Exhibit 2.15
STOCK PURCHASE AGREEMENT
among
MJD VENTURES, INC.
XXXX XXXXXXX,
XXXXXXX WINNER
and
THE COLUMBUS GROVE TELEPHONE COMPANY
dated as of November 2, 1998
TABLE OF CONTENTS
This Table of Contents is not part of this Agreement but is attached for
convenience only.
ARTICLE I
PURCHASE OF STOCK......................................................2
Section 1.1 Purchase and Sale....................................2
Section 1.2 Purchase Price.......................................2
Section 1.3 Excluded Assets and Liabilities......................2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BELCH SISTERS ...................3
Section 2.1 Corporate Organization...............................3
Section 2.2 Authorization........................................3
Section 2.3 No Violation.........................................3
Section 2.4 Subsidiaries and Investments.........................4
Section 2.5 Stock Record Book....................................4
Section 2.6 Corporate Books......................................5
Section 2.7 Title to Stock.......................................5
Section 2.8 Options and Rights...................................5
Section 2.9 Financial Statements.................................6
(a) Generally. ...................................6
(b) Absence of Change. ...........................6
Section 2.10 Employees......................................7
Section 2.11 Absence of Certain Changes.....................8
Section 2.12 Contracts......................................8
(a) Generally. ...................................8
(b) Compliance. .................................10
Section 2.13 True and Complete Copies......................10
Section 2.14 Title and Related Matters.....................10
(a) Owned Property. .............................10
(b) Leased Property. ............................11
(c) Liens. ......................................11
(d) Utilities. ..................................11
(e) Condition. ..................................12
Section 2.15 Litigation....................................12
Section 2.16 Tax Matters...................................12
(a) Generally. ..................................12
(b) Good Faith. .................................13
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(c) Claims. .....................................13
(d) Course of Business. .........................13
(e) Withholdings. ...............................13
(f) Partnerships. ...............................13
(g) Accounting Method Adjustments. ..............13
(h) Tax Exemptions. .............................14
(i) Tax Return Reviews. .........................14
(j) Power of Attorney. ..........................14
(k) True and Complete Copies. ....................14
Section 2.17 Bank and Brokerage Accounts...................14
Section 2.18 Compliance with Applicable
Laws, Regulations and Orders..................14
Section 2.19 Employee Benefit Plans........................14
Section 2.20 Intellectual Property.........................18
Section 2.21 Environmental Matters.........................18
(a) Generally. ..................................19
(b) Property. ....................................19
(c) Transportation. .............................19
(d) Notification of Release. ....................19
(e) Liens. ......................................19
(f) Site Assessments. ...........................20
Section 2.22 Capital Expenditures and Invest-
ments.........................................20
Section 2.23 Dealings with Affiliates......................20
Section 2.24 Insurance.....................................20
Section 2.25 Commissions...................................21
Section 2.26 Permits and Reports...........................21
Section 2.27 Absence of Undisclosed Liabilities............22
Section 2.28 Disclosure....................................22
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......................22
Section 3.1 Corporate Organization..............................23
Section 3.2 Authorization.......................................23
Section 3.3 No Violation........................................23
Section 3.4 Investment Intent...................................23
ARTICLE IV
COVENANTS OF THE SELLER AND THE COMPANY...............................24
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Section 4.1 Regular Course of Business..........................24
(a) Generally. ..................................24
(b) Compensation. ...............................24
(c) Insurance. ..................................24
(d) Claims. .....................................24
(e) Supplement. .................................25
Section 4.2 Amendments..........................................25
Section 4.3 Capital Changes.....................................25
Section 4.4 Dividends...........................................25
Section 4.5 Capital Expenditures................................25
Section 4.6 Borrowing...........................................25
Section 4.7 Property............................................26
Section 4.8 Other Commitments...................................26
Section 4.9 Interim Financial Information.......................26
Section 4.10 Consents and Authorizations........................26
Section 4.11 Access.............................................26
Section 4.12 Notice of Transfer.................................26
Section 4.13 Payment of Stamp Tax...............................26
Section 4.14 Disclosure.........................................27
Section 4.15 Cooperation with Purchaser. ......................27
Section 4.16 Reasonable Efforts to Assemble
Company Capital Stock..............................27
ARTICLE V
COVENANTS OF THE PURCHASER............................................28
Section 5.1 Consents and Authorizations.........................28
Section 5.2 Employees. ........................................28
ARTICLE VI
OTHER AGREEMENTS......................................................28
Section 6.1 Agreement to Defend.................................28
Section 6.2 Further Assurances..................................28
Section 6.3 Consents............................................29
Section 6.4 No Solicitation or Negotiation......................29
Section 6.5 No Termination of the Obligations
by Subsequent Dissolution.....................29
Section 6.6 Public Announcements................................29
Section 6.7 Records and Information.............................30
(a) Retention of Records. .......................30
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(b) Access to Information. ......................30
(c) Provisions of Corporate Records. ............30
(d) Witnesses. ..................................30
Section 6.8 Insurance Policies and
Claims Administration.........................31
(a) Insurance Coverage Prior to the
Closing Date. ................................31
(b) Insurance Coverage After the
Closing Date. ...............................31
Section 6.9 Other Tax Matters...................................32
(a) Tax Returns. ................................32
(b) Information. ................................32
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER........................32
Section 7.1 Representations and Warranties......................33
Section 7.2 Consents and Approvals..............................33
Section 7.3 No Material Adverse Change..........................33
Section 7.4 No Proceeding or Litigation.........................34
Section 7.5 Secretary's Certificate.............................34
Section 7.6 Certificates of Good Standing.......................34
Section 7.7 Opinion of Seller's Counsel.........................34
Section 7.8 Noncompetition Agreement............................34
Section 7.9 Consulting Agreement. .............................34
Section 7.10 Resignations.......................................34
Section 7.11 Other Documents....................................34
Section 7.12 Liens..............................................34
Section 7.13 Delivery of Certain Company Capital
Stock. ...........................................35
Section 7.14 Delivery of Minute Books. ........................35
Section 7.15 Delivery of Interim Financial Statements...........35
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS
OF THE BELCH SISTERS..................................................35
Section 8.1 Representations and Warranties......................35
Section 8.2 Consents and Approvals..............................35
Section 8.3 No Proceeding or Litigation.........................36
Section 8.4 Secretary's Certificate.............................36
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Section 8.5 Opinion of Purchaser's Counsel. ...................36
Section 8.6 Excluded Assets Documents. .......................36
Section 8.7 Noncompetition Agreement. .........................36
Section 8.8 Consulting Agreement. .............................36
Section 8.9 Certificate of Good Standing. .....................36
Section 8.10 Other Documents. .................................36
ARTICLE IX
CLOSING...............................................................37
Section 9.1 Closing.............................................37
Section 9.2 Closing Date Payment and Receipt of
Shares from Seller............................37
Section 9.3 Closing Date Payment and Receipt of
Shares from Other Stockholders. .............37
Section 9.4 Purchase of Certain Company Capital
Stock.........................................38
ARTICLE X
TERMINATION AND ABANDONMENT...........................................38
Section 10.1 Methods of Termination........................38
(a) Mutual Consent. .............................38
(b) Seller's Failure to Perform. ................38
(c) Purchaser's Failure to Perform. .............39
(d) Failure to Close by March 31,
1999..........................................39
(e) Material Adverse Change. ....................39
(f) Remedies. ...................................39
Section 10.2 Procedure Upon Termination....................39
(a) Return of Records. ..........................39
(b) Confidentiality. ............................39
ARTICLE XI
SURVIVAL OF TERMS; INDEMNIFICATION....................................40
Section 11.1 Survival; Limitations.........................40
Section 11.2 Escrow of Liquid Assets.......................40
Section 11.3 Indemnification by the Belch
Sisters.......................................41
(a) Misrepresentation or Breach. ................41
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(b) Taxes. ......................................41
(c) Third Party Claims. .........................41
(d) Other.........................................41
(e) Related Expenses. ...........................41
Section 11.4 Indemnification by the Purchaser..............41
(a) Misrepresentation or Breach. ................42
(b) Taxes. ......................................42
(c) Third Party Claims. .........................42
(d) Officers and Directors........................42
(e) Other.........................................42
(f) Related Expenses. ...........................42
Section 11.5 Third Party Claims............................42
(a) Generally. ..................................42
(b) Counsel. ....................................43
Section 11.6 Other Claims..................................44
Section 11.7 Continued Liability for Indemnity
Claims........................................45
Section 11.8 Exclusive Remedy. ...........................45
Section 11.9 Early Release of Escrow Funds
Upon Nonpayment of Xxxxxxx Noncom-
petition Agreement and Consulting
Agreement Obligations Absent Xxxxxxx
Default.......................................46
ARTICLE XII
GENERAL PROVISIONS....................................................46
Section 12.1 Amendment and Modification....................46
Section 12.2 Waiver........................................46
Section 12.3 Certain Definitions...........................46
Section 12.4 Notices.......................................50
Section 12.5 Assignment....................................51
Section 12.6 Governing Law.................................51
Section 12.7 Counterparts..................................51
Section 12.8 Headings......................................51
Section 12.9 Entire Agreement..............................51
Section 12.10 No Benefit....................................52
Section 12.11 Delays or Omissions...........................52
Section 12.12 Severability..................................52
Section 12.13 Expenses......................................52
Section 12.14 Time of the Essence. ........................52
Section 12.15 Injunctive Relief.............................52
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SCHEDULES
1.3 Excluded Assets and Liabilities
2.3 No Violations
2.4 Subsidiaries and Investments
2.5 Capital Stock
2.6 Corporate Books
2.7 List of Shareholders/No Liens on Shares
2.9 Changes Since December 31, 1997
2.10 Employees
2.11 Certain Changes
2.12 Contracts
2.13 Exceptions to Delivery Requirements
2.14(a) Owned Property/Liens
2.14(b) Leased Property
2.14(c) Liens
2.15 Litigation
2.16 Tax Matters
2.17 Bank and Brokerage Accounts
2.19 Employee Benefit Plans
2.20 Intellectual Property
2.21 Environmental Matters
2.22 Capital Expenditures and Investments
2.23 Dealings with Affiliates
2.24 Insurance
2.26 Permits
2.27 Absence of Undisclosed Liabilities/Corporate Debt
3.3 Consents and Authorizations of Purchaser
4.14 Article IV Disclosure Statement
EXHIBITS
A Other Stockholders
7.7 Opinion of Seller's Counsel
7.8 Noncompetition Agreement
7.9 Consulting Agreement
8.5 Opinion of Purchaser's Counsel
11.2 Escrow Agreement
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AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of the
2nd day of November, 1998, among MJD VENTURES, INC., a Delaware corporation (the
"Purchaser"), XXXX XXXXXXX, an Ohio resident ("Xxxxxxx"), XXXXXXX WINNER, an
Ohio resident ("Winner") (Xxxxxxx and Winner collectively referred to
hereinafter as "Seller" or "Sellers"), and THE COLUMBUS GROVE TELEPHONE COMPANY,
an Ohio corporation ("Columbus" or the "Company").
RECITALS
WHEREAS, Xxxxxxx, as Trustee of the Xxxx X. Xxxxxxx Trust u/t/a dated
November 21, 1996, owns 156 shares of common stock of the Company, Winner owns
144 shares of common stock of the Company, and the other stockholders shown on
Exhibit A hereto (the "Other Stockholders"), own 23 shares of common stock of
the Company, the 323 shares, each with a $100.00 par value, constituting all of
the issued and outstanding shares of capital stock of the Company (the "Company
Capital Stock");
WHEREAS, the Company owns 850 shares of common stock, no par value, of
Quality One Technologies, Inc. ("Quality"), constituting all of the issued and
outstanding shares of capital stock of Quality (the "Quality Capital Stock")
(any and all shares, options, warrants, rights and interests, legal or
equitable, in or with respect to the Company Capital Stock and the Quality
Capital Stock hereinafter referred to collectively as the "Shares");
WHEREAS, Columbus is an operating telephone company that provides wireline
telecommunications services in the exchange of Columbus Grove, Ohio, operating
in the Counties of Xxxxxx and Xxxxx, with at least 1649 access lines (the
"Exchange") and Quality owns and operates a cable television franchise and
Internet business in Columbus Grove, Ohio (the "Franchise") (collectively the
businesses of the Company and Quality are hereinafter referred to as the
"Business" or the "business");
WHEREAS, the Seller desires to sell all shares of Company Capital Stock
which Seller owns, and the Purchaser desires to purchase all such shares and all
shares of Company Capital Stock owned by the Other Stockholders, on the terms
and subject to the conditions set forth in this Agreement, Purchaser intends to
acquire thereby indirect ownership of the Quality Capital Stock;
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE OF STOCK
Section 1.1 Purchase and Sale. At the Closing Date, on the terms and
subject to the conditions set forth in this Agreement, the Seller agrees to sell
to the Purchaser, and the Purchaser agrees to purchase from the Seller and the
Other Stockholders, the Company Capital Stock. The Purchaser is desirous of
purchasing all of the Company Capital Stock but understands and acknowledges
that the Belch Sisters may not be able to cause the delivery of all of such
Company Capital Stock.
Section 1.2 Purchase Price. In consideration for the conveyance of the
Company Capital Stock and subject to the conditions set forth in this Agreement,
the Purchaser shall pay to the Seller and the Other Stockholders on the Closing
Date, as provided in Section 9.2 hereof, an amount per share of $15,479.88 for
so many of the 323 shares of the Company Capital Stock (the "Purchase Price") as
are delivered pursuant hereto.
Section 1.3 Excluded Assets and Liabilities. Notwithstanding that this
Agreement relates to the purchase of capital stock from the Seller and the Other
Stockholders by the Purchaser, which results in the Company retaining any and
all of its assets and liabilities, it is understood and agreed that prior to
Closing Xxxxxxx shall remove from the Company's premises and/or, as appropriate,
remove from the Company's books and records, only those particular assets set
forth on Schedule 1.3 hereto (the "Excluded Assets"). Further, Xxxxxxx shall
assume any and all liabilities, if any, set forth on Schedule 1.3 hereto (the
"Excluded Liabilities"). Purchaser agrees that it shall cause the Company to
execute, and Xxxxxxx agrees to execute, any and all such bills of sale, deeds,
assignments and/or agreements as may be necessary to transfer title to the
Excluded Assets to Xxxxxxx and to assign and/or transfer the Excluded
Liabilities to Xxxxxxx. The parties hereto further agree that no other assets of
the Company, whether tangible or intangible, have been removed from the
Company's premises or from the Company's books and records except in the
ordinary course of the Company's Business as provided herein from and after
December 31, 1997 through the date hereof and the parties hereto agree that no
other such assets shall be removed from the Company's premises
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or from the Company's books and records after the date hereof through the
Closing Date without the prior written consent of Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BELCH SISTERS
Xxxxxxx and Winner (herein collectively the "Belch Sisters") hereby
represent and warrant to the Purchaser as follows:
Section 2.1 Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing with perpetual duration under
the laws of its jurisdiction of incorporation, with full corporate power and
authority to own, operate and lease its properties and to conduct its business
as presently conducted. Each Seller is a resident of Ohio. The Stock record book
of Columbus recites that the Other Stockholders are all a resident of either
Ohio or Florida, as shown on Exhibit A to this Agreement. There are no
Shareholder Agreements in place among any of the Sellers. The Company is
qualified to do business and is in good standing in every jurisdiction in which
the conduct of its business, the ownership or lease of its properties, or the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby requires it to be so qualified. True, complete
and correct copies of the Company's charter and by-laws as presently in effect
have been delivered to the Purchaser.
Section 2.2 Authorization. The Seller and the Company each has full power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors (and as appropriate,
the stockholders) of the Company has duly authorized the execution, delivery and
performance of this Agreement, and no other corporate proceedings on its part
are necessary to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement constitutes a legal, valid and binding obligation of each of the
Seller and the Company enforceable against each such party in accordance with
its terms, subject to equitable considerations and the effect of bankruptcy and
other laws affecting the rights of creditors generally. The Seller will, at the
Closing, have full power and authority to deliver the Company Capital Stock and
the certificates evidencing the Company Capital Stock to the Purchaser free and
clear of all Liens as provided for herein.
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Section 2.3 No Violation. Except as set forth on Schedule 2.3, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by each of the Seller and the Company do
not and will not (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) constitute a default or event of default under
(with due notice, lapse of time or both), (c) result in the creation of any Lien
upon the Company or its capital stock or assets pursuant to, (d) give any third
party the right to accelerate any obligation under, (e) result in a violation
of, or (f) require any authorization, consent, approval, exemption or other
action by, or notice to, any Person pursuant to (i) the charter or by-laws of
either the Seller or the Company, (ii) any applicable Regulation, (iii) any
Order to which either the Seller or the Company is subject, or (iv) any Contract
to which the Seller or the Company or any of their properties are subject. The
Seller and the Company have complied with all applicable Regulations and Orders
in connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby, subject to the requirements which are
conditions to the Closing.
Section 2.4 Subsidiaries and Investments. Except as set forth on Schedule
2.4 hereto, except for Quality, Columbus has no subsidiaries, Affiliates or
investments in any Person. Quality has no subsidiaries, investments or
Affiliates. Attached as set forth on Schedule 2.4 is a true and complete
corporate organizational chart for the Company. Except as set forth on Schedule
2.4, the transactions contemplated by this Agreement will not conflict with or
result in a breach of the terms, conditions or provisions of any agreement to
which the Company is a party with respect to any such subsidiaries or
investments, nor, with respect to the Company Capital Stock owned by Seller and
J. Xxxx Xxxxx and Xxxxxx Xxxxxxx (hereafter the "Family Shares"), shall the
transactions contemplated by this Agreement trigger any purchase, put, call or
right of first refusal rights in any Person. Seller has no knowledge that the
transactions contemplated by this Agreement will trigger any purchase, put, call
or right of first refusal rights in any Company Capital Stock owned by any Other
Stockholder. The Quality Capital Stock constitutes an asset of Columbus and
Columbus is the only Person with any rights thereto. Except as set forth on
Schedule 2.4, Columbus does not owe any indebtedness to or on account of
Quality, nor has Columbus guaranteed any indebtedness on behalf of, or have any
other contingent obligations with respect to Quality, and Columbus has not
pledged any of the assets of Quality or its Quality Capital Stock or any other
of its assets in connection with any obligations relating to Quality. Columbus
is not a party to any Shareholders' or Stockholders' Agreements with respect to
Quality. Also set forth on Schedule 2.4 hereto is a listing of all
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dividends and/or distributions made with respect to Quality since January 3,
1997, Quality's date of incorporation.
Section 2.5 Stock Record Book. To the Belch Sisters' knowledge the stock
record book of the Company is complete and correct in all material respects. No
shares of capital stock of the Company are currently reserved for issuance for
any purpose or upon the occurrence of any event or condition. The Shares
constitute all of the outstanding capital stock of Columbus and Quality.
Columbus is the true and lawful owner of all of the outstanding capital stock of
Quality. Schedule 2.5 sets forth the total number of authorized shares of
capital stock and recites the ownership of such shares as indicated in the stock
record book for each of Columbus and Quality. Notwithstanding anything to the
contrary herein provided, the Belch Sisters represent and warrant that no more
than 323 shares of the Company Capital Stock are outstanding.
Section 2.6 Corporate Books. The corporate minute books of the Company are
complete and correct in all material respects and contain signed minutes of all
of the proceedings of the shareholders and directors of the Company since
incorporation. A true and complete list of the directors and officers of the
Company as of the date hereof is set forth in Schedule 2.6.
Section 2.7 Title to Stock. To the Belch Sisters' knowledge the stock
record book of Columbus shows the ownership of all of the shares of Columbus as
recited in Schedule 2.5. Columbus owns all of the Quality Capital Stock. No
shares of preferred stock or other class of capital stock are authorized, issued
or outstanding with respect to the Company. The Shares have been duly authorized
and validly issued and are fully paid and nonassessable. The Shares were issued
pursuant to applicable exemptions from registration under Federal securities
laws and the securities laws of the State of Ohio. The Quality Capital Stock is
owned by Columbus and is held by Columbus free and clear of all Liens. Except as
set forth on Schedule 2.7 hereto, Seller owns the Company Capital Stock set
forth in the recitals to this Agreement and Seller's Company Capital Stock will
be sold pursuant hereto free and clear of all Liens. Except as set forth on
Schedule 2.7 hereto, upon payment of the Purchase Price to the Seller in
accordance with this Agreement, the Seller will convey to the Purchaser good and
marketable title to such Company Capital Stock, free and clear of all Liens
whatsoever, as provided herein. Except as set forth on Schedule 2.7 hereto, the
assignments, endorsements, stock powers and other instruments of transfer
delivered by the Seller to the Purchaser at the Closing will be sufficient to
transfer the Seller's entire interest, and all of the interests, legal and
beneficial of Seller in and to the
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Columbus Capital Stock and thereby indirectly in the Quality Capital Stock.
Except as set forth on Schedule 2.7 hereto or as contemplated by Section 4.4, no
dividends or other distributions are owed by the Company in connection with any
of the Shares and none have been made to any Stockholder of the Company or to
any Seller since at least December 31, 1987.
Section 2.8 Options and Rights. There are no outstanding subscriptions,
options, warrants, rights, puts, calls or other Contracts by which the Company
is bound to issue or to repurchase or otherwise acquire shares of its capital
stock, or pursuant to which any Person has a right to purchase or to acquire,
through conversion or otherwise, shares of the Company's capital stock from the
Company.
Section 2.9 Financial Statements.
(a) Generally. The Seller has delivered to the Purchaser correct and
complete copies of (i) the compiled balance sheets of the Company as of December
31, 1995, December 31, 1996 and December 31, 1997 and the related statements of
income, cash flow and retained earnings for the fiscal year reporting periods
then ended, together with all notes and schedules thereto (the "Year-End
Financial Statements") and (ii) the unaudited monthly balance sheets of the
Company as of June 30, 1998 and the related monthly statements of income and
cash flow for the period then ended, together with all notes and schedules
thereto (the June 30, 1998 statements, with all unaudited statements delivered
hereafter, the "Interim Financial Statements"). The Financial Statements have
been compiled by Pry CPA Services, Inc., certified public accountants for the
Company. The Year-End Financial Statements and the Interim Financial Statements
(a) have been prepared in accordance with the books and records of the Company
and (b) fairly present the financial condition and results of operations and
cash flows of the Company as of, and for the respective periods ended on, such
dates, all in conformity with GAAP consistently applied, except, with respect to
the Interim Financial Statements, for adjustments and notes that would result
from normal year-end adjustments. Except as indicated on Schedule 2.27 hereto,
since December 31, 1997 and except as fully set forth in the Year-End Financial
Statements and the Interim Financial Statements, the Company has no liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due, whether known or unknown, and regardless of when asserted)
arising out of transactions or events heretofore entered into or any action or
inaction or state of facts existing, with respect to, or based upon transactions
or events heretofore occurring, other than (i) liabilities incurred since the
last disclosed Interim Financial
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Statements; and (ii) those incurred in the ordinary course of the Company's
business consistent with past practices. Any such liabilities incurred since the
last disclosed Interim Financial Statements which were not incurred in the
ordinary course of business are described on Schedule 2.9 hereto.
(b) Absence of Change. Except as set forth on Schedule 2.9 hereto,
since December 31, 1997, (i) the Company's business has been operated only in
the ordinary course; (ii) there has been no Material Adverse Change in the
business, properties, business prospects, condition (financial or otherwise),
financial statements or results of operations of the Company; (iii) there has
been no sale, assignment or transfer of any assets or properties of the Company
except in the ordinary course of business, or any theft, damage, removal or
destruction of such assets or properties or any casualty loss affecting the
Company or its business; (iv) there has been no amendment or termination of any
of the Company's Permits or material Contracts; (v) there has been no waiver or
release of any material right or claim of the Company; (vi) there has been no
labor dispute or union activity which affects the operation of the Company; and
(vii) there has been no agreement by either the Seller or the Company to take
any of the actions described in the preceding clauses (i) through (vi), except
as contemplated by this Agreement.
Section 2.10 Employees.
(a) Schedule 2.10 sets forth a list of all of the Company's
employees, officers, directors, consultants and independent contractors, as of
the date hereof, together with a description of any Contract regarding the terms
of service and the rate and basis for total compensation of such persons.
(b) The Company has paid or made provision for the payment of all
salaries and accrued wages, accrued vacation and sick leave, and any other form
of accrued, but unpaid, compensation, and has complied in all material respects
with all applicable laws, rules and regulations relating to the employment of
labor, including those relating to wages, hours, collective bargaining and the
payment and withholding of taxes, and has withheld and paid to the appropriate
governmental authority, or is holding for payment not yet due to such authority,
all amounts required by law or agreement to be withheld from the wages or
salaries of its employees. No amounts have been accrued on the Company's books
for vacation or sick leave in excess of the current year's obligations and no
such obligations exist. Except as contemplated by Section 5.2 hereto, no
contracts or provisions exist that would obligate the Company to pay any
severance compensation to
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any employee should his or her employment with the Company be terminated for any
reason from and after the date hereof. Except as contemplated by Section 5.2
hereto, no contracts or provisions exist that would obligate the Company to pay
any amounts to any Person upon the change of control of the Company.
(c) Except as set forth on Schedule 2.10 hereto and as contemplated
by Section 5.2, the Company is not a party to any (i) outstanding employment
agreements or contracts with officers or employees that are not terminable at
will, or that provide for payment of any bonus or commission or severance
compensation, (ii) agreement, policy or practice that requires it to pay
termination or severance pay to salaried, exempt, non-exempt or hourly
employees, (iii) collective bargaining agreement or other labor union contract
applicable to persons employed by the Company, nor do the Belch Sisters or the
Company know of any activities or proceedings of any labor union to organize any
such employees. The Company has furnished to Purchaser complete and correct
copies of all such agreements, if any ("Employment and Labor Agreements"). The
Company has not breached or otherwise failed to comply with any provisions of
any Employment or Labor Agreement.
(d) Except as set forth in Schedule 2.10 hereto, (i) there is no
unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB"), (ii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or, to the Belch Sisters' or
Company's knowledge, threatened, against or affecting the Company, and the
Company has not experienced any strike, material slow down or material work
stoppage, lockout or other collective labor action by or with respect to
employees of the Company, (iii) there are no charges with respect to or relating
to the Company pending before the Equal Employment Opportunity Commission or any
state, local or foreign agency responsible for the prevention of unlawful
employment practices, and (iv) the Company has not received formal notice from
any federal, state, local or foreign agency responsible for the enforcement of
labor or employment laws of an intention to conduct an investigation of the
Company and, to the knowledge of the Belch Sisters and Company, no such
investigation is in progress.
Section 2.11 Absence of Certain Changes. Except as set forth in Schedule
2.11, or as contemplated by Section 4.4 hereto or Section 5.2 hereto, since
December 31, 1997, there has been no (a) declaration, setting aside or payment
of any dividend or distribution (whether in cash, stock or property) in respect
of the Shares (including, without
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by way of limitation, in respect of the Quality Capital Stock) or any redemption
of the Shares (including, without by way of limitation, in respect of the
Quality Capital Stock), (b) increase in the compensation payable to or to become
payable by the Company to its employees, officers, directors, consultants or
independent contractors, (c) entry by the Company into any Contract not in the
ordinary course of business, including, without limitation, any borrowing or
capital expenditure or (d) change in accounting methods or principles used by
the Company, except for any such change which is necessitated by a change in
GAAP (which such changes shall be set forth on Schedule 2.11 hereto).
Section 2.12 Contracts.
(a) Generally. Except as listed in Schedule 2.12, the
Company is not a party to any Contract relating to:
(i) Bonus, pension, profit sharing, retirement, stock option,
employee stock purchase or other plans providing for deferred
compensation.
(ii) Collective bargaining agreements or any other Contract
with any labor union.
(iii) Hospitalization insurance or other welfare benefit plans
or practices.
(iv) Loans to its employees, officers, directors or
Affiliates.
(v) The borrowing or loaning of money to or from any Person or
the mortgaging, pledging or otherwise placing a Lien on any asset of the
Company, including, but not limited to, any Contract with respect to the
Company's indebtedness.
(vi) A guarantee of any obligation.
(vii) The ownership, lease (whether as lessee or lessor) or
operation of any property, real or personal.
(viii) Intangible property (including Proprietary Rights).
(ix) Warranties with respect to its services rendered or its
products sold or leased.
-9-
(x) Registration or preemptive rights with respect to any
securities.
(xi) Prohibitions preventing it from freely engaging in any
business.
(xii) The purchase, acquisition, disposition or supply of
inventory and other property and assets.
(xiii) Employees, independent contractors, consultants, or
other agents.
(xiv) Sales, commissions, advertising or marketing.
(xv) Unconditional purchase or payment obligations.
(xvi) Agreements between Seller and customers of the Business.
(xvii) All cable television programming and Internet provider
agreements entered into by the Business.
(xviii) Leases, licenses, easements, rights of way, pole
attachment agreements, license agreements for joint use of poles and other
agreements regarding property rights to earth stations, utility poles,
real property, fixtures and other similar items used in the operation of
the Business.
(xix) The Grant of telephone or cable television franchise
rights.
(xx) Any investment or subsidiary of the Company, including,
but not limited to, those shown on Schedule 2.4 hereto.
(xxi) Any other Contract not of the type covered by any of the
foregoing items of this Section 2.12(a) requiring total payments by the
Company in excess of ten thousand dollars ($10,000).
(b) Compliance. The Company has performed all obligations required
to be performed by it, and is not in receipt of any claim of default or breach
or notice of audit, under any Contract to which it is subject (including,
without limitation, those required to be disclosed on Schedule 2.12). Except as
disclosed in Schedule 2.12, no event has occurred which with the passage of time
or the giving of notice or both would result in a material default, breach or
event of non-compliance
-10-
by the Company under any Contract to which it is subject. Except as disclosed in
Schedule 2.12, the Company has no present expectation or intention of not fully
performing all of its obligations under any Contract to which it is subject and
has no knowledge of any breach or anticipated breach by any other party to any
Contract to which it is subject.
Section 2.13 True and Complete Copies. The Company has delivered to the
Purchaser true and complete copies of all Contracts and documents listed in the
Schedules to this Agreement, as well as of all minute books and stock books of
Columbus and Quality, except to the extent set forth on Schedule 2.13 hereto.
Such minute books and stock books are current and contain the true and complete
records kept of such companies. Notwithstanding anything to the contrary in this
Agreement, to the Belch Sisters' knowledge, the record book of Columbus shows
the ownership of all of the shares of capital stock of Columbus. Notwithstanding
anything to the contrary in this Agreement, all representations and warranties
made by Seller with respect to Company Capital Stock or Shares owned by the
Other Stockholders shall be limited to the Seller's knowledge.
Section 2.14 Title and Related Matters.
(a) Owned Property. Set forth in Schedule 2.14(a) is a description
of all real and of substantially all of the personal property owned or used by
the Company. The Company has valid and marketable title to all such property,
free and clear of all Liens, except Permitted Liens and those liens shown on
Schedule 2.14(a) hereto. All properties used in the Company's business
operations as of December 31, 1997 are reflected in the Year-End Financial
Statements in accordance with and to the extent required by GAAP and, as of the
date hereof, are fully set forth on Schedule 2.14(a) hereto. Except as set forth
on Schedule 2.14(a) hereto, the Company has delivered, with respect to any real
property owned by the Company, true and complete copies of all deeds, title
policies, environmental assessments, surveys and other title documents relating
to such real property.
(b) Leased Property. Set forth in Schedule 2.14(b) is a description
of all real and of substantially all of the personal property leased or used by
the Company. Except as otherwise set forth in Schedule 2.14(b), the Company's
leases are in full force and effect and are valid and enforceable in accordance
with their respective terms. Except as set forth on Schedule 2.14(b) hereto,
there exists no event of default or event which constitutes or would constitute
(with notice or lapse of time or both) a default by the Company or any other
Person under any such lease, and neither the Belch Sisters nor the Company have
received notice of such default or event. All rent and other amounts due and
payable with respect to each of the Company's leases have been paid through the
date of this Agreement. Except as set forth in Schedule 2.14(b), neither the
Belch Sisters nor the
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Company have received notice that the landlord with respect to any real property
or personal property lease would refuse to renew such lease upon expiration of
the period thereof upon substantially the same terms, except for rent increases
consistent with past experience or market rentals. The Company has delivered to
the Purchaser, with respect to any leased real or personal property, true and
complete copies of all such leases and all amendments or supplements thereto.
(c) Liens. Except as set forth in Schedule 2.14(c), the real
property owned or leased by the Company and the buildings, structures and
improvements included within such real property (collectively, the
"Improvements") comply with all applicable restrictions, building ordinances and
zoning ordinances and all Regulations of the applicable health and fire
departments. No alteration, repair, improvement or other work which could give
rise to a Lien has been performed with respect to such Improvements within the
last one hundred twenty (120) days. The Company's owned or leased real property
and its continued use, occupancy and operation as currently used, occupied and
operated does not constitute a nonconforming use under any Regulation or Order
affecting such real property, and the continued existence, use, occupancy and
operation of such Improvements is not dependent on any special permit,
exception, approval or variance. There is no pending or, to the Belch Sisters'
or Company's knowledge, threatened or proposed action or proceeding by any
Authority to modify the zoning classification of, to condemn or take by the
power of eminent domain (or to purchase in lieu thereof), to classify as a
landmark, to impose special assessments on or otherwise to take or restrict in
any way the right to use, develop or alter all or any part of the Company's
owned or leased real property.
(d) Utilities. The real property owned or leased by the Company has
access, sufficient for the conduct of the Company's business as presently
conducted, to public roads and to all utilities, including electricity, sanitary
and storm sewer, potable water, natural gas and other utilities used in the
operation of the Company's business as presently conducted. To Seller's
knowledge, access to all such public roads and utilities will be available after
the Closing Date in the same manner and to the same extent as at the Closing
Date.
(e) Condition. The Company owns, or has all rights necessary to use,
all properties and assets necessary for the conduct of its business as presently
conducted. The assets and properties
-12-
owned, leased or used by the Company in the conduct of the Business
are in good condition (reasonable wear and tear excepted), are suitable for
their respective uses, and comply with all applicable Regulations. Further such
assets and properties constitute all of the assets and properties necessary for
the Company to conduct its Business as now conducted.
Section 2.15 Litigation. Except as set forth in Schedule 2.15, there is
(a) no Claim pending or, to the Belch Sisters' and the Company's knowledge,
threatened against the Company, (b) no Claim by the Company pending or
threatened against any Person, (c) no outstanding Order relating to the Company,
(d) no Claim by any Person relating to the Company Capital Stock being sold by
Seller hereunder or to the Quality Capital Stock, or (e) to the Belch Sisters'
and the Company's knowledge, no Claim by any Person relating to the Company
Capital Stock owned by any Other Stockholder.
Section 2.16 Tax Matters.
(a) Generally. Except as set forth in Schedule 2.16, Columbus and
Quality have timely filed all federal, state and local tax reports, returns,
information returns and any other documents required to be filed by each
(collectively, "Tax Returns") and have duly paid all Taxes shown to be due and
payable on such Tax Returns and all estimated or advance payments required by
law. All Taxes for periods ending on or prior to or including the Closing Date
have been fully paid or reserved against on the Interim Financial Statements and
on the books of Columbus and Quality in accordance with GAAP. All Taxes which
are required to be withheld or collected by Columbus or Quality have been duly
withheld or collected and, to the extent required, have been paid to the proper
federal, state or local authorities or properly segregated or deposited as
required by applicable Regulations. There are no Liens for Taxes upon any
property or assets of Columbus or Quality except for Liens for Taxes not yet due
and payable or for Taxes being contested in a manner permitted by applicable law
(all as disclosed on Schedule 2.16 hereto). Except as disclosed in Schedule
2.16, neither Columbus nor Quality have requested an extension of time within
which to file any Tax Return and none have waived the statute of limitations on
the right of the IRS or any other taxing authority to assess or collect
additional Taxes or to contest the information reported on any Tax Return. All
Taxes owed by any affiliated group of which Columbus and/or, Quality has at any
time been a member (whether or not shown on any Tax Return) have been paid for
each taxable period during which Columbus and/or Quality was a member of the
affiliated group. Neither Columbus nor Quality has any liability for the unpaid
Taxes of any Person under Treasury Regulation ss. 1.1502-6 (or any
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similar provision of state or local law), as a transferee or successor, by
contract, or otherwise.
(b) Good Faith. All Tax Returns described in Section 2.16(a) have
been prepared in good faith and are correct and complete in all respects, and
there is no basis for assessment of any addition to the Taxes shown thereon.
(c) Claims. Except as disclosed in Schedule 2.16, (i) there are no
proceedings, examinations or claims currently pending by any taxing Authority in
connection with any Tax Returns described in Section 2.16(a) nor with respect to
the periods to which such Tax Returns relate and (ii) there are no unresolved
issues or unpaid deficiencies or outstanding or proposed assessments relating to
any such proceedings, examinations, claims or Tax Returns. None of the Tax
Returns described in Section 2.16(a) currently is under audit or has been
audited. The items relating to the Business, properties and operations of the
Company on the Tax Returns filed by the Company (including the supporting
schedules filed therewith), state accurately, in all material respects, the
information requested with respect to Columbus and Quality, which information
was derived from the books and records of Columbus or Quality.
(d) Course of Business. The Company has not taken any action outside
the ordinary course of business or any such action that would not conform to
normal industry practices in anticipation of the Closing that would have the
effect of deferring any liability for Taxes of Columbus or Quality to any period
(or portion thereof) ending after the Closing Date.
(e) Withholdings. All payments for withholding Taxes, unemployment
insurance and other amounts required to be withheld and deposited or paid to any
relevant taxing Authorities have been so withheld, deposited or paid by or on
behalf of Columbus and/or Quality, as appropriate.
(f) Partnerships. The Company is not subject to any joint venture,
partnership or other arrangement or Contract which is treated as a partnership
for federal income tax purposes. The Company has no written tax-sharing
agreement.
(g) Accounting Method Adjustments. Except as disclosed in Schedule
2.16, the Company will not be required to recognize after the Closing Date any
taxable income in respect of accounting method adjustments required to be made
under any Regulation relating to Taxes,
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including without limitation, the Tax Reform Act of 1986 and
the Revenue Act of 1987.
(h) Tax Exemptions. None of the assets of the Company constitutes
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the IRC, and the Company is not subject to a lease, safe
harbor lease or other arrangement as a result of which the Company is not
treated as the owner of leased property for federal income tax purposes.
(i) Tax Return Reviews. An accurate and complete
description of the most recent review, if any, of the Tax Returns
of the Company by the IRS or any other taxing Authority is set
forth in Schedule 2.16.
(j) Power of Attorney. Except as set forth in Schedule 2.16 hereto,
no power of attorney has been granted by the Company with respect to any matter,
including, without limitation, the payment of Taxes, which is currently in
force.
(k) True and Complete Copies. Except as set forth in Schedule 2.16
hereto, the Company has delivered to the Purchaser true and complete copies of
all Tax Returns filed by the Company with respect to its 1993, 1994, 1995, 1996
and 1997 fiscal years.
Section 2.17 Bank and Brokerage Accounts. Set forth in Schedule 2.17
hereto is a list of all of the bank and brokerage accounts maintained by the
Company and the authorized signatories for each such account.
Section 2.18 Compliance with Applicable Laws, Regulations and Orders. The
Company has been and is presently in material compliance with all laws,
ordinances, codes, rules, Regulations and Orders applicable to the conduct of
its Business, including, without limitation, all Regulations relating to health,
sanitation, fire, zoning, building and occupational safety.
Section 2.19 Employee Benefit Plans.
(a) Set forth on Schedule 2.19 hereto is a true and complete list
of:
(i) each employee pension benefit plan, as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"),
maintained by the Company or to which the Company
-15-
or the Seller is required to make contributions ("Pension Benefit Plan");
and
(ii) each employee welfare benefit plan, as defined in Section
3(1) of ERISA, maintained by the Company or to which the Company or the
Seller is required to make contributions ("Welfare Benefit Plan").
True and complete copies of all Pension Benefit Plans and Welfare
Benefit Plans (collectively, "ERISA Plans") have been delivered to or made
available to Purchaser together with, as applicable with respect to each such
ERISA Plan, trust agreements, summary plan descriptions, all IRS determination
letters or applications therefor with respect to any Pension Benefit Plan
intended to be qualified pursuant to Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and valuation or actuarial reports,
accountant's opinions, financial statements, IRS Form 5500s (or 5500-C or
5500-R) and summary annual reports for the last three years.
(b) With respect to the ERISA Plans, except as set forth on Schedule
2.19:
(i) there is no ERISA Plan which is a "multi employer" plan as
that term is defined in Section 3(37) of ERISA ("Multi employer Plan");
(ii) no event has occurred or (to the knowledge of the Belch
Sisters or Company) is threatened or about to occur which would constitute
a prohibited transaction under Section 406 of ERISA or under Section 4975
of the Code;
(iii) each ERISA Plan has operated since its inception in
accordance with the reporting and disclosure requirements imposed under
ERISA and the Code and has timely filed Form 5500 (or 5500-C or 5500-R)
and predecessors thereof; and
(iv) no ERISA Plan is liable for any federal,
state, local or foreign Taxes.
-16-
(c) Each Pension Benefit Plan intended to be qualified
under Section 401(a) of the Code:
(i) has been qualified, from its inception, under Section
401(a) of the Code, and the trust established thereunder has been exempt
from taxation under Section 501(a) of the Code and is currently in
compliance with applicable federal laws;
(ii) has been operated, since its inception, in accordance
with its terms and there exists no fact which would adversely affect its
qualified status; and
(iii) is not currently under investigation, audit or review by
the IRS and (to the knowledge of the Belch Sisters or Company) no such
action is contemplated or under consideration and the IRS has not asserted
that any Pension Benefit Plan is not qualified under Section 401(a) of the
Code or that any trust established under a Pension Benefit Plan is not
exempt under Section 501(a) of the Code.
(d) With respect to each Pension Benefit Plan which is a defined
benefit plan under Section 414(j) and each defined contribution plan under
Section 414(i) of the Code:
(i) no liability to the Pension Benefit Guaranty Corporation
("PBGC") under Sections 4062-4064 of ERISA has been incurred by the
Company since the effective date of ERISA and all premiums due and owing
to the PBGC have been timely paid;
(ii) the PBGC has not notified the Company or any Pension
Benefit Plan of the commencement of proceedings under Section 4042 of
ERISA to terminate any such plan;
(iii) no event has occurred since the inception of any Pension
Benefit Plan or (to the knowledge of the Belch Sisters or Company) is
threatened or about to occur which would constitute a reportable event
within the meaning of Section 4043(b) of ERISA;
(iv) No Pension Benefit Plan ever has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code); and
(v) The funding requirements of Title IV of ERISA are not
applicable to any of the Company's plans.
-17-
(e) With respect to each Pension Benefit Plan, Schedule 2.19
contains a list of all Pension Benefit Plans to which ERISA has applied which
have been or are being terminated, or for which a termination is contemplated,
and a description of the actions taken by the PBGC and the IRS with respect
thereto.
(f) The aggregate of the amounts of contributions by the Company to
be paid or accrued under ERISA Plans, excluding salary deferrals under Code
Section 401(k), is not expected to exceed approximately $20,000.00 for the
entire current fiscal year, all of which has been or will be properly accrued or
reserved for on the Year-End Financial Statements and Interim Financial
Statements to the extent required in accordance with GAAP. To the extent
required in accordance with GAAP, the Company's Year-End Financial Statements
reflect in the aggregate an accrual of all amounts of employer contributions
accrued but unpaid by the Company under the ERISA Plans as of the date of the
Year-End Financial Statements.
(g) With respect to any Multi employer Plan (1) the Company has not,
since its formation, made or suffered a "complete withdrawal" or "partial
withdrawal" as such terms are respectively defined in Sections 4203 and 4205 of
ERISA; (2) there is no withdrawal liability of the Company under any Multi
employer Plan, computed as if a "complete withdrawal" by the Company had
occurred under each such Plan as of December 31, 1997; and (3) the Company has
not received notice to the effect that any Multi employer Plan is either in
reorganization (as defined in Section 4241 of ERISA) or insolvent (as defined in
Section 4245 of ERISA).
(h) With respect to the Welfare Benefit Plans:
(i) There are no liabilities other than liabilities that have
been incurred but not reported (none of which the Company is aware of), of
the Company under Welfare Benefit Plans with respect to any condition
which relates to a claim filed on or before the Closing Date.
(ii) No claims for benefits are in dispute or in litigation.
(i) Set forth on Schedule 2.19 hereto is a true and complete list
of:
(i) each employee stock purchase, employee stock option,
employee stock ownership, deferred compensation, performance, bonus,
incentive, vacation pay, holiday pay,
-18-
insurance, severance, retirement, excess benefit or other plan, trust or
arrangement which is not an ERISA Plan whether written or oral, which the
Company maintains or is required to make contributions to; and
(ii) each other agreement, arrangement, commitment and
understanding of any kind, whether written or oral, with any current or
former employee, officer, director or consultant of the Company pursuant
to which payments may be required to be made at any time following the
date hereof (including, without limitation, any employment, deferred
compensation, severance, supplemental pension, termination or
consulting agreement or arrangement).
(j) True and complete copies of all of the written plans,
arrangements and agreements referred to on Schedule 2.19 ("Compensation
Commitments") have been provided to Purchaser together with, where prepared by
or for the Company, any valuation, actuarial or accountant's opinion or other
financial reports with respect to each Compensation Commitment for the last
three years. An accurate and complete written summary has been provided to
Purchaser with respect to any Compensation Commitment which is unwritten.
(k) Each Compensation Commitment:
(i) since its inception, has been implemented in
all material respects in accordance with its terms;
(ii) is not currently under investigation, audit or review by
the IRS or any other federal or state agency and (to the knowledge of the
Belch Sisters and Company) no such action is contemplated or under
consideration;
(iii) has no liability for any federal, state,
local or foreign Taxes;
(iv) has no claims subject to dispute or
litigation;
(v) has met all applicable requirements, if any,
of the Code; and
(vi) has been implemented since its inception in material
compliance with the reporting and disclosure requirements imposed under
ERISA and the Code.
-19-
Section 2.20 Intellectual Property. Schedule 2.20 sets forth a complete
and accurate list of the Proprietary Rights owned or used by the Company. Except
as set forth in Schedule 2.20 hereto, the Company has no written documents
relating to the Company's ownership or use of the Proprietary Rights listed in
Schedule 2.20. No other Person has any rights to such Proprietary Rights, except
pursuant to agreements or licenses specified in Schedule 2.20. To the Belch
Sisters' and Company's knowledge, no other Person is infringing, violating or
misappropriating any such Proprietary Right. If necessary, the Company owns or
holds valid licenses to use all Proprietary Rights used in the operation of its
business as presently conducted and proposed to be conducted, with all such
licenses being specified in Schedule 2.20.
Section 2.21 Environmental Matters. The Company has obtained all
Environmental Permits required in connection with the operation of its business.
The Company is and has been, and is capable of continuing to be in compliance in
all respects with (i) the terms and conditions of all such Environmental Permits
and (ii) all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables of any
applicable Environmental Law or Regulation, Order, code, plan, decree, judgment,
injunction or demand letter issued, entered, promulgated or approved thereunder.
The Company currently possesses and maintains such Environmental Permits in its
name, and no amendments or modifications to such Environmental Permits or
filings with any permitting Authority are required to permit the acquisition of
the Company Capital Stock and the indirect acquisition of the Quality Capital
Stock as contemplated hereby. In addition, except as set forth in Schedule 2.21:
(a) Generally. No notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending
or, to the Belch Sister 's and Company's knowledge, threatened by any Authority
or other entity with respect to the Company relating to any Environmental
Permit, license or authorization required in connection with the conduct of the
business of the Company or with respect to the generation, treatment, storage,
recycling, transportation, disposal or Release of any substance regulated under
Environmental Laws ("Hazardous Materials").
(b) Property.
(i) The Company has not handled any Hazardous Material on any
property now or previously owned or leased by the Company.
-20-
(ii) No PCB or asbestos is or has been present at any property
now or previously owned or leased by the Company.
(iii) There are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now or previously owned or
leased by the Company.
(iv) There has been no Release of Hazardous Materials at, on
or under any property now or previously owned or leased by the Company.
(c) Transportation. The Company has not (i) transported or arranged
for the transportation of any Hazardous Material to any location which is listed
on the National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), listed for
possible inclusion on the National Priorities List by the Environmental
Protection Agency in the Comprehensive Environmental Response and Liability
Information System ("CERCLIS") or on any similar state list or which is the
subject of federal, state or local enforcement actions or other investigations
or (ii) stored, treated, transported or disposed, or arranged for storage,
treatment, transport or disposal of any Hazardous Materials, other than in
compliance with Environmental Law.
(d) Notification of Release. No oral or written notification of a
Release of a Hazardous Material has been filed by or on behalf of the Company,
and no property now or previously owned or leased by the Company is listed or
proposed for listing on the National Priorities List under CERCLA, on CERCLIS or
on any similar state list of sites requiring investigation or clean-up.
(e) Liens. There are no Liens arising under or pursuant to any
Environmental Laws on any of the real property owned or leased by the Company,
and no government actions have been taken or are threatened which could subject
any of such properties to such Liens. The Company is not required to place any
notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(f) Site Assessments. Except as set forth in Schedule 2.21, there
have been no Phase I or Phase II environmental site assessments conducted by or
which are in the possession of the Belch Sisters or the Company in relation to
any property or facility now or previously owned or leased by the Company.
-21-
Section 2.22 Capital Expenditures and Investments. The Company has no
outstanding Contracts or commitments for capital expenditures and investments,
except as set forth in Schedule 2.22 attached hereto, which schedule includes a
list of all disbursements on account of capital expenditures and investments by
the Company since December 31, 1997. Attached to Schedule 2.22 are copies of the
Company's capital expenditures budgets for 1998 and 1999. Except as set forth in
Schedule 2.22 hereto, there has been no order or ruling from the PUCO or any
other regulatory body and, to the Company's knowledge, none is threatened or
expected by the Company requiring or recommending that the Company undertake any
capital expenditures or investments which have not already been made.
Section 2.23 Dealings with Affiliates. Schedule 2.23 sets forth a complete
and accurate list of all oral or written Contracts between Columbus and Quality.
Except as set forth in Schedule 2.23, since December 31, 1997, the Company has
not made any payments, loaned any funds or property or made any credit
arrangement with any Affiliate or employee except for the payment of employee
salaries in the ordinary course of business.
Section 2.24 Insurance. The Company currently is covered by insurance
policies which provide for coverages that are usual and customary as to amount
and scope in the business of the Company, descriptions of which policies,
including the names of the insurer and the insured, the amount of premiums, and
the types and amounts of coverage, are set forth on Schedule 2.24. All of such
policies are in full force and effect, all premiums with respect thereto have
been paid or accrued therefor, and no notice of cancellation or termination has
been received with respect to any such policy. Such policies are sufficient for
compliance with (i) all applicable Regulations and (ii) all Contracts to which
the Company is a party. The Company has not breached or otherwise failed to
perform its obligations under any of such policies, nor has the Company received
any adverse notice from any of the insurers party to such policies with respect
to any alleged breach or failure in connection with any of such policies. Such
policies will not terminate or lapse by reason of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
Except as set forth on Schedule 2.24, there are no pending or, to the Belch
Sisters' or Company's knowledge, threatened claims under any policy relating to
the Company. Also set forth on Schedule 2.24 is a true and complete listing of
any and all claims made by the Company under any policy since May 31, 1995.
Section 2.25 Commissions. There are and will be no claims for brokerage
commissions, finder's fees, fees for fairness opinions or
-22-
financial advisory services or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Seller, the Company, or any of their
Affiliates.
Section 2.26 Permits and Reports. Schedule 2.26 hereto sets forth a list
of all permits, licenses, registrations, certificates, franchises, orders,
approvals or other authorizations from any Authority or other Person including,
without limitation, the FCC and the PUCO and the municipality of Columbus Grove
("Permits") issued to or held by the Company in connection with its operations,
the Business, the Exchange or the Franchise. Such Permits are the only Permits
that are required for the Company to conduct its business as presently
conducted. Each such Permit is in full force and effect, and the Company has not
received notice that any suspension, cancellation or modification of the terms
of any such Permit is threatened. The Company is in full compliance with the
terms of each such Permit, and each of the Company and the Belch Sisters is not
aware of any reason not set forth in said Permit why any such Permit would not
be renewed, upon substantially the same terms as currently exist, upon
expiration of such Permit. Except as set forth on Schedule 2.26, no other Person
is currently operating or providing cable television or local exchange telephone
service within the Columbus Grove cable television franchise area or telephone
exchange area and, to the Belch Sisters' and Company's knowledge, no Person is
anticipating or contemplating doing so. Except as set forth in Schedule 2.26, no
authorization, consent or notification of or filing with any Authority is
necessary in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, and each Permit issued
to or held by the Company will continue in full force and effect following the
Closing Date. Except as set forth on Schedule 2.26, (i) all returns, reports,
applications, statements and other documents required to be filed by the Company
with the FCC, the PUCO and any other regulatory or governmental authority or
municipality (including taxing authorities) with respect to the Business on or
before the date hereof have been duly filed or properly extended as permitted by
law (details of such extensions, if any, are set forth on Schedule 2.26 hereto)
and are true and complete in all material respects, and (ii) all reporting
requirements of the FCC, the PUCO and other regulatory or governmental
authorities or municipalities (including taxing authorities) having jurisdiction
thereof have been complied with in all material respects. A listing of all
returns, reports, applications, statements and other documents filed by the
Company within the past five (5) years with the FCC, the PUCO and any other
regulatory or governmental authority (including taxing authorities) or
municipality is attached hereto as Schedule 2.26; except as set forth on
Schedule 2.26 hereto, true and
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complete copies of all such returns, reports, applications, statements and other
documents set forth on Schedule 2.26 have been previously provided to Purchaser
by Seller. The transactions contemplated by this Agreement shall not cause the
Exchange's cost study area to change.
Section 2.27 Absence of Undisclosed Liabilities. The Company does not have
any liability of any nature whatsoever (whether known or unknown, due or to
become due, accrued, absolute, contingent or otherwise), including, without
limitation, any unfunded obligation under employee benefit plans or arrangements
as described in Section 2.19 hereof or liabilities for Taxes (as defined in
Section 2.16 hereof) or liabilities for under-reporting, under-billing or
under-collection of revenues or underpayment of revenues to a third party or
liabilities relating to investments or subsidiaries, except for (i) liabilities
stated or reserved against in the Year-End Financial Statements, (ii) current
liabilities incurred in the ordinary course of business and consistent with past
practice after the date of the Year-End Financial Statements which, individually
and in the aggregate, do not have, and cannot reasonably be expected to have, a
Material Adverse Effect, and (iii) liabilities disclosed on Schedules 2.9 or
2.27 hereto. All obligations and liabilities relating in any way to the
Company's ownership of Quality are set forth on Schedule 2.4 hereto, setting
forth the maximum amount of the Company's potential obligations and the expected
payment schedule therefor. Except as set forth on Schedule 2.9, the Company is
not a party to any Contract, or subject to any articles of incorporation or
bylaw provision, any other corporate limitation or any legal requirement which
has, or can reasonably be expected to have, a Material Adverse Effect. Any and
all long term obligations and liabilities of the Company as of the date hereof
are set forth on Schedule 2.27 hereto.
Section 2.28 Disclosure. Neither this Agreement nor any of the
attachments, Schedules, Exhibits, written statements, documents, certificates or
other items prepared for or supplied to the Purchaser by or on behalf of the
Seller or the Company with respect to the transactions contemplated hereby
contains any untrue statement of a material fact or omits any material fact
necessary to make each statement contained herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
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Section 3.1 Corporate Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to own,
operate and lease its properties and to conduct its business as presently
conducted and proposed to be conducted. The Purchaser is qualified to do
business and is in good standing in every jurisdiction in which the conduct of
its business, the ownership or lease of its properties, or the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby requires it to be so qualified. True, complete and correct copies of the
Purchaser's charter and by-laws as presently in effect have been delivered to
the Seller.
Section 3.2 Authorization. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors of the Purchaser has
duly authorized the execution, delivery and performance of this Agreement, and
no other corporate proceedings on its part are necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement constitutes a legal, valid
and binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, subject to equitable considerations and the effect of
bankruptcy and other laws affecting the rights of creditors generally.
Section 3.3 No Violation. Except as set forth on Schedule 3.3 hereto, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by the Purchaser do not and will not (a)
conflict with or result in a breach of the terms, conditions or provisions of,
(b) constitute a default or event of default under (with due notice, lapse of
time or both), (c) result in the creation of any Lien upon the Purchaser or its
capital stock or assets pursuant to, (d) give any third party the right to
accelerate any obligation under, (e) result in a violation of or (f) require any
authorization, consent, approval, exemption or other action by, or notice to,
any Person pursuant to the charter or by-laws of the Purchaser, any applicable
Regulation (including, without limitation, the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976), any Order to which the Purchaser is subject or any
Contract to which the Purchaser or any of its properties are subject. The
Purchaser has complied with all applicable Regulations and Orders in connection
with the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, subject to the requirements which are
conditions to the Closing.
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Section 3.4 Investment Intent. The Purchaser represents and warrants to
the Seller that it is purchasing the Company Capital Stock for investment
purposes and not with a view to distribution thereof and agrees that it shall
not make any sale, transfer, or other disposition of the Company Capital Stock
in violation of the Securities Act of 1933, as amended, or the Regulations
thereunder or under any other applicable securities laws. The Purchaser has been
afforded the opportunity to make inquiries of the Company and of the Belch
Sisters and has received such information reasonably requested by it, all toward
its efforts to make an informed decision to acquire the Company Capital Stock in
accordance with the terms and conditions of this Agreement.
ARTICLE IV
COVENANTS OF THE SELLER AND THE COMPANY
Subject to the provisions of Section 4.14 hereof, from and after December
31, 1997 until the Closing Date, each of the Belch Sisters and the Company agree
that they shall have acted and shall act, or refrain from acting where so
required, to comply (and in the case of the Belch Sisters, to cause the Company
to comply) with the following:
Section 4.1 Regular Course of Business.
(a) Generally. The Company shall operate its business diligently and
in good faith, consistent with past management practices, shall maintain all of
its properties in customary repair, order and condition (excepting ordinary wear
and tear), shall maintain (except for expiration due to lapse of time or
cancellation by another party pursuant to the terms thereof) in the ordinary
course of business all leases and Contracts in effect without change except as
expressly provided herein and shall comply in all material respects with the
provisions of all Regulations, Orders and Permits applicable to the Company and
the conduct of its business. The Company shall comply, without modification,
with all Contracts and commitments relating to capital expenditures as set forth
on Schedule 2.22. The Company shall maintain its financial and accounting
records in a manner consistent with that employed at December 31, 1997.
(b) Compensation. The Company shall not hire any employee and shall
not grant any increase in the compensation of any employee, officer, board
member, consultant or independent contractor.
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(c) Insurance. The Company shall maintain current its insurance
policies with the coverage and in the amounts set forth in Schedule 2.24.
(d) Claims. The Company shall promptly notify the Purchaser of any
Claims that are commenced against it, as well as of any threatened, suspected or
expected Claims of which the Company or the Belch Sisters are aware.
(e) Supplement. From time to time prior to the Closing Date, the
Seller shall promptly notify the Purchaser of any changes with respect to the
information set forth in this Agreement or the Schedules hereto and of any
matters hereafter arising which, if in existence at the date hereof, would have
been required to be set forth in this Agreement or the Schedules hereto.
Section 4.2 Amendments. No change or amendment shall be made to the
charter or by-laws of the Company, and the Company shall not merge into or
consolidate with any other Person or change the character of its business.
Section 4.3 Capital Changes. The Company shall not issue, sell, purchase
or redeem any shares of its capital stock of any class or issue or sell any
securities convertible into, or options, warrants or other rights to subscribe
for, any shares of its capital stock. The Company shall not pledge or otherwise
encumber any shares of its capital stock, nor shall the Company allow the
transfer of any shares of its capital stock on its stock transfer ledger or
other books and records.
Section 4.4 Dividends. The Company shall not declare, pay or set aside for
payment any dividend or other distribution in respect of its capital stock,
except that the Company may (i) declare a dividend in December, 1998 in the
amount of $25.00 per share which dividend shall be paid prior to Closing and
(ii) pay director fees for services rendered in 1998 in the amount of $6,000 to
each of the Belch Sisters and J. Xxxx Xxxxx, as all of the directors of the
Company.
Section 4.5 Capital Expenditures. The Company shall not, without
Purchaser's prior written consent, make any capital expenditures, or commitments
with respect thereto, except as provided in Schedule 2.22. Further, the Company
shall be obligated to complete, and expend therefor, all capital expenditures
shown on the 1998 capital expenditures budget attached to Schedule 2.22 and
shall be further obligated to complete and expend therefore, that percentage of
its 1999 capital expenditures budget attached to Schedule 2.22 as approximates
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that percentage of the elapsed 1999 fiscal year, if any. Columbus shall not make
or accept any loan or advance to or from Quality, except in the ordinary course
of business, or from any Seller.
Section 4.6 Borrowing. The Company shall not incur, assume or guarantee
any indebtedness or obligation not reflected on the Year-End Financial
Statements, except for amounts due to any one Person which do not exceed ten
thousand dollars ($10,000) in the aggregate and those that are incurred in the
ordinary course of business. Further, Columbus shall not incur, assume or
guarantee any indebtedness or obligation of Quality.
Section 4.7 Property. The Company shall not sell, transfer, or dispose of
any of its assets and properties, other than in the ordinary course of business,
or allow any of its assets and properties to become subject to a Lien.
Section 4.8 Other Commitments. Except as set forth in this Agreement or
permitted in writing by the Purchaser from and after the date hereof, the
Company shall not enter into any transaction, make any commitment or incur any
obligation other than in the ordinary course of business.
Section 4.9 Interim Financial Information. From and after the date hereof,
the Company shall supply the Purchaser with a copy of its internal monthly
Interim Financial Statements within thirty (30) days after the end of each
month.
Section 4.10 Consents and Authorizations. The Belch Sisters and the
Company shall, promptly after the date hereof, commence efforts to obtain the
consents, waivers and authorizations listed in Schedules 2.3 and 2.26. The
Seller and the Company shall diligently pursue and use their best efforts to
obtain such consents, waivers and authorizations as promptly as practicable
prior to the Closing Date.
Section 4.11 Access. The Company shall afford to the Purchaser and its
counsel, accountants, agents and other authorized representatives and to
financial institutions specified by the Purchaser reasonable access during
business hours to the Company's plants, properties, books and records in order
that the Purchaser may have full opportunity to make such reasonable
investigations as it shall desire to make of the affairs of the Company. The
Company shall cause its officers, employees and auditors to furnish such
additional financial and operating data and other information as the Purchaser
or its lender shall from time to time reasonably request.
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Section 4.12 Notice of Transfer. Xxxxxxx and the Company shall cooperate
with Purchaser in providing any required notices to the appropriate Authority
regarding any issues of ownership or control or change thereof (including,
without limitation, any such issues relating to the Permits).
Section 4.13 Payment of Stamp Tax. All transfer (including any real estate
transfer tax), documentary, sales, use, stamp, registration and other such Taxes
and fees (including any penalties and interest) incurred in connection with this
Agreement shall be borne by the Purchaser when due, and the parties will file on
a timely basis all necessary Tax Returns and other documentation with respect to
all such transfer, documentary, sales, use, stamp, registration and other Taxes
and fees, and, if required by applicable Regulation, will, and will cause its
respective Affiliates to, join in the execution of any such Tax Returns and
other documentation.
Section 4.14 Disclosure. To the extent the Company shall have taken any
actions contrary to any of the covenants set forth in this Article IV, from and
after December 31, 1997 and prior to the date hereof, such actions are set forth
on Schedule 4.14 hereto. From and after the date hereof, the Company shall not
take any actions contrary to any of the covenants set forth in this Article IV
without the prior written consent of the Purchaser. Further, to the extent this
Agreement requires any party to deliver documents to any other party hereto,
each commits and agrees to deliver any and all such documents in its possession
or otherwise known to it. Further still, to the extent any party hereto
represents herein that it has so delivered such documents, such party is
representing and warranting that it has so delivered any such documents in its
possession or of which it is aware. Further, to the extent all documents
required to be delivered hereunder have not been so delivered but instead have
been made available to Purchaser for its review at the Company's headquarters or
elsewhere, such has been disclosed on Schedule 2.13 hereto. Further still, to
the extent a disclosure is made by the Company or the Belch Sisters hereunder on
one Schedule hereto, it is deemed made as to all Schedules attached hereto.
Section 4.15 Cooperation with Purchaser. Each of the Seller and the
Company shall cooperate with Purchaser as shall be necessary for Purchaser to
consummate this transaction and to obtain financing therefor, including giving
access to the Company's properties and business records as shall be necessary
for Purchaser to, among other things, obtain surveys of the real property, a
title commitment with respect to the real property and/or environmental
assessments.
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Section 4.16 Reasonable Efforts to Assemble Company Capital Stock. It is
Purchaser's desire to purchase 100% of the Company Capital Stock at the Closing.
The Belch Sisters shall use reasonable efforts to fully inform the Other
Stockholders of the transactions contemplated by this Agreement and to cause
such Other Stockholders to deliver all of the Company Capital Stock which they
own at Closing as referenced in Section 9.2 hereof. Purchaser agrees to
cooperate with the Belch Sisters in their efforts to assemble the Company
Capital Stock and the Belch Sisters agree to allow Purchaser and its counsel to
review any and all materials used to solicit and deliver such Company Capital
Stock.
ARTICLE V
COVENANTS OF THE PURCHASER
Section 5.1 Consents and Authorizations. The Purchaser shall, promptly
after the date hereof, with the assistance of Xxxxxxx and the Company, commence
efforts to obtain the consents, waivers and authorizations listed in Schedule
3.3. The Purchaser shall diligently pursue and use its best efforts to obtain
such consents, waivers and authorizations as promptly as practicable prior to
the Closing Date.
Section 5.2 Employees. Purchaser shall cause the Company to continue to
employ all current full time and part time employees as shown on Schedule 2.10
hereto, except J. Xxxx Xxxxx and Xxxxxxx, after the Closing for at least two (2)
years absent grounds to terminate such employee(s) for cause (as determined in
the Company's sole discretion). Purchaser acknowledges that (1) it is the
Company's intention to terminate the employment of J. Xxxx Xxxxx prior to the
Closing Date and, in connection therewith, to pay him severance benefits
aggregating up to $30,000, and (2) such payment shall not violate any provision
of this Agreement or require any further disclosure hereunder.
ARTICLE VI
OTHER AGREEMENTS
The parties hereto further agree as follows:
Section 6.1 Agreement to Defend. In the event any claim of the nature
specified in Section 7.4 or Section 8.3 hereof is commenced, whether before or
after the Closing Date, the parties hereto agree to
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cooperate and use all reasonable efforts to defend against and respond thereto.
Section 6.2 Further Assurances. On the terms and subject to the conditions
of this Agreement, the parties hereto shall use all reasonable efforts at their
own expense to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Regulations to
consummate and make effective as promptly as possible the transactions
contemplated by this Agreement, and to cooperate with each other in connection
with the foregoing, including, without limitation, using all reasonable efforts
(a) to obtain all necessary waivers, consents and approvals from other parties
to loan agreements, leases, mortgages and other Contracts, (b) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any Regulations or in connection with any Permits, (c) to lift or rescind
any injunction or restraining order or other Order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby, (d)
to obtain the financing necessary for the consummation of the transactions
contemplated hereunder, and (e) to fulfill all conditions to the obligations of
the parties under this Agreement. Each of the parties hereto further covenants
and agrees that it shall use all reasonable efforts to prevent a threatened or
pending preliminary or permanent injunction or other Order.
Section 6.3 Consents. Without limiting the generality of Section 6.2, each
of the parties hereto shall use all reasonable efforts to obtain all waivers,
Permits, authorizations, consents and approvals of all Persons and Authorities
necessary, proper or advisable in connection with the consummation of the
transactions contemplated by this Agreement prior to the Closing Date.
Section 6.4 No Solicitation or Negotiation. Unless and until this
Agreement is terminated, neither the Belch Sisters nor the Company shall, and
each shall use best efforts to cause its Affiliates, and the directors,
officers, employees, representatives, agents, advisors, accountants,
shareholders and attorneys of each of them, not to initiate or solicit, directly
or indirectly, any inquiries or the making of any proposal with respect to, or
engage in negotiations concerning, or provide any confidential information or
data to any Person with respect to, or have any discussions with any Person
relating to, any acquisition, business combination or purchase of all or any
significant asset of, or any equity interest in, directly or indirectly, the
Company, or otherwise facilitate any effort or attempt to do or seek any of the
foregoing and shall immediately cease and cause to be terminated any existing
activities, discussions or
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negotiations with any parties conducted heretofore with respect to any of the
foregoing.
Section 6.5 No Termination of the Obligations by Subsequent Dissolution.
Each of the parties hereto specifically agrees that its obligations hereunder,
including, without limitation, obligations pursuant to this Article VI, shall
not be terminated by the dissolution of such party, whether by operation of law,
Regulations or otherwise.
Section 6.6 Public Announcements. Prior to the Closing Date, no party
hereto nor any Affiliate, representative or shareholder of such party shall
disclose any of the terms of this Agreement to any third party without the other
parties' prior written consent, except (i) as required to obtain the consents,
waivers and authorizations listed in Schedules 2.3, 2.26 and 3.3, (ii) in
connection with the Purchaser's financing of the transactions contemplated
hereby, (iii) as required by applicable law, (iv) in connection with seeking
advice, assistance or representation with or from such party's legal and
accounting professionals and as necessary to procure financing in connection
herewith, and (v) in connection with any securities law filing. Subject to the
foregoing sentence, prior to the Closing Date, the form, content and timing of
all press releases, public announcements or publicity statements with respect to
this Agreement and the transactions contemplated hereby shall be subject to the
prior approval of both Xxxxxxx and the Purchaser, which approval shall not be
unreasonably withheld.
Section 6.7 Records and Information.
(a) Retention of Records. Except as otherwise required by applicable
Regulation or agreed to in writing, each of the Seller and the Purchaser shall
retain, and shall cause its Affiliates to retain, for a period of at least four
(4) years, or the period required by applicable Regulations, following the
Closing Date, all records, books, contracts, instruments, computer data and
other data and information (collectively, "Information") relating to the Company
currently in their possession.
(b) Access to Information. From and after the Closing Date, the
Seller shall afford to the Purchaser and its authorized accountants, counsel and
other designated representatives reasonable access (including using reasonable
efforts to give access to Persons or firms possessing Information) and
duplicating rights during normal business hours to all Information within the
Seller's possession relating to the Company, insofar as such access is
reasonably required by the Purchaser. Similarly, the Purchaser shall afford to
the Seller
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and its authorized accountants, counsel, and other designated representatives
reasonable access (including reasonable efforts to give access to Persons or
firms possessing Information) and duplicating rights during normal business
hours to Information within the Purchaser's possession relating to the Company
or its business as conducted prior to the Closing Date, insofar as such access
is reasonably required by the Seller.
(c) Provisions of Corporate Records. The Seller shall arrange, as
soon as practicable following the Closing Date, to the extent not previously
delivered in connection with the transactions contemplated herein, for
transportation at the Seller's cost to the Purchaser of the records in the
Seller's possession relating to the Company, the corporate minutes books, stock
ledgers and certificates and corporate seals of the Company, and all Contracts
and litigation files relating to the Company, except to the extent (i) such
items are already in the possession of any of the Purchaser or the Company or
(ii) it is necessary or appropriate for the Seller to retain such records for
use in preparation of Tax Returns under the provisions hereof. The Belch Sisters
may make and retain copies of all or any such records or documents at their
expense.
(d) Witnesses. At all times from and after the Closing Date, each of
the Seller and the Purchaser shall use reasonable efforts to make available to
the other, upon written request, its and its Affiliates' officers, directors,
employees and agents as witnesses to the extent that such Persons may reasonably
be required in connection with any legal, administrative or other proceedings in
which the requesting party may from time to time be involved, at no cost;
provided, however, that a party producing such witnesses shall be entitled to
receive from the requesting party, upon presentation therefor, payment for such
out-of-pocket costs and disbursements as may be reasonably incurred in producing
such witnesses.
Section 6.8 Insurance Policies and Claims Administration.
(a) Insurance Coverage Prior to the Closing Date. Xxxxxxx shall be
responsible for the administration of all claims under the Company's insurance
policies relating to periods prior to the Closing Date. If any claim is asserted
against the Company relating to periods prior to the Closing Date, Xxxxxxx
shall, if requested by the Purchaser, promptly assert and pursue coverage and
payment for such claim with the appropriate insurance carrier, and the Purchaser
shall, and shall cause the Company to, provide reasonable cooperation and
assistance to Xxxxxxx in asserting and pursuing such coverage. In particular,
the Purchaser shall, upon request by Xxxxxxx, cause the
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Company to file all necessary claims and take all such other action as may
reasonably be requested by Xxxxxxx to pursue such coverage. As between Xxxxxxx,
on the one hand, and the Purchaser and the Company, on the other hand, the
Purchaser and the Company shall be entitled to recover all insurance proceeds
with respect to any claim, except to the extent the Belch Sisters have
previously provided indemnification therefor to the Purchaser or the Company
under this Agreement. If the Purchaser shall pursue coverage and payment for any
claim relating to periods prior to the Closing Date on behalf of the Company,
then Xxxxxxx shall provide reasonable cooperation and assistance to the Company
and the Purchaser. Notwithstanding anything to the contrary in this Agreement,
Xxxxxxx shall not be obligated to perform services or take any actions which are
beyond the scope of actions and services contemplated by the Consulting
Agreement attached hereto as Exhibit 7.9 or by the indemnification provisions
hereof.
(b) Insurance Coverage After the Closing Date. Each party shall be
responsible for establishing and maintaining its own property and casualty
insurance (including, without limitation, primary and excess general liability,
automobile, workers' compensation, property, director and officer liability,
fire, crime, surety and other similar insurance policies) for the activities and
claims of such party and its Affiliates on and after the Closing Date; provided,
however, the Purchaser shall, if it so desires, continue the Company's policies
in place as at the Closing Date and the Belch Sisters shall, if they so desire,
obtain new insurance policies on any of the assets distributed to any of them as
Excluded Assets as provided herein.
Section 6.9 Other Tax Matters.
(a) Tax Returns. The Purchaser, the Belch Sisters, the Company and
their successors shall cooperate in the preparation of all Tax Returns and
reports and shall make available all necessary records and timely take all
action necessary to allow for the preparation and filing of all Tax Returns and
reports. Within ten (10) days following the Closing, the Belch Sisters shall
deliver or shall cause to be delivered to the Purchaser all books, records,
returns, schedules, work papers, and other documents (including without
limitation, appraisals and other background information) which are (1) in the
possession of the Belch Sisters, (2) which have not otherwise been delivered to
Purchaser hereunder, and (3) which relate to any Taxes of the Company for any
taxable period prior to Closing. Prior to the delivery of the materials
described in the preceding sentence, the Belch Sisters shall cooperate with the
Purchaser in providing access to such materials as is reasonably required by the
Purchaser.
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The parties hereto agree that the Belch Sisters shall prepare, and pay (or
if reserved for, such Taxes shall be Purchaser's obligation to the extent so
reserved for) all Taxes arising prior to Closing, all Tax Returns for the
Company for the periods ending on or before the Closing Date and, except as
otherwise provided herein, for all Taxes arising as a result of the transactions
contemplated by this Agreement. Upon mutual agreement between the Belch Sisters
and the Purchaser, the Company may prepare any such required Tax Returns.
Purchaser shall prepare, and pay all Taxes arising therefrom, all Tax Returns
for the Company for the periods ending after the Closing Date.
(b) Information. The Purchaser and the Belch Sisters agree to
furnish or cause to be furnished to each other, as promptly as practicable, such
information (including access to books and records) and assistance relating to
the Company as is reasonably requested for the filing of any Tax Return, in
determining a Tax liability or right to refund, for the preparation of any audit
or other proceeding, and for the prosecution of any claim, suit or proceeding
relating to a proposed Tax adjustment. The Purchaser and the Belch Sisters shall
cooperate with each other in the conduct of any Tax audit or other Tax
proceedings involving the Company. The parties shall execute and deliver such
powers of attorney and other documents as are reasonably requested to carry out
the administration of the Tax provisions of this Agreement.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser under this Agreement shall be subject to
the satisfaction of each of the following conditions unless waived in writing by
the Purchaser:
Section 7.1 Representations and Warranties. The representations and
warranties of the Belch Sisters and the Company contained in Article II hereof
and elsewhere in this Agreement and all information contained in any Exhibit,
Schedule or attachment hereto shall be true and correct in all material respects
when made and on the Closing Date as though then made. The Seller and the
Company shall have performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by them prior to the Closing Date. The Belch Sisters shall
have delivered to the Purchaser a certificate, dated the Closing Date, in a form
reasonably satisfactory to the Purchaser, certifying to the foregoing, and
providing such supplemental
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information, agreements and disclosures as shall be necessary to make such
representations and warranties as accurate on the Closing Date as on the date
originally given. The Seller shall deliver to the Purchaser all of the
certificates, stock powers and other documentation referenced in Section 9.2
hereof, evidencing the transfer to the Purchaser of clear title to all of the
Company Capital Stock owned by Seller at the Closing, all in form and substance
satisfactory to the Purchaser and its counsel in their sole discretion.
Section 7.2 Consents and Approvals. The Belch Sisters, the Company and the
Purchaser shall have obtained all consents, approvals, Orders, qualifications,
licenses, Permits and other authorizations specified in Schedules 2.3, 2.26 and
3.3 hereto and, to the extent not listed in Schedules 2.3, 2.26 and 3.3 hereto,
required by all applicable material Regulations, Orders and Contracts binding on
any of the Seller, the Company or the Purchaser or any of their respective
properties and assets, with respect to the execution, delivery and performance
of this Agreement, the financing and consummation of the transactions
contemplated herein and the conduct of the business of the Company in the same
manner after the Closing Date as before the Closing Date and all such consents,
approvals, Orders, qualifications, licenses, Permits and other authorizations
shall have become final and the appeal period, if any, therefrom shall have
expired or any applicable appeal thereof shall have been dismissed.
Section 7.3 No Material Adverse Change. There shall have been no Material
Adverse Change in the business, properties, Year-End Financial Statements,
Interim Financial Statements, Schedules to this Agreement, business prospects,
condition (financial or otherwise) or results of operations of the Company since
December 31, 1997 through the Closing Date. The Purchaser shall have received a
certificate, dated the Closing Date, from the Belch Sisters, in a form
reasonably satisfactory to the Purchaser, certifying to the foregoing.
Section 7.4 No Proceeding or Litigation. No Order or Regulation shall be
in effect which would prevent the consummation of the transactions contemplated
hereby.
Section 7.5 Secretary's Certificate. The Purchaser shall have received a
certificate, signed by the Secretary of the Company and Quality dated the
Closing Date, as to the charter and by-laws of the Company and Quality and the
resolutions adopted by the shareholders and directors of the Company and Quality
in connection with this Agreement in a form reasonably satisfactory to the
Purchaser.
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Section 7.6 Certificates of Good Standing. At the Closing, the Company
shall have delivered to the Purchaser certificates issued by the appropriate
governmental authorities evidencing the good standing of the Company and Quality
in their respective jurisdictions of incorporation and in each jurisdiction in
which each is qualified to do business as a foreign corporation as of a date not
more than fifteen (15) days prior to the Closing Date.
Section 7.7 Opinion of Seller's Counsel. The Belch Sisters shall deliver
at Closing an opinion of counsel to the Seller addressed to Purchaser and
Purchaser's lender in substantially the form attached hereto as Exhibit 7.7.
Section 7.8 Noncompetition Agreement. The Belch Sisters and Company shall
have caused Xxxxxxx to enter into the Noncompetition Agreement attached hereto
as Exhibit 7.8.
Section 7.9 Consulting Agreement. The Belch Sisters and Company shall have
caused Xxxxxxx to enter into the Consulting Agreement attached hereto as Exhibit
7.9.
Section 7.10 Resignations. The Belch Sisters shall have caused all
directors and officers of Columbus and Quality to have resigned.
Section 7.11 Other Documents. The Purchaser shall have been furnished with
such other and further documents and certificates, including certificates of the
Seller, or the Company's and Quality's officers, directors and others, as the
Purchaser shall reasonably request to evidence compliance with the conditions
set forth in this Agreement.
Section 7.12 Liens. The Belch Sisters and the Company shall have removed
all Liens on the Company Capital Stock owned by Seller and the Quality Capital
Stock and/or on the assets and properties of the Company other than Permitted
Liens.
Section 7.13 Delivery of Certain Company Capital Stock. All of the capital
stock of at least the Belch Sisters, J. Xxxx Xxxxx and Xxxxxx Xxxxxxx shall be
delivered at Closing.
Section 7.14 Delivery of Minute Books. The Belch Sisters and the Company
shall deliver at Closing all original minute books and stock transfer records of
Columbus and Quality.
Section 7.15 Delivery of Interim Financial Statements. The Company shall
deliver Interim Financial Statements to the Purchaser on
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a monthly basis from and after the date hereof as soon as such Interim Financial
Statements shall have been prepared and as provided in Section 4.9 hereof.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS
OF THE BELCH SISTERS
The obligations of the Belch Sisters under this Agreement shall be subject
to the satisfaction of each of the following conditions unless waived in writing
by Xxxxxxx:
Section 8.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Article III hereof and elsewhere in
this Agreement and all information contained in any Exhibit, Schedule or
attachment hereto shall be true and correct in all material respects when made
and on the Closing Date as though then made, except as expressly provided herein
or therein. The Purchaser shall have performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement to be performed and complied with by it prior to the Closing Date. An
officer of the Purchaser in his capacity as such shall have delivered to the
Belch Sisters a certificate, dated the Closing Date, in a form reasonably
satisfactory to the Belch Sisters, certifying to the foregoing, and providing
such supplemental information, agreements and disclosures as shall be necessary
to make such representations and warranties as accurate on the Closing Date as
on the date originally given.
Section 8.2 Consents and Approvals. The Purchaser, the Seller and the
Company shall have obtained all consents, approvals, Orders, qualifications,
licenses, Permits and other authorizations, specified in Schedules 2.3, 2.26 and
3.3 hereto and, to the extent not listed in Schedules 2.3, 2.26 and 3.3 hereto,
required by all applicable Regulations, Orders and Contracts binding on any of
the Purchaser, the Belch Sisters or the Company or any of their respective
properties and assets with respect to the execution, delivery and performance of
this Agreement and the financing and consummation of the transactions
contemplated herein and all such consents, approvals, Orders, qualifications,
licenses, Permits and other authorizations shall have become final and the
appeal period, if any, therefrom shall have expired or any applicable appeal
thereof shall have been dismissed.
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Section 8.3 No Proceeding or Litigation. No Order or Regulation shall be
in effect which would prevent the consummation of the transactions contemplated
hereby.
Section 8.4 Secretary's Certificate. The Belch Sisters shall have received
a certificate, signed by the Secretary of the Purchaser, dated the Closing Date,
as to the charter and by-laws of the Purchaser and the resolutions adopted by
the directors of the Purchaser in connection with this Agreement in a form
reasonably satisfactory to the Belch Sisters.
Section 8.5 Opinion of Purchaser's Counsel. Purchaser shall deliver at
Closing an opinion of counsel to Purchaser addressed to the Belch Sisters in
substantially the form attached hereto as Exhibit 8.5.
Section 8.6 Excluded Assets Documents. Purchaser and the Company shall
deliver at Closing those documents required pursuant to Section 1.3 hereof with
respect to transfer of the Excluded Assets.
Section 8.7 Noncompetition Agreement. Purchaser shall enter into at
Closing the Noncompetition Agreement attached hereto as Exhibit 7.8.
Section 8.8 Consulting Agreement. Purchaser shall enter into at Closing
the Consulting Agreement attached hereto as Exhibit 7.9.
Section 8.9 Certificate of Good Standing. At the Closing, Purchaser shall
have delivered to the Belch Sisters a certificate evidencing the good standing
of the Purchaser in the State of Delaware.
Section 8.10 Other Documents. The Belch Sisters shall have been furnished
with such other documents and certificates as the Belch Sisters shall reasonably
request to evidence compliance with the conditions set forth in this Agreement.
ARTICLE IX
CLOSING
Section 9.1 Closing. Unless this Agreement shall have been terminated or
abandoned pursuant to the provisions of Article X hereof, a closing of the
transactions contemplated by this Agreement (the "Closing") shall be held on or
before January 4, 1999, effective as of January 1, 1999 (or on such date either
before or after January 4, 1999
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as the parties hereto shall mutually agree, which shall be at least ten (10)
days after receipt of all final PUCO and other approvals required as a
precondition to Closing) (the "Closing Date") in the offices of the Seller's
counsel; provided, that the Closing shall occur as soon as practicable (but no
sooner than ten (10) days) after the satisfaction of the conditions contained in
Articles VII and VIII hereof.
Section 9.2 Closing Date Payment and Receipt of Shares from Seller. On the
Closing Date, (i) each of the Sellers will (a) assign and transfer to the
Purchaser good and valid title in and to their Company Capital Stock, free and
clear of all Liens, by delivering to the Purchaser stock certificates
representing all such shares of Company Capital Stock, duly endorsed for
transfer or accompanied by duly executed stock powers endorsed in blank with
requisite stock transfer tax stamps, if any, attached (including appropriate
representations and warranties as to ownership, authority and liens); and (b)
cause Columbus to deliver the certificate(s) representing all Quality Capital
Stock to the Purchaser; (ii) the Purchaser shall, by wire transfer of same-day
funds, deposit in an escrow account the amount of One Million Dollars
($1,000,000) from the proceeds otherwise payable to the Belch Sisters, all as
provided in Section 11.2 hereof; (iii) the Purchaser shall, by wire transfer of
same-day funds, pay to the Seller the amount of the Purchase Price for all of
the Company Capital Stock so delivered, less (from the amount otherwise payable
to the Belch Sisters) the Escrow Funds; and (iv) the parties shall deliver to
each other the documents required under this Agreement to be delivered at or
prior to the Closing. Each Seller shall, prior to Closing, advise Xxxxxxx of her
desired manner of payment.
Section 9.3 Closing Date Payment and Receipt of Shares from Other
Stockholders. On the Closing Date, (i) each of the Other Stockholders who
desires to sell his or her Company Capital Stock will (a) assign and transfer to
the Purchaser good and valid title in and to his or her Company Capital Stock,
free and clear of all Liens, by delivering to the Purchaser stock certificates
representing all such shares of Company Capital Stock, duly endorsed for
transfer or accompanied by duly executed stock powers endorsed in blank with
requisite stock transfer tax stamps, if any, attached (including appropriate
representations and warranties as to ownership, authority and liens); (ii) the
Purchaser shall, by wire transfer of same-day funds, pay to such Other
Stockholders the amount of the Purchase Price for such Company Capital Stock
delivered; and (iii) the Other Stockholders shall deliver to Purchaser such
other documents required by Purchaser. The Other Stockholders shall, prior to
Closing, advise Purchaser of his or her desired manner of payment.
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Section 9.4 Purchase of Certain Company Capital Stock. If any Other
Stockholder other than J. Xxxx Xxxxx and Xxxxxx Xxxxxxx shall have elected not
to participate in the Closing or should any Other Stockholder not have been
located by the Belch Sisters, the Company or the Purchaser prior to Closing,
then Purchaser hereby agrees to pay the Purchase Price to such Other Stockholder
for such number of shares of the Company Capital Stock set forth on Exhibit A
hereto should they elect to participate at some time after the Closing or should
they be located after the Closing. Notwithstanding anything to the contrary
herein provided, the Belch Sisters shall be liable hereunder should any other
shareholder, not listed on Exhibit A hereto, come forth and legitimately claim
ownership of shares in the Company or should a Seller legitimately claim
ownership of shares in excess of the number set forth with respect to him, her
or it on Exhibit A hereto, all to the extent that the Purchaser is called upon
to pay for more than 323 shares of the Company Capital Stock.
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1 Methods of Termination. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time:
(a) Mutual Consent. By mutual written consent of the Purchaser and
the Belch Sisters.
(b) Seller's Failure to Perform. By the Purchaser if as of the
Closing Date (i) the Purchaser is not in material default and (ii) any of the
conditions specified in Article VII hereof have not been satisfied (and remain
so unsatisfied for more than ten (10) days after the Purchaser has notified the
Belch Sisters in writing thereof) or if either the Seller or the Company is
otherwise in default in any material respect under this Agreement (and remains
in default for more than ten (10) days after the Purchaser has notified the
Belch Sisters in writing of such default) or if at any time prior to the Closing
Date it becomes apparent to the Purchaser (on reasonable grounds) that either
the Seller or the Company will be unable to satisfy one or more of the
representations and warranties in Article II hereof or one or more of the
covenants or agreements in Articles IV, VI or VII hereof,
(c) Purchaser's Failure to Perform. By the Belch Sisters if as of
the Closing Date (i) the Belch Sisters and/or the Company are not in material
default and (ii)any of the conditions specified in
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Article VIII hereof have not been satisfied (and remain so unsatisfied for more
than ten (10) days after the Belch Sisters have notified the Purchaser in
writing thereof) or if the Purchaser is otherwise in default in any material
respect under this Agreement (and remains in default for more than ten (10) days
after the Belch Sisters has notified the Purchaser in writing of such default)
or if at any time prior to the Closing Date it becomes apparent to the Belch
Sisters (on reasonable grounds) that the Purchaser will be unable to satisfy one
or more of its representations and warranties in Article III hereof or one or
more of the covenants or agreements in Articles V, VI or VIII hereof.
(d) Failure to Close by March 31, 1999. By either party in the event
the Closing has not occurred by March 31, 1999, unless such failure to close
shall be due to a breach of this Agreement by the party seeking to terminate the
Agreement.
(e) Material Adverse Change. By the Purchaser if a Material Adverse
Change shall be shown (in the sole discretion of Purchaser) in any of the
Interim Financial Statements delivered after the date hereof and written notice
of termination of this Agreement shall have been given by the Purchaser within
thirty (30) business days of Purchaser's receipt of such Interim Financial
Statements.
(f) Remedies. In the event of any failure to perform as described in
this Section 10.1, the nonbreaching party shall have such remedies for breach of
contract as are allowed by law or equity in addition to or in substitution of
the right of termination.
Section 10.2 Procedure Upon Termination. If this Agreement is terminated
as provided herein:
(a) Return of Records. Each party shall as promptly as practicable
redeliver to the party furnishing the same, all data, information and other
written material (including all copies thereof) of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof.
(b) Confidentiality. All information received by any party hereto
with respect to the business of any other party (other than information which is
a matter of public knowledge or which has heretofore been or is hereafter
published in any publication for public distribution or filed as public
information with any governmental authority or is independently made available
to the party by third parties having a right to disclose such information) shall
not at any time be used by such party, or disclosed to third parties (other than
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such party's legal, financial or financing advisers or sources for purposes of
evaluating and closing the transactions contemplated hereby).
ARTICLE XI
SURVIVAL OF TERMS; INDEMNIFICATION
Section 11.1 Survival; Limitations.
(a) All of the terms and conditions of this Agreement, together with
the representations, warranties and covenants contained herein or in any
instrument or document delivered or to be delivered pursuant to this Agreement
and the agreements of the parties to indemnify each other as set forth in this
Article XI shall survive the execution of this Agreement and the Closing Date
notwithstanding any investigation heretofore or hereafter made by or on behalf
of any party hereto and shall continue for, and all claims with respect thereto
shall be made prior to Xxxxx 00, 0000 (xx the Closing shall have occurred at any
time in 1998) or prior to the date which is seven (7) months after Closing (if
the Closing shall have occurred at any time in 1999) (the "Indemnification
Period"); provided, however, that with respect to any income tax liability of
Columbus or Quality attributable to any activities or transactions occurring by
any of them on or prior to the Closing Date, the agreement of the Belch Sisters
to indemnify Purchaser and its Affiliates shall survive until, and all claims
with respect thereto shall be made prior to, the expiration of the applicable
statute of limitations.
(b) Notwithstanding anything in this Agreement to the contrary, the
Belch Sisters and the Purchaser shall be required to indemnify one another
pursuant to the provisions of this Article XI only to the extent that Claims
indemnifiable by such party exceed Twenty-Five Thousand Dollars ($25,000) in the
aggregate, and only with respect to such excess. Notwithstanding anything herein
to the contrary, the liability of both of the Belch Sisters, on the one hand,
and the Purchaser, on the other hand, with respect to this Article XI shall be
limited to One Million Dollars ($1,000,000) in the aggregate.
Section 11.2 Escrow of Liquid Assets. Five Hundred Thousand Dollars
($500,000) of the Purchase Price otherwise payable to each of the Belch Sisters
for their Shares (for a total of $1,000,000) (collectively, the "Escrow Funds")
shall be maintained in an escrow account (the "Escrow Account"), in KeyCorp,
pursuant to the terms and
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provisions of an Escrow Agreement to be executed at Closing substantially in the
form attached hereto as Exhibit 11.2 (the "Escrow Agreement").
Section 11.3 Indemnification by the Belch Sisters. After the Closing Date,
subject to the limitations set forth in Article XI hereof, the Purchaser and its
Affiliates (including, without limitation, the Company and Quality) and their
respective officers, directors, employees, shareholders, representatives and
agents shall, as their sole and exclusive remedy, be indemnified and held
harmless jointly and severally by the Belch Sisters, their respective heirs,
successors, representatives and assigns, to the extent provided herein and
payable solely from the Escrow Account, against and in respect of any and all
Claims and any and all other damage, loss, liability, cost or expense
(including, unless otherwise provided herein, the reasonable fees and expenses
of counsel and any Tax liability resulting from any indemnity payment made
hereunder) resulting from, or in respect of, any of the following:
(a) Misrepresentation or Breach. Any misrepresentation or breach of
warranty of the Seller, or the Company, or nonfulfillment of any obligation on
the part of the Company (to be performed prior to the Closing) or the Seller or
the Belch Sisters under this Agreement, or contained in any Schedule or Exhibit
to this Agreement or from any misrepresentation in or omission from any
certificate, Schedule, Exhibit, related agreement, Year-End Financial Statement,
Interim Financial Statement, or instrument delivered by or on behalf of the
Seller or the Company hereunder.
(b) Taxes. All Taxes of the Seller, of the Belch Sisters, of
Columbus or Quality attributable to any period or partial period ending prior to
or on the Closing Date.
(c) Third Party Claims. Any Claim of a third party including,
without limitation a Claim by the Belch Sisters as officers and/or directors of
the Company described in Section 11.4(d) hereto, arising out of the business or
operations of the Company prior to or on the Closing Date, or any Claim
resulting from or arising out of the ownership, management or use of the Shares
and/or the business of the Company prior to or on the Closing Date.
(d) Other. Any other Claims of Purchaser, Columbus, Quality, or
their Affiliates arising hereunder or as a result of the transactions
contemplated hereby.
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(e) Related Expenses. All expenses and costs, including but not
limited to legal fees, reasonably paid or incurred in connection with any such
indemnified Claim.
Section 11.4 Indemnification by the Purchaser. After the Closing, subject
to the limitations set forth in Section 11.1, the Seller and its Affiliates and
their respective officers, directors, employees, shareholders, representatives
and agents shall be indemnified and held harmless by the Purchaser against and
in respect of any and all damage, loss, liability, cost or expense (including,
unless otherwise provided herein, the reasonable fees and expenses of counsel
and any Tax liability resulting from any indemnity payment made hereunder)
resulting from, or in respect of, any of the following:
(a) Misrepresentation or Breach. Any misrepresentation or breach of
warranty of the Purchaser, or nonfulfillment of any obligation on the part of
the Company (to be performed after the Closing) or the Purchaser under this
Agreement, or contained in any Schedule or Exhibit to this Agreement or from any
misrepresentation in or omission from any certificate, Schedule, Exhibit,
related agreement or instrument delivered by or on behalf of the Purchaser
hereunder.
(b) Taxes. All Taxes of the Purchaser or of the Company attributable
to any period which begins after the Closing Date.
(c) Third Party Claims. Any Claim of a third party arising out of
the business or operations of the Company after the Closing Date.
(d) Officers and Directors. Any Claim for which the Belch Sisters
would have been entitled to indemnification as an officer or director of the
Company prior to Closing.
(e) Other. Any other Claims of Seller arising hereunder or as a
result of the transactions contemplated hereby.
(f) Related Expenses. All expenses and costs, including but not
limited to legal fees, reasonably paid or incurred in connection with any such
indemnified Claim.
Section 11.5 Third Party Claims.
(a) Generally. Except as otherwise provided in this Agreement, the
following procedures shall be applicable with respect to indemnification for
third party Claims. Promptly after receipt by the party seeking indemnification
hereunder (hereinafter referred to as the
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"Indemnitee") of notice of the commencement of any action or the assertion of
any Claim, liability or obligation by a third party (whether by legal process or
otherwise), against which Claim, liability or obligation another party to this
Agreement (hereinafter the "Indemnitor") is, or may be, required under this
Agreement to indemnify such Indemnitee, the Indemnitee shall, if a claim thereon
is to be, or may be, made against the Indemnitor, immediately notify the
Indemnitor in writing of the commencement or assertion thereof and give the
Indemnitor a copy of such Claim or process and all legal pleadings. The
Indemnitee's failure to give timely notice as required by this Section 11.5(a)
shall not serve to eliminate or limit the Indemnitor's obligation to indemnify
the Indemnitee unless such failure prejudices the rights of the Indemnitor, and
then only to the extent of such prejudice. Moreover, the Indemnitee shall have
the right to take any actions or steps it deems reasonable to avoid the
occurrence of any prejudice to the rights of the Indemnitee. The Indemnitor
shall have the right to assume the defense of such action with counsel of
reputable standing unless with respect to such action (A) injunctive or
equitable remedies have been sought therein in respect of the Indemnitee or its
business or (B) such action is for an alleged amount of less than Five Thousand
Dollars ($5,000); provided, that the Indemnitee and counsel to the Indemnitee
shall have the right to participate in the defense of any and all Claims
pursuant to the provisions of Section 11.5(b) hereof. The Indemnitor and the
Indemnitee shall reasonably cooperate in the defense of such Claims. If the
Indemnitee shall be required by judgment or a settlement agreement to pay any
amount in respect of any obligation or liability against which the Indemnitor
has agreed to indemnify the Indemnitee under this Agreement, the Indemnitor
shall immediately pay such amount to the Indemnitee in order to enable the
Indemnitee to make such payment, and otherwise shall promptly reimburse the
Indemnitee in an amount equal to the amount of such payment, in either case,
plus all reasonable out-of-pocket expenses (including legal fees and expenses)
incurred by such Indemnitee at the specific request of the Indemnitor, as
provided above, or as otherwise authorized by Section 11.5(b) hereof, in
connection with such obligation or liability subject to this Article XI.
Notwithstanding anything to the contrary in this Agreement, in the event the
Purchaser or any of its Affiliates is the Indemnitee, the Indemnitor and the
Indemnitee shall jointly instruct the Escrow Agent, in writing, to make such
payment and reimbursement from and out of the Escrow Account. No Indemnitor, in
the defense of any such Claim, shall, except with the consent of the Indemnitee,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all
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liability with respect to such Claim. In the event that the Indemnitor does not
accept the defense of any matter for which it is entitled to assume such defense
as provided in this Section 11.5(a), the Indemnitee shall have the full right to
defend against any such Claim and shall be entitled to settle or agree to pay in
full such Claim in its sole discretion. With respect to any matter as to which
the Indemnitor is not entitled to assume the defense pursuant to the terms of
this Section 11.5(a), the Indemnitee shall not enter into any settlement for
which an indemnification Claim will be made hereunder without the approval of
the Indemnitor, which shall not be unreasonably withheld.
(b) Counsel. An Indemnitee shall have the right to employ its own
counsel, but the fees and expenses of such counsel shall be at the expense of
the Indemnitee unless (i) the employment of such counsel shall have been
authorized in writing by the Indemnitor in connection with the defense of such
Claim and the Indemnitor has agreed in writing to pay such fees and expenses, or
(ii) the Indemnitor shall not have employed counsel in the defense of such Claim
(which counsel may be in-house counsel unless and until a lawsuit has been
commenced). In either of which events, such fees and expenses of not more than
one such counsel for the Indemnitee shall be borne by the Indemnitor.
Section 11.6 Other Claims.
(a) In the event an Indemnitee should have a claim under this
Article XI against an Indemnitor that does not involve a third party Claim, the
Indemnitee shall promptly give notice (the "Indemnitee Notice") and the details
thereof, including copies of all relevant information and documents, to the
Indemnitor within a period of thirty (30) days following the discovery of the
claim by the Indemnitee (the "Claim Notice Period"). The failure by any
Indemnitee to give the Indemnitee Notice within the Claim Notice Period shall
not impair the Indemnitee's rights hereunder except to the extent that the
Indemnitor demonstrates that it has been prejudiced thereby. The Indemnitor will
notify the Indemnitee within a period of thirty (30) days after the receipt of
the Indemnitee Notice by the Indemnitor (the "Indemnity Response Period")
whether the Indemnitor disputes its liability to the Indemnitee under this
Article XI with respect to such Claim. If the Indemnitor notifies the Indemnitee
that it does not dispute the Claim described in such Indemnitee Notice or fails
to notify the Indemnitee within the Indemnity Response Period whether the
Indemnitor disputes the claim described in such Indemnitee Notice, the actual
damages as finally determined will be conclusively deemed to be a liability of
the Indemnitor under this Article XI and the Indemnitor shall pay the amount of
such damages to the Indemnitee on demand. Notwithstanding anything to the
contrary in this Agreement, in the event the Purchaser
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or any of the Affiliates is the Indemnitee, the Indemnitor and Indemnitee shall
jointly give prompt written notice to the Escrow Agent to pay such amount from
and out of the Escrow Funds. If the Indemnitor notifies the Indemnitee within
the Indemnity Response Period that the Indemnitor disputes its liability with
respect to such Claim, the Indemnitor and the Indemnitee will proceed in good
faith to negotiate a resolution of such dispute, and if not resolved through
negotiations within a period of thirty (30) days from the date of such notice or
such longer period as may be agreed to by the parties in writing, such dispute
shall be resolved by arbitration in accordance with Section 11.6(b) hereof.
(b) Any dispute required to be submitted to arbitration pursuant to
this Section 11.6(b) shall be finally and conclusively determined in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
(the "Rules of Arbitration") then in effect by the decision of three (3)
arbitrators (the "Board of Arbitration") selected in accordance with the Rules
of Arbitration. The Board of Arbitration shall meet in Columbus, Ohio and shall
render a decision in writing (concurred in by a majority of the members of the
Board of Arbitration) with respect to and stating the amount, if any, which the
Indemnitor is required to pay to the Indemnitee in respect of the claim made by
the Indemnitee. The decision of the Board of Arbitration shall be rendered as
soon as practical following commencement of proceedings with respect thereto.
The Board of Arbitration shall cause its written decision to be delivered to the
Indemnitee and the Indemnitor and, to the extent the Escrow Account is still in
existence, to the Escrow Agent. Any decision made by the Board of Arbitration
shall be final, binding and conclusive on the Indemnitee and the Indemnitor and
entitled to be enforced to the fullest extent permitted by law and entered in
any court of competent jurisdiction.
The parties hereto hereby consent to the jurisdiction of the
foregoing Board of Arbitration and to the jurisdiction of any local, state or
federal court located in the State of Ohio, without regard to its principles of
conflict of laws, for the purpose of enforcing the decision or award of the
Board of Arbitration or otherwise. The parties hereto agree that all service of
process may be made on any such party by personal delivery or by registered or
certified mail addressed to the appropriate party at the address for such party
set forth in this Agreement.
All fees, costs and expenses of the prevailing party in any
arbitration, including, but not limited to, attorneys' fees, shall be paid by
the losing party and shall be awarded to the prevailing party
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as part of the decision of the Board of Arbitration. For purposes hereof, a
"Prevailing Party" shall mean the party which substantially prevails in its
position in arbitration. Each and every arbitration proceeding commenced
pursuant to this Section 11.6(b) shall be consolidated with any arbitration
proceedings simultaneously or previously commenced (but not concluded) under
this Section 11.6(b).
Section 11.7 Continued Liability for Indemnity Claims.
The liability of any Indemnitor hereunder with respect to claims
hereunder shall continue for so long as any claims for indemnification may be
made hereunder pursuant to this Article XI and, with respect to any such
indemnification claims duly and timely made, thereafter until the Indemnitor's
liability therefore is finally determined and satisfied.
Section 11.8 Exclusive Remedy. The parties hereby expressly agree that the
indemnification to be provided under and pursuant to Article XI shall be the
sole and exclusive remedy for any and all Claims by any party hereto against any
other party hereto for matters arising under this Agreement or any transactions
contemplated by this Agreement. There is no right of offset from or against any
of the payments to be made to Xxxxxxx under the Noncompetition Agreement or
Consulting Agreement.
Section 11.9 Early Release of Escrow Funds Upon Nonpayment of Xxxxxxx
Noncompetition Agreement and Consulting Agreement Obligations Absent Xxxxxxx
Default. Notwithstanding anything to the contrary herein or in the Escrow
Agreement provided, to the extent Purchaser and/or the Company shall have failed
to timely pay any amounts due to Xxxxxxx under the Noncompetition Agreement
and/or the Consulting Agreement and such failure to pay shall have continued
after written notice thereof by Xxxxxxx and a thirty (30) day opportunity to
cure such default, if Xxxxxxx is not otherwise in default of those agreements,
then all Escrow Funds remaining in the Escrow Account shall be paid to the Belch
Sisters as in the Escrow Agreement provided, notwithstanding that the Escrow
Period may not have otherwise expired. The parties hereto agree to so instruct
the Escrow Agent on a timely basis.
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ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Amendment and Modification. This Agreement may only be
amended, modified or supplemented by a written agreement signed by all of the
parties hereto.
Section 12.2 Waiver. The failure of any party hereto to comply with any
obligation, covenant, agreement or condition herein may be waived in writing by
the other parties hereto, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent may only be given in writing.
Section 12.3 Certain Definitions.
"Affiliate" shall mean, with regard to any Person, any Person which,
directly or indirectly controls, is controlled by, or is under common control
with, such Person and, with respect to any Person who is an individual, the
spouse, ancestors and descendants (lineal or by marriage) thereof. "Control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by Contract or otherwise.
"Agreement" shall have the meaning ascribed to such term in the preamble
hereof.
"Authority" shall mean any governmental authority, including, without
limitation, the FCC and the PUCO and the municipality of Columbus Grove, Ohio,
and any other governmental, regulatory or administrative body, agency,
commission, board of arbitrators, or any court or judicial authority, whether
federal, state, local or foreign.
"Belch Sisters" shall have the meaning ascribed to such term in the
preamble of Article II hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday and
that in Columbus Grove, Ohio, or Charlotte, North Carolina, is not a day on
which banking institutions are generally authorized or obligated by Regulation
to close.
-50-
"CERCLA" shall have the meaning ascribed to such term in Section 2.21(c)
hereof.
"CERCLIS" shall have the meaning ascribed to such term in Section 2.21(c)
hereof.
"Claim" shall mean any action, written claim, complaint, lawsuit, written
demand, suit, notice of a violation, litigation, proceeding, arbitration or
other dispute noticed in writing, or otherwise, whether civil, criminal,
administrative or otherwise, by any Authority or other Person.
"Closing" shall have the meaning ascribed to such term in Section 9.1
hereof.
"Closing Date" shall have the meaning ascribed to such term in Section 9.1
hereof.
"Company" shall have the meaning ascribed to such term in the preamble
hereof, but with respect to all representations, warranties, covenants and
agreements contained herein or in any Exhibit or Schedule hereto shall mean
Columbus and Quality.
"Contract" shall mean any agreement, contract, commitment, instrument or
other binding arrangement or understanding, whether written or oral.
"Environmental Law" shall mean any Regulation or Order, including, but not
limited to, any term or condition included in a validly issued Permit to
construct or operate a facility subject to any Regulation or Order, which
relates to or otherwise imposes liability or standards of conduct concerning
environmental matters, mining or reclamation of mined land, discharges,
emissions, releases or threatened releases of noises, odors or any pollutants,
contaminants or hazardous or toxic wastes, substances or materials, whether as
matter or energy, into ambient air, water or land or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants or
hazardous wastes, substances or materials, including (but not limited to)
CERCLA, the Superfund Amendments and Reauthorization Act of 1986, as amended,
the Resource Conservation and Recovery Act of 1976, as amended, the Toxic
Substances Control Act of 1976, as amended, the Federal Water Pollution Control
Act Amendments of 1972, the Clean Water Act of 1977, as amended, any so-called
"superlien" law and any other
-51-
similar Regulation by any Authority in effect on or before the Closing Date.
"Environmental Permit" shall mean a Permit relating to or required by any
Environmental Law.
"ERISA" shall have the meaning ascribed to such term in Section 2.19
hereof.
"ERISA Plans" shall have the meaning ascribed to such term in Section 2.19
hereof.
"Escrow Account" shall have the meaning ascribed to such term in Section
11.2 hereof.
"Escrow Agreement" shall have the meaning ascribed to such term in Section
11.2 hereof.
"Escrow Funds" shall have the meaning ascribed to such term in Section
11.2 hereof.
"FCC" shall mean the Federal Communications Commission.
"GAAP" shall mean United States generally accepted accounting principles,
consistently applied, as in existence at the date hereof and/or at the Closing
Date.
"Hazardous Materials" shall have the meaning ascribed to such term in
Section 2.21(a) hereof.
"Improvements" shall have the meaning ascribed to such term in Section
2.14(c) hereof.
"Indemnitee" shall have the meaning ascribed to such term in Section
11.5(a) hereof.
"Indemnitor" shall have the meaning ascribed to such term in Section
11.5(a) hereof.
"Interim Financial Statements" shall have the meaning ascribed to such
term in Section 2.9(a) hereof.
"IRC" or the "Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
-52-
"IRS" means the Internal Revenue Service.
"Lien" shall mean any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, claim, easement, restriction (on transfer or
otherwise) or interest of another Person of any kind or nature.
"Material Adverse Change" shall mean any developments or changes which
would have a Material Adverse Effect.
"Material Adverse Effect" shall mean, with respect to any Person, any
circumstances, state of facts or matters which could reasonably be expected,
either individually or in conjunction with any other circumstance, state of
facts or matter, to have a material adverse effect in respect of such Person's
business, business prospects, properties, assets, condition (financial or
otherwise) or results of operations.
"Order" shall mean any judgment, decree (consent or otherwise), order,
injunction (preliminary or permanent), stipulation, ruling, decree or consent of
or by an Authority.
"PCB" shall mean polychlorinated biphenyls.
"Permits" shall have the meaning ascribed to such term in Section 2.26
hereof.
"Permitted Liens" shall mean (i) statutory Liens for Taxes not yet due and
payable, (ii) such imperfections or irregularities of title, Liens, easements,
charges or encumbrances as do not materially interfere with the present use of
the properties or assets subject thereto or affected thereby, do not otherwise
materially impair present business operations at such properties, or do not have
a Material Adverse Effect on the value of such properties and assets and (iii)
Liens reflected in the Year-End Financial Statements.
"Person" shall mean any corporation, partnership, joint venture,
organization, entity, Authority or natural person, together with any and all
heirs, successors, representatives and assigns thereof.
"Pension Benefit Plan" shall have the meaning ascribed to such term in
Section 2.19 hereof.
"Proprietary Rights" shall mean all (i) patents, patent applications,
patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, reexamination, utility,
-53-
model, certificate of invention and design patents, registrations and
applications for registrations, (ii) trademarks, service marks, logos, trade
names and corporate names and registrations and applications for registration
thereof and (iii) copyrights and registrations and applications for registration
thereof.
"Purchase Price" shall have the meaning ascribed to such term in Section
1.2 hereof.
"Purchaser" shall have the meaning ascribed to such term in the preamble
hereof.
"PUCO" shall mean the Public Utilities Commission of the State of Ohio.
"Regulation" shall mean any law, statute, regulation, ordinance,
requirement, rule, executive order or binding action of or by an Authority.
"Release" shall have the meaning ascribed to such term in Section 9601(22)
of Title 42 of the United States Code.
"Seller" shall have the meaning ascribed to such term in the preamble
hereof.
"Shares" shall have the meaning ascribed to such term in the recitals
hereof.
"Tax Returns" shall have the meaning ascribed to such term in Section
2.16(a) hereof.
"Tax" or "Taxes" means any income, gross receipt, net proceeds,
alternative or add-on minimum, ad valorem, value added, estimated, turnover,
sales, use, property, personal property (tangible and intangible), stamp,
leasing, lease, user, excise, duty, franchise, transfer, license, withholding,
payroll, employment, foreign, fuel, excess profits, occupational and interest
equalization, windfall profits, severance and other taxes, charges, fees, levies
or other assessments of any kind whatsoever (including interest, penalties,
fines and additions thereto) imposed by any taxing Authority, federal, state,
local or foreign.
"Welfare Benefit Plan" shall have the meaning ascribed to such term in
Section 2.19 hereof.
-54-
"Year-End Financial Statements" shall have the meaning ascribed to such
term in Section 2.9(a) hereof.
Section 12.4 Notices. All notices, claims, requests, demands or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, by first class certified
mail, return receipt requested, with postage paid, or by receipted overnight
courier service to the intended recipient at the address specified below or at
such other address as shall be designated by such party in any notice to the
other parties.
Notices to Purchaser: With a Copy to:
--------------------- --------------
MJD Ventures, Inc. Xxxxxxxxx Xxxxxx Xxxxxx &
000 Xxxx Xxxxxxxx Xxxxxx Xxxxxx, P.A.
Suite 250 000 X. Xxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000 Suite 2020
ATTN: Xxxxxx X. Xxxxxxx, Vice Xxxxxxxxx, XX 00000-0000
Chairman and Executive Vice ATTN: Xxxxxxx X. Xxxx, Esq.
President (000) 000-0000 (Phone)
(000) 000-0000 (Phone) (000) 000-0000 (Fax)
(000) 000-0000 (Fax)
Notices to Seller, to With a Copy to:
the Company, to Belch
Sisters and Xxxxxxx
--------------------- ---------------
Xx. Xxxx Xxxxxxx Xxxxxxxx Xxxx & Xxxxx LLP
The Columbus Grove Telephone One Columbus
Company 00 Xxxx Xxxxx Xxxxxx,
000 Xxxx Xxxxxxxx Xxxxxx Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000 Xxxxxxxx, XX 00000-0000
(000) 000-0000 (Phone) ATTN: X. Xxxxxxx
(000) 000-0000 (Fax) Xxxxxxxx, Esq.
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
Section 12.5 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto
-55-
without the prior written consent of the other parties hereto, which consent
shall not be unreasonably withheld.
Section 12.6 Governing Law. This Agreement shall be governed by the laws
of the State of Delaware, without regard to its principles of conflict of laws.
Section 12.7 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 12.8 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 12.9 Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties hereto with regard to the subject
matter hereof and supersedes all prior agreements, representations, warranties,
promises, covenants, arrangements and understandings, oral or written, express
or implied, among the parties with respect to such subject matter. There are no
agreements, representations, warranties, promises, covenants, arrangements or
understandings among the parties with respect to such subject matter other than
those expressly set forth or referred to herein.
Section 12.10 No Benefit. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the signatories to this
Agreement and each of their respective heirs, successors and permitted assigns.
Section 12.11 Delays or Omissions. Except as otherwise provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party
hereto upon any breach or default of another party hereto under this Agreement
shall impair any such right, power or remedy of such party nor shall it be
construed to be a waiver of any such breach or default or an acquiescence
therein or of or in any similar breach or default thereafter occurring. All
remedies, whether under this Agreement, by Regulation or otherwise, afforded to
any party shall be cumulative and not alternative.
Section 12.12 Severability. Unless otherwise provided herein, if any
provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
-56-
Section 12.13 Expenses. Each of the parties hereto shall bear its own
expenses, including, without limitation, legal fees, taxes and expenses, with
respect to this Agreement and the transactions contemplated hereby (which, with
respect to such expenses incurred by or on behalf of the Seller or the Company,
shall be paid by the Seller and not by the Company).
Section 12.14 Time of the Essence. Time is strictly of the essence with
respect to the provisions of this Agreement.
Section 12.15 Injunctive Relief. The parties hereby agree that any remedy
at law for any breach of the provisions of this Agreement shall be inadequate
and that the nonbreaching party shall be entitled to injunctive relief in
addition to any other remedy which such nonbreaching party might have at law or
in equity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-57-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MJD VENTURES, INC.
/s/ Xxxxxxx X. Xxxxx
-----------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President
/s/ Xxxx Xxxxxxx (SEAL)
----------------------------
XXXX XXXXXXX
/s/ Xxxx Xxxxxxx (SEAL)
----------------------------
XXXX XXXXXXX, Trustee
/s/ Xxxxxxx Winner (SEAL)
----------------------------
XXXXXXX WINNER
THE COLUMBUS GROVE TELEPHONE COMPANY
/s/ Xxxx Xxxxxxx
By: Xxxx Xxxxxxx
Title: Secretary & Treasurer
-58-
Exhibit A
Other Stockholders
J. Xxxx Xxxxx (7 Shares) Xxxxxx X. Xxxxxxx (4 Shares)
000 X. Xxxx Xxxxxx 00000 Xxx XX 00
Xxxxxxxx Xxxxx, XX 00000 Xxxxxx, XX 00000
Xxxxxx X. Xxxxxxxx (4 Shares) Xxxxxx X. Xxxxxxxx (1 Share)
167 Hillcrest 0000 Xxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000 Xxxxxxxx Xxx, XX 00000
Xxxx Xxxxxxxx (2 Shares) Xxxx X. Xxxxx (1 Share)
000 X. Xxxxxxxx Xxxxxx 0000 Xxxxxxxx Xxxx
Xxxxxxxx Xxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxxx Xxxxxxxx (2 Shares) Xxxxxx X. Xxxxxx (1 Share)
000 Xxxx Xxxxxx 000 Xxx Xxx Xxxx
Xxxxxxxx Xxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxx Xxxxxx (1 Share)
__________________________
Lima, OH
Exhibit 7.7
Opinion of Seller's Counsel
[LETTERHEAD OF XXXXXXXX XXXX & XXXXX LLP]
_____________, 1998
MJD Ventures, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
[Lender to be determined.]
--------------------------------
--------------------------------
--------------------------------
Re: The Columbus Grove Telephone Company and Shareholders
Ladies and Gentlemen:
We have served as counsel to The Columbus Grove Telephone Company and to
its sole subsidiary Quality One Technologies, Inc.(collectively the "Company"),
each an Ohio corporation, in connection with the preparation, execution and
delivery of the Stock Purchase Agreement dated as of November ____, 1998 (the
"Agreement"), among MJD Ventures, Inc. ("MJD"), the Company and the shareholders
of the Company individually (such shareholders shall be referred to collectively
herein as the "Shareholders"), relating to the purchase of the shares of capital
stock of The Columbus Grove Telephone Company (the "Shares") owned by the
Shareholders. This opinion is delivered to you pursuant to Section 7.7 of the
Agreement. All capitalized terms used herein have the meaning assigned to them
in the Agreement except as otherwise provided herein.
In connection with the opinions expressed below, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records and other writings of the
Company, certificates of public officials or officers of the Company, and such
other documents and writings as were deemed necessary or appropriate for the
opinions hereinafter expressed.
MJD Ventures, Inc.
---------------------
_______________, 1998
Page 2
In making such examination and rendering the opinions set forth below, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
photostatic copies, and the authenticity of the originals of such documents and
the legal capacity of all natural persons.
Our opinions as hereinafter expressed are subject to the following
qualifications:
1. Our opinions are subject to the effect of bankruptcy,
fraudulent conveyance, insolvency, reorganization, arrangement,
moratorium and other similar laws;
2. Our opinions are subject to limitations imposed by laws and judicial
decisions relating to or affecting the rights of creditors or secured creditors
generally, or general principles of equity (regardless of whether enforcement is
considered in proceedings at law or in equity) upon the enforceability of any of
the remedies, covenants and other provisions of the Agreement and upon the
availability of injunctive relief or other equitable remedies;
3. We express no opinion as to the creation or
enforceability of security interests or as to the recoverability of
attorneys' fees and legal expenses;
4. We express no opinion as to the laws or the effect or
applicability of the laws of any jurisdiction other than the laws
of the State of Ohio;
5. The opinions expressed herein are as of the date hereof, and we
undertake no responsibility to advise you of changes occurring after the date of
this letter.
Based upon the foregoing and subject to further assumptions, limitations
and qualifications set forth below, we are of the opinion that:
MJD Ventures, Inc.
---------------------
_______________, 1998
Page 3
(a) The Columbus Grove Telephone Company and Quality One
Technologies, Inc. is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Ohio with full
corporate power and authority to carry on the business in which it is
presently engaged and to own, lease and operate its properties as now
being conducted and to perform its obligations under the Agreement. The
Shareholders are all residents of Ohio or Florida, as shown on Exhibit A
to the Agreement.
(b) The execution and delivery of the Agreement has been duly
authorized and approved by the Company's board of directors and the
Shareholders. The Agreement is a valid and binding obligation of the
Company and the Shareholders, enforceable in accordance with its terms,
subject to limitations and qualifications noted above. All persons who
have executed this Agreement on behalf of the Company have been duly
authorized to do so by all necessary action of the Company and its
Shareholders.
(c) The authorized capital stock of The Columbus Grove Telephone
Company consists of 500 shares of $100.00 par value common stock, of which
322 shares are issued and outstanding (the "Columbus Stock"). Each
Shareholder is the lawful owner of the number of shares reported in the
Agreement or in Exhibit A to the Agreement. The Columbus Grove Telephone
Company has no other class of stock authorized or issued and outstanding.
All of the issued and outstanding shares of the Columbus Stock are duly
and validly issued and outstanding, are fully paid and nonassessable, were
issued in compliance with all state and federal laws and are held by the
Shareholders. The delivery by the Shareholders to Purchaser at Closing of
certificates representing the Columbus Stock will pass good and marketable
title to all of the Columbus Stock to Purchaser free and clear of all
liens, encumbrances, claims, restrictions and equities of any kind, other
than as disclosed on Schedule 2.7 of the Agreement. There are no
outstanding warrants, options, rights, puts, calls or other commitments of
any nature relating to the Columbus Stock, and there are no outstanding
securities or debt obligations of the Company convertible into shares of
capital stock of the Company. To our best knowledge, none of the issued
and outstanding shares of capital stock of the Company was issued in
violation of
MJD Ventures, Inc.
---------------------
_______________, 1998
Page 4
preemptive rights. No shares of capital stock of the Company are held in
the treasury of the Company.
(d) The foregoing opinions are equally applicable to the capital
stock of each affiliate or subsidiary of the Corporation hereinafter set
forth, except that the authorized, issued and outstanding capital stock of
such corporations are as follows:
[Xxx, we do want an opinion on the outstanding capital stock. You
may rely on your review of the stock record books.]
Issued and
Authorized Outstanding
Corporation Capital Stock Capital Stock
----------- ------------- -------------
Quality One Technolo-
xxxx, Inc. 850 shares, 850 shares issued
no par value, to The Columbus
stock Grove Telephone
Company on
___________, 19___
(e) The execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated by the Agreement will not:
(i) violate or result in a breach of or default or acceleration under the
Articles of Incorporation or Bylaws of the Company or any instrument or
agreement to which the Company or the Shareholders are a party or are
bound which would have a material adverse effect on the Company's
properties or operations; (ii) violate any judgment, order, injunction,
decree or award against or binding upon the Company or upon the Columbus
Stock or other securities, property or business of the Company which would
have a material adverse effect on the Company's properties or operations;
(iii) result in the creation of any material lien, charge or encumbrance
upon the properties or assets of the Company or the Columbus Stock; or
(iv) violate any law or regulation of any jurisdiction relating to the
Company or the Columbus Stock or other securities, property or business of
the Company, assuming all required regulatory approvals
MJD Ventures, Inc.
---------------------
_______________, 1998
Page 5
have been obtained in connection with the transactions contemplated by the
Agreement.
(f) There is no litigation, claim or proceeding, pending or
threatened against the Company or the Shareholders, or against any of
their respective assets or properties, or relating to the ownership of any
or all of the Columbus Stock, or which questions the validity or
enforceability of the Agreement, or which could prevent, hinder or delay
consummation of the Agreement or any of the transactions contemplated
thereby.
(g) To our knowledge, there is not pending any threatened or
existing claim, unsatisfied judgment, litigation, governmental
investigation or proceeding before any court, arbitrator or federal, state
or other governmental commission, board or other agency by or against the
Company or the Shareholders or adversely affecting the operations or
financial condition of the Company or its business, property, prospects or
assets.
(h) The Shareholders and the Company have given all notices to and
have obtained from all local, state and federal regulatory authorities any
and all final and unappealable approvals, consents, permits and
authorizations required in order to consummate the transactions
contemplated in the Agreement. No such approvals are needed to effect a
change of control of Quality's cable television business.
(i) Upon completion of the transactions contemplated by the
Agreement, no Person, other than the Purchaser, shall have any ownership
or other right in and/or to the Columbus Stock.
The opinions expressed herein are solely for your benefit in connection
with the Agreement and, without our express written consent, neither our
opinions nor this opinion letter may be assigned, quoted or relied upon for any
other purpose. No other person or entity may rely upon or claim reliance upon
this opinion, and it is not to be quoted in whole or in part or otherwise
referred to by any governmental agency or other person or entity without prior
written consent of this firm.
Very truly yours,
MJD Ventures, Inc.
---------------------
_______________, 1998
Page 6
XXXXXXXX XXXX & XXXXX LLP
By:_________________________________
Name:______________________________
Title:_____________________________
Exhibit 7.8
NONCOMPETITION AGREEMENT
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made effective as of
the _________ day of ____________, 1998 (the "Effective Date"), by and between
XXXX XXXXXXX, a resident of Ohio ("Xxxxxxx"); THE COLUMBUS GROVE TELEPHONE
COMPANY, an Ohio corporation ("Columbus"), QUALITY ONE TECHNOLOGIES, INC., an
Ohio corporation ("Quality", and collectively with Columbus, the "Company") and
MJD VENTURES, INC., a Delaware corporation ("MJD").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Stock Purchase Agreement by and among
Xxxxxxx, the Company and MJD, among others, dated as of November ____, 1998 (the
"Purchase Agreement"), MJD is desirous of purchasing all of the outstanding
capital stock of the Company; and
WHEREAS, Xxxxxxx is a principal shareholder of the Company, and Xxxxxxx'x
knowledge of and contacts within the Company's relevant trade are such that MJD
is unwilling to enter into the Purchase Agreement in the absence of Xxxxxxx'x
agreement to the covenants set forth herein.
NOW, THEREFORE, in consideration of and as an inducement to MJD's entering
into the Purchase Agreement and the transactions contemplated thereby, and for
other good and valuable consideration as provided herein, the receipt and
sufficiency of which are hereby acknowledged, Xxxxxxx hereby undertakes and
agrees as follows:
1. Xxxxxxx will not, without the prior written approval of the Company and
MJD, directly or indirectly engage or attempt to engage in any of the following
competitive activities within the "Restricted Territory" during the "Restricted
Period" (as defined in Paragraphs 1(c) and 1(d) hereof, respectively):
(a) ownership, management, operation or control of, or participation
in the ownership, management, operation or control of, or connection with
or ownership of any interest in, or exploitation of any customers,
business or opportunities of, to or with, or otherwise assisting in any
manner, any entity which is engaged in any one or more of the "Restricted
Activities" (as defined in Paragraph 1 (e) hereof). By way of example and
not limitation, this restriction shall apply to actions taken by Xxxxxxx
in the capacity of director, officer, employee, agent, consultant, partner
or stockholder (except that Xxxxxxx shall be permitted to acquire a stock
interest in a corporation provided such stock is publicly traded and the
stock so acquired is not
more than five percent (5%) of the total outstanding shares of such
corporation) and shall further apply to actions taken by Xxxxxxx through
Xxxxxxx Winner or J. Xxxx Xxxxx or Xxxxxx Xxxxxxx or any other relative or
friend of hers, his or theirs; or
(b) employing or engaging or attempting to employ or engage, or
knowingly arranging or soliciting to have any other person or entity
employ or engage or attempt to employ or engage, any person who heretofore
has been employed or engaged by the Company and who is, on the Effective
Date or thereafter, employed or engaged by the Company or MJD, including,
without way of limitation, all such persons working in the capacity of
employee, agent, sales consultant or independent contractor (exclusive of
its legal and accounting advisers, Xxxxxxxx Xxxx & Xxxxx LLP and Pry CPA
Services, Inc.)
(c) As used herein, the term "Restricted Territory" shall include
any and all locations which as of the Effective Date are within the
operating area of Columbus or Quality, including but not limited to the
Counties of Xxxxxx and Xxxxx, as defined by the Public Utilities
Commission of the State of Ohio or the applicable municipality, and any
and all locations within a radius of fifty (50) miles of the outermost
boundary thereof.
(d) As used herein, the term "Restricted Period" shall be a period
of five (5) consecutive years, commencing with the Effective Date.
(e) As used herein, the term "Restricted Activities" shall mean the
provision or sale of any of the following telecommunications services to
any existing or future wireline or cable television customer of the
Company (i.e., any Person at a location within the Restricted Territory):
(1) Wireline or wireless telephone service;
(2) Paging;
(3) Cellular Resale;
(4) Paging Resale;
(5) Internet Access;
(6) PCS;
-2-
(7) Voice Mail;
(8) Fax Store & Forward;
(9) Directory;
(10) Pre-Paid Calling Cards;
(11) Toll Resale;
(12) Cable Television (wired and/or wireless);
(13) Local Dial Tone; and
(14) Optional Wire Maintenance.
2. Notwithstanding anything to the contrary herein provided, Xxxxxxx may,
without further consent of the Company or MJD, engage in the following permitted
activities (the "Permitted Activities"):
(1) Internet sales outside of the Restricted
Territory;
(2) Computer sales and services, whether within or
outside the Restricted Territory;
(3) Non-telecommunications sales and services
within the Restricted Territory; and
(4) Telecommunications-related services outside the
Restricted Territory.
3. Xxxxxxx shall not, directly or indirectly, at any and all times
hereafter, use, divulge or make available to any person or entity, any
confidential information or any documents, files or other papers concerning the
business of the Company, except for such disclosure which is consented to in
writing in advance by MJD, or otherwise required by applicable law or
regulations. Nothing contained in this Agreement shall in any way restrict or
impair Xxxxxxx'x right to use, disclose or otherwise deal with any confidential
information which: (a) at the time of disclosure is generally available to the
public or thereafter becomes generally available to the public through no act of
Xxxxxxx in violation of this Agreement, or (b) is independently made available
to Xxxxxxx by third parties having a right to disclose such information.
-3-
4. As consideration for the foregoing restrictions upon competition (in
addition to MJD's execution of the Purchase Agreement), MJD shall pay Xxxxxxx
the principal sum of Nine Hundred Thousand and no/100 Dollars ($900,000.00) (the
"Noncompete Payment"). The Noncompete Payment shall be payable in twenty (20)
equal quarterly installments of Forty-Five Thousand and no/100 Dollars
($45,000.00) each. The quarterly installments shall be payable in arrears,
commencing on the last day of the first full calendar quarter ending after the
Effective Date, and continuing on the last day of each calendar quarter
occurring thereafter until the total amount of the Noncompete Payment has been
paid in full to Xxxxxxx or her heirs or assigns, subject to the provisions
hereof. To the extent that the Effective Date has occurred after the start of a
particular calendar quarter, then the first quarterly installment shall be
prorated accordingly. The Noncompete Payment may be prepaid in part or in full
at any time by MJD, in its sole discretion, without penalty or premium.
5. In the event of any breach by Xxxxxxx of any provision contained
herein, all obligations and liabilities of MJD with respect to the Noncompete
Payment shall cease and terminate, and the Restricted Period shall, to the
extent permitted by law, be extended by any period of time during which (i) such
breach continues and (ii) there is pending litigation in which MJD is seeking to
enforce the terms of this Agreement. Xxxxxxx'x death shall not be deemed a
breach of this Agreement. There is no right of offset against the payments to be
made to Xxxxxxx hereunder for any of the indemnification obligations set forth
in Article XI of the Purchase Agreement.
6. In the event of nonpayment of any of the amounts set forth in Paragraph
4 hereof, after written notice thereof by Xxxxxxx and a thirty (30) day
opportunity to cure such default, if Xxxxxxx is not otherwise in default of this
Agreement, all obligations and liabilities of Xxxxxxx hereunder shall cease and
terminate until such time as payment hereunder shall have recommenced and been
brought current.
7. Except as otherwise defined herein, capitalized terms used herein shall
have the meanings ascribed to them in the Purchase Agreement. In the event that
any provision contained herein is held to be invalid, prohibited or
unenforceable because of the scope, duration or area of its applicability or for
other reasons, such provision shall be ineffective only to the extent of such
invalidity, prohibition or unenforceability, without invalidating the remaining
provisions hereof. No narrowed construction, court-modification or invalidation
of any provision hereof shall affect the construction, legality, validity or
enforceability of any other provision hereof.
-4-
8. Xxxxxxx acknowledges that the Company and MJD will be irreparably
damaged if the provisions hereof are not specifically enforced, and agrees that
either or both of the Company and/or MJD shall be entitled to an injunction
restraining any violation or attempted violation of this Agreement (without any
bond or other security being required), or any other appropriate decree of
specific performance. Such remedies shall not be exclusive and shall be in
addition to any other remedy which the Company and/or MJD may have.
9. This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware without regard to its principles of conflict of
laws. This Agreement shall inure to the benefit of the Company, MJD and Xxxxxxx
and their respective heirs, successors and assigns. The restrictive covenants
contained herein shall apply to all actions taken by Xxxxxxx or any person or
entity directly or indirectly controlling, controlled by or affiliated with
Xxxxxxx. The terms hereof may not be modified or terminated except by a writing
signed by the Company, MJD and Xxxxxxx.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
-5-
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the date first set forth above.
(SEAL)
---------------------------
XXXX XXXXXXX
THE COLUMBUS GROVE TELEPHONE COMPANY
ATTEST:
_____________________________ _____________________________
By: _________________________ By: _________________________
Title: ______________________ Title: ______________________
(Corporate Seal)
QUALITY ONE TECHNOLOGIES, INC.
ATTEST:
_____________________________ _____________________________
By: _________________________ By: _________________________
Title: ______________________ Title: ______________________
(Corporate Seal)
MJD VENTURES, INC.
ATTEST:
_____________________________ _____________________________
By: _________________________ By: _________________________
Title: ______________________ Title: ______________________
(Corporate Seal)
-6-
Exhibit 7.9
CONSULTING AGREEMENT
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made effective as of the
_________ day of ____________, 1998 (the "Effective Date"), by and between XXXX
XXXXXXX, a resident of Ohio ("Xxxxxxx"); THE COLUMBUS GROVE TELEPHONE COMPANY,
an Ohio corporation ("Columbus") and MJD VENTURES, INC. , a Delaware corporation
("MJD").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is an Ohio corporation, and with its wholly owned
subsidiary, Quality, is engaged in, among other activities, the ownership and
operation of a telephone company that provides wire line and cable television
telecommunications services in the exchange of Columbus Grove, Ohio (the
"Business"); and
WHEREAS, pursuant to that certain Stock Purchase Agreement by and among
Xxxxxxx, the Company and MJD, among others, dated as of November ____, 1998 (the
"Purchase Agreement"), MJD is desirous of purchasing all of the outstanding
capital stock of the Company; and
WHEREAS, Consultant possesses valuable knowledge and experience regarding
the business affairs of the Company and of the regulatory climate of the
telecommunications industry in general; and
WHEREAS, the Company desires to obtain the services of Consultant for its
business in order to insure an orderly transition of control of the Business and
to assist the Company with its regulatory and legislative needs, and Consultant
is willing to provide such services;
C O V E N A N T S:
- - - - - - - - -
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Consultation Services. The Company hereby engages Consultant to provide
Business consulting services, and Consultant hereby agrees to provide such
services to the Company. The specific services to be rendered by Consultant
shall be mutually agreed upon from time to time between Consultant and
appropriate officers and/or the Board of Directors of the Company. Subject to
the provisions of the following paragraph, Consultant agrees to devote such time
and energy as may be necessary to perform the duties and responsibilities
requested by the Company.
The parties contemplate that the majority of the Consultant's services
shall pertain to assisting the Company with its regulatory and legislative
needs, and that the Consultant shall expend an average of no more than
twenty-five (25) hours per month providing such consulting services.
2. Term. The term of this Agreement shall be for a period of five (5)
years commencing as of the date hereof ("Term").
3. Compensation. For all services rendered by Consultant under this
Agreement, the Company shall pay Consultant an annualized fee in the amount of
Sixty Thousand and No/100 Dollars ($60,000.00) (the "Consulting Payment")
payable in equal monthly payments of Five Thousand Dollars ($5,000.00) each.
There is no right of offset against the payments to be paid to Consultant
hereunder for any of the indemnification obligations set forth in Article XI of
the Purchase Agreement. Notwithstanding anything to the contrary herein
provided, in the event of nonpayment by Company of any of the amounts set forth
in this Paragraph 3, after written notice thereof by Consultant and a thirty
(30) day opportunity to cure such default, if Xxxxxxx is not otherwise in
default of this Agreement, all obligations of Xxxxxxx hereunder shall cease and
terminate until such time as payment hereunder shall have recommenced and been
brought current.
4. Expenses. The Company shall reimburse the Consultant for reasonable
out-of-pocket business expenses incurred in the course of the Consultant's
performance of her duties hereunder, upon presentation by the Consultant to the
Company of such documentation as is reasonably requested by the Company to
enable it to comply with applicable tax regulations.
5. Relationship of the Parties.
(a) It is expressly agreed and understood that Consultant shall act
as an independent contractor and not as an employee or agent of the
Company. The Company has no responsibility for Consultant as an
independent contractor, and has no responsibility for any employees hired
by Consultant.
(b) As an independent contractor, Consultant hereby expressly agrees
that she is responsible for the payment of all taxes, including federal,
state and local taxes, arising out of Consultant's performance of the
services, including, but not limited to, federal and state income tax,
Social Security tax,
-2-
unemployment insurance taxes, worker's compensation and any and all other
taxes.
(c) It is expressly agreed that Consultant will make any insurance
arrangements for herself she deems necessary. Consultant understands that
she shall not be entitled to receive any health insurance benefits,
retirement benefits or other benefits available to employees of the
Company.
6. Entire Agreement. This Agreement, with the Stock Purchase Agreement and
the Noncompetition Agreement entered into by Consultant simultaneously herewith,
contains the entire agreement of the parties with respect to its subject matter
and, as of the date hereof, supersedes all previous and contemporaneous
agreements and understandings, inducements, or conditions, expressed or implied,
oral or written, between the parties with respect to the subject matter hereof,
and no waiver, modification, or change of any of its provisions shall be valid
unless in writing and signed by the parties against whom such claimed waiver,
modification or change is sought to be enforced.
7. Waiver of Breach. The waiver of any breach of any term or condition of
this Agreement shall not be deemed to constitute a waiver of any other term or
condition of this Agreement.
8. Severability. If any term or provision of this Agreement or the
application thereof to any person of circumstance shall to any extent be invalid
or unenforceable, the remainder of this Agreement shall not be affected thereby
and each term and provision of this Agreement shall be valid and enforceable to
the fullest extent permitted by law.
9. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without regard to
its principles of conflict of laws.
10. Notices. Any notices, requests, demands or other communications under
this Agreement to a party hereto shall be in writing and shall be deemed to have
been fully given when delivered in person or deposited in the United States
Mail, postage pre-paid, by registered or certified mail, return receipt
requested, to the parties hereto to the following address:
as to Consultant: Xxxx Xxxxxxx
00000 Xxx XX 00
Xxxxxx, XX 00000
-3-
as to the Company: The Columbus Grove Tele-
phone Company
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
as to MJD: MJD Ventures, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Any party hereto may change its address to which notices or other communications
hereunder are to be directed (and the person to whom such notice or other
communication is to be directed) by giving notice thereof to the other parties
hereto as hereinabove provided.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first above written.
(SEAL)
------------------------------
XXXX XXXXXXX
THE COLUMBUS GROVE TELEPHONE COMPANY
ATTEST:
_____________________________ _____________________________
By: _________________________ By: _________________________
Title: ______________________ Title: ______________________
(Corporate Seal)
MJD VENTURES, INC.
ATTEST:
_____________________________ _____________________________
By: _________________________ By: _________________________
Title: ______________________ Title: ______________________
(Corporate Seal)
-4-
Exhibit 8.5
Opinion of Purchaser's Counsel
XXXXXXXXX XXXXXX XXXXXX & XXXXXX, P.A.
ATTORNEYS AT LAW
XXXXXXXXX XXXXX XXXXXXXX, XXXXX 0000
000 XXXXX XXXXXXX XXXXXX
XXXXXXX X. XXXXX XXXXXXXXX, XXXXX XXXXXXXX 00000-0000
XXXXXXXXX XXXXXXXX XXXXXXXXX
XXXXXXX X. XXXXXX
C. XXXXX XXXXXX, XX. TELEPHONE
XXXXXXX X. XXXX 000-000-0000
XXXX X. XXXXXXX III
XXXXXXX X. XXXXXXXX III
XXXXXXX X. XXXXXXX, XX. FACSIMILE
XXXXXXX X. XXXXXX, XX. 000-000-0000
XXXXX X. XXXXXX
XXXXXX X. XXXXXX, XX.
XXXXXXX X. XXXXXXXXX, XX.
XXXXXX XXXXXX III
__________________, 1998
Xx. Xxxx Xxxxxxx
Ms. Earlene Winner
c/o The Columbus Grove
Telephone Company
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel to MJD Ventures, Inc., a Delaware corporation
("MJD" or "Purchaser"), in connection with the purchase by Purchaser of all of
the capital stock of The Columbus Grove Telephone Company (the "Company") from
Xxxx Xxxxxxx, Xxxxxxx Winner and the Other Stockholders ("Seller"), pursuant to
a Stock Purchase Agreement entered into as of November ___, 1998 (the "Purchase
Agreement") by, between and among Purchaser, the Company and Seller.
This opinion is being delivered to you pursuant to Section 8.5 of the
Purchase Agreement. Capitalized terms used herein which are not otherwise
defined herein shall have the meanings set forth in the Purchase Agreement.
In connection with this transaction, we have reviewed the Articles of
Incorporation and Bylaws (the "Organizational Documents") of the Purchaser, the
Purchase Agreement and such other instruments and documents as are executed and
delivered pursuant to the Purchase Agreement, and have examined such other
records and information and have conducted such other investigations as we have
deemed necessary to
Xx. Xxxx Xxxxxxx
Ms. Earlene Winner
c/o The Columbus Grove
Telephone Company
_______________, 1998
Page 2
render the opinion set forth below. As to facts material to our opinion, we have
relied upon the factual representations of Purchaser in the Purchase Agreement,
certificates from certain state authorities and on those certificates delivered
at Closing.
We have assumed the conformity of all copies to the originals of all
documents reviewed by us, the genuineness of all signatures (other than those of
the shareholders, directors and officers of Purchaser) and the authenticity of
all documents submitted to us (whether originals or copies).
For the purposes of our opinion, we have assumed that the Purchase
Agreement and all other instruments and documents executed and delivered
pursuant thereto have been duly authorized, executed and delivered by all of the
parties thereto other than Purchaser.
Whenever a statement herein is qualified by the phrases "known to us" or
"to our knowledge", or similar phrases, it is intended to indicate that during
the course of our representation of Purchaser and the transactions contemplated
by the Purchase Agreement, and having made inquiry of certain officers of
Purchaser as to such matters, no information that would give us actual knowledge
of the inaccuracy of such statement has come to our attention. However, we have
not undertaken any independent investigation or review to determine the accuracy
of any such statement. No inference as to our knowledge of any matters bearing
on the accuracy of any such statement should be drawn from our representation of
Purchaser.
Based upon the foregoing, and subject to the assumptions and
qualifications herein set forth, it is our opinion that:
1. MJD is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to carry on the business in which it is engaged, to own, lease and
operate its properties, and to enter into and to perform its obligations under
the Purchase Agreement.
2. The execution and delivery of the Purchase Agreement was duly
authorized and approved by the Board of Directors of MJD. The Purchase
Xx. Xxxx Xxxxxxx
Xx. Xxxxxxx Winner
c/o The Columbus Grove
Telephone Company
_______________, 1998
Page 3
Agreement is a valid and binding obligation of MJD enforceable in accordance
with its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights in the event of future bankruptcy,
insolvency or reorganization of Purchaser, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. All persons who have executed this Purchase
Agreement on behalf of MJD have been duly authorized to do so by all necessary
corporate action.
3. To our knowledge, MJD has given all notices to and has obtained from
all state and federal regulatory authorities any approvals, consents, permits
and authorizations required in order to consummate the transactions contemplated
in the Purchase Agreement.
The opinions expressed herein are based upon and limited to matters
governed by the laws of the State of North Carolina and the State of Delaware,
and we express no opinion as to any matter governed by the laws of any other
jurisdiction. We are not authorized to practice law in the State of Delaware and
the opinions set forth herein are rendered solely upon our review of applicable
provisions of Delaware corporation law as currently published in standard
compilations and such consultations with Delaware local counsel as we have
deemed necessary or appropriate.
This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in laws which may hereafter
occur. This opinion is limited to matters herein, and no opinion may be inferred
or implied beyond the matters expressly stated herein.
This opinion is being furnished to you in connection with the transactions
contemplated by the Purchase Agreement. This opinion is solely for your benefit
and is not to be used, circulated, quoted or otherwise referred to for any other
purpose nor relied upon by any other person or entity without our prior written
consent.
Xx. Xxxx Xxxxxxx
Ms. Earlene Winner
c/o The Columbus Grove
Telephone Company
_______________, 1998
Page 4
Finally, the opinions expressed herein represent our reasonable judgment
as to the matters of law addressed herein, based upon the facts presented or
assumed, and are not, and should not be construed or considered as, a guaranty.
Very truly yours,
XXXXXXXXX XXXXXX XXXXXX & XXXXXX, P.A.
Exhibit 11.2
Escrow Agreement
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Escrow Agreement") is made as of
______________, 1998, between XXXX XXXXXXX, a resident of the State of Ohio
("Xxxxxxx"), XXXXXXX WINNER, a resident of the State of Ohio ("Winner", and
collectively with Xxxxxxx, the "Belch Sisters"), MJD SERVICES CORP., a Delaware
corporation ("Purchaser") and KeyCorp. (the "Escrow Agent").
STATEMENT OF PURPOSE
On or about November ___, 1998, the Belch Sisters and Purchaser, among
others, entered into a Stock Purchase Agreement (the "Purchase Agreement"), and
pursuant to the provisions of Section 9.2 of the Purchase Agreement, the Belch
Sisters and Purchaser agreed that One Million Dollars ($1,000,000) (the "Escrow
Funds") of the total purchase price otherwise attributable to the Belch Sisters
would be deposited with Escrow Agent as the exclusive source of recovery by
Purchaser for any breach of the Purchase Agreement as set forth therein all in
accordance with the terms of this Escrow Agreement.
The Escrow Agent has agreed to serve as escrow agent under this Escrow
Agreement and to accept delivery of the Escrow Funds in accordance with the
terms and conditions set out in this Escrow Agreement.
AGREEMENT
In consideration of the premises, and the agreements set out below, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties enter into the following Escrow Agreement:
1. Deposit with Escrow Agent. At Closing of the sale and purchase of the
Shares as provided in the Purchase Agreement, Purchaser shall deliver to the
Escrow Agent the sum of One Million Dollars ($1,000,000) to be held,
administered and distributed by the Escrow Agent pursuant to the terms of this
Escrow Agreement.
2. Escrow Funds. Upon receipt of the Escrow Funds, the Escrow Agent shall
deposit the Escrow Funds in an escrow account (the "Escrow Account") and shall
hold, administer, invest and distribute the Escrow Funds in accordance with the
terms of this Escrow Agreement. All references in this Escrow Agreement to
Escrow Funds shall include any investment of such funds and all investment
earnings thereon.
-1-
3. Purposes of Escrow. The Escrow Funds shall be used solely for the
purposes and in the manner set forth in Article XI of the Purchase Agreement.
The Escrow Funds shall not constitute an asset of the Belch Sisters until the
distribution thereof to the Belch Sisters in accordance with the terms of the
Purchase Agreement and of this Escrow Agreement.
4. Term. The term of this Escrow Agreement ("Escrow Period") shall expire
on April 30, 1999 (if the Closing contemplated by the Purchase Agreement (the
"Closing") shall have occurred at any time in 1998) or the date which is seven
(7) months after Closing (if Closing shall have occurred at any time in 1999),
except that the Escrow Period shall be automatically extended as necessary to
provide for the disposition of any Claims filed by Purchaser with the Escrow
Agent during such period, in accordance with the procedures set forth in Section
5 hereof.
5. Disbursement of Escrow Funds.
(a) In the event Purchaser determines that it is entitled to all or
any portion of the Escrow Funds pursuant to Article XI of the Purchase
Agreement, Purchaser shall deliver written notice to the Escrow Agent and
the Belch Sisters, stating the factual basis for, and the amount of, such
entitlement ("Claim"). Within thirty (30) days following such delivery of
the Claim, the Belch Sisters may deny all or any portion of the Claim by
delivering written notice to the Escrow Agent and Purchaser, indicating
the amount or portion of the Claim which is denied and the factual basis
for such denial ("Denial").
(b) In the event that the Belch Sisters fail to timely deliver a
Denial to the Escrow Agent, the Escrow Agent shall immediately release and
distribute to Purchaser an amount equal to the Claim.
(c) In the event the Escrow Agent receives a timely Denial from the
Belch Sisters as to all or any portion of a Claim, the Escrow Agent shall
(i) immediately distribute to Purchaser an amount, if any, equal to the
portion of the Claim that the Belch Sisters have not denied, and (ii)
within sixty (60) days of receipt of such Denial, file an action in
interpleader with any Ohio court of competent jurisdiction to resolve such
disagreement and deposit with the registry of the court an amount equal to
the denied portion of the Claim, unless a joint instruction is received by
the Escrow Agent from the Belch Sisters and the Purchaser as to the
disposition of the denied portion of the Claim
-2-
prior to the expiration of such sixty (60) day period. If the Denial does
not state the amount or portion of the Claim denied, the total amount of
the Claim shall be deemed denied. Purchaser and the Belch Sisters agree to
thereafter apply to such court for an order submitting the matter to
arbitration pursuant to Section 11.6(b) of the Purchase Agreement.
(d) The Escrow Agent shall equally divide and distribute any portion
of the Escrow Funds remaining in the Escrow Agent's possession immediately
upon the expiration of the Escrow Period in equal amounts to each of the
Belch Sisters, free and discharged from any further obligation with
respect to the same hereunder.
(e) Notwithstanding anything herein to the contrary, during the
Escrow Period, the Escrow Agent shall distribute so much of the Escrow
Funds to the Belch Sisters as provided in a written joint instruction
received by the Escrow Agent from the Belch Sisters and the Purchaser and
signed by all of them.
6. Release From Escrow. As and when all of the Escrow Funds are either
distributed as provided hereunder or deposited with the registry of the court in
interpleader, the Escrow Agent shall be released and discharged from any further
obligation hereunder without further action of any party. Compliance by the
Escrow Agent with any final, non-appealable order or a judgment of a court
concerning the subject matter of any such dispute or agreement shall thereupon
release and relieve the Escrow Agent from all obligations and responsibility
with respect to the Escrow Funds to which such order or judgment relates.
7. Investment of Escrow Funds. The Escrow Agent shall hold the Escrow
Funds delivered to it under the terms of this Escrow Agreement and shall invest
the Escrow Funds held by it (i) in interest bearing demand deposit accounts with
commercial banks whose accounts are insured by the Federal Deposit Insurance
Corporation, or (ii) in any other investment upon which the Belch Sisters and
the Purchaser shall mutually agree in writing.
8. Agreement of Escrow Agent. The Escrow Agent hereby agrees to receive
the Escrow Funds and hold the same intact, and to deposit the Escrow Funds in
accordance with the terms of this Escrow Agreement, and shall not permit any
withdrawal except under the terms of this Escrow Agreement. The Escrow Agent
shall be responsible only for the safekeeping and the deposit of the Escrow
Funds and the disbursements or delivery in accordance with the terms of this
Escrow Agreement. The Escrow Agent shall not be responsible for the
appropriateness, sufficiency or accuracy of information contained in any written
notice.
-3-
9. Performance of Escrow Agent.
(a) There are no implied duties under this Escrow Agreement. The
duties, obligations and acts of the Escrow Agent shall be construed as
purely ministerial in nature. Escrow Agent shall be responsible for only
those duties expressly set forth in this Escrow Agreement. In performing
any of its duties under this Escrow Agreement, or upon the claimed failure
to perform its duties under this Escrow Agreement, Escrow Agent shall not
be liable to anyone for any damages, losses, or expenses which they may
incur as a result of the Escrow Agent so acting, or failing to act;
provided, however, Escrow Agent shall be liable for damages arising out of
its willful default or gross negligence under this Escrow Agreement.
Accordingly, Escrow Agent shall not incur any such liability with respect
to (i) any action taken or omitted to be taken in good faith upon advice
of its counsel or counsel for any other party to this Escrow Agreement
given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent hereunder or (ii) any action taken or
omitted to be taken in reliance upon any document, including any written
notice or instructions provided for in this Escrow Agreement, not only as
to its due execution and to the validity and effectiveness of its
provisions but also as to the truth and accuracy of any information
contained in any notice or document, which the Escrow Agent shall in good
faith believe to be genuine, to have been signed or presented by a proper
person or persons and to conform with the provisions of this Escrow
Agreement.
(b) The Belch Sisters and the Purchaser agree to indemnify and hold
harmless Escrow Agent against any and all losses, claims, damages, liabilities
and expenses, including without limitation, reasonable costs of investigation
and counsel fees and disbursements which may be imposed by Escrow Agent or
incurred by it in connection with its acceptance of this appointment as Escrow
Agent or the performance of its duties, including, without limitation,
reasonable attorneys fees and costs attributable to any interpleader action
commenced by the Escrow Agent or any other litigation arising from this Escrow
Agreement or involving the subject matter of this Escrow Agreement; provided,
however, that if Escrow Agent shall be found guilty of willful default or gross
negligence under this Escrow Agreement, then, in that event, Escrow Agent shall
itself bear all such losses, claims, damages, liabilities and expenses. The
Belch Sisters on the one hand and the Purchaser on the other hand agree to split
equally any amounts due under this Section 9(b).
-4-
10. Fees of Escrow Agent. For its ordinary services hereunder (which shall
include receipt, investment and disbursement of the Escrow Funds in the manner
described in this Escrow Agreement), the Escrow Agent shall receive compensation
of _________________________________ Dollars ($_______) to be paid equally by
each of Purchaser on the one hand and the Belch Sisters on the other hand upon
execution of this Escrow Agreement and shall receive such additional reasonable
compensation during the term hereof as is commensurate with its services
provided hereunder as Escrow Agent; any such additional compensation to be
similarly paid equally by each of Purchaser on the one hand and the Belch
Sisters on the other hand.
11. Resignation of Escrow Agent. The Escrow Agent or successor at any time
may resign by giving thirty (30) business days written notice to the parties
hereto, and such resignation shall take effect at the end of such thirty (30)
business days if all of the Escrow Funds have been tendered into the registry or
custody of an Ohio court in the manner provided in Section 5 hereof, or upon the
earlier appointment, with the approval of the Belch Sisters and the Purchaser,
of a successor. From and after the effective date of such resignation or
appointment of a successor, the Escrow Agent shall not be obligated to perform
any of the duties of the Escrow Agent hereunder and will not be liable for any
nonperformance thereof nor for any act or failure to act whatsoever on the part
of any successor Escrow Agent. If the Belch Sisters and the Purchaser are unable
to agree upon a successor Escrow Agent within thirty (30) days following notice
of the Escrow Agent's resignation, the Escrow Agent shall commence an action in
interpleader and deposit the Escrow Funds with the registry of the court in the
manner provided in Section 5 hereof.
12. Successor to Escrow Agent. Any corporation resulting from any merger
or consolidation to which the Escrow Agent or any successor to it shall be a
party, or any corporation in any manner succeeding to all or substantially all
of the business of the Escrow Agent or any successor, shall be the successor
escrow agent hereunder without the execution or filing of any paper or any
further acts on the part of any of the parties hereto. In the event of a
resignation of the Escrow Agent pursuant to paragraph 11 of this Escrow
Agreement, any person(s) or corporation hereafter agreed upon by the parties
shall be the successor escrow agent hereunder.
13. Instructions and Notices. In executing and performing its duties
hereunder, except as otherwise provided, the Escrow Agent shall be entitled to
rely upon instructions of the Belch Sisters and the Purchaser. For all purposes
hereunder, the Belch Sisters shall be required to act with unanimity, and
Xxxxxxx shall act as spokeswoman for the Belch Sisters for purposes of all
notices, communications,
-5-
decisions and determinations. Any notice, payment, demand, instruction or
communication required or permitted to be given by this Escrow Agreement shall
be in writing and shall be given by hand delivery, overnight messenger or
certified mail, return receipt requested, addressed to the appropriate party at
the address stated below:
If to the Belch Sisters:
Xxxx Xxxxxxx and Xxxxxxx Winner
00000 Xxx XX 00
Xxxxxx, XX 00000
If to Purchaser:
MJD Ventures, Inc.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
ATTN: Xx. Xxxxxx X. Xxxxxxx, Vice Chairman
and Executive Vice President
If to Escrow Agent:
KeyCorp.
----------------------------------------
----------------------------------------
----------------------------------------
Any notice sent by overnight messenger or hand delivery shall be deemed
made on the date received, and any notice sent by certified mail shall be deemed
made three (3) days after mailing.
14. Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its principles of conflicts of law.
15. Headings. The headings in this Escrow Agreement are inserted for
convenience and identification only and are in no way intended to interpret,
define or limit the scope, extent or intent of this Escrow Agreement or any
provision of this Escrow Agreement.
16. Severability. Each provision of this Escrow Agreement is intended to
be severable. If any term or provision of this Escrow Agreement is illegal or
invalid for any reason whatsoever, such
-6-
illegality or invalidity shall not affect the validity or enforcement of the
remainder of this Escrow Agreement.
17. Counterparts. This Escrow Agreement and any amendment hereto may be
executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
18. Amendment. No modification or amendment to this Escrow Agreement shall
be valid unless produced in writing and signed by all of the parties hereto.
19. Successors. This Escrow Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns, as the case may be. Escrow Agent shall not be bound by or incur any
liability with respect to this Escrow Agreement or any other agreement or
understanding between the Belch Sisters and the Purchaser, except as in this
Escrow Agreement expressly provided.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed as of the date first above written.
_______________________________(SEAL)
XXXX XXXXXXX
_______________________________(SEAL)
XXXXXXX WINNER
MJD VENTURES, INC.
__________________________________
By: ______________________________
Its: _____________________________
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Escrow Agent
KEYCORP.
By: _______________________________
Its: ______________________________
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Schedule 3.3
Consents and Authorizations of Purchaser
Approval of the PUCO to the change of control and reorganizations of
Columbus and/or Quality contemplated by this transaction.
FCC approval to transfer of control of certain radio and walkie talkie
licenses.
Local/municipal approval of change of control of telephone and cable
television operations, as may be necessary.
