purchased by you hereunder:
(1) if you are an insurance company, the Source is your
"insurance company general account" as defined in Department of Labor
Prohibited Transaction Exemption PTE 95-60 (60 FR 35925), July 12, 1995
(hereinafter "PTE 95-60"), and in respect thereof you represent that
there is no "employee benefit plan" (as defined in section 3(3) of
ERISA and section 4975(e)(1) of the Code) established or maintained by
the Company (and affiliates thereof as defined in section V(a)(1) of
the PTE 95-60) with respect to which the amount of general account
reserves and liabilities of all contracts held by or on behalf of such
plan exceed ten percent (10%) of the total reserves and liabilities of
such general account (exclusive of separate account liabilities) plus
surplus, as set forth in the National Association of Insurance
Commissioners' Annual Statement filed with your state of domicile; or
(2) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
to the Company in writing pursuant to this subparagraph (2), no
employee benefit plan or group or plans maintained by the same employer
or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(3) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the
10
meaning of Section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM, exceed
20% of the total client assets managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, neither the
QPAM nor a person controlling or controlled by the QPAM (applying the
definition of "control" in Section V(e) of the QPAM Exemption) owns a
5% or more interest in the Company and (i) the identity of such QPAM
and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company
in writing pursuant to this subparagraph (3); or
(4) the Source is a governmental plan; or
(5) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this subparagraph (5); or
(6) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
If you indicate that you are relying on any representation contained
in subparagraph (2), (3) or (5) above, the Company shall deliver on the
Closing Date a certificate, which shall either state that (i) it is neither a
party in interest nor a "disqualified person" (as defined in Section
4975(e)(2) of the Code), with respect to any plan identified pursuant to
paragraphs (2) or (5) above, or (ii) with respect to any plan identified
pursuant to subparagraph (3) above, neither it nor any "affiliate" (as
defined in Section V(c) of the QPAM Exemption) has at such time, and during
the immediately preceding one year, exercised the authority to appoint or
terminate said QPAM as manager of any plan identified in writing pursuant to
subparagraph (3) above or to negotiate the terms of said QPAM's management
agreement on behalf of any such identified plan.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA.
SECTION 7. INFORMATION AS TO COMPANY.
SECTION 7.1. FINANCIAL AND BUSINESS INFORMATION. The Company
shall deliver to each holder of Notes that is an Institutional Investor:
(a) QUARTERLY STATEMENTS -- promptly, and in any event,
within 45 days after the end of each quarterly fiscal period in each
fiscal year of the Company (other than the last quarterly fiscal period
of each such fiscal year), duplicate copies of:
11
(i) a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending
with such quarter,setting forth in each case in comparative
form the figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in accordance
with GAAP applicable to quarterly financial statements
generally, and certified by a Senior Financial Officer as
fairly presenting, in all material respects, the financial
position of the companies being reported on and their results
of operations and cash flows, subject to changes resulting
from year-end adjustments, PROVIDED that delivery within the
time period specified above of copies of the Company's
Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1 (a);
(b) ANNUAL STATEMENTS -- promptly, and in any event, within
120 days after the end of each fiscal year of the Company, duplicate
copies of,
(i) a consolidated balance sheet of the Company and
its Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by
(A) an opinion thereon of Xxxxx, Xxxxxxx &
Co., Ltd. or any other independent certified public
accountants of recognized national standing, which
opinion shall state that such financial statements
present fairly, in all material respects, the
financial position of the companies being reported
upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and
that the examination of such accountants in
connection with such financial statements has been
made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, and
(B) a certificate of such accountants
stating that they have reviewed this Agreement and
stating further whether, in making their audit, they
have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if
they are aware that any such condition or event then
12
exists, specifying the nature and period of the
existence thereof (it being understood that such
accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of
any Default or Event of Default unless such
accountants should have obtained knowledge thereof in
making an audit in accordance with generally accepted
auditing standards or did not make such an audit),
PROVIDED that the delivery within the time period specified above of
the Company's Annual Report on Form 10-K for such fiscal year (together
with the Company's annual report to shareholders, if any, prepared
pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
with the requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's certificate
described in clause (B) above, shall be deemed to satisfy the
requirements of this Section 7.1(b);
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public
securities holders generally, and (ii) each regular or periodic report,
each registration statement (without exhibits except as expressly
requested by such holder), and each prospectus and all amendments
thereto filed by the Company or any Subsidiary with the Securities and
Exchange Commission and of all press releases and other statements made
available generally by the Company or any Subsidiary to the public
concerning developments that are Material;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT OR ACCELERATION OF
NOTES -- promptly, and in any event within five days after a
Responsible Officer becoming aware of (i) the existence of any Default
or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any
Person has given any notice or taken any action with respect to a
claimed default of the type referred to in Section 11(f), a written
notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto
or (ii) the acceleration of any Note pursuant to Section 12.1 hereof, a
written notice setting forth the principal amount of each Note so
accelerated, the name of the holder thereof and the circumstances
surrounding such acceleration;
(e) ERISA MATTERS -- promptly, and in any event within five
days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the
action, if any, that the Company or an ERISA Affiliate proposes to take
with respect thereto:
(i) with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date hereof;
or
13
(ii) the taking by the PBGC of steps to institute, or
the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or
any ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material
Adverse Effect;
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to
the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect;
(g) AUDIT REPORTS -- Promptly upon receipt thereof, one copy
of each interim or special audit made by independent accountants of the
books of the Company or any Subsidiary and any management letter
received from such accountants; and
(h) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes (including,
without limitation, any data or information furnished to any other
holder of Debt of the Company or any Subsidiary) as from time to time
may be reasonably requested by any such holder of Notes.
SECTION 7.2. OFFICER'S CERTIFICATE. Each set of financial
statements delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b) hereof shall be accompanied by a certificate of a Senior
Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including
detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of Section 10.2 through
Section 10.7 hereof, inclusive, during the quarterly or annual period
covered by the statements then being furnished (including with respect
to each such Section, where applicable, the calculations of the maximum
or minimum amount, ratio or percentage, as the case may be, permissible
under the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence); and
14
(b) EVENT OF DEFAULT -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or
event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without limitation,
any such event or condition resulting from the failure of the Company
or any Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
SECTION 7.3. INSPECTION. The Company shall permit the
representatives of each holder of Notes that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior written
notice to the Company, to visit the principal executive office of the
Company, to discuss the affairs, finances and accounts of the Company
and its Subsidiaries with the Company's officers, and (with the consent
of the Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) DEFAULT -- if a Default or Event of Default then exists,
at the expense of the Company, to visit and inspect any of the offices
or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
SECTION 8. PREPAYMENT OF THE NOTES.
SECTION 8.1. REQUIRED PREPAYMENTS. On April 1, 2002 and on each
April 1 thereafter to and including April 1, 2011, the Company will prepay
$3,636,364.00 principal amount (or such lesser principal amount as shall then
be outstanding) of the Notes at par and without payment of the Make-Whole
Amount or any premium, PROVIDED that any partial prepayment of the Notes
pursuant to Section 8.2 shall be deemed to be applied first, to the amount of
principal scheduled to remain unpaid on April 1, 2012, and then to the
remaining scheduled principal payments under this Section 8.1 in inverse
chronological order.
SECTION 8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT. The
Company may, at its option, upon notice as provided below, prepay at any time
all, or from time to time any part of, the Notes,
15
in an amount not less than 10% of the aggregate principal amount of the Notes
then outstanding in the case of a partial prepayment, at 100% of the
principal amount so prepaid, together with interest accrued thereon to the
date of such prepayment, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal amount. The Company will give
each holder of Notes written notice of each optional prepayment under this
Section 8.2 not less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall specify such date, the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.4), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and
shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to
such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.
SECTION 8.3. CHANGE IN CONTROL.
(a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company
will, within two Business Days after any Responsible Officer has knowledge of
the occurrence of any Change in Control or Control Event, give written notice
of such Change in Control or Control Event to each holder of Notes UNLESS
notice in respect of such Change in Control (or the Change in Control
contemplated by such Control Event) shall have been given pursuant to
subparagraph (b) of this Section 8.3. If a Change in Control has occurred,
such notice shall contain and constitute an offer to prepay Notes as
described in subparagraph (c) of this Section 8.3 and shall be accompanied by
the certificate described in subparagraph (g) of this Section 8.3.
(b) CONDITION TO COMPANY ACTION. The Company will not take any
action that consummates or finalizes a Change in Control unless (i) at least
30 Business Days prior to such action it shall have given to each holder of
Notes written notice containing and constituting an offer to prepay Notes as
described in subparagraph (c) of this Section 8.3, accompanied by the
certificate described in subparagraph (g) of this Section 8.3, and (ii)
contemporaneously with such action, it prepays all Notes required to be
prepaid in accordance with this Section 8.3.
(c) OFFER TO PREPAY NOTES. The offer to prepay Notes contemplated
by subparagraphs (a) and (b) of this Section 8.3 shall be an offer to prepay,
in accordance with and subject to this Section 8.3, all, but not less than
all, the Notes held by each holder (in this case only, "HOLDER" in respect of
any Note registered in the name of a nominee for a disclosed beneficial owner
shall mean such beneficial owner) on a date specified in such offer (the
"PROPOSED PREPAYMENT DATE"). If such Proposed Prepayment Date is in
connection with an offer contemplated by subparagraph (a) of this Section
8.3, such date shall be not less than 30 days and not more than 60 days after
the date of such offer (if the Proposed Prepayment Date shall not be
specified in such offer, the Proposed Prepayment Date shall be the 45th day
after the date of such offer).
16
(d) ACCEPTANCE. A holder of Notes may accept or reject the offer
to prepay made pursuant to this Section 8.3 by causing a notice of such
acceptance or rejection to be delivered to the Company at least 10 Business
Days prior to the Proposed Prepayment Date. A failure by a holder of Notes to
respond to an offer to prepay made pursuant to this Section 8.3 shall be
deemed to constitute a rejection of such offer by such holder.
(e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant to
this Section 8.3 shall be at 100% of the principal amount of such Notes,
together with interest on such Notes accrued to the date of prepayment. The
prepayment shall be made on the Proposed Prepayment Date except as provided
in subparagraph (f) of this Section 8.3
(f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the
Company to prepay Notes pursuant to the offers required by subparagraph (b)
and accepted in accordance with subparagraph (d) of this Section 8.3 is
subject to the occurrence of the Change in Control in respect of which such
offers and acceptances shall have been made. In the event that such Change in
Control does not occur on or prior to the Proposed Prepayment Date in respect
thereof, the prepayment shall be deferred until and shall be made on the date
on which such Change in Control occurs. The Company shall keep each holder of
Notes reasonably and timely informed of (i) any such deferral of the date of
prepayment, (ii) the date on which such Change in Control and the prepayment
are expected to occur, and (iii) any determination by the Company that
efforts to effect such Change in Control have ceased or been abandoned (in
which case the offers and acceptances made pursuant to this Section 8.3 in
respect of such Change in Control shall be deemed rescinded).
(g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant
to this Section 8.3 shall be accompanied by a certificate, executed by a
Senior Financial Officer of the Company and dated the date of such offer,
specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made
pursuant to this Section 8.3; (iii) the principal amount of each Note offered
to be prepaid; (iv) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed Prepayment Date; (v) that the conditions of
this Section 8.3 have been fulfilled; and (vi) in reasonable detail, the
nature and date or proposed date of the Change in Control.
(h) EFFECT ON REQUIRED PAYMENTS. The amount of each payment of the
principal of the Notes made pursuant to this Section 8.3 shall be applied
against and reduce each of the then remaining principal payments due pursuant
to Section 8.1 by a percentage equal to the aggregate principal amount of the
Notes so paid divided by the aggregate principal amount of the Notes
outstanding immediately prior to such payment.
(i) "CHANGE IN CONTROL" means any of the following events or
circumstances:
if any person (as such term is used in section 13(d) and section
14(d)(2) of the Exchange Act as in effect on the date of the Closing)
or related persons constituting a Group, other than the Current
Management Group, become the "beneficial owners" (as such term is used
in Rule 13d-3
17
under the Exchange Act as in effect on the date of the Closing),
directly or indirectly, of more than 50% of the total voting power
of all classes then outstanding of the Company's voting stock.
"CURRENT MANAGEMENT GROUP" shall mean and include any Group
which includes, and is under the general direction and authority of, at
least two of Xxxxxx Xxxxx, Xxxxx Xxxxxxxxxxx, Xxx Xxxxxxxx and Xxx
Xxxxxxxx so long as such individuals continue to be employed in a
managerial capacity by the Company.
"GROUP" shall mean any group of related persons constituting a
"Group" for the purposes of Section 13(d) of the Exchange Act, or any
successor provision.
(j) CONTROL EVENT" means:
(i) the execution by the Company or any of its Subsidiaries
or Affiliates of any agreement or letter of intent with respect to any
proposed transaction or event or series of transactions or events
which, individually or in the aggregate, may reasonably be expected to
result in a Change in Control,
(ii) the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Change in Control,
or
(iii) the making of any written offer by any person (as such
term is used in section 13(d) and section 14(d)(2) of the Exchange Act
as in effect on the date of the Closing) or related persons
constituting a group (as such term is used in Rule 13d-5 under the
Exchange Act as in effect on the date of the Closing) to the holders of
the common stock of the Company, which offer, if accepted by the
requisite number of holders, would result in a Change in Control.
SECTION 8.4. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of
each partial prepayment of the Notes pursuant to Section 8.1 or Section 8.2,
the principal amount of the Notes to be prepaid shall be allocated among all
of the Notes at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof.
SECTION 8.5. MATURITY; SURRENDER, ETC. In the case of each
prepayment of Notes pursuant to this Section 8, the principal amount of each
Note to be prepaid shall mature and become due and payable on the date fixed
for such prepayment, together with interest on such principal amount accrued
to such date and the applicable Make-Whole Amount, if any. From and after
such date, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
SECTION 8.6. PURCHASE OF NOTES. The Company will not and will
not permit any Affiliate to purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any of the outstanding Notes except
18
upon the payment or prepayment of the Notes in accordance with the terms of
Sections 8.1, 8.2 and 8.3, and the Notes. The Company will promptly cancel
all Notes acquired by it or any Affiliate pursuant to any payment, prepayment
or purchase of Notes pursuant to any provision of this Agreement and no Notes
may be issued in substitution or exchange for any such Notes.
SECTION 8.7. MAKE-WHOLE AMOUNT. The term "MAKE-WHOLE AMOUNT"
means, with respect to any Note, an amount equal to the excess, if any, of
the Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Note over the amount of such Called Principal,
PROVIDED that the Make-Whole Amount may in no event be less than zero. For
the purposes of determining the Make-Whole Amount, the following terms have
the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (i)
the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "USD" of the Bloomberg
Financial Markets Services Screen (or such other display as may replace
page "USD" of the Bloomberg Financial Markets Services Screen) for
actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury xxxx
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest to and
greater than the Remaining Average Life and (2) the actively traded
U.S. Treasury security with the duration closest to and less than the
Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal
19
into (ii) the sum of the products obtained by multiplying (a) the
principal component of each Remaining Scheduled Payment with respect
to such Called Principal by (b) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the Settlement
Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, PROVIDED that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
SECTION 9.1. COMPLIANCE WITH LAW. The Company will, and will
cause each of its Subsidiaries to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject,
including, without limitation, ERISA and all Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such
laws, ordinances or governmental rules or regulations or failures to obtain
or maintain in effect such licenses, certificates, permits, franchises and
other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 9.2. INSURANCE. The Company will, and will cause each of
its Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
SECTION 9.3. MAINTENANCE OF PROPERTIES. The Company will, and
will cause each of its Subsidiaries to, maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working
order and condition (other than ordinary wear and tear), so that the business
carried on in
20
connection therewith may be properly conducted at all times, PROVIDED that
this Section shall not prevent the Company or any Subsidiary from
discontinuing the operation and the maintenance of any of its properties if
such discontinuance is desirable in the conduct of its business and the
Company has concluded that such discontinuance could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 9.4. PAYMENT OF TAXES AND CLAIMS. The Company will, and
will cause each of its Subsidiaries to, file all tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be due
and payable on such returns and all other taxes, assessments, governmental
charges, or levies imposed on them or any of their properties, assets, income
or franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent and all claims for which sums
have become due and payable that have or might become a Lien on properties or
assets of the Company or any Subsidiary, PROVIDED that neither the Company
nor any Subsidiary need pay any such tax or assessment or claims if (i) the
amount, applicability or validity thereof is contested by the Company or such
Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or such Subsidiary has established reserves reasonably deemed
by it to be adequate, on the books of the Company or such Subsidiary with
respect thereto or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
SECTION 9.5. CORPORATE EXISTENCE, ETC. The Company will at all
times preserve and keep in full force and effect its corporate existence.
Subject to Sections 10.2 and 10.3, the Company will at all times preserve and
keep in full force and effect the corporate existence of each of its
Subsidiaries and all rights and franchises of the Company and its
Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
SECTION 10.1. TRANSACTIONS WITH AFFILIATES. The Company will not
and will not permit any Subsidiary to enter into directly or indirectly any
transaction or Material group of related transactions (including without
limitation the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or
another Subsidiary), except pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in
a comparable arm's-length transaction with a Person not an Affiliate.
SECTION 10.2. MERGER, CONSOLIDATION, ETC. The Company shall not,
and shall not permit any Subsidiary to, consolidate with or merge with any
other Person or convey, transfer or lease substantially all of its assets in
a single transaction or series of transactions to any Person (except that a
Subsidiary may (x) consolidate with or merge with, or convey, transfer or
lease substantially all of its assets in a single transaction or series of
transactions to, the Company or another Subsidiary and (y) convey, transfer or
21
lease all of its assets in compliance with the provisions of Section 10.3),
PROVIDED that the foregoing restriction does not apply to the consolidation
or merger of the Company with, or the conveyance, transfer or lease of
substantially all of the assets of the Company in a single transaction or
series of transactions to, any Person so long as:
(a) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by conveyance,
transfer or lease substantially all of the assets of the Company as an
entirety, as the case may be, shall be a solvent corporation (the
"SUCCESSOR") organized and existing under the laws of the United States
or any State thereof (including the District of Columbia) and, if the
Company is not such Successor, (i) such Successor shall have executed
and delivered to each holder of any Notes its assumption of the due and
punctual performance and observance of each covenant and condition of
this Agreement, the Other Agreements and the Notes and (ii) shall have
caused to be delivered to each holder of any Notes an opinion of
nationally recognized independent counsel, or other independent counsel
reasonably satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting any such assumptions are
enforceable in accordance with their terms and comply with the terms
hereof; and
(b) at the time thereof and immediately after giving effect
to such transaction, no Default or Event of Default shall have occurred
and be continuing.
No such conveyance, transfer or lease of substantially all of the assets of
the Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed
in this Section 10.2 from its liability under this Agreement or the Notes.
SECTION 10.3. SALE OF ASSETS, ETC. Except as permitted under
Section 10.2, the Company will not, and will not permit any of its
Subsidiaries to, make any Asset Disposition unless:
(a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market Value
at least equal to that of the property exchanged and is in the best
interest of the Company or such Subsidiary; and
(b) immediately after giving effect to the Asset Disposition,
no Default or Event of Default would exist; and
(c) immediately after giving effect to the Asset Disposition,
the Disposition Value of all property that was the subject of any Asset
Disposition occurring in the then current fiscal year would not exceed
15% of Consolidated Telephone Segment Assets or 50% of Consolidated
Non-Telephone Segment Assets, as of the end of the fiscal quarter of
the Company immediately preceding such Asset Disposition.
If the Net Proceeds Amount for any Transfer is applied to a Debt
Prepayment Application or a Property Reinvestment Application within one year
after such Transfer, then such Transfer, only for the
22
purpose of determining compliance with subsection (c) of this Section 10.3 as
of any date, shall be deemed not to be an Asset Disposition.
SECTION 10.4. LIENS. The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any Lien
on or with respect to any property or asset (including, without limitation,
any document or instrument in respect of goods or accounts receivable) of the
Company or any such Subsidiary, whether now owned or held or hereafter
acquired, or any income or profits therefrom or assign or otherwise convey
any right to receive income or profits (unless it makes, or causes to be
made, effective provision whereby the Notes will be equally and ratably
secured with any and all other obligations thereby secured, such security to
be pursuant to an agreement reasonably satisfactory to the Required Holders
and the Company provides an opinion of independent counsel reasonably
satisfactory to the Required Holders including, but not limited to, the
legal, valid and binding nature of such agreement and the relative priority
of such security interest, and, in any such case, the Notes shall have the
benefit, to the fullest extent that, and with such priority as, the holders
of the Notes may be entitled under applicable law, of an equitable Lien on
such property), except:
(a) Liens for taxes, assessments or other governmental
charges which are not yet due and payable or the payment of which is
not at the time required by Section 9.4;
(b) Liens of or resulting from any litigation or legal
proceeding which are currently being contested in good faith by
appropriate proceedings and for which the Company or such Subsidiary
shall have set aside on its books adequate reserves with respect
thereto;
(c) Liens on property or assets of any Subsidiary securing
Debt owing to the Company or to any Wholly-Owned Subsidiary;
(d) Liens existing on the date of this Agreement and securing
the Debt of the Company and its Subsidiaries referred to in items 1 and
2 of Schedule 5.15;
(e) any Lien created to secure all or any part of the
purchase price, or to secure Debt incurred or assumed to pay all or any
part of the purchase price or cost of construction, of tangible
property (or any improvement thereon) acquired or constructed by the
Company or a Subsidiary after the date of the Closing including Liens
existing on fixed assets at the time of acquisition thereof or at the
time of acquisition by the Company or a Subsidiary of any business
entity then owing such fixed assets, whether or not such existing Liens
were given to secure the payment of the purchase price of the fixed
assets to which they attach so long as they were not incurred, extended
or renewed in contemplation of such acquisition, PROVIDED that
(i) any such Lien shall extend solely to the item or
items of such property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument
originally creating such Lien, other property (or improvement
thereon) which is an improvement to or is acquired for
specific use in connection with such acquired or
23
constructed property (or improvement thereon) or which is
real property being improved by such acquired or constructed
property (or improvement thereon),
(ii) the principal amount of the Debt secured by any
such Lien shall at no time exceed an amount equal to 100% of
the Fair Market Value (as determined in good faith by the
board of directors of the Company) of such property (or
improvement thereon) at the time of such acquisition or
construction, and
(iii) any such Lien shall be created contemporaneously
with, or within 120 days after, the acquisition or
construction of such property;
(f) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in connection with
worker's compensation, unemployment insurance and other like laws,
warehousemen's and attorneys' liens and statutory landlords' liens) and
Liens to secure the performance of bids, tenders or trade contracts, or
to secure statutory obligations, indemnity, surety or appeal bonds or
other Liens of like general nature, in any such case not incurred in
connection with the incurrence of Debt; PROVIDED that such Liens do
not, individually or in the aggregate, materially impair the use of
such property encumbered by any such Lien in the operation of the
business of the Company and its Subsidiaries, taken as a whole, or the
value of the property so encumbered for purposes of such business;
PROVIDED FURTHER in each case, the obligation secured is not overdue
or, if overdue, is being contested in good faith by appropriate actions
or proceedings;
(g) minor survey exceptions or minor encumbrances, easements
or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Company and its Subsidiaries or which customarily
exist on properties of Persons engaged in similar activities and
similarly situated and which do not in any event materially impair
their use in the operation of the business of the Company and its
Subsidiaries, taken as a whole;
(h) any Lien renewing, extending or refunding any Lien
permitted by paragraph (d) of this Section 10.4, PROVIDED that (i) the
principal amount of Debt secured by such Lien immediately prior to such
extension, renewal or refunding is not increased or the maturity
thereof reduced, (ii) such Lien is not extended to any other property,
and (iii) immediately after such extension, renewal or refunding no
Default or Event of Default would exist; and
(i) other Liens not otherwise permitted by paragraphs (a)
through (h) securing Debt of the Company or any Subsidiary permitted
under Section 10.6.
For the purposes of this Section 10.4, any Person becoming a Subsidiary after
the date of this Agreement shall be deemed to have incurred all of its then
outstanding Liens at the time it becomes a Subsidiary, and any Person
extending, renewing or refunding any Debt secured by any Lien shall be deemed
to have incurred such Lien at the time of such extension, renewal or
refunding.
24
SECTION 10.5. CONSOLIDATED NET WORTH. The Company will not, at
any time, permit Consolidated Net Worth to be less than the sum of (a)
$34,000,000, plus (b) an aggregate amount equal to 40% of its aggregate
Consolidated Net Earnings (but only if a positive number) for the period
beginning on the date of Closing and ending at the end of the Company's most
recently completed fiscal quarter.
SECTION 10.6. LIMITATIONS ON PRIORITY DEBT. (a) The Company will
not, at any time, permit Priority Debt to exceed 15% of Consolidated Net
Worth.
(b) Any corporation which becomes a Subsidiary after the date
hereof shall for all purposes of this Section 10.6 be deemed to have created,
assumed or incurred at the time it becomes a Subsidiary all Debt of such
corporation existing immediately after it becomes a Subsidiary.
SECTION 10.7. CONSOLIDATED FUNDED DEBT TO EBITDA RATIO. The
Company shall not, at any time, permit the ratio of (i) Consolidated Funded
Debt to (ii) EBITDA, to be greater than 3.00 to 1.00 determined, in the case
of EBITDA, as of the end of each fiscal quarter for the period consisting of
the immediately preceding four fiscal quarters, (each such rolling four
fiscal quarter period being treated as a single accounting period).
SECTION 10.8. LINE OF BUSINESS. The Company will not, and will
not permit any of its Subsidiaries to, engage to any substantial extent in
any business other than the businesses in which the Company and its
Subsidiaries are engaged on the date of this Agreement as described in the
Memorandum and businesses reasonably related thereto or in furtherance
thereof.
In addition, the Company will not, and will not permit any of its
Subsidiaries to, engage in any business if, as a result, Consolidated
Telephone Segment Assets would be less than 51% of Consolidated Total Assets.
SECTION 11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on
any Note for more than five Business Days after the same becomes due
and payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Sections 10.2 through 10.7; or
25
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is not
remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a "NOTICE OF DEFAULT" and to
refer specifically to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this
Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect
in any Material respect on the date as of which made; or
(f) (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any Debt
that is outstanding in an aggregate principal amount of at least
$1,000,000 beyond any period of grace provided with respect thereto, or
(ii) the Company or any Subsidiary is in default in the performance of
or compliance with any term of any evidence of any Debt in an aggregate
outstanding principal amount of at least $1,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Debt has
become, or has been declared due and payable before its stated maturity
or before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurrence or continuation of any event or condition
(other than the passage of time or the right of the holder of Debt to
convert such Debt into equity interests), (x) the Company or any
Subsidiary has become obligated to purchase or repay Debt before its
regular maturity or before its regularly scheduled dates of payment in
an aggregate outstanding principal amount of at least $1,000,000, or
(y) one or more Persons have required the Company or any Subsidiary so
to purchase or repay such Debt; or
(g) the Company or any Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they
become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or Governmental Authority of competent
jurisdiction enters an order appointing, without consent by the Company
or any of its Subsidiaries, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief
or approving a petition for relief or reorganization or any other
petition in bankruptcy or for liquidation or to take advantage of any
26
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any of its
Subsidiaries, or any such petition shall be filed against the Company
or any of its Subsidiaries and such petition shall not be dismissed
within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 are rendered against one or more of
the Company and its Subsidiaries and which judgments are not, within 45
days after entry thereof, bonded, discharged or stayed pending appeal,
or are not discharged within 45 days after the expiration of such stay;
or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under Section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
all Plans, determined in accordance with Title IV of ERISA, shall
exceed $1,000,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
any Subsidiary establishes or amends any employee welfare benefit plan
that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and
any such event or events described in clauses (i) through (vi) above,
either individually or together with any other such event or events,
could reasonably be expected to have a Material Adverse Effect.
As used in Section 11(v), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
SECTION 12. REMEDIES ON DEFAULT, ETC.
SECTION 12.1. ACCELERATION. (a) If an Event of Default with
respect to the Company described in paragraph (g) or (h) of Section 11 (other
than an Event of Default described in clause (i) of paragraph (g) or
described in clause (vi) of paragraph (g) by virtue of the fact that such
clause encompasses clause (i) of paragraph (g)) has occurred, all the Notes
then outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
any holder or holders of more than 25% in principal amount of the Notes at
the time outstanding may at any time at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
27
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder of Notes at the time
outstanding affected by such Event of Default may at any time, at its option,
by notice or notices to the Company, declare all the Notes held by it to be
immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (i) all accrued and
unpaid interest thereon and (ii) the Make-Whole Amount determined in respect
of such principal amount (to the full extent permitted by applicable law),
shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby
waived. The Company acknowledges, and the parties hereto agree, that each
holder of a Note has the right to maintain its investment in the Notes free
from repayment by the Company (except as herein specifically provided for),
and that the provision for payment of a Make-Whole Amount by the Company in
the event that the Notes are prepaid or are accelerated as a result of an
Event of Default, is intended to provide compensation for the deprivation of
such right under such circumstances.
SECTION 12.2. OTHER REMEDIES. If any Default or Event of Default
has occurred and is continuing, and irrespective of whether any Notes have
become or have been declared immediately due and payable under Section 12.1,
the holder of any Note at the time outstanding may proceed to protect and
enforce the rights of such holder by an action at law, suit in equity or
other appropriate proceeding, whether for the specific performance of any
agreement contained herein or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law or otherwise.
SECTION 12.3. RESCISSION. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1, the
holders of not less than 76% in principal amount of the Notes then
outstanding, by written notice to the Company, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes, all principal of and Make-Whole Amount, if any, on any
Notes that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the Default Rate, (b) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (c) no judgment or decree has been entered for
the payment of any monies due pursuant hereto or to the Notes. No rescission
and annulment under this Section 12.3 will extend to or affect any subsequent
Event of Default or Default or impair any right consequent thereon.
SECTION 12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15,
the Company
28
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
SECTION 13.1. REGISTRATION OF NOTES. The Company shall keep at
its principal executive office a register for the registration and
registration of transfers of Notes. The name and address of each holder of
one or more Notes, each transfer thereof and the name and address of each
transferee of one or more Notes shall be registered in such register. Prior
to due presentment for registration of transfer, the Person in whose name any
Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of
a Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered
holders of Notes.
SECTION 13.2. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of
any Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or his attorney duly
authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and
deliver, at the Company's expense (except as provided below), one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note if no interest shall have been paid thereon. The Company
may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000, PROVIDED
that if necessary to enable the registration of transfer by a holder of its
entire holding of Notes, one Note may be in a denomination of less than
$100,000. Any transferee of a Note, or purchaser of a participation therein,
shall, by its acceptance of such Note be deemed to make the same
representations to the Company regarding the Note or participation as you and
the Other Purchasers have made pursuant to Section 6.2, PROVIDED, that such
entity may (in reliance upon information provided by the Company, which shall
not be unreasonably withheld) make a representation to the effect that the
purchase by such entity of any Note will not constitute a non-exempt
prohibited transaction under section 406(a) of ERISA.
SECTION 13.3. REPLACEMENT OF NOTES. Upon receipt by the Company
of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any Note (which evidence shall be, in the
case of an Institutional Investor, notice from such Institutional Investor of
such ownership and such loss, theft, destruction or mutilation), and
29
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a
Note with a minimum net worth of at least $10,000,000, such Person's
own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a
new Note, dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note or dated the
date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
SECTION 14. PAYMENTS ON NOTES.
SECTION 14.1. PLACE OF PAYMENT. Subject to Section 14.2, payments
of principal, Make-Whole Amount, if any, and interest becoming due and
payable on the Notes shall be made in Mankato, Minnesota at the principal
office of the Company in such jurisdiction. The Company may at any time, by
notice to each holder of a Note, change the place of payment of the Notes so
long as such place of payment shall be either the principal office of the
Company in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.
SECTION 14.2. HOME OFFICE PAYMENT. So long as you or your nominee
shall be the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and
interest by the method and at the address specified for such purpose below
your name in Schedule A, or by such other method or at such other address as
you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of
any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full
of any Note, you shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 14.1.
SECTION 15. EXPENSES, ETC.
SECTION 15.1. TRANSACTION EXPENSES. Whether or not the
transactions contemplated hereby are consummated, the Company will pay all
costs and expenses (including reasonable attorneys' fees of a special counsel
and, if reasonably required, local or other counsel) incurred by you and each
Other Purchaser or holder of a Note in connection with such transactions and
in connection with any amendments, waivers or consents under or in respect of
this Agreement or the Notes (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce
or defend) any rights under this Agreement or the Notes or in responding to
any subpoena or other legal process or
30
informal investigative demand issued in connection with this Agreement or the
Notes, or by reason of being a holder of any Note, and (b) the costs and
expenses, including financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in connection
with any work-out or restructuring of the transactions contemplated hereby or
the Notes. The Company will pay, and will save you and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses, if
any, of brokers and finders (other than those retained by you).
SECTION 15.2. SURVIVAL. The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of you
or any other holder of a Note. All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to this
Agreement shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.
SECTION 17. AMENDMENT AND WAIVER.
SECTION 17.1. REQUIREMENTS. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment
or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof,
or any defined term (as it is used therein), will be effective as to you
unless consented to by you in writing, and (b) no such amendment or waiver
may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time
of payment or method of computation of interest or of the Make-Whole Amount
on, the Notes, (ii) change the percentage of the principal amount of the
Notes the holders of which are required to consent to any such amendment or
waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
SECTION 17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required,
to enable such holder to make an informed and considered decision with
respect to
31
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 17 to each holder of outstanding Notes promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder
of Notes as consideration for or as an inducement to the entering into by any
holder of Notes of any waiver or amendment of any of the terms and provisions
hereof or of the Notes unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each holder
of Notes then outstanding whether or not such holder consented to such waiver
or amendment.
SECTION 17.3. BINDING EFFECT, ETC. Any amendment or waiver
consented to as provided in this Section 17 applies equally to all holders of
Notes and is binding upon them and upon each future holder of any Note and
upon the Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to
or affect any obligation, covenant, agreement, Default or Event of Default
not expressly amended or waived or impair any right consequent thereon. No
course of dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.
SECTION 17.4. NOTES HELD BY COMPANY, ETC. Solely for the purpose
of determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or consented to
any amendment, waiver or consent to be given under this Agreement or the
Notes, or have directed the taking of any action provided herein or in the
Notes to be taken upon the direction of the holders of a specified percentage
of the aggregate principal amount of Notes then outstanding, Notes directly
or indirectly owned by the Company or any of its Affiliates shall be deemed
not to be outstanding.
SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
32
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company
in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of Chief Financial
Officer, or at such other address as the Company shall have specified
to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closing (except
the Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing
evidence to demonstrate the inaccuracy of any such reproduction.
SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, PROVIDED
that such term does not include information that (a) was publicly known or
otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any Person acting
on your behalf, (c) otherwise becomes known to you other than through
disclosure by the Company or any Subsidiary or (d) constitutes financial
statements delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information of third parties delivered to you, PROVIDED
that you may deliver or disclose Confidential Information to (i) your
directors, trustees, officers, employees, agents, attorneys and affiliates
(to the extent such disclosure reasonably relates to the administration of
the investment represented by your Notes), (ii) your financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20,
(iii) any other holder of any Note, (iv) any Institutional Investor to which
you sell or offer to sell such
33
Note or any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (v) any Person from which you
offer to purchase any security of the Company (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 20), (vi) any federal or state regulatory
authority having jurisdiction over you, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about your
investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to
which you are a party or (z) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 20
as though it were a party to this Agreement. On reasonable request by the
Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this
Agreement or its nominee or any other holder that shall have previously
delivered such a confirmation), such holder will confirm in writing that it
is bound by the provisions of this Section 20.
SECTION 21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and
such Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon
receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted
as a purchaser hereunder and such Affiliate thereafter transfers to you all
of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall no longer be deemed to refer
to such Affiliate, but shall refer to you, and you shall have all the rights
of an original holder of the Notes under this Agreement.
SECTION 22. MISCELLANEOUS.
SECTION 22.1. SUCCESSORS AND ASSIGNS. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and
assigns (including, without limitation, any subsequent holder of a Note)
whether so expressed or not.
34
SECTION 22.2. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or Make-Whole Amount or interest on any Note that is due on a
date other than a Business Day shall be made on the next succeeding Business
Day without including the additional days elapsed in the computation of the
interest payable on such next succeeding Business Day.
SECTION 22.3. SEVERABILITY. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall (to the
full extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 22.4. CONSTRUCTION. Each covenant contained herein shall
be construed (absent express provision to the contrary) as being independent
of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
SECTION 22.5. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
SECTION 22.6. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with, and the rights of the parties shall be
governed by, the law of the State of Minnesota excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.
* * * * *
35
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
HICKORY TECH CORPORATION
By
----------------------------
Its
---------------------------
The foregoing is hereby agreed to as of the date thereof.
[Variation]
By
-------------------------------
Its
------------------------------
36
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASER PURCHASED
XXXX XXXX $X,X00,000
XXXX XXXX
XXXX XXXX
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Hickory Tech Corporation, 7.11% Senior Notes due April 1, 2012, PPN 429060
A* 7, principal, premium or interest") to:
XXXX Bank
XXXX, XXXX
ABA #XXXXXXXXX
For credit to: XXXXX XXXXX
Account #XXX-XXXXX
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-XXXXXXX
SCHEDULE A
(to Note Agreement)
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
GENERAL PROVISIONS
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the express
requirements of this Agreement.
Where any provision in this Agreement refers to action to be taken
by any Person, or which such Person is prohibited from taking, such provision
shall be applicable whether the action in question is taken directly or
indirectly by such Person.
"AFFILIATE" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control
with, such first Person, and (b) any Person beneficially owning or holding,
directly or indirectly, 10% or more of any class of voting or equity
interests of the Company or any Subsidiary or any corporation of which the
Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity
interests. As used in this definition, "CONTROL" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "AFFILIATE" is a reference to an Affiliate of
the Company.
"ACQUISITION" shall mean the acquisition by the Company of eleven
new exchanges from US WEST representing 12,400 access lines in northern Iowa
pursuant to the Agreement for Purchase and Sale of Exchanges dated as of June
15, 1995 between Hickory Tech Corporation and US West Communications, Inc.
"ASSET DISPOSITION" means any Transfer except:
(a) any Transfer from a Subsidiary to the Company or a
Subsidiary so long as immediately before and immediately after the
consummation of any such Transfer and after giving effect thereto, no
Default or Event of Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or
(ii) equipment, fixtures, supplies or materials
SCHEDULE B
(to Note Purchase Agreement)
no longer required in the operation of the business of the Company or
any of its Subsidiaries or that is obsolete.
"BUSINESS DAY" means (a) for the purposes of Section 8.7 only, any
day other than a Saturday, a Sunday or a day on which commercial banks in New
York City are required or authorized to be closed, and (b) for the purposes
of any other provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in Minneapolis, Minnesota or New
York, New York are required or authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset
and the incurrence of a liability in accordance with GAAP or, with respect to
which the amount of the asset and liability thereunder as if so capitalized,
should be disclosed in a note to the lessee's balance sheet.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease which would, in accordance with GAAP, appear as a
liability on a balance sheet of such Person.
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to
time.
"COMPANY" means Hickory Tech Corporation, a Minnesota corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED NET WORTH" means, at any time stockholder's equity of
the Company and its Subsidiaries as such amount would be shown on a
consolidated balance sheet of the Company and its Subsidiaries as of such
time prepared in accordance with GAAP.
"CONSOLIDATED FUNDED DEBT" means, as of any date of determination,
the total of all Funded Debt of the Company and its Subsidiaries outstanding
on such date, after eliminating all offsetting debits and credits between the
Company and its Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Company and its Subsidiaries in accordance with GAAP.
"CONSOLIDATED NET EARNINGS" for any period shall mean the gross
revenues of the Company and its Subsidiaries for such period LESS all
expenses and other proper charges, determined on a consolidated basis in
accordance with GAAP after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
2
(a) any extraordinary gains or losses determined in
accordance with GAAP; and
(b) net earnings of any business entity (other than a
Subsidiary of the Company) in which the Company or any Subsidiary of
the Company has an ownership interest unless such net earnings shall
have actually have been received by the Company or a Subsidiary of the
Company in the form of cash distributions.
"CONSOLIDATED TOTAL ASSETS" shall mean, as of the date of any
determination thereof, total assets of the Company and its Subsidiaries
determined on a consolidated basis in accordance with GAAP eliminating
intercompany items.
"CONSOLIDATED NON-TELEPHONE SEGMENT ASSETS" means the remainder of
Consolidated Total Assets MINUS Consolidated Telephone Segment Assets.
"CONSOLIDATED TELEPHONE SEGMENT ASSETS" means, as of any date of
determination thereof, the sum of all assets of the Company and its
Subsidiaries which are attributable to the telephone operations as determined
on a consolidated basis in accordance with GAAP eliminating intercompany
items, and including, but not limited to, those assets related to local
exchange telephone services, fiber optic transport network, operator
assistance, network tandem switching, switched and dedicated private line
service, directory advertising, wireless communications, resale of
long-distance and other services and internet services.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any time, the sum of
Consolidated Net Worth and Consolidated Funded Debt.
"DEBT" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);
(c) its Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all obligations of such Person in respect of acceptances
or letters of credit or other credit enhancement instruments issued or
created for the account of any such Person and
3
reimbursement obligations in respect of credit enhancement instruments
which are, in substance, financial guaranties;
(f) all Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (f) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP, HOWEVER, Debt shall not
include unfunded obligations relating to any Plan of such Person.
"DEBT PREPAYMENT APPLICATION" means, with respect to any Transfer of
property, the application by the Company or its Subsidiaries of cash in an
amount equal to the Net Proceeds Amount with respect to such Transfer to pay
Senior Funded Debt of the Company (other than Senior Funded Debt owing to the
Company, any of its Subsidiaries or any Affiliate and Senior Funded Debt in
respect of any revolving credit or similar credit facility providing the
Company or any of its Subsidiaries with the right to obtain loans or other
extensions of credit from time to time, except to the extent that in
connection with such payment of Senior Funded Debt the availability of credit
under such credit facility is permanently reduced by an amount not less than
the amount of such proceeds applied to the payment of such Senior Funded Debt
(any such Senior Funded Debt being herein referred to as "REVOLVING FUNDED
DEBT")), PROVIDED THAT in the course of making such application the Company
shall offer to prepay each outstanding Note in accordance with Section 8.2 in
a principal amount which, when added to the Make-Whole Amount applicable
thereto, equals the Ratable Portion for such Note. If any holder of a Note
fails to accept such offer of prepayment, then, for purposes of the preceding
sentence only, the Company nevertheless will be deemed to have paid Senior
Funded Debt in an amount equal to the Ratable Portion for such Note. "RATABLE
PORTION" for any Note means an amount equal to the product of (x) the Net
Proceeds Amount being so applied to the payment of Senior Funded Debt
multiplied by (y) a fraction the numerator of which is the outstanding
principal amount of such Note and the denominator of which is the aggregate
principal amount of Senior Funded Debt of the Company and its Subsidiaries
other than Revolving Funded Debt.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become
an Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater of
(i) 2.0% per annum above the rate of interest stated in clause (a) of the
first paragraph of the Notes or (ii) 2.00% over the rate of interest publicly
announced by The Chase Manhattan Bank N.A. in New York, New York as its
"base" or "prime" rate.
"DISPOSITION VALUE" means, at any time, with respect to any property
4
(a) in the case of property that does not constitute
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by the Company, and
(b) in the case of property that constitutes Subsidiary
Stock, an amount equal to that percentage of book value of the assets
of the Subsidiary that issued such stock as is equal to the percentage
that the book value of such Subsidiary Stock represents of the book
value of all of the outstanding capital stock of such Subsidiary
(assuming, in making such calculations, that all Securities convertible
into such capital stock are so converted and giving full effect to all
transactions that would occur or be required in connection with such
conversion) determined at the time of the disposition thereof, in good
faith by the Company.
"EBITDA" means, in respect of any period, the sum of (a)
Consolidated Net Earnings for such period plus, to the extent deducted in the
determination of Consolidated Net Earnings for such period, (b) Interest
Charges, (c) taxes imposed on or measured by income or excess profits and (d)
the amount of all depreciation and amortization allowances, in each case, of
the Company and its Subsidiaries. For purposes of any determination of EBITDA
pursuant to Section 10.7, (i) "EBITDA" (determined in a manner consistent
with the immediately preceding sentence of this definition) which were earned
in the period of determination by any business entity acquired by the Company
or any of its Subsidiaries during such period of determination shall be
included in any determination of "EBITDA", PROVIDED that there shall be a
reasonable basis consistent with GAAP for the computation of such "EBITDA"
and, concurrently with such determination, the Company shall have furnished
to the holders of the Notes audited financial statements or other financial
information reasonably satisfactory to the Required Holders with respect to
such business entity demonstrating to the reasonable satisfaction of the
Required Holders the basis for the including and computations of such
"EBITDA" and (ii) "EBITDA" (determined in a manner consistent with the
immediately preceding sentence of this definition) which were earned in the
period of determination by any business entity divested by the Company or any
of its Subsidiaries during such period shall be excluded from a determination
of "EBITDA."
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
5
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"FUNDED DEBT" means, with respect to any Person, (i) all Debt of
such Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, more than
one year from, or is directly or indirectly renewable or extendible at the
option of the obligor in respect thereof to a date more than one year
(including, without limitation, an option of such obligor under a revolving
credit or similar agreement obligating the lender or lenders to extend credit
over a period of more than one year) from, the date of the creation thereof
(ii) Capitalized Lease Obligations and (iii) any Guaranty of Funded Debt of
others, PROVIDED, HOWEVER, that FUNDED DEBT shall not include, to the extent
otherwise included therein, Debt outstanding under any credit line, revolving
credit or similar agreement which Debt is fully paid (and not refinanced) for
a period of not less than 30 consecutive days in the immediately preceding 12
calendar month period pursuant to the terms of such agreement.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any indebtedness, dividend or other obligation of any other
Person in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or
otherwise, by such Person:
6
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to maintain any
working capital or other balance sheet condition or any income
statement condition of any other Person or otherwise to advance or make
available funds for the purchase or payment of such indebtedness or
obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor
under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage,
seepage, or filtration of which is or shall be restricted, prohibited or
penalized by any applicable law (including, without limitation, asbestos,
urea formaldehyde foam insulation and polychlorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company,
savings and loan association or other financial institution, any pension
plan, any investment company, any insurance company, any broker or dealer, or
any other similar financial institution or entity, regardless of legal form.
"INTEREST CHARGES" means, with respect to any period, all interest
and all amortization of debt discount and expense on any particular Debt of
the Company and its Subsidiaries (including, without limitation,
payment-in-kind, zero coupon and other like securities) for which such
calculations are being made, including imputed interest on Capital Leases and
all fees and commissions for letters of credit and bankers' acceptance
financings and the net interest costs of Swaps.
7
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.7.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties or prospects of the Company
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
the Company and its Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the Notes, or (c)
the validity or enforceability of this Agreement or the Notes.
"MEMORANDUM" is defined in Section 5.3.
"MINORITY INTERESTS" shall mean any shares of stock of any class of
a Subsidiary of the Company (other than directors' qualifying shares as
required by law) that are not owned by the Company and/or one or more
Subsidiaries of the Company. Minority Interests shall be valued by valuing
Minority Interests constituting Preferred Stock at the voluntary or
involuntary liquidating value of such Preferred Stock, whichever is greater,
and by valuing Minority Interests constituting common stock at the book value
of capital and surplus applicable thereto adjusted, if necessary, to reflect
any changes from the book value of such common stock required by the
foregoing method of valuing Minority Interests in Preferred Stock.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
"NET PROCEEDS AMOUNT" means, with respect to any Transfer of any
Property by any Person, an amount equal to the DIFFERENCE of
(a) the aggregate amount of the consideration (valued at the
Fair Market Value of such consideration at the time of the consummation
of such Transfer) received by such Person in respect of such Transfer,
MINUS
(b) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by such Person in connection with such
Transfer.
"NOTES" is defined in Section 1.
8
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend
to the subject matter of such certificate.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3)
of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may
have any liability.
"PREFERRED STOCK" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation
as to the payment of dividends or the payment of any amount upon liquidation
or dissolution of such corporation.
"PRIORITY DEBT" shall mean as of the date of any determination
thereof, the sum of (i) Debt of the Company or any Subsidiary secured by a
Lien described in Section 10.4(i) PLUS (but without duplication) (ii) Debt of
Subsidiaries.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible,
xxxxxx or inchoate.
"PROPERTY REINVESTMENT APPLICATION" means, with respect to any
Transfer of property, the satisfaction of each of the following conditions:
(a) an amount equal to the Net Proceeds Amount with respect
to such Transfer shall have been applied to the acquisition by the
Company, or any of its Subsidiaries making such Transfer, of property
that upon such acquisition is unencumbered by any Lien (other than
Liens described in subparagraphs (a) through (i), inclusive, of Section
10.4) and that
(i) constitutes property that is (x) property
classifiable under GAAP as non-current to the extent that such
proceeds are derived from the transfer of property that was
properly classifiable as non-current, and otherwise properly
classifiable as either current or non-current, and (y) to be
used in the ordinary course of business of the Company and the
Subsidiaries, or
9
(ii) constitutes equity interests of a Person that
shall be, on or prior to the time of such acquisition, a
Wholly-Owned Subsidiary of the Company, and that shall invest
the proceeds of such acquisition in property of the nature
described in the immediately preceding clause (i); and
(b) the Company shall have delivered a certificate of a
Responsible Officer of the Company to each holder of a Note referring
to Section 10.3 and identifying the property that was the subject of
such Transfer, the Disposition Value of such property, and the nature,
terms, amount and application of the proceeds from the Transfer.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"REQUIRED HOLDERS" means, at any time, the holders of at least
66-2/3% in principal amount of the Notes at the time outstanding (exclusive
of Notes then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of
the relevant portion of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SECURITY" has the meaning set forth in section 2(1) of the
Securities Act.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"SENIOR FUNDED DEBT" means (a) any Funded Debt of the Company which
is not in any manner subordinated in right of payment or security in any
respect to the Debt evidenced by the Notes and (b) any Funded Debt of any
Subsidiary.
"SUBSIDIARY" means, as to any Person, any corporation, association
or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns
sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can
and does ordinarily take major business actions without the prior approval of
such Person or one or more of its Subsidiaries). Unless the context otherwise
clearly requires, any reference to a "Subsidiary" is a reference to a
Subsidiary of the Company.
10
"SUBSIDIARY STOCK" means, with respect to any Person, the stock (or
any options or warrants to purchase stock or other Securities exchangeable
for or convertible into stock) of any Subsidiary of such Person.
"SWAPS" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect
thereof as of the end of the then most recently ended fiscal quarter of such
Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement
relating to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount
of such obligation shall be the net amount so determined.
"TRANSFER" means, with respect to any Person, any transaction in
which such Person sells, conveys, transfers or leases (as lessor) any of its
property, including, without limitation, Subsidiary Stock. For purposes of
determining the application of the Net Proceeds Amount in respect of any
Transfer, the Company may designate any Transfer as one or more separate
Transfers each yielding a separate Net Proceeds Amount. In any such case, (a)
the Disposition Value of any property subject to each such separate Transfer
and (b) the amount of Consolidated Total Assets attributable to any property
subject to each such separate Transfer shall be determined by ratably
allocating the aggregate Disposition Value of, and the aggregate Consolidated
Total Assets attributable to, all property subject to all such separate
Transfers to each such separate Transfer on a proportionate basis.
11
SECTION 5.4(a)(i) - SUBSIDIARIES
SUBSIDIARY NUMBER OF SHARES JURISDICTION OF INCORPORATION
Mankato Citizens Telephone Company 429,714 Minnesota
Mid-Communications, Inc. 13,791 Minnesota
Cable Network, Inc. 3,000 Minnesota
Amana Colonies Telephone Company 100,000 Minnesota
Computoservice, Inc. (a) 560 Minnesota
Xxxxxxx Communications System Co. 16,053 Minnesota
Digital Techniques, Inc. 477,057 Texas
Crystal Communications, Inc. 1,000 Minnesota
Heartland Telecommunications
Company of Iowa 1,000 Minnesota
All such subsidiaries are 100%-owned by Hickory Tech Corporation.
(a) Includes a wholly owned subsidiary, National Independent
Billing, Inc., a Minnesota corporation
SECTION 5.4(a)(ii) -- AFFILIATES OTHER THAN SUBSIDIARIEs
-None-
SCHEDULE 5.4
(to Note Purchase Agreement)
SECTION 5.4(a)(iii) -- DIRECTORS AND SENIOR OFFICERS OF COMPANy
DIRECTORS
Xxxxxx X. Xxxxx, Xx.
Xxxx X. Xxxxxxxx
Xxxxxx X. Else
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
R. Xxxx Xxxxxxx, Xx.
Starr X. Xxxxxxx
Xxxxx X. Xxxxxx, Xx.
OFFICERS
Xxxxxx X. Xxxxx, Xx. - Chairman, President
and Chief Executive Officer
Xxx X. Xxxxxxxx - Vice President
Xxxxxx X. Xxxxxxxx - Vice President
Xxxxx X. Xxxxxxxxxxx - Vice President, Chief
Financial Officer, Treasurer and Secretary
Xxxx X. Xxxxxx - Vice President
Xxxxx X. Xxxxxxxx - Vice President
Xxxxx X. Xxxxxx - Vice President
2
The financial statements delivered to each purchaser:
DELIVERED IN CONJUNCTION WITH CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
Annual Report for Year ended December 31, 1995
SEC Form 10-K for Year ended December 31, 1995
DELIVERED SUBSEQUENT TO PURCHASER'S BID ACCEPTANCE:
Annual Report for Year ended December 31, 1996
SCHEDULE 5.5
(to Note Purchase Agreement)
GOVERNMENTAL AUTHORIZATIONS
On May 30, 1996, the Iowa Utilities Board approved the Acquisition.
On June 25, 1996, the South Dakota Public Utilities Commission approved the
Acquisition.
On September 9, 1996, the Minnesota Public Utilities Commission approved the
Acquisition.
(Note: three states were involved because of customer location)
On February 14, 1997, the Federal Communications Commission approved an
application in connection with the Acquisition, and this constituted final
regulatory approval.
On March 4, 1997 the Federal Trade Commission ruled on the Premerger
Notification filing (Xxxx-Xxxxx-Xxxxxx Antitrust Act) in connection with the
Acquisition and granted authorization without comment.
SCHEDULE 5.7
(to Note Purchase Agreement)
HICKORY TECH CORPORATION AND SUBSIDIARIES
DEBT DESCRIPTIONS FOLLOWED BY COLLATERAL
Amounts as of 12/31/96
See following excerpt from 12/31/96 Annual Report
NOTE 6 - DEBT
Long-term debt consists of the following:
(DOLLARS IN THOUSANDS) 1996 1995
---- ----
1. Notes Payable to Rural Utilities
Service, 2% Due November 2003 $ 935 $1,119
2. Notes Payable to Rural Telephone
Bank, 4% Due April 2007 154 174
----- ------
TOTAL 1,089 1,293
Less Current Maturities 212 206
----- ------
Long-Term Debt $ 887 $1,087
===== ======
The collateral for the notes payable to the Rural Utilities Service (RUS) and
the Rural Telephone Bank (RTB) is exclusively the property, plant and
equipment of Mid-Communications, Inc.
Annual requirements for principal payments for the four years subsequent to
1997 are as follows: 1998 -- $217,100; 1999 -- $222,900; 2000 -- $229,800 and
2001 -- $237,700.
In July, 1996, the Company secured a $10 million line of credit arrangement
with a local bank. This line of credit will be used for general corporate
purposes including interim financing for acquisitions. The line of credit
provides for borrowing at a variable annual rate of LIBOR plus 1.5%. There
are no material compensating balances or commitment fee requirements under
this arrangement.
SCHEDULE 5.15
(to Note Purchase Agreement)
[FORM OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND CANNOT BE RESOLD EXCEPT PURSUANT
TO REGISTRATION UNDER SAID ACT AND ANY NECESSARY STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM.
HICKORY TECH CORPORATION
7.11% SENIOR NOTE DUE APRIL 1, 2012
No. [_________] [Date]
$[____________] PPN 429060 A* 7
FOR VALUE RECEIVED, the undersigned, Hickory Tech Corporation
(herein called the "COMPANY"), a corporation organized and existing under the
laws of the State of Minnesota, hereby promises to pay to [________________],
or registered assigns, the principal sum of [________________] DOLLARS on
April 1, 2012 with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.11%
per annum from the date hereof, payable semiannually, on the first day of
April and October in each year, commencing with the April or October next
succeeding the date hereof, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the greater of (i) 9.11% or (ii)
2.00% over the rate of interest publicly announced by The Chase Manhattan
Bank N.A. from time to time in New York, New York as its "base" or "prime"
rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of the Company in Mankato, Minnesota or at
such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements referred
to below.
This Note is one of a series of Senior Notes (herein called the
"NOTES") issued pursuant to separate Note Purchase Agreements, dated as of
April 1, 1997 (as from time to time amended, the "NOTE PURCHASE AGREEMENTS"),
between the Company and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions
set forth in Section 20 of the Note Purchase Agreements and (ii) to have made
the representation set forth in Section 6.2 of the Note Purchase Agreements
PROVIDED that such holder may (in reliance upon information provided by the
Company, which shall not be
EXHIBIT 1
(to Note Purchase Agreement)
unreasonably withheld) make a representation to the effect that the purchase
by such holder of any Note will not constitute a non-exempt prohibited
transaction under section 406(a) of ERISA.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment
and for all other purposes, and the Company will not be affected by any
notice to the contrary.
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreements. This Note is
also subject to optional prepayment, in whole or from time to time in part,
at the times and on the terms specified in the Note Purchase Agreements, but
not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
This Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of
Minnesota excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State.
HICKORY TECH CORPORATION
By
----------------------------
----------------------------
[Title]
EXHIBIT 1-2
FORM OF OPINION OF SPECIAL COUNSEL
TO THE COMPANY
The closing opinion of _______________________, counsel for the
Company which is called for by Section 4.4(a) of the Note Purchase
Agreements, shall be dated the date of the Closing and addressed to you and
the Other Purchasers, shall be satisfactory in scope and form to you and the
Other Purchasers and shall be to the effect that:
EXHIBIT 4.4(a)
(to Note Purchase Agreement)
FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
The closing opinion of Xxxxxxx and Xxxxxx, special counsel to the
Purchasers, called for by Section 4.4(b) of the Note Purchase Agreements,
shall be dated the date of the Closing and addressed to you and the Other
Purchasers, shall be satisfactory in form and substance to you and the Other
Purchasers and shall be to the effect that:
1. The Company is a corporation validly existing and in good
standing under the laws of the State of Minnesota, and has the
corporate power and the corporate authority to execute and deliver the
Note Purchase Agreements and to issue the Notes.
2. Each Note Purchase Agreement has been duly authorized by
all necessary corporate action on the part of the Company, has been
duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether the application of
such principles is considered in a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed
and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreements do not,
under existing law, require the registration of the Notes under the
Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.
The opinion of Xxxxxxx and Xxxxxx shall also state that the opinion
of Xxxxxx & Whitney LLP and Xxxxxxx, Xxxx & Xxxxxx, counsel for the Company,
is satisfactory in scope and form to Xxxxxxx and Xxxxxx and that, in their
opinion, you and the Other Purchasers are justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, Xxxxxxx and
Xxxxxx may rely solely upon an examination of the Articles of Incorporation
certified by, and a certificate of good standing of the Company from, the
Secretary of State and the By-laws of the Company.
With respect to matters of fact upon which such opinion is based,
Xxxxxxx and Xxxxxx may rely on appropriate certificates of public officials
and officers of the Company and upon representations of the Company, the
Other Purchasers and you delivered in connection with the issuance and sale
of the Notes. The opinion of Xxxxxxx and Xxxxxx may be limited to the laws of
the State of Illinois, and the Federal laws of the United States.
1
Exhibit 10(d)
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (this "Agreement") is entered into
as of the 25th day of June, 1998, by and between Hickory Tech Corporation, a
Minnesota corporation (the "Company"), and Xxxxxx X. Xxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive has heretofore devoted substantial skill and
effort to the affairs of the Company, and the Board of Directors of the
Company desires to recognize the significant personal contribution that the
Executive has made to further the best interests of the Company; and
WHEREAS, it is desirable and in the best interests of the Company
and its stockholders to continue to obtain the benefits of the Executive's
services and attention to the affairs of the Company, and
WHEREAS, it is desirable and in the best interests of the Company
and its stockholders to provide inducement for the Executive (1) to remain in
the service of the Company in order to facilitate an orderly transition in
the event of a change in control of the Company and (2) to remain in the
service of the Company in the event of any threatened or anticipated change
in control of the Company; and
WHEREAS, it is desirable and in the best interests of the Company
and its stockholders that the Executive be in a position to make judgments
and take actions with respect to proposed change in control of the Company
without regard to the possibility that his or her employment may be
terminated without compensation in the event of certain changes in control of
the Company; and
WHEREAS, the Executive desires to be protected in the event of
certain changes in control of the Company; and
WHEREAS, for the reasons set forth above, the Company and the
Executive desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the facts recited above and the
mutual covenants and agreements contained herein, the Company and the
Executive agree as follows:
1. RIGHT TO PAYMENT. If (A) the Executive's employment with the Company or its
Successor is terminated within three (3) years following an Event (as
defined in Paragraph 2 below) for any reason other than a reason permitted
in Paragraph 3 below, or (B) the Executive voluntarily terminates his or
her employment within a period of thirty (30) days following the first
anniversary of an Event, then the Executive shall be entitled to receive
the Benefits set out in Paragraph 4 below. If a subsequent Event occurs,
and if the Executive did not receive Benefits under this Agreement as a
result of any prior Event, the three (3) year period shall be renewed upon
the occurrence of each subsequent Event and the other provisions of this
Agreement shall be applied accordingly.
2. CHANGE OF CONTROL EVENTS. An "Event" shall be deemed to have occurred if:
(a) A majority of the directors of the Company shall be persons other
than persons
(1) for whose election proxies shall have been solicited by
the Board of Directors of the
1
Company; or
(2) who are then serving as directors and who were initially
appointed or elected by the Board of Directors to fill
vacancies on the Board of Directors caused by death or
resignation (but not by removal), or to fill newly
created directorships created by the Board of Directors;
provided, however, that a person shall not be deemed to
be a director subject to clause (1) or (2), above, if his
or her initial assumption of office occurs as a result of
an actual or threatened election contest with respect to
the threatened election or removal of directors (or other
actual or threatened solicitation of proxies or consents)
by or on behalf of any person other than the Board of
Directors of the Company.
(b) 30% or more of the outstanding voting stock of the Company or all
or substantially all of the assets or stock of the Company is
acquired or beneficially owned (as defined in Rule 13d-3 under the
Securities and Exchange Act of 1934, as amended, or any successor
rule thereto), directly or indirectly, by any Person (other than
by the Company, a subsidiary of the Company, an employee benefit
plan (or related trust) sponsored or maintained by the Company or
one or more of its subsidiaries, or by the Employee or a group of
persons, including the Employee, acting in concert) or group of
Persons, acting in concert, whether by acquisition of assets,
merger, consolidation, statutory share exchange (other than a
merger, consolidation or statutory share exchange described in
clause (c)(i) or (ii), below), tender offer, exchange offer, or
otherwise;
(c) The Company is merged into or consolidated with another
corporation (other than a subsidiary of the Company) on a
statutory share exchange for the Company's outstanding voting
stock of any class is consummated unless (i) a majority of the
voting power of the voting stock of the surviving corporation is,
immediately following the merger, consolidation or statutory share
exchange, beneficially owned, directly or indirectly, by the
Employee (or a group of Persons, including the Employee, acting in
concert) or (ii) immediately following the merger, consolidation
or statutory share exchange, more than 70% of the voting power of
the voting stock of the surviving corporation is beneficially
owned, directly or indirectly, by the persons who beneficially
owned voting stock of the Company immediately prior to such
merger, consolidation or statutory share exchange in substantially
the same proportion as their ownership of the voting stock of the
Company immediately prior to such merger, consolidation or
statutory share exchange; or
(d) The shareholders of the Company approve the complete liquidation
or dissolution of the Company.
3. TERMINATION NOT ENTITLING EXECUTIVE TO BENEFITS. The Executive shall not be
entitled to the Benefits set out in Paragraph 4 if his or her employment is
terminated during the three (3) year period following an Event for any of
the following reasons:
(a) DEATH. The Executive's death.
(b) DISABILITY. The Executive's disability. "Disability" shall mean
the inability of the Executive to perform the duties and
responsibilities of his or her employment by reasons of illness or
other physical or mental impairment or condition, if such
inability continues for an uninterrupted period of one hundred
eighty (180) calendar days or more. A period of inability shall be
"uninterrupted" unless and until the Executive returns to
full-time work for a continuous period of at least thirty (30) out
of thirty-two (32) business days.
2
(1) The determination of whether the Executive is suffering
from a "disability" as defined herein shall be made in the
first instance by the Executive's treating physician. At
the Company's sole discretion, however, the Company can
request that the Executive be examined by a physician of
the Company's own choosing. If the physician chosen by the
Company disagrees with the determination made by the
Executive's treating physician, then the Company and
Executive shall jointly pick a third physician whose
determination shall be conclusive and binding.
(2) The Executive agrees to make himself or herself available
for and to submit to examinations by such physicians as
may be requested by the Company. The Executive's failure
to submit to examinations by such physicians as may be
requested by the Company shall disqualify Executive from
receiving Benefits under this Agreement.
(c) VOLUNTARY TERMINATION. The Executive's voluntary retirement or
voluntary termination of employment. However, the Executive's
retirement or termination of employment shall not be considered
voluntary if, following the Event, one or more of the following
has occurred (unless the Executive has expressly consented thereto
in writing):
(1) There has been a failure to provide the Executive with
substantially equivalent reporting responsibilities,
titles, offices or positions, or Executive has been
removed from, or has not been re-elected to, any of such
positions, which has the effect of materially diminishing
the Executive's responsibility or authority;
(2) There has been a failure to provide the Executive with
substantially equivalent (or greater) salary or other
remuneration or fringe benefits;
(3) There has been a failure to provide the Executive with
substantially equivalent office space, furniture,
secretarial or administrative support, or other working
conditions, or
(4) Executive has been required to perform his or her
services in an area other than the Executive's regularly
assigned geographical location at the time of the Event,
or to do substantially more job related traveling.
(d) INVOLUNTARY TERMINATION FOR CAUSE. The Executive's involuntary
termination "for cause." "For cause" shall mean:
(1) A persistent failure by the Executive to perform the
duties and responsibilities of his or her job, which
failure is willful and deliberate on the Executive's part
and is not remedied within a reasonable period of time
after the Executive's receipt of written notice from the
Company or its Successor specifying the act or omission
constituting such failure;
(2) An act or acts of dishonesty undertaken by the Executive
and intended to result in substantial gain or personal
enrichment of the Executive at the expense of the Company
or its Successor;
(3) Unlawful conduct or gross misconduct that is willful and
deliberate on the Executive's part and that, in either
event, is materially injurious to the Company or
3
its Successor; or
(4) The conviction of the Executive of a felony.
(e) SUBSEQUENT OCCURRENCES. If the Executive's employment is
terminated under circumstances in which Executive would be
entitled to Benefits as defined in Paragraph 4, and thereafter
there is an occurrence that would have justified the termination
of the Executive's employment with no entitlement to Benefits
(such as the Executive's death, disability, voluntary termination,
or involuntary termination for cause [all as defined above in this
Paragraph]), that subsequent occurrence shall not disqualify the
Executive (or the Executive's legal representative) from receiving
or continuing to receive the Benefits provided under this
Agreement.
4. BENEFITS. If the Executive's employment is terminated under circumstances
entitling the Executive to Benefits, the Executive shall receive the
following:
(a) LUMP SUM PAYMENT. The Executive shall be entitled to a lump sum
cash payment in the amount of One Month's Salary times 35.88. One
Month's Salary shall be determined by taking the Executive's
highest annual compensation for a calendar year (including salary,
bonuses, and other incentive payments) during the five-year period
prior to the Executive's termination and dividing that amount by
twelve (12). This lump sum payment shall be made by the Company or
its Successor at the time of the Executive's termination of
employment, and shall be subject to withholding of all taxes and
other amounts required by law to be withheld or paid to others.
(b) In the event it shall be determined that any payment or
distribution by the Company or other amount with respect to the
Company to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, (a "Payment"), is (or will be)
subject to the excise tax imposed by Section 280G of the Internal
Revenue Code or any interest or penalties are (or will be)
incurred by the Executive with respect to the excise tax imposed
by Section 280G of the Internal Revenue Code with respect to the
Company (the excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the
Executive shall be entitled to receive an additional cash payment
(a "Gross-Up Payment") from the Company in an amount equal to the
sum of the Excise Tax and an amount sufficient to pay the
cumulative Excise Tax and all cumulative income taxes (including
any interest and penalties imposed with respect to such taxes)
relating to the Gross-Up Payment so that the net amount retained
by the Executive is equal to all payments received pursuant to the
terms of this Agreement or otherwise (prior to income taxes with
respect to such payments).
(c) All determinations required to be made to determine whether and
when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at
the determination shall be made by a nationally recognized
certified public accounting firm designated by the Executive (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 30 days
after the receipt of notice from the Executive that there has been
a Payment, or such earlier time as is requested by the Company. In
the event that at any time relevant to this Agreement the
Accounting Firm is serving as accountant or auditor for the
individual, entity or group or Person effecting the Change in
Control, the executive shall appoint another nationally recognized
certified public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred
to as the "Accounting Firm" hereunder). All
4
fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined in accordance
with this Section, shall be paid by the Company to the Executive
within five days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall so indicate to the
Executive in writing. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive.
(d) CONTINUED INSURANCE COVERAGE. The Executive shall be entitled to
continuation of his or her Company-provided insurance coverage
(health, life, dental, accidental death and dismemberment, and any
other applicable health and welfare benefit programs excluding
short and long-term disability) for 2.99 years after the
Executive's employment termination, at the same levels and
coverages and on the same terms and conditions as if the Executive
were still an active employee of the Company or its Successor
throughout such period, including the right (if provided to active
employees) to elect spousal or family coverage. In the event that
the participation of the Executive in any such insurance plan or
program is barred, the Company or its Successor, at its sole cost
and expense, shall arrange to provide the Executive with benefits
substantially similar to those which the Executive would otherwise
be entitled to receive under such plans and programs.
Notwithstanding the foregoing, however, the Company or its
Successor shall not be required to provide any continuation
coverage under this subparagraph 4(b) to the extent that such
coverage is duplicative of any coverage the Executive is receiving
under any other policy provided at the expense of the Company or
another employer.
5. BENEFITS OFFSET BY OTHER SEVERANCE PAYMENTS. The lump sum payment provided
in subparagraph 4(a) shall be in addition to any salary or other
remuneration otherwise payable to the Executive on account of the
Executive's employment by the Company or its Successor. This payment shall
be in lieu of any severance payments under any other agreement resulting
from his or her termination of employment with the Company or its
Successor, and any payments the Executive receives pursuant to any
individual income continuation agreements between the Company or its
Successor and the Executive.
6. NO DUTY TO MITIGATE. The Executive shall not be required to mitigate the
amount of any payment or other benefit provided for in Paragraph 4 by
seeking other employment or otherwise, nor (except as specifically provided
in subparagraph 4(d) and paragraphs 5 above) shall the amount of any
payment or other benefit provided for in Paragraph 4 be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Executive's employment termination.
7. DEFINITION OF CERTAIN TERMS.
(a) SUCCESSOR. "Successor" means any Person that succeeds to the
business of the Company through merger, consolidation, or
acquisition, including any Person acquiring all or substantially
all of the assets or stock of the Company.
(b) PERSON. "Person" means an individual, partnership, corporation,
estate, trust, or other entity.
8. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the benefit of
the legal representatives, successors, and assigns of the parties
hereto; provided, however, that the Executive shall not have any
right to assign, pledge, or otherwise dispose of or transfer any
interest in this Agreement or any payments hereunder, whether
directly or indirectly or in whole or in part,
5
without the written consent of the Company or its Successor.
(b) The Company will require any Successor, by agreement in form and
substance satisfactory to the Executive, to assume expressly and
agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place.
9. ATTORNEYS' FEES, COSTS AND INTEREST. If the Executive (or the Executive's
legal representative) successfully challenges, in whole or in part, the
refusal of the Company or its Successor to provide Benefits under this
Agreement or to abide by any other provision of this Agreement, then the
Company or its Successor shall pay to the Executive (or the Executive's
legal representative):
(a) All legal fees, costs, disbursements, and expenses incurred as a
result of the refusal to provide Benefits or to abide by the other
provisions of the Agreement; and
(b) Interest on any funds (or on the fair market value of any
benefits) that were wrongfully withheld by the Company or its
Successor, calculated by reference to the prime rate as in effect
during the applicable period.
10. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Minnesota, without giving effect to principles of
conflicts of laws.
11. NOTICES. All notices, requests, and demands given to or made pursuant
hereto shall be in writing and be either hand-delivered or mailed to any
such party at its address which:
(a) In the case of the Company shall be:
Hickory Tech Corporation
000 Xxxx Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
(b) In the case of the Executive shall be:
Xxxxxx X. Xxxxx
000 Xxxxx Xxx
Xxxxxxx, XX 00000
Either party may, by notice hereunder, designate a changed address. Any
notice, if properly addressed and sent prepaid by registered or
certified mail, shall be deemed dispatched on the registered date or
that stamped on the certified mail receipt, and shall be deemed
received within the second business day thereafter or when it is
actually received, whichever is sooner. Any notice sent regular mail or
hand-delivered shall be deemed received when it is actually received by
the other party.
12. SEVERABILITY. In the event that any portion of this Agreement may be held
to be invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect the other portions of this Agreement, and
any court of competent jurisdiction may so modify the objectionable
provision as to make it valid, reasonable, and enforceable.
6
13. INCENTIVE COMPENSATION PLAN AND STOCK OPTIONS. In the case of a payment
being due as described in Paragraph 1, the Executive's benefits under the
HTC Executive Incentive Plan, and any outstanding stock options or awards
issued to the Executive (including restricted stock and performance
shares), shall immediately become fully vested.
7
14. AMENDMENT OR TERMINATION OF THIS AGREEMENT.
(a) PRIOR TO THE OCCURRENCE OF AN EVENT. Prior to the occurrence of an
Event, the Company, by resolution of the Compensation Committee of
the Board of Directors, has the unilateral power to amend or
terminate this Agreement at any time and for any reason, and may
do so without the Executive's consent. Notwithstanding the
foregoing, however:
(1) No such amendment or termination of this Agreement shall
be effective with respect to the Executive until two
weeks following the date that Executive is provided with
written notice of the change.
(2) No such amendment or termination of this Agreement shall
be effective with respect to the Executive, unless
otherwise agreed by the Executive, if an Event occurs
during the one-year period following the date of adoption
of the resolution amending or terminating this Agreement.
(b) AFTER THE OCCURRENCE OF AN EVENT. After the occurrence of an
Event, the Company, by resolution of the Compensation Committee of
the Board of Directors, can amend or terminate this Agreement, but
no such amendment or termination of this Agreement shall be
effective unless the Executive consents thereto in writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set out above.
EXECUTIVE HICKORY TECH CORPORATION
By:
------------------------------ ----------------------------
Name Its:
------------------------
8
Exhibit 10(e)
Exhibit 10(e) note: There were Change in Control Agreements executed
identical to the agreement filed herewith between registrant and the
following six officers Xxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxxxxx, Xxxx X. Xxxxx,
Xxxx X. Xxxxxx, F. Xxxxxx Xxxxxxx and Xxxxx X. Xxxxxxxx.
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (this "Agreement") is entered into
as of the 25th day of June, 1998, by and between Hickory Tech Corporation, a
Minnesota corporation (the "Company"), and Xxx X. Xxxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive has heretofore devoted substantial skill and
effort to the affairs of the Company, and the Board of Directors of the
Company desires to recognize the significant personal contribution that the
Executive has made to further the best interests of the Company; and
WHEREAS, it is desirable and in the best interests of the Company
and its stockholders to continue to obtain the benefits of the Executive's
services and attention to the affairs of the Company, and
WHEREAS, it is desirable and in the best interests of the Company
and its stockholders to provide inducement for the Executive (1) to remain in
the service of the Company in order to facilitate an orderly transition in
the event of a change in control of the Company and (2) to remain in the
service of the Company in the event of any threatened or anticipated change
in control of the Company; and
WHEREAS, it is desirable and in the best interests of the Company
and its stockholders that the Executive be in a position to make judgments
and take actions with respect to proposed change in control of the Company
without regard to the possibility that his or her employment may be
terminated without compensation in the event of certain changes in control of
the Company; and
WHEREAS, the Executive desires to be protected in the event of
certain changes in control of the Company; and
WHEREAS, for the reasons set forth above, the Company and the
Executive desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the facts recited above and the
mutual covenants and agreements contained herein, the Company and the Executive
agree as follows:
2. RIGHT TO PAYMENT. If (A) the Executive's employment with the Company or its
Successor is terminated within three (3) years following an Event (as
defined in Paragraph 2 below) for any reason other than a reason permitted
in Paragraph 3 below, or (B) the Executive voluntarily terminates his or
her employment within a period of thirty (30) days following the first
anniversary of an Event, then the Executive shall be entitled to receive
the Benefits set out in Paragraph 4 below. If a subsequent Event occurs,
and if the Executive did not receive Benefits under this Agreement as a
result of any prior Event, the three (3) year period shall be renewed upon
the occurrence of each subsequent Event and the other provisions of this
Agreement shall be applied accordingly.
3. CHANGE OF CONTROL EVENTS. An "Event" shall be deemed to have occurred if:
(b) A majority of the directors of the Company shall be persons other
than persons
(2) for whose election proxies shall have been solicited by
the Board of Directors of the Company; or
(3) who are then serving as directors and who were initially
appointed or elected by the
1
Board of Directors to fill vacancies on the Board of
Directors caused by death or resignation (but not by
removal), or to fill newly created directorships
created by the Board of Directors; provided, however,
that a person shall not be deemed to be a director
subject to clause (1) or (2), above, if his or her
initial assumption of office occurs as a result of
an actual or threatened election contest with respect to
the threatened election or removal of directors (or other
actual or threatened solicitation of proxies or consents)
by or on behalf of any person other than the Board of
Directors of the Company.
(d) 30% or more of the outstanding voting stock of the Company or all
or substantially all of the assets or stock of the Company is
acquired or beneficially owned (as defined in Rule 13d-3 under the
Securities and Exchange Act of 1934, as amended, or any successor
rule thereto), directly or indirectly, by any Person (other than
by the Company, a subsidiary of the Company, an employee benefit
plan (or related trust) sponsored or maintained by the Company or
one or more of its subsidiaries, or by the Employee or a group of
persons, including the Employee, acting in concert) or group of
Persons, acting in concert, whether by acquisition of assets,
merger, consolidation, statutory share exchange (other than a
merger, consolidation or statutory share exchange described in
clause (c)(i) or (ii), below), tender offer, exchange offer, or
otherwise;
(e) The Company is merged into or consolidated with another
corporation (other than a subsidiary of the Company) on a
statutory share exchange for the Company's outstanding voting
stock of any class is consummated unless (i) a majority of the
voting power of the voting stock of the surviving corporation is,
immediately following the merger, consolidation or statutory share
exchange, beneficially owned, directly or indirectly, by the
Employee (or a group of Persons, including the Employee, acting in
concert) or (ii) immediately following the merger, consolidation
or statutory share exchange, more than 70% of the voting power of
the voting stock of the surviving corporation is beneficially
owned, directly or indirectly, by the persons who beneficially
owned voting stock of the Company immediately prior to such
merger, consolidation or statutory share exchange in substantially
the same proportion as their ownership of the voting stock of the
Company immediately prior to such merger, consolidation or
statutory share exchange; or
(e) The shareholders of the Company approve the complete liquidation
or dissolution of the Company.
4. TERMINATION NOT ENTITLING EXECUTIVE TO BENEFITS. The Executive shall not be
entitled to the Benefits set out in Paragraph 4 if his or her employment is
terminated during the three (3) year period following an Event for any of
the following reasons:
(b) DEATH. The Executive's death.
(c) DISABILITY. The Executive's disability. "Disability" shall mean
the inability of the Executive to perform the duties and
responsibilities of his or her employment by reasons of illness or
other physical or mental impairment or condition, if such
inability continues for an uninterrupted period of one hundred
eighty (180) calendar days or more. A period of inability shall be
"uninterrupted" unless and until the Executive returns to
full-time work for a continuous period of at least thirty (30) out
of thirty-two (32) business days.
(2) The determination of whether the Executive is suffering
from a "disability" as defined herein shall be made in
the first instance by the Executive's treating
2
physician. At the Company's sole discretion, however,
the Company can request that the Executive be examined
by a physician of the Company's own choosing. If the
physician chosen by the Company disagrees with the
determination made by the Executive's treating physician,
then the Company and Executive shall jointly pick a
third physician whose determination shall be conclusive
and binding.
(3) The Executive agrees to make himself or herself available
for and to submit to examinations by such physicians as
may be requested by the Company. The Executive's failure
to submit to examinations by such physicians as may be
requested by the Company shall disqualify Executive from
receiving Benefits under this Agreement.
(d) VOLUNTARY TERMINATION. The Executive's voluntary retirement or
voluntary termination of employment. However, the Executive's
retirement or termination of employment shall not be considered
voluntary if, following the Event, one or more of the following
has occurred (unless the Executive has expressly consented thereto
in writing):
(2) There has been a failure to provide the Executive with
substantially equivalent reporting responsibilities,
titles, offices or positions, or Executive has been
removed from, or has not been re-elected to, any of such
positions, which has the effect of materially diminishing
the Executive's responsibility or authority;
(3) There has been a failure to provide the Executive with
substantially equivalent (or greater) salary or other
remuneration or fringe benefits;
(4) There has been a failure to provide the Executive with
substantially equivalent office space, furniture,
secretarial or administrative support, or other working
conditions, or
(5) Executive has been required to perform his or her
services in an area other than the Executive's regularly
assigned geographical location at the time of the Event,
or to do substantially more job related traveling.
(e) INVOLUNTARY TERMINATION FOR CAUSE. The Executive's involuntary
termination "for cause." "For cause" shall mean:
(2) A persistent failure by the Executive to perform the
duties and responsibilities of his or her job, which
failure is willful and deliberate on the Executive's part
and is not remedied within a reasonable period of time
after the Executive's receipt of written notice from the
Company or its Successor specifying the act or omission
constituting such failure;
(3) An act or acts of dishonesty undertaken by the Executive
and intended to result in substantial gain or personal
enrichment of the Executive at the expense of the Company
or its Successor;
(4) Unlawful conduct or gross misconduct that is willful and
deliberate on the Executive's part and that, in either
event, is materially injurious to the Company or its
Successor; or
(5) The conviction of the Executive of a felony.
3
(f) SUBSEQUENT OCCURRENCES. If the Executive's employment is
terminated under circumstances in which Executive would be
entitled to Benefits as defined in Paragraph 4, and thereafter
there is an occurrence that would have justified the termination
of the Executive's employment with no entitlement to Benefits
(such as the Executive's death, disability, voluntary termination,
or involuntary termination for cause [all as defined above in this
Paragraph]), that subsequent occurrence shall not disqualify the
Executive (or the Executive's legal representative) from receiving
or continuing to receive the Benefits provided under this
Agreement.
5. BENEFITS. If the Executive's employment is terminated under circumstances
entitling the Executive to Benefits, the Executive shall receive the
following:
(b) LUMP SUM PAYMENT. The Executive shall be entitled to a lump sum
cash payment in the amount of One Month's Salary times 24. One
Month's Salary shall be determined by taking the Executive's
highest annual compensation for a calendar year (including salary,
bonuses, and other incentive payments) during the five-year period
prior to the Executive's termination and dividing that amount by
twelve (12). This lump sum payment shall be made by the Company or
its Successor at the time of the Executive's termination of
employment, and shall be subject to withholding of all taxes and
other amounts required by law to be withheld or paid to others.
(e) In the event it shall be determined that any payment or
distribution by the Company or other amount with respect to the
Company to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, (a "Payment"), is (or will be)
subject to the excise tax imposed by Section 280G of the Internal
Revenue Code or any interest or penalties are (or will be)
incurred by the Executive with respect to the excise tax imposed
by Section 280G of the Internal Revenue Code with respect to the
Company (the excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the
Executive shall be entitled to receive an additional cash payment
(a "Gross-Up Payment") from the Company in an amount equal to the
sum of the Excise Tax and an amount sufficient to pay the
cumulative Excise Tax and all cumulative income taxes (including
any interest and penalties imposed with respect to such taxes)
relating to the Gross-Up Payment so that the net amount retained
by the Executive is equal to all payments received pursuant to the
terms of this Agreement or otherwise (prior to income taxes with
respect to such payments).
(f) All determinations required to be made to determine whether and
when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at
the determination shall be made by a nationally recognized
certified public accounting firm designated by the Executive (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 30 days
after the receipt of notice from the Executive that there has been
a Payment, or such earlier time as is requested by the Company. In
the event that at any time relevant to this Agreement the
Accounting Firm is serving as accountant or auditor for the
individual, entity or group or Person effecting the Change in
Control, the executive shall appoint another nationally recognized
certified public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred
to as the "Accounting Firm" hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined in accordance with this Section,
shall be paid by the Company to the Executive within five days
after the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the
4
Executive, it shall so indicate to the Executive in writing. Any
determination by the Accounting Firm shall be binding upon the
Company and the Executive.
(g) CONTINUED INSURANCE COVERAGE. The Executive shall be entitled to
continuation of his or her Company-provided insurance coverage
(health, life, dental, accidental death and dismemberment, and any
other applicable health and welfare benefit programs excluding
short and long-term disability) for two years after the
Executive's employment termination, at the same levels and
coverages and on the same terms and conditions as if the Executive
were still an active employee of the Company or its Successor
throughout such period, including the right (if provided to active
employees) to elect spousal or family coverage. In the event that
the participation of the Executive in any such insurance plan or
program is barred, the Company or its Successor, at its sole cost
and expense, shall arrange to provide the Executive with benefits
substantially similar to those which the Executive would otherwise
be entitled to receive under such plans and programs.
Notwithstanding the foregoing, however, the Company or its
Successor shall not be required to provide any continuation
coverage under this subparagraph 4(b) to the extent that such
coverage is duplicative of any coverage the Executive is receiving
under any other policy provided at the expense of the Company or
another employer.
6. BENEFITS OFFSET BY OTHER SEVERANCE PAYMENTS. The lump sum payment provided
in subparagraph 4(a) shall be in addition to any salary or other
remuneration otherwise payable to the Executive on account of the
Executive's employment by the Company or its Successor. This payment shall
be in lieu of any severance payments under any other agreement resulting
from his or her termination of employment with the Company or its
Successor, and any payments the Executive receives pursuant to any
individual income continuation agreements between the Company or its
Successor and the Executive.
7. NO DUTY TO MITIGATE. The Executive shall not be required to mitigate the
amount of any payment or other benefit provided for in Paragraph 4 by
seeking other employment or otherwise, nor (except as specifically provided
in subparagraph 4(d) and paragraphs 5 above) shall the amount of any
payment or other benefit provided for in Paragraph 4 be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Executive's employment termination.
8. DEFINITION OF CERTAIN TERMS.
(b) SUCCESSOR. "Successor" means any Person that succeeds to the
business of the Company through merger, consolidation, or
acquisition, including any Person acquiring all or substantially
all of the assets or stock of the Company.
(c) PERSON. "Person" means an individual, partnership, corporation,
estate, trust, or other entity.
9. SUCCESSORS AND ASSIGNS.
(b) This Agreement shall be binding upon and inure to the benefit of
the legal representatives, successors, and assigns of the parties
hereto; provided, however, that the Executive shall not have any
right to assign, pledge, or otherwise dispose of or transfer any
interest in this Agreement or any payments hereunder, whether
directly or indirectly or in whole or in part, without the written
consent of the Company or its Successor.
(c) The Company will require any Successor, by agreement in form and
substance satisfactory to the Executive, to assume expressly and
agree to perform this Agreement in the same manner
5
and to the same extent that the Company would be required to
perform it if no such succession had taken place.
10. ATTORNEYS' FEES, COSTS AND INTEREST. If the Executive (or the Executive's
legal representative) successfully challenges, in whole or in part, the
refusal of the Company or its Successor to provide Benefits under this
Agreement or to abide by any other provision of this Agreement, then the
Company or its Successor shall pay to the Executive (or the Executive's
legal representative):
(b) All legal fees, costs, disbursements, and expenses incurred as a
result of the refusal to provide Benefits or to abide by the other
provisions of the Agreement; and
(c) Interest on any funds (or on the fair market value of any
benefits) that were wrongfully withheld by the Company or its
Successor, calculated by reference to the prime rate as in effect
during the applicable period.
11. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Minnesota, without giving effect to principles of
conflicts of laws.
12. NOTICES. All notices, requests, and demands given to or made pursuant
hereto shall be in writing and be either hand-delivered or mailed to any
such party at its address which:
(b) In the case of the Company shall be:
Hickory Tech Corporation
000 Xxxx Xxxxxxx Xxxxxx
P.O. Box 3248
Mankato, MN 56002-3248
(c) In the case of the Executive shall be:
Xxx X. Xxxxxxxx
00000 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Either party may, by notice hereunder, designate a changed address. Any
notice, if properly addressed and sent prepaid by registered or
certified mail, shall be deemed dispatched on the registered date or
that stamped on the certified mail receipt, and shall be deemed
received within the second business day thereafter or when it is
actually received, whichever is sooner. Any notice sent regular mail or
hand-delivered shall be deemed received when it is actually received by
the other party.
13. SEVERABILITY. In the event that any portion of this Agreement may be held
to be invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect the other portions of this Agreement, and
any court of competent jurisdiction may so modify the objectionable
provision as to make it valid, reasonable, and enforceable.
15. INCENTIVE COMPENSATION PLAN AND STOCK OPTIONS. In the case of a payment
being due as described in Paragraph 1, the Executive's benefits under the
HTC Executive Incentive Plan, and any outstanding stock options or awards
issued to the Executive (including restricted stock and performance
shares), shall immediately become fully vested.
6
16. AMENDMENT OR TERMINATION OF THIS AGREEMENT.
(b) PRIOR TO THE OCCURRENCE OF AN EVENT. Prior to the occurrence of an
Event, the Company, by resolution of the Compensation Committee of
the Board of Directors, has the unilateral power to amend or
terminate this Agreement at any time and for any reason, and may
do so without the Executive's consent. Notwithstanding the
foregoing, however:
(2) No such amendment or termination of this Agreement shall
be effective with respect to the Executive until two
weeks following the date that Executive is provided with
written notice of the change.
(3) No such amendment or termination of this Agreement shall
be effective with respect to the Executive, unless
otherwise agreed by the Executive, if an Event occurs
during the one-year period following the date of adoption
of the resolution amending or terminating this Agreement.
(c) AFTER THE OCCURRENCE OF AN EVENT. After the occurrence of an
Event, the Company, by resolution of the Compensation Committee of
the Board of Directors, can amend or terminate this Agreement, but
no such amendment or termination of this Agreement shall be
effective unless the Executive consents thereto in writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set out above.
EXECUTIVE HICKORY TECH CORPORATION
By:
----------------------------- ---------------------------
Name Its:
-----------------------
7
