-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, FYsTi5AVav5el6HSiDm0nb93B3q8ZNHrzXI6oW1ULVbTp7bxi/tTv8BjxS8E5kqg 62jZwI8FLEf21ZmUfsOJQg== 0000020520-95-000007.txt : 19950615 0000020520-95-000007.hdr.sgml : 19950615 ACCESSION NUMBER: 0000020520-95-000007 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950316 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS UTILITIES CO CENTRAL INDEX KEY: 0000020520 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 060619596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11001 FILM NUMBER: 95521167 BUSINESS ADDRESS: STREET 1: HIGH RIDGE PK BLDG 3 STREET 2: P O BOX 3801 CITY: STAMFORD STATE: CT ZIP: 06905 BUSINESS PHONE: 2033298800 10-K 1 CITIZENS UTILITIES COMPANY -------------------------- FORM 10-K --------- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) --------------------------------------------- OF THE SECURITIES EXCHANGE ACT OF 1934 -------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1994 ------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1994 Commission file number 0-1291 ----------------- ------ CITIZENS UTILITIES COMPANY - ---------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 06-0619596 - --------------------------------- ---------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) High Ridge Park P.O. Box 3801 Stamford, Connecticut 06905 - ------------------------------------ -------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 329-8800 ---------------- Securities registered pursuant to Section 12(b) of the Act: Common Stock Series A, par value $.25 per share New York Stock Exchange Common Stock Series B, par value $.25 per share New York Stock Exchange - -------------------------------------------------------------------------- (Title of each class) (Name of exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: NONE - -------------------------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months, (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes X No ----- ----- State the aggregate market value of the voting stock held by nonaffiliates of the registrant as of January 31, 1995: $2,808,214,408. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of January 31, 1995. Common Stock Series A 152,700,792 Common Stock Series B 60,137,151 DOCUMENTS INCORPORATED BY REFERENCE The Proxy Statement for the registrant's 1995 Annual Meeting of Stockholders is incorporated by reference into Part III of this Report. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Item 1. Description of Business ----------------------- (a) General Development of Business ------------------------------ The "Company" includes Citizens Utilities Company and its subsidiaries except where the context or statement indicates otherwise. The Company was incorporated in Delaware in 1935 to acquire the assets and business of a predecessor public utility corporation. Since then, the Company has grown as a result of investment in owned utility operations and numerous acquisitions of additional utility operations. It continues to consider and carry out business expansion through significant acquisitions and joint ventures in traditional public utility and related fields and the rapidly evolving telecommunications and cable television industries. The Company directly, or through subsidiaries, provides telecommunications, electric distribution, natural gas transmission and distribution and water and wastewater treatment services to more than 1,400,000 customer connections in areas of eighteen states. Other than the transfer to the Company of the GTE Telephone Properties discussed below, there have not been any material changes in the business of the Company during the past fiscal year. The Company's strong financial resources and consistent operating performance enable it to make the investments and conduct the operations necessary to serve growing areas and to expand through acquisitions. On May 19, 1993, the Company and GTE Corporation announced the signing of ten definitive agreements pursuant to which the Company agreed to acquire from GTE Corporation, for $1.1 billion, certain telephone properties serving approximately 500,000 local telephone access lines in nine states ("the GTE Telephone Properties"). On December 31, 1993, 189,123 access lines in Idaho, Tennessee, Utah and West Virginia were transferred to the Company. On June 30, 1994, 270,883 local telephone access lines in New York were transferred to the Company. On November 30, 1994, 37,802 local telephone access lines in Arizona and Montana were transferred to the Company and on December 30, 1994, 5,440 local telephone access lines in California were transferred to the Company. The remaining GTE Telephone Property is located in Oregon and is expected to be transferred to Citizens in 1995. On November 29, 1994, the Company and ALLTEL Corporation ("ALLTEL") announced the signing of eight definitive agreements pursuant to which Citizens agreed to acquire from ALLTEL for $292,000,000, certain telephone properties servicing approximately 110,000 local telephone access lines and certain cable television systems servicing approximately 7,000 subscribers. The properties are located in eight states: Arizona, California, Nevada, New Mexico, Oregon, Tennessee, Utah and West Virginia ("ALLTEL Telephone Properties"). The closings are expected to occur state by state throughout 1995 and the first half of 1996. (b) Financial Information about Industry Segments --------------------------------------------- The Consolidated Statements of Income and Note 10 of the Notes to Consolidated Financial Statements included herein sets forth financial information about industry segments of the Company for the last three fiscal years. (c) Narrative Description of Business --------------------------------- TELECOMMUNICATIONS ------------------ The Company provides telecommunications services in Arizona, California, Idaho, Montana, New York, Oregon, Pennsylvania, Tennessee, Utah, Washington and West Virginia to primarily residential customers served by more than 706,000 access lines as of December 31, 1994. The Company will provide telecommunications services to customers served by approximately 126,000 additional access lines in Arizona, California, Nevada, New Mexico, Oregon, Tennessee, Utah and West Virginia and cable television service to approximately 7,000 subscribers in California upon the transfer to the Company of the remaining GTE and ALLTEL Telephone Properties. Telecommunications services consist of local exchange service, centrex service, network access service, long distance service, interexchange service, competitive access service, competitive local exchange service, cellular service, cable television service and other related services. The Company's telecommunications services and/or rates are subject to the jurisdiction of the Federal Communications Commission and state regulatory agencies. Various state regulatory agencies, state legislatures and the federal government have initiated proceedings to promote the development of competition in telecommunications markets. These proceedings are focussed on removing the regulatory and legal barriers to competitive entry into the interLATA toll, intrastate intraLATA toll and local exchange markets; developing rules to govern the relationship between competitors; and designing rebalanced rate structures for the incumbent local exchange company ("LEC") which would allow LECs the opportunity to effectively compete in these markets while protecting the public's interest and access to telecommunication services. Simultaneously, many states are investigating or have implemented procedures for LECs to enter into incentive regulatory frameworks ("IRF") as an alternative to traditional rate base, rate of return regulation, and/or classifying services on the basis of the presence of competition and allowing deregulation or flexible pricing regulation for the services deemed competitive. The Public Utility Commission of the State of California ("CPUC") issued an order, effective January 1, 1995, authorizing competition for intrastate intraLATA switched toll services, rebalancing local exchange and toll rates, establishing more specific procedures for local exchange carriers to enter into incentive regulatory frameworks ("IRF") and providing a timetable for the elimination of the intrastate toll settlement pools for mid-sized local exchange carriers. In support of CPUC efforts which preceded its order, the Company's California telephone subsidiary (the "Subsidiary") exited the toll settlement pools in 1991 and entered into a transition contract with Pacific Bell. Pursuant to this contract, Pacific Bell agreed to pay the Subsidiary $38,000,000 annually through the end of 1994 to partially offset the decline in revenues which resulted from exiting the toll settlement pools. The Subsidiary expected to conclude a general rate case permitting the implementation of rebalanced, competitive rates effective January 1, 1995 intended to protect the Subsidiary's overall revenues, other than the $38,000,000 Pacific Bell contract payment, by enabling it to effectively compete in the intrastate intraLATA switched toll services market. Although this general rate case has not been finalized, the CPUC has issued an interim rate order which became effective January 1, 1995 and authorizes rebalanced competitive rates for the Subsidiary. In its general rate case, the Subsidiary requested approval of an IRF which would allow it to earn up to 5% in excess of its authorized rate of return. It is expected that the approved IRF will be effective when the final rate order is issued later in 1995. The Company continues to invest in its subsidiary, Electric Lightwave, Inc. ("ELI"), a competitive access provider in Arizona, California, Oregon, Utah and Washington. Through ELI, the Company has been granted authority in Washington to provide competitive local exchange service and has filed applications to provide competitive local exchange service in Utah and Oregon. The Company has completed construction of a fiber-optic route from Las Vegas, Nevada to Phoenix, Arizona which will provide the Company's other telecommunications operations in Arizona centralized equal access to long distance carriers and will provide the Company with the fiber optic capacity to provide transport services to other carriers along this route. The Company has invested approximately $110,300,000 in ELI through the year ended December 31, 1994. The Company's Mohave Cellular subsidiary holds a one-third interest and is general managing partner of a cellular limited partnership operating six cell sites in Arizona. On September 22, 1994, a subsidiary of the Company and a subsidiary of Century Communications Corp. ("Century") entered into a joint venture agreement for the purpose of acquiring, for approximately $89 million, and operating two cable television systems in southern California (the "Systems"). Century is a cable television company of which Leonard Tow, the Chairman and Chief Executive Officer of the Company, is Chairman, Chief Executive Officer, Chief Financial Officer and a director. In addition, Claire Tow, a director of the Company is Senior Vice President and a director of Century and Robert Siff, a director of the Company is a director of Century. The joint venture is governed by a management board on which the Company and Century are equally represented. The joint venture has entered into an agreement pursuant to which a subsidiary of Century (the "Manager") will manage the day-to-day operations of the Systems. The Manager will not receive a management fee but will be reimbursed only for the actual costs it incurs on behalf of the joint venture. With respect to the purchase of any service or asset for the joint venture for use in the Systems, the Manager is obligated to pass through to the joint venture any discount, up to 5%, off the published prices of vendors and is entitled to retain any discount in excess of 5%. On September 30, 1994, the joint venture acquired one of the systems serving approximately 26,500 subscribers. The purchase of the second system, serving approximately 19,200 subscribers, remains subject to regulatory approval for the transfer of licenses. Through a subsidiary, the Company intends to provide new telecommunications toll services. State regulatory agencies have granted authority for the Company to provide intrastate intraLATA and interLATA toll services in New York and West Virginia and intrastate interLATA toll services in California. The Company also intends to provide intrastate intraLATA and interLATA toll services in Idaho, Tennessee and Utah where such authority is not required. Upon receipt of required authority, the Company intends to provide authorized intrastate toll services in Arizona, Montana, Nevada, Oregon and Washington. The Company has authority and intends to provide interstate toll services initially in its local telephone service areas. In January 1995, the Company entered into a definitive agreement to acquire Flex Communications by merger in a stock-for-stock transaction. Flex is a switch-based, inter-exchange carrier providing long-distance, 800 Inbound long-distance, voice mail, paging, private data networks and cellular services to approximately 3,500 customers in upstate New York. The transaction is expected to close in 1995. The GTE Telephone Properties acquired and to be acquired and the ALLTEL Telephone Properties to be acquired increase the Company's number of local exchange access lines serving customers to approximately 832,000. To better manage its telecommunications properties, the Company is consolidating its telecommunications operations support services and establishing a centralized telecommunications infrastructure to manage these services. In this regard, the Company has entered into an agreement with ALLTEL's information services subsidiary, ALLTEL Information Services, Inc. ("AISI"), pursuant to which AISI will provide certain operational support systems in a service bureau environment for all of the Company's local telephone exchange operations; such support systems include customer billing and customer service and engineering information data bases. AISI will also provide network management, data center operations and ongoing software modernization for existing systems to meet new business requirements. This agreement is expected to enhance significantly the Company's management and operation of all of its local telephone exchange operations. Although such agreement contemplates a multi-year arrangement, the Company has the unilateral right to terminate such agreement if the parties do not execute a separate agreement which involves the development of certain new operating support systems. NATURAL GAS - ----------- Operating divisions of the Company provide natural gas transmission and distribution services to primarily residential customers in Arizona, Colorado and Louisiana. The total number of natural gas customers served as of December 31, 1994 was approximately 356,000. The provision of services and/or rates charged are subject to the jurisdiction of federal and state regulatory agencies. The Company purchases all needed natural gas, the supply of which is believed to be adequate to meet current demands and to provide for additional sales to new customers. The natural gas industry is subject to seasonal demand, with the peak demand occurring during the heating season of November 1 through March 31. The Company's natural gas sector experiences third party competition from fuel oil, propane, and other natural gas suppliers for most of its large consumption customers (of which there are few) and from electricity for all of its customer base. The competitive position of natural gas at any given time depends primarily on the relative prices of natural gas and these other energy sources. Various federal and state tax incentive programs call for replacing other fuels with compressed natural gas. However, these regulations may, in certain circumstances, also promote the use of other fuels to replace natural gas. The Company continues to expand its northern Arizona natural gas transmission and distribution service area. The service area has grown from 63,000 customers prior to expansion to 77,000 customers as of December 31, 1994. ELECTRIC - -------- Operating divisions of the Company provide electric distribution services to primarily residential customers in Arizona, Hawaii and Vermont. Total number of electric customers served as of December 31, 1994 was approximately 105,000. The provision of services and/or rates charged are subject to the jurisdiction of federal and state regulatory agencies. The Company purchases over 80% of needed electric energy, the supply of which is believed to be adequate to meet current demands and to provide for additional sales to new customers. As a whole, the Company's electric sector does not experience material seasonal fluctuations. In response to regulatory initiatives, the Company's electric sector is proceeding with demand-side management programs and integrated resource planning techniques designed to promote the most efficient use of electricity and to reduce the environmental impacts associated with new generation facilities. The Company's Kauai Electric Division ("KED") has restored all transmission and distribution lines, poles and equipment that were damaged as a result of Hurricane Iniki in September 1992. The Hawaii Public Utilities Commission ("HPUC") approved a stipulation on December 9, 1992 which addresses the regulatory treatment of certain costs associated with the restoration of KED facilities. As part of this stipulation, KED agreed to defer its next general rate increase application until 1994 with rates becoming effective no earlier than January 1, 1995 (the "deferred rate case"). Under the terms of this stipulation, KED is authorized to earn an allowance for funds used during construction ("AFUDC") on the restoration costs. The allowed restoration costs, plus associated AFUDC earnings, will be included in rate base and recovered in the deferred rate case. Restoration costs plus associated AFUDC earnings not ultimately allowed in rate base should be recovered by the Company in the deferred rate case over an amortization period to be determined in that case. Depreciation expense on the restoration plant is being deferred and will be amortized over the remaining useful life of the restored plant when rates are approved in the deferred rate case. Lost gross margin (unrecovered costs of service and the allowed return on investment based on the rate award received by the KED in November, 1992) and interest, compounded monthly, on the lost gross margin is authorized to be accrued and is subject to recovery in the deferred rate case. KED made final modifications to its filed deferred rate case in July 1994 using a future test year of 1995. The deferred rate case requested an increase in rates of $23,600,000, with the rate increase to be phased-in over three steps ending in April of 1996. A final order from the HPUC regarding the deferred rate case is currently expected later in 1995. Prior to 1992, the United States Environmental Protection Agency ("EPA") named the Company a potentially responsible party ("PRP") with respect to three sites which have been designated for federally supervised clean-up under the Comprehensive Environmental Response, Compensation and Liability Act. These three sites are Missouri Electric Works in Cape Girardeau, Missouri; Northwest Transformer in Everson, Washington; and Rose Chemicals in Holden, Missouri. The EPA has determined that the Company's electric sector's participation in each site is less than 0.5%. The number of named PRP's ranges from 40 to 700 at each site. Significant parties have accepted responsibility and are currently funding the clean-up activity as required. The Company's remaining financial liability is estimated to be approximately $140,000. WATER/WASTEWATER - ---------------- The Company provided water and/or wastewater treatment services to approximately 270,000 primarily residential customer connections in Arizona, California, Illinois, Indiana, Ohio and Pennsylvania as of December 31, 1994. The provision of these services and/or rates charged are subject to the jurisdiction of federal, state and local regulatory agencies. A significant portion of the Company's water/wastewater treatment sector construction expenditures necessary to serve new customers are made under agreements with land developers who generally advance funds for construction and/or plant to the Company that are later refunded by the Company in part as developers add new customers and revenues are added in their developments. The Company's water/wastewater treatment public utility properties can become subjected to condemnation proceedings initiated by municipalities or utility districts seeking to acquire and take control of the operation of such property. During 1992, one operation in Illinois became subject to such proceeding. This condemnation is being contested by the Company. On August 31, 1994, RHC, Inc. ("Metro Utility Co."), an operator of water and wastewater utilities serving portions of the suburban Chicago area, was merged into the Company. The acquired operations serve approximately 10,000 customers, increasing the number of the Company's water/wastewater treatment customers in Illinois to over 65,000. The Company issued 504,807 shares of Common Stock Series B in exchange for all of the common stock of Metro Utility Co. The transaction was accounted for as a pooling of interests. In September 1992, the EPA filed a complaint with the United States District Court for the Northern District of Illinois relating to alleged violations by the Company's Illinois subsidiary with respect to National Pollutant Discharge Elimination System permit requirements. The Company has negotiated a proposed settlement of this action. Such settlement is now undergoing the approval process within the EPA; once it is approved, it will be submitted to the District Court for final approval. Under the settlement, the Company will pay a fine of $490,000 and it will also make certain plant improvements with an estimated cost of $2,200,000. These improvements are presently under design. Construction is expected to begin in 1995 and be completed before the end of 1996. The improvements are required in order to comply with new discharge limits reached under the settlement. As a regulated entity, the Company is entitled to earn a fair rate of return on these improvements that are placed in service for the benefit of its customers. The Company believes that the cost of these improvements will be recovered through customer rates. General - ------- The Company's public utility operations are conducted primarily in small-and medium-size towns and communities. No material part of the Company's business is dependent upon a single customer or upon a small group of customers. The loss of one or more of such customers would not have a material adverse effect on operating income. As a result of its diversification, the Company is not dependent upon any single geographic area or upon any one type of utility service for its revenues. Due to this diversity, no single regulatory body regulates a utility service of the Company accounting for more than 13% of its 1994 revenues. The Company is subject to regulation by the respective state regulatory agencies and federal regulatory agencies. The Company is not subject to the Public Utility Holding Company Act. Order backlog is not a significant consideration in the Company's business, and the Company has no contracts or subcontracts which may be subject to renegotiation of profits or termination at the election of the federal government. The Company holds franchises from local governmental bodies, which vary in duration. The Company also holds certificates of convenience and necessity granted by various state commissions which are generally of indefinite duration. The Company has no special working capital practices. The Company's research and development activities are not material. There are no patents, trademarks, licenses or concessions held by the Company that are material. The Company had 4,294 employees at December 31, 1994. (d) Financial Information about Foreign and Domestic Operations and Export Sales ---------------------------------------------------------------- The Company does not have any foreign operations or material export sales. Item 2. Description of Property ----------------------- The administrative offices of the Company are located at High Ridge Park, Stamford, Connecticut, 06905 and are leased. The Company owns property including: telecommunications outside plant, central office, microwave radio and fiber-optic facilities; electric generation, transmission and distribution facilities; gas transmission and distribution facilities; water production, treatment, storage, transmission and distribution facilities; and wastewater treatment, transmission, collection and discharge facilities; all of which are necessary to provide services at the locations listed below. State Service(s) Provided - ----- ----------------------------------------- Arizona Electric, Natural Gas, Telecommunications,* Water, Wastewater treatment California Telecommunications, Water Colorado Natural Gas Hawaii Electric Idaho Telecommunications Illinois Water, Wastewater treatment Indiana Water Louisiana Natural Gas Ohio Water, Wastewater Oregon Telecommunications Montana Telecommunications New York Telecommunications Pennsylvania Telecommunications, Water Tennessee Telecommunications Utah Telecommunications Vermont Electric Washington Telecommunications West Virginia Telecommunications * Certain properties are subject to a mortgage deed pursuant to Rural Electrification Administration and Rural Telephone Bank borrowings. Item 3. Legal Proceedings ----------------- In September 1992, the United States Environmental Protection Agency filed a complaint with the United States District Court for the Northern District of Illinois relating to alleged violations by the Company's Illinois subsidiary with respect to National Pollutant Discharge Elimination System permit requirements. The Company has negotiated a proposed settlement of this action. Such settlement is now undergoing the approval process within the Environmental Protection Agency; once it is approved, it will be submitted to the District Court for final approval. Under the settlement, the Company will pay a fine of $490,000 and it will also make certain plant improvements with an estimated cost of $2,200,000. These improvements are presently under design. Construction is expected to begin in 1995 and be completed before the end of 1996. The improvements are required in order to comply with new discharge limits reached under the settlement. As a regulated entity, the Company is entitled to earn a fair rate of return on these improvements that are placed in service for the benefit of its customers. The Company believes that the cost of these improvements will be recovered through customer rates. On February 19, 1993, the Company was served with a summons and complaint in an action brought by the Sun City Taxpayers' Association in the United States District Court for the District of Connecticut. The plaintiff alleged that the Company, through its Sun City Water Company and Sun City Sewer Company subsidiaries, misrepresented rate-base investment in rate applications submitted to the Arizona Corporation Commission ("ACC") between 1968 and 1978 and claimed damages of $65,000,000 before trebling. The plaintiff made substantially the same allegations in a regulatory proceeding before the ACC in 1986 and the ACC rejected those allegations. On February 1, 1994, the Company's motion to dismiss this action was granted and the complaint was dismissed by an opinion and order of the District Court. On February 9, 1994, plaintiff filed a notice of appeal seeking review of the court's ruling by the United States Court of Appeals for the Second Circuit. The Second Circuit denied the appeal on January 23, 1995 and the Plaintiff filed a Writ of Certiorari to the United States Supreme Court on February 14, 1995. In June 1993, several stockholders commenced purported derivative actions in the Delaware Court of Chancery against the Company's Board of Directors. These actions have since been consolidated (the "Consolidated Action"). These stockholders allege that the compensation approved by the Board of Directors for the Company's Chairman is excessive and seek, among other things, an accounting for alleged corporate waste and a declaration that the Chairman's employment agreement and existing stock options are invalid. These stockholders further allege that certain corporate transactions involving the Company and Century Communications Corp. ("Century") benefitted Century to the detriment of the Company. In February 1994, a memorandum of understanding was executed among counsel for the stockholders in the Consolidated Action and counsel for the Company's Board of Directors. The memorandum of understanding contemplates that the parties will attempt to agree upon and execute a stipulation of settlement resolving all of the claims in the Consolidated Action. Consummation of the proposed settlement will be subject to: (a) the completion by plaintiffs of appropriate confirmatory discovery in the Consolidated Action; (b) the drafting and execution of a stipulation of settlement; (c) notice to all stockholders of the Company of the terms of the proposed settlement; and (d) final approval of the stipulation of settlement by the Delaware Court of Chancery and dismissal of the Consolidated Action with prejudice. It is contemplated that the stipulation of settlement will provide for certain modifications to the Chairman's compensation arrangements and for the complete release and settlement of all claims of the plaintiffs and all derivative claims of the Company against the Company's Board of Directors arising out of the allegations in the Consolidated Action. The plaintiffs in the Consolidated Action have completed their confirmatory discovery, and the terms of the stipulation of settlement are being negotiated. Plaintiffs' counsel will seek an award of attorneys' fees and expenses in connection with the settlement. No understanding has been reached with respect to the amount of fees and expenses to be sought, but the Company expects to recover the fees and expenses, if any, to be awarded by the Delaware Court of Chancery to plaintiffs' counsel under the Company's Directors' and Officers' liability insurance policy. Another action ("Thorpe") was filed in June 1993 in the Delaware Court of Chancery. Like the plaintiffs in the Consolidated Action, plaintiffs in Thorpe allege derivative claims challenging the Chairman's compensation as excessive and the validity of certain stock options granted to the Chairman and other members of the Company's Board of Directors. The plaintiffs in Thorpe also assert derivative claims challenging the fairness of the 1991 merger between the cellular subsidiaries of the Company and Century. In addition, these plaintiffs have alleged that the Chairman and Century paid a premium to purchase control of the Company from the former Chairman, Richard L. Rosenthal, and others. The plaintiffs in Thorpe have also asserted individual and purported class claims challenging the disclosures made by the defendants relating to the above matters and the allegedly improper accounting treatment with respect to the Company's investment in Centennial Cellular Corp. These plaintiffs seek, among other things, an accounting for alleged corporate waste, a declaration that the Chairman's employment agreement and existing stock options are invalid and unspecified monetary damages from the director defendants. In November 1993, another purported derivative action ("Biggs") was filed in the Delaware Court of Chancery against the Company's Board of Directors and Century. The plaintiffs in Biggs challenge the Chairman's compensation, the grant of stock options to the Chairman and other members of the Company's Board of Directors and the 1991 cellular subsidiary merger and the service agreement between Century and Centennial. The Company's Board of Directors has moved to dismiss the complaints in these derivative actions for failure to state a claim and for failure to comply with the demand requirements applicable to a derivative suit. The motions are currently pending. In May 1994, the Delaware Court of Chancery stayed proceedings in the Thorpe and Biggs actions pending presentation of the proposed stipulation of settlement of the Consolidated Action for approval by the Court. In June 1993, a stockholder of the Company ("Berlin") commenced a purported class action in the United States District Court for the District of Delaware against the Company and the Company's Board of Directors. The stockholder's complaint, amended in July 1993, alleged that the proxy statements disseminated by the Company from 1990 to 1993 failed to disclose material information regarding, among other things, the Chairman's compensation and certain purported related-party transactions and thereby violated federal and state disclosure requirements. The relief sought included a declaration that the results of the 1993 Annual Meeting of the stockholders are null and void, a declaration that the Chairman's Employment Agreement is invalid and unspecified damages. In September 1994, the District Court granted in part and denied in part defendants' motion to dismiss the amended complaint and denied defendants' motion for summary judgment. In October 1994, defendants moved for summary judgment dismissing the remainder of the claim. This motion is currently pending. In November 1994, plaintiff moved to supplement her amended complaint to add a claim seeking to invalidate the results of the 1994 Annual Meeting of Citizens stockholders on the grounds that the Company's 1994 proxy statement allegedly failed to disclose the amount of the management fee then proposed to be paid to Century in connection with a proposed cable television joint venture. The proposed supplemental complaint also seeks unspecified monetary damages. This motion is currently pending. In October 1994, the Company and eight other companies were served with a Summons and Complaint by the Town of Walkill, New York ("the Town") in the United States District Court for the Southern District of New York. The Town seeks to recover an unspecified amount representing response costs resulting from the release or threatened release of hazardous substances at the Town's Landfill, and damages and restitution under common law theories for other costs associated with environmental conditions at the Town's Landfill. The Town also seeks a declaratory judgement under CERCLA that the Defendants are strictly, jointly and severally liable for future necessary response costs. The Company notified GTE Corporation of this action since any potential liability for this matter has been retained by GTE Corporation pursuant to the Asset Purchase Agreement dated May 18, 1993. GTE Corporation has assumed the Company's defense in this action. The Company believes the risk of material loss from the above actions is remote. Item 4. Submission of Matters to Vote of Security Holders ------------------------------------------------- None in fourth quarter 1994. Executive Officers - ------------------ Information as to Executive Officers of the Company as of January 31, 1995, follows: Name Age Current Position and Office - ---------- --- --------------------------- Leonard Tow 66 Chairman of the Board, Chief Executive Officer and Chief Financial Officer Daryl A. Ferguson 56 President and Chief Operating Officer Robert J. DeSantis 39 Vice President, Treasurer and Assistant Secretary James P. Avery 38 Vice President, Energy Richard A. Faust,Jr. 48 Vice President, Mohave County and Assistant Secretary J. Michael Love 43 Vice President, Corporate Planning Robert L. O'Brien 52 Vice President, Regulatory Affairs Donald K. Roberton 53 Vice President, Telecommunications Livingston E. Ross 46 Vice President and Controller Ronald E. Walsh 55 Vice President, Water/Wastewater and Assistant Secretary There is no family relationship between any of the officers of the Registrant. The term of office of each of the foregoing officers of the Registrant will continue until the next annual meeting of the Board of Directors and until a successor has been elected and qualified. LEONARD TOW has been associated with the Registrant since April 1989 as a Director. In June 1990, he was elected Chairman of the Board and Chief Executive Officer. In October 1991, he was appointed to the additional position of Chief Financial Officer of the Registrant. He has also been a Director, Chief Executive Officer and Chief Financial Officer of Century Communications Corp. since its incorporation in 1973, and Chairman of its Board of Directors since October 1989. DARYL A. FERGUSON has been associated with the Registrant since July 1989. He was Vice President, Administration from July 1989 through March 1990 and Senior Vice President, Operations and Engineering from March 1990 through June 1990. He has been President and Chief Operating Officer since June 1990. During the period April 1987 through July 1989, he was President and Chief Executive Officer of Microtecture Corporation. He is currently a Director of Centennial Cellular Corp. ROBERT J. DeSANTIS has been associated with the Registrant since January 1986. He was Assistant to the Treasurer through May 1986 and Assistant Treasurer from June 1986 through September 1991. He has been Vice President and Treasurer since October 1991 and Assistant Secretary since May 1993. JAMES P. AVERY has been associated with the Registrant since August 1981. He was Project Manager, Electric through June 1988, Assistant Vice President, Electric Operations from June 1988 through December 1990 and Vice President, Electric from December 1990 through May 1994. He has been Vice President, Energy since June 1994. RICHARD A. FAUST, JR. has been associated with the Registrant since December 1990. He was associated with Louisiana General Services, Inc. from 1972 until that Company was merged with the Registrant in December 1990. He served as Vice President, General Counsel and Secretary of Louisiana General Services, Inc. from March 1984 through May 1993. He was elected Assistant Secretary for the Registrant in June 1991 and Vice President, Mohave County, (Arizona) in June 1993. J. MICHAEL LOVE has been associated with the Registrant since May 1990 and from November 1984 through January 1988. He was Assistant Vice President, Regulatory Affairs and Community Relations from June 1986 through January 1988. He left the Registrant in January 1988 to become President and General Counsel of Southern New Hampshire Water Company. He rejoined the Registrant in April 1990 and was Assistant Vice President, Corporate Planning from June 1990 through March 1991. He has been Vice President, Corporate Planning since March 1991. ROBERT L. O'BRIEN has been associated with the Registrant since March 1975. He has been Vice President, Regulatory Affairs since June 1981. DONALD K. ROBERTON has been associated with the Registrant since January 1991 and has been Vice President, Telecommunications since that date. Prior to joining the Registrant, he was Vice President, Western Operations at Henkels & McCoy from December 1989 through December 1990. From January 1984 through November 1989, he was Vice President with Centel Communications Systems. LIVINGSTON E. ROSS has been associated with the Registrant since August 1977. He was Manager of Reporting from September 1984 through March 1988, Manager of General Accounting from April 1988 through September 1990 and Assistant Controller from October 1990 through November 1991. He has been Vice President and Controller since December 1991. RONALD E. WALSH has been associated with the Registrant since January 1986. He was Attorney and Assistant Secretary from November 1987 through August 1992. He has been Vice President, Water/Wastewater since August 1992. PART II ------- Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters ---------------------------------------------------------------- PRICE RANGE OF COMMON STOCK The Company's Common Stock is traded on the New York Stock Exchange under the symbols CZNA and CZNB for Series A and Series B, respectively. The following table indicates the high and low prices per share as taken from the daily quotations published in the "Wall Street Journal" during the periods indicated. Prices have been adjusted retroactively for intervening stock dividends, and the August 31, 1993 2-for-1 stock split, rounded to the nearest 1/8th. (See Note 7 of Notes to Consolidated Financial Statements.) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter ----------- ------------ ------------ ----------- High Low High Low High Low High Low ------------ ------------ ------------ ------------ 1994: - ----- Series A 17 1/8 14 15 7/8 13 1/4 14 1/2 13 1/4 13 3/4 12 1/2 Series B 17 1/4 13 7/8 15 7/8 13 1/4 14 1/2 13 1/4 13 3/4 12 5/8 1993: - ----- Series A 16 3/4 12 3/4 17 1/2 15 1/8 17 1/4 12 5/8 18 7/8 15 3/8 Series B 16 3/4 12 7/8 17 1/2 15 17 1/4 12 5/8 18 3/4 15 3/8 The December 30, 1994 prices were: Series A $12.875 high, $12.50 low; Series B $12.875 high, $12.625 low. As of January 31, 1995, the approximate number of record security holders of the Company's Common Stock Series A and Series B was 43,989. This information was obtained from the Company's transfer agent. DIVIDENDS Quarterly stock dividends declared and issued on both Common Stock Series A and Series B were 1.1% for the first quarter of 1994, 1.15% for the second quarter of 1994, 1.3% for the third quarter of 1994 and 1.4% for the fourth quarter of 1994. Quarterly stock dividends declared and issued on both Common Stock Series A and Series B were 1.2% for the first quarter of 1993, 1.0% for the second quarter of 1993 and 1.1% for the third quarter of 1993 and 1.0% for the fourth quarter of 1993. An annual cash dividend equivalent rate of .733 and .691 per share (adjusted for all stock splits and stock dividends paid subsequent to all dividends declared through December 31, 1994 and rounded to the nearest 1/8th) was considered by the Company's Board of Directors in establishing the Series A and Series B stock dividends during 1994 and 1993, respectively. (See Note 7 of Notes to Consolidated Financial Statements.) Item 6. Selected Financial Data (In thousands, except for per-share amounts) -------------------------------------------------------------------- Year Ended December 31, ---------------------------------------------------- 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- Operating revenues $916,014 $619,392 $580,464 $545,025 $528,251 Income from continuing operations $143,997 $125,630 $115,013 $112,354 $105,624 Earnings per-share of Common Stock Series A and Series B(1) $.77 $.67 $.63 $.62 $.57 Stock dividends declared on Common Stock Series A and Series B(2) 5.04% 4.37% 5.61% 7.93% 6.54% Total assets $3,576,566 $2,627,118 $1,887,981 $1,721,452 $1,491,199 Long-term debt $ 994,189 $ 547,673 $ 522,699 $ 484,021 $ 412,348 (1) Adjusted for subsequent stock dividends and splits; no adjustment has been made for the Company's 1.5% first quarter 1995 stock dividend because the effect is immaterial. (2) Annual rate of quarterly stock dividends compounded. Cash dividends of $.32 per share were paid by Louisiana General Services, Inc. in 1990 prior to its merger into the Company on December 4, 1990. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations --------------------------------------------------------------- (a) Liquidity and Capital Resources ------------------------------- In 1994, the Company's primary sources of funds were from operations and borrowings. Funds requisitioned from the 1994, 1993, 1992 and 1991 Series Industrial Development Revenue Bond construction fund trust accounts were used to pay for the construction of utility plant. Commercial paper notes payable in the amount of $703,000,000 were outstanding as of December 31, 1994, of which $515,200,000 is classified as short-term debt as it represents the balance of the amount that was issued to temporarily and partially fund the acquisition of the GTE Telephone Properties; this debt is expected to be repaid from maturing temporary investments, funds from operations and proceeds from the issuance of equity securities. On April 26, 1994, the Company issued $175,000,000 of debentures at par with an interest rate of 7.6% and a maturity date of June 1, 2006. On October 6, 1994, the Company issued $100,000,000 of debentures at par with an interest rate of 7.68% and a maturity date of October 1, 2034. The proceeds from the sale of the debentures were used to permanently fund the acquisition of the GTE Telephone Properties. On June 16, 1994 and on September 9, 1994, Citizens Utilities Rural Telephone Company, Inc., a subsidiary of the Company, under its Rural Telephone Bank loan contract, was advanced $2,394,000 and $3,848,000, respectively. These funds bear interest at a rate of 5.3% and have an ultimate maturity date of December 31, 2027. On September 28, 1994, the Company arranged for the composite issuance of $14,640,000 of 1994 Series Industrial Development Revenue Bonds; the bonds were issued as demand purchase bonds with an interest rate of 6.6% and mature on May 1, 2029. On August 16, 1994, the Company filed a shelf-registration statement with the Securities and Exchange Commission to register up to 1,600,000 shares of common stock Series B to fund acquisitions, from which 504,807 shares were issued on August 31, 1994 to fund the acquisition of Metro Utility Co. and 622,500 restricted shares, previously issued for the 1993 acquisitions of Natural Gas Company of Louisiana and Franklin Electric Light Company, Incorporated, were registered. On January 30, 1995, the Company, pursuant to an underwritten public offering, issued 19,000,000 shares of its Common Stock Series A at an issuance price of $13 3/8 per share and realized $244,200,000 in net proceeds. These proceeds were used to repay short-term debt. The Company considers its operating cash flows and its ability to raise debt and equity capital as the principal indicators of its liquidity. Although working capital is not considered to be an indicator of the Company's liquidity, the Company experienced a decrease in its working capital at December 31, 1994. The decrease is primarily due to the issuance of short-term debt to temporarily and partially fund the acquisition of the GTE Telephone Properties. Capital expenditures for the years 1994, 1993 and 1992 were $311,420,000, $182,480,000 and $148,027,000, respectively, and for 1995 are expected to be approximately $262,000,000. These expenditures were, and in 1995 will be, for utility and related facilities and properties, including the GTE Telephone Properties acquired. The Company anticipates that the funds necessary for its 1995 capital expenditures will be provided from operations; from 1991, 1993 and 1994 Series Industrial Development Revenue Bond construction fund trust account requisitions; from Rural Telephone Bank loan contract advances; from commercial paper notes payable; from parties desiring utility service; from debt, equity and other financings at appropriate times; and, if deemed advantageous, from short-term borrowings under bank credit facilities. The Company has committed lines of credit with banks under which it may borrow up to $1,200,000,000. During 1994, the Company was authorized net increases in annual revenues for properties in Arizona, California, Pennsylvania and Vermont totaling $7,206,000. The Company has requests for increases pending before regulatory commissions in Arizona, California, Hawaii and Ohio. Regulatory Matters - ------------------ In September 1992, the United States Environmental Protection Agency ("EPA") filed a complaint with the United States District Court for the Northern District of Illinois relating to alleged violations by the Company's Illinois subsidiary with respect to National Pollutant Discharge Elimination System permit requirements. The Company has negotiated a proposed settlement of this action. Such settlement is now undergoing the approval process within the EPA; once it is approved, it will be submitted to the District Court for final approval. Under the settlement, the Company will pay a fine of $490,000 and it will also make certain plant improvements with an estimated cost of $2,200,000. These improvements are presently under design. Construction is expected to begin in 1995 and be completed before the end of 1996. The improvements are required in order to comply with new discharge limits reached under the settlement. As a regulated entity, the Company is entitled to earn a fair rate of return on these improvements that are placed in service for the benefit of its customers. The Company believes that the cost of these improvements will be recovered through customer rates. On February 19, 1993, the Company was served with a summons and complaint in an action brought by the Sun City Taxpayers' Association in the United States District Court for the District of Connecticut. The plaintiff alleged that the Company, through its Sun City Water Company and Sun City Sewer Company subsidiaries, misrepresented rate-base investment in rate applications submitted to the Arizona Corporation Commission ("ACC") between 1968 and 1978 and claimed damages of $65,000,000 before trebling. The plaintiff made substantially the same allegations in a regulatory proceeding before the ACC in 1986 and the ACC rejected those allegations. On February 1, 1994, the Company's motion to dismiss this action was granted and the complaint was dismissed by an opinion and order of the District Court. On February 9, 1994, plaintiff filed a notice of appeal and is seeking review of the court's ruling by the United States Court of Appeals for the Second Circuit. The Second Circuit denied the appeal on January 23, 1995 and the Plaintiff filed a Writ of Certiorari to the United States Supreme Court on February 14, 1995. Prior to 1992, the EPA named the Company a potentially responsible party ("PRP") with respect to three sites which have been designated for federally supervised clean-up under the Comprehensive Environmental Response, Compensation and Liability Act. These three sites are Missouri Electric Works in Cape Girardeau, Missouri; Northwest Transformer in Everson, Washington; and Rose Chemicals in Holden, Missouri. The EPA has determined that the Company's electric sector's participation in each site is less than 0.5%. The number of named PRP's ranges from 40 to 700 at each site. Significant parties have accepted responsibility and are currently funding the clean-up activity as required. The Company's remaining financial liability is estimated to be approximately $140,000. Various state regulatory agencies, state legislatures and the federal government have initiated proceedings intending to promote the development of competition in telecommunications markets. These proceedings are focused on removing the regulatory and legal barriers to competitive entry into the interLATA toll, intrastate intraLATA toll and local exchange markets; developing rules to govern the relationship between competitors; and designing rebalanced rate structures for the incumbent local exchange company ("LEC") which would allow LECs the opportunity to compete effectively in these markets while protecting the public's interest and access to telecommunication services. Simultaneously, many states are investigating or have implemented procedures for LECs to enter into incentive regulatory frameworks ("IRF") as an alternative to traditional rate base, rate of return regulation, and/or classifying services on the basis of the presence of competition and allowing deregulation or flexible pricing regulation for the services deemed competitive. The Public Utility Commission of the State of California ("CPUC") issued an order, effective January 1, 1995, authorizing competition for intrastate intraLATA switched toll services, rebalancing local exchange and toll rates, establishing more specific procedures for local exchange carriers to enter into incentive regulatory frameworks ("IRF") and providing a timetable for the elimination of the intrastate toll settlement pools for mid-sized local exchange carriers. In support of CPUC efforts which preceded its order, the Company's California telephone subsidiary (the "Subsidiary") exited the toll settlement pools in 1991 and entered into a transition contract with Pacific Bell. Pursuant to this contract, Pacific Bell agreed to pay the Subsidiary $38,000,000 annually through the end of 1994 to partially offset the decline in revenues which resulted from exiting the toll settlement pools. The Subsidiary expected to conclude a general rate case permitting the implementation of rebalanced, competitive rates effective January 1, 1995 intended to protect the Subsidiary's overall revenues, other than the $38,000,000 Pacific Bell contract payment, by enabling it to compete effectively in the intrastate intraLATA switched toll services market. Although this general rate case has not been finalized, the CPUC has issued an interim rate order which became effective January 1, 1995 and authorizes rebalanced competitive rates for the Subsidiary. In its general rate case, the Subsidiary requested approval of an IRF which would allow it to earn up to 5% in excess of its authorized rate of return. It is expected that the approved IRF will be effective when the final rate order is issued later in 1995. The Company continues to invest in its subsidiary, Electric Lightwave, Inc. ("ELI"), a competitive access provider in Arizona, California, Oregon, Utah and Washington. Through ELI, the Company has been granted authority in Washington to provide competitive local exchange service and has filed applications to provide competitive local exchange service in Utah and Oregon. The Company has completed construction of a fiber-optic route from Las Vegas, Nevada to Phoenix, Arizona which will provide the Company's other telecommunications operations in Arizona centralized equal access to long distance carriers and will provide the Company with the fiber optic capacity to provide transport services to other carriers along this route. The Company has invested approximately $110,300,000 in ELI through the year ended December 31, 1994. The Company's Mohave Cellular subsidiary holds a one-third interest and is general managing partner of a cellular limited partnership operating six cell sites in Arizona. Through a subsidiary, the Company intends to provide new telecommunications toll services. State regulatory agencies have granted authority for the Company to provide intrastate intraLATA and interLATA toll services in New York and West Virginia and intrastate interLATA toll services in California. The Company also intends to provide intrastate intraLATA and interLATA toll services in Idaho, Tennessee and Utah where such authority is not required. Upon receipt of required authority, the Company intends to provide authorized intrastate toll services in Arizona, Montana, Nevada, Oregon and Washington. The Company has authority and intends to provide interstate toll services initially in its local telephone service areas. New Accounting Pronouncements - ----------------------------- Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards ("SFAS") 112, "Employers' Accounting for Postemployment Benefits" and SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities". The Company applied the provisions of these accounting standards prospectively. Adoption of SFAS 112 did not have a material effect on the Consolidated Financial Statements. SFAS 115 requires fair value reporting for certain investments in debt and equity securities with the unrealized gain or loss, net of tax effect, recorded as a separate element of Shareholders' Equity. See Note 5 of Notes to the Consolidated Financial Statements. In October 1994, the Financial Accounting Standards Board issued SFAS 119, "Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments", effective for fiscal years ending after December 15, 1994. The Company has only limited involvement with gas futures contracts and does not use these instruments for investment or trading purposes. Gas futures contracts are used on a very limited and select basis to manage well-defined commodity price risks associated with Company commitments to deliver natural gas to customers at fixed prices. The Company's exposure under such contracts at December 31, 1994 was immaterial. (b) Results of Operations --------------------- Telecommunications generated revenues of $461,094,000 in 1994 compared with $177,500,000 in 1993 and $186,200,000 in 1992. The 1994 results reflect revenues derived from operating the GTE Telephone Properties acquired on December 31, 1993, June 30, 1994 and November 30, 1994. Operating the GTE Telephone Properties during 1994 generated revenues of $261,700,000. Telecommunications revenues decreased 5% in 1993, primarily due to regulatory changes in the state of California. The decrease was partially offset by $2,626,000 of increased local revenues as a result of customer growth and $2,548,000 of increased toll revenues as a result of increased toll volume. Natural gas revenues decreased $3,000,000 in 1994 due to a decrease in transportation revenues. This decrease was partially offset by increased industrial gas revenues and increased residential and commercial revenues from the Company's Northern Arizona Gas operations. Natural gas revenues in 1993 increased 12% over 1992 primarily due to $7,100,000 of revenues from Natural Gas Company of Louisiana ("NGL"), which was acquired by the Company in 1993; $3,600,000 from increased revenue per MCF of gas sold to industrial customers; $5,200,000 from increased average revenue per MCF of gas sold to residential and commercial customers; and $9,300,000 from pass-ons to residential and commercial customers of increases in the wholesale costs of commodities purchased. Pass-ons are required under tariff provisions and do not affect net income. The Company's electric sector revenues increased 6% over 1993, and 1993 revenues increased 13% over 1992 primarily due to increased consumption of $11,900,000 in 1994 and $4,700,000 in 1993; these increases were primarily as a result of customer growth. Revenues earned by the Company's water/wastewater treatment sector increased 11% or $7,000,000 in 1994. This increase is primarily due to favorable rate increases which contributed $4,800,000 in water revenues and revenues of $2,800,000 generated by Metro Utility Co. acquired by merger in August 1994. Water/Wastewater treatment sector revenues increased 10% in 1993 primarily due to $2,800,000 of rate increases, $2,000,000 from increased customer usage and $1,300,000 of revenues received from a water property acquisition in December 1992. Electric energy and fuel oil purchased costs increased 4% in 1994 and 9% in 1993. Electric energy purchased costs for 1994 totaled $72,400,000, a 6% increase over the 1993 amount of $68,200,000, which was a 6% increase over the 1992 cost of $64,100,000. The increased cost of electricity purchased in 1994 and 1993 was primarily due to increased customer demand; the increase in 1993 was also partially due to increased supplier prices. Fuel oil purchased in 1994 of $14,200,000 decreased from the 1993 amount of $14,900,000 primarily due to a decrease in supplier prices. Fuel oil purchased costs in 1993 increased 22% from the 1992 amount of $12,200,000, primarily due to higher supplier prices and increased volume to satisfy increased customer consumption. Natural gas purchased costs decreased $1,300,000 in 1994, primarily due to a decrease in supplier prices. Natural gas purchased costs increased 15% in 1993, primarily due to higher supplier prices. Under tariff provisions, increases and decreases in the Company's wholesale costs of electric energy, fuel oil and natural gas purchased are passed on to customers. Operating and maintenance expenses increased by 86% or $143,300,000 in 1994, primarily due to the acquisition of the GTE Telephone Properties. Depreciation expense of $115,200,000 more than doubled the 1993 amount of $54,700,000. The increase is attributable to increases in depreciable plant as a result of the acquisitions of the GTE Telephone Properties. Taxes other than income increased $23,700,000 or 67% over the 1993 period due to increased taxes on the newly acquired GTE Telephone Properties. Interest expense for the year ended December 31, 1994 increased $35,300,000 over the 1993 period as a result of the issuance of debt securities, the proceeds of which were used to partially finance the acquisition of the GTE Telephone Properties and an increase in industrial development revenue bond borrowings. Interest expense decreased 4% in 1993, primarily due to the refinancing of higher-coupon First Mortgage Bonds with lower cost debentures and increased allowance for funds used during construction related to borrowings, which is a reduction to interest expense. Investment income decreased to $40,500,000 from $42,100,000 in 1993, representing a 4% decline. This decrease is due to the liquidation of investments to fund the GTE acquisition, partially offset by an increase in income from the Company's Centennial investment. Investment income increased 5% in 1993, primarily due to the realization of gains on sales of securities and an increase in income from the Company's Centennial investment, partially offset by lower investment balances and market yields. Income taxes increased 23% in 1994 and 19% in 1993, primarily due to increased taxable income. Cost increases, including those due to inflation, are expected to be offset in due course by increases in revenues obtained under established regulatory procedures. Item 8. Financial Statements and Supplementary Data ------------------------------------------- The following documents are filed as part of this Report: 1. Financial Statements: See Index on page F-1. 2. Supplementary Data: Quarterly Financial Data is included in the Financial Statements (see 1. above). Item 9. Disagreements with Auditors on Accounting and Financial Disclosure ------------------------------------------------------------------ None PART III -------- The Company intends to file with the Commission a definitive proxy statement for the 1995 Annual Meeting of Stockholders pursuant to Regulation 14A not later than 120 days after December 31, 1994. The information called for by this Part III is incorporated by reference to that proxy statement. PART IV --------- Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K --------------------------------------------------------------- (a) The exhibits listed below are filed as part of this Report: Exhibit No. Description - -------- ----------------- 3.1 Certificate of Incorporation 3.2 By-laws 3.2.1 Amendment dated April 14, 1992, to the By-laws 3.200.1 Restated Certificate of Incorporation of Citizens Utilities Company, with all amendments to March 9, 1994 3.200.2 By-laws of the Company, as amended to-date of Citizens Utilities Company, with all amendments to March 9, 1994 4.100.1 Copy of Indenture of Securities, dated as of August 15, 1991, to Chemical Bank, as Trustee 4.100.2 First Supplemental Indenture, dated August 15, 1991 4.100.3 Letter of Representations, dated August 20, 1991, from Citizens Utilities Company and Chemical Bank, as Trustee, to Depository Trust Company ("DTC") for deposit of securities with DTC 4.100.4 Second Supplemental Indenture, dated January 15, 1992, to Chemical Bank, as Trustee 4.100.5 Letter of Representations, dated January 29, 1992, from Citizens Utilities Company and Chemical Bank, as Trustee, to DTC, for deposit of securities with DTC 4.100.6 Third Supplemental Indenture, dated April 15, 1994, to Chemical Bank, as Trustee 4.100.7 Fourth Supplemental Indenture, dated October 1, 1994, to Chemical Bank, as Trustee The Company agrees to furnish to the Commission upon request copies of the Realty and Chattel Mortgage, dated as of March 1, 1965, made by Citizens Utilities Rural Company, Inc., to the United States of America (the Rural Electrification Administration and Rural Telephone Bank) and the Mortgage Notes which that mortgage secures; and the several subsequent supplemental Mortgages and Mortgage Notes; copies of the instruments governing the long- term debt of Louisiana General Services, Inc.; and copies of separate loan agreements and indentures governing various Industrial development revenue bonds. 10.1 Incentive Deferred Compensation Plan, dated April 16, 1991 10.6 Deferred Compensation Plans for Directors, dated November 26, 1984 and December 10, 1984 10.6.1 Directors' Retirement Plan, effective January 1, 1989 10.6.2 Non-Employee Directors' Deferred Fee Equity Plan, dated as of June 28, 1994 10.9 Management Equity Incentive Plan, effective June 22, 1990 10.10 LGS 1979 Option Incentive Plan, as amended 10.11 LGS 1981 Incentive Option Plan, as amended 10.12 LGS 1981 Stock Option Plan, as amended 10.13 LGS Supplemental Executive Retirement Plan 10.16 Employment Agreement between Citizens Utilities Company and Leonard Tow 10.17 1992 Employee Stock Purchase Plan 10.18 Amendment dated May 21, 1993, to the 1992 Employee Stock Purchase Plan 10.19 Asset Purchase Agreements, dated May 18, 1993 10.20 Asset Purchase Agreements, dated November 28, 1994 12. Computation of ratio of earnings to fixed charges (this item is included herein for the sole purpose of incorporation by reference) 21. Subsidiaries of the Registrant 23. Auditors' Consent 24. Powers of Attorney Exhibit number 10.6 is incorporated by reference to the same exhibit designation in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1984. Exhibit number 10.6.1 is incorporated by reference to the same exhibit designation in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. Exhibit number 10.9 is incorporated by reference to Appendix A to the Registrant's Proxy Statement dated May 14, 1990. Exhibit numbers 10.10, 10.11, 10.12 and 10.13 are incorporated by reference to the same exhibit designation in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. Exhibit numbers 4.100.1, 4.100.2 and 4.100.3 are incorporated by reference to the same exhibit designation in the Registrant's Quarterly Report on Form 10-Q for the nine months ended September 30, 1991. Exhibit numbers 3.1, 3.2, 4.100.4, 4.100.5, 10.1 and 10.16 are incorporated by reference to the same exhibit designation in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991. Exhibit number 3.2.1 and 10.17 is incorporated by reference to the same exhibit designation in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. Exhibit number 10.18 is incorporated by reference to the Registrant's Proxy Statement, dated March 31, 1993. Exhibit number 10.19 is incorporated by reference to exhibit number 2.1 in the Registrant's Form 8-K Current Report filed June 30, 1993. Exhibit numbers 4.100.6 and 4.100.7 are incorporated by reference to the Registrant's Form 8-K Current Reports filed on July 5, 1994 and January 3, 1995, respectively. Exhibit numbers 3.200.1 and 3.200.2 are incorporated by reference to the same exhibit designation in the Registrant's Form S-3 filed December 16, 1993. The Registrant's Annual Reports on Form 10-K and Form 8-K Current Reports bear SEC File Number Reference 0-1291. (b) The Company filed on Form 8-K dated December 7, 1994, under Item 5 "Other Events", a press release announcing the proposed ALLTEL acquisitions. The Company filed on Form 8-K dated December 21, 1994, under Item 5 "Other Events", and Item 7 "Financial Statements and Exhibits", the financial statements of the ALLTEL properties to be acquired. SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CITIZENS UTILITIES COMPANY -------------------------- (Registrant) By: /s/ Leonard Tow ----------------- Leonard Tow Chairman of the Board; Chief Executive Officer; Chief Financial Officer; Member, Executive Committee and Director March 15, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 15th day of March 1995. Signature Title - --------- ----- /s/ Robert J. DeSantis Vice President, Treasurer __________________________________________ and Assistant Secretary (Robert J. DeSantis) /s/ Livingston E. Ross _________________________________________ Vice President and Controller (Livingston E. Ross) Norman I. Botwinik* Director - ----------------------------------------- (Norman I. Botwinik) Aaron I. Fleischman* Member, Executive Committee - ----------------------------------------- and Director (Aaron I. Fleischman) Stanley Harfenist* Member, Executive Committee - ------------------------------------------ and Director (Stanley Harfenist) Andrew N. Heine* Director - ------------------------------------------ (Andrew N. Heine) Elwood A. Rickless* Director - ------------------------------------------ (Elwood A. Rickless) John L. Schroeder* Member, Executive Committee - ------------------------------------------ and Director (John L. Schroeder) Robert D. Siff* Director - ------------------------------------------ (Robert D. Siff) Robert A. Stanger* Director - ------------------------------------------ (Robert A. Stanger) Edwin Tornberg* Director - ------------------------------------------ (Edwin Tornberg) Claire L. Tow* Director - ------------------------------------------ (Claire L. Tow) /s/ Robert J. DeSantis *By: ------------------------------- (Robert J. DeSantis) Attorney-in-Fact CITIZENS UTILITIES COMPANY AND SUBSIDIARIES Index to Financial Statements Independent Auditors' Report F-2 Consolidated balance sheets as of December 31, 1994, 1993 and 1992 F-3 Consolidated statements of income for the years ended December 31, 1994, 1993 and 1992 F-4 Consolidated statements of shareholders' equity for the years ended December 31, 1994, 1993 and 1992 F-5 Consolidated statements of cash flows for the years ended December 31, 1994, 1993 and 1992 F-6 Notes to consolidated financial statements F-7 - F-21 Independent Auditors' Report ---------------------------- The Board of Directors and Shareholders Citizens Utilities Company: We have audited the consolidated financial statements of Citizens Utilities Company and subsidiaries as of December 31, 1994, 1993 and 1992, and the related consolidated statements of income, shareholders' equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Citizens Utilities Company and subsidiaries at December 31, 1994, 1993 and 1992, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. As discussed in Note 1 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards (SFAS) 115, "Accounting for Certain Investments in Equity and Debt Securities", effective January 1, 1994. As discussed in Notes 1 and 13 to the consolidated financial statements, the Company adopted SFAS 109, "Accounting for Income Taxes", and SFAS 106, "Employers' Accounting for Postretirement Benefits Other than Pensions", effective January 1, 1993. KPMG Peat Marwick LLP New York, New York March 8, 1995 CITIZENS UTILITIES COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1994, 1993 and 1992 (In thousands) 1994 1993 1992 ---- ---- ---- ASSETS - ------ Current assets: Cash $ 14,224 $ 21,738 $ 19,752 Temporary investments 108,818 89,752 0 Accounts receivable: Utility service 134,510 99,684 75,754 Other 34,713 15,088 15,932 Less allowance for doubtful accounts 2,428 459 441 ---------- --------- ---------- Total accounts receivable 166,795 114,313 91,245 ---------- --------- ---------- Materials and supplies 18,330 10,061 7,794 Other current assets 5,887 4,873 4,400 ---------- --------- ---------- Total current assets 314,054 240,737 123,191 ---------- --------- ---------- Property, plant and equipment 3,583,723 2,153,891 1,503,471 Less accumulated depreciation 1,014,068 461,924 406,833 ---------- --------- ---------- Net property, plant and equipment 2,569,655 1,691,967 1,096,638 ---------- --------- ---------- Investments 325,011 411,022 561,062 Regulatory assets 177,414 146,207 0 Deferred debits and other assets 190,432 137,185 107,090 ---------- --------- ---------- Total assets $3,576,566 $2,627,118 $1,887,981 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY - ----------------------------- Current liabilities: Accounts payable $ 122,404 $ 84,015 $ 87,298 Income taxes accrued 92,366 82,632 59,947 Long-term debt due within one year 13,986 1,620 10,850 Customers' deposits 19,919 19,436 17,150 Interest accrued 15,841 12,731 12,943 Other current liabilities 99,461 47,791 36,300 Short-term debt 515,200 380,000 0 ------------ ---------- ---------- Total current liabilities 879,177 628,225 224,488 Customer advances for construction 145,150 137,012 140,309 Contributions in aid of construction 71,580 47,241 39,549 Deferred income taxes 248,150 213,471 95,222 Regulatory liabilities 30,830 28,376 0 Deferred credits 50,594 50,634 28,443 Long-term debt 994,189 547,673 522,699 Shareholders' equity 1,156,896 974,486 837,271 ------------- ----------- ---------- Total liabilities and shareholders' equity $3,576,566 $2,627,118 $1,887,981 ============= =========== ========== The accompanying Notes are an integral part of these Consolidated Financial Statements. CITIZENS UTILITIES COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 and 1992 (In thousands, except for per-share amounts) 1994 1993 1992 ---- ---- ---- Revenues: Telecommunications $461,094 $177,497 $186,232 Natural gas 208,940 211,892 189,812 Electric 173,585 164,515 145,032 Water/Wastewater treatment 72,395 65,488 59,388 -------- -------- -------- Total revenues 916,014 619,392 580,464 -------- -------- -------- Operating expenses: Natural gas purchased 116,419 117,724 102,556 Electric energy and fuel oil purchased 86,576 83,119 76,286 Operating expenses 249,096 142,718 141,954 Maintenance expenses 61,779 24,816 24,893 Depreciation 115,175 54,698 50,127 Taxes other than income 58,845 35,157 34,174 -------- -------- ------- Total operating expenses 687,890 458,232 429,990 -------- -------- ------- Income from operations 228,124 161,160 150,474 Investment income 40,454 42,097 40,072 Other income - net 12,486 12,102 7,278 Interest expense 72,744 37,431 39,044 -------- ------- ------- Income before income taxes 208,320 177,928 158,780 Income taxes 64,323 52,298 43,767 -------- ------- ------- Net income $143,997 $125,630 $115,013 ======== ======== ======== Earnings per share of Common Stock Series A and Series B $.77 $.67 $.63 ==== ==== ==== The accompanying Notes are an integral part of these Consolidated Financial Statements. CITIZENS UTILITIES COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 and 1992 (In thousands, except for per-share amounts)
Additional Common Stock ($.25) Paid-in Retained Series A Series B Capital Earnings Other Total -------- -------- ---------- -------- ----- ----- Balance December 31, 1991 $10,291 $3,323 $468,107 $236,660 $1,295 $719,676 Net income 115,013 115,013 Stock dividends in shares of Common Stock Series A and Series B 700 237 117,454 (118,391) 0 Stock split (3-for-2) 5,270 1,783 (7,053) 0 Stock plans 86 9,853 9,939 Tax benefit arising from stock options exercised 531 531 Non-vested restricted stock (6,593) (6,593) Conversions of Series A to Series B (222) 222 0 Other (1,295) (1,295) -------- -------- --------- ------- -------- -------- Balance December 31, 1992 $16,039 $5,651 $582,299 $233,282 $ 0 $837,271 NGL merger 142 497 2,949 3,588 Franklin merger 13 505 (35) 483 Net income 125,630 125,630 Stock dividends in shares of Common Stock Series A and Series B 1,029 387 129,963 (131,594) (215) Stock split (2-for-1) 16,155 6,036 (22,191) 0 Stock plans 114 5,854 5,968 Tax benefit arising from stock options exercised 537 537 Non-vested restricted stock 1,224 1,224 Conversions of Series A to Series B (776) 776 0 -------- ----- ------- ------- ------- ------- Balance December 31, 1993 $ 32,447 $ 13,119 $ 698,688 $ 230,232 $ 0 $974,486 Metro Utility Co. merger 126 4,646 3,231 8,003 Net income 143,997 143,997 Stock dividends in shares of Common Stock Series A and Series B 1,621 686 137,736 (140,043) 0 Stock plans 88 281 18,759 19,128 Tax benefit arising from stock options exercised 137 137 Non-vested restricted stock 2,015 2,015 Conversions of Series A to Series B (570) 570 0 Unrealized gain on securities classified as available-for- sale, net of taxes 9,130 9,130 ------- ----- ------ --------- ----- ----- Balance December 31, 1994 $33,586 $14,782 $861,981 $237,417 $9,130 $1,156,896 ======= ======= ======== ======== ====== ==========
The accompanying Notes are an integral part of these Consolidated Financial Statements. CITIZENS UTILITIES COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 and 1992 (In thousands) 1994 1993 1992 ---- ---- ---- Net cash provided by operating activities $262,316 $194,949 $131,040 -------- -------- -------- Cash flows used for investing activities: Business acquisitions (700,222) (481,257) 0 Construction expenditures (287,708) (175,308) (148,563) Securities purchases (18,219) (254,203) (356,816) Securities sales 23,478 269,624 212,634 Securities maturities 89,885 54,465 72,651 Customer advances for construction and contributions in aid of construction 24,546 6,959 5,033 Other (13,795) (7,086) 19,755 -------- -------- ------- (882,035) (586,806) (195,306) -------- -------- ------- Cash flows from financing activities: Long-term debt borrowings 458,589 34,733 135,672 Long-term debt principal payments (1,268) (26,644) (95,365) Short-term debt borrowings 135,200 380,000 0 Issuance of Common Stock 18,465 3,780 989 Other 1,219 1,974 493 -------- ------- -------- 612,205 393,843 41,789 -------- ------- -------- Increase (decrease) in cash (7,514) 1,986 (22,477) Cash at January 1, 21,738 19,752 42,229 -------- ------- -------- Cash at December 31, $ 14,224 $ 21,738 $ 19,752 ======== ========= ========= The accompanying Notes are an integral part of these Consolidated Financial Statements. CITIZENS UTILITIES COMPANY and SUBSIDIARIES Notes to Consolidated Financial Statements ------------------------------------------ (1) Summary of Significant Accounting Policies: ------------------------------------------- (a) Principles of Consolidation: ---------------------------- The Consolidated Financial Statements include the accounts of Citizens Utilities Company and all subsidiaries after elimination of intercompany balances and transactions. Certain reclassifications of balances previously reported have been made to conform to current presentation. (b) Revenues: --------- Electric, natural gas and water/wastewater treatment - The Company records revenues from electric, natural gas and water/wastewater treatment customers when billed. These customers are billed on a cycle basis based on monthly meter readings. The Company accrues unbilled revenues earned from the dates customers were last billed to the end of the accounting period. Telecommunications - The Company records revenues from telecommunications services when earned. Revenues from local service are primarily derived from providing local telephone services. Revenues from long-distance service are derived from charges for access to the Company's local exchange network, subscriber line charges and contractual arrangements. Certain toll and access services revenues are estimated under cost separation procedures that base revenues on current operating costs and investments in facilities to provide such services. (c) Construction Costs and Maintenance Expense: ------------------------------------------- Property, plant and equipment are stated at original cost, including general overhead and an allowance for funds used during construction ("AFUDC"). AFUDC represents the borrowing costs and a return on common equity of funds used to finance construction. AFUDC is capitalized as a component of additions to property, plant and equipment and is credited to income. AFUDC does not represent current cash earnings; however, under established regulatory rate- making practices, after the related plant is placed in service, the Company is permitted to include in the rates charged for utility services a fair return on and depreciation of such AFUDC included in plant in service. The amount relating to equity is included in other income ($11,402,000, $10,123,000 and $6,398,000 for 1994, 1993 and 1992, respectively) and the amount relating to borrowings is a reduction of interest expense ($3,031,000, $2,678,000 and $1,805,000 for 1994, 1993 and 1992, respectively). The weighted average rates used to calculate AFUDC were 12% in 1994 and 1993, and 14% in 1992. Maintenance and repairs are charged to operating expenses as incurred. The book value, net of salvage, of routine property, plant and equipment dispositions is charged against accumulated depreciation. (d) Depreciation Expense: --------------------- Depreciation expense, calculated using the straight-line method, is based upon the estimated service lives of various classifications of property, plant and equipment and represented approximately 4% of the gross depreciable property, plant and equipment for 1994, 1993 and 1992. (e) Regulatory Assets and Liabilities: ---------------------------------- The Company's regulated operations are subject to the provisions of Statement of Financial Accounting Standards ("SFAS") 71; "Accounting for the Effects of Certain Types of Regulation". SFAS 71 requires regulated entities to record regulatory assets and liabilities as a result of actions of regulators. Regulatory assets of $24,669,000 at December 31, 1994 were recorded in connection with the provisions of SFAS 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" (see Note 13 ). In connection with the provisions of SFAS 109, "Accounting for Income Taxes", the Company's regulatory assets were $152,745,000 and regulatory liabilities were $30,830,000 at December 31, 1994. The regulatory assets and liabilities related to SFAS 109 were recorded to offset deferred income taxes which were recorded primarily as a result of the income tax benefits that were previously flowed through to customers and to the allowance for funds used during construction, partially offset by the effects of tax law changes and the tax benefit of unamortized deferred investment tax credits. The Company continuously monitors the applicability of SFAS 71 to its regulated operations. SFAS 71 may, at some future date, be deemed inapplicable due to changes in the regulatory and competitive environments and/or a decision by the Company to accelerate deployment of new technology. If the Company were to discontinue the application of SFAS 71 to one or more of its regulated operations, the Company would be required to write off its regulatory assets and regulatory liabilities associated with such operation(s) and would be required to adjust the carrying amount of any property, plant and equipment that would be deemed not recoverable. The Company believes its regulated operations continue to meet the criteria for SFAS 71. (f) Accounting for Investments, Temporary Investments and Short-Term Debt: ---------------------------------------------------------------- Investments include high credit quality, short- and intermediate-term fixed-income securities (primarily state and municipal debt obligations) and equity securities. Prior to the adoption of SFAS 115, fixed income securities were stated at amortized cost and marketable equity securities were stated at the lower of cost or market. The Company adopted SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities" as of January 1, 1994. SFAS 115 requires, among other things, that securities be designated as available-for- sale, held-to-maturity or trading. Securities which the Company will hold for an indefinite period of time, but which might be sold in the future as changes in market conditions or economic factors occur, are classified as available-for-sale and are carried at estimated fair market value. Net aggregate unrealized gains and losses related to such securities, net of taxes, are included as a separate component of Shareholders' Equity. Securities for which the Company has the intent and ability to hold to maturity are designated as held-to-maturity and are carried at amortized cost, adjusted for amortization of premiums and accretion of discounts over the period to maturity. Securities are designated as available-for-sale or held-to-maturity at the time of acquisition. Interest, dividends and gains and losses realized on sales of securities are reported in Investment income. The Company does not invest in securities which would be designated as trading. Temporary investments are investments in state and municipal securities which mature in less than one year, the proceeds of which are to be used to repay a portion of the short-term debt issued to partially and temporarily fund the acquisition of the GTE Telephone Properties (see Note 3). Such investments are considered held-to-maturity and are carried at amortized cost. The fair value of temporary investments at December 31, 1994 and 1993 was $108,935,000 and $93,438,000, respectively. Short-term debt outstanding was issued in the form of commercial paper notes payable to temporarily and partially fund the acquisition of the GTE Telephone Properties. This short-term debt had a weighted average interest rate of 5.75% at December 31, 1994 and is expected to be repaid from maturing temporary investments, funds from operations and proceeds from the issuance of equity securities. The fair value of short-term debt at December 31, 1994 and 1993, was $515,200,000 and $380,000,000, respectively. (g) Investment in Centennial Cellular Corp.: ---------------------------------------- The Company recorded its initial investment in Centennial Cellular Corp. ("Centennial") Convertible Redeemable Preferred Stock (the "Preferred Security") and Class B Common Stock at the historical cost of the Company's investment in Citizens Cellular Company, prior to its merger with Century Cellular Corp. During 1994, the Company purchased 615,195 additional shares of Centennial Class B Common Stock for $8,613,000 pursuant to a Centennial rights offering. Pursuant to SFAS 115, beginning January 1, 1994, the investment in the Centennial Class B Common Shares was classified as available-for-sale and is carried at fair market value. The terms of the Preferred Security provide that the Preferred Security accretes a liquidation value preference at a fixed dividend rate of 7.5%, compounded quarterly, on an initial liquidation value preference of $125,700,000 until the Preferred Security reaches a liquidation value preference of $186,000,000 on August 31, 1996. The Company recognizes the non-cash accretion as it is earned in each period as investment income and increases the book value of its investment in Centennial by the same amount. On a quarterly basis, the Company assesses whether the book value of the Preferred Security can be realized by comparing such book value to the market value of Centennial's common equity and by evaluating other relevant indicators of realizability, including Centennial's ability to redeem the Preferred Security. The book value of the Preferred Security would be deemed impaired to the extent that such book value exceeds the estimated realizability of the Preferred Security based on all existing facts and circumstances, including the Company's assessment of its ability to realize the book value of the Preferred Security through mandatory redemption (see Note 5). (h) Income Taxes and Investment Tax Credits: ---------------------------------------- The Company and its subsidiaries are included in a consolidated federal income tax return using a calendar year reporting period. The Company adopted SFAS 109 in 1993 without restating prior years' financial statements; the adoption of SFAS 109 had no material effect on net income in 1993. SFAS 109 required a change from the deferred to the liability method of computing deferred income taxes. Adoption of SFAS 109 resulted in recording a net increase in the liability for deferred income taxes of $115,437,000 at December 31, 1993. Such increase resulted principally from income tax benefits previously flowed through to customers and to the allowance for funds used during construction; partially offsetting these items were the effects of tax law changes and the tax benefit associated with the unamortized deferred investment tax credits. Due to the effects of utility regulation, the Company recorded regulatory assets and liabilities of $143,813,000 and $28,376,000, respectively, as offsets to the increase in the deferred income taxes at December 31, 1993. Prior to the adoption of SFAS 109, deferred income taxes resulted from the tax effect of using accelerated depreciation methods and certain other timing differences between income reported on the Consolidated Financial Statements and taxable income reported on the Company's income tax returns. The investment tax credits relating to utility properties, as defined by applicable regulatory authorities, have been deferred and are being amortized to income over the lives of the related properties. (i) Earnings Per Share: ------------------- Earnings per share is based on the average number of outstanding shares. Earnings per share is presented with adjustment for subsequent stock dividends and stock splits. The calculation has not been adjusted for the 1.5% stock dividend declared on February 7, 1995, because its effect is immaterial. The effect on earnings per share of the exercise of dilutive options is immaterial. (2) Property, Plant and Equipment: ------------------------------ The components of property, plant and equipment at December 31, 1994, 1993 and 1992 are as follows: 1994 1993 1992 ---- ---- ---- ($ in thousands) Transmission and distribution facilities $2,159,452 $1,417,320 $1,032,426 Production and generating facilities 818,927 414,743 222,594 Pumping, storage and purification facilities 93,942 80,175 71,238 Construction work in progress 210,213 68,868 45,616 Intangibles 7,773 5,968 3,145 Other 293,416 166,817 128,452 ---------- ---------- ---------- $3,583,723 $2,153,891 $1,503,471 ========== ========== ========== (3) Mergers and Acquisitions: ------------------------- The Company and GTE Corporation announced the signing of 10 definitive agreements pursuant to which the Company agreed to acquire from GTE Corporation, for $1.1 billion, certain telephone properties serving approximately 500,000 local telephone access lines in nine states ("the GTE Telephone Properties"). On December 31, 1993, 189,123 local telephone access lines in Idaho, Tennessee, Utah and West Virginia were transferred to the Company. On June 30, 1994, 270,883 local telephone access lines in New York were transferred to the Company. On November 30, 1994, 37,802 local telephone access lines in Arizona and Montana were transferred to the Company. On December 30, 1994, 5,440 local telephone access lines in California were transferred to the Company. The remaining GTE Telephone Property is located in Oregon and is expected to be transferred to Citizens in 1995. The acquisitions were accounted for using the purchase method of accounting and the results of operations of the GTE Telephone Properties acquired have been included in the accompanying financial statements from the dates of their acquisition. The following unaudited pro forma financial information presents the combined results of operations of the Company and the GTE Telephone Properties acquired as if the acquisitions had occurred on January 1, 1993. The pro forma financial information does not necessarily reflect the results of operations that would have occurred had the Company and the GTE Telephone Properties constituted a single entity during such periods. 1994 1993 ---- ---- ($ in thousands, except for per-share amounts) Revenues $1,054,000 $1,016,000 Net Income $165,000 $153,000 Earnings per share $.77 $.72 On August 31, 1994, RHC, Inc. ("Metro Utility Co."), an operator of water and wastewater treatment utilities serving portions of the suburban Chicago area, was merged into the Company. The acquired operations serve approximately 10,000 customers, increasing the number of the Company's water/wastewater treatment customers in Illinois to over 65,000. The transaction was accounted for as a pooling of interests. Prior year financial statements were not restated as the amounts are not significant. On November 29, 1994, the Company and ALLTEL Corporation ("ALLTEL") announced the signing of eight definitive agreements pursuant to which Citizens agreed to acquire from ALLTEL, for $292,000,000, certain telephone properties servicing approximately 110,000 local telephone access lines and certain cable television systems servicing approximately 7,000 subscribers. The properties are located in eight states: Arizona, California, Nevada, New Mexico, Oregon, Tennessee, Utah and West Virginia. The closings are expected to occur state by state throughout 1995 and the first half of 1996. On September 22, 1994, a subsidiary of the Company and a subsidiary of Century Communications Corp. ("Century") entered into a joint venture agreement for the purpose of acquiring, for approximately $89 million, and operating two cable television systems in southern California (the "Systems"). Century is a cable television company of which Leonard Tow, the Chairman and Chief Executive Officer of the Company, is Chairman, Chief Executive Officer, Chief Financial Officer and a director. In addition, Claire Tow, a director of the Company is Senior Vice President and a director of Century and Robert Siff, a director of the Company is a director of Century. The joint venture is governed by a management board on which the Company and Century are equally represented. The joint venture has entered into an agreement pursuant to which a subsidiary of Century (the "Manager") will manage the day-to-day operations of the Systems. The Manager will not receive a management fee but will be reimbursed only for the actual costs it incurs on behalf of the joint venture. With respect to the purchase of any service or asset for the joint venture for use in the Systems, the Manager is obligated to pass through to the joint venture any discount, up to 5%, off the published prices of vendors and is entitled to retain any discount in excess of 5%. On September 30, 1994, the joint venture acquired one of the systems serving approximately 26,500 subscribers. The purchase of the second system, serving approximately 19,200 subscribers, remains subject to regulatory approval for the transfer of licenses. The Company's interest in the joint venture is accounted for under the equity method of accounting. In January 1995, the Company entered into a definitive agreement to acquire Flex Communications by merger in a stock-for-stock transaction. Flex is a switch-based, inter-exchange carrier providing long-distance, 800 Inbound long-distance, voice mail, paging, private data networks and cellular services to approximately 3,500 customers in upstate New York. The transaction is expected to close in 1995. In 1993, the Company separately acquired Natural Gas Company of Louisiana ("NGL") and Franklin Electric Light Company, Incorporated ("Franklin") by merger. In these mergers, the Company issued 568,748 shares and 51,500 shares of Series B Common Stock for all of the common stock of NGL and Franklin, respectively. The acquisitions were accounted for as poolings of interests. Prior years' financial statements were not restated for the effects of these transactions because the amounts were not significant. (4) Dispositions: ------------- The Company has agreed to transfer, in the form of a tax-free exchange, its Pennsylvania Telephone property as partial consideration in the acquisition of the ALLTEL Telephone Properties. The agreed-upon value for this property is approximately $10,000,000. During 1993, the Company disposed of its Santa Cruz County, Arizona water and wastewater treatment properties, Idaho water property and Aalert Paging Company. The sale of the Santa Cruz properties yielded net proceeds of $1,694,000 and had a net investment of $94,000. The Company received net proceeds of $1,221,000 from the sale of the Idaho water property and had a net investment of $1,249,000. The sale of Aalert Paging Company yielded net proceeds of $5,498,000 and had a net investment of $5,287,000. The resulting gains and losses are included in Other income - net. During 1992, the Company disposed of two water properties in California. One property was transferred to a municipality through condemnation proceedings. The Company received net proceeds of $3,400,000 and had a net investment of $1,877,000. The other property was sold for net proceeds of $6,618,000; the Company's net investment was $4,160,000. In December 1992, the Company disposed of its Idaho electric operations. The Company received $1,177,500 and had a net investment of $706,000. The resulting gains on dispositions are included in other income-net. (5) Investments: ------------ The components of investments at December 31, 1994, 1993 and 1992 are as follows: 1994 1993 1992 ---- ---- ---- ($ in thousands) State and municipal securities $174,790 $296,371 $448,605 Investment in Centennial 117,982 90,628 81,034 Other fixed income securities 411 7,670 10,680 Marketable equity securities 31,828 13,282 13,934 Other 0 3,071 6,809 -------- -------- -------- Total $325,011 $411,022 $561,062 ======== ======== ======== The Company's investment in Centennial at December 31, 1994, includes 102,187 shares of Convertible Redeemable Preferred Stock ("the Preferred Security") and 1,982,294 Class B Common Shares. The liquidation value preference earned on the Preferred Security for 1994, 1993 and 1992 was $13,481,000, $9,594,000 and $8,803,000, respectively, and was recorded as investment income. The carrying value of the investment in Centennial at December 31, 1994, as presented in the table above, represents the historical book value of the Preferred Security of $49,842,000 plus $34,441,000 of liquidation value preference earned on the Preferred Security through December 31, 1994 and the market value of the Class B Common Stock of Centennial of $33,699,000. The Preferred Security is mandatorily redeemable in the year 2006. The Company believes it can realize its investment in Centennial either by cash redemption by the issuer funded through refinancing by the issuer, by temporary conversion to common equity securities followed by the sale of the common equity securities, or by sale of its current investment holdings. The aggregate market value of marketable equity securities at December 31, 1993 was $27,492,000 and total unrealized gains were $14,210,000. Net realized gains on marketable equity securities included in the determination of net income for the years 1994, 1993 and 1992, respectively, were $3,760,000, $0 and $259,000. The cost of securities sold was based on the actual cost of the shares of each security held at the time of sale. Marketable equity securities for each year include 1,807,095 shares (1,500,000 original shares adjusted for stock dividends) of Class A Common Stock of Century. These shares represent less than 2% of the total outstanding common stock of Century. The Chairman and Chief Executive Officer of the Company is also Chairman and Chief Executive Officer of Century. Pursuant to the provisions of SFAS 115, the Company classified its Investments into two categories: "held-to-maturity" and "available-for-sale" at January 1, 1994. The Company recorded unrealized holding gains on securities classified as available-for-sale as an increase to Investments. The fair value of Investments at December 31, 1993 and 1992 were $534,496,000 and $649,366,000, respectively, based on relative market information about each financial instrument. The following summarizes the cost, unrealized gains and fair market value for investments at December 31, 1994. Unrealized Aggregate Fair Investment Classification Amortized Cost Holding Gains Value - ------------------------- -------------- ------------- -------------- ($ in thousands) Held-To-Maturity $259,484 $77,238 $336,722 Available-For-Sale 50,809 14,718 65,527 Held-to-Maturity Securities --------------------------- Investment Maturities Amortized Cost Fair Value - --------------------- -------------- ---------- ($ in thousands) 2-5 years $141,030 $139,567 6-10 years 34,171 33,656 Thereafter 84,283 163,499 -------- --------- $259,484 $336,722 ======== ========= The Company sold $19,335,000 of securities classified as held-to-maturity during 1994 for the purpose of financing the acquisition of the GTE Telephone Properties; gains and losses of $372,000 and $94,000, respectively, were realized on such sales. The amortized cost and related gains on available- for-sale securities sold during 1994 were $384,000 and $3,760,000, respectively. (6) Long-term Debt: --------------- Weighted average interest rate at December 31, December 31, 1994 Maturities 1994 1993 1992 ----------------- ---------- ---- ---- ---- ($ in thousands) Debentures 7.68% 2001-2034 $425,000 $150,000 $150,000 Industrial development revenue bonds 5.93% 2015-2029 325,125 284,777 242,391 Commercial paper notes payable 5.75% Variable 187,800 58,953 62,680 Rural Electrification Administration and Rural Telephone Bank notes 5.80% 2006-2027 47,106 42,237 43,494 Subordinated notes 10.83% 1995-1998 2,045 11,692 12,261 Other long-term debt 8.18% 1998-2000 7,113 14 11,873 ------- -------- -------- -------- 6.67% $994,189 $547,673 $522,699 ======= ======== ======== ======== Certain commercial paper notes payable have been classified as long-term debt because these obligations are expected to be refinanced with long-term debt securities. The Company has available lines of credit with commercial banks in the amounts of $1,000,000,000 and $200,000,000, which expire on December 13, 1995 and December 16, 1997, respectively, and have associated facility fees of one-twentieth of one percent per annum and one-twelfth of one percent per annum, respectively. The terms of the lines of credit provide the Company with extension options. The total principal amounts of industrial development revenue bonds at December 31, 1994, 1993 and 1992, were $392,530,000, $377,890,000 and $274,030,000, respectively. Amounts presented in the table above have been reduced by funds held by trustees to be used for payment of qualifying construction expenditures. Holders of certain industrial development revenue bonds may tender at par prior to maturity. The next tender date is August 1, 1997, for $30,350,000 of principal amount of bonds. In the years 1994, 1993 and 1992, respectively, interest payments on short- and long-term debt were $74,803,000, $40,217,000 and $37,913,000. The fair value of long-term debt, presented as required by SFAS 107 at December 31, 1994, 1993 and 1992, respectively, was $992,349,000, $602,710,000 and $550,724,000 based on relative market information and information about each financial instrument. The installment principal payments and maturities of long-term debt for the next five years are as follows: 1995 1996 1997 1998 1999 ---- ---- ---- ---- ---- ($ in thousands) Installment principal payments $ 4,233 $4,311 $3,963 $3,021 $2,156 Maturities 9,753 845 118 1,334 - ------- ------ ------ ------ ------ $13,986 $5,156 $4,081 $4,355 $2,156 ======= ====== ====== ====== ====== (7) Capital Stock: -------------- The common stock of the Company is in two series, Series A and Series B. The Company is authorized to issue up to 200,000,000 shares of Common Stock Series A and 300,000,000 shares of Common Stock Series B. Quarterly stock dividends are declared and issued at the same rate on both Series A and Series B. Series B shareholders have the option of enrolling in the "Series B Common Stock Dividend Sale Plan." The Plan offers Series B shareholders the opportunity to have their stock dividends sold by the Plan Broker and the net cash proceeds of the sale distributed to them quarterly. Series A shares are convertible share-for-share into Series B shares. Series B shares are not convertible into Series A. Both series are the same in all other respects. On April 14, 1992, the Company declared a 3-for-2 stock split of its Series A and Series B Common Stock. The stock split was distributed on July 24, 1992, to shareholders of record on July 1, 1992. On May 21, 1993, the Company declared a 2-for-1 stock split of its Series A and Series B common stock. The stock split was distributed on August 31, 1993, to shareholders of record on August 16, 1993. On January 30, 1995, the Company, pursuant to an underwritten public offering, issued 19,000,000 shares of its Common Stock Series A at an issuance price of $13 3/8 per share. The $244,200,000 of net proceeds from the issuance were used to permanently fund the acquisition of the GTE Telephone Properties.Quarterly stock dividend rates declared on Common Stock Series A and Series B are based upon cash equivalent rates and share market prices, and have been as follows: Dividend Rates -------------- 1994 1993 1992 ---- ---- ---- First quarter 1.1% 1.2% 1.6% Second quarter 1.15% 1.0% 1.5% Third quarter 1.3% 1.1% 1.2% Fourth quarter 1.4% 1.0% 1.2% ----- ----- ----- Total 4.95% 4.3% 5.5% ===== ===== ===== Compounded Total 5.04% 4.37% 5.61% ===== ===== ===== Annualized stock dividend cash equivalent rates considered by the Company's Board of Directors in declaring stock dividends for 1994, 1993 and 1992, respectively, were .733, .691 and .624 per share (adjusted for all stock splits and stock dividends paid subsequent to all dividends declared through December 31, 1994 and rounded to the nearest 1/8th). The activity in shares of outstanding common stock for Series A and Series B during 1994, 1993 and 1992 is summarized as follows: Number of Shares ---------------- Series A Series B -------- -------- Balance at January 1, 1992 41,166,000 13,289,000 Stock dividends 2,799,000 950,000 Stock split (3-for-2) 21,078,000 7,134,000 Stock plans 0 344,000 Conversions of Series A to Series B (887,000) 887,000 ----------- ---------- Balance at December 31, 1992 64,156,000 22,604,000 NGL merger 0 569,000 Franklin merger 0 52,000 Stock dividends 4,114,000 1,548,000 Stock split (2-for-1) 64,620,000 24,142,000 Stock plans 0 457,000 Conversions of Series A to Series B (3,105,000) 3,105,000 ------------ ---------- Balance at December 31, 1993 129,785,000 52,477,000 Metro Utility Co. merger 0 505,000 Stock dividends 6,484,000 2,744,000 Stock plans 355,000 1,122,000 Conversions of Series A to Series B (2,278,000) 2,278,000 ------------ ---------- Balance at December 31, 1994 134,346,000 59,126,000 ============ ========== The Company used 7,000 Series B shares (not adjusted for subsequent stock dividends and a stock split) acquired from employees pursuant to the Management Equity Incentive Plan in partial payment of the 1993 stock dividend. These shares had a cost of $215,000. The Company has 50,000,000 authorized shares of preferred stock ($.01 par), none of which has been issued. The preferred stock may be issued by the Board of Directors (without further approval by shareholders) in one or more series, having such attributes as may be designated by the Board of Directors at the time of issuance. (8) Employee Stock Plans: --------------------- On June 22, 1990, shareholders approved the Citizens Utilities Company Management Equity Incentive Plan ("MEIP"). Under the MEIP, awards of the Company's Series A or Series B common stock may be granted to eligible officers, management employees and non-management exempt employees of the Company and its subsidiaries in the form of incentive stock options, non- qualified stock options, stock appreciation rights ("SARs"), restricted stock or other stock-based awards. The MEIP is administered by the Compensation Committee of the Board of Directors. The maximum number of shares of common stock which may be issued pursuant to awards at any time is 5% of the Company's common stock outstanding provided that no more than 8,558,000 shares (adjusted for subsequent stock dividends and stock splits) will be issued pursuant to incentive stock options under the MEIP. No awards will be granted more than 10 years after the effective date of the MEIP. The exercise price of stock options and SARs shall be equal to or greater than the fair market value of the underlying common stock on the date of grant. Stock options are generally not exercisable on the date of grant but vest over a period of time. Some options were awarded in tandem with related SARs. SARs provide the MEIP participant with the alternative of electing not to exercise the related stock option, but to receive instead an amount in cash or in common stock equal to the difference between the option price and the fair market value of the common stock on the date the SAR is exercised. Either the SAR or the related option may be exercised, but not both. There were no SARs granted during 1994 or 1993. During 1992, 613,000 SARs were exercised at an average exercise price of $12.21 per share (not adjusted for subsequent stock dividends and stock splits). This resulted in the cancellation of the 613,000 tandem stock options. At December 31, 1994, 1993 and 1992, no SARs were outstanding. Under the terms of the MEIP, subsequent stock dividends and stock splits have the effect of increasing the option shares outstanding, which correspondingly decreases the average exercise price of outstanding options. The following summary of shares subject to option under the MEIP reflects the original options granted, adjusted for subsequent stock splits, at original option prices which have also been adjusted for subsequent stock splits. Average option Shares subject to option price per share ------------------------ --------------- Balance at January 1, 1992 2,931,000 $ 8.06 Options granted 2,367,000 14.90 Options exercised (257,000) 6.60 Options cancelled or lapsed (1,294,000) 6.28 Adjustment for stock dividends* 173,000 - ------------ ------ Balance at December 31, 1992 3,920,000 12.54 Options granted 1,862,000 18.06 Options exercised (239,000) 7.62 Options cancelled or lapsed (25,000) 5.44 Adjustment for stock dividends* 201,000 - ------------ ----- Balance at December 31, 1993 5,719,000 14.14 Options granted 1,562,000 13.06 Options exercised (149,000) 8.04 Options cancelled or lapsed (69,000) 14.17 Adjustment for stock dividends* 287,000 - ----------- ------ Balance at December 31, 1994 7,350,000 $14.07 =========== ====== Options exercisable at end of year 1,667,000 $11.85 =========== ====== * Represents adjustment to outstanding option shares to reflect stock dividends. During 1993 and 1992, the Company granted restricted stock awards to key employees in the form of the Company's Common Stock Series B. There were no restricted stock awards during 1994. The number of Series B shares issued as restricted stock awards during 1993 and 1992 was 149,000 and 792,000, respectively (adjusted for subsequent stock dividends and stock splits). None of the restricted stock awards may be sold, assigned, pledged or otherwise transferred, voluntarily or involuntarily, by the employee. The restrictions lapse over three- and five-year periods. At December 31, 1994, 482,618 shares (adjusted for subsequent stock dividends and stock splits) of restricted stock were outstanding. The Company's Employee Stock Purchase Plan ("ESP Plan") was approved by shareholders on June 12, 1992 and amended on May 21, 1993. Under the ESP Plan, eligible employees of the Company and its subsidiaries may subscribe to purchase shares of Series B common stock at the lower of 85% of the average market price on the first day of the purchase period or on the last day of the purchase period. An employee may elect to have up to 20% of annual base pay withheld in equal installments throughout the designated payroll- deduction period for the purchase of shares. The value of an employee's subscription may not exceed $25,000 in any one calendar year. As of December 31, 1994, there are 1,278,000 shares of Series B common stock reserved for issuance under the ESP Plan. These shares will be adjusted for any future stock dividends or stock splits. The ESP Plan will terminate when all 1,278,000 shares reserved have been subscribed for, unless terminated earlier by the Board of Directors. The ESP Plan is administered by a committee of the Board of Directors. As of December 31, 1994, the number of employees participating in the ESP Plan was 1,561 and the total number of shares subscribed for under the ESP Plan was 240,640. (9) Income Taxes: ------------- The following is a reconciliation of the provision for income taxes at federal statutory rates to the reported provision for income taxes: 1994 1993 1992 ------------- --------------- ---------------- ($ in thousands) Consolidated tax provision at federal statutory rate $72,912 35.0% $62,275 35.0% $53,985 34.0% Allowance for funds used during construction (5,051) (2.4%) (4,480) (2.5%) (2,789) (1.8%) Amortization of investment tax credits (1,949) (0.9%) (2,086) (1.2%) (2,140) (1.3%) State income tax provisions, net of federal income tax benefit 5,262 2.5% 6,432 3.6% 4,989 3.1% Nontaxable investment income (6,032) (2.9%) (8,339) (4.7%) (8,490) (5.3%) All other - net (819) (0.4%) (1,504) (0.8%) (1,788) (1.1%) -------- ------ -------- ------ -------- ------ $64,323 30.9% $52,298 29.4% $43,767 27.6% ======== ====== ======== ====== ======== ====== For 1994, 1993 and 1992, accumulated deferred income taxes amounted to $230,556,000, $194,165,000 and $72,969,000, respectively, and the unamortized deferred investment tax credits amounted to $17,594,000, $19,306,000 and $22,253,000, respectively. Income taxes paid during the year were $30,395,000, $24,139,000 and $22,798,000 for 1994, 1993 and 1992, respectively. The components of the net deferred income tax liability at December 31, are as follows: 1994 1993 ---- ---- ($ in thousands) Deferred tax liabilities - ------------------------ Property, plant and equipment basis differences $177,549 $148,756 Regulatory assets 62,578 57,134 Other-net 28,704 25,365 -------- -------- 268,831 231,255 -------- -------- Deferred tax assets - ------------------- Deferred investment tax credits 7,183 6,649 Regulatory liabilities 13,498 11,135 -------- ------- 20,681 17,784 -------- ------- Valuation Allowance 0 0* -------- -------- Deferred income taxes $248,150 $213,471 ======== ======== * There was no change in the valuation allowance during 1993. The provision for federal and state income taxes, as well as the taxes charged or credited to Shareholders equity, includes amounts both payable currently and deferred for payment in future periods as indicated below. 1994 1993 1992 ---- ---- ---- Income Taxes Included in the Income Statements: ($ in thousands) - ------------------------ Current Federal $28,347 $39,571 $37,501 State 3,595 8,682 7,118 ------- ------- ------- 31,942 48,253 44,619 ------- ------- ------- Deferred Federal 29,829 4,917 847 Investment tax credits (1,949) (2,086) (2,140) State 4,501 1,214 441 ------- ------ ------ 32,381 4,045 (852) ------- ------ ------ Income taxes included in the Income Statement 64,323 52,298 43,767 ------- ------ ------ Income Taxes Included in Shareholders' Equity: - ------------------------ Deferred income taxes on unrealized gains on securities classified as available-for-sale 5,588 - - Current benefit arising from stock options exercised (137) (537) (531) -------- -------- -------- Income taxes included in Shareholders' Equity 5,451 (537) (531) -------- -------- -------- Total income taxes $69,774 $51,761 $43,236 ======== ======== ========= (10) Segment Information: -------------------- Year Ended December 31, ----------------------------------- 1994 1993 1992 ---- ---- ---- ($ in thousands) Telecommunications: - ------------------- Revenues $461,094 $177,497 $186,232 Assets 1,805,893 910,276 325,618 Depreciation 81,659 22,744 22,452 Capital expenditures 177,419 66,619 20,672 Operating income before income taxes 148,720 85,934 85,994 Natural gas: - ------------ Revenues $208,940 $211,892 $189,812 Assets 306,979 289,121 243,582 Depreciation 10,827 10,646 10,106 Capital expenditures 31,235 25,677 22,280 Operating income before income taxes 30,205 28,971 26,952 Electric: - --------- Revenues $173,585 $164,515 $145,032 Assets 458,457 446,284 356,829 Depreciation 15,251 12,924 11,038 Capital expenditures 43,132 43,673 74,502 Operating income before income taxes 31,221 30,660 18,999 Water/Wastewater: - ----------------- Revenues $ 72,395 $ 65,488 $ 59,388 Assets 455,312 400,288 320,985 Depreciation 7,438 8,384 6,531 Capital expenditures 38,884 37,426 25,456 Operating income before income taxes 17,978 15,595 18,529 (11) Quarterly Financial Data (unaudited): ------------------------------------- Net Income ---------------------------------- ($ in thousands) Per Share - ---------------- -------------------- 1994 Revenues Amount Series A Series B ---- -------- ------ -------- -------- First quarter $223,896 $31,655 $.17 $.17 Second quarter 188,674 38,016 .20 .20 Third quarter 242,309 38,687 .20 .20 Fourth quarter 261,135 35,639 .19 .19 Net Income ----------------------------------- ($ in thousands) Per Share - ---------------- -------------------- 1993 Revenues Amount Series A Series B ---- -------- ------ -------- -------- First quarter $165,915 $28,239 $.15 $.15 Second quarter 146,170 34,682 .18 .18 Third quarter 145,315 34,269 .18 .18 Fourth quarter 161,992 28,440 .15 .15 The quarterly net income per share amounts are rounded to the nearest cent. Annual earnings per share may vary depending on the effect of such rounding. (12) Supplemental Cash Flow Information: ----------------------------------- Schedule of net cash provided by operating activities for the years ended December 31, 1994 1993 1992 ---- ---- ---- ($ in thousands) Net income $143,997 $125,630 $115,013 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 115,175 54,698 50,127 Deferred income taxes and amortization of investment tax credits 32,381 4,045 (852) Centennial investment income (13,481) (9,594) (8,803) Allowance for equity funds used during construction (11,402) (10,123) (6,398) Change in accounts receivable (20,663) (23,068) (12,372) Change in accounts payable 21,520 (3,773) (4,607) Change in accrued taxes and accrued interest 13,024 24,960 19,672 Other (18,235) 32,174 (20,740) --------- -------- --------- Net cash provided by operating activities $262,316 $194,949 $131,040 ========= ======== ========= (13) Pension and Retirement Plans: ----------------------------- The Company and its subsidiaries have noncontributory pension plans covering all employees who have met certain service and age requirements. The benefits are based on years of service and final average pay or pay rate. Contributions are made in amounts sufficient to fund the plans' current service costs and to provide for benefits expected to be earned in the future. Plan assets are invested in a diversified portfolio of equity and fixed-income securities. Pension costs for 1994, 1993 and 1992 include the following components: 1994 1993 1992 ---- ---- ---- ($ in thousands) Service cost $5,777 $3,585 $3,277 Interest cost on projected benefit obligations 8,166 5,038 4,544 Net amortization and deferral 172 1,751 132 Return on plan assets (9,754) (6,945) (5,438) -------- ------- ------- Net pension cost $4,361 $3,429 $2,515 ======== ======= ======== Assumptions used in the computation of pension costs and the actuarial present value of projected benefit obligations included the following: 1994 1993 1992 ---- ---- ---- Discount rate 8% 7.5% 8% Expected long-term rate of return on plan assets 8.5% 8% 8.5% Rate of increase in compensation levels 4.5% 4.5% 5% As of December 31, 1994, 1993 and 1992, respectively, the fair values of plan assets were $133,964,000, $73,233,000 and $68,506,000. The actuarial present values of the accumulated benefit obligations were $86,186,000, $57,216,000 and $48,661,000 for 1994, 1993 and 1992, respectively. The actuarial present values of the vested accumulated benefit obligation for 1994, 1993 and 1992, respectively, were $77,053,000, $54,591,000 and $46,819,000. The total projected benefit obligations for 1994, 1993 and 1992, respectively, were $125,943,000, $75,531,000 and $63,199,000. The Company provides certain medical, dental and life insurance benefits for retired employees and their beneficiaries and covered dependents. In January 1993, the Company implemented SFAS 106, "Employers' Accounting for Postretirement Benefits Other than Pensions". SFAS 106 requires the Company to accrue the expected costs of providing postretirement benefits to employees and to employees' beneficiaries and covered dependents during the years the employee renders the necessary service. The Company's 1994 and 1993 annualized costs were approximately $6,605,000 and $3,671,000, respectively, of which approximately $4,261,000 and $1,601,000 were recorded as regulatory assets for states whose regulatory commissions to date have not but will likely allow recovery of accrued costs in future rate proceedings. The Company's annual cost includes 20-year prospective recognition of the transition obligation. The Company's accumulated postretirement benefit obligation at December 31, 1994 was approximately $54,986,000. The Company is currently assessing the costs and benefits of alternative funding methods. For measurement purposes, the Company used an 8% discount rate and a 9% annual rate of increase in the per-capita cost of covered health-care benefits, gradually decreasing to 6% in the year 2030 and remaining at that level thereafter. The effect of a 1% increase in the assumed health-care cost trend rates for each future year on the aggregate of the service and interest cost components of the total postretirement benefit cost would be $529,000 and the effect on the accumulated postretirement benefit obligation for health benefits would be $5,332,000. The Company recorded $27,357,000 of accumulated postretirement benefit obligation pursuant to the acquisition of the GTE Telephone Properties. The components of the net periodic postretirement benefit cost for the years ended December 31, 1994 and 1993 are as follows: 1994 1993 ---- ---- ($ in thousands) Service cost $1,826 $ 845 Interest cost 3,418 1,710 Amortization of transition obligation 1,048 1,116 Other 313 0 ------ ------ Net periodic postretirement benefit cost $6,605 $3,671 ====== ====== The following table sets forth the accrued postretirement benefit liability recognized in the Company's balance sheets at December 31, 1994 and 1993: 1994 1993 ---- ---- ($ in thousands) Accumulated postretirement benefit obligation: Retirees ($14,946) ($13,919) Fully eligible active plan participants (7,158) (2,749) Other active plan participants (32,882) (7,328) --------- -------- Total accumulated postretirement benefit obligation (54,986) (23,996) Unrecognized net (gain) loss (1,914) 1,563 Unrecognized prior service cost 2,932 (1,477) Unrecognized transition obligation 18,676 21,201 --------- -------- Net accumulated postretirement benefit obligation ($35,292) ($2,709) ========= ======== (14) Commitments and Contingencies: ------------------------------ The Company has budgeted expenditures for facilities in 1995 of approximately $262,000,000 and certain commitments have been entered into in connection therewith. On November 29, 1994, the Company and ALLTEL Corporation announced the signing of eight definitive agreements pursuant to which Citizens agreed to acquire from ALLTEL, for $292,000,000, certain properties servicing approximately 110,000 local telephone access lines, and certain cable television systems servicing approximately 7,000 subscribers. The properties are located in eight states: Arizona, California, Nevada, New Mexico, Oregon, Tennessee, Utah and West Virginia. The closings are expected to occur state by state throughout 1995 and the first half of 1996. EX-10 2 EXHIBIT NO. 10.6.2 CITIZENS UTILITIES COMPANY NON-EMPLOYEE DIRECTORS' DEFERRED FEE EQUITY PLAN ARTICLE 1 PURPOSES OF THE PLAN 1.1 Purposes. The purpose of this Citizens Utilities Company Deferred Fee Equity Plan For Non-Employee Directors (the "Plan") is to provide each Director with an opportunity to defer some or all of the Director's Fees and receive compensation for services in the form of options to purchase Citizens' Common Stock or in Plan Units which are equivalent to Citizens' Common Stock. The Plan will implement corporate policy that all employees, officers and directors are to be encouraged to share in the Company's long- term prospects by taking part of their compensation in Common Stock and options. 1.2 Introduction. The Plan is comprised of two separate plans. Because a number of administrative and procedural provisions of each of the plans are similar or identical, the plans have been combined in a single plan for convenience. The Plan consists of an option plan through which a director may elect to receive his or her Fees for a period of up to five years (or a shorter period in the case of 1994) in an equivalent amount of options to purchase Common Stock. This plan is referred to as the Option Plan. The provisions of Articles 3 and 4 apply exclusively to the Option Plan. The Plan also includes a separate stock plan through which a director may elect (a "Stock Plan Election") to receive his or her Fees for the next calendar year (or a shorter period in the case of 1994 or a newly elected director) in an equivalent amount of Plan Units. Upon termination of directorship, a Stock Plan Participant will receive the value of his Plan Units in either stock or cash or installments of cash as selected by the Participant at the time of the related Stock Plan Election. The provisions of Articles 5, 6, 7 and 8 apply exclusively to the Stock Plan. As defined below, the term "Plan" will include both the Stock Plan and Option Plan; the term "Participant" includes an Option Plan Participant and a Stock Plan Participant; the term "Election" includes an Option Plan Election and a Stock Plan Election; and the term "Committee" includes an Option Plan Committee and the Stock Plan Committee; unless, in each case, the context requires otherwise. ARTICLE 2 DEFINITIONS As used herein, the following words shall have following meaning unless otherwise specifically provided: 2.1 "Accounting Date" means, for purposes of the Stock Plan, each January 1, April 1, July 1 and October 1, except that the first Accounting Date in 1995 shall be February 1. 2.2 "Administrator" means the person or persons appointed by the Board of Directors to represent the Company in the administration of each Plan pursuant to the provisions of Article 10.1. 2.3 "Act" means the Securities Act of 1933. 2.4 "Applicable Rate of Interest" means, as of any date, 120% of the then applicable Federal rate of interest pursuant to the Internal Revenue Code. The Federal short term rate of interest shall be the interest component applicable to deferred Fees from the date of deferral until the date of investment in Plan Units under the Stock Plan. The Federal medium term rate of interest shall apply to distributions in annual installments deferred after Termination pursuant to the Stock Plan. 2.5 "Beneficiary" means the person or persons designated in writing by the Participant as entitled to receive a Stock Plan Participant's Account upon his death, or to exercise an Option Plan Participant's Option upon his death, or failing such designation, the person or persons who, upon the death of a Participant, shall have acquired by will, or the laws of descent and distribution, the right to receive the benefits specified under this Plan. Beneficiary designations shall be made in writing and delivered to the Administrator and shall comply with any applicable state law relating to testamentary dispositions and other requirements. A Participant may designate a new Beneficiary or Beneficiaries at any time by notifying the Administrator. The last such designation received by the Administrator shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Administrator prior to the Participant's death, and in no event shall it be effective as of a date prior to such receipt. "Beneficiary" shall include the person or persons who, upon the disability or incompetence of a Participant, shall have acquired on behalf of the Participant, by legal proceeding or otherwise, the right to receive the benefits specified in this Plan on behalf of the Participant. 2.6 "Board of Directors" means the Board of Directors of Citizens Utilities Company. 2.7 "Code" means the Internal Revenue Code of 1986. 2.8 "Company" means Citizens Utilities Company and its successors and assignors. 2.9 "Common Stock" means Common Stock Series B, par value $.25 per share, of the Company or any successor Common Stock. 2.10 "Director" means any director of the Company who is not a full-time employee of the Company. 2.11 "Effective Date" means, for Option Plan Elections before July 20, 1994, August 1, 1994; and for other Option Plan Elections, the next January 1. 2.12 "Exchange Act" means the Securities Exchange Act of 1934. "Rule 16b-3" shall mean such rule promulgated by the Securities and Exchange Commission under the Exchange Act and, unless the circumstances require otherwise, shall include any other rule or regulation adopted under Sections 16(a) or 16(b) of the Exchange Act relating to compliance with, or an exemption from, Section 16(b). Reference to any section of the Exchange Act or any rule promulgated thereunder shall include any successor section or rule. 2.13 "Fair Market Value", of the Common Stock as of any Accounting Date or Time of Distribution for the purposes of the Stock Plan, and as of any Effective Date for purposes of the Option Plan, shall be the average of the daily high and low prices of shares of Common Stock reported on a composite tape for securities listed on The New York Stock Exchange or, if such shares are not listed for trading on such exchange, on any other established securities market for which quotations are readily available, for the third, fourth, fifth and sixth trading days of the month which follow each Accounting Date or Time of Distribution or Effective Date, as the case may be. Participants will be credited with fractional share interests. If required, an appropriate adjustment will be made for record dates, payment dates and ex-distribution trading. The Stock Plan Committee, the Option Plan Committee or the Board of Directors may select in advance different trading days of the month for determining Fair Market Value, in their discretion. 2.14 "Option Plan Committee" means the Committee described in Section 10.1 hereof to administer the Option Plan. 2.15 "Option Plan Election" is an election to receive Options equivalent in value to Option Plan Fees to be earned during the period August 1 - December 31, 1994 or during one or more subsequent Plan Years. 2.16 "Option Plan Fees" are those Directors' Fees which may be the subject of an Option Plan Election. These are limited to future retainer fees at the rate in effect in the year in which the Option Plan Election is made and board and committee meeting fees, up to a maximum of $30,000 per year. Option Plan Fees for 1994 shall be limited to $12,500. 2.17 "Option Plan Participant" means a Director who has elected to receive Directors' Fees in the form of Options. 2.18 "Option Value" - For each Option Plan Election, the Options granted hereunder shall be in an amount equivalent to the value of the Directors' Fees subject to such Option Plan Election. In order to implement this standard, the Board of Directors has determined at the time of adoption of the Plan that the "Option Value" of an Option with the terms and conditions of the Option described herein to purchase one share of Common Stock of the Company is 20% of the Fair Market Value of such share on the Effective Date of the Option in question. 2.19 "Plan" means this Citizens Utilities Company Deferred Fee Equity Plan For Non-Employee Directors. 2.20 "Plan Unit" shall mean a credit established in a Participant's Stock Plan Account reflecting the number of shares of Common Stock which could be purchased at Fair Market Value as of each Accounting Date as provided in Section 6.1. A Plan Unit shall be deemed to be the equivalent of a share of Common Stock and shall be subject to adjustment in the event of change in Common Stock as provided in Section 11.5. 2.21 "Plan Year" means the fiscal year of the Company, currently the twelve-month period ended December 31. 2.22 "Stock Plan Account" shall mean the account established for each Stock Plan Participant to reflect the amount of Fees which such Participant has elected to defer under the Stock Plan, any interest component and all Plan Units which have been acquired with such Fees and interest component. 2.23 "Stock Plan Committee" means the Committee described in Section 10.1 hereof to administer the Stock Plan. 2.24 "Stock Plan Election" means a Stock Plan Participant's delivery of a written notice of election to the Administrator (a) electing to defer payment of his or her Fees, and (b) further electing to receive payment of his or her Stock Plan Account either (i) at Time of Distribution in either (A) Common Stock or (B) cash, or (ii) in installments in cash annually over a five-year period. All such elections shall be irrevocable except as otherwise provided in the Stock Plan. 2.25 "Stock Plan Fees" and "Fees" each mean the retainer fees and Board of Directors and committee meeting attendance fees unless the context otherwise requires. 2.26 "Stock Plan Participant" means a Director who has elected to defer payment of all or a portion of his or her Stock Plan Fees and to establish a Stock Plan Account. 2.27 "Termination" means retirement from the Board of Directors or termination of service as a Director for death, disability or any other reason. 2.28 "Time of Distribution" means a date ten (10) calendar days after Termination, except as may be otherwise specified in Article 7; provided that, if payment is to be made in cash and the Time of Distribution is within six months after the date of acquisition or crediting of Plan Units within the contemplation of Rule 16b-3(c)(1) or any successor rule under the Exchange Act, the Time of Distribution shall be delayed, solely for such Plan Units, until more than six months shall have elapsed from the date of acquisition or crediting of such Common Stock or Plan Units. 2.29 "Trust Agreement" means any Trust Agreement entered into between the Company and any Trustee in connection with the Plan. 2.30 "Trustee" means any entity named as Trustee in the Trust Agreement, or any successor corporate Trustee thereunder. ARTICLE 3 ELECTIONS BY OPTION PLAN PARTICIPANTS 3.1 Directors may elect to receive Fees in the form of Options. Option Plan Fees to be earned by Directors for the Plan Years 1995 through 1999 may, at the election of a Director, be received as Options as herein provided. Option Plan Fees to be earned by Directors for the period August 1, 1994 through December 31, 1994 may also, at the election of a Director, be received as Options. 3.2 Annual Option Plan Elections On or before December 15 of each year (except for 1994 when the Option Plan Election must be made on or before July 20, 1994) a Director may deliver to the Administrator his or her Option Plan Election to receive a stated percentage of his or her Option Plan Fees for one or more of the Plan Years 1995 through 1999 or the period August 1 - December 31, 1994, in Options to purchase the number of shares of Common Stock specified in Section 4.1. For example: the annual Option Plan Election may cover the Plan Year or Years set forth below (to the extent not theretofore the subject of an Option Plan Election). Date of Option Plan Election Plan Years or Periods for Which Option Plan Fees May Be Elected On or before July 20, 1994 August 1-Dec. 31, 1994 On or Before July 20, 1994 1995 - 1999 On or Before December 15, 1995 1996 - 1999 On or Before December 15, 1996 1997 - 1999 On or Before December 15, 1997 1998 - 1999 On or Before December 15, 1998 1999 Elections must include the earliest Plan Year for which un-elected Fees exist and (if additional years are included in the Election) consecutive successive years. An Option Plan Election covering Option Plan Fees for this period shall preclude a Stock Plan Election purporting to cover the same Fees and the Stock Plan Election shall be automatically modified to comply with Section 10.4. 3.3 Effective Date Option Plan Elections made on or before July 20, 1994 shall become effective on August 1, 1994. Later years' Option Plan Elections shall become effective as of the next Option Plan Effective Date. 3.4 Adjustment for Actual Fees Earned If by the end of any Plan Year a Director shall not have earned the amount of Option Plan Fees elected by him or her to be received in Options, the number of shares of Common Stock covered by Options granted for such Plan Year shall be diminished pro rata. Any Fees earned which have not been subject of an Option Plan Election shall be paid in cash in accordance with the normal payment practices of the Company for Directors' Fees. If a Participant's directorship should terminate during a Plan Year which has been the subject of an Option Plan Election, all Fees (including Option Plan Fees) earned by a director prior to termination shall be paid to him or her or his or her Beneficiary, in cash, on January 15 of the next calendar year (and the related Option shall terminate as elsewhere herein provided). 3.5 Cancellation of Election At any time an Option Plan Participant may cancel one or more Options or installments of Options held by him or her which relate to future Plan Years and consequently have not been earned as of the date of such cancellation. Cancellation shall be effected by delivering a written notice of cancellation to the Administrator. Such cancellation shall not affect any Options held by the Participant relating to the year in which cancellation occurs or to any prior year. Option Plan Fees to be earned by a Director covered by a canceled Election shall thenceforth be paid in cash in accordance with the Company's practices, and may not thereafter become the subject of an Option Plan Election. ARTICLE 4 TERMS OF OPTIONS 4.1 Number of Shares covered by an Option. The number of shares of Common Stock covered by an Option resulting from an Option Plan Election shall be equal to the Option Plan Fees covered by the Election divided by the Option Value. 4.2 Maximum Duration. The maximum exercise period for each Option granted under the Option Plan shall be ten years from the Effective Date of the Option. 4.3 Initial Exercisability in Installments. Options representing Option Plan Fees to be earned in one Plan Year shall become exercisable on January 1 of the following Plan Year. Options which relate to Fees to be earned in more than one Plan Year shall become exercisable in installments on the January 1 of the year following the year in which Fees represented by the installment are earned. For example: An Election covering the years 1996, 1997 and 1998 would become exercisable: as to shares representing 1996 Fees - January 1, 1997; as to shares representing 1997 Fees - January 1, 1998; as to the remainder of the shares - January 1, 1999. An Election covering Fees to be earned in 1999 will first become exercisable on January 1, 2000. Options relating to the period August 1, 1994 - December 31, 1994 shall first become exercisable on February 1, 1995. 4.4 Exercise Price The Exercise Price for all shares of Common Stock purchasable upon exercise of an Option shall be 90% of the Fair Market Value as of the Effective Date applicable to the Option exercised. 4.5 Notice of Exercise An Option Plan Participant wishing to exercise an Option may do so by giving written notice of exercise in the form adopted for the Option Plan. 4.6 Payment of Purchase Price At the choice of the holder of the Option, the Purchase Price may be paid either in cash, or in shares of Common Stock valued at Fair Market Value on the trading day immediately preceding the date of exercise specified in the notice of exercise. 4.7 Exercisability after Termination. If a Participant's directorship terminates for any reason, the Option shall continue to be exercisable by the Participant or his or her Beneficiary for a period of twelve months after termination of directorship, but only to the extent that the Option was exercisable on the day of termination of the directorship. In no event shall the exercise date be later than the date specified in Section 4.2. 4.8 Option not transferable. No Option granted under the Option Plan shall be transferrable other than by will or the laws of descent or distribution or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code or Title I of the Employee Retirement Income Security Act ("ERISA") or the rules thereunder. During the lifetime of the Option Plan Participant an Option shall be exercisable only by the Participant, or in the event of his or her disability or incompetence, his or her Beneficiary. ARTICLE 5 ELECTIONS BY STOCK PLAN PARTICIPANTS 5.1 Directors may elect to receive Fees in the form of Plan Units. Directors may elect to receive Directors' Fees (to the extent such Directors' Fees are not the subject of an Option Plan Election) in the form of Plan Units. 5.2 Stock Plan Election to Defer. A Director of the Company may become a Stock Plan Participant by electing, on an annual basis and prior to June 30 of a Plan Year, to defer receipt of all or a portion of the Stock Plan Fees payable to such Director for the next ensuing Plan Year. An Election shall be effective upon the delivery by a Stock Plan Participant to the Administrator of a written Stock Plan Election to evidence his or her decision. Such Stock Plan Election shall indicate the portion of Directors' Fees to be deferred and credited to his or her Stock Plan Account. The following special provisions shall apply to Directors' Fees for 1994 and 1995: On or before July 20, 1994, a Director may deliver a Stock Plan Election to the Administrator in which he or she elects to defer receipt of all or a portion of the Directors' Fees payable to such Director for services during the period August 1, 1994 through December 31, 1994. In such a case, all deferred Fees will be held by the Company in the Participant's Stock Plan Account and will not be invested in Plan Units until February 1, 1995. An election to defer Fees to be accrued during the period January 1, 1995 through December 31, 1995 shall be made on or before July 20, 1994 as provided herein except that the first Accounting Date for investment of such Fees shall be April 1, 1995. If a person becomes a Director after the beginning of any Plan Year, he or she may elect to defer receipt of Fees for future services in such Plan Year. Such Stock Plan Election must be made in writing and delivered to the Administrator within twenty days after the individual becomes a Director and will take effect as of the first calendar quarter to start after the date of such Election. In such a case, deferred Fees will be held by the Company in the Participant's Stock Plan Account and will not be invested in Common Stock or Plan Units until the first Accounting Date which is at least six (6) months after the date that such Stock Plan Election is first delivered to the Administrator. 5.3 Effectiveness of Elections. Elections for each Plan Year shall be effective and irrevocable upon the delivery of a Stock Plan Election to the Administrator, except as specifically provided in this Plan. Fees deferred pursuant to such Stock Plan Election shall be credited to the Participant's Stock Plan Account and distributed at the times and in the manner set forth in such Election. In the absence of an effective Stock Plan Election to take effect on the Time of Distribution as to the time and/or manner of distribution, the payout of a Stock Plan Account shall be in one lump sum cash payment at the Time of Distribution or as soon thereafter as possible, as provided by Section 2.28. ARTICLE 6 STOCK PLAN ACCOUNTS AND PLAN UNITS 6.1 Crediting Stock Plan Accounts. The Stock Plan Account of each Stock Plan Participant shall be credited as of each Accounting Date with Plan Units equal to the number of shares of Common Stock (including fractional share entitlements) that could have been purchased with 110% of the amount credited to his or her Stock Plan Account by reason of the Fees deferred for the quarter ended on the Accounting Date and any interest component at the Applicable Rate of Interest. The quarterly crediting of the Plan Units with deferred Fees has been established for administrative convenience. As of the date of any payment of a stock dividend or stock split by the Company, a Participant's Stock Plan Account will be credited with Plan Units equal to the number of shares of Common Stock (including fractional share entitlements) which are payable by the Company with respect to the number of shares (including fractional share entitlements) equal to the number of Plan Units credited to the Participant's Stock Plan Account on the record date for such stock dividend or stock split. As of the date of any dividend in cash or property or other distribution payable to holders of Common Stock, the Participant's Stock Plan Account shall be credited with additional Plan Units equal to the number of shares of Common Stock (including fractional share entitlements) that could have been purchased at the Fair Market Value as of such payment date with the amount which would have been received as a dividend or distribution on the number of shares (including fractional share entitlements) equal to the Plan Units credited to the Participant's Stock Plan Account as of the record date. On a quarterly basis, or as otherwise appropriate to match increases in Plan Units held in the Plan, the Company may, but shall not be required to, purchase Common Stock on the open market and hold the same in the "Deferred Fee Stock Plan for Non- Employee Directors Account". Also, the Company may enter into a Trust Agreement with a Trustee and may, but shall not be required to, transfer to the Trustee either (a) the number of shares of Common Stock approximately equal in Fair Market Value as of the last Accounting Date to the aggregate dollar amount of credits in the Participants' Stock Plan Accounts for Stock Plan Fees deferred by the Directors and any interest component on such Accounting Date, or (b) cash with instructions to purchase shares of Common Stock either from the Company or in the open market, as determined by the Company. Purchases in the open market by the Trustee shall not be subject to any direct or indirect control or influence over the times when, or the prices at which, or the broker or dealer through which, the Trustee shall buy such shares. 6.2 Establishment of Stock Plan Accounts. The Company, Administrator or the Trustee, as appropriate, shall establish a separate "Stock Plan Account" for each Stock Plan Participant who defers Stock Plan Fees pursuant to the Plan, and credit each Participant's Stock Plan Account with his or her entitlement to deferred Fees, an interest component at the Applicable Rate of Interest and Plan Units. 6.3 Adjustment of Stock Plan Accounts. As of each Accounting Date of each Plan Year and on such other dates as the Administrator directs, the value of each Stock Plan Account shall be determined by the Company, the Administrator, or the Trustee, as appropriate. ARTICLE 7 PAYMENT OF STOCK PLAN ACCOUNTS 7.1 Time and Method of Distribution. Distribution of a Participant's Stock Plan Account shall commence at Time of Distribution. Distribution shall be made in a lump sum or in equal annual cash installments over a period of five years. If a distribution is to be made in a lump sum it may made either in shares of Common Stock or in cash. If a distribution is to be made in cash, it shall be in an amount equal to the Fair Market Value as of the Time of Distribution (or such later date as may be required to continue an exemption under Rule 16b-3) of all Plan Units credited to a Participant's Stock Plan Account plus any uninvested deferred Stock Plan Fees and related interest component. The distribution shall be paid to the Stock Plan Participant or his or her Beneficiary. If a distribution is to be made in shares of Common Stock, the distribution shall be such number of shares of Common Stock as shall equal the Plan Units credited to such Participant's Stock Plan Account plus shares of Common Stock equivalent in Fair Market Value to the amount of any accumulated uninvested deferred Fees and interest component in such Participant's Stock Plan Account as of the Time of Distribution. Any remaining fractional interest shall be paid in cash. If a distribution is made in annual installments, each annual installment shall be in cash and equal to one-fifth of the amount of the lump sum payable as of the Time of Distribution or later date as aforesaid, with interest on each unpaid installment at the Applicable Rate of Interest in effect on the date of Termination by a Director of his directorship. 7.2 Election of Method of Distribution At the time that a Director first makes an Stock Plan Election to defer Fees for a Plan Year, such Director may elect whether the payments to be made at the Time of Distribution for that Plan Year shall be distributed in a lump sum or in five equal annual cash installments. At the same time, any Stock Plan Participant electing lump sum payment may also elect for the payment of such lump sum to be in shares of Common Stock credited to the Stock Plan Account or in cash. A Stock Plan Participant may, in connection with his or her retirement, death or disability, change his or her Stock Plan Election as to the method of payment (shares or cash) of any lump sum distribution from time to time. Subject to the provisions of Articles 9 and 10, either the Committee or the Administrator, in their sole discretion, may direct the distribution of the Director's entitlement in a lump sum or in annual installments, and the Committee or Administrator may take into account, but need not take into account, any request by a Director concerning the period over which his entitlement will be distributed. 7.3 Merger, consolidation, sale of assets or tender for shares. In the event of a proposed merger or consolidation in which the Company will not be the surviving corporation, or a sale of a majority of the assets of the Company, or in the case of a tender offer for the Company's Common Stock or a similar corporate transaction which is expected in the view of the Committee to result in another company, firm, or group acquiring 20% or more of the voting power of the Company's outstanding securities, the Plan shall take steps to convert Plan Units held by Participants into shares of Common Stock. The Plan shall obtain such shares with a view to making the same available for participation by Stock Plan Participants in the transaction (subject to the fourth from last sentence of this Section). Such shares may be obtained by the Plan from the "Deferred Fee Stock Plan for Non-Employee Directors Account," any trust account for the benefit of Plan Participants, the Company, or any other source, including authorized and unissued, or issued and reacquired, shares of Common Stock. In the event that shares of Common Stock are convertible into or otherwise exchangeable for securities of another corporation, or cash or other property without the need for action or tender by an individual shareholder, the Company shall take all necessary steps to carry out such conversion or exchange and shall deliver to each Stock Plan Participant the securities, cash or other property into which his or her shares have been exchanged or converted. In the event of a tender offer or similar event in which an individual shareholder of the Company may elect to tender shares or otherwise take steps to receive securities, cash or other property, the Company shall so advise the Participants and take such action, including tender, or shall refrain from action, as directed in writing by each Stock Plan Participant. Prior to the completion of such tender offer or similar event, no Participant shall have any entitlement to any shares, and if such event is not completed each Participant shall be entitled to Plan Units and not shares of Common Stock. Upon the completion of such tender offer or similar event, the Company shall distribute to each Stock Plan Participant any shares of Common Stock, securities, cash or other property held by the Plan for his or her Stock Plan Account. The Administrator may delay such distribution to any Stock Plan Participant in order to comply with, or continue the availability of an exemption under, the Act or Exchange Act. Upon the completion of such distribution the Stock Plan shall terminate. 7.4 Change in Tax Law. The Stock Plan is intended to be treated as an unfunded deferred compensation plan under the Code. It is the intention of the Company that the amounts deferred pursuant to this Plan shall not be included in the gross income of the Participants or their Beneficiaries until such time as the deferred amounts are distributed from the Plan. If, at any time, it is determined or claimed by the Internal Revenue Service ("Service") that amounts deferred in earlier Plan Years have become currently taxable to the Participants or their Beneficiaries, the Committee may, in its discretion, terminate the Plan and distribute amounts credited to the Stock Plan Participants or their Beneficiaries. Such determination shall be based on a ruling or publicly available pronouncement from the Service, or on the position taken by the Service in audit, or a written opinion from tax counsel. ARTICLE 8 CREDITORS AND INSOLVENCY 8.1 Unfunded Status. Any and all payments made to a Stock Plan Participant pursuant to the Plan shall be made from the general assets of the Company or assets available to its general creditors. Any payments made in good faith under the terms of the Plan to a Stock Plan Participant or his Beneficiary shall fully discharge the Plan, the Company, the Trustee, if any, the Administrator and the Committee from all further obligations with respect to such payments. The Company intends that the Plan shall be considered unfunded for all purposes, including tax purposes and purposes of Title I of ERISA. 8.2 Claims of the Company's Creditors. All assets held pursuant to the provisions of this Plan shall be subject to the claims of general creditors of the Company, including judgment creditors and bankruptcy creditors. The rights of a Stock Plan Participant or Beneficiary to any assets of the Plan or Trust shall be no greater than the rights of an unsecured creditor of the Company. No Stock Plan Participant shall have any claim or entitlement to any shares of Common Stock which have been purchased, acquired or held by the Plan, Company or any Trustee. Any and all such shares shall be the property of the Company and shall only represent funds or assets available to the Company which it shall have designated to match its obligations and accruals with respect to the Plan. 8.3 Notification of Trustee, if any. If the Company has appointed a Trustee for the Plan, the following provisions shall obtain: In the event the Company becomes insolvent, the Board of Directors and the Chief Executive Officer of the Company shall immediately notify the Trustee of that fact. The Trustee shall not make any payments from the Trust to any Stock Plan Participant or any Beneficiary under the Plan after such notification is received or at any time after the Trustee has knowledge of such insolvency. Under any such circumstances, the Trustee shall make available any property held in the Trust to satisfy the claims of the Company's general creditors or, upon satisfaction of such claims, to the Participants, as a court of competent jurisdiction may direct. For purposes of this Plan, the Company shall be deemed to be insolvent if the Company is subject to a pending voluntary or involuntary proceeding as a debtor under the United States Bankruptcy Code, or is unable to pay its debts as they mature. All trust assets shall be subject to the claims of general creditors of the Company to the fullest extent contemplated by Revenue Procedure 92-64. ARTICLE 9 PAYMENT OF SHARES 9.1 Delivery of Certificates for Stock. At the Time of Distribution or as soon thereafter as practicable, subject to the fourth paragraph of this Section, the Company shall deliver to a Stock Plan Participant who has elected to receive shares of Common Stock or to his Beneficiary a certificate for the shares of Common Stock to which he or she is entitled. At the time of exercise of an Option, subject to the fourth paragraph of this Section, the Company shall deliver to the Option Plan Participant or his or her Beneficiary a certificate for shares of Common Stock to which he or she is entitled. Such certificates shall be registered in the name of the Participant or Beneficiary. The Company shall not be required to issue or deliver any certificates for, or make book-entry reflecting, shares of Common Stock prior to (a) the listing of such shares on any stock exchange or quotation system on which the Common Stock may then be listed or quoted and (b) the completion of any registration, qualification, approval or authorization of such shares under any federal or state law, or any ruling or regulation or approval or authorization of any governmental body which the Company shall, in its sole discretion, determine to be necessary or advisable. All certificates for shares of Common Stock delivered under the Plan, and book entries reflecting such shares, shall be subject to such restrictions as the Administrator may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed and any applicable federal or state securities laws. If the registration of ownership of Common Stock is then being maintained by the Company or its transfer agent in book- entry form, then the delivery of shares of Common Stock to the Participant or his Beneficiary may be evidenced by book entry, unless the Participant or Beneficiary requests otherwise in writing. 9.2 Taxes. The Company or the Trustee, as appropriate, shall deduct the amount of any taxes, if so required by law, from any payments made pursuant to the Plan and shall transmit the withheld amounts to the appropriate taxing authority, and provide the Stock Plan Participant or any Beneficiary of appropriate evidence of withholding. In the case of exercise of an Option under the Option Plan or payment in shares of Common Stock under the Stock Plan, the Participant may request the Company to accept payment of any related income or withholding taxes in the form of shares of Common Stock valued at Fair Market Value on the trading day immediately prior to the related exercise of the Option or payment in shares of Common Stock, as the case may be. 9.3 Payment to Beneficiary; Exercise of Option by Beneficiary. Upon the death of a Stock Plan Participant, the Stock Plan Account of the deceased Stock Plan Participant shall be paid to the Beneficiary either (i) in the same manner as it would have been paid to the Stock Plan Participant or (ii) in a lump sum settlement, as determined by the Committee or the Administrator in their sole discretion, consistent with the guidelines referred to in Article 10. Upon the death of a Option Plan Participant, the Beneficiary may exercise any Option to the extent exercisable on the date of death. 9.4 Redesignation of Beneficiary. Amendments which serve only to change the Beneficiary designation shall be permitted at any time and as often as necessary. ARTICLE 10 ADMINISTRATION 10.1 Appointment of Committee and Administrator. The Board of Directors shall appoint a Stock Plan Committee and an Option Plan Committee (which may be the same Committee), each consisting of not less than two persons, to administer and interpret the Plan. Members of a Committee shall hold office at the pleasure of the Board of Directors and may be dismissed at any time with or without cause. The Board of Directors shall also designate one or more officers or employees of the Company to be the Administrator to have the primary administrative responsibility with respect to each Plan, in coordination with and under the direction of the Committee. 10.2 Powers of the Administrator and the Committee. The Stock Plan and Option Plan Committees and the Administrator shall together administer the Plan. The Committees shall not, under any circumstances, have authority to select those Directors who will be eligible to participate in the Plan or to make decisions concerning the timing, pricing or amount of any benefit, Plan Unit, share of Common Stock or Option under the Plan. All such matters are determined solely by the provisions of the Plan. The Committees shall interpret or supplement the provisions of the Plan where desirable or necessary and may resolve ambiguities or omissions or adopt procedures for the ad- ministration of the Plan consistent with the purpose and provisions of the Plan and any rules adopted by the Committee. Whenever directions, designations, applications, requests or other notices are to be given by a Participant under the Plan, they shall be filed with the Administrator. Except as provided in the next paragraph, all decisions, determinations or actions of a Committee made or taken pursuant to grants of authority under the Plan shall be made or taken in the sole discretion of a Committee and shall be final, conclusive and binding on all persons for all purposes. If the taking of any action or the making of any determination by a Committee or Administrator shall jeopardize the effectiveness of the deferral of Fees or of credits in Participants' Stock Plan Accounts or Options for federal income tax purposes or any exemption of any plan of the Company from Section 16(a) and (b) of the Exchange Act, the Committee or Administrator, as the case may be, shall be deemed to be without the power to take such action or make such determination. 10.3 Rendering of Quarterly Plan Accounts. After the close of each quarter, the Administrator will deliver to each Participant a statement showing the Plan Units which have been credited to his or her account as of the end of such quarter and any accumulated deferred fees. The accounting shall also indicate the price per unit for all Plan Units credited since the end of the previous account. The statement will also show the Options held and/or elected by a Participant and the terms of such Options. 10.4 Both Elections may apply to a Plan Year. Subject to the limitations contained in each Plan, a Director may elect to include all or any portion of his Fees to be earned in any future Plan Year in one or both of the Plans, but without duplication. If a Director has delivered an Option Plan Election and a Stock Plan Election for the same Plan Year or period, the Fees covered by such Elections shall be allocated as specified in such elections or in other instructions from the Directors. In the event of a conflict in instructions from a Director, the Administrator shall advise the Director. 10.5 Advance Notification by Administrator On or before May 31 of each year, the Administrator shall notify each Director that he or she must deliver a written Stock Plan Election to the Administrator prior to June 30 (or any later cut-off date permitted by the Administrator) in order to defer Fees during the next calendar year. On or before November 30 of each year, the Administrator shall notify each Director that he or she must deliver a written Option Plan Election to the Administrator prior to December 15 (or any later cut-off date permitted by the Administrator) in order to elect to receive Options in payment for future services as a Director in upcoming Plan Years. ARTICLE 11 MISCELLANEOUS 11.1 Term of Plan. The Plan shall become effective as provided in Section 11.9 and the Stock Plan shall continue through the Plan Year 2014 unless earlier terminated pursuant to Sections 7.3 or 7.4. 11.2 Shares Subject to the Plan. As of any date the maximum number of shares of Common Stock which the Plan may be obligated to deliver pursuant to the Stock Plan and the maximum number of shares of Common Stock which shall have been purchased by Participants pursuant to Options and which may be issued pursuant to outstanding Options under the Option Plan shall not be more than one (1%) percent of the total outstanding shares of Common Stock Series A and Series B of the Company as of such date, subject to adjustment in the event of changes in the corporate structure of the Company affecting capital stock. Any Common Stock transferred by the Company to a Stock Plan Account or to the Trustee or delivered by the Company upon exercise of an Option hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares as the Company shall determine. Cash transferred to the Trustee may be used to purchase Common Stock in the open market or from the Company. In the event that the total number of shares of Common Stock subject to, or issued pursuant to, the Plan at any one time is in excess of the above-stated limit, the number need not be reduced if such excess has resulted from a reduction in the amount of issued and outstanding shares of Common Stock subsequent to the time that such Options were granted or such shares were issued. If any shares of Common Stock subject to purchase by a Participant under an Option under the Plan are not purchased, such shares of Stock shall be deemed not to have been purchased pursuant to the Plan for purposes of this Section. Shares of Common Stock received or retained by the Company in payment of the exercise price of Options or in payment, or in lieu of payment, of withholding taxes shall not reduce the number of shares deemed to have been purchased pursuant to the Plan. 11.3 Non-alienation of Benefits. The rights of a Stock Plan Participant to the payment of deferred compensation, to funds or shares as provided in this Plan and with respect to amounts credited to his or her Stock Plan Account and the rights of an Option Plan Participant with respect to an Option or to purchase shares of Common Stock upon exercise of an Option are not transferable by a Participant other than by will or the laws of descent and distribution and shall not be assigned, transferred, pledged or encumbered or be subject in any manner to alienation or anticipation. No Participant may borrow against his or her Stock Plan Account or Options. No Stock Plan Account nor Option shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, whether voluntary or involuntary, including, but not limited to, any liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of a Participant. Neither a Participant's Stock Plan Account or Option hereunder nor a Participant's rights to benefits hereunder may be assigned to any other party by means of a judgment, decree or order (including approval of a property settlement agreement) relating to the provision of child support, alimony payments, or marital property rights of a spouse, former spouse, child or other dependent of the Participant. As contemplated by Revenue Procedure 92-65 under the Code, a Stock Plan Participant's rights to benefit payments under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's Beneficiary. This Plan shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any persons entitled to benefits hereunder. In the event that, notwithstanding the foregoing, any Participant's benefits are garnisheed or attached by order of any court, the Administrator may elect to bring an action for a declaratory judgment in a court of competent jurisdiction to determine the proper recipient of the benefits to be paid by the Plan. During the pendency of said action, any benefits that become payable may be paid into the court as they become payable, to be distributed by a court to the recipient as it deems proper at the close of said action. In addition, a Participant or Beneficiary shall have no rights against or security interest in the assets of the Plan, Company or Trust, if any, and shall have only the Company's unsecured promise to pay benefits. All assets of the Trust, if any, shall remain subject to the claims of the Company's general creditors. 11.4 Participants' Rights. Nothing contained in this Plan shall be construed as giving any Participant the right to be retained as a Director of the Company. Nothing contained in this Plan shall be construed as limiting, in any way, any right that any party or parties may have to remove a Participant as a Director of the Company or to appoint or to elect another individual to replace a Participant as a Director of the Company. Nothing contained in this Plan shall be construed as giving any Participant the right to receive any benefit not specifically provided by the Plan. Any other provision of the Plan notwithstanding, a Stock Plan Participant shall not have any interest in the amounts credited to his Stock Plan Account until such Stock Plan Account is distributed in accordance with the provisions of Article 7, and all deferred Fees, and all earnings, gains and losses with respect thereto shall remain subject to the claims of the Company's general creditors in accordance with the provisions of the Stock Plan. With respect to amounts credited to a Participant's Stock Plan Account, the rights of the Stock Plan Participant, the Beneficiary of the Participant or any other person claiming through the Participant under this Stock Plan shall be solely those of unsecured general creditors of the Company, and the obligations of the Company hereunder shall be purely contractual. Such benefits shall be paid from the general assets of the Company. As contemplated by Revenue Procedure 92-65 under the Code, Participants shall have the status of general unsecured creditors of the Company and each Plan, and all rights thereunder, shall constitute a mere promise of the Company to make benefit payments in the future. 11.5 Adjustments in Event of Change in Common Stock. Subject to the provision of Sections 6.1 and 7.3, in the event of any stock dividend, stock split, recapitalization, reclassification, consolidation of shares of Common Stock, merger or consolidation of the Company or sale by the Company of all or a portion of its assets, or tender offer for its securities, or other event which could distort the implementation of the Plan or the realization of its objectives, the Administrator shall make such appropriate adjustments in the number and kind of securities which a Plan Unit will represent or which may be paid out under the Plan, and in the number of shares of Common Stock or other securities or number and kind of securities, and the purchase price therefor, for which an Option may be exercisable or in terms, conditions or restrictions on securities as the Administrator deems equitable. In the event of a stock split or stock dividend, the number of shares purchasable upon exercise of an Option shall be increased to the new number of shares which result from the shares covered by the Option immediately before the split or dividend. The purchase price per share shall be reduced proportionately and the total purchase price will remain the same. In the case of a distribution in property other than cash the number of shares covered shall be increased to reflect, in shares valued at the then current market, the fair value of the distribution. All events occurring between the Effective Date of the Option and its exercise shall result in an adjustment to the Option terms. 11.6 Amendments; Other. The Board or the Committee may amend the Plan to the extent necessary or appropriate to effect compliance with Rule 16b-3 in order to continue or provide an exemption from Section 16(a) and (b) of the Exchange Act for either Plan or any other equity plan of the Company, and the Administrator may change the cut-off dates for Elections or the dates of effectiveness of transactions or other events under the Plan to the same end; provided that no such amendments or change shall materially increase the benefits to or adversely affect the rights of the Participants. In addition, the Board may amend the Plan in any other manner, provided, however, that no amendment shall adversely and materially affect the rights of a Participant, taken as a whole, to amounts previously credited to his or her Stock Plan Account or to Options which have been granted unless such amendment is required by Rule 16b-3 in order to continue or provide an exemption from Section 16(b) of the Exchange Act for either Plan or any other equity plan of the Company, or for the deferral of Directors' Fees until the year of payout or exercise of Options under either Plan for Federal income tax purposes. Amendments may not be made more frequently than permitted by Rule 16b-3. No amendment shall require shareholder approval unless required under Rule 16b-3. If shareholders' approval is necessary or desirable for the continued validity of the Plan or if the failure to obtain such approval would adversely affect the compliance of the Plan with Rule 16b-3, no such amendment shall become effective unless approved by affirmative vote of the Company's shareholders. Transactions under each Plan are intended to comply with applicable conditions of Rule 16b-3, except that a purchase under the Option Plan may be deemed to occur on an Effective Date. To the extent any provision of each Plan intended to comply, or action by the Administrator, fails to so comply, it shall be deemed null and void, to the extent permitted by law and declared advisable by the Administrator. 11.7 Notices. All elections, designations, requests, notices, instructions and other communications from a Director, Participant, Beneficiary or other person to the Administrator, required or permitted under the Plan, shall be in such form as is prescribed from time to time by the Administrator and shall be mailed by first class mail, delivered by facsimile or otherwise delivered to such location as shall be specified by the Administrator. 11.8 Binding Effect. The terms of the Plan shall be binding upon the Company and its successors and assigns. 11.9 Effective Date of Plan. The Plan shall be effective as of June 28, 1994, subject to approval by the shareholders of the Company. All deferrals or credits to an Stock Plan Account, and all Options, made prior to such shareholder approval shall be contingent on such approval. The existing Citizens Utilities Company Deferred Compensation Plan for Directors shall continue to be available for compensation deferrals and shall not be affected by the adoption of this Plan. As of March 2, 1995 CITIZENS UTILITIES COMPANY NON-EMPLOYEE DIRECTORS' DEFERRED FEE EQUITY PLAN Page ARTICLE 1 PURPOSES OF THE PLAN 1.1 Purposes. . . . . . . . . . . . . . . . . . . . 1 1.2 Introduction. . . . . . . . . . . . . . . . . . 1 ARTICLE 2 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE 3 ELECTIONS BY OPTION PLAN PARTICIPANTS 3.1 Directors may elect to receive Fees in the form of Options.. . . . . . . . . . . . . . . . 6 3.2 Annual Option Plan Elections. . . . . . . . . . 6 3.3 Effective Date. . . . . . . . . . . . . . . . . 7 3.4 Adjustment for Actual Fees Earned . . . . . . . 7 3.5 Cancellation of Election. . . . . . . . . . . . 7 ARTICLE 4 TERMS OF OPTIONS 4.1 Number of Shares covered by an Option . . . . . 7 4.2 Maximum Duration. . . . . . . . . . . . . . . . 8 4.3 Initial Exercisability in Installments. . . . . 8 4.5 Notice of Exercise. . . . . . . . . . . . . . . 8 4.6 Payment of Purchase Price . . . . . . . . . . . 8 4.7 Exercisability after Termination. . . . . . . . 8 4.8 Option not transferable . . . . . . . . . . . . 9 ARTICLE 5 ELECTIONS BY STOCK PLAN PARTICIPANTS 5.1 Directors may elect to receive Fees in the form of Plan Units. . . . . . . . . . . . . . . 9 5.2 Stock Plan Election to Defer. . . . . . . . . . 9 5.3 Effectiveness of Elections. . . . . . . . . . 10 ARTICLE 6 STOCK PLAN ACCOUNTS AND PLAN UNITS 6.1 Crediting Stock Plan Accounts.. . . . . . . . 10 6.2 Establishment of Stock Plan Accounts. . . . . 11 6.3 Adjustment of Stock Plan Accounts.. . . . . . 11 ARTICLE 7 PAYMENT OF STOCK PLAN ACCOUNTS 7.1 Time and Method of Distribution.. . . . . . . 12 7.2 Election of Method of Distribution. . . . . . 12 7.3 Merger, consolidation, sale of assets or tender for shares.. . . . . . . . . . . . . . 13 7.4 Change in Tax Law.. . . . . . . . . . . . . . 14 ARTICLE 8 CREDITORS AND INSOLVENCY 8.1 Unfunded Status . . . . . . . . . . . . . . . 14 8.2 Claims of the Company's Creditors.. . . . . . 14 8.3 Notification of Trustee, if any.. . . . . . . 15 ARTICLE 9 PAYMENT OF SHARES 9.1 Delivery of Certificates for Stock. . . . . . 15 9.2 Taxes.. . . . . . . . . . . . . . . . . . . . 16 9.3 Payment to Beneficiary; Exercise of Option by Beneficiary. . . . . . . . . . . . . . . . 16 9.4 Redesignation of Beneficiary. . . . . . . . . 17 ARTICLE 10 ADMINISTRATION 10.1 Appointment of Committee and Administrator.. . . . . . . . . . . . . . . . 17 10.2 Powers of the Administrator and the Committee.. . . . . . . . . . . . . . . . . . 17 10.3 Rendering of Quarterly Plan Accounts. . . . . 18 10.4 Both Elections may apply to a Plan Year . . . 18 10.5 Advance Notification by Administrator . . . . 18 ARTICLE 11 MISCELLANEOUS 11.1 Term of Plan. . . . . . . . . . . . . . . . . 19 11.2 Shares Subject to the Plan. . . . . . . . . . 19 11.3 Non-alienation of Benefits. . . . . . . . . . 19 11.4 Participants' Rights. . . . . . . . . . . . . 20 11.5 Adjustments in Event of Change in Common Stock.. . . . . . . . . . . . . . . . . . . . 21 11.6 Amendments; Other.. . . . . . . . . . . . . . 22 11.7 Notices.. . . . . . . . . . . . . . . . . . . 23 11.8 Binding Effect. . . . . . . . . . . . . . . . 23 11.9 Effective Date of Plan. . . . . . . . . . . . 23 EX-10 3 EXHIBIT NO. 10.20 EXECUTION COPY ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 28th day of November, 1994 (the "Execution Date"), by and among Citizens Utilities Company, a Delaware corporation ("Buyer"), and ALLTEL Tennessee, Inc., a Tennessee corporation ("Seller"). RECITALS WHEREAS, Seller is in the business of providing regulated local exchange telephone service in certain areas of the State of Tennessee; and WHEREAS, Seller desires to sell, convey, assign, transfer and deliver to Buyer, and Buyer desires to purchase and accept from Seller, substantially all of its telephone properties and related assets, upon the terms and conditions set forth in this Agreement; and NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement and any amendment hereto, the following terms are defined as set out below or in the Section referenced below: Additional Financial Statements is defined in Section 11.4. ------------------------------- Advanced Billing Amounts is defined in Section 2.4. ------------------------ Affiliate has the meaning given to that term in Rule 405 under the --------- Securities Act of 1933, as amended. Agreement is defined in Section 17.7. --------- Assumed Liabilities is defined in Section 2.5. 1. ------------------- The Business means the business of providing local exchange and ------------ exchange access telecommunications services and other related regulated and non-regulated activities, services and products associated with the Purchased Exchanges, including without limitation such unregulated activities, services and products of Seller conducted, offered or serviced by the Transferred Employees or provided or related to Seller's subscribers or customers served in or from the Purchased Exchanges (such unregulated activities, services and products are considered an integral part of the Business for all purposes of this Agreement). Buyer's Closing Certificate is defined in Section 7.2.1. --------------------------- CERCLA means the Comprehensive Environmental Response, Compensation and ------ Liability Act of 1980, as amended. Casualty Notice is defined in Section 11.9. --------------- Casualty Termination Notice is defined in Section 11.9. --------------------------- Closing is defined in Section 8.1. ------- Closing Date is defined in Section 8.1. ------------ Confidentiality Agreement means the Confidentiality Agreement dated ------------------------- September 30, 1994 between ALLTEL Corporation and Citizens Utilities Company which is attached and incorporated into this Agreement as Schedule 1-1. Construction Advances is defined in Section 11.11. --------------------- Contracts is defined in Section 2.2.2. --------- Customer Deposits is defined in Section 11.11. ----------------- Damaged Property is defined in Section 11.9. ---------------- Debtholder Consents is defined in Section 5.2(a). ------------------- Direct Claim is defined in Section 13.4(b). ------------ Earned Accounts Receivable is defined in Section 2.4. -------------------------- Effective Date is defined in Section 8.1. -------------- Employee Plan Assets is defined in the Employee Transfer Agreement. -------------------- Employee Transfer Agreement is defined in Section 12.1 --------------------------- Employment Agreements is defined in Section 9.1.18. --------------------- Environmental Liabilities means all liabilities, obligations (including ------------------------- obligations to respond to, investigate and remediate conditions caused by any Regulated Material), responsibilities, losses, damages (including punitive or treble damages), costs and expenses (including reasonable fees, disbursements and expenses of counsel, experts, consultants and expert witnesses), fines, penalties, interest or bonds, based upon any Environmental Requirements of any Governmental Authority, or as a consequence of (a) the release or threatened release of a Regulated Material in amounts that require response or remediation into the outdoor environment, (b) any circumstance or condition relating to the ownership or operation of the Purchased Property by any person or party or the conduct of the Business or any part thereof, that does not comply with Environmental Requirements, or (c) any claim, demand, notice, cause of action, directive, order, judgment, fine or penalty asserted or sought under or pursuant to any Environmental Requirements by an entity or person not a party to this Agreement, to the extent that the condition or circumstance or event giving rise to the claim, demand, notice, cause of action, directive, order, judgment, fine or penalty relates to the ownership or operation of the Purchased Property by any person or party or the conduct of the Business or any part thereof. Environmental Requirements means (i) any federal, state and local law, -------------------------- statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority and all valid and enforceable guidance documents and policies thereof, relating to (x) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (y) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Regulated Material, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Regulated Material in each case as now amended and as now or hereafter in effect. The term Environmental Requirements includes, without limitation, CERCLA, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the federal Solid Waste Disposal Act, the federal Toxic Substances Control Act and the federal Insecticide, Fungicide and Rodenticide Act, each as now amended and as now or hereafter in effect. ERISA means the Employee Retirement Income Security Act of 1974, as ----- amended. ERISA Plans is defined in Section 9.1.18. ----------- Estimated Prorations is defined in Section 3.3(b). -------------------- Estimated Purchase Price is defined in Section 3.3(a). ------------------------ Evaluation Material is defined in the first paragraph of the ------------------- Confidentiality Agreement. Excluded Contracts is defined in Section 2.4(g). ------------------ Excluded Property is defined in Section 2.4. ----------------- Execution Date is defined in the preamble to this Agreement. -------------- Executive Officers of an entity means the president and any vice president ------------------ of the entity in charge of a principal business unit, division or function. Existing Environmental Requirements means those applicable provisions of ----------------------------------- any Environmental Requirements that are both in effect and applicable to Seller, the Business or the Purchased Property on or prior to the Effective Date. FCC means the Federal Communications Commission. --- FCC Consents is defined in Section 5.4. ------------ FCC Licenses is defined in Section 2.2.4. ------------ Final Order means an action by the FCC, the PUC, or any other Governmental ----------- Authority, as to which: (a) no request for stay of the action by the FCC, the PUC, or such other Governmental Authority, as the case may be, is pending, no such stay is in effect, and if any time period for filing any request for such a stay is provided by statute or regulation, such time period has passed; (b) no petition, motion or application for rehearing, reconsideration, or review, of the action is pending before the FCC, the PUC, or such other Governmental Authority, as the case may be, and the time provided for filing any such petition, motion or application has passed; (c) the FCC, the PUC, or such other Governmental Authority, as the case may be, does not have the action under reconsideration on its own motion and the time in which such reconsideration is permitted has passed; and (d) no appeal to a court, of the FCC's, the PUC's or such other Government Authority's action, as the case may be, is pending or in effect, and the deadline for filing any such appeal has passed. Final Prorations is defined in Section 3.4. ---------------- Final Purchase Price is defined in Section 3.4. -------------------- Financial Statements is defined in Section 9.1.11. -------------------- GAAP means generally accepted accounting principles. ---- Governmental Authority is defined in Section 9.1.3. ---------------------- HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as ------- amended. Indemnifiable Losses is defined in Section 13.2(a). -------------------- Indemnification Payment is defined in Section 13.2(a). ----------------------- Indemnifying Party is defined in Section 13.2(a). ------------------ Indemnitee is defined in Section 13.2(a). ---------- Intellectual Property is defined in Section 11.1.1. --------------------- IRC means the Internal Revenue Code of 1986, as amended. --- IRS means the Internal Revenue Service. --- June 1994 Base Amount means the sum of (i) the amount of Net --------------------- Telecommunications Plant as of June 30, 1994 and (ii) the amount of Materials and Supplies as of June 30, 1994 Law is defined in Section 9.1.4. --- Leases is defined in Section 2.3. ------ Marks is defined in Section 11.1.5. ----- Materials and Supplies is the amount set forth on Seller's balance sheet as ---------------------- of a date certain comprising Seller's Materials and Supplies. Net Telecommunications Plant is the amount set forth on Seller's balance ---------------------------- sheet as of a date certain comprising the sum of Seller's Telecommunications Plant In Service, Plant Under Construction -- Short Term, Plant Under Construction -- Long Term, and Telecommunications Plant -- Other, less Accumulated Depreciation and Amortization. Original Cost Documents means all original cost documentation relating to ----------------------- the Telephone Plant. Other Assets is defined in Section 2.2.5. ------------ NECA means the National Exchange Carrier Association. ---- Non-FCC Authorizations is defined in 2.2.6. ---------------------- Parent means ALLTEL Corporation, a Delaware corporation. ------ PBGC means the Pension Benefit Guaranty Corporation. ---- Permitted Exceptions is defined in Section 11.16. -------------------- Plans is defined in Section 9.1.18. ----- Press Release is defined in Section 17.2. ------------- PUC means the Tennessee Public Service Commission. --- Purchase Price is defined in Section 3. 1. -------------- Purchased Exchanges is defined in Section 2.2. ------------------- Purchased Property is defined in Section 2.2. ------------------ Real Property is defined in Section 2.2. 1. ------------- Regulated Material means (i) any "hazardous substance" as defined in ------------------ CERCLA, (ii) any petroleum or petroleum substance, and (iii) any other pollutant, waste, contaminant, or other substance regulated under Environmental Requirements or, as applicable, Existing Environmental Requirements. Regulatory Approvals is defined in Section 5. 1. -------------------- Retained Books and Records is defined in Section 2.4(e). -------------------------- Retained Liabilities is defined in Section 2.5.2. -------------------- Secured Indebtedness is defined in Section 5.2. -------------------- Secured Parties is defined in Section 5.2. --------------- Seller's Closing Certificate is defined in Section 7. 1. 1. ---------------------------- Tax Returns means a report, return or other information statement required ----------- to be supplied to a federal, state or local taxing Governmental Authority with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes Seller. Tax(es) means any foreign, federal, state, provincial, county or local ------- income, sales, use, transfer, excise, franchise, stamp duty, custom duty, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, recording, ad valorem, gains, value-added, unemployment compensation, general corporate, profits, registration, unincorporated business, alternative, social security, estimated, add-on, minimum, privilege or withholding tax and any interest and penalties and additions to such taxes (civil or criminal) related thereto or to the nonpayment thereof. Telephone Plant is defined in Section 2.2. 1. --------------- Third Party Claim is defined in Section 13.4(a). ----------------- Transferred Employee is defined in Article II.A of the Employee Transfer -------------------- Agreement. Transferred Books and Records is defined in Section 2.2.3. ----------------------------- Transition Services Agreement is defined in Section 10.1. ----------------------------- Unregulated Business is defined in the definition of Business set forth in -------------------- this Article 1. ARTICLE 2. PURCHASE AND SALE OF ASSETS 2.1 Purchase and Sale of Assets. Subject to the terms and conditions of --------------------------- this Agreement, Seller agrees to sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees to purchase and accept, as of the Effective Date, all of Seller's right, title and interest in and to the Purchased Property, free and clear of all security interests, liens, or encumbrances, except for Permitted Exceptions. 2.2 Purchased Property. For purposes of this Agreement, the "Purchased ------------------ Property" consists of the Telephone Plant, Contracts and Leases (to the extent permitted following compliance with Section 5.3), Transferred Books and Records, FCC Licenses, Non-FCC Authorizations and Other Assets in effect or owned by Seller as of the Effective Date that are associated with (i) the telephone exchanges listed in Schedule 2.2(a) (the "Purchased Exchanges"), and (ii) the Unregulated Business described on Schedule 2.2(b). 2.2.1 Telephone Plant. For purposes of this Agreement, "Telephone Plant" --------------- means the Real Property, machinery, equipment, vehicles and all other assets and properties used, or held for future use, in connection with the conduct of the Business, including, without limitation, all improvements, plants, systems, structures, construction work in progress, telephone cable (wherever located and whether in service or under construction), microwave facilities (including frequency spectrum assignments), telephone line facilities, telephones, machinery, furniture, fixtures, tools, implements, conduits, stations, substations, equipment (including, without limitation, central office equipment, subscribers' station equipment and other equipment in general), instruments, house-wiring connections and all other equipment of every nature and kind owned by Seller or in which Seller holds an interest (other than as a lessee) and used in connection with the Business. For purposes of this Agreement, "Real Property" means the real property owned by Seller and used in connection with the Business, including, without limitation, all land, buildings, structures, easements, rights of way, appurtenances, improvements or privileges located thereon and relating thereto. Without limiting the generality of the foregoing, the Telephone Plant includes the assets that would be properly included in the fixed asset accounts referenced in Part 32 of the FCC's Rules and Regulations (47 C.F.R. Part 32), as such accounts are reflected in Schedule 9.1.19. 2.2.2 Contracts. For purposes of this Agreement, "Contracts" means all --------- agreements that relate to the Business between Seller or any Affiliate of Seller and (i) Seller's subscribers or customers, or (ii) other entities or persons who are not Affiliates of Seller and have business relationships with Seller relating to the Business, except for the Excluded Contracts (some of which are specifically governed by other Sections in this Agreement or the Employee Transfer Agreement). 2.2.3 Transferred Books and Records. For purposes of this Agreement, ----------------------------- "Transferred Books and Records" means all of Seller's customer or subscriber lists and records, accounts and billing records (including a copy of the detailed general ledger and the summary trial balances, where available for the past two fiscal years), detailed continuing property record list, plans, blueprints, specifications, designs, drawings, surveys, engineering reports, personnel records (where applicable), Original Cost Documents (where located in the Purchased Exchanges but excluding Retained Books and Records) and all other documents, computer data and records (including records and files on computer disks or stored electronically) relating to the Business (excluding Retained Books and Records), the Purchased Property, the Transferred Employees and/or the Assumed Liabilities, except for the Retained Books and Records. 2.2.4 FCC Licenses. For purposes of this Agreement, "FCC Licenses" means ------------ all licenses, certificates, permits or other authorizations, including, without limitation, Section 214 authorizations where applicable granted to Seller by the FCC that are used in the conduct of the Business. 2.2.5 Other Assets. For purposes of this Agreement, Other Assets means ------------ all Non-FCC Authorizations to the extent transferable; all telephone numbers to the extent transferable, listings, telephone directories and telephone directory advertisements within such telephone directories, used in the operation of the Business; all prepaid expenses relating to the Business; all non-operating plant relating to the Business; all warranties relating to the Purchased Property, to the extent transferable and all materials and supplies relating to the Business. 2.2.6 Non-FCC Authorizations. For purposes of this Agreement, "Non-FCC ---------------------- Authorizations" means all licenses, certificates, permits, franchises, or other authorizations (other than FCC Licenses) granted to Seller by Governmental Authorities that are used in or relate to the conduct of the Business (including without limitation those that are listed or required to be listed on Schedule 9.1.17(c)). 2.3 Leased Assets. Subject to the provisions of Sections 2.5.2(i) and ------------- 5.3, as of the Effective Date, Seller shall assign to Buyer all of its interests, rights, benefits and obligations as lessee with respect to all real and personal property leases that are necessary or useful in connection with Seller's conduct of the Business (the "Leases"). 2.4 Excluded Property. The sale contemplated by this Agreement shall not ----------------- include the Excluded Property. For purposes of this Agreement, "Excluded Property" means the following, subject to the provisions set forth in Article 4 and Sections 11.8, 11.9, 11.11, 11.12.3, 11.12.4, 11.12.5 and 11.13: (a) Cash, cash equivalent and investments. (b) All accounts receivable, trade or otherwise (excluding those related to interexchange carriers), of Seller outstanding as of the Effective Date relating to the Business (the "Accounts Receivable"), including, without limitation, (i) any accounts receivable from any Affiliate of Seller; and (ii) all amounts that have been earned by Seller in connection with the conduct of the Business whether billed or unbilled as of the Effective Date (the "Earned Accounts Receivable") which are addressed under Article 4; excluding, however, all amounts that have been billed as of the Effective Date by Seller in connection with the conduct of the Business but are unearned as of the Effective Date, relating to service after the Effective Date (the "Advanced Billing Amounts"). (c) All accounts receivable of Seller from interexchange carriers whether billed or unbilled, relating to the Business which are outstanding as of the Effective Date. (d) Seller's interest in any business other than the Business, including without limitation the cellular telephone business or personal communication services business, and, in all cases, any applications or licenses granted with respect thereto. (e) Subject to Section 2.2.3, the general ledger and all books and records relating to (i) tax returns and tax records, (ii) the other assets and properties of Seller which are included in the Excluded Property, (iii) the Retained Liabilities, (iv) employees of the Company who are not Transferred Employees or (v) subject to Section 11.13, all Original Cost Documents that are not located in the Purchased Exchanges (collectively, the "Retained Books and Records"). (f) All trademarks, trade names, trade dress, logos and any other intangible assets that use or incorporate the word "ALLTEL" and any other Marks listed on Schedule 11.1.5. (g) The contracts, leases and agreements listed or identified on Schedule 2.4(g) (the "Excluded Contracts"), such other assets of Seller which do not relate to the Business and which were not included in Net Telecommunications Plant as of June 30, 1994, such other assets, if any, as Seller lists and identifies on Schedule 2.4(g), and such other assets, if any, as may be excluded in accordance with the provisions of Sections 11.9 or 14.1.7. (h) Any prepaid taxes or tax refunds relating to the Purchased Property and the Business for periods on or prior to the Effective Date. 2.5 Assumption of Liabilities. ------------------------- 2.5.1 Assumed Liabilities. Buyer hereby agrees to assume as of the ------------------- Effective Date, and to timely perform and discharge after the Effective Date, and to indemnity Seller against the specific liabilities, responsibilities and obligations set forth below with respect to the Purchased Property (the "Assumed Liabilities"): (a) Conduct of Business after the Effective Date. All liabilities, -------------------------------------------- responsibilities and obligations relating to, arising out of, or in connection with, or resulting from the use or ownership of the Purchased Property after the Effective Date or the conduct of the Business by Buyer after the Effective Date, including, without limitation, any liabilities, responsibilities and obligations for Taxes relating to the conduct of the Business after the Effective Date or the ownership, use or operation of the Purchased Property after the Effective Date. (b) Employment Matters. All liabilities, responsibilities and ------------------ obligations that are to be assumed by Buyer (or which Buyer may otherwise be liable for pursuant to applicable law and which are not otherwise expressly assumed or retained by Seller pursuant to this Agreement) under the Employee Transfer Agreement. (c) Environmental Matters. All liabilities, responsibilities and --------------------- obligations that are to be assumed by Buyer under Article 14 (or which Buyer may otherwise be liable for pursuant to applicable law and which are not otherwise expressly assumed or retained by Seller pursuant to this Agreement) with respect to Environmental Liabilities. (d) Contracts, Leases. All liabilities, responsibilities and ----------------- obligations that arise after the Effective Date in connection with or relating to the performance or nonperformance of the Contracts and the Leases after the Effective Date. (e) Joint Construction Projects. All liabilities, responsibilities --------------------------- and obligations to third parties that arise or relate to the period after the Effective Date and that relate to arrangements and commitments permitted hereunder between Seller and a third party for the construction of mutual transmission facilities between various switching points (the "Joint Construction Projects"), which Joint Construction Projects are listed on Schedule 2.5.l(e). (f) Construction in Progress. All liabilities, responsibilities and ------------------------ obligations to third parties that arise or relate to the period or are incurred after the Effective Date, and relate to engineering and construction services or similar services which are required to complete the construction and other capital expenditure projects referred to in and permitted by Section 11.5. (g) Customer Deposits and Construction Advances. All liabilities, ------------------------------------------- responsibilities and obligations relating to Customer Deposits and Construction Advances. (h) Advanced Billing Amounts. All liabilities, responsibilities ------------------------ and obligations relating to Advanced Billing Amounts. (i) Assumed Long Term Debt. All liabilities, obligations and ---------------------- responsibilities relating to long term debt assumed by Buyer, if any, pursuant to Section 5.2(a) including, without limitation, indebtedness to Secured Parties. 2.5.2 Retained Liabilities. Seller shall retain and have full -------------------- responsibility and obligation with respect to, shall timely perform and discharge, and shall indemnify Buyer against, all liabilities, responsibilities and obligations of Seller relating to, arising out of, or in connection with, or resulting from the use or ownership of the Purchased Property on or before the Effective Date or the conduct of the Business by Seller on or before the Effective Date, including any liability, obligation or debt, known or unknown, fixed, contingent or otherwise, not specifically assumed by Buyer pursuant to Section 2.5.1 or any other provision of this Agreement, and excluding those liabilities, responsibilities and obligations that are specifically assumed by Buyer pursuant to Section 2.5.1 or any other express provision of this Agreement (the "Retained Liabilities"). Without limiting the generality of the foregoing, but subject to liabilities that are specifically assumed by Buyer pursuant to Section 2.5.1 or any other express provision of this Agreement, the Retained Liabilities shall include the following liabilities, responsibilities and obligations of Seller: (a) All liabilities, responsibilities and obligations relating to the use or ownership of the Purchased Property on or before the Effective Date or to the conduct of the Business on or before the Effective Date. (b) All current liabilities of Seller as of the Effective Date, including, without limitation, trade, interest and other payables. (c) All long-term debt of Seller not assumed by Buyer pursuant to Section 5.2(a), including, without limitation, indebtedness to the Secured Parties. (d) Subject to Sections 11.8 and 11.17, all Taxes of Seller or its consolidated or combined group relating to the conduct of the Business on or before the Effective Date or the use, ownership or operation of the Purchased Property on or before the Effective Date. (e) Except as otherwise provided in the Employee Transfer Agreement, all liabilities and obligations arising on or before the Effective Date with respect to the Transferred Employees, and any such liabilities or obligations that arise after the Effective Date to the extent that such liabilities and obligations relate to facts, circumstances or conditions arising or occurring on or before the Effective Date. (f) All liabilities, responsibilities and obligations arising out of or related to the litigation, claims and other matters set forth on Schedule 9.1.16 and any other litigation claims, actions, lawsuits or legal proceedings based on facts, circumstances or conditions arising, existing or occurring on or before the Effective Date, regardless of whether known or unknown, asserted or unasserted, as of the Effective Date. (g) All liabilities, responsibilities and obligations arising on or before the Effective Date relating to collective bargaining or other union contracts. (h) All liabilities, responsibilities and obligations with respect to the Excluded Property and the Excluded Contracts. (i) All liabilities and obligations arising on or before the Effective Date with respect to the Contracts and the Leases. (j) All liabilities and obligations for prior period adjustments of revenues from the Business and for any customer overbillings and prospective refunds of overcharges (including rates collected under bond but excluding prospective rate reductions) occurring or relating to the period prior to the Effective Date, including without limitation all toll revenues, settlements, pools, separations studies or similar activities for which Seller is responsible pursuant to Section 11.10, but excluding any amounts which relate to Advanced Billing Amounts. Notwithstanding the foregoing, Buyer's and Seller's responsibility for Environmental Liabilities shall be governed by the provisions of Article 14. ARTICLE 3. PURCHASE PRICE 3.1 Purchase Price. -------------- (a) In consideration of the sale of the Purchased Property and the other undertakings of Seller in this Agreement, and subject to and in accordance with the other terms and conditions of this Agreement, on the Closing Date, Buyer will pay to Seller the sum of Twenty Five Million Forty One Thousand Dollars ($25,041,000.00), subject to adjustment as provided in Section 3.2 (the "Purchase Price"). (b) (i) On or before the Closing Date, Buyer shall deliver to Seller, in immediately available funds in U.S. Dollars, the Estimated Purchase Price, plus or minus, as the case may be, the Estimated Prorations. Such delivery shall be made by bank wire transfer to an account that Seller shall designate at least two (2) business days prior to the Effective Date. (ii) Buyer will use its best efforts to make the wire transfer of the Estimated Purchase Price, plus or minus, as the case may be, the Estimated Prorations, by 12:00 noon (Eastern Time) on the Closing Date, provided that all conditions to Closing set forth in Article 7 have been satisfied, or waived by the appropriate party, before such time. 3.2 Adjustments to Purchase Price. ----------------------------- (a) Adjustment Regarding Damaged Property. ------------------------------------- (1) If the provisions of Section 11.9(c)(i) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to repair or replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (2) If the provisions of Section 11.9(c)(ii) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (b) Adjustment Regarding Customer Deposits and Construction ------------------------------------------------------- Advances. The Purchase Price shall be decreased in an amount equal to the - -------- dollar amount of Customer Deposits and Construction Advances outstanding as of the Effective Date. (c) Adjustment Regarding June 1994 Base Amount. The Purchase Price ------------------------------------------ shall be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which the sum of Net Telecommunications Plant and Materials and Supplies as of the Effective Date exceeds or is less than the June 1994 Base Amount; provided, however, that in determining Net Telecommunications Plant and Material and Supplies as of the Effective Date no effect will be given for: (i) any decrease thereof resulting from damage, loss or destruction of Damaged Property which is repaired or replaced by Seller or for which Seller makes a substitution, in accordance with Section 11.9(b); (ii) any increase thereof resulting from expenditures made by Seller in connection with any such repair, replacement or substitution of Damaged Property in accordance with Section 11.9(b); or (iii) any increase thereof resulting from Seller's expenditures pursuant to its obligations under Sections 14.1.7(b) and (c) except for the cost of purchasing specific items of new plant (i.e., storage tanks). ---- (d) Adjustment Regarding FAS 106. The Purchase Price shall be ---------------------------- reduced by the amount included as "Other Current Liabilities" of Seller (item 14-Liabilities of Seller's balance sheet) as of the Effective Date which are associated with the requirements of Financial Accounting Standard 106 attributable to the active Transferred Employees. (e) Adjustment Regarding Long Term Debt. The Purchase Price shall ----------------------------------- be reduced by the amount of long term indebtedness of Seller that is assumed by Buyer pursuant to Section 5.2(a). 3.3 Estimate of Purchase Price and Prorations. At least five (5) days ----------------------------------------- prior to the date scheduled for Closing, Seller shall deliver to Buyer: (a) An estimate of the Purchase Price based on Seller's good faith estimate of the amount of each adjustment described in Section 3.2 (the "Estimated Purchase Price") on the same basis and in accordance with the same accounting principles, methods and practices applied in preparing the Financial Statements and the Additional Financial Statements, if applicable, taking into account all adjustments required in Section 3.2 (using Net Telecommunications Plant and Materials and Supplies as of the end of the month immediately preceding the month in which the Effective Date is scheduled to occur for purposes of the Adjustment Regarding June 1994 Base Amount) and accompanied by a reasonably detailed statement, certified by the chief financial or accounting officer of Seller, describing how each such adjustment was determined; and (b) An estimate of the prorations made by Seller in good faith in the manner provided in Section 11.8 (the "Estimated Prorations"). 3.4 Adjustments After Closing. ------------------------- (a) Within sixty (60) days following the Effective Date, Buyer shall deliver to Seller final calculations of the Purchase Price, as adjusted pursuant to Section 3.2 (prepared on the same basis (but using Net Telecommunications Plant and Materials and Supplies as of the Effective Date) and in accordance with the same accounting principles, methods and practices used to prepare the Estimated Purchase Price) which shall be accompanied by a reasonably detailed statement certified by the chief financial or accounting officer of Buyer describing how each such adjustment was determined, and final adjustments of the prorations referred to in Section 11.8. (For the purpose of preparing Buyer's calculations and adjustments, Seller shall give Buyer access to all books, records, and other information available to Seller that Buyer may reasonably determine appropriate.) Within thirty (30) days following the delivery of such calculations and adjustments, Seller shall notify Buyer of any objection thereto, stating in reasonable detail the reasons therefor; otherwise, such calculations and adjustments of the Purchase Price and the prorations shall be final and binding on Seller and Buyer. (For the purpose of reviewing Buyer's calculations and adjustments, Buyer shall give Seller access to all books, records, and other information available to Buyer that Seller may reasonably determine appropriate.) If Seller shall object, Seller and Buyer shall work in good faith to agree on the correct amounts for the final Purchase Price and the final Prorations, but if they fail to agree, either party may exercise its rights pursuant to Article 16. (b) Within three (3) business days following the day on which the Purchase Price and the prorations shall become final, whether by expiration of time or agreement of Seller and Buyer, (respectively, the "Final Purchase Price" and the "Final Prorations"): (i) if the Final Purchase Price (plus or minus, as applicable, the Final Prorations) shall exceed the Estimated Purchase Price (plus or minus, as applicable, the Estimated Prorations), Buyer shall cause to be transferred to such account in the United States as Seller may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer, or (ii) if the Estimated Purchase Price (plus or minus, as applicable, the Estimated Prorations) shall exceed the Final Purchase Price (plus or minus, as applicable, the Final Prorations), Seller shall cause to be transferred to such account in the United States as Buyer may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer. It is the intent of the parties that all Purchase Price adjustments that are not disputed shall be paid by the appropriate party as soon as reasonably practicable, and any disputed amounts will not delay payments with respect to amounts not in dispute. ARTICLE 4. BILLING AND COLLECTION PROCEDURES 4.1 Determination of Earned Accounts Receivable. The parties ------------------------------------------- acknowledge that Seller's accounts receivable as of the Effective Date will include both Earned Accounts Receivable and Advanced Billing Amounts (collectively, the "Total Accounts Receivable"). Within thirty (30) days after the Effective Date, Buyer and Seller shall agree on a statement setting forth, with respect to the Total Accounts Receivable as of the Effective Date, the portions that are Earned Accounts Receivable and the portions that are Advanced Billing Amounts; the methodology used to prepare such statement shall be consistent with that used to prepare, and described on, the sample statement set forth on Schedule 4.1 describing the portions of Seller's June 30, 1994 Earned Accounts Receivable and June 30, 1994 Advance Billing Amounts, which the parties agree is a proper methodology for allocation of the Total Accounts Receivable. In preparing such statement each party shall cooperate with the other and provide the other with reasonable access to its applicable books and records. If the parties fail to agree within the thirty (30) day period, Buyer and Seller will continue to negotiate in good faith to resolve such differences, but if they fail to so resolve such difference, either party may exercise its rights pursuant to Article 16. 4.2 Purchase of Accounts Receivable. ------------------------------- As of the Effective Date, Buyer shall purchase from Seller the Earned Accounts Receivable outstanding as of the Effective Date, with payment for such Earned Accounts Receivable being payable in the monthly installments set forth below. Buyer shall be entitled to receive all cash collections with respect to such Earned Accounts Receivable and, as payment for such Earned Accounts Receivable, shall pay Seller on the final business day of the first three calendar months following the Effective Date an amount equal to a percentage (as set forth below) of such Earned Accounts Receivable net of the Uncollectible Amount. The "Uncollectible Amount" shall be computed by multiplying such Earned Accounts Receivable by Seller's uncollectible factor based upon Seller's actual uncollectible net write-offs as a percentage of current billings for the calendar year immediately preceding the year in which the Closing occurs, which amount shall be agreed to by the parties at least thirty (30) days prior to the Effective Date. Payment for the Earned Accounts Receivable, net of the Uncollectible Amount purchased by Buyer as of the Effective Date, shall be made in three installments, as follows: Final business day of first month after Closing: 80% Final business day of second month after Closing: 15% Final business day of third month after Closing: 5% Buyer shall have the right to review Seller's calculations of the Earned Accounts Receivable and the Uncollectible Amount and Seller shall cooperate with Buyer and provide Buyer and its representatives with reasonable access to Seller's books and records in the course of such review. If such review results in amounts different from Seller's calculations, Buyer and Seller will negotiate in good faith to resolve such differences. The parties agree that notwithstanding any disagreement between them with respect to the calculation of the Earned Accounts Receivable or Advance Billing Amounts, Buyer shall pay Seller, in accordance with the above schedule, all agreed to Earned Accounts Receivable amounts net of the Uncollectible Amount. When the disagreement concerning any such unagreed to item has been resolved, the appropriate party shall promptly pay the other the amount of such resolved item plus interest from the regularly scheduled payment date at a rate of 7% per annum. 4.3 Carrier Access Billing. Seller shall render its own final carrier ---------------------- access bills to its interexchange carriers for minutes, messages and other applicable charges up to and including the Effective Date which bills shall contain no charges for services to be rendered after the Effective Date. Seller shall be responsible for collecting and settling any disputes associated with its bills to the interexchange carriers. ARTICLE 5. REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS 5.1 Governmental Regulatory Approval. Except as provided in Section -------------------------------- 5.4, as promptly as practicable after the Execution Date with respect to applications to be filed with the PUC, but no later than forty-five (45) days after the Execution Date, the parties shall file the applications and notices described on Schedule 5.1 in such form as agreed to by the parties with the PUC and other appropriate Governmental Authorities, seeking an order permitting the transfer of service in the Purchased Exchanges, and the transfer or assignment of the Non-FCC Authorizations, to Buyer (the "Regulatory Approvals"). Buyer will be responsible for establishing the tariff for its post-Effective Date operations in the state in which the Purchased Property is located, by requesting adoption of tariffs which are the same or substantially the same as Seller's pre-Effective Date tariffs. To the extent assignable, Seller will assign the Non-FCC Authorizations to Buyer. Each party agrees to use its best efforts to obtain the Regulatory Approvals and the parties agree to cooperate fully with each other and with all Governmental Authorities to obtain the Regulatory Approvals as described on Schedule 5.1 at the earliest practicable date. The parties agree that the Regulatory Approvals containing asterisks on Schedule 5.1 constitute material Regulatory Approvals (the "Material Regulatory Approvals") which are subject to Sections 7.1.3 and 7.2.4, and the Regulatory Approvals that do not contain an asterisk on Schedule 5.1 constitute Immaterial Regulatory Approvals (the "Immaterial Regulatory Approvals") which are subject to Section 5.3, but not Sections 7.1.3 and 7.2.4. 5.2 Debtholder Consents; Indebtedness Assumption, Releases or --------------------------------------------------------- Terminations. (a) With respect to Seller's long-term indebtedness identified - ------------- on Schedule 5.2(a), as promptly as practicable following the Execution Date, but in any event no more than forty-five (45) days thereafter, the parties shall contact the holders of such indebtedness to request, and use their best efforts to obtain, such holders' consent ("Debtholder Consent") to Buyer's assumption of, and Sellers' release from, such indebtedness on terms acceptable to the parties. Each party shall bear their own costs and expenses in obtaining such Debtholder Consent. Neither party, however, shall be required to make any payment to the debtholder to obtain the Debtholder Consent, except that Seller shall be responsible for any such payments as are specified in the relevant debt agreement. The parties acknowledge that all indebtedness with respect to which Debtholder Consents are obtained and which is assumed by Buyer shall constitute an Assumed Liability pursuant to Section 2.5.1(i), and all indebtedness which is not so assumed by Buyer shall constitute a Retained Liability. (b) If within thirty (30) days prior to the Closing Date, the parties have been unable to obtain the Debtholder Consent with respect to any indebtedness, Seller shall have the right to repay such indebtedness owed to such non-consenting debtholder. (c) Except with respect to indebtedness assumed by Buyer pursuant to Section 5.2(a), Seller shall take, at Seller's sole cost and expense, all actions necessary with respect to all persons or entities (collectively, the "Secured Parties") holding a security interest or lien against the Purchased Property to obtain the termination or release, as of the Effective Date, and the prompt removal after the Effective Date, of all security agreements, mortgages and financing statements relating to the Purchased Property (such terminations and releases being hereinafter collectively referred to as the "Secured Indebtedness Releases or Terminations"). Buyer agrees to cooperate in good faith with Seller in obtaining the required Secured Indebtedness Releases or Terminations. 5.3 Other Consents. -------------- (a) As promptly as practicable after the Execution Date, the parties hereto shall mutually seek the consent, approval or waiver of the other party to any Lease or Contract that requires consent, approval or waiver as a condition to an assignment of such Lease or Contract. To the extent any of the approvals, consents or waivers required to assign any Lease, Contract or Immaterial Authorization have not been obtained with respect to any Lease, Contract or Immaterial Authorization as of the Effective Date, Seller shall continue to use its best efforts to obtain the consent of such other third party that is required for the transfer or assignment of such Lease, Contract or Immaterial Authorization after the Effective Date. Refusal by such other third party to release Seller from a Lease or Contract shall not excuse Seller from entering into an assignment of such Lease or Contract. From the Effective Date until the earlier of (i) the time such approval, consent or waiver is obtained, and (ii) six months after the Effective Date, Seller shall hold such Leases, Contracts and Immaterial Authorizations or ancillary rights as agent for Buyer, and preserve the benefit of and enforce the same as agent for Buyer to the fullest extent permissible under the applicable Lease, Contract or Immaterial Authorization. Buyer and Seller agree that upon request by either party, at Closing, they will enter into an agency agreement in form and substance mutually satisfactory to each party specifying the terms and conditions upon which Seller will so act as Buyer's agent, which terms and conditions shall include a six month term. (b) If a third party refuses to consent to a Lease or Contract assignment, and if the applicable Lease or Contract permits a sublease or subcontract without the consent of the third party, the parties hereto, as of the Effective Date, shall enter into a sublease or subcontract upon terms and conditions as similar and comparable to an assignment of the Lease or Contract as is reasonably feasible so as to enable Buyer to retain the ultimate benefits of such Lease or Contract after the Effective Date. (c) Notwithstanding anything to the contrary contained herein, if a third party refuses or has failed to consent to a Lease, Contract or Immaterial Authorization assignment after the Seller has used its best efforts for a period of six months after the Effective Date to obtain such consent, waiver or approval, and if the applicable Lease or Contract does not permit a sublease or subcontract without the consent of the third party, then Seller and Buyer shall within thirty (30) days after expiration of such six-month period negotiate in good faith and agree upon, and Seller shall pay to Buyer, an amount representing fair compensation to Buyer for the harm caused by the failure to obtain such consent, waiver or approval. Following such payment, Seller shall have no further obligation to Buyer with respect to such Lease, Contract or Immaterial Authorization except as otherwise provided in Section 11.12 with respect to the Contracts and Excluded Contracts addressed in Section 11.12. (d) Seller shall bear all reasonable costs and expenses in obtaining such consents, approvals or waivers to the extent such costs or expenses are specified in the relevant Lease, Contract or Immaterial Authorization, or under applicable Law, and shall reimburse Buyer to the extent Buyer makes any transfer payments which are specified in amount and required under any Lease or Contract to the lessor or other party thereto, provided that seven (7) business days before Buyer makes any transfer payments, Buyer will notify Seller of its intent to do so and after making such transfer payment, Buyer will provide evidence satisfactory to Seller that such transfer payment was made. Buyer and Seller will negotiate in good faith to determine the extent to which each will bear any other costs and expenses arising in connection with obtaining such consents, approvals and waivers. 5.4 FCC Consents. As promptly as practicable after the Execution Date, ------------ but no later than forty-five (45) days after the Execution Date, the parties shall file all applications and requests described on Schedule 5.4 in such form as agreed to by the parties with the FCC seeking, and shall use their best efforts to obtain, the FCC's consent to assign all FCC Licenses (as listed in Schedule 9.1.17(b)) from Seller to Buyer (the "FCC Consents"). Except as set forth on Schedule 5.4, the parties each agree that in connection with taking the immediately above described actions, they will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Purchased Exchanges shall remain in the National Exchange Carrier Association Tariff F.C.C. No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. Each party agrees to use its best efforts, and the parties agree to cooperate fully with each other and with the FCC, to obtain the FCC Consents at the earliest practicable date. 5.5 HSR Act Review. As promptly as practicable after the Execution Date -------------- but in no event later than thirty (30) days after the Execution Date, the parties will make such filings as may be required by the HSR Act with respect to the sale contemplated by this Agreement. Thereafter, the parties will file as promptly as practicable any supplemental information that may be requested by the U.S. Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR Act. The parties agree to cooperate in seeking early termination of the waiting periods under the HSR Act. ARTICLE 6. PRECLOSING COVENANTS 6.1 Investigation by Buyer. ---------------------- (a) Prior to the Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford to the authorized representatives of Buyer reasonable access during normal business hours to the books and records relating to the Purchased Property (including, without limitation, relevant tax information) and to the personal property and Real Property comprising the Purchased Property. Buyer and Seller will cooperate with each other to schedule such access. With the consent of Seller (which consent will not be unreasonably withheld), Buyer and its representatives shall have access to all interexchange carriers having business relationships with the Business, to all customers of the Business, and to all officers, employees and agents of Seller having knowledge or information concerning the operations of the Business so as to afford Buyer the opportunity to make such review, examination and investigation of the Business and the Purchased Property as Buyer may desire to make, to evaluate the competitiveness of the Business, and to enable Buyer to assimilate the Business into Buyer's operations as soon as practicable after the Effective Date. To the extent it so desires, Seller shall accompany Buyer on all of Buyer's access to interexchange carriers, customers and agents of Seller. Buyer will be permitted to make extracts from or copies of such books and records as may be reasonably necessary. Buyer will not contact any employee, customer or supplier of Seller as to this Agreement or the matters involved herein except in accordance with this Section 6.1. (b) Subject to applicable law, and upon Buyer's request and Seller's consent (which consent will not be unreasonably withheld), Seller shall permit, at Buyer's sole cost and expense: (i) certain key employees and officers of Seller selected by Buyer to attend workshops and training sessions of Buyer (including sessions to train such employees in Buyer's business planning process in order to have the Business after the Effective Date follow Buyer's business planning process and procedures); (ii) Seller's management to work with Buyer during Buyer's planning process between the Execution Date and the Effective Date; (iii) Buyer to confer with Seller about, and to participate in Seller's planning for, any material reduction in work force or other arrangements regarding employees required or implemented pursuant to the Employee Transfer Agreement. (c) As promptly as reasonably practicable after Buyer's request, Seller will furnish such financial and operating data and other information pertaining to the Business as Buyer may reasonably request in order, among other things, to comply with Buyer's disclosure obligations under the federal securities or other laws as such obligations relate to Buyer's prospective ownership of the Business, including any disclosure required in connection with the sale of any securities by Buyer; provided, however, that nothing herein will obligate Seller to take actions that would unreasonably disrupt the normal course of the business of Seller or violate the terms of any applicable Law or any contract to which Seller is a party or to which any of its assets is subject in providing such information, or to incur any costs with respect to Buyer's external auditors (or Seller's external auditors in the event a report by such auditors is requested by Buyer) providing accounting services with respect to issuing an auditor's report required by Buyer. Any information or document provided to Buyer or acquired by Buyer during this investigation shall be deemed "Evaluation Material" as that term is defined in the Confidentiality Agreement and shall be subject in all cases to the terms of the Confidentiality Agreement; provided, however, that following consultation with Seller, Buyer may disseminate financial or other information with respect to the Business of Seller that Buyer, upon consultation with counsel, determines is required to be disclosed under federal securities laws. (d) Prior to Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford the authorized representatives of Buyer access to the Purchased Properties in order to conduct the environmental audit contemplated by Section 14.1. (e) In connection with the continuing operation of the Business between the Execution Date and the Effective Date, Seller shall confer in good faith with Buyer, as reasonably requested by Buyer from time to time, to report on material operational matters, material reductions in work force and other material employee matters, and the general status of ongoing operations. (f) Notwithstanding the provisions of this Agreement or the Confidentiality Agreement, from and after the Execution Date, upon the prior consent of Seller (which consent will not be unreasonably withheld), Buyer may disclose Evaluation Material (as defined in the Confidentiality Agreement) to representatives of rating agencies, underwriters, underwriters' counsel, public accountants, prospective lenders and other third parties involved in any of Buyer's offering of securities or other financings and to fixed income and equity analysts to the extent such parties reasonably have a need to know any such information; provided, that such parties shall (y) be advised of the confidential nature of any Evaluation Material they receive, and (z) agree in writing to be bound to the provisions of the Confidentiality Agreement. 6.2 Satisfaction of Conditions. Without limiting the generality or -------------------------- effect of any provision of Article 7, the parties will use their best efforts to satisfy promptly all conditions required to be satisfied prior to the Closing. 6.3 Notification as to Certain Matters. ----------------------------------- (a) The Buyer will promptly notify Seller of (i) any information that would cause any representation or warranty of Buyer contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the transactions contemplated by this Agreement; of which in any such case, Buyer's representatives listed on Schedule 6.3(a) become aware on or before the Effective Date. Buyer shall use reasonable best efforts to keep Seller informed of the events described in this Section 6.3(a) and shall permit Seller access to all materials prepared by Buyer in connection therewith. (b) The Seller will promptly notify Buyer of (i) any information that would cause any representation or warranty of Seller contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the Business or the transactions contemplated by this Agreement; of which in any such case, Seller's representatives listed on Schedule 6.3(b) become aware on or before the Effective Date. Seller shall use reasonable best efforts to keep Buyer informed of the events described in this Section 6.3(b) and shall permit Buyer access to all materials prepared by Seller in connection therewith. ARTICLE 7. CONDITIONS PRECEDENT TO THE CLOSING 7.1 Conditions Precedent to Obligations of Buyer. The obligations of -------------------------------------------- Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Buyer: 7.1.1 No Misrepresentation or Breach of Covenants and Warranties. There ---------------------------------------------------------- shall have been no material breach by Seller of any of its covenants to be performed in whole or in part prior to the Closing and the representations and warranties of Seller in Section 9.1 (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) shall be true and correct as of the Effective Date, except for such representations or warranties that are made expressly as of some other date, which shall be true and correct (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) as of such other date, and Seller shall have delivered to Buyer a certificate in the form attached hereto as Schedule 7.1.1 ("Seller's Closing Certificate"), dated as of the Effective Date and signed by one of Seller's Executive Officers, certifying each of the foregoing, or specifying those respects in which such covenants have been materially breached or such representations and warranties (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) are not true and correct in which event, if the Closing occurs, any claim with respect to matters so specified shall be waived by Buyer unless otherwise expressly agreed by Seller at Closing. 7.1.2 Documents. Seller shall have delivered to Buyer all documents --------- required by Section 8.2. 7.1.3 No Legal Obstruction. All required waiting periods under the HSR -------------------- Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions or restrictions which Buyer determines, in good faith and in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Buyer of the transactions contemplated by this Agreement. For purposes of this Section 7.1.3, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.1.4 Material Adverse Changes. There shall have been no material adverse ------------------------ changes to the Purchased Property as a whole or the financial position or results of operations of the Business as a whole, and, subject to Section 11.9, Seller shall not have suffered any material loss or damage to the Purchased Property, whether or not insured, that would materially affect or impair Buyer's ability to conduct the Business after the Effective Date. None of the Additional Financial Statements of Seller delivered pursuant to Section 11.4 shall reflect a material change in the financial position or results of operations of the Business from the financial position or results of operations reflected in the Financial Statements. 7.1.5 Real Estate Transfers. Seller shall have complied with Section --------------------- 11.16 with respect to its Real Property to be transferred to Buyer. 7.1.6 Lessor and Other Third Party Consents. Seller shall have delivered ------------------------------------- to Buyer all consents, approvals or waivers of lessors or other third parties to the Material Agreements as so identified by an asterisk on Schedules 9.1.9 and 9.1.13, as such Schedules may be amended pursuant to Section 11.22. All of such delivered consents, approvals or waivers shall be in effect as of the Effective Date. 7.1.7 [INTENTIONALLY DELETED] 7.1.8 Litigation. There shall not be any litigation or other proceeding ---------- pending or to the best of Buyer's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Buyer, would involve material expense to Buyer. 7.1.9. Corporate Proceedings. All corporate proceedings required to be --------------------- taken by Seller in connection with the transactions contemplated by this Agreement shall have been taken; 7.1.10 Lien Searches. Seller shall have delivered to Buyer reasonably ------------- comprehensive searches, dated as of a date within 30 days of the Execution Date or any time thereafter, of the public records regarding liens and judgments with respect to the Business and the Purchased Property. 7.1.11. Debtholder Consents. With respect to any long-term indebtedness to ------------------- be assumed by Buyer pursuant to Section 5.2(a), Buyer shall have received the Debtholder Consents and shall have entered into an assignment and assumption agreement with the Debtholder in form and substance reasonably acceptable to Buyer. 7.2 Conditions Precedent to Obligations of Seller. The obligations of --------------------------------------------- Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Seller: 7.2.1 No Misrepresentations or Breach of Covenants and Warranties. There ----------------------------------------------------------- shall have shall have been no material breach by Buyer of any of its covenants to be performed in whole or in part prior to the Closing, and the representations and warranties of Buyer in Section 9.2 shall be true and correct as of the Effective Date, except for such representations or warranties made expressly as of some other date, which shall be true and correct as of such other date (all such representations and warranties to be qualified by any materiality standards contained therein), and Buyer shall have delivered to Seller a certificate ("Buyer's Closing Certificate"), dated as of the Effective Date and signed by one of Buyer's Executive Officers, certifying each of the foregoing or specifying those respects in which such covenants have not been performed or such representations and warranties are not true and correct in which event if the Closing occurs any claim with respect to matters so specified shall be waived by Seller unless otherwise expressly agreed by Buyer at Closing. 7.2.2 Documents. Buyer shall have delivered to Seller all documents --------- required by Section 8.3. 7.2.3 Purchase Price. Buyer shall have delivered to Seller, in the manner -------------- specified in Section 3.1, the Estimated Purchase Price as adjusted pursuant to Section 3.2. 7.2.4 No Legal Obstruction. All required waiting periods under the HSR -------------------- Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions, or restrictions which Seller determines, in good faith in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Seller of the transactions contemplated by this Agreement. For purposes of this Section 7.2.4, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.2.5 Corporate Proceedings. All corporate proceedings required to be --------------------- taken by Buyer in connection with the transactions contemplated by this Agreement shall have been taken. 7.2.6 Litigation. There shall not be any litigation or other proceeding ---------- pending or to the best of Seller's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Seller would involve a material expense to Seller. 7.2.7 [INTENTIONALLY DELETED] 7.2.8 Debtholder Releases. With respect to any long-term indebtedness to ------------------- be assumed by Buyer pursuant to Section 5.2(a), Seller shall have received Debtholder Consents and release of debt (and, if applicable, lien) documentation reasonably acceptable to Seller. ARTICLE 8. THE CLOSING 8.1 The Closing. Subject to the terms and conditions of this Agreement, ----------- the closing of the transactions contemplated by this Agreement (the "Closing") shall be held at a place mutually agreed upon by the parties at 9:00 a.m., local time, on the last calendar day (the "Closing Date") of the calendar month in which occurs the tenth (10th) business day after the date Seller notifies Buyer in writing (the "Notice") of its determination that all required Material Regulatory Approvals and FCC Consents have been obtained and provided that the other conditions set forth in Article 7 shall have been satisfied, or at such other place and time as may be agreed upon by Seller and Buyer. The transactions to be consummated at Closing shall be deemed to have been consummated as of 11:59 p.m. on the last calendar day of the calendar month in which occurs the tenth (10th) business day after the date of the Notice (the "Effective Date"). If the Effective Date is not a day on which financial institutions are open and operating, then the Closing Date shall be the immediately following business day on which financial institutions are open and operating. 8.2 Seller's Obligations at Closing. At the Closing, Seller shall deliver ------------------------------- to Buyer the following documents duly executed and acknowledged, as appropriate: (a) Bills of sale, special warranty deeds, assignments and other good and sufficient instruments of transfer (including, without limitation, vehicle titles) to transfer title in the Purchased Property to Buyer, in form and substance mutually satisfactory to Buyer and Seller. (b) Seller's Closing Certificate. (c) Instruments of assignment or, to the extent required by Section 5.3, subleases or subcontracts for the Leases and the Contracts, in each case in form and substance mutually satisfactory to Buyer and Seller. (d) Secured Indebtedness Releases and Terminations. (e) All of the documents and papers required of Seller as conditions to Closing, including without limitation, the Regulatory Approvals, FCC Consents and the documents required to be delivered by Seller pursuant to Section 11.16. (f) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (g) The Environmental Remediation Agreement if required pursuant to Section 14.1.7(d). (h) All documents required of Seller under the Employee Transfer Agreement. (i) Certificate of the Secretary or Assistant Secretary of Seller certifying as to Articles of Incorporation, Bylaws, Board of Director approval and incumbency. 8.3 Buyer's Obligations at Closing. At the Closing, Buyer shall deliver ------------------------------ to Seller the following items and documents duly executed and acknowledged as appropriate: (a) The Estimated Purchase Price (as adjusted under Section 3.2), in the manner specified in Section 3.1; (b) Buyer's Closing Certificate (c) All of the documents and papers required of Buyer as conditions to Closing, including, without limitation, the Regulatory Approval and FCC Consents. (d) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (e) The Environmental Remediation Agreement if required pursuant to Section 14.17(d). (f) All documents required of Buyer under the Employee Transfer Agreement. (g) Instruments of assignment and assumption or, to the extent required by Section 5.3, subleases or subcontracts for the Leases and the Contracts, in each case in form and substance mutually satisfactory to Seller and Buyer. (h) Special warranty deeds (to the extent required to be executed by Buyer) and other instruments of assignment and assumption (including, without limitation, vehicle title and Assumed Liabilities) to transfer title to the Purchased Property and assumed obligations thereunder to Buyer, in form and substance mutually satisfactory to Buyer and Seller. (i) Certificate of the Secretary or Assistant Secretary of the Buyer certifying as to Articles of Incorporation, Bylaws, Board of Director approval and incumbency. ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties of Seller. Except as to the ----------------------------------------- environmental matters which are exclusively addressed in Article 14 of this Agreement, Seller represents and warrants to Buyer as follows: 9.1.1 Authorization and Effect of Agreement. Seller has the requisite ------------------------------------- corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement and to fulfill its respective obligations under this Agreement. The execution and delivery by Seller of this Agreement and the fulfillment of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and, assuming the due execution and delivery of this Agreement by Buyer, constitutes a valid and binding obligation of Seller, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualification that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.1.2 No Restrictions Against Sale of the Purchased Property. The ------------------------------------------------------ execution and delivery of this Agreement by Seller does not, and the fulfillment by Seller of its obligations under this Agreement will not, (i) conflict with or violate any provision of its certificate of incorporation or bylaws or, (ii) except as set forth in Schedule 9.1.13, or subject to obtaining the approvals and consents reflected in Article 5, conflict with, violate or result in the breach of, constitute a default under, accelerate the performance required by, or result in the creation of any encumbrance upon any of the Purchased Property under any provision of any Contract other than any such conflict, violation or breach that alone or in the aggregate would not have an adverse effect on the Buyer, the Business or the Purchased Property after the Effective Date. 9.1.3 Consents and Approvals of Governmental Authorities. No consent, -------------------------------------------------- approval, order or authorization of, or registration, declaration or filing with, any court or governmental agency, authority or instrumentality (" Governmental Authority") is required to be obtained or made by or with respect to Seller or in connection with the execution and delivery of this Agreement by Seller or the fulfillment by Seller of its obligations under this Agreement, except (i) the filings and approvals described in Article 5 (ii) real estate deeds and other documents filed in connection with the transfer of the Real Property included in the Purchased Property, (iii) certificates of title for the motor vehicles included in the Purchased Property, and (iv) such other consents, approvals, orders or authorizations, or registrations, declarations or filings, which if not obtained or made would not result in a material adverse effect on Buyer, the Business or the Purchased Property. 9.1.4 No Violation of Law. Except as indicated in Schedule 9.1.4, the ------------------- execution and delivery of this Agreement and the fulfillment by Seller of its obligations under this Agreement will not violate any applicable existing statute, ordinance, rule, regulation or common law obligation (collectively, "Law"), except where such violation would not have a material adverse effect on the Business as a whole or on any significant part of Purchased Property after the Effective Date. 9.1.5 Corporate Organization. Seller is a corporation duly organized, ---------------------- validly existing and in good standing under the laws of Tennessee; it has full corporate power and authority to own its properties and to carry on the Business as it is now being conducted and to own, or hold under lease the Purchased Property. 9.1.6 Brokers. Seller has not paid or become obligated to pay any fee or ------- commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Buyer for any broker's or finder's fees or similar fees or expenses. 9.1.7 Assumed Liabilities. Seller is not in default with respect to any ------------------- of its obligations or liabilities that will become Buyer's Assumed Liabilities at the Effective Date or the performance, observance or fulfillment of any covenant or condition relating thereto, and no event has occurred and is continuing that constitutes a material breach or default thereunder or that would constitute such a material breach or default with the giving of notice or lapse of time, or both. 9.1.8 Title to Purchased Property. Seller has good, valid, undivided, --------------------------- marketable and defensible title to all owned Purchased Property, free and clear of all restrictions, charges, liens, or encumbrances of any kind, except for (i) the Assumed Liabilities (ii) the liens, encumbrances and restrictions shown and disclosed on Schedule 9.1.8-1, (iii) current real and personal property taxes and other statutory liens covering amounts not yet due and payable, and (iv) such other imperfections of title and encumbrances, if any, as do not interfere in any material respect with the present use or value of the item of owned Purchased Property to which such imperfection or encumbrance relates. No condemnation proceeding is pending or, to the knowledge of Seller, threatened with respect to any part of the Purchased Property and such Purchased Property is not in any violation of any restrictive covenant relating thereto. Schedule 9.1.8-2 sets forth the address and a general description of each item of Real Property owned by Seller included in the Purchased Property. In addition, Schedule 9.1.8-2 sets forth a list of the Real Property included in the Purchased Property in which Seller holds other than a fee interest (such as easements and rights of way). Except to the extent indicated in Schedules 9.1.8-1 and 9.1.8-2, Seller has the unqualified right to transfer and convey to Buyer Seller's interest in such Real Property. 9.1.9 Leases. Seller has set forth on Schedule 9.1.9 a list of all the ------ Leases. Each of the Leases is valid, binding and enforceable in accordance with its terms, and except as otherwise disclosed in Schedule 9.1.9, there is not any existing material default or existing material breach of a covenant by Seller under any Lease. Seller enjoys peaceful and undisturbed possession under all material Leases and, to Seller's knowledge, the lessor under any such Lease is not (with or without notice or the lapse of time, or both) in material breach or default thereunder, has performed all material obligations required to be performed by it thereunder, and has not given notice of such lessor's intent to terminate such Lease. 9.1.10 Condition of Tangible Assets. All of the tangible Purchased ---------------------------- Property is in substantially good operating condition and repair, normal wear and tear excepted, well maintained, adequate for the present uses thereof and in compliance in all material respects with applicable federal, state and local ordinances, regulations and statutes relating to the ownership and operation of such property. Except as set forth on Schedule 9. 1. 10, Seller has not received any written notice within the past twelve (12) months of a violation of any ordinances, regulations or building, zoning and other similar laws with respect to such assets that would have a material adverse effect on the Business as a whole or any significant part of the Purchased Property. Each parcel of Real Property and, to the knowledge of Seller, of real estate leased by Seller and material or necessary to the Business as presently conducted substantially complies with all applicable Laws except where the failure to so comply individually or in the aggregate, would not have a material adverse effect on the Business as a whole or any such parcel after the Effective Date. Except as set forth on Schedule 9.1.10, other than Seller, no person or party has actual possession or has a right to possession of all or any material portion of any parcel of such Real Property or such leased real estate. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 9.1.10, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED OR STATUTORY, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE PERSONAL PURCHASED PROPERTY AND HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED OR STATUTORY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. 9.1.11 Financial Statements. -------------------- (a) Seller has delivered to Buyer a true and correct copy of its audited financial statements, consisting of a balance sheet, income statement and related statement of cash flows as of and for the respective periods ended December 31, 1992, and December 31, 1993, together with the auditor's report thereon (the "Financial Statements"). The Financial Statements were prepared based upon the books and records of Seller, and fairly present in all material respects the financial condition of Seller as of the appropriate periods and the results of operations for the year then ended, in each case in conformity with GAAP and to the best of Seller's knowledge and to the extent required by applicable law, have been prepared in all material respects in conformity with the regulations of the FCC and the PUC. The Financial Statements contain no untrue statements of any material fact nor omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Additional Financial Statements to be delivered to Buyer pursuant to Section 11.4 hereof (i) will be prepared in each case in accordance with GAAP (except for the omission of notes thereto with respect to interim Additional Financial Statements), consistent with past practices, from the books and records of Seller; and (ii) will fairly present the financial condition of Seller and the results of operations of Seller for the periods indicated, subject, in the case of interim Additional Financial Statements, to normal year-end adjustments which will not be material in amount or effect; and (iii) to the best of Seller's knowledge and to the extent required by applicable Law, will be prepared in all material respects in conformity with the regulations of the FCC and the PUC; and (iv) will not contain any untrue statements of any material facts or omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) The unaudited balance sheet of Seller as of June 30, 1994 was prepared in accordance with GAAP except for the omission of notes thereto, consistent with past practices, from the books and records of Seller and fairly presents the financial condition of Seller as of such date subject to normal year-end adjustments which will not be material in amount or effect, and to the best of Seller's knowledge and to the extent required by applicable Law, was prepared in all material respects in conformity with the regulations of the FCC and the PUC. 9.1.12 Absence of Material Changes. Except as Seller may disclose in --------------------------- Schedule 9.1.12, since December 31, 1993, there has not been: (a) Any material change in the financial condition, results of operations, assets, liabilities, operations or future business prospects of the Business; (b) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the Purchased Property or the Business; (c) Any disposition (including, without limitation, the grant of a license, franchise, option or other right of any nature whatsoever to sell or distribute) or encumbrance or agreement to dispose of or to encumber, or pledge or grant of a security interest in or agreement to pledge or grant a security interest in, any of the Purchased Property, or any increase or an agreement to increase any indebtedness of Seller related to the Business or the Purchased Property, except in the ordinary course of business; (d) Any material change in Seller's tariffs or in the manner of conducting the Business; (e) Any dispute, litigation or other event or condition that materially and adversely affects the business or prospects of the Business or the Purchased Property; (f) Any waiver or release of any material rights or settlement of any material dispute involving the Business or the Purchased Property; (g) Any granting of a material salary increase or other material benefits payable to any Employee, except for ordinary and routine salary increases or bonuses authorized or granted in the ordinary course of business and consistent with past practices; (h) Any transaction entered into by Seller that would have a material adverse effect on the Business as a whole or the Purchased Property as a whole; (i) Any change in the accounting methods or practices of Seller with respect to the Purchased Property or the Business except as required by GAAP or any change in depreciation or amortization policies or rates heretofore adopted by Seller with respect to the Purchased Property or the Business except as required by GAAP; (j) Any material labor dispute or threat thereof which affects generally the Transferred Employees of the Business or, to Seller's knowledge, any attempt to organize the Transferred Employees of the Business for the purpose of collective bargaining; (k) Any event that would have been prohibited under Section 11.5 if Section 11.5 had been in effect since December 31, 1993; or (l) Any agreement or commitment by Seller (or any understanding between Seller and any third party) to do or to take any of the actions referred to in paragraphs (a) through (k) of this Section 9.1.12. 9.1.13 Contracts. Each of the Contracts is in full force and effect as of --------- the date of this Agreement in accordance with its terms, and there is no outstanding notice of cancellation or termination in connection therewith. Seller is not in material breach or default in connection with any Contracts, and there is no basis for any claim of breach or default by Seller, or to Seller's knowledge, any other party, in any material respect under any of the Contracts. None of the Contracts, either separately or in the aggregate, materially and adversely affects the Business or the Purchased Property. After the Effective Date, all rights and obligations of Seller under the Contracts shall continue unimpaired in Buyer (assuming that if any Contract requires the consent of the other party thereto, such consent will have been obtained by the parties hereto prior to the Effective Date). Except for the instruments specifically listed in Schedule 9.1.13, Seller is not a party to or subject to: (i) any agreement for the purchase or disposition of any material, equipment, supplies, inventory or service, except individual purchase orders and contracts in amounts less than Twenty-Five Thousand Dollars ($25,000.00); (ii) any agreement to which Seller is a party or by which any of the Purchased Property is bound relating to indebtedness for money borrowed including capital leases, security arrangements relating thereto and any amendment or waiver thereof; and (iii) any other agreement not of the type covered by any of the foregoing items of this Section 9.1.13 requiring payments by Seller in excess of Seventy-Five Thousand Dollars ($75,000.00) per agreement, on or after the Effective Date. Schedule 9.1.13 also lists (a) each Contract relating to the Business or the Purchased Property between Seller and any Affiliate of Seller, and (b) each material Contract relating to the Business or the Purchased Property between Seller or an Affiliate of Seller and any third party. Seller has made available to Buyer true and correct copies of all agreements and instruments listed in Schedule 9.1.13. Schedule 9.1.13 specifically identifies, with respect to those Contracts which are required to be listed thereon, the Contracts which require the consent, approval or waiver of the other party thereto for the assignment thereof. 9.1.14 Insurance. The Purchased Property of an insurable nature and of a --------- character usually insured by companies carrying on similar businesses is insured under insurance policies in such amounts and against such losses or casualties as is (i) usual in such companies and (ii) required under any of the Contracts or Leases. The insurance policies referred to in this Section 9.1.14 are (i) listed on Schedule 9.1.14, and (ii) in full force and effect and the premiums due thereon have been duly and timely paid. The most current statement of values (the statement of values of property of an insurable nature that is submitted to an insurance company to be used as a basis for the calculation of premiums) relative to the Purchased Property as presently insured has been made available to Buyer by Seller. On the Effective Date, the coverage under the insurance policies and programs applicable to the Purchased Property will be terminated, and Buyer will be responsible for providing all insurance coverage for the Purchased Property. Following the Effective Date, Seller shall be responsible for and shall pay any additional premiums that might be required by an insurance company for insurance coverage prior to the Effective Date relating to the Purchased Property and shall be entitled to any refunds or dividends due from such companies relating to such coverage. All claims that relate to the operation of the Purchased Property prior to the Effective Date shall remain the sole responsibility of Seller. Schedule 9.1.14 sets forth a list of the open material claims affecting the Purchased Property, complete in all material respects, and a description of any self-insurance levels, underlying limits and deductibles. 9.1.15 Taxes. ----- (a) Except as disclosed on Schedule 9.1.15, (i) all Tax Returns required to be filed by Seller on or before the Effective Date with respect to the Business or the Purchased Property have or will have been filed, and all taxes shown as due and payable on such Tax Returns have been or will be paid by Seller when required by law; (ii) all penalties, interest or other charges that have or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax have been or will be timely paid in full, (iii) no deficiencies for any taxes, assessments or other governmental charges have been asserted in writing or assessed against Seller with respect to the Business that remain unpaid and that individually or in the aggregate are material to the Business; (iv) Seller has withheld all required federal, state and local payroll taxes and other similar taxes with respect to creditors and third party vendors, and has remitted all amounts required to be remitted to the appropriate taxing authorities; (v) there are no tax liens upon any of the Purchased Property except for statutory liens covering taxes not yet due and payable; (vi) none of the Purchased Property is tax-exempt use property within the meaning of Section 168(h) of the IRC and none of the Purchased Property is property that is or will be required to be treated as being owned by another person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986; and (vii) Seller is not a "foreign person" within the meaning of Section 1445(b)(2) of the IRC and shall provide an appropriate affidavit for purposes of Section 1445(b)(2) of the IRC. (b) Seller has been subject to normal and routine audits, examinations and adjustments of Taxes from time to time, but there are no material, current audits or material audits for which notification has been received (in either case, with respect to the Business) other than those set forth on Schedule 9.1.15. 9.1.16 No Material Claims. Except as disclosed in Schedule 9.1.16 or with ------------------ respect to Taxes, there are no claims, actions, lawsuits or legal or administrative proceedings pending, or, to the knowledge of Seller, threatened against or affecting Seller or its properties that, if determined adversely to Seller, would reasonably be expected to have a material adverse effect on the Business as a whole or any significant part of the Purchased Property. Seller does not know of any reasonable basis for any such action, claim, lawsuit or proceeding or any governmental or regulatory investigation relative to the Business or the Purchased Property. Seller is not in default under any judgment, order or decree of any Governmental Authority applicable to the Business or any significant part of the Purchased Property which would reasonably be expected to have a material adverse effect on the Business as a whole or any significant part of the Purchased Property after the Effective Date. 9.1.17 Tariffs: FCC Licenses, Non-FCC Authorizations. ---------------------------------------------- (a) Except as described on Schedule 9.1.17(a), with respect to federal tariffs, Seller is an issuing carrier in the National Exchange Carrier Association Tariff F.C.C. No. 5 for the purpose of providing interstate access service. Except as described on Schedule 9.1.17(a), the state regulatory tariffs applicable to the Business stand in full force and effect on the date of this Agreement in accordance with all terms of such state tariffs, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's knowledge, any threatened suspension, cancellation or termination in connection therewith, nor is the Seller subject to any restrictions or conditions applicable to its state regulatory tariffs that limit or would limit the operation of the Business (other than restrictions or conditions generally applicable to tariffs of that type). Except as described on Schedule 9.1.17(a), each such state tariff has been duly and validly approved by the appropriate state regulatory agency. Except as otherwise disclosed on Schedule 9.1.17(a), Seller is not in material violation under the terms and conditions of any such state tariff, and there is no basis for any claim of material violation by Seller in any material respect under any such state tariff. Except as described in Schedule 9.1.17(a), there are no applications by Seller or complaints or petitions by others or proceedings pending or threatened before the state regulatory authority relating to the Business or its operations or the state regulatory tariffs. To the knowledge of Seller, there are no material violations by subscribers or others under any such state tariff that would be material to the Business. A true and correct copy of each state tariff applicable to the Business has been delivered to Buyer. (b) Listed on Schedule 9.1.17(b) are the FCC Licenses held by Seller and used in the operation of the Business. Each such FCC License is in full force and effect in accordance with its terms, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's knowledge, any threatened suspension, cancellation or termination in connection therewith nor are any of such FCC Licenses subject to any restrictions or conditions that limit the operation of the Business (other than restrictions or conditions generally applicable to licenses of that type). Subject to the Communications Act of 1934, as amended, and the regulations thereunder, the FCC Licenses are free from all security interests, liens, claims, or encumbrances of any nature whatsoever. Except as set forth on Schedule 9.1.17(b), there are no applications by Seller or material complaints or material petitions by others or proceedings pending or threatened before the FCC relating to the Business or the FCC Licenses. (c) Listed on Schedule 9.1.17(c) are all Non-FCC Authorizations materially necessary for the conduct of the Business which would include, without limitation, all FAA radio tower ownership authorizations. Each such Non-FCC Authorization is in full force and effect in accordance with its terms. To Seller's knowledge, no event has occurred with respect to any materially necessary Non-FCC Authorization which permits, or after notice or lapse of time or both would permit, revocation or termination thereof, or would result in any other material impairment of the rights of the holder of such materially necessary Non-FCC Authorization. 9.1.18 Employee Matters. ---------------- (a) Schedule 9.1.18(a) lists (and identifies the sponsor of) each material "employee pension benefit plan, " as that term is defined in Section 3(2) of ERISA, each material " employee welfare benefit plan," as that term is defined in Section 3(1) of ERISA maintained or contributed to by Seller or any of its Affiliates in respect of any Transferred Employee (as defined below) (such plans being hereinafter referred to collectively as the "ERISA Plans"), and each other material retirement, pension, profit-sharing, money purchase, deferred compensation, incentive compensation, bonus, stock option, stock purchase, severance pay, unemployment benefit, vacation pay, savings, medical, dental, post-retirement medical, accident, disability, weekly income, salary continuation, health, life or other insurance, fringe benefit, or other employee benefit plan, program, agreement, or arrangement maintained or contributed to by Seller or its Affiliates in respect of or for the benefit of any Transferred Employee or former employee, excluding any such plan, program, agreement, or arrangement maintained or contributed to solely in respect of or for the benefit of Transferred Employees or former employees employed or formerly employed by Seller outside of the United States, as of the date hereof (collectively, together with the ERISA Plans, referred to hereinafter as the "Plans"). Schedule 9.1.18(a) also includes a list of each material written employment, severance, termination or similar-type agreement between Seller or its Affiliates and any Transferred Employee (the "Employment Agreements"). Except to the extent that any assets, liabilities, or accounts are transferred from the Plans or Agreements (pursuant to an Employee Transfer Agreement or otherwise) to plan(s) or agreement(s) maintained or contributed to by Buyer, all such Plans and Agreements shall remain the liabilities of the Seller or its Affiliates and Seller shall take any and all steps necessary to ensure that Buyer shall not be a sponsor of any such Plan or Agreement subsequent to the Effective Date. Except as otherwise disclosed on Schedule 9.1.18(a), the execution and delivery of this Agreement by Seller and the performance of this Agreement by Seller will not directly result now or at any time in the future in (i) the payment by Seller or its Affiliates to any Transferred Employee of any severance, termination, or similar type payments or benefits or (ii) any "parachute payment" (as such term is defined in Section 28OG of the IRC) being made by Seller or its Affiliates to any Transferred Employee. (b) Except as set forth on Schedule 9.1.18(b): (i) Neither Seller nor any of its Affiliates, any of the ERISA Plans, any trust created thereunder, or any trustee or administrator thereof, has engaged in any transaction as a result of which Seller could be subject to any material liability pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC; and (ii) Since the effective date of ERISA, no material liability under Title IV of ERISA with respect to the ERISA Plans has been incurred or is reasonably expected to be incurred by Seller or any of its Affiliates (other than liability for premiums due to the PBGC), unless such liability is reserved for or otherwise reflected on the Financial Statements or unless such liability has been, or prior to the Effective Date will be, satisfied in full. (iii) There is no contract or Employment Agreement covering any Transferred Employee or former employee of the Seller that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the IRC. (iv) Neither the Seller nor any of its Affiliates has engaged in, or is a successor or parent corporation to a person that has engaged in, a transaction described in Section 4069 of ERISA. (c) Except as set forth on Schedule 9.1.18(c), with respect to the ERISA Plans other than those ERISA Plans identified on Schedule 9.1.18(a) as "multi-employer plans": (i) the PBGC has not instituted proceedings to terminate any Plan that is subject to Title IV of ERISA (the "Retirement Plans") and no condition exists or has existed which could constitute grounds for any termination by PBGC; (ii) no filing has been made by the Seller, or any of its Affiliates with the PBGC to terminate any Retirement Plan identified on Schedule 9.1.18(a); (iii) none of the ERISA Plans has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the IRC), whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to the Execution Date; (iv) each of the ERISA Plans has been operated and administered in all material respects in accordance with its provisions and with all applicable laws; (v) each of the ERISA Plans that is intended to be "qualified" within the meaning of Section 401(a) of the IRC and, to the extent applicable, Section 401(k) of the IRC, has been determined by the IRS to be so qualified, and nothing has occurred since the date of the most recent such determination (other than the effective date of certain amendments to the IRC, the remedial amendment period for which has not yet expired) that would adversely affect the qualified status of any of such ERISA Plans; (vi) there are no pending material actions, claims or lawsuits which have been asserted or instituted against any of the ERISA Plans, the assets of any of the trusts under such Plan, the plan sponsor, the plan administrator, trustee or any other fiduciary of such Plans with respect to any aspect of such ERISA Plans (except for routine benefit claims or routine expenses). (d) Except as set forth on Schedule 9.1.18(d), none of the ERISA Plans is a "multi-employer plan," as that term is defined in Section 3(37) of ERISA and with respect to any such multiemployer plans (as so defined) listed in Schedule 9.1.18(d), Seller has not made or incurred a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA that would result in the incurrence of a material liability by Seller that is not reserved for or otherwise reflected on the Financial Statements. (e) Except as set forth on Schedule 9.1.18(e), no post-retirement medical and life insurance benefit obligations exist with respect to any Transferred Employees or former employees of Seller. (f) No Plan identified on Schedule 9.1.18(a) has any restrictions against termination or modification, either by its terms or, to Seller's knowledge, due to any written or oral communications by any representative of the Seller nor any of its Affiliates. (g) Except as set forth on Schedule 9.1.18(g), (i) none of the Transferred Employees are represented by a labor union or labor organization and (ii) neither Seller nor any of its Affiliates is a party to nor is Seller subject to, any collective bargaining agreement covering any Transferred Employee. There are currently no strikes, slowdowns, work stoppages or lockouts by or with respect to any Transferred Employee covered by collective bargaining agreements. Except as set forth on Schedule 9.1.18(g), to the best knowledge of Seller, during the twelve (12) months preceding the Execution Date there have not been any union organizational campaigns by or directed at the employees of Seller. Except as set forth on Schedule 9.1.18(g), no condition has existed or exists that has caused or could be expected to result in the imposition of any lien or encumbrance under ERISA or the IRC on any part of the Purchased Property. (h) Seller will make available to Buyer, prior to the Closing Date, a list of those Transferred Employees that Seller believes to have participated in the health or dependent care reimbursement accounts of Seller, together with the elections made prior to the Effective Date with respect to such accounts through the Effective Date. 9.1.19 Schedules of the Telephone Plant. Seller has set forth on Schedule -------------------------------- 9.1.19 copies of schedules (at the level of detail agreed to by the parties but in any case including details regarding net book value and continuing property records lists associated therewith) of its Telephone Plant as of June 30, 1994, including, to the extent available, a schedule specifically identifying the Telephone Plant that is associated with the Unregulated Business. The account balances reflected on the schedule of Telephone Plant correspond, in all material respects, to the associated account balances reflected on the Continuing Property Records. 9.1.20. Accuracy of Certain Information. Seller hereby represents and -------------------------------- warrants to Buyer as follows: (a) The information regarding type of central office switch and number of access lines in service for each exchange set forth on Schedule 9.1.20 (a) is true and complete in all material respects as of the respective dates set forth thereon. (b) The information set forth only with respect to the 1993 column of the "Capital Budget-Network Modernization Forecast" attached as Schedule 9.1.20 (b) is true and complete as of December 31, 1993. (c) Schedule 9.1.20 (c) sets forth a substantially complete list of all vehicles included in the Purchased Property (including trailers, equipment mounted on trailers and self-propelled equipment) together with the manufacturer, model and year of each such vehicle, and indicates whether such vehicle is owned or leased by Seller. (d) [INTENTIONALLY DELETED] (e) Schedule 9.1.20(e) sets forth a true and complete list of the interstate billing and collection revenues and intrastate interlata billing and collection revenues of Seller from the Business for the year 1993. 9.1.21 Rate Base. Except as set forth on Schedule 9.1.21, Seller has no --------- materials and supplies, plant or equipment used in the Business that has been disallowed from rate base or excluded from the revenue calculations for any pool (unless due to the deregulation of the service for which such assets are used) or in the most recent rate order issued by the PUC or the FCC or any determination by an administrator of an interstate or intrastate pool, and has not received written notification that the PUC or the FCC or any pool administrator proposes to exclude any assets from rate base or revenue calculations for the pools, or any tariff filed with or approved in the most recent rate order of the PUC or the FCC, in each case which materials and supplies, plant or equipment, in the aggregate, would be in excess of one percent (1%) of Net Telecommunications Plant. 9.1.22 Payments. All material payments of any kind required to be made by -------- Seller to third parties under any Contract and maturing prior to the Effective Date have been, or will be as of the Effective Date, properly and timely paid or provided for, unless otherwise subject to a bona fide dispute disclosed in Schedule 9.1.22. 9.1.23 Compliance with Laws. Except as Seller shall specifically indicate -------------------- on Schedule 9.1.23, (i) Seller is in compliance in all material respects with all Laws applicable to the Purchased Property and the Business and holds all governmental permits or licenses required in order to conduct the Business and to own and operate the Purchased Property; (ii) the present uses of the Purchased Property in the conduct of the Business do not violate in any material respect any Law and (iii) no written notice or warning from any governmental or regulatory authority with respect to any failure or alleged failure by Seller to comply with any Law or questioning the validity of any governmental permit or license, with respect to the Business or the Purchased Property has been issued or given, nor to the knowledge of Seller, is any such notice or warning proposed or threatened. Seller is not aware of any fact, event or circumstance relating to Seller that is reasonably likely to cause a regulatory agency to deny or withhold its approval to the transactions contemplated hereby. 9.1.24 Correct Records. The financial records, ledgers, account books and --------------- other accounting records of Seller relating to the Business are current, correct and complete and reasonably well organized, in all material respects and to the best of Seller's knowledge and to the extent required by applicable Law, conform in all material respects with the rules and regulations of the FCC and PUC. Seller and its Affiliates have retained substantially all Original Cost Documents regarding the expenditures made by Seller within the immediately preceding two-year period that relate to Seller's Net Telecommunications Plant, and such Original Cost Documents are correct and complete in all material respects. 9.1.25 Materials and Supplies. As of the Effective Date, the value (as ---------------------- reflected on Seller's books) of Seller's materials and supplies relating to the Business which are obsolete or in excess of the requirements of the Business, will not materially exceed Seller's reserve for obsolete or excess Materials and Supplies as reflected on Seller's books. 9.1.26 Assets Necessary to the Business. The Purchased Property includes -------------------------------- all of the assets and properties (including all licenses and agreements) currently being used or which are reasonably necessary to carry on the Business as currently conducted, other than the assets and properties included in the Excluded Property. 9.1.27 [INTENTIONALLY DELETED] 9.1.28 Unregulated Business. Schedule 2.2(b) is an accurate summary -------------------- description of the Unregulated Business, in detail reasonably acceptable to Buyer. 9.1.29. Capital Improvements Required by PUC. Except as set forth on ------------------------------------ Schedule 9.1.29, there are no changes, modifications, upgrades or enhancements required by the PUC to be made to the Purchased Property or the operation thereof. 9.2 Representations and Warranties of Buyer. Buyer represents and --------------------------------------- warrants to Seller as follows: 9.2.1 Corporate Organization. Buyer is a corporation duly organized, ---------------------- validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease or otherwise hold the assets owned, leased or held by it. 9.2.2 Authorization and Effect of Agreement. Buyer has the requisite ------------------------------------- corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement, to carry on the Business as presently conducted and to fulfill all other obligations of Buyer under this Agreement. The execution and delivery by Buyer of this Agreement and the fulfillment by it of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Buyer. Buyer has the requisite legal capacity to purchase, own and hold the Purchased Properties upon the consummation of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Buyer and, assuming the due execution and delivery of this Agreement by Seller, constitutes a valid and binding obligation of Buyer, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualifications that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.2.3 No Restrictions Against Purchase of the Purchased Properties. The ------------------------------------------------------------ execution and delivery of this Agreement by Buyer do not, and the fulfillment by Buyer of its obligations under this Agreement will not, conflict with, violate or result in the breach of any provision of the certificate of incorporation or bylaws of Buyer or, subject to obtaining the approvals and consents referred to in Article 5, conflict with, violate or result in the breach of, constitute default under, or accelerate the performance required by any Contract to which Buyer is a party. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by or with respect to Buyer in connection with the execution and delivery of this Agreement by Buyer or the fulfillment by Buyer of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, (ii) real estate deeds and other documents filed in connection with the transfer of the Real Property included in the Purchased Property, and (iii) certificates of title for the motor vehicles included in the Purchased Property. 9.2.4 No Violation of Law. The execution and delivery of this Agreement ------------------- and the fulfillment by Buyer of its obligations under this Agreement will not violate any Law. 9.2.5 Brokers. Buyer has not paid or become obligated to pay any fee or ------- commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Seller for any broker's or finder's fees or similar fees or expenses. 9.2.6 No Material Claims. There are no claims, actions, lawsuits or legal ------------------ proceedings pending or, to the knowledge of Buyer, threatened against Buyer or its properties that would prevent the consummation of the transactions contemplated by this Agreement. 9.2.7 FCC Tariffs. Except as described on Schedule 5.4, in connection ----------- with obtaining assignment to Seller's FCC's Licenses, as described in Section 5.4, Buyer will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Purchased Exchanges shall remain in the National Exchange Carrier Association Tariff FCC No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. ARTICLE 10. CONTINUING BUSINESS RELATIONSHIPS 10.1 Transition Services Agreement. If requested in writing by Buyer on ----------------------------- or prior to March 15, 1995, the parties shall, as promptly as practicable but in any event within 30 days after Buyer's written request, negotiate in good faith and enter into a Transition Services Agreement, to be effective no later than the Effective Date, pursuant to which Seller will provide to Buyer, at Buyer's expense, such financial, accounting, billing, computer, network, administrative and other services (including services relating to the conversion of systems and processes) as may be reasonably requested by Buyer, which agreement shall be in form and substance as mutually agreed to by both Buyer and Seller (the "Transition Services Agreement"). ARTICLE 11. ADDITIONAL COVENANTS OF THE PARTIES 11.1 Intellectual Property. --------------------- 11.1.1 Definition. "Intellectual Property" means all inventions (whether ---------- patentable or not and whether or not such inventions are described or claimed in any patent or patent application), designs (useful or ornamental), and works subject to copyright that may be embodied in, without exclusion, invention disclosures, specifications, manuals, drawings, functional or system block diagrams, flow charts, circuit diagrams, design or user documentation, engineering notebooks, schematics, test programs, documented procedures, documented processes, documented flows, devices, software, or firmware, that relate to the function, design, development, manufacture, testing, use, operation, maintenance or repair of any product, apparatus, article of manufacture, process, method or service. "Intellectual Property" shall also include patents, patent applications (including continuations, continuations-in-part, divisions, reissues, reexamined patents and patent applications and extensions thereof), copyrights (whether common law or statutory, registered or unregistered), or trade secrets, residing in the subject matter above. 11.1.2 Grant by Seller. --------------- (a) Subject to the terms and conditions of this Agreement, effective on the Effective Date, Seller shall grant to Buyer, and Buyer shall accept, a nonexclusive, fully paid, royalty-free, perpetual license for the Intellectual Property that, on the Effective Date, Seller owns or controls or with respect to which Seller has an unrestricted right to grant such license without permission from, or any consideration to, any third party, and if Seller has a restricted right to grant such license, Seller will use its best efforts to assist Buyer (provided that Buyer shall be responsible for any fees associated therewith) in obtaining the consent for the use of any such license, provided that the above grant and any assistance required by Seller shall be effective with respect to only such Intellectual Property that Seller has placed in public use on, or prior to, the Effective Date and that is presently used by Seller, in the ordinary and normal course of the Business, and shall exclude any Intellectual Property listed in Schedule 2.4(g). The above license shall include the right of Buyer to grant sublicenses after the Effective Date to vendors and customers of Buyer and to other third parties, as is necessary in the ordinary and normal course of the Business with respect to the Purchased Property. (b) The grant set forth in Section 11.1.2(a) is made subject to preexisting agreements; however, Seller represents that it is aware of no other agreement that precludes the grant made herein. (c) The above Sections 11.1.2(a) and (b) set forth Seller's entire obligation with respect to the license of Intellectual Property to Buyer. Except as specifically provided otherwise in this Agreement or any other agreement between Buyer and Seller, Seller shall have no continuing obligation beyond the Effective Date to provide support of any kind in Buyer's use of such Intellectual Property. (d) Buyer agrees and understands that Seller or its Affiliates shall retain ownership of all Intellectual Property owned by Seller or its Affiliates as of the Effective Date. Buyer further agrees and understands that the retained ownership shall include the right of Seller to grant licenses to vendors and customers of Seller, and to other third parties. (e) Additional agreements, if any, between Buyer and Seller regarding possession and use by Buyer of computer software that is owned by Seller, or that is licensed by an Affiliate of Seller to Seller, are set forth in Schedule 11.1.2. 11.1.3 Nonassertion. In addition to granting to Buyer the license set ------------ forth in Section 11.1.2, Seller agrees that, with respect to the Intellectual Property that as of the Effective Date Seller owns or controls or under which it has the right to grant licenses, Seller shall not assert against Buyer, or Affiliates of Buyer, or vendees, mediate or immediate, of Buyer, a claim of infringement, misappropriation or misuse of such Intellectual Property right arising from Buyer's activities practiced in the ordinary and normal course of the Business. 11.1.4 Infringement. ------------ (a) Notwithstanding any other provision of this Agreement and subject to the representation in Section 11.1.3, Buyer understands that Seller has not made or given, and does not make or give, any warranty as to the value, enforceability, or validity of any Intellectual Property or that the use by Buyer of any Intellectual Property under this Agreement will not infringe other intellectual property rights not licensed under this Agreement. (b) Nothing contained in this Agreement shall be construed as an agreement by, or obligation of, Seller to bring or prosecute actions or suits against third parties for infringement or violation of any Intellectual Property licensed hereunder. (c) Seller shall have no obligation to defend, indemnity or hold harmless Buyer from any damages, costs or expenses resulting from any obligation, proceeding or suit based upon any claim that any activity, subsequent to the Effective Date, engaged in by Buyer, a customer of Buyer's or anyone claiming under Buyer constitutes direct or contributory infringement or misuse of any intellectual property rights not licensed under this Agreement. (d) Buyer shall be liable for and shall hold Seller and its Affiliates harmless from and against any and all Indemnifiable Losses resulting from any obligation, proceeding or suit based upon any claim that any activity conducted or engaged in, subsequent to the Effective Date, by Buyer, a customer of Buyer's, or anyone claiming under Buyer constitutes direct or contributory infringement, or misuse, or misappropriation of any intellectual property right of any third party. 11.1.5 Trademark Phaseout. Buyer acknowledges that Seller or its ------------------ Affiliates are the owners of certain trade names, trade dress, trademarks, service marks, logos and related intangible property (collectively, "Marks") used in connection with the Business, including, without limitation, the items listed on Schedule 11.1.5, and Buyer understands and agrees that the Marks, or any right or license to the Marks are not being transferred pursuant to this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in the use of the Marks, and Buyer agrees that it shall not use the Marks (or any names or Marks confusingly similar to the Marks) except as expressly set forth in this Section 11.1.5. After the Effective Date, all Marks of Seller shall be replaced by Buyer as soon as possible, but in no event later than one hundred eighty (180) days after the Effective Date for Marks affixed to items with a valid continuing use in Buyer's conduct of the Business, including, without limitation, buildings, vehicles, heavy equipment, hard hats, tools, tool boxes, kits (safety and others), signs, manual covers and notebooks. After the Effective Date, Buyer will not use, and will destroy or deliver to Seller, all such items with Marks affixed to them that have no valid continuing use in Buyer's conduct of the Business, including items affecting customer or employee relations or items that do not reflect Buyer's true identity. Specific items to be destroyed or returned include items with Marks affixed to them including, without limitation, giveaways; order, purchase or materials forms; requisitions; invoices; statements; time sheets/labor reports; bill inserts; stationery; personalized note pads; maps; organization charts; bulletins/releases; sales/price literature; manuals or catalogs; report covers/folders; program materials; and materials such as media contact lists/cards. The one hundred eighty (180) day time period for replacement of Marks affixed to telephone directories that were already published or closed for publication as of the Effective Date shall be extended to the production of replacements for such directories. 11.1.6 Goodwill. Buyer recognizes the value of the goodwill associated -------- with the Marks, and acknowledges that the Marks and all rights therein and the goodwill pertaining thereto belong exclusively to Seller, and that the Marks have a secondary meaning in the minds of the public. 11.1.7 Quality of Goods. Buyer agrees that the conduct of the Business ---------------- after the Effective Date by Buyer using the Marks shall be provided in accordance with all applicable federal, state and local laws, and that the same shall not reflect adversely upon the good name of Seller, and that the conduct of the Business will be of a standard and skill equivalent to that employed by Seller prior to the Effective Date. 11.1.8 Seller's Remedies for Unauthorized Use of Marks. Buyer ----------------------------------------------- acknowledges that its failure to cease use of the Marks as provided in this Agreement, or its improper use of the Marks, will result in immediate and irreparable damage to Seller. Buyer acknowledges and admits that there is no adequate remedy at law for such failure to terminate use of the Marks, or for such improper use of the Marks, and Buyer agrees that in the event of such failure or improper use, Seller shall be entitled to equitable relief by way of temporary restraining order or injunction or any other relief available under this Agreement. 11.2 Effect of Due Diligence and Related Matters. Buyer represents that ------------------------------------------- it is a sophisticated entity that was advised by knowledgeable counsel and, to the extent it deemed necessary, other advisors in connection with this Agreement and by the Effective Date will have conducted its own independent review and evaluation of the Purchased Property. Accordingly, Buyer covenants and agrees that (i) except for the representations and warranties set forth in this Agreement and the Schedules (and the Financial Statements, the Additional Financial Statements, and actuarial reports required pursuant to the Employee Transfer Agreement), Buyer has not relied and will not rely upon any document or written or oral information furnished to or discovered by it or its representatives, (ii) there are no representations or warranties by or on behalf of Seller or its Affiliates or representatives except for those expressly set forth in this Agreement and in any other written agreement entered into with Seller or any of its Affiliates in connection with this Agreement, and (iii) to the fullest extent permitted by law, Buyer's rights and obligations with respect to all of the foregoing matters will be solely as set forth in this Agreement or in such other written agreements. 11.3 Confidentiality. Whether or not the Closing occurs, the parties --------------- hereto and their respective officers, directors, employees and representatives will comply with the Confidentiality Agreement, the provisions of which are expressly incorporated herein in their entirety by this reference. 11.4 Additional Financial Statements. ------------------------------- Seller shall deliver to Buyer the following financial statements of Seller (collectively, the "Additional Financial Statements") within the time periods set forth below: (a) Within forty-five (45) days after the Execution Date for the month of October, 1994, and within forty-five (45) days after the close of each month beginning with November, 1994, and continuing up to and including the month next preceding the month in which the Closing occurs, a balance sheet and income statement as of and for such month, and as of and for the year-to-date period then ended; and (b) By April 30, 1995, a balance sheet for the year ended December 31, 1994, and an income statement and statement of cash flows for 1994, together with the auditor's report thereon. 11.5 Conduct of Business. From the Execution Date until the Effective ------------------- Date, Seller shall conduct the Business in the ordinary course in accordance with prudent business judgment and consistent with past practice and policy and shall (i) preserve the Business as an ongoing business, (ii) keep available to the Business its services and the services of its Affiliates at least to the same extent as such were generally available from January 1, 1994 through the Execution Date and are available on the date hereof, (iii) not take any action that would jeopardize any material and beneficial contractual relationships with persons having business dealings with the Business, and (iv) preserve all of the Business' tariffs, certificates, licenses, authorizations and other rights. From the Execution Date to the Effective Date, except with the prior written consent of Buyer, which the Buyer shall not unreasonably withhold: (a) The Business will be conducted in substantially the same manner as it is presently being conducted on the Execution Date. With respect to the Business, Seller will refrain from entering into any material transaction or contract other than in the ordinary course of business and will not make any material change in the general nature of the Business or in its methods of management, marketing, accounting or operations (including repair and maintenance functions). (b) Seller will not, with respect to the Business, (i) create or incur any indebtedness for borrowed money or otherwise, except in the ordinary course of business, (ii) enter into or terminate, as lessor or lessee, any Lease other than in the ordinary course of business, (iii) create any liens or other security interest, except in the ordinary course of business, or (iv) change in any material respect or terminate any of the insurance policies referred to in Section 9.1.14, unless equivalent coverage is obtained. (c) Except as listed or described on Schedule 11.5(c), and except for dispositions of salvaged property that has been replaced in accordance with the plans attached in Schedule 11.5(c), Seller will not sell, lease, dispose of or otherwise transfer, or make any contract for the sale, lease, disposition or transfer of any Purchased Property other than, with respect to any individual item (other than vehicles) having a value of less than Seventy-Five Thousand Dollars ($75,000.00) and with respect to all items (other than vehicles) the aggregate value of which shall not exceed Two Hundred Fifty Thousand Dollars ($250,000.00). (d) Without prior reasonable notification to Buyer, or unless otherwise expressly directed by the PUC, Seller will not (i) institute any proceeding with respect to, or otherwise change, amend or supplement any tariff or (ii) enter into or agree to any stipulation, order, or decree of, or settlement with the PUC that, in case of (i) or (ii) above, would have a material adverse effect on the revenue, authorized return on equity or earnings of the Business. Seller will not file any application, petition, motion, brief, testimony, settlement agreement or other pleading in any proceeding before the PUC, or before the FCC (except for filings on behalf of all of Parent's local exchange telephone companies) or appeals related thereto, unless Seller shall have first provided Buyer with a copy of the same and provided Buyer a reasonable opportunity to comment to Seller with respect thereto. If Buyer determines it should intervene in any proceeding before the PUC in which Buyer's position is or may be different from Seller's, Seller, without waiving any other rights related thereto, will not oppose Buyer's intervention in such proceeding. (e) Except as listed on Schedule 11.5(e) or as required by law or in the ordinary course of business of Seller or pursuant to any Contract, not (i) enter into or amend any employment agreement with any individual that will become a Transferred Employee, or enter into or amend any union agreement or commitment (including any new commitment to pay retirement or other benefits, or amendments to the Seller's retirement plans), (ii) effect any net increase over five percent (5%) since the Execution Date in the number of employees of the Seller who will become Transferred Employees, or (iii) increase over 5% the benefit provided under any plans concerning employee benefits or increase the general rates of compensation of the Transferred Employees, or change the manner by which compensation (including fringe benefits) is determined and paid to any Transferred Employee. (f) Seller will not engage in any intercompany transactions with any Affiliate of Seller, except for transactions consistent with past practices. (g) Seller shall maintain the Purchased Property in good repair, order and condition, reasonable wear and use excepted, and shall maintain the Transferred Books and Records and Retained Books and Records in the usual, regular and ordinary manner on a basis consistent with prior years. (h) Seller will not make any commitment to take any actions prohibited by the provisions of this Section 11.5. 11.6 Construction Projects and Capital Budget. By December 31, 1994, ---------------------------------------- Buyer and Seller shall have met and reviewed Seller's construction and other capital expenditure plans for the calendar years 1994 and 1995 (or such later date agreed to by the parties). The construction and capital expenditure plans which Buyer shall have approved (both as to the type of project and the dollars expended) shall be set forth on Schedule 11.6, and the parties agree that when such expenditures have been incurred they will constitute an addition to a component of Seller's Net Telecommunications Plant thereby becoming subject to Section 3.2(c). Seller agrees to use its best efforts substantially to complete such plans within the projected time schedules; provided, that Seller will not incur any liability for unbudgeted expenditures in excess of $200,000.00 in the aggregate without the prior written consent of Buyer. All construction work that is in progress on the Effective Date will be accounted for by identifying and accruing all associated time reporting, material invoices or contractor invoices inputted or received on or before the Effective Date, and all payments therefor shall be the responsibility of Seller and will constitute an addition to a component of Seller's Net Telecommunications Plant thereby becoming subject to Section 3.2(c). 11.7 Further Assurances. After the Closing, Seller will furnish to Buyer ------------------ such other instruments and information as Buyer may reasonably request in order to convey to Buyer title to the Purchased Property, to be delivered from time to time upon Buyer's reasonable request. 11.8 Prorations. ---------- (i) The following liabilities shall be prorated between Seller and Buyer: (a) utility charges (which shall include, without limitation, water, sewer, electricity, gas and other utility charges) with respect to the Real Property, the property subject to the Leases and customer owned equipment, (b) rental charges (which shall include, without limitation, rental charges and other lease payments under the Leases), (c) real and personal property taxes and (d) regulatory and telephone relay service fees, with respect to measurement periods during which the Effective Date occurs (all such periods of time being hereinafter called "Proration Periods"), the liabilities described in clauses (a) and (b) of the preceding sentence shall be apportioned between Seller and Buyer as of the Effective Date, with Buyer bearing only the expense thereof in the proportion that the number of days in the applicable Proration Period after the Effective Date bears to the total number of days covered by such Proration Period. Real and personal property taxes shall be prorated between Buyer and Seller based on the period the Purchased Property was owned by each respective party during the fiscal period for which such taxes were unposed by the taxing jurisdiction (as such fiscal period is reflected on the bill rendered by such taxing jurisdiction). Buyer and Seller shall pay or be reimbursed for real and personal property taxes (including instances in which such property taxes have been paid before the Effective Date) prorated on this basis. Unless otherwise handled as an adjustment to the Purchase Price and then, only to such extent, if a payment on a prorated bill is due after the Effective Date, the party that is legally or contractually required to make such payment shall make such payment and promptly forward an invoice to the other party for its pro rata share, if any. If the other party does not pay the invoice within thirty (30) calendar days of receipt, the amount of such payment shall bear interest at the rate of seven percent (7%) per annum beginning from the date thirty (30) calendar days after receipt until time of payment. (ii) All prepayments made by Seller with respect to service or maintenance agreements with third parties shall be prorated between Seller and Buyer to the extent Buyer shall receive the benefits of such prepayments after the Effective Date. (iii) All Universal Service Fund payments by NECA or its state equivalent received by either of the parties with respect to a Proration Period concerning the Purchased Exchange shall be apportioned between Seller and Buyer as of the Effective Date, with Buyer receiving and being allowed to retain only that portion of the payment that the number of days in the applicable Proration Period after the Effective Date bears to the total number of days covered by such Proration Period. 11.9 Risk of Loss Prior to the Effective Date. If any material damage, ---------------------------------------- loss or destruction of any sort (including, without limitation, by theft, unauthorized use, fire, act of God or condemnation) occurs prior to the Effective Date to any of the tangible properties that constitute the Purchased Property, Seller shall promptly notify Buyer thereof (the "Casualty Notice"). (a) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace such damaged, lost or destroyed Purchased Properties (the "Damaged Property") will exceed One Million Two Hundred Fifty Two Thousand Fifty Dollars ($1,252,050.00), either party may, by written notice to the other party (the "Casualty Termination Notice") within thirty (30) days after the date of delivery of the Casualty Notice, terminate this Agreement. (b) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace the Damaged Property will not exceed One Million Two Hundred Fifty Two Thousand Fifty Dollars ($1,252,050.00), or the Casualty Termination Notice is not given by either party, then Seller, within forty-five (45) days after the damage or destruction, shall agree in writing, (i) to repair or replace, prior to the Effective Date or at some later date as may be mutually agreed to by the parties, at Seller's sole cost and expense, the Damaged Property, and Seller will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will be excluded from the Purchased Property and will become an Excluded Asset, Seller will substitute therefor an equivalent item or items of Purchased Property if the Damaged Property is personal property and if the Damaged Property is Real Property substitute Real Property therefor but only if such substituted personal property or Real Property is satisfactory to Buyer, and Seller will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property. (c) if Seller fails to make an election pursuant to Section 11.9(b)(i) or (ii), the Buyer shall have the option, within thirty (30) days after the initial forty-five (45) day period, to elect one of the following options: (i) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the Manner contemplated by this Agreement, the Damaged Property will remain part of the Purchased Property, the adjustment to the Purchase Price contemplated by Section 3.2(a)(1) will be made, and Seller shall be entitled to make all claims related to the Damaged Property and to receive and retain any proceeds of insurance received by Seller with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will be excluded from the Purchased Property and will become Excluded Assets, Seller will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property, and the Purchase Price Adjustment contemplated by Section 3.2(a)(2) will be made. (d) Notwithstanding the other provisions of this Section 11.9, if the time periods pursuant to this Section 11.9 continue beyond the Effective Date or if Seller has not fully performed its obligations pursuant to Section 11.9(b)(i) or 11.9(b)(ii) prior to the Effective Date (or otherwise made reasonably satisfactory arrangements with Buyer), either party hereto may elect to postpone the Closing and the Effective Date, until the expiration of any such periods or the full performance of such obligations, which election shall be binding upon all parties hereto. 11.10 Settlements and Cost Studies. Seller agrees that, with respect to ---------------------------- all toll revenues, settlements, pools, separations studies, Universal Service Fund payments or similar activities, Seller shall be responsible for (and shall receive the benefit or suffer the burden of) the results of any such activities that are related to the conduct of the Business or the ownership or operation of the Purchased Property on or before the Effective Date. 11.11 Construction Advances and Customer Deposits. Seller agrees to ------------------------------------------- transfer to Buyer as of the Effective Date all of Seller's rights to hold and control the construction deposits of the Business (and interest thereon, if any) held by Seller as of the Effective Date (the "Construction Advances") and the customer deposits, advances and interest of the Business held by Seller as of the Effective Date (the "Customer Deposits"), and Buyer agrees to hold, disburse and retain such Construction Advances and Customer Deposits in accordance with the tariffs, laws and Contracts related thereto. The parties acknowledge that the Purchase Price adjustment pursuant to Section 3.2(b) is intended to compensate Buyer for the liability associated with the Construction Advances and Customer Deposits. 11.12 Other Contracts. --------------- 11.12.1 Telephone Directories Published by ALLTEL Publishing Corporation. ---------------------------------------------------------------- The Directory Publishing Agreement dated as of November 15, 1994 by and between Seller and ALLTEL Publishing Corporation (the ""Directory Publishing Agreement") is an Excluded Contract on Schedule 2.4(g), except as hereinafter provided. Within thirty (30) days after the Execution Date, Buyer shall cause its existing directory provider to indicate in writing whether it will provide directory publication services to Buyer, as of the Effective Date (or as of such later date as described below) with regard to all of the Purchased Exchanges on the same terms and conditions as it is presently providing such services to Buyer, and Buyer shall inform Seller within such thirty (30) day period of Buyer's existing telephone directory provider's written intention. If Buyer's existing directory provider's indication is that it will not provide directory publication services for all of the Purchased Exchanges on the same terms and conditions that it is presently providing such services to Buyer, then the Directory Publishing Agreement shall be deemed to become a Contract for the purposes of this Agreement. Promptly, thereafter, the Buyer and ALLTEL Publishing Corporation shall agree to meet in good faith to negotiate any necessary amendments to the Directory Publishing Agreement, to be effective as of the Effective Date, to provide for a retention rate equal to or greater than the higher of (x) 60% or (y) the retention rate provided for in any substantially similar directory publishing agreement between ALLTEL Publishing Corporation and a non-Affiliate of ALLTEL Publishing Corporation that was entered into within 18 months prior to the Effective Date. If Buyer's existing directory provider indicates that it will provide directory publication for all the Purchased Exchanges, as provided above, the Directory Publishing Agreement shall remain in effect as to the directory of each of the Purchased Exchanges for which (i) the directory is scheduled to be or is published prior to the Effective Date or (ii) the canvass for the directory has begun prior to the Effective Date and it is scheduled to be published after the Effective Date. Under such circumstances, the Buyer's existing directory provider will not begin providing directory publication services for such exchange until canvass and production begins for the next succeeding directory related to such Purchased Exchange. 11.12.2 Telephone Directories-General. If Buyer's existing directory ----------------------------- provider indicates that it will provide directory publication for all of the Purchased Exchanges, as provided in Section 11.12.1 of this Agreement, Seller and Buyer agree to cooperate and to use their best efforts as follows: (a) Seller will deliver to Buyer on a date mutually agreeable to Buyer and Seller, copies of all records, documents, and materials of the Seller even if in the possession of a third party (the "Directory Records") related to directories of the Purchased Exchanges that are published by Seller or its Affiliate. (b) Except as otherwise agreed between the parties, Seller and its Affiliate shall have no responsibility for the canvass and production functions of any directories related to the Purchased Exchanges that are scheduled to begin canvassing and publication after the Effective Date. (c) Seller and Seller's Affiliates and Buyer shall provide the other reasonable access to such documentation, reports and accounting records related to directory publication as may be necessary to insure a proper transition of directory production in accordance with the terms of such agreements in effect on the Effective Date. (d) As promptly as practicable after receipt by Seller of Buyer's existing directory provider's indication that it will provide directory publication services for all of the Purchased Exchanges, Seller or its Affiliate (ALLTEL Publishing Corporation), and Buyer will meet to negotiate in good faith to agree upon the services or work, if any, that Seller or its Affiliate (ALLTEL Publishing Corporation) will provide, and the compensation that the Buyer will pay for such services and work, related to any directories that will be canvassed and published by Buyer's existing directory provider. 11.12.3 B&C Agreements. Seller and Buyer shall, prior to the Closing, use -------------- their best efforts to allow Buyer to negotiate a billing and collection agreement ("B&C Agreement") reasonably satisfactory to Buyer with each interexchange carrier ("IXC") and each local exchange carrier ("LEC") for which Seller provides, on the Execution Date, billing and collection services in any Purchased Exchange (each such IXC or LEC is hereinafter referred to as a "Carrier"). Seller and Buyer shall cooperate with each other and make available to each other all documents and records relevant and necessary to allow Buyer to finalize negotiations of B&C Agreements, as necessary, and to perform such B&C Agreements after the Effective Date. 11.12.4 Equipment Manufacturers. Seller shall use its best efforts to ----------------------- assist Buyer in obtaining a written agreement with such equipment manufacturers (such as Northern Telecom and Stromberg-Carlson; collectively "Equipment Manufacturers") as Buyer may request, covering such software license agreements and other agreements as are necessary to enable Buyer to operate the equipment manufactured and sold by the Equipment Manufacturers included in the Purchased Property in substantially the same manner as operated by Seller prior to the Effective Date. The agreements shall contain material terms and conditions (including license and warranty, but not necessarily including pricing) that are substantially the same as those provisions in the corresponding agreements between Seller and the Equipment Manufacturers. Buyer understands and agrees that the price and fee provisions of such agreements will be as negotiated between Buyer and the Equipment Manufacturers. The above obligation of Seller shall be expressly conditioned upon the acceptance by Buyer of all material obligations accepted by Seller in such corresponding agreements. It is the responsibility of Buyer to enter into appropriate agreements with the Equipment Manufacturers in respect of service, support, training, maintenance, and future development (hardware and software) for the Purchased Property, such agreements to include terms and conditions agreed to between Buyer and the Equipment Manufacturers. To the extent assignable, Seller agrees to assign, and to the extent non-assignable, Seller agrees to assist Buyer in obtaining the Equipment Manufacturers' consent to the assignment of training credits remaining at the Effective Date on Purchased Property furnished by the Equipment Manufacturers. 11.12.5 Integrated Contracts. Seller and Buyer acknowledge that certain -------------------- agreements between Seller (or Affiliates of Seller) and third parties relate both to the Purchased Property and the Excluded Property. Seller agrees to use its best efforts to assist Buyer in obtaining contractual arrangements with such third parties relating to the Purchased Property, which arrangements will be reasonably satisfactory to Buyer; provided that neither Seller nor any of its Affiliates shall be obligated under this Section 11.12.5 to make any payment to any such third party unless such payment is expressly provided for in such agreement. 11.13 Retention of Books and Records. After the Closing, the parties ------------------------------ shall retain the Retained Books and Records or the Transferred Books and Records, as applicable, until the shorter of the date that other party consents in writing to their destruction or the seventh anniversary of the Effective Date. Each party shall provide full and free access to the Transferred Books and Records and Retained Books and Records, as the case may be, to duly authorized representatives of the other party at any time during regular business hours for the period in which such Books and Records are required to be retained. Either party may make copies of any such Books and Records as it deems desirable, at its own expense. After the Effective Date, upon reasonable notice, Seller shall provide Buyer with reasonable assistance in locating any of Seller's Original Cost Documents which Buyer may reasonably request after the Effective Date. 11.14 [INTENTIONALLY DELETED] 11.15 Purchase Price Allocation. Prior to the Effective Date Buyer and ------------------------- Seller shall agree to the allocation (the "Allocation") of the Purchase Price and the Assumed Liabilities to the individual assets or classes of assets (within the meaning of Section 1060 of the IRC). Buyer, Seller, and their respective Affiliates, shall file all Tax Returns and schedules thereto (including, without limitation, those returns and forms required by Section 1060 of the IRC) consistent with the Allocation unless otherwise required by applicable Law. 11.16 Real Property Transfers. Within sixty (60) days after the Execution ----------------------- Date, Seller shall deliver to Buyer copies of all existing title insurance policies and surveys covering the Real Property. Thereafter, no later than sixty (60) days before the Effective Date, Seller shall deliver (at its expense) to Buyer a preliminary title binder (on a standard form reasonably acceptable to Buyer), issued by Lawyers Title Insurance Corporation or another title insurance company reasonably acceptable to Buyer, with respect to all Real Property included in the Purchased Property and in which Seller purports to own fee title. Such title binders shall be in form, substance and amount reasonably satisfactory to Buyer (ALTA Owners Policies where available but based upon boundary surveys as described below) and shall be current as of a date no earlier than ninety (90) days prior to the Effective Date. The parties agree that the dollar amount of title insurance to be inserted on each policy shall equal the dollar value set forth on Seller's continuing property records list as of December 31, 1993 for land and buildings. Such title binders shall reflect that, upon consummation of the sale contemplated by this Agreement, Buyer will be vested with good, fee simple, marketable and insurable title to such Real Property, subject only to (i) standard printed exceptions; (ii) inchoate liens for current taxes and assessments not yet delinquent, (iii) standard utility and roadway easements, covenants and restrictions, whether or not of record, that do not individually or in the aggregate materially detract from the value, or impair the use of the Real Property affected thereby, (iv) existing zoning or similar laws or ordinances that do not interfere with the operation of the Business, (v) Leases and (vi) survey exceptions that do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby (collectively, the "Permitted Exceptions"). If a preliminary title binder indicates an exception other than a Permitted Exception that would impair marketability in any material respect, Seller shall, at its expense, cause such exception to be removed on or before the Effective Date. With respect to each parcel of Real Property covered by a preliminary title binder, Seller shall deliver to Buyer (at Seller's expense and on or prior to sixty (60) days before the Effective Date) a certified current boundary survey showing (x) access to the property, and (y) all improvements on the property and any encroachments across the property line by any improvements of Seller or owners of adjacent property and (at Seller's expense and within sixty (60) days after the Effective Date) owner's title insurance policies for the Real Property (ALTA Owners Policies where available but based upon boundary surveys as set forth above). 11.17 Transfer Taxes and Sales Taxes. ------------------------------ (a) Seller and Buyer shall take all reasonable measures to provide that the sale contemplated by this Agreement qualifies for any available exclusion from sales and use taxes for occasional, casual or isolated sales. (b) Buyer and Seller each shall bear and be responsible for paying one- half of any sales, use, transfer, gross receipts, or similar taxes (including related penalties and interest) imposed by state or local tax authorities with respect to the transfer of Purchased Property to Buyer (including, without limitation, the Real Property), regardless of whether the tax authority seeks to collect the tax from the transferor or the recipient. Seller shall be responsible for filing the applicable return in a timely manner and administering the payment of such sales, use, transfer, gross receipts or similar tax, and Buyer and Seller shall be responsible for defending or pursuing any proceedings related thereto, provided that any expenses related thereto shall be shared equally between Buyer and Seller. Twenty (20) days prior to filing of any such returns, Seller shall deliver to the Buyer those returns for review. Ten (10) business days prior to filing of any such returns, Buyer shall approve the information contained therein and the filing of such returns. (c) Buyer and Seller shall give prompt written notice to the other party of any proposed adjustment or assessment of a sales, use, transfer, gross receipts or similar tax on the sale contemplated hereby, or of any examination of the sale in a sales, use, transfer or similar tax audit. In any proceedings, whether formal or informal, Buyer and Seller shall permit the other party to participate and defend such proceeding, and shall take all actions and execute all documents required to allow such participation. Neither Buyer nor Seller shall negotiate a settlement or compromise of any sales, use, transfer, gross receipts or similar tax on the sale of the Purchased Property without the written consent of the other party, which consent shall not be unreasonably withheld. Seller shall be responsible for the income or franchise taxes imposed with respect to its transfer of the Purchased Property. 11.18 Bulk Sales Laws. Seller and Buyer waive compliance with applicable --------------- laws under any version of Article 6 of the Uniform Commercial Code adopted by any state or any similar law relating to the sale of inventory, equipment or other assets in bulk in connection with the sale of the Purchased Property. 11.19 Customer Notification. For a period of at least two (2) months --------------------- prior to the Effective Date, Seller will permit Buyer to insert preprinted single-page subscriber education materials into billing documentation to be delivered during such period to subscribers affected by the sale. All reasonable costs and expenses related to such insertion and delivery shall be borne and paid by Seller. Other means of notifying subscribers may be employed by either party, at the expense of the initiating party, but in no event shall any notification be initiated without the prior consent of the other party (which consent shall not be unreasonably withheld) or earlier than three (3) months prior to the Effective Date. 11.20. Delivery of Schedules. Except as otherwise provided in Section --------------------- 11.22, Seller shall have a period of ten (10) business days after the Execution Date (the "Supplemental Schedule Period") to supplement or otherwise modify the Schedules to this Agreement by delivering to Buyer, within the Supplemental Schedule Period, a substitute schedule or schedules (collectively, the "Supplemental Schedules"), bearing the legend "This Schedule _, dated _______________, is executed and delivered in accordance with Section 11.20 of the Asset Purchase Agreement, dated as of November 28, 1994 which shall be duly executed by Seller and submitted to Buyer. Buyer shall have a period of ten (10) business days after the expiration of the Supplemental Schedule Period to review the Supplemental Schedules and within such ten (10) business day period notify Seller in writing (which writing may be transmitted by facsimile) of any objections thereto. If Buyer's objections are not resolved to the satisfaction of Buyer within five (5) days of such notification, Buyer may terminate this Agreement, effective immediately upon written notification of that termination. In the event that Buyer does not terminate this Agreement, then Buyer waives all rights to a claim of indemnification based upon or as the result of any changes in the Schedules as reflected in the Supplemental Schedules. For purposes of determining breaches of representations, warranties or covenants hereunder, the Supplemental Schedules provided by Seller shall be deemed Schedules for all purposes. 11.21 FCC Tariffs. Except as described on Schedule 5.4, in connection ----------- with obtaining assignment to Seller's FCC Licenses, as described in Section 5.4, during the period from the Execution Date until the Effective Date, neither party shall file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Purchased Exchanges shall remain in the Natural Exchange Carrier Association Tariff FCC No. 5; provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 11.22 Post-Execution Lease and Contract Review. Buyer shall have a ---------------------------------------- period of forty-five (45) calendar days after the Execution Date to review the Leases and Contracts listed on Schedules 9.1.9 and 9.1.13 respectively, and to notify Seller in writing (which writing may be transmitted by facsimile) of the identity of those Leases and Contracts that Buyer reasonably believes are material to the operation of the Business as a whole or any significant part of the Purchased Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent to their assignment before the Effective Date can occur. If Buyer does not notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Buyer shall be deemed to have agreed that none of the Leases and Contracts which are listed on Schedules 9.1.9 and 9.1.13 require consent to their assignment, in accordance with Section 7.1.6, before the Effective Date can occur. If Buyer does notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Seller shall have a period of ten (10) business days upon receipt of such notification to notify Buyer in writing (which writing may be transmitted by facsimile of any objections thereto. Thereafter , Buyer and Seller shall negotiate in good faith and agree in writing as to the identity of those Leases and Contracts which are material to the operation of the Business as a whole or any significant part of the Purchased Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a consent to their assignment before the Effective Date can occur (the "Material Leases and Contracts"). The parties shall reflect their written agreement as to the identity of the Material Leases and Contracts by placing an asterisk next to the appropriate Lease or Contract on Schedule 9.1.9 or 9.1.13, which revised Schedule 9.1.9 or 9.1.13 shall be deemed to be an amendment to this Agreement. ARTICLE 12. EMPLOYEES AND EMPLOYEE MATTERS 12.1 Employee Transfer Agreement. The parties have addressed the --------------------------- transfer of employees and employee benefits matters in a separate agreement, entitled Employee Transfer Agreement, the terms and provisions of which are incorporated into this Agreement as if fully set forth herein and a copy of which is attached hereto as Schedule 12.1 (the "Employee Transfer Agreement"). ARTICLE 13. INDEMNIFICATION 13.1 Survival of Representations, Warranties and Covenants. ----------------------------------------------------- (a) The representations and warranties made pursuant to this Agreement shall survive the Closing for the following periods after the Effective Date: (i) The representations and warranties set forth in Sections 9.1.6, 9.1.8, and 9.2.5 shall survive without limitation as to time. (ii) The representations and warranties set forth in Section 9.1.15 shall survive until sixty (60) days after the expiration of the applicable statute of limitations (including all extensions). (iii) All other representations and warranties shall survive for eighteen (18) months. The date of expiration of any representation or warranty shall be referred to herein as the "Termination Date." Representations and warranties under this Agreement shall be of no further force or effect after the applicable Termination Date. Any claim for indemnification with respect to any alleged breach of any representation or warranty not asserted by notice given as herein provided that specifically identifies a particular breach and the underlying facts relating thereto, which notice is given prior to the Termination Date, may not be pursued and is irrevocably waived and released after such time. Without limiting the generality or effect of the foregoing, no claim for indemnification with respect to any representation or warranty will be deemed to have been properly made except to the extent it is based upon a Third Party Claim or a Direct Claim. (b) Unless a specified period is set forth in this Agreement (in which event such specified period will control), the covenants contained in Section 2.5.1 (except for Section 2.5.1(a) with respect to Taxes), Section 2.5.2 (except for Section 2.5.2(d)), Section 4.3, Section 5.2, Section 5.3, this Article 13, and in Sections 11.1, 11.2, 11.3, 11.6, 11.7, 11.10, 11.12, 11.13, 11.15, 11.16 and 11.18, Articles 16 and 17 and in the Employee Transfer Agreement, will survive the Closing and remain in effect indefinitely, or in the case of Sections 2.5.1(a) (with respect to Taxes), 2.5.2(d), 11.17, and the property tax proration provisions set forth in Section 11.8, will survive until sixty (60) days after expiration of the applicable statute of limitations. All other covenants contained in this Agreement will terminate, without further action, upon the occurrence of the Effective Date and any claim following the Effective Date for an alleged breach of any such covenant may not be pursued, and is irrevocably waived, upon the occurrence of the Effective Date, except that Buyer may make a claim for Seller's breach of the covenants contained in Section 11.5 at any time within eighteen months after the Effective Date. The immediately preceding sentence shall not apply to, or limit to preclude, a party's rights and remedies if the sale contemplated by this Agreement is not concluded as a result of the other party's breach of this Agreement. 13.2 Limitations on Liability. ------------------------ (a) For purposes of this Agreement, (i) "Indemnification Payment" means any amount of Indemnifiable Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee" means any person or entity entitled to indemnification under this Agreement, (iii) "Indemnifying Party" means any person or entity required to provide indemnification under this Agreement, and (iv) "Indemnifiable Losses" means any losses, liabilities, costs, fines, penalties, damages (actual, punitive or other), and expenses and any claims, demands or suits by any person or entity, including, without limitation, any Governmental Authority, and costs and expenses actually incurred in connection with any actions, suits, demands, assessments, judgments and settlements and reasonable attorneys' fees and expenses, in any such case (x) reduced by the amount of insurance proceeds recovered from any person or entity as a result of the Indemnifiable Losses involved and (y) provided that the underlying liability or obligation is not solely the result of any action taken or omitted to be taken by the Indemnitee. (b) As between Seller and any Affiliate of Seller, on the one hand, and Buyer and any Affiliate of Buyer, on the other hand, the rights and obligations set forth in this Article 13 will be the exclusive rights and obligations with respect to the liabilities and obligations referred to in Section 13.3, and any breach of the representations, warranties or covenants referred to in Section 13.3., except for any liability, obligation or breach that results from the actual fraud under the common law, not otherwise implied or imputed, by a party to this Agreement. Without limiting the foregoing, as a material inducement to entering into this Agreement, to the fullest extent permitted by law, each of the parties waives any claim or cause of action that it otherwise might assert, including, without limitation, under the common law or federal or state securities, trade regulation or other laws, by reason of the liabilities and obligations, and any breach of the representations, warranties or covenants, referred to in Section 13.3, except for claims or causes of action brought under and subject to the terms and conditions of this Article 13, and except for claims or causes of action arising due to the actual fraud under the common law, not otherwise implied or imputed. (c) Notwithstanding any other provision of this Agreement or of any applicable law, no Indemnitee will be entitled to make a claim against an Indemnifying Party under Sections 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6 and 9.1.8) or 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) until the aggregate amount of claims that may be asserted for such Indemnifiable Losses incurred by the Indemnitee exceeds Sixty Two Thousand Six Hundred Two Dollars ($62,602.00) and then only to the extent of the excess. (d) Notwithstanding any other provision of this Agreement, the indemnification obligations of Seller under Section 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6 and 9.1.8) and of Buyer under Section 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) will not exceed the sum of One Million Eight Hundred Seventy Eight Thousand Seventy Five Dollars ($1,878,075.00). (e) Notwithstanding anything to the contrary contained herein, no Indemnifying Party shall be liable to or obligated to indemnity any Indemnitee hereunder for any consequential, special, multiple, punitive or exemplary damages including, but not limited to, damages arising from loss or interruption of business, profits, business opportunities or goodwill, loss of use of facilities, loss of capital, claims of customers, or any cost or expense related thereto, except to the extent such damages have been recovered by a third person and are the subject of a Third Party Claim for which indemnification is available under the express terms of this Section 13. 13.3 Indemnification. --------------- (a) Subject to the other sections of this Article 13, Seller will indemnity, defend and hold harmless Buyer and its Affiliates, directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Seller of any of the representations and warranties contained in Section 9.1, except for any such breach of representations and warranties which was specified on Seller's Closing Certificate all of which are waived upon Closing, (ii) a breach by Seller of any covenant of Seller contained in this Agreement or in the Employee Transfer Agreement, except for any such breach of covenants which was specified on Seller's Closing Certificate all of which are waived upon Closing, (iii) the Retained Liabilities, (iv) any Third Party Claim, whether filed, asserted, or sought before or after the Effective Date, in respect of the conduct of the Business or any part of the Business (including contractual obligations in connection with sales or transfers of assets made by Seller prior to the Effective Date), or the ownership or operation of the Business, on or prior to the Effective Date, regardless of whether known or unknown, asserted or unasserted, on the Effective Date. Notwithstanding anything to the contrary contained herein except for Section 11.17, Seller shall not be liable for and shall not be required to indemnify Buyer for any Taxes arising with respect to the post-Effective Date period, regardless of whether the claim is based on breach of a representation, warranty, covenant or otherwise. (b) Subject to the other sections of this Article 13, Buyer will indemnity, defend and hold harmless Seller and its Affiliates, and their directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Buyer of any of the representations or warranties contained in Section 9.2, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (ii) a breach by Buyer of any covenant of Buyer contained in this Agreement or in the Employee Transfer Agreement, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (iii) the Assumed Liabilities, (iv) any Third Party Claim, filed, asserted, or sought after the Effective Date, in respect of the conduct of the Business or any part of the Business or the ownership or operation of the Business, after the Effective Date. (c) All environmental matters or issues, including without limitation, the indemnification obligations contained in Article 14 with respect to Environmental Liabilities, are to be governed by Article 14 and are not addressed, limited or governed by the provisions of this Article 13. (d) Payments made under this Section 13.3 shall be treated by Buyer and Seller as purchase price adjustments and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. 13.4 Defense of Claims. ----------------- (a) If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action, proceeding, or investigation by any entity or person that is not a party to this Agreement or an Affiliate of such a party (a "Third Party Claim") against such Indemnitee, with respect to which an Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of actual notice of such Third Party Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party during the required notification period shall only relieve the Indemnifying Party from its obligation to indemnity the Indemnitee pursuant to this Article 13 to the extent that Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. Indemnifying Party shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether or not the Indemnifying Party elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof, provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (i) the employment of such separate counsel has been specifically authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party has failed to assume the defense of such Third Party Claim within a reasonable time after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee or (iii) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnifying Party and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall not be liable for the fees and disbursements of more than one counsel for all Indemnified Parties in connection with any one proceeding or any similar or related proceedings arising from the same general allegations or circumstances. Without the prior written consent of the Indemnitee, the Indemnifying Party will not enter into any settlement of any Third Party Claim that would lead to liability or create any financial or other obligation on the part of the Indemnitee unless such settlement includes as an unconditional term thereof the release of the Indemnitee from all liability in respect of such Third Party Claim. (b) Any claim by an Indemnitee on account of an Indemnifiable Loss that does not result from a Third Party Claim (a "Direct Claim") will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after the Indemnitee actually becomes aware of the incurrence thereof, and the Indemnifying Party will have a period of thirty (30) calendar days within which to respond in writing to such Direct Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party shall only relieve the indemnifying Party from its obligation to indemnify the Indemnitee pursuant to this Article 13 to the extent the Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. If the Indemnifying Party does not so respond within such thirty (30) calendar day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article 13. (c) If after the making of any Indemnification Payment the amount of the Indemnifiable Loss to which such payment relates is reduced by recovery, settlement or otherwise under any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction (less any costs, expenses, premiums or taxes incurred in connection therewith) will promptly be repaid by the Indemnitee to the Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying Party will, to the extent of such Indemnification Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the Indemnification Payment relates; provided that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss, all claims of the Indemnifying Party against any such third party on account of said Indemnification Payment will be subrogated and subordinated in right of payment to the Indemnitee's rights against such third party. Without limiting the generality or effect of any other provision of this Article 13, each such Indemnitee and Indemnifying Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights. ARTICLE 14. ENVIRONMENTAL MATTERS 14.1 Environmental Due Diligence. --------------------------- 14.1.1 Right to Conduct Due Diligence. Buyer shall have the opportunity ------------------------------ to conduct environmental due diligence regarding the Purchased Property in accordance with this Section 14.1, for a period not to exceed 120 days after the Environmental Data Delivery Date (as defined below). 14.1.2 Treatment of Data. All information collected and generated as a ----------------- result of the environmental due diligence authorized by this Section 14.1 will be subject to the terms and conditions of the Confidentiality Agreement, except as otherwise expressly provided in this Section 14.l. Buyer shall provide to Seller copies of all reports, assessments and other information composed or compiled by Buyer's environmental consultant(s) and shall treat all such information in accordance with the procedures of Section 14.1.5(c). Within thirty (30) days after the Execution Date (the "Environmental Data Delivery Date"), Seller will provide to Buyer copies of all surveys and reports in Seller's possession concerning the existence or possible existence of asbestos or materials containing asbestos relating to any of the Real Property, a list of all underground storage tanks which to Seller's knowledge are located on, or have been removed within the last three years from, any Real Property owned or real estate leased or operated by Seller in connection with the Business and any other reports, studies or documents in Seller's possession relating to Seller's potential liability under any Existing Environmental Requirements. The parties further agree that, if Seller discloses the existence or suspected existence of materials containing asbestos with respect to a given parcel of Real Property and the asbestos does not exceed applicable limits, if Buyer desires to make renovations or structural changes to the property after the Effective Date (which changes require the removal of asbestos), the removal will be at the expense of Buyer. 14.1.3 Environmental Consultants. Buyer may retain one or more outside ------------------------- environmental consultants to assist in its environmental due diligence concerning the Purchased Property and shall notify Seller of the environmental consultant or consultants Buyer intends to retain. Thereafter, Seller shall have five (5) business days after receipt of such notification to notify Buyer in writing of Seller's objection (which must be for good cause) and substantiate the basis for that objection. If Seller does not object for good cause and substantiate that objection within said five (5) business day period, Seller shall be deemed to have consented to Buyer's selection. 14.1.4 Phase I Reviews. Buyer may conduct the usual Phase I environmental --------------- assessment activities of the Purchased Property, including inspecting individual sites, submitting environmental questionnaires to Seller and reviewing existing environmental reports, correspondence, permits and related materials regarding the Purchased Property. Phase I environmental assessment activities shall not include any sampling or intrusive testing other than tank tightness testing and hand auger soil testing. (a) Buyer shall give Seller at least three (3) business days' notice prior to any entry onto the Purchased Property. (b) If Buyer enters the Purchased Property, a representative of Seller may be, but is not required to be, present during such entry on the Purchased Property. (c) All activities of Buyer regarding environmental due diligence shall be conducted to minimize any inconvenience or interruption of the normal use and enjoyment of Seller's Business and the Purchased Property. 14.1.5 Phase II Reviews. Buyer may conduct the usual Phase II ---------------- environmental assessment activities of the Purchased Property (including, but not limited to, the taking and analysis of soil, surface water and groundwater samples, testing of buildings, drilling wells and taking soil borings) after first conducting a Phase I assessment of a particular site provided that such Phase II assessment activities are conducted in accordance with this Section 14.1.5. (a) If Buyer desires to perform sampling or intrusive testing at a site included in the Purchased Property, Buyer must notify Seller of its desire at least five (5) business days in advance of the proposed date of such sampling or testing and provide a description of the scope of work regarding such sampling or intrusive testing. If Seller does not notify Buyer in writing of Seller's objection to such proposed sampling or testing within five (5) business days after receipt of such notice, Seller shall be deemed to have consented to the proposed sampling or testing. Seller shall not unreasonably object to Buyer's request to perform sampling or testing. (b) Buyer shall provide Seller with copies of field data, field reports, laboratory analyses, logs, laboratory reports and other material or information regarding the sampling or intrusive testing ("Environmental Data") within three (3) business days of Buyer's receipt of such data and shall promptly provide Seller with "matched" or "paired" samples, in accordance with standard sampling and testing protocols, that are obtained during the sampling or intrusive testing of a particular site; provided, however, that Seller shall have no obligation to Buyer to take any action whatsoever regarding such samples. (c) It is understood and agreed that neither Buyer nor its environmental consultant(s) shall disclose or release any Environmental Data without the prior written consent of Seller and that all such information shall be kept strictly confidential. The Environmental Data shall be prepared at the request of counsel to Buyer and, to the fullest extent permitted by law, shall be the work product of such counsel and constitute confidential attorney/client communications. The Environmental Data shall be transferred among Buyer and its consultant(s) in a manner that will preserve, to the greatest extent possible, such privileges. Buyer expressly agrees that until the Closing, it will not distribute the Environmental Data to any third party without Seller's written consent. After the Closing, Buyer agrees that it will not distribute the Environmental Data to any third party without Seller's written consent, except as required by law or by express provisions of Buyer's corporate compliance program if Seller is provided written notice at least ten (10) business days prior to such distribution, provided, however, that for a period of two (2) years after the Effective Date, Buyer may distribute the Environmental Data to any potential purchaser of the Purchased Property only after first notifying the Seller, and without such notice at any time after such two (2) year period. 14.1.6 Indemnity for Due Diligence Activities. Buyer hereby agrees to -------------------------------------- indemnify and hold harmless Seller, Seller's Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all claims, liabilities, damages, losses, orders, penalties, fines, costs, charges and expenses (including reasonable attorneys' fees and disbursements, and reasonable costs of experts and expert witnesses) with respect to persons or property arising out of or in connection with the entry of Buyer or its environmental consultant(s) onto the Purchased Property and resulting from any act or omission of Buyer or its environmental consultant(s) provided that Buyer shall not be liable for any Environmental Liabilities incurred by any such party merely discovered by the environmental due diligence performed by Buyer or its environmental consultants. In addition, in the event the transactions contemplated herein with regard to any portion of the Purchased Property do not close, Buyer agrees to restore such portion of the Purchased Property to the condition which existed prior to Buyer's inspections and testing thereof to the extent such portion of the Purchased Property was damaged by such inspections and testing. 14.1.7 Effect of Due Diligence Results. ------------------------------- (a) Subject to Section 14.1.7(b) below, Buyer conditionally may terminate this Agreement by written notice to Seller at any time during the period set forth in Section 14.1.1 if: (i) the results of Buyer's environmental due diligence investigation, conducted in accordance with this Section 14. 1, indicate Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Purchased Property; and (ii) Buyer reasonably determines (on the basis of its environmental due diligence) that responding to and remediating the foregoing Environmental Liabilities based upon Existing Environmental Requirements cannot be completed for less than Five Hundred Thousand Eight Hundred Twenty Dollars ($500,820.00) (the "Environmental Liabilities Amount") To be effective, any such conditional termination of this Agreement must be delivered in writing to Seller, which writing must specifically acknowledge that the termination is subject to the provisions of paragraph (b) below. (b) In the case of a conditional termination of this Agreement by Buyer in accordance with Section 14.1.7(a) above, Seller may nullify the termination by agreeing to: (i) respond to and fully remediate the Environmental Liabilities based upon Existing Environmental Requirements; or (ii) pay Buyer the cost thereof; or (iii) in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller, remove from the Purchased Property the item or items of Purchased Property that have occasioned the Environmental Liabilities based upon Existing Environmental Requirements and either substitute therefor an equivalent item or items of Purchased Property satisfactory to Buyer, or make other adjustments to the terms and conditions of the sale contemplated by this Agreement all in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller. Seller's election to nullify Buyer's conditional termination by selecting one of the above options shall be, in each case, specified in a writing mutually satisfactory to the parties, and thereafter on or before the Closing (subject to Section 14.1.7(d)), Seller shall perform its obligations under that writing in full. If the parties fail to sign the writing specifying Seller's obligations within thirty (30) days following Buyer's conditional termination (or such longer period acceptable to Buyer) or sign that writing but Seller fails to perform its obligations thereunder in full on or before the Closing (subject to Section 14.1.7(d)), Buyer's conditional termination under paragraph (a) above automatically shall become final and unconditional unless the parties agree otherwise. (c) If the results of Buyer's environmental due diligence conducted in accordance with this Section 14.1 indicate that the costs of responding to and remediating Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Purchased Property are less than the Environmental Liabilities Amount in the aggregate, Seller agrees, at its sole cost, to either (i) remove from the Purchase Property the item or items of Purchased Property that have occasioned the Environmental Liabilities based upon Existing Environmental Requirements and either make a substitution or other adjustment therefor prior to the Closing in accordance with Section 14.1.7(b)(iii) above, or (ii) prior to the Closing (subject to Section 14.1.7(d)), otherwise respond to and remediate those Environmental Liabilities based upon Existing Environmental Requirements in accordance with Section 14.1.7(b)(i) or Section 14.1.7(b)(ii) above, unless the cost of such substitution or the conduct of such response action would exceed the Environmental Liabilities Amount in which case Seller's sole obligation under this Section 14.1.7(c) shall be to pay the Environmental Liabilities Amount toward the completion of such substitution or response and remediation actions. If Seller discharges its obligations under this Section 14.1.7 by expending the Environmental Liabilities Amount on such substituted property or response and remediation action (such expenses to be verified by Seller by delivery by Seller to Buyer of a reasonably detailed statement setting forth such expenses), or paying to Buyer the Environmental Liabilities Amount, Buyer shall sign and deliver to Seller at the Closing a release of Seller from any further liability to Buyer for such remediation and shall indemnify Seller against any liability for such Environmental Liabilities or Environmental Requirements. (d) If Seller elects to respond to and fully remediate Environmental Liabilities based upon Existing Environmental Requirements pursuant to Section 14.1.7(b)(i) or (c)(ii), and such response and remediation has not been completed by the date scheduled for Closing, the parties on or prior to Closing shall enter into an Environmental Remediation Agreement in form and substance reasonably satisfactory to the parties and proceed to Closing; provided, however, that in the case of response and remediation under Section 14.1.7(b)(i), Buyer may elect to postpone the Closing until sufficient response and remediation has been completed so that the remaining response and remediation is equal to or less than the Environmental Liabilities Amount. 14.2 Environmental Indemnification. ----------------------------- 14.2.1 Sole Remedy and Release. It is the intent of the parties that the ----------------------- indemnification provided under this Section 14.2 shall be the sole remedy for allocating responsibility regarding environmental matters related to the sale contemplated by this Agreement, the Business and the Purchased Property of which Buyer does not receive notice prior to the Closing (either from Seller in Schedule 14.3 or pursuant to notice given pursuant to Section 17.1 or in any written communication made to Buyer from Buyer's environmental consultants (collectively the "Known Environmental Matters")). Except as expressly provided in this Section 14.2, at Closing each party, for itself and its successors and assigns, by virtue of consummating the sale contemplated by this Agreement and without further action on the part of such party, shall waive and release the other party from any and all liability under any other cause of action at law or in equity concerning the Known Environmental Matters, whether raised pursuant to (i) Environmental Requirements, (ii) any other applicable federal, state or local statute, ordinance, rule or regulation, or (iii) common law. 14.2.2 Indemnification. Subject to the provisions of Sections 14.2.3, --------------- 14.2.4 and 14.2.5, Seller agrees to indemnify and hold harmless Buyer, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities under Existing Environmental Requirements arising from acts or omissions occurring, or from the use or ownership of, or any condition or circumstance, relating to, the Purchased Property or the Business that occurred or arose prior to or on the Effective Date on the Purchased Property or in connection with the operation of the Business prior to or on the Effective Date. The foregoing indemnity in this Section 14.2.2 shall only apply to matters that do not constitute Known Environmental Matters (such matters being referred to as the "Unknown Environmental Matters"). Such indemnification under this Section 14.2.2 shall be provided only for claims for Unknown Environmental Matters noticed to the other party pursuant to the procedures of Section 14.2.3, within eighteen (18) months after the Effective Date. Subject to the provisions of Sections 14.2.3 and 14.2.4, Buyer agrees to indemnify and hold harmless Seller, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities, with respect to any Environmental Requirements in existence now or hereafter in effect, arising from acts or omissions occurring after the Effective Date, or from the use or ownership of the Purchased Property after the Effective Date, or any condition or circumstance relating to the Purchased Property or the Business that occurred or arose after the Effective Date on the Purchased Property or in connection with the operation of the Business after the Effective Date. 14.2.3 Notice. A party seeking indemnification under this Section 14.2 ------ must give written notice to the other party, including information sufficient to inform the other party of, and allow such other party to confirm the nature of, the claim and any activities required to address the claim, in sufficient detail for the indemnifying party to confirm that all costs incurred or to be incurred by the party to be indemnified under this Section 14.2 are required by Environmental Requirements, as applicable to Buyer, and Existing Environmental Requirements, as applicable to Seller, and are reasonable and cost-effective. If the indemnifying party disagrees with the party to be indemnified as to the necessity of costs or the reasonableness or cost-effectiveness of the remediation method selected, the parties shall negotiate in good faith to achieve at a mutually satisfactory solution. If the parties cannot agree as to costs or methods of remediation, the matter shall be resolved in accordance with Article 16. 14.2.4 Actual Damages. Any indemnifiable claim under this Section 14.2 -------------- shall not include incidental or consequential damages except to the extent such damages have been recovered by a third person and are the subject of a Third Party claim for which indemnification is available under the express terms of this Article 14. Any indemnifiable claim under this Section 14.2 shall be reduced to account for any insurance, storage tank fund, or other proceeds received by the party to be indemnified, as a result of the indemnifiable losses involved. The parties agree to take all reasonable steps to mitigate any indemnifiable claim under this Section 14.2, including complying with any registration and reporting requirements necessary to qualify for reimbursement from any storage tank fund. 14.2.5 Limitations on Indemnification. Notwithstanding any other ------------------------------ provision of this Agreement, this Article 14, or any applicable law, the indemnification obligations of Seller under this Section 14.2 shall not exceed the aggregate amount of Nine Hundred Thirty Nine Thousand Thirty Seven Dollars ($939,037.00). 14.2.6 Adjustments to Purchase Price. Payments made under this Article 14 ----------------------------- shall be treated by Buyer and Seller as purchase price adjustments, and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. ARTICLE 15. TERMINATION 15.1 Termination Rights. This Agreement may be terminated at any time ------------------ prior to the Closing Date: (a) at any time by mutual written consent of the parties; (b) by Seller or Buyer, as applicable, if there has been a material breach on the part of the other party of its respective representations, warranties or covenants set forth in this Agreement; provided, however, that a party shall not be entitled to exercise its right of termination under this subsection (b) if the breach is capable of being cured to the non-breaching party's reasonable satisfaction and the breaching party is proceeding diligently with its best efforts to effect such cure. (c) by Buyer, pursuant to Section 11.20 (Delivery of Schedules); (d) by Buyer and Seller, as the result of Section 14.1.7(a); (e) by Buyer or Seller, pursuant to Section 11.9; (f) by Seller or Buyer, if the Closing shall not have occurred by December 31, 1995 due to no fault or delay attributable to the party seeking termination; provided, however, that a party shall not be entitled to exercise any right of termination pursuant to this subsection (f) above if such party shall not have performed diligently and in good faith the obligations required to be performed by such party hereunder prior to the date of termination; (g) by Buyer if a Governmental Authority, the approval of which is a condition to Buyer's obligations under Section 7.1, has provided written notice that it shall not consent to or approve the transactions contemplated hereby; or (h) by Seller, if a Governmental Authority, the approval of which is a condition to Seller's obligations under Section 7.2, has provided written notice that it shall not consent to or approve the transactions contemplated hereby. 15.2 Effect of Termination. --------------------- (a) If this Agreement is terminated pursuant to Section 15. 1 (a), (c), (d), (e), (f), (g) or (h), this Agreement shall be of no further force and effect and there shall be no further liability hereunder on the part of either party or its Affiliates, directors, officers, shareholders, agents or other representatives. (b) A party's exercise of its right of termination under Section 15.1(b) shall not constitute a waiver of its rights to recover damages, whether pursuant to breach of contract or in tort, or other remedies available at law or in equity, from the other party as a result of the other party's breach of this Agreement. (c) Notwithstanding anything to the contrary contained herein, the provisions of this Section 15.2 and of Sections 17.1, 17.2, 17.3, 17.8, 17.11, 17.13, 17.14 and Article 16 shall survive any termination of this Agreement. ARTICLE 16. DISPUTE RESOLUTION 16.1 Exclusive Remedy. Subject to Section 16.5, the parties agree to ---------------- resolve disputes arising out of this Agreement without litigation. Accordingly, except as provided in Section 16.5, or in the case of a suit to compel compliance with this dispute resolution process, the parties agree to use the following alternative dispute resolution procedure as their sole remedy with respect to any controversy or claim arising out of or relating to this Agreement or its breach. 16.2 Dispute Resolution Process. At the written request of a party, each -------------------------- party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any dispute arising under this Agreement. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations. Discussions and correspondence among the parties' representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, exempt from discovery and production, and without the concurrence of both parties shall not be admissible in the arbitration described below or in any lawsuit. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration. 16.3 Arbitration. Subject to Section 16.5, if negotiations between the ----------- representatives of the parties do not resolve the dispute within sixty (60) days of the initial written request, the dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Either party may demand such arbitration in accordance with the procedures set out in those rules. The arbitration hearing shall be commenced within sixty (60) days of the demand for arbitration and the arbitration shall be held in a mutually agreeable location. The arbitrator shall control the scheduling (so as to process the matter expeditiously) and any discovery. The parties may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within thirty (30) days after the close of hearings. The times specified in this Section 16.3 may be extended upon mutual agreement of the parties or by the arbitrator upon a showing of good cause. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. 16.4 Costs and Attorneys' Fees. Each party will bear its own costs and ------------------------- expenses in submitting and presenting its position with respect to any such dispute to the arbitrator, and the fees and expenses of such arbitration procedures, including the fees of the arbitrator will be shared equally by Buyer and Seller, except that a party seeking discovery shall reimburse the responding party the cost of production of documents (including search time and reproduction costs); provided, however, that if the arbitrator determines that the position taken in the dispute by the non-prevailing party taken as a whole is unreasonable, the nonprevailing party will bear all such fees and expenses, and reimburse the prevailing party for all of its reasonable costs and expenses in submitting and presenting its position. 16.5 Certain Limitations. The provisions of this Article 16 with respect ------------------- to the resolution of disputes without litigation shall not apply to any dispute, controversy or claim arising out of the provisions of Section 11.1, or the Confidentiality Agreement, or to a party's seeking to proceed under Section 17.14, it being understood and agreed that in the event of a breach by either party of the provisions of Section 11.1, or the Confidentiality Agreement, or in the event that a party seeks to proceed under Section 17.14, the non-defaulting party shall be entitled to proceed to protect and enforce its rights by an action at law, a suit in equity or other appropriate proceeding, whether for specific enforcement of any agreement contained in Section 11.1, or the Confidentiality Agreement or in aid of the exercise of any power granted by Section 11.1, 17.14 or the Confidentiality Agreement or by law or otherwise. ARTICLE 17. MISCELLANEOUS 17.1 Notices. All notices, consents and other communications required or ------- permitted hereunder shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been given when delivered in person or dispatched by electronic facsimile transfer (confirmed in writing by certified mail, concurrently dispatched) or one business day after having been dispatched for next-day delivery by a nationally recognized overnight courier service to the appropriate party at the address specified below: (a) If to Buyer, to: Mr. Donald K. Roberton Vice President-Telecommunications Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4627 and L. Russell Mitten, II, Esq. Vice President-General Counsel Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4651 with a copy to: Jeffry L. Hardin, Esq. Fleischman and Walsh, L.L.P. 1400 Sixteenth Street, N.W. Washington, D.C. 20036 Facsimile No.: 202/745-0916 (b) If to Seller to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: President Facsimile No.: 501/661-0962 with a copy to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: General Counsel Facsimile No.: 501/661-0962 or to such other persons or address or addresses as any such party may from time to time designate for itself by like notice. 17.2 Press Releases. The parties shall consult with each other in -------------- preparing any press release, public announcement, news media response or other forth of release of information concerning this Agreement or the transactions contemplated hereby that is intended to provide such information to the news media or the public (a "Press Release"). Neither party shall issue or cause the publication of any such Press Release without the prior written consent of the other party; provided, however, that nothing herein will prohibit either party from issuing or causing publication of any such Press Release to the extent that such action is required by applicable Law or the rules of any national stock exchange applicable to such party or its Affiliates, in which case the party wishing to make such disclosure wig, if practicable under the circumstances, notify the other party of the proposed time of issuance of such Press Release and consult with and allow the other party reasonable tune to comment on such Press Release in advance of its issuance. 17.3 Expenses. Except as otherwise expressly provided herein, each party -------- will pay any expenses (including, without limitation, attorneys' fees) incurred by it incident to this Agreement and in consummating the transactions provided for herein. All regulatory filing fees required pursuant to Sections 5.1, 5.4 and 5.5 shall be split equally between the parties. Each party will pay the appropriate costs and filing fees relating to any other applications required to be filed by such party. 17.4 Successors and Assigns. This Agreement will be binding upon and ---------------------- inure to the benefit of the parties hereto and their respective successors and permitted assigns. Buyer may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Seller; provided that Buyer may assign or delegate its rights and obligations under this Agreement without the prior written consent of Seller, to any directly or indirectly wholly owned subsidiary of Buyer provided such subsidiary assumes in writing all of the duties and obligations of Buyer hereunder, but no such assignment and assumption shall in any way operate to enlarge, alter or change any obligation of or due to Seller or relieve Buyer of its obligations hereunder and provided that Buyer agrees to cause such subsidiary to perform each of its agreements and covenants herein, and shall be jointly and severally liable for any non-performance thereof. Seller may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Buyer. Upon the sale, assignment or transfer by Buyer of the Business or the Purchased Property to a non-Affiliate of Buyer not in the ordinary course of business of Buyer, Seller's representations and warranties and indemnification obligation for breach thereof shall terminate. Any assignment made in violation of the foregoing provisions shall be void. 17.5 Amendments. This Agreement may be amended or modified only by a ---------- subsequent writing signed by authorized representatives of both parties. 17.6 Captions. The captions set forth in this Agreement are for -------- convenience only and shall not be considered as part of this Agreement, nor as in any way limiting or amplifying the terms and provisions hereof. 17.7 Entire Agreement. The term "this Agreement" shall mean collectively ---------------- this document, the Schedules hereto, any agreements expressly incorporated herein, and the Confidentiality Agreement. This Agreement supersedes and revokes any prior discussions and representations, other agreements, commitments, arrangements or understandings of any sort whatsoever, whether oral or written, that may have been made or entered into by the parties relating to the matters contemplated hereby. This Agreement constitutes the entire agreement by and among the parties, and there are no representations, warranties, agreements, commitments, arrangements or understandings except as expressly set forth herein. 17.8 Waiver. Except as otherwise expressly provided in this Agreement, ------ neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege available to each party at law or in equity. 17.9 Third Parties. Except as expressly provided herein, nothing ------------- contained in this Agreement is intended to confer upon any person, other than the parties and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 17.10 Counterparts. This Agreement may be executed in two or more ------------ counterparts, any or all of which shall constitute one and the same instrument. 17.11 Governing Law. This Agreement shall in all respects be governed by ------------- and construed in accordance with the internal laws of the State of Delaware (except that no effect shall be given to any conflicts of law principles of the State of Delaware that would require the application of the laws of any other jurisdiction). In accordance with Title 6, Section 2708 of the Delaware Code Annotated, the parties agree to the jurisdiction of the courts of Delaware and to be served with legal process from any of such courts. 17.12 Further Assurances. From time to time, as and when requested by one ------------------ of the parties, the other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate and make effective the transactions contemplated by this Agreement. 17.13 Certain Interpretive Matters and Definitions. -------------------------------------------- (a) Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning so assigned to it, (iii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (iii) all references to the "knowledge of a party" will be deemed to refer to the actual knowledge of the Executive Officers of the party after reasonable investigation, and (iv) all references to a party's "best efforts" and references of like import will be deemed to refer to the best efforts of such party in accordance with reasonable commercial practice and without the incurrence of unreasonable expense. (b) No provision of this Agreement will be interpreted in favor of, or against, either of the parties by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of such provision or of this Agreement. 17.14 Specific Performance. In addition to all other rights and remedies -------------------- available at law or in equity, any party hereto may pursue, to the fullest extent available, the remedy of specific performance in order to compel the other party to close pursuant to Article 8. IN WITNESS WHEREOF, the parties, acting through their duly authorized agents, have caused this Agreement to be duly executed and delivered as of the date first above written. ALLTEL TENNESSEE, INC.: By: /s/ Tim G. Griffin -------------------- Name: Tim G. Griffin Title: Vice President CITIZENS UTILITIES COMPANY: By: /s/ Leonard Tow ----------------- Name: Leonard Tow Title: Chairman of the Board and Chief Executive Officer EX-10 4 EXHIBIT 10.20 EXECUTION COPY STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 28th day of November, 1994 (the "Execution Date"), by and among Citizens Utilities Company, a Delaware corporation ("Buyer"), and ALLTEL Corporation, a Delaware corporation ("Seller"). RECITALS WHEREAS, Seller is the record and beneficial owner of all of the issued and outstanding shares of capital stock of Navajo Communications Co., Inc. a New Mexico corporation (the "Company"); and WHEREAS, Seller desires to sell and deliver to Buyer, and Buyer desires to purchase and accept from Seller, the Shares (as defined below), upon the terms and conditions set forth in this Agreement; and NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement and any amendment hereto, the following terms are defined as set out below or in the Section referenced below: Additional Financial Statements is defined in Section 11.4. Adjusted Total Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Telecommunications Accounts Receivable (item 2-Assets on the Company's Balance Sheet) less "Accounts Receivable Allowance" (item 3 - Assets on the Company's Balance Sheet) after adjusting "Accounts Receivable Allowance" to reflect an uncollectible percentage based upon the Company's actual uncollectible net write-off percentage for the calendar year immediately preceding the year in which the Closing occurs, (ii) Accounts Receivable - Other (item 5-Assets on the Company's Balance Sheet) less Accounts Receivable Allowance - Other (item 6 - Assets on the Company's Balance Sheet), (iii) Prepaid Expense (item 9-Assets on the Company's Balance Sheet), and (iv) Other Current Assets (item 10- Assets on the Company's Balance Sheet) to the extent such other current assets do not represent cash accounts. Adjusted Total Non-Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Other Investments at Cost (item 15-Assets on the Company's Balance Sheet) to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and which RTB Stock is owned by the Company immediately after the Effective Date, (ii) Unamortized Debt Expense (item 16-Assets on the Company's Balance Sheet) to the extent such debt expense relates to debt which is to remain outstanding immediately after the Effective Date, and (iii) Deferred Maintenance and Retirements (Item 17 - Assets on the Company's Balance Sheet). Adjusted Total Current And Non-Current Liabilities means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Current Maturities of Long Term Debt (item 1- Liabilities on the Company's Balance Sheet) to the extent such long term debt is to remain outstanding immediately after the Effective Date, (ii) Accounts Payable-Other (item 6-Liabilities on the Company's Balance Sheet), (iii) Advance Payments and Customer Deposits (item 7-Liabilities on the Company's Balance Sheet), (iv) Taxes Accrued - Other (item 9 - Liability on the Company's Balance Sheet), (v) Interest Accrued-Other (item 13-Liabilities on the Company's Balance Sheet) to the extent such interest relates to debt which is to remain outstanding immediately after the Effective Date, and (vi) that portion of Other Deferred Credits (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities that are associated with the requirements of Financial Accounting Standard 106 attributable to the active Transferred Employees. Affiliate has the meaning given to that term in Rule 405 under the Securities Act of 1933, as amended. Agreement is defined in Section 17.7. The Business means the business of the Company; i.e., providing local exchange and exchange access telecommunications services and other related regulated and non-regulated activities, services and products associated with the Exchanges, including without limitation such unregulated activities, services and products of the Company conducted, offered or serviced by the Transferred Employees or provided or related to the Company's subscribers or customers served in or from the Exchanges (such unregulated activities, services and products (the "Unregulated Business") are considered an integral part of the Business for all purposes of this Agreement). Buyer's Closing Certificate is defined in Section 7.2.1. CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Casualty Notice is defined in Section 11.9. Casualty Termination Notice is defined in Section 11.9. Closing is defined in Section 8.1. Closing Date is defined in Section 8.1. Common Stock means the common stock of the Company par value $1.00. Company is defined in the recitals of this Agreement. Company Books and Records is defined in Section 2.2.3. Company's Balance Sheet means the balance sheet of the Company. Confidentiality Agreement means the Confidentiality Agreement dated September 30, 1994 between ALLTEL Corporation and Citizens Utilities Company which is attached and incorporated into this Agreement as Schedule 1-1. Contracts is defined in Section 2.2.2. Damaged Property is defined in Section 11.9. Debtholder Consents is defined in Section 5.2(a). Direct Claim is defined in Section 13.4(b). Effective Date is defined in Section 8.1. Employee Plan Assets is defined in the Employee Transfer Agreement. Employee Transfer Agreement is defined in Section 12.1 Employment Agreements is defined in Section 9.1.18. Environmental Liabilities means all liabilities, obligations (including obligations to respond to, investigate and remediate conditions caused by any Regulated Material), responsibilities, losses, damages (including punitive or treble damages), costs and expenses (including reasonable fees, disbursements and expenses of counsel, experts, consultants and expert witnesses), fines, penalties, interest or bonds, based upon any Environmental Requirements of any Governmental Authority, or as a consequence of (a) the release or threatened release of a Regulated Material in amounts that require response or remediation into the outdoor environment, (b) any circumstance or condition relating to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof, that does not comply with Environmental Requirements, or (c) any claim, demand, notice, cause of action, directive, order, judgment, fine or penalty asserted or sought under or pursuant to any Environmental Requirements by an entity or person not a party to this Agreement, to the extent that the condition or circumstance or event giving rise to the claim, demand, notice, cause of action, directive, order, judgment, fine or penalty relates to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof. Environmental Requirements means (i) any federal, state and local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority and all valid and enforceable guidance documents and policies thereof, relating to (x) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (y) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Regulated Material, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Regulated Material in each case as now amended and as now or hereafter in effect. The term Environmental Requirements includes, without limitation, CERCLA, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the federal Solid Waste Disposal Act, the federal Toxic Substances Control Act and the federal Insecticide, Fungicide and Rodenticide Act, each as now amended and as now or hereafter in effect. ERISA means the Employee Retirement Income Security Act of 1974, as amended. ERISA Plans is defined in Section 9.1.18. Estimated Purchase Price is defined in Section 3.3(a). Evaluation Material is defined in the first paragraph of the Confidentiality Agreement. Exchanges is defined in Section 2.2. Excluded Books and Records means the general ledger and all books and records relating to (i) tax returns and tax records, (ii) the Excluded Property or (iii) the Retained Liabilities, (iv) employees of the Company that are not Transferred Employees, and (v) subject to Section 11.13, all Original Cost Documents that are not located in the Exchanges. Excluded Contracts means the contracts, leases and agreements listed or identified on Schedule 11.22. Excluded Property means the Excluded Books and Records, the trademarks, trade names, trade dress, logos, and any other intangible assets that use or incorporate the word "ALLTEL" and any other marks listed on Schedule 11.1.5, the Company's interest in any cellular telephone or personal communications services business, and, in each case, any applications or licenses granted with respect thereto, and the assets disposed, transferred or dividended by the Company pursuant to Section 11.22 and any assets excluded pursuant to Sections 11.9 and 14.1.7. Execution Date is defined in the preamble to this Agreement. Executive Officers of an entity means the president and any vice president of the entity in charge of a principal business unit, division or function. Existing Environmental Requirements means those applicable provisions of any Environmental Requirements that are both in effect and applicable to the Company, the Business or the Property on or prior to the Effective Date. FCC means the Federal Communications Commission. FCC Consents is defined in Section 5.4. FCC Licenses is defined in Section 2.2.4. Final Order means an action by the FCC, the PUC, or any other Governmental Authority, as to which: (a) no request for stay of the action by the FCC, the PUC, or such other Governmental Authority, as the case may be, is pending, no such stay is in effect, and if any time period for filing any request for such a stay is provided by statute or regulation, such time period has passed; (b) no petition, motion or application for rehearing, reconsideration, or review, of the action is pending before the FCC, the PUC, or such other Governmental Authority, as the case may be, and the time provided for filing any such petition, motion or application has passed; (c) the FCC, the PUC, or such other Governmental Authority, as the case may be, does not have the action under reconsideration on its own motion and the time in which such reconsideration is permitted has passed; and (d) no appeal to a court, of the FCC's, the PUC's or such other Government Authority's action, as the case may be, is pending or in effect, and the deadline for filing any such appeal has passed. Final Purchase Price is defined in Section 3.4. Financial Statements is defined in Section 9.1.11. GAAP means generally accepted accounting principles. Governmental Authority is defined in Section 9.1.3. HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Indebtedness Releases or Terminations is defined in Section 5.2. Indemnifiable Losses is defined in Section 13.2(a). Indemnification Payment is defined in Section 13.2(a). Indemnifying Party is defined in Section 13.2(a). Indemnitee is defined in Section 13.2(a). Intellectual Property is defined in Section 11.1.1. IRC means the Internal Revenue Code of 1986, as amended. IRS means the Internal Revenue Service. June 1994 Base Amount means the sum of (i) the amount of Net Telecommunications Plant as of June 30, 1994 and (ii) the amount of Materials and Supplies as of June 30, 1994 Law is defined in Section 9.1.4. Leases means all real and personal property leases to which the Company is a party, or to which any Affiliate of the Company is a party and which are used in connection with the Business. Marks is defined in Section 11.1.5. Materials and Supplies means the amount set forth on the Company's Balance Sheet as of a date certain comprising the Company's Materials and Supplies (item 8 - Assets on the Company's Balance Sheet). Net Telecommunications Plant means the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of Telecommunications Plant In Service (item 22 - Assets on the Company's Balance Sheet, Plant Under Construction -- Short Term (item 23 - Assets on the Company's Balance Sheet), Plant Under Construction -- Long Term (item 24 - Assets on the Company's Balance Sheet), and Telecommunications Plant -- Other (item 25 - Assets on the Company's Balance Sheet), less Accumulated Depreciation and Amortization (item 27 - Assets on the Company's Balance Sheet). Original Cost Documents means all original cost documentation relating to the Telephone Plant. NECA means the National Exchange Carrier Association. Non-FCC Authorizations is defined in 2.2.6. PBGC means the Pension Benefit Guaranty Corporation. Permitted Exceptions is defined in Section 11.16. Plans is defined in Section 9.1.18. Press Release is defined in Section 17.2. PUC means the Public Service Commission of New Mexico, the Arizona Corporation Commission, and the Public Service Commission of Utah. Purchase Price is defined in Section 3. 1. Property is defined in Section 2.2. REA Debt means debt of the Company owed to the Rural Electrification Administration. Real Property is defined in Section 2.2. 1. Regulated Material means (i) any "hazardous substance" as defined in CERCLA, (ii) any petroleum or petroleum substance, and (iii) any other pollutant, waste, contaminant, or other substance regulated under Environmental Requirements or, as applicable, Existing Environmental Requirements. Regulatory Approvals is defined in Section 5. 1. Retained Liabilities is defined in Section 13.3(a). RTB Stock means stock of the Rural Telephone Bank. Seller's Closing Certificate is defined in Section 7. 1. 1. Shares means the 4,487,900 shares of the Common Stock owned by Seller. Tax Returns means a report, return or other information statement required to be supplied to a federal, state or local taxing Governmental Authority with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes the Company. Tax(es) means any foreign, federal, state, provincial, county or local income, sales, use, transfer, excise, franchise, stamp duty, custom duty, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, recording, ad valorem, gains, value-added, unemployment compensation, general corporate, profits, registration, unincorporated business, alternative, social security, estimated, add-on, minimum, privilege or withholding tax and any interest and penalties and additions to such taxes (civil or criminal) related thereto or to the nonpayment thereof. Telephone Plant is defined in Section 2.2. 1. Third Party Claim is defined in Section 13.4(a). Total Deferred Credits is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Unamortized Investment Tax Credit" (Item 22 - Liabilities on the Company's Balance Sheet), "Non-Current Deferred Income Taxes" (Item 23 - Liabilities on the Company's Balance Sheet), "Regulatory Liabilities" (Item 24 - Liabilities on the Company's Balance Sheet), "Other Deferred Credits" (Item 25 - Liabilities on the Company's Balance Sheet), and "Donations of Telephone Plant" (Item 26 - Liabilities on the Company's Balance Sheet). Total Long-Term Debt is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Long-Term Debt" (Item 17 - Liabilities on the Company's Balance Sheet), "Premium/Discount on Long-Term Debt" (Item 18 - Liabilities on the Company's Balance Sheet), and "Capital Lease Obligations" (Item 19 - Liabilities on the Company's Balance Sheet). Transferred Employee is defined in Article II.A of the Employee Transfer Agreement. Transition Services Agreement is defined in Section 10.1. Unregulated Business is defined in the definition of Business set forth in this Article 1. ARTICLE 2. PURCHASE AND SALE OF SHARES 2.1 Purchase and Sale of Shares. Subject to the terms and conditions of this Agreement, Seller agrees to sell and deliver to Buyer, and Buyer agrees to purchase and accept, as of the Effective Date, the Shares, free and clear of all security interests, liens, or encumbrances. 2.2 Property. For purposes of this Agreement, the "Property" consists of the Telephone Plant, Contracts and Leases (to the extent permitted following compliance with Section 5.3), Company Books and Records, FCC Licenses, the Non-FCC Authorizations and other assets in effect or owned by the Company as of the Effective Date that are associated with (i) the telephone exchanges listed in Schedule 2.2(a) (the "Exchanges"), and (ii) the Unregulated Business described on Schedule 2.2(b). 2.2.1 Telephone Plant. For purposes of this Agreement, "Telephone Plant" means the Real Property, machinery, equipment, vehicles and all other assets and properties used, or held for future use, in connection with the conduct of the Business, including, without limitation, all improvements, plants, systems, structures, construction work in progress, telephone cable (wherever located and whether in service or under construction), microwave facilities (including frequency spectrum assignments), telephone line facilities, telephones, machinery, furniture, fixtures, tools, implements, conduits, stations, substations, equipment (including, without limitation, central office equipment, subscribers' station equipment and other equipment in general), instruments, house-wiring connections and all other equipment of every nature and kind owned by the Company or in which the Company holds an interest (other than as a lessee) and used in connection with the Business. For purposes of this Agreement, "Real Property" means the real property owned by the Company and used in connection with the Business, including, without limitation, all land, buildings, structures, easements, rights of way, appurtenances, improvements or privileges located thereon and relating thereto. Without limiting the generality of the foregoing, the Telephone Plant includes the assets that would be properly included in the fixed asset accounts referenced in Part 32 of the FCC's Rules and Regulations (47 C.F.R. Part 32), as such accounts are reflected in Schedule 9.1.19. 2.2.2 Contracts. For purposes of this Agreement, "Contracts" means all agreements that relate to the Business between the Company or any Affiliate of the Company and (i) the Company's subscribers or customers, or (ii) other entities or persons who are not Affiliates of the Company and have business relationships with the Company relating to the Business, except for the Excluded Contracts (some of which are specifically governed by other Sections in this Agreement or the Employee Transfer Agreement). 2.2.3 Company Books and Records. For purposes of this Agreement, "Company Books and Records" means all of the Company's customer or subscriber lists and records, accounts and billing records (including a copy of the detailed general ledger and the summary trial balances, where available for the past two fiscal years), detailed continuing property record lists, plans, blueprints, specifications, designs, drawings, surveys, engineering reports, personnel records (where applicable), Original Cost Documents (where located in the Exchanges but excluding Excluded Books and Records) and all other documents, computer data and records (including records and files on computer disks or stored electronically) relating to the Business (excluding Excluded Books and Records), the Property and the Transferred Employees, except for the Excluded Books and Records. 2.2.4 FCC Licenses. For purposes of this Agreement, "FCC Licenses" means all licenses, certificates, permits or other authorizations, including, without limitation, Section 214 authorizations where applicable, granted to the Company by the FCC. 2.2.5 [INTENTIONALLY DELETED] 2.2.6 Non-FCC Authorizations. For purposes of this Agreement, "Non-FCC Authorizations" means all licenses, certificates, permits, franchises, or other authorizations (other than FCC Licenses) granted to the Company by Governmental Authorities (including without limitation those that are listed or required to be listed on Schedule 9.1.17(c)). ARTICLE 3. PURCHASE PRICE 3.1 Purchase Price. (a) In consideration of the sale of the Shares and the other undertakings of Seller in this Agreement, and subject to and in accordance with the other terms and conditions of this Agreement, on the Closing Date, Buyer will pay to Seller the sum of Fifty Four Million One Hundred One Thousand Dollars ($54,101,000.00), subject to adjustment as provided in Section 3.2 (the "Purchase Price"). (b) (i) On or before the Closing Date, Buyer shall deliver to Seller, in immediately available funds in U.S. Dollars, the Estimated Purchase Price. Such delivery shall be made by bank wire transfer to an account that Seller shall designate at least two (2) business days prior to the Effective Date. (ii) Buyer will use its best efforts to make the wire transfer of the Estimated Purchase Price by 12:00 noon (Eastern Time) on the Closing Date, provided that all conditions to Closing set forth in Article 7 have been satisfied, or waived by the appropriate party, before such time. 3.2 Adjustments to Purchase Price. (a) Adjustment Regarding Damaged Property. (1) If the provisions of Section 11.9(c)(i) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to repair or replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (2) If the provisions of Section 11.9(c)(ii) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (b) [INTENTIONALLY DELETED] (c) Adjustment Regarding June 1994 Base Amount. The Purchase Price shall be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which the sum of Net Telecommunications Plant and Materials and Supplies as of the Effective Date exceeds or is less than the June 1994 Base Amount; provided, however, that in determining Net Telecommunications Plant and Material and Supplies as of the Effective Date, no effect will be given for: (i) any decrease thereof resulting from damage, loss or destruction of Damaged Property which is repaired or replaced by Seller or the Company or for which Seller or the Company makes a substitution, in accordance with Section 11.9(b); (ii) any increase thereof resulting from expenditures made by Seller or the Company in connection with any such repair, replacement or substitution of Damaged Property in accordance with Section 11.9(b); or (iii) any increase thereof resulting from Seller's expenditures pursuant to its obligations under Section 14.1.7(b) and (c) except for the cost of purchasing specific items of new plant (i.e., storage tanks). (d) Adjustment Regarding Assets and Liabilities. The Purchase Price will be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which, in each case as of the Effective Date: (i) Adjusted Total Current Assets plus Adjusted Total Non-Current Assets exceeds or is less than (ii) Adjusted Total Current and Non-Current Liabilities plus Total Long Term Debt to the extent such Total Long-Term Debt shall remain outstanding immediately after the Effective Date. 3.3 Estimate of Purchase Price. At least five (5) days prior to the date scheduled for Closing, Seller shall deliver to Buyer an estimate of the Purchase Price based on Seller's good faith estimate of the amount of each adjustment described in Section 3.2 (the "Estimated Purchase Price") on the same basis and in accordance with the same accounting principles, methods and practices applied in preparing the Financial Statements and the Additional Financial Statements, if applicable, taking into account all adjustments required in Section 3.2 (using the balances as reflected on the Company's Balance Sheet as of the end of the month immediately preceding the month in which the Effective Date is scheduled to occur for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and accompanied by a reasonably detailed statement, certified by the chief financial or accounting officer of Seller, describing how each such adjustment was determined. 3.4 Adjustments After Closing. (a) Within sixty (60) days following the Effective Date, Buyer shall deliver to Seller final calculations of the Purchase Price, as adjusted pursuant to Section 3.2 (prepared on the same basis (but using the balances reflected on the Company's Balance Sheet as of the Effective Date for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and in accordance with the same accounting principles, methods and practices used to prepare the Estimated Purchase Price) which shall be accompanied by a reasonably detailed statement certified by the chief financial or accounting officer of Buyer describing how each such adjustment was determined. (For the purpose of preparing Buyer's calculations and adjustments, Seller shall give Buyer access to all books, records, and other information regarding the Company available to Seller that Buyer may reasonably determine appropriate.) Within thirty (30) days following the delivery of such calculations and adjustments, Seller shall notify Buyer of any objection thereto, stating in reasonable detail the reasons therefor; otherwise, such calculations and adjustments of the Purchase Price shall be final and binding on Seller and Buyer. (For the purpose of reviewing Buyer's calculations and adjustments, Buyer shall give Seller access to all books, records, and other information regarding the Company available to Buyer that Seller may reasonably determine appropriate.) If Seller shall object, Seller and Buyer shall work in good faith to agree on the correct amounts for the final Purchase Price, but if they fail to agree, either party may exercise its rights pursuant to Article 16. (b) Within three (3) business days following the day on which the Purchase Price shall become final, whether by expiration of time or agreement of Seller and Buyer (the "Final Purchase Price"): (i) if the Final Purchase Price shall exceed the Estimated Purchase Price, Buyer shall cause to be transferred to such account in the United States as Seller may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer, or (ii) if the Estimated Purchase Price shall exceed the Final Purchase Price, Seller shall cause to be transferred to such account in the United States as Buyer may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer. It is the intent of the parties that all Purchase Price adjustments that are not disputed shall be paid by the appropriate party as soon as reasonably practicable, and any disputed amounts will not delay payments with respect to amounts not in dispute. ARTICLE 4. [INTENTIONALLY DELETED] ARTICLE 5. REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS 5.1 Governmental Regulatory Approval. Except as provided in Section 5.4, as promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date with respect to applications to be filed with the PUC and with respect to Material Regulatory Approvals, the parties shall file the applications and notices described on Schedule 5.1 in such form as agreed to by the parties with the PUC and other appropriate Governmental Authorities, seeking an order permitting the transfer of control of the Company to Buyer (the "Regulatory Approvals"). Each party agrees to use its best efforts to obtain the Regulatory Approvals and the parties agree to cooperate fully with each other and with all Governmental Authorities to obtain the Regulatory Approvals as described on Schedule 5.1 at the earliest practicable date. The parties agree that the Regulatory Approvals containing asterisks on Schedule 5.1 constitute material Regulatory Approvals (the "Material Regulatory Approvals") which are subject to Sections 7.1.3 and 7.2.4, and the Regulatory Approvals that do not contain an asterisk on Schedule 5.1 constitute Immaterial Regulatory Approvals (the "Immaterial Regulatory Approvals") which are subject to Section 5.3, but not Sections 7.1.3 and 7.2.4. 5.2 Debtholder Consents; Indebtedness Releases or Terminations. (a) With respect to the Company's long-term indebtedness identified on Schedule 5.2(a) (the "Long Term Indebtedness"), where required by the underlying debt instruments, as promptly as practicable following the Execution Date, but in any event no more than forty-five (45) days thereafter, the parties shall contact the holders of such indebtedness to request, and use their best efforts to obtain, such holders' consent ("Debtholder Consents") to the transfer of control of the Company on terms acceptable to the parties. The parties acknowledge that all Long Term Indebtedness for which Debtholder Consents have been obtained before the Effective Date and all other Long Term Indebtedness for which Debtholder Consent is not required, shall remain outstanding immediately after the Effective Date and shall be included as a Purchase Price adjustment pursuant to Section 3.2(d). Each party shall bear their own costs and expenses in obtaining such Debtholder Consent. Neither party, however, shall be required to make any payment to the debtholder to obtain the Debtholder Consent, except that Seller shall be responsible for any such payments as are specified in the relevant debt agreement. (b) If within thirty (30) days prior to the Closing Date, the parties have been unable to obtain the Debtholder Consents with respect to any Long Term Indebtedness, the Company shall repay such Long Term Indebtedness in full (including all interest and premiums or penalties thereon). (c) With respect to Long Term Indebtedness that the Company shall repay on or prior to the Effective Date, Seller shall take, at Seller's sole cost and expense, all actions necessary with respect to all persons or entities (collectively, the "Secured Parties") holding any security interest or lien against the Property, to obtain the termination or release, as of the Effective Date, and the prompt removal after the Effective Date, of all security agreements, mortgages and financing statements relating to the Property (such terminations and releases being hereinafter collectively referred to as the "Indebtedness Releases or Terminations"). Buyer agrees to cooperate in good faith with Seller in obtaining the required Indebtedness Releases or Terminations. 5.3 Other Consents. (a) As promptly as practicable after the Execution Date, the parties hereto shall mutually seek the consent, approval or waiver of the other party to any Lease or Contract that requires consent, approval or waiver as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares. To the extent any of the approvals, consents or waivers required with respect to any Lease, Contract or Immaterial Authorization have not been obtained with respect to any Lease, Contract or Immaterial Authorization as of the Effective Date, Seller shall continue to use its best efforts to obtain the consent of such other third party that is required for the transfer of control of such Lease, Contract or Immaterial Authorization after the Effective Date. (b) Notwithstanding anything to the contrary contained herein, if a third party refuses or has failed to consent to the transfer of control of a Lease, Contract or Immaterial Authorization after the Seller has used its best efforts for a period of six months after the Effective Date to obtain such consent, waiver or approval, then Seller and Buyer shall within thirty (30) days after expiration of such six-month period negotiate in good faith and agree upon, and Seller shall pay to Buyer, an amount representing fair compensation to Buyer for the harm caused by the failure to obtain such consent, waiver or approval. Following such payment, Seller shall have no further obligation to Buyer with respect to such Lease, Contract or Immaterial Authorization except as otherwise provided in Section 11.12 with respect to the Contracts and Excluded Contracts addressed in Section 11.12. (c) Seller shall bear all reasonable costs and expenses in obtaining such consents, approvals or waivers to the extent such costs or expenses are specified in the relevant Lease, Contract or Immaterial Authorization, or under applicable Law, and shall reimburse Buyer to the extent Buyer makes any transfer payments which are specified in amount and required under any Lease or Contract to the lessor or other party thereto, provided that seven (7) business days before Buyer makes any transfer payments, Buyer will notify Seller of its intent to do so and after making such transfer payment, Buyer will provide evidence satisfactory to Seller that such transfer payment was made. Buyer and Seller will negotiate in good faith to determine the extent to which each will bear any other costs and expenses arising in connection with obtaining such consents, approvals and waivers. 5.4 FCC Consents. As promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date, the parties shall file all applications and requests described on Schedule 5.4 in such form as agreed to by the parties with the FCC seeking, and shall use their best efforts to obtain, the FCC's consent to the transfer of control of all FCC Licenses (as listed in Schedule 9.1.17(b)) from Seller to Buyer (the "FCC Consents"). The parties each agree that in connection with taking the immediately above described actions, they will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the National Exchange Carrier Association Tariff F.C.C. No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. Each party agrees to use its best efforts, and the parties agree to cooperate fully with each other and with the FCC, to obtain the FCC Consents at the earliest practicable date. 5.5 HSR Act Review. As promptly as practicable after the Execution Date but in no event later than thirty (30) days after the Execution Date, the parties will make such filings as may be required by the HSR Act with respect to the sale contemplated by this Agreement. Thereafter, the parties will file as promptly as practicable any supplemental information that may be requested by the U.S. Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR Act. The parties agree to cooperate in seeking early termination of the waiting periods under the HSR Act. ARTICLE 6. PRECLOSING COVENANTS 6.1 Investigation by Buyer. (a) Prior to the Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford to the authorized representatives of Buyer reasonable access during normal business hours to the books and records of the Company (including, without limitation, relevant tax information) and to the personal property and Real Property comprising the Property. Buyer and Seller will cooperate with each other to schedule such access. With the consent of Seller (which consent will not be unreasonably withheld), Buyer and its representatives shall have access to all interexchange carriers having business relationships with the Company, to all customers of the Company, and to all officers, employees and agents of the Company having knowledge or information concerning the operations of the Company so as to afford Buyer the opportunity to make such review, examination and investigation of the Company and the Property as Buyer may desire to make, to evaluate the competitiveness of the Company and the Business, and to enable Buyer to assimilate the Company and the Business into Buyer's operations as soon as practicable after the Effective Date. To the extent it so desires, Seller shall accompany Buyer on all of Buyer's access to interexchange carriers, customers and agents of the Company. Buyer will be permitted to make extracts from or copies of such books and records as may be reasonably necessary. Buyer will not contact any employee, customer or supplier of the Company as to this Agreement or the matters involved herein except in accordance with this Section 6.1. (b) Subject to applicable law, and upon Buyer's request and Seller's consent (which consent will not be unreasonably withheld), Seller shall cause the Company to permit, at Buyer's sole cost and expense: (i) certain key employees and officers of the Company selected by Buyer to attend workshops and training sessions of Buyer (including sessions to train such employees in Buyer's business planning process in order to have the Company after the Effective Date follow Buyer's business planning process and procedures); (ii) The Company's management to work with Buyer during Buyer's planning process between the Execution Date and the Effective Date; (iii) Buyer to confer with the Company about, and to participate in the Company's planning for, any material reduction in work force or other arrangements regarding employees required or implemented pursuant to the Employee Transfer Agreement. (c) As promptly as reasonably practicable after Buyer's request, Seller will furnish, and cause the Company to furnish, such financial and operating data and other information pertaining to the Company as Buyer may reasonably request in order, among other things, to comply with Buyer's disclosure obligations under the federal securities or other laws as such obligations relate to Buyer's prospective ownership of the Company, including any disclosure required in connection with the sale of any securities by Buyer; provided, however, that nothing herein will obligate Seller or the Company to take actions that would unreasonably disrupt the normal course of the business of the Company or violate the terms of any applicable Law or any contract to which the Company is a party or to which any of its assets is subject in providing such information, or to incur any costs with respect to Buyer's external auditors (or the Company's external auditors in the event a report by such auditors is requested by Buyer) providing accounting services with respect to issuing an auditor's report required by Buyer. Any information or document provided to Buyer or acquired by Buyer during this investigation shall be deemed "Evaluation Material" as that term is defined in the Confidentiality Agreement and shall be subject in all cases to the terms of the Confidentiality Agreement; provided, however, that following consultation with Seller, Buyer may disseminate financial or other information with respect to the Business or the Company that Buyer, upon consultation with counsel, determines is required to be disclosed under federal securities laws. (d) Prior to Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will cause the Company to afford the authorized representatives of Buyer access to the Properties in order to conduct the environmental audit contemplated by Section 14.1. (e) In connection with the continuing operation of the Business between the Execution Date and the Effective Date, Seller shall cause the Company to confer in good faith with Buyer, as reasonably requested by Buyer from time to time, to report on material operational matters, material reductions in work force and other material employee matters, and the general status of ongoing operations. (f) Notwithstanding the provisions of this Agreement or the Confidentiality Agreement, from and after the Execution Date, upon the prior consent of Seller (which consent will not be unreasonably withheld), Buyer may disclose Evaluation Material (as defined in the Confidentiality Agreement) to representatives of rating agencies, underwriters, underwriters' counsel, public accountants, prospective lenders and other third parties involved in any of Buyer's offering of securities or other financings and to fixed income and equity analysts to the extent such parties reasonably have a need to know any such information; provided, that such parties shall (y) be advised of the confidential nature of any Evaluation Material they receive, and (z) agree in writing to be bound to the provisions of the Confidentiality Agreement. 6.2 Satisfaction of Conditions. Without limiting the generality or effect of any provision of Article 7, the parties will use their best efforts to satisfy promptly all conditions required to be satisfied prior to the Closing. 6.3 Notification as to Certain Matters. (a) The Buyer will promptly notify Seller of (i) any information that would cause any representation or warranty of Buyer contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the transactions contemplated by this Agreement; of which in any such case, Buyer's representatives listed on Schedule 6.3(a) become aware on or before the Effective Date. Buyer shall use reasonable best efforts to keep Seller informed of the events described in this Section 6.3(a) and shall permit Seller access to all materials prepared by Buyer in connection therewith. (b) The Seller will promptly notify Buyer of (i) any information that would cause any representation or warranty of Seller contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the Company, the Business or the transactions contemplated by this Agreement; of which in any such case, Seller's representatives listed on Schedule 6.3(b) become aware on or before the Effective Date. Seller shall use reasonable best efforts to keep Buyer informed of the events described in this Section 6.3(b) and shall permit Buyer access to all materials prepared by Seller in connection therewith. ARTICLE 7. CONDITIONS PRECEDENT TO THE CLOSING 7.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Buyer: 7.1.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been no material breach by Seller of any of its covenants to be performed in whole or in part prior to the Closing and the representations and warranties of Seller in Section 9.1 (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) shall be true and correct as of the Effective Date, except for such representations or warranties that are made expressly as of some other date, which shall be true and correct (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) as of such other date, and Seller shall have delivered to Buyer a certificate in the form attached hereto as Schedule 7.1.1 ("Seller's Closing Certificate"), dated as of the Effective Date and signed by one of Seller's Executive Officers, certifying each of the foregoing, or specifying those respects in which such covenants have been materially breached or such representations and warranties (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) are not true and correct in which event, if the Closing occurs, any claim with respect to matters so specified shall be waived by Buyer unless otherwise expressly agreed by Seller at Closing. 7.1.2 Documents. Seller shall have delivered to Buyer all documents required by Section 8.2. 7.1.3 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions or restrictions which Buyer determines, in good faith and in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Buyer of the transactions contemplated by this Agreement. For purposes of this Section 7.1.3, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.1.4 Material Adverse Changes. There shall have been no material adverse changes to the Property as a whole or the financial position or results of operations of the Company as a whole, and, subject to Section 11.9, the Company shall not have suffered any material loss or damage to the Property, whether or not insured, that would materially affect or impair the Company's ability to conduct the Business after the Effective Date. None of the Additional Financial Statements of the Company delivered pursuant to Section 11.4 shall reflect a material change in the financial position or results of operations of the Company from the financial position or results of operations reflected in the Financial Statements. 7.1.5 Real Estate Transfers. Seller shall have complied with Section 11.16 with respect to its Real Property to be transferred to Buyer. 7.1.6 Lessor and Other Third Party Consents. Seller shall have delivered to Buyer all consents, approvals or waivers of lessors or other third parties to the Material Agreements as so identified by an asterisk on Schedules 9.1.9 and 9.1.13, as such Schedules may be amended pursuant to Section 11.24. All of such delivered consents, approvals or waivers shall be in effect as of the Effective Date. 7.1.7 [INTENTIONALLY DELETED] 7.1.8 Litigation. There shall not be any litigation or other proceeding pending or to the best of Buyer's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Buyer, would involve material expense to Buyer. 7.1.9. Corporate Proceedings. All corporate proceedings required to be taken by Seller in connection with the transactions contemplated by this Agreement shall have been taken; 7.1.10 Lien Searches. Seller shall have delivered to Buyer reasonably comprehensive searches, dated as of a date within 30 days of the Execution Date or any time thereafter, of the public records regarding liens and judgments with respect to the Company, the Business and the Property. 7.1.11. Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Buyer if required by the underlying debt instrument shall have received the Debtholder Consents and shall have entered into any other necessary agreements with the holders of such Long-Term Indebtedness evidencing such Debtholder Consent in form and substance reasonably acceptable to Buyer. 7.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Seller: 7.2.1 No Misrepresentations or Breach of Covenants and Warranties. There shall have shall have been no material breach by Buyer of any of its covenants to be performed in whole or in part prior to the Closing, and the representations and warranties of Buyer in Section 9.2 shall be true and correct as of the Effective Date, except for such representations or warranties made expressly as of some other date, which shall be true and correct as of such other date (all such representations and warranties to be qualified by any materiality standards contained therein), and Buyer shall have delivered to Seller a certificate ("Buyer's Closing Certificate"), dated as of the Effective Date and signed by one of Buyer's Executive Officers, certifying each of the foregoing or specifying those respects in which such covenants have not been performed or such representations and warranties are not true and correct in which event if the Closing occurs any claim with respect to matters so specified shall be waived by Seller unless otherwise expressly agreed by Buyer at Closing. 7.2.2 Documents. Buyer shall have delivered to Seller all documents required by Section 8.3. 7.2.3 Purchase Price. Buyer shall have delivered to Seller, in the manner specified in Section 3.1, the Estimated Purchase Price as adjusted pursuant to Section 3.2. 7.2.4 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions, or restrictions which Seller determines, in good faith in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Seller of the transactions contemplated by this Agreement. For purposes of this Section 7.2.4, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.2.5 Corporate Proceedings. All corporate proceedings required to be taken by Buyer in connection with the transactions contemplated by this Agreement shall have been taken. 7.2.6 Litigation. There shall not be any litigation or other proceeding pending or to the best of Seller's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Seller would involve a material expense to Seller. 7.2.7 [INTENTIONALLY DELETED] 7.2.8 Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Seller, if required by the underlying debt instrument, shall have received the Debtholder Consent. ARTICLE 8. THE CLOSING 8.1 The Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall be held at a place mutually agreed upon by the parties at 9:00 a.m., local time, on the last calendar day (the "Closing Date") of the calendar month in which occurs the tenth (10th) business day after the date Seller notifies Buyer in writing (the "Notice") of its determination that all required Material Regulatory Approvals and FCC Consents have been obtained and provided that the other conditions set forth in Article 7 shall have been satisfied, or at such other place and time as may be agreed upon by Seller and Buyer. The transactions to be consummated at Closing shall be deemed to have been consummated as of 11:59 p.m. on the last calendar day of the calendar month in which occurs the tenth (10th) business day after the date of the Notice (the "Effective Date"). If the Effective Date is not a day on which financial institutions are open and operating, then the Closing Date shall be the immediately following business day on which financial institutions are open and operating. 8.2 Seller's Obligations at Closing. At the Closing, Seller shall deliver to Buyer the following documents duly executed and acknowledged, as appropriate: (a) Certificates representing the Shares, duly endorsed for transfer or accompanied by stock powers duly endorsed in blank. (b) Seller's Closing Certificate. (c) [INTENTIONALLY DELETED.] (d) Indebtedness Releases and Terminations and evidence satisfactory to Buyer that all Long-Term Indebtedness (and interest, premiums and penalties thereon) to be repaid pursuant to Section 5.2(b) has been (or will be at Closing) repaid in full. (e) All of the documents and papers required of Seller as conditions to Closing, including without limitation, the Regulatory Approvals, FCC Consents and the documents required to be delivered by Seller pursuant to Section 11.16. (f) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (g) The Environmental Remediation Agreement if required pursuant to Section 14.1.7(d). (h) All documents required of Seller under the Employee Transfer Agreement. (i) Certificate of the Secretary or Assistant Secretary of Seller certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. (j) Resignations of all officers and directors of the Company, effective as of the Effective Date. 8.3 Buyer's Obligations at Closing. At the Closing, Buyer shall deliver to Seller the following items and documents duly executed and acknowledged as appropriate: (a) The Estimated Purchase Price (as adjusted under Section 3.2), in the manner specified in Section 3.1; (b) Buyer's Closing Certificate (c) All of the documents and papers required of Buyer as conditions to Closing, including, without limitation, the Regulatory Approval and FCC Consents. (d) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (e) The Environmental Remediation Agreement if required pursuant to Section 14.17(d). (f) All documents required of Buyer under the Employee Transfer Agreement. (g) Certificate of the Secretary or Assistant Secretary of the Buyer certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties of Seller. Except as to the environmental matters which are exclusively addressed in Article 14 of this Agreement, Seller represents and warrants to Buyer as follows: 9.1.1 Authorization and Effect of Agreement. Seller has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement and to fulfill its respective obligations under this Agreement. The execution and delivery by Seller of this Agreement and the fulfillment of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and, assuming the due execution and delivery of this Agreement by Buyer, constitutes a valid and binding obligation of Seller, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualification that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.1.2 No Restrictions Against Sale of the Shares. The execution and delivery of this Agreement by Seller does not, and the fulfillment by Seller of its obligations under this Agreement will not, (i) conflict with or violate any provision of Seller's or the Company's certificate of incorporation or bylaws or, (ii) except as set forth in Schedule 9.1.13, or subject to obtaining the approvals and consents reflected in Article 5, conflict with, violate or result in the breach of, constitute a default under, accelerate the performance required by, or result in the creation of any encumbrance upon any of the Property under any provision of any Contract other than any such conflict, violation or breach that alone or in the aggregate would not have an adverse effect on the Buyer, the Company, the Business or the Property after the Effective Date. 9.1.3 Consents and Approvals of Governmental Authorities. No consent, approval, order or authorization of, or registration, declaration or filing with, any court or governmental agency, authority or instrumentality, including, without limitation, the Navajo Nation ("Governmental Authority") is required to be obtained or made by or with respect to Seller or the Company or in connection with the execution and delivery of this Agreement by Seller or the fulfillment by Seller of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, (ii) as described in Schedule 9.1.3, and (ii) such other consents, approvals, orders or authorizations, or registrations, declarations or filings, which if not obtained or made would not result in a material adverse effect on Buyer, the Company, the Business or the Property. 9.1.4 No Violation of Law. Except as indicated in Schedule 9.1.4, the execution and delivery of this Agreement and the fulfillment by Seller of its obligations under this Agreement will not violate any applicable existing statute, ordinance, rule, regulation or common law obligation (collectively, "Law"), except where such violation would not have a material adverse effect on the Company, the Business as a whole or on any significant part of Property after the Effective Date. 9.1.5 Corporate Organization of Seller. Seller is a corporation duly organized, validly existing and in good standing under the laws of Delaware; it has full corporate power and authority to own the Shares and perform its obligations under this Agreement. 9.1.6 Brokers. Seller has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Buyer for any broker's or finder's fees or similar fees or expenses. 9.1.7 Liabilities. The Company is not in default with respect to any of its obligations or liabilities, or the performance, observance or fulfillment of any covenant or condition relating thereto, and no event has occurred and is continuing that constitutes a material breach or default thereunder or that would constitute such a material breach or default with the giving of notice or lapse of time, or both. 9.1.8 Title to Property. The Company has good, valid, undivided, marketable and defensible title to all owned Property, free and clear of all restrictions, charges, liens, or encumbrances of any kind, except for (i) the liens, encumbrances and restrictions shown and disclosed on Schedule 9.1.8-1, (ii) current real and personal property taxes and other statutory liens covering amounts not yet due and payable, and (iii) such other imperfections of title and encumbrances, if any, as do not interfere in any material respect with the present use or value of the item of owned Property to which such imperfection or encumbrance relates. No condemnation proceeding is pending or, to the knowledge of Seller or the Company, threatened with respect to any part of the Property and such Property is not in any violation of any restrictive covenant relating thereto. Schedule 9.1.8-2 sets forth the address and a general description of each item of Real Property owned by the Company included in the Property. In addition, Schedule 9.1.8-2 sets forth a list of the Real Property included in the Property in which the Company holds other than a fee interest (such as easements and rights of way). 9.1.9 Leases. Seller has set forth on Schedule 9.1.9 a list of all the Leases. Each of the Leases is valid, binding and enforceable in accordance with its terms, and except as otherwise disclosed in Schedule 9.1.9, there is not any existing material default or existing material breach of a covenant by the Company under any Lease. The Company enjoys peaceful and undisturbed possession under all material Leases and, to Seller's and the Company's knowledge, the lessor under any such Lease is not (with or without notice or the lapse of time, or both) in material breach or default thereunder, has performed all material obligations required to be performed by it thereunder, and has not given notice of such lessor's intent to terminate such Lease. 9.1.10 Condition of Tangible Assets. All of the tangible Property is in substantially good operating condition and repair, normal wear and tear excepted, well maintained, adequate for the present uses thereof and in compliance in all material respects with applicable federal, state and local ordinances, regulations and statutes relating to the ownership and operation of such Property. Except as set forth on Schedule 9. 1. 10, the Company has not received any written notice within the past twelve (12) months of a violation of any ordinances, regulations or building, zoning and other similar laws with respect to such assets that would have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Each parcel of Real Property and, to the knowledge of Seller and the Company, of real estate leased by the Company and material or necessary to the Business as presently conducted substantially complies with all applicable Laws except where the failure to so comply individually or in the aggregate, would not have a material adverse effect on the Company, the Business as a whole or any such parcel after the Effective Date. Except as set forth on Schedule 9.1.10, other than the Company, no person or party has actual possession or has a right to possession of all or any material portion of any parcel of such Real Property or such leased real estate. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 9.1.10, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED OR STATUTORY, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE PERSONAL PROPERTY INCLUDED IN THE PROPERTY AND HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED OR STATUTORY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. 9.1.11 Financial Statements. (a) Seller has delivered to Buyer a true and correct copy of the Company's audited financial statements, consisting of a balance sheet, income statement and related statement of cash flows as of and for the respective periods ended December 31, 1992, and December 31, 1993, together with the auditor's report thereon (the "Financial Statements"). The Financial Statements were prepared based upon the books and records of the Company, and fairly present in all material respects the financial condition of the Company as of the appropriate periods and the results of operations for the year then ended, in each case in conformity with GAAP and to the best of Seller's knowledge and to the extent required by applicable Law, have been prepared in all material respects in conformity with the regulations of the FCC and the PUC. The Financial Statements contain no untrue statements of any material fact nor omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Additional Financial Statements to be delivered to Buyer pursuant to Section 11.4 hereof (i) will be prepared in each case in accordance with GAAP (except for the omission of notes thereto with respect to interim Additional Financial Statements), consistent with past practices, from the books and records of the Company; and (ii) will fairly present the financial condition of the Company and the results of operations of the Company for the periods indicated, subject, in the case of interim Additional Financial Statements, to normal year-end adjustments which will not be material in amount or effect; and (iii) to the best of Seller's knowledge and to the extent required by applicable Law, will be prepared in all material respects in conformity with the regulations of the FCC and the PUC; and (iv) will not contain any untrue statements of any material facts or omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) The unaudited balance sheet of the Company as of June 30, 1994 was prepared in accordance with GAAP except for the omission of notes thereto, consistent with past practices, from the books and records of the Company and fairly presents the financial condition of the Company as of such date subject to normal year-end adjustments which will not be material in amount or effect, and to the best of Seller's knowledge and to the extent required by applicable Law, was prepared in all material respects in conformity with the regulations of the FCC and the PUC. 9.1.12 Absence of Material Changes. Except as Seller may disclose in Schedule 9.1.12, since December 31, 1993, there has not been: (a) Except as described in Section 11.22, any material change in the financial condition, results of operations, assets, liabilities, operations or future business prospects of the Company or the Business; (b) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the Property, the Company or the Business; (c) Except as described in Section 11.22, any disposition (including, without limitation, the grant of a license, franchise, option or other right of any nature whatsoever to sell or distribute) or encumbrance or agreement to dispose of or to encumber, or pledge or grant of a security interest in or agreement to pledge or grant a security interest in, any of the Property, or any increase or an agreement to increase any indebtedness of the Company, except in the ordinary course of business; (d) Any material change in the Company's tariffs or in the manner of conducting the Business; (e) Except as described in Section 11.22, any dispute, litigation or other event or condition that materially and adversely affects the business or prospects of the Company, the Business or the Property; (f) Any waiver or release of any material rights or settlement of any material dispute involving the Company, the Business or the Property; (g) Any granting of a material salary increase or other material benefits payable to any Employee, except for ordinary and routine salary increases or bonuses authorized or granted in the ordinary course of business and consistent with past practices; (h) Except as described in Section 11.22, any transaction entered into by Seller or the Company that would have a material adverse effect on the Company, the Business as a whole or the Property as a whole; (i) Any change in the accounting methods or practices of the Company except as required by GAAP or any change in depreciation or amortization policies or rates heretofore adopted by the Company except as required by GAAP; (j) Any material labor dispute or threat thereof which affects generally the Transferred Employees or, to Seller's or the Company's knowledge, any attempt to organize the Transferred Employees for the purpose of collective bargaining; (k) Any event that would have been prohibited under Section 11.5 if Section 11.5 had been in effect since December 31, 1993; (l) Except as described in Section 11.22, any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company of any outstanding shares of capital stock or other securities of, the Company; (m) any amendment of any material term of any outstanding capital stock of the Company; (n) any incurrence, assumption or guarantee by the Company of any indebtedness for borrowed money other than in the ordinary course of business and in amounts and on terms consistent with past practice; (o) Except as described in Section 11.22, any making of any loan, advance or capital contributions to or investment in any person or entity other than loans, advances, capital contributions or investments made in the ordinary course of business; or (p) Except as described in Section 11.22, any agreement or commitment by Seller or the Company (or any understanding between Seller or the Company and any third party) to do or to take any of the actions referred to in paragraphs (a) through (o) of this Section 9.1.12. 9.1.13 Contracts. Each of the Contracts is in full force and effect as of the date of this Agreement in accordance with its terms, and there is no outstanding notice of cancellation or termination in connection therewith. The Company is not in material breach or default in connection with any Contracts, and there is no basis for any claim of breach or default by the Company, or to Seller's the Company's knowledge, any other party, in any material respect under any of the Contracts. None of the Contracts, either separately or in the aggregate, materially and adversely affects the Company, the Business or the Property. After the Effective Date, all rights and obligations of the Company under the Contracts shall continue unimpaired in the Company (assuming that if any Contract requires the consent of the other party thereto, such consent will have been obtained by the parties hereto prior to the Effective Date). Except for the instruments specifically listed in Schedule 9.1.13, the Company is not a party to or subject to: (i) any agreement for the purchase or disposition of any material, equipment, supplies, inventory or service, except individual purchase orders and contracts in amounts less than Twenty-Five Thousand Dollars ($25,000.00); (ii) any agreement to which the Company is a party or by which any of the Property is bound relating to indebtedness for money borrowed including capital leases, security arrangements relating thereto and any amendment or waiver thereof; and (iii) any other agreement not of the type covered by any of the foregoing items of this Section 9.1.13 requiring payments by the Company in excess of Seventy-Five Thousand Dollars ($75,000.00) per agreement, on or after the Effective Date. Schedule 9.1.13 also lists (a) each Contract between the Company and any Affiliate of the Company, and (b) each material Contract between the Company, or an Affiliate of the Company and relating to the Business, and any third party. Seller has made available to Buyer true and correct copies of all agreements and instruments listed in Schedule 9.1.13. Schedule 9.1.13 specifically identifies, with respect to those Contracts which are required to be listed thereon, the Contracts which require the consent, approval or waiver of the other party thereto for the transfer of control of the Company. 9.1.14 Insurance. The Property of an insurable nature and of a character usually insured by companies carrying on similar businesses is insured under insurance policies in such amounts and against such losses or casualties as is (i) usual in such companies and (ii) required under any of the Contracts or Leases. The insurance policies referred to in this Section 9.1.14 are (i) listed on Schedule 9.1.14, and (ii) in full force and effect and the premiums due thereon have been duly and timely paid. The most current statement of values (the statement of values of property of an insurable nature that is submitted to an insurance company to be used as a basis for the calculation of premiums) relative to the Property as presently insured has been made available to Buyer by Seller. On the Effective Date, the coverage under the insurance policies and programs of Seller and its Affiliates applicable to the Company will be terminated, and Buyer will be responsible for providing all insurance coverage for the Company. Following the Effective Date, Seller shall be responsible for and shall pay any additional premiums that might be required by an insurance company for insurance coverage prior to the Effective Date relating to the Company and shall be entitled to any refunds or dividends due from such companies relating to such coverage. Schedule 9.1.14 sets forth a list of the open material claims affecting the Company complete in all material respects, and a description of any self-insurance levels, underlying limits and deductibles. 9.1.15 Taxes. (a) Except as set forth on Schedule 9.1.15(a): (i) Seller or the Company has filed or caused to be filed with the appropriate United States, state and local Governmental Authorities, all Tax Returns required to be filed on or prior to the Effective Date (taking into account all extensions of due dates) by or with respect to the Company and has paid or adequately provided for all Taxes shown thereon as owing, except where the failure to file such Tax Returns or pay any such Taxes would not, or could not reasonably be expected to, have a material adverse effect on Buyer, the Business, or the Company after the Effective Date, (ii) all such Tax Returns were or will be correct and complete in all material respects, (iii) to the knowledge of Seller, all withholding Tax requirements imposed on or with respect to the Company have been or will be satisfied in full in all respects, and (iv) all penalties, interest or other charges that have or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax have been or will be timely paid in full. (b) The Company has been subject to normal and routine audits, examinations and adjustments of Taxes from time to time, but there are no material current audits or material audits for which notification has been received (in either case, with respect to the Company) other than those set forth on Schedule 9.1.15(b). (c) Except as set forth in Schedule 9.1.15(c), there is no material written claim against the Company for any Taxes, and no material assessment, deficiency or adjustment has been asserted or, to the knowledge of Seller proposed with respect to any Tax Return of or with respect to the Company. (d) Except as set forth in Schedule 9.1.15(d), there is not in force any extension of time with respect to the due date for the filing of any Tax Return of or with respect to the Company or any waiver or agreement for any extension of time for the assessment or payment of any Tax of or with respect to the Company. (e) Except for Taxes due with respect to Tax Returns that will be paid by Seller, the balance sheet included in the Financial Statements includes adequate provisions for the payment in full of all federal and state income taxes of the Company for all taxable periods or portions thereof during the period beginning with respect to each Tax Return statute of limitations and ending no later than December 31, 1993. The balance sheet included in the Financial Statements has attached thereto a schedule (the "Tax Schedule") which sets forth provisions for such federal and state income taxes. (f) All accrued rights or obligations under any written or unwritten Tax allocation or sharing agreements or arrangements affecting the Company are reflected in the intercompany accounts of the Company. All such Tax allocation or sharing agreements or arrangements have been or will be cancelled on or prior to the Effective Date. No payments are or will become due by the Company after the Effective Date pursuant to any such agreement or arrangement. (g) Except as set forth in Schedule 9.1.15(g), none of the property of the Company is held in an arrangement for which partnership Tax Returns are being filed, and the Company does not own any interest in any controlled foreign corporation (as defined in Section 957 of the Code) or passive foreign investment company (as defined in Section 1296 of the Code). (h) Except as set forth in Schedule 9.1.15(h), none of the property of the Company or any of its Subsidiaries is subject to a safe- harbor lease (pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect after the Economic Recovery Act of 1981 and before the Tax Reform Act of 1986) or is "tax-exempt use property" (within the meaning of Section 168(h) of the IRC) or "tax-exempt bond financed property" (within the meaning of Section 168(g)(5) of the IRC). (i) Except as set forth in Schedule 9.1.15(i), the Company will not be required to include any amount in income for any taxable period beginning after December 31, 1993 as a result of a change in accounting method for any taxable period ending on or before December 31, 1992 or pursuant to any agreement with any Tax authority with respect to any such taxable period. (j) The Company has not consented to have the provisions of Section 341(f)(2) of the IRC apply with respect to a sale of its stock. (k) As a result of the transactions contemplated by this Agreement, neither Buyer nor the Company will be obligated to make a payment to an individual that would be a "parachute payment" to a "disqualified individual" as those terms are defined in Section 280G of the IRC without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future. (l) All Taxes that the Company is required by law to withhold or collect through the Effective Date have been or will be duly withheld or collected and, to the extend required, have been or will be paid to the proper governmental authorities or properly deposited as required by applicable laws. 9.1.16 No Material Claims. Except as disclosed in Schedule 9.1.16 or with respect to Taxes, there are no claims, actions, lawsuits or legal or administrative proceedings pending, or, to the knowledge of Seller or the Company, threatened against or affecting the Company or its properties that, if determined adversely to the Company, would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Neither Seller nor the Company knows of any reasonable basis for any such action, claim, lawsuit or proceeding or any governmental or regulatory investigation relative to the Company, the Business as a whole or the Property. The Company is not in default under any judgment, order or decree of any Governmental Authority which would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property after the Effective Date. 9.1.17 Tariffs: FCC Licenses, Non-FCC Authorizations. (a) With respect to federal tariffs, the Company is an issuing carrier in the National Exchange Carrier Association Tariff F.C.C. No. 5 for the purpose of providing interstate access service. Except as described on Schedule 9.1.17(a), the state regulatory tariffs applicable to the Company stand in full force and effect on the date of this Agreement in accordance with all terms of such state tariffs, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation or termination in connection therewith, nor is the Company subject to any restrictions or conditions applicable to its state regulatory tariffs that limit or would limit the operation of the Business (other than restrictions or conditions generally applicable to tariffs of that type). Except as described on Schedule 9.1.17(a), each such state tariff has been duly and validly approved by the appropriate state regulatory agency. Except as otherwise disclosed on Schedule 9.1.17(a), the Company is not in material violation under the terms and conditions of any such state tariff, and there is no basis for any claim of material violation by the Company in any material respect under any such state tariff. Except as described in Schedule 9.1.17(a), there are no applications by the Company or complaints or petitions by others or proceedings pending or threatened before the state regulatory authority relating to the Company, the Business or its operations or the state regulatory tariffs. To the knowledge of Seller and the Company, there are no material violations by subscribers or others under any such state tariff that would be material to the Company or the Business. A true and correct copy of each state tariff applicable to the Company or the Business has been delivered to Buyer. (b) Listed on Schedule 9.1.17(b) are the FCC Licenses held by the Company. Each such FCC License is in full force and effect in accordance with its terms, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation or termination in connection therewith nor are any of such FCC Licenses subject to any restrictions or conditions that limit the operation of the Business (other than restrictions or conditions generally applicable to licenses of that type). The FCC Licenses are free from all security interests, liens, claims, or encumbrances of any nature whatsoever. Except as set forth on Schedule 9.1.17(b), there are no applications by the Company or material complaints or material petitions by others or proceedings pending or threatened before the FCC relating to the Company or the FCC Licenses. (c) Listed on Schedule 9.1.17(c) are all Non-FCC Authorizations materially necessary for the conduct of the Business which would include, without limitation, all FAA radio tower ownership authorizations. Each such Non-FCC Authorization is in full force and effect in accordance with its terms. To Seller's and the Company's knowledge, no event has occurred with respect to any materially necessary Non-FCC Authorization which permits, or after notice or lapse of time or both would permit, revocation or termination thereof, or would result in any other material impairment of the rights of the holder of such materially necessary Non-FCC Authorization. 9.1.18 Employee Matters. (a) Schedule 9.1.18(a) lists (and identifies the sponsor of) each material "employee pension benefit plan, " as that term is defined in Section 3(2) of ERISA, each material " employee welfare benefit plan," as that term is defined in Section 3(1) of ERISA maintained or contributed to by the Company or any of its Affiliates in respect of any Transferred Employee (as defined below) (such plans being hereinafter referred to collectively as the "ERISA Plans"), and each other material retirement, pension, profit-sharing, money purchase, deferred compensation, incentive compensation, bonus, stock option, stock purchase, severance pay, unemployment benefit, vacation pay, savings, medical, dental, post-retirement medical, accident, disability, weekly income, salary continuation, health, life or other insurance, fringe benefit, or other employee benefit plan, program, agreement, or arrangement maintained or contributed to by the Company or its Affiliates in respect of or for the benefit of any Transferred Employee or former employee, excluding any such plan, program, agreement, or arrangement maintained or contributed to solely in respect of or for the benefit of Transferred Employees or former employees employed or formerly employed by the Company outside of the United States, as of the date hereof (collectively, together with the ERISA Plans, referred to hereinafter as the "Plans"). Seller has supplied Buyer with a true and complete copy of each Plan and all amendments thereto. Schedule 9.1.18(a) also includes a list of each material written employment, severance, termination or similar-type agreement between the Company or its Affiliates and any Transferred Employee (the "Employment Agreements"). Except to the extent that any assets, liabilities, or accounts are transferred from the Plans or Agreements (pursuant to an Employee Transfer Agreement or otherwise) to plan(s) or agreement(s) maintained or contributed to by Buyer, all such Plans and Agreements shall remain the liabilities of the Seller or its Affiliates and Seller shall take any and all steps necessary to ensure that neither Buyer nor the Company shall be a sponsor of any such Plan or Agreement subsequent to the Effective Date. Except as otherwise disclosed on Schedule 9.1.18(a), the execution and delivery of this Agreement by Seller and the performance of this Agreement by Seller will not directly result now or at any time in the future in (i) the payment by the Company or its Affiliates to any Transferred Employee of any severance, termination, or similar type payments or benefits or (ii) any "parachute payment" (as such term is defined in Section 28OG of the IRC) being made by the Company or its Affiliates to any Transferred Employee. (b) Except as set forth on Schedule 9.1.18(b): (i) Neither the Company nor any of its Affiliates, any of the ERISA Plans, any trust created thereunder, or any trustee or administrator thereof, has engaged in any transaction as a result of which the Company could be subject to any material liability pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC; and (ii) Since the effective date of ERISA, no material liability under Title IV of ERISA with respect to the ERISA Plans has been incurred or is reasonably expected to be incurred by the Company or any of its Affiliates (other than liability for premiums due to the PBGC), unless such liability is reserved for or otherwise reflected on the Financial Statements or unless such liability has been, or prior to the Effective Date will be, satisfied in full. (iii) There is no contract or Employment Agreement covering any Transferred Employee of the Company that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the IRC. (iv) Neither the Company nor any of its Affiliates has engaged in, or is a successor or parent corporation to a person that has engaged in, a transaction described in Section 4069 of ERISA. (c) Except as set forth on Schedule 9.1.18(c), with respect to the ERISA Plans other than those ERISA Plans identified on Schedule 9.1.18(a) as "multi-employer plans": (i) the PBGC has not instituted proceedings to terminate any Plan that is subject to Title IV of ERISA (the "Retirement Plans") and no condition exists or has existed which could constitute grounds for any termination by PBGC; (ii) no filing has been made by the Company, or any of its Affiliates with the PBGC to terminate any Retirement Plan identified on Schedule 9.1.18(a); (iii) none of the ERISA Plans has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the IRC), whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to the Execution Date; (iv) each of the ERISA Plans has been operated and administered in all material respects in accordance with its provisions and with all applicable laws; (v) each of the ERISA Plans that is intended to be "qualified" within the meaning of Section 401(a) of the IRC and, to the extent applicable, Section 401(k) of the IRC, has been determined by the IRS to be so qualified, and nothing has occurred since the date of the most recent such determination (other than the effective date of certain amendments to the IRC, the remedial amendment period for which has not yet expired) that would adversely affect the qualified status of any of such ERISA Plans; (vi) there are no pending material actions, claims or lawsuits which have been asserted or instituted against any of the ERISA Plans, the assets of any of the trusts under such Plan, the plan sponsor, the plan administrator, trustee or any other fiduciary of such Plans with respect to any aspect of such ERISA Plans (except for routine benefit claims or routine expenses). (d) Except as set forth on Schedule 9.1.18(d), none of the ERISA Plans is a "multi-employer plan," as that term is defined in Section 3(37) of ERISA and with respect to any such multiemployer plans (as so defined) listed in Schedule 9.1.18(d), Seller has not made or incurred a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA that would result in the incurrence of a material liability by the Company that is not reserved for or otherwise reflected on the Financial Statements. (e) Except as set forth on Schedule 9.1.18(e), no post-retirement medical and life insurance benefit obligations exist with respect to any Transferred Employees of the Company. (f) No Plan identified on Schedule 9.1.18(a) has any restrictions against termination or modification, either by its terms or, to Seller's or the Company's knowledge, due to any written or oral communications by any representative of the Company nor any of its Affiliates. (g) Except as set forth on Schedule 9.1.18(g), (i) none of the Transferred Employees are represented by a labor union or labor organization and (ii) neither the Company nor any of its Affiliates is a party to nor is the Company subject to, any collective bargaining agreement covering any Transferred Employee. There are currently no strikes, slowdowns, work stoppages or lockouts by or with respect to any Transferred Employee covered by collective bargaining agreements. Except as set forth on Schedule 9.1.18(g), to the best knowledge of Seller and the Company, during the twelve (12) months preceding the Execution Date there have not been any union organizational campaigns by or directed at the employees of the Company. Except as set forth on Schedule 9.1.18(g), no condition has existed or exists that has caused or could be expected to result in the imposition of any lien or encumbrance under ERISA or the IRC on any part of the Property. (h) Seller will make available to Buyer, prior to the Closing Date, a list of those Transferred Employees that Seller believes to have participated in the health or dependent care reimbursement accounts of the Company, together with the elections made prior to the Effective Date with respect to such accounts through the Effective Date. (i) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will cause any acceleration of benefits under any Plan. 9.1.19 Schedules of the Telephone Plant. Seller has set forth on Schedule 9.1.19 copies of schedules (at the level of detail agreed to by the parties but in any case including details regarding net book value and continuing property records lists associated therewith) of the Company's Telephone Plant as of June 30, 1994, including, to the extent available, a schedule specifically identifying the Telephone Plant that is associated with the Unregulated Business. The account balances reflected on the schedule of Telephone Plant correspond, in all material respects, to the associated account balances reflected on the Company's Continuing Property Records. 9.1.20. Accuracy of Certain Information. With respect to the Company's Business, Seller hereby represents and warrants to Buyer as follows: (a) The information regarding type of central office switch and number of access lines in service for each exchange set forth on Schedule 9.1.20 (a) is true and complete in all material respects as of the respective dates set forth thereon. (b) The information set forth only with respect to the 1993 column of the "Capital Budget-Network Modernization Forecast" attached as Schedule 9.1.20 (b) is true and complete as of December 31, 1993. (c) Schedule 9.1.20 (c) sets forth a substantially complete list of all vehicles included in the Property (including trailers, equipment mounted on trailers and self-propelled equipment) together with the manufacturer, model and year of each such vehicle, and indicates whether such vehicle is owned or leased by the Company. (d) [INTENTIONALLY DELETED] (e) Schedule 9.1.20(e) sets forth a true and complete list of the interstate billing and collection revenues and intrastate interlata billing and collection revenues of the Company for the year 1993. 9.1.21 Rate Base. Except as set forth on Schedule 9.1.21, the Company has no materials and supplies, plant or equipment that has been disallowed from rate base or excluded from the revenue calculations for any pool (unless due to the deregulation of the service for which such assets are used) or in the most recent rate order issued by the PUC or the FCC or any determination by an administrator of an interstate or intrastate pool, and has not received written notification that the PUC or the FCC or any pool administrator proposes to exclude any assets from rate base or revenue calculations for the pools, or any tariff filed with or approved in the most recent rate order of the PUC or the FCC, in each case which materials and supplies, plant or equipment, in the aggregate, would be in excess of one percent (1%) of Net Telecommunications Plant. 9.1.22 Payments. All material payments of any kind required to be made by the Company to third parties under any Contract and maturing prior to the Effective Date have been, or will be as of the Effective Date, properly and timely paid or provided for, unless otherwise subject to a bona fide dispute disclosed in Schedule 9.1.22. 9.1.23 Compliance with Laws. Except as Seller shall specifically indicate on Schedule 9.1.23, (i) the Company is in compliance in all material respects with all Laws applicable to it, the Property and the Business and holds all governmental permits or licenses required in order to conduct the Business and to own and operate the Property; (ii) the present uses of the Property in the conduct of the Business do not violate in any material respect any Law and (iii) no written notice or warning from any governmental or regulatory authority with respect to any failure or alleged failure by the Company to comply with any Law or questioning the validity of any governmental permit or license, has been issued or given, nor to the knowledge of Seller or the Company, is any such notice or warning proposed or threatened. Neither Seller nor the Company is aware of any fact, event or circumstance relating to the Company that is reasonably likely to cause a regulatory agency to deny or withhold its approval to the transactions contemplated hereby. 9.1.24 Correct Records. The financial records, ledgers, account books and other accounting records of the Company are current, correct and complete and reasonably well organized, in all material respects and to the knowledge of Seller and the Company, to the extent required by applicable Law, conform in all material respects with the rules and regulations of the FCC and PUC. The Company and its Affiliates have retained substantially all Original Cost Documents regarding the expenditures made by the Company within the immediately preceding two-year period that relate to the Company's Net Telecommunications Plant, and such Original Cost Documents are correct and complete in all material respects. 9.1.25 Materials and Supplies. As of the Effective Date, the value (as reflected on the Company's books) of the Company's materials and supplies relating to the Business which are obsolete or in excess of the requirements of the Business, will not materially exceed the Company's reserve for obsolete or excess Materials and Supplies as reflected on the Company's books. 9.1.26 Assets Necessary to the Business. The Property includes all of the assets and properties (including all licenses and agreements) currently being used or which are reasonably necessary to carry on the Business as currently conducted, other than the assets and properties included in the Excluded Property. 9.1.27 Indian and BIA Consents. (a) Schedule 9.1.27 sets forth all easements, rights-of-way, franchises, licenses, permits, consents, approvals, certificates and other authorizations of tribal authorities and the United States Bureau of Indian Affairs (the "BIA") held by the Company (collectively "Indian Authorizations"). All such Indian Authorizations are in full force and effect, the Company is not in material default thereunder, and there are no other Indian Authorizations required to be obtained by the Company from, or filings required to be made by the Company with, any tribal authority or the BIA; except where the failure to obtain such Indian Authorizations or to make such filings would not have a material adverse effect on the Company, the Business as a whole or on any significant part of the Property after the Effective Date. (b) Except as disclosed on Schedule 9.1.27, there are no material claims, actions, lawsuits or other proceedings pending, or, to the knowledge of Seller or the Company threatened, with respect to any of the Property located, or any operations of the Business conducted, on Indian reservations or tribal lands, and no tribal authority has given written notice of or, to Seller's or the Company's knowledge, has threatened, any cancellation, revocation, termination or material amendment or modification of any Indian Authorization. (c) Except as set forth on Schedule 9.1.27, no consent, approval or waiver from, or filing with, any tribal authority or the BIA is required to be obtained or made in connection with the execution and delivery by Seller of this Agreement, or Seller's fulfillment of its obligations under this Agreement. 9.1.28 Unregulated Business. Schedule 2.2(b) is an accurate summary description of the Unregulated Business, in detail reasonably acceptable to Buyer. 9.1.29. Capital Improvements Required by PUC and Government Authorities. Except as set forth on Schedule 9.1.29, there are no changes, modifications, upgrades or enhancements required by the PUC or any Government Authority to be made to the Property or the operation thereof. 9.1.30 Undisclosed Liabilities. Except as contemplated by this Agreement or as otherwise set forth in Schedule 9.1.30 the Company has no liabilities or obligations of any nature, secured or unsecured (absolute, accrued, contingent or otherwise and whether due or to become due), of a nature required to be recorded or disclosed in a corporate balance sheet prepared in accordance with GAAP, except liabilities and obligations which are not materially in excess of amounts reflected, reserved against or disclosed in the December 31, 1993 Financial Statements or the notes thereto and except for liabilities and obligations incurred in the ordinary course of business since December 31, 1993. Except as may be reflected in the December 31, 1993 Financial Statements or the notes thereto or on Schedule 9.1.30, the Company has no obligations under guarantees, endorsements or indemnities of the obligations of any other person or entity. 9.1.31 Banks. Schedule 9.1.31 lists the name of each bank in which the Company has an account or safe deposit box, and the names of all persons authorized to draw thereon or have access thereto, and the names of all persons holding a power of attorney from the Company. 9.1.32 Ownership of Shares. Seller is the record and beneficial owner of the Shares, which comprise 100% of the outstanding shares of all classes of capital stock of the Company. Seller has legal, valid and marketable title to the Shares, free and clear of all liens, claims, options, security interests or other encumbrances of any character whatsoever ("Encumbrances"). The sale and delivery of the Shares to Buyer pursuant to Article 2 will vest in Buyer legal, valid and marketable title to the Shares free and clear of all Encumbrances other than Encumbrances created or suffered by Buyer and restrictions on sales of the Shares under applicable federal and state securities laws. 9.1.33 Capital Stock. The Common Stock is the only capital stock authorized to be issued by the Company. The Shares are the only shares of Common Stock outstanding. All of the Shares are duly authorized, validly issued, fully paid and non-assessable. There are outstanding no securities convertible into, exchangeable for, or carrying the right to acquire, equity securities of the Company nor are there any subscriptions, warrants, options, rights or other arrangements or commitments (other than this Agreement) which could obligate Seller or the Company to issue any shares of capital stock or dispose of any ownership interest therein. There are no outstanding obligations of the Company to issue or deliver, or to repurchase, redeem or otherwise acquire any capital stock or other securities of the Company. 9.1.34 Investments. Set forth on Schedule 9.1.34 is the name of each corporation, partnership, joint venture or other entity in which the Company has, or pursuant to any agreement will have, directly or indirectly, the right to acquire by any means, an equity interest therein, together with a description of the Company's interest (or right to acquire the same) in such entity, including any Encumbrances on such interest. 9.1.35 Corporation Organization of Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of New Mexico; it has full corporate power and authority to own its properties and to carry on the Business as it is now being conducted, and to own or hold under the lease, the Property. 9.2 Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows: 9.2.1 Corporate Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease or otherwise hold the assets owned, leased or held by it. 9.2.2 Authorization and Effect of Agreement. Buyer has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement, to own the Shares and to fulfill all other obligations of Buyer under this Agreement. The execution and delivery by Buyer of this Agreement and the fulfillment by it of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Buyer. Buyer has the requisite legal capacity to purchase, own and hold the Shares upon the consummation of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Buyer and, assuming the due execution and delivery of this Agreement by Seller, constitutes a valid and binding obligation of Buyer, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualifications that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.2.3 No Restrictions Against Purchase of the Shares. The execution and delivery of this Agreement by Buyer do not, and the fulfillment by Buyer of its obligations under this Agreement will not, conflict with, violate or result in the breach of any provision of the certificate of incorporation or bylaws of Buyer or, subject to obtaining the approvals and consents referred to in Article 5, conflict with, violate or result in the breach of, constitute default under, or accelerate the performance required by any Contract to which Buyer is a party. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by or with respect to Buyer in connection with the execution and delivery of this Agreement by Buyer or the fulfillment by Buyer of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, and (ii) the filings and approvals listed on Schedule 9.2.3. 9.2.4 No Violation of Law. The execution and delivery of this Agreement and the fulfillment by Buyer of its obligations under this Agreement will not violate any Law. 9.2.5 Brokers. Buyer has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Seller for any broker's or finder's fees or similar fees or expenses. 9.2.6 No Material Claims. There are no claims, actions, lawsuits or legal proceedings pending or, to the knowledge of Buyer, threatened against Buyer or its properties that would prevent the consummation of the transactions contemplated by this Agreement. 9.2.7 FCC Tariffs. In connection with obtaining consent to the transfer of control of the Company's FCC's Licenses, as described in Section 5.4, Buyer will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the National Exchange Carrier Association Tariff FCC No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 9.2.8 Investment. Buyer understands that the Shares that it will acquire pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended (the "Act"), and cannot be offered for sale, sold or otherwise transferred unless the Shares subsequently are so registered or qualified for exemption from registration under the Act. The Shares are being acquired under this Agreement by Buyer in good faith solely for its own account, for investment and not with a view toward resale or other distribution within the meaning of the Act. The Shares will not be offered for sale, sold or otherwise transferred by Buyer without either registration or exemption from registration under the Act and applicable state securities laws. Buyer has such knowledge and experience in financial and business matters that Buyer is capable of evaluating the merits and risks of Buyer's investment in the Shares. Buyer understands and is able to bear any economic risks associated with such investment (including the necessity of holding the Shares for an indefinite period of time, inasmuch as the Shares have not been registered under the Act). ARTICLE 10. CONTINUING BUSINESS RELATIONSHIPS 10.1 Transition Services Agreement. If requested in writing by Buyer on or prior to March 15, 1995, the parties shall, as promptly as practicable but in any event within 30 days after Buyer's written request, negotiate in good faith and enter into a Transition Services Agreement, to be effective no later than the Effective Date, pursuant to which Seller will provide to the Company, at the Company's expense, such financial, accounting, billing, computer, network, administrative and other services (including services relating to the conversion of systems and processes) as may be reasonably requested by Buyer, which agreement shall be in form and substance as mutually agreed to by both Buyer and Seller (the "Transition Services Agreement"). ARTICLE 11. ADDITIONAL COVENANTS OF THE PARTIES 11.1 Intellectual Property. 11.1.1 Definition. "Intellectual Property" means all inventions (whether patentable or not and whether or not such inventions are described or claimed in any patent or patent application), designs (useful or ornamental), and works subject to copyright that may be embodied in, without exclusion, invention disclosures, specifications, manuals, drawings, functional or system block diagrams, flow charts, circuit diagrams, design or user documentation, engineering notebooks, schematics, test programs, documented procedures, documented processes, documented flows, devices, software, or firmware, that relate to the function, design, development, manufacture, testing, use, operation, maintenance or repair of any product, apparatus, article of manufacture, process, method or service. "Intellectual Property" shall also include patents, patent applications (including continuations, continuations-in-part, divisions, reissues, reexamined patents and patent applications and extensions thereof), copyrights (whether common law or statutory, registered or unregistered), or trade secrets, residing in the subject matter above. 11.1.2 Grant by Seller. (a) Subject to the terms and conditions of this Agreement Seller will use its best efforts to assist the Company (provided that Buyer shall be responsible for any fees associated therewith) in obtaining the consent of any necessary third party for the use of any Intellectual Property that the Company has placed in public use on, or prior to, the Effective Date and that is presently used by the Company, but excluding any Intellectual Property listed in Schedule 11.22. (b) The above Section 11.1.2(a) sets forth Seller's entire obligation with respect to the Intellectual Property to the Company. Except as specifically provided otherwise in this Agreement or any other agreement between Buyer and Seller, Seller shall have no continuing obligation beyond the Effective Date to provide support of any kind in the Company's use of such Intellectual Property. (c) Buyer agrees and understands that Seller or its Affiliates shall retain ownership of all Intellectual Property owned by Seller or its Affiliates as of the Effective Date. Buyer further agrees and understands that the retained ownership shall include the right of Seller to grant licenses to vendors and customers of Seller, and to other third parties. (d) Additional agreements, if any, between Buyer and Seller regarding possession and use by the Company of computer software that is owned by Seller, or that is licensed by an Affiliate of Seller to Seller, are set forth in Schedule 11.1.2. 11.1.3 Nonassertion. Seller agrees that, with respect to the Intellectual Property that as of the Effective Date the Company owns or controls or under which it has the right to grant licenses, Seller shall not assert against Buyer, or Affiliates of Buyer, or vendees, mediate or immediate, of Buyer or the Company, a claim of infringement, misappropriation or misuse of such Intellectual Property right arising from the Company's activities practiced in the ordinary and normal course of the Business. 11.1.4 Infringement. (a) Notwithstanding any other provision of this Agreement and subject to the representation in Section 11.1.3, Buyer understands that Seller has not made or given, and does not make or give, any warranty as to the value, enforceability, or validity of any Intellectual Property or that the use by the Company of any Intellectual Property under this Agreement will not infringe other intellectual property rights not licensed under this Agreement. (b) Nothing contained in this Agreement shall be construed as an agreement by, or obligation of, Seller to bring or prosecute actions or suits against third parties for infringement or violation of any Intellectual Property licensed hereunder. (c) Seller shall have no obligation to defend, indemnify or hold harmless the Company or Buyer from any damages, costs or expenses resulting from any obligation, proceeding or suit based upon any claim that any activity, subsequent to the Effective Date, engaged in by Buyer, the Company, a customer of Buyer's or the Company's or anyone claiming under Buyer or the Company constitutes direct or contributory infringement or misuse of any intellectual property rights not licensed under this Agreement. (d) Buyer shall be liable for and shall hold Seller and its Affiliates harmless from and against any and all Indemnifiable Losses resulting from any obligation, proceeding or suit based upon any claim that any activity conducted or engaged in, subsequent to the Effective Date, by Buyer, the Company, a customer of Buyer's or the Company's, or anyone claiming under Buyer or the Company constitutes direct or contributory infringement, or misuse, or misappropriation of any intellectual property right of any third party. 11.1.5 Trademark Phaseout; Corporate Name Change. (a) Buyer acknowledges that Seller or its Affiliates are the owners of, and have permitted the Company to use, certain trade names, trade dress, trademarks, service marks, logos and related intangible property (collectively, "Marks") used in connection with the Business, including, without limitation, the items listed on Schedule 11.1.5, and Buyer understands and agrees that the Marks, or any right or license of the Company to the Marks are not being transferred pursuant to this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in the use of the Marks, and Buyer agrees that it shall cause the Company not to use the Marks (or any names or Marks confusingly similar to the Marks) except as expressly set forth in this Section 11.1.5. After the Effective Date, Buyer shall cause the Company to replace all Marks of Seller as soon as possible, but in no event later than one hundred eighty (180) days after the Effective Date for Marks affixed to items with a valid continuing use in the Company's conduct of the Business, including, without limitation, buildings, vehicles, heavy equipment, hard hats, tools, tool boxes, kits (safety and others), signs, manual covers and notebooks. After the Effective Date, Buyer will cause the Company to not use, and will destroy or deliver to Seller, all such items with Marks affixed to them that have no valid continuing use in the Company's conduct of the Business, including items affecting customer or employee relations or items that do not reflect the Company's true identity. Specific items to be destroyed or returned include items with Marks affixed to them including, without limitation, giveaways; order, purchase or materials forms; requisitions; invoices; statements; time sheets/labor reports; bill inserts; stationery; personalized note pads; maps; organization charts; bulletins/releases; sales/price literature; manuals or catalogs; report covers/folders; program materials; and materials such as media contact lists/cards. The one hundred eighty (180) day time period for replacement of Marks affixed to telephone directories that were already published or closed for publication as of the Effective Date shall be extended to the production of replacements for such directories. (b) Within two business days after the Effective Date, Buyer shall take all action necessary to change the corporate name of the Company so as to reflect that the Company is no longer an Affiliate of Seller. 11.1.6 Goodwill. Buyer recognizes the value of the goodwill associated with the Marks, and acknowledges that the Marks and all rights therein and the goodwill pertaining thereto belong exclusively to Seller, and that the Marks have a secondary meaning in the minds of the public. 11.1.7 Quality of Goods. Buyer agrees that the conduct of the Business after the Effective Date by the Company using the Marks shall be provided in accordance with all applicable federal, state and local laws, and that the same shall not reflect adversely upon the good name of Seller, and that the conduct of the Business will be of a standard and skill equivalent to that employed prior to the Effective Date. 11.1.8 Seller's Remedies for Unauthorized Use of Marks. Buyer acknowledges that the Company's failure to cease use of the Marks as provided in this Agreement, or its improper use of the Marks, will result in immediate and irreparable damage to Seller. Buyer acknowledges and admits that there is no adequate remedy at law for such failure to terminate use of the Marks, or for such improper use of the Marks, and Buyer agrees that in the event of such failure or improper use, Seller shall be entitled to equitable relief by way of temporary restraining order or injunction or any other relief available under this Agreement. 11.2 Effect of Due Diligence and Related Matters. Buyer represents that it is a sophisticated entity that was advised by knowledgeable counsel and, to the extent it deemed necessary, other advisors in connection with this Agreement and by the Effective Date will have conducted its own independent review and evaluation of the Company. Accordingly, Buyer covenants and agrees that (i) except for the representations and warranties set forth in this Agreement and the Schedules (and the Financial Statements, the Additional Financial Statements, and actuarial reports required pursuant to the Employee Transfer Agreement), Buyer has not relied and will not rely upon any document or written or oral information furnished to or discovered by it or its representatives, (ii) there are no representations or warranties by or on behalf of Seller or its Affiliates or representatives except for those expressly set forth in this Agreement and in any other written agreement entered into with Seller or any of its Affiliates in connection with this Agreement, and (iii) to the fullest extent permitted by law, Buyer's rights and obligations with respect to all of the foregoing matters will be solely as set forth in this Agreement or in such other written agreements. 11.3 Confidentiality. Whether or not the Closing occurs, the parties hereto and their respective officers, directors, employees and representatives will comply with the Confidentiality Agreement, the provisions of which are expressly incorporated herein in their entirety by this reference. 11.4 Additional Financial Statements. Seller shall deliver to Buyer the following financial statements of the Company (collectively, the "Additional Financial Statements") within the time periods set forth below: (a) Within forty-five (45) days after the Execution Date for the month of October, 1994, and within forty-five (45) days after the close of each month beginning with November, 1994, and continuing up to and including the month next preceding the month in which the Closing occurs, a balance sheet and income statement as of and for such month, and as of and for the year-to-date period then ended; and (b) By April 30, 1995, a balance sheet for the year ended December 31, 1994, and an income statement and statement of cash flows for 1994, together with the auditor's report thereon. 11.5 Conduct of Business. From the Execution Date until the Effective Date, except as described in Section 11.22, Seller shall cause the Company to conduct the Business in the ordinary course in accordance with prudent business judgment and consistent with past practice and policy and to (i) preserve the Business as an ongoing business, (ii) keep available to the Business its services and the services of its Affiliates at least to the same extent as such were generally available from January 1, 1994 through the Execution Date and are available on the date hereof, (iii) not take any action that would jeopardize any material and beneficial contractual relationships with persons having business dealings with the Business, and (iv) preserve all of the Business' tariffs, certificates, licenses, authorizations and other rights. From the Execution Date to the Effective Date, except as described in Section 11.22 and except with the prior written consent of Buyer, which the Buyer shall not unreasonably withhold: (a) The Business will be conducted in substantially the same manner as it is presently being conducted on the Execution Date. Seller will cause the Company to refrain from entering into any material transaction or contract other than in the ordinary course of business and to not make any material change in the general nature of the Business or in its methods of management, marketing, accounting or operations (including repair and maintenance functions). (b) Seller will cause the Company not to (i) create or incur any indebtedness for borrowed money or otherwise, except in the ordinary course of business, (ii) enter into or terminate, as lessor or lessee, any Lease other than in the ordinary course of business, (iii) create any liens or other security interest, except in the ordinary course of business, or (iv) change in any material respect or terminate any of the insurance policies referred to in Section 9.1.14, unless equivalent coverage is obtained. (c) Except as listed or described on Schedule 11.5(c), and except for dispositions of salvaged property that has been replaced in accordance with the plans attached in Schedule 11.5(c), Seller will cause the Company not to sell, lease, dispose of or otherwise transfer, or make any contract for the sale, lease, disposition or transfer of any Property other than, with respect to any individual item (other than vehicles) having a value of less than Seventy-Five Thousand Dollars ($75,000.00) and with respect to all items (other than vehicles) the aggregate value of which shall not exceed Two Hundred Fifty Thousand Dollars ($250,000.00). (d) Without prior reasonable notification to Buyer, or unless otherwise expressly directed by the PUC, Seller will cause the Company not to (i) institute any proceeding with respect to, or otherwise change, amend or supplement any tariff or (ii) enter into or agree to any stipulation, order, or decree of, or settlement with the PUC that, in the case of (i) or (ii) above, would have a material adverse effect on the revenue, authorized return on equity or earnings of the Business. Seller will cause the Company not to file any application, petition, motion, brief, testimony, settlement agreement or other pleading in any proceeding before the PUC, or before the FCC (except for filings on behalf of all of Seller's local exchange telephone companies) or appeals related thereto, unless Seller shall have first provided Buyer with a copy of the same and provided Buyer with a reasonable opportunity to comment to Seller with respect thereto. If Buyer determines it should intervene in any proceeding before the PUC in which Buyer's position is or may be different from the Seller's or the Company's, Seller will not, and will cause the Company not to, without waiving any other rights related thereto, oppose Buyer's intervention in such proceeding. (e) Except as listed on Schedule 11.5(e) or as required by law or in the ordinary course of business of the Company or pursuant to any Contract, Seller will cause the Company not to (i) enter into or amend any employment agreement with any individual that will become a Transferred Employee, or enter into or amend any union agreement or commitment (including any new commitment to pay retirement or other benefits, or amendments to the Company's retirement plans), (ii) effect any net increase over five percent (5%) since the Execution Date in the number of employees of the Company who will become Transferred Employees, or (iii) increase over 5% the benefit provided under any plans concerning employee benefits or increase the general rates of compensation of the Transferred Employees, or change the manner by which compensation (including fringe benefits) is determined and paid to any Transferred Employee. (f) Seller will cause the Company not to engage in any intercompany transactions with any Affiliate thereof, except for transactions consistent with past practice. (g) Seller shall cause the Company to maintain the Property in good repair, order and condition, reasonable wear and use excepted, and shall maintain the Company Books and Records in the usual, regular and ordinary manner on a basis consistent with prior years. (h) Seller will cause the Company not to make any commitment to take any actions prohibited by the provisions of this Section 11.5. (i) Seller will cause the Company not to issue, sell, purchase or redeem, to grant any option or right to purchase, or to otherwise agree to issue, sell, purchase or redeem any shares of its capital stock or any other securities. (j) Seller will cause the Company not to amend its Articles of Incorporation or Bylaws. (k) Seller will not permit the Company to merge or consolidate with any other person or entity or acquire a material amount of assets of any other person or entity. 11.6 Construction Projects and Capital Budget. By December 31, 1994, Buyer and Seller shall have met and reviewed the Company's construction and other capital expenditure plans for the calendar years 1994 and 1995 (or such later date agreed to by the parties). The construction and capital expenditure plans which Buyer shall have approved (both as to the type of project and the dollars expended) shall be set forth on Schedule 11.6, and the parties agree that when such expenditures have been incurred they will constitute an addition to a component of Net Telecommunications Plant thereby becoming subject to Section 3.2(c). Seller agrees to cause the Company to use its best efforts substantially to complete such plans within the projected time schedules; provided, that the Company will not incur any liability for unbudgeted expenditures in excess of $200,000.00 in the aggregate without the prior written consent of Buyer. All construction work that is in progress on the Effective Date will be accounted for by identifying and accruing all associated time reporting, material invoices or contractor invoices inputted or received on or before the Effective Date, and all payments therefor shall be the responsibility of the Company and will constitute an addition to a component of Seller's Net Telecommunications Plant thereby becoming subject to Section 3.2(c). 11.7 Further Assurances. After the Closing, Seller will furnish to Buyer such other instruments and information about the Company as Buyer may reasonably request in order to convey to Buyer title to the Shares, to be delivered from time to time upon Buyer's reasonable request. 11.8 [INTENTIONALLY DELETED] 11.9 Risk of Loss Prior to the Effective Date. If any material damage, loss or destruction of any sort (including, without limitation, by theft, unauthorized use, fire, act of God or condemnation) occurs prior to the Effective Date to any of the tangible properties that constitute the Property, Seller shall promptly notify Buyer thereof (the "Casualty Notice"). (a) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace such damaged, lost or destroyed Properties (the "Damaged Property") will exceed Two Million Seven Hundred Five Thousand Fifty Dollars ($2,705,050.00), either party may, by written notice to the other party (the "Casualty Termination Notice") within thirty (30) days after the date of delivery of the Casualty Notice, terminate this Agreement. (b) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace the Damaged Property will not exceed Two Million Seven Hundred Five Thousand Fifty Dollars ($2,705,050.00), or the Casualty Termination Notice is not given by either party, then Seller, within forty-five (45) days after the damage or destruction, shall agree in writing to take all action, and to cause the Company to take all action, (i) to repair or replace, prior to the Effective Date, at the Company's sole cost and expense, the Damaged Property, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will obtain as a substitute therefor an equivalent item or items of Property if the Damaged Property is personal property, and Real Property if the Damaged Property is Real Property, but only if such substituted personal property or Real Property is satisfactory to Buyer, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property. (c) If Seller fails to make an election pursuant to Section 11.9(b)(i) or (ii), the Buyer shall have the option, within thirty (30) days after the initial forty-five (45) day period, to elect one of the following options: (i) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will remain part of the Property, the adjustment to the Purchase Price contemplated by Section 3.2(a)(1) will be made, and the Company will be entitled to make, all claims related to the Damaged Property and to receive and retain any proceeds of insurance with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property, and the Purchase Price Adjustment contemplated by Section 3.2(a)(2) will be made. (d) Notwithstanding the other provisions of this Section 11.9, if the time periods pursuant to this Section 11.9 continue beyond the Effective Date or if Seller has not fully performed its obligations pursuant to Section 11.9(b)(i) or 11.9(b)(ii) prior to the Effective Date (or otherwise made reasonably satisfactory arrangements with Buyer), either party hereto may elect to postpone the Closing and the Effective Date, until the expiration of any such periods or the full performance of such obligations, which election shall be binding upon all parties hereto. 11.10 Settlements and Cost Studies. The parties agree that, with respect to all toll revenues, settlements, pools, separations studies, Universal Service Fund payments or similar activities, Seller shall receive the benefit or suffer the burden of the results of any such activities that are related to the conduct of the Business or the ownership or operation of the Company on or before the Effective Date. 11.11 [INTENTIONALLY DELETED] 11.12 Other Contracts. 11.12.1 Telephone Directories Published by ALLTEL Publishing Corporation. The Directory Publishing Agreement dated as of November 15, 1994, by and between Company and ALLTEL Publishing Corporation (the "Directory Publishing Agreement") is an Excluded Contract on Schedule 11.22(h), except as hereinafter provided. Within thirty days after the Execution Date, Buyer shall cause its existing directory provider to indicate in writing whether it will provide directory production services to the Company, as of the Effective Date (or as of such later date as described below) with regard to all of the Exchanges on the same terms and conditions as it is presently providing such services to Buyer, and Buyer shall inform Seller within such thirty day period of Buyer's existing telephone directory provider's written intention. If Buyer's existing directory provider's indication is that it will not provide directory publication services for all of the Exchanges on the same terms and conditions that it is presently providing such services to Buyer, then the Directory Publishing Agreement shall be deemed to become a Contract for the purposes of this Agreement. Promptly, thereafter, the Buyer and ALLTEL Publishing Corporation shall agree to meet in good faith to negotiate any necessary amendments to the Directory Publishing Agreement, to be effective as of the Effective Date, to provide for a retention rate equal to or greater than the higher of (x) 60% or (y) the retention rate provided for in any substantially similar directory publishing agreement between ALLTEL Publishing Corporation and a non- Affiliate of ALLTEL Publishing Corporation that was entered into within 18 months prior to the Effective Date. If Buyer's existing directory provider indicates that it will provide directory publication for all the Exchanges, as provided above, the Directory Publishing Agreement shall remain in effect as to the directory of each of the Exchanges for which (i) the directory is scheduled to be or is published prior to the Effective Date or (ii) the canvass for the directory has begun prior to the Effective Date and it is scheduled to be published after the Effective Date. Under such circumstances, the Buyer's existing directory provider will not begin providing directory publication services for such Exchange until canvass and production begins for the next succeeding directory related to such Exchange. 11.12.2 Telephone Directories-General. If Buyer's existing directory provider indicates that it will provide directory publication for all of the Exchanges, as provided in Section 11.12.1 of this Agreement, Seller and Buyer agree to cooperate and to use their best efforts as follows: (a) Seller will deliver to Buyer on a date mutually agreeable to Buyer and Seller, copies of all records, documents, and materials of the Seller even if in the possession of a third party (the "Directory Records") related to directories of the Exchanges that are published by Seller or its Affiliate. (b) Except as otherwise agreed between the parties, Seller and its Affiliate shall have no responsibility for the canvass and production functions of any directories related to the Exchanges that are scheduled to begin canvassing and publication after the Effective Date. (c) Seller and Seller's Affiliates and Buyer shall provide the other reasonable access to such documentation, reports and accounting records related to directory publication as may be necessary to insure a proper transition of directory publication in accordance with the terms of such agreements in effect on the Effective Date. (d) As promptly as practicable after receipt by Seller of Buyer's existing directory provider's indication that it will provide directory publication services for all of the Company's Exchanges, Seller or its Affiliate (ALLTEL Publishing Corporation), and Buyer will meet to negotiate in good faith to agree upon the services or work, if any, that Seller or its Affiliate (ALLTEL Publishing Corporation) will provide, and the compensation that the Buyer will pay for such services and work, related to any directories that will be canvassed and published by Buyer's existing directory provider. 11.12.3 B&C Agreements. Seller and Buyer shall, prior to the Closing, use their best efforts to allow Buyer to negotiate, on behalf of the Company, a billing and collection agreement ("B&C Agreement") reasonably satisfactory to Buyer with each interexchange carrier ("IXC") and each local exchange carrier ("LEC") for which the Company provides, on the Execution Date, billing and collection services in any Exchange (each such IXC or LEC is hereinafter referred to as a "Carrier"). Seller and Buyer shall cooperate with each other and make available to each other all documents and records relevant and necessary to allow the Company to finalize negotiations of B&C Agreements, as necessary, and to perform such B&C Agreements after the Effective Date. 11.12.4 Equipment Manufacturers. Seller shall use its best efforts to assist Buyer, on behalf of the Company, in obtaining a written agreement with such equipment manufacturers (such as Northern Telecom and Stromberg-Carlson; collectively "Equipment Manufacturers") as Buyer may request, covering such software license agreements and other agreements as are necessary to enable the Company after the Effective Date to operate the equipment manufactured and sold by the Equipment Manufacturers included in the Property in substantially the same manner as operated by the Company prior to the Effective Date. The agreements shall contain material terms and conditions (including license and warranty, but not necessarily including pricing) that are substantially the same as those provisions in the corresponding agreements between the Company and the Equipment Manufacturers as of the Effective Date. Buyer understands and agrees that the price and fee provisions of such agreements will be as negotiated between Buyer, on behalf of the Company, and the Equipment Manufacturers. The above obligation of Seller shall be expressly conditioned upon the acceptance by Buyer, on behalf of the Company, of all material obligations accepted by Seller in such corresponding agreements. It is the responsibility of Buyer, on behalf of the Company, to enter into appropriate agreements with the Equipment Manufacturers in respect of service, support, training, maintenance, and future development (hardware and software) for the Property, such agreements to include terms and conditions agreed to between Buyer, on behalf of the Company, and the Equipment Manufacturers. Seller agrees to assist Buyer, on behalf of the Company, in obtaining the Equipment Manufacturers' consent, if necessary, to enable the Company after the Effective Date to avail itself of all training credits remaining at the Effective Date on Property furnished by the Equipment Manufacturers. 11.12.5 Integrated Contracts. Seller and Buyer acknowledge that certain agreements between the Company (or Affiliates of the Company) and third parties relate both to the Property and the Excluded Property. Seller agrees to use its best efforts to assist Buyer in obtaining, on behalf of the Company, contractual arrangements with such third parties relating to the Property, which arrangements will be reasonably satisfactory to Buyer; provided that neither the Company nor any Affiliate of the Company shall be obligated under this Section 11.12.5 to make any payment to any such third party unless such payment is expressly provided for in such agreement. 11.13 Retention of Books and Records. After the Effective Date, Seller will retain the Retained Books and Records, and Buyer will cause the Company to retain the Company Books and Records, in either case, until the shorter of the date that other party consents in writing to their destruction or the seventh anniversary of the Effective Date. Each party shall provide full and free access to the Company Books and Records and Retained Books and Records, as the case may be, to duly authorized representatives of the other party at any time during regular business hours for the period in which such Books and Records are required to be retained. Either party may make copies of any such Books and Records as it deems desirable, at its own expense. After the Effective Date, upon reasonable notice, Seller shall provide Buyer and the Company with reasonable assistance in locating any of the Company's Original Cost Documents which Buyer may reasonably request after the Effective Date. 11.14 [INTENTIONALLY DELETED] 11.15 [INTENTIONALLY DELETED] 11.16 Real Property Title Insurance. Within sixty (60) days after the Execution Date, Seller shall deliver to Buyer copies of all existing title insurance policies and surveys covering the Real Property. Thereafter, no later than sixty (60) days before the Effective Date, Seller shall deliver (at its expense) to Buyer a preliminary title binder (on a standard form reasonably acceptable to Buyer), issued by Lawyers Title Insurance Company or another title insurance company reasonably acceptable to Buyer, with respect to all Real Property included in the Property and in which the Company purports to own fee title. Such title binders shall be in form, substance and amount reasonably satisfactory to Buyer (ALTA Owners Policies where available but based upon boundary surveys as set forth below) and shall be current as of a date no earlier than ninety (90) days prior to the Effective Date. The parties agree that the dollar amount of title insurance to be inserted on each policy shall equal the dollar value set forth on the Company's continuing property records list as of December 31, 1993 for land and buildings. Such title binders shall reflect that the Company is vested with good, fee simple, marketable and insurable title to such Real Property, subject only to (i) standard printed exceptions; (ii) inchoate liens for current taxes and assessments not yet delinquent, (iii) standard utility and roadway easements, covenants and restrictions, whether or not of record, that do not individually or in the aggregate materially detract from the value, or impair the use of the Real Property affected thereby, (iv) existing zoning or similar laws or ordinances that do not interfere with the operation of the Business, (v) Leases, (vi) survey exceptions that do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby, (vii) standard title plat exceptions to the extent the matters shown on such title plats do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby and (viii) standard water rights exceptions (collectively, the "Permitted Exceptions"). If a preliminary title binder indicates an exception other than a Permitted Exception that would impair marketability in any material respect, Seller shall, at its expense, cause such exception to be removed on or before the Effective Date. With respect to each parcel of Real Property covered by a preliminary title binder, Seller shall deliver to Buyer (at Seller's expense and on or prior to sixty (60) days before the Effective Date) a certified current boundary survey showing (x) access to the property and (y) all improvements on the property and any encroachments across the property line by any improvements of the Company or owners of adjacent property and (at Seller's expense and within sixty (60) days after the Effective Date) owner's title insurance policies for the Real Property (ALTA Owners Policies where available but based upon boundary surveys as set forth above). 11.17 [INTENTIONALLY DELETED] 11.18 [INTENTIONALLY DELETED] 11.19 Customer Notification. For a period of at least two (2) months prior to the Effective Date, Seller will cause the Company to permit Buyer to insert preprinted single-page subscriber education materials into billing documentation to be delivered during such period to subscribers affected by the sale. All reasonable costs and expenses related to such insertion and delivery shall be borne and paid by the Company. Other means of notifying subscribers may be employed by either party, at the expense of the initiating party, but in no event shall any notification be initiated without the prior consent of the other party (which consent shall not be unreasonably withheld) or earlier than three (3) months prior to the Effective Date. 11.20. Delivery of Schedules. Except as otherwise provided in Section 11.24, Seller shall have a period of ten (10) business days after the Execution Date (the "Supplemental Schedule Period") to supplement or otherwise modify the Schedules to this Agreement by delivering to Buyer, within the Supplemental Schedule Period, a substitute schedule or schedules (collectively, the "Supplemental Schedules"), bearing the legend "This Schedule _, dated _______________, is executed and delivered in accordance with Section 11.20 of the Stock Purchase Agreement, dated as of November 28, 1994 which shall be duly executed by Seller and submitted to Buyer. Buyer shall have a period of ten (10) business days after the expiration of the Supplemental Schedule Period to review the Supplemental Schedules and within such ten (10) business day period notify Seller in writing (which writing may be transmitted by facsimile) of any objections thereto. If Buyer's objections are not resolved to the satisfaction of Buyer within five (5) days of such notification, Buyer may terminate this Agreement, effective immediately upon written notification of that termination. In the event that Buyer does not terminate this Agreement, then Buyer waives all rights to a claim of indemnification based upon or as the result of any changes in the Schedules as reflected in the Supplemental Schedules. For purposes of determining breaches of representations, warranties or covenants hereunder, the Supplemental Schedules provided by Seller shall be deemed Schedules for all purposes. 11.21 FCC Tariffs. In connection with obtaining consent to the transfer of control of the Company's FCC Licenses, as described in Section 5.4, during the period from the Execution Date until the Effective Date, neither party shall file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the Natural Exchange Carrier Association Tariff FCC No. 5; provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 11.22 Pre-Effective Date Balance Sheet Transactions. Seller shall take, and shall cause the Company to take, all action necessary to effect, on or prior to the Effective Date, the following transactions: (a) The Company shall dispose of, transfer, dividend or otherwise cause to be zero as of the Effective Date, all "Cash" (item 1 - Assets on the Company's Balance Sheet). (b) All "Accounts Receivable-Affiliates" (item 4 - Assets on the Company's Balance Sheet) and "Dividends Receivable-Affiliates" (item 7 -- Assets on the Company's Balance Sheet) (collectively, "Affiliate Receivables") shall be netted against all "Advances and Notes-Parent Company" (item 2 - Liabilities on the Company's Balance Sheet), "Accounts Payable- Affiliates" (item 5 - Liabilities on the Company's Balance Sheet), "Dividends Accrued - Affiliates" (item 10 - Liabilities on the Company's Balance Sheet) and "Interest Accrued - Alltel" (item 12 - Liabilities on the Company's Balance Sheet) (collectively, "Affiliate Payables"). To the extent there is a net excess of Affiliate Receivables, a cash payment or payments will be made to the Company which cash will then be disposed of by the Company, and to the extent there is a net excess of Affiliate Payables, such Affiliate Payables will be contributed to the Company as a contribution to the Company's capital, and take any other action necessary, such that the balances of each of the Affiliate Receivable and Affiliate Payable accounts, and of any other intercompany accounts, as of the Effective Date will be zero. (c) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Excess Cost Over Equity" (item 13 - Assets on the Company's Balance Sheet) and all "Investments in Affiliates" (item 14 - Assets on the Company's Balance Sheet). (d) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Other Investments At Cost" (item 15 - Assets on the Company's Balance Sheet), except to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and all "Unamortized Debt Expense" (Item 16 - Assets on the Company's Balance Sheet), except to the extent such unamortized debt expense relates to debt which is to remain outstanding immediately after the Effective Date. (e) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Regulatory Assets" (item 18 - Assets on the Company's Balance Sheet). (f) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, (i) all "Other Current Assets" (item 10 - Assets on the Company's Balance Sheet) to the extent such other current assets represent cash accounts, and (ii) all "Other Non-Current Assets" (item 19 - Assets on the Company's Balance Sheet). (g) The Company shall pay off or otherwise cause to be zero as of the Effective Date all Total Long-Term Debt, to the extent that such debt is not to remain outstanding immediately after the Effective Date. (h) The Company shall dispose of, transfer or assign, the Excluded Books and Records, the Marks listed on Schedule 11.1.5, the Company's interest in any business other than the Business, and those other assets, including agreements and contracts ("Excluded Contracts"), set forth on Schedule 11.22(h). (i) The balance in the Company's Total Deferred Credits shall be zero as of the Effective Date except for that portion of the Company's "Other Deferred Credits" (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities associated with the requirements of Financial Accounting Standard 106 attributable to Transferred Employees. (j) The balance in the Company's Taxes Accrued-Federal Income (item 8-Liabilities on the Company's Balance Sheet) shall be zero as of the Effective Date. (k) The balance in the Company's Notes Payable - Other (item 3 - Liabilities on the Company's Balance Sheet), Commercial Paper Outstanding (item 4 - Liabilities on the Company's Balance Sheet), Other Current Liabilities (item 14 - Liabilities on the Company's Balance Sheet) and Dividends Accrued - Other (item 11 - Liabilities on the Company's Balance Sheet) accounts shall be zero as of the Effective Date. (l) The balance in the Company's Current Maturities of Long-Term Debt (item 1 - Liabilities on the Company's Balance Sheet), and Interest Accrued - Other (item 13 - Liabilities on the Company's Balance Sheet), to the extent each of such amounts relate to debt which is not to remain outstanding immediately after the Effective Date, shall be zero as of the Effective Date. 11.23 Taxes. 11.23.1 Certain Tax Matters. (a) Except as otherwise expressly provided in this Section 11.23.1, Buyer and Seller will share equally all sales, use, transfer, stamp, conveyance, value added or other similar taxes, duties, excise or governmental charges imposed by any taxing jurisdiction (but not including Income Taxes, as hereinafter defined, which shall be paid by Seller), and all recording or filing fees, notarial fees and other similar costs of Closing with respect to the transfer of the Shares or otherwise on account of this Agreement or the transactions contemplated herein (but not including any transactions contemplated by this Agreement to be effected pursuant to the transactions contemplated by Section 11.22 or otherwise between Seller and the Company, which shall be paid by Seller). (b) Seller will cause to be included in its consolidated federal income Tax Returns (and the state income Tax Returns of any state that permits consolidated, combined or unitary income Tax Returns, if any) for all periods ending on or before or which include the Effective Date, all items of income, gain, loss, deduction, and credit or other items (collectively "Tax Items") attributable to the operations of the Company during such periods or portions thereof determined by an interim closing of the books as of the Effective Date. Seller will sign and file timely all such Tax Returns with the appropriate United States, state and local Governmental Authorities. Buyer will provide or cause to be provided any consent request to file such Tax Returns on behalf of the Company. Seller will make all payments shown thereon as owing with respect to any such Tax Returns. (c) With respect to any taxable period that would otherwise include but not end on the Effective Date, to the extent permissible pursuant to applicable Law, Seller will, and Buyer will cause the Company to, take all steps as are or may be reasonably necessary, including without limitation the filing of elections or returns with applicable taxing authorities, to cause such period to end on the Effective Date. (d) Seller will prepare or cause to be prepared all state Income Tax Returns (other than Tax Returns described in Section 10.5.1(b)) for the Company required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period that ends on or before the Effective Date that have not been filed prior to the Effective Date. Seller will sign and file timely all such Tax Returns with the applicable Governmental Authority and make all payments shown thereon as owing with respect to such Tax Returns. If requested by Seller, Buyer will deliver or cause the Company to deliver to Seller a power of attorney authorizing Seller to sign such Tax Returns. Notwithstanding the foregoing, if Seller is legally precluded from filing any such Tax Return, Buyer shall sign such Tax Return. Seller shall deliver a copy of each such Tax Return to Buyer within 10 days prior to filing such Tax Return. (e) Except as otherwise provided in Section 11.23.1(b) or Section 11.23.1(d), Seller will have no obligation to file any Tax Return for the Company, and Buyer will prepare and file or cause to be prepared and filed all Tax Returns for the Company that are required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period which begins before and ends after the Effective Date. In the case of Income Taxes, Buyer shall cause such Tax Return to be prepared and shall cause to be included in such Tax Return all Tax Items required to be included therein. Buyer shall determine (by an interim closing of the books as of the Effective Date) the portion, if any, of the Income Tax due with respect to the period covered by such Tax Return which is attributable to the Company for a Pre-Effective Date Taxable Period (as hereinafter defined). At least 15 days prior to the due date (taking into account all extensions of due date) of such Tax Return, Buyer shall deliver to Seller a copy of such Tax Return and of its determinations. If the amount reflected as a liability for Income Taxes on the Tax Schedule less Prior Reimbursements (as hereafter defined) is less than the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period, Seller shall pay to Buyer the amount of such shortfall not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). If the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period is less than the amount reflected as a liability for Income Taxes on the Tax Schedule, to the extent not previously paid to Seller or the applicable Governmental Authority by the Company and subject to Section 11.23.1(f), Buyer will pay to Seller the amount of such excess not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). As used in this Agreement, "Pre-Effective Date Taxable Period" means all or a portion of (i) any taxable period up to and including the Effective Date or (ii) any taxable period with respect to which the Tax is computed by reference to Tax Items, assets, capital or operations of the Company arising on or before, or existing as of, the Effective Date. As used in this Agreement, "Income Taxes" means all Taxes measured in whole or in part on or by net income imposed by the United States, any state of the United States or any political subdivision thereof, and will include any such Taxes even if denominated as franchise taxes. (f) The amount paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) will not exceed (i) the amount reflected as a liability for Income Taxes on the Tax Schedule, reduced by (ii) Prior Reimbursements. As used in this Agreement, "Prior Reimbursements" means all amounts reflected as a liability for Income Taxes on the Tax Schedule that have previously been (A) paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) or (B) paid by Buyer or the Company to Seller or to the applicable Governmental Authority with respect to Income Taxes properly attributable to Pre-Effective Date Taxable Periods that are reflected on Tax Returns described in Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e). (g) In order to assist Seller in the preparation of all Tax Returns that Seller is required to prepare pursuant to Section 11.23.1(b) and 11.23.1(d), Buyer will provide or cause to be provided to Seller access to such information and personnel as Seller may require in order to properly prepare such Tax Returns. (h) Buyer will pay or cause to be paid to Seller all refunds or credits of Taxes (including any interest received from or credited thereon by the applicable Governmental Authority) received by Buyer after the Effective Date and attributable to Taxes paid by Seller or the Company (or any predecessor or Affiliate thereof) with respect to any Pre-Effective Date Taxable Period (or, in the cases of Taxes other than Income Taxes, taxable periods or portions thereof ending on or before the Effective Date), net of any Taxes imposed upon Buyer or the Company by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). Such payment will be made to Seller within 30 days after receipt of any such refund from, or allowance of such credit by, the relevant Governmental Authority. (i) If after the Effective Date Seller or any affiliate receives or is credited with a refund of any Tax attributable to the utilization or carryback of any Tax Item of the Company arising after the Effective Date, Seller shall pay to Buyer an amount equal to the amount of such refund together with any interest received from or credited thereon the applicable Governmental Authority, net of any Taxes imposed upon Seller or any affiliate by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). (j) Buyer is eligible to and will make a timely and effective election under Section 338(g) of the IRC (and any comparable provision of state or local Law) with respect to the purchase of the Shares hereunder. Both Seller, as the common parent of the affiliated group of corporations (which includes the Company) that file a consolidated federal income Tax Return and Buyer are eligible to and will make a timely and effective election under Section 338(h)(10) of the IRC (and any comparable provision of state or local Law) with respect to such purchase (collectively, together with the elections under Section 338(g) of the Code and any comparable provision of state or local Law, the "Section 338(h)(10) Elections"). To facilitate such election, within thirty (30) days of the Closing, Buyer will deliver to Seller a completed Internal Revenue Service Form 8023 and the required schedules thereto and any similar forms under applicable state or local Law (the "Forms") with respect to Buyer's purchase of the Shares, which Forms shall have been duly executed by an authorized person for Buyer. Provided that the information on such Forms is, in the reasonable determination of Seller, correct and complete in all material respects, Seller will, at the Closing, cause such Forms to be duly executed by an authorized person for Seller and deliver such Forms to Buyer. If any changes or supplements are required to the Forms as a result of information that is first available after the Closing, Seller and Buyer will promptly agree upon and make such changes. Buyer will timely file the Forms, and any required supplements thereto, in the manner prescribed by Treasury Regulation 1.338(h)(10)-1T or the corresponding provisions of applicable state or local Law, and will provide written evidence to Seller that it has done so. Buyer and Seller agree that neither of them will take, or permit their affiliates to take, any action to modify or revoke the elections contained in or the content of any Forms without the express written consent of the other. (k) Seller agrees that it will cause any and all tax sharing agreements between Seller and the Company to be terminated on or prior to the Effective Date. 11.23.2 Tax Indemnifications. (a) Seller hereby agrees to protect, defend, indemnify and hold harmless Buyer and the Company from and against, and agrees to pay, all Taxes imposed and all indemnifiable Losses incurred (all herein referred to as "Tax Losses") as a result of: (i) A proposed adjustment, notice of deficiency Authority, or assessment by, or any obligation owing to, any Governmental Authority for: (A) Any income Taxes of the Company attributable to any Pre-Effective Date Taxable Period; (B) Any Taxes other than Income Taxes of the Company attributable to any taxable period or portion thereof ending prior to the Effective Date; (C) Any Taxes of any corporation (other than the Company) that (i) is or was a member of any affiliated group of corporations of which the Company was a member at any time prior to the Effective Date or (ii) joined in the filing of a combined or unitary Tax Return with the Company on or prior to the Effective Date; (D) Any Taxes resulting from the Section 338(h)(10) Elections; and (E) Except as otherwise provided in Section 11.23.1(a), any Taxes attributable to the transactions contemplated by this Agreement; and (ii) Any breach of any representation, warranty or covenants of Seller under this Agreement. (b) Buyer agrees to protect, defend, indemnify and hold harmless Seller from and against, and agrees to pay, all Tax Losses incurred as a result of: (i) A proposed adjustment, notice of deficiency, or assessment by, or any obligation owing to, any Governmental Authority for any Taxes of the Company which Taxes are not attributable to any Pre-Effective Date Taxable Period; and (ii) Any breach of any representation, warranty or covenant of Buyer under this Agreement. (c) (i) If a proposed adjustment shall be made by any Governmental Authority that, if successful, would result in the indemnification of a party under this Section 11.23.2 (referred to herein as a "Tax Indemnified Party"), the Tax Indemnified Party shall promptly notify the party obligated under this Section 11.23.2 to so indemnify (referred to herein as the "Tax Indemnifying Party") in writing of such fact. (ii) The Tax Indemnified Party shall take such action in connection with contesting such claim as the Tax Indemnifying Party shall reasonably request in writing from time to time, including the selection of counsel and experts and the execution of powers of attorney, provided that (A) within 30 days after the notice described in Section 11.23.2(c)(i) has been delivered (or such earlier date that any payment of Taxes is due by the Tax Indemnified Party but in no event sooner than 5 days after the Tax Indemnifying Party's receipt of such notice), the Tax Indemnifying Party requests that such claim be contested, (B) the Tax Indemnifying Party shall have agreed to pay the Tax Indemnified Party all costs and expenses that the Tax Indemnified Party incurs in connection with contesting such claim, including, without limitation, reasonable attorneys' and accountants' fees and disbursements, and (C) if the Tax Indemnified Party is requested by the Tax Indemnifying Party to pay the Tax claimed and sue for a refund, the Tax Indemnifying Party shall have advanced to the Tax Indemnified Party, on an interest-free basis, the amount of such claim. The Tax Indemnified Party shall not make any payment of such claim for at least 30 days (or such shorter period as may be required by applicable Law) after the giving of the notice required by Section 11.23.2(c)(i), shall give to the Tax Indemnifying Party any information reasonably requested relating to such claim, and otherwise shall cooperate with the Tax Indemnifying Party in good faith in order to contest effectively any such claim. (iii) Subject to the provisions of Section 11.23.2(c)(ii), the Tax Indemnified Party shall enter into a settlement of such contest with the applicable Governmental Authority or prosecute such contest to a determination in a court or other tribunal of initial or appellate jurisdiction, all as the Tax Indemnifying Party may request. (iv) If, after actual receipt by the Tax Indemnified Party of an amount advanced by the Tax Indemnifying Party pursuant to Section 11.23.2(c)(ii)(B), the extent of the liability of the Tax Indemnified Party with respect to the claim shall be established by the final judgment or decree of a court or other tribunal or a final and binding settlement with an administrative agency having jurisdiction thereof, the Tax Indemnified Party shall promptly repay to the Tax Indemnifying Party the amount advanced to the extent of any refund received by the Tax Indemnified Party with respect to a claim together with any interest received thereon from the applicable Governmental Authority and any recovery of legal fees from such Governmental Authority, net of any Taxes as are required to be paid by the Tax Indemnified Party with respect to such refund, interest or legal fees (calculated at the maximum applicable statutory rate of Tax without regard to any other Tax Items). Notwithstanding the foregoing, the Tax Indemnified Party shall not be required to make any payment hereunder before such time as the Tax Indemnifying Party shall have made all payments or indemnities then due with respect to the Tax Indemnified Party pursuant to this Agreement. (v) Promptly after a final determination the Tax Indemnifying Party shall pay to the Tax Indemnified Party the amount of any Tax Losses to which the Tax Indemnified Party may become entitled by reason of the provisions of this Section 11.23.2. (d) Anything to the contrary in this Agreement notwithstanding, the representations, warranties, covenants, agreements, rights and obligations of the parties hereto with respect to any Tax covered by this Agreement shall survive the Effective Date and shall not terminate until sixty days after the expiration of the statute of limitations (including extensions) applicable to such Tax. 11.24 Post-Execution Lease and Contract Review. Buyer shall have a period of forty-five (45) calendar days after the Execution Date to review the Leases and Contracts listed on Schedules 9.1.9 and 9.1.13 respectively, and to notify Seller in writing (which writing may be transmitted by facsimile) of the identity of those Leases and Contracts that Buyer reasonably believes are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur. If Buyer does not notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Buyer shall be deemed to have agreed that none of the Leases and Contracts which are listed on Schedules 9.1.9 and 9.1.13 require consent, in accordance with Section 7.1.6, before the Effective Date can occur. If Buyer does notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Seller shall have a period of ten (10) business days upon receipt of such notification to notify Buyer in writing (which writing may be transmitted by facsimile) of any objections thereto. Thereafter, Buyer and Seller shall negotiate in good faith and agree in writing as to the identity of those Leases and Contracts which are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur (the "Material Leases and Contracts"). The parties shall reflect their written agreement as to the identity of the Material Leases and Contracts by placing an asterisk next to the appropriate Lease or Contract on Schedule 9.1.9 or 9.1.13, which revised Schedule 9.1.9 or 9.1.13 shall be deemed to be an amendment to this Agreement. ARTICLE 12. EMPLOYEES AND EMPLOYEE MATTERS 12.1 Employee Transfer Agreement. The parties have addressed the transfer of employees and employee benefits matters in a separate agreement, entitled Employee Transfer Agreement, the terms and provisions of which are incorporated into this Agreement as if fully set forth herein and a copy of which is attached hereto as Schedule 12.1 (the "Employee Transfer Agreement"). ARTICLE 13. INDEMNIFICATION 13.1 Survival of Representations, Warranties and Covenants. (a) The representations and warranties made pursuant to this Agreement shall survive the Closing for the following periods after the Effective Date: (i) The representations and warranties set forth in Sections 9.1.6, 9.1.8, 9.1.32, 9.1.33, and 9.2.5 shall survive without limitation as to time. (ii) The representations and warranties set forth in Section 9.1.15 shall survive as set forth in Section 11.23.2(d). (iii) All other representations and warranties shall survive for eighteen (18) months. The date of expiration of any representation or warranty shall be referred to herein as the "Termination Date." Representations and warranties under this Agreement shall be of no further force or effect after the applicable Termination Date. Any claim for indemnification with respect to any alleged breach of any representation or warranty not asserted by notice given as herein provided that specifically identifies a particular breach and the underlying facts relating thereto, which notice is given prior to the Termination Date, may not be pursued and is irrevocably waived and released after such time. Without limiting the generality or effect of the foregoing, no claim for indemnification with respect to any representation or warranty will be deemed to have been properly made except to the extent it is based upon a Third Party Claim or a Direct Claim. (b) Unless a specified period is set forth in this Agreement (in which event such specified period will control), the covenants contained in Section 5.2, Section 5.3, this Article 13, and in Sections 11.1, 11.2, 11.3, 11.6, 11.7, 11.10, 11.12, 11.13, 11.16 and Articles 16 and 17 and in the Employee Transfer Agreement, will survive the Closing and remain in effect indefinitely. Covenants regarding Taxes shall survive as set forth in Section 11.23.2(d). All other covenants contained in this Agreement will terminate, without further action, upon the occurrence of the Effective Date and any claim following the Effective Date for an alleged breach of any such covenant may not be pursued, and is irrevocably waived, upon the occurrence of the Effective Date, except that Buyer may make a claim for Seller's breach of the covenants contained in Section 11.5 at any time within eighteen months after the Effective Date. The immediately preceding sentence shall not apply to, or limit to preclude, a party's rights and remedies if the sale contemplated by this Agreement is not concluded as a result of the other party's breach of this Agreement. 13.2 Limitations on Liability. (a) For purposes of this Agreement, (i) "Indemnification Payment" means any amount of Indemnifiable Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee" means any person or entity entitled to indemnification under this Agreement, (iii) "Indemnifying Party" means any person or entity required to provide indemnification under this Agreement, and (iv) "Indemnifiable Losses" means any losses, liabilities, costs, fines, penalties, damages (actual, punitive or other), and expenses and any claims, demands or suits by any person or entity, including, without limitation, any Governmental Authority, and costs and expenses actually incurred in connection with any actions, suits, demands, assessments, judgments and settlements and reasonable attorneys' fees and expenses, in any such case (x) reduced by the amount of insurance proceeds recovered from any person or entity as a result of the Indemnifiable Losses involved and (y) provided that the underlying liability or obligation is not solely the result of any action taken or omitted to be taken by the Indemnitee. (b) As between Seller and any Affiliate of Seller, on the one hand, and Buyer and any Affiliate of Buyer, on the other hand, the rights and obligations set forth in this Article 13 will be the exclusive rights and obligations with respect to the liabilities and obligations referred to in Section 13.3, and any breach of the representations, warranties or covenants referred to in Section 13.3., except for any liability, obligation or breach that results from the actual fraud under the common law, not otherwise implied or imputed, by a party to this Agreement. Without limiting the foregoing, as a material inducement to entering into this Agreement, to the fullest extent permitted by law, each of the parties waives any claim or cause of action that it otherwise might assert, including, without limitation, under the common law or federal or state securities, trade regulation or other laws, by reason of the liabilities and obligations, and any breach of the representations, warranties or covenants, referred to in Section 13.3, except for claims or causes of action brought under and subject to the terms and conditions of this Article 13, and except for claims or causes of action arising due to the actual fraud under the common law, not otherwise implied or imputed. (c) Notwithstanding any other provision of this Agreement or of any applicable law, no Indemnitee will be entitled to make a claim against an Indemnifying Party under Sections 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32 and 9.1.33) or 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) until the aggregate amount of claims that may be asserted for such Indemnifiable Losses incurred by the Indemnitee exceeds One Hundred Thirty Five Thousand Two Hundred Fifty Two Dollars ($135,252.00) and then only to the extent of the excess. (d) Notwithstanding any other provision of this Agreement, the indemnification obligations of Seller under Section 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32 and 9.1.33) and of Buyer under Section 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) will not exceed the sum of Four Million Fifty Seven Thousand Five Hundred Seventy Five Dollars ($4,057,575.00). (e) Notwithstanding anything to the contrary contained herein, no Indemnifying Party shall be liable to or obligated to indemnity any Indemnitee hereunder for any consequential, special, multiple, punitive or exemplary damages including, but not limited to, damages arising from loss or interruption of business, profits, business opportunities or goodwill, loss of use of facilities, loss of capital, claims of customers, or any cost or expense related thereto, except to the extent such damages have been recovered by a third person and are the subject of a Third Party Claim for which indemnification is available under the express terms of this Section 13. 13.3 Indemnification. (a) Subject to the other sections of this Article 13, Seller will indemnity, defend and hold harmless Buyer and its Affiliates (including the Company after the Effective Date), directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Seller of any of the representations and warranties contained in Section 9.1, except for any such breach of representations and warranties which was specified on Seller's Closing Certificate all of which are waived upon Closing, (ii) a breach by Seller of any covenant of Seller contained in this Agreement or in the Employee Transfer Agreement, except for any such breach of covenants which was specified on Seller's Closing Certificate all of which are waived upon Closing, (iii) the Retained Liabilities, (iv) any Third Party Claim, whether filed, asserted, or sought before or after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business (including contractual obligations in connection with sales or transfers of assets made by the Company prior to the Effective Date), or the ownership or operation of the Business, on or prior to the Effective Date, regardless of whether known or unknown, asserted or unasserted, on the Effective Date. As used in this Agreement, "Retained Liabilities" means all liabilities, responsibilities and obligations (whether known or unknown, fixed, contingent or otherwise) of the Company relating to, arising out of, or in connection with, or resulting from the use or ownership of the Property or the conduct of the Business during, the period ending on the Effective Date, including, without limitation,: (i) all liabilities, responsibilities and obligations with respect to the Excluded Property and the Excluded Contracts; (ii) all liabilities and obligations for prior period adjustments of revenues from the Business and for any customer overbillings and prospective refunds of overcharges (including rates collected under bond but excluding prospective rate reduction) occurring or relating to the period prior to the Effective Date, including without limitation all toll revenues, settlements, pools, separations studies or similar activities for which Seller is responsible pursuant to Section 11.10; and (iii) All liabilities, responsibilities and obligations arising out of or related to the litigation, claims and other matters set forth on Schedule 9.1.16 and any other litigation, claims, actions, lawsuits or legal proceedings based on facts, circumstances or conditions arising, existing or occurring on or before the Effective Date, regardless of whether known or unknown, asserted or unasserted, as of the Effective Date; but excluding all liabilities, responsibilities and obligations of the Company Date to the extent Buyer receives a Purchase Price adjustment in its favor pursuant to Section 3.2 therefor; (b) Subject to the other sections of this Article 13, Buyer will indemnity, defend and hold harmless Seller and its Affiliates, and their directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Buyer of any of the representations or warranties contained in Section 9.2, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (ii) a breach by Buyer of any covenant of Buyer contained in this Agreement or in the Employee Transfer Agreement, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (iii) any Third Party Claim, filed, asserted, or sought after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business or the ownership or operation of the Company or the Business, after the Effective Date. (c) All Tax and environmental matters or issues, including without limitation, the indemnification obligations with respect to Taxes and Environmental Liabilities, are to be governed by Sections 9.1.15 and 11.23 and Article 14, respectively, and are not addressed, limited or governed by the provisions of this Article 13. (d) Payments made under this Section 13.3 shall be treated by Buyer and Seller as purchase price adjustments and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. 13.4 Defense of Claims. (a) If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action, proceeding, or investigation by any entity or person that is not a party to this Agreement or an Affiliate of such a party (a "Third Party Claim") against such Indemnitee, with respect to which an Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of actual notice of such Third Party Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party during the required notification period shall only relieve the Indemnifying Party from its obligation to indemnity the Indemnitee pursuant to this Article 13 to the extent that Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. Indemnifying Party shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether or not the Indemnifying Party elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof, provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (i) the employment of such separate counsel has been specifically authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party has failed to assume the defense of such Third Party Claim within a reasonable time after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee or (iii) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnifying Party and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall not be liable for the fees and disbursements of more than one counsel for all Indemnified Parties in connection with any one proceeding or any similar or related proceedings arising from the same general allegations or circumstances. Without the prior written consent of the Indemnitee, the Indemnifying Party will not enter into any settlement of any Third Party Claim that would lead to liability or create any financial or other obligation on the part of the Indemnitee unless such settlement includes as an unconditional term thereof the release of the Indemnitee from all liability in respect of such Third Party Claim. (b) Any claim by an Indemnitee on account of an Indemnifiable Loss that does not result from a Third Party Claim (a "Direct Claim") will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after the Indemnitee actually becomes aware of the incurrence thereof, and the Indemnifying Party will have a period of thirty (30) calendar days within which to respond in writing to such Direct Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party shall only relieve the indemnifying Party from its obligation to indemnify the Indemnitee pursuant to this Article 13 to the extent the Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. If the Indemnifying Party does not so respond within such thirty (30) calendar day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article 13. (c) If after the making of any Indemnification Payment the amount of the Indemnifiable Loss to which such payment relates is reduced by recovery, settlement or otherwise under any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction (less any costs, expenses, premiums or taxes incurred in connection therewith) will promptly be repaid by the Indemnitee to the Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying Party will, to the extent of such Indemnification Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the Indemnification Payment relates; provided that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss, all claims of the Indemnifying Party against any such third party on account of said Indemnification Payment will be subrogated and subordinated in right of payment to the Indemnitee's rights against such third party. Without limiting the generality or effect of any other provision of this Article 13, each such Indemnitee and Indemnifying Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights. ARTICLE 14. ENVIRONMENTAL MATTERS 14.1 Environmental Due Diligence. 14.1.1 Right to Conduct Due Diligence. Buyer shall have the opportunity to conduct environmental due diligence regarding the Property in accordance with this Section 14.1, for a period not to exceed 120 days after the Environmental Data Delivery Date (as defined below). 14.1.2 Treatment of Data. All information collected and generated as a result of the environmental due diligence authorized by this Section 14.1 will be subject to the terms and conditions of the Confidentiality Agreement, except as otherwise expressly provided in this Section 14.l. Buyer shall provide to Seller copies of all reports, assessments and other information composed or compiled by Buyer's environmental consultant(s) and shall treat all such information in accordance with the procedures of Section 14.1.5(c). Within thirty (30) days after the Execution Date (the "Environmental Data Delivery Date"), Seller will provide to Buyer copies of all surveys and reports in Seller's or the Company's possession concerning the existence or possible existence of asbestos or materials containing asbestos relating to any of the Real Property, a list of all underground storage tanks which to Seller's or the Company's knowledge are located on, or have been removed within the last three years from, any Real Property owned or real estate leased or operated by the Company in connection with the Business and any other reports, studies or documents in Seller's or the Company's possession relating to the Company's potential liability under any Existing Environmental Requirements. The parties further agree that, if Seller discloses the existence or suspected existence of materials containing asbestos with respect to a given parcel of Real Property and the asbestos does not exceed applicable limits, if Buyer desires to make renovations or structural changes to the property after the Effective Date (which changes require the removal of asbestos), the removal will be at the expense of Buyer. 14.1.3 Environmental Consultants. Buyer may retain one or more outside environmental consultants to assist in its environmental due diligence concerning the Property and shall notify Seller of the environmental consultant or consultants Buyer intends to retain. Thereafter, Seller shall have five (5) business days after receipt of such notification to notify Buyer in writing of Seller's objection (which must be for good cause) and substantiate the basis for that objection. If Seller does not object for good cause and substantiate that objection within said five (5) business day period, Seller shall be deemed to have consented to Buyer's selection. 14.1.4 Phase I Reviews. Buyer may conduct the usual Phase I environmental assessment activities of the Property, including inspecting individual sites, submitting environmental questionnaires to Seller and the Company and reviewing existing environmental reports, correspondence, permits and related materials regarding the Property. Phase I environmental assessment activities shall not include any sampling or intrusive testing other than tank tightness testing and hand auger soil testing. (a) Buyer shall give Seller at least three (3) business days' notice prior to any entry onto the Property. (b) If Buyer enters the Property, a representative of Seller may be, but is not required to be, present during such entry on the Property. (c) All activities of Buyer regarding environmental due diligence shall be conducted to minimize any inconvenience or interruption of the normal use and enjoyment of the Business and the Property. 14.1.5 Phase II Reviews. Buyer may conduct the usual Phase II environmental assessment activities of the Property (including, but not limited to, the taking and analysis of soil, surface water and groundwater samples, testing of buildings, drilling wells and taking soil borings) after first conducting a Phase I assessment of a particular site provided that such Phase II assessment activities are conducted in accordance with this Section 14.1.5. (a) If Buyer desires to perform sampling or intrusive testing at a site included in the Property, Buyer must notify Seller of its desire at least five (5) business days in advance of the proposed date of such sampling or testing and provide a description of the scope of work regarding such sampling or intrusive testing. If Seller does not notify Buyer in writing of Seller's objection to such proposed sampling or testing within five (5) business days after receipt of such notice, Seller shall be deemed to have consented to the proposed sampling or testing. Seller shall not unreasonably object to Buyer's request to perform sampling or testing. (b) Buyer shall provide Seller with copies of field data, field reports, laboratory analyses, logs, laboratory reports and other material or information regarding the sampling or intrusive testing ("Environmental Data") within three (3) business days of Buyer's receipt of such data and shall promptly provide Seller with "matched" or "paired" samples, in accordance with standard sampling and testing protocols, that are obtained during the sampling or intrusive testing of a particular site; provided, however, that Seller shall have no obligation to Buyer to take any action whatsoever regarding such samples. (c) It is understood and agreed that neither Buyer nor its environmental consultant(s) shall disclose or release any Environmental Data without the prior written consent of Seller and that all such information shall be kept strictly confidential. The Environmental Data shall be prepared at the request of counsel to Buyer and, to the fullest extent permitted by law, shall be the work product of such counsel and constitute confidential attorney/client communications. The Environmental Data shall be transferred among Buyer and its consultant(s) in a manner that will preserve, to the greatest extent possible, such privileges. Buyer expressly agrees that until the Closing, it will not distribute the Environmental Data to any third party without Seller's written consent. After the Closing, Buyer agrees that it will not distribute the Environmental Data to any third party without Seller's written consent, except as required by law or by express provisions of Buyer's corporate compliance program if Seller is provided written notice at least ten (10) business days prior to such distribution, provided, however, that for a period of two (2) years after the Effective Date, Buyer may distribute the Environmental Data to any potential purchaser of the Company or the Property only after first notifying the Seller, and without such notice at any time after such two (2) year period. 14.1.6 Indemnity for Due Diligence Activities. Buyer hereby agrees to indemnify and hold harmless Seller, Seller's Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all claims, liabilities, damages, losses, orders, penalties, fines, costs, charges and expenses (including reasonable attorneys' fees and disbursements, and reasonable costs of experts and expert witnesses) with respect to persons or property arising out of or in connection with the entry of Buyer or its environmental consultant(s) onto the Property and resulting from any act or omission of Buyer or its environmental consultant(s) provided that Buyer shall not be liable for any Environmental Liabilities incurred by any such party merely discovered by the environmental due diligence performed by Buyer or its environmental consultants. In addition, in the event the transactions contemplated herein with regard to any portion of the Property do not close, Buyer agrees to restore such portion of the Property to the condition which existed prior to Buyer's inspections and testing thereof to the extent such portion of the Property was damaged by such inspections and testing. 14.1.7 Effect of Due Diligence Results. (a) Subject to Section 14.1.7(b) below, Buyer conditionally may terminate this Agreement by written notice to Seller at any time during the period set forth in Section 14.1.1 if: (i) the results of Buyer's environmental due diligence investigation, conducted in accordance with this Section 14. 1, indicate Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company; and (ii) Buyer reasonably determines (on the basis of its environmental due diligence) that responding to and remediating the foregoing Environmental Liabilities based upon Existing Environmental Requirements cannot be completed for less than One Million Eighty Two Thousand Twenty Dollars ($1,082,020.00) (the "Environmental Liabilities Amount") To be effective, any such conditional termination of this Agreement must be delivered in writing to Seller, which writing must specifically acknowledge that the termination is subject to the provisions of paragraph (b) below. (b) In the case of a conditional termination of this Agreement by Buyer in accordance with Section 14.1.7(a) above, Seller may nullify the termination by agreeing to: (i) cause the Company to respond to and fully remediate the Environmental Liabilities based upon Existing Environmental Requirements; or (ii) pay Buyer the cost thereof; or (iii) make other adjustments to the terms and conditions of the sale contemplated by this Agreement all in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller. Seller's election to nullify Buyer's conditional termination by selecting one of the above options shall be, in each case, specified in a writing mutually satisfactory to the parties, and thereafter on or before the Closing (subject to Section 14.1.7(d)), Seller shall perform its obligations under that writing in full. If the parties fail to sign the writing specifying Seller's obligations within thirty (30) days following Buyer's conditional termination (or such longer period acceptable to Buyer) or sign that writing but the Company fails to perform its obligations thereunder in full on or before the Closing (subject to Section 14.1.7(d)), Buyer's conditional termination under paragraph (a) above automatically shall become final and unconditional unless the parties agree otherwise. (c) If the results of Buyer's environmental due diligence conducted in accordance with this Section 14.1 indicate that the costs of responding to and remediating Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company are less than the Environmental Liabilities Amount in the aggregate, Seller agrees, to cause the Company at the Company's sole cost, to either (i) make a mutually satisfactory adjustment to the terms and conditions of the transactions contemplated by this Agreement prior to the Closing in accordance with Section 14.1.7(b)(iii) above, or (ii) prior to the Closing (subject to Section 14.1.7(d)), otherwise respond to and remediate those Environmental Liabilities based upon Existing Environmental Requirements in accordance with Section 14.1.7(b)(i) or Section 14.1.7(b)(ii) above, unless the cost of conducting such response action would exceed the Environmental Liabilities Amount in which case Seller's sole obligation under this Section 14.1.7(c) shall be to pay the Environmental Liabilities Amount toward the completion of such response and remediation actions. If Seller discharges its obligations under this Section 14.1.7 by expending the Environmental Liabilities Amount on such response and remediation action (such expenses to be verified by Seller by delivery by Seller to Buyer of a reasonably detailed statement setting forth such expenses), or paying to Buyer the Environmental Liabilities Amount, Buyer shall sign and deliver to Seller at the Closing a release of Seller from any further liability to Buyer for such remediation and shall indemnify Seller against any liability for such Environmental Liabilities or Environmental Requirements. (d) If Seller elects to cause the Company to respond to and fully remediate Environmental Liabilities based upon Existing Environmental Requirements pursuant to Section 14.1.7(b)(i) or (c)(ii), and such response and remediation has not been completed by the date scheduled for Closing, the parties on or prior to Closing shall enter into an Environmental Remediation Agreement in form and substance reasonably satisfactory to the parties and proceed to Closing; provided, however, that in the case of response and remediation under Section 14.1.7(b)(i), Buyer may elect to postpone the Closing until sufficient response and remediation has been completed so that the remaining response and remediation is equal to or less than the Environmental Liabilities Amount. 14.2 Environmental Indemnification. 14.2.1 Sole Remedy and Release. It is the intent of the parties that the indemnification provided under this Section 14.2 shall be the sole remedy for allocating responsibility regarding environmental matters related to the sale contemplated by this Agreement, the Company, the Business and the Property of which Buyer does not receive notice prior to the Closing (either from Seller in Schedule 14.3 or pursuant to notice given pursuant to Section 17.1 or in any written communication made to Buyer from Buyer's environmental consultants (collectively the "Known Environmental Matters")). Except as expressly provided in this Section 14.2, at Closing each party, for itself and its successors and assigns, by virtue of consummating the sale contemplated by this Agreement and without further action on the part of such party, shall waive and release the other party from any and all liability under any other cause of action at law or in equity concerning the Known Environmental Matters, whether raised pursuant to (i) Environmental Requirements, (ii) any other applicable federal, state or local statute, ordinance, rule or regulation, or (iii) common law. 14.2.2 Indemnification. Subject to the provisions of Sections 14.2.3, 14.2.4 and 14.2.5, Seller agrees to indemnify and hold harmless Buyer, its Affiliates (including the Company after the Effective Date) and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities under Existing Environmental Requirements arising from acts or omissions occurring with respect to, or from the use or ownership of, or any condition or circumstance relating to, the Company or the Property that occurred or arose prior to or on the Effective Date. The foregoing indemnity in this Section 14.2.2 shall only apply to matters that do not constitute Known Environmental Matters (such matters being referred to as the "Unknown Environmental Matters"). Such indemnification under this Section 14.2.2 shall be provided only for claims for Unknown Environmental Matters noticed to the other party pursuant to the procedures of Section 14.2.3, within eighteen (18) months after the Effective Date. Subject to the provisions of Sections 14.2.3 and 14.2.4, Buyer agrees to indemnify and hold harmless Seller, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities, with respect to any Environmental Requirements in existence now or hereafter in effect, arising from acts or omissions occurring after the Effective Date, or from the use or ownership of the Property after the Effective Date, or any condition or circumstance relating to the Company, the Property or the Business that occurred or arose after the Effective Date on the Property or in connection with the Company or the operation of the Business after the Effective Date. 14.2.3 Notice. A party seeking indemnification under this Section 14.2 must give written notice to the other party, including information sufficient to inform the other party of, and allow such other party to confirm the nature of, the claim and any activities required to address the claim, in sufficient detail for the indemnifying party to confirm that all costs incurred or to be incurred by the party to be indemnified under this Section 14.2 are required by Environmental Requirements, as applicable to Buyer, and Existing Environmental Requirements, as applicable to Seller, and are reasonable and cost-effective. If the indemnifying party disagrees with the party to be indemnified as to the necessity of costs or the reasonableness or cost-effectiveness of the remediation method selected, the parties shall negotiate in good faith to achieve at a mutually satisfactory solution. If the parties cannot agree as to costs or methods of remediation, the matter shall be resolved in accordance with Article 16. 14.2.4 Actual Damages. Any indemnifiable claim under this Section 14.2 shall not include incidental or consequential damages except to the extent such damages have been recovered by a third person and are the subject of a Third Party claim for which indemnification is available under the express terms of this Article 14. Any indemnifiable claim under this Section 14.2 shall be reduced to account for any insurance, storage tank fund, or other proceeds received by the party to be indemnified, as a result of the indemnifiable losses involved. The parties agree to take all reasonable steps to mitigate any indemnifiable claim under this Section 14.2, including complying with any registration and reporting requirements necessary to qualify for reimbursement from any storage tank fund. 14.2.5 Limitations on Indemnification. Notwithstanding any other provision of this Agreement, this Article 14, or any applicable law, the indemnification obligations of Seller under this Section 14.2 shall not exceed the aggregate amount of Two Million Twenty Eight Thousand Seven Hundred Eighty Seven Dollars ($2,028,787.00). 14.2.6 Adjustments to Purchase Price. Payments made under this Article 14 shall be treated by Buyer and Seller as purchase price adjustments, and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. ARTICLE 15. TERMINATION 15.1 Termination Rights. This Agreement may be terminated at any time prior to the Closing Date: (a) at any time by mutual written consent of the parties; (b) by Seller or Buyer, as applicable, if there has been a material breach on the part of the other party of its respective representations, warranties or covenants set forth in this Agreement; provided, however, that a party shall not be entitled to exercise its right of termination under this subsection (b) if the breach is capable of being cured to the non-breaching party's reasonable satisfaction and the breaching party is proceeding diligently with its best efforts to effect such cure. (c) by Buyer, pursuant to Section 11.20 (Delivery of Schedules); (d) by Buyer and Seller, as the result of Section 14.1.7(a); (e) by Buyer or Seller, pursuant to Section 11.9; (f) by Seller or Buyer, if the Closing shall not have occurred by December 31, 1995 due to no fault or delay attributable to the party seeking termination; provided, however, that a party shall not be entitled to exercise any right of termination pursuant to this subsection (f) if such party shall not have performed diligently and in good faith the obligations required to be performed by such party hereunder prior to the date of termination; (g) by Buyer if a Governmental Authority, the approval of which is a condition to Buyer's obligations under Section 7.1, has provided written notice that it shall not consent to or approve the transactions contemplated hereby; or (h) by Seller, if a Governmental Authority, the approval of which is a condition to Seller's obligations under Section 7.2, has provided written notice that it shall not consent to or approve the transactions contemplated hereby. 15.2 Effect of Termination. (a) If this Agreement is terminated pursuant to Section 15. 1 (a), (c), (d), (e), (f), (g) or (h), this Agreement shall be of no further force and effect and there shall be no further liability hereunder on the part of either party or its Affiliates, directors, officers, shareholders, agents or other representatives. (b) A party's exercise of its right of termination under Section 15.1(b) shall not constitute a waiver of its rights to recover damages, whether pursuant to breach of contract or in tort, or other remedies available at law or in equity, from the other party as a result of the other party's breach of this Agreement. (c) Notwithstanding anything to the contrary contained herein, the provisions of this Section 15.2 and of Sections 17.1, 17.2, 17.3, 17.8, 17.11, 17.13, 17.14 and Article 16 shall survive any termination of this Agreement. ARTICLE 16. DISPUTE RESOLUTION 16.1 Exclusive Remedy. Subject to Section 16.5, the parties agree to resolve disputes arising out of this Agreement without litigation. Accordingly, except as provided in Section 16.5, or in the case of a suit to compel compliance with this dispute resolution process, the parties agree to use the following alternative dispute resolution procedure as their sole remedy with respect to any controversy or claim arising out of or relating to this Agreement or its breach. 16.2 Dispute Resolution Process. At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any dispute arising under this Agreement. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations. Discussions and correspondence among the parties' representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, exempt from discovery and production, and without the concurrence of both parties shall not be admissible in the arbitration described below or in any lawsuit. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration. 16.3 Arbitration. Subject to Section 16.5, if negotiations between the representatives of the parties do not resolve the dispute within sixty (60) days of the initial written request, the dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Either party may demand such arbitration in accordance with the procedures set out in those rules. The arbitration hearing shall be commenced within sixty (60) days of the demand for arbitration and the arbitration shall be held in a mutually agreeable location. The arbitrator shall control the scheduling (so as to process the matter expeditiously) and any discovery. The parties may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within thirty (30) days after the close of hearings. The times specified in this Section 16.3 may be extended upon mutual agreement of the parties or by the arbitrator upon a showing of good cause. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. 16.4 Costs and Attorneys' Fees. Each party will bear its own costs and expenses in submitting and presenting its position with respect to any such dispute to the arbitrator, and the fees and expenses of such arbitration procedures, including the fees of the arbitrator will be shared equally by Buyer and Seller, except that a party seeking discovery shall reimburse the responding party the cost of production of documents (including search time and reproduction costs); provided, however, that if the arbitrator determines that the position taken in the dispute by the non-prevailing party taken as a whole is unreasonable, the nonprevailing party will bear all such fees and expenses, and reimburse the prevailing party for all of its reasonable costs and expenses in submitting and presenting its position. 16.5 Certain Limitations. The provisions of this Article 16 with respect to the resolution of disputes without litigation shall not apply to any dispute, controversy or claim arising out of the provisions of Section 11.1, or the Confidentiality Agreement, or to a party's seeking to proceed under Section 17.14, it being understood and agreed that in the event of a breach by either party of the provisions of Section 11.1, or the Confidentiality Agreement, or in the event that a party seeks to proceed under Section 17.14, the non-defaulting party shall be entitled to proceed to protect and enforce its rights by an action at law, a suit in equity or other appropriate proceeding, whether for specific enforcement of any agreement contained in Section 11.1, or the Confidentiality Agreement or in aid of the exercise of any power granted by Section 11.1, 17.14 or the Confidentiality Agreement or by law or otherwise. ARTICLE 17. MISCELLANEOUS 17.1 Notices. All notices, consents and other communications required or permitted hereunder shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been given when delivered in person or dispatched by electronic facsimile transfer (confirmed in writing by certified mail, concurrently dispatched) or one business day after having been dispatched for next-day delivery by a nationally recognized overnight courier service to the appropriate party at the address specified below: (a) If to Buyer, to: Mr. Donald K. Roberton Vice President-Telecommunications Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4627 and L. Russell Mitten, II, Esq. Vice President-General Counsel Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4651 with a copy to: Jeffry L. Hardin, Esq. Fleischman and Walsh, L.L.P. 1400 Sixteenth Street, N.W. Washington, D.C. 20036 Facsimile No.: 202/745-0916 (b) If to Seller to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: President Facsimile No.: 501/661-0962 with a copy to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: General Counsel Facsimile No.: 501/661-0962 or to such other persons or address or addresses as any such party may from time to time designate for itself by like notice. 17.2 Press Releases. The parties shall consult with each other in preparing any press release, public announcement, news media response or other forth of release of information concerning this Agreement or the transactions contemplated hereby that is intended to provide such information to the news media or the public (a "Press Release"). Neither party shall issue or cause the publication of any such Press Release without the prior written consent of the other party; provided, however, that nothing herein will prohibit either party from issuing or causing publication of any such Press Release to the extent that such action is required by applicable Law or the rules of any national stock exchange applicable to such party or its Affiliates, in which case the party wishing to make such disclosure will, if practicable under the circumstances, notify the other party of the proposed time of issuance of such Press Release and consult with and allow the other party reasonable time to comment on such Press Release in advance of its issuance. 17.3 Expenses. Except as otherwise expressly provided herein, each party will pay any expenses (including, without limitation, attorneys' fees) incurred by it incident to this Agreement and in consummating the transactions provided for herein. All regulatory filing fees required pursuant to Sections 5.1, 5.4 and 5.5 shall be split equally between the parties. Each party will pay the appropriate costs and filing fees relating to any other applications required to be filed by such party. 17.4 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Buyer may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Seller; provided that Buyer may assign or delegate its rights and obligations under this Agreement without the prior written consent of Seller, to any directly or indirectly wholly owned subsidiary of Buyer provided such subsidiary assumes in writing all of the duties and obligations of Buyer hereunder, but no such assignment and assumption shall in any way operate to enlarge, alter or change any obligation of or due to Seller or relieve Buyer of its obligations hereunder and provided that Buyer agrees to cause such subsidiary to perform each of its agreements and covenants herein, and shall be jointly and severally liable for any non-performance thereof. Seller may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Buyer. Upon the sale, assignment or transfer by Buyer of the Company, the Business or the Property to a non-Affiliate of Buyer not in the ordinary course of business of Buyer, Seller's representations and warranties and indemnification obligation for breach thereof shall terminate. Any assignment made in violation of the foregoing provisions shall be void. 17.5 Amendments. This Agreement may be amended or modified only by a subsequent writing signed by authorized representatives of both parties. 17.6 Captions. The captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement, nor as in any way limiting or amplifying the terms and provisions hereof. 17.7 Entire Agreement. The term "this Agreement" shall mean collectively this document, the Schedules hereto, any agreements expressly incorporated herein, and the Confidentiality Agreement. This Agreement supersedes and revokes any prior discussions and representations, other agreements, commitments, arrangements or understandings of any sort whatsoever, whether oral or written, that may have been made or entered into by the parties relating to the matters contemplated hereby. This Agreement constitutes the entire agreement by and among the parties, and there are no representations, warranties, agreements, commitments, arrangements or understandings except as expressly set forth herein. 17.8 Waiver. Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege available to each party at law or in equity. 17.9 Third Parties. Except as expressly provided herein, nothing contained in this Agreement is intended to confer upon any person, other than the parties and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 17.10 Counterparts. This Agreement may be executed in two or more counterparts, any or all of which shall constitute one and the same instrument. 17.11 Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of Delaware (except that no effect shall be given to any conflicts of law principles of the State of Delaware that would require the application of the laws of any other jurisdiction). In accordance with Title 6, Section 2708 of the Delaware Code Annotated, the parties agree to the jurisdiction of the courts of Delaware and to be served with legal process from any of such courts. 17.12 Further Assurances. From time to time, as and when requested by one of the parties, the other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate and make effective the transactions contemplated by this Agreement. 17.13 Certain Interpretive Matters and Definitions. (a) Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning so assigned to it, (iii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (iii) all references to the "knowledge of a party" will be deemed to refer to the actual knowledge of the Executive Officers of the party after reasonable investigation, and (iv) all references to a party's "best efforts" and references of like import will be deemed to refer to the best efforts of such party in accordance with reasonable commercial practice and without the incurrence of unreasonable expense. (b) No provision of this Agreement will be interpreted in favor of, or against, either of the parties by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of such provision or of this Agreement. 17.14 Specific Performance. In addition to all other rights and remedies available at law or in equity, any party hereto may pursue, to the fullest extent available, the remedy of specific performance in order to compel the other party to close pursuant to Article 8. IN WITNESS WHEREOF, the parties, acting through their duly authorized agents, have caused this Agreement to be duly executed and delivered as of the date first above written. ALLTEL CORPORATION: By: /s/ Max E. Bobbitt ------------------ Name: Max E. Bobbitt Title: President and Chief Operating Officer CITIZENS UTILITIES COMPANY: By: /s/ Leonard Tow --------------- Name: Leonard Tow Title: Chairman of the Board and Chief Executive Officer EX-10 5 EXHIBIT 10.20 EXECUTION COPY STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 28th day of November, 1994 (the "Execution Date"), by and among Citizens Utilities Company, a Delaware corporation ("Buyer"), and ALLTEL Corporation, a Delaware corporation ("Seller"). RECITALS WHEREAS, Seller is the record and beneficial owner of all of the issued and outstanding shares of capital stock of ALLTEL Nevada, Inc., a Nevada corporation (the "Company"); and WHEREAS, Seller desires to sell and deliver to Buyer, and Buyer desires to purchase and accept from Seller, the Shares (as defined below), upon the terms and conditions set forth in this Agreement; and NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement and any amendment hereto, the following terms are defined as set out below or in the Section referenced below: Additional Financial Statements is defined in Section 11.4. Adjusted Total Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Telecommunications Accounts Receivable (item 2-Assets on the Company's Balance Sheet) less "Accounts Receivable Allowance" (item 3 - Assets on the Company's Balance Sheet) after adjusting "Accounts Receivable Allowance" to reflect an uncollectible percentage based upon the Company's actual uncollectible net write-off percentage for the calendar year immediately preceding the year in which the Closing occurs, (ii) Accounts Receivable - Other (item 5-Assets on the Company's Balance Sheet) less Accounts Receivable Allowance - Other (item 6 - Assets on the Company's Balance Sheet), (iii) Prepaid Expense (item 9-Assets on the Company's Balance Sheet), and (iv) Other Current Assets (item 10-Assets on the Company's Balance Sheet) to the extent such other current assets do not represent cash accounts. Adjusted Total Non-Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Other Investments at Cost (item 15-Assets on the Company's Balance Sheet) to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and which RTB Stock is owned by the Company immediately after the Effective Date, (ii) Unamortized Debt Expense (item 16-Assets on the Company's Balance Sheet) to the extent such debt expense relates to debt which is to remain outstanding immediately after the Effective Date, and (iii) Deferred Maintenance and Retirements (Item 17 - Assets on the Company's Balance Sheet). Adjusted Total Current And Non-Current Liabilities means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Current Maturities of Long Term Debt (item 1- Liabilities on the Company's Balance Sheet) to the extent such long term debt is to remain outstanding immediately after the Effective Date, (ii) Accounts Payable-Other (item 6-Liabilities on the Company's Balance Sheet), (iii) Advance Payments and Customer Deposits (item 7-Liabilities on the Company's Balance Sheet), (iv) Taxes Accrued - Other (item 9 - Liability on the Company's Balance Sheet), (v) Interest Accrued-Other (item 13-Liabilities on the Company's Balance Sheet) to the extent such interest relates to debt which is to remain outstanding immediately after the Effective Date, and (vi) that portion of Other Deferred Credits (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities that are associated with the requirements of Financial Accounting Standard 106 attributable to the active Transferred Employees. Affiliate has the meaning given to that term in Rule 405 under the Securities Act of 1933, as amended. Agreement is defined in Section 17.7. The Business means the business of the Company; i.e., providing local exchange and exchange access telecommunications services and other related regulated and non-regulated activities, services and products associated with the Exchanges, including without limitation such unregulated activities, services and products of the Company conducted, offered or serviced by the Transferred Employees or provided or related to the Company's subscribers or customers served in or from the Exchanges (such unregulated activities, services and products (the "Unregulated Business") are considered an integral part of the Business for all purposes of this Agreement). Buyer's Closing Certificate is defined in Section 7.2.1. CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Casualty Notice is defined in Section 11.9. Casualty Termination Notice is defined in Section 11.9. Closing is defined in Section 8.1. Closing Date is defined in Section 8.1. Common Stock means the common stock of the Company, no par value. Company is defined in the recitals of this Agreement. Company Books and Records is defined in Section 2.2.3. Company's Balance Sheet means the balance sheet of the Company. Confidentiality Agreement means the Confidentiality Agreement dated September 30, 1994 between ALLTEL Corporation and Citizens Utilities Company which is attached and incorporated into this Agreement as Schedule 1-1. Contracts is defined in Section 2.2.2. Damaged Property is defined in Section 11.9. Debtholder Consents is defined in Section 5.2(a). Direct Claim is defined in Section 13.4(b). Effective Date is defined in Section 8.1. Employee Plan Assets is defined in the Employee Transfer Agreement. Employee Transfer Agreement is defined in Section 12.1 Employment Agreements is defined in Section 9.1.18. Environmental Liabilities means all liabilities, obligations (including obligations to respond to, investigate and remediate conditions caused by any Regulated Material), responsibilities, losses, damages (including punitive or treble damages), costs and expenses (including reasonable fees, disbursements and expenses of counsel, experts, consultants and expert witnesses), fines, penalties, interest or bonds, based upon any Environmental Requirements of any Governmental Authority, or as a consequence of (a) the release or threatened release of a Regulated Material in amounts that require response or remediation into the outdoor environment, (b) any circumstance or condition relating to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof, that does not comply with Environmental Requirements, or (c) any claim, demand, notice, cause of action, directive, order, judgment, fine or penalty asserted or sought under or pursuant to any Environmental Requirements by an entity or person not a party to this Agreement, to the extent that the condition or circumstance or event giving rise to the claim, demand, notice, cause of action, directive, order, judgment, fine or penalty relates to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof. Environmental Requirements means (i) any federal, state and local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority and all valid and enforceable guidance documents and policies thereof, relating to (x) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (y) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Regulated Material, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Regulated Material in each case as now amended and as now or hereafter in effect. The term Environmental Requirements includes, without limitation, CERCLA, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the federal Solid Waste Disposal Act, the federal Toxic Substances Control Act and the federal Insecticide, Fungicide and Rodenticide Act, each as now amended and as now or hereafter in effect. ERISA means the Employee Retirement Income Security Act of 1974, as amended. ERISA Plans is defined in Section 9.1.18. Estimated Purchase Price is defined in Section 3.3(a). Evaluation Material is defined in the first paragraph of the Confidentiality Agreement. Exchanges is defined in Section 2.2. Excluded Books and Records means the general ledger and all books and records relating to (i) tax returns and tax records, (ii) the Excluded Property or (iii) the Retained Liabilities, (iv) employees of the Company that are not Transferred Employees, and (v) subject to Section 11.13, all Original Cost Documents that are not located in the Exchanges. Excluded Contracts means the contracts, leases and agreements listed or identified on Schedule 11.22. Excluded Property means the Excluded Books and Records, the trademarks, trade names, trade dress, logos, and any other intangible assets that use or incorporate the word "ALLTEL" and any other marks listed on Schedule 11.1.5, the Company's interest in any cellular telephone or personal communications services business, and, in each case, any applications or licenses granted with respect thereto, and the assets disposed, transferred or dividended by the Company pursuant to Section 11.22 and any assets excluded pursuant to Sections 11.9 and 14.1.7. Execution Date is defined in the preamble to this Agreement. Executive Officers of an entity means the president and any vice president of the entity in charge of a principal business unit, division or function. Existing Environmental Requirements means those applicable provisions of any Environmental Requirements that are both in effect and applicable to the Company, the Business or the Property on or prior to the Effective Date. FCC means the Federal Communications Commission. FCC Consents is defined in Section 5.4. FCC Licenses is defined in Section 2.2.4. Final Order means an action by the FCC, the PUC, or any other Governmental Authority, as to which: (a) no request for stay of the action by the FCC, the PUC, or such other Governmental Authority, as the case may be, is pending, no such stay is in effect, and if any time period for filing any request for such a stay is provided by statute or regulation, such time period has passed; (b) no petition, motion or application for rehearing, reconsideration, or review, of the action is pending before the FCC, the PUC, or such other Governmental Authority, as the case may be, and the time provided for filing any such petition, motion or application has passed; (c) the FCC, the PUC, or such other Governmental Authority, as the case may be, does not have the action under reconsideration on its own motion and the time in which such reconsideration is permitted has passed; and (d) no appeal to a court, of the FCC's, the PUC's or such other Government Authority's action, as the case may be, is pending or in effect, and the deadline for filing any such appeal has passed. Final Purchase Price is defined in Section 3.4. Financial Statements is defined in Section 9.1.11. GAAP means generally accepted accounting principles. Governmental Authority is defined in Section 9.1.3. HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Indebtedness Releases or Terminations is defined in Section 5.2. Indemnifiable Losses is defined in Section 13.2(a). Indemnification Payment is defined in Section 13.2(a). Indemnifying Party is defined in Section 13.2(a). Indemnitee is defined in Section 13.2(a). Intellectual Property is defined in Section 11.1.1. IRC means the Internal Revenue Code of 1986, as amended. IRS means the Internal Revenue Service. June 1994 Base Amount means the sum of (i) the amount of Net Telecommunications Plant as of June 30, 1994 and (ii) the amount of Materials and Supplies as of June 30, 1994 Law is defined in Section 9.1.4. Leases means all real and personal property leases to which the Company is a party, or to which any Affiliate of the Company is a party and which are used in connection with the Business. Marks is defined in Section 11.1.5. Materials and Supplies means the amount set forth on the Company's Balance Sheet as of a date certain comprising the Company's Materials and Supplies (item 8 - Assets on the Company's Balance Sheet). Net Telecommunications Plant means the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of Telecommunications Plant In Service (item 22 - Assets on the Company's Balance Sheet, Plant Under Construction -- Short Term (item 23 - Assets on the Company's Balance Sheet), Plant Under Construction -- Long Term (item 24 - Assets on the Company's Balance Sheet), and Telecommunications Plant -- Other (item 25 - Assets on the Company's Balance Sheet), less Accumulated Depreciation and Amortization (item 27 - Assets on the Company's Balance Sheet). Original Cost Documents means all original cost documentation relating to the Telephone Plant. NECA means the National Exchange Carrier Association. Non-FCC Authorizations is defined in 2.2.6. PBGC means the Pension Benefit Guaranty Corporation. Permitted Exceptions is defined in Section 11.16. Plans is defined in Section 9.1.18. Press Release is defined in Section 17.2. PUC means the Public Service Commission of Nevada. Purchase Price is defined in Section 3. 1. Property is defined in Section 2.2. REA Debt means debt of the Company owed to the Rural Electrification Administration. Real Property is defined in Section 2.2. 1. Regulated Material means (i) any "hazardous substance" as defined in CERCLA, (ii) any petroleum or petroleum substance, and (iii) any other pollutant, waste, contaminant, or other substance regulated under Environmental Requirements or, as applicable, Existing Environmental Requirements. Regulatory Approvals is defined in Section 5. 1. Retained Liabilities is defined in Section 13.3(a). RTB Stock means stock of the Rural Telephone Bank. Seller's Closing Certificate is defined in Section 7. 1. 1. Shares means the 260,553.67 shares of the Common Stock owned by Seller. Tax Returns means a report, return or other information statement required to be supplied to a federal, state or local taxing Governmental Authority with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes the Company. Tax(es) means any foreign, federal, state, provincial, county or local income, sales, use, transfer, excise, franchise, stamp duty, custom duty, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, recording, ad valorem, gains, value-added, unemployment compensation, general corporate, profits, registration, unincorporated business, alternative, social security, estimated, add-on, minimum, privilege or withholding tax and any interest and penalties and additions to such taxes (civil or criminal) related thereto or to the nonpayment thereof. Telephone Plant is defined in Section 2.2. 1. Third Party Claim is defined in Section 13.4(a). Total Deferred Credits is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Unamortized Investment Tax Credit" (Item 22 - Liabilities on the Company's Balance Sheet), "Non-Current Deferred Income Taxes" (Item 23 - Liabilities on the Company's Balance Sheet), "Regulatory Liabilities" (Item 24 - Liabilities on the Company's Balance Sheet), "Other Deferred Credits" (Item 25 - Liabilities on the Company's Balance Sheet), and "Donations of Telephone Plant" (Item 26 - Liabilities on the Company's Balance Sheet). Total Long-Term Debt is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Long-Term Debt" (Item 17 - Liabilities on the Company's Balance Sheet), "Premium/Discount on Long-Term Debt" (Item 18 - Liabilities on the Company's Balance Sheet), and "Capital Lease Obligations" (Item 19 - Liabilities on the Company's Balance Sheet). Transferred Employee is defined in Article II.A of the Employee Transfer Agreement. Transition Services Agreement is defined in Section 10.1. Unregulated Business is defined in the definition of Business set forth in this Article 1. ARTICLE 2. PURCHASE AND SALE OF SHARES 2.1 Purchase and Sale of Shares. Subject to the terms and conditions of this Agreement, Seller agrees to sell and deliver to Buyer, and Buyer agrees to purchase and accept, as of the Effective Date, the Shares, free and clear of all security interests, liens, or encumbrances. 2.2 Property. For purposes of this Agreement, the "Property" consists of the Telephone Plant, Contracts and Leases (to the extent permitted following compliance with Section 5.3), Company Books and Records, FCC Licenses, the Non- FCC Authorizations and other assets in effect or owned by the Company as of the Effective Date that are associated with (i) the telephone exchanges listed in Schedule 2.2(a) (the "Exchanges"), and (ii) the Unregulated Business described on Schedule 2.2(b). 2.2.1 Telephone Plant. For purposes of this Agreement, "Telephone Plant" means the Real Property, machinery, equipment, vehicles and all other assets and properties used, or held for future use, in connection with the conduct of the Business, including, without limitation, all improvements, plants, systems, structures, construction work in progress, telephone cable (wherever located and whether in service or under construction), microwave facilities (including frequency spectrum assignments), telephone line facilities, telephones, machinery, furniture, fixtures, tools, implements, conduits, stations, substations, equipment (including, without limitation, central office equipment, subscribers' station equipment and other equipment in general), instruments, house-wiring connections and all other equipment of every nature and kind owned by the Company or in which the Company holds an interest (other than as a lessee) and used in connection with the Business. For purposes of this Agreement, "Real Property" means the real property owned by the Company and used in connection with the Business, including, without limitation, all land, buildings, structures, easements, rights of way, appurtenances, improvements or privileges located thereon and relating thereto. Without limiting the generality of the foregoing, the Telephone Plant includes the assets that would be properly included in the fixed asset accounts referenced in Part 32 of the FCC's Rules and Regulations (47 C.F.R. Part 32), as such accounts are reflected in Schedule 9.1.19. 2.2.2 Contracts. For purposes of this Agreement, "Contracts" means all agreements that relate to the Business between the Company or any Affiliate of the Company and (i) the Company's subscribers or customers, or (ii) other entities or persons who are not Affiliates of the Company and have business relationships with the Company relating to the Business, except for the Excluded Contracts (some of which are specifically governed by other Sections in this Agreement or the Employee Transfer Agreement). 2.2.3 Company Books and Records. For purposes of this Agreement, "Company Books and Records" means all of the Company's customer or subscriber lists and records, accounts and billing records (including a copy of the detailed general ledger and the summary trial balances, where available for the past two fiscal years), detailed continuing property record lists, plans, blueprints, specifications, designs, drawings, surveys, engineering reports, personnel records (where applicable), Original Cost Documents (where located in the Exchanges but excluding Excluded Books and Records) and all other documents, computer data and records (including records and files on computer disks or stored electronically) relating to the Business (excluding Excluded Books and Records), the Property and the Transferred Employees, except for the Excluded Books and Records. 2.2.4 FCC Licenses. For purposes of this Agreement, "FCC Licenses" means all licenses, certificates, permits or other authorizations, including, without limitation, Section 214 authorizations where applicable, granted to the Company by the FCC. 2.2.5 [INTENTIONALLY DELETED] 2.2.6 Non-FCC Authorizations. For purposes of this Agreement, "Non-FCC Authorizations" means all licenses, certificates, permits, franchises, or other authorizations (other than FCC Licenses) granted to the Company by Governmental Authorities (including without limitation those that are listed or required to be listed on Schedule 9.1.17(c)). ARTICLE 3. PURCHASE PRICE 3.1 Purchase Price. (a) In consideration of the sale of the Shares and the other undertakings of Seller in this Agreement, and subject to and in accordance with the other terms and conditions of this Agreement, on the Closing Date, Buyer will pay to Seller the sum of Fifty Million Four Hundred Twenty One Thousand Dollars ($50,421,000.00), subject to adjustment as provided in Section 3.2 (the "Purchase Price"). (b) (i) On or before the Closing Date, Buyer shall deliver to Seller, in immediately available funds in U.S. Dollars, the Estimated Purchase Price. Such delivery shall be made by bank wire transfer to an account that Seller shall designate at least two (2) business days prior to the Effective Date. (ii) Buyer will use its best efforts to make the wire transfer of the Estimated Purchase Price by 12:00 noon (Eastern Time) on the Closing Date, provided that all conditions to Closing set forth in Article 7 have been satisfied, or waived by the appropriate party, before such time. 3.2 Adjustments to Purchase Price. (a) Adjustment Regarding Damaged Property. (1) If the provisions of Section 11.9(c)(i) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to repair or replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (2) If the provisions of Section 11.9(c)(ii) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (b) [INTENTIONALLY DELETED] (c) Adjustment Regarding June 1994 Base Amount. The Purchase Price shall be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which the sum of Net Telecommunications Plant and Materials and Supplies as of the Effective Date exceeds or is less than the June 1994 Base Amount; provided, however, that in determining Net Telecommunications Plant and Material and Supplies as of the Effective Date, no effect will be given for: (i) any decrease thereof resulting from damage, loss or destruction of Damaged Property which is repaired or replaced by Seller or the Company or for which Seller or the Company makes a substitution, in accordance with Section 11.9(b); (ii) any increase thereof resulting from expenditures made by Seller or the Company in connection with any such repair, replacement or substitution of Damaged Property in accordance with Section 11.9(b); or (iii) any increase thereof resulting from Seller's expenditures pursuant to its obligations under Section 14.1.7(b) and (c) except for the cost of purchasing specific items of new plant (i.e., storage tanks). (d) Adjustment Regarding Assets and Liabilities. The Purchase Price will be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which, in each case as of the Effective Date: (i) Adjusted Total Current Assets plus Adjusted Total Non-Current Assets exceeds or is less than (ii) Adjusted Total Current and Non-Current Liabilities plus Total Long Term Debt to the extent such Total Long-Term Debt shall remain outstanding immediately after the Effective Date. 3.3 Estimate of Purchase Price. At least five (5) days prior to the date scheduled for Closing, Seller shall deliver to Buyer an estimate of the Purchase Price based on Seller's good faith estimate of the amount of each adjustment described in Section 3.2 (the "Estimated Purchase Price") on the same basis and in accordance with the same accounting principles, methods and practices applied in preparing the Financial Statements and the Additional Financial Statements, if applicable, taking into account all adjustments required in Section 3.2 (using the balances as reflected on the Company's Balance Sheet as of the end of the month immediately preceding the month in which the Effective Date is scheduled to occur for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and accompanied by a reasonably detailed statement, certified by the chief financial or accounting officer of Seller, describing how each such adjustment was determined. 3.4 Adjustments After Closing. (a) Within sixty (60) days following the Effective Date, Buyer shall deliver to Seller final calculations of the Purchase Price, as adjusted pursuant to Section 3.2 (prepared on the same basis (but using the balances reflected on the Company's Balance Sheet as of the Effective Date for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and in accordance with the same accounting principles, methods and practices used to prepare the Estimated Purchase Price) which shall be accompanied by a reasonably detailed statement certified by the chief financial or accounting officer of Buyer describing how each such adjustment was determined. (For the purpose of preparing Buyer's calculations and adjustments, Seller shall give Buyer access to all books, records, and other information regarding the Company available to Seller that Buyer may reasonably determine appropriate.) Within thirty (30) days following the delivery of such calculations and adjustments, Seller shall notify Buyer of any objection thereto, stating in reasonable detail the reasons therefor; otherwise, such calculations and adjustments of the Purchase Price shall be final and binding on Seller and Buyer. (For the purpose of reviewing Buyer's calculations and adjustments, Buyer shall give Seller access to all books, records, and other information regarding the Company available to Buyer that Seller may reasonably determine appropriate.) If Seller shall object, Seller and Buyer shall work in good faith to agree on the correct amounts for the final Purchase Price, but if they fail to agree, either party may exercise its rights pursuant to Article 16. (b) Within three (3) business days following the day on which the Purchase Price shall become final, whether by expiration of time or agreement of Seller and Buyer (the "Final Purchase Price"): (i) if the Final Purchase Price shall exceed the Estimated Purchase Price, Buyer shall cause to be transferred to such account in the United States as Seller may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer, or (ii) if the Estimated Purchase Price shall exceed the Final Purchase Price, Seller shall cause to be transferred to such account in the United States as Buyer may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer. It is the intent of the parties that all Purchase Price adjustments that are not disputed shall be paid by the appropriate party as soon as reasonably practicable, and any disputed amounts will not delay payments with respect to amounts not in dispute. ARTICLE 4. [INTENTIONALLY DELETED] ARTICLE 5. REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS 5.1 Governmental Regulatory Approval. Except as provided in Section 5.4, as promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date with respect to applications to be filed with the PUC and with respect to Material Regulatory Approvals, the parties shall file the applications and notices described on Schedule 5.1 in such form as agreed to by the parties with the PUC and other appropriate Governmental Authorities, seeking an order permitting the transfer of control of the Company to Buyer (the "Regulatory Approvals"). Each party agrees to use its best efforts to obtain the Regulatory Approvals and the parties agree to cooperate fully with each other and with all Governmental Authorities to obtain the Regulatory Approvals as described on Schedule 5.1 at the earliest practicable date. The parties agree that the Regulatory Approvals containing asterisks on Schedule 5.1 constitute material Regulatory Approvals (the "Material Regulatory Approvals") which are subject to Sections 7.1.3 and 7.2.4, and the Regulatory Approvals that do not contain an asterisk on Schedule 5.1 constitute Immaterial Regulatory Approvals (the "Immaterial Regulatory Approvals") which are subject to Section 5.3, but not Sections 7.1.3 and 7.2.4. 5.2 Debtholder Consents; Indebtedness Releases or Terminations. (a) With respect to the Company's long-term indebtedness identified on Schedule 5.2(a) (the "Long Term Indebtedness"), where required by the underlying debt instruments, as promptly as practicable following the Execution Date, but in any event no more than forty-five (45) days thereafter, the parties shall contact the holders of such indebtedness to request, and use their best efforts to obtain, such holders' consent ("Debtholder Consents") to the transfer of control of the Company on terms acceptable to the parties. The parties acknowledge that all Long Term Indebtedness for which Debtholder Consents have been obtained before the Effective Date and all other Long Term Indebtedness for which Debtholder Consent is not required, shall remain outstanding immediately after the Effective Date and shall be included as a Purchase Price adjustment pursuant to Section 3.2(d). Each party shall bear their own costs and expenses in obtaining such Debtholder Consent. Neither party, however, shall be required to make any payment to the debtholder to obtain the Debtholder Consent, except that Seller shall be responsible for any such payments as are specified in the relevant debt agreement. (b) If within thirty (30) days prior to the Closing Date, the parties have been unable to obtain the Debtholder Consents with respect to any Long Term Indebtedness, the Company shall repay such Long Term Indebtedness in full (including all interest and premiums or penalties thereon). (c) With respect to Long Term Indebtedness that the Company shall repay on or prior to the Effective Date, Seller shall take, at Seller's sole cost and expense, all actions necessary with respect to all persons or entities (collectively, the "Secured Parties") holding any security interest or lien against the Property, to obtain the termination or release, as of the Effective Date, and the prompt removal after the Effective Date, of all security agreements, mortgages and financing statements relating to the Property (such terminations and releases being hereinafter collectively referred to as the "Indebtedness Releases or Terminations"). Buyer agrees to cooperate in good faith with Seller in obtaining the required Indebtedness Releases or Terminations. 5.3 Other Consents. (a) As promptly as practicable after the Execution Date, the parties hereto shall mutually seek the consent, approval or waiver of the other party to any Lease or Contract that requires consent, approval or waiver as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares. To the extent any of the approvals, consents or waivers required with respect to any Lease, Contract or Immaterial Authorization have not been obtained with respect to any Lease, Contract or Immaterial Authorization as of the Effective Date, Seller shall continue to use its best efforts to obtain the consent of such other third party that is required for the transfer of control of such Lease, Contract or Immaterial Authorization after the Effective Date. (b) Notwithstanding anything to the contrary contained herein, if a third party refuses or has failed to consent to the transfer of control of a Lease, Contract or Immaterial Authorization after the Seller has used its best efforts for a period of six months after the Effective Date to obtain such consent, waiver or approval, then Seller and Buyer shall within thirty (30) days after expiration of such six-month period negotiate in good faith and agree upon, and Seller shall pay to Buyer, an amount representing fair compensation to Buyer for the harm caused by the failure to obtain such consent, waiver or approval. Following such payment, Seller shall have no further obligation to Buyer with respect to such Lease, Contract or Immaterial Authorization except as otherwise provided in Section 11.12 with respect to the Contracts and Excluded Contracts addressed in Section 11.12. (c) Seller shall bear all reasonable costs and expenses in obtaining such consents, approvals or waivers to the extent such costs or expenses are specified in the relevant Lease, Contract or Immaterial Authorization, or under applicable Law, and shall reimburse Buyer to the extent Buyer makes any transfer payments which are specified in amount and required under any Lease or Contract to the lessor or other party thereto, provided that seven (7) business days before Buyer makes any transfer payments, Buyer will notify Seller of its intent to do so and after making such transfer payment, Buyer will provide evidence satisfactory to Seller that such transfer payment was made. Buyer and Seller will negotiate in good faith to determine the extent to which each will bear any other costs and expenses arising in connection with obtaining such consents, approvals and waivers. 5.4 FCC Consents. As promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date, the parties shall file all applications and requests described on Schedule 5.4 in such form as agreed to by the parties with the FCC seeking, and shall use their best efforts to obtain, the FCC's consent to the transfer of control of all FCC Licenses (as listed in Schedule 9.1.17(b)) from Seller to Buyer (the "FCC Consents"). The parties each agree that in connection with taking the immediately above described actions, they will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the National Exchange Carrier Association Tariff F.C.C. No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. Each party agrees to use its best efforts, and the parties agree to cooperate fully with each other and with the FCC, to obtain the FCC Consents at the earliest practicable date. 5.5 HSR Act Review. As promptly as practicable after the Execution Date but in no event later than thirty (30) days after the Execution Date, the parties will make such filings as may be required by the HSR Act with respect to the sale contemplated by this Agreement. Thereafter, the parties will file as promptly as practicable any supplemental information that may be requested by the U.S. Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR Act. The parties agree to cooperate in seeking early termination of the waiting periods under the HSR Act. ARTICLE 6. PRECLOSING COVENANTS 6.1 Investigation by Buyer. (a) Prior to the Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford to the authorized representatives of Buyer reasonable access during normal business hours to the books and records of the Company (including, without limitation, relevant tax information) and to the personal property and Real Property comprising the Property. Buyer and Seller will cooperate with each other to schedule such access. With the consent of Seller (which consent will not be unreasonably withheld), Buyer and its representatives shall have access to all interexchange carriers having business relationships with the Company, to all customers of the Company, and to all officers, employees and agents of the Company having knowledge or information concerning the operations of the Company so as to afford Buyer the opportunity to make such review, examination and investigation of the Company and the Property as Buyer may desire to make, to evaluate the competitiveness of the Company and the Business, and to enable Buyer to assimilate the Company and the Business into Buyer's operations as soon as practicable after the Effective Date. To the extent it so desires, Seller shall accompany Buyer on all of Buyer's access to interexchange carriers, customers and agents of the Company. Buyer will be permitted to make extracts from or copies of such books and records as may be reasonably necessary. Buyer will not contact any employee, customer or supplier of the Company as to this Agreement or the matters involved herein except in accordance with this Section 6.1. (b) Subject to applicable law, and upon Buyer's request and Seller's consent (which consent will not be unreasonably withheld), Seller shall cause the Company to permit, at Buyer's sole cost and expense: (i) certain key employees and officers of the Company selected by Buyer to attend workshops and training sessions of Buyer (including sessions to train such employees in Buyer's business planning process in order to have the Company after the Effective Date follow Buyer's business planning process and procedures); (ii) The Company's management to work with Buyer during Buyer's planning process between the Execution Date and the Effective Date; (iii) Buyer to confer with the Company about, and to participate in the Company's planning for, any material reduction in work force or other arrangements regarding employees required or implemented pursuant to the Employee Transfer Agreement. (c) As promptly as reasonably practicable after Buyer's request, Seller will furnish, and cause the Company to furnish, such financial and operating data and other information pertaining to the Company as Buyer may reasonably request in order, among other things, to comply with Buyer's disclosure obligations under the federal securities or other laws as such obligations relate to Buyer's prospective ownership of the Company, including any disclosure required in connection with the sale of any securities by Buyer; provided, however, that nothing herein will obligate Seller or the Company to take actions that would unreasonably disrupt the normal course of the business of the Company or violate the terms of any applicable Law or any contract to which the Company is a party or to which any of its assets is subject in providing such information, or to incur any costs with respect to Buyer's external auditors (or the Company's external auditors in the event a report by such auditors is requested by Buyer) providing accounting services with respect to issuing an auditor's report required by Buyer. Any information or document provided to Buyer or acquired by Buyer during this investigation shall be deemed "Evaluation Material" as that term is defined in the Confidentiality Agreement and shall be subject in all cases to the terms of the Confidentiality Agreement; provided, however, that following consultation with Seller, Buyer may disseminate financial or other information with respect to the Business or the Company that Buyer, upon consultation with counsel, determines is required to be disclosed under federal securities laws. (d) Prior to Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will cause the Company to afford the authorized representatives of Buyer access to the Properties in order to conduct the environmental audit contemplated by Section 14.1. (e) In connection with the continuing operation of the Business between the Execution Date and the Effective Date, Seller shall cause the Company to confer in good faith with Buyer, as reasonably requested by Buyer from time to time, to report on material operational matters, material reductions in work force and other material employee matters, and the general status of ongoing operations. (f) Notwithstanding the provisions of this Agreement or the Confidentiality Agreement, from and after the Execution Date, upon the prior consent of Seller (which consent will not be unreasonably withheld), Buyer may disclose Evaluation Material (as defined in the Confidentiality Agreement) to representatives of rating agencies, underwriters, underwriters' counsel, public accountants, prospective lenders and other third parties involved in any of Buyer's offering of securities or other financings and to fixed income and equity analysts to the extent such parties reasonably have a need to know any such information; provided, that such parties shall (y) be advised of the confidential nature of any Evaluation Material they receive, and (z) agree in writing to be bound to the provisions of the Confidentiality Agreement. 6.2 Satisfaction of Conditions. Without limiting the generality or effect of any provision of Article 7, the parties will use their best efforts to satisfy promptly all conditions required to be satisfied prior to the Closing. 6.3 Notification as to Certain Matters. (a) The Buyer will promptly notify Seller of (i) any information that would cause any representation or warranty of Buyer contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the transactions contemplated by this Agreement; of which in any such case, Buyer's representatives listed on Schedule 6.3(a) become aware on or before the Effective Date. Buyer shall use reasonable best efforts to keep Seller informed of the events described in this Section 6.3(a) and shall permit Seller access to all materials prepared by Buyer in connection therewith. (b) The Seller will promptly notify Buyer of (i) any information that would cause any representation or warranty of Seller contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the Company, the Business or the transactions contemplated by this Agreement; of which in any such case, Seller's representatives listed on Schedule 6.3(b) become aware on or before the Effective Date. Seller shall use reasonable best efforts to keep Buyer informed of the events described in this Section 6.3(b) and shall permit Buyer access to all materials prepared by Seller in connection therewith. ARTICLE 7. CONDITIONS PRECEDENT TO THE CLOSING 7.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Buyer: 7.1.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been no material breach by Seller of any of its covenants to be performed in whole or in part prior to the Closing and the representations and warranties of Seller in Section 9.1 (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) shall be true and correct as of the Effective Date, except for such representations or warranties that are made expressly as of some other date, which shall be true and correct (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) as of such other date, and Seller shall have delivered to Buyer a certificate in the form attached hereto as Schedule 7.1.1 ("Seller's Closing Certificate"), dated as of the Effective Date and signed by one of Seller's Executive Officers, certifying each of the foregoing, or specifying those respects in which such covenants have been materially breached or such representations and warranties (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) are not true and correct in which event, if the Closing occurs, any claim with respect to matters so specified shall be waived by Buyer unless otherwise expressly agreed by Seller at Closing. 7.1.2 Documents. Seller shall have delivered to Buyer all documents required by Section 8.2. 7.1.3 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions or restrictions which Buyer determines, in good faith and in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Buyer of the transactions contemplated by this Agreement. For purposes of this Section 7.1.3, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.1.4 Material Adverse Changes. There shall have been no material adverse changes to the Property as a whole or the financial position or results of operations of the Company as a whole, and, subject to Section 11.9, the Company shall not have suffered any material loss or damage to the Property, whether or not insured, that would materially affect or impair the Company's ability to conduct the Business after the Effective Date. None of the Additional Financial Statements of the Company delivered pursuant to Section 11.4 shall reflect a material change in the financial position or results of operations of the Company from the financial position or results of operations reflected in the Financial Statements. 7.1.5 Real Estate Transfers. Seller shall have complied with Section 11.16 with respect to its Real Property to be transferred to Buyer. 7.1.6 Lessor and Other Third Party Consents. Seller shall have delivered to Buyer all consents, approvals or waivers of lessors or other third parties to the Material Agreements as so identified by an asterisk on Schedules 9.1.9 and 9.1.13, as such Schedules may be amended pursuant to Section 11.24. All of such delivered consents, approvals or waivers shall be in effect as of the Effective Date. 7.1.7 [INTENTIONALLY DELETED] 7.1.8 Litigation. There shall not be any litigation or other proceeding pending or to the best of Buyer's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Buyer, would involve material expense to Buyer. 7.1.9. Corporate Proceedings. All corporate proceedings required to be taken by Seller in connection with the transactions contemplated by this Agreement shall have been taken; 7.1.10 Lien Searches. Seller shall have delivered to Buyer reasonably comprehensive searches, dated as of a date within 30 days of the Execution Date or any time thereafter, of the public records regarding liens and judgments with respect to the Company, the Business and the Property. 7.1.11. Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Buyer if required by the underlying debt instrument shall have received the Debtholder Consents and shall have entered into any other necessary agreements with the holders of such Long-Term Indebtedness evidencing such Debtholder Consent in form and substance reasonably acceptable to Buyer. 7.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Seller: 7.2.1 No Misrepresentations or Breach of Covenants and Warranties. There shall have shall have been no material breach by Buyer of any of its covenants to be performed in whole or in part prior to the Closing, and the representations and warranties of Buyer in Section 9.2 shall be true and correct as of the Effective Date, except for such representations or warranties made expressly as of some other date, which shall be true and correct as of such other date (all such representations and warranties to be qualified by any materiality standards contained therein), and Buyer shall have delivered to Seller a certificate ("Buyer's Closing Certificate"), dated as of the Effective Date and signed by one of Buyer's Executive Officers, certifying each of the foregoing or specifying those respects in which such covenants have not been performed or such representations and warranties are not true and correct in which event if the Closing occurs any claim with respect to matters so specified shall be waived by Seller unless otherwise expressly agreed by Buyer at Closing. 7.2.2 Documents. Buyer shall have delivered to Seller all documents required by Section 8.3. 7.2.3 Purchase Price. Buyer shall have delivered to Seller, in the manner specified in Section 3.1, the Estimated Purchase Price as adjusted pursuant to Section 3.2. 7.2.4 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions, or restrictions which Seller determines, in good faith in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Seller of the transactions contemplated by this Agreement. For purposes of this Section 7.2.4, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.2.5 Corporate Proceedings. All corporate proceedings required to be taken by Buyer in connection with the transactions contemplated by this Agreement shall have been taken. 7.2.6 Litigation. There shall not be any litigation or other proceeding pending or to the best of Seller's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Seller would involve a material expense to Seller. 7.2.7 [INTENTIONALLY DELETED] 7.2.8 Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Seller, if required by the underlying debt instrument, shall have received the Debtholder Consent. ARTICLE 8. THE CLOSING 8.1 The Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall be held at a place mutually agreed upon by the parties at 9:00 a.m., local time, on the last calendar day (the "Closing Date") of the calendar month in which occurs the tenth (10th) business day after the date Seller notifies Buyer in writing (the "Notice") of its determination that all required Material Regulatory Approvals and FCC Consents have been obtained and provided that the other conditions set forth in Article 7 shall have been satisfied, or at such other place and time as may be agreed upon by Seller and Buyer. The transactions to be consummated at Closing shall be deemed to have been consummated as of 11:59 p.m. on the last calendar day of the calendar month in which occurs the tenth (10th) business day after the date of the Notice (the "Effective Date"). If the Effective Date is not a day on which financial institutions are open and operating, then the Closing Date shall be the immediately following business day on which financial institutions are open and operating. 8.2 Seller's Obligations at Closing. At the Closing, Seller shall deliver to Buyer the following documents duly executed and acknowledged, as appropriate: (a) Certificates representing the Shares, duly endorsed for transfer or accompanied by stock powers duly endorsed in blank. (b) Seller's Closing Certificate. (c) [INTENTIONALLY DELETED.] (d) Indebtedness Releases and Terminations and evidence satisfactory to Buyer that all Long-Term Indebtedness (and interest, premiums and penalties thereon) to be repaid pursuant to Section 5.2(b) has been (or will be at Closing) repaid in full. (e) All of the documents and papers required of Seller as conditions to Closing, including without limitation, the Regulatory Approvals, FCC Consents and the documents required to be delivered by Seller pursuant to Section 11.16. (f) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (g) The Environmental Remediation Agreement if required pursuant to Section 14.1.7(d). (h) All documents required of Seller under the Employee Transfer Agreement. (i) Certificate of the Secretary or Assistant Secretary of Seller certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. (j) Resignations of all officers and directors of the Company, effective as of the Effective Date. 8.3 Buyer's Obligations at Closing. At the Closing, Buyer shall deliver to Seller the following items and documents duly executed and acknowledged as appropriate: (a) The Estimated Purchase Price (as adjusted under Section 3.2), in the manner specified in Section 3.1; (b) Buyer's Closing Certificate (c) All of the documents and papers required of Buyer as conditions to Closing, including, without limitation, the Regulatory Approval and FCC Consents. (d) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (e) The Environmental Remediation Agreement if required pursuant to Section 14.17(d). (f) All documents required of Buyer under the Employee Transfer Agreement. (g) Certificate of the Secretary or Assistant Secretary of the Buyer certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties of Seller. Except as to the environmental matters which are exclusively addressed in Article 14 of this Agreement, Seller represents and warrants to Buyer as follows: 9.1.1 Authorization and Effect of Agreement. Seller has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement and to fulfill its respective obligations under this Agreement. The execution and delivery by Seller of this Agreement and the fulfillment of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and, assuming the due execution and delivery of this Agreement by Buyer, constitutes a valid and binding obligation of Seller, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualification that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.1.2 No Restrictions Against Sale of the Shares. The execution and delivery of this Agreement by Seller does not, and the fulfillment by Seller of its obligations under this Agreement will not, (i) conflict with or violate any provision of Seller's or the Company's certificate of incorporation or bylaws or, (ii) except as set forth in Schedule 9.1.13, or subject to obtaining the approvals and consents reflected in Article 5, conflict with, violate or result in the breach of, constitute a default under, accelerate the performance required by, or result in the creation of any encumbrance upon any of the Property under any provision of any Contract other than any such conflict, violation or breach that alone or in the aggregate would not have an adverse effect on the Buyer, the Company, the Business or the Property after the Effective Date. 9.1.3 Consents and Approvals of Governmental Authorities. No consent, approval, order or authorization of, or registration, declaration or filing with, any court or governmental agency, authority or instrumentality (" Governmental Authority") is required to be obtained or made by or with respect to Seller or the Company or in connection with the execution and delivery of this Agreement by Seller or the fulfillment by Seller of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, (ii) as described in Schedule 9.1.3, and (ii) such other consents, approvals, orders or authorizations, or registrations, declarations or filings, which if not obtained or made would not result in a material adverse effect on Buyer, the Company, the Business or the Property. 9.1.4 No Violation of Law. Except as indicated in Schedule 9.1.4, the execution and delivery of this Agreement and the fulfillment by Seller of its obligations under this Agreement will not violate any applicable existing statute, ordinance, rule, regulation or common law obligation (collectively, "Law"), except where such violation would not have a material adverse effect on the Company, the Business as a whole or on any significant part of Property after the Effective Date. 9.1.5 Corporate Organization of Seller. Seller is a corporation duly organized, validly existing and in good standing under the laws of Delaware; it has full corporate power and authority to own the Shares and perform its obligations under this Agreement. 9.1.6 Brokers. Seller has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Buyer for any broker's or finder's fees or similar fees or expenses. 9.1.7 Liabilities. The Company is not in default with respect to any of its obligations or liabilities, or the performance, observance or fulfillment of any covenant or condition relating thereto, and no event has occurred and is continuing that constitutes a material breach or default thereunder or that would constitute such a material breach or default with the giving of notice or lapse of time, or both. 9.1.8 Title to Property. The Company has good, valid, undivided, marketable and defensible title to all owned Property, free and clear of all restrictions, charges, liens, or encumbrances of any kind, except for (i) the liens, encumbrances and restrictions shown and disclosed on Schedule 9.1.8-1, (ii) current real and personal property taxes and other statutory liens covering amounts not yet due and payable, and (iii) such other imperfections of title and encumbrances, if any, as do not interfere in any material respect with the present use or value of the item of owned Property to which such imperfection or encumbrance relates. No condemnation proceeding is pending or, to the knowledge of Seller or the Company, threatened with respect to any part of the Property and such Property is not in any violation of any restrictive covenant relating thereto. Schedule 9.1.8-2 sets forth the address and a general description of each item of Real Property owned by the Company included in the Property. In addition, Schedule 9.1.8-2 sets forth a list of the Real Property included in the Property in which the Company holds other than a fee interest (such as easements and rights of way). 9.1.9 Leases. Seller has set forth on Schedule 9.1.9 a list of all the Leases. Each of the Leases is valid, binding and enforceable in accordance with its terms, and except as otherwise disclosed in Schedule 9.1.9, there is not any existing material default or existing material breach of a covenant by the Company under any Lease. The Company enjoys peaceful and undisturbed possession under all material Leases and, to Seller's and the Company's knowledge, the lessor under any such Lease is not (with or without notice or the lapse of time, or both) in material breach or default thereunder, has performed all material obligations required to be performed by it thereunder, and has not given notice of such lessor's intent to terminate such Lease. 9.1.10 Condition of Tangible Assets. All of the tangible Property is in substantially good operating condition and repair, normal wear and tear excepted, well maintained, adequate for the present uses thereof and in compliance in all material respects with applicable federal, state and local ordinances, regulations and statutes relating to the ownership and operation of such Property. Except as set forth on Schedule 9. 1. 10, the Company has not received any written notice within the past twelve (12) months of a violation of any ordinances, regulations or building, zoning and other similar laws with respect to such assets that would have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Each parcel of Real Property and, to the knowledge of Seller and the Company, of real estate leased by the Company and material or necessary to the Business as presently conducted substantially complies with all applicable Laws except where the failure to so comply individually or in the aggregate, would not have a material adverse effect on the Company, the Business as a whole or any such parcel after the Effective Date. Except as set forth on Schedule 9.1.10, other than the Company, no person or party has actual possession or has a right to possession of all or any material portion of any parcel of such Real Property or such leased real estate. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 9.1.10, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED OR STATUTORY, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE PERSONAL PROPERTY INCLUDED IN THE PROPERTY AND HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED OR STATUTORY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. 9.1.11 Financial Statements. (a) Seller has delivered to Buyer a true and correct copy of the Company's audited financial statements, consisting of a balance sheet, income statement and related statement of cash flows as of and for the respective periods ended December 31, 1992, and December 31, 1993, together with the auditor's report thereon (the "Financial Statements"). The Financial Statements were prepared based upon the books and records of the Company, and fairly present in all material respects the financial condition of the Company as of the appropriate periods and the results of operations for the year then ended, in each case in conformity with GAAP and to the best of Seller's knowledge and to the extent required by applicable Law, have been prepared in all material respects in conformity with the regulations of the FCC and the PUC. The Financial Statements contain no untrue statements of any material fact nor omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Additional Financial Statements to be delivered to Buyer pursuant to Section 11.4 hereof (i) will be prepared in each case in accordance with GAAP (except for the omission of notes thereto with respect to interim Additional Financial Statements), consistent with past practices, from the books and records of the Company; and (ii) will fairly present the financial condition of the Company and the results of operations of the Company for the periods indicated, subject, in the case of interim Additional Financial Statements, to normal year-end adjustments which will not be material in amount or effect; and (iii) to the best of Seller's knowledge and to the extent required by applicable Law, will be prepared in all material respects in conformity with the regulations of the FCC and the PUC; and (iv) will not contain any untrue statements of any material facts or omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) The unaudited balance sheet of the Company as of June 30, 1994 was prepared in accordance with GAAP except for the omission of notes thereto, consistent with past practices, from the books and records of the Company and fairly presents the financial condition of the Company as of such date subject to normal year-end adjustments which will not be material in amount or effect, and to the best of Seller's knowledge and to the extent required by applicable Law, was prepared in all material respects in conformity with the regulations of the FCC and the PUC. 9.1.12 Absence of Material Changes. Except as Seller may disclose in Schedule 9.1.12, since December 31, 1993, there has not been: (a) Except as described in Section 11.22, any material change in the financial condition, results of operations, assets, liabilities, operations or future business prospects of the Company or the Business; (b) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the Property, the Company or the Business; (c) Except as described in Section 11.22, any disposition (including, without limitation, the grant of a license, franchise, option or other right of any nature whatsoever to sell or distribute) or encumbrance or agreement to dispose of or to encumber, or pledge or grant of a security interest in or agreement to pledge or grant a security interest in, any of the Property, or any increase or an agreement to increase any indebtedness of the Company, except in the ordinary course of business; (d) Any material change in the Company's tariffs or in the manner of conducting the Business; (e) Except as described in Section 11.22, any dispute, litigation or other event or condition that materially and adversely affects the business or prospects of the Company, the Business or the Property; (f) Any waiver or release of any material rights or settlement of any material dispute involving the Company, the Business or the Property; (g) Any granting of a material salary increase or other material benefits payable to any Employee, except for ordinary and routine salary increases or bonuses authorized or granted in the ordinary course of business and consistent with past practices; (h) Except as described in Section 11.22, any transaction entered into by Seller or the Company that would have a material adverse effect on the Company, the Business as a whole or the Property as a whole; (i) Any change in the accounting methods or practices of the Company except as required by GAAP or any change in depreciation or amortization policies or rates heretofore adopted by the Company except as required by GAAP; (j) Any material labor dispute or threat thereof which affects generally the Transferred Employees or, to Seller's or the Company's knowledge, any attempt to organize the Transferred Employees for the purpose of collective bargaining; (k) Any event that would have been prohibited under Section 11.5 if Section 11.5 had been in effect since December 31, 1993; (l) Except as described in Section 11.22, any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company of any outstanding shares of capital stock or other securities of, the Company; (m) any amendment of any material term of any outstanding capital stock of the Company; (n) any incurrence, assumption or guarantee by the Company of any indebtedness for borrowed money other than in the ordinary course of business and in amounts and on terms consistent with past practice; (o) Except as described in Section 11.22, any making of any loan, advance or capital contributions to or investment in any person or entity other than loans, advances, capital contributions or investments made in the ordinary course of business; or (p) Except as described in Section 11.22, any agreement or commitment by Seller or the Company (or any understanding between Seller or the Company and any third party) to do or to take any of the actions referred to in paragraphs (a) through (o) of this Section 9.1.12. 9.1.13 Contracts. Each of the Contracts is in full force and effect as of the date of this Agreement in accordance with its terms, and there is no outstanding notice of cancellation or termination in connection therewith. The Company is not in material breach or default in connection with any Contracts, and there is no basis for any claim of breach or default by the Company, or to Seller's the Company's knowledge, any other party, in any material respect under any of the Contracts. None of the Contracts, either separately or in the aggregate, materially and adversely affects the Company, the Business or the Property. After the Effective Date, all rights and obligations of the Company under the Contracts shall continue unimpaired in the Company (assuming that if any Contract requires the consent of the other party thereto, such consent will have been obtained by the parties hereto prior to the Effective Date). Except for the instruments specifically listed in Schedule 9.1.13, the Company is not a party to or subject to: (i) any agreement for the purchase or disposition of any material, equipment, supplies, inventory or service, except individual purchase orders and contracts in amounts less than Twenty-Five Thousand Dollars ($25,000.00); (ii) any agreement to which the Company is a party or by which any of the Property is bound relating to indebtedness for money borrowed including capital leases, security arrangements relating thereto and any amendment or waiver thereof; and (iii) any other agreement not of the type covered by any of the foregoing items of this Section 9.1.13 requiring payments by the Company in excess of Seventy-Five Thousand Dollars ($75,000.00) per agreement, on or after the Effective Date. Schedule 9.1.13 also lists (a) each Contract between the Company and any Affiliate of the Company, and (b) each material Contract between the Company, or an Affiliate of the Company and relating to the Business, and any third party. Seller has made available to Buyer true and correct copies of all agreements and instruments listed in Schedule 9.1.13. Schedule 9.1.13 specifically identifies, with respect to those Contracts which are required to be listed thereon, the Contracts which require the consent, approval or waiver of the other party thereto for the transfer of control of the Company. 9.1.14 Insurance. The Property of an insurable nature and of a character usually insured by companies carrying on similar businesses is insured under insurance policies in such amounts and against such losses or casualties as is (i) usual in such companies and (ii) required under any of the Contracts or Leases. The insurance policies referred to in this Section 9.1.14 are (i) listed on Schedule 9.1.14, and (ii) in full force and effect and the premiums due thereon have been duly and timely paid. The most current statement of values (the statement of values of property of an insurable nature that is submitted to an insurance company to be used as a basis for the calculation of premiums) relative to the Property as presently insured has been made available to Buyer by Seller. On the Effective Date, the coverage under the insurance policies and programs of Seller and its Affiliates applicable to the Company will be terminated, and Buyer will be responsible for providing all insurance coverage for the Company. Following the Effective Date, Seller shall be responsible for and shall pay any additional premiums that might be required by an insurance company for insurance coverage prior to the Effective Date relating to the Company and shall be entitled to any refunds or dividends due from such companies relating to such coverage. Schedule 9.1.14 sets forth a list of the open material claims affecting the Company complete in all material respects, and a description of any self-insurance levels, underlying limits and deductibles. 9.1.15 Taxes. (a) Except as set forth on Schedule 9.1.15(a): (i) Seller or the Company has filed or caused to be filed with the appropriate United States, state and local Governmental Authorities, all Tax Returns required to be filed on or prior to the Effective Date (taking into account all extensions of due dates) by or with respect to the Company and has paid or adequately provided for all Taxes shown thereon as owing, except where the failure to file such Tax Returns or pay any such Taxes would not, or could not reasonably be expected to, have a material adverse effect on Buyer, the Business, or the Company after the Effective Date, (ii) all such Tax Returns were or will be correct and complete in all material respects, (iii) to the knowledge of Seller, all withholding Tax requirements imposed on or with respect to the Company have been or will be satisfied in full in all respects, and (iv) all penalties, interest or other charges that have or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax have been or will be timely paid in full. (b) The Company has been subject to normal and routine audits, examinations and adjustments of Taxes from time to time, but there are no material current audits or material audits for which notification has been received (in either case, with respect to the Company) other than those set forth on Schedule 9.1.15(b). (c) Except as set forth in Schedule 9.1.15(c), there is no material written claim against the Company for any Taxes, and no material assessment, deficiency or adjustment has been asserted or, to the knowledge of Seller proposed with respect to any Tax Return of or with respect to the Company. (d) Except as set forth in Schedule 9.1.15(d), there is not in force any extension of time with respect to the due date for the filing of any Tax Return of or with respect to the Company or any waiver or agreement for any extension of time for the assessment or payment of any Tax of or with respect to the Company. (e) Except for Taxes due with respect to Tax Returns that will be paid by Seller, the balance sheet included in the Financial Statements includes adequate provisions for the payment in full of all federal and state income taxes of the Company for all taxable periods or portions thereof during the period beginning with respect to each Tax Return statute of limitations and ending no later than December 31, 1993. The balance sheet included in the Financial Statements has attached thereto a schedule (the "Tax Schedule") which sets forth provisions for such federal and state income taxes. (f) All accrued rights or obligations under any written or unwritten Tax allocation or sharing agreements or arrangements affecting the Company are reflected in the intercompany accounts of the Company. All such Tax allocation or sharing agreements or arrangements have been or will be cancelled on or prior to the Effective Date. No payments are or will become due by the Company after the Effective Date pursuant to any such agreement or arrangement. (g) Except as set forth in Schedule 9.1.15(g), none of the property of the Company is held in an arrangement for which partnership Tax Returns are being filed, and the Company does not own any interest in any controlled foreign corporation (as defined in Section 957 of the Code) or passive foreign investment company (as defined in Section 1296 of the Code). (h) Except as set forth in Schedule 9.1.15(h), none of the property of the Company or any of its Subsidiaries is subject to a safe-harbor lease (pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect after the Economic Recovery Act of 1981 and before the Tax Reform Act of 1986) or is "tax-exempt use property" (within the meaning of Section 168(h) of the IRC) or "tax-exempt bond financed property" (within the meaning of Section 168(g)(5) of the IRC). (i) Except as set forth in Schedule 9.1.15(i), the Company will not be required to include any amount in income for any taxable period beginning after December 31, 1993 as a result of a change in accounting method for any taxable period ending on or before December 31, 1992 or pursuant to any agreement with any Tax authority with respect to any such taxable period. (j) The Company has not consented to have the provisions of Section 341(f)(2) of the IRC apply with respect to a sale of its stock. (k) As a result of the transactions contemplated by this Agreement, neither Buyer nor the Company will be obligated to make a payment to an individual that would be a "parachute payment" to a "disqualified individual" as those terms are defined in Section 280G of the IRC without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future. (l) All Taxes that the Company is required by law to withhold or collect through the Effective Date have been or will be duly withheld or collected and, to the extend required, have been or will be paid to the proper governmental authorities or properly deposited as required by applicable laws. 9.1.16 No Material Claims. Except as disclosed in Schedule 9.1.16 or with respect to Taxes, there are no claims, actions, lawsuits or legal or administrative proceedings pending, or, to the knowledge of Seller or the Company, threatened against or affecting the Company or its properties that, if determined adversely to the Company, would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Neither Seller nor the Company knows of any reasonable basis for any such action, claim, lawsuit or proceeding or any governmental or regulatory investigation relative to the Company, the Business as a whole or the Property. The Company is not in default under any judgment, order or decree of any Governmental Authority which would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property after the Effective Date. 9.1.17 Tariffs: FCC Licenses, Non-FCC Authorizations. (a) With respect to federal tariffs, the Company is an issuing carrier in the National Exchange Carrier Association Tariff F.C.C. No. 5 for the purpose of providing interstate access service. Except as described on Schedule 9.1.17(a), the state regulatory tariffs applicable to the Company stand in full force and effect on the date of this Agreement in accordance with all terms of such state tariffs, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation or termination in connection therewith, nor is the Company subject to any restrictions or conditions applicable to its state regulatory tariffs that limit or would limit the operation of the Business (other than restrictions or conditions generally applicable to tariffs of that type). Except as described on Schedule 9.1.17(a), each such state tariff has been duly and validly approved by the appropriate state regulatory agency. Except as otherwise disclosed on Schedule 9.1.17(a), the Company is not in material violation under the terms and conditions of any such state tariff, and there is no basis for any claim of material violation by the Company in any material respect under any such state tariff. Except as described in Schedule 9.1.17(a), there are no applications by the Company or complaints or petitions by others or proceedings pending or threatened before the state regulatory authority relating to the Company, the Business or its operations or the state regulatory tariffs. To the knowledge of Seller and the Company, there are no material violations by subscribers or others under any such state tariff that would be material to the Company or the Business. A true and correct copy of each state tariff applicable to the Company or the Business has been delivered to Buyer. (b) Listed on Schedule 9.1.17(b) are the FCC Licenses held by the Company. Each such FCC License is in full force and effect in accordance with its terms, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation or termination in connection therewith nor are any of such FCC Licenses subject to any restrictions or conditions that limit the operation of the Business (other than restrictions or conditions generally applicable to licenses of that type). The FCC Licenses are free from all security interests, liens, claims, or encumbrances of any nature whatsoever. Except as set forth on Schedule 9.1.17(b), there are no applications by the Company or material complaints or material petitions by others or proceedings pending or threatened before the FCC relating to the Company or the FCC Licenses. (c) Listed on Schedule 9.1.17(c) are all Non-FCC Authorizations materially necessary for the conduct of the Business which would include, without limitation, all FAA radio tower ownership authorizations. Each such Non-FCC Authorization is in full force and effect in accordance with its terms. To Seller's and the Company's knowledge, no event has occurred with respect to any materially necessary Non-FCC Authorization which permits, or after notice or lapse of time or both would permit, revocation or termination thereof, or would result in any other material impairment of the rights of the holder of such materially necessary Non-FCC Authorization. 9.1.18 Employee Matters. (a) Schedule 9.1.18(a) lists (and identifies the sponsor of) each material "employee pension benefit plan, " as that term is defined in Section 3(2) of ERISA, each material " employee welfare benefit plan," as that term is defined in Section 3(1) of ERISA maintained or contributed to by the Company or any of its Affiliates in respect of any Transferred Employee (as defined below) (such plans being hereinafter referred to collectively as the "ERISA Plans"), and each other material retirement, pension, profit-sharing, money purchase, deferred compensation, incentive compensation, bonus, stock option, stock purchase, severance pay, unemployment benefit, vacation pay, savings, medical, dental, post-retirement medical, accident, disability, weekly income, salary continuation, health, life or other insurance, fringe benefit, or other employee benefit plan, program, agreement, or arrangement maintained or contributed to by the Company or its Affiliates in respect of or for the benefit of any Transferred Employee or former employee, excluding any such plan, program, agreement, or arrangement maintained or contributed to solely in respect of or for the benefit of Transferred Employees or former employees employed or formerly employed by the Company outside of the United States, as of the date hereof (collectively, together with the ERISA Plans, referred to hereinafter as the "Plans"). Seller has supplied Buyer with a true and complete copy of each Plan and all amendments thereto. Schedule 9.1.18(a) also includes a list of each material written employment, severance, termination or similar-type agreement between the Company or its Affiliates and any Transferred Employee (the "Employment Agreements"). Except to the extent that any assets, liabilities, or accounts are transferred from the Plans or Agreements (pursuant to an Employee Transfer Agreement or otherwise) to plan(s) or agreement(s) maintained or contributed to by Buyer, all such Plans and Agreements shall remain the liabilities of the Seller or its Affiliates and Seller shall take any and all steps necessary to ensure that neither Buyer nor the Company shall be a sponsor of any such Plan or Agreement subsequent to the Effective Date. Except as otherwise disclosed on Schedule 9.1.18(a), the execution and delivery of this Agreement by Seller and the performance of this Agreement by Seller will not directly result now or at any time in the future in (i) the payment by the Company or its Affiliates to any Transferred Employee of any severance, termination, or similar type payments or benefits or (ii) any "parachute payment" (as such term is defined in Section 28OG of the IRC) being made by the Company or its Affiliates to any Transferred Employee. (b) Except as set forth on Schedule 9.1.18(b): (i) Neither the Company nor any of its Affiliates, any of the ERISA Plans, any trust created thereunder, or any trustee or administrator thereof, has engaged in any transaction as a result of which the Company could be subject to any material liability pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC; and (ii) Since the effective date of ERISA, no material liability under Title IV of ERISA with respect to the ERISA Plans has been incurred or is reasonably expected to be incurred by the Company or any of its Affiliates (other than liability for premiums due to the PBGC), unless such liability is reserved for or otherwise reflected on the Financial Statements or unless such liability has been, or prior to the Effective Date will be, satisfied in full. (iii) There is no contract or Employment Agreement covering any Transferred Employee of the Company that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the IRC. (iv) Neither the Company nor any of its Affiliates has engaged in, or is a successor or parent corporation to a person that has engaged in, a transaction described in Section 4069 of ERISA. (c) Except as set forth on Schedule 9.1.18(c), with respect to the ERISA Plans other than those ERISA Plans identified on Schedule 9.1.18(a) as "multi-employer plans": (i) the PBGC has not instituted proceedings to terminate any Plan that is subject to Title IV of ERISA (the "Retirement Plans") and no condition exists or has existed which could constitute grounds for any termination by PBGC; (ii) no filing has been made by the Company, or any of its Affiliates with the PBGC to terminate any Retirement Plan identified on Schedule 9.1.18(a); (iii) none of the ERISA Plans has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the IRC), whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to the Execution Date; (iv) each of the ERISA Plans has been operated and administered in all material respects in accordance with its provisions and with all applicable laws; (v) each of the ERISA Plans that is intended to be "qualified" within the meaning of Section 401(a) of the IRC and, to the extent applicable, Section 401(k) of the IRC, has been determined by the IRS to be so qualified, and nothing has occurred since the date of the most recent such determination (other than the effective date of certain amendments to the IRC, the remedial amendment period for which has not yet expired) that would adversely affect the qualified status of any of such ERISA Plans; (vi) there are no pending material actions, claims or lawsuits which have been asserted or instituted against any of the ERISA Plans, the assets of any of the trusts under such Plan, the plan sponsor, the plan administrator, trustee or any other fiduciary of such Plans with respect to any aspect of such ERISA Plans (except for routine benefit claims or routine expenses). (d) Except as set forth on Schedule 9.1.18(d), none of the ERISA Plans is a "multi-employer plan," as that term is defined in Section 3(37) of ERISA and with respect to any such multiemployer plans (as so defined) listed in Schedule 9.1.18(d), Seller has not made or incurred a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA that would result in the incurrence of a material liability by the Company that is not reserved for or otherwise reflected on the Financial Statements. (e) Except as set forth on Schedule 9.1.18(e), no post-retirement medical and life insurance benefit obligations exist with respect to any Transferred Employees of the Company. (f) No Plan identified on Schedule 9.1.18(a) has any restrictions against termination or modification, either by its terms or, to Seller's or the Company's knowledge, due to any written or oral communications by any representative of the Company nor any of its Affiliates. (g) Except as set forth on Schedule 9.1.18(g), (i) none of the Transferred Employees are represented by a labor union or labor organization and (ii) neither the Company nor any of its Affiliates is a party to nor is the Company subject to, any collective bargaining agreement covering any Transferred Employee. There are currently no strikes, slowdowns, work stoppages or lockouts by or with respect to any Transferred Employee covered by collective bargaining agreements. Except as set forth on Schedule 9.1.18(g), to the best knowledge of Seller and the Company, during the twelve (12) months preceding the Execution Date there have not been any union organizational campaigns by or directed at the employees of the Company. Except as set forth on Schedule 9.1.18(g), no condition has existed or exists that has caused or could be expected to result in the imposition of any lien or encumbrance under ERISA or the IRC on any part of the Property. (h) Seller will make available to Buyer, prior to the Closing Date, a list of those Transferred Employees that Seller believes to have participated in the health or dependent care reimbursement accounts of the Company, together with the elections made prior to the Effective Date with respect to such accounts through the Effective Date. (i) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will cause any acceleration of benefits under any Plan. 9.1.19 Schedules of the Telephone Plant. Seller has set forth on Schedule 9.1.19 copies of schedules (at the level of detail agreed to by the parties but in any case including details regarding net book value and continuing property records lists associated therewith) of the Company's Telephone Plant as of June 30, 1994, including, to the extent available, a schedule specifically identifying the Telephone Plant that is associated with the Unregulated Business. The account balances reflected on the schedule of Telephone Plant correspond, in all material respects, to the associated account balances reflected on the Company's Continuing Property Records. 9.1.20. Accuracy of Certain Information. With respect to the Company's Business, Seller hereby represents and warrants to Buyer as follows: (a) The information regarding type of central office switch and number of access lines in service for each exchange set forth on Schedule 9.1.20 (a) is true and complete in all material respects as of the respective dates set forth thereon. (b) The information set forth only with respect to the 1993 column of the "Capital Budget-Network Modernization Forecast" attached as Schedule 9.1.20 (b) is true and complete as of December 31, 1993. (c) Schedule 9.1.20 (c) sets forth a substantially complete list of all vehicles included in the Property (including trailers, equipment mounted on trailers and self-propelled equipment) together with the manufacturer, model and year of each such vehicle, and indicates whether such vehicle is owned or leased by the Company. (d) [INTENTIONALLY DELETED] (e) Schedule 9.1.20(e) sets forth a true and complete list of the interstate billing and collection revenues and intrastate interlata billing and collection revenues of the Company for the year 1993. 9.1.21 Rate Base. Except as set forth on Schedule 9.1.21, the Company has no materials and supplies, plant or equipment that has been disallowed from rate base or excluded from the revenue calculations for any pool (unless due to the deregulation of the service for which such assets are used) or in the most recent rate order issued by the PUC or the FCC or any determination by an administrator of an interstate or intrastate pool, and has not received written notification that the PUC or the FCC or any pool administrator proposes to exclude any assets from rate base or revenue calculations for the pools, or any tariff filed with or approved in the most recent rate order of the PUC or the FCC, in each case which materials and supplies, plant or equipment, in the aggregate, would be in excess of one percent (1%) of Net Telecommunications Plant. 9.1.22 Payments. All material payments of any kind required to be made by the Company to third parties under any Contract and maturing prior to the Effective Date have been, or will be as of the Effective Date, properly and timely paid or provided for, unless otherwise subject to a bona fide dispute disclosed in Schedule 9.1.22. 9.1.23 Compliance with Laws. Except as Seller shall specifically indicate on Schedule 9.1.23, (i) the Company is in compliance in all material respects with all Laws applicable to it, the Property and the Business and holds all governmental permits or licenses required in order to conduct the Business and to own and operate the Property; (ii) the present uses of the Property in the conduct of the Business do not violate in any material respect any Law and (iii) no written notice or warning from any governmental or regulatory authority with respect to any failure or alleged failure by the Company to comply with any Law or questioning the validity of any governmental permit or license, has been issued or given, nor to the knowledge of Seller or the Company, is any such notice or warning proposed or threatened. Neither Seller nor the Company is aware of any fact, event or circumstance relating to the Company that is reasonably likely to cause a regulatory agency to deny or withhold its approval to the transactions contemplated hereby. 9.1.24 Correct Records. The financial records, ledgers, account books and other accounting records of the Company are current, correct and complete and reasonably well organized, in all material respects and to the knowledge of Seller and the Company, to the extent required by applicable Law, conform in all material respects with the rules and regulations of the FCC and PUC. The Company and its Affiliates have retained substantially all Original Cost Documents regarding the expenditures made by the Company within the immediately preceding two-year period that relate to the Company's Net Telecommunications Plant, and such Original Cost Documents are correct and complete in all material respects. 9.1.25 Materials and Supplies. As of the Effective Date, the value (as reflected on the Company's books) of the Company's materials and supplies relating to the Business which are obsolete or in excess of the requirements of the Business, will not materially exceed the Company's reserve for obsolete or excess Materials and Supplies as reflected on the Company's books. 9.1.26 Assets Necessary to the Business. The Property includes all of the assets and properties (including all licenses and agreements) currently being used or which are reasonably necessary to carry on the Business as currently conducted, other than the assets and properties included in the Excluded Property. 9.1.27 [INTENTIONALLY DELETED] 9.1.28 Unregulated Business. Schedule 2.2(b) is an accurate summary description of the Unregulated Business, in detail reasonably acceptable to Buyer. 9.1.29. Capital Improvements Required by PUC. Except as set forth on Schedule 9.1.29, there are no changes, modifications, upgrades or enhancements required by the PUC to be made to the Property or the operation thereof. 9.1.30 Undisclosed Liabilities. Except as contemplated by this Agreement or as otherwise set forth in Schedule 9.1.30 the Company has no liabilities or obligations of any nature, secured or unsecured (absolute, accrued, contingent or otherwise and whether due or to become due), of a nature required to be recorded or disclosed in a corporate balance sheet prepared in accordance with GAAP, except liabilities and obligations which are not materially in excess of amounts reflected, reserved against or disclosed in the December 31, 1993 Financial Statements or the notes thereto and except for liabilities and obligations incurred in the ordinary course of business since December 31, 1993. Except as may be reflected in the December 31, 1993 Financial Statements or the notes thereto or on Schedule 9.1.30, the Company has no obligations under guarantees, endorsements or indemnities of the obligations of any other person or entity. 9.1.31 Banks. Schedule 9.1.31 lists the name of each bank in which the Company has an account or safe deposit box, and the names of all persons authorized to draw thereon or have access thereto, and the names of all persons holding a power of attorney from the Company. 9.1.32 Ownership of Shares. Seller is the record and beneficial owner of the Shares, which comprise 100% of the outstanding shares of all classes of capital stock of the Company. Seller has legal, valid and marketable title to the Shares, free and clear of all liens, claims, options, security interests or other encumbrances of any character whatsoever ("Encumbrances"). The sale and delivery of the Shares to Buyer pursuant to Article 2 will vest in Buyer legal, valid and marketable title to the Shares free and clear of all Encumbrances other than Encumbrances created or suffered by Buyer and restrictions on sales of the Shares under applicable federal and state securities laws. 9.1.33 Capital Stock. The Common Stock is the only capital stock authorized to be issued by the Company. The Shares are the only shares of Common Stock outstanding. All of the Shares are duly authorized, validly issued, fully paid and non-assessable. There are outstanding no securities convertible into, exchangeable for, or carrying the right to acquire, equity securities of the Company nor are there any subscriptions, warrants, options, rights or other arrangements or commitments (other than this Agreement) which could obligate Seller or the Company to issue any shares of capital stock or dispose of any ownership interest therein. There are no outstanding obligations of the Company to issue or deliver, or to repurchase, redeem or otherwise acquire any capital stock or other securities of the Company. 9.1.34 Investments. Set forth on Schedule 9.1.34 is the name of each corporation, partnership, joint venture or other entity in which the Company has, or pursuant to any agreement will have, directly or indirectly, the right to acquire by any means, an equity interest therein, together with a description of the Company's interest (or right to acquire the same) in such entity, including any Encumbrances on such interest. 9.1.35 Corporation Organization of Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of Nevada; it has full corporate power and authority to own its properties and to carry on the Business as it is now being conducted, and to own or hold under the lease, the Property. 9.2 Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows: 9.2.1 Corporate Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease or otherwise hold the assets owned, leased or held by it. 9.2.2 Authorization and Effect of Agreement. Buyer has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement, to own the Shares and to fulfill all other obligations of Buyer under this Agreement. The execution and delivery by Buyer of this Agreement and the fulfillment by it of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Buyer. Buyer has the requisite legal capacity to purchase, own and hold the Shares upon the consummation of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Buyer and, assuming the due execution and delivery of this Agreement by Seller, constitutes a valid and binding obligation of Buyer, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualifications that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.2.3 No Restrictions Against Purchase of the Shares. The execution and delivery of this Agreement by Buyer do not, and the fulfillment by Buyer of its obligations under this Agreement will not, conflict with, violate or result in the breach of any provision of the certificate of incorporation or bylaws of Buyer or, subject to obtaining the approvals and consents referred to in Article 5, conflict with, violate or result in the breach of, constitute default under, or accelerate the performance required by any Contract to which Buyer is a party. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by or with respect to Buyer in connection with the execution and delivery of this Agreement by Buyer or the fulfillment by Buyer of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, and (ii) the filings and approvals listed on Schedule 9.2.3. 9.2.4 No Violation of Law. The execution and delivery of this Agreement and the fulfillment by Buyer of its obligations under this Agreement will not violate any Law. 9.2.5 Brokers. Buyer has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Seller for any broker's or finder's fees or similar fees or expenses. 9.2.6 No Material Claims. There are no claims, actions, lawsuits or legal proceedings pending or, to the knowledge of Buyer, threatened against Buyer or its properties that would prevent the consummation of the transactions contemplated by this Agreement. 9.2.7 FCC Tariffs. In connection with obtaining consent to the transfer of control of the Company's FCC's Licenses, as described in Section 5.4, Buyer will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the National Exchange Carrier Association Tariff FCC No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 9.2.8 Investment. Buyer understands that the Shares that it will acquire pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended (the "Act"), and cannot be offered for sale, sold or otherwise transferred unless the Shares subsequently are so registered or qualified for exemption from registration under the Act. The Shares are being acquired under this Agreement by Buyer in good faith solely for its own account, for investment and not with a view toward resale or other distribution within the meaning of the Act. The Shares will not be offered for sale, sold or otherwise transferred by Buyer without either registration or exemption from registration under the Act and applicable state securities laws. Buyer has such knowledge and experience in financial and business matters that Buyer is capable of evaluating the merits and risks of Buyer's investment in the Shares. Buyer understands and is able to bear any economic risks associated with such investment (including the necessity of holding the Shares for an indefinite period of time, inasmuch as the Shares have not been registered under the Act). ARTICLE 10. CONTINUING BUSINESS RELATIONSHIPS 10.1 Transition Services Agreement. If requested in writing by Buyer on or prior to March 15, 1995, the parties shall, as promptly as practicable but in any event within 30 days after Buyer's written request, negotiate in good faith and enter into a Transition Services Agreement, to be effective no later than the Effective Date, pursuant to which Seller will provide to the Company, at the Company's expense, such financial, accounting, billing, computer, network, administrative and other services (including services relating to the conversion of systems and processes) as may be reasonably requested by Buyer, which agreement shall be in form and substance as mutually agreed to by both Buyer and Seller (the "Transition Services Agreement"). ARTICLE 11. ADDITIONAL COVENANTS OF THE PARTIES 11.1 Intellectual Property. 11.1.1 Definition. "Intellectual Property" means all inventions (whether patentable or not and whether or not such inventions are described or claimed in any patent or patent application), designs (useful or ornamental), and works subject to copyright that may be embodied in, without exclusion, invention disclosures, specifications, manuals, drawings, functional or system block diagrams, flow charts, circuit diagrams, design or user documentation, engineering notebooks, schematics, test programs, documented procedures, documented processes, documented flows, devices, software, or firmware, that relate to the function, design, development, manufacture, testing, use, operation, maintenance or repair of any product, apparatus, article of manufacture, process, method or service. "Intellectual Property" shall also include patents, patent applications (including continuations, continuations- in-part, divisions, reissues, reexamined patents and patent applications and extensions thereof), copyrights (whether common law or statutory, registered or unregistered), or trade secrets, residing in the subject matter above. 11.1.2 Grant by Seller. (a) Subject to the terms and conditions of this Agreement Seller will use its best efforts to assist the Company (provided that Buyer shall be responsible for any fees associated therewith) in obtaining the consent of any necessary third party for the use of any Intellectual Property that the Company has placed in public use on, or prior to, the Effective Date and that is presently used by the Company, but excluding any Intellectual Property listed in Schedule 11.22. (b) The above Section 11.1.2(a) sets forth Seller's entire obligation with respect to the Intellectual Property to the Company. Except as specifically provided otherwise in this Agreement or any other agreement between Buyer and Seller, Seller shall have no continuing obligation beyond the Effective Date to provide support of any kind in the Company's use of such Intellectual Property. (c) Buyer agrees and understands that Seller or its Affiliates shall retain ownership of all Intellectual Property owned by Seller or its Affiliates as of the Effective Date. Buyer further agrees and understands that the retained ownership shall include the right of Seller to grant licenses to vendors and customers of Seller, and to other third parties. (d) Additional agreements, if any, between Buyer and Seller regarding possession and use by the Company of computer software that is owned by Seller, or that is licensed by an Affiliate of Seller to Seller, are set forth in Schedule 11.1.2. 11.1.3 Nonassertion. Seller agrees that, with respect to the Intellectual Property that as of the Effective Date the Company owns or controls or under which it has the right to grant licenses, Seller shall not assert against Buyer, or Affiliates of Buyer, or vendees, mediate or immediate, of Buyer or the Company, a claim of infringement, misappropriation or misuse of such Intellectual Property right arising from the Company's activities practiced in the ordinary and normal course of the Business. 11.1.4 Infringement. (a) Notwithstanding any other provision of this Agreement and subject to the representation in Section 11.1.3, Buyer understands that Seller has not made or given, and does not make or give, any warranty as to the value, enforceability, or validity of any Intellectual Property or that the use by the Company of any Intellectual Property under this Agreement will not infringe other intellectual property rights not licensed under this Agreement. (b) Nothing contained in this Agreement shall be construed as an agreement by, or obligation of, Seller to bring or prosecute actions or suits against third parties for infringement or violation of any Intellectual Property licensed hereunder. (c) Seller shall have no obligation to defend, indemnify or hold harmless the Company or Buyer from any damages, costs or expenses resulting from any obligation, proceeding or suit based upon any claim that any activity, subsequent to the Effective Date, engaged in by Buyer, the Company, a customer of Buyer's or the Company's or anyone claiming under Buyer or the Company constitutes direct or contributory infringement or misuse of any intellectual property rights not licensed under this Agreement. (d) Buyer shall be liable for and shall hold Seller and its Affiliates harmless from and against any and all Indemnifiable Losses resulting from any obligation, proceeding or suit based upon any claim that any activity conducted or engaged in, subsequent to the Effective Date, by Buyer, the Company, a customer of Buyer's or the Company's, or anyone claiming under Buyer or the Company constitutes direct or contributory infringement, or misuse, or misappropriation of any intellectual property right of any third party. 11.1.5 Trademark Phaseout; Corporate Name Change. (a) Buyer acknowledges that Seller or its Affiliates are the owners of, and have permitted the Company to use, certain trade names, trade dress, trademarks, service marks, logos and related intangible property (collectively, "Marks") used in connection with the Business, including, without limitation, the items listed on Schedule 11.1.5, and Buyer understands and agrees that the Marks, or any right or license of the Company to the Marks are not being transferred pursuant to this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in the use of the Marks, and Buyer agrees that it shall cause the Company not to use the Marks (or any names or Marks confusingly similar to the Marks) except as expressly set forth in this Section 11.1.5. After the Effective Date, Buyer shall cause the Company to replace all Marks of Seller as soon as possible, but in no event later than one hundred eighty (180) days after the Effective Date for Marks affixed to items with a valid continuing use in the Company's conduct of the Business, including, without limitation, buildings, vehicles, heavy equipment, hard hats, tools, tool boxes, kits (safety and others), signs, manual covers and notebooks. After the Effective Date, Buyer will cause the Company to not use, and will destroy or deliver to Seller, all such items with Marks affixed to them that have no valid continuing use in the Company's conduct of the Business, including items affecting customer or employee relations or items that do not reflect the Company's true identity. Specific items to be destroyed or returned include items with Marks affixed to them including, without limitation, giveaways; order, purchase or materials forms; requisitions; invoices; statements; time sheets/labor reports; bill inserts; stationery; personalized note pads; maps; organization charts; bulletins/releases; sales/price literature; manuals or catalogs; report covers/folders; program materials; and materials such as media contact lists/cards. The one hundred eighty (180) day time period for replacement of Marks affixed to telephone directories that were already published or closed for publication as of the Effective Date shall be extended to the production of replacements for such directories. (b) Within two business days after the Effective Date, Buyer shall take all action necessary to change the corporate name of the Company so as to reflect that the Company is no longer an Affiliate of Seller. 11.1.6 Goodwill. Buyer recognizes the value of the goodwill associated with the Marks, and acknowledges that the Marks and all rights therein and the goodwill pertaining thereto belong exclusively to Seller, and that the Marks have a secondary meaning in the minds of the public. 11.1.7 Quality of Goods. Buyer agrees that the conduct of the Business after the Effective Date by the Company using the Marks shall be provided in accordance with all applicable federal, state and local laws, and that the same shall not reflect adversely upon the good name of Seller, and that the conduct of the Business will be of a standard and skill equivalent to that employed prior to the Effective Date. 11.1.8 Seller's Remedies for Unauthorized Use of Marks. Buyer acknowledges that the Company's failure to cease use of the Marks as provided in this Agreement, or its improper use of the Marks, will result in immediate and irreparable damage to Seller. Buyer acknowledges and admits that there is no adequate remedy at law for such failure to terminate use of the Marks, or for such improper use of the Marks, and Buyer agrees that in the event of such failure or improper use, Seller shall be entitled to equitable relief by way of temporary restraining order or injunction or any other relief available under this Agreement. 11.2 Effect of Due Diligence and Related Matters. Buyer represents that it is a sophisticated entity that was advised by knowledgeable counsel and, to the extent it deemed necessary, other advisors in connection with this Agreement and by the Effective Date will have conducted its own independent review and evaluation of the Company. Accordingly, Buyer covenants and agrees that (i) except for the representations and warranties set forth in this Agreement and the Schedules (and the Financial Statements, the Additional Financial Statements, and actuarial reports required pursuant to the Employee Transfer Agreement), Buyer has not relied and will not rely upon any document or written or oral information furnished to or discovered by it or its representatives, (ii) there are no representations or warranties by or on behalf of Seller or its Affiliates or representatives except for those expressly set forth in this Agreement and in any other written agreement entered into with Seller or any of its Affiliates in connection with this Agreement, and (iii) to the fullest extent permitted by law, Buyer's rights and obligations with respect to all of the foregoing matters will be solely as set forth in this Agreement or in such other written agreements. 11.3 Confidentiality. Whether or not the Closing occurs, the parties hereto and their respective officers, directors, employees and representatives will comply with the Confidentiality Agreement, the provisions of which are expressly incorporated herein in their entirety by this reference. 11.4 Additional Financial Statements. Seller shall deliver to Buyer the following financial statements of the Company (collectively, the "Additional Financial Statements") within the time periods set forth below: (a) Within forty-five (45) days after the Execution Date for the month of October, 1994, and within forty-five (45) days after the close of each month beginning with November, 1994, and continuing up to and including the month next preceding the month in which the Closing occurs, a balance sheet and income statement as of and for such month, and as of and for the year-to-date period then ended; and (b) By April 30, 1995, a balance sheet for the year ended December 31, 1994, and an income statement and statement of cash flows for 1994, together with the auditor's report thereon. 11.5 Conduct of Business. From the Execution Date until the Effective Date, except as described in Section 11.22, Seller shall cause the Company to conduct the Business in the ordinary course in accordance with prudent business judgment and consistent with past practice and policy and to (i) preserve the Business as an ongoing business, (ii) keep available to the Business its services and the services of its Affiliates at least to the same extent as such were generally available from January 1, 1994 through the Execution Date and are available on the date hereof, (iii) not take any action that would jeopardize any material and beneficial contractual relationships with persons having business dealings with the Business, and (iv) preserve all of the Business' tariffs, certificates, licenses, authorizations and other rights. From the Execution Date to the Effective Date, except as described in Section 11.22 and except with the prior written consent of Buyer, which the Buyer shall not unreasonably withhold: (a) The Business will be conducted in substantially the same manner as it is presently being conducted on the Execution Date. Seller will cause the Company to refrain from entering into any material transaction or contract other than in the ordinary course of business and to not make any material change in the general nature of the Business or in its methods of management, marketing, accounting or operations (including repair and maintenance functions). (b) Seller will cause the Company not to (i) create or incur any indebtedness for borrowed money or otherwise, except in the ordinary course of business, (ii) enter into or terminate, as lessor or lessee, any Lease other than in the ordinary course of business, (iii) create any liens or other security interest, except in the ordinary course of business, or (iv) change in any material respect or terminate any of the insurance policies referred to in Section 9.1.14, unless equivalent coverage is obtained. (c) Except as listed or described on Schedule 11.5(c), and except for dispositions of salvaged property that has been replaced in accordance with the plans attached in Schedule 11.5(c), Seller will cause the Company not to sell, lease, dispose of or otherwise transfer, or make any contract for the sale, lease, disposition or transfer of any Property other than, with respect to any individual item (other than vehicles) having a value of less than Seventy-Five Thousand Dollars ($75,000.00) and with respect to all items (other than vehicles) the aggregate value of which shall not exceed Two Hundred Fifty Thousand Dollars ($250,000.00). (d) Without prior reasonable notification to Buyer, or unless otherwise expressly directed by the PUC, Seller will cause the Company not to (i) institute any proceeding with respect to, or otherwise change, amend or supplement any tariff or (ii) enter into or agree to any stipulation, order, or decree of, or settlement with the PUC that, in the case of (i) or (ii) above, would have a material adverse effect on the revenue, authorized return on equity or earnings of the Business. Seller will cause the Company not to file any application, petition, motion, brief, testimony, settlement agreement or other pleading in any proceeding before the PUC, or before the FCC (except for filings on behalf of all of Seller's local exchange telephone companies) or appeals related thereto, unless Seller shall have first provided Buyer with a copy of the same and provided Buyer with a reasonable opportunity to comment to Seller with respect thereto. If Buyer determines it should intervene in any proceeding before the PUC in which Buyer's position is or may be different from the Seller's or the Company's, Seller will not, and will cause the Company not to, without waiving any other rights related thereto, oppose Buyer's intervention in such proceeding. (e) Except as listed on Schedule 11.5(e) or as required by law or in the ordinary course of business of the Company or pursuant to any Contract, Seller will cause the Company not to (i) enter into or amend any employment agreement with any individual that will become a Transferred Employee, or enter into or amend any union agreement or commitment (including any new commitment to pay retirement or other benefits, or amendments to the Company's retirement plans), (ii) effect any net increase over five percent (5%) since the Execution Date in the number of employees of the Company who will become Transferred Employees, or (iii) increase over 5% the benefit provided under any plans concerning employee benefits or increase the general rates of compensation of the Transferred Employees, or change the manner by which compensation (including fringe benefits) is determined and paid to any Transferred Employee. (f) Seller will cause the Company not to engage in any intercompany transactions with any Affiliate thereof, except for transactions consistent with past practice. (g) Seller shall cause the Company to maintain the Property in good repair, order and condition, reasonable wear and use excepted, and shall maintain the Company Books and Records in the usual, regular and ordinary manner on a basis consistent with prior years. (h) Seller will cause the Company not to make any commitment to take any actions prohibited by the provisions of this Section 11.5. (i) Seller will cause the Company not to issue, sell, purchase or redeem, to grant any option or right to purchase, or to otherwise agree to issue, sell, purchase or redeem any shares of its capital stock or any other securities. (j) Seller will cause the Company not to amend its Articles of Incorporation or Bylaws. (k) Seller will not permit the Company to merge or consolidate with any other person or entity or acquire a material amount of assets of any other person or entity. 11.6 Construction Projects and Capital Budget. By December 31, 1994, Buyer and Seller shall have met and reviewed the Company's construction and other capital expenditure plans for the calendar years 1994 and 1995 (or such later date agreed to by the parties). The construction and capital expenditure plans which Buyer shall have approved (both as to the type of project and the dollars expended) shall be set forth on Schedule 11.6, and the parties agree that when such expenditures have been incurred they will constitute an addition to a component of Net Telecommunications Plant thereby becoming subject to Section 3.2(c). Seller agrees to cause the Company to use its best efforts substantially to complete such plans within the projected time schedules; provided, that the Company will not incur any liability for unbudgeted expenditures in excess of $200,000.00 in the aggregate without the prior written consent of Buyer. All construction work that is in progress on the Effective Date will be accounted for by identifying and accruing all associated time reporting, material invoices or contractor invoices inputted or received on or before the Effective Date, and all payments therefor shall be the responsibility of the Company and will constitute an addition to a component of Seller's Net Telecommunications Plant thereby becoming subject to Section 3.2(c). 11.7 Further Assurances. After the Closing, Seller will furnish to Buyer such other instruments and information about the Company as Buyer may reasonably request in order to convey to Buyer title to the Shares, to be delivered from time to time upon Buyer's reasonable request. 11.8 [INTENTIONALLY DELETED] 11.9 Risk of Loss Prior to the Effective Date. If any material damage, loss or destruction of any sort (including, without limitation, by theft, unauthorized use, fire, act of God or condemnation) occurs prior to the Effective Date to any of the tangible properties that constitute the Property, Seller shall promptly notify Buyer thereof (the "Casualty Notice"). (a) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace such damaged, lost or destroyed Properties (the "Damaged Property") will exceed Two Million Five Hundred Twenty One Thousand Fifty Dollars ($2,521,050.00), either party may, by written notice to the other party (the "Casualty Termination Notice") within thirty (30) days after the date of delivery of the Casualty Notice, terminate this Agreement. (b) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace the Damaged Property will not exceed Two Million Five Hundred Twenty One Thousand Fifty Dollars ($2,521,050.00), or the Casualty Termination Notice is not given by either party, then Seller, within forty-five (45) days after the damage or destruction, shall agree in writing to take all action, and to cause the Company to take all action, (i) to repair or replace, prior to the Effective Date, at the Company's sole cost and expense, the Damaged Property, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will obtain as a substitute therefor an equivalent item or items of Property if the Damaged Property is personal property, and Real Property if the Damaged Property is Real Property, but only if such substituted personal property or Real Property is satisfactory to Buyer, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property. (c) If Seller fails to make an election pursuant to Section 11.9(b)(i) or (ii), the Buyer shall have the option, within thirty (30) days after the initial forty-five (45) day period, to elect one of the following options: (i) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will remain part of the Property, the adjustment to the Purchase Price contemplated by Section 3.2(a)(1) will be made, and the Company will be entitled to make, all claims related to the Damaged Property and to receive and retain any proceeds of insurance with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property, and the Purchase Price Adjustment contemplated by Section 3.2(a)(2) will be made. (d) Notwithstanding the other provisions of this Section 11.9, if the time periods pursuant to this Section 11.9 continue beyond the Effective Date or if Seller has not fully performed its obligations pursuant to Section 11.9(b)(i) or 11.9(b)(ii) prior to the Effective Date (or otherwise made reasonably satisfactory arrangements with Buyer), either party hereto may elect to postpone the Closing and the Effective Date, until the expiration of any such periods or the full performance of such obligations, which election shall be binding upon all parties hereto. 11.10 Settlements and Cost Studies. The parties agree that, with respect to all toll revenues, settlements, pools, separations studies, Universal Service Fund payments or similar activities, Seller shall receive the benefit or suffer the burden of the results of any such activities that are related to the conduct of the Business or the ownership or operation of the Company on or before the Effective Date. 11.11 [INTENTIONALLY DELETED] 11.12 Other Contracts. 11.12.1 Telephone Directories Published by ALLTEL Publishing Corporation. The Directory Publishing Agreement dated as of November 15, 1994, by and between Company and ALLTEL Publishing Corporation (the "Directory Publishing Agreement") is an Excluded Contract on Schedule 11.22(h), except as hereinafter provided. Within thirty days after the Execution Date, Buyer shall cause its existing directory provider to indicate in writing whether it will provide directory production services to the Company, as of the Effective Date (or as of such later date as described below) with regard to all of the Exchanges on the same terms and conditions as it is presently providing such services to Buyer, and Buyer shall inform Seller within such thirty day period of Buyer's existing telephone directory provider's written intention. If Buyer's existing directory provider's indication is that it will not provide directory publication services for all of the Exchanges on the same terms and conditions that it is presently providing such services to Buyer, then the Directory Publishing Agreement shall be deemed to become a Contract for the purposes of this Agreement. Promptly, thereafter, the Buyer and ALLTEL Publishing Corporation shall agree to meet in good faith to negotiate any necessary amendments to the Directory Publishing Agreement, to be effective as of the Effective Date, to provide for a retention rate equal to or greater than the higher of (x) 60% or (y) the retention rate provided for in any substantially similar directory publishing agreement between ALLTEL Publishing Corporation and a non-Affiliate of ALLTEL Publishing Corporation that was entered into within 18 months prior to the Effective Date. If Buyer's existing directory provider indicates that it will provide directory publication for all the Exchanges, as provided above, the Directory Publishing Agreement shall remain in effect as to the directory of each of the Exchanges for which (i) the directory is scheduled to be or is published prior to the Effective Date or (ii) the canvass for the directory has begun prior to the Effective Date and it is scheduled to be published after the Effective Date. Under such circumstances, the Buyer's existing directory provider will not begin providing directory publication services for such Exchange until canvass and production begins for the next succeeding directory related to such Exchange. 11.12.2 Telephone Directories-General. If Buyer's existing directory provider indicates that it will provide directory publication for all of the Exchanges, as provided in Section 11.12.1 of this Agreement, Seller and Buyer agree to cooperate and to use their best efforts as follows: (a) Seller will deliver to Buyer on a date mutually agreeable to Buyer and Seller, copies of all records, documents, and materials of the Seller even if in the possession of a third party (the "Directory Records") related to directories of the Exchanges that are published by Seller or its Affiliate. (b) Except as otherwise agreed between the parties, Seller and its Affiliate shall have no responsibility for the canvass and production functions of any directories related to the Exchanges that are scheduled to begin canvassing and publication after the Effective Date. (c) Seller and Seller's Affiliates and Buyer shall provide the other reasonable access to such documentation, reports and accounting records related to directory publication as may be necessary to insure a proper transition of directory production in accordance with the terms of such agreements in effect on the Effective Date. (d) As promptly as practicable after receipt by Seller of Buyer's existing directory provider's indication that it will provide directory publication services for all of the Company's Exchanges, Seller or its Affiliate (ALLTEL Publishing Corporation), and Buyer will meet to negotiate in good faith to agree upon the services or work, if any, that Seller or its Affiliate (ALLTEL Publishing Corporation) will provide, and the compensation that the Buyer will pay for such services and work, related to any directories that will be canvassed and published by Buyer's existing directory provider. 11.12.3 B&C Agreements. Seller and Buyer shall, prior to the Closing, use their best efforts to allow Buyer to negotiate, on behalf of the Company, a billing and collection agreement ("B&C Agreement") reasonably satisfactory to Buyer with each interexchange carrier ("IXC") and each local exchange carrier ("LEC") for which the Company provides, on the Execution Date, billing and collection services in any Exchange (each such IXC or LEC is hereinafter referred to as a "Carrier"). Seller and Buyer shall cooperate with each other and make available to each other all documents and records relevant and necessary to allow the Company to finalize negotiations of B&C Agreements, as necessary, and to perform such B&C Agreements after the Effective Date. 11.12.4 Equipment Manufacturers. Seller shall use its best efforts to assist Buyer, on behalf of the Company, in obtaining a written agreement with such equipment manufacturers (such as Northern Telecom and Stromberg-Carlson; collectively "Equipment Manufacturers") as Buyer may request, covering such software license agreements and other agreements as are necessary to enable the Company after the Effective Date to operate the equipment manufactured and sold by the Equipment Manufacturers included in the Property in substantially the same manner as operated by the Company prior to the Effective Date. The agreements shall contain material terms and conditions (including license and warranty, but not necessarily including pricing) that are substantially the same as those provisions in the corresponding agreements between the Company and the Equipment Manufacturers as of the Effective Date. Buyer understands and agrees that the price and fee provisions of such agreements will be as negotiated between Buyer, on behalf of the Company, and the Equipment Manufacturers. The above obligation of Seller shall be expressly conditioned upon the acceptance by Buyer, on behalf of the Company, of all material obligations accepted by Seller in such corresponding agreements. It is the responsibility of Buyer, on behalf of the Company, to enter into appropriate agreements with the Equipment Manufacturers in respect of service, support, training, maintenance, and future development (hardware and software) for the Property, such agreements to include terms and conditions agreed to between Buyer, on behalf of the Company, and the Equipment Manufacturers. Seller agrees to assist Buyer, on behalf of the Company, in obtaining the Equipment Manufacturers' consent, if necessary, to enable the Company after the Effective Date to avail itself of all training credits remaining at the Effective Date on Property furnished by the Equipment Manufacturers. 11.12.5 Integrated Contracts. Seller and Buyer acknowledge that certain agreements between the Company (or Affiliates of the Company) and third parties relate both to the Property and the Excluded Property. Seller agrees to use its best efforts to assist Buyer in obtaining, on behalf of the Company, contractual arrangements with such third parties relating to the Property, which arrangements will be reasonably satisfactory to Buyer; provided that neither the Company nor any Affiliate of the Company shall be obligated under this Section 11.12.5 to make any payment to any such third party unless such payment is expressly provided for in such agreement. 11.13 Retention of Books and Records. After the Effective Date, Seller will retain the Retained Books and Records, and Buyer will cause the Company to retain the Company Books and Records, in either case, until the shorter of the date that other party consents in writing to their destruction or the seventh anniversary of the Effective Date. Each party shall provide full and free access to the Company Books and Records and Retained Books and Records, as the case may be, to duly authorized representatives of the other party at any time during regular business hours for the period in which such Books and Records are required to be retained. Either party may make copies of any such Books and Records as it deems desirable, at its own expense. After the Effective Date, upon reasonable notice, Seller shall provide Buyer and the Company with reasonable assistance in locating any of the Company's Original Cost Documents which Buyer may reasonably request after the Effective Date. 11.14 [INTENTIONALLY DELETED] 11.15 [INTENTIONALLY DELETED] 11.16 Real Property Title Insurance. Within sixty (60) days after the Execution Date, Seller shall deliver to Buyer copies of all existing title insurance policies and surveys covering the Real Property. Thereafter, no later than sixty (60) days before the Effective Date, Seller shall deliver (at its expense) to Buyer a preliminary title binder (on a standard form reasonably acceptable to Buyer), issued by Lawyers Title Insurance Company or another title insurance company reasonably acceptable to Buyer, with respect to all Real Property included in the Property and in which the Company purports to own fee title. Such title binders shall be in form, substance and amount reasonably satisfactory to Buyer (ALTA Owners Policies where available but based upon boundary surveys as set forth below) and shall be current as of a date no earlier than ninety (90) days prior to the Effective Date. The parties agree that the dollar amount of title insurance to be inserted on each policy shall equal the dollar value set forth on the Company's continuing property records list as of December 31, 1993 for land and buildings. Such title binders shall reflect that the Company is vested with good, fee simple, marketable and insurable title to such Real Property, subject only to (i) standard printed exceptions; (ii) inchoate liens for current taxes and assessments not yet delinquent, (iii) standard utility and roadway easements, covenants and restrictions, whether or not of record, that do not individually or in the aggregate materially detract from the value, or impair the use of the Real Property affected thereby, (iv) existing zoning or similar laws or ordinances that do not interfere with the operation of the Business, (v) Leases, (vi) survey exceptions that do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby and (vii) standard title plat exceptions to the extent the matters shown on such title plats do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby (collectively, the "Permitted Exceptions"). If a preliminary title binder indicates an exception other than a Permitted Exception that would impair marketability in any material respect, Seller shall, at its expense, cause such exception to be removed on or before the Effective Date. With respect to each parcel of Real Property covered by a preliminary title binder, Seller shall deliver to Buyer (at Seller's expense and on or prior to sixty (60) days before the Effective Date) a certified current boundary survey showing (x) access to the property and (y) all improvements on the property and any encroachments across the property line by any improvements of the Company or owners of adjacent property and (at Seller's expense and within sixty (60) days after the Effective Date) owner's title insurance policies for the Real Property (ALTA Owners Policies where available but based upon boundary surveys as set forth above). 11.17 [INTENTIONALLY DELETED] 11.18 [INTENTIONALLY DELETED] 11.19 Customer Notification. For a period of at least two (2) months prior to the Effective Date, Seller will cause the Company to permit Buyer to insert preprinted single-page subscriber education materials into billing documentation to be delivered during such period to subscribers affected by the sale. All reasonable costs and expenses related to such insertion and delivery shall be borne and paid by the Company. Other means of notifying subscribers may be employed by either party, at the expense of the initiating party, but in no event shall any notification be initiated without the prior consent of the other party (which consent shall not be unreasonably withheld) or earlier than three (3) months prior to the Effective Date. 11.20. Delivery of Schedules. Except as otherwise provided in Section 11.24, Seller shall have a period of ten (10) business days after the Execution Date (the "Supplemental Schedule Period") to supplement or otherwise modify the Schedules to this Agreement by delivering to Buyer, within the Supplemental Schedule Period, a substitute schedule or schedules (collectively, the "Supplemental Schedules"), bearing the legend "This Schedule _, dated _______________, is executed and delivered in accordance with Section 11.20 of the Stock Purchase Agreement, dated as of November 28, 1994 which shall be duly executed by Seller and submitted to Buyer. Buyer shall have a period of ten (10) business days after the expiration of the Supplemental Schedule Period to review the Supplemental Schedules and within such ten (10) business day period notify Seller in writing (which writing may be transmitted by facsimile) of any objections thereto. If Buyer's objections are not resolved to the satisfaction of Buyer within five (5) days of such notification, Buyer may terminate this Agreement, effective immediately upon written notification of that termination. In the event that Buyer does not terminate this Agreement, then Buyer waives all rights to a claim of indemnification based upon or as the result of any changes in the Schedules as reflected in the Supplemental Schedules. For purposes of determining breaches of representations, warranties or covenants hereunder, the Supplemental Schedules provided by Seller shall be deemed Schedules for all purposes. 11.21 FCC Tariffs. In connection with obtaining consent to the transfer of control of the Company's FCC Licenses, as described in Section 5.4, during the period from the Execution Date until the Effective Date, neither party shall file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the Natural Exchange Carrier Association Tariff FCC No. 5; provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 11.22 Pre-Effective Date Balance Sheet Transactions. Seller shall take, and shall cause the Company to take, all action necessary to effect, on or prior to the Effective Date, the following transactions: (a) The Company shall dispose of, transfer, dividend or otherwise cause to be zero as of the Effective Date, all "Cash" (item 1 - Assets on the Company's Balance Sheet). (b) All "Accounts Receivable-Affiliates" (item 4 - Assets on the Company's Balance Sheet) and "Dividends Receivable-Affiliates" (item 7 -- Assets on the Company's Balance Sheet) (collectively, "Affiliate Receivables") shall be netted against all "Advances and Notes-Parent Company" (item 2 - Liabilities on the Company's Balance Sheet), "Accounts Payable-Affiliates" (item 5 - Liabilities on the Company's Balance Sheet), "Dividends Accrued - Affiliates" (item 10 - Liabilities on the Company's Balance Sheet) and "Interest Accrued - Alltel" (item 12 - Liabilities on the Company's Balance Sheet) (collectively, "Affiliate Payables"). To the extent there is a net excess of Affiliate Receivables, a cash payment or payments will be made to the Company which cash will then be disposed of by the Company, and to the extent there is a net excess of Affiliate Payables, such Affiliate Payables will be contributed to the Company as a contribution to the Company's capital, and take any other action necessary, such that the balances of each of the Affiliate Receivable and Affiliate Payable accounts, and of any other intercompany accounts, as of the Effective Date will be zero. (c) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Excess Cost Over Equity" (item 13 - Assets on the Company's Balance Sheet) and all "Investments in Affiliates" (item 14 - Assets on the Company's Balance Sheet). (d) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Other Investments At Cost" (item 15 - Assets on the Company's Balance Sheet), except to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and all "Unamortized Debt Expense" (Item 16 - Assets on the Company's Balance Sheet), except to the extent such unamortized debt expense relates to debt which is to remain outstanding immediately after the Effective Date. (e) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Regulatory Assets" (item 18 - Assets on the Company's Balance Sheet). (f) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, (i) all "Other Current Assets" (item 10 - Assets on the Company's Balance Sheet) to the extent such other current assets represent cash accounts, and (ii) all "Other Non-Current Assets" (item 19 - Assets on the Company's Balance Sheet). (g) The Company shall pay off or otherwise cause to be zero as of the Effective Date all Total Long-Term Debt, to the extent that such debt is not to remain outstanding immediately after the Effective Date. (h) The Company shall dispose of, transfer or assign, the Excluded Books and Records, the Marks listed on Schedule 11.1.5, the Company's interest in any business other than the Business, and those other assets, including agreements and contracts ("Excluded Contracts"), set forth on Schedule 11.22(h). (i) The balance in the Company's Total Deferred Credits shall be zero as of the Effective Date except for that portion of the Company's "Other Deferred Credits" (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities associated with the requirements of Financial Accounting Standard 106 attributable to Transferred Employees. (j) The balance in the Company's Taxes Accrued-Federal Income (item 8-Liabilities on the Company's Balance Sheet) shall be zero as of the Effective Date. (k) The balance in the Company's Notes Payable - Other (item 3 - Liabilities on the Company's Balance Sheet), Commercial Paper Outstanding (item 4 - Liabilities on the Company's Balance Sheet), Other Current Liabilities (item 14 - Liabilities on the Company's Balance Sheet) and Dividends Accrued - Other (item 11 - Liabilities on the Company's Balance Sheet) accounts shall be zero as of the Effective Date. (l) The balance in the Company's Current Maturities of Long-Term Debt (item 1 - Liabilities on the Company's Balance Sheet), and Interest Accrued - Other (item 13 - Liabilities on the Company's Balance Sheet), to the extent each of such amounts relate to debt which is not to remain outstanding immediately after the Effective Date, shall be zero as of the Effective Date. 11.23 Taxes. 11.23.1 Certain Tax Matters. (a) Except as otherwise expressly provided in this Section 11.23.1, Buyer and Seller will share equally all sales, use, transfer, stamp, conveyance, value added or other similar taxes, duties, excise or governmental charges imposed by any taxing jurisdiction (but not including Income Taxes, as hereinafter defined, which shall be paid by Seller), and all recording or filing fees, notarial fees and other similar costs of Closing with respect to the transfer of the Shares or otherwise on account of this Agreement or the transactions contemplated herein (but not including any transactions contemplated by this Agreement to be effected pursuant to the transactions contemplated by Section 11.22 or otherwise between Seller and the Company, which shall be paid by Seller). (b) Seller will cause to be included in its consolidated federal income Tax Returns (and the state income Tax Returns of any state that permits consolidated, combined or unitary income Tax Returns, if any) for all periods ending on or before or which include the Effective Date, all items of income, gain, loss, deduction, and credit or other items (collectively "Tax Items") attributable to the operations of the Company during such periods or portions thereof determined by an interim closing of the books as of the Effective Date. Seller will sign and file timely all such Tax Returns with the appropriate United States, state and local Governmental Authorities. Buyer will provide or cause to be provided any consent request to file such Tax Returns on behalf of the Company. Seller will make all payments shown thereon as owing with respect to any such Tax Returns. (c) With respect to any taxable period that would otherwise include but not end on the Effective Date, to the extent permissible pursuant to applicable Law, Seller will, and Buyer will cause the Company to, take all steps as are or may be reasonably necessary, including without limitation the filing of elections or returns with applicable taxing authorities, to cause such period to end on the Effective Date. (d) Seller will prepare or cause to be prepared all state Income Tax Returns (other than Tax Returns described in Section 10.5.1(b)) for the Company required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period that ends on or before the Effective Date that have not been filed prior to the Effective Date. Seller will sign and file timely all such Tax Returns with the applicable Governmental Authority and make all payments shown thereon as owing with respect to such Tax Returns. If requested by Seller, Buyer will deliver or cause the Company to deliver to Seller a power of attorney authorizing Seller to sign such Tax Returns. Notwithstanding the foregoing, if Seller is legally precluded from filing any such Tax Return, Buyer shall sign such Tax Return. Seller shall deliver a copy of each such Tax Return to Buyer within 10 days prior to filing such Tax Return. (e) Except as otherwise provided in Section 11.23.1(b) or Section 11.23.1(d), Seller will have no obligation to file any Tax Return for the Company, and Buyer will prepare and file or cause to be prepared and filed all Tax Returns for the Company that are required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period which begins before and ends after the Effective Date. In the case of Income Taxes, Buyer shall cause such Tax Return to be prepared and shall cause to be included in such Tax Return all Tax Items required to be included therein. Buyer shall determine (by an interim closing of the books as of the Effective Date) the portion, if any, of the Income Tax due with respect to the period covered by such Tax Return which is attributable to the Company for a Pre- Effective Date Taxable Period (as hereinafter defined). At least 15 days prior to the due date (taking into account all extensions of due date) of such Tax Return, Buyer shall deliver to Seller a copy of such Tax Return and of its determinations. If the amount reflected as a liability for Income Taxes on the Tax Schedule less Prior Reimbursements (as hereafter defined) is less than the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period, Seller shall pay to Buyer the amount of such shortfall not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). If the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period is less than the amount reflected as a liability for Income Taxes on the Tax Schedule, to the extent not previously paid to Seller or the applicable Governmental Authority by the Company and subject to Section 11.23.1(f), Buyer will pay to Seller the amount of such excess not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). As used in this Agreement, "Pre-Effective Date Taxable Period" means all or a portion of (i) any taxable period up to and including the Effective Date or (ii) any taxable period with respect to which the Tax is computed by reference to Tax Items, assets, capital or operations of the Company arising on or before, or existing as of, the Effective Date. As used in this Agreement, "Income Taxes" means all Taxes measured in whole or in part on or by net income imposed by the United States, any state of the United States or any political subdivision thereof, and will include any such Taxes even if denominated as franchise taxes. (f) The amount paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) will not exceed (i) the amount reflected as a liability for Income Taxes on the Tax Schedule, reduced by (ii) Prior Reimbursements. As used in this Agreement, "Prior Reimbursements" means all amounts reflected as a liability for Income Taxes on the Tax Schedule that have previously been (A) paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) or (B) paid by Buyer or the Company to Seller or to the applicable Governmental Authority with respect to Income Taxes properly attributable to Pre-Effective Date Taxable Periods that are reflected on Tax Returns described in Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e). (g) In order to assist Seller in the preparation of all Tax Returns that Seller is required to prepare pursuant to Section 11.23.1(b) and 11.23.1(d), Buyer will provide or cause to be provided to Seller access to such information and personnel as Seller may require in order to properly prepare such Tax Returns. (h) Buyer will pay or cause to be paid to Seller all refunds or credits of Taxes (including any interest received from or credited thereon by the applicable Governmental Authority) received by Buyer after the Effective Date and attributable to Taxes paid by Seller or the Company (or any predecessor or Affiliate thereof) with respect to any Pre-Effective Date Taxable Period (or, in the cases of Taxes other than Income Taxes, taxable periods or portions thereof ending on or before the Effective Date), net of any Taxes imposed upon Buyer or the Company by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). Such payment will be made to Seller within 30 days after receipt of any such refund from, or allowance of such credit by, the relevant Governmental Authority. (i) If after the Effective Date Seller or any affiliate receives or is credited with a refund of any Tax attributable to the utilization or carryback of any Tax Item of the Company arising after the Effective Date, Seller shall pay to Buyer an amount equal to the amount of such refund together with any interest received from or credited thereon the applicable Governmental Authority, net of any Taxes imposed upon Seller or any affiliate by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). (j) Buyer is eligible to and will make a timely and effective election under Section 338(g) of the IRC (and any comparable provision of state or local Law) with respect to the purchase of the Shares hereunder. Both Seller, as the common parent of the affiliated group of corporations (which includes the Company) that file a consolidated federal income Tax Return and Buyer are eligible to and will make a timely and effective election under Section 338(h)(10) of the IRC (and any comparable provision of state or local Law) with respect to such purchase (collectively, together with the elections under Section 338(g) of the Code and any comparable provision of state or local Law, the "Section 338(h)(10) Elections"). To facilitate such election, within thirty (30) days of the Closing, Buyer will deliver to Seller a completed Internal Revenue Service Form 8023 and the required schedules thereto and any similar forms under applicable state or local Law (the "Forms") with respect to Buyer's purchase of the Shares, which Forms shall have been duly executed by an authorized person for Buyer. Provided that the information on such Forms is, in the reasonable determination of Seller, correct and complete in all material respects, Seller will, at the Closing, cause such Forms to be duly executed by an authorized person for Seller and deliver such Forms to Buyer. If any changes or supplements are required to the Forms as a result of information that is first available after the Closing, Seller and Buyer will promptly agree upon and make such changes. Buyer will timely file the Forms, and any required supplements thereto, in the manner prescribed by Treasury Regulation 1.338(h)(10)-1T or the corresponding provisions of applicable state or local Law, and will provide written evidence to Seller that it has done so. Buyer and Seller agree that neither of them will take, or permit their affiliates to take, any action to modify or revoke the elections contained in or the content of any Forms without the express written consent of the other. (k) Seller agrees that it will cause any and all tax sharing agreements between Seller and the Company to be terminated on or prior to the Effective Date. 11.23.2 Tax Indemnifications. (a) Seller hereby agrees to protect, defend, indemnify and hold harmless Buyer and the Company from and against, and agrees to pay, all Taxes imposed and all indemnifiable Losses incurred (all herein referred to as "Tax Losses") as a result of: (i) A proposed adjustment, notice of deficiency Authority, or assessment by, or any obligation owing to, any Governmental Authority for: (A) Any income Taxes of the Company attributable to any Pre- Effective Date Taxable Period; (B) Any Taxes other than Income Taxes of the Company attributable to any taxable period or portion thereof ending prior to the Effective Date; (C) Any Taxes of any corporation (other than the Company) that (i) is or was a member of any affiliated group of corporations of which the Company was a member at any time prior to the Effective Date or (ii) joined in the filing of a combined or unitary Tax Return with the Company on or prior to the Effective Date; (D) Any Taxes resulting from the Section 338(h)(10) Elections; and (E) Except as otherwise provided in Section 11.23.1(a), any Taxes attributable to the transactions contemplated by this Agreement; and (ii) Any breach of any representation, warranty or covenants of Seller under this Agreement. (b) Buyer agrees to protect, defend, indemnify and hold harmless Seller from and against, and agrees to pay, all Tax Losses incurred as a result of: (i) A proposed adjustment, notice of deficiency, or assessment by, or any obligation owing to, any Governmental Authority for any Taxes of the Company which Taxes are not attributable to any Pre-Effective Date Taxable Period; and (ii) Any breach of any representation, warranty or covenant of Buyer under this Agreement. (c) (i) If a proposed adjustment shall be made by any Governmental Authority that, if successful, would result in the indemnification of a party under this Section 11.23.2 (referred to herein as a "Tax Indemnified Party"), the Tax Indemnified Party shall promptly notify the party obligated under this Section 11.23.2 to so indemnify (referred to herein as the "Tax Indemnifying Party") in writing of such fact. (ii) The Tax Indemnified Party shall take such action in connection with contesting such claim as the Tax Indemnifying Party shall reasonably request in writing from time to time, including the selection of counsel and experts and the execution of powers of attorney, provided that (A) within 30 days after the notice described in Section 11.23.2(c)(i) has been delivered (or such earlier date that any payment of Taxes is due by the Tax Indemnified Party but in no event sooner than 5 days after the Tax Indemnifying Party's receipt of such notice), the Tax Indemnifying Party requests that such claim be contested, (B) the Tax Indemnifying Party shall have agreed to pay the Tax Indemnified Party all costs and expenses that the Tax Indemnified Party incurs in connection with contesting such claim, including, without limitation, reasonable attorneys' and accountants' fees and disbursements, and (C) if the Tax Indemnified Party is requested by the Tax Indemnifying Party to pay the Tax claimed and sue for a refund, the Tax Indemnifying Party shall have advanced to the Tax Indemnified Party, on an interest-free basis, the amount of such claim. The Tax Indemnified Party shall not make any payment of such claim for at least 30 days (or such shorter period as may be required by applicable Law) after the giving of the notice required by Section 11.23.2(c)(i), shall give to the Tax Indemnifying Party any information reasonably requested relating to such claim, and otherwise shall cooperate with the Tax Indemnifying Party in good faith in order to contest effectively any such claim. (iii) Subject to the provisions of Section 11.23.2(c)(ii), the Tax Indemnified Party shall enter into a settlement of such contest with the applicable Governmental Authority or prosecute such contest to a determination in a court or other tribunal of initial or appellate jurisdiction, all as the Tax Indemnifying Party may request. (iv) If, after actual receipt by the Tax Indemnified Party of an amount advanced by the Tax Indemnifying Party pursuant to Section 11.23.2(c)(ii)(B), the extent of the liability of the Tax Indemnified Party with respect to the claim shall be established by the final judgment or decree of a court or other tribunal or a final and binding settlement with an administrative agency having jurisdiction thereof, the Tax Indemnified Party shall promptly repay to the Tax Indemnifying Party the amount advanced to the extent of any refund received by the Tax Indemnified Party with respect to a claim together with any interest received thereon from the applicable Governmental Authority and any recovery of legal fees from such Governmental Authority, net of any Taxes as are required to be paid by the Tax Indemnified Party with respect to such refund, interest or legal fees (calculated at the maximum applicable statutory rate of Tax without regard to any other Tax Items). Notwithstanding the foregoing, the Tax Indemnified Party shall not be required to make any payment hereunder before such time as the Tax Indemnifying Party shall have made all payments or indemnities then due with respect to the Tax Indemnified Party pursuant to this Agreement. (v) Promptly after a final determination the Tax Indemnifying Party shall pay to the Tax Indemnified Party the amount of any Tax Losses to which the Tax Indemnified Party may become entitled by reason of the provisions of this Section 11.23.2. (d) Anything to the contrary in this Agreement notwithstanding, the representations, warranties, covenants, agreements, rights and obligations of the parties hereto with respect to any Tax covered by this Agreement shall survive the Effective Date and shall not terminate until sixty days after the expiration of the statute of limitations (including extensions) applicable to such Tax. 11.24 Post-Execution Lease and Contract Review. Buyer shall have a period of forty-five (45) calendar days after the Execution Date to review the Leases and Contracts listed on Schedules 9.1.9 and 9.1.13 respectively, and to notify Seller in writing (which writing may be transmitted by facsimile) of the identity of those Leases and Contracts that Buyer reasonably believes are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur. If Buyer does not notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Buyer shall be deemed to have agreed that none of the Leases and Contracts which are listed on Schedules 9.1.9 and 9.1.13 require consent, in accordance with Section 7.1.6, before the Effective Date can occur. If Buyer does notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Seller shall have a period of ten (10) business days upon receipt of such notification to notify Buyer in writing (which writing may be transmitted by facsimile) of any objections thereto. Thereafter, Buyer and Seller shall negotiate in good faith and agree in writing as to the identity of those Leases and Contracts which are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur (the "Material Leases and Contracts"). The parties shall reflect their written agreement as to the identity of the Material Leases and Contracts by placing an asterisk next to the appropriate Lease or Contract on Schedule 9.1.9 or 9.1.13, which revised Schedule 9.1.9 or 9.1.13 shall be deemed to be an amendment to this Agreement. ARTICLE 12. EMPLOYEES AND EMPLOYEE MATTERS 12.1 Employee Transfer Agreement. The parties have addressed the transfer of employees and employee benefits matters in a separate agreement, entitled Employee Transfer Agreement, the terms and provisions of which are incorporated into this Agreement as if fully set forth herein and a copy of which is attached hereto as Schedule 12.1 (the "Employee Transfer Agreement"). ARTICLE 13. INDEMNIFICATION 13.1 Survival of Representations, Warranties and Covenants. (a) The representations and warranties made pursuant to this Agreement shall survive the Closing for the following periods after the Effective Date: (i) The representations and warranties set forth in Sections 9.1.6, 9.1.8, 9.1.32, 9.1.33, and 9.2.5 shall survive without limitation as to time. (ii) The representations and warranties set forth in Section 9.1.15 shall survive as set forth in Section 11.23.2(d). (iii) All other representations and warranties shall survive for eighteen (18) months. The date of expiration of any representation or warranty shall be referred to herein as the "Termination Date." Representations and warranties under this Agreement shall be of no further force or effect after the applicable Termination Date. Any claim for indemnification with respect to any alleged breach of any representation or warranty not asserted by notice given as herein provided that specifically identifies a particular breach and the underlying facts relating thereto, which notice is given prior to the Termination Date, may not be pursued and is irrevocably waived and released after such time. Without limiting the generality or effect of the foregoing, no claim for indemnification with respect to any representation or warranty will be deemed to have been properly made except to the extent it is based upon a Third Party Claim or a Direct Claim. (b) Unless a specified period is set forth in this Agreement (in which event such specified period will control), the covenants contained in Section 5.2, Section 5.3, this Article 13, and in Sections 11.1, 11.2, 11.3, 11.6, 11.7, 11.10, 11.12, 11.13, 11.16 and Articles 16 and 17 and in the Employee Transfer Agreement, will survive the Closing and remain in effect indefinitely. Covenants regarding Taxes shall survive as set forth in Section 11.23.2(d). All other covenants contained in this Agreement will terminate, without further action, upon the occurrence of the Effective Date and any claim following the Effective Date for an alleged breach of any such covenant may not be pursued, and is irrevocably waived, upon the occurrence of the Effective Date, except that Buyer may make a claim for Seller's breach of the covenants contained in Section 11.5 at any time within eighteen months after the Effective Date. The immediately preceding sentence shall not apply to, or limit to preclude, a party's rights and remedies if the sale contemplated by this Agreement is not concluded as a result of the other party's breach of this Agreement. 13.2 Limitations on Liability. (a) For purposes of this Agreement, (i) "Indemnification Payment" means any amount of Indemnifiable Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee" means any person or entity entitled to indemnification under this Agreement, (iii) "Indemnifying Party" means any person or entity required to provide indemnification under this Agreement, and (iv) "Indemnifiable Losses" means any losses, liabilities, costs, fines, penalties, damages (actual, punitive or other), and expenses and any claims, demands or suits by any person or entity, including, without limitation, any Governmental Authority, and costs and expenses actually incurred in connection with any actions, suits, demands, assessments, judgments and settlements and reasonable attorneys' fees and expenses, in any such case (x) reduced by the amount of insurance proceeds recovered from any person or entity as a result of the Indemnifiable Losses involved and (y) provided that the underlying liability or obligation is not solely the result of any action taken or omitted to be taken by the Indemnitee. (b) As between Seller and any Affiliate of Seller, on the one hand, and Buyer and any Affiliate of Buyer, on the other hand, the rights and obligations set forth in this Article 13 will be the exclusive rights and obligations with respect to the liabilities and obligations referred to in Section 13.3, and any breach of the representations, warranties or covenants referred to in Section 13.3., except for any liability, obligation or breach that results from the actual fraud under the common law, not otherwise implied or imputed, by a party to this Agreement. Without limiting the foregoing, as a material inducement to entering into this Agreement, to the fullest extent permitted by law, each of the parties waives any claim or cause of action that it otherwise might assert, including, without limitation, under the common law or federal or state securities, trade regulation or other laws, by reason of the liabilities and obligations, and any breach of the representations, warranties or covenants, referred to in Section 13.3, except for claims or causes of action brought under and subject to the terms and conditions of this Article 13, and except for claims or causes of action arising due to the actual fraud under the common law, not otherwise implied or imputed. (c) Notwithstanding any other provision of this Agreement or of any applicable law, no Indemnitee will be entitled to make a claim against an Indemnifying Party under Sections 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32 and 9.1.33) or 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) until the aggregate amount of claims that may be asserted for such Indemnifiable Losses incurred by the Indemnitee exceeds One Hundred Twenty Six Thousand Fifty Two Dollars ($126,052.00) and then only to the extent of the excess. (d) Notwithstanding any other provision of this Agreement, the indemnification obligations of Seller under Section 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32 and 9.1.33) and of Buyer under Section 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) will not exceed the sum of Three Million Seven Hundred Eighty One Thousand Five Hundred Seventy Five Dollars ($3,781,575.00). (e) Notwithstanding anything to the contrary contained herein, no Indemnifying Party shall be liable to or obligated to indemnity any Indemnitee hereunder for any consequential, special, multiple, punitive or exemplary damages including, but not limited to, damages arising from loss or interruption of business, profits, business opportunities or goodwill, loss of use of facilities, loss of capital, claims of customers, or any cost or expense related thereto, except to the extent such damages have been recovered by a third person and are the subject of a Third Party Claim for which indemnification is available under the express terms of this Section 13. 13.3 Indemnification. (a) Subject to the other sections of this Article 13, Seller will indemnity, defend and hold harmless Buyer and its Affiliates (including the Company after the Effective Date), directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Seller of any of the representations and warranties contained in Section 9.1, except for any such breach of representations and warranties which was specified on Seller's Closing Certificate all of which are waived upon Closing, (ii) a breach by Seller of any covenant of Seller contained in this Agreement or in the Employee Transfer Agreement, except for any such breach of covenants which was specified on Seller's Closing Certificate all of which are waived upon Closing, (iii) the Retained Liabilities, (iv) any Third Party Claim, whether filed, asserted, or sought before or after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business (including contractual obligations in connection with sales or transfers of assets made by the Company prior to the Effective Date), or the ownership or operation of the Business, on or prior to the Effective Date, regardless of whether known or unknown, asserted or unasserted, on the Effective Date. As used in this Agreement, "Retained Liabilities" means all liabilities, responsibilities and obligations (whether known or unknown, fixed, contingent or otherwise) of the Company relating to, arising out of, or in connection with, or resulting from the use or ownership of the Property or the conduct of the Business during, the period ending on the Effective Date, including, without limitation,: (i) all liabilities, responsibilities and obligations with respect to the Excluded Property and the Excluded Contracts; (ii) all liabilities and obligations for prior period adjustments of revenues from the Business and for any customer overbillings and prospective refunds of overcharges (including rates collected under bond but excluding prospective rate reduction) occurring or relating to the period prior to the Effective Date, including without limitation all toll revenues, settlements, pools, separations studies or similar activities for which Seller is responsible pursuant to Section 11.10; and (iii) All liabilities, responsibilities and obligations arising out of or related to the litigation, claims and other matters set forth on Schedule 9.1.16 and any other litigation, claims, actions, lawsuits or legal proceedings based on facts, circumstances or conditions arising, existing or occurring on or before the Effective Date, regardless of whether known or unknown, asserted or unasserted, as of the Effective Date; but excluding all liabilities, responsibilities and obligations of the Company Date to the extent Buyer receives a Purchase Price adjustment in its favor pursuant to Section 3.2 therefor; (b) Subject to the other sections of this Article 13, Buyer will indemnity, defend and hold harmless Seller and its Affiliates, and their directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Buyer of any of the representations or warranties contained in Section 9.2, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (ii) a breach by Buyer of any covenant of Buyer contained in this Agreement or in the Employee Transfer Agreement, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (iii) any Third Party Claim, filed, asserted, or sought after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business or the ownership or operation of the Company or the Business, after the Effective Date. (c) All Tax and environmental matters or issues, including without limitation, the indemnification obligations with respect to Taxes and Environmental Liabilities, are to be governed by Sections 9.1.15 and 11.23 and Article 14, respectively, and are not addressed, limited or governed by the provisions of this Article 13. (d) Payments made under this Section 13.3 shall be treated by Buyer and Seller as purchase price adjustments and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. 13.4 Defense of Claims. (a) If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action, proceeding, or investigation by any entity or person that is not a party to this Agreement or an Affiliate of such a party (a "Third Party Claim") against such Indemnitee, with respect to which an Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of actual notice of such Third Party Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party during the required notification period shall only relieve the Indemnifying Party from its obligation to indemnity the Indemnitee pursuant to this Article 13 to the extent that Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. Indemnifying Party shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether or not the Indemnifying Party elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof, provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (i) the employment of such separate counsel has been specifically authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party has failed to assume the defense of such Third Party Claim within a reasonable time after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee or (iii) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnifying Party and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall not be liable for the fees and disbursements of more than one counsel for all Indemnified Parties in connection with any one proceeding or any similar or related proceedings arising from the same general allegations or circumstances. Without the prior written consent of the Indemnitee, the Indemnifying Party will not enter into any settlement of any Third Party Claim that would lead to liability or create any financial or other obligation on the part of the Indemnitee unless such settlement includes as an unconditional term thereof the release of the Indemnitee from all liability in respect of such Third Party Claim. (b) Any claim by an Indemnitee on account of an Indemnifiable Loss that does not result from a Third Party Claim (a "Direct Claim") will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after the Indemnitee actually becomes aware of the incurrence thereof, and the Indemnifying Party will have a period of thirty (30) calendar days within which to respond in writing to such Direct Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party shall only relieve the indemnifying Party from its obligation to indemnify the Indemnitee pursuant to this Article 13 to the extent the Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. If the Indemnifying Party does not so respond within such thirty (30) calendar day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article 13. (c) If after the making of any Indemnification Payment the amount of the Indemnifiable Loss to which such payment relates is reduced by recovery, settlement or otherwise under any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction (less any costs, expenses, premiums or taxes incurred in connection therewith) will promptly be repaid by the Indemnitee to the Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying Party will, to the extent of such Indemnification Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the Indemnification Payment relates; provided that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss, all claims of the Indemnifying Party against any such third party on account of said Indemnification Payment will be subrogated and subordinated in right of payment to the Indemnitee's rights against such third party. Without limiting the generality or effect of any other provision of this Article 13, each such Indemnitee and Indemnifying Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights. ARTICLE 14. ENVIRONMENTAL MATTERS 14.1 Environmental Due Diligence. 14.1.1 Right to Conduct Due Diligence. Buyer shall have the opportunity to conduct environmental due diligence regarding the Property in accordance with this Section 14.1, for a period not to exceed 120 days after the Environmental Data Delivery Date (as defined below). 14.1.2 Treatment of Data. All information collected and generated as a result of the environmental due diligence authorized by this Section 14.1 will be subject to the terms and conditions of the Confidentiality Agreement, except as otherwise expressly provided in this Section 14.l. Buyer shall provide to Seller copies of all reports, assessments and other information composed or compiled by Buyer's environmental consultant(s) and shall treat all such information in accordance with the procedures of Section 14.1.5(c). Within thirty (30) days after the Execution Date (the "Environmental Data Delivery Date"), Seller will provide to Buyer copies of all surveys and reports in Seller's or the Company's possession concerning the existence or possible existence of asbestos or materials containing asbestos relating to any of the Real Property, a list of all underground storage tanks which to Seller's or the Company's knowledge are located on, or have been removed within the last three years from, any Real Property owned or real estate leased or operated by the Company in connection with the Business and any other reports, studies or documents in Seller's or the Company's possession relating to the Company's potential liability under any Existing Environmental Requirements. The parties further agree that, if Seller discloses the existence or suspected existence of materials containing asbestos with respect to a given parcel of Real Property and the asbestos does not exceed applicable limits, if Buyer desires to make renovations or structural changes to the property after the Effective Date (which changes require the removal of asbestos), the removal will be at the expense of Buyer. 14.1.3 Environmental Consultants. Buyer may retain one or more outside environmental consultants to assist in its environmental due diligence concerning the Property and shall notify Seller of the environmental consultant or consultants Buyer intends to retain. Thereafter, Seller shall have five (5) business days after receipt of such notification to notify Buyer in writing of Seller's objection (which must be for good cause) and substantiate the basis for that objection. If Seller does not object for good cause and substantiate that objection within said five (5) business day period, Seller shall be deemed to have consented to Buyer's selection. 14.1.4 Phase I Reviews. Buyer may conduct the usual Phase I environmental assessment activities of the Property, including inspecting individual sites, submitting environmental questionnaires to Seller and the Company and reviewing existing environmental reports, correspondence, permits and related materials regarding the Property. Phase I environmental assessment activities shall not include any sampling or intrusive testing other than tank tightness testing and hand auger soil testing. (a) Buyer shall give Seller at least three (3) business days' notice prior to any entry onto the Property. (b) If Buyer enters the Property, a representative of Seller may be, but is not required to be, present during such entry on the Property. (c) All activities of Buyer regarding environmental due diligence shall be conducted to minimize any inconvenience or interruption of the normal use and enjoyment of the Business and the Property. 14.1.5 Phase II Reviews. Buyer may conduct the usual Phase II environmental assessment activities of the Property (including, but not limited to, the taking and analysis of soil, surface water and groundwater samples, testing of buildings, drilling wells and taking soil borings) after first conducting a Phase I assessment of a particular site provided that such Phase II assessment activities are conducted in accordance with this Section 14.1.5. (a) If Buyer desires to perform sampling or intrusive testing at a site included in the Property, Buyer must notify Seller of its desire at least five (5) business days in advance of the proposed date of such sampling or testing and provide a description of the scope of work regarding such sampling or intrusive testing. If Seller does not notify Buyer in writing of Seller's objection to such proposed sampling or testing within five (5) business days after receipt of such notice, Seller shall be deemed to have consented to the proposed sampling or testing. Seller shall not unreasonably object to Buyer's request to perform sampling or testing. (b) Buyer shall provide Seller with copies of field data, field reports, laboratory analyses, logs, laboratory reports and other material or information regarding the sampling or intrusive testing ("Environmental Data") within three (3) business days of Buyer's receipt of such data and shall promptly provide Seller with "matched" or "paired" samples, in accordance with standard sampling and testing protocols, that are obtained during the sampling or intrusive testing of a particular site; provided, however, that Seller shall have no obligation to Buyer to take any action whatsoever regarding such samples. (c) It is understood and agreed that neither Buyer nor its environmental consultant(s) shall disclose or release any Environmental Data without the prior written consent of Seller and that all such information shall be kept strictly confidential. The Environmental Data shall be prepared at the request of counsel to Buyer and, to the fullest extent permitted by law, shall be the work product of such counsel and constitute confidential attorney/client communications. The Environmental Data shall be transferred among Buyer and its consultant(s) in a manner that will preserve, to the greatest extent possible, such privileges. Buyer expressly agrees that until the Closing, it will not distribute the Environmental Data to any third party without Seller's written consent. After the Closing, Buyer agrees that it will not distribute the Environmental Data to any third party without Seller's written consent, except as required by law or by express provisions of Buyer's corporate compliance program if Seller is provided written notice at least ten (10) business days prior to such distribution, provided, however, that for a period of two (2) years after the Effective Date, Buyer may distribute the Environmental Data to any potential purchaser of the Company or the Property only after first notifying the Seller, and without such notice at any time after such two (2) year period. 14.1.6 Indemnity for Due Diligence Activities. Buyer hereby agrees to indemnify and hold harmless Seller, Seller's Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all claims, liabilities, damages, losses, orders, penalties, fines, costs, charges and expenses (including reasonable attorneys' fees and disbursements, and reasonable costs of experts and expert witnesses) with respect to persons or property arising out of or in connection with the entry of Buyer or its environmental consultant(s) onto the Property and resulting from any act or omission of Buyer or its environmental consultant(s) provided that Buyer shall not be liable for any Environmental Liabilities incurred by any such party merely discovered by the environmental due diligence performed by Buyer or its environmental consultants. In addition, in the event the transactions contemplated herein with regard to any portion of the Property do not close, Buyer agrees to restore such portion of the Property to the condition which existed prior to Buyer's inspections and testing thereof to the extent such portion of the Property was damaged by such inspections and testing. 14.1.7 Effect of Due Diligence Results. (a) Subject to Section 14.1.7(b) below, Buyer conditionally may terminate this Agreement by written notice to Seller at any time during the period set forth in Section 14.1.1 if: (i) the results of Buyer's environmental due diligence investigation, conducted in accordance with this Section 14. 1, indicate Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company; and (ii) Buyer reasonably determines (on the basis of its environmental due diligence) that responding to and remediating the foregoing Environmental Liabilities based upon Existing Environmental Requirements cannot be completed for less than One Million Eight Thousand Four Hundred Twenty Dollars ($1,008,420.00) (the "Environmental Liabilities Amount") To be effective, any such conditional termination of this Agreement must be delivered in writing to Seller, which writing must specifically acknowledge that the termination is subject to the provisions of paragraph (b) below. (b) In the case of a conditional termination of this Agreement by Buyer in accordance with Section 14.1.7(a) above, Seller may nullify the termination by agreeing to: (i) cause the Company to respond to and fully remediate the Environmental Liabilities based upon Existing Environmental Requirements; or (ii) pay Buyer the cost thereof; or (iii) make other adjustments to the terms and conditions of the sale contemplated by this Agreement all in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller. Seller's election to nullify Buyer's conditional termination by selecting one of the above options shall be, in each case, specified in a writing mutually satisfactory to the parties, and thereafter on or before the Closing (subject to Section 14.1.7(d)), Seller shall perform its obligations under that writing in full. If the parties fail to sign the writing specifying Seller's obligations within thirty (30) days following Buyer's conditional termination (or such longer period acceptable to Buyer) or sign that writing but the Company fails to perform its obligations thereunder in full on or before the Closing (subject to Section 14.1.7(d)), Buyer's conditional termination under paragraph (a) above automatically shall become final and unconditional unless the parties agree otherwise. (c) If the results of Buyer's environmental due diligence conducted in accordance with this Section 14.1 indicate that the costs of responding to and remediating Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company are less than the Environmental Liabilities Amount in the aggregate, Seller agrees, to cause the Company at the Company's sole cost, to either (i) make a mutually satisfactory adjustment to the terms and conditions of the transactions contemplated by this Agreement prior to the Closing in accordance with Section 14.1.7(b)(iii) above, or (ii) prior to the Closing (subject to Section 14.1.7(d)), otherwise respond to and remediate those Environmental Liabilities based upon Existing Environmental Requirements in accordance with Section 14.1.7(b)(i) or Section 14.1.7(b)(ii) above, unless the cost of conducting such response action would exceed the Environmental Liabilities Amount in which case Seller's sole obligation under this Section 14.1.7(c) shall be to pay the Environmental Liabilities Amount toward the completion of such response and remediation actions. If Seller discharges its obligations under this Section 14.1.7 by expending the Environmental Liabilities Amount on such response and remediation action (such expenses to be verified by Seller by delivery by Seller to Buyer of a reasonably detailed statement setting forth such expenses), or paying to Buyer the Environmental Liabilities Amount, Buyer shall sign and deliver to Seller at the Closing a release of Seller from any further liability to Buyer for such remediation and shall indemnify Seller against any liability for such Environmental Liabilities or Environmental Requirements. (d) If Seller elects to cause the Company to respond to and fully remediate Environmental Liabilities based upon Existing Environmental Requirements pursuant to Section 14.1.7(b)(i) or (c)(ii), and such response and remediation has not been completed by the date scheduled for Closing, the parties on or prior to Closing shall enter into an Environmental Remediation Agreement in form and substance reasonably satisfactory to the parties and proceed to Closing; provided, however, that in the case of response and remediation under Section 14.1.7(b)(i), Buyer may elect to postpone the Closing until sufficient response and remediation has been completed so that the remaining response and remediation is equal to or less than the Environmental Liabilities Amount. 14.2 Environmental Indemnification. 14.2.1 Sole Remedy and Release. It is the intent of the parties that the indemnification provided under this Section 14.2 shall be the sole remedy for allocating responsibility regarding environmental matters related to the sale contemplated by this Agreement, the Company, the Business and the Property of which Buyer does not receive notice prior to the Closing (either from Seller in Schedule 14.3 or pursuant to notice given pursuant to Section 17.1 or in any written communication made to Buyer from Buyer's environmental consultants (collectively the "Known Environmental Matters")). Except as expressly provided in this Section 14.2, at Closing each party, for itself and its successors and assigns, by virtue of consummating the sale contemplated by this Agreement and without further action on the part of such party, shall waive and release the other party from any and all liability under any other cause of action at law or in equity concerning the Known Environmental Matters, whether raised pursuant to (i) Environmental Requirements, (ii) any other applicable federal, state or local statute, ordinance, rule or regulation, or (iii) common law. 14.2.2 Indemnification. Subject to the provisions of Sections 14.2.3, 14.2.4 and 14.2.5, Seller agrees to indemnify and hold harmless Buyer, its Affiliates (including the Company after the Effective Date) and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities under Existing Environmental Requirements arising from acts or omissions occurring with respect to, or from the use or ownership of, or any condition or circumstance relating to, the Company or the Property that occurred or arose prior to or on the Effective Date. The foregoing indemnity in this Section 14.2.2 shall only apply to matters that do not constitute Known Environmental Matters (such matters being referred to as the "Unknown Environmental Matters"). Such indemnification under this Section 14.2.2 shall be provided only for claims for Unknown Environmental Matters noticed to the other party pursuant to the procedures of Section 14.2.3, within eighteen (18) months after the Effective Date. Subject to the provisions of Sections 14.2.3 and 14.2.4, Buyer agrees to indemnify and hold harmless Seller, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities, with respect to any Environmental Requirements in existence now or hereafter in effect, arising from acts or omissions occurring after the Effective Date, or from the use or ownership of the Property after the Effective Date, or any condition or circumstance relating to the Company, the Property or the Business that occurred or arose after the Effective Date on the Property or in connection with the Company or the operation of the Business after the Effective Date. 14.2.3 Notice. A party seeking indemnification under this Section 14.2 must give written notice to the other party, including information sufficient to inform the other party of, and allow such other party to confirm the nature of, the claim and any activities required to address the claim, in sufficient detail for the indemnifying party to confirm that all costs incurred or to be incurred by the party to be indemnified under this Section 14.2 are required by Environmental Requirements, as applicable to Buyer, and Existing Environmental Requirements, as applicable to Seller, and are reasonable and cost-effective. If the indemnifying party disagrees with the party to be indemnified as to the necessity of costs or the reasonableness or cost-effectiveness of the remediation method selected, the parties shall negotiate in good faith to achieve at a mutually satisfactory solution. If the parties cannot agree as to costs or methods of remediation, the matter shall be resolved in accordance with Article 16. 14.2.4 Actual Damages. Any indemnifiable claim under this Section 14.2 shall not include incidental or consequential damages except to the extent such damages have been recovered by a third person and are the subject of a Third Party claim for which indemnification is available under the express terms of this Article 14. Any indemnifiable claim under this Section 14.2 shall be reduced to account for any insurance, storage tank fund, or other proceeds received by the party to be indemnified, as a result of the indemnifiable losses involved. The parties agree to take all reasonable steps to mitigate any indemnifiable claim under this Section 14.2, including complying with any registration and reporting requirements necessary to qualify for reimbursement from any storage tank fund. 14.2.5 Limitations on Indemnification. Notwithstanding any other provision of this Agreement, this Article 14, or any applicable law, the indemnification obligations of Seller under this Section 14.2 shall not exceed the aggregate amount of One Million Eight Hundred Ninety Thousand Seven Hundred Eighty Seven Dollars ($1,890,787.00). 14.2.6 Adjustments to Purchase Price. Payments made under this Article 14 shall be treated by Buyer and Seller as purchase price adjustments, and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. ARTICLE 15. TERMINATION 15.1 Termination Rights. This Agreement may be terminated at any time prior to the Closing Date: (a) at any time by mutual written consent of the parties; (b) by Seller or Buyer, as applicable, if there has been a material breach on the part of the other party of its respective representations, warranties or covenants set forth in this Agreement; provided, however, that a party shall not be entitled to exercise its right of termination under this subsection (b) if the breach is capable of being cured to the non-breaching party's reasonable satisfaction and the breaching party is proceeding diligently with its best efforts to effect such cure. (c) by Buyer, pursuant to Section 11.20 (Delivery of Schedules); (d) by Buyer and Seller, as the result of Section 14.1.7(a); (e) by Buyer or Seller, pursuant to Section 11.9; (f) by Seller or Buyer, if the Closing shall not have occurred by December 31, 1995 due to no fault or delay attributable to the party seeking termination; provided, however, that a party shall not be entitled to exercise any right of termination pursuant to this subsection (f) if such party shall not have performed diligently and in good faith the obligations required to be performed by such party hereunder prior to the date of termination; (g) by Buyer if a Governmental Authority, the approval of which is a condition to Buyer's obligations under Section 7.1, has provided written notice that it shall not consent to or approve the transactions contemplated hereby; or (h) by Seller, if a Governmental Authority, the approval of which is a condition to Seller's obligations under Section 7.2, has provided written notice that it shall not consent to or approve the transactions contemplated hereby. 15.2 Effect of Termination. (a) If this Agreement is terminated pursuant to Section 15. 1 (a), (c), (d), (e), (f), (g) or (h), this Agreement shall be of no further force and effect and there shall be no further liability hereunder on the part of either party or its Affiliates, directors, officers, shareholders, agents or other representatives. (b) A party's exercise of its right of termination under Section 15.1(b) shall not constitute a waiver of its rights to recover damages, whether pursuant to breach of contract or in tort, or other remedies available at law or in equity, from the other party as a result of the other party's breach of this Agreement. (c) Notwithstanding anything to the contrary contained herein, the provisions of this Section 15.2 and of Sections 17.1, 17.2, 17.3, 17.8, 17.11, 17.13, 17.14 and Article 16 shall survive any termination of this Agreement. ARTICLE 16. DISPUTE RESOLUTION 16.1 Exclusive Remedy. Subject to Section 16.5, the parties agree to resolve disputes arising out of this Agreement without litigation. Accordingly, except as provided in Section 16.5, or in the case of a suit to compel compliance with this dispute resolution process, the parties agree to use the following alternative dispute resolution procedure as their sole remedy with respect to any controversy or claim arising out of or relating to this Agreement or its breach. 16.2 Dispute Resolution Process. At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any dispute arising under this Agreement. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations. Discussions and correspondence among the parties' representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, exempt from discovery and production, and without the concurrence of both parties shall not be admissible in the arbitration described below or in any lawsuit. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration. 16.3 Arbitration. Subject to Section 16.5, if negotiations between the representatives of the parties do not resolve the dispute within sixty (60) days of the initial written request, the dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Either party may demand such arbitration in accordance with the procedures set out in those rules. The arbitration hearing shall be commenced within sixty (60) days of the demand for arbitration and the arbitration shall be held in a mutually agreeable location. The arbitrator shall control the scheduling (so as to process the matter expeditiously) and any discovery. The parties may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within thirty (30) days after the close of hearings. The times specified in this Section 16.3 may be extended upon mutual agreement of the parties or by the arbitrator upon a showing of good cause. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. 16.4 Costs and Attorneys' Fees. Each party will bear its own costs and expenses in submitting and presenting its position with respect to any such dispute to the arbitrator, and the fees and expenses of such arbitration procedures, including the fees of the arbitrator will be shared equally by Buyer and Seller, except that a party seeking discovery shall reimburse the responding party the cost of production of documents (including search time and reproduction costs); provided, however, that if the arbitrator determines that the position taken in the dispute by the non-prevailing party taken as a whole is unreasonable, the nonprevailing party will bear all such fees and expenses, and reimburse the prevailing party for all of its reasonable costs and expenses in submitting and presenting its position. 16.5 Certain Limitations. The provisions of this Article 16 with respect to the resolution of disputes without litigation shall not apply to any dispute, controversy or claim arising out of the provisions of Section 11.1, or the Confidentiality Agreement, or to a party's seeking to proceed under Section 17.14, it being understood and agreed that in the event of a breach by either party of the provisions of Section 11.1, or the Confidentiality Agreement, or in the event that a party seeks to proceed under Section 17.14, the non- defaulting party shall be entitled to proceed to protect and enforce its rights by an action at law, a suit in equity or other appropriate proceeding, whether for specific enforcement of any agreement contained in Section 11.1, or the Confidentiality Agreement or in aid of the exercise of any power granted by Section 11.1, 17.14 or the Confidentiality Agreement or by law or otherwise. ARTICLE 17. MISCELLANEOUS 17.1 Notices. All notices, consents and other communications required or permitted hereunder shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been given when delivered in person or dispatched by electronic facsimile transfer (confirmed in writing by certified mail, concurrently dispatched) or one business day after having been dispatched for next-day delivery by a nationally recognized overnight courier service to the appropriate party at the address specified below: (a) If to Buyer, to: Mr. Donald K. Roberton Vice President-Telecommunications Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4627 and L. Russell Mitten, II, Esq. Vice President-General Counsel Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4651 with a copy to: Jeffry L. Hardin, Esq. Fleischman and Walsh, L.L.P. 1400 Sixteenth Street, N.W. Washington, D.C. 20036 Facsimile No.: 202/745-0916 (b) If to Seller to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: President Facsimile No.: 501/661-0962 with a copy to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: General Counsel Facsimile No.: 501/661-0962 or to such other persons or address or addresses as any such party may from time to time designate for itself by like notice. 17.2 Press Releases. The parties shall consult with each other in preparing any press release, public announcement, news media response or other forth of release of information concerning this Agreement or the transactions contemplated hereby that is intended to provide such information to the news media or the public (a "Press Release"). Neither party shall issue or cause the publication of any such Press Release without the prior written consent of the other party; provided, however, that nothing herein will prohibit either party from issuing or causing publication of any such Press Release to the extent that such action is required by applicable Law or the rules of any national stock exchange applicable to such party or its Affiliates, in which case the party wishing to make such disclosure will, if practicable under the circumstances, notify the other party of the proposed time of issuance of such Press Release and consult with and allow the other party reasonable time to comment on such Press Release in advance of its issuance. 17.3 Expenses. Except as otherwise expressly provided herein, each party will pay any expenses (including, without limitation, attorneys' fees) incurred by it incident to this Agreement and in consummating the transactions provided for herein. All regulatory filing fees required pursuant to Sections 5.1, 5.4 and 5.5 shall be split equally between the parties. Each party will pay the appropriate costs and filing fees relating to any other applications required to be filed by such party. 17.4 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Buyer may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Seller; provided that Buyer may assign or delegate its rights and obligations under this Agreement without the prior written consent of Seller, to any directly or indirectly wholly owned subsidiary of Buyer provided such subsidiary assumes in writing all of the duties and obligations of Buyer hereunder, but no such assignment and assumption shall in any way operate to enlarge, alter or change any obligation of or due to Seller or relieve Buyer of its obligations hereunder and provided that Buyer agrees to cause such subsidiary to perform each of its agreements and covenants herein, and shall be jointly and severally liable for any non-performance thereof. Seller may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Buyer. Upon the sale, assignment or transfer by Buyer of the Company, the Business or the Property to a non-Affiliate of Buyer not in the ordinary course of business of Buyer, Seller's representations and warranties and indemnification obligation for breach thereof shall terminate. Any assignment made in violation of the foregoing provisions shall be void. 17.5 Amendments. This Agreement may be amended or modified only by a subsequent writing signed by authorized representatives of both parties. 17.6 Captions. The captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement, nor as in any way limiting or amplifying the terms and provisions hereof. 17.7 Entire Agreement. The term "this Agreement" shall mean collectively this document, the Schedules hereto, any agreements expressly incorporated herein, and the Confidentiality Agreement. This Agreement supersedes and revokes any prior discussions and representations, other agreements, commitments, arrangements or understandings of any sort whatsoever, whether oral or written, that may have been made or entered into by the parties relating to the matters contemplated hereby. This Agreement constitutes the entire agreement by and among the parties, and there are no representations, warranties, agreements, commitments, arrangements or understandings except as expressly set forth herein. 17.8 Waiver. Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege available to each party at law or in equity. 17.9 Third Parties. Except as expressly provided herein, nothing contained in this Agreement is intended to confer upon any person, other than the parties and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 17.10 Counterparts. This Agreement may be executed in two or more counterparts, any or all of which shall constitute one and the same instrument. 17.11 Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of Delaware (except that no effect shall be given to any conflicts of law principles of the State of Delaware that would require the application of the laws of any other jurisdiction). In accordance with Title 6, Section 2708 of the Delaware Code Annotated, the parties agree to the jurisdiction of the courts of Delaware and to be served with legal process from any of such courts. 17.12 Further Assurances. From time to time, as and when requested by one of the parties, the other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate and make effective the transactions contemplated by this Agreement. 17.13 Certain Interpretive Matters and Definitions. (a) Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning so assigned to it, (iii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (iii) all references to the "knowledge of a party" will be deemed to refer to the actual knowledge of the Executive Officers of the party after reasonable investigation, and (iv) all references to a party's "best efforts" and references of like import will be deemed to refer to the best efforts of such party in accordance with reasonable commercial practice and without the incurrence of unreasonable expense. (b) No provision of this Agreement will be interpreted in favor of, or against, either of the parties by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of such provision or of this Agreement. 17.14 Specific Performance. In addition to all other rights and remedies available at law or in equity, any party hereto may pursue, to the fullest extent available, the remedy of specific performance in order to compel the other party to close pursuant to Article 8. IN WITNESS WHEREOF, the parties, acting through their duly authorized agents, have caused this Agreement to be duly executed and delivered as of the date first above written. ALLTEL CORPORATION: By: /s/ Max E. Bobitt ----------------- Name: Max E. Bobbitt Title: President and Chief Operating Officer CITIZENS UTILITIES COMPANY: By: /s/ Leonard Tow --------------- Name: Leonard Tow Title: Chairman of the Board and Chief Executive Officer EX-10 6 EXHIBIT 10.20 EXECUTION COPY STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 28th day of November, 1994 (the "Execution Date"), by and among Citizens Utilities Company, a Delaware corporation ("Buyer"), and ALLTEL Corporation, a Delaware corporation ("Seller"). RECITALS WHEREAS, Seller is the record and beneficial owner of all of the issued and outstanding shares of capital stock of Mountain State Telephone Company, a West Virginia corporation (the "Company"); and WHEREAS, Seller desires to sell and deliver to Buyer, and Buyer desires to purchase and accept from Seller, the Shares (as defined below), upon the terms and conditions set forth in this Agreement; and NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement and any amendment hereto, the following terms are defined as set out below or in the Section referenced below: Additional Financial Statements is defined in Section 11.4. Adjusted Total Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Telecommunications Accounts Receivable (item 2-Assets on the Company's Balance Sheet) less "Accounts Receivable Allowance" (item 3 - Assets on the Company's Balance Sheet) after adjusting "Accounts Receivable Allowance" to reflect an uncollectible percentage based upon the Company's actual uncollectible net write-off percentage for the calendar year immediately preceding the year in which the Closing occurs, (ii) Accounts Receivable - Other (item 5-Assets on the Company's Balance Sheet) less Accounts Receivable Allowance - Other (item 6 - Assets on the Company's Balance Sheet), (iii) Prepaid Expense (item 9-Assets on the Company's Balance Sheet), and (iv) Other Current Assets (item 10-Assets on the Company's Balance Sheet) to the extent such other current assets do not represent cash accounts. Adjusted Total Non-Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Other Investments at Cost (item 15-Assets on the Company's Balance Sheet) to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and which RTB Stock is owned by the Company immediately after the Effective Date, (ii) Unamortized Debt Expense (item 16-Assets on the Company's Balance Sheet) to the extent such debt expense relates to debt which is to remain outstanding immediately after the Effective Date, and (iii) Deferred Maintenance and Retirements (Item 17 - Assets on the Company's Balance Sheet). Adjusted Total Current And Non-Current Liabilities means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Current Maturities of Long Term Debt (item 1- Liabilities on the Company's Balance Sheet) to the extent such long term debt is to remain outstanding immediately after the Effective Date, (ii) Accounts Payable-Other (item 6-Liabilities on the Company's Balance Sheet), (iii) Advance Payments and Customer Deposits (item 7-Liabilities on the Company's Balance Sheet), (iv) Taxes Accrued - Other (item 9 - Liability on the Company's Balance Sheet), (v) Interest Accrued-Other (item 13-Liabilities on the Company's Balance Sheet) to the extent such interest relates to debt which is to remain outstanding immediately after the Effective Date, and (vi) that portion of Other Deferred Credits (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities that are associated with the requirements of Financial Accounting Standard 106 attributable to the active Transferred Employees. Affiliate has the meaning given to that term in Rule 405 under the Securities Act of 1933, as amended. Agreement is defined in Section 17.7. The Business means the business of the Company; i.e., providing local exchange and exchange access telecommunications services and other related regulated and non-regulated activities, services and products associated with the Exchanges, including without limitation such unregulated activities, services and products of the Company conducted, offered or serviced by the Transferred Employees or provided or related to the Company's subscribers or customers served in or from the Exchanges (such unregulated activities, services and products (the "Unregulated Business") are considered an integral part of the Business for all purposes of this Agreement). Buyer's Closing Certificate is defined in Section 7.2.1. CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Casualty Notice is defined in Section 11.9. Casualty Termination Notice is defined in Section 11.9. Closing is defined in Section 8.1. Closing Date is defined in Section 8.1. Common Stock means the common stock of the Company par value $100.00. Company is defined in the recitals of this Agreement. Company Books and Records is defined in Section 2.2.3. Company's Balance Sheet means the balance sheet of the Company. Confidentiality Agreement means the Confidentiality Agreement dated September 30, 1994 between ALLTEL Corporation and Citizens Utilities Company which is attached and incorporated into this Agreement as Schedule 1-1. Contracts is defined in Section 2.2.2. Damaged Property is defined in Section 11.9. Debtholder Consents is defined in Section 5.2(a). Direct Claim is defined in Section 13.4(b). Effective Date is defined in Section 8.1. Employee Plan Assets is defined in the Employee Transfer Agreement. Employee Transfer Agreement is defined in Section 12.1 Employment Agreements is defined in Section 9.1.18. Environmental Liabilities means all liabilities, obligations (including obligations to respond to, investigate and remediate conditions caused by any Regulated Material), responsibilities, losses, damages (including punitive or treble damages), costs and expenses (including reasonable fees, disbursements and expenses of counsel, experts, consultants and expert witnesses), fines, penalties, interest or bonds, based upon any Environmental Requirements of any Governmental Authority, or as a consequence of (a) the release or threatened release of a Regulated Material in amounts that require response or remediation into the outdoor environment, (b) any circumstance or condition relating to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof, that does not comply with Environmental Requirements, or (c) any claim, demand, notice, cause of action, directive, order, judgment, fine or penalty asserted or sought under or pursuant to any Environmental Requirements by an entity or person not a party to this Agreement, to the extent that the condition or circumstance or event giving rise to the claim, demand, notice, cause of action, directive, order, judgment, fine or penalty relates to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof. Environmental Requirements means (i) any federal, state and local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority and all valid and enforceable guidance documents and policies thereof, relating to (x) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (y) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Regulated Material, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Regulated Material in each case as now amended and as now or hereafter in effect. The term Environmental Requirements includes, without limitation, CERCLA, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the federal Solid Waste Disposal Act, the federal Toxic Substances Control Act and the federal Insecticide, Fungicide and Rodenticide Act, each as now amended and as now or hereafter in effect. ERISA means the Employee Retirement Income Security Act of 1974, as amended. ERISA Plans is defined in Section 9.1.18. Estimated Purchase Price is defined in Section 3.3(a). Evaluation Material is defined in the first paragraph of the Confidentiality Agreement. Exchanges is defined in Section 2.2. Excluded Books and Records means the general ledger and all books and records relating to (i) tax returns and tax records, (ii) the Excluded Property or (iii) the Retained Liabilities, (iv) employees of the Company that are not Transferred Employees, and (v) subject to Section 11.13, all Original Cost Documents that are not located in the Exchanges. Excluded Contracts means the contracts, leases and agreements listed or identified on Schedule 11.22. Excluded Property means the Excluded Books and Records, the trademarks, trade names, trade dress, logos, and any other intangible assets that use or incorporate the word "ALLTEL" and any other marks listed on Schedule 11.1.5, the Company's interest in any cellular telephone or personal communications services business, and, in each case, any applications or licenses granted with respect thereto, and the assets disposed, transferred or dividended by the Company pursuant to Section 11.22 and any assets excluded pursuant to Sections 11.9 and 14.1.7. Execution Date is defined in the preamble to this Agreement. Executive Officers of an entity means the president and any vice president of the entity in charge of a principal business unit, division or function. Existing Environmental Requirements means those applicable provisions of any Environmental Requirements that are both in effect and applicable to the Company, the Business or the Property on or prior to the Effective Date. FCC means the Federal Communications Commission. FCC Consents is defined in Section 5.4. FCC Licenses is defined in Section 2.2.4. Final Order means an action by the FCC, the PUC, or any other Governmental Authority, as to which: (a) no request for stay of the action by the FCC, the PUC, or such other Governmental Authority, as the case may be, is pending, no such stay is in effect, and if any time period for filing any request for such a stay is provided by statute or regulation, such time period has passed; (b) no petition, motion or application for rehearing, reconsideration, or review, of the action is pending before the FCC, the PUC, or such other Governmental Authority, as the case may be, and the time provided for filing any such petition, motion or application has passed; (c) the FCC, the PUC, or such other Governmental Authority, as the case may be, does not have the action under reconsideration on its own motion and the time in which such reconsideration is permitted has passed; and (d) no appeal to a court, of the FCC's, the PUC's or such other Government Authority's action, as the case may be, is pending or in effect, and the deadline for filing any such appeal has passed. Final Purchase Price is defined in Section 3.4. Financial Statements is defined in Section 9.1.11. GAAP means generally accepted accounting principles. Governmental Authority is defined in Section 9.1.3. HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Indebtedness Releases or Terminations is defined in Section 5.2. Indemnifiable Losses is defined in Section 13.2(a). Indemnification Payment is defined in Section 13.2(a). Indemnifying Party is defined in Section 13.2(a). Indemnitee is defined in Section 13.2(a). Intellectual Property is defined in Section 11.1.1. IRC means the Internal Revenue Code of 1986, as amended. IRS means the Internal Revenue Service. June 1994 Base Amount means the sum of (i) the amount of Net Telecommunications Plant as of June 30, 1994 and (ii) the amount of Materials and Supplies as of June 30, 1994 Law is defined in Section 9.1.4. Leases means all real and personal property leases to which the Company is a party, or to which any Affiliate of the Company is a party and which are used in connection with the Business. Marks is defined in Section 11.1.5. Materials and Supplies means the amount set forth on the Company's Balance Sheet as of a date certain comprising the Company's Materials and Supplies (item 8 - Assets on the Company's Balance Sheet). Net Telecommunications Plant means the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of Telecommunications Plant In Service (item 22 - Assets on the Company's Balance Sheet, Plant Under Construction -- Short Term (item 23 - Assets on the Company's Balance Sheet), Plant Under Construction -- Long Term (item 24 - Assets on the Company's Balance Sheet), and Telecommunications Plant -- Other (item 25 - Assets on the Company's Balance Sheet), less Accumulated Depreciation and Amortization (item 27 - Assets on the Company's Balance Sheet). Original Cost Documents means all original cost documentation relating to the Telephone Plant. NECA means the National Exchange Carrier Association. Non-FCC Authorizations is defined in 2.2.6. PBGC means the Pension Benefit Guaranty Corporation. Permitted Exceptions is defined in Section 11.16. Plans is defined in Section 9.1.18. Press Release is defined in Section 17.2. PUC means the Public Service Commission of West Virginia. Purchase Price is defined in Section 3. 1. Property is defined in Section 2.2. REA Debt means debt of the Company owed to the Rural Electrification Administration. Real Property is defined in Section 2.2. 1. Regulated Material means (i) any "hazardous substance" as defined in CERCLA, (ii) any petroleum or petroleum substance, and (iii) any other pollutant, waste, contaminant, or other substance regulated under Environmental Requirements or, as applicable, Existing Environmental Requirements. Regulatory Approvals is defined in Section 5. 1. Retained Liabilities is defined in Section 13.3(a). RTB Stock means stock of the Rural Telephone Bank. Seller's Closing Certificate is defined in Section 7. 1. 1. Shares means the 5,348 shares of the Common Stock owned by Seller. Tax Returns means a report, return or other information statement required to be supplied to a federal, state or local taxing Governmental Authority with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes the Company. Tax(es) means any foreign, federal, state, provincial, county or local income, sales, use, transfer, excise, franchise, stamp duty, custom duty, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, recording, ad valorem, gains, value-added, unemployment compensation, general corporate, profits, registration, unincorporated business, alternative, social security, estimated, add-on, minimum, privilege or withholding tax and any interest and penalties and additions to such taxes (civil or criminal) related thereto or to the nonpayment thereof. Telephone Plant is defined in Section 2.2. 1. Third Party Claim is defined in Section 13.4(a). Total Deferred Credits is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Unamortized Investment Tax Credit" (Item 22 - Liabilities on the Company's Balance Sheet), "Non-Current Deferred Income Taxes" (Item 23 - Liabilities on the Company's Balance Sheet), "Regulatory Liabilities" (Item 24 - Liabilities on the Company's Balance Sheet), "Other Deferred Credits" (Item 25 - Liabilities on the Company's Balance Sheet), and "Donations of Telephone Plant" (Item 26 - Liabilities on the Company's Balance Sheet). Total Long-Term Debt is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Long-Term Debt" (Item 17 - Liabilities on the Company's Balance Sheet), "Premium/Discount on Long-Term Debt" (Item 18 - Liabilities on the Company's Balance Sheet), and "Capital Lease Obligations" (Item 19 - Liabilities on the Company's Balance Sheet). Transferred Employee is defined in Article II.A of the Employee Transfer Agreement. Transition Services Agreement is defined in Section 10.1. Unregulated Business is defined in the definition of Business set forth in this Article 1. ARTICLE 2. PURCHASE AND SALE OF SHARES 2.1 Purchase and Sale of Shares. Subject to the terms and conditions of this Agreement, Seller agrees to sell and deliver to Buyer, and Buyer agrees to purchase and accept, as of the Effective Date, the Shares, free and clear of all security interests, liens, or encumbrances. 2.2 Property. For purposes of this Agreement, the "Property" consists of the Telephone Plant, Contracts and Leases (to the extent permitted following compliance with Section 5.3), Company Books and Records, FCC Licenses, the Non- FCC Authorizations and other assets in effect or owned by the Company as of the Effective Date that are associated with (i) the telephone exchanges listed in Schedule 2.2(a) (the "Exchanges"), and (ii) the Unregulated Business described on Schedule 2.2(b). 2.2.1 Telephone Plant. For purposes of this Agreement, "Telephone Plant" means the Real Property, machinery, equipment, vehicles and all other assets and properties used, or held for future use, in connection with the conduct of the Business, including, without limitation, all improvements, plants, systems, structures, construction work in progress, telephone cable (wherever located and whether in service or under construction), microwave facilities (including frequency spectrum assignments), telephone line facilities, telephones, machinery, furniture, fixtures, tools, implements, conduits, stations, substations, equipment (including, without limitation, central office equipment, subscribers' station equipment and other equipment in general), instruments, house-wiring connections and all other equipment of every nature and kind owned by the Company or in which the Company holds an interest (other than as a lessee) and used in connection with the Business. For purposes of this Agreement, "Real Property" means the real property owned by the Company and used in connection with the Business, including, without limitation, all land, buildings, structures, easements, rights of way, appurtenances, improvements or privileges located thereon and relating thereto. Without limiting the generality of the foregoing, the Telephone Plant includes the assets that would be properly included in the fixed asset accounts referenced in Part 32 of the FCC's Rules and Regulations (47 C.F.R. Part 32), as such accounts are reflected in Schedule 9.1.19. 2.2.2 Contracts. For purposes of this Agreement, "Contracts" means all agreements that relate to the Business between the Company or any Affiliate of the Company and (i) the Company's subscribers or customers, or (ii) other entities or persons who are not Affiliates of the Company and have business relationships with the Company relating to the Business, except for the Excluded Contracts (some of which are specifically governed by other Sections in this Agreement or the Employee Transfer Agreement). 2.2.3 Company Books and Records. For purposes of this Agreement, "Company Books and Records" means all of the Company's customer or subscriber lists and records, accounts and billing records (including a copy of the detailed general ledger and the summary trial balances, where available for the past two fiscal years), detailed continuing property record lists, plans, blueprints, specifications, designs, drawings, surveys, engineering reports, personnel records (where applicable), Original Cost Documents (where located in the Exchanges but excluding Excluded Books and Records) and all other documents, computer data and records (including records and files on computer disks or stored electronically) relating to the Business (excluding Excluded Books and Records), the Property and the Transferred Employees, except for the Excluded Books and Records. 2.2.4 FCC Licenses. For purposes of this Agreement, "FCC Licenses" means all licenses, certificates, permits or other authorizations, including, without limitation, Section 214 authorizations where applicable, granted to the Company by the FCC. 2.2.5 [INTENTIONALLY DELETED] 2.2.6 Non-FCC Authorizations. For purposes of this Agreement, "Non-FCC Authorizations" means all licenses, certificates, permits, franchises, or other authorizations (other than FCC Licenses) granted to the Company by Governmental Authorities (including without limitation those that are listed or required to be listed on Schedule 9.1.17(c)). ARTICLE 3. PURCHASE PRICE 3.1 Purchase Price. (a) In consideration of the sale of the Shares and the other undertakings of Seller in this Agreement, and subject to and in accordance with the other terms and conditions of this Agreement, on the Closing Date, Buyer will pay to Seller the sum of Seventy Two Million Six Hundred Thirty Four Thousand Dollars ($72,634,000.00), subject to adjustment as provided in Section 3.2 (the "Purchase Price"). (b) (i) On or before the Closing Date, Buyer shall deliver to Seller, in immediately available funds in U.S. Dollars, the Estimated Purchase Price. Such delivery shall be made by bank wire transfer to an account that Seller shall designate at least two (2) business days prior to the Effective Date. (ii) Buyer will use its best efforts to make the wire transfer of the Estimated Purchase Price by 12:00 noon (Eastern Time) on the Closing Date, provided that all conditions to Closing set forth in Article 7 have been satisfied, or waived by the appropriate party, before such time. 3.2 Adjustments to Purchase Price. (a) Adjustment Regarding Damaged Property. (1) If the provisions of Section 11.9(c)(i) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to repair or replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (2) If the provisions of Section 11.9(c)(ii) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (b) [INTENTIONALLY DELETED] (c) Adjustment Regarding June 1994 Base Amount. The Purchase Price shall be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which the sum of Net Telecommunications Plant and Materials and Supplies as of the Effective Date exceeds or is less than the June 1994 Base Amount; provided, however, that in determining Net Telecommunications Plant and Material and Supplies as of the Effective Date, no effect will be given for: (i) any decrease thereof resulting from damage, loss or destruction of Damaged Property which is repaired or replaced by Seller or the Company or for which Seller or the Company makes a substitution, in accordance with Section 11.9(b); (ii) any increase thereof resulting from expenditures made by Seller or the Company in connection with any such repair, replacement or substitution of Damaged Property in accordance with Section 11.9(b); or (iii) any increase thereof resulting from Seller's expenditures pursuant to its obligations under Section 14.1.7(b) and (c) except for the cost of purchasing specific items of new plant (i.e., storage tanks). (d) Adjustment Regarding Assets and Liabilities. The Purchase Price will be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which, in each case as of the Effective Date: (i) Adjusted Total Current Assets plus Adjusted Total Non-Current Assets exceeds or is less than (ii) Adjusted Total Current and Non-Current Liabilities plus Total Long Term Debt to the extent such Total Long-Term Debt shall remain outstanding immediately after the Effective Date. 3.3 Estimate of Purchase Price. At least five (5) days prior to the date scheduled for Closing, Seller shall deliver to Buyer an estimate of the Purchase Price based on Seller's good faith estimate of the amount of each adjustment described in Section 3.2 (the "Estimated Purchase Price") on the same basis and in accordance with the same accounting principles, methods and practices applied in preparing the Financial Statements and the Additional Financial Statements, if applicable, taking into account all adjustments required in Section 3.2 (using the balances as reflected on the Company's Balance Sheet as of the end of the month immediately preceding the month in which the Effective Date is scheduled to occur for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and accompanied by a reasonably detailed statement, certified by the chief financial or accounting officer of Seller, describing how each such adjustment was determined. 3.4 Adjustments After Closing. (a) Within sixty (60) days following the Effective Date, Buyer shall deliver to Seller final calculations of the Purchase Price, as adjusted pursuant to Section 3.2 (prepared on the same basis (but using the balances reflected on the Company's Balance Sheet as of the Effective Date for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and in accordance with the same accounting principles, methods and practices used to prepare the Estimated Purchase Price) which shall be accompanied by a reasonably detailed statement certified by the chief financial or accounting officer of Buyer describing how each such adjustment was determined. (For the purpose of preparing Buyer's calculations and adjustments, Seller shall give Buyer access to all books, records, and other information regarding the Company available to Seller that Buyer may reasonably determine appropriate.) Within thirty (30) days following the delivery of such calculations and adjustments, Seller shall notify Buyer of any objection thereto, stating in reasonable detail the reasons therefor; otherwise, such calculations and adjustments of the Purchase Price shall be final and binding on Seller and Buyer. (For the purpose of reviewing Buyer's calculations and adjustments, Buyer shall give Seller access to all books, records, and other information regarding the Company available to Buyer that Seller may reasonably determine appropriate.) If Seller shall object, Seller and Buyer shall work in good faith to agree on the correct amounts for the final Purchase Price, but if they fail to agree, either party may exercise its rights pursuant to Article 16. (b) Within three (3) business days following the day on which the Purchase Price shall become final, whether by expiration of time or agreement of Seller and Buyer (the "Final Purchase Price"): (i) if the Final Purchase Price shall exceed the Estimated Purchase Price, Buyer shall cause to be transferred to such account in the United States as Seller may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer, or (ii) if the Estimated Purchase Price shall exceed the Final Purchase Price, Seller shall cause to be transferred to such account in the United States as Buyer may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer. It is the intent of the parties that all Purchase Price adjustments that are not disputed shall be paid by the appropriate party as soon as reasonably practicable, and any disputed amounts will not delay payments with respect to amounts not in dispute. ARTICLE 4. [INTENTIONALLY DELETED] ARTICLE 5. REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS 5.1 Governmental Regulatory Approval. Except as provided in Section 5.4, as promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date with respect to applications to be filed with the PUC and with respect to Material Regulatory Approvals, the parties shall file the applications and notices described on Schedule 5.1 in such form as agreed to by the parties with the PUC and other appropriate Governmental Authorities, seeking an order permitting the transfer of control of the Company to Buyer (the "Regulatory Approvals"). Each party agrees to use its best efforts to obtain the Regulatory Approvals and the parties agree to cooperate fully with each other and with all Governmental Authorities to obtain the Regulatory Approvals as described on Schedule 5.1 at the earliest practicable date. The parties agree that the Regulatory Approvals containing asterisks on Schedule 5.1 constitute material Regulatory Approvals (the "Material Regulatory Approvals") which are subject to Sections 7.1.3 and 7.2.4, and the Regulatory Approvals that do not contain an asterisk on Schedule 5.1 constitute Immaterial Regulatory Approvals (the "Immaterial Regulatory Approvals") which are subject to Section 5.3, but not Sections 7.1.3 and 7.2.4. 5.2 Debtholder Consents; Indebtedness Releases or Terminations. (a) With respect to the Company's long-term indebtedness identified on Schedule 5.2(a) (the "Long Term Indebtedness"), where required by the underlying debt instruments, as promptly as practicable following the Execution Date, but in any event no more than forty-five (45) days thereafter, the parties shall contact the holders of such indebtedness to request, and use their best efforts to obtain, such holders' consent ("Debtholder Consents") to the transfer of control of the Company on terms acceptable to the parties. The parties acknowledge that all Long Term Indebtedness for which Debtholder Consents have been obtained before the Effective Date and all other Long Term Indebtedness for which Debtholder Consent is not required, shall remain outstanding immediately after the Effective Date and shall be included as a Purchase Price adjustment pursuant to Section 3.2(d). Each party shall bear their own costs and expenses in obtaining such Debtholder Consent. Neither party, however, shall be required to make any payment to the debtholder to obtain the Debtholder Consent, except that Seller shall be responsible for any such payments as are specified in the relevant debt agreement. (b) If within thirty (30) days prior to the Closing Date, the parties have been unable to obtain the Debtholder Consents with respect to any Long Term Indebtedness, the Company shall repay such Long Term Indebtedness in full (including all interest and premiums or penalties thereon). (c) With respect to Long Term Indebtedness that the Company shall repay on or prior to the Effective Date, Seller shall take, at Seller's sole cost and expense, all actions necessary with respect to all persons or entities (collectively, the "Secured Parties") holding any security interest or lien against the Property, to obtain the termination or release, as of the Effective Date, and the prompt removal after the Effective Date, of all security agreements, mortgages and financing statements relating to the Property (such terminations and releases being hereinafter collectively referred to as the "Indebtedness Releases or Terminations"). Buyer agrees to cooperate in good faith with Seller in obtaining the required Indebtedness Releases or Terminations. 5.3 Other Consents. (a) As promptly as practicable after the Execution Date, the parties hereto shall mutually seek the consent, approval or waiver of the other party to any Lease or Contract that requires consent, approval or waiver as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares. To the extent any of the approvals, consents or waivers required with respect to any Lease, Contract or Immaterial Authorization have not been obtained with respect to any Lease, Contract or Immaterial Authorization as of the Effective Date, Seller shall continue to use its best efforts to obtain the consent of such other third party that is required for the transfer of control of such Lease, Contract or Immaterial Authorization after the Effective Date. (b) Notwithstanding anything to the contrary contained herein, if a third party refuses or has failed to consent to the transfer of control of a Lease, Contract or Immaterial Authorization after the Seller has used its best efforts for a period of six months after the Effective Date to obtain such consent, waiver or approval, then Seller and Buyer shall within thirty (30) days after expiration of such six-month period negotiate in good faith and agree upon, and Seller shall pay to Buyer, an amount representing fair compensation to Buyer for the harm caused by the failure to obtain such consent, waiver or approval. Following such payment, Seller shall have no further obligation to Buyer with respect to such Lease, Contract or Immaterial Authorization except as otherwise provided in Section 11.12 with respect to the Contracts and Excluded Contracts addressed in Section 11.12. (c) Seller shall bear all reasonable costs and expenses in obtaining such consents, approvals or waivers to the extent such costs or expenses are specified in the relevant Lease, Contract or Immaterial Authorization, or under applicable Law, and shall reimburse Buyer to the extent Buyer makes any transfer payments which are specified in amount and required under any Lease or Contract to the lessor or other party thereto, provided that seven (7) business days before Buyer makes any transfer payments, Buyer will notify Seller of its intent to do so and after making such transfer payment, Buyer will provide evidence satisfactory to Seller that such transfer payment was made. Buyer and Seller will negotiate in good faith to determine the extent to which each will bear any other costs and expenses arising in connection with obtaining such consents, approvals and waivers. 5.4 FCC Consents. As promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date, the parties shall file all applications and requests described on Schedule 5.4 in such form as agreed to by the parties with the FCC seeking, and shall use their best efforts to obtain, the FCC's consent to the transfer of control of all FCC Licenses (as listed in Schedule 9.1.17(b)) from Seller to Buyer (the "FCC Consents"). The parties each agree that in connection with taking the immediately above described actions, they will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the National Exchange Carrier Association Tariff F.C.C. No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. Each party agrees to use its best efforts, and the parties agree to cooperate fully with each other and with the FCC, to obtain the FCC Consents at the earliest practicable date. 5.5 HSR Act Review. As promptly as practicable after the Execution Date but in no event later than thirty (30) days after the Execution Date, the parties will make such filings as may be required by the HSR Act with respect to the sale contemplated by this Agreement. Thereafter, the parties will file as promptly as practicable any supplemental information that may be requested by the U.S. Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR Act. The parties agree to cooperate in seeking early termination of the waiting periods under the HSR Act. ARTICLE 6. PRECLOSING COVENANTS 6.1 Investigation by Buyer. (a) Prior to the Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford to the authorized representatives of Buyer reasonable access during normal business hours to the books and records of the Company (including, without limitation, relevant tax information) and to the personal property and Real Property comprising the Property. Buyer and Seller will cooperate with each other to schedule such access. With the consent of Seller (which consent will not be unreasonably withheld), Buyer and its representatives shall have access to all interexchange carriers having business relationships with the Company, to all customers of the Company, and to all officers, employees and agents of the Company having knowledge or information concerning the operations of the Company so as to afford Buyer the opportunity to make such review, examination and investigation of the Company and the Property as Buyer may desire to make, to evaluate the competitiveness of the Company and the Business, and to enable Buyer to assimilate the Company and the Business into Buyer's operations as soon as practicable after the Effective Date. To the extent it so desires, Seller shall accompany Buyer on all of Buyer's access to interexchange carriers, customers and agents of the Company. Buyer will be permitted to make extracts from or copies of such books and records as may be reasonably necessary. Buyer will not contact any employee, customer or supplier of the Company as to this Agreement or the matters involved herein except in accordance with this Section 6.1. (b) Subject to applicable law, and upon Buyer's request and Seller's consent (which consent will not be unreasonably withheld), Seller shall cause the Company to permit, at Buyer's sole cost and expense: (i) certain key employees and officers of the Company selected by Buyer to attend workshops and training sessions of Buyer (including sessions to train such employees in Buyer's business planning process in order to have the Company after the Effective Date follow Buyer's business planning process and procedures); (ii) The Company's management to work with Buyer during Buyer's planning process between the Execution Date and the Effective Date; (iii) Buyer to confer with the Company about, and to participate in the Company's planning for, any material reduction in work force or other arrangements regarding employees required or implemented pursuant to the Employee Transfer Agreement. (c) As promptly as reasonably practicable after Buyer's request, Seller will furnish, and cause the Company to furnish, such financial and operating data and other information pertaining to the Company as Buyer may reasonably request in order, among other things, to comply with Buyer's disclosure obligations under the federal securities or other laws as such obligations relate to Buyer's prospective ownership of the Company, including any disclosure required in connection with the sale of any securities by Buyer; provided, however, that nothing herein will obligate Seller or the Company to take actions that would unreasonably disrupt the normal course of the business of the Company or violate the terms of any applicable Law or any contract to which the Company is a party or to which any of its assets is subject in providing such information, or to incur any costs with respect to Buyer's external auditors (or the Company's external auditors in the event a report by such auditors is requested by Buyer) providing accounting services with respect to issuing an auditor's report required by Buyer. Any information or document provided to Buyer or acquired by Buyer during this investigation shall be deemed "Evaluation Material" as that term is defined in the Confidentiality Agreement and shall be subject in all cases to the terms of the Confidentiality Agreement; provided, however, that following consultation with Seller, Buyer may disseminate financial or other information with respect to the Business or the Company that Buyer, upon consultation with counsel, determines is required to be disclosed under federal securities laws. (d) Prior to Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will cause the Company to afford the authorized representatives of Buyer access to the Properties in order to conduct the environmental audit contemplated by Section 14.1. (e) In connection with the continuing operation of the Business between the Execution Date and the Effective Date, Seller shall cause the Company to confer in good faith with Buyer, as reasonably requested by Buyer from time to time, to report on material operational matters, material reductions in work force and other material employee matters, and the general status of ongoing operations. (f) Notwithstanding the provisions of this Agreement or the Confidentiality Agreement, from and after the Execution Date, upon the prior consent of Seller (which consent will not be unreasonably withheld), Buyer may disclose Evaluation Material (as defined in the Confidentiality Agreement) to representatives of rating agencies, underwriters, underwriters' counsel, public accountants, prospective lenders and other third parties involved in any of Buyer's offering of securities or other financings and to fixed income and equity analysts to the extent such parties reasonably have a need to know any such information; provided, that such parties shall (y) be advised of the confidential nature of any Evaluation Material they receive, and (z) agree in writing to be bound to the provisions of the Confidentiality Agreement. 6.2 Satisfaction of Conditions. Without limiting the generality or effect of any provision of Article 7, the parties will use their best efforts to satisfy promptly all conditions required to be satisfied prior to the Closing. 6.3 Notification as to Certain Matters. (a) The Buyer will promptly notify Seller of (i) any information that would cause any representation or warranty of Buyer contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the transactions contemplated by this Agreement; of which in any such case, Buyer's representatives listed on Schedule 6.3(a) become aware on or before the Effective Date. Buyer shall use reasonable best efforts to keep Seller informed of the events described in this Section 6.3(a) and shall permit Seller access to all materials prepared by Buyer in connection therewith. (b) The Seller will promptly notify Buyer of (i) any information that would cause any representation or warranty of Seller contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the Company, the Business or the transactions contemplated by this Agreement; of which in any such case, Seller's representatives listed on Schedule 6.3(b) become aware on or before the Effective Date. Seller shall use reasonable best efforts to keep Buyer informed of the events described in this Section 6.3(b) and shall permit Buyer access to all materials prepared by Seller in connection therewith. ARTICLE 7. CONDITIONS PRECEDENT TO THE CLOSING 7.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Buyer: 7.1.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been no material breach by Seller of any of its covenants to be performed in whole or in part prior to the Closing and the representations and warranties of Seller in Section 9.1 (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) shall be true and correct as of the Effective Date, except for such representations or warranties that are made expressly as of some other date, which shall be true and correct (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) as of such other date, and Seller shall have delivered to Buyer a certificate in the form attached hereto as Schedule 7.1.1 ("Seller's Closing Certificate"), dated as of the Effective Date and signed by one of Seller's Executive Officers, certifying each of the foregoing, or specifying those respects in which such covenants have been materially breached or such representations and warranties (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) are not true and correct in which event, if the Closing occurs, any claim with respect to matters so specified shall be waived by Buyer unless otherwise expressly agreed by Seller at Closing. 7.1.2 Documents. Seller shall have delivered to Buyer all documents required by Section 8.2. 7.1.3 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions or restrictions which Buyer determines, in good faith and in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Buyer of the transactions contemplated by this Agreement. For purposes of this Section 7.1.3, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.1.4 Material Adverse Changes. There shall have been no material adverse changes to the Property as a whole or the financial position or results of operations of the Company as a whole, and, subject to Section 11.9, the Company shall not have suffered any material loss or damage to the Property, whether or not insured, that would materially affect or impair the Company's ability to conduct the Business after the Effective Date. None of the Additional Financial Statements of the Company delivered pursuant to Section 11.4 shall reflect a material change in the financial position or results of operations of the Company from the financial position or results of operations reflected in the Financial Statements. 7.1.5 Real Estate Transfers. Seller shall have complied with Section 11.16 with respect to its Real Property to be transferred to Buyer. 7.1.6 Lessor and Other Third Party Consents. Seller shall have delivered to Buyer all consents, approvals or waivers of lessors or other third parties to the Material Agreements as so identified by an asterisk on Schedules 9.1.9 and 9.1.13, as such Schedules may be amended pursuant to Section 11.24. All of such delivered consents, approvals or waivers shall be in effect as of the Effective Date. 7.1.7 [INTENTIONALLY DELETED] 7.1.8 Litigation. There shall not be any litigation or other proceeding pending or to the best of Buyer's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Buyer, would involve material expense to Buyer. 7.1.9. Corporate Proceedings. All corporate proceedings required to be taken by Seller in connection with the transactions contemplated by this Agreement shall have been taken; 7.1.10 Lien Searches. Seller shall have delivered to Buyer reasonably comprehensive searches, dated as of a date within 30 days of the Execution Date or any time thereafter, of the public records regarding liens and judgments with respect to the Company, the Business and the Property. 7.1.11. Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Buyer if required by the underlying debt instrument shall have received the Debtholder Consents and shall have entered into any other necessary agreements with the holders of such Long-Term Indebtedness evidencing such Debtholder Consent in form and substance reasonably acceptable to Buyer. 7.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Seller: 7.2.1 No Misrepresentations or Breach of Covenants and Warranties. There shall have shall have been no material breach by Buyer of any of its covenants to be performed in whole or in part prior to the Closing, and the representations and warranties of Buyer in Section 9.2 shall be true and correct as of the Effective Date, except for such representations or warranties made expressly as of some other date, which shall be true and correct as of such other date (all such representations and warranties to be qualified by any materiality standards contained therein), and Buyer shall have delivered to Seller a certificate ("Buyer's Closing Certificate"), dated as of the Effective Date and signed by one of Buyer's Executive Officers, certifying each of the foregoing or specifying those respects in which such covenants have not been performed or such representations and warranties are not true and correct in which event if the Closing occurs any claim with respect to matters so specified shall be waived by Seller unless otherwise expressly agreed by Buyer at Closing. 7.2.2 Documents. Buyer shall have delivered to Seller all documents required by Section 8.3. 7.2.3 Purchase Price. Buyer shall have delivered to Seller, in the manner specified in Section 3.1, the Estimated Purchase Price as adjusted pursuant to Section 3.2. 7.2.4 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions, or restrictions which Seller determines, in good faith in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Seller of the transactions contemplated by this Agreement. For purposes of this Section 7.2.4, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.2.5 Corporate Proceedings. All corporate proceedings required to be taken by Buyer in connection with the transactions contemplated by this Agreement shall have been taken. 7.2.6 Litigation. There shall not be any litigation or other proceeding pending or to the best of Seller's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Seller would involve a material expense to Seller. 7.2.7 [INTENTIONALLY DELETED] 7.2.8 Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Seller, if required by the underlying debt instrument, shall have received the Debtholder Consent. ARTICLE 8. THE CLOSING 8.1 The Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall be held at a place mutually agreed upon by the parties at 9:00 a.m., local time, on the last calendar day (the "Closing Date") of the calendar month in which occurs the tenth (10th) business day after the date Seller notifies Buyer in writing (the "Notice") of its determination that all required Material Regulatory Approvals and FCC Consents have been obtained and provided that the other conditions set forth in Article 7 shall have been satisfied, or at such other place and time as may be agreed upon by Seller and Buyer. The transactions to be consummated at Closing shall be deemed to have been consummated as of 11:59 p.m. on the last calendar day of the calendar month in which occurs the tenth (10th) business day after the date of the Notice (the "Effective Date"). If the Effective Date is not a day on which financial institutions are open and operating, then the Closing Date shall be the immediately following business day on which financial institutions are open and operating. 8.2 Seller's Obligations at Closing. At the Closing, Seller shall deliver to Buyer the following documents duly executed and acknowledged, as appropriate: (a) Certificates representing the Shares, duly endorsed for transfer or accompanied by stock powers duly endorsed in blank. (b) Seller's Closing Certificate. (c) [INTENTIONALLY DELETED.] (d) Indebtedness Releases and Terminations and evidence satisfactory to Buyer that all Long-Term Indebtedness (and interest, premiums and penalties thereon) to be repaid pursuant to Section 5.2(b) has been (or will be at Closing) repaid in full. (e) All of the documents and papers required of Seller as conditions to Closing, including without limitation, the Regulatory Approvals, FCC Consents and the documents required to be delivered by Seller pursuant to Section 11.16. (f) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (g) The Environmental Remediation Agreement if required pursuant to Section 14.1.7(d). (h) All documents required of Seller under the Employee Transfer Agreement. (i) Certificate of the Secretary or Assistant Secretary of Seller certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. (j) Resignations of all officers and directors of the Company, effective as of the Effective Date. 8.3 Buyer's Obligations at Closing. At the Closing, Buyer shall deliver to Seller the following items and documents duly executed and acknowledged as appropriate: (a) The Estimated Purchase Price (as adjusted under Section 3.2), in the manner specified in Section 3.1; (b) Buyer's Closing Certificate (c) All of the documents and papers required of Buyer as conditions to Closing, including, without limitation, the Regulatory Approval and FCC Consents. (d) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (e) The Environmental Remediation Agreement if required pursuant to Section 14.17(d). (f) All documents required of Buyer under the Employee Transfer Agreement. (g) Certificate of the Secretary or Assistant Secretary of the Buyer certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties of Seller. Except as to the environmental matters which are exclusively addressed in Article 14 of this Agreement, Seller represents and warrants to Buyer as follows: 9.1.1 Authorization and Effect of Agreement. Seller has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement and to fulfill its respective obligations under this Agreement. The execution and delivery by Seller of this Agreement and the fulfillment of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and, assuming the due execution and delivery of this Agreement by Buyer, constitutes a valid and binding obligation of Seller, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualification that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.1.2 No Restrictions Against Sale of the Shares. The execution and delivery of this Agreement by Seller does not, and the fulfillment by Seller of its obligations under this Agreement will not, (i) conflict with or violate any provision of Seller's or the Company's certificate of incorporation or bylaws or, (ii) except as set forth in Schedule 9.1.13, or subject to obtaining the approvals and consents reflected in Article 5, conflict with, violate or result in the breach of, constitute a default under, accelerate the performance required by, or result in the creation of any encumbrance upon any of the Property under any provision of any Contract other than any such conflict, violation or breach that alone or in the aggregate would not have an adverse effect on the Buyer, the Company, the Business or the Property after the Effective Date. 9.1.3 Consents and Approvals of Governmental Authorities. No consent, approval, order or authorization of, or registration, declaration or filing with, any court or governmental agency, authority or instrumentality (" Governmental Authority") is required to be obtained or made by or with respect to Seller or the Company or in connection with the execution and delivery of this Agreement by Seller or the fulfillment by Seller of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, (ii) as described in Schedule 9.1.3, and (ii) such other consents, approvals, orders or authorizations, or registrations, declarations or filings, which if not obtained or made would not result in a material adverse effect on Buyer, the Company, the Business or the Property. 9.1.4 No Violation of Law. Except as indicated in Schedule 9.1.4, the execution and delivery of this Agreement and the fulfillment by Seller of its obligations under this Agreement will not violate any applicable existing statute, ordinance, rule, regulation or common law obligation (collectively, "Law"), except where such violation would not have a material adverse effect on the Company, the Business as a whole or on any significant part of Property after the Effective Date. 9.1.5 Corporate Organization of Seller. Seller is a corporation duly organized, validly existing and in good standing under the laws of Delaware; it has full corporate power and authority to own the Shares and perform its obligations under this Agreement. 9.1.6 Brokers. Seller has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Buyer for any broker's or finder's fees or similar fees or expenses. 9.1.7 Liabilities. The Company is not in default with respect to any of its obligations or liabilities, or the performance, observance or fulfillment of any covenant or condition relating thereto, and no event has occurred and is continuing that constitutes a material breach or default thereunder or that would constitute such a material breach or default with the giving of notice or lapse of time, or both. 9.1.8 Title to Property. The Company has good, valid, undivided, marketable and defensible title to all owned Property, free and clear of all restrictions, charges, liens, or encumbrances of any kind, except for (i) the liens, encumbrances and restrictions shown and disclosed on Schedule 9.1.8-1, (ii) current real and personal property taxes and other statutory liens covering amounts not yet due and payable, and (iii) such other imperfections of title and encumbrances, if any, as do not interfere in any material respect with the present use or value of the item of owned Property to which such imperfection or encumbrance relates. No condemnation proceeding is pending or, to the knowledge of Seller or the Company, threatened with respect to any part of the Property and such Property is not in any violation of any restrictive covenant relating thereto. Schedule 9.1.8-2 sets forth the address and a general description of each item of Real Property owned by the Company included in the Property. In addition, Schedule 9.1.8-2 sets forth a list of the Real Property included in the Property in which the Company holds other than a fee interest (such as easements and rights of way). 9.1.9 Leases. Seller has set forth on Schedule 9.1.9 a list of all the Leases. Each of the Leases is valid, binding and enforceable in accordance with its terms, and except as otherwise disclosed in Schedule 9.1.9, there is not any existing material default or existing material breach of a covenant by the Company under any Lease. The Company enjoys peaceful and undisturbed possession under all material Leases and, to Seller's and the Company's knowledge, the lessor under any such Lease is not (with or without notice or the lapse of time, or both) in material breach or default thereunder, has performed all material obligations required to be performed by it thereunder, and has not given notice of such lessor's intent to terminate such Lease. 9.1.10 Condition of Tangible Assets. All of the tangible Property is in substantially good operating condition and repair, normal wear and tear excepted, well maintained, adequate for the present uses thereof and in compliance in all material respects with applicable federal, state and local ordinances, regulations and statutes relating to the ownership and operation of such Property. Except as set forth on Schedule 9. 1. 10, the Company has not received any written notice within the past twelve (12) months of a violation of any ordinances, regulations or building, zoning and other similar laws with respect to such assets that would have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Each parcel of Real Property and, to the knowledge of Seller and the Company, of real estate leased by the Company and material or necessary to the Business as presently conducted substantially complies with all applicable Laws except where the failure to so comply individually or in the aggregate, would not have a material adverse effect on the Company, the Business as a whole or any such parcel after the Effective Date. Except as set forth on Schedule 9.1.10, other than the Company, no person or party has actual possession or has a right to possession of all or any material portion of any parcel of such Real Property or such leased real estate. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 9.1.10, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED OR STATUTORY, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE PERSONAL PROPERTY INCLUDED IN THE PROPERTY AND HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED OR STATUTORY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. 9.1.11 Financial Statements. (a) Seller has delivered to Buyer a true and correct copy of the Company's audited financial statements, consisting of a balance sheet, income statement and related statement of cash flows as of and for the respective periods ended December 31, 1992, and December 31, 1993, together with the auditor's report thereon (the "Financial Statements"). The Financial Statements were prepared based upon the books and records of the Company, and fairly present in all material respects the financial condition of the Company as of the appropriate periods and the results of operations for the year then ended, in each case in conformity with GAAP and to the best of Seller's knowledge and to the extent required by applicable Law, have been prepared in all material respects in conformity with the regulations of the FCC and the PUC. The Financial Statements contain no untrue statements of any material fact nor omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Additional Financial Statements to be delivered to Buyer pursuant to Section 11.4 hereof (i) will be prepared in each case in accordance with GAAP (except for the omission of notes thereto with respect to interim Additional Financial Statements), consistent with past practices, from the books and records of the Company; and (ii) will fairly present the financial condition of the Company and the results of operations of the Company for the periods indicated, subject, in the case of interim Additional Financial Statements, to normal year-end adjustments which will not be material in amount or effect; and (iii) to the best of Seller's knowledge and to the extent required by applicable Law, will be prepared in all material respects in conformity with the regulations of the FCC and the PUC; and (iv) will not contain any untrue statements of any material facts or omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) The unaudited balance sheet of the Company as of June 30, 1994 was prepared in accordance with GAAP except for the omission of notes thereto, consistent with past practices, from the books and records of the Company and fairly presents the financial condition of the Company as of such date subject to normal year-end adjustments which will not be material in amount or effect, and to the best of Seller's knowledge and to the extent required by applicable Law, was prepared in all material respects in conformity with the regulations of the FCC and the PUC. 9.1.12 Absence of Material Changes. Except as Seller may disclose in Schedule 9.1.12, since December 31, 1993, there has not been: (a) Except as described in Section 11.22, any material change in the financial condition, results of operations, assets, liabilities, operations or future business prospects of the Company or the Business; (b) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the Property, the Company or the Business; (c) Except as described in Section 11.22, any disposition (including, without limitation, the grant of a license, franchise, option or other right of any nature whatsoever to sell or distribute) or encumbrance or agreement to dispose of or to encumber, or pledge or grant of a security interest in or agreement to pledge or grant a security interest in, any of the Property, or any increase or an agreement to increase any indebtedness of the Company, except in the ordinary course of business; (d) Any material change in the Company's tariffs or in the manner of conducting the Business; (e) Except as described in Section 11.22, any dispute, litigation or other event or condition that materially and adversely affects the business or prospects of the Company, the Business or the Property; (f) Any waiver or release of any material rights or settlement of any material dispute involving the Company, the Business or the Property; (g) Any granting of a material salary increase or other material benefits payable to any Employee, except for ordinary and routine salary increases or bonuses authorized or granted in the ordinary course of business and consistent with past practices; (h) Except as described in Section 11.22, any transaction entered into by Seller or the Company that would have a material adverse effect on the Company, the Business as a whole or the Property as a whole; (i) Any change in the accounting methods or practices of the Company except as required by GAAP or any change in depreciation or amortization policies or rates heretofore adopted by the Company except as required by GAAP; (j) Any material labor dispute or threat thereof which affects generally the Transferred Employees or, to Seller's or the Company's knowledge, any attempt to organize the Transferred Employees for the purpose of collective bargaining; (k) Any event that would have been prohibited under Section 11.5 if Section 11.5 had been in effect since December 31, 1993; (l) Except as described in Section 11.22, any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company of any outstanding shares of capital stock or other securities of, the Company; (m) any amendment of any material term of any outstanding capital stock of the Company; (n) any incurrence, assumption or guarantee by the Company of any indebtedness for borrowed money other than in the ordinary course of business and in amounts and on terms consistent with past practice; (o) Except as described in Section 11.22, any making of any loan, advance or capital contributions to or investment in any person or entity other than loans, advances, capital contributions or investments made in the ordinary course of business; or (p) Except as described in Section 11.22, any agreement or commitment by Seller or the Company (or any understanding between Seller or the Company and any third party) to do or to take any of the actions referred to in paragraphs (a) through (o) of this Section 9.1.12. 9.1.13 Contracts. Each of the Contracts is in full force and effect as of the date of this Agreement in accordance with its terms, and there is no outstanding notice of cancellation or termination in connection therewith. The Company is not in material breach or default in connection with any Contracts, and there is no basis for any claim of breach or default by the Company, or to Seller's the Company's knowledge, any other party, in any material respect under any of the Contracts. None of the Contracts, either separately or in the aggregate, materially and adversely affects the Company, the Business or the Property. After the Effective Date, all rights and obligations of the Company under the Contracts shall continue unimpaired in the Company (assuming that if any Contract requires the consent of the other party thereto, such consent will have been obtained by the parties hereto prior to the Effective Date). Except for the instruments specifically listed in Schedule 9.1.13, the Company is not a party to or subject to: (i) any agreement for the purchase or disposition of any material, equipment, supplies, inventory or service, except individual purchase orders and contracts in amounts less than Twenty-Five Thousand Dollars ($25,000.00); (ii) any agreement to which the Company is a party or by which any of the Property is bound relating to indebtedness for money borrowed including capital leases, security arrangements relating thereto and any amendment or waiver thereof; and (iii) any other agreement not of the type covered by any of the foregoing items of this Section 9.1.13 requiring payments by the Company in excess of Seventy-Five Thousand Dollars ($75,000.00) per agreement, on or after the Effective Date. Schedule 9.1.13 also lists (a) each Contract between the Company and any Affiliate of the Company, and (b) each material Contract between the Company, or an Affiliate of the Company and relating to the Business, and any third party. Seller has made available to Buyer true and correct copies of all agreements and instruments listed in Schedule 9.1.13. Schedule 9.1.13 specifically identifies, with respect to those Contracts which are required to be listed thereon, the Contracts which require the consent, approval or waiver of the other party thereto for the transfer of control of the Company. 9.1.14 Insurance. The Property of an insurable nature and of a character usually insured by companies carrying on similar businesses is insured under insurance policies in such amounts and against such losses or casualties as is (i) usual in such companies and (ii) required under any of the Contracts or Leases. The insurance policies referred to in this Section 9.1.14 are (i) listed on Schedule 9.1.14, and (ii) in full force and effect and the premiums due thereon have been duly and timely paid. The most current statement of values (the statement of values of property of an insurable nature that is submitted to an insurance company to be used as a basis for the calculation of premiums) relative to the Property as presently insured has been made available to Buyer by Seller. On the Effective Date, the coverage under the insurance policies and programs of Seller and its Affiliates applicable to the Company will be terminated, and Buyer will be responsible for providing all insurance coverage for the Company. Following the Effective Date, Seller shall be responsible for and shall pay any additional premiums that might be required by an insurance company for insurance coverage prior to the Effective Date relating to the Company and shall be entitled to any refunds or dividends due from such companies relating to such coverage. Schedule 9.1.14 sets forth a list of the open material claims affecting the Company complete in all material respects, and a description of any self-insurance levels, underlying limits and deductibles. 9.1.15 Taxes. (a) Except as set forth on Schedule 9.1.15(a): (i) Seller or the Company has filed or caused to be filed with the appropriate United States, state and local Governmental Authorities, all Tax Returns required to be filed on or prior to the Effective Date (taking into account all extensions of due dates) by or with respect to the Company and has paid or adequately provided for all Taxes shown thereon as owing, except where the failure to file such Tax Returns or pay any such Taxes would not, or could not reasonably be expected to, have a material adverse effect on Buyer, the Business, or the Company after the Effective Date, (ii) all such Tax Returns were or will be correct and complete in all material respects, (iii) to the knowledge of Seller, all withholding Tax requirements imposed on or with respect to the Company have been or will be satisfied in full in all respects, and (iv) all penalties, interest or other charges that have or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax have been or will be timely paid in full. (b) The Company has been subject to normal and routine audits, examinations and adjustments of Taxes from time to time, but there are no material current audits or material audits for which notification has been received (in either case, with respect to the Company) other than those set forth on Schedule 9.1.15(b). (c) Except as set forth in Schedule 9.1.15(c), there is no material written claim against the Company for any Taxes, and no material assessment, deficiency or adjustment has been asserted or, to the knowledge of Seller proposed with respect to any Tax Return of or with respect to the Company. (d) Except as set forth in Schedule 9.1.15(d), there is not in force any extension of time with respect to the due date for the filing of any Tax Return of or with respect to the Company or any waiver or agreement for any extension of time for the assessment or payment of any Tax of or with respect to the Company. (e) Except for Taxes due with respect to Tax Returns that will be paid by Seller, the balance sheet included in the Financial Statements includes adequate provisions for the payment in full of all federal and state income taxes of the Company for all taxable periods or portions thereof during the period beginning with respect to each Tax Return statute of limitations and ending no later than December 31, 1993. The balance sheet included in the Financial Statements has attached thereto a schedule (the "Tax Schedule") which sets forth provisions for such federal and state income taxes. (f) All accrued rights or obligations under any written or unwritten Tax allocation or sharing agreements or arrangements affecting the Company are reflected in the intercompany accounts of the Company. All such Tax allocation or sharing agreements or arrangements have been or will be cancelled on or prior to the Effective Date. No payments are or will become due by the Company after the Effective Date pursuant to any such agreement or arrangement. (g) Except as set forth in Schedule 9.1.15(g), none of the property of the Company is held in an arrangement for which partnership Tax Returns are being filed, and the Company does not own any interest in any controlled foreign corporation (as defined in Section 957 of the Code) or passive foreign investment company (as defined in Section 1296 of the Code). (h) Except as set forth in Schedule 9.1.15(h), none of the property of the Company or any of its Subsidiaries is subject to a safe-harbor lease (pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect after the Economic Recovery Act of 1981 and before the Tax Reform Act of 1986) or is "tax-exempt use property" (within the meaning of Section 168(h) of the IRC) or "tax-exempt bond financed property" (within the meaning of Section 168(g)(5) of the IRC). (i) Except as set forth in Schedule 9.1.15(i), the Company will not be required to include any amount in income for any taxable period beginning after December 31, 1993 as a result of a change in accounting method for any taxable period ending on or before December 31, 1992 or pursuant to any agreement with any Tax authority with respect to any such taxable period. (j) The Company has not consented to have the provisions of Section 341(f)(2) of the IRC apply with respect to a sale of its stock. (k) As a result of the transactions contemplated by this Agreement, neither Buyer nor the Company will be obligated to make a payment to an individual that would be a "parachute payment" to a "disqualified individual" as those terms are defined in Section 280G of the IRC without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future. (l) All Taxes that the Company is required by law to withhold or collect through the Effective Date have been or will be duly withheld or collected and, to the extend required, have been or will be paid to the proper governmental authorities or properly deposited as required by applicable laws. 9.1.16 No Material Claims. Except as disclosed in Schedule 9.1.16 or with respect to Taxes, there are no claims, actions, lawsuits or legal or administrative proceedings pending, or, to the knowledge of Seller or the Company, threatened against or affecting the Company or its properties that, if determined adversely to the Company, would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Neither Seller nor the Company knows of any reasonable basis for any such action, claim, lawsuit or proceeding or any governmental or regulatory investigation relative to the Company, the Business as a whole or the Property. The Company is not in default under any judgment, order or decree of any Governmental Authority which would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property after the Effective Date. 9.1.17 Tariffs: FCC Licenses, Non-FCC Authorizations. (a) With respect to federal tariffs, the Company is an issuing carrier in the National Exchange Carrier Association Tariff F.C.C. No. 5 for the purpose of providing interstate access service. Except as described on Schedule 9.1.17(a), the state regulatory tariffs applicable to the Company stand in full force and effect on the date of this Agreement in accordance with all terms of such state tariffs, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation or termination in connection therewith, nor is the Company subject to any restrictions or conditions applicable to its state regulatory tariffs that limit or would limit the operation of the Business (other than restrictions or conditions generally applicable to tariffs of that type). Except as described on Schedule 9.1.17(a), each such state tariff has been duly and validly approved by the appropriate state regulatory agency. Except as otherwise disclosed on Schedule 9.1.17(a), the Company is not in material violation under the terms and conditions of any such state tariff, and there is no basis for any claim of material violation by the Company in any material respect under any such state tariff. Except as described in Schedule 9.1.17(a), there are no applications by the Company or complaints or petitions by others or proceedings pending or threatened before the state regulatory authority relating to the Company, the Business or its operations or the state regulatory tariffs. To the knowledge of Seller and the Company, there are no material violations by subscribers or others under any such state tariff that would be material to the Company or the Business. A true and correct copy of each state tariff applicable to the Company or the Business has been delivered to Buyer. (b) Listed on Schedule 9.1.17(b) are the FCC Licenses held by the Company. Each such FCC License is in full force and effect in accordance with its terms, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation or termination in connection therewith nor are any of such FCC Licenses subject to any restrictions or conditions that limit the operation of the Business (other than restrictions or conditions generally applicable to licenses of that type). The FCC Licenses are free from all security interests, liens, claims, or encumbrances of any nature whatsoever. Except as set forth on Schedule 9.1.17(b), there are no applications by the Company or material complaints or material petitions by others or proceedings pending or threatened before the FCC relating to the Company or the FCC Licenses. (c) Listed on Schedule 9.1.17(c) are all Non-FCC Authorizations materially necessary for the conduct of the Business which would include, without limitation, all FAA radio tower ownership authorizations. Each such Non-FCC Authorization is in full force and effect in accordance with its terms. To Seller's and the Company's knowledge, no event has occurred with respect to any materially necessary Non-FCC Authorization which permits, or after notice or lapse of time or both would permit, revocation or termination thereof, or would result in any other material impairment of the rights of the holder of such materially necessary Non-FCC Authorization. 9.1.18 Employee Matters. (a) Schedule 9.1.18(a) lists (and identifies the sponsor of) each material "employee pension benefit plan, " as that term is defined in Section 3(2) of ERISA, each material " employee welfare benefit plan," as that term is defined in Section 3(1) of ERISA maintained or contributed to by the Company or any of its Affiliates in respect of any Transferred Employee (as defined below) (such plans being hereinafter referred to collectively as the "ERISA Plans"), and each other material retirement, pension, profit-sharing, money purchase, deferred compensation, incentive compensation, bonus, stock option, stock purchase, severance pay, unemployment benefit, vacation pay, savings, medical, dental, post-retirement medical, accident, disability, weekly income, salary continuation, health, life or other insurance, fringe benefit, or other employee benefit plan, program, agreement, or arrangement maintained or contributed to by the Company or its Affiliates in respect of or for the benefit of any Transferred Employee or former employee, excluding any such plan, program, agreement, or arrangement maintained or contributed to solely in respect of or for the benefit of Transferred Employees or former employees employed or formerly employed by the Company outside of the United States, as of the date hereof (collectively, together with the ERISA Plans, referred to hereinafter as the "Plans"). Seller has supplied Buyer with a true and complete copy of each Plan and all amendments thereto. Schedule 9.1.18(a) also includes a list of each material written employment, severance, termination or similar-type agreement between the Company or its Affiliates and any Transferred Employee (the "Employment Agreements"). Except to the extent that any assets, liabilities, or accounts are transferred from the Plans or Agreements (pursuant to an Employee Transfer Agreement or otherwise) to plan(s) or agreement(s) maintained or contributed to by Buyer, all such Plans and Agreements shall remain the liabilities of the Seller or its Affiliates and Seller shall take any and all steps necessary to ensure that neither Buyer nor the Company shall be a sponsor of any such Plan or Agreement subsequent to the Effective Date. Except as otherwise disclosed on Schedule 9.1.18(a), the execution and delivery of this Agreement by Seller and the performance of this Agreement by Seller will not directly result now or at any time in the future in (i) the payment by the Company or its Affiliates to any Transferred Employee of any severance, termination, or similar type payments or benefits or (ii) any "parachute payment" (as such term is defined in Section 28OG of the IRC) being made by the Company or its Affiliates to any Transferred Employee. (b) Except as set forth on Schedule 9.1.18(b): (i) Neither the Company nor any of its Affiliates, any of the ERISA Plans, any trust created thereunder, or any trustee or administrator thereof, has engaged in any transaction as a result of which the Company could be subject to any material liability pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC; and (ii) Since the effective date of ERISA, no material liability under Title IV of ERISA with respect to the ERISA Plans has been incurred or is reasonably expected to be incurred by the Company or any of its Affiliates (other than liability for premiums due to the PBGC), unless such liability is reserved for or otherwise reflected on the Financial Statements or unless such liability has been, or prior to the Effective Date will be, satisfied in full. (iii) There is no contract or Employment Agreement covering any Transferred Employee of the Company that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the IRC. (iv) Neither the Company nor any of its Affiliates has engaged in, or is a successor or parent corporation to a person that has engaged in, a transaction described in Section 4069 of ERISA. (c) Except as set forth on Schedule 9.1.18(c), with respect to the ERISA Plans other than those ERISA Plans identified on Schedule 9.1.18(a) as "multi-employer plans": (i) the PBGC has not instituted proceedings to terminate any Plan that is subject to Title IV of ERISA (the "Retirement Plans") and no condition exists or has existed which could constitute grounds for any termination by PBGC; (ii) no filing has been made by the Company, or any of its Affiliates with the PBGC to terminate any Retirement Plan identified on Schedule 9.1.18(a); (iii) none of the ERISA Plans has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the IRC), whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to the Execution Date; (iv) each of the ERISA Plans has been operated and administered in all material respects in accordance with its provisions and with all applicable laws; (v) each of the ERISA Plans that is intended to be "qualified" within the meaning of Section 401(a) of the IRC and, to the extent applicable, Section 401(k) of the IRC, has been determined by the IRS to be so qualified, and nothing has occurred since the date of the most recent such determination (other than the effective date of certain amendments to the IRC, the remedial amendment period for which has not yet expired) that would adversely affect the qualified status of any of such ERISA Plans; (vi) there are no pending material actions, claims or lawsuits which have been asserted or instituted against any of the ERISA Plans, the assets of any of the trusts under such Plan, the plan sponsor, the plan administrator, trustee or any other fiduciary of such Plans with respect to any aspect of such ERISA Plans (except for routine benefit claims or routine expenses). (d) Except as set forth on Schedule 9.1.18(d), none of the ERISA Plans is a "multi-employer plan," as that term is defined in Section 3(37) of ERISA and with respect to any such multiemployer plans (as so defined) listed in Schedule 9.1.18(d), Seller has not made or incurred a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA that would result in the incurrence of a material liability by the Company that is not reserved for or otherwise reflected on the Financial Statements. (e) Except as set forth on Schedule 9.1.18(e), no post-retirement medical and life insurance benefit obligations exist with respect to any Transferred Employees of the Company. (f) No Plan identified on Schedule 9.1.18(a) has any restrictions against termination or modification, either by its terms or, to Seller's or the Company's knowledge, due to any written or oral communications by any representative of the Company nor any of its Affiliates. (g) Except as set forth on Schedule 9.1.18(g), (i) none of the Transferred Employees are represented by a labor union or labor organization and (ii) neither the Company nor any of its Affiliates is a party to nor is the Company subject to, any collective bargaining agreement covering any Transferred Employee. There are currently no strikes, slowdowns, work stoppages or lockouts by or with respect to any Transferred Employee covered by collective bargaining agreements. Except as set forth on Schedule 9.1.18(g), to the best knowledge of Seller and the Company, during the twelve (12) months preceding the Execution Date there have not been any union organizational campaigns by or directed at the employees of the Company. Except as set forth on Schedule 9.1.18(g), no condition has existed or exists that has caused or could be expected to result in the imposition of any lien or encumbrance under ERISA or the IRC on any part of the Property. (h) Seller will make available to Buyer, prior to the Closing Date, a list of those Transferred Employees that Seller believes to have participated in the health or dependent care reimbursement accounts of the Company, together with the elections made prior to the Effective Date with respect to such accounts through the Effective Date. (i) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will cause any acceleration of benefits under any Plan. 9.1.19 Schedules of the Telephone Plant. Seller has set forth on Schedule 9.1.19 copies of schedules (at the level of detail agreed to by the parties but in any case including details regarding net book value and continuing property records lists associated therewith) of the Company's Telephone Plant as of June 30, 1994, including, to the extent available, a schedule specifically identifying the Telephone Plant that is associated with the Unregulated Business. The account balances reflected on the schedule of Telephone Plant correspond, in all material respects, to the associated account balances reflected on the Company's Continuing Property Records. 9.1.20. Accuracy of Certain Information. With respect to the Company's Business, Seller hereby represents and warrants to Buyer as follows: (a) The information regarding type of central office switch and number of access lines in service for each exchange set forth on Schedule 9.1.20 (a) is true and complete in all material respects as of the respective dates set forth thereon. (b) The information set forth only with respect to the 1993 column of the "Capital Budget-Network Modernization Forecast" attached as Schedule 9.1.20 (b) is true and complete as of December 31, 1993. (c) Schedule 9.1.20 (c) sets forth a substantially complete list of all vehicles included in the Property (including trailers, equipment mounted on trailers and self-propelled equipment) together with the manufacturer, model and year of each such vehicle, and indicates whether such vehicle is owned or leased by the Company. (d) [INTENTIONALLY DELETED] (e) Schedule 9.1.20(e) sets forth a true and complete list of the interstate billing and collection revenues and intrastate interlata billing and collection revenues of the Company for the year 1993. 9.1.21 Rate Base. Except as set forth on Schedule 9.1.21, the Company has no materials and supplies, plant or equipment that has been disallowed from rate base or excluded from the revenue calculations for any pool (unless due to the deregulation of the service for which such assets are used) or in the most recent rate order issued by the PUC or the FCC or any determination by an administrator of an interstate or intrastate pool, and has not received written notification that the PUC or the FCC or any pool administrator proposes to exclude any assets from rate base or revenue calculations for the pools, or any tariff filed with or approved in the most recent rate order of the PUC or the FCC, in each case which materials and supplies, plant or equipment, in the aggregate, would be in excess of one percent (1%) of Net Telecommunications Plant. 9.1.22 Payments. All material payments of any kind required to be made by the Company to third parties under any Contract and maturing prior to the Effective Date have been, or will be as of the Effective Date, properly and timely paid or provided for, unless otherwise subject to a bona fide dispute disclosed in Schedule 9.1.22. 9.1.23 Compliance with Laws. Except as Seller shall specifically indicate on Schedule 9.1.23, (i) the Company is in compliance in all material respects with all Laws applicable to it, the Property and the Business and holds all governmental permits or licenses required in order to conduct the Business and to own and operate the Property; (ii) the present uses of the Property in the conduct of the Business do not violate in any material respect any Law and (iii) no written notice or warning from any governmental or regulatory authority with respect to any failure or alleged failure by the Company to comply with any Law or questioning the validity of any governmental permit or license, has been issued or given, nor to the knowledge of Seller or the Company, is any such notice or warning proposed or threatened. Neither Seller nor the Company is aware of any fact, event or circumstance relating to the Company that is reasonably likely to cause a regulatory agency to deny or withhold its approval to the transactions contemplated hereby. 9.1.24 Correct Records. The financial records, ledgers, account books and other accounting records of the Company are current, correct and complete and reasonably well organized, in all material respects and to the knowledge of Seller and the Company, to the extent required by applicable Law, conform in all material respects with the rules and regulations of the FCC and PUC. The Company and its Affiliates have retained substantially all Original Cost Documents regarding the expenditures made by the Company within the immediately preceding two-year period that relate to the Company's Net Telecommunications Plant, and such Original Cost Documents are correct and complete in all material respects. 9.1.25 Materials and Supplies. As of the Effective Date, the value (as reflected on the Company's books) of the Company's materials and supplies relating to the Business which are obsolete or in excess of the requirements of the Business, will not materially exceed the Company's reserve for obsolete or excess Materials and Supplies as reflected on the Company's books. 9.1.26 Assets Necessary to the Business. The Property includes all of the assets and properties (including all licenses and agreements) currently being used or which are reasonably necessary to carry on the Business as currently conducted, other than the assets and properties included in the Excluded Property. 9.1.27 [INTENTIONALLY DELETED] 9.1.28 Unregulated Business. Schedule 2.2(b) is an accurate summary description of the Unregulated Business, in detail reasonably acceptable to Buyer. 9.1.29. Capital Improvements Required by PUC. Except as set forth on Schedule 9.1.29, there are no changes, modifications, upgrades or enhancements required by the PUC to be made to the Property or the operation thereof. 9.1.30 Undisclosed Liabilities. Except as contemplated by this Agreement or as otherwise set forth in Schedule 9.1.30 the Company has no liabilities or obligations of any nature, secured or unsecured (absolute, accrued, contingent or otherwise and whether due or to become due), of a nature required to be recorded or disclosed in a corporate balance sheet prepared in accordance with GAAP, except liabilities and obligations which are not materially in excess of amounts reflected, reserved against or disclosed in the December 31, 1993 Financial Statements or the notes thereto and except for liabilities and obligations incurred in the ordinary course of business since December 31, 1993. Except as may be reflected in the December 31, 1993 Financial Statements or the notes thereto or on Schedule 9.1.30, the Company has no obligations under guarantees, endorsements or indemnities of the obligations of any other person or entity. 9.1.31 Banks. Schedule 9.1.31 lists the name of each bank in which the Company has an account or safe deposit box, and the names of all persons authorized to draw thereon or have access thereto, and the names of all persons holding a power of attorney from the Company. 9.1.32 Ownership of Shares. Seller is the record and beneficial owner of the Shares, which comprise 100% of the outstanding shares of the common stock of the Company. Seller has legal, valid and marketable title to the Shares, free and clear of all liens, claims, options, security interests or other encumbrances of any character whatsoever ("Encumbrances"). The sale and delivery of the Shares to Buyer pursuant to Article 2 will vest in Buyer legal, valid and marketable title to the Shares free and clear of all Encumbrances other than Encumbrances created or suffered by Buyer and restrictions on sales of the Shares under applicable federal and state securities laws. 9.1.33 Capital Stock. The Common Stock and the Company's 6% preferred stock, $50.00 par value per share (the "Preferred Stock"), are the only capital stock authorized to be issued by the Company. The Shares are the only shares of Common Stock outstanding. As of the Execution Date, there exists a total of 21 shares of Preferred Stock outstanding. The Shares and the 21 shares of Preferred Stock represent the only shares of capital stock of the Company outstanding. All of the Shares are duly authorized, validly issued, fully paid and non-assessable. Except as described in Schedule 9.1.33, there are outstanding no securities convertible into, exchangeable for, or carrying the right to acquire, equity securities of the Company nor are there any subscriptions, warrants, options, rights or other arrangements or commitments (other than this Agreement) which could obligate Seller or the Company to issue any shares of capital stock or dispose of any ownership interest therein. Except as described in Schedule 9.1.33, there are no outstanding obligations of the Company to issue or deliver, or to repurchase, redeem or otherwise acquire any capital stock or other securities of the Company. 9.1.34 Investments. Set forth on Schedule 9.1.34 is the name of each corporation, partnership, joint venture or other entity in which the Company has, or pursuant to any agreement will have, directly or indirectly, the right to acquire by any means, an equity interest therein, together with a description of the Company's interest (or right to acquire the same) in such entity, including any Encumbrances on such interest. 9.1.35 Corporation Organization of Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of West Virginia; it has full corporate power and authority to own its properties and to carry on the Business as it is now being conducted, and to own or hold under the lease, the Property. 9.2 Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows: 9.2.1 Corporate Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease or otherwise hold the assets owned, leased or held by it. 9.2.2 Authorization and Effect of Agreement. Buyer has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement, to own the Shares and to fulfill all other obligations of Buyer under this Agreement. The execution and delivery by Buyer of this Agreement and the fulfillment by it of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Buyer. Buyer has the requisite legal capacity to purchase, own and hold the Shares upon the consummation of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Buyer and, assuming the due execution and delivery of this Agreement by Seller, constitutes a valid and binding obligation of Buyer, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualifications that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.2.3 No Restrictions Against Purchase of the Shares. The execution and delivery of this Agreement by Buyer do not, and the fulfillment by Buyer of its obligations under this Agreement will not, conflict with, violate or result in the breach of any provision of the certificate of incorporation or bylaws of Buyer or, subject to obtaining the approvals and consents referred to in Article 5, conflict with, violate or result in the breach of, constitute default under, or accelerate the performance required by any Contract to which Buyer is a party. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by or with respect to Buyer in connection with the execution and delivery of this Agreement by Buyer or the fulfillment by Buyer of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, and (ii) the filings and approvals listed on Schedule 9.2.3. 9.2.4 No Violation of Law. The execution and delivery of this Agreement and the fulfillment by Buyer of its obligations under this Agreement will not violate any Law. 9.2.5 Brokers. Buyer has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Seller for any broker's or finder's fees or similar fees or expenses. 9.2.6 No Material Claims. There are no claims, actions, lawsuits or legal proceedings pending or, to the knowledge of Buyer, threatened against Buyer or its properties that would prevent the consummation of the transactions contemplated by this Agreement. 9.2.7 FCC Tariffs. In connection with obtaining consent to the transfer of control of the Company's FCC's Licenses, as described in Section 5.4, Buyer will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the National Exchange Carrier Association Tariff FCC No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 9.2.8 Investment. Buyer understands that the Shares that it will acquire pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended (the "Act"), and cannot be offered for sale, sold or otherwise transferred unless the Shares subsequently are so registered or qualified for exemption from registration under the Act. The Shares are being acquired under this Agreement by Buyer in good faith solely for its own account, for investment and not with a view toward resale or other distribution within the meaning of the Act. The Shares will not be offered for sale, sold or otherwise transferred by Buyer without either registration or exemption from registration under the Act and applicable state securities laws. Buyer has such knowledge and experience in financial and business matters that Buyer is capable of evaluating the merits and risks of Buyer's investment in the Shares. Buyer understands and is able to bear any economic risks associated with such investment (including the necessity of holding the Shares for an indefinite period of time, inasmuch as the Shares have not been registered under the Act). ARTICLE 10. CONTINUING BUSINESS RELATIONSHIPS 10.1 Transition Services Agreement. If requested in writing by Buyer on or prior to March 15, 1995, the parties shall, as promptly as practicable but in any event within 30 days after Buyer's written request, negotiate in good faith and enter into a Transition Services Agreement, to be effective no later than the Effective Date, pursuant to which Seller will provide to the Company, at the Company's expense, such financial, accounting, billing, computer, network, administrative and other services (including services relating to the conversion of systems and processes) as may be reasonably requested by Buyer, which agreement shall be in form and substance as mutually agreed to by both Buyer and Seller (the "Transition Services Agreement"). ARTICLE 11. ADDITIONAL COVENANTS OF THE PARTIES 11.1 Intellectual Property. 11.1.1 Definition. "Intellectual Property" means all inventions (whether patentable or not and whether or not such inventions are described or claimed in any patent or patent application), designs (useful or ornamental), and works subject to copyright that may be embodied in, without exclusion, invention disclosures, specifications, manuals, drawings, functional or system block diagrams, flow charts, circuit diagrams, design or user documentation, engineering notebooks, schematics, test programs, documented procedures, documented processes, documented flows, devices, software, or firmware, that relate to the function, design, development, manufacture, testing, use, operation, maintenance or repair of any product, apparatus, article of manufacture, process, method or service. "Intellectual Property" shall also include patents, patent applications (including continuations, continuations- in-part, divisions, reissues, reexamined patents and patent applications and extensions thereof), copyrights (whether common law or statutory, registered or unregistered), or trade secrets, residing in the subject matter above. 11.1.2 Grant by Seller. (a) Subject to the terms and conditions of this Agreement Seller will use its best efforts to assist the Company (provided that Buyer shall be responsible for any fees associated therewith) in obtaining the consent of any necessary third party for the use of any Intellectual Property that the Company has placed in public use on, or prior to, the Effective Date and that is presently used by the Company, but excluding any Intellectual Property listed in Schedule 11.22. (b) The above Section 11.1.2(a) sets forth Seller's entire obligation with respect to the Intellectual Property to the Company. Except as specifically provided otherwise in this Agreement or any other agreement between Buyer and Seller, Seller shall have no continuing obligation beyond the Effective Date to provide support of any kind in the Company's use of such Intellectual Property. (c) Buyer agrees and understands that Seller or its Affiliates shall retain ownership of all Intellectual Property owned by Seller or its Affiliates as of the Effective Date. Buyer further agrees and understands that the retained ownership shall include the right of Seller to grant licenses to vendors and customers of Seller, and to other third parties. (d) Additional agreements, if any, between Buyer and Seller regarding possession and use by the Company of computer software that is owned by Seller, or that is licensed by an Affiliate of Seller to Seller, are set forth in Schedule 11.1.2. 11.1.3 Nonassertion. Seller agrees that, with respect to the Intellectual Property that as of the Effective Date the Company owns or controls or under which it has the right to grant licenses, Seller shall not assert against Buyer, or Affiliates of Buyer, or vendees, mediate or immediate, of Buyer or the Company, a claim of infringement, misappropriation or misuse of such Intellectual Property right arising from the Company's activities practiced in the ordinary and normal course of the Business. 11.1.4 Infringement. (a) Notwithstanding any other provision of this Agreement and subject to the representation in Section 11.1.3, Buyer understands that Seller has not made or given, and does not make or give, any warranty as to the value, enforceability, or validity of any Intellectual Property or that the use by the Company of any Intellectual Property under this Agreement will not infringe other intellectual property rights not licensed under this Agreement. (b) Nothing contained in this Agreement shall be construed as an agreement by, or obligation of, Seller to bring or prosecute actions or suits against third parties for infringement or violation of any Intellectual Property licensed hereunder. (c) Seller shall have no obligation to defend, indemnify or hold harmless the Company or Buyer from any damages, costs or expenses resulting from any obligation, proceeding or suit based upon any claim that any activity, subsequent to the Effective Date, engaged in by Buyer, the Company, a customer of Buyer's or the Company's or anyone claiming under Buyer or the Company constitutes direct or contributory infringement or misuse of any intellectual property rights not licensed under this Agreement. (d) Buyer shall be liable for and shall hold Seller and its Affiliates harmless from and against any and all Indemnifiable Losses resulting from any obligation, proceeding or suit based upon any claim that any activity conducted or engaged in, subsequent to the Effective Date, by Buyer, the Company, a customer of Buyer's or the Company's, or anyone claiming under Buyer or the Company constitutes direct or contributory infringement, or misuse, or misappropriation of any intellectual property right of any third party. 11.1.5 Trademark Phaseout; Corporate Name Change. (a) Buyer acknowledges that Seller or its Affiliates are the owners of, and have permitted the Company to use, certain trade names, trade dress, trademarks, service marks, logos and related intangible property (collectively, "Marks") used in connection with the Business, including, without limitation, the items listed on Schedule 11.1.5, and Buyer understands and agrees that the Marks, or any right or license of the Company to the Marks are not being transferred pursuant to this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in the use of the Marks, and Buyer agrees that it shall cause the Company not to use the Marks (or any names or Marks confusingly similar to the Marks) except as expressly set forth in this Section 11.1.5. After the Effective Date, Buyer shall cause the Company to replace all Marks of Seller as soon as possible, but in no event later than one hundred eighty (180) days after the Effective Date for Marks affixed to items with a valid continuing use in the Company's conduct of the Business, including, without limitation, buildings, vehicles, heavy equipment, hard hats, tools, tool boxes, kits (safety and others), signs, manual covers and notebooks. After the Effective Date, Buyer will cause the Company to not use, and will destroy or deliver to Seller, all such items with Marks affixed to them that have no valid continuing use in the Company's conduct of the Business, including items affecting customer or employee relations or items that do not reflect the Company's true identity. Specific items to be destroyed or returned include items with Marks affixed to them including, without limitation, giveaways; order, purchase or materials forms; requisitions; invoices; statements; time sheets/labor reports; bill inserts; stationery; personalized note pads; maps; organization charts; bulletins/releases; sales/price literature; manuals or catalogs; report covers/folders; program materials; and materials such as media contact lists/cards. The one hundred eighty (180) day time period for replacement of Marks affixed to telephone directories that were already published or closed for publication as of the Effective Date shall be extended to the production of replacements for such directories. (b) Within two business days after the Effective Date, Buyer shall take all action necessary to change the corporate name of the Company so as to reflect that the Company is no longer an Affiliate of Seller. 11.1.6 Goodwill. Buyer recognizes the value of the goodwill associated with the Marks, and acknowledges that the Marks and all rights therein and the goodwill pertaining thereto belong exclusively to Seller, and that the Marks have a secondary meaning in the minds of the public. 11.1.7 Quality of Goods. Buyer agrees that the conduct of the Business after the Effective Date by the Company using the Marks shall be provided in accordance with all applicable federal, state and local laws, and that the same shall not reflect adversely upon the good name of Seller, and that the conduct of the Business will be of a standard and skill equivalent to that employed prior to the Effective Date. 11.1.8 Seller's Remedies for Unauthorized Use of Marks. Buyer acknowledges that the Company's failure to cease use of the Marks as provided in this Agreement, or its improper use of the Marks, will result in immediate and irreparable damage to Seller. Buyer acknowledges and admits that there is no adequate remedy at law for such failure to terminate use of the Marks, or for such improper use of the Marks, and Buyer agrees that in the event of such failure or improper use, Seller shall be entitled to equitable relief by way of temporary restraining order or injunction or any other relief available under this Agreement. 11.2 Effect of Due Diligence and Related Matters. Buyer represents that it is a sophisticated entity that was advised by knowledgeable counsel and, to the extent it deemed necessary, other advisors in connection with this Agreement and by the Effective Date will have conducted its own independent review and evaluation of the Company. Accordingly, Buyer covenants and agrees that (i) except for the representations and warranties set forth in this Agreement and the Schedules (and the Financial Statements, the Additional Financial Statements, and actuarial reports required pursuant to the Employee Transfer Agreement), Buyer has not relied and will not rely upon any document or written or oral information furnished to or discovered by it or its representatives, (ii) there are no representations or warranties by or on behalf of Seller or its Affiliates or representatives except for those expressly set forth in this Agreement and in any other written agreement entered into with Seller or any of its Affiliates in connection with this Agreement, and (iii) to the fullest extent permitted by law, Buyer's rights and obligations with respect to all of the foregoing matters will be solely as set forth in this Agreement or in such other written agreements. 11.3 Confidentiality. Whether or not the Closing occurs, the parties hereto and their respective officers, directors, employees and representatives will comply with the Confidentiality Agreement, the provisions of which are expressly incorporated herein in their entirety by this reference. 11.4 Additional Financial Statements. Seller shall deliver to Buyer the following financial statements of the Company (collectively, the "Additional Financial Statements") within the time periods set forth below: (a) Within forty-five (45) days after the Execution Date for the month of October, 1994, and within forty-five (45) days after the close of each month beginning with November, 1994, and continuing up to and including the month next preceding the month in which the Closing occurs, a balance sheet and income statement as of and for such month, and as of and for the year-to-date period then ended; and (b) By April 30, 1995, a balance sheet for the year ended December 31, 1994, and an income statement and statement of cash flows for 1994, together with the auditor's report thereon. 11.5 Conduct of Business. From the Execution Date until the Effective Date, except as described in Section 11.22, Seller shall cause the Company to conduct the Business in the ordinary course in accordance with prudent business judgment and consistent with past practice and policy and to (i) preserve the Business as an ongoing business, (ii) keep available to the Business its services and the services of its Affiliates at least to the same extent as such were generally available from January 1, 1994 through the Execution Date and are available on the date hereof, (iii) not take any action that would jeopardize any material and beneficial contractual relationships with persons having business dealings with the Business, and (iv) preserve all of the Business' tariffs, certificates, licenses, authorizations and other rights. From the Execution Date to the Effective Date, except as described in Section 11.22 and except with the prior written consent of Buyer, which the Buyer shall not unreasonably withhold: (a) The Business will be conducted in substantially the same manner as it is presently being conducted on the Execution Date. Seller will cause the Company to refrain from entering into any material transaction or contract other than in the ordinary course of business and to not make any material change in the general nature of the Business or in its methods of management, marketing, accounting or operations (including repair and maintenance functions). (b) Seller will cause the Company not to (i) create or incur any indebtedness for borrowed money or otherwise, except in the ordinary course of business, (ii) enter into or terminate, as lessor or lessee, any Lease other than in the ordinary course of business, (iii) create any liens or other security interest, except in the ordinary course of business, or (iv) change in any material respect or terminate any of the insurance policies referred to in Section 9.1.14, unless equivalent coverage is obtained. (c) Except as listed or described on Schedule 11.5(c), and except for dispositions of salvaged property that has been replaced in accordance with the plans attached in Schedule 11.5(c), Seller will cause the Company not to sell, lease, dispose of or otherwise transfer, or make any contract for the sale, lease, disposition or transfer of any Property other than, with respect to any individual item (other than vehicles) having a value of less than Seventy-Five Thousand Dollars ($75,000.00) and with respect to all items (other than vehicles) the aggregate value of which shall not exceed Two Hundred Fifty Thousand Dollars ($250,000.00). (d) Without prior reasonable notification to Buyer, or unless otherwise expressly directed by the PUC, Seller will cause the Company not to (i) institute any proceeding with respect to, or otherwise change, amend or supplement any tariff or (ii) enter into or agree to any stipulation, order, or decree of, or settlement with the PUC that, in the case of (i) or (ii) above, would have a material adverse effect on the revenue, authorized return on equity or earnings of the Business. Seller will cause the Company not to file any application, petition, motion, brief, testimony, settlement agreement or other pleading in any proceeding before the PUC, or before the FCC (except for filings on behalf of all of Seller's local exchange telephone companies) or appeals related thereto, unless Seller shall have first provided Buyer with a copy of the same and provided Buyer with a reasonable opportunity to comment to Seller with respect thereto. If Buyer determines it should intervene in any proceeding before the PUC in which Buyer's position is or may be different from the Seller's or the Company's, Seller will not, and will cause the Company not to, without waiving any other rights related thereto, oppose Buyer's intervention in such proceeding. (e) Except as listed on Schedule 11.5(e) or as required by law or in the ordinary course of business of the Company or pursuant to any Contract, Seller will cause the Company not to (i) enter into or amend any employment agreement with any individual that will become a Transferred Employee, or enter into or amend any union agreement or commitment (including any new commitment to pay retirement or other benefits, or amendments to the Company's retirement plans), (ii) effect any net increase over five percent (5%) since the Execution Date in the number of employees of the Company who will become Transferred Employees, or (iii) increase over 5% the benefit provided under any plans concerning employee benefits or increase the general rates of compensation of the Transferred Employees, or change the manner by which compensation (including fringe benefits) is determined and paid to any Transferred Employee. (f) Seller will cause the Company not to engage in any intercompany transactions with any Affiliate thereof, except for transactions consistent with past practice. (g) Seller shall cause the Company to maintain the Property in good repair, order and condition, reasonable wear and use excepted, and shall maintain the Company Books and Records in the usual, regular and ordinary manner on a basis consistent with prior years. (h) Seller will cause the Company not to make any commitment to take any actions prohibited by the provisions of this Section 11.5. (i) Seller will cause the Company not to issue, sell, purchase or redeem, to grant any option or right to purchase, or to otherwise agree to issue, sell, purchase or redeem any shares of its capital stock or any other securities. (j) Seller will cause the Company not to amend its Articles of Incorporation or Bylaws. (k) Seller will not permit the Company to merge or consolidate with any other person or entity or acquire a material amount of assets of any other person or entity. 11.6 Construction Projects and Capital Budget. By December 31, 1994, Buyer and Seller shall have met and reviewed the Company's construction and other capital expenditure plans for the calendar years 1994 and 1995 (or such later date agreed to by the parties). The construction and capital expenditure plans which Buyer shall have approved (both as to the type of project and the dollars expended) shall be set forth on Schedule 11.6, and the parties agree that when such expenditures have been incurred they will constitute an addition to a component of Net Telecommunications Plant thereby becoming subject to Section 3.2(c). Seller agrees to cause the Company to use its best efforts substantially to complete such plans within the projected time schedules; provided, that the Company will not incur any liability for unbudgeted expenditures in excess of $200,000.00 in the aggregate without the prior written consent of Buyer. All construction work that is in progress on the Effective Date will be accounted for by identifying and accruing all associated time reporting, material invoices or contractor invoices inputted or received on or before the Effective Date, and all payments therefor shall be the responsibility of the Company and will constitute an addition to a component of Seller's Net Telecommunications Plant thereby becoming subject to Section 3.2(c). 11.7 Further Assurances. After the Closing, Seller will furnish to Buyer such other instruments and information about the Company as Buyer may reasonably request in order to convey to Buyer title to the Shares, to be delivered from time to time upon Buyer's reasonable request. 11.8 [INTENTIONALLY DELETED] 11.9 Risk of Loss Prior to the Effective Date. If any material damage, loss or destruction of any sort (including, without limitation, by theft, unauthorized use, fire, act of God or condemnation) occurs prior to the Effective Date to any of the tangible properties that constitute the Property, Seller shall promptly notify Buyer thereof (the "Casualty Notice"). (a) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace such damaged, lost or destroyed Properties (the "Damaged Property") will exceed Three Million Six Hundred Thirty One Thousand Seven Hundred Dollars ($3,631,700.00), either party may, by written notice to the other party (the "Casualty Termination Notice") within thirty (30) days after the date of delivery of the Casualty Notice, terminate this Agreement. (b) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace the Damaged Property will not exceed Three Million Six Hundred Thirty One Thousand Seven Hundred Dollars ($3,631,700.00), or the Casualty Termination Notice is not given by either party, then Seller, within forty-five (45) days after the damage or destruction, shall agree in writing to take all action, and to cause the Company to take all action, (i) to repair or replace, prior to the Effective Date, at the Company's sole cost and expense, the Damaged Property, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will obtain as a substitute therefor an equivalent item or items of Property if the Damaged Property is personal property, and Real Property if the Damaged Property is Real Property, but only if such substituted personal property or Real Property is satisfactory to Buyer, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property. (c) If Seller fails to make an election pursuant to Section 11.9(b)(i) or (ii), the Buyer shall have the option, within thirty (30) days after the initial forty-five (45) day period, to elect one of the following options: (i) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will remain part of the Property, the adjustment to the Purchase Price contemplated by Section 3.2(a)(1) will be made, and the Company will be entitled to make, all claims related to the Damaged Property and to receive and retain any proceeds of insurance with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property, and the Purchase Price Adjustment contemplated by Section 3.2(a)(2) will be made. (d) Notwithstanding the other provisions of this Section 11.9, if the time periods pursuant to this Section 11.9 continue beyond the Effective Date or if Seller has not fully performed its obligations pursuant to Section 11.9(b)(i) or 11.9(b)(ii) prior to the Effective Date (or otherwise made reasonably satisfactory arrangements with Buyer), either party hereto may elect to postpone the Closing and the Effective Date, until the expiration of any such periods or the full performance of such obligations, which election shall be binding upon all parties hereto. 11.10 Settlements and Cost Studies. The parties agree that, with respect to all toll revenues, settlements, pools, separations studies, Universal Service Fund payments or similar activities, Seller shall receive the benefit or suffer the burden of the results of any such activities that are related to the conduct of the Business or the ownership or operation of the Company on or before the Effective Date. 11.11 [INTENTIONALLY DELETED] 11.12 Other Contracts. 11.12.1 Telephone Directories Published by ALLTEL Publishing Corporation. The Directory Publishing Agreement dated as of November 15, 1994, by and between Company and ALLTEL Publishing Corporation (the "Directory Publishing Agreement") is an Excluded Contract on Schedule 11.22(h), except as hereinafter provided. Within thirty days after the Execution Date, Buyer shall cause its existing directory provider to indicate in writing whether it will provide directory production services to the Company, as of the Effective Date (or as of such later date as described below) with regard to all of the Exchanges on the same terms and conditions as it is presently providing such services to Buyer, and Buyer shall inform Seller within such thirty day period of Buyer's existing telephone directory provider's written intention. If Buyer's existing directory provider's indication is that it will not provide directory publication services for all of the Exchanges on the same terms and conditions that it is presently providing such services to Buyer, then the Directory Publishing Agreement shall be deemed to become a Contract for the purposes of this Agreement. Promptly, thereafter, the Buyer and ALLTEL Publishing Corporation shall agree to meet in good faith to negotiate any necessary amendments to the Directory Publishing Agreement, to be effective as of the Effective Date, to provide for a retention rate equal to or greater than the higher of (x) 60% or (y) the retention rate provided for in any substantially similar directory publishing agreement between ALLTEL Publishing Corporation and a non-Affiliate of ALLTEL Publishing Corporation that was entered into within 18 months prior to the Effective Date. If Buyer's existing directory provider indicates that it will provide directory publication for all the Exchanges, as provided above, the Directory Publishing Agreement shall remain in effect as to the directory of each of the Exchanges for which (i) the directory is scheduled to be or is published prior to the Effective Date or (ii) the canvass for the directory has begun prior to the Effective Date and it is scheduled to be published after the Effective Date. Under such circumstances, the Buyer's existing directory provider will not begin providing directory publication services for such Exchange until canvass and production begins for the next succeeding directory related to such Exchange. 11.12.2 Telephone Directories-General. If Buyer's existing directory provider indicates that it will provide directory publication for all of the Exchanges, as provided in Section 11.12.1 of this Agreement, Seller and Buyer agree to cooperate and to use their best efforts as follows: (a) Seller will deliver to Buyer on a date mutually agreeable to Buyer and Seller, copies of all records, documents, and materials of the Seller even if in the possession of a third party (the "Directory Records") related to directories of the Exchanges that are published by Seller or its Affiliate. (b) Except as otherwise agreed between the parties, Seller and its Affiliate shall have no responsibility for the canvass and production functions of any directories related to the Exchanges that are scheduled to begin canvassing and publication after the Effective Date. (c) Seller and Seller's Affiliates and Buyer shall provide the other reasonable access to such documentation, reports and accounting records related to directory production as may be necessary to insure a proper transition of directory publication in accordance with the terms of such agreements in effect on the Effective Date. (d) As promptly as practicable after receipt by Seller of Buyer's existing directory provider's indication that it will provide directory publication services for all of the Company's Exchanges, Seller or its Affiliate (ALLTEL Publishing Corporation), and Buyer will meet to negotiate in good faith to agree upon the services or work, if any, that Seller or its Affiliate (ALLTEL Publishing Corporation) will provide, and the compensation that the Buyer will pay for such services and work, related to any directories that will be canvassed and published by Buyer's existing directory provider. 11.12.3 B&C Agreements. Seller and Buyer shall, prior to the Closing, use their best efforts to allow Buyer to negotiate, on behalf of the Company, a billing and collection agreement ("B&C Agreement") reasonably satisfactory to Buyer with each interexchange carrier ("IXC") and each local exchange carrier ("LEC") for which the Company provides, on the Execution Date, billing and collection services in any Exchange (each such IXC or LEC is hereinafter referred to as a "Carrier"). Seller and Buyer shall cooperate with each other and make available to each other all documents and records relevant and necessary to allow the Company to finalize negotiations of B&C Agreements, as necessary, and to perform such B&C Agreements after the Effective Date. 11.12.4 Equipment Manufacturers. Seller shall use its best efforts to assist Buyer, on behalf of the Company, in obtaining a written agreement with such equipment manufacturers (such as Northern Telecom and Stromberg-Carlson; collectively "Equipment Manufacturers") as Buyer may request, covering such software license agreements and other agreements as are necessary to enable the Company after the Effective Date to operate the equipment manufactured and sold by the Equipment Manufacturers included in the Property in substantially the same manner as operated by the Company prior to the Effective Date. The agreements shall contain material terms and conditions (including license and warranty, but not necessarily including pricing) that are substantially the same as those provisions in the corresponding agreements between the Company and the Equipment Manufacturers as of the Effective Date. Buyer understands and agrees that the price and fee provisions of such agreements will be as negotiated between Buyer, on behalf of the Company, and the Equipment Manufacturers. The above obligation of Seller shall be expressly conditioned upon the acceptance by Buyer, on behalf of the Company, of all material obligations accepted by Seller in such corresponding agreements. It is the responsibility of Buyer, on behalf of the Company, to enter into appropriate agreements with the Equipment Manufacturers in respect of service, support, training, maintenance, and future development (hardware and software) for the Property, such agreements to include terms and conditions agreed to between Buyer, on behalf of the Company, and the Equipment Manufacturers. Seller agrees to assist Buyer, on behalf of the Company, in obtaining the Equipment Manufacturers' consent, if necessary, to enable the Company after the Effective Date to avail itself of all training credits remaining at the Effective Date on Property furnished by the Equipment Manufacturers. 11.12.5 Integrated Contracts. Seller and Buyer acknowledge that certain agreements between the Company (or Affiliates of the Company) and third parties relate both to the Property and the Excluded Property. Seller agrees to use its best efforts to assist Buyer in obtaining, on behalf of the Company, contractual arrangements with such third parties relating to the Property, which arrangements will be reasonably satisfactory to Buyer; provided that neither the Company nor any Affiliate of the Company shall be obligated under this Section 11.12.5 to make any payment to any such third party unless such payment is expressly provided for in such agreement. 11.13 Retention of Books and Records. After the Effective Date, Seller will retain the Retained Books and Records, and Buyer will cause the Company to retain the Company Books and Records, in either case, until the shorter of the date that other party consents in writing to their destruction or the seventh anniversary of the Effective Date. Each party shall provide full and free access to the Company Books and Records and Retained Books and Records, as the case may be, to duly authorized representatives of the other party at any time during regular business hours for the period in which such Books and Records are required to be retained. Either party may make copies of any such Books and Records as it deems desirable, at its own expense. After the Effective Date, upon reasonable notice, Seller shall provide Buyer and the Company with reasonable assistance in locating any of the Company's Original Cost Documents which Buyer may reasonably request after the Effective Date. 11.14 [INTENTIONALLY DELETED] 11.15 [INTENTIONALLY DELETED] 11.16 Real Property Title Insurance. Within sixty (60) days after the Execution Date, Seller shall deliver to Buyer copies of all existing title insurance policies and surveys covering the Real Property. Thereafter, no later than sixty (60) days before the Effective Date, Seller shall deliver (at its expense) to Buyer a preliminary title binder (on a standard form reasonably acceptable to Buyer), issued by Lawyers Title Insurance Company or another title insurance company reasonably acceptable to Buyer, with respect to all Real Property included in the Property and in which the Company purports to own fee title. Such title binders shall be in form, substance and amount reasonably satisfactory to Buyer (ALTA Owners Policies where available but based upon boundary surveys as set forth below) and shall be current as of a date no earlier than ninety (90) days prior to the Effective Date. The parties agree that the dollar amount of title insurance to be inserted on each policy shall equal the dollar value set forth on the Company's continuing property records list as of December 31, 1993 for land and buildings. Such title binders shall reflect that the Company is vested with good, fee simple, marketable and insurable title to such Real Property, subject only to (i) standard printed exceptions; (ii) inchoate liens for current taxes and assessments not yet delinquent, (iii) standard utility and roadway easements, covenants and restrictions, whether or not of record, that do not individually or in the aggregate materially detract from the value, or impair the use of the Real Property affected thereby, (iv) existing zoning or similar laws or ordinances that do not interfere with the operation of the Business, (v) Leases, (vi) survey exceptions that do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby and (vii) standard mineral rights exceptions (collectively, the "Permitted Exceptions"). If a preliminary title binder indicates an exception other than a Permitted Exception that would impair marketability in any material respect, Seller shall, at its expense, cause such exception to be removed on or before the Effective Date. With respect to each parcel of Real Property covered by a preliminary title binder, Seller shall deliver to Buyer (at Seller's expense and on or prior to sixty (60) days before the Effective Date) a certified current boundary survey showing (x) access to the property and (y) all improvements on the property and any encroachments across the property line by any improvements of the Company or owners of adjacent property and (at Seller's expense and within sixty (60) days after the Effective Date) owner's title insurance policies for the Real Property (ALTA Owners Policies where available but based upon boundary surveys as set forth above). 11.17 [INTENTIONALLY DELETED] 11.18 [INTENTIONALLY DELETED] 11.19 Customer Notification. For a period of at least two (2) months prior to the Effective Date, Seller will cause the Company to permit Buyer to insert preprinted single-page subscriber education materials into billing documentation to be delivered during such period to subscribers affected by the sale. All reasonable costs and expenses related to such insertion and delivery shall be borne and paid by the Company. Other means of notifying subscribers may be employed by either party, at the expense of the initiating party, but in no event shall any notification be initiated without the prior consent of the other party (which consent shall not be unreasonably withheld) or earlier than three (3) months prior to the Effective Date. 11.20. Delivery of Schedules. Except as otherwise provided in Section 11.24, Seller shall have a period of ten (10) business days after the Execution Date (the "Supplemental Schedule Period") to supplement or otherwise modify the Schedules to this Agreement by delivering to Buyer, within the Supplemental Schedule Period, a substitute schedule or schedules (collectively, the "Supplemental Schedules"), bearing the legend "This Schedule _, dated _______________, is executed and delivered in accordance with Section 11.20 of the Stock Purchase Agreement, dated as of November 28, 1994 which shall be duly executed by Seller and submitted to Buyer. Buyer shall have a period of ten (10) business days after the expiration of the Supplemental Schedule Period to review the Supplemental Schedules and within such ten (10) business day period notify Seller in writing (which writing may be transmitted by facsimile) of any objections thereto. If Buyer's objections are not resolved to the satisfaction of Buyer within five (5) days of such notification, Buyer may terminate this Agreement, effective immediately upon written notification of that termination. In the event that Buyer does not terminate this Agreement, then Buyer waives all rights to a claim of indemnification based upon or as the result of any changes in the Schedules as reflected in the Supplemental Schedules. For purposes of determining breaches of representations, warranties or covenants hereunder, the Supplemental Schedules provided by Seller shall be deemed Schedules for all purposes. 11.21 FCC Tariffs. In connection with obtaining consent to the transfer of control of the Company's FCC Licenses, as described in Section 5.4, during the period from the Execution Date until the Effective Date, neither party shall file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the Natural Exchange Carrier Association Tariff FCC No. 5; provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 11.22 Pre-Effective Date Balance Sheet Transactions. Seller shall take, and shall cause the Company to take, all action necessary to effect, on or prior to the Effective Date, the following transactions: (a) The Company shall dispose of, transfer, dividend or otherwise cause to be zero as of the Effective Date, all "Cash" (item 1 - Assets on the Company's Balance Sheet). (b) All "Accounts Receivable-Affiliates" (item 4 - Assets on the Company's Balance Sheet) and "Dividends Receivable-Affiliates" (item 7 -- Assets on the Company's Balance Sheet) (collectively, "Affiliate Receivables") shall be netted against all "Advances and Notes-Parent Company" (item 2 - Liabilities on the Company's Balance Sheet), "Accounts Payable-Affiliates" (item 5 - Liabilities on the Company's Balance Sheet), "Dividends Accrued - Affiliates" (item 10 - Liabilities on the Company's Balance Sheet) and "Interest Accrued - Alltel" (item 12 - Liabilities on the Company's Balance Sheet) (collectively, "Affiliate Payables"). To the extent there is a net excess of Affiliate Receivables, a cash payment or payments will be made to the Company which cash will then be disposed of by the Company, and to the extent there is a net excess of Affiliate Payables, such Affiliate Payables will be contributed to the Company as a contribution to the Company's capital, and take any other action necessary, such that the balances of each of the Affiliate Receivable and Affiliate Payable accounts, and of any other intercompany accounts, as of the Effective Date will be zero. (c) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Excess Cost Over Equity" (item 13 - Assets on the Company's Balance Sheet) and all "Investments in Affiliates" (item 14 - Assets on the Company's Balance Sheet). (d) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Other Investments At Cost" (item 15 - Assets on the Company's Balance Sheet), except to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and all "Unamortized Debt Expense" (Item 16 - Assets on the Company's Balance Sheet), except to the extent such unamortized debt expense relates to debt which is to remain outstanding immediately after the Effective Date. (e) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Regulatory Assets" (item 18 - Assets on the Company's Balance Sheet). (f) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, (i) all "Other Current Assets" (item 10 - Assets on the Company's Balance Sheet) to the extent such other current assets represent cash accounts, and (ii) all "Other Non-Current Assets" (item 19 - Assets on the Company's Balance Sheet). (g) The Company shall pay off or otherwise cause to be zero as of the Effective Date all Total Long-Term Debt, to the extent that such debt is not to remain outstanding immediately after the Effective Date. (h) The Company shall dispose of, transfer or assign, the Excluded Books and Records, the Marks listed on Schedule 11.1.5, the Company's interest in any business other than the Business, and those other assets, including agreements and contracts ("Excluded Contracts"), set forth on Schedule 11.22(h). (i) The balance in the Company's Total Deferred Credits shall be zero as of the Effective Date except for that portion of the Company's "Other Deferred Credits" (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities associated with the requirements of Financial Accounting Standard 106 attributable to Transferred Employees. (j) The balance in the Company's Taxes Accrued-Federal Income (item 8-Liabilities on the Company's Balance Sheet) shall be zero as of the Effective Date. (k) The balance in the Company's Notes Payable - Other (item 3 - Liabilities on the Company's Balance Sheet), Commercial Paper Outstanding (item 4 - Liabilities on the Company's Balance Sheet), Other Current Liabilities (item 14 - Liabilities on the Company's Balance Sheet) and Dividends Accrued - Other (item 11 - Liabilities on the Company's Balance Sheet) accounts shall be zero as of the Effective Date. (l) The balance in the Company's Current Maturities of Long-Term Debt (item 1 - Liabilities on the Company's Balance Sheet) and Interest Accrued - - Other (item 13 - Liabilities on the Company's Balance Sheet), to the extent each of such amounts relate to debt which is not to remain outstanding immediately after the Effective Date, shall be zero as of the Effective Date. 11.23 Taxes. 11.23.1 Certain Tax Matters. (a) Except as otherwise expressly provided in this Section 11.23.1, Buyer and Seller will share equally all sales, use, transfer, stamp, conveyance, value added or other similar taxes, duties, excise or governmental charges imposed by any taxing jurisdiction (but not including Income Taxes, as hereinafter defined, which shall be paid by Seller), and all recording or filing fees, notarial fees and other similar costs of Closing with respect to the transfer of the Shares or otherwise on account of this Agreement or the transactions contemplated herein (but not including any transactions contemplated by this Agreement to be effected pursuant to the transactions contemplated by Section 11.22 or otherwise between Seller and the Company, which shall be paid by Seller). (b) Seller will cause to be included in its consolidated federal income Tax Returns (and the state income Tax Returns of any state that permits consolidated, combined or unitary income Tax Returns, if any) for all periods ending on or before or which include the Effective Date, all items of income, gain, loss, deduction, and credit or other items (collectively "Tax Items") attributable to the operations of the Company during such periods or portions thereof determined by an interim closing of the books as of the Effective Date. Seller will sign and file timely all such Tax Returns with the appropriate United States, state and local Governmental Authorities. Buyer will provide or cause to be provided any consent request to file such Tax Returns on behalf of the Company. Seller will make all payments shown thereon as owing with respect to any such Tax Returns. (c) With respect to any taxable period that would otherwise include but not end on the Effective Date, to the extent permissible pursuant to applicable Law, Seller will, and Buyer will cause the Company to, take all steps as are or may be reasonably necessary, including without limitation the filing of elections or returns with applicable taxing authorities, to cause such period to end on the Effective Date. (d) Seller will prepare or cause to be prepared all state Income Tax Returns (other than Tax Returns described in Section 10.5.1(b)) for the Company required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period that ends on or before the Effective Date that have not been filed prior to the Effective Date. Seller will sign and file timely all such Tax Returns with the applicable Governmental Authority and make all payments shown thereon as owing with respect to such Tax Returns. If requested by Seller, Buyer will deliver or cause the Company to deliver to Seller a power of attorney authorizing Seller to sign such Tax Returns. Notwithstanding the foregoing, if Seller is legally precluded from filing any such Tax Return, Buyer shall sign such Tax Return. Seller shall deliver a copy of each such Tax Return to Buyer within 10 days prior to filing such Tax Return. (e) Except as otherwise provided in Section 11.23.1(b) or Section 11.23.1(d), Seller will have no obligation to file any Tax Return for the Company, and Buyer will prepare and file or cause to be prepared and filed all Tax Returns for the Company that are required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period which begins before and ends after the Effective Date. In the case of Income Taxes, Buyer shall cause such Tax Return to be prepared and shall cause to be included in such Tax Return all Tax Items required to be included therein. Buyer shall determine (by an interim closing of the books as of the Effective Date) the portion, if any, of the Income Tax due with respect to the period covered by such Tax Return which is attributable to the Company for a Pre- Effective Date Taxable Period (as hereinafter defined). At least 15 days prior to the due date (taking into account all extensions of due date) of such Tax Return, Buyer shall deliver to Seller a copy of such Tax Return and of its determinations. If the amount reflected as a liability for Income Taxes on the Tax Schedule less Prior Reimbursements (as hereafter defined) is less than the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period, Seller shall pay to Buyer the amount of such shortfall not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). If the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period is less than the amount reflected as a liability for Income Taxes on the Tax Schedule, to the extent not previously paid to Seller or the applicable Governmental Authority by the Company and subject to Section 11.23.1(f), Buyer will pay to Seller the amount of such excess not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). As used in this Agreement, "Pre-Effective Date Taxable Period" means all or a portion of (i) any taxable period up to and including the Effective Date or (ii) any taxable period with respect to which the Tax is computed by reference to Tax Items, assets, capital or operations of the Company arising on or before, or existing as of, the Effective Date. As used in this Agreement, "Income Taxes" means all Taxes measured in whole or in part on or by net income imposed by the United States, any state of the United States or any political subdivision thereof, and will include any such Taxes even if denominated as franchise taxes. (f) The amount paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) will not exceed (i) the amount reflected as a liability for Income Taxes on the Tax Schedule, reduced by (ii) Prior Reimbursements. As used in this Agreement, "Prior Reimbursements" means all amounts reflected as a liability for Income Taxes on the Tax Schedule that have previously been (A) paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) or (B) paid by Buyer or the Company to Seller or to the applicable Governmental Authority with respect to Income Taxes properly attributable to Pre-Effective Date Taxable Periods that are reflected on Tax Returns described in Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e). (g) In order to assist Seller in the preparation of all Tax Returns that Seller is required to prepare pursuant to Section 11.23.1(b) and 11.23.1(d), Buyer will provide or cause to be provided to Seller access to such information and personnel as Seller may require in order to properly prepare such Tax Returns. (h) Buyer will pay or cause to be paid to Seller all refunds or credits of Taxes (including any interest received from or credited thereon by the applicable Governmental Authority) received by Buyer after the Effective Date and attributable to Taxes paid by Seller or the Company (or any predecessor or Affiliate thereof) with respect to any Pre-Effective Date Taxable Period (or, in the cases of Taxes other than Income Taxes, taxable periods or portions thereof ending on or before the Effective Date), net of any Taxes imposed upon Buyer or the Company by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). Such payment will be made to Seller within 30 days after receipt of any such refund from, or allowance of such credit by, the relevant Governmental Authority. (i) If after the Effective Date Seller or any affiliate receives or is credited with a refund of any Tax attributable to the utilization or carryback of any Tax Item of the Company arising after the Effective Date, Seller shall pay to Buyer an amount equal to the amount of such refund together with any interest received from or credited thereon the applicable Governmental Authority, net of any Taxes imposed upon Seller or any affiliate by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). (j) Buyer is eligible to and will make a timely and effective election under Section 338(g) of the IRC (and any comparable provision of state or local Law) with respect to the purchase of the Shares hereunder. Both Seller, as the common parent of the affiliated group of corporations (which includes the Company) that file a consolidated federal income Tax Return and Buyer are eligible to and will make a timely and effective election under Section 338(h)(10) of the IRC (and any comparable provision of state or local Law) with respect to such purchase (collectively, together with the elections under Section 338(g) of the Code and any comparable provision of state or local Law, the "Section 338(h)(10) Elections"). To facilitate such election, within thirty (30) days of the Closing, Buyer will deliver to Seller a completed Internal Revenue Service Form 8023 and the required schedules thereto and any similar forms under applicable state or local Law (the "Forms") with respect to Buyer's purchase of the Shares, which Forms shall have been duly executed by an authorized person for Buyer. Provided that the information on such Forms is, in the reasonable determination of Seller, correct and complete in all material respects, Seller will, at the Closing, cause such Forms to be duly executed by an authorized person for Seller and deliver such Forms to Buyer. If any changes or supplements are required to the Forms as a result of information that is first available after the Closing, Seller and Buyer will promptly agree upon and make such changes. Buyer will timely file the Forms, and any required supplements thereto, in the manner prescribed by Treasury Regulation 1.338(h)(10)-1T or the corresponding provisions of applicable state or local Law, and will provide written evidence to Seller that it has done so. Buyer and Seller agree that neither of them will take, or permit their affiliates to take, any action to modify or revoke the elections contained in or the content of any Forms without the express written consent of the other. (k) Seller agrees that it will cause any and all tax sharing agreements between Seller and the Company to be terminated on or prior to the Effective Date. 11.23.2 Tax Indemnifications. (a) Seller hereby agrees to protect, defend, indemnify and hold harmless Buyer and the Company from and against, and agrees to pay, all Taxes imposed and all indemnifiable Losses incurred (all herein referred to as "Tax Losses") as a result of: (i) A proposed adjustment, notice of deficiency Authority, or assessment by, or any obligation owing to, any Governmental Authority for: (A) Any income Taxes of the Company attributable to any Pre- Effective Date Taxable Period; (B) Any Taxes other than Income Taxes of the Company attributable to any taxable period or portion thereof ending prior to the Effective Date; (C) Any Taxes of any corporation (other than the Company) that (i) is or was a member of any affiliated group of corporations of which the Company was a member at any time prior to the Effective Date or (ii) joined in the filing of a combined or unitary Tax Return with the Company on or prior to the Effective Date; (D) Any Taxes resulting from the Section 338(h)(10) Elections; and (E) Except as otherwise provided in Section 11.23.1(a), any Taxes attributable to the transactions contemplated by this Agreement; and (ii) Any breach of any representation, warranty or covenants of Seller under this Agreement. (b) Buyer agrees to protect, defend, indemnify and hold harmless Seller from and against, and agrees to pay, all Tax Losses incurred as a result of: (i) A proposed adjustment, notice of deficiency, or assessment by, or any obligation owing to, any Governmental Authority for any Taxes of the Company which Taxes are not attributable to any Pre-Effective Date Taxable Period; and (ii) Any breach of any representation, warranty or covenant of Buyer under this Agreement. (c) (i) If a proposed adjustment shall be made by any Governmental Authority that, if successful, would result in the indemnification of a party under this Section 11.23.2 (referred to herein as a "Tax Indemnified Party"), the Tax Indemnified Party shall promptly notify the party obligated under this Section 11.23.2 to so indemnify (referred to herein as the "Tax Indemnifying Party") in writing of such fact. (ii) The Tax Indemnified Party shall take such action in connection with contesting such claim as the Tax Indemnifying Party shall reasonably request in writing from time to time, including the selection of counsel and experts and the execution of powers of attorney, provided that (A) within 30 days after the notice described in Section 11.23.2(c)(i) has been delivered (or such earlier date that any payment of Taxes is due by the Tax Indemnified Party but in no event sooner than 5 days after the Tax Indemnifying Party's receipt of such notice), the Tax Indemnifying Party requests that such claim be contested, (B) the Tax Indemnifying Party shall have agreed to pay the Tax Indemnified Party all costs and expenses that the Tax Indemnified Party incurs in connection with contesting such claim, including, without limitation, reasonable attorneys' and accountants' fees and disbursements, and (C) if the Tax Indemnified Party is requested by the Tax Indemnifying Party to pay the Tax claimed and sue for a refund, the Tax Indemnifying Party shall have advanced to the Tax Indemnified Party, on an interest-free basis, the amount of such claim. The Tax Indemnified Party shall not make any payment of such claim for at least 30 days (or such shorter period as may be required by applicable Law) after the giving of the notice required by Section 11.23.2(c)(i), shall give to the Tax Indemnifying Party any information reasonably requested relating to such claim, and otherwise shall cooperate with the Tax Indemnifying Party in good faith in order to contest effectively any such claim. (iii) Subject to the provisions of Section 11.23.2(c)(ii), the Tax Indemnified Party shall enter into a settlement of such contest with the applicable Governmental Authority or prosecute such contest to a determination in a court or other tribunal of initial or appellate jurisdiction, all as the Tax Indemnifying Party may request. (iv) If, after actual receipt by the Tax Indemnified Party of an amount advanced by the Tax Indemnifying Party pursuant to Section 11.23.2(c)(ii)(B), the extent of the liability of the Tax Indemnified Party with respect to the claim shall be established by the final judgment or decree of a court or other tribunal or a final and binding settlement with an administrative agency having jurisdiction thereof, the Tax Indemnified Party shall promptly repay to the Tax Indemnifying Party the amount advanced to the extent of any refund received by the Tax Indemnified Party with respect to a claim together with any interest received thereon from the applicable Governmental Authority and any recovery of legal fees from such Governmental Authority, net of any Taxes as are required to be paid by the Tax Indemnified Party with respect to such refund, interest or legal fees (calculated at the maximum applicable statutory rate of Tax without regard to any other Tax Items). Notwithstanding the foregoing, the Tax Indemnified Party shall not be required to make any payment hereunder before such time as the Tax Indemnifying Party shall have made all payments or indemnities then due with respect to the Tax Indemnified Party pursuant to this Agreement. (v) Promptly after a final determination the Tax Indemnifying Party shall pay to the Tax Indemnified Party the amount of any Tax Losses to which the Tax Indemnified Party may become entitled by reason of the provisions of this Section 11.23.2. (d) Anything to the contrary in this Agreement notwithstanding, the representations, warranties, covenants, agreements, rights and obligations of the parties hereto with respect to any Tax covered by this Agreement shall survive the Effective Date and shall not terminate until sixty days after the expiration of the statute of limitations (including extensions) applicable to such Tax. 11.24 Post-Execution Lease and Contract Review. Buyer shall have a period of forty-five (45) calendar days after the Execution Date to review the Leases and Contracts listed on Schedules 9.1.9 and 9.1.13 respectively, and to notify Seller in writing (which writing may be transmitted by facsimile) of the identity of those Leases and Contracts that Buyer reasonably believes are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur. If Buyer does not notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Buyer shall be deemed to have agreed that none of the Leases and Contracts which are listed on Schedules 9.1.9 and 9.1.13 require consent, in accordance with Section 7.1.6, before the Effective Date can occur. If Buyer does notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Seller shall have a period of ten (10) business days upon receipt of such notification to notify Buyer in writing (which writing may be transmitted by facsimile) of any objections thereto. Thereafter, Buyer and Seller shall negotiate in good faith and agree in writing as to the identity of those Leases and Contracts which are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur (the "Material Leases and Contracts"). The parties shall reflect their written agreement as to the identity of the Material Leases and Contracts by placing an asterisk next to the appropriate Lease or Contract on Schedule 9.1.9 or 9.1.13, which revised Schedule 9.1.9 or 9.1.13 shall be deemed to be an amendment to this Agreement. ARTICLE 12. EMPLOYEES AND EMPLOYEE MATTERS 12.1 Employee Transfer Agreement. The parties have addressed the transfer of employees and employee benefits matters in a separate agreement, entitled Employee Transfer Agreement, the terms and provisions of which are incorporated into this Agreement as if fully set forth herein and a copy of which is attached hereto as Schedule 12.1 (the "Employee Transfer Agreement"). ARTICLE 13. INDEMNIFICATION 13.1 Survival of Representations, Warranties and Covenants. (a) The representations and warranties made pursuant to this Agreement shall survive the Closing for the following periods after the Effective Date: (i) The representations and warranties set forth in Sections 9.1.6, 9.1.8, 9.1.32, 9.1.33, and 9.2.5 shall survive without limitation as to time. (ii) The representations and warranties set forth in Section 9.1.15 shall survive as set forth in Section 11.23.2(d). (iii) All other representations and warranties shall survive for eighteen (18) months. The date of expiration of any representation or warranty shall be referred to herein as the "Termination Date." Representations and warranties under this Agreement shall be of no further force or effect after the applicable Termination Date. Any claim for indemnification with respect to any alleged breach of any representation or warranty not asserted by notice given as herein provided that specifically identifies a particular breach and the underlying facts relating thereto, which notice is given prior to the Termination Date, may not be pursued and is irrevocably waived and released after such time. Without limiting the generality or effect of the foregoing, no claim for indemnification with respect to any representation or warranty will be deemed to have been properly made except to the extent it is based upon a Third Party Claim or a Direct Claim. (b) Unless a specified period is set forth in this Agreement (in which event such specified period will control), the covenants contained in Section 5.2, Section 5.3, this Article 13, and in Sections 11.1, 11.2, 11.3, 11.6, 11.7, 11.10, 11.12, 11.13, 11.16 and Articles 16 and 17 and in the Employee Transfer Agreement, will survive the Closing and remain in effect indefinitely. Covenants regarding Taxes shall survive as set forth in Section 11.23.2(d). All other covenants contained in this Agreement will terminate, without further action, upon the occurrence of the Effective Date and any claim following the Effective Date for an alleged breach of any such covenant may not be pursued, and is irrevocably waived, upon the occurrence of the Effective Date, except that Buyer may make a claim for Seller's breach of the covenants contained in Section 11.5 at any time within eighteen months after the Effective Date. The immediately preceding sentence shall not apply to, or limit to preclude, a party's rights and remedies if the sale contemplated by this Agreement is not concluded as a result of the other party's breach of this Agreement. 13.2 Limitations on Liability. (a) For purposes of this Agreement, (i) "Indemnification Payment" means any amount of Indemnifiable Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee" means any person or entity entitled to indemnification under this Agreement, (iii) "Indemnifying Party" means any person or entity required to provide indemnification under this Agreement, and (iv) "Indemnifiable Losses" means any losses, liabilities, costs, fines, penalties, damages (actual, punitive or other), and expenses and any claims, demands or suits by any person or entity, including, without limitation, any Governmental Authority, and costs and expenses actually incurred in connection with any actions, suits, demands, assessments, judgments and settlements and reasonable attorneys' fees and expenses, in any such case (x) reduced by the amount of insurance proceeds recovered from any person or entity as a result of the Indemnifiable Losses involved and (y) provided that the underlying liability or obligation is not solely the result of any action taken or omitted to be taken by the Indemnitee. (b) As between Seller and any Affiliate of Seller, on the one hand, and Buyer and any Affiliate of Buyer, on the other hand, the rights and obligations set forth in this Article 13 will be the exclusive rights and obligations with respect to the liabilities and obligations referred to in Section 13.3, and any breach of the representations, warranties or covenants referred to in Section 13.3., except for any liability, obligation or breach that results from the actual fraud under the common law, not otherwise implied or imputed, by a party to this Agreement. Without limiting the foregoing, as a material inducement to entering into this Agreement, to the fullest extent permitted by law, each of the parties waives any claim or cause of action that it otherwise might assert, including, without limitation, under the common law or federal or state securities, trade regulation or other laws, by reason of the liabilities and obligations, and any breach of the representations, warranties or covenants, referred to in Section 13.3, except for claims or causes of action brought under and subject to the terms and conditions of this Article 13, and except for claims or causes of action arising due to the actual fraud under the common law, not otherwise implied or imputed. (c) Notwithstanding any other provision of this Agreement or of any applicable law, no Indemnitee will be entitled to make a claim against an Indemnifying Party under Sections 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32 and 9.1.33) or 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) until the aggregate amount of claims that may be asserted for such Indemnifiable Losses incurred by the Indemnitee exceeds One Hundred Eighty One Thousand Five Hundred Eighty Five Dollars ($181,585.00) and then only to the extent of the excess. (d) Notwithstanding any other provision of this Agreement, the indemnification obligations of Seller under Section 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32 and 9.1.33) and of Buyer under Section 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) will not exceed the sum of Five Million Four Hundred Forty Seven Thousand Five Hundred Fifty Dollars ($5,447,550.00). (e) Notwithstanding anything to the contrary contained herein, no Indemnifying Party shall be liable to or obligated to indemnity any Indemnitee hereunder for any consequential, special, multiple, punitive or exemplary damages including, but not limited to, damages arising from loss or interruption of business, profits, business opportunities or goodwill, loss of use of facilities, loss of capital, claims of customers, or any cost or expense related thereto, except to the extent such damages have been recovered by a third person and are the subject of a Third Party Claim for which indemnification is available under the express terms of this Section 13. 13.3 Indemnification. (a) Subject to the other sections of this Article 13, Seller will indemnity, defend and hold harmless Buyer and its Affiliates (including the Company after the Effective Date), directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Seller of any of the representations and warranties contained in Section 9.1, except for any such breach of representations and warranties which was specified on Seller's Closing Certificate all of which are waived upon Closing, (ii) a breach by Seller of any covenant of Seller contained in this Agreement or in the Employee Transfer Agreement, except for any such breach of covenants which was specified on Seller's Closing Certificate all of which are waived upon Closing, (iii) the Retained Liabilities, (iv) any Third Party Claim, whether filed, asserted, or sought before or after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business (including contractual obligations in connection with sales or transfers of assets made by the Company prior to the Effective Date), or the ownership or operation of the Business, on or prior to the Effective Date, regardless of whether known or unknown, asserted or unasserted, on the Effective Date. As used in this Agreement, "Retained Liabilities" means all liabilities, responsibilities and obligations (whether known or unknown, fixed, contingent or otherwise) of the Company relating to, arising out of, or in connection with, or resulting from the use or ownership of the Property or the conduct of the Business during, the period ending on the Effective Date, including, without limitation,: (i) all liabilities, responsibilities and obligations with respect to the Excluded Property and the Excluded Contracts; (ii) all liabilities and obligations for prior period adjustments of revenues from the Business and for any customer overbillings and prospective refunds of overcharges (including rates collected under bond but excluding prospective rate reduction) occurring or relating to the period prior to the Effective Date, including without limitation all toll revenues, settlements, pools, separations studies or similar activities for which Seller is responsible pursuant to Section 11.10; and (iii) All liabilities, responsibilities and obligations arising out of or related to the litigation, claims and other matters set forth on Schedule 9.1.16 and any other litigation, claims, actions, lawsuits or legal proceedings based on facts, circumstances or conditions arising, existing or occurring on or before the Effective Date, regardless of whether known or unknown, asserted or unasserted, as of the Effective Date; but excluding all liabilities, responsibilities and obligations of the Company Date to the extent Buyer receives a Purchase Price adjustment in its favor pursuant to Section 3.2 therefor; (b) Subject to the other sections of this Article 13, Buyer will indemnity, defend and hold harmless Seller and its Affiliates, and their directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Buyer of any of the representations or warranties contained in Section 9.2, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (ii) a breach by Buyer of any covenant of Buyer contained in this Agreement or in the Employee Transfer Agreement, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (iii) any Third Party Claim, filed, asserted, or sought after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business or the ownership or operation of the Company or the Business, after the Effective Date. (c) All Tax and environmental matters or issues, including without limitation, the indemnification obligations with respect to Taxes and Environmental Liabilities, are to be governed by Sections 9.1.15 and 11.23 and Article 14, respectively, and are not addressed, limited or governed by the provisions of this Article 13. (d) Payments made under this Section 13.3 shall be treated by Buyer and Seller as purchase price adjustments and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. 13.4 Defense of Claims. (a) If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action, proceeding, or investigation by any entity or person that is not a party to this Agreement or an Affiliate of such a party (a "Third Party Claim") against such Indemnitee, with respect to which an Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of actual notice of such Third Party Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party during the required notification period shall only relieve the Indemnifying Party from its obligation to indemnity the Indemnitee pursuant to this Article 13 to the extent that Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. Indemnifying Party shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether or not the Indemnifying Party elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof, provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (i) the employment of such separate counsel has been specifically authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party has failed to assume the defense of such Third Party Claim within a reasonable time after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee or (iii) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnifying Party and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall not be liable for the fees and disbursements of more than one counsel for all Indemnified Parties in connection with any one proceeding or any similar or related proceedings arising from the same general allegations or circumstances. Without the prior written consent of the Indemnitee, the Indemnifying Party will not enter into any settlement of any Third Party Claim that would lead to liability or create any financial or other obligation on the part of the Indemnitee unless such settlement includes as an unconditional term thereof the release of the Indemnitee from all liability in respect of such Third Party Claim. (b) Any claim by an Indemnitee on account of an Indemnifiable Loss that does not result from a Third Party Claim (a "Direct Claim") will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after the Indemnitee actually becomes aware of the incurrence thereof, and the Indemnifying Party will have a period of thirty (30) calendar days within which to respond in writing to such Direct Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party shall only relieve the indemnifying Party from its obligation to indemnify the Indemnitee pursuant to this Article 13 to the extent the Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. If the Indemnifying Party does not so respond within such thirty (30) calendar day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article 13. (c) If after the making of any Indemnification Payment the amount of the Indemnifiable Loss to which such payment relates is reduced by recovery, settlement or otherwise under any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction (less any costs, expenses, premiums or taxes incurred in connection therewith) will promptly be repaid by the Indemnitee to the Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying Party will, to the extent of such Indemnification Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the Indemnification Payment relates; provided that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss, all claims of the Indemnifying Party against any such third party on account of said Indemnification Payment will be subrogated and subordinated in right of payment to the Indemnitee's rights against such third party. Without limiting the generality or effect of any other provision of this Article 13, each such Indemnitee and Indemnifying Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights. ARTICLE 14. ENVIRONMENTAL MATTERS 14.1 Environmental Due Diligence. 14.1.1 Right to Conduct Due Diligence. Buyer shall have the opportunity to conduct environmental due diligence regarding the Property in accordance with this Section 14.1, for a period not to exceed 120 days after the Environmental Data Delivery Date (as defined below). 14.1.2 Treatment of Data. All information collected and generated as a result of the environmental due diligence authorized by this Section 14.1 will be subject to the terms and conditions of the Confidentiality Agreement, except as otherwise expressly provided in this Section 14.l. Buyer shall provide to Seller copies of all reports, assessments and other information composed or compiled by Buyer's environmental consultant(s) and shall treat all such information in accordance with the procedures of Section 14.1.5(c). Within thirty (30) days after the Execution Date (the "Environmental Data Delivery Date"), Seller will provide to Buyer copies of all surveys and reports in Seller's or the Company's possession concerning the existence or possible existence of asbestos or materials containing asbestos relating to any of the Real Property, a list of all underground storage tanks which to Seller's or the Company's knowledge are located on, or have been removed within the last three years from, any Real Property owned or real estate leased or operated by the Company in connection with the Business and any other reports, studies or documents in Seller's or the Company's possession relating to the Company's potential liability under any Existing Environmental Requirements. The parties further agree that, if Seller discloses the existence or suspected existence of materials containing asbestos with respect to a given parcel of Real Property and the asbestos does not exceed applicable limits, if Buyer desires to make renovations or structural changes to the property after the Effective Date (which changes require the removal of asbestos), the removal will be at the expense of Buyer. 14.1.3 Environmental Consultants. Buyer may retain one or more outside environmental consultants to assist in its environmental due diligence concerning the Property and shall notify Seller of the environmental consultant or consultants Buyer intends to retain. Thereafter, Seller shall have five (5) business days after receipt of such notification to notify Buyer in writing of Seller's objection (which must be for good cause) and substantiate the basis for that objection. If Seller does not object for good cause and substantiate that objection within said five (5) business day period, Seller shall be deemed to have consented to Buyer's selection. 14.1.4 Phase I Reviews. Buyer may conduct the usual Phase I environmental assessment activities of the Property, including inspecting individual sites, submitting environmental questionnaires to Seller and the Company and reviewing existing environmental reports, correspondence, permits and related materials regarding the Property. Phase I environmental assessment activities shall not include any sampling or intrusive testing other than tank tightness testing and hand auger soil testing. (a) Buyer shall give Seller at least three (3) business days' notice prior to any entry onto the Property. (b) If Buyer enters the Property, a representative of Seller may be, but is not required to be, present during such entry on the Property. (c) All activities of Buyer regarding environmental due diligence shall be conducted to minimize any inconvenience or interruption of the normal use and enjoyment of the Business and the Property. 14.1.5 Phase II Reviews. Buyer may conduct the usual Phase II environmental assessment activities of the Property (including, but not limited to, the taking and analysis of soil, surface water and groundwater samples, testing of buildings, drilling wells and taking soil borings) after first conducting a Phase I assessment of a particular site provided that such Phase II assessment activities are conducted in accordance with this Section 14.1.5. (a) If Buyer desires to perform sampling or intrusive testing at a site included in the Property, Buyer must notify Seller of its desire at least five (5) business days in advance of the proposed date of such sampling or testing and provide a description of the scope of work regarding such sampling or intrusive testing. If Seller does not notify Buyer in writing of Seller's objection to such proposed sampling or testing within five (5) business days after receipt of such notice, Seller shall be deemed to have consented to the proposed sampling or testing. Seller shall not unreasonably object to Buyer's request to perform sampling or testing. (b) Buyer shall provide Seller with copies of field data, field reports, laboratory analyses, logs, laboratory reports and other material or information regarding the sampling or intrusive testing ("Environmental Data") within three (3) business days of Buyer's receipt of such data and shall promptly provide Seller with "matched" or "paired" samples, in accordance with standard sampling and testing protocols, that are obtained during the sampling or intrusive testing of a particular site; provided, however, that Seller shall have no obligation to Buyer to take any action whatsoever regarding such samples. (c) It is understood and agreed that neither Buyer nor its environmental consultant(s) shall disclose or release any Environmental Data without the prior written consent of Seller and that all such information shall be kept strictly confidential. The Environmental Data shall be prepared at the request of counsel to Buyer and, to the fullest extent permitted by law, shall be the work product of such counsel and constitute confidential attorney/client communications. The Environmental Data shall be transferred among Buyer and its consultant(s) in a manner that will preserve, to the greatest extent possible, such privileges. Buyer expressly agrees that until the Closing, it will not distribute the Environmental Data to any third party without Seller's written consent. After the Closing, Buyer agrees that it will not distribute the Environmental Data to any third party without Seller's written consent, except as required by law or by express provisions of Buyer's corporate compliance program if Seller is provided written notice at least ten (10) business days prior to such distribution, provided, however, that for a period of two (2) years after the Effective Date, Buyer may distribute the Environmental Data to any potential purchaser of the Company or the Property only after first notifying the Seller, and without such notice at any time after such two (2) year period. 14.1.6 Indemnity for Due Diligence Activities. Buyer hereby agrees to indemnify and hold harmless Seller, Seller's Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all claims, liabilities, damages, losses, orders, penalties, fines, costs, charges and expenses (including reasonable attorneys' fees and disbursements, and reasonable costs of experts and expert witnesses) with respect to persons or property arising out of or in connection with the entry of Buyer or its environmental consultant(s) onto the Property and resulting from any act or omission of Buyer or its environmental consultant(s) provided that Buyer shall not be liable for any Environmental Liabilities incurred by any such party merely discovered by the environmental due diligence performed by Buyer or its environmental consultants. In addition, in the event the transactions contemplated herein with regard to any portion of the Property do not close, Buyer agrees to restore such portion of the Property to the condition which existed prior to Buyer's inspections and testing thereof to the extent such portion of the Property was damaged by such inspections and testing. 14.1.7 Effect of Due Diligence Results. (a) Subject to Section 14.1.7(b) below, Buyer conditionally may terminate this Agreement by written notice to Seller at any time during the period set forth in Section 14.1.1 if: (i) the results of Buyer's environmental due diligence investigation, conducted in accordance with this Section 14. 1, indicate Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company; and (ii) Buyer reasonably determines (on the basis of its environmental due diligence) that responding to and remediating the foregoing Environmental Liabilities based upon Existing Environmental Requirements cannot be completed for less than One Million Four Hundred Fifty Two Thousand Six Hundred Eighty Dollars ($1,452,680.00) (the "Environmental Liabilities Amount") To be effective, any such conditional termination of this Agreement must be delivered in writing to Seller, which writing must specifically acknowledge that the termination is subject to the provisions of paragraph (b) below. (b) In the case of a conditional termination of this Agreement by Buyer in accordance with Section 14.1.7(a) above, Seller may nullify the termination by agreeing to: (i) cause the Company to respond to and fully remediate the Environmental Liabilities based upon Existing Environmental Requirements; or (ii) pay Buyer the cost thereof; or (iii) make other adjustments to the terms and conditions of the sale contemplated by this Agreement all in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller. Seller's election to nullify Buyer's conditional termination by selecting one of the above options shall be, in each case, specified in a writing mutually satisfactory to the parties, and thereafter on or before the Closing (subject to Section 14.1.7(d)), Seller shall perform its obligations under that writing in full. If the parties fail to sign the writing specifying Seller's obligations within thirty (30) days following Buyer's conditional termination (or such longer period acceptable to Buyer) or sign that writing but the Company fails to perform its obligations thereunder in full on or before the Closing (subject to Section 14.1.7(d)), Buyer's conditional termination under paragraph (a) above automatically shall become final and unconditional unless the parties agree otherwise. (c) If the results of Buyer's environmental due diligence conducted in accordance with this Section 14.1 indicate that the costs of responding to and remediating Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company are less than the Environmental Liabilities Amount in the aggregate, Seller agrees, to cause the Company at the Company's sole cost, to either (i) make a mutually satisfactory adjustment to the terms and conditions of the transactions contemplated by this Agreement prior to the Closing in accordance with Section 14.1.7(b)(iii) above, or (ii) prior to the Closing (subject to Section 14.1.7(d)), otherwise respond to and remediate those Environmental Liabilities based upon Existing Environmental Requirements in accordance with Section 14.1.7(b)(i) or Section 14.1.7(b)(ii) above, unless the cost of conducting such response action would exceed the Environmental Liabilities Amount in which case Seller's sole obligation under this Section 14.1.7(c) shall be to pay the Environmental Liabilities Amount toward the completion of such response and remediation actions. If Seller discharges its obligations under this Section 14.1.7 by expending the Environmental Liabilities Amount on such response and remediation action (such expenses to be verified by Seller by delivery by Seller to Buyer of a reasonably detailed statement setting forth such expenses), or paying to Buyer the Environmental Liabilities Amount, Buyer shall sign and deliver to Seller at the Closing a release of Seller from any further liability to Buyer for such remediation and shall indemnify Seller against any liability for such Environmental Liabilities or Environmental Requirements. (d) If Seller elects to cause the Company to respond to and fully remediate Environmental Liabilities based upon Existing Environmental Requirements pursuant to Section 14.1.7(b)(i) or (c)(ii), and such response and remediation has not been completed by the date scheduled for Closing, the parties on or prior to Closing shall enter into an Environmental Remediation Agreement in form and substance reasonably satisfactory to the parties and proceed to Closing; provided, however, that in the case of response and remediation under Section 14.1.7(b)(i), Buyer may elect to postpone the Closing until sufficient response and remediation has been completed so that the remaining response and remediation is equal to or less than the Environmental Liabilities Amount. 14.2 Environmental Indemnification. 14.2.1 Sole Remedy and Release. It is the intent of the parties that the indemnification provided under this Section 14.2 shall be the sole remedy for allocating responsibility regarding environmental matters related to the sale contemplated by this Agreement, the Company, the Business and the Property of which Buyer does not receive notice prior to the Closing (either from Seller in Schedule 14.3 or pursuant to notice given pursuant to Section 17.1 or in any written communication made to Buyer from Buyer's environmental consultants (collectively the "Known Environmental Matters")). Except as expressly provided in this Section 14.2, at Closing each party, for itself and its successors and assigns, by virtue of consummating the sale contemplated by this Agreement and without further action on the part of such party, shall waive and release the other party from any and all liability under any other cause of action at law or in equity concerning the Known Environmental Matters, whether raised pursuant to (i) Environmental Requirements, (ii) any other applicable federal, state or local statute, ordinance, rule or regulation, or (iii) common law. 14.2.2 Indemnification. Subject to the provisions of Sections 14.2.3, 14.2.4 and 14.2.5, Seller agrees to indemnify and hold harmless Buyer, its Affiliates (including the Company after the Effective Date) and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities under Existing Environmental Requirements arising from acts or omissions occurring with respect to, or from the use or ownership of, or any condition or circumstance relating to, the Company or the Property that occurred or arose prior to or on the Effective Date. The foregoing indemnity in this Section 14.2.2 shall only apply to matters that do not constitute Known Environmental Matters (such matters being referred to as the "Unknown Environmental Matters"). Such indemnification under this Section 14.2.2 shall be provided only for claims for Unknown Environmental Matters noticed to the other party pursuant to the procedures of Section 14.2.3, within eighteen (18) months after the Effective Date. Subject to the provisions of Sections 14.2.3 and 14.2.4, Buyer agrees to indemnify and hold harmless Seller, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities, with respect to any Environmental Requirements in existence now or hereafter in effect, arising from acts or omissions occurring after the Effective Date, or from the use or ownership of the Property after the Effective Date, or any condition or circumstance relating to the Company, the Property or the Business that occurred or arose after the Effective Date on the Property or in connection with the Company or the operation of the Business after the Effective Date. 14.2.3 Notice. A party seeking indemnification under this Section 14.2 must give written notice to the other party, including information sufficient to inform the other party of, and allow such other party to confirm the nature of, the claim and any activities required to address the claim, in sufficient detail for the indemnifying party to confirm that all costs incurred or to be incurred by the party to be indemnified under this Section 14.2 are required by Environmental Requirements, as applicable to Buyer, and Existing Environmental Requirements, as applicable to Seller, and are reasonable and cost-effective. If the indemnifying party disagrees with the party to be indemnified as to the necessity of costs or the reasonableness or cost-effectiveness of the remediation method selected, the parties shall negotiate in good faith to achieve at a mutually satisfactory solution. If the parties cannot agree as to costs or methods of remediation, the matter shall be resolved in accordance with Article 16. 14.2.4 Actual Damages. Any indemnifiable claim under this Section 14.2 shall not include incidental or consequential damages except to the extent such damages have been recovered by a third person and are the subject of a Third Party claim for which indemnification is available under the express terms of this Article 14. Any indemnifiable claim under this Section 14.2 shall be reduced to account for any insurance, storage tank fund, or other proceeds received by the party to be indemnified, as a result of the indemnifiable losses involved. The parties agree to take all reasonable steps to mitigate any indemnifiable claim under this Section 14.2, including complying with any registration and reporting requirements necessary to qualify for reimbursement from any storage tank fund. 14.2.5 Limitations on Indemnification. Notwithstanding any other provision of this Agreement, this Article 14, or any applicable law, the indemnification obligations of Seller under this Section 14.2 shall not exceed the aggregate amount of Two Million Seven Hundred Twenty Three Thousand Seven Hundred Seventy Five Dollars ($2,723,775.00). 14.2.6 Adjustments to Purchase Price. Payments made under this Article 14 shall be treated by Buyer and Seller as purchase price adjustments, and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. ARTICLE 15. TERMINATION 15.1 Termination Rights. This Agreement may be terminated at any time prior to the Closing Date: (a) at any time by mutual written consent of the parties; (b) by Seller or Buyer, as applicable, if there has been a material breach on the part of the other party of its respective representations, warranties or covenants set forth in this Agreement; provided, however, that a party shall not be entitled to exercise its right of termination under this subsection (b) if the breach is capable of being cured to the non-breaching party's reasonable satisfaction and the breaching party is proceeding diligently with its best efforts to effect such cure. (c) by Buyer, pursuant to Section 11.20 (Delivery of Schedules); (d) by Buyer and Seller, as the result of Section 14.1.7(a); (e) by Buyer or Seller, pursuant to Section 11.9; (f) by Seller or Buyer, if the Closing shall not have occurred by December 31, 1995 due to no fault or delay attributable to the party seeking termination; provided, however, that a party shall not be entitled to exercise any right of termination pursuant to this subsection (f) if such party shall not have performed diligently and in good faith the obligations required to be performed by such party hereunder prior to the date of termination; (g) by Buyer if a Governmental Authority, the approval of which is a condition to Buyer's obligations under Section 7.1, has provided written notice that it shall not consent to or approve the transactions contemplated hereby; or (h) by Seller, if a Governmental Authority, the approval of which is a condition to Seller's obligations under Section 7.2, has provided written notice that it shall not consent to or approve the transactions contemplated hereby. 15.2 Effect of Termination. (a) If this Agreement is terminated pursuant to Section 15. 1 (a), (c), (d), (e), (f), (g) or (h), this Agreement shall be of no further force and effect and there shall be no further liability hereunder on the part of either party or its Affiliates, directors, officers, shareholders, agents or other representatives. (b) A party's exercise of its right of termination under Section 15.1(b) shall not constitute a waiver of its rights to recover damages, whether pursuant to breach of contract or in tort, or other remedies available at law or in equity, from the other party as a result of the other party's breach of this Agreement. (c) Notwithstanding anything to the contrary contained herein, the provisions of this Section 15.2 and of Sections 17.1, 17.2, 17.3, 17.8, 17.11, 17.13, 17.14 and Article 16 shall survive any termination of this Agreement. ARTICLE 16. DISPUTE RESOLUTION 16.1 Exclusive Remedy. Subject to Section 16.5, the parties agree to resolve disputes arising out of this Agreement without litigation. Accordingly, except as provided in Section 16.5, or in the case of a suit to compel compliance with this dispute resolution process, the parties agree to use the following alternative dispute resolution procedure as their sole remedy with respect to any controversy or claim arising out of or relating to this Agreement or its breach. 16.2 Dispute Resolution Process. At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any dispute arising under this Agreement. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations. Discussions and correspondence among the parties' representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, exempt from discovery and production, and without the concurrence of both parties shall not be admissible in the arbitration described below or in any lawsuit. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration. 16.3 Arbitration. Subject to Section 16.5, if negotiations between the representatives of the parties do not resolve the dispute within sixty (60) days of the initial written request, the dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Either party may demand such arbitration in accordance with the procedures set out in those rules. The arbitration hearing shall be commenced within sixty (60) days of the demand for arbitration and the arbitration shall be held in a mutually agreeable location. The arbitrator shall control the scheduling (so as to process the matter expeditiously) and any discovery. The parties may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within thirty (30) days after the close of hearings. The times specified in this Section 16.3 may be extended upon mutual agreement of the parties or by the arbitrator upon a showing of good cause. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. 16.4 Costs and Attorneys' Fees. Each party will bear its own costs and expenses in submitting and presenting its position with respect to any such dispute to the arbitrator, and the fees and expenses of such arbitration procedures, including the fees of the arbitrator will be shared equally by Buyer and Seller, except that a party seeking discovery shall reimburse the responding party the cost of production of documents (including search time and reproduction costs); provided, however, that if the arbitrator determines that the position taken in the dispute by the non-prevailing party taken as a whole is unreasonable, the nonprevailing party will bear all such fees and expenses, and reimburse the prevailing party for all of its reasonable costs and expenses in submitting and presenting its position. 16.5 Certain Limitations. The provisions of this Article 16 with respect to the resolution of disputes without litigation shall not apply to any dispute, controversy or claim arising out of the provisions of Section 11.1, or the Confidentiality Agreement, or to a party's seeking to proceed under Section 17.14, it being understood and agreed that in the event of a breach by either party of the provisions of Section 11.1, or the Confidentiality Agreement, or in the event that a party seeks to proceed under Section 17.14, the non- defaulting party shall be entitled to proceed to protect and enforce its rights by an action at law, a suit in equity or other appropriate proceeding, whether for specific enforcement of any agreement contained in Section 11.1, or the Confidentiality Agreement or in aid of the exercise of any power granted by Section 11.1, 17.14 or the Confidentiality Agreement or by law or otherwise. ARTICLE 17. MISCELLANEOUS 17.1 Notices. All notices, consents and other communications required or permitted hereunder shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been given when delivered in person or dispatched by electronic facsimile transfer (confirmed in writing by certified mail, concurrently dispatched) or one business day after having been dispatched for next-day delivery by a nationally recognized overnight courier service to the appropriate party at the address specified below: (a) If to Buyer, to: Mr. Donald K. Roberton Vice President-Telecommunications Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4627 and L. Russell Mitten, II, Esq. Vice President-General Counsel Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4651 with a copy to: Jeffry L. Hardin, Esq. Fleischman and Walsh, L.L.P. 1400 Sixteenth Street, N.W. Washington, D.C. 20036 Facsimile No.: 202/745-0916 (b) If to Seller to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: President Facsimile No.: 501/661-0962 with a copy to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: General Counsel Facsimile No.: 501/661-0962 or to such other persons or address or addresses as any such party may from time to time designate for itself by like notice. 17.2 Press Releases. The parties shall consult with each other in preparing any press release, public announcement, news media response or other forth of release of information concerning this Agreement or the transactions contemplated hereby that is intended to provide such information to the news media or the public (a "Press Release"). Neither party shall issue or cause the publication of any such Press Release without the prior written consent of the other party; provided, however, that nothing herein will prohibit either party from issuing or causing publication of any such Press Release to the extent that such action is required by applicable Law or the rules of any national stock exchange applicable to such party or its Affiliates, in which case the party wishing to make such disclosure will, if practicable under the circumstances, notify the other party of the proposed time of issuance of such Press Release and consult with and allow the other party reasonable time to comment on such Press Release in advance of its issuance. 17.3 Expenses. Except as otherwise expressly provided herein, each party will pay any expenses (including, without limitation, attorneys' fees) incurred by it incident to this Agreement and in consummating the transactions provided for herein. All regulatory filing fees required pursuant to Sections 5.1, 5.4 and 5.5 shall be split equally between the parties. Each party will pay the appropriate costs and filing fees relating to any other applications required to be filed by such party. 17.4 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Buyer may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Seller; provided that Buyer may assign or delegate its rights and obligations under this Agreement without the prior written consent of Seller, to any directly or indirectly wholly owned subsidiary of Buyer provided such subsidiary assumes in writing all of the duties and obligations of Buyer hereunder, but no such assignment and assumption shall in any way operate to enlarge, alter or change any obligation of or due to Seller or relieve Buyer of its obligations hereunder and provided that Buyer agrees to cause such subsidiary to perform each of its agreements and covenants herein, and shall be jointly and severally liable for any non-performance thereof. Seller may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Buyer. Upon the sale, assignment or transfer by Buyer of the Company, the Business or the Property to a non-Affiliate of Buyer not in the ordinary course of business of Buyer, Seller's representations and warranties and indemnification obligation for breach thereof shall terminate. Any assignment made in violation of the foregoing provisions shall be void. 17.5 Amendments. This Agreement may be amended or modified only by a subsequent writing signed by authorized representatives of both parties. 17.6 Captions. The captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement, nor as in any way limiting or amplifying the terms and provisions hereof. 17.7 Entire Agreement. The term "this Agreement" shall mean collectively this document, the Schedules hereto, any agreements expressly incorporated herein, and the Confidentiality Agreement. This Agreement supersedes and revokes any prior discussions and representations, other agreements, commitments, arrangements or understandings of any sort whatsoever, whether oral or written, that may have been made or entered into by the parties relating to the matters contemplated hereby. This Agreement constitutes the entire agreement by and among the parties, and there are no representations, warranties, agreements, commitments, arrangements or understandings except as expressly set forth herein. 17.8 Waiver. Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege available to each party at law or in equity. 17.9 Third Parties. Except as expressly provided herein, nothing contained in this Agreement is intended to confer upon any person, other than the parties and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 17.10 Counterparts. This Agreement may be executed in two or more counterparts, any or all of which shall constitute one and the same instrument. 17.11 Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of Delaware (except that no effect shall be given to any conflicts of law principles of the State of Delaware that would require the application of the laws of any other jurisdiction). In accordance with Title 6, Section 2708 of the Delaware Code Annotated, the parties agree to the jurisdiction of the courts of Delaware and to be served with legal process from any of such courts. 17.12 Further Assurances. From time to time, as and when requested by one of the parties, the other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate and make effective the transactions contemplated by this Agreement. 17.13 Certain Interpretive Matters and Definitions. (a) Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning so assigned to it, (iii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (iii) all references to the "knowledge of a party" will be deemed to refer to the actual knowledge of the Executive Officers of the party after reasonable investigation, and (iv) all references to a party's "best efforts" and references of like import will be deemed to refer to the best efforts of such party in accordance with reasonable commercial practice and without the incurrence of unreasonable expense. (b) No provision of this Agreement will be interpreted in favor of, or against, either of the parties by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of such provision or of this Agreement. 17.14 Specific Performance. In addition to all other rights and remedies available at law or in equity, any party hereto may pursue, to the fullest extent available, the remedy of specific performance in order to compel the other party to close pursuant to Article 8. IN WITNESS WHEREOF, the parties, acting through their duly authorized agents, have caused this Agreement to be duly executed and delivered as of the date first above written. ALLTEL CORPORATION: By: /s/ Max E. Bobbitt ------------------ Name: Max E. Bobbitt Title: President and Chief Operating Officer CITIZENS UTILITIES COMPANY: By: /s/ Leonard Tow --------------- Name: Leonard Tow Title: Chairman of the Board and Chief Executive Officer EX-10 7 EXHIBIT 10.20 EXECUTION COPY ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 28th day of November, 1994 (the "Execution Date"), by and among Citizens Utilities Company of California, a California corporation ("Buyer"), and CP National Corporation, a California corporation ("Seller"). RECITALS WHEREAS, Seller is in the business of providing regulated local exchange telephone service in certain areas of the State of California; and WHEREAS, Seller desires to sell, convey, assign, transfer and deliver to Buyer, and Buyer desires to purchase and accept from Seller, substantially all of its telephone properties and related assets, upon the terms and conditions set forth in this Agreement; and NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement and any amendment hereto, the following terms are defined as set out below or in the Section referenced below: Additional Financial Statements is defined in Section 11.4. Advanced Billing Amounts is defined in Section 2.4. Affiliate has the meaning given to that term in Rule 405 under the Securities Act of 1933, as amended. Agreement is defined in Section 17.7. Assumed Liabilities is defined in Section 2.5. 1. The Business means the business of providing local exchange and exchange access telecommunications services and other related regulated and non-regulated activities, services and products associated with the Purchased Exchanges, including without limitation such unregulated activities, services and products of Seller conducted, offered or serviced by the Transferred Employees or provided or related to Seller's subscribers or customers served in or from the Purchased Exchanges (such unregulated activities, services and products are considered an integral part of the Business for all purposes of this Agreement). Buyer's Closing Certificate is defined in Section 7.2.1. CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Casualty Notice is defined in Section 11.9. Casualty Termination Notice is defined in Section 11.9. Closing is defined in Section 8.1. Closing Date is defined in Section 8.1. Confidentiality Agreement means the Confidentiality Agreement dated September 30, 1994 between ALLTEL Corporation and Citizens Utilities Company which is attached and incorporated into this Agreement as Schedule 1-1. Construction Advances is defined in Section 11.11. Contracts is defined in Section 2.2.2. Customer Deposits is defined in Section 11.11. Damaged Property is defined in Section 11.9. Debtholder Consents is defined in Section 5.2(a). Direct Claim is defined in Section 13.4(b). Earned Accounts Receivable is defined in Section 2.4. Effective Date is defined in Section 8.1. Employee Plan Assets is defined in the Employee Transfer Agreement. Employee Transfer Agreement is defined in Section 12.1 Employment Agreements is defined in Section 9.1.18. Environmental Liabilities means all liabilities, obligations (including obligations to respond to, investigate and remediate conditions caused by any Regulated Material), responsibilities, losses, damages (including punitive or treble damages), costs and expenses (including reasonable fees, disbursements and expenses of counsel, experts, consultants and expert witnesses), fines, penalties, interest or bonds, based upon any Environmental Requirements of any Governmental Authority, or as a consequence of (a) the release or threatened release of a Regulated Material in amounts that require response or remediation into the outdoor environment, (b) any circumstance or condition relating to the ownership or operation of the Purchased Property by any person or party or the conduct of the Business or any part thereof, that does not comply with Environmental Requirements, or (c) any claim, demand, notice, cause of action, directive, order, judgment, fine or penalty asserted or sought under or pursuant to any Environmental Requirements by an entity or person not a party to this Agreement, to the extent that the condition or circumstance or event giving rise to the claim, demand, notice, cause of action, directive, order, judgment, fine or penalty relates to the ownership or operation of the Purchased Property by any person or party or the conduct of the Business or any part thereof. Environmental Requirements means (i) any federal, state and local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority and all valid and enforceable guidance documents and policies thereof, relating to (x) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (y) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Regulated Material, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Regulated Material in each case as now amended and as now or hereafter in effect. The term Environmental Requirements includes, without limitation, CERCLA, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the federal Solid Waste Disposal Act, the federal Toxic Substances Control Act and the federal Insecticide, Fungicide and Rodenticide Act, each as now amended and as now or hereafter in effect. ERISA means the Employee Retirement Income Security Act of 1974, as amended. ERISA Plans is defined in Section 9.1.18. Estimated Prorations is defined in Section 3.3(b). Estimated Purchase Price is defined in Section 3.3(a). Evaluation Material is defined in the first paragraph of the Confidentiality Agreement. Excluded Contracts is defined in Section 2.4(g). Excluded Property is defined in Section 2.4. Execution Date is defined in the preamble to this Agreement. Executive Officers of an entity means the president and any vice president of the entity in charge of a principal business unit, division or function. Existing Environmental Requirements means those applicable provisions of any Environmental Requirements that are both in effect and applicable to Seller, the Business or the Purchased Property on or prior to the Effective Date. FCC means the Federal Communications Commission. FCC Consents is defined in Section 5.4. FCC Licenses is defined in Section 2.2.4. Final Order means an action by the FCC, the PUC, or any other Governmental Authority, as to which: (a) no request for stay of the action by the FCC, the PUC, or such other Governmental Authority, as the case may be, is pending, no such stay is in effect, and if any time period for filing any request for such a stay is provided by statute or regulation, such time period has passed; (b) no petition, motion or application for rehearing, reconsideration, or review, of the action is pending before the FCC, the PUC, or such other Governmental Authority, as the case may be, and the time provided for filing any such petition, motion or application has passed; (c) the FCC, the PUC, or such other Governmental Authority, as the case may be, does not have the action under reconsideration on its own motion and the time in which such reconsideration is permitted has passed; and (d) no appeal to a court, of the FCC's, the PUC's or such other Government Authority's action, as the case may be, is pending or in effect, and the deadline for filing any such appeal has passed. Final Prorations is defined in Section 3.4. Final Purchase Price is defined in Section 3.4. Financial Statements is defined in Section 9.1.11. GAAP means generally accepted accounting principles. Governmental Authority is defined in Section 9.1.3. HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Indemnifiable Losses is defined in Section 13.2(a). Indemnification Payment is defined in Section 13.2(a). Indemnifying Party is defined in Section 13.2(a). Indemnitee is defined in Section 13.2(a). Intellectual Property is defined in Section 11.1.1. IRC means the Internal Revenue Code of 1986, as amended. IRS means the Internal Revenue Service. June 1994 Base Amount means the sum of (i) the amount of Net Telecommunications Plant as of June 30, 1994 and (ii) the amount of Materials and Supplies as of June 30, 1994 Law is defined in Section 9.1.4. Leases is defined in Section 2.3. Marks is defined in Section 11.1.5. Materials and Supplies is the amount set forth on Seller's balance sheet as of a date certain comprising Seller's Materials and Supplies. Net Telecommunications Plant is the amount set forth on Seller's balance sheet as of a date certain comprising the sum of Seller's Telecommunications Plant In Service, Plant Under Construction -- Short Term, Plant Under Construction -- Long Term, and Telecommunications Plant -- Other, less Accumulated Depreciation and Amortization. Original Cost Documents means all original cost documentation relating to the Telephone Plant. Other Assets is defined in Section 2.2.5. NECA means the National Exchange Carrier Association. Non-FCC Authorizations is defined in 2.2.6. Parent means ALLTEL Corporation, a Delaware corporation. PBGC means the Pension Benefit Guaranty Corporation. Permitted Exceptions is defined in Section 11.16. Plans is defined in Section 9.1.18. Press Release is defined in Section 17.2. PUC means the Public Utilities Commission of California. Purchase Price is defined in Section 3. 1. Purchased Exchanges is defined in Section 2.2. Purchased Property is defined in Section 2.2. Real Property is defined in Section 2.2. 1. Regulated Material means (i) any "hazardous substance" as defined in CERCLA, (ii) any petroleum or petroleum substance, and (iii) any other pollutant, waste, contaminant, or other substance regulated under Environmental Requirements or, as applicable, Existing Environmental Requirements. Regulatory Approvals is defined in Section 5. 1. Retained Books and Records is defined in Section 2.4(e). Retained Liabilities is defined in Section 2.5.2. Secured Indebtedness is defined in Section 5.2. Secured Parties is defined in Section 5.2. Seller's Closing Certificate is defined in Section 7. 1. 1. Tax Returns means a report, return or other information statement required to be supplied to a federal, state or local taxing Governmental Authority with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes Seller. Tax(es) means any foreign, federal, state, provincial, county or local income, sales, use, transfer, excise, franchise, stamp duty, custom duty, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, recording, ad valorem, gains, value-added, unemployment compensation, general corporate, profits, registration, unincorporated business, alternative, social security, estimated, add-on, minimum, privilege or withholding tax and any interest and penalties and additions to such taxes (civil or criminal) related thereto or to the nonpayment thereof. Telephone Plant is defined in Section 2.2. 1. Third Party Claim is defined in Section 13.4(a). Transferred Employee is defined in Article II.A of the Employee Transfer Agreement. Transferred Books and Records is defined in Section 2.2.3. Transition Services Agreement is defined in Section 10.1. Unregulated Business is defined in the definition of Business set forth in this Article 1. ARTICLE 2. PURCHASE AND SALE OF ASSETS 2.1 Purchase and Sale of Assets. Subject to the terms and conditions of this Agreement, Seller agrees to sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees to purchase and accept, as of the Effective Date, all of Seller's right, title and interest in and to the Purchased Property, free and clear of all security interests, liens, or encumbrances, except for Permitted Exceptions. 2.2 Purchased Property. For purposes of this Agreement, the "Purchased Property" consists of the Telephone Plant, Contracts and Leases (to the extent permitted following compliance with Section 5.3), Transferred Books and Records, FCC Licenses, Non-FCC Authorizations and Other Assets in effect or owned by Seller as of the Effective Date that are associated with (i) the telephone exchanges listed in Schedule 2.2(a) (the "Purchased Exchanges"), and (ii) the Unregulated Business described on Schedule 2.2(b). 2.2.1 Telephone Plant. For purposes of this Agreement, "Telephone Plant" means the Real Property, machinery, equipment, vehicles and all other assets and properties used, or held for future use, in connection with the conduct of the Business, including, without limitation, all improvements, plants, systems, structures, construction work in progress, telephone cable (wherever located and whether in service or under construction), microwave facilities (including frequency spectrum assignments), telephone line facilities, telephones, machinery, furniture, fixtures, tools, implements, conduits, stations, substations, equipment (including, without limitation, central office equipment, subscribers' station equipment and other equipment in general), instruments, house-wiring connections and all other equipment of every nature and kind owned by Seller or in which Seller holds an interest (other than as a lessee) and used in connection with the Business. For purposes of this Agreement, "Real Property" means the real property owned by Seller and used in connection with the Business, including, without limitation, all land, buildings, structures, easements, rights of way, appurtenances, improvements or privileges located thereon and relating thereto. Without limiting the generality of the foregoing, the Telephone Plant includes the assets that would be properly included in the fixed asset accounts referenced in Part 32 of the FCC's Rules and Regulations (47 C.F.R. Part 32), as such accounts are reflected in Schedule 9.1.19. 2.2.2 Contracts. For purposes of this Agreement, "Contracts" means all agreements that relate to the Business between Seller or any Affiliate of Seller and (i) Seller's subscribers or customers, or (ii) other entities or persons who are not Affiliates of Seller and have business relationships with Seller relating to the Business, except for the Excluded Contracts (some of which are specifically governed by other Sections in this Agreement or the Employee Transfer Agreement). 2.2.3 Transferred Books and Records. For purposes of this Agreement, "Transferred Books and Records" means all of Seller's customer or subscriber lists and records, accounts and billing records (including a copy of the detailed general ledger and the summary trial balances, where available for the past two fiscal years), detailed continuing property record list, plans, blueprints, specifications, designs, drawings, surveys, engineering reports, personnel records (where applicable), Original Cost Documents (where located in the Purchased Exchanges but excluding Retained Books and Records) and all other documents, computer data and records (including records and files on computer disks or stored electronically) relating to the Business (excluding Retained Books and Records), the Purchased Property, the Transferred Employees and/or the Assumed Liabilities, except for the Retained Books and Records. 2.2.4 FCC Licenses. For purposes of this Agreement, "FCC Licenses" means all licenses, certificates, permits or other authorizations, including, without limitation, Section 214 authorizations where applicable granted to Seller by the FCC that are used in the conduct of the Business. 2.2.5 Other Assets. For purposes of this Agreement, Other Assets means all Non-FCC Authorizations to the extent transferable; all telephone numbers to the extent transferable, listings, telephone directories and telephone directory advertisements within such telephone directories, used in the operation of the Business; all prepaid expenses relating to the Business; all non-operating plant relating to the Business; all warranties relating to the Purchased Property, to the extent transferable and all materials and supplies relating to the Business. 2.2.6 Non-FCC Authorizations. For purposes of this Agreement, "Non-FCC Authorizations" means all licenses, certificates, permits, franchises, or other authorizations (other than FCC Licenses) granted to Seller by Governmental Authorities that are used in or relate to the conduct of the Business (including without limitation those that are listed or required to be listed on Schedule 9.1.17(c)). 2.3 Leased Assets. Subject to the provisions of Sections 2.5.2(i) and 5.3, as of the Effective Date, Seller shall assign to Buyer all of its interests, rights, benefits and obligations as lessee with respect to all real and personal property leases that are necessary or useful in connection with Seller's conduct of the Business (the "Leases"). 2.4 Excluded Property. The sale contemplated by this Agreement shall not include the Excluded Property. For purposes of this Agreement, "Excluded Property" means the following, subject to the provisions set forth in Article 4 and Sections 11.8, 11.9, 11.11, 11.12.3, 11.12.4, 11.12.5 and 11.13: (a) Cash, cash equivalent and investments. (b) All accounts receivable, trade or otherwise (excluding those related to interexchange carriers), of Seller outstanding as of the Effective Date relating to the Business (the "Accounts Receivable"), including, without limitation, (i) any accounts receivable from any Affiliate of Seller; and (ii) all amounts that have been earned by Seller in connection with the conduct of the Business whether billed or unbilled as of the Effective Date (the "Earned Accounts Receivable") which are addressed under Article 4; excluding, however, all amounts that have been billed as of the Effective Date by Seller in connection with the conduct of the Business but are unearned as of the Effective Date, relating to service after the Effective Date (the "Advanced Billing Amounts"). (c) All accounts receivable of Seller from interexchange carriers whether billed or unbilled, relating to the Business which are outstanding as of the Effective Date. (d) Seller's interest in any business other than the Business, including without limitation the cellular telephone business or personal communication services business, and, in all cases, any applications or licenses granted with respect thereto. (e) Subject to Section 2.2.3, the general ledger and all books and records relating to (i) tax returns and tax records, (ii) the other assets and properties of Seller which are included in the Excluded Property, (iii) the Retained Liabilities, (iv) employees of the Company who are not Transferred Employees or (v) subject to Section 11.13, all Original Cost Documents that are not located in the Purchased Exchanges (collectively, the "Retained Books and Records"). (f) All trademarks, trade names, trade dress, logos and any other intangible assets that use or incorporate the word "ALLTEL" and any other Marks listed on Schedule 11.1.5. (g) The contracts, leases and agreements listed or identified on Schedule 2.4(g) (the "Excluded Contracts"), such other assets of Seller which do not relate to the Business and which were not included in Net Telecommunications Plant as of June 30, 1994, such other assets, if any, as Seller lists and identifies on Schedule 2.4(g), and such other assets, if any, as may be excluded in accordance with the provisions of Sections 11.9 or 14.1.7. (h) Any prepaid taxes or tax refunds relating to the Purchased Property and the Business for periods on or prior to the Effective Date. 2.5 Assumption of Liabilities. 2.5.1 Assumed Liabilities. Buyer hereby agrees to assume as of the Effective Date, and to timely perform and discharge after the Effective Date, and to indemnity Seller against the specific liabilities, responsibilities and obligations set forth below with respect to the Purchased Property (the "Assumed Liabilities"): (a) Conduct of Business after the Effective Date. All liabilities, responsibilities and obligations relating to, arising out of, or in connection with, or resulting from the use or ownership of the Purchased Property after the Effective Date or the conduct of the Business by Buyer after the Effective Date, including, without limitation, any liabilities, responsibilities and obligations for Taxes relating to the conduct of the Business after the Effective Date or the ownership, use or operation of the Purchased Property after the Effective Date. (b) Employment Matters. All liabilities, responsibilities and obligations that are to be assumed by Buyer (or which Buyer may otherwise be liable for pursuant to applicable law and which are not otherwise expressly assumed or retained by Seller pursuant to this Agreement) under the Employee Transfer Agreement. (c) Environmental Matters. All liabilities, responsibilities and obligations that are to be assumed by Buyer under Article 14 (or which Buyer may otherwise be liable for pursuant to applicable law and which are not otherwise expressly assumed or retained by Seller pursuant to this Agreement) with respect to Environmental Liabilities. (d) Contracts, Leases. All liabilities, responsibilities and obligations that arise after the Effective Date in connection with or relating to the performance or nonperformance of the Contracts and the Leases after the Effective Date. (e) Joint Construction Projects. All liabilities, responsibilities and obligations to third parties that arise or relate to the period after the Effective Date and that relate to arrangements and commitments permitted hereunder between Seller and a third party for the construction of mutual transmission facilities between various switching points (the "Joint Construction Projects"), which Joint Construction Projects are listed on Schedule 2.5.l(e). (f) Construction in Progress. All liabilities, responsibilities and obligations to third parties that arise or relate to the period or are incurred after the Effective Date, and relate to engineering and construction services or similar services which are required to complete the construction and other capital expenditure projects referred to in and permitted by Section 11.5. (g) Customer Deposits and Construction Advances. All liabilities, responsibilities and obligations relating to Customer Deposits and Construction Advances. (h) Advanced Billing Amounts. All liabilities, responsibilities and obligations relating to Advanced Billing Amounts. (i) Assumed Long Term Debt. All liabilities, obligations and responsibilities relating to long term debt assumed by Buyer, if any, pursuant to Section 5.2(a) including, without limitation, indebtedness to Secured Parties. 2.5.2 Retained Liabilities. Seller shall retain and have full responsibility and obligation with respect to, shall timely perform and discharge, and shall indemnify Buyer against, all liabilities, responsibilities and obligations of Seller relating to, arising out of, or in connection with, or resulting from the use or ownership of the Purchased Property on or before the Effective Date or the conduct of the Business by Seller on or before the Effective Date, including any liability, obligation or debt, known or unknown, fixed, contingent or otherwise, not specifically assumed by Buyer pursuant to Section 2.5.1 or any other provision of this Agreement, and excluding those liabilities, responsibilities and obligations that are specifically assumed by Buyer pursuant to Section 2.5.1 or any other express provision of this Agreement (the "Retained Liabilities"). Without limiting the generality of the foregoing, but subject to liabilities that are specifically assumed by Buyer pursuant to Section 2.5.1 or any other express provision of this Agreement, the Retained Liabilities shall include the following liabilities, responsibilities and obligations of Seller: (a) All liabilities, responsibilities and obligations relating to the use or ownership of the Purchased Property on or before the Effective Date or to the conduct of the Business on or before the Effective Date. (b) All current liabilities of Seller as of the Effective Date, including, without limitation, trade, interest and other payables. (c) All long-term debt of Seller not assumed by Buyer pursuant to Section 5.2(a), including, without limitation, indebtedness to the Secured Parties. (d) Subject to Sections 11.8 and 11.17, all Taxes of Seller or its consolidated or combined group relating to the conduct of the Business on or before the Effective Date or the use, ownership or operation of the Purchased Property on or before the Effective Date. (e) Except as otherwise provided in the Employee Transfer Agreement, all liabilities and obligations arising on or before the Effective Date with respect to the Transferred Employees, and any such liabilities or obligations that arise after the Effective Date to the extent that such liabilities and obligations relate to facts, circumstances or conditions arising or occurring on or before the Effective Date. (f) All liabilities, responsibilities and obligations arising out of or related to the litigation, claims and other matters set forth on Schedule 9.1.16 and any other litigation claims, actions, lawsuits or legal proceedings based on facts, circumstances or conditions arising, existing or occurring on or before the Effective Date, regardless of whether known or unknown, asserted or unasserted, as of the Effective Date. (g) All liabilities, responsibilities and obligations arising on or before the Effective Date relating to collective bargaining or other union contracts. (h) All liabilities, responsibilities and obligations with respect to the Excluded Property and the Excluded Contracts. (i) All liabilities and obligations arising on or before the Effective Date with respect to the Contracts and the Leases. (j) All liabilities and obligations for prior period adjustments of revenues from the Business and for any customer overbillings and prospective refunds of overcharges (including rates collected under bond but excluding prospective rate reductions) occurring or relating to the period prior to the Effective Date, including without limitation all toll revenues, settlements, pools, separations studies or similar activities for which Seller is responsible pursuant to Section 11.10, but excluding any amounts which relate to Advanced Billing Amounts. Notwithstanding the foregoing, Buyer's and Seller's responsibility for Environmental Liabilities shall be governed by the provisions of Article 14. ARTICLE 3. PURCHASE PRICE 3.1 Purchase Price. (a) In consideration of the sale of the Purchased Property and the other undertakings of Seller in this Agreement, and subject to and in accordance with the other terms and conditions of this Agreement, on the Closing Date, Buyer will pay to Seller the sum of Thirty Nine Million Twenty Four Thousand Dollars ($39,024,000.00), subject to adjustment as provided in Section 3.2 (the "Purchase Price"). (b) (i) On or before the Closing Date, Buyer shall deliver to Seller, in immediately available funds in U.S. Dollars, the Estimated Purchase Price, plus or minus, as the case may be, the Estimated Prorations. Such delivery shall be made by bank wire transfer to an account that Seller shall designate at least two (2) business days prior to the Effective Date. (ii) Buyer will use its best efforts to make the wire transfer of the Estimated Purchase Price, plus or minus, as the case may be, the Estimated Prorations, by 12:00 noon (Eastern Time) on the Closing Date, provided that all conditions to Closing set forth in Article 7 have been satisfied, or waived by the appropriate party, before such time. 3.2 Adjustments to Purchase Price. (a) Adjustment Regarding Damaged Property. (1) If the provisions of Section 11.9(c)(i) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to repair or replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (2) If the provisions of Section 11.9(c)(ii) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (b) Adjustment Regarding Customer Deposits and Construction Advances. The Purchase Price shall be decreased in an amount equal to the dollar amount of Customer Deposits and Construction Advances outstanding as of the Effective Date. (c) Adjustment Regarding June 1994 Base Amount. The Purchase Price shall be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which the sum of Net Telecommunications Plant and Materials and Supplies as of the Effective Date exceeds or is less than the June 1994 Base Amount; provided, however, that in determining Net Telecommunications Plant and Material and Supplies as of the Effective Date no effect will be given for: (i) any decrease thereof resulting from damage, loss or destruction of Damaged Property which is repaired or replaced by Seller or for which Seller makes a substitution, in accordance with Section 11.9(b); (ii) any increase thereof resulting from expenditures made by Seller in connection with any such repair, replacement or substitution of Damaged Property in accordance with Section 11.9(b); or (iii) any increase thereof resulting from Seller's expenditures pursuant to its obligations under Sections 14.1.7(b) and (c) except for the cost of purchasing specific items of new plant (i.e., storage tanks). (d) Adjustment Regarding FAS 106. The Purchase Price shall be reduced by the amount included as "Other Current Liabilities" of Seller (item 14-Liabilities of Seller's balance sheet) as of the Effective Date which are associated with the requirements of Financial Accounting Standard 106 attributable to the active Transferred Employees. (e) Adjustment Regarding Long Term Debt. The Purchase Price shall be reduced by the amount of long term indebtedness of Seller that is assumed by Buyer pursuant to Section 5.2(a). 3.3 Estimate of Purchase Price and Prorations. At least five (5) days prior to the date scheduled for Closing, Seller shall deliver to Buyer: (a) An estimate of the Purchase Price based on Seller's good faith estimate of the amount of each adjustment described in Section 3.2 (the "Estimated Purchase Price") on the same basis and in accordance with the same accounting principles, methods and practices applied in preparing the Financial Statements and the Additional Financial Statements, if applicable, taking into account all adjustments required in Section 3.2 (using Net Telecommunications Plant and Materials and Supplies as of the end of the month immediately preceding the month in which the Effective Date is scheduled to occur for purposes of the Adjustment Regarding June 1994 Base Amount) and accompanied by a reasonably detailed statement, certified by the chief financial or accounting officer of Seller, describing how each such adjustment was determined; and (b) An estimate of the prorations made by Seller in good faith in the manner provided in Section 11.8 (the "Estimated Prorations"). 3.4 Adjustments After Closing. (a) Within sixty (60) days following the Effective Date, Buyer shall deliver to Seller final calculations of the Purchase Price, as adjusted pursuant to Section 3.2 (prepared on the same basis (but using Net Telecommunications Plant and Materials and Supplies as of the Effective Date) and in accordance with the same accounting principles, methods and practices used to prepare the Estimated Purchase Price) which shall be accompanied by a reasonably detailed statement certified by the chief financial or accounting officer of Buyer describing how each such adjustment was determined, and final adjustments of the prorations referred to in Section 11.8. (For the purpose of preparing Buyer's calculations and adjustments, Seller shall give Buyer access to all books, records, and other information available to Seller that Buyer may reasonably determine appropriate.) Within thirty (30) days following the delivery of such calculations and adjustments, Seller shall notify Buyer of any objection thereto, stating in reasonable detail the reasons therefor; otherwise, such calculations and adjustments of the Purchase Price and the prorations shall be final and binding on Seller and Buyer. (For the purpose of reviewing Buyer's calculations and adjustments, Buyer shall give Seller access to all books, records, and other information available to Buyer that Seller may reasonably determine appropriate.) If Seller shall object, Seller and Buyer shall work in good faith to agree on the correct amounts for the final Purchase Price and the final Prorations, but if they fail to agree, either party may exercise its rights pursuant to Article 16. (b) Within three (3) business days following the day on which the Purchase Price and the prorations shall become final, whether by expiration of time or agreement of Seller and Buyer, (respectively, the "Final Purchase Price" and the "Final Prorations"): (i) if the Final Purchase Price (plus or minus, as applicable, the Final Prorations) shall exceed the Estimated Purchase Price (plus or minus, as applicable, the Estimated Prorations), Buyer shall cause to be transferred to such account in the United States as Seller may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer, or (ii) if the Estimated Purchase Price (plus or minus, as applicable, the Estimated Prorations) shall exceed the Final Purchase Price (plus or minus, as applicable, the Final Prorations), Seller shall cause to be transferred to such account in the United States as Buyer may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer. It is the intent of the parties that all Purchase Price adjustments that are not disputed shall be paid by the appropriate party as soon as reasonably practicable, and any disputed amounts will not delay payments with respect to amounts not in dispute. ARTICLE 4. BILLING AND COLLECTION PROCEDURES 4.1 Determination of Earned Accounts Receivable. The parties acknowledge that Seller's accounts receivable as of the Effective Date will include both Earned Accounts Receivable and Advanced Billing Amounts (collectively, the "Total Accounts Receivable"). Within thirty (30) days after the Effective Date, Buyer and Seller shall agree on a statement setting forth, with respect to the Total Accounts Receivable as of the Effective Date, the portions that are Earned Accounts Receivable and the portions that are Advanced Billing Amounts; the methodology used to prepare such statement shall be consistent with that used to prepare, and described on, the sample statement set forth on Schedule 4.1 describing the portions of Seller's June 30, 1994 Earned Accounts Receivable and June 30, 1994 Advance Billing Amounts, which the parties agree is a proper methodology for allocation of the Total Accounts Receivable. In preparing such statement each party shall cooperate with the other and provide the other with reasonable access to its applicable books and records. If the parties fail to agree within the thirty (30) day period, Buyer and Seller will continue to negotiate in good faith to resolve such differences, but if they fail to so resolve such difference, either party may exercise its rights pursuant to Article 16. 4.2 Purchase of Accounts Receivable. As of the Effective Date, Buyer shall purchase from Seller the Earned Accounts Receivable outstanding as of the Effective Date, with payment for such Earned Accounts Receivable being payable in the monthly installments set forth below. Buyer shall be entitled to receive all cash collections with respect to such Earned Accounts Receivable and, as payment for such Earned Accounts Receivable, shall pay Seller on the final business day of the first three calendar months following the Effective Date an amount equal to a percentage (as set forth below) of such Earned Accounts Receivable net of the Uncollectible Amount. The "Uncollectible Amount" shall be computed by multiplying such Earned Accounts Receivable by Seller's uncollectible factor based upon Seller's actual uncollectible net write-offs as a percentage of current billings for the calendar year immediately preceding the year in which the Closing occurs, which amount shall be agreed to by the parties at least thirty (30) days prior to the Effective Date. Payment for the Earned Accounts Receivable, net of the Uncollectible Amount purchased by Buyer as of the Effective Date, shall be made in three installments, as follows: Final business day of first month after Closing: 80% Final business day of second month after Closing: 15% Final business day of third month after Closing: 5% Buyer shall have the right to review Seller's calculations of the Earned Accounts Receivable and the Uncollectible Amount and Seller shall cooperate with Buyer and provide Buyer and its representatives with reasonable access to Seller's books and records in the course of such review. If such review results in amounts different from Seller's calculations, Buyer and Seller will negotiate in good faith to resolve such differences. The parties agree that notwithstanding any disagreement between them with respect to the calculation of the Earned Accounts Receivable or Advance Billing Amounts, Buyer shall pay Seller, in accordance with the above schedule, all agreed to Earned Accounts Receivable amounts net of the Uncollectible Amount. When the disagreement concerning any such unagreed to item has been resolved, the appropriate party shall promptly pay the other the amount of such resolved item plus interest from the regularly scheduled payment date at a rate of 7% per annum. 4.3 Carrier Access Billing. Seller shall render its own final carrier access bills to its interexchange carriers for minutes, messages and other applicable charges up to and including the Effective Date which bills shall contain no charges for services to be rendered after the Effective Date. Seller shall be responsible for collecting and settling any disputes associated with its bills to the interexchange carriers. ARTICLE 5. REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS 5.1 Governmental Regulatory Approval. Except as provided in Section 5.4, as promptly as practicable after the Execution Date with respect to applications to be filed with the PUC, but no later than forty-five (45) days after the Execution Date, the parties shall file the applications and notices described on Schedule 5.1 in such form as agreed to by the parties with the PUC and other appropriate Governmental Authorities, seeking an order permitting the transfer of service in the Purchased Exchanges, and the transfer or assignment of the Non-FCC Authorizations, to Buyer (the "Regulatory Approvals"). Buyer will be responsible for establishing the tariff for its post-Effective Date operations in the state in which the Purchased Property is located, by requesting adoption of tariffs which are the same or substantially the same as Seller's pre-Effective Date tariffs. To the extent assignable, Seller will assign the Non-FCC Authorizations to Buyer. Each party agrees to use its best efforts to obtain the Regulatory Approvals and the parties agree to cooperate fully with each other and with all Governmental Authorities to obtain the Regulatory Approvals as described on Schedule 5.1 at the earliest practicable date. The parties agree that the Regulatory Approvals containing asterisks on Schedule 5.1 constitute material Regulatory Approvals (the "Material Regulatory Approvals") which are subject to Sections 7.1.3 and 7.2.4, and the Regulatory Approvals that do not contain an asterisk on Schedule 5.1 constitute Immaterial Regulatory Approvals (the "Immaterial Regulatory Approvals") which are subject to Section 5.3, but not Sections 7.1.3 and 7.2.4. 5.2 Debtholder Consents; Indebtedness Assumption, Releases or Terminations. (a) With respect to Seller's long-term indebtedness identified on Schedule 5.2(a), as promptly as practicable following the Execution Date, but in any event no more than forty-five (45) days thereafter, the parties shall contact the holders of such indebtedness to request, and use their best efforts to obtain, such holders' consent ("Debtholder Consent") to Buyer's assumption of, and Sellers' release from, such indebtedness on terms acceptable to the parties. Each party shall bear their own costs and expenses in obtaining such Debtholder Consent. Neither party, however, shall be required to make any payment to the debtholder to obtain the Debtholder Consent, except that Seller shall be responsible for any such payments as are specified in the relevant debt agreement. The parties acknowledge that all indebtedness with respect to which Debtholder Consents are obtained and which is assumed by Buyer shall constitute an Assumed Liability pursuant to Section 2.5.1(i), and all indebtedness which is not so assumed by Buyer shall constitute a Retained Liability. (b) If within thirty (30) days prior to the Closing Date, the parties have been unable to obtain the Debtholder Consent with respect to any indebtedness, Seller shall have the right to repay such indebtedness owed to such non-consenting debtholder. (c) Except with respect to indebtedness assumed by Buyer pursuant to Section 5.2(a), Seller shall take, at Seller's sole cost and expense, all actions necessary with respect to all persons or entities (collectively, the "Secured Parties") holding a security interest or lien against the Purchased Property to obtain the termination or release, as of the Effective Date, and the prompt removal after the Effective Date, of all security agreements, mortgages and financing statements relating to the Purchased Property (such terminations and releases being hereinafter collectively referred to as the "Secured Indebtedness Releases or Terminations"). Buyer agrees to cooperate in good faith with Seller in obtaining the required Secured Indebtedness Releases or Terminations. 5.3 Other Consents. (a) As promptly as practicable after the Execution Date, the parties hereto shall mutually seek the consent, approval or waiver of the other party to any Lease or Contract that requires consent, approval or waiver as a condition to an assignment of such Lease or Contract. To the extent any of the approvals, consents or waivers required to assign any Lease, Contract or Immaterial Authorization have not been obtained with respect to any Lease, Contract or Immaterial Authorization as of the Effective Date, Seller shall continue to use its best efforts to obtain the consent of such other third party that is required for the transfer or assignment of such Lease, Contract or Immaterial Authorization after the Effective Date. Refusal by such other third party to release Seller from a Lease or Contract shall not excuse Seller from entering into an assignment of such Lease or Contract. From the Effective Date until the earlier of (i) the time such approval, consent or waiver is obtained, and (ii) six months after the Effective Date, Seller shall hold such Leases, Contracts and Immaterial Authorizations or ancillary rights as agent for Buyer, and preserve the benefit of and enforce the same as agent for Buyer to the fullest extent permissible under the applicable Lease, Contract or Immaterial Authorization. Buyer and Seller agree that upon request by either party, at Closing, they will enter into an agency agreement in form and substance mutually satisfactory to each party specifying the terms and conditions upon which Seller will so act as Buyer's agent, which terms and conditions shall include a six month term. (b) If a third party refuses to consent to a Lease or Contract assignment, and if the applicable Lease or Contract permits a sublease or subcontract without the consent of the third party, the parties hereto, as of the Effective Date, shall enter into a sublease or subcontract upon terms and conditions as similar and comparable to an assignment of the Lease or Contract as is reasonably feasible so as to enable Buyer to retain the ultimate benefits of such Lease or Contract after the Effective Date. (c) Notwithstanding anything to the contrary contained herein, if a third party refuses or has failed to consent to a Lease, Contract or Immaterial Authorization assignment after the Seller has used its best efforts for a period of six months after the Effective Date to obtain such consent, waiver or approval, and if the applicable Lease or Contract does not permit a sublease or subcontract without the consent of the third party, then Seller and Buyer shall within thirty (30) days after expiration of such six-month period negotiate in good faith and agree upon, and Seller shall pay to Buyer, an amount representing fair compensation to Buyer for the harm caused by the failure to obtain such consent, waiver or approval. Following such payment, Seller shall have no further obligation to Buyer with respect to such Lease, Contract or Immaterial Authorization except as otherwise provided in Section 11.12 with respect to the Contracts and Excluded Contracts addressed in Section 11.12. (d) Seller shall bear all reasonable costs and expenses in obtaining such consents, approvals or waivers to the extent such costs or expenses are specified in the relevant Lease, Contract or Immaterial Authorization, or under applicable Law, and shall reimburse Buyer to the extent Buyer makes any transfer payments which are specified in amount and required under any Lease or Contract to the lessor or other party thereto, provided that seven (7) business days before Buyer makes any transfer payments, Buyer will notify Seller of its intent to do so and after making such transfer payment, Buyer will provide evidence satisfactory to Seller that such transfer payment was made. Buyer and Seller will negotiate in good faith to determine the extent to which each will bear any other costs and expenses arising in connection with obtaining such consents, approvals and waivers. 5.4 FCC Consents. As promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date, the parties shall file all applications and requests described on Schedule 5.4 in such form as agreed to by the parties with the FCC seeking, and shall use their best efforts to obtain, the FCC's consent to assign all FCC Licenses (as listed in Schedule 9.1.17(b)) from Seller to Buyer (the "FCC Consents"). The parties each agree that in connection with taking the immediately above described actions, they will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Purchased Exchanges shall remain in the National Exchange Carrier Association Tariff F.C.C. No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. Each party agrees to use its best efforts, and the parties agree to cooperate fully with each other and with the FCC, to obtain the FCC Consents at the earliest practicable date. 5.5 HSR Act Review. As promptly as practicable after the Execution Date but in no event later than thirty (30) days after the Execution Date, the parties will make such filings as may be required by the HSR Act with respect to the sale contemplated by this Agreement. Thereafter, the parties will file as promptly as practicable any supplemental information that may be requested by the U.S. Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR Act. The parties agree to cooperate in seeking early termination of the waiting periods under the HSR Act. ARTICLE 6. PRECLOSING COVENANTS 6.1 Investigation by Buyer. (a) Prior to the Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford to the authorized representatives of Buyer reasonable access during normal business hours to the books and records relating to the Purchased Property (including, without limitation, relevant tax information) and to the personal property and Real Property comprising the Purchased Property. Buyer and Seller will cooperate with each other to schedule such access. With the consent of Seller (which consent will not be unreasonably withheld), Buyer and its representatives shall have access to all interexchange carriers having business relationships with the Business, to all customers of the Business, and to all officers, employees and agents of Seller having knowledge or information concerning the operations of the Business so as to afford Buyer the opportunity to make such review, examination and investigation of the Business and the Purchased Property as Buyer may desire to make, to evaluate the competitiveness of the Business, and to enable Buyer to assimilate the Business into Buyer's operations as soon as practicable after the Effective Date. To the extent it so desires, Seller shall accompany Buyer on all of Buyer's access to interexchange carriers, customers and agents of Seller. Buyer will be permitted to make extracts from or copies of such books and records as may be reasonably necessary. Buyer will not contact any employee, customer or supplier of Seller as to this Agreement or the matters involved herein except in accordance with this Section 6.1. (b) Subject to applicable law, and upon Buyer's request and Seller's consent (which consent will not be unreasonably withheld), Seller shall permit, at Buyer's sole cost and expense: (i) certain key employees and officers of Seller selected by Buyer to attend workshops and training sessions of Buyer (including sessions to train such employees in Buyer's business planning process in order to have the Business after the Effective Date follow Buyer's business planning process and procedures); (ii) Seller's management to work with Buyer during Buyer's planning process between the Execution Date and the Effective Date; (iii) Buyer to confer with Seller about, and to participate in Seller's planning for, any material reduction in work force or other arrangements regarding employees required or implemented pursuant to the Employee Transfer Agreement. (c) As promptly as reasonably practicable after Buyer's request, Seller will furnish such financial and operating data and other information pertaining to the Business as Buyer may reasonably request in order, among other things, to comply with Buyer's disclosure obligations under the federal securities or other laws as such obligations relate to Buyer's prospective ownership of the Business, including any disclosure required in connection with the sale of any securities by Buyer; provided, however, that nothing herein will obligate Seller to take actions that would unreasonably disrupt the normal course of the business of Seller or violate the terms of any applicable Law or any contract to which Seller is a party or to which any of its assets is subject in providing such information, or to incur any costs with respect to Buyer's external auditors (or Seller's external auditors in the event a report by such auditors is requested by Buyer) providing accounting services with respect to issuing an auditor's report required by Buyer. Any information or document provided to Buyer or acquired by Buyer during this investigation shall be deemed "Evaluation Material" as that term is defined in the Confidentiality Agreement and shall be subject in all cases to the terms of the Confidentiality Agreement; provided, however, that following consultation with Seller, Buyer may disseminate financial or other information with respect to the Business of Seller that Buyer, upon consultation with counsel, determines is required to be disclosed under federal securities laws. (d) Prior to Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford the authorized representatives of Buyer access to the Purchased Properties in order to conduct the environmental audit contemplated by Section 14.1. (e) In connection with the continuing operation of the Business between the Execution Date and the Effective Date, Seller shall confer in good faith with Buyer, as reasonably requested by Buyer from time to time, to report on material operational matters, material reductions in work force and other material employee matters, and the general status of ongoing operations. (f) Notwithstanding the provisions of this Agreement or the Confidentiality Agreement, from and after the Execution Date, upon the prior consent of Seller (which consent will not be unreasonably withheld), Buyer may disclose Evaluation Material (as defined in the Confidentiality Agreement) to representatives of rating agencies, underwriters, underwriters' counsel, public accountants, prospective lenders and other third parties involved in any of Buyer's offering of securities or other financings and to fixed income and equity analysts to the extent such parties reasonably have a need to know any such information; provided, that such parties shall (y) be advised of the confidential nature of any Evaluation Material they receive, and (z) agree in writing to be bound to the provisions of the Confidentiality Agreement. 6.2 Satisfaction of Conditions. Without limiting the generality or effect of any provision of Article 7, the parties will use their best efforts to satisfy promptly all conditions required to be satisfied prior to the Closing. 6.3 Notification as to Certain Matters. (a) The Buyer will promptly notify Seller of (i) any information that would cause any representation or warranty of Buyer contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the transactions contemplated by this Agreement; of which in any such case, Buyer's representatives listed on Schedule 6.3(a) become aware on or before the Effective Date. Buyer shall use reasonable best efforts to keep Seller informed of the events described in this Section 6.3(a) and shall permit Seller access to all materials prepared by Buyer in connection therewith. (b) The Seller will promptly notify Buyer of (i) any information that would cause any representation or warranty of Seller contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the Business or the transactions contemplated by this Agreement; of which in any such case, Seller's representatives listed on Schedule 6.3(b) become aware on or before the Effective Date. Seller shall use reasonable best efforts to keep Buyer informed of the events described in this Section 6.3(b) and shall permit Buyer access to all materials prepared by Seller in connection therewith. ARTICLE 7. CONDITIONS PRECEDENT TO THE CLOSING 7.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Buyer: 7.1.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been no material breach by Seller of any of its covenants to be performed in whole or in part prior to the Closing and the representations and warranties of Seller in Section 9.1 (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) shall be true and correct as of the Effective Date, except for such representations or warranties that are made expressly as of some other date, which shall be true and correct (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) as of such other date, and Seller shall have delivered to Buyer a certificate in the form attached hereto as Schedule 7.1.1 ("Seller's Closing Certificate"), dated as of the Effective Date and signed by one of Seller's Executive Officers, certifying each of the foregoing, or specifying those respects in which such covenants have been materially breached or such representations and warranties (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) are not true and correct in which event, if the Closing occurs, any claim with respect to matters so specified shall be waived by Buyer unless otherwise expressly agreed by Seller at Closing. 7.1.2 Documents. Seller shall have delivered to Buyer all documents required by Section 8.2. 7.1.3 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions or restrictions which Buyer determines, in good faith and in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Buyer of the transactions contemplated by this Agreement. For purposes of this Section 7.1.3, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.1.4 Material Adverse Changes. There shall have been no material adverse changes to the Purchased Property as a whole or the financial position or results of operations of the Business as a whole, and, subject to Section 11.9, Seller shall not have suffered any material loss or damage to the Purchased Property, whether or not insured, that would materially affect or impair Buyer's ability to conduct the Business after the Effective Date. None of the Additional Financial Statements of Seller delivered pursuant to Section 11.4 shall reflect a material change in the financial position or results of operations of the Business from the financial position or results of operations reflected in the Financial Statements. 7.1.5 Real Estate Transfers. Seller shall have complied with Section 11.16 with respect to its Real Property to be transferred to Buyer. 7.1.6 Lessor and Other Third Party Consents. Seller shall have delivered to Buyer all consents, approvals or waivers of lessors or other third parties to the Material Agreements as so identified by an asterisk on Schedules 9.1.9 and 9.1.13, as such Schedules may be amended pursuant to Section 11.22. All of such delivered consents, approvals or waivers shall be in effect as of the Effective Date. 7.1.7 [INTENTIONALLY DELETED] 7.1.8 Litigation. There shall not be any litigation or other proceeding pending or to the best of Buyer's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Buyer, would involve material expense to Buyer. 7.1.9. Corporate Proceedings. All corporate proceedings required to be taken by Seller in connection with the transactions contemplated by this Agreement shall have been taken; 7.1.10 Lien Searches. Seller shall have delivered to Buyer reasonably comprehensive searches, dated as of a date within 30 days of the Execution Date or any time thereafter, of the public records regarding liens and judgments with respect to the Business and the Purchased Property. 7.1.11. Debtholder Consents. With respect to any long-term indebtedness to be assumed by Buyer pursuant to Section 5.2(a), Buyer shall have received the Debtholder Consents and shall have entered into an assignment and assumption agreement with the Debtholder in form and substance reasonably acceptable to Buyer. 7.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Seller: 7.2.1 No Misrepresentations or Breach of Covenants and Warranties. There shall have shall have been no material breach by Buyer of any of its covenants to be performed in whole or in part prior to the Closing, and the representations and warranties of Buyer in Section 9.2 shall be true and correct as of the Effective Date, except for such representations or warranties made expressly as of some other date, which shall be true and correct as of such other date (all such representations and warranties to be qualified by any materiality standards contained therein), and Buyer shall have delivered to Seller a certificate ("Buyer's Closing Certificate"), dated as of the Effective Date and signed by one of Buyer's Executive Officers, certifying each of the foregoing or specifying those respects in which such covenants have not been performed or such representations and warranties are not true and correct in which event if the Closing occurs any claim with respect to matters so specified shall be waived by Seller unless otherwise expressly agreed by Buyer at Closing. 7.2.2 Documents. Buyer shall have delivered to Seller all documents required by Section 8.3. 7.2.3 Purchase Price. Buyer shall have delivered to Seller, in the manner specified in Section 3.1, the Estimated Purchase Price as adjusted pursuant to Section 3.2. 7.2.4 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions, or restrictions which Seller determines, in good faith in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Seller of the transactions contemplated by this Agreement. For purposes of this Section 7.2.4, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.2.5 Corporate Proceedings. All corporate proceedings required to be taken by Buyer in connection with the transactions contemplated by this Agreement shall have been taken. 7.2.6 Litigation. There shall not be any litigation or other proceeding pending or to the best of Seller's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Seller would involve a material expense to Seller. 7.2.7 [INTENTIONALLY DELETED] 7.2.8 Debtholder Releases. With respect to any long-term indebtedness to be assumed by Buyer pursuant to Section 5.2(a), Seller shall have received Debtholder Consents and release of debt (and, if applicable, lien) documentation reasonably acceptable to Seller. ARTICLE 8. THE CLOSING 8.1 The Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall be held at a place mutually agreed upon by the parties at 9:00 a.m., local time, on the last calendar day (the "Closing Date") of the calendar month in which occurs the tenth (10th) business day after the date Seller notifies Buyer in writing (the "Notice") of its determination that all required Material Regulatory Approvals and FCC Consents have been obtained and provided that the other conditions set forth in Article 7 shall have been satisfied, or at such other place and time as may be agreed upon by Seller and Buyer. The transactions to be consummated at Closing shall be deemed to have been consummated as of 11:59 p.m. on the last calendar day of the calendar month in which occurs the tenth (10th) business day after the date of the Notice (the "Effective Date"). If the Effective Date is not a day on which financial institutions are open and operating, then the Closing Date shall be the immediately following business day on which financial institutions are open and operating. 8.2 Seller's Obligations at Closing. At the Closing, Seller shall deliver to Buyer the following documents duly executed and acknowledged, as appropriate: (a) Bills of sale, special warranty deeds, assignments and other good and sufficient instruments of transfer (including, without limitation, vehicle titles) to transfer title in the Purchased Property to Buyer, in form and substance mutually satisfactory to Buyer and Seller. (b) Seller's Closing Certificate. (c) Instruments of assignment or, to the extent required by Section 5.3, subleases or subcontracts for the Leases and the Contracts, in each case in form and substance mutually satisfactory to Buyer and Seller. (d) Secured Indebtedness Releases and Terminations. (e) All of the documents and papers required of Seller as conditions to Closing, including without limitation, the Regulatory Approvals, FCC Consents and the documents required to be delivered by Seller pursuant to Section 11.16. (f) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (g) The Environmental Remediation Agreement if required pursuant to Section 14.1.7(d). (h) All documents required of Seller under the Employee Transfer Agreement. (i) Certificate of the Secretary or Assistant Secretary of Seller certifying as to Articles of Incorporation, Bylaws, Board of Director approval and incumbency. 8.3 Buyer's Obligations at Closing. At the Closing, Buyer shall deliver to Seller the following items and documents duly executed and acknowledged as appropriate: (a) The Estimated Purchase Price (as adjusted under Section 3.2), in the manner specified in Section 3. 1; (b) Buyer's Closing Certificate (c) All of the documents and papers required of Buyer as conditions to Closing, including, without limitation, the Regulatory Approval and FCC Consents. (d) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (e) The Environmental Remediation Agreement if required pursuant to Section 14.17(d). (f) All documents required of Buyer under the Employee Transfer Agreement. (g) Instruments of assignment and assumption or, to the extent required by Section 5.3, subleases or subcontracts for the Leases and the Contracts, in each case in form and substance mutually satisfactory to Seller and Buyer. (h) Special warranty deeds (to the extent required to be executed by Buyer) and other instruments of assignment and assumption (including, without limitation, vehicle title and Assumed Liabilities) to transfer title to the Purchased Property and assumed obligations thereunder to Buyer, in form and substance mutually satisfactory to Buyer and Seller. (i) Certificate of the Secretary or Assistant Secretary of the Buyer certifying as to Articles of Incorporation, Bylaws, Board of Director approval and incumbency. ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties of Seller. Except as to the environmental matters which are exclusively addressed in Article 14 of this Agreement, Seller represents and warrants to Buyer as follows: 9.1.1 Authorization and Effect of Agreement. Seller has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement and to fulfill its respective obligations under this Agreement. The execution and delivery by Seller of this Agreement and the fulfillment of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and, assuming the due execution and delivery of this Agreement by Buyer, constitutes a valid and binding obligation of Seller, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualification that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.1.2 No Restrictions Against Sale of the Purchased Property. The execution and delivery of this Agreement by Seller does not, and the fulfillment by Seller of its obligations under this Agreement will not, (i) conflict with or violate any provision of its certificate of incorporation or bylaws or, (ii) except as set forth in Schedule 9.1.13, or subject to obtaining the approvals and consents reflected in Article 5, conflict with, violate or result in the breach of, constitute a default under, accelerate the performance required by, or result in the creation of any encumbrance upon any of the Purchased Property under any provision of any Contract other than any such conflict, violation or breach that alone or in the aggregate would not have an adverse effect on the Buyer, the Business or the Purchased Property after the Effective Date. 9.1.3 Consents and Approvals of Governmental Authorities. No consent, approval, order or authorization of, or registration, declaration or filing with, any court or governmental agency, authority or instrumentality (" Governmental Authority") is required to be obtained or made by or with respect to Seller or in connection with the execution and delivery of this Agreement by Seller or the fulfillment by Seller of its obligations under this Agreement, except (i) the filings and approvals described in Article 5 (ii) real estate deeds and other documents filed in connection with the transfer of the Real Property included in the Purchased Property, (iii) certificates of title for the motor vehicles included in the Purchased Property, and (iv) such other consents, approvals, orders or authorizations, or registrations, declarations or filings, which if not obtained or made would not result in a material adverse effect on Buyer, the Business or the Purchased Property. 9.1.4 No Violation of Law. Except as indicated in Schedule 9.1.4, the execution and delivery of this Agreement and the fulfillment by Seller of its obligations under this Agreement will not violate any applicable existing statute, ordinance, rule, regulation or common law obligation (collectively, "Law"), except where such violation would not have a material adverse effect on the Business as a whole or on any significant part of Purchased Property after the Effective Date. 9.1.5 Corporate Organization. Seller is a corporation duly organized, validly existing and in good standing under the laws of California; it has full corporate power and authority to own its properties and to carry on the Business as it is now being conducted and to own, or hold under lease the Purchased Property. 9.1.6 Brokers. Seller has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Buyer for any broker's or finder's fees or similar fees or expenses. 9.1.7 Assumed Liabilities. Seller is not in default with respect to any of its obligations or liabilities that will become Buyer's Assumed Liabilities at the Effective Date or the performance, observance or fulfillment of any covenant or condition relating thereto, and no event has occurred and is continuing that constitutes a material breach or default thereunder or that would constitute such a material breach or default with the giving of notice or lapse of time, or both. 9.1.8 Title to Purchased Property. Seller has good, valid, undivided, marketable and defensible title to all owned Purchased Property, free and clear of all restrictions, charges, liens, or encumbrances of any kind, except for (i) the Assumed Liabilities (ii) the liens, encumbrances and restrictions shown and disclosed on Schedule 9.1.8-1, (iii) current real and personal property taxes and other statutory liens covering amounts not yet due and payable, and (iv) such other imperfections of title and encumbrances, if any, as do not interfere in any material respect with the present use or value of the item of owned Purchased Property to which such imperfection or encumbrance relates. No condemnation proceeding is pending or, to the knowledge of Seller, threatened with respect to any part of the Purchased Property and such Purchased Property is not in any violation of any restrictive covenant relating thereto. Schedule 9.1.8-2 sets forth the address and a general description of each item of Real Property owned by Seller included in the Purchased Property. In addition, Schedule 9.1.8-2 sets forth a list of the Real Property included in the Purchased Property in which Seller holds other than a fee interest (such as easements and rights of way). Except to the extent indicated in Schedules 9.1.8-1 and 9.1.8-2, Seller has the unqualified right to transfer and convey to Buyer Seller's interest in such Real Property. 9.1.9 Leases. Seller has set forth on Schedule 9.1.9 a list of all the Leases. Each of the Leases is valid, binding and enforceable in accordance with its terms, and except as otherwise disclosed in Schedule 9.1.9, there is not any existing material default or existing material breach of a covenant by Seller under any Lease. Seller enjoys peaceful and undisturbed possession under all material Leases and, to Seller's knowledge, the lessor under any such Lease is not (with or without notice or the lapse of time, or both) in material breach or default thereunder, has performed all material obligations required to be performed by it thereunder, and has not given notice of such lessor's intent to terminate such Lease. 9.1.10 Condition of Tangible Assets. All of the tangible Purchased Property is in substantially good operating condition and repair, normal wear and tear excepted, well maintained, adequate for the present uses thereof and in compliance in all material respects with applicable federal, state and local ordinances, regulations and statutes relating to the ownership and operation of such property. Except as set forth on Schedule 9. 1. 10, Seller has not received any written notice within the past twelve (12) months of a violation of any ordinances, regulations or building, zoning and other similar laws with respect to such assets that would have a material adverse effect on the Business as a whole or any significant part of the Purchased Property. Each parcel of Real Property and, to the knowledge of Seller, of real estate leased by Seller and material or necessary to the Business as presently conducted substantially complies with all applicable Laws except where the failure to so comply individually or in the aggregate, would not have a material adverse effect on the Business as a whole or any such parcel after the Effective Date. Except as set forth on Schedule 9.1.10, other than Seller, no person or party has actual possession or has a right to possession of all or any material portion of any parcel of such Real Property or such leased real estate. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 9.1.10, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED OR STATUTORY, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE PERSONAL PURCHASED PROPERTY AND HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED OR STATUTORY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. 9.1.11 Financial Statements. (a) Seller has delivered to Buyer a true and correct copy of its audited financial statements, consisting of a balance sheet, income statement and related statement of cash flows as of and for the respective periods ended December 31, 1992, and December 31, 1993, together with the auditor's report thereon (the "Financial Statements"). The Financial Statements were prepared based upon the books and records of Seller, and fairly present in all material respects the financial condition of Seller as of the appropriate periods and the results of operations for the year then ended, in each case in conformity with GAAP and to the best of Seller's knowledge and to the extent required by applicable law, have been prepared in all material respects in conformity with the regulations of the FCC and the PUC. The Financial Statements contain no untrue statements of any material fact nor omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Additional Financial Statements to be delivered to Buyer pursuant to Section 11.4 hereof (i) will be prepared in each case in accordance with GAAP (except for the omission of notes thereto with respect to interim Additional Financial Statements), consistent with past practices, from the books and records of Seller; and (ii) will fairly present the financial condition of Seller and the results of operations of Seller for the periods indicated, subject, in the case of interim Additional Financial Statements, to normal year-end adjustments which will not be material in amount or effect; and (iii) to the best of Seller's knowledge and to the extent required by applicable Law, will be prepared in all material respects in conformity with the regulations of the FCC and the PUC; and (iv) will not contain any untrue statements of any material facts or omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) The unaudited balance sheet of Seller as of June 30, 1994 was prepared in accordance with GAAP except for the omission of notes thereto, consistent with past practices, from the books and records of Seller and fairly presents the financial condition of Seller as of such date subject to normal year-end adjustments which will not be material in amount or effect, and to the best of Seller's knowledge and to the extent required by applicable Law, was prepared in all material respects in conformity with the regulations of the FCC and the PUC. 9.1.12 Absence of Material Changes. Except as Seller may disclose in Schedule 9.1.12, since December 31, 1993, there has not been: (a) Any material change in the financial condition, results of operations, assets, liabilities, operations or future business prospects of the Business; (b) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the Purchased Property or the Business; (c) Any disposition (including, without limitation, the grant of a license, franchise, option or other right of any nature whatsoever to sell or distribute) or encumbrance or agreement to dispose of or to encumber, or pledge or grant of a security interest in or agreement to pledge or grant a security interest in, any of the Purchased Property, or any increase or an agreement to increase any indebtedness of Seller related to the Business or the Purchased Property, except in the ordinary course of business; (d) Any material change in Seller's tariffs or in the manner of conducting the Business; (e) Any dispute, litigation or other event or condition that materially and adversely affects the business or prospects of the Business or the Purchased Property; (f) Any waiver or release of any material rights or settlement of any material dispute involving the Business or the Purchased Property; (g) Any granting of a material salary increase or other material benefits payable to any Employee, except for ordinary and routine salary increases or bonuses authorized or granted in the ordinary course of business and consistent with past practices; (h) Any transaction entered into by Seller that would have a material adverse effect on the Business as a whole or the Purchased Property as a whole; (i) Any change in the accounting methods or practices of Seller with respect to the Purchased Property or the Business except as required by GAAP or any change in depreciation or amortization policies or rates heretofore adopted by Seller with respect to the Purchased Property or the Business except as required by GAAP; (j) Any material labor dispute or threat thereof which affects generally the Transferred Employees of the Business or, to Seller's knowledge, any attempt to organize the Transferred Employees of the Business for the purpose of collective bargaining; (k) Any event that would have been prohibited under Section 11.5 if Section 11.5 had been in effect since December 31, 1993; or (l) Any agreement or commitment by Seller (or any understanding between Seller and any third party) to do or to take any of the actions referred to in paragraphs (a) through (k) of this Section 9.1.12. 9.1.13 Contracts. Each of the Contracts is in full force and effect as of the date of this Agreement in accordance with its terms, and there is no outstanding notice of cancellation or termination in connection therewith. Seller is not in material breach or default in connection with any Contracts, and there is no basis for any claim of breach or default by Seller, or to Seller's knowledge, any other party, in any material respect under any of the Contracts. None of the Contracts, either separately or in the aggregate, materially and adversely affects the Business or the Purchased Property. After the Effective Date, all rights and obligations of Seller under the Contracts shall continue unimpaired in Buyer (assuming that if any Contract requires the consent of the other party thereto, such consent will have been obtained by the parties hereto prior to the Effective Date). Except for the instruments specifically listed in Schedule 9.1.13, Seller is not a party to or subject to: (i) any agreement for the purchase or disposition of any material, equipment, supplies, inventory or service, except individual purchase orders and contracts in amounts less than Twenty-Five Thousand Dollars ($25,000.00); (ii) any agreement to which Seller is a party or by which any of the Purchased Property is bound relating to indebtedness for money borrowed including capital leases, security arrangements relating thereto and any amendment or waiver thereof; and (iii) any other agreement not of the type covered by any of the foregoing items of this Section 9.1.13 requiring payments by Seller in excess of Seventy-Five Thousand Dollars ($75,000.00) per agreement, on or after the Effective Date. Schedule 9.1.13 also lists (a) each Contract relating to the Business or the Purchased Property between Seller and any Affiliate of Seller, and (b) each material Contract relating to the Business or the Purchased Property between Seller or an Affiliate of Seller and any third party. Seller has made available to Buyer true and correct copies of all agreements and instruments listed in Schedule 9.1.13. Schedule 9.1.13 specifically identifies, with respect to those Contracts which are required to be listed thereon, the Contracts which require the consent, approval or waiver of the other party thereto for the assignment thereof. 9.1.14 Insurance. The Purchased Property of an insurable nature and of a character usually insured by companies carrying on similar businesses is insured under insurance policies in such amounts and against such losses or casualties as is (i) usual in such companies and (ii) required under any of the Contracts or Leases. The insurance policies referred to in this Section 9.1.14 are (i) listed on Schedule 9.1.14, and (ii) in full force and effect and the premiums due thereon have been duly and timely paid. The most current statement of values (the statement of values of property of an insurable nature that is submitted to an insurance company to be used as a basis for the calculation of premiums) relative to the Purchased Property as presently insured has been made available to Buyer by Seller. On the Effective Date, the coverage under the insurance policies and programs applicable to the Purchased Property will be terminated, and Buyer will be responsible for providing all insurance coverage for the Purchased Property. Following the Effective Date, Seller shall be responsible for and shall pay any additional premiums that might be required by an insurance company for insurance coverage prior to the Effective Date relating to the Purchased Property and shall be entitled to any refunds or dividends due from such companies relating to such coverage. All claims that relate to the operation of the Purchased Property prior to the Effective Date shall remain the sole responsibility of Seller. Schedule 9.1.14 sets forth a list of the open material claims affecting the Purchased Property, complete in all material respects, and a description of any self-insurance levels, underlying limits and deductibles. 9.1.15 Taxes. (a) Except as disclosed on Schedule 9.1.15, (i) all Tax Returns required to be filed by Seller on or before the Effective Date with respect to the Business or the Purchased Property have or will have been filed, and all taxes shown as due and payable on such Tax Returns have been or will be paid by Seller when required by law; (ii) all penalties, interest or other charges that have or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax have been or will be timely paid in full, (iii) no deficiencies for any taxes, assessments or other governmental charges have been asserted in writing or assessed against Seller with respect to the Business that remain unpaid and that individually or in the aggregate are material to the Business; (iv) Seller has withheld all required federal, state and local payroll taxes and other similar taxes with respect to creditors and third party vendors, and has remitted all amounts required to be remitted to the appropriate taxing authorities; (v) there are no tax liens upon any of the Purchased Property except for statutory liens covering taxes not yet due and payable; (vi) none of the Purchased Property is tax-exempt use property within the meaning of Section 168(h) of the IRC and none of the Purchased Property is property that is or will be required to be treated as being owned by another person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986; and (vii) Seller is not a "foreign person" within the meaning of Section 1445(b)(2) of the IRC and shall provide an appropriate affidavit for purposes of Section 1445(b)(2) of the IRC. (b) Seller has been subject to normal and routine audits, examinations and adjustments of Taxes from time to time, but there are no material, current audits or material audits for which notification has been received (in either case, with respect to the Business) other than those set forth on Schedule 9.1.15. 9.1.16 No Material Claims. Except as disclosed in Schedule 9.1.16 or with respect to Taxes, there are no claims, actions, lawsuits or legal or administrative proceedings pending, or, to the knowledge of Seller, threatened against or affecting Seller or its properties that, if determined adversely to Seller, would reasonably be expected to have a material adverse effect on the Business as a whole or any significant part of the Purchased Property. Seller does not know of any reasonable basis for any such action, claim, lawsuit or proceeding or any governmental or regulatory investigation relative to the Business or the Purchased Property. Seller is not in default under any judgment, order or decree of any Governmental Authority applicable to the Business or any significant part of the Purchased Property which would reasonably be expected to have a material adverse effect on the Business as a whole or any significant part of the Purchased Property after the Effective Date. 9.1.17 Tariffs: FCC Licenses, Non-FCC Authorizations. (a) With respect to federal tariffs, Seller is an issuing carrier in the National Exchange Carrier Association Tariff F.C.C. No. 5 for the purpose of providing interstate access service. Except as described on Schedule 9.1.17(a), the state regulatory tariffs applicable to the Business stand in full force and effect on the date of this Agreement in accordance with all terms of such state tariffs, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's knowledge, any threatened suspension, cancellation or termination in connection therewith, nor is the Seller subject to any restrictions or conditions applicable to its state regulatory tariffs that limit or would limit the operation of the Business (other than restrictions or conditions generally applicable to tariffs of that type). Except as described on Schedule 9.1.17(a), each such state tariff has been duly and validly approved by the appropriate state regulatory agency. Except as otherwise disclosed on Schedule 9.1.17(a), Seller is not in material violation under the terms and conditions of any such state tariff, and there is no basis for any claim of material violation by Seller in any material respect under any such state tariff. Except as described in Schedule 9.1.17(a), there are no applications by Seller or complaints or petitions by others or proceedings pending or threatened before the state regulatory authority relating to the Business or its operations or the state regulatory tariffs. To the knowledge of Seller, there are no material violations by subscribers or others under any such state tariff that would be material to the Business. A true and correct copy of each state tariff applicable to the Business has been delivered to Buyer. (b) Listed on Schedule 9.1.17(b) are the FCC Licenses held by Seller and used in the operation of the Business. Each such FCC License is in full force and effect in accordance with its terms, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's knowledge, any threatened suspension, cancellation or termination in connection therewith nor are any of such FCC Licenses subject to any restrictions or conditions that limit the operation of the Business (other than restrictions or conditions generally applicable to licenses of that type). Subject to the Communications Act of 1934, as amended, and the regulations thereunder, the FCC Licenses are free from all security interests, liens, claims, or encumbrances of any nature whatsoever. Except as set forth on Schedule 9.1.17(b), there are no applications by Seller or material complaints or material petitions by others or proceedings pending or threatened before the FCC relating to the Business or the FCC Licenses. (c) Listed on Schedule 9.1.17(c) are all Non-FCC Authorizations materially necessary for the conduct of the Business which would include, without limitation, all FAA radio tower ownership authorizations. Each such Non-FCC Authorization is in full force and effect in accordance with its terms. To Seller's knowledge, no event has occurred with respect to any materially necessary Non-FCC Authorization which permits, or after notice or lapse of time or both would permit, revocation or termination thereof, or would result in any other material impairment of the rights of the holder of such materially necessary Non-FCC Authorization. 9.1.18 Employee Matters. (a) Schedule 9.1.18(a) lists (and identifies the sponsor of) each material "employee pension benefit plan, " as that term is defined in Section 3(2) of ERISA, each material " employee welfare benefit plan," as that term is defined in Section 3(1) of ERISA maintained or contributed to by Seller or any of its Affiliates in respect of any Transferred Employee (as defined below) (such plans being hereinafter referred to collectively as the "ERISA Plans"), and each other material retirement, pension, profit-sharing, money purchase, deferred compensation, incentive compensation, bonus, stock option, stock purchase, severance pay, unemployment benefit, vacation pay, savings, medical, dental, post-retirement medical, accident, disability, weekly income, salary continuation, health, life or other insurance, fringe benefit, or other employee benefit plan, program, agreement, or arrangement maintained or contributed to by Seller or its Affiliates in respect of or for the benefit of any Transferred Employee or former employee, excluding any such plan, program, agreement, or arrangement maintained or contributed to solely in respect of or for the benefit of Transferred Employees or former employees employed or formerly employed by Seller outside of the United States, as of the date hereof (collectively, together with the ERISA Plans, referred to hereinafter as the "Plans"). Schedule 9.1.18(a) also includes a list of each material written employment, severance, termination or similar-type agreement between Seller or its Affiliates and any Transferred Employee (the "Employment Agreements"). Except to the extent that any assets, liabilities, or accounts are transferred from the Plans or Agreements (pursuant to an Employee Transfer Agreement or otherwise) to plan(s) or agreement(s) maintained or contributed to by Buyer, all such Plans and Agreements shall remain the liabilities of the Seller or its Affiliates and Seller shall take any and all steps necessary to ensure that Buyer shall not be a sponsor of any such Plan or Agreement subsequent to the Effective Date. Except as otherwise disclosed on Schedule 9.1.18(a), the execution and delivery of this Agreement by Seller and the performance of this Agreement by Seller will not directly result now or at any time in the future in (i) the payment by Seller or its Affiliates to any Transferred Employee of any severance, termination, or similar type payments or benefits or (ii) any "parachute payment" (as such term is defined in Section 28OG of the IRC) being made by Seller or its Affiliates to any Transferred Employee. (b) Except as set forth on Schedule 9.1.18(b): (i) Neither Seller nor any of its Affiliates, any of the ERISA Plans, any trust created thereunder, or any trustee or administrator thereof, has engaged in any transaction as a result of which Seller could be subject to any material liability pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC; and (ii) Since the effective date of ERISA, no material liability under Title IV of ERISA with respect to the ERISA Plans has been incurred or is reasonably expected to be incurred by Seller or any of its Affiliates (other than liability for premiums due to the PBGC), unless such liability is reserved for or otherwise reflected on the Financial Statements or unless such liability has been, or prior to the Effective Date will be, satisfied in full. (iii) There is no contract or Employment Agreement covering any Transferred Employee or former employee of the Seller that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the IRC. (iv) Neither the Seller nor any of its Affiliates has engaged in, or is a successor or parent corporation to a person that has engaged in, a transaction described in Section 4069 of ERISA. (c) Except as set forth on Schedule 9.1.18(c), with respect to the ERISA Plans other than those ERISA Plans identified on Schedule 9.1.18(a) as "multi-employer plans": (i) the PBGC has not instituted proceedings to terminate any Plan that is subject to Title IV of ERISA (the "Retirement Plans") and no condition exists or has existed which could constitute grounds for any termination by PBGC; (ii) no filing has been made by the Seller, or any of its Affiliates with the PBGC to terminate any Retirement Plan identified on Schedule 9.1.18(a); (iii) none of the ERISA Plans has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the IRC), whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to the Execution Date; (iv) each of the ERISA Plans has been operated and administered in all material respects in accordance with its provisions and with all applicable laws; (v) each of the ERISA Plans that is intended to be "qualified" within the meaning of Section 401(a) of the IRC and, to the extent applicable, Section 401(k) of the IRC, has been determined by the IRS to be so qualified, and nothing has occurred since the date of the most recent such determination (other than the effective date of certain amendments to the IRC, the remedial amendment period for which has not yet expired) that would adversely affect the qualified status of any of such ERISA Plans; (vi) there are no pending material actions, claims or lawsuits which have been asserted or instituted against any of the ERISA Plans, the assets of any of the trusts under such Plan, the plan sponsor, the plan administrator, trustee or any other fiduciary of such Plans with respect to any aspect of such ERISA Plans (except for routine benefit claims or routine expenses). (d) Except as set forth on Schedule 9.1.18(d), none of the ERISA Plans is a "multi-employer plan," as that term is defined in Section 3(37) of ERISA and with respect to any such multiemployer plans (as so defined) listed in Schedule 9.1.18(d), Seller has not made or incurred a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA that would result in the incurrence of a material liability by Seller that is not reserved for or otherwise reflected on the Financial Statements. (e) Except as set forth on Schedule 9.1.18(e), no post- retirement medical and life insurance benefit obligations exist with respect to any Transferred Employees or former employees of Seller. (f) No Plan identified on Schedule 9.1.18(a) has any restrictions against termination or modification, either by its terms or, to Seller's knowledge, due to any written or oral communications by any representative of the Seller nor any of its Affiliates. (g) Except as set forth on Schedule 9.1.18(g), (i) none of the Transferred Employees are represented by a labor union or labor organization and (ii) neither Seller nor any of its Affiliates is a party to nor is Seller subject to, any collective bargaining agreement covering any Transferred Employee. There are currently no strikes, slowdowns, work stoppages or lockouts by or with respect to any Transferred Employee covered by collective bargaining agreements. Except as set forth on Schedule 9.1.18(g), to the best knowledge of Seller, during the twelve (12) months preceding the Execution Date there have not been any union organizational campaigns by or directed at the employees of Seller. Except as set forth on Schedule 9.1.18(g), no condition has existed or exists that has caused or could be expected to result in the imposition of any lien or encumbrance under ERISA or the IRC on any part of the Purchased Property. (h) Seller will make available to Buyer, prior to the Closing Date, a list of those Transferred Employees that Seller believes to have participated in the health or dependent care reimbursement accounts of Seller, together with the elections made prior to the Effective Date with respect to such accounts through the Effective Date. 9.1.19 Schedules of the Telephone Plant. Seller has set forth on Schedule 9.1.19 copies of schedules (at the level of detail agreed to by the parties but in any case including details regarding net book value and continuing property records lists associated therewith) of its Telephone Plant as of June 30, 1994, including, to the extent available, a schedule specifically identifying the Telephone Plant that is associated with the Unregulated Business. The account balances reflected on the schedule of Telephone Plant correspond, in all material respects, to the associated account balances reflected on the Continuing Property Records. 9.1.20. Accuracy of Certain Information. Seller hereby represents and warrants to Buyer as follows: (a) The information regarding type of central office switch and number of access lines in service for each exchange set forth on Schedule 9.1.20 (a) is true and complete in all material respects as of the respective dates set forth thereon. (b) The information set forth only with respect to the 1993 column of the "Capital Budget-Network Modernization Forecast" attached as Schedule 9.1.20 (b) is true and complete as of December 31, 1993. (c) Schedule 9.1.20 (c) sets forth a substantially complete list of all vehicles included in the Purchased Property (including trailers, equipment mounted on trailers and self- propelled equipment) together with the manufacturer, model and year of each such vehicle, and indicates whether such vehicle is owned or leased by Seller. (d) [INTENTIONALLY DELETED] (e) Schedule 9.1.20(e) sets forth a true and complete list of the interstate billing and collection revenues and intrastate interlata billing and collection revenues of Seller from the Business for the year 1993. 9.1.21 Rate Base. Except as set forth on Schedule 9.1.21, Seller has no materials and supplies, plant or equipment used in the Business that has been disallowed from rate base or excluded from the revenue calculations for any pool (unless due to the deregulation of the service for which such assets are used) or in the most recent rate order issued by the PUC or the FCC or any determination by an administrator of an interstate or intrastate pool, and has not received written notification that the PUC or the FCC or any pool administrator proposes to exclude any assets from rate base or revenue calculations for the pools, or any tariff filed with or approved in the most recent rate order of the PUC or the FCC, in each case which materials and supplies, plant or equipment, in the aggregate, would be in excess of one percent (1%) of Net Telecommunications Plant. 9.1.22 Payments. All material payments of any kind required to be made by Seller to third parties under any Contract and maturing prior to the Effective Date have been, or will be as of the Effective Date, properly and timely paid or provided for, unless otherwise subject to a bona fide dispute disclosed in Schedule 9.1.22. 9.1.23 Compliance with Laws. Except as Seller shall specifically indicate on Schedule 9.1.23, (i) Seller is in compliance in all material respects with all Laws applicable to the Purchased Property and the Business and holds all governmental permits or licenses required in order to conduct the Business and to own and operate the Purchased Property; (ii) the present uses of the Purchased Property in the conduct of the Business do not violate in any material respect any Law and (iii) no written notice or warning from any governmental or regulatory authority with respect to any failure or alleged failure by Seller to comply with any Law or questioning the validity of any governmental permit or license, with respect to the Business or the Purchased Property has been issued or given, nor to the knowledge of Seller, is any such notice or warning proposed or threatened. Seller is not aware of any fact, event or circumstance relating to Seller that is reasonably likely to cause a regulatory agency to deny or withhold its approval to the transactions contemplated hereby. 9.1.24 Correct Records. The financial records, ledgers, account books and other accounting records of Seller relating to the Business are current, correct and complete and reasonably well organized, in all material respects and to the best of Seller's knowledge and to the extent required by applicable Law, conform in all material respects with the rules and regulations of the FCC and PUC. Seller and its Affiliates have retained substantially all Original Cost Documents regarding the expenditures made by Seller within the immediately preceding two-year period that relate to Seller's Net Telecommunications Plant, and such Original Cost Documents are correct and complete in all material respects. 9.1.25 Materials and Supplies. As of the Effective Date, the value (as reflected on Seller's books) of Seller's materials and supplies relating to the Business which are obsolete or in excess of the requirements of the Business, will not materially exceed Seller's reserve for obsolete or excess Materials and Supplies as reflected on Seller's books. 9.1.26 Assets Necessary to the Business. The Purchased Property includes all of the assets and properties (including all licenses and agreements) currently being used or which are reasonably necessary to carry on the Business as currently conducted, other than the assets and properties included in the Excluded Property. 9.1.27 [INTENTIONALLY DELETED] 9.1.28 Unregulated Business. Schedule 2.2(b) is an accurate summary description of the Unregulated Business, in detail reasonably acceptable to Buyer. 9.1.29. Capital Improvements Required by PUC. Except as set forth on Schedule 9.1.29, there are no changes, modifications, upgrades or enhancements required by the PUC to be made to the Purchased Property or the operation thereof. 9.2 Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows: 9.2.1 Corporate Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has the requisite corporate power and authority to own, lease or otherwise hold the assets owned, leased or held by it. 9.2.2 Authorization and Effect of Agreement. Buyer has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement, to carry on the Business as presently conducted and to fulfill all other obligations of Buyer under this Agreement. The execution and delivery by Buyer of this Agreement and the fulfillment by it of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Buyer. Buyer has the requisite legal capacity to purchase, own and hold the Purchased Properties upon the consummation of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Buyer and, assuming the due execution and delivery of this Agreement by Seller, constitutes a valid and binding obligation of Buyer, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualifications that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.2.3 No Restrictions Against Purchase of the Purchased Properties. The execution and delivery of this Agreement by Buyer do not, and the fulfillment by Buyer of its obligations under this Agreement will not, conflict with, violate or result in the breach of any provision of the certificate of incorporation or bylaws of Buyer or, subject to obtaining the approvals and consents referred to in Article 5, conflict with, violate or result in the breach of, constitute default under, or accelerate the performance required by any Contract to which Buyer is a party. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by or with respect to Buyer in connection with the execution and delivery of this Agreement by Buyer or the fulfillment by Buyer of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, (ii) real estate deeds and other documents filed in connection with the transfer of the Real Property included in the Purchased Property, and (iii) certificates of title for the motor vehicles included in the Purchased Property. 9.2.4 No Violation of Law. The execution and delivery of this Agreement and the fulfillment by Buyer of its obligations under this Agreement will not violate any Law. 9.2.5 Brokers. Buyer has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Seller for any broker's or finder's fees or similar fees or expenses. 9.2.6 No Material Claims. There are no claims, actions, lawsuits or legal proceedings pending or, to the knowledge of Buyer, threatened against Buyer or its properties that would prevent the consummation of the transactions contemplated by this Agreement. 9.2.7 FCC Tariffs. In connection with obtaining assignment to Seller's FCC's Licenses, as described in Section 5.4, Buyer will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Purchased Exchanges shall remain in the National Exchange Carrier Association Tariff FCC No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. ARTICLE 10. CONTINUING BUSINESS RELATIONSHIPS 10.1 Transition Services Agreement. If requested in writing by Buyer on or prior to March 15, 1995, the parties shall, as promptly as practicable but in any event within 30 days after Buyer's written request, negotiate in good faith and enter into a Transition Services Agreement, to be effective no later than the Effective Date, pursuant to which Seller will provide to Buyer, at Buyer's expense, such financial, accounting, billing, computer, network, administrative and other services (including services relating to the conversion of systems and processes) as may be reasonably requested by Buyer, which agreement shall be in form and substance as mutually agreed to by both Buyer and Seller (the "Transition Services Agreement"). ARTICLE 11. ADDITIONAL COVENANTS OF THE PARTIES 11.1 Intellectual Property. 11.1.1 Definition. "Intellectual Property" means all inventions (whether patentable or not and whether or not such inventions are described or claimed in any patent or patent application), designs (useful or ornamental), and works subject to copyright that may be embodied in, without exclusion, invention disclosures, specifications, manuals, drawings, functional or system block diagrams, flow charts, circuit diagrams, design or user documentation, engineering notebooks, schematics, test programs, documented procedures, documented processes, documented flows, devices, software, or firmware, that relate to the function, design, development, manufacture, testing, use, operation, maintenance or repair of any product, apparatus, article of manufacture, process, method or service. "Intellectual Property" shall also include patents, patent applications (including continuations, continuations-in-part, divisions, reissues, reexamined patents and patent applications and extensions thereof), copyrights (whether common law or statutory, registered or unregistered), or trade secrets, residing in the subject matter above. 11.1.2 Grant by Seller. (a) Subject to the terms and conditions of this Agreement, effective on the Effective Date, Seller shall grant to Buyer, and Buyer shall accept, a nonexclusive, fully paid, royalty-free, perpetual license for the Intellectual Property that, on the Effective Date, Seller owns or controls or with respect to which Seller has an unrestricted right to grant such license without permission from, or any consideration to, any third party, and if Seller has a restricted right to grant such license, Seller will use its best efforts to assist Buyer (provided that Buyer shall be responsible for any fees associated therewith) in obtaining the consent for the use of any such license, provided that the above grant and any assistance required by Seller shall be effective with respect to only such Intellectual Property that Seller has placed in public use on, or prior to, the Effective Date and that is presently used by Seller, in the ordinary and normal course of the Business, and shall exclude any Intellectual Property listed in Schedule 2.4(g). The above license shall include the right of Buyer to grant sublicenses after the Effective Date to vendors and customers of Buyer and to other third parties, as is necessary in the ordinary and normal course of the Business with respect to the Purchased Property. (b) The grant set forth in Section 11.1.2(a) is made subject to preexisting agreements; however, Seller represents that it is aware of no other agreement that precludes the grant made herein. (c) The above Sections 11.1.2(a) and (b) set forth Seller's entire obligation with respect to the license of Intellectual Property to Buyer. Except as specifically provided otherwise in this Agreement or any other agreement between Buyer and Seller, Seller shall have no continuing obligation beyond the Effective Date to provide support of any kind in Buyer's use of such Intellectual Property. (d) Buyer agrees and understands that Seller or its Affiliates shall retain ownership of all Intellectual Property owned by Seller or its Affiliates as of the Effective Date. Buyer further agrees and understands that the retained ownership shall include the right of Seller to grant licenses to vendors and customers of Seller, and to other third parties. (e) Additional agreements, if any, between Buyer and Seller regarding possession and use by Buyer of computer software that is owned by Seller, or that is licensed by an Affiliate of Seller to Seller, are set forth in Schedule 11.1.2. 11.1.3 Nonassertion. In addition to granting to Buyer the license set forth in Section 11.1.2, Seller agrees that, with respect to the Intellectual Property that as of the Effective Date Seller owns or controls or under which it has the right to grant licenses, Seller shall not assert against Buyer, or Affiliates of Buyer, or vendees, mediate or immediate, of Buyer, a claim of infringement, misappropriation or misuse of such Intellectual Property right arising from Buyer's activities practiced in the ordinary and normal course of the Business. 11.1.4 Infringement. (a) Notwithstanding any other provision of this Agreement and subject to the representation in Section 11.1.3, Buyer understands that Seller has not made or given, and does not make or give, any warranty as to the value, enforceability, or validity of any Intellectual Property or that the use by Buyer of any Intellectual Property under this Agreement will not infringe other intellectual property rights not licensed under this Agreement. (b) Nothing contained in this Agreement shall be construed as an agreement by, or obligation of, Seller to bring or prosecute actions or suits against third parties for infringement or violation of any Intellectual Property licensed hereunder. (c) Seller shall have no obligation to defend, indemnity or hold harmless Buyer from any damages, costs or expenses resulting from any obligation, proceeding or suit based upon any claim that any activity, subsequent to the Effective Date, engaged in by Buyer, a customer of Buyer's or anyone claiming under Buyer constitutes direct or contributory infringement or misuse of any intellectual property rights not licensed under this Agreement. (d) Buyer shall be liable for and shall hold Seller and its Affiliates harmless from and against any and all Indemnifiable Losses resulting from any obligation, proceeding or suit based upon any claim that any activity conducted or engaged in, subsequent to the Effective Date, by Buyer, a customer of Buyer's, or anyone claiming under Buyer constitutes direct or contributory infringement, or misuse, or misappropriation of any intellectual property right of any third party. 11.1.5 Trademark Phaseout. Buyer acknowledges that Seller or its Affiliates are the owners of certain trade names, trade dress, trademarks, service marks, logos and related intangible property (collectively, "Marks") used in connection with the Business, including, without limitation, the items listed on Schedule 11.1.5, and Buyer understands and agrees that the Marks, or any right or license to the Marks are not being transferred pursuant to this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in the use of the Marks, and Buyer agrees that it shall not use the Marks (or any names or Marks confusingly similar to the Marks) except as expressly set forth in this Section 11.1.5. After the Effective Date, all Marks of Seller shall be replaced by Buyer as soon as possible, but in no event later than one hundred eighty (180) days after the Effective Date for Marks affixed to items with a valid continuing use in Buyer's conduct of the Business, including, without limitation, buildings, vehicles, heavy equipment, hard hats, tools, tool boxes, kits (safety and others), signs, manual covers and notebooks. After the Effective Date, Buyer will not use, and will destroy or deliver to Seller, all such items with Marks affixed to them that have no valid continuing use in Buyer's conduct of the Business, including items affecting customer or employee relations or items that do not reflect Buyer's true identity. Specific items to be destroyed or returned include items with Marks affixed to them including, without limitation, giveaways; order, purchase or materials forms; requisitions; invoices; statements; time sheets/labor reports; bill inserts; stationery; personalized note pads; maps; organization charts; bulletins/releases; sales/price literature; manuals or catalogs; report covers/folders; program materials; and materials such as media contact lists/cards. The one hundred eighty (180) day time period for replacement of Marks affixed to telephone directories that were already published or closed for publication as of the Effective Date shall be extended to the production of replacements for such directories. 11.1.6 Goodwill. Buyer recognizes the value of the goodwill associated with the Marks, and acknowledges that the Marks and all rights therein and the goodwill pertaining thereto belong exclusively to Seller, and that the Marks have a secondary meaning in the minds of the public. 11.1.7 Quality of Goods. Buyer agrees that the conduct of the Business after the Effective Date by Buyer using the Marks shall be provided in accordance with all applicable federal, state and local laws, and that the same shall not reflect adversely upon the good name of Seller, and that the conduct of the Business will be of a standard and skill equivalent to that employed by Seller prior to the Effective Date. 11.1.8 Seller's Remedies for Unauthorized Use of Marks. Buyer acknowledges that its failure to cease use of the Marks as provided in this Agreement, or its improper use of the Marks, will result in immediate and irreparable damage to Seller. Buyer acknowledges and admits that there is no adequate remedy at law for such failure to terminate use of the Marks, or for such improper use of the Marks, and Buyer agrees that in the event of such failure or improper use, Seller shall be entitled to equitable relief by way of temporary restraining order or injunction or any other relief available under this Agreement. 11.2 Effect of Due Diligence and Related Matters. Buyer represents that it is a sophisticated entity that was advised by knowledgeable counsel and, to the extent it deemed necessary, other advisors in connection with this Agreement and by the Effective Date will have conducted its own independent review and evaluation of the Purchased Property. Accordingly, Buyer covenants and agrees that (i) except for the representations and warranties set forth in this Agreement and the Schedules (and the Financial Statements, the Additional Financial Statements, and actuarial reports required pursuant to the Employee Transfer Agreement), Buyer has not relied and will not rely upon any document or written or oral information furnished to or discovered by it or its representatives, (ii) there are no representations or warranties by or on behalf of Seller or its Affiliates or representatives except for those expressly set forth in this Agreement and in any other written agreement entered into with Seller or any of its Affiliates in connection with this Agreement, and (iii) to the fullest extent permitted by law, Buyer's rights and obligations with respect to all of the foregoing matters will be solely as set forth in this Agreement or in such other written agreements. 11.3 Confidentiality. Whether or not the Closing occurs, the parties hereto and their respective officers, directors, employees and representatives will comply with the Confidentiality Agreement, the provisions of which are expressly incorporated herein in their entirety by this reference. 11.4 Additional Financial Statements. Seller shall deliver to Buyer the following financial statements of Seller (collectively, the "Additional Financial Statements") within the time periods set forth below: (a) Within forty-five (45) days after the Execution Date for the month of October, 1994, and within forty-five (45) days after the close of each month beginning with November, 1994, and continuing up to and including the month next preceding the month in which the Closing occurs, a balance sheet and income statement as of and for such month, and as of and for the year-to- date period then ended; and (b) By April 30, 1995, a balance sheet for the year ended December 31, 1994, and an income statement and statement of cash flows for 1994, together with the auditor's report thereon. 11.5 Conduct of Business. From the Execution Date until the Effective Date, Seller shall conduct the Business in the ordinary course in accordance with prudent business judgment and consistent with past practice and policy and shall (i) preserve the Business as an ongoing business, (ii) keep available to the Business its services and the services of its Affiliates at least to the same extent as such were generally available from January 1, 1994 through the Execution Date and are available on the date hereof, (iii) not take any action that would jeopardize any material and beneficial contractual relationships with persons having business dealings with the Business, and (iv) preserve all of the Business' tariffs, certificates, licenses, authorizations and other rights. From the Execution Date to the Effective Date, except with the prior written consent of Buyer, which the Buyer shall not unreasonably withhold: (a) The Business will be conducted in substantially the same manner as it is presently being conducted on the Execution Date. With respect to the Business, Seller will refrain from entering into any material transaction or contract other than in the ordinary course of business and will not make any material change in the general nature of the Business or in its methods of management, marketing, accounting or operations (including repair and maintenance functions). (b) Seller will not, with respect to the Business, (i) create or incur any indebtedness for borrowed money or otherwise, except in the ordinary course of business, (ii) enter into or terminate, as lessor or lessee, any Lease other than in the ordinary course of business, (iii) create any liens or other security interest, except in the ordinary course of business, or (iv) change in any material respect or terminate any of the insurance policies referred to in Section 9.1.14, unless equivalent coverage is obtained. (c) Except as listed or described on Schedule 11.5(c), and except for dispositions of salvaged property that has been replaced in accordance with the plans attached in Schedule 11.5(c), Seller will not sell, lease, dispose of or otherwise transfer, or make any contract for the sale, lease, disposition or transfer of any Purchased Property other than, with respect to any individual item (other than vehicles) having a value of less than Seventy-Five Thousand Dollars ($75,000.00) and with respect to all items (other than vehicles) the aggregate value of which shall not exceed Two Hundred Fifty Thousand Dollars ($250,000.00). (d) Without prior reasonable notification to Buyer, or unless otherwise expressly directed by the PUC, Seller will not (i) institute any proceeding with respect to, or otherwise change, amend or supplement any tariff or (ii) enter into or agree to any stipulation, order, or decree of, or settlement with the PUC that, in case of (i) or (ii) above, would have a material adverse effect on the revenue, authorized return on equity or earnings of the Business. Seller will not file any application, petition, motion, brief, testimony, settlement agreement or other pleading in any proceeding before the PUC, or before the FCC (except for filings on behalf of all of Parent's local exchange telephone companies) or appeals related thereto, unless Seller shall have first provided Buyer with a copy of the same and provided Buyer a reasonable opportunity to comment to Seller with respect thereto. If Buyer determines it should intervene in any proceeding before the PUC in which Buyer's position is or may be different from Seller's, Seller, without waiving any other rights related thereto, will not oppose Buyer's intervention in such proceeding. (e) Except as listed on Schedule 11.5(e) or as required by law or in the ordinary course of business of Seller or pursuant to any Contract, not (i) enter into or amend any employment agreement with any individual that will become a Transferred Employee, or enter into or amend any union agreement or commitment (including any new commitment to pay retirement or other benefits, or amendments to the Seller's retirement plans), (ii) effect any net increase over five percent (5%) since the Execution Date in the number of employees of the Seller who will become Transferred Employees, or (iii) increase over 5% the benefit provided under any plans concerning employee benefits or increase the general rates of compensation of the Transferred Employees, or change the manner by which compensation (including fringe benefits) is determined and paid to any Transferred Employee. (f) Seller will not engage in any intercompany transactions with any Affiliate of Seller, except for transactions consistent with past practices. (g) Seller shall maintain the Purchased Property in good repair, order and condition, reasonable wear and use excepted, and shall maintain the Transferred Books and Records and Retained Books and Records in the usual, regular and ordinary manner on a basis consistent with prior years. (h) Seller will not make any commitment to take any actions prohibited by the provisions of this Section 11.5. 11.6 Construction Projects and Capital Budget. By December 31, 1994, Buyer and Seller shall have met and reviewed Seller's construction and other capital expenditure plans for the calendar years 1994 and 1995 (or such later date agreed to by the parties). The construction and capital expenditure plans which Buyer shall have approved (both as to the type of project and the dollars expended) shall be set forth on Schedule 11.6, and the parties agree that when such expenditures have been incurred they will constitute an addition to a component of Seller's Net Telecommunications Plant thereby becoming subject to Section 3.2(c). Seller agrees to use its best efforts substantially to complete such plans within the projected time schedules; provided, that Seller will not incur any liability for unbudgeted expenditures in excess of $200,000.00 in the aggregate without the prior written consent of Buyer. All construction work that is in progress on the Effective Date will be accounted for by identifying and accruing all associated time reporting, material invoices or contractor invoices inputted or received on or before the Effective Date, and all payments therefor shall be the responsibility of Seller and will constitute an addition to a component of Seller's Net Telecommunications Plant thereby becoming subject to Section 3.2(c). 11.7 Further Assurances. After the Closing, Seller will furnish to Buyer such other instruments and information as Buyer may reasonably request in order to convey to Buyer title to the Purchased Property, to be delivered from time to time upon Buyer's reasonable request. 11.8 Prorations. (i) The following liabilities shall be prorated between Seller and Buyer: (a) utility charges (which shall include, without limitation, water, sewer, electricity, gas and other utility charges) with respect to the Real Property, the property subject to the Leases and customer owned equipment, (b) rental charges (which shall include, without limitation, rental charges and other lease payments under the Leases), (c) real and personal property taxes and (d) regulatory and telephone relay service fees, with respect to measurement periods during which the Effective Date occurs (all such periods of time being hereinafter called "Proration Periods"), the liabilities described in clauses (a) and (b) of the preceding sentence shall be apportioned between Seller and Buyer as of the Effective Date, with Buyer bearing only the expense thereof in the proportion that the number of days in the applicable Proration Period after the Effective Date bears to the total number of days covered by such Proration Period. Real and personal property taxes shall be prorated between Buyer and Seller based on the period the Purchased Property was owned by each respective party during the fiscal period for which such taxes were unposed by the taxing jurisdiction (as such fiscal period is reflected on the bill rendered by such taxing jurisdiction). Buyer and Seller shall pay or be reimbursed for real and personal property taxes (including instances in which such property taxes have been paid before the Effective Date) prorated on this basis. Unless otherwise handled as an adjustment to the Purchase Price and then, only to such extent, if a payment on a prorated bill is due after the Effective Date, the party that is legally or contractually required to make such payment shall make such payment and promptly forward an invoice to the other party for its pro rata share, if any. If the other party does not pay the invoice within thirty (30) calendar days of receipt, the amount of such payment shall bear interest at the rate of seven percent (7%) per annum beginning from the date thirty (30) calendar days after receipt until time of payment. (ii) All prepayments made by Seller with respect to service or maintenance agreements with third parties shall be prorated between Seller and Buyer to the extent Buyer shall receive the benefits of such prepayments after the Effective Date. (iii) All Universal Service Fund payments by NECA or its state equivalent received by either of the parties with respect to a Proration Period concerning the Purchased Exchange shall be apportioned between Seller and Buyer as of the Effective Date, with Buyer receiving and being allowed to retain only that portion of the payment that the number of days in the applicable Proration Period after the Effective Date bears to the total number of days covered by such Proration Period. 11.9 Risk of Loss Prior to the Effective Date. If any material damage, loss or destruction of any sort (including, without limitation, by theft, unauthorized use, fire, act of God or condemnation) occurs prior to the Effective Date to any of the tangible properties that constitute the Purchased Property, Seller shall promptly notify Buyer thereof (the "Casualty Notice"). (a) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace such damaged, lost or destroyed Purchased Properties (the "Damaged Property") will exceed One Million Nine Hundred Fifty One Thousand Two Hundred Dollars ($1,951,200.00), either party may, by written notice to the other party (the "Casualty Termination Notice") within thirty (30) days after the date of delivery of the Casualty Notice, terminate this Agreement. (b) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace the Damaged Property will not exceed One Million Nine Hundred Fifty One Thousand Two Hundred Dollars ($1,951,200.00), or the Casualty Termination Notice is not given by either party, then Seller, within forty-five (45) days after the damage or destruction, shall agree in writing, (i) to repair or replace, prior to the Effective Date or at some later date as may be mutually agreed to by the parties, at Seller's sole cost and expense, the Damaged Property, and Seller will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will be excluded from the Purchased Property and will become an Excluded Asset, Seller will substitute therefor an equivalent item or items of Purchased Property if the Damaged Property is personal property and if the Damaged Property is Real Property substitute Real Property therefor but only if such substituted personal property or Real Property is satisfactory to Buyer, and Seller will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property. (c) if Seller fails to make an election pursuant to Section 11.9(b)(i) or (ii), the Buyer shall have the option, within thirty (30) days after the initial forty-five (45) day period, to elect one of the following options: (i) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the Manner contemplated by this Agreement, the Damaged Property will remain part of the Purchased Property, the adjustment to the Purchase Price contemplated by Section 3.2(a)(1) will be made, and Seller shall be entitled to make all claims related to the Damaged Property and to receive and retain any proceeds of insurance received by Seller with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will be excluded from the Purchased Property and will become Excluded Assets, Seller will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property, and the Purchase Price Adjustment contemplated by Section 3.2(a)(2) will be made. (d) Notwithstanding the other provisions of this Section 11.9, if the time periods pursuant to this Section 11.9 continue beyond the Effective Date or if Seller has not fully performed its obligations pursuant to Section 11.9(b)(i) or 11.9(b)(ii) prior to the Effective Date (or otherwise made reasonably satisfactory arrangements with Buyer), either party hereto may elect to postpone the Closing and the Effective Date, until the expiration of any such periods or the full performance of such obligations, which election shall be binding upon all parties hereto. 11.10 Settlements and Cost Studies. Seller agrees that, with respect to all toll revenues, settlements, pools, separations studies, Universal Service Fund payments or similar activities, Seller shall be responsible for (and shall receive the benefit or suffer the burden of) the results of any such activities that are related to the conduct of the Business or the ownership or operation of the Purchased Property on or before the Effective Date. 11.11 Construction Advances and Customer Deposits. Seller agrees to transfer to Buyer as of the Effective Date all of Seller's rights to hold and control the construction deposits of the Business (and interest thereon, if any) held by Seller as of the Effective Date (the "Construction Advances") and the customer deposits, advances and interest of the Business held by Seller as of the Effective Date (the "Customer Deposits"), and Buyer agrees to hold, disburse and retain such Construction Advances and Customer Deposits in accordance with the tariffs, laws and Contracts related thereto. The parties acknowledge that the Purchase Price adjustment pursuant to Section 3.2(b) is intended to compensate Buyer for the liability associated with the Construction Advances and Customer Deposits. 11.12 Other Contracts. 11.12.1 Telephone Directories Published by ALLTEL Publishing Corporation. The Directory Publishing Agreement dated as of November 15, 1994, by and between Seller and ALLTEL Publishing Corporation (the "Directory Publishing Agreement") is an Excluded Contract on Schedule 2.4(g), except as hereinafter provided. Within thirty (30) days after the Execution Date, Buyer shall cause its existing directory provider to indicate in writing whether it will provide directory publication services to Buyer, as of the Effective Date (or as of such later date as described below) with regard to all of the Purchased Exchanges on the same terms and conditions as it is presently providing such services to Buyer, and Buyer shall inform Seller within such thirty (30) day period of Buyer's existing telephone directory provider's written intention. If Buyer's existing directory provider's indication is that it will not provide directory publication services for all of the Purchased Exchanges on the same terms and conditions that it is presently providing such services to Buyer, then the Directory Publishing Agreement shall be deemed to become a Contact for the purposes of this Agreement. Promptly, thereafter, the Buyer and ALLTEL Publishing Corporation shall agree to meet in good faith to negotiate any necessary amendments to the Directory Publishing Agreement, to be effective as of the Effective Date, to provide for a retention rate equal to or greater than the higher of (x) 60% or (y) the retention rate provided for in any substantially similar directory publishing agreement between ALLTEL Publishing Corporation and a non-Affiliate of ALLTEL Publishing Corporation that was entered into within 18 months prior to the Effective Date. If Buyer's existing directory provider indicates that it will provide directory publication for all the Purchased Exchanges, as provided above, the Directory Publishing Agreement shall remain in effect as to the directory of each of the Purchased Exchanges for which (i) the directory is scheduled to be or is published prior to the Effective Date, or (ii) the canvass for the directory has begun prior to the Effective Date and it is scheduled to be published after the Effective Date. Under such circumstances, the Buyer's existing directory provider will not begin providing directory publication services for such exchange until canvass and production begins for the next succeeding directory related to such Purchased Exchange. 11.12.2 Telephone Directories-General. If Buyer's existing directory provider indicates that it will provide directory publication for all of the Purchased Exchanges, as provided in Section 11.12.1 of this Agreement, Seller and Buyer agree to cooperate and to use their best efforts as follows: (a) Seller will deliver to Buyer on a date mutually agreeable to Buyer and Seller, copies of all records, documents, and materials of the Seller even if in the possession of a third party (the "Directory Records") related to directories of the Purchased Exchange that are published by Seller or its Affiliate. (b) Except as otherwise agreed between the parties, Seller and its Affiliate shall have no responsibility for the canvass and production functions of any directories related to the Purchased Exchanges that are scheduled to begin canvassing and publication after the Effective Date. (c) Seller and Seller's Affiliates and Buyer shall provide the other reasonable access to such documentation, reports and accounting records related to directory production as may be necessary to insure a proper transition of directory production in accordance with the terms of such agreements in effect on the Effective Date. (d) As promptly as practicable after receipt by Seller of Buyer's existing directory provider's indication that it will provide directory publication services for all of the Purchased Exchanges, Seller or its Affiliate (ALLTEL Publishing Corporation), and Buyer will meet to negotiate in good faith to agree upon the services or work, if any, that Seller or its Affiliate (ALLTEL Publishing Corporation) will provide, and the compensation that the Buyer will pay for such services and work, related to any directories that will be canvassed and published by Buyer's existing directory provider. 11.12.3 B&C Agreements. Seller and Buyer shall, prior to the Closing, use their best efforts to allow Buyer to negotiate a billing and collection agreement ("B&C Agreement") reasonably satisfactory to Buyer with each interexchange carrier ("IXC") and each local exchange carrier ("LEC") for which Seller provides, on the Execution Date, billing and collection services in any Purchased Exchange (each such IXC or LEC is hereinafter referred to as a "Carrier"). Seller and Buyer shall cooperate with each other and make available to each other all documents and records relevant and necessary to allow Buyer to finalize negotiations of B&C Agreements, as necessary, and to perform such B&C Agreements after the Effective Date. 11.12.4 Equipment Manufacturers. Seller shall use its best efforts to assist Buyer in obtaining a written agreement with such equipment manufacturers (such as Northern Telecom and Stromberg- Carlson; collectively "Equipment Manufacturers") as Buyer may request, covering such software license agreements and other agreements as are necessary to enable Buyer to operate the equipment manufactured and sold by the Equipment Manufacturers included in the Purchased Property in substantially the same manner as operated by Seller prior to the Effective Date. The agreements shall contain material terms and conditions (including license and warranty, but not necessarily including pricing) that are substantially the same as those provisions in the corresponding agreements between Seller and the Equipment Manufacturers. Buyer understands and agrees that the price and fee provisions of such agreements will be as negotiated between Buyer and the Equipment Manufacturers. The above obligation of Seller shall be expressly conditioned upon the acceptance by Buyer of all material obligations accepted by Seller in such corresponding agreements. It is the responsibility of Buyer to enter into appropriate agreements with the Equipment Manufacturers in respect of service, support, training, maintenance, and future development (hardware and software) for the Purchased Property, such agreements to include terms and conditions agreed to between Buyer and the Equipment Manufacturers. To the extent assignable, Seller agrees to assign, and to the extent non-assignable, Seller agrees to assist Buyer in obtaining the Equipment Manufacturers' consent to the assignment of training credits remaining at the Effective Date on Purchased Property furnished by the Equipment Manufacturers. 11.12.5 Integrated Contracts. Seller and Buyer acknowledge that certain agreements between Seller (or Affiliates of Seller) and third parties relate both to the Purchased Property and the Excluded Property. Seller agrees to use its best efforts to assist Buyer in obtaining contractual arrangements with such third parties relating to the Purchased Property, which arrangements will be reasonably satisfactory to Buyer; provided that neither Seller nor any of its Affiliates shall be obligated under this Section 11.12.5 to make any payment to any such third party unless such payment is expressly provided for in such agreement. 11.13 Retention of Books and Records. After the Closing, the parties shall retain the Retained Books and Records or the Transferred Books and Records, as applicable, until the shorter of the date that other party consents in writing to their destruction or the seventh anniversary of the Effective Date. Each party shall provide full and free access to the Transferred Books and Records and Retained Books and Records, as the case may be, to duly authorized representatives of the other party at any time during regular business hours for the period in which such Books and Records are required to be retained. Either party may make copies of any such Books and Records as it deems desirable, at its own expense. After the Effective Date, upon reasonable notice, Seller shall provide Buyer with reasonable assistance in locating any of Seller's Original Cost Documents which Buyer may reasonably request after the Effective Date. 11.14 [INTENTIONALLY DELETED] 11.15 Purchase Price Allocation. Prior to the Effective Date Buyer and Seller shall agree to the allocation (the "Allocation") of the Purchase Price and the Assumed Liabilities to the individual assets or classes of assets (within the meaning of Section 1060 of the IRC). Buyer, Seller, and their respective Affiliates, shall file all Tax Returns and schedules thereto (including, without limitation, those returns and forms required by Section 1060 of the IRC) consistent with the Allocation unless otherwise required by applicable Law. 11.16 Real Property Transfers. Within sixty (60) days after the Execution Date, Seller shall deliver to Buyer copies of all existing title insurance policies and surveys covering the Real Property. Thereafter, no later than sixty (60) days before the Effective Date, Seller shall deliver (at its expense) to Buyer a preliminary title binder (on a standard form reasonably acceptable to Buyer), issued by Lawyers Title Insurance Corporation or another title insurance company reasonably acceptable to Buyer, with respect to all Real Property included in the Purchased Property and in which Seller purports to own fee title. Such title binders shall be in form, substance and amount reasonably satisfactory to Buyer (ALTA Owners Policies where available but based upon boundary surveys as described below) and shall be current as of a date no earlier than ninety (90) days prior to the Effective Date. The parties agree that the dollar amount of title insurance to be inserted on each policy shall equal the dollar value set forth on Seller's continuing property records list as of December 31, 1993 for land and buildings. Such title binders shall reflect that, upon consummation of the sale contemplated by this Agreement, Buyer will be vested with good, fee simple, marketable and insurable title to such Real Property, subject only to (i) standard printed exceptions; (ii) inchoate liens for current taxes and assessments not yet delinquent, (iii) standard utility and roadway easements, covenants and restrictions, whether or not of record, that do not individually or in the aggregate materially detract from the value, or impair the use of the Real Property affected thereby, (iv) existing zoning or similar laws or ordinances that do not interfere with the operation of the Business, (v) Leases and (vi) survey exceptions that do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby (collectively, the "Permitted Exceptions"). If a preliminary title binder indicates an exception other than a Permitted Exception that would impair marketability in any material respect, Seller shall, at its expense, cause such exception to be removed on or before the Effective Date. With respect to each parcel of Real Property covered by a preliminary title binder, Seller shall deliver to Buyer (at Seller's expense and on or prior to sixty (60) days before the Effective Date) a certified current boundary survey showing (x) access to the property, and (y) all improvements on the property and any encroachments across the property line by any improvements of Seller or owners of adjacent property and (at Seller's expense and within sixty (60) days after the Effective Date) owner's title insurance policies for the Real Property (ALTA Owners Policies where available but based upon boundary surveys as set forth above). 11.17 Transfer Taxes and Sales Taxes. (a) Seller and Buyer shall take all reasonable measures to provide that the sale contemplated by this Agreement qualifies for any available exclusion from sales and use taxes for occasional, casual or isolated sales. (b) Buyer and Seller each shall bear and be responsible for paying one-half of any sales, use, transfer, gross receipts, or similar taxes (including related penalties and interest) imposed by state or local tax authorities with respect to the transfer of Purchased Property to Buyer (including, without limitation, the Real Property), regardless of whether the tax authority seeks to collect the tax from the transferor or the recipient. Seller shall be responsible for filing the applicable return in a timely manner and administering the payment of such sales, use, transfer, gross receipts or similar tax, and Buyer and Seller shall be responsible for defending or pursuing any proceedings related thereto, provided that any expenses related thereto shall be shared equally between Buyer and Seller. Twenty (20) days prior to filing of any such returns, Seller shall deliver to the Buyer those returns for review. Ten (10) business days prior to filing of any such returns, Buyer shall approve the information contained therein and the filing of such returns. (c) Buyer and Seller shall give prompt written notice to the other party of any proposed adjustment or assessment of a sales, use, transfer, gross receipts or similar tax on the sale contemplated hereby, or of any examination of the sale in a sales, use, transfer or similar tax audit. In any proceedings, whether formal or informal, Buyer and Seller shall permit the other party to participate and defend such proceeding, and shall take all actions and execute all documents required to allow such participation. Neither Buyer nor Seller shall negotiate a settlement or compromise of any sales, use, transfer, gross receipts or similar tax on the sale of the Purchased Property without the written consent of the other party, which consent shall not be unreasonably withheld. Seller shall be responsible for the income or franchise taxes imposed with respect to its transfer of the Purchased Property. 11.18 Bulk Sales Laws. Seller and Buyer waive compliance with applicable laws under any version of Article 6 of the Uniform Commercial Code adopted by any state or any similar law relating to the sale of inventory, equipment or other assets in bulk in connection with the sale of the Purchased Property. 11.19 Customer Notification. For a period of at least two (2) months prior to the Effective Date, Seller will permit Buyer to insert preprinted single-page subscriber education materials into billing documentation to be delivered during such period to subscribers affected by the sale. All reasonable costs and expenses related to such insertion and delivery shall be borne and paid by Seller. Other means of notifying subscribers may be employed by either party, at the expense of the initiating party, but in no event shall any notification be initiated without the prior consent of the other party (which consent shall not be unreasonably withheld) or earlier than three (3) months prior to the Effective Date. 11.20 Delivery of Schedules. Except as otherwise provided in Section 11.22, Seller shall have a period of ten (10) business days after the Execution Date (the "Supplemental Schedule Period") to supplement or otherwise modify the Schedules to this Agreement by delivering to Buyer, within the Supplemental Schedule Period, a substitute schedule or schedules (collectively, the "Supplemental Schedules"), bearing the legend "This Schedule _, dated _______________, is executed and delivered in accordance with Section 11.20 of the Asset Purchase Agreement, dated as of November 28, 1994 which shall be duly executed by Seller and submitted to Buyer. Buyer shall have a period of ten (10) business days after the expiration of the Supplemental Schedule Period to review the Supplemental Schedules and within such ten (10) business day period notify Seller in writing (which writing may be transmitted by facsimile) of any objections thereto. If Buyer's objections are not resolved to the satisfaction of Buyer within five (5) days of such notification, Buyer may terminate this Agreement, effective immediately upon written notification of that termination. In the event that Buyer does not terminate this Agreement, then Buyer waives all rights to a claim of indemnification based upon or as the result of any changes in the Schedules as reflected in the Supplemental Schedules. For purposes of determining breaches of representations, warranties or covenants hereunder, the Supplemental Schedules provided by Seller shall be deemed Schedules for all purposes. 11.21 FCC Tariffs. In connection with obtaining assignment to Seller's FCC Licenses, as described in Section 5.4, during the period from the Execution Date until the Effective Date, neither party shall file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Purchased Exchanges shall remain in the Natural Exchange Carrier Association Tariff FCC No. 5; provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 11.22 Post-Execution Lease and Contract Review. Buyer shall have a period of forty-five (45) calendar days after the Execution Date to review the Leases and Contracts listed on Schedules 9.1.9 and 9.1.13 respectively, and to notify Seller in writing (which writing may be transmitted by facsimile) of the identity of those Leases and Contracts that Buyer reasonably believes are material to the operation of the Business as a whole or any significant part of the Purchased Property and which their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent to their assignment before the Effective Date can occur. If Buyer does not notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Buyer shall be deemed to have agreed that none of the Leases and Contracts which are listed on Schedules 9.1.9 and 9.1.13 require consent to their assignment, in accordance with Section 7.1.6, before the Effective Date can occur. If Buyer does notify Seller in writing within such forty- five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Seller shall have a period of ten (10) business days upon receipt of such notification to notify Buyer in writing (which writing may be transmitted by facsimile) of any objections thereto. Thereafter, Buyer and Seller shall negotiate in good faith and agree in writing as to the identity of those Leases and Contracts which are material to the operation of the Business as a whole or any significant part of the Purchased Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a consent to their assignment before the Effective Date can occur (the "Material Leases and Contracts"). The parties shall reflect their written agreement as to the identity of the Material Leases and Contracts by placing an asterisk next to the appropriate Lease or Contract on Schedule 9.1.9 or 9.1.13, which revised Schedule 9.1.9 or 9.1.13 shall be deemed to be an amendment to this Agreement. ARTICLE 12. EMPLOYEES AND EMPLOYEE MATTERS 12.1 Employee Transfer Agreement. The parties have addressed the transfer of employees and employee benefits matters in a separate agreement, entitled Employee Transfer Agreement, the terms and provisions of which are incorporated into this Agreement as if fully set forth herein and a copy of which is attached hereto as Schedule 12.1 (the "Employee Transfer Agreement"). ARTICLE 13. INDEMNIFICATION 13.1 Survival of Representations, Warranties and Covenants. (a) The representations and warranties made pursuant to this Agreement shall survive the Closing for the following periods after the Effective Date: (i) The representations and warranties set forth in Sections 9.1.6, 9.1.8, and 9.2.5 shall survive without limitation as to time. (ii) The representations and warranties set forth in Section 9.1.15 shall survive until sixty (60) days after the expiration of the applicable statute of limitations (including all extensions). (iii) All other representations and warranties shall survive for eighteen (18) months. The date of expiration of any representation or warranty shall be referred to herein as the "Termination Date." Representations and warranties under this Agreement shall be of no further force or effect after the applicable Termination Date. Any claim for indemnification with respect to any alleged breach of any representation or warranty not asserted by notice given as herein provided that specifically identifies a particular breach and the underlying facts relating thereto, which notice is given prior to the Termination Date, may not be pursued and is irrevocably waived and released after such time. Without limiting the generality or effect of the foregoing, no claim for indemnification with respect to any representation or warranty will be deemed to have been properly made except to the extent it is based upon a Third Party Claim or a Direct Claim. (b) Unless a specified period is set forth in this Agreement (in which event such specified period will control), the covenants contained in Section 2.5.1 (except for Section 2.5.1(a) with respect to Taxes), Section 2.5.2 (except for Section 2.5.2(d)), Section 4.3, Section 5.2, Section 5.3, this Article 13, and in Sections 11.1, 11.2, 11.3, 11.6, 11.7, 11.10, 11.12, 11.13, 11.15, 11.16 and 11.18, Articles 16 and 17 and in the Employee Transfer Agreement, will survive the Closing and remain in effect indefinitely, or in the case of Sections 2.5.1(a) (with respect to Taxes), 2.5.2(d), 11.17, and the property tax proration provisions set forth in Section 11.8, will survive until sixty (60) days after expiration of the applicable statute of limitations. All other covenants contained in this Agreement will terminate, without further action, upon the occurrence of the Effective Date and any claim following the Effective Date for an alleged breach of any such covenant may not be pursued, and is irrevocably waived, upon the occurrence of the Effective Date, except that Buyer may make a claim for Seller's breach of the covenants contained in Section 11.5 at any time within eighteen months after the Effective Date. The immediately preceding sentence shall not apply to, or limit to preclude, a party's rights and remedies if the sale contemplated by this Agreement is not concluded as a result of the other party's breach of this Agreement. 13.2 Limitations on Liability. (a) For purposes of this Agreement, (i) "Indemnification Payment" means any amount of Indemnifiable Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee" means any person or entity entitled to indemnification under this Agreement, (iii) "Indemnifying Party" means any person or entity required to provide indemnification under this Agreement, and (iv) "Indemnifiable Losses" means any losses, liabilities, costs, fines, penalties, damages (actual, punitive or other), and expenses and any claims, demands or suits by any person or entity, including, without limitation, any Governmental Authority, and costs and expenses actually incurred in connection with any actions, suits, demands, assessments, judgments and settlements and reasonable attorneys' fees and expenses, in any such case (x) reduced by the amount of insurance proceeds recovered from any person or entity as a result of the Indemnifiable Losses involved and (y) provided that the underlying liability or obligation is not solely the result of any action taken or omitted to be taken by the Indemnitee. (b) As between Seller and any Affiliate of Seller, on the one hand, and Buyer and any Affiliate of Buyer, on the other hand, the rights and obligations set forth in this Article 13 will be the exclusive rights and obligations with respect to the liabilities and obligations referred to in Section 13.3, and any breach of the representations, warranties or covenants referred to in Section 13.3., except for any liability, obligation or breach that results from the actual fraud under the common law, not otherwise implied or imputed, by a party to this Agreement. Without limiting the foregoing, as a material inducement to entering into this Agreement, to the fullest extent permitted by law, each of the parties waives any claim or cause of action that it otherwise might assert, including, without limitation, under the common law or federal or state securities, trade regulation or other laws, by reason of the liabilities and obligations, and any breach of the representations, warranties or covenants, referred to in Section 13.3, except for claims or causes of action brought under and subject to the terms and conditions of this Article 13, and except for claims or causes of action arising due to the actual fraud under the common law, not otherwise implied or imputed. (c) Notwithstanding any other provision of this Agreement or of any applicable law, no Indemnitee will be entitled to make a claim against an Indemnifying Party under Sections 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6 and 9.1.8) or 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) until the aggregate amount of claims that may be asserted for such Indemnifiable Losses incurred by the Indemnitee exceeds Ninety Seven Thousand Five Hundred Sixty Dollars ($97,560.00) and then only to the extent of the excess. (d) Notwithstanding any other provision of this Agreement, the indemnification obligations of Seller under Section 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6 and 9.1.8) and of Buyer under Section 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) will not exceed the sum of Two Million Nine Hundred Twenty Six Thousand Eight Hundred Dollars ($2,926,800.00). (e) Notwithstanding anything to the contrary contained herein, no Indemnifying Party shall be liable to or obligated to indemnity any Indemnitee hereunder for any consequential, special, multiple, punitive or exemplary damages including, but not limited to, damages arising from loss or interruption of business, profits, business opportunities or goodwill, loss of use of facilities, loss of capital, claims of customers, or any cost or expense related thereto, except to the extent such damages have been recovered by a third person and are the subject of a Third Party Claim for which indemnification is available under the express terms of this Section 13. 13.3 Indemnification. (a) Subject to the other sections of this Article 13, Seller will indemnity, defend and hold harmless Buyer and its Affiliates, directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Seller of any of the representations and warranties contained in Section 9.1, except for any such breach of representations and warranties which was specified on Seller's Closing Certificate all of which are waived upon Closing, (ii) a breach by Seller of any covenant of Seller contained in this Agreement or in the Employee Transfer Agreement, except for any such breach of covenants which was specified on Seller's Closing Certificate all of which are waived upon Closing, (iii) the Retained Liabilities, (iv) any Third Party Claim, whether filed, asserted, or sought before or after the Effective Date, in respect of the conduct of the Business or any part of the Business (including contractual obligations in connection with sales or transfers of assets made by Seller prior to the Effective Date), or the ownership or operation of the Business, on or prior to the Effective Date, regardless of whether known or unknown, asserted or unasserted, on the Effective Date. Notwithstanding anything to the contrary contained herein except for Section 11.17, Seller shall not be liable for and shall not be required to indemnify Buyer for any Taxes arising with respect to the post-Effective Date period, regardless of whether the claim is based on breach of a representation, warranty, covenant or otherwise. (b) Subject to the other sections of this Article 13, Buyer will indemnity, defend and hold harmless Seller and its Affiliates, and their directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Buyer of any of the representations or warranties contained in Section 9.2, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (ii) a breach by Buyer of any covenant of Buyer contained in this Agreement or in the Employee Transfer Agreement, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (iii) the Assumed Liabilities, (iv) any Third Party Claim, filed, asserted, or sought after the Effective Date, in respect of the conduct of the Business or any part of the Business or the ownership or operation of the Business, after the Effective Date. (c) All environmental matters or issues, including without limitation, the indemnification obligations contained in Article 14 with respect to Environmental Liabilities, are to be governed by Article 14 and are not addressed, limited or governed by the provisions of this Article 13. (d) Payments made under this Section 13.3 shall be treated by Buyer and Seller as purchase price adjustments and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. 13.4 Defense of Claims. (a) If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action, proceeding, or investigation by any entity or person that is not a party to this Agreement or an Affiliate of such a party (a "Third Party Claim") against such Indemnitee, with respect to which an Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of actual notice of such Third Party Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party during the required notification period shall only relieve the Indemnifying Party from its obligation to indemnity the Indemnitee pursuant to this Article 13 to the extent that Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. Indemnifying Party shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether or not the Indemnifying Party elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof, provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (i) the employment of such separate counsel has been specifically authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party has failed to assume the defense of such Third Party Claim within a reasonable time after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee or (iii) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnifying Party and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall not be liable for the fees and disbursements of more than one counsel for all Indemnified Parties in connection with any one proceeding or any similar or related proceedings arising from the same general allegations or circumstances. Without the prior written consent of the Indemnitee, the Indemnifying Party will not enter into any settlement of any Third Party Claim that would lead to liability or create any financial or other obligation on the part of the Indemnitee unless such settlement includes as an unconditional term thereof the release of the Indemnitee from all liability in respect of such Third Party Claim. (b) Any claim by an Indemnitee on account of an Indemnifiable Loss that does not result from a Third Party Claim (a "Direct Claim") will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after the Indemnitee actually becomes aware of the incurrence thereof, and the Indemnifying Party will have a period of thirty (30) calendar days within which to respond in writing to such Direct Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party shall only relieve the indemnifying Party from its obligation to indemnify the Indemnitee pursuant to this Article 13 to the extent the Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. If the Indemnifying Party does not so respond within such thirty (30) calendar day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article 13. (c) If after the making of any Indemnification Payment the amount of the Indemnifiable Loss to which such payment relates is reduced by recovery, settlement or otherwise under any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction (less any costs, expenses, premiums or taxes incurred in connection therewith) will promptly be repaid by the Indemnitee to the Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying Party will, to the extent of such Indemnification Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the Indemnification Payment relates; provided that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss, all claims of the Indemnifying Party against any such third party on account of said Indemnification Payment will be subrogated and subordinated in right of payment to the Indemnitee's rights against such third party. Without limiting the generality or effect of any other provision of this Article 13, each such Indemnitee and Indemnifying Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights. ARTICLE 14. ENVIRONMENTAL MATTERS 14.1 Environmental Due Diligence. 14.1.1 Right to Conduct Due Diligence. Buyer shall have the opportunity to conduct environmental due diligence regarding the Purchased Property in accordance with this Section 14.1, for a period not to exceed 120 days after the Environmental Data Delivery Date (as defined below). 14.1.2 Treatment of Data. All information collected and generated as a result of the environmental due diligence authorized by this Section 14.1 will be subject to the terms and conditions of the Confidentiality Agreement, except as otherwise expressly provided in this Section 14.l. Buyer shall provide to Seller copies of all reports, assessments and other information composed or compiled by Buyer's environmental consultant(s) and shall treat all such information in accordance with the procedures of Section 14.1.5(c). Within thirty (30) days after the Execution Date (the "Environmental Data Delivery Date"), Seller will provide to Buyer copies of all surveys and reports in Seller's possession concerning the existence or possible existence of asbestos or materials containing asbestos relating to any of the Real Property, a list of all underground storage tanks which to Seller's knowledge are located on, or have been removed within the last three years from, any Real Property owned or real estate leased or operated by Seller in connection with the Business and any other reports, studies or documents in Seller's possession relating to Seller's potential liability under any Existing Environmental Requirements. The parties further agree that, if Seller discloses the existence or suspected existence of materials containing asbestos with respect to a given parcel of Real Property and the asbestos does not exceed applicable limits, if Buyer desires to make renovations or structural changes to the property after the Effective Date (which changes require the removal of asbestos), the removal will be at the expense of Buyer. 14.1.3 Environmental Consultants. Buyer may retain one or more outside environmental consultants to assist in its environmental due diligence concerning the Purchased Property and shall notify Seller of the environmental consultant or consultants Buyer intends to retain. Thereafter, Seller shall have five (5) business days after receipt of such notification to notify Buyer in writing of Seller's objection (which must be for good cause) and substantiate the basis for that objection. If Seller does not object for good cause and substantiate that objection within said five (5) business day period, Seller shall be deemed to have consented to Buyer's selection. 14.1.4 Phase I Reviews. Buyer may conduct the usual Phase I environmental assessment activities of the Purchased Property, including inspecting individual sites, submitting environmental questionnaires to Seller and reviewing existing environmental reports, correspondence, permits and related materials regarding the Purchased Property. Phase I environmental assessment activities shall not include any sampling or intrusive testing other than tank tightness testing and hand auger soil testing. (a) Buyer shall give Seller at least three (3) business days' notice prior to any entry onto the Purchased Property. (b) If Buyer enters the Purchased Property, a representative of Seller may be, but is not required to be, present during such entry on the Purchased Property. (c) All activities of Buyer regarding environmental due diligence shall be conducted to minimize any inconvenience or interruption of the normal use and enjoyment of Seller's Business and the Purchased Property. 14.1.5 Phase II Reviews. Buyer may conduct the usual Phase II environmental assessment activities of the Purchased Property (including, but not limited to, the taking and analysis of soil, surface water and groundwater samples, testing of buildings, drilling wells and taking soil borings) after first conducting a Phase I assessment of a particular site provided that such Phase II assessment activities are conducted in accordance with this Section 14.1.5. (a) If Buyer desires to perform sampling or intrusive testing at a site included in the Purchased Property, Buyer must notify Seller of its desire at least five (5) business days in advance of the proposed date of such sampling or testing and provide a description of the scope of work regarding such sampling or intrusive testing. If Seller does not notify Buyer in writing of Seller's objection to such proposed sampling or testing within five (5) business days after receipt of such notice, Seller shall be deemed to have consented to the proposed sampling or testing. Seller shall not unreasonably object to Buyer's request to perform sampling or testing. (b) Buyer shall provide Seller with copies of field data, field reports, laboratory analyses, logs, laboratory reports and other material or information regarding the sampling or intrusive testing ("Environmental Data") within three (3) business days of Buyer's receipt of such data and shall promptly provide Seller with "matched" or "paired" samples, in accordance with standard sampling and testing protocols, that are obtained during the sampling or intrusive testing of a particular site; provided, however, that Seller shall have no obligation to Buyer to take any action whatsoever regarding such samples. (c) It is understood and agreed that neither Buyer nor its environmental consultant(s) shall disclose or release any Environmental Data without the prior written consent of Seller and that all such information shall be kept strictly confidential. The Environmental Data shall be prepared at the request of counsel to Buyer and, to the fullest extent permitted by law, shall be the work product of such counsel and constitute confidential attorney/client communications. The Environmental Data shall be transferred among Buyer and its consultant(s) in a manner that will preserve, to the greatest extent possible, such privileges. Buyer expressly agrees that until the Closing, it will not distribute the Environmental Data to any third party without Seller's written consent. After the Closing, Buyer agrees that it will not distribute the Environmental Data to any third party without Seller's written consent, except as required by law or by express provisions of Buyer's corporate compliance program if Seller is provided written notice at least ten (10) business days prior to such distribution, provided, however, that for a period of two (2) years after the Effective Date, Buyer may distribute the Environmental Data to any potential purchaser of the Purchased Property only after first notifying the Seller, and without such notice at any time after such two (2) year period. 14.1.6 Indemnity for Due Diligence Activities. Buyer hereby agrees to indemnify and hold harmless Seller, Seller's Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all claims, liabilities, damages, losses, orders, penalties, fines, costs, charges and expenses (including reasonable attorneys' fees and disbursements, and reasonable costs of experts and expert witnesses) with respect to persons or property arising out of or in connection with the entry of Buyer or its environmental consultant(s) onto the Purchased Property and resulting from any act or omission of Buyer or its environmental consultant(s) provided that Buyer shall not be liable for any Environmental Liabilities incurred by any such party merely discovered by the environmental due diligence performed by Buyer or its environmental consultants. In addition, in the event the transactions contemplated herein with regard to any portion of the Purchased Property do not close, Buyer agrees to restore such portion of the Purchased Property to the condition which existed prior to Buyer's inspections and testing thereof to the extent such portion of the Purchased Property was damaged by such inspections and testing. 14.1.7 Effect of Due Diligence Results. (a) Subject to Section 14.1.7(b) below, Buyer conditionally may terminate this Agreement by written notice to Seller at any time during the period set forth in Section 14.1.1 if: (i) the results of Buyer's environmental due diligence investigation, conducted in accordance with this Section 14. 1, indicate Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Purchased Property; and (ii) Buyer reasonably determines (on the basis of its environmental due diligence) that responding to and remediating the foregoing Environmental Liabilities based upon Existing Environmental Requirements cannot be completed for less than Seven Hundred Eighty Thousand Four Hundred Eighty Dollars ($780,480.00) (the "Environmental Liabilities Amount") To be effective, any such conditional termination of this Agreement must be delivered in writing to Seller, which writing must specifically acknowledge that the termination is subject to the provisions of paragraph (b) below. (b) In the case of a conditional termination of this Agreement by Buyer in accordance with Section 14.1.7(a) above, Seller may nullify the termination by agreeing to: (i) respond to and fully remediate the Environmental Liabilities based upon Existing Environmental Requirements; or (ii) pay Buyer the cost thereof; or (iii) in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller, remove from the Purchased Property the item or items of Purchased Property that have occasioned the Environmental Liabilities based upon Existing Environmental Requirements and either substitute therefor an equivalent item or items of Purchased Property satisfactory to Buyer, or make other adjustments to the terms and conditions of the sale contemplated by this Agreement all in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller. Seller's election to nullify Buyer's conditional termination by selecting one of the above options shall be, in each case, specified in a writing mutually satisfactory to the parties, and thereafter on or before the Closing (subject to Section 14.1.7(d)), Seller shall perform its obligations under that writing in full. If the parties fail to sign the writing specifying Seller's obligations within thirty (30) days following Buyer's conditional termination (or such longer period acceptable to Buyer) or sign that writing but Seller fails to perform its obligations thereunder in full on or before the Closing (subject to Section 14.1.7(d)), Buyer's conditional termination under paragraph (a) above automatically shall become final and unconditional unless the parties agree otherwise. (c) If the results of Buyer's environmental due diligence conducted in accordance with this Section 14.1 indicate that the costs of responding to and remediating Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Purchased Property are less than the Environmental Liabilities Amount in the aggregate, Seller agrees, at its sole cost, to either (i) remove from the Purchase Property the item or items of Purchased Property that have occasioned the Environmental Liabilities based upon Existing Environmental Requirements and either make a substitution or other adjustment therefor prior to the Closing in accordance with Section 14.1.7(b)(iii) above, or (ii) prior to the Closing (subject to Section 14.1.7(d)), otherwise respond to and remediate those Environmental Liabilities based upon Existing Environmental Requirements in accordance with Section 14.1.7(b)(i) or Section 14.1.7(b)(ii) above, unless the cost of such substitution or the conduct of such response action would exceed the Environmental Liabilities Amount in which case Seller's sole obligation under this Section 14.1.7(c) shall be to pay the Environmental Liabilities Amount toward the completion of such substitution or response and remediation actions. If Seller discharges its obligations under this Section 14.1.7 by expending the Environmental Liabilities Amount on such substituted property or response and remediation action (such expenses to be verified by Seller by delivery by Seller to Buyer of a reasonably detailed statement setting forth such expenses), or paying to Buyer the Environmental Liabilities Amount, Buyer shall sign and deliver to Seller at the Closing a release of Seller from any further liability to Buyer for such remediation and shall indemnify Seller against any liability for such Environmental Liabilities or Environmental Requirements. (d) If Seller elects to respond to and fully remediate Environmental Liabilities based upon Existing Environmental Requirements pursuant to Section 14.1.7(b)(i) or (c)(ii), and such response and remediation has not been completed by the date scheduled for Closing, the parties on or prior to Closing shall enter into an Environmental Remediation Agreement in form and substance reasonably satisfactory to the parties and proceed to Closing; provided, however, that in the case of response and remediation under Section 14.1.7(b)(i), Buyer may elect to postpone the Closing until sufficient response and remediation has been completed so that the remaining response and remediation is equal to or less than the Environmental Liabilities Amount. 14.2 Environmental Indemnification. 14.2.1 Sole Remedy and Release. It is the intent of the parties that the indemnification provided under this Section 14.2 shall be the sole remedy for allocating responsibility regarding environmental matters related to the sale contemplated by this Agreement, the Business and the Purchased Property of which Buyer does not receive notice prior to the Closing (either from Seller in Schedule 14.3 or pursuant to notice given pursuant to Section 17.1 or in any written communication made to Buyer from Buyer's environmental consultants (collectively the "Known Environmental Matters")). Except as expressly provided in this Section 14.2, at Closing each party, for itself and its successors and assigns, by virtue of consummating the sale contemplated by this Agreement and without further action on the part of such party, shall waive and release the other party from any and all liability under any other cause of action at law or in equity concerning the Known Environmental Matters, whether raised pursuant to (i) Environmental Requirements, (ii) any other applicable federal, state or local statute, ordinance, rule or regulation, or (iii) common law. 14.2.2 Indemnification. Subject to the provisions of Sections 14.2.3, 14.2.4 and 14.2.5, Seller agrees to indemnify and hold harmless Buyer, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities under Existing Environmental Requirements arising from acts or omissions occurring, or from the use or ownership of, or any condition or circumstance, relating to, the Purchased Property or the Business that occurred or arose prior to or on the Effective Date on the Purchased Property or in connection with the operation of the Business prior to or on the Effective Date. The foregoing indemnity in this Section 14.2.2 shall only apply to matters that do not constitute Known Environmental Matters (such matters being referred to as the "Unknown Environmental Matters"). Such indemnification under this Section 14.2.2 shall be provided only for claims for Unknown Environmental Matters noticed to the other party pursuant to the procedures of Section 14.2.3, within eighteen (18) months after the Effective Date. Subject to the provisions of Sections 14.2.3 and 14.2.4, Buyer agrees to indemnify and hold harmless Seller, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities, with respect to any Environmental Requirements in existence now or hereafter in effect, arising from acts or omissions occurring after the Effective Date, or from the use or ownership of the Purchased Property after the Effective Date, or any condition or circumstance relating to the Purchased Property or the Business that occurred or arose after the Effective Date on the Purchased Property or in connection with the operation of the Business after the Effective Date. 14.2.3 Notice. A party seeking indemnification under this Section 14.2 must give written notice to the other party, including information sufficient to inform the other party of, and allow such other party to confirm the nature of, the claim and any activities required to address the claim, in sufficient detail for the indemnifying party to confirm that all costs incurred or to be incurred by the party to be indemnified under this Section 14.2 are required by Environmental Requirements, as applicable to Buyer, and Existing Environmental Requirements, as applicable to Seller, and are reasonable and cost-effective. If the indemnifying party disagrees with the party to be indemnified as to the necessity of costs or the reasonableness or cost- effectiveness of the remediation method selected, the parties shall negotiate in good faith to achieve at a mutually satisfactory solution. If the parties cannot agree as to costs or methods of remediation, the matter shall be resolved in accordance with Article 16. 14.2.4 Actual Damages. Any indemnifiable claim under this Section 14.2 shall not include incidental or consequential damages except to the extent such damages have been recovered by a third person and are the subject of a Third Party claim for which indemnification is available under the express terms of this Article 14. Any indemnifiable claim under this Section 14.2 shall be reduced to account for any insurance, storage tank fund, or other proceeds received by the party to be indemnified, as a result of the indemnifiable losses involved. The parties agree to take all reasonable steps to mitigate any indemnifiable claim under this Section 14.2, including complying with any registration and reporting requirements necessary to qualify for reimbursement from any storage tank fund. 14.2.5 Limitations on Indemnification. Notwithstanding any other provision of this Agreement, this Article 14, or any applicable law, the indemnification obligations of Seller under this Section 14.2 shall not exceed the aggregate amount of One Million Four Hundred Sixty Three Thousand Four Hundred Dollars ($1,463,400.00). 14.2.6 Adjustments to Purchase Price. Payments made under this Article 14 shall be treated by Buyer and Seller as purchase price adjustments, and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. ARTICLE 15. TERMINATION 15.1 Termination Rights. This Agreement may be terminated at any time prior to the Closing Date: (a) at any time by mutual written consent of the parties; (b) by Seller or Buyer, as applicable, if there has been a material breach on the part of the other party of its respective representations, warranties or covenants set forth in this Agreement; provided, however, that a party shall not be entitled to exercise its right of termination under this subsection (b) if the breach is capable of being cured to the non-breaching party's reasonable satisfaction and the breaching party is proceeding diligently with its best efforts to effect such cure. (c) by Buyer, pursuant to Section 11.20 (Delivery of Schedules); (d) by Buyer and Seller, as the result of Section 14.1.7(a); (e) by Buyer or Seller, pursuant to Section 11.9; (f) by Seller or Buyer, if the Closing shall not have occurred by December 31, 1995 due to no fault or delay attributable to the party seeking termination; provided, however, that a party shall not be entitled to exercise any right of termination pursuant to this subsection (f) if such party shall not have performed diligently and in good faith the obligations required to be performed by such party hereunder prior to the date of termination; (g) by Buyer if a Governmental Authority, the approval of which is a condition to Buyer's obligations under Section 7.1, has provided written notice that it shall not consent to or approve the transactions contemplated hereby; or (h) by Seller, if a Governmental Authority, the approval of which is a condition to Seller's obligations under Section 7.2, has provided written notice that it shall not consent to or approve the transactions contemplated hereby. 15.2 Effect of Termination. (a) If this Agreement is terminated pursuant to Section 15. 1 (a), (c), (d), (e), (f), (g) or (h), this Agreement shall be of no further force and effect and there shall be no further liability hereunder on the part of either party or its Affiliates, directors, officers, shareholders, agents or other representatives. (b) A party's exercise of its right of termination under Section 15.1(b) shall not constitute a waiver of its rights to recover damages, whether pursuant to breach of contract or in tort, or other remedies available at law or in equity, from the other party as a result of the other party's breach of this Agreement. (c) Notwithstanding anything to the contrary contained herein, the provisions of this Section 15.2 and of Sections 17.1, 17.2, 17.3, 17.8, 17.11, 17.13, 17.14 and Article 16 shall survive any termination of this Agreement. ARTICLE 16. DISPUTE RESOLUTION 16.1 Exclusive Remedy. Subject to Section 16.5, the parties agree to resolve disputes arising out of this Agreement without litigation. Accordingly, except as provided in Section 16.5, or in the case of a suit to compel compliance with this dispute resolution process, the parties agree to use the following alternative dispute resolution procedure as their sole remedy with respect to any controversy or claim arising out of or relating to this Agreement or its breach. 16.2 Dispute Resolution Process. At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any dispute arising under this Agreement. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations. Discussions and correspondence among the parties' representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, exempt from discovery and production, and without the concurrence of both parties shall not be admissible in the arbitration described below or in any lawsuit. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration. 16.3 Arbitration. Subject to Section 16.5, if negotiations between the representatives of the parties do not resolve the dispute within sixty (60) days of the initial written request, the dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Either party may demand such arbitration in accordance with the procedures set out in those rules. The arbitration hearing shall be commenced within sixty (60) days of the demand for arbitration and the arbitration shall be held in a mutually agreeable location. The arbitrator shall control the scheduling (so as to process the matter expeditiously) and any discovery. The parties may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within thirty (30) days after the close of hearings. The times specified in this Section 16.3 may be extended upon mutual agreement of the parties or by the arbitrator upon a showing of good cause. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. 16.4 Costs and Attorneys' Fees. Each party will bear its own costs and expenses in submitting and presenting its position with respect to any such dispute to the arbitrator, and the fees and expenses of such arbitration procedures, including the fees of the arbitrator will be shared equally by Buyer and Seller, except that a party seeking discovery shall reimburse the responding party the cost of production of documents (including search time and reproduction costs); provided, however, that if the arbitrator determines that the position taken in the dispute by the non- prevailing party taken as a whole is unreasonable, the non- prevailing party will bear all such fees and expenses, and reimburse the prevailing party for all of its reasonable costs and expenses in submitting and presenting its position. 16.5 Certain Limitations. The provisions of this Article 16 with respect to the resolution of disputes without litigation shall not apply to any dispute, controversy or claim arising out of the provisions of Section 11.1, or the Confidentiality Agreement, or to a party's seeking to proceed under Section 17.14, it being understood and agreed that in the event of a breach by either party of the provisions of Section 11.1, or the Confidentiality Agreement, or in the event that a party seeks to proceed under Section 17.14, the non-defaulting party shall be entitled to proceed to protect and enforce its rights by an action at law, a suit in equity or other appropriate proceeding, whether for specific enforcement of any agreement contained in Section 11.1, or the Confidentiality Agreement or in aid of the exercise of any power granted by Section 11.1, 17.14 or the Confidentiality Agreement or by law or otherwise. ARTICLE 17. MISCELLANEOUS 17.1 Notices. All notices, consents and other communications required or permitted hereunder shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been given when delivered in person or dispatched by electronic facsimile transfer (confirmed in writing by certified mail, concurrently dispatched) or one business day after having been dispatched for next-day delivery by a nationally recognized overnight courier service to the appropriate party at the address specified below: (a) If to Buyer, to: Mr. Donald K. Roberton Vice President-Telecommunications Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4627 and L. Russell Mitten, II, Esq. Vice President-General Counsel Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4651 with a copy to: Jeffry L. Hardin, Esq. Fleischman and Walsh, L.L.P. 1400 Sixteenth Street, N.W. Washington, D.C. 20036 Facsimile No.: 202/745-0916 (b) If to Seller to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: President Facsimile No.: 501/661-0962 with a copy to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: General Counsel Facsimile No.: 501/661-0962 or to such other persons or address or addresses as any such party may from time to time designate for itself by like notice. 17.2 Press Releases. The parties shall consult with each other in preparing any press release, public announcement, news media response or other forth of release of information concerning this Agreement or the transactions contemplated hereby that is intended to provide such information to the news media or the public (a "Press Release"). Neither party shall issue or cause the publication of any such Press Release without the prior written consent of the other party; provided, however, that nothing herein will prohibit either party from issuing or causing publication of any such Press Release to the extent that such action is required by applicable Law or the rules of any national stock exchange applicable to such party or its Affiliates, in which case the party wishing to make such disclosure wig, if practicable under the circumstances, notify the other party of the proposed time of issuance of such Press Release and consult with and allow the other party reasonable tune to comment on such Press Release in advance of its issuance. 17.3 Expenses. Except as otherwise expressly provided herein, each party will pay any expenses (including, without limitation, attorneys' fees) incurred by it incident to this Agreement and in consummating the transactions provided for herein. All regulatory filing fees required pursuant to Sections 5.1, 5.4 and 5.5 shall be split equally between the parties. Each party will pay the appropriate costs and filing fees relating to any other applications required to be filed by such party. 17.4 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Buyer may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Seller; provided that Buyer may assign or delegate its rights and obligations under this Agreement without the prior written consent of Seller, to any directly or indirectly wholly owned subsidiary of Buyer provided such subsidiary assumes in writing all of the duties and obligations of Buyer hereunder, but no such assignment and assumption shall in any way operate to enlarge, alter or change any obligation of or due to Seller or relieve Buyer of its obligations hereunder and provided that Buyer agrees to cause such subsidiary to perform each of its agreements and covenants herein, and shall be jointly and severally liable for any non-performance thereof. Seller may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Buyer. Upon the sale, assignment or transfer by Buyer of the Business or the Purchased Property to a non-Affiliate of Buyer not in the ordinary course of business of Buyer, Seller's representations and warranties and indemnification obligation for breach thereof shall terminate. Any assignment made in violation of the foregoing provisions shall be void. 17.5 Amendments. This Agreement may be amended or modified only by a subsequent writing signed by authorized representatives of both parties. 17.6 Captions. The captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement, nor as in any way limiting or amplifying the terms and provisions hereof. 17.7 Entire Agreement. The term "this Agreement" shall mean collectively this document, the Schedules hereto, any agreements expressly incorporated herein, and the Confidentiality Agreement. This Agreement supersedes and revokes any prior discussions and representations, other agreements, commitments, arrangements or understandings of any sort whatsoever, whether oral or written, that may have been made or entered into by the parties relating to the matters contemplated hereby. This Agreement constitutes the entire agreement by and among the parties, and there are no representations, warranties, agreements, commitments, arrangements or understandings except as expressly set forth herein. 17.8 Waiver. Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege available to each party at law or in equity. 17.9 Third Parties. Except as expressly provided herein, nothing contained in this Agreement is intended to confer upon any person, other than the parties and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 17.10 Counterparts. This Agreement may be executed in two or more counterparts, any or all of which shall constitute one and the same instrument. 17.11 Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of Delaware (except that no effect shall be given to any conflicts of law principles of the State of Delaware that would require the application of the laws of any other jurisdiction). In accordance with Title 6, Section 2708 of the Delaware Code Annotated, the parties agree to the jurisdiction of the courts of Delaware and to be served with legal process from any of such courts. 17.12 Further Assurances. From time to time, as and when requested by one of the parties, the other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate and make effective the transactions contemplated by this Agreement. 17.13 Certain Interpretive Matters and Definitions. (a) Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning so assigned to it, (iii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (iii) all references to the "knowledge of a party" will be deemed to refer to the actual knowledge of the Executive Officers of the party after reasonable investigation, and (iv) all references to a party's "best efforts" and references of like import will be deemed to refer to the best efforts of such party in accordance with reasonable commercial practice and without the incurrence of unreasonable expense. (b) No provision of this Agreement will be interpreted in favor of, or against, either of the parties by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of such provision or of this Agreement. 17.14 Specific Performance. In addition to all other rights and remedies available at law or in equity, any party hereto may pursue, to the fullest extent available, the remedy of specific performance in order to compel the other party to close pursuant to Article 8. IN WITNESS WHEREOF, the parties, acting through their duly authorized agents, have caused this Agreement to be duly executed and delivered as of the date first above written. CP NATIONAL CORPORATION: By: /s/ Charles R. Galloway ----------------------- Name: Charles R. Galloway Title: Senior Vice President - Accounting & Finance CITIZENS UTILITIES COMPANY OF CALIFORNIA: By: /s/ Leonard Tow --------------- Name: Leonard Tow Title: Chairman of the Board and Chief Executive Officer EX-10 8 EXHIBIT 10.20 EXECUTION COPY STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 28th day of November, 1994 (the "Execution Date"), by and among Citizens Telecommunications Company of Oregon, a Delaware corporation ("Buyer"), and ALLTEL Corporation, a Delaware corporation ("Seller"). RECITALS WHEREAS, Seller is the record and beneficial owner of all of the issued and outstanding shares of capital stock of ALLTEL Oregon, Inc., an Oregon corporation (the "Company"); and WHEREAS, Seller desires to sell and deliver to Buyer, and Buyer desires to purchase and accept from Seller, the Shares (as defined below), upon the terms and conditions set forth in this Agreement; and NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement and any amendment hereto, the following terms are defined as set out below or in the Section referenced below: Additional Financial Statements is defined in Section 11.4. Adjusted Total Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Telecommunications Accounts Receivable (item 2-Assets on the Company's Balance Sheet) less "Accounts Receivable Allowance" (item 3 - Assets on the Company's Balance Sheet) after adjusting "Accounts Receivable Allowance" to reflect an uncollectible percentage based upon the Company's actual uncollectible net write-off percentage for the calendar year immediately preceding the year in which the Closing occurs, (ii) Accounts Receivable - Other (item 5-Assets on the Company's Balance Sheet) less Accounts Receivable Allowance - Other (item 6 - Assets on the Company's Balance Sheet), (iii) Prepaid Expense (item 9-Assets on the Company's Balance Sheet), and (iv) Other Current Assets (item 10-Assets on the Company's Balance Sheet) to the extent such other current assets do not represent cash accounts. Adjusted Total Non-Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Other Investments at Cost (item 15-Assets on the Company's Balance Sheet) to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and which RTB Stock is owned by the Company immediately after the Effective Date, (ii) Unamortized Debt Expense (item 16-Assets on the Company's Balance Sheet) to the extent such debt expense relates to debt which is to remain outstanding immediately after the Effective Date, and (iii) Deferred Maintenance and Retirements (Item 17 - Assets on the Company's Balance Sheet). Adjusted Total Current And Non-Current Liabilities means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Current Maturities of Long Term Debt (item 1- Liabilities on the Company's Balance Sheet) to the extent such long term debt is to remain outstanding immediately after the Effective Date, (ii) Accounts Payable-Other (item 6-Liabilities on the Company's Balance Sheet), (iii) Advance Payments and Customer Deposits (item 7-Liabilities on the Company's Balance Sheet), (iv) Taxes Accrued - Other (item 9 - Liability on the Company's Balance Sheet), (v) Interest Accrued-Other (item 13-Liabilities on the Company's Balance Sheet) to the extent such interest relates to debt which is to remain outstanding immediately after the Effective Date, and (vi) that portion of Other Deferred Credits (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities that are associated with the requirements of Financial Accounting Standard 106 attributable to the active Transferred Employees. Affiliate has the meaning given to that term in Rule 405 under the Securities Act of 1933, as amended. Agreement is defined in Section 17.7. The Business means the business of the Company; i.e., providing local exchange and exchange access telecommunications services and other related regulated and non-regulated activities, services and products associated with the Exchanges, including without limitation such unregulated activities, services and products of the Company conducted, offered or serviced by the Transferred Employees or provided or related to the Company's subscribers or customers served in or from the Exchanges (such unregulated activities, services and products (the "Unregulated Business") are considered an integral part of the Business for all purposes of this Agreement). Buyer's Closing Certificate is defined in Section 7.2.1. CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Casualty Notice is defined in Section 11.9. Casualty Termination Notice is defined in Section 11.9. Closing is defined in Section 8.1. Closing Date is defined in Section 8.1. Common Stock means the common stock of the Company par value $1.00. Company is defined in the recitals of this Agreement. Company Books and Records is defined in Section 2.2.3. Company's Balance Sheet means the balance sheet of the Company. Confidentiality Agreement means the Confidentiality Agreement dated September 30, 1994 between ALLTEL Corporation and Citizens Utilities Company which is attached and incorporated into this Agreement as Schedule 1-1. Contracts is defined in Section 2.2.2. Damaged Property is defined in Section 11.9. Debtholder Consents is defined in Section 5.2(a). Direct Claim is defined in Section 13.4(b). Effective Date is defined in Section 8.1. Employee Plan Assets is defined in the Employee Transfer Agreement. Employee Transfer Agreement is defined in Section 12.1 Employment Agreements is defined in Section 9.1.18. Environmental Liabilities means all liabilities, obligations (including obligations to respond to, investigate and remediate conditions caused by any Regulated Material), responsibilities, losses, damages (including punitive or treble damages), costs and expenses (including reasonable fees, disbursements and expenses of counsel, experts, consultants and expert witnesses), fines, penalties, interest or bonds, based upon any Environmental Requirements of any Governmental Authority, or as a consequence of (a) the release or threatened release of a Regulated Material in amounts that require response or remediation into the outdoor environment, (b) any circumstance or condition relating to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof, that does not comply with Environmental Requirements, or (c) any claim, demand, notice, cause of action, directive, order, judgment, fine or penalty asserted or sought under or pursuant to any Environmental Requirements by an entity or person not a party to this Agreement, to the extent that the condition or circumstance or event giving rise to the claim, demand, notice, cause of action, directive, order, judgment, fine or penalty relates to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof. Environmental Requirements means (i) any federal, state and local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority and all valid and enforceable guidance documents and policies thereof, relating to (x) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (y) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Regulated Material, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Regulated Material in each case as now amended and as now or hereafter in effect. The term Environmental Requirements includes, without limitation, CERCLA, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the federal Solid Waste Disposal Act, the federal Toxic Substances Control Act and the federal Insecticide, Fungicide and Rodenticide Act, each as now amended and as now or hereafter in effect. ERISA means the Employee Retirement Income Security Act of 1974, as amended. ERISA Plans is defined in Section 9.1.18. Estimated Purchase Price is defined in Section 3.3(a). Evaluation Material is defined in the first paragraph of the Confidentiality Agreement. Exchanges is defined in Section 2.2. Excluded Books and Records means the general ledger and all books and records relating to (i) tax returns and tax records, (ii) the Excluded Property or (iii) the Retained Liabilities, (iv) employees of the Company that are not Transferred Employees, and (v) subject to Section 11.13, all Original Cost Documents that are not located in the Exchanges. Excluded Contracts means the contracts, leases and agreements listed or identified on Schedule 11.22. Excluded Property means the Excluded Books and Records, the trademarks, trade names, trade dress, logos, and any other intangible assets that use or incorporate the word "ALLTEL" and any other marks listed on Schedule 11.1.5, the Company's interest in any cellular telephone or personal communications services business, and, in each case, any applications or licenses granted with respect thereto, and the assets disposed, transferred or dividended by the Company pursuant to Section 11.22 and any assets excluded pursuant to Sections 11.9 and 14.1.7. Execution Date is defined in the preamble to this Agreement. Executive Officers of an entity means the president and any vice president of the entity in charge of a principal business unit, division or function. Existing Environmental Requirements means those applicable provisions of any Environmental Requirements that are both in effect and applicable to the Company, the Business or the Property on or prior to the Effective Date. FCC means the Federal Communications Commission. FCC Consents is defined in Section 5.4. FCC Licenses is defined in Section 2.2.4. Final Order means an action by the FCC, the PUC, or any other Governmental Authority, as to which: (a) no request for stay of the action by the FCC, the PUC, or such other Governmental Authority, as the case may be, is pending, no such stay is in effect, and if any time period for filing any request for such a stay is provided by statute or regulation, such time period has passed; (b) no petition, motion or application for rehearing, reconsideration, or review, of the action is pending before the FCC, the PUC, or such other Governmental Authority, as the case may be, and the time provided for filing any such petition, motion or application has passed; (c) the FCC, the PUC, or such other Governmental Authority, as the case may be, does not have the action under reconsideration on its own motion and the time in which such reconsideration is permitted has passed; and (d) no appeal to a court, of the FCC's, the PUC's or such other Government Authority's action, as the case may be, is pending or in effect, and the deadline for filing any such appeal has passed. Final Purchase Price is defined in Section 3.4. Financial Statements is defined in Section 9.1.11. GAAP means generally accepted accounting principles. Governmental Authority is defined in Section 9.1.3. HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Indebtedness Releases or Terminations is defined in Section 5.2. Indemnifiable Losses is defined in Section 13.2(a). Indemnification Payment is defined in Section 13.2(a). Indemnifying Party is defined in Section 13.2(a). Indemnitee is defined in Section 13.2(a). Intellectual Property is defined in Section 11.1.1. IRC means the Internal Revenue Code of 1986, as amended. IRS means the Internal Revenue Service. June 1994 Base Amount means the sum of (i) the amount of Net Telecommunications Plant as of June 30, 1994 and (ii) the amount of Materials and Supplies as of June 30, 1994 Law is defined in Section 9.1.4. Leases means all real and personal property leases to which the Company is a party, or to which any Affiliate of the Company is a party and which are used in connection with the Business. Marks is defined in Section 11.1.5. Materials and Supplies means the amount set forth on the Company's Balance Sheet as of a date certain comprising the Company's Materials and Supplies (item 8 - Assets on the Company's Balance Sheet). Net Telecommunications Plant means the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of Telecommunications Plant In Service (item 22 - Assets on the Company's Balance Sheet, Plant Under Construction -- Short Term (item 23 - Assets on the Company's Balance Sheet), Plant Under Construction -- Long Term (item 24 - Assets on the Company's Balance Sheet), and Telecommunications Plant -- Other (item 25 - Assets on the Company's Balance Sheet), less Accumulated Depreciation and Amortization (item 27 - Assets on the Company's Balance Sheet). Original Cost Documents means all original cost documentation relating to the Telephone Plant. NECA means the National Exchange Carrier Association. Non-FCC Authorizations is defined in 2.2.6. PBGC means the Pension Benefit Guaranty Corporation. Permitted Exceptions is defined in Section 11.16. Plans is defined in Section 9.1.18. Press Release is defined in Section 17.2. PUC means the Public Utility Commission of Oregon. Purchase Price is defined in Section 3. 1. Property is defined in Section 2.2. REA Debt means debt of the Company owed to the Rural Electrification Administration. Real Property is defined in Section 2.2. 1. Regulated Material means (i) any "hazardous substance" as defined in CERCLA, (ii) any petroleum or petroleum substance, and (iii) any other pollutant, waste, contaminant, or other substance regulated under Environmental Requirements or, as applicable, Existing Environmental Requirements. Regulatory Approvals is defined in Section 5. 1. Retained Liabilities is defined in Section 13.3(a). RTB Stock means stock of the Rural Telephone Bank. Seller's Closing Certificate is defined in Section 7. 1. 1. Shares means the 1,000 shares of the Common Stock owned by Seller. Tax Returns means a report, return or other information statement required to be supplied to a federal, state or local taxing Governmental Authority with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes the Company. Tax(es) means any foreign, federal, state, provincial, county or local income, sales, use, transfer, excise, franchise, stamp duty, custom duty, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, recording, ad valorem, gains, value-added, unemployment compensation, general corporate, profits, registration, unincorporated business, alternative, social security, estimated, add-on, minimum, privilege or withholding tax and any interest and penalties and additions to such taxes (civil or criminal) related thereto or to the nonpayment thereof. Telephone Plant is defined in Section 2.2. 1. Third Party Claim is defined in Section 13.4(a). Total Deferred Credits is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Unamortized Investment Tax Credit" (Item 22 - Liabilities on the Company's Balance Sheet), "Non-Current Deferred Income Taxes" (Item 23 - Liabilities on the Company's Balance Sheet), "Regulatory Liabilities" (Item 24 - Liabilities on the Company's Balance Sheet), "Other Deferred Credits" (Item 25 - Liabilities on the Company's Balance Sheet), and "Donations of Telephone Plant" (Item 26 - Liabilities on the Company's Balance Sheet). Total Long-Term Debt is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Long-Term Debt" (Item 17 - Liabilities on the Company's Balance Sheet), "Premium/Discount on Long-Term Debt" (Item 18 - Liabilities on the Company's Balance Sheet), and "Capital Lease Obligations" (Item 19 - Liabilities on the Company's Balance Sheet). Transferred Employee is defined in Article II.A of the Employee Transfer Agreement. Transition Services Agreement is defined in Section 10.1. Unregulated Business is defined in the definition of Business set forth in this Article 1. ARTICLE 2. PURCHASE AND SALE OF SHARES 2.1 Purchase and Sale of Shares. Subject to the terms and conditions of this Agreement, Seller agrees to sell and deliver to Buyer, and Buyer agrees to purchase and accept, as of the Effective Date, the Shares, free and clear of all security interests, liens, or encumbrances. 2.2 Property. For purposes of this Agreement, the "Property" consists of the Telephone Plant, Contracts and Leases (to the extent permitted following compliance with Section 5.3), Company Books and Records, FCC Licenses, the Non- FCC Authorizations and other assets in effect or owned by the Company as of the Effective Date that are associated with (i) the telephone exchanges listed in Schedule 2.2(a) (the "Exchanges"), and (ii) the Unregulated Business described on Schedule 2.2(b). 2.2.1 Telephone Plant. For purposes of this Agreement, "Telephone Plant" means the Real Property, machinery, equipment, vehicles and all other assets and properties used, or held for future use, in connection with the conduct of the Business, including, without limitation, all improvements, plants, systems, structures, construction work in progress, telephone cable (wherever located and whether in service or under construction), microwave facilities (including frequency spectrum assignments), telephone line facilities, telephones, machinery, furniture, fixtures, tools, implements, conduits, stations, substations, equipment (including, without limitation, central office equipment, subscribers' station equipment and other equipment in general), instruments, house-wiring connections and all other equipment of every nature and kind owned by the Company or in which the Company holds an interest (other than as a lessee) and used in connection with the Business. For purposes of this Agreement, "Real Property" means the real property owned by the Company and used in connection with the Business, including, without limitation, all land, buildings, structures, easements, rights of way, appurtenances, improvements or privileges located thereon and relating thereto. Without limiting the generality of the foregoing, the Telephone Plant includes the assets that would be properly included in the fixed asset accounts referenced in Part 32 of the FCC's Rules and Regulations (47 C.F.R. Part 32), as such accounts are reflected in Schedule 9.1.19. 2.2.2 Contracts. For purposes of this Agreement, "Contracts" means all agreements that relate to the Business between the Company or any Affiliate of the Company and (i) the Company's subscribers or customers, or (ii) other entities or persons who are not Affiliates of the Company and have business relationships with the Company relating to the Business, except for the Excluded Contracts (some of which are specifically governed by other Sections in this Agreement or the Employee Transfer Agreement). 2.2.3 Company Books and Records. For purposes of this Agreement, "Company Books and Records" means all of the Company's customer or subscriber lists and records, accounts and billing records (including a copy of the detailed general ledger and the summary trial balances, where available for the past two fiscal years), detailed continuing property record lists, plans, blueprints, specifications, designs, drawings, surveys, engineering reports, personnel records (where applicable), Original Cost Documents (where located in the Exchanges but excluding Excluded Books and Records) and all other documents, computer data and records (including records and files on computer disks or stored electronically) relating to the Business (excluding Excluded Books and Records), the Property and the Transferred Employees, except for the Excluded Books and Records. 2.2.4 FCC Licenses. For purposes of this Agreement, "FCC Licenses" means all licenses, certificates, permits or other authorizations, including, without limitation, Section 214 authorizations where applicable, granted to the Company by the FCC. 2.2.5 [INTENTIONALLY DELETED] 2.2.6 Non-FCC Authorizations. For purposes of this Agreement, "Non-FCC Authorizations" means all licenses, certificates, permits, franchises, or other authorizations (other than FCC Licenses) granted to the Company by Governmental Authorities (including without limitation those that are listed or required to be listed on Schedule 9.1.17(c)). ARTICLE 3. PURCHASE PRICE 3.1 Purchase Price. (a) In consideration of the sale of the Shares and the other undertakings of Seller in this Agreement, and subject to and in accordance with the other terms and conditions of this Agreement, on the Closing Date, Buyer will pay to Seller the sum of Thirty Two Million One Hundred Eleven Thousand Dollars ($32,111,000.00), subject to adjustment as provided in Section 3.2 (the "Purchase Price"). (b) (i) On or before the Closing Date, Buyer shall deliver to Seller, in immediately available funds in U.S. Dollars, the Estimated Purchase Price. Such delivery shall be made by bank wire transfer to an account that Seller shall designate at least two (2) business days prior to the Effective Date. (ii) Buyer will use its best efforts to make the wire transfer of the Estimated Purchase Price by 12:00 noon (Eastern Time) on the Closing Date, provided that all conditions to Closing set forth in Article 7 have been satisfied, or waived by the appropriate party, before such time. 3.2 Adjustments to Purchase Price. (a) Adjustment Regarding Damaged Property. (1) If the provisions of Section 11.9(c)(i) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to repair or replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (2) If the provisions of Section 11.9(c)(ii) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (b) [INTENTIONALLY DELETED] (c) Adjustment Regarding June 1994 Base Amount. The Purchase Price shall be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which the sum of Net Telecommunications Plant and Materials and Supplies as of the Effective Date exceeds or is less than the June 1994 Base Amount; provided, however, that in determining Net Telecommunications Plant and Material and Supplies as of the Effective Date, no effect will be given for: (i) any decrease thereof resulting from damage, loss or destruction of Damaged Property which is repaired or replaced by Seller or the Company or for which Seller or the Company makes a substitution, in accordance with Section 11.9(b); (ii) any increase thereof resulting from expenditures made by Seller or the Company in connection with any such repair, replacement or substitution of Damaged Property in accordance with Section 11.9(b); or (iii) any increase thereof resulting from Seller's expenditures pursuant to its obligations under Section 14.1.7(b) and (c) except for the cost of purchasing specific items of new plant (i.e., storage tanks). (d) Adjustment Regarding Assets and Liabilities. The Purchase Price will be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which, in each case as of the Effective Date: (i) Adjusted Total Current Assets plus Adjusted Total Non-Current Assets exceeds or is less than (ii) Adjusted Total Current and Non-Current Liabilities plus Total Long Term Debt to the extent such Total Long-Term Debt shall remain outstanding immediately after the Effective Date. 3.3 Estimate of Purchase Price. At least five (5) days prior to the date scheduled for Closing, Seller shall deliver to Buyer an estimate of the Purchase Price based on Seller's good faith estimate of the amount of each adjustment described in Section 3.2 (the "Estimated Purchase Price") on the same basis and in accordance with the same accounting principles, methods and practices applied in preparing the Financial Statements and the Additional Financial Statements, if applicable, taking into account all adjustments required in Section 3.2 (using the balances as reflected on the Company's Balance Sheet as of the end of the month immediately preceding the month in which the Effective Date is scheduled to occur for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and accompanied by a reasonably detailed statement, certified by the chief financial or accounting officer of Seller, describing how each such adjustment was determined. 3.4 Adjustments After Closing. (a) Within sixty (60) days following the Effective Date, Buyer shall deliver to Seller final calculations of the Purchase Price, as adjusted pursuant to Section 3.2 (prepared on the same basis (but using the balances reflected on the Company's Balance Sheet as of the Effective Date for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and in accordance with the same accounting principles, methods and practices used to prepare the Estimated Purchase Price) which shall be accompanied by a reasonably detailed statement certified by the chief financial or accounting officer of Buyer describing how each such adjustment was determined. (For the purpose of preparing Buyer's calculations and adjustments, Seller shall give Buyer access to all books, records, and other information regarding the Company available to Seller that Buyer may reasonably determine appropriate.) Within thirty (30) days following the delivery of such calculations and adjustments, Seller shall notify Buyer of any objection thereto, stating in reasonable detail the reasons therefor; otherwise, such calculations and adjustments of the Purchase Price shall be final and binding on Seller and Buyer. (For the purpose of reviewing Buyer's calculations and adjustments, Buyer shall give Seller access to all books, records, and other information regarding the Company available to Buyer that Seller may reasonably determine appropriate.) If Seller shall object, Seller and Buyer shall work in good faith to agree on the correct amounts for the final Purchase Price, but if they fail to agree, either party may exercise its rights pursuant to Article 16. (b) Within three (3) business days following the day on which the Purchase Price shall become final, whether by expiration of time or agreement of Seller and Buyer (the "Final Purchase Price"): (i) if the Final Purchase Price shall exceed the Estimated Purchase Price, Buyer shall cause to be transferred to such account in the United States as Seller may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer, or (ii) if the Estimated Purchase Price shall exceed the Final Purchase Price, Seller shall cause to be transferred to such account in the United States as Buyer may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer. It is the intent of the parties that all Purchase Price adjustments that are not disputed shall be paid by the appropriate party as soon as reasonably practicable, and any disputed amounts will not delay payments with respect to amounts not in dispute. ARTICLE 4. [INTENTIONALLY DELETED] ARTICLE 5. REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS 5.1 Governmental Regulatory Approval. Except as provided in Section 5.4, as promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date with respect to applications to be filed with the PUC and with respect to Material Regulatory Approvals, the parties shall file the applications and notices described on Schedule 5.1 in such form as agreed to by the parties with the PUC and other appropriate Governmental Authorities, seeking an order permitting the transfer of control of the Company to Buyer (the "Regulatory Approvals"). Each party agrees to use its best efforts to obtain the Regulatory Approvals and the parties agree to cooperate fully with each other and with all Governmental Authorities to obtain the Regulatory Approvals as described on Schedule 5.1 at the earliest practicable date. The parties agree that the Regulatory Approvals containing asterisks on Schedule 5.1 constitute material Regulatory Approvals (the "Material Regulatory Approvals") which are subject to Sections 7.1.3 and 7.2.4, and the Regulatory Approvals that do not contain an asterisk on Schedule 5.1 constitute Immaterial Regulatory Approvals (the "Immaterial Regulatory Approvals") which are subject to Section 5.3, but not Sections 7.1.3 and 7.2.4. 5.2 Debtholder Consents; Indebtedness Releases or Terminations. (a) With respect to the Company's long-term indebtedness identified on Schedule 5.2(a) (the "Long Term Indebtedness"), where required by the underlying debt instruments, as promptly as practicable following the Execution Date, but in any event no more than forty-five (45) days thereafter, the parties shall contact the holders of such indebtedness to request, and use their best efforts to obtain, such holders' consent ("Debtholder Consents") to the transfer of control of the Company on terms acceptable to the parties. The parties acknowledge that all Long Term Indebtedness for which Debtholder Consents have been obtained before the Effective Date and all other Long Term Indebtedness for which Debtholder Consent is not required, shall remain outstanding immediately after the Effective Date and shall be included as a Purchase Price adjustment pursuant to Section 3.2(d). Each party shall bear their own costs and expenses in obtaining such Debtholder Consent. Neither party, however, shall be required to make any payment to the debtholder to obtain the Debtholder Consent, except that Seller shall be responsible for any such payments as are specified in the relevant debt agreement. (b) If within thirty (30) days prior to the Closing Date, the parties have been unable to obtain the Debtholder Consents with respect to any Long Term Indebtedness, the Company shall repay such Long Term Indebtedness in full (including all interest and premiums or penalties thereon). (c) With respect to Long Term Indebtedness that the Company shall repay on or prior to the Effective Date, Seller shall take, at Seller's sole cost and expense, all actions necessary with respect to all persons or entities (collectively, the "Secured Parties") holding any security interest or lien against the Property, to obtain the termination or release, as of the Effective Date, and the prompt removal after the Effective Date, of all security agreements, mortgages and financing statements relating to the Property (such terminations and releases being hereinafter collectively referred to as the "Indebtedness Releases or Terminations"). Buyer agrees to cooperate in good faith with Seller in obtaining the required Indebtedness Releases or Terminations. 5.3 Other Consents. (a) As promptly as practicable after the Execution Date, the parties hereto shall mutually seek the consent, approval or waiver of the other party to any Lease or Contract that requires consent, approval or waiver as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares. To the extent any of the approvals, consents or waivers required with respect to any Lease, Contract or Immaterial Authorization have not been obtained with respect to any Lease, Contract or Immaterial Authorization as of the Effective Date, Seller shall continue to use its best efforts to obtain the consent of such other third party that is required for the transfer of control of such Lease, Contract or Immaterial Authorization after the Effective Date. (b) Notwithstanding anything to the contrary contained herein, if a third party refuses or has failed to consent to the transfer of control of a Lease, Contract or Immaterial Authorization after the Seller has used its best efforts for a period of six months after the Effective Date to obtain such consent, waiver or approval, then Seller and Buyer shall within thirty (30) days after expiration of such six-month period negotiate in good faith and agree upon, and Seller shall pay to Buyer, an amount representing fair compensation to Buyer for the harm caused by the failure to obtain such consent, waiver or approval. Following such payment, Seller shall have no further obligation to Buyer with respect to such Lease, Contract or Immaterial Authorization except as otherwise provided in Section 11.12 with respect to the Contracts and Excluded Contracts addressed in Section 11.12. (c) Seller shall bear all reasonable costs and expenses in obtaining such consents, approvals or waivers to the extent such costs or expenses are specified in the relevant Lease, Contract or Immaterial Authorization, or under applicable Law, and shall reimburse Buyer to the extent Buyer makes any transfer payments which are specified in amount and required under any Lease or Contract to the lessor or other party thereto, provided that seven (7) business days before Buyer makes any transfer payments, Buyer will notify Seller of its intent to do so and after making such transfer payment, Buyer will provide evidence satisfactory to Seller that such transfer payment was made. Buyer and Seller will negotiate in good faith to determine the extent to which each will bear any other costs and expenses arising in connection with obtaining such consents, approvals and waivers. 5.4 FCC Consents. As promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date, the parties shall file all applications and requests described on Schedule 5.4 in such form as agreed to by the parties with the FCC seeking, and shall use their best efforts to obtain, the FCC's consent to the transfer of control of all FCC Licenses (as listed in Schedule 9.1.17(b)) from Seller to Buyer (the "FCC Consents"). The parties each agree that in connection with taking the immediately above described actions, they will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the National Exchange Carrier Association Tariff F.C.C. No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. Each party agrees to use its best efforts, and the parties agree to cooperate fully with each other and with the FCC, to obtain the FCC Consents at the earliest practicable date. 5.5 HSR Act Review. As promptly as practicable after the Execution Date but in no event later than thirty (30) days after the Execution Date, the parties will make such filings as may be required by the HSR Act with respect to the sale contemplated by this Agreement. Thereafter, the parties will file as promptly as practicable any supplemental information that may be requested by the U.S. Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR Act. The parties agree to cooperate in seeking early termination of the waiting periods under the HSR Act. ARTICLE 6. PRECLOSING COVENANTS 6.1 Investigation by Buyer. (a) Prior to the Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford to the authorized representatives of Buyer reasonable access during normal business hours to the books and records of the Company (including, without limitation, relevant tax information) and to the personal property and Real Property comprising the Property. Buyer and Seller will cooperate with each other to schedule such access. With the consent of Seller (which consent will not be unreasonably withheld), Buyer and its representatives shall have access to all interexchange carriers having business relationships with the Company, to all customers of the Company, and to all officers, employees and agents of the Company having knowledge or information concerning the operations of the Company so as to afford Buyer the opportunity to make such review, examination and investigation of the Company and the Property as Buyer may desire to make, to evaluate the competitiveness of the Company and the Business, and to enable Buyer to assimilate the Company and the Business into Buyer's operations as soon as practicable after the Effective Date. To the extent it so desires, Seller shall accompany Buyer on all of Buyer's access to interexchange carriers, customers and agents of the Company. Buyer will be permitted to make extracts from or copies of such books and records as may be reasonably necessary. Buyer will not contact any employee, customer or supplier of the Company as to this Agreement or the matters involved herein except in accordance with this Section 6.1. (b) Subject to applicable law, and upon Buyer's request and Seller's consent (which consent will not be unreasonably withheld), Seller shall cause the Company to permit, at Buyer's sole cost and expense: (i) certain key employees and officers of the Company selected by Buyer to attend workshops and training sessions of Buyer (including sessions to train such employees in Buyer's business planning process in order to have the Company after the Effective Date follow Buyer's business planning process and procedures); (ii) The Company's management to work with Buyer during Buyer's planning process between the Execution Date and the Effective Date; (iii) Buyer to confer with the Company about, and to participate in the Company's planning for, any material reduction in work force or other arrangements regarding employees required or implemented pursuant to the Employee Transfer Agreement. (c) As promptly as reasonably practicable after Buyer's request, Seller will furnish, and cause the Company to furnish, such financial and operating data and other information pertaining to the Company as Buyer may reasonably request in order, among other things, to comply with Buyer's disclosure obligations under the federal securities or other laws as such obligations relate to Buyer's prospective ownership of the Company, including any disclosure required in connection with the sale of any securities by Buyer; provided, however, that nothing herein will obligate Seller or the Company to take actions that would unreasonably disrupt the normal course of the business of the Company or violate the terms of any applicable Law or any contract to which the Company is a party or to which any of its assets is subject in providing such information, or to incur any costs with respect to Buyer's external auditors (or the Company's external auditors in the event a report by such auditors is requested by Buyer) providing accounting services with respect to issuing an auditor's report required by Buyer. Any information or document provided to Buyer or acquired by Buyer during this investigation shall be deemed "Evaluation Material" as that term is defined in the Confidentiality Agreement and shall be subject in all cases to the terms of the Confidentiality Agreement; provided, however, that following consultation with Seller, Buyer may disseminate financial or other information with respect to the Business or the Company that Buyer, upon consultation with counsel, determines is required to be disclosed under federal securities laws. (d) Prior to Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will cause the Company to afford the authorized representatives of Buyer access to the Properties in order to conduct the environmental audit contemplated by Section 14.1. (e) In connection with the continuing operation of the Business between the Execution Date and the Effective Date, Seller shall cause the Company to confer in good faith with Buyer, as reasonably requested by Buyer from time to time, to report on material operational matters, material reductions in work force and other material employee matters, and the general status of ongoing operations. (f) Notwithstanding the provisions of this Agreement or the Confidentiality Agreement, from and after the Execution Date, upon the prior consent of Seller (which consent will not be unreasonably withheld), Buyer may disclose Evaluation Material (as defined in the Confidentiality Agreement) to representatives of rating agencies, underwriters, underwriters' counsel, public accountants, prospective lenders and other third parties involved in any of Buyer's offering of securities or other financings and to fixed income and equity analysts to the extent such parties reasonably have a need to know any such information; provided, that such parties shall (y) be advised of the confidential nature of any Evaluation Material they receive, and (z) agree in writing to be bound to the provisions of the Confidentiality Agreement. 6.2 Satisfaction of Conditions. Without limiting the generality or effect of any provision of Article 7, the parties will use their best efforts to satisfy promptly all conditions required to be satisfied prior to the Closing. 6.3 Notification as to Certain Matters. (a) The Buyer will promptly notify Seller of (i) any information that would cause any representation or warranty of Buyer contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the transactions contemplated by this Agreement; of which in any such case, Buyer's representatives listed on Schedule 6.3(a) become aware on or before the Effective Date. Buyer shall use reasonable best efforts to keep Seller informed of the events described in this Section 6.3(a) and shall permit Seller access to all materials prepared by Buyer in connection therewith. (b) The Seller will promptly notify Buyer of (i) any information that would cause any representation or warranty of Seller contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the Company, the Business or the transactions contemplated by this Agreement; of which in any such case, Seller's representatives listed on Schedule 6.3(b) become aware on or before the Effective Date. Seller shall use reasonable best efforts to keep Buyer informed of the events described in this Section 6.3(b) and shall permit Buyer access to all materials prepared by Seller in connection therewith. ARTICLE 7. CONDITIONS PRECEDENT TO THE CLOSING 7.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Buyer: 7.1.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been no material breach by Seller of any of its covenants to be performed in whole or in part prior to the Closing and the representations and warranties of Seller in Section 9.1 (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) shall be true and correct as of the Effective Date, except for such representations or warranties that are made expressly as of some other date, which shall be true and correct (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) as of such other date, and Seller shall have delivered to Buyer a certificate in the form attached hereto as Schedule 7.1.1 ("Seller's Closing Certificate"), dated as of the Effective Date and signed by one of Seller's Executive Officers, certifying each of the foregoing, or specifying those respects in which such covenants have been materially breached or such representations and warranties (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) are not true and correct in which event, if the Closing occurs, any claim with respect to matters so specified shall be waived by Buyer unless otherwise expressly agreed by Seller at Closing. 7.1.2 Documents. Seller shall have delivered to Buyer all documents required by Section 8.2. 7.1.3 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions or restrictions which Buyer determines, in good faith and in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Buyer of the transactions contemplated by this Agreement. For purposes of this Section 7.1.3, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.1.4 Material Adverse Changes. There shall have been no material adverse changes to the Property as a whole or the financial position or results of operations of the Company as a whole, and, subject to Section 11.9, the Company shall not have suffered any material loss or damage to the Property, whether or not insured, that would materially affect or impair the Company's ability to conduct the Business after the Effective Date. None of the Additional Financial Statements of the Company delivered pursuant to Section 11.4 shall reflect a material change in the financial position or results of operations of the Company from the financial position or results of operations reflected in the Financial Statements. 7.1.5 Real Estate Transfers. Seller shall have complied with Section 11.16 with respect to its Real Property to be transferred to Buyer. 7.1.6 Lessor and Other Third Party Consents. Seller shall have delivered to Buyer all consents, approvals or waivers of lessors or other third parties to the Material Agreements as so identified by an asterisk on Schedules 9.1.9 and 9.1.13, as such Schedules may be amended pursuant to Section 11.24. All of such delivered consents, approvals or waivers shall be in effect as of the Effective Date. 7.1.7 [INTENTIONALLY DELETED] 7.1.8 Litigation. There shall not be any litigation or other proceeding pending or to the best of Buyer's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Buyer, would involve material expense to Buyer. 7.1.9. Corporate Proceedings. All corporate proceedings required to be taken by Seller in connection with the transactions contemplated by this Agreement shall have been taken; 7.1.10 Lien Searches. Seller shall have delivered to Buyer reasonably comprehensive searches, dated as of a date within 30 days of the Execution Date or any time thereafter, of the public records regarding liens and judgments with respect to the Company, the Business and the Property. 7.1.11. Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Buyer if required by the underlying debt instrument shall have received the Debtholder Consents and shall have entered into any other necessary agreements with the holders of such Long-Term Indebtedness evidencing such Debtholder Consent in form and substance reasonably acceptable to Buyer. 7.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Seller: 7.2.1 No Misrepresentations or Breach of Covenants and Warranties. There shall have shall have been no material breach by Buyer of any of its covenants to be performed in whole or in part prior to the Closing, and the representations and warranties of Buyer in Section 9.2 shall be true and correct as of the Effective Date, except for such representations or warranties made expressly as of some other date, which shall be true and correct as of such other date (all such representations and warranties to be qualified by any materiality standards contained therein), and Buyer shall have delivered to Seller a certificate ("Buyer's Closing Certificate"), dated as of the Effective Date and signed by one of Buyer's Executive Officers, certifying each of the foregoing or specifying those respects in which such covenants have not been performed or such representations and warranties are not true and correct in which event if the Closing occurs any claim with respect to matters so specified shall be waived by Seller unless otherwise expressly agreed by Buyer at Closing. 7.2.2 Documents. Buyer shall have delivered to Seller all documents required by Section 8.3. 7.2.3 Purchase Price. Buyer shall have delivered to Seller, in the manner specified in Section 3.1, the Estimated Purchase Price as adjusted pursuant to Section 3.2. 7.2.4 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions, or restrictions which Seller determines, in good faith in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Seller of the transactions contemplated by this Agreement. For purposes of this Section 7.2.4, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.2.5 Corporate Proceedings. All corporate proceedings required to be taken by Buyer in connection with the transactions contemplated by this Agreement shall have been taken. 7.2.6 Litigation. There shall not be any litigation or other proceeding pending or to the best of Seller's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Seller would involve a material expense to Seller. 7.2.7 [INTENTIONALLY DELETED] 7.2.8 Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Seller, if required by the underlying debt instrument, shall have received the Debtholder Consent. ARTICLE 8. THE CLOSING 8.1 The Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall be held at a place mutually agreed upon by the parties at 9:00 a.m., local time, on the last calendar day (the "Closing Date") of the calendar month in which occurs the tenth (10th) business day after the date Seller notifies Buyer in writing (the "Notice") of its determination that all required Material Regulatory Approvals and FCC Consents have been obtained and provided that the other conditions set forth in Article 7 shall have been satisfied, or at such other place and time as may be agreed upon by Seller and Buyer. The transactions to be consummated at Closing shall be deemed to have been consummated as of 11:59 p.m. on the last calendar day of the calendar month in which occurs the tenth (10th) business day after the date of the Notice (the "Effective Date"). If the Effective Date is not a day on which financial institutions are open and operating, then the Closing Date shall be the immediately following business day on which financial institutions are open and operating. 8.2 Seller's Obligations at Closing. At the Closing, Seller shall deliver to Buyer the following documents duly executed and acknowledged, as appropriate: (a) Certificates representing the Shares, duly endorsed for transfer or accompanied by stock powers duly endorsed in blank. (b) Seller's Closing Certificate. (c) [INTENTIONALLY DELETED.] (d) Indebtedness Releases and Terminations and evidence satisfactory to Buyer that all Long-Term Indebtedness (and interest, premiums and penalties thereon) to be repaid pursuant to Section 5.2(b) has been (or will be at Closing) repaid in full. (e) All of the documents and papers required of Seller as conditions to Closing, including without limitation, the Regulatory Approvals, FCC Consents and the documents required to be delivered by Seller pursuant to Section 11.16. (f) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (g) The Environmental Remediation Agreement if required pursuant to Section 14.1.7(d). (h) All documents required of Seller under the Employee Transfer Agreement. (i) Certificate of the Secretary or Assistant Secretary of Seller certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. (j) Resignations of all officers and directors of the Company, effective as of the Effective Date. 8.3 Buyer's Obligations at Closing. At the Closing, Buyer shall deliver to Seller the following items and documents duly executed and acknowledged as appropriate: (a) The Estimated Purchase Price (as adjusted under Section 3.2), in the manner specified in Section 3.1; (b) Buyer's Closing Certificate (c) All of the documents and papers required of Buyer as conditions to Closing, including, without limitation, the Regulatory Approval and FCC Consents. (d) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (e) The Environmental Remediation Agreement if required pursuant to Section 14.17(d). (f) All documents required of Buyer under the Employee Transfer Agreement. (g) Certificate of the Secretary or Assistant Secretary of the Buyer certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties of Seller. Except as to the environmental matters which are exclusively addressed in Article 14 of this Agreement, Seller represents and warrants to Buyer as follows: 9.1.1 Authorization and Effect of Agreement. Seller has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement and to fulfill its respective obligations under this Agreement. The execution and delivery by Seller of this Agreement and the fulfillment of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and, assuming the due execution and delivery of this Agreement by Buyer, constitutes a valid and binding obligation of Seller, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualification that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.1.2 No Restrictions Against Sale of the Shares. The execution and delivery of this Agreement by Seller does not, and the fulfillment by Seller of its obligations under this Agreement will not, (i) conflict with or violate any provision of Seller's or the Company's certificate of incorporation or bylaws or, (ii) except as set forth in Schedule 9.1.13, or subject to obtaining the approvals and consents reflected in Article 5, conflict with, violate or result in the breach of, constitute a default under, accelerate the performance required by, or result in the creation of any encumbrance upon any of the Property under any provision of any Contract other than any such conflict, violation or breach that alone or in the aggregate would not have an adverse effect on the Buyer, the Company, the Business or the Property after the Effective Date. 9.1.3 Consents and Approvals of Governmental Authorities. No consent, approval, order or authorization of, or registration, declaration or filing with, any court or governmental agency, authority or instrumentality (" Governmental Authority") is required to be obtained or made by or with respect to Seller or the Company or in connection with the execution and delivery of this Agreement by Seller or the fulfillment by Seller of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, (ii) as described in Schedule 9.1.3, and (ii) such other consents, approvals, orders or authorizations, or registrations, declarations or filings, which if not obtained or made would not result in a material adverse effect on Buyer, the Company, the Business or the Property. 9.1.4 No Violation of Law. Except as indicated in Schedule 9.1.4, the execution and delivery of this Agreement and the fulfillment by Seller of its obligations under this Agreement will not violate any applicable existing statute, ordinance, rule, regulation or common law obligation (collectively, "Law"), except where such violation would not have a material adverse effect on the Company, the Business as a whole or on any significant part of Property after the Effective Date. 9.1.5 Corporate Organization of Seller. Seller is a corporation duly organized, validly existing and in good standing under the laws of Delaware; it has full corporate power and authority to own the Shares and perform its obligations under this Agreement. 9.1.6 Brokers. Seller has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Buyer for any broker's or finder's fees or similar fees or expenses. 9.1.7 Liabilities. The Company is not in default with respect to any of its obligations or liabilities, or the performance, observance or fulfillment of any covenant or condition relating thereto, and no event has occurred and is continuing that constitutes a material breach or default thereunder or that would constitute such a material breach or default with the giving of notice or lapse of time, or both. 9.1.8 Title to Property. The Company has good, valid, undivided, marketable and defensible title to all owned Property, free and clear of all restrictions, charges, liens, or encumbrances of any kind, except for (i) the liens, encumbrances and restrictions shown and disclosed on Schedule 9.1.8-1, (ii) current real and personal property taxes and other statutory liens covering amounts not yet due and payable, and (iii) such other imperfections of title and encumbrances, if any, as do not interfere in any material respect with the present use or value of the item of owned Property to which such imperfection or encumbrance relates. No condemnation proceeding is pending or, to the knowledge of Seller or the Company, threatened with respect to any part of the Property and such Property is not in any violation of any restrictive covenant relating thereto. Schedule 9.1.8-2 sets forth the address and a general description of each item of Real Property owned by the Company included in the Property. In addition, Schedule 9.1.8-2 sets forth a list of the Real Property included in the Property in which the Company holds other than a fee interest (such as easements and rights of way). 9.1.9 Leases. Seller has set forth on Schedule 9.1.9 a list of all the Leases. Each of the Leases is valid, binding and enforceable in accordance with its terms, and except as otherwise disclosed in Schedule 9.1.9, there is not any existing material default or existing material breach of a covenant by the Company under any Lease. The Company enjoys peaceful and undisturbed possession under all material Leases and, to Seller's and the Company's knowledge, the lessor under any such Lease is not (with or without notice or the lapse of time, or both) in material breach or default thereunder, has performed all material obligations required to be performed by it thereunder, and has not given notice of such lessor's intent to terminate such Lease. 9.1.10 Condition of Tangible Assets. All of the tangible Property is in substantially good operating condition and repair, normal wear and tear excepted, well maintained, adequate for the present uses thereof and in compliance in all material respects with applicable federal, state and local ordinances, regulations and statutes relating to the ownership and operation of such Property. Except as set forth on Schedule 9. 1. 10, the Company has not received any written notice within the past twelve (12) months of a violation of any ordinances, regulations or building, zoning and other similar laws with respect to such assets that would have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Each parcel of Real Property and, to the knowledge of Seller and the Company, of real estate leased by the Company and material or necessary to the Business as presently conducted substantially complies with all applicable Laws except where the failure to so comply individually or in the aggregate, would not have a material adverse effect on the Company, the Business as a whole or any such parcel after the Effective Date. Except as set forth on Schedule 9.1.10, other than the Company, no person or party has actual possession or has a right to possession of all or any material portion of any parcel of such Real Property or such leased real estate. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 9.1.10, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED OR STATUTORY, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE PERSONAL PROPERTY INCLUDED IN THE PROPERTY AND HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED OR STATUTORY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. 9.1.11 Financial Statements. (a) Seller has delivered to Buyer a true and correct copy of the Company's audited financial statements, consisting of a balance sheet, income statement and related statement of cash flows as of and for the respective periods ended December 31, 1992, and December 31, 1993, together with the auditor's report thereon (the "Financial Statements"). The Financial Statements were prepared based upon the books and records of the Company, and fairly present in all material respects the financial condition of the Company as of the appropriate periods and the results of operations for the year then ended, in each case in conformity with GAAP and to the best of Seller's knowledge and to the extent required by applicable Law, have been prepared in all material respects in conformity with the regulations of the FCC and the PUC. The Financial Statements contain no untrue statements of any material fact nor omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Additional Financial Statements to be delivered to Buyer pursuant to Section 11.4 hereof (i) will be prepared in each case in accordance with GAAP (except for the omission of notes thereto with respect to interim Additional Financial Statements), consistent with past practices, from the books and records of the Company; and (ii) will fairly present the financial condition of the Company and the results of operations of the Company for the periods indicated, subject, in the case of interim Additional Financial Statements, to normal year-end adjustments which will not be material in amount or effect; and (iii) to the best of Seller's knowledge and to the extent required by applicable Law, will be prepared in all material respects in conformity with the regulations of the FCC and the PUC; and (iv) will not contain any untrue statements of any material facts or omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) The unaudited balance sheet of the Company as of June 30, 1994 was prepared in accordance with GAAP except for the omission of notes thereto, consistent with past practices, from the books and records of the Company and fairly presents the financial condition of the Company as of such date subject to normal year-end adjustments which will not be material in amount or effect, and to the best of Seller's knowledge and to the extent required by applicable Law, was prepared in all material respects in conformity with the regulations of the FCC and the PUC. 9.1.12 Absence of Material Changes. Except as Seller may disclose in Schedule 9.1.12, since December 31, 1993, there has not been: (a) Except as described in Section 11.22, any material change in the financial condition, results of operations, assets, liabilities, operations or future business prospects of the Company or the Business; (b) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the Property, the Company or the Business; (c) Except as described in Section 11.22, any disposition (including, without limitation, the grant of a license, franchise, option or other right of any nature whatsoever to sell or distribute) or encumbrance or agreement to dispose of or to encumber, or pledge or grant of a security interest in or agreement to pledge or grant a security interest in, any of the Property, or any increase or an agreement to increase any indebtedness of the Company, except in the ordinary course of business; (d) Any material change in the Company's tariffs or in the manner of conducting the Business; (e) Except as described in Section 11.22, any dispute, litigation or other event or condition that materially and adversely affects the business or prospects of the Company, the Business or the Property; (f) Any waiver or release of any material rights or settlement of any material dispute involving the Company, the Business or the Property; (g) Any granting of a material salary increase or other material benefits payable to any Employee, except for ordinary and routine salary increases or bonuses authorized or granted in the ordinary course of business and consistent with past practices; (h) Except as described in Section 11.22, any transaction entered into by Seller or the Company that would have a material adverse effect on the Company, the Business as a whole or the Property as a whole; (i) Any change in the accounting methods or practices of the Company except as required by GAAP or any change in depreciation or amortization policies or rates heretofore adopted by the Company except as required by GAAP; (j) Any material labor dispute or threat thereof which affects generally the Transferred Employees or, to Seller's or the Company's knowledge, any attempt to organize the Transferred Employees for the purpose of collective bargaining; (k) Any event that would have been prohibited under Section 11.5 if Section 11.5 had been in effect since December 31, 1993; (l) Except as described in Section 11.22, any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company of any outstanding shares of capital stock or other securities of, the Company; (m) any amendment of any material term of any outstanding capital stock of the Company; (n) any incurrence, assumption or guarantee by the Company of any indebtedness for borrowed money other than in the ordinary course of business and in amounts and on terms consistent with past practice; (o) Except as described in Section 11.22, any making of any loan, advance or capital contributions to or investment in any person or entity other than loans, advances, capital contributions or investments made in the ordinary course of business; or (p) Except as described in Section 11.22, any agreement or commitment by Seller or the Company (or any understanding between Seller or the Company and any third party) to do or to take any of the actions referred to in paragraphs (a) through (o) of this Section 9.1.12. 9.1.13 Contracts. Each of the Contracts is in full force and effect as of the date of this Agreement in accordance with its terms, and there is no outstanding notice of cancellation or termination in connection therewith. The Company is not in material breach or default in connection with any Contracts, and there is no basis for any claim of breach or default by the Company, or to Seller's the Company's knowledge, any other party, in any material respect under any of the Contracts. None of the Contracts, either separately or in the aggregate, materially and adversely affects the Company, the Business or the Property. After the Effective Date, all rights and obligations of the Company under the Contracts shall continue unimpaired in the Company (assuming that if any Contract requires the consent of the other party thereto, such consent will have been obtained by the parties hereto prior to the Effective Date). Except for the instruments specifically listed in Schedule 9.1.13, the Company is not a party to or subject to: (i) any agreement for the purchase or disposition of any material, equipment, supplies, inventory or service, except individual purchase orders and contracts in amounts less than Twenty-Five Thousand Dollars ($25,000.00); (ii) any agreement to which the Company is a party or by which any of the Property is bound relating to indebtedness for money borrowed including capital leases, security arrangements relating thereto and any amendment or waiver thereof; and (iii) any other agreement not of the type covered by any of the foregoing items of this Section 9.1.13 requiring payments by the Company in excess of Seventy-Five Thousand Dollars ($75,000.00) per agreement, on or after the Effective Date. Schedule 9.1.13 also lists (a) each Contract between the Company and any Affiliate of the Company, and (b) each material Contract between the Company, or an Affiliate of the Company and relating to the Business, and any third party. Seller has made available to Buyer true and correct copies of all agreements and instruments listed in Schedule 9.1.13. Schedule 9.1.13 specifically identifies, with respect to those Contracts which are required to be listed thereon, the Contracts which require the consent, approval or waiver of the other party thereto for the transfer of control of the Company. 9.1.14 Insurance. The Property of an insurable nature and of a character usually insured by companies carrying on similar businesses is insured under insurance policies in such amounts and against such losses or casualties as is (i) usual in such companies and (ii) required under any of the Contracts or Leases. The insurance policies referred to in this Section 9.1.14 are (i) listed on Schedule 9.1.14, and (ii) in full force and effect and the premiums due thereon have been duly and timely paid. The most current statement of values (the statement of values of property of an insurable nature that is submitted to an insurance company to be used as a basis for the calculation of premiums) relative to the Property as presently insured has been made available to Buyer by Seller. On the Effective Date, the coverage under the insurance policies and programs of Seller and its Affiliates applicable to the Company will be terminated, and Buyer will be responsible for providing all insurance coverage for the Company. Following the Effective Date, Seller shall be responsible for and shall pay any additional premiums that might be required by an insurance company for insurance coverage prior to the Effective Date relating to the Company and shall be entitled to any refunds or dividends due from such companies relating to such coverage. Schedule 9.1.14 sets forth a list of the open material claims affecting the Company complete in all material respects, and a description of any self-insurance levels, underlying limits and deductibles. 9.1.15 Taxes. (a) Except as set forth on Schedule 9.1.15(a): (i) Seller or the Company has filed or caused to be filed with the appropriate United States, state and local Governmental Authorities, all Tax Returns required to be filed on or prior to the Effective Date (taking into account all extensions of due dates) by or with respect to the Company and has paid or adequately provided for all Taxes shown thereon as owing, except where the failure to file such Tax Returns or pay any such Taxes would not, or could not reasonably be expected to, have a material adverse effect on Buyer, the Business, or the Company after the Effective Date, (ii) all such Tax Returns were or will be correct and complete in all material respects, (iii) to the knowledge of Seller, all withholding Tax requirements imposed on or with respect to the Company have been or will be satisfied in full in all respects, and (iv) all penalties, interest or other charges that have or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax have been or will be timely paid in full. (b) The Company has been subject to normal and routine audits, examinations and adjustments of Taxes from time to time, but there are no material current audits or material audits for which notification has been received (in either case, with respect to the Company) other than those set forth on Schedule 9.1.15(b). (c) Except as set forth in Schedule 9.1.15(c), there is no material written claim against the Company for any Taxes, and no material assessment, deficiency or adjustment has been asserted or, to the knowledge of Seller proposed with respect to any Tax Return of or with respect to the Company. (d) Except as set forth in Schedule 9.1.15(d), there is not in force any extension of time with respect to the due date for the filing of any Tax Return of or with respect to the Company or any waiver or agreement for any extension of time for the assessment or payment of any Tax of or with respect to the Company. (e) Except for Taxes due with respect to Tax Returns that will be paid by Seller, the balance sheet included in the Financial Statements includes adequate provisions for the payment in full of all federal and state income taxes of the Company for all taxable periods or portions thereof during the period beginning with respect to each Tax Return statute of limitations and ending no later than December 31, 1993. The balance sheet included in the Financial Statements has attached thereto a schedule (the "Tax Schedule") which sets forth provisions for such federal and state income taxes. (f) All accrued rights or obligations under any written or unwritten Tax allocation or sharing agreements or arrangements affecting the Company are reflected in the intercompany accounts of the Company. All such Tax allocation or sharing agreements or arrangements have been or will be cancelled on or prior to the Effective Date. No payments are or will become due by the Company after the Effective Date pursuant to any such agreement or arrangement. (g) Except as set forth in Schedule 9.1.15(g), none of the property of the Company is held in an arrangement for which partnership Tax Returns are being filed, and the Company does not own any interest in any controlled foreign corporation (as defined in Section 957 of the Code) or passive foreign investment company (as defined in Section 1296 of the Code). (h) Except as set forth in Schedule 9.1.15(h), none of the property of the Company or any of its Subsidiaries is subject to a safe-harbor lease (pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect after the Economic Recovery Act of 1981 and before the Tax Reform Act of 1986) or is "tax-exempt use property" (within the meaning of Section 168(h) of the IRC) or "tax-exempt bond financed property" (within the meaning of Section 168(g)(5) of the IRC). (i) Except as set forth in Schedule 9.1.15(i), the Company will not be required to include any amount in income for any taxable period beginning after December 31, 1993 as a result of a change in accounting method for any taxable period ending on or before December 31, 1992 or pursuant to any agreement with any Tax authority with respect to any such taxable period. (j) The Company has not consented to have the provisions of Section 341(f)(2) of the IRC apply with respect to a sale of its stock. (k) As a result of the transactions contemplated by this Agreement, neither Buyer nor the Company will be obligated to make a payment to an individual that would be a "parachute payment" to a "disqualified individual" as those terms are defined in Section 280G of the IRC without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future. (l) All Taxes that the Company is required by law to withhold or collect through the Effective Date have been or will be duly withheld or collected and, to the extend required, have been or will be paid to the proper governmental authorities or properly deposited as required by applicable laws. 9.1.16 No Material Claims. Except as disclosed in Schedule 9.1.16 or with respect to Taxes, there are no claims, actions, lawsuits or legal or administrative proceedings pending, or, to the knowledge of Seller or the Company, threatened against or affecting the Company or its properties that, if determined adversely to the Company, would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Neither Seller nor the Company knows of any reasonable basis for any such action, claim, lawsuit or proceeding or any governmental or regulatory investigation relative to the Company, the Business as a whole or the Property. The Company is not in default under any judgment, order or decree of any Governmental Authority which would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property after the Effective Date. 9.1.17 Tariffs: FCC Licenses, Non-FCC Authorizations. (a) With respect to federal tariffs, the Company is an issuing carrier in the National Exchange Carrier Association Tariff F.C.C. No. 5 for the purpose of providing interstate access service. Except as described on Schedule 9.1.17(a), the state regulatory tariffs applicable to the Company stand in full force and effect on the date of this Agreement in accordance with all terms of such state tariffs, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation or termination in connection therewith, nor is the Company subject to any restrictions or conditions applicable to its state regulatory tariffs that limit or would limit the operation of the Business (other than restrictions or conditions generally applicable to tariffs of that type). Except as described on Schedule 9.1.17(a), each such state tariff has been duly and validly approved by the appropriate state regulatory agency. Except as otherwise disclosed on Schedule 9.1.17(a), the Company is not in material violation under the terms and conditions of any such state tariff, and there is no basis for any claim of material violation by the Company in any material respect under any such state tariff. Except as described in Schedule 9.1.17(a), there are no applications by the Company or complaints or petitions by others or proceedings pending or threatened before the state regulatory authority relating to the Company, the Business or its operations or the state regulatory tariffs. To the knowledge of Seller and the Company, there are no material violations by subscribers or others under any such state tariff that would be material to the Company or the Business. A true and correct copy of each state tariff applicable to the Company or the Business has been delivered to Buyer. (b) Listed on Schedule 9.1.17(b) are the FCC Licenses held by the Company. Each such FCC License is in full force and effect in accordance with its terms, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation or termination in connection therewith nor are any of such FCC Licenses subject to any restrictions or conditions that limit the operation of the Business (other than restrictions or conditions generally applicable to licenses of that type). The FCC Licenses are free from all security interests, liens, claims, or encumbrances of any nature whatsoever. Except as set forth on Schedule 9.1.17(b), there are no applications by the Company or material complaints or material petitions by others or proceedings pending or threatened before the FCC relating to the Company or the FCC Licenses. (c) Listed on Schedule 9.1.17(c) are all Non-FCC Authorizations materially necessary for the conduct of the Business which would include, without limitation, all FAA radio tower ownership authorizations. Each such Non-FCC Authorization is in full force and effect in accordance with its terms. To Seller's and the Company's knowledge, no event has occurred with respect to any materially necessary Non-FCC Authorization which permits, or after notice or lapse of time or both would permit, revocation or termination thereof, or would result in any other material impairment of the rights of the holder of such materially necessary Non-FCC Authorization. 9.1.18 Employee Matters. (a) Schedule 9.1.18(a) lists (and identifies the sponsor of) each material "employee pension benefit plan, " as that term is defined in Section 3(2) of ERISA, each material " employee welfare benefit plan," as that term is defined in Section 3(1) of ERISA maintained or contributed to by the Company or any of its Affiliates in respect of any Transferred Employee (as defined below) (such plans being hereinafter referred to collectively as the "ERISA Plans"), and each other material retirement, pension, profit-sharing, money purchase, deferred compensation, incentive compensation, bonus, stock option, stock purchase, severance pay, unemployment benefit, vacation pay, savings, medical, dental, post-retirement medical, accident, disability, weekly income, salary continuation, health, life or other insurance, fringe benefit, or other employee benefit plan, program, agreement, or arrangement maintained or contributed to by the Company or its Affiliates in respect of or for the benefit of any Transferred Employee or former employee, excluding any such plan, program, agreement, or arrangement maintained or contributed to solely in respect of or for the benefit of Transferred Employees or former employees employed or formerly employed by the Company outside of the United States, as of the date hereof (collectively, together with the ERISA Plans, referred to hereinafter as the "Plans"). Seller has supplied Buyer with a true and complete copy of each Plan and all amendments thereto. Schedule 9.1.18(a) also includes a list of each material written employment, severance, termination or similar-type agreement between the Company or its Affiliates and any Transferred Employee (the "Employment Agreements"). Except to the extent that any assets, liabilities, or accounts are transferred from the Plans or Agreements (pursuant to an Employee Transfer Agreement or otherwise) to plan(s) or agreement(s) maintained or contributed to by Buyer, all such Plans and Agreements shall remain the liabilities of the Seller or its Affiliates and Seller shall take any and all steps necessary to ensure that neither Buyer nor the Company shall be a sponsor of any such Plan or Agreement subsequent to the Effective Date. Except as otherwise disclosed on Schedule 9.1.18(a), the execution and delivery of this Agreement by Seller and the performance of this Agreement by Seller will not directly result now or at any time in the future in (i) the payment by the Company or its Affiliates to any Transferred Employee of any severance, termination, or similar type payments or benefits or (ii) any "parachute payment" (as such term is defined in Section 28OG of the IRC) being made by the Company or its Affiliates to any Transferred Employee. (b) Except as set forth on Schedule 9.1.18(b): (i) Neither the Company nor any of its Affiliates, any of the ERISA Plans, any trust created thereunder, or any trustee or administrator thereof, has engaged in any transaction as a result of which the Company could be subject to any material liability pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC; and (ii) Since the effective date of ERISA, no material liability under Title IV of ERISA with respect to the ERISA Plans has been incurred or is reasonably expected to be incurred by the Company or any of its Affiliates (other than liability for premiums due to the PBGC), unless such liability is reserved for or otherwise reflected on the Financial Statements or unless such liability has been, or prior to the Effective Date will be, satisfied in full. (iii) There is no contract or Employment Agreement covering any Transferred Employee of the Company that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the IRC. (iv) Neither the Company nor any of its Affiliates has engaged in, or is a successor or parent corporation to a person that has engaged in, a transaction described in Section 4069 of ERISA. (c) Except as set forth on Schedule 9.1.18(c), with respect to the ERISA Plans other than those ERISA Plans identified on Schedule 9.1.18(a) as "multi-employer plans": (i) the PBGC has not instituted proceedings to terminate any Plan that is subject to Title IV of ERISA (the "Retirement Plans") and no condition exists or has existed which could constitute grounds for any termination by PBGC; (ii) no filing has been made by the Company, or any of its Affiliates with the PBGC to terminate any Retirement Plan identified on Schedule 9.1.18(a); (iii) none of the ERISA Plans has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the IRC), whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to the Execution Date; (iv) each of the ERISA Plans has been operated and administered in all material respects in accordance with its provisions and with all applicable laws; (v) each of the ERISA Plans that is intended to be "qualified" within the meaning of Section 401(a) of the IRC and, to the extent applicable, Section 401(k) of the IRC, has been determined by the IRS to be so qualified, and nothing has occurred since the date of the most recent such determination (other than the effective date of certain amendments to the IRC, the remedial amendment period for which has not yet expired) that would adversely affect the qualified status of any of such ERISA Plans; (vi) there are no pending material actions, claims or lawsuits which have been asserted or instituted against any of the ERISA Plans, the assets of any of the trusts under such Plan, the plan sponsor, the plan administrator, trustee or any other fiduciary of such Plans with respect to any aspect of such ERISA Plans (except for routine benefit claims or routine expenses). (d) Except as set forth on Schedule 9.1.18(d), none of the ERISA Plans is a "multi-employer plan," as that term is defined in Section 3(37) of ERISA and with respect to any such multiemployer plans (as so defined) listed in Schedule 9.1.18(d), Seller has not made or incurred a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA that would result in the incurrence of a material liability by the Company that is not reserved for or otherwise reflected on the Financial Statements. (e) Except as set forth on Schedule 9.1.18(e), no post-retirement medical and life insurance benefit obligations exist with respect to any Transferred Employees of the Company. (f) No Plan identified on Schedule 9.1.18(a) has any restrictions against termination or modification, either by its terms or, to Seller's or the Company's knowledge, due to any written or oral communications by any representative of the Company nor any of its Affiliates. (g) Except as set forth on Schedule 9.1.18(g), (i) none of the Transferred Employees are represented by a labor union or labor organization and (ii) neither the Company nor any of its Affiliates is a party to nor is the Company subject to, any collective bargaining agreement covering any Transferred Employee. There are currently no strikes, slowdowns, work stoppages or lockouts by or with respect to any Transferred Employee covered by collective bargaining agreements. Except as set forth on Schedule 9.1.18(g), to the best knowledge of Seller and the Company, during the twelve (12) months preceding the Execution Date there have not been any union organizational campaigns by or directed at the employees of the Company. Except as set forth on Schedule 9.1.18(g), no condition has existed or exists that has caused or could be expected to result in the imposition of any lien or encumbrance under ERISA or the IRC on any part of the Property. (h) Seller will make available to Buyer, prior to the Closing Date, a list of those Transferred Employees that Seller believes to have participated in the health or dependent care reimbursement accounts of the Company, together with the elections made prior to the Effective Date with respect to such accounts through the Effective Date. (i) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will cause any acceleration of benefits under any Plan. 9.1.19 Schedules of the Telephone Plant. Seller has set forth on Schedule 9.1.19 copies of schedules (at the level of detail agreed to by the parties but in any case including details regarding net book value and continuing property records lists associated therewith) of the Company's Telephone Plant as of June 30, 1994, including, to the extent available, a schedule specifically identifying the Telephone Plant that is associated with the Unregulated Business. The account balances reflected on the schedule of Telephone Plant correspond, in all material respects, to the associated account balances reflected on the Company's Continuing Property Records. 9.1.20. Accuracy of Certain Information. With respect to the Company's Business, Seller hereby represents and warrants to Buyer as follows: (a) The information regarding type of central office switch and number of access lines in service for each exchange set forth on Schedule 9.1.20 (a) is true and complete in all material respects as of the respective dates set forth thereon. (b) The information set forth only with respect to the 1993 column of the "Capital Budget-Network Modernization Forecast" attached as Schedule 9.1.20 (b) is true and complete as of December 31, 1993. (c) Schedule 9.1.20 (c) sets forth a substantially complete list of all vehicles included in the Property (including trailers, equipment mounted on trailers and self-propelled equipment) together with the manufacturer, model and year of each such vehicle, and indicates whether such vehicle is owned or leased by the Company. (d) [INTENTIONALLY DELETED] (e) Schedule 9.1.20(e) sets forth a true and complete list of the interstate billing and collection revenues and intrastate interlata billing and collection revenues of the Company for the year 1993. 9.1.21 Rate Base. Except as set forth on Schedule 9.1.21, the Company has no materials and supplies, plant or equipment that has been disallowed from rate base or excluded from the revenue calculations for any pool (unless due to the deregulation of the service for which such assets are used) or in the most recent rate order issued by the PUC or the FCC or any determination by an administrator of an interstate or intrastate pool, and has not received written notification that the PUC or the FCC or any pool administrator proposes to exclude any assets from rate base or revenue calculations for the pools, or any tariff filed with or approved in the most recent rate order of the PUC or the FCC, in each case which materials and supplies, plant or equipment, in the aggregate, would be in excess of one percent (1%) of Net Telecommunications Plant. 9.1.22 Payments. All material payments of any kind required to be made by the Company to third parties under any Contract and maturing prior to the Effective Date have been, or will be as of the Effective Date, properly and timely paid or provided for, unless otherwise subject to a bona fide dispute disclosed in Schedule 9.1.22. 9.1.23 Compliance with Laws. Except as Seller shall specifically indicate on Schedule 9.1.23, (i) the Company is in compliance in all material respects with all Laws applicable to it, the Property and the Business and holds all governmental permits or licenses required in order to conduct the Business and to own and operate the Property; (ii) the present uses of the Property in the conduct of the Business do not violate in any material respect any Law and (iii) no written notice or warning from any governmental or regulatory authority with respect to any failure or alleged failure by the Company to comply with any Law or questioning the validity of any governmental permit or license, has been issued or given, nor to the knowledge of Seller or the Company, is any such notice or warning proposed or threatened. Neither Seller nor the Company is aware of any fact, event or circumstance relating to the Company that is reasonably likely to cause a regulatory agency to deny or withhold its approval to the transactions contemplated hereby. 9.1.24 Correct Records. The financial records, ledgers, account books and other accounting records of the Company are current, correct and complete and reasonably well organized, in all material respects and to the knowledge of Seller and the Company, to the extent required by applicable Law, conform in all material respects with the rules and regulations of the FCC and PUC. The Company and its Affiliates have retained substantially all Original Cost Documents regarding the expenditures made by the Company within the immediately preceding two-year period that relate to the Company's Net Telecommunications Plant, and such Original Cost Documents are correct and complete in all material respects. 9.1.25 Materials and Supplies. As of the Effective Date, the value (as reflected on the Company's books) of the Company's materials and supplies relating to the Business which are obsolete or in excess of the requirements of the Business, will not materially exceed the Company's reserve for obsolete or excess Materials and Supplies as reflected on the Company's books. 9.1.26 Assets Necessary to the Business. The Property includes all of the assets and properties (including all licenses and agreements) currently being used or which are reasonably necessary to carry on the Business as currently conducted, other than the assets and properties included in the Excluded Property. 9.1.27 [INTENTIONALLY DELETED] 9.1.28 Unregulated Business. Schedule 2.2(b) is an accurate summary description of the Unregulated Business, in detail reasonably acceptable to Buyer. 9.1.29. Capital Improvements Required by PUC. Except as set forth on Schedule 9.1.29, there are no changes, modifications, upgrades or enhancements required by the PUC to be made to the Property or the operation thereof. 9.1.30 Undisclosed Liabilities. Except as contemplated by this Agreement or as otherwise set forth in Schedule 9.1.30 the Company has no liabilities or obligations of any nature, secured or unsecured (absolute, accrued, contingent or otherwise and whether due or to become due), of a nature required to be recorded or disclosed in a corporate balance sheet prepared in accordance with GAAP, except liabilities and obligations which are not materially in excess of amounts reflected, reserved against or disclosed in the December 31, 1993 Financial Statements or the notes thereto and except for liabilities and obligations incurred in the ordinary course of business since December 31, 1993. Except as may be reflected in the December 31, 1993 Financial Statements or the notes thereto or on Schedule 9.1.30, the Company has no obligations under guarantees, endorsements or indemnities of the obligations of any other person or entity. 9.1.31 Banks. Schedule 9.1.31 lists the name of each bank in which the Company has an account or safe deposit box, and the names of all persons authorized to draw thereon or have access thereto, and the names of all persons holding a power of attorney from the Company. 9.1.32 Ownership of Shares. Seller is the record and beneficial owner of the Shares, which comprise 100% of the outstanding shares of all classes of capital stock of the Company. Seller has legal, valid and marketable title to the Shares, free and clear of all liens, claims, options, security interests or other encumbrances of any character whatsoever ("Encumbrances"). The sale and delivery of the Shares to Buyer pursuant to Article 2 will vest in Buyer legal, valid and marketable title to the Shares free and clear of all Encumbrances other than Encumbrances created or suffered by Buyer and restrictions on sales of the Shares under applicable federal and state securities laws. 9.1.33 Capital Stock. The Common Stock is the only capital stock authorized to be issued by the Company. The Shares are the only shares of Common Stock outstanding. All of the Shares are duly authorized, validly issued, fully paid and non-assessable. There are outstanding no securities convertible into, exchangeable for, or carrying the right to acquire, equity securities of the Company nor are there any subscriptions, warrants, options, rights or other arrangements or commitments (other than this Agreement) which could obligate Seller or the Company to issue any shares of capital stock or dispose of any ownership interest therein. There are no outstanding obligations of the Company to issue or deliver, or to repurchase, redeem or otherwise acquire any capital stock or other securities of the Company. 9.1.34 Investments. Set forth on Schedule 9.1.34 is the name of each corporation, partnership, joint venture or other entity in which the Company has, or pursuant to any agreement will have, directly or indirectly, the right to acquire by any means, an equity interest therein, together with a description of the Company's interest (or right to acquire the same) in such entity, including any Encumbrances on such interest. 9.1.35 Corporation Organization of Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of Oregon; it has full corporate power and authority to own its properties and to carry on the Business as it is now being conducted, and to own or hold under the lease, the Property. 9.2 Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows: 9.2.1 Corporate Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease or otherwise hold the assets owned, leased or held by it. 9.2.2 Authorization and Effect of Agreement. Buyer has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement, to own the Shares and to fulfill all other obligations of Buyer under this Agreement. The execution and delivery by Buyer of this Agreement and the fulfillment by it of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Buyer. Buyer has the requisite legal capacity to purchase, own and hold the Shares upon the consummation of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Buyer and, assuming the due execution and delivery of this Agreement by Seller, constitutes a valid and binding obligation of Buyer, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualifications that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.2.3 No Restrictions Against Purchase of the Shares. The execution and delivery of this Agreement by Buyer do not, and the fulfillment by Buyer of its obligations under this Agreement will not, conflict with, violate or result in the breach of any provision of the certificate of incorporation or bylaws of Buyer or, subject to obtaining the approvals and consents referred to in Article 5, conflict with, violate or result in the breach of, constitute default under, or accelerate the performance required by any Contract to which Buyer is a party. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by or with respect to Buyer in connection with the execution and delivery of this Agreement by Buyer or the fulfillment by Buyer of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, and (ii) the filings and approvals listed on Schedule 9.2.3. 9.2.4 No Violation of Law. The execution and delivery of this Agreement and the fulfillment by Buyer of its obligations under this Agreement will not violate any Law. 9.2.5 Brokers. Buyer has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Seller for any broker's or finder's fees or similar fees or expenses. 9.2.6 No Material Claims. There are no claims, actions, lawsuits or legal proceedings pending or, to the knowledge of Buyer, threatened against Buyer or its properties that would prevent the consummation of the transactions contemplated by this Agreement. 9.2.7 FCC Tariffs. In connection with obtaining consent to the transfer of control of the Company's FCC's Licenses, as described in Section 5.4, Buyer will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the National Exchange Carrier Association Tariff FCC No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 9.2.8 Investment. Buyer understands that the Shares that it will acquire pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended (the "Act"), and cannot be offered for sale, sold or otherwise transferred unless the Shares subsequently are so registered or qualified for exemption from registration under the Act. The Shares are being acquired under this Agreement by Buyer in good faith solely for its own account, for investment and not with a view toward resale or other distribution within the meaning of the Act. The Shares will not be offered for sale, sold or otherwise transferred by Buyer without either registration or exemption from registration under the Act and applicable state securities laws. Buyer has such knowledge and experience in financial and business matters that Buyer is capable of evaluating the merits and risks of Buyer's investment in the Shares. Buyer understands and is able to bear any economic risks associated with such investment (including the necessity of holding the Shares for an indefinite period of time, inasmuch as the Shares have not been registered under the Act). ARTICLE 10. CONTINUING BUSINESS RELATIONSHIPS 10.1 Transition Services Agreement. If requested in writing by Buyer on or prior to March 15, 1995, the parties shall, as promptly as practicable but in any event within 30 days after Buyer's written request, negotiate in good faith and enter into a Transition Services Agreement, to be effective no later than the Effective Date, pursuant to which Seller will provide to the Company, at the Company's expense, such financial, accounting, billing, computer, network, administrative and other services (including services relating to the conversion of systems and processes) as may be reasonably requested by Buyer, which agreement shall be in form and substance as mutually agreed to by both Buyer and Seller (the "Transition Services Agreement"). ARTICLE 11. ADDITIONAL COVENANTS OF THE PARTIES 11.1 Intellectual Property. 11.1.1 Definition. "Intellectual Property" means all inventions (whether patentable or not and whether or not such inventions are described or claimed in any patent or patent application), designs (useful or ornamental), and works subject to copyright that may be embodied in, without exclusion, invention disclosures, specifications, manuals, drawings, functional or system block diagrams, flow charts, circuit diagrams, design or user documentation, engineering notebooks, schematics, test programs, documented procedures, documented processes, documented flows, devices, software, or firmware, that relate to the function, design, development, manufacture, testing, use, operation, maintenance or repair of any product, apparatus, article of manufacture, process, method or service. "Intellectual Property" shall also include patents, patent applications (including continuations, continuations- in-part, divisions, reissues, reexamined patents and patent applications and extensions thereof), copyrights (whether common law or statutory, registered or unregistered), or trade secrets, residing in the subject matter above. 11.1.2 Grant by Seller. (a) Subject to the terms and conditions of this Agreement Seller will use its best efforts to assist the Company (provided that Buyer shall be responsible for any fees associated therewith) in obtaining the consent of any necessary third party for the use of any Intellectual Property that the Company has placed in public use on, or prior to, the Effective Date and that is presently used by the Company, but excluding any Intellectual Property listed in Schedule 11.22. (b) The above Section 11.1.2(a) sets forth Seller's entire obligation with respect to the Intellectual Property to the Company. Except as specifically provided otherwise in this Agreement or any other agreement between Buyer and Seller, Seller shall have no continuing obligation beyond the Effective Date to provide support of any kind in the Company's use of such Intellectual Property. (c) Buyer agrees and understands that Seller or its Affiliates shall retain ownership of all Intellectual Property owned by Seller or its Affiliates as of the Effective Date. Buyer further agrees and understands that the retained ownership shall include the right of Seller to grant licenses to vendors and customers of Seller, and to other third parties. (d) Additional agreements, if any, between Buyer and Seller regarding possession and use by the Company of computer software that is owned by Seller, or that is licensed by an Affiliate of Seller to Seller, are set forth in Schedule 11.1.2. 11.1.3 Nonassertion. Seller agrees that, with respect to the Intellectual Property that as of the Effective Date the Company owns or controls or under which it has the right to grant licenses, Seller shall not assert against Buyer, or Affiliates of Buyer, or vendees, mediate or immediate, of Buyer or the Company, a claim of infringement, misappropriation or misuse of such Intellectual Property right arising from the Company's activities practiced in the ordinary and normal course of the Business. 11.1.4 Infringement. (a) Notwithstanding any other provision of this Agreement and subject to the representation in Section 11.1.3, Buyer understands that Seller has not made or given, and does not make or give, any warranty as to the value, enforceability, or validity of any Intellectual Property or that the use by the Company of any Intellectual Property under this Agreement will not infringe other intellectual property rights not licensed under this Agreement. (b) Nothing contained in this Agreement shall be construed as an agreement by, or obligation of, Seller to bring or prosecute actions or suits against third parties for infringement or violation of any Intellectual Property licensed hereunder. (c) Seller shall have no obligation to defend, indemnify or hold harmless the Company or Buyer from any damages, costs or expenses resulting from any obligation, proceeding or suit based upon any claim that any activity, subsequent to the Effective Date, engaged in by Buyer, the Company, a customer of Buyer's or the Company's or anyone claiming under Buyer or the Company constitutes direct or contributory infringement or misuse of any intellectual property rights not licensed under this Agreement. (d) Buyer shall be liable for and shall hold Seller and its Affiliates harmless from and against any and all Indemnifiable Losses resulting from any obligation, proceeding or suit based upon any claim that any activity conducted or engaged in, subsequent to the Effective Date, by Buyer, the Company, a customer of Buyer's or the Company's, or anyone claiming under Buyer or the Company constitutes direct or contributory infringement, or misuse, or misappropriation of any intellectual property right of any third party. 11.1.5 Trademark Phaseout; Corporate Name Change. (a) Buyer acknowledges that Seller or its Affiliates are the owners of, and have permitted the Company to use, certain trade names, trade dress, trademarks, service marks, logos and related intangible property (collectively, "Marks") used in connection with the Business, including, without limitation, the items listed on Schedule 11.1.5, and Buyer understands and agrees that the Marks, or any right or license of the Company to the Marks are not being transferred pursuant to this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in the use of the Marks, and Buyer agrees that it shall cause the Company not to use the Marks (or any names or Marks confusingly similar to the Marks) except as expressly set forth in this Section 11.1.5. After the Effective Date, Buyer shall cause the Company to replace all Marks of Seller as soon as possible, but in no event later than one hundred eighty (180) days after the Effective Date for Marks affixed to items with a valid continuing use in the Company's conduct of the Business, including, without limitation, buildings, vehicles, heavy equipment, hard hats, tools, tool boxes, kits (safety and others), signs, manual covers and notebooks. After the Effective Date, Buyer will cause the Company to not use, and will destroy or deliver to Seller, all such items with Marks affixed to them that have no valid continuing use in the Company's conduct of the Business, including items affecting customer or employee relations or items that do not reflect the Company's true identity. Specific items to be destroyed or returned include items with Marks affixed to them including, without limitation, giveaways; order, purchase or materials forms; requisitions; invoices; statements; time sheets/labor reports; bill inserts; stationery; personalized note pads; maps; organization charts; bulletins/releases; sales/price literature; manuals or catalogs; report covers/folders; program materials; and materials such as media contact lists/cards. The one hundred eighty (180) day time period for replacement of Marks affixed to telephone directories that were already published or closed for publication as of the Effective Date shall be extended to the production of replacements for such directories. (b) Within two business days after the Effective Date, Buyer shall take all action necessary to change the corporate name of the Company so as to reflect that the Company is no longer an Affiliate of Seller. 11.1.6 Goodwill. Buyer recognizes the value of the goodwill associated with the Marks, and acknowledges that the Marks and all rights therein and the goodwill pertaining thereto belong exclusively to Seller, and that the Marks have a secondary meaning in the minds of the public. 11.1.7 Quality of Goods. Buyer agrees that the conduct of the Business after the Effective Date by the Company using the Marks shall be provided in accordance with all applicable federal, state and local laws, and that the same shall not reflect adversely upon the good name of Seller, and that the conduct of the Business will be of a standard and skill equivalent to that employed prior to the Effective Date. 11.1.8 Seller's Remedies for Unauthorized Use of Marks. Buyer acknowledges that the Company's failure to cease use of the Marks as provided in this Agreement, or its improper use of the Marks, will result in immediate and irreparable damage to Seller. Buyer acknowledges and admits that there is no adequate remedy at law for such failure to terminate use of the Marks, or for such improper use of the Marks, and Buyer agrees that in the event of such failure or improper use, Seller shall be entitled to equitable relief by way of temporary restraining order or injunction or any other relief available under this Agreement. 11.2 Effect of Due Diligence and Related Matters. Buyer represents that it is a sophisticated entity that was advised by knowledgeable counsel and, to the extent it deemed necessary, other advisors in connection with this Agreement and by the Effective Date will have conducted its own independent review and evaluation of the Company. Accordingly, Buyer covenants and agrees that (i) except for the representations and warranties set forth in this Agreement and the Schedules (and the Financial Statements, the Additional Financial Statements, and actuarial reports required pursuant to the Employee Transfer Agreement), Buyer has not relied and will not rely upon any document or written or oral information furnished to or discovered by it or its representatives, (ii) there are no representations or warranties by or on behalf of Seller or its Affiliates or representatives except for those expressly set forth in this Agreement and in any other written agreement entered into with Seller or any of its Affiliates in connection with this Agreement, and (iii) to the fullest extent permitted by law, Buyer's rights and obligations with respect to all of the foregoing matters will be solely as set forth in this Agreement or in such other written agreements. 11.3 Confidentiality. Whether or not the Closing occurs, the parties hereto and their respective officers, directors, employees and representatives will comply with the Confidentiality Agreement, the provisions of which are expressly incorporated herein in their entirety by this reference. 11.4 Additional Financial Statements. Seller shall deliver to Buyer the following financial statements of the Company (collectively, the "Additional Financial Statements") within the time periods set forth below: (a) Within forty-five (45) days after the Execution Date for the month of October, 1994, and within forty-five (45) days after the close of each month beginning with November, 1994, and continuing up to and including the month next preceding the month in which the Closing occurs, a balance sheet and income statement as of and for such month, and as of and for the year-to-date period then ended; and (b) By April 30, 1995, a balance sheet for the year ended December 31, 1994, and an income statement and statement of cash flows for 1994, together with the auditor's report thereon. 11.5 Conduct of Business. From the Execution Date until the Effective Date, except as described in Section 11.22, Seller shall cause the Company to conduct the Business in the ordinary course in accordance with prudent business judgment and consistent with past practice and policy and to (i) preserve the Business as an ongoing business, (ii) keep available to the Business its services and the services of its Affiliates at least to the same extent as such were generally available from January 1, 1994 through the Execution Date and are available on the date hereof, (iii) not take any action that would jeopardize any material and beneficial contractual relationships with persons having business dealings with the Business, and (iv) preserve all of the Business' tariffs, certificates, licenses, authorizations and other rights. From the Execution Date to the Effective Date, except as described in Section 11.22 and except with the prior written consent of Buyer, which the Buyer shall not unreasonably withhold: (a) The Business will be conducted in substantially the same manner as it is presently being conducted on the Execution Date. Seller will cause the Company to refrain from entering into any material transaction or contract other than in the ordinary course of business and to not make any material change in the general nature of the Business or in its methods of management, marketing, accounting or operations (including repair and maintenance functions). (b) Seller will cause the Company not to (i) create or incur any indebtedness for borrowed money or otherwise, except in the ordinary course of business, (ii) enter into or terminate, as lessor or lessee, any Lease other than in the ordinary course of business, (iii) create any liens or other security interest, except in the ordinary course of business, or (iv) change in any material respect or terminate any of the insurance policies referred to in Section 9.1.14, unless equivalent coverage is obtained. (c) Except as listed or described on Schedule 11.5(c), and except for dispositions of salvaged property that has been replaced in accordance with the plans attached in Schedule 11.5(c), Seller will cause the Company not to sell, lease, dispose of or otherwise transfer, or make any contract for the sale, lease, disposition or transfer of any Property other than, with respect to any individual item (other than vehicles) having a value of less than Seventy-Five Thousand Dollars ($75,000.00) and with respect to all items (other than vehicles) the aggregate value of which shall not exceed Two Hundred Fifty Thousand Dollars ($250,000.00). (d) Without prior reasonable notification to Buyer, or unless otherwise expressly directed by the PUC, Seller will cause the Company not to (i) institute any proceeding with respect to, or otherwise change, amend or supplement any tariff or (ii) enter into or agree to any stipulation, order, or decree of, or settlement with the PUC that, in the case of (i) or (ii) above, would have a material adverse effect on the revenue, authorized return on equity or earnings of the Business. Seller will cause the Company not to file any application, petition, motion, brief, testimony, settlement agreement or other pleading in any proceeding before the PUC, or before the FCC (except for filings on behalf of all of Seller's local exchange telephone companies) or appeals related thereto, unless Seller shall have first provided Buyer with a copy of the same and provided Buyer with a reasonable opportunity to comment to Seller with respect thereto. If Buyer determines it should intervene in any proceeding before the PUC in which Buyer's position is or may be different from the Seller's or the Company's, Seller will not, and will cause the Company not to, without waiving any other rights related thereto, oppose Buyer's intervention in such proceeding. (e) Except as listed on Schedule 11.5(e) or as required by law or in the ordinary course of business of the Company or pursuant to any Contract, Seller will cause the Company not to (i) enter into or amend any employment agreement with any individual that will become a Transferred Employee, or enter into or amend any union agreement or commitment (including any new commitment to pay retirement or other benefits, or amendments to the Company's retirement plans), (ii) effect any net increase over five percent (5%) since the Execution Date in the number of employees of the Company who will become Transferred Employees, or (iii) increase over 5% the benefit provided under any plans concerning employee benefits or increase the general rates of compensation of the Transferred Employees, or change the manner by which compensation (including fringe benefits) is determined and paid to any Transferred Employee. (f) Seller will cause the Company not to engage in any intercompany transactions with any Affiliate thereof, except for transactions consistent with past practice. (g) Seller shall cause the Company to maintain the Property in good repair, order and condition, reasonable wear and use excepted, and shall maintain the Company Books and Records in the usual, regular and ordinary manner on a basis consistent with prior years. (h) Seller will cause the Company not to make any commitment to take any actions prohibited by the provisions of this Section 11.5. (i) Seller will cause the Company not to issue, sell, purchase or redeem, to grant any option or right to purchase, or to otherwise agree to issue, sell, purchase or redeem any shares of its capital stock or any other securities. (j) Seller will cause the Company not to amend its Articles of Incorporation or Bylaws. (k) Seller will not permit the Company to merge or consolidate with any other person or entity or acquire a material amount of assets of any other person or entity. 11.6 Construction Projects and Capital Budget. By December 31, 1994, Buyer and Seller shall have met and reviewed the Company's construction and other capital expenditure plans for the calendar years 1994 and 1995 (or such later date agreed to by the parties). The construction and capital expenditure plans which Buyer shall have approved (both as to the type of project and the dollars expended) shall be set forth on Schedule 11.6, and the parties agree that when such expenditures have been incurred they will constitute an addition to a component of Net Telecommunications Plant thereby becoming subject to Section 3.2(c). Seller agrees to cause the Company to use its best efforts substantially to complete such plans within the projected time schedules; provided, that the Company will not incur any liability for unbudgeted expenditures in excess of $200,000.00 in the aggregate without the prior written consent of Buyer. All construction work that is in progress on the Effective Date will be accounted for by identifying and accruing all associated time reporting, material invoices or contractor invoices inputted or received on or before the Effective Date, and all payments therefor shall be the responsibility of the Company and will constitute an addition to a component of Seller's Net Telecommunications Plant thereby becoming subject to Section 3.2(c). 11.7 Further Assurances. After the Closing, Seller will furnish to Buyer such other instruments and information about the Company as Buyer may reasonably request in order to convey to Buyer title to the Shares, to be delivered from time to time upon Buyer's reasonable request. 11.8 [INTENTIONALLY DELETED] 11.9 Risk of Loss Prior to the Effective Date. If any material damage, loss or destruction of any sort (including, without limitation, by theft, unauthorized use, fire, act of God or condemnation) occurs prior to the Effective Date to any of the tangible properties that constitute the Property, Seller shall promptly notify Buyer thereof (the "Casualty Notice"). (a) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace such damaged, lost or destroyed Properties (the "Damaged Property") will exceed One Million Six Hundred Five Thousand Five Hundred Fifty Dollars ($1,605,550.00), either party may, by written notice to the other party (the "Casualty Termination Notice") within thirty (30) days after the date of delivery of the Casualty Notice, terminate this Agreement. (b) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace the Damaged Property will not exceed One Million Six Hundred Five Thousand Five Hundred Fifty Dollars ($1,605,550.00), or the Casualty Termination Notice is not given by either party, then Seller, within forty-five (45) days after the damage or destruction, shall agree in writing to take all action, and to cause the Company to take all action, (i) to repair or replace, prior to the Effective Date, at the Company's sole cost and expense, the Damaged Property, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will obtain as a substitute therefor an equivalent item or items of Property if the Damaged Property is personal property, and Real Property if the Damaged Property is Real Property, but only if such substituted personal property or Real Property is satisfactory to Buyer, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property. (c) If Seller fails to make an election pursuant to Section 11.9(b)(i) or (ii), the Buyer shall have the option, within thirty (30) days after the initial forty-five (45) day period, to elect one of the following options: (i) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will remain part of the Property, the adjustment to the Purchase Price contemplated by Section 3.2(a)(1) will be made, and the Company will be entitled to make, all claims related to the Damaged Property and to receive and retain any proceeds of insurance with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property, and the Purchase Price Adjustment contemplated by Section 3.2(a)(2) will be made. (d) Notwithstanding the other provisions of this Section 11.9, if the time periods pursuant to this Section 11.9 continue beyond the Effective Date or if Seller has not fully performed its obligations pursuant to Section 11.9(b)(i) or 11.9(b)(ii) prior to the Effective Date (or otherwise made reasonably satisfactory arrangements with Buyer), either party hereto may elect to postpone the Closing and the Effective Date, until the expiration of any such periods or the full performance of such obligations, which election shall be binding upon all parties hereto. 11.10 Settlements and Cost Studies. The parties agree that, with respect to all toll revenues, settlements, pools, separations studies, Universal Service Fund payments or similar activities, Seller shall receive the benefit or suffer the burden of the results of any such activities that are related to the conduct of the Business or the ownership or operation of the Company on or before the Effective Date. 11.11 [INTENTIONALLY DELETED] 11.12 Other Contracts. 11.12.1 Telephone Directories Published by ALLTEL Publishing Corporation. The Directory Publishing Agreement dated as of November 15, 1994, by and between Company and ALLTEL Publishing Corporation (the "Directory Publishing Agreement") is an Excluded Contract on Schedule 11.22(h), except as hereinafter provided. Within thirty days after the Execution Date, Buyer shall cause its existing directory provider to indicate in writing whether it will provide directory production services to the Company, as of the Effective Date (or as of such later date as described below) with regard to all of the Exchanges on the same terms and conditions as it is presently providing such services to Buyer, and Buyer shall inform Seller within such thirty day period of Buyer's existing telephone directory provider's written intention. If Buyer's existing directory provider's indication is that it will not provide directory publication services for all of the Exchanges on the same terms and conditions that it is presently providing such services to Buyer, then the Directory Publishing Agreement shall be deemed to become a Contract for the purposes of this Agreement. Promptly, thereafter, the Buyer and ALLTEL Publishing Corporation shall agree to meet in good faith to negotiate any necessary amendments to the Directory Publishing Agreement, to be effective as of the Effective Date, to provide for a retention rate equal to or greater than the higher of (x) 60% or (y) the retention rate provided for in any substantially similar directory publishing agreement between ALLTEL Publishing Corporation and a non-Affiliate of ALLTEL Publishing Corporation that was entered into within 18 months prior to the Effective Date. If Buyer's existing directory provider indicates that it will provide directory publication for all the Exchanges, as provided above, the Directory Publishing Agreement shall remain in effect as to the directory of each of the Exchanges for which (i) the directory is scheduled to be or is published prior to the Effective Date or (ii) the canvass for the directory has begun prior to the Effective Date and it is scheduled to be published after the Effective Date. Under such circumstances, the Buyer's existing directory provider will not begin providing directory publication services for such Exchange until canvass and production begins for the next succeeding directory related to such Exchange. 11.12.2 Telephone Directories-General. If Buyer's existing directory provider indicates that it will provide directory publication for all of the Exchanges, as provided in Section 11.12.1 of this Agreement, Seller and Buyer agree to cooperate and to use their best efforts as follows: (a) Seller will deliver to Buyer on a date mutually agreeable to Buyer and Seller, copies of all records, documents, and materials of the Seller even if in the possession of a third party (the "Directory Records") related to directories of the Exchanges that are published by Seller or its Affiliate. (b) Except as otherwise agreed between the parties, Seller and its Affiliate shall have no responsibility for the canvass and production functions of any directories related to the Exchanges that are scheduled to begin canvassing and publication after the Effective Date. (c) Seller and Seller's Affiliates and Buyer shall provide the other reasonable access to such documentation, reports and accounting records related to directory publication as may be necessary to insure a proper transition of directory publication in accordance with the terms of such agreements in effect on the Effective Date. (d) As promptly as practicable after receipt by Seller of Buyer's existing directory provider's indication that it will provide directory publication services for all of the Company's Exchanges, Seller or its Affiliate (ALLTEL Publishing Corporation), and Buyer will meet to negotiate in good faith to agree upon the services or work, if any, that Seller or its Affiliate (ALLTEL Publishing Corporation) will provide, and the compensation that the Buyer will pay for such services and work, related to any directories that will be canvassed and published by Buyer's existing directory provider. 11.12.3 B&C Agreements. Seller and Buyer shall, prior to the Closing, use their best efforts to allow Buyer to negotiate, on behalf of the Company, a billing and collection agreement ("B&C Agreement") reasonably satisfactory to Buyer with each interexchange carrier ("IXC") and each local exchange carrier ("LEC") for which the Company provides, on the Execution Date, billing and collection services in any Exchange (each such IXC or LEC is hereinafter referred to as a "Carrier"). Seller and Buyer shall cooperate with each other and make available to each other all documents and records relevant and necessary to allow the Company to finalize negotiations of B&C Agreements, as necessary, and to perform such B&C Agreements after the Effective Date. 11.12.4 Equipment Manufacturers. Seller shall use its best efforts to assist Buyer, on behalf of the Company, in obtaining a written agreement with such equipment manufacturers (such as Northern Telecom and Stromberg-Carlson; collectively "Equipment Manufacturers") as Buyer may request, covering such software license agreements and other agreements as are necessary to enable the Company after the Effective Date to operate the equipment manufactured and sold by the Equipment Manufacturers included in the Property in substantially the same manner as operated by the Company prior to the Effective Date. The agreements shall contain material terms and conditions (including license and warranty, but not necessarily including pricing) that are substantially the same as those provisions in the corresponding agreements between the Company and the Equipment Manufacturers as of the Effective Date. Buyer understands and agrees that the price and fee provisions of such agreements will be as negotiated between Buyer, on behalf of the Company, and the Equipment Manufacturers. The above obligation of Seller shall be expressly conditioned upon the acceptance by Buyer, on behalf of the Company, of all material obligations accepted by Seller in such corresponding agreements. It is the responsibility of Buyer, on behalf of the Company, to enter into appropriate agreements with the Equipment Manufacturers in respect of service, support, training, maintenance, and future development (hardware and software) for the Property, such agreements to include terms and conditions agreed to between Buyer, on behalf of the Company, and the Equipment Manufacturers. Seller agrees to assist Buyer, on behalf of the Company, in obtaining the Equipment Manufacturers' consent, if necessary, to enable the Company after the Effective Date to avail itself of all training credits remaining at the Effective Date on Property furnished by the Equipment Manufacturers. 11.12.5 Integrated Contracts. Seller and Buyer acknowledge that certain agreements between the Company (or Affiliates of the Company) and third parties relate both to the Property and the Excluded Property. Seller agrees to use its best efforts to assist Buyer in obtaining, on behalf of the Company, contractual arrangements with such third parties relating to the Property, which arrangements will be reasonably satisfactory to Buyer; provided that neither the Company nor any Affiliate of the Company shall be obligated under this Section 11.12.5 to make any payment to any such third party unless such payment is expressly provided for in such agreement. 11.13 Retention of Books and Records. After the Effective Date, Seller will retain the Retained Books and Records, and Buyer will cause the Company to retain the Company Books and Records, in either case, until the shorter of the date that other party consents in writing to their destruction or the seventh anniversary of the Effective Date. Each party shall provide full and free access to the Company Books and Records and Retained Books and Records, as the case may be, to duly authorized representatives of the other party at any time during regular business hours for the period in which such Books and Records are required to be retained. Either party may make copies of any such Books and Records as it deems desirable, at its own expense. After the Effective Date, upon reasonable notice, Seller shall provide Buyer and the Company with reasonable assistance in locating any of the Company's Original Cost Documents which Buyer may reasonably request after the Effective Date. 11.14 [INTENTIONALLY DELETED] 11.15 [INTENTIONALLY DELETED] 11.16 Real Property Title Insurance. Within sixty (60) days after the Execution Date, Seller shall deliver to Buyer copies of all existing title insurance policies and surveys covering the Real Property. Thereafter, no later than sixty (60) days before the Effective Date, Seller shall deliver (at its expense) to Buyer a preliminary title binder (on a standard form reasonably acceptable to Buyer), issued by Lawyers Title Insurance Company or another title insurance company reasonably acceptable to Buyer, with respect to all Real Property included in the Property and in which the Company purports to own fee title. Such title binders shall be in form, substance and amount reasonably satisfactory to Buyer (ALTA Owners Policies where available but based upon boundary surveys as set forth below) and shall be current as of a date no earlier than ninety (90) days prior to the Effective Date. The parties agree that the dollar amount of title insurance to be inserted on each policy shall equal the dollar value set forth on the Company's continuing property records list as of December 31, 1993 for land and buildings. Such title binders shall reflect that the Company is vested with good, fee simple, marketable and insurable title to such Real Property, subject only to (i) standard printed exceptions; (ii) inchoate liens for current taxes and assessments not yet delinquent, (iii) standard utility and roadway easements, covenants and restrictions, whether or not of record, that do not individually or in the aggregate materially detract from the value, or impair the use of the Real Property affected thereby, (iv) existing zoning or similar laws or ordinances that do not interfere with the operation of the Business, (v) Leases and (vi) survey exceptions that do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby (collectively, the "Permitted Exceptions"). If a preliminary title binder indicates an exception other than a Permitted Exception that would impair marketability in any material respect, Seller shall, at its expense, cause such exception to be removed on or before the Effective Date. With respect to each parcel of Real Property covered by a preliminary title binder, Seller shall deliver to Buyer (at Seller's expense and on or prior to sixty (60) days before the Effective Date) a certified current boundary survey showing (x) access to the property and (y) all improvements on the property and any encroachments across the property line by any improvements of the Company or owners of adjacent property and (at Seller's expense and within sixty (60) days after the Effective Date) owner's title insurance policies for the Real Property (ALTA Owners Policies where available but based upon boundary surveys as set forth above). 11.17 [INTENTIONALLY DELETED] 11.18 [INTENTIONALLY DELETED] 11.19 Customer Notification. For a period of at least two (2) months prior to the Effective Date, Seller will cause the Company to permit Buyer to insert preprinted single-page subscriber education materials into billing documentation to be delivered during such period to subscribers affected by the sale. All reasonable costs and expenses related to such insertion and delivery shall be borne and paid by the Company. Other means of notifying subscribers may be employed by either party, at the expense of the initiating party, but in no event shall any notification be initiated without the prior consent of the other party (which consent shall not be unreasonably withheld) or earlier than three (3) months prior to the Effective Date. 11.20. Delivery of Schedules. Except as otherwise provided in Section 11.24, Seller shall have a period of ten (10) business days after the Execution Date (the "Supplemental Schedule Period") to supplement or otherwise modify the Schedules to this Agreement by delivering to Buyer, within the Supplemental Schedule Period, a substitute schedule or schedules (collectively, the "Supplemental Schedules"), bearing the legend "This Schedule _, dated _______________, is executed and delivered in accordance with Section 11.20 of the Stock Purchase Agreement, dated as of November 28, 1994 which shall be duly executed by Seller and submitted to Buyer. Buyer shall have a period of ten (10) business days after the expiration of the Supplemental Schedule Period to review the Supplemental Schedules and within such ten (10) business day period notify Seller in writing (which writing may be transmitted by facsimile) of any objections thereto. If Buyer's objections are not resolved to the satisfaction of Buyer within five (5) days of such notification, Buyer may terminate this Agreement, effective immediately upon written notification of that termination. In the event that Buyer does not terminate this Agreement, then Buyer waives all rights to a claim of indemnification based upon or as the result of any changes in the Schedules as reflected in the Supplemental Schedules. For purposes of determining breaches of representations, warranties or covenants hereunder, the Supplemental Schedules provided by Seller shall be deemed Schedules for all purposes. 11.21 FCC Tariffs. In connection with obtaining consent to the transfer of control of the Company's FCC Licenses, as described in Section 5.4, during the period from the Execution Date until the Effective Date, neither party shall file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Exchanges shall remain in the Natural Exchange Carrier Association Tariff FCC No. 5; provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Buyer, in its sole discretion, shall determine. 11.22 Pre-Effective Date Balance Sheet Transactions. Seller shall take, and shall cause the Company to take, all action necessary to effect, on or prior to the Effective Date, the following transactions: (a) The Company shall dispose of, transfer, dividend or otherwise cause to be zero as of the Effective Date, all "Cash" (item 1 - Assets on the Company's Balance Sheet). (b) All "Accounts Receivable-Affiliates" (item 4 - Assets on the Company's Balance Sheet) and "Dividends Receivable-Affiliates" (item 7 -- Assets on the Company's Balance Sheet) (collectively, "Affiliate Receivables") shall be netted against all "Advances and Notes-Parent Company" (item 2 - Liabilities on the Company's Balance Sheet), "Accounts Payable-Affiliates" (item 5 - Liabilities on the Company's Balance Sheet), "Dividends Accrued - Affiliates" (item 10 - Liabilities on the Company's Balance Sheet) and "Interest Accrued - Alltel" (item 12 - Liabilities on the Company's Balance Sheet) (collectively, "Affiliate Payables"). To the extent there is a net excess of Affiliate Receivables, a cash payment or payments will be made to the Company which cash will then be disposed of by the Company, and to the extent there is a net excess of Affiliate Payables, such Affiliate Payables will be contributed to the Company as a contribution to the Company's capital, and take any other action necessary, such that the balances of each of the Affiliate Receivable and Affiliate Payable accounts, and of any other intercompany accounts, as of the Effective Date will be zero. (c) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Excess Cost Over Equity" (item 13 - Assets on the Company's Balance Sheet) and all "Investments in Affiliates" (item 14 - Assets on the Company's Balance Sheet). (d) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Other Investments At Cost" (item 15 - Assets on the Company's Balance Sheet), except to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and all "Unamortized Debt Expense" (Item 16 - Assets on the Company's Balance Sheet), except to the extent such unamortized debt expense relates to debt which is to remain outstanding immediately after the Effective Date. (e) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Regulatory Assets" (item 18 - Assets on the Company's Balance Sheet). (f) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, (i) all "Other Current Assets" (item 10 - Assets on the Company's Balance Sheet) to the extent such other current assets represent cash accounts, and (ii) all "Other Non-Current Assets" (item 19 - Assets on the Company's Balance Sheet). (g) The Company shall pay off or otherwise cause to be zero as of the Effective Date all Total Long-Term Debt, to the extent that such debt is not to remain outstanding immediately after the Effective Date. (h) The Company shall dispose of, transfer or assign, the Excluded Books and Records, the Marks listed on Schedule 11.1.5, the Company's interest in any business other than the Business, and those other assets, including agreements and contracts ("Excluded Contracts"), set forth on Schedule 11.22(h). (i) The balance in the Company's Total Deferred Credits shall be zero as of the Effective Date except for that portion of the Company's "Other Deferred Credits" (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities associated with the requirements of Financial Accounting Standard 106 attributable to Transferred Employees. (j) The balance in the Company's Taxes Accrued-Federal Income (item 8-Liabilities on the Company's Balance Sheet) shall be zero as of the Effective Date. (k) The balance in the Company's Notes Payable - Other (item 3 - Liabilities on the Company's Balance Sheet), Commercial Paper Outstanding (item 4 - Liabilities on the Company's Balance Sheet), Other Current Liabilities (item 14 - Liabilities on the Company's Balance Sheet) and Dividends Accrued - Other (item 11 - Liabilities on the Company's Balance Sheet) accounts shall be zero as of the Effective Date. (l) The balance in the Company's Current Maturities of Long-Term Debt (item 1 - Liabilities on the Company's Balance Sheet), and Interest Accrued - Other (item 13 - Liabilities on the Company's Balance Sheet), to the extent each of such amounts relate to debt which is not to remain outstanding immediately after the Effective Date, shall be zero as of the Effective Date. 11.23 Taxes. 11.23.1 Certain Tax Matters. (a) Except as otherwise expressly provided in this Section 11.23.1, Buyer and Seller will share equally all sales, use, transfer, stamp, conveyance, value added or other similar taxes, duties, excise or governmental charges imposed by any taxing jurisdiction (but not including Income Taxes, as hereinafter defined, which shall be paid by Seller), and all recording or filing fees, notarial fees and other similar costs of Closing with respect to the transfer of the Shares or otherwise on account of this Agreement or the transactions contemplated herein (but not including any transactions contemplated by this Agreement to be effected pursuant to the transactions contemplated by Section 11.22 or otherwise between Seller and the Company, which shall be paid by Seller). (b) Seller will cause to be included in its consolidated federal income Tax Returns (and the state income Tax Returns of any state that permits consolidated, combined or unitary income Tax Returns, if any) for all periods ending on or before or which include the Effective Date, all items of income, gain, loss, deduction, and credit or other items (collectively "Tax Items") attributable to the operations of the Company during such periods or portions thereof determined by an interim closing of the books as of the Effective Date. Seller will sign and file timely all such Tax Returns with the appropriate United States, state and local Governmental Authorities. Buyer will provide or cause to be provided any consent request to file such Tax Returns on behalf of the Company. Seller will make all payments shown thereon as owing with respect to any such Tax Returns. (c) With respect to any taxable period that would otherwise include but not end on the Effective Date, to the extent permissible pursuant to applicable Law, Seller will, and Buyer will cause the Company to, take all steps as are or may be reasonably necessary, including without limitation the filing of elections or returns with applicable taxing authorities, to cause such period to end on the Effective Date. (d) Seller will prepare or cause to be prepared all state Income Tax Returns (other than Tax Returns described in Section 10.5.1(b)) for the Company required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period that ends on or before the Effective Date that have not been filed prior to the Effective Date. Seller will sign and file timely all such Tax Returns with the applicable Governmental Authority and make all payments shown thereon as owing with respect to such Tax Returns. If requested by Seller, Buyer will deliver or cause the Company to deliver to Seller a power of attorney authorizing Seller to sign such Tax Returns. Notwithstanding the foregoing, if Seller is legally precluded from filing any such Tax Return, Buyer shall sign such Tax Return. Seller shall deliver a copy of each such Tax Return to Buyer within 10 days prior to filing such Tax Return. (e) Except as otherwise provided in Section 11.23.1(b) or Section 11.23.1(d), Seller will have no obligation to file any Tax Return for the Company, and Buyer will prepare and file or cause to be prepared and filed all Tax Returns for the Company that are required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period which begins before and ends after the Effective Date. In the case of Income Taxes, Buyer shall cause such Tax Return to be prepared and shall cause to be included in such Tax Return all Tax Items required to be included therein. Buyer shall determine (by an interim closing of the books as of the Effective Date) the portion, if any, of the Income Tax due with respect to the period covered by such Tax Return which is attributable to the Company for a Pre- Effective Date Taxable Period (as hereinafter defined). At least 15 days prior to the due date (taking into account all extensions of due date) of such Tax Return, Buyer shall deliver to Seller a copy of such Tax Return and of its determinations. If the amount reflected as a liability for Income Taxes on the Tax Schedule less Prior Reimbursements (as hereafter defined) is less than the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period, Seller shall pay to Buyer the amount of such shortfall not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). If the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period is less than the amount reflected as a liability for Income Taxes on the Tax Schedule, to the extent not previously paid to Seller or the applicable Governmental Authority by the Company and subject to Section 11.23.1(f), Buyer will pay to Seller the amount of such excess not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). As used in this Agreement, "Pre-Effective Date Taxable Period" means all or a portion of (i) any taxable period up to and including the Effective Date or (ii) any taxable period with respect to which the Tax is computed by reference to Tax Items, assets, capital or operations of the Company arising on or before, or existing as of, the Effective Date. As used in this Agreement, "Income Taxes" means all Taxes measured in whole or in part on or by net income imposed by the United States, any state of the United States or any political subdivision thereof, and will include any such Taxes even if denominated as franchise taxes. (f) The amount paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) will not exceed (i) the amount reflected as a liability for Income Taxes on the Tax Schedule, reduced by (ii) Prior Reimbursements. As used in this Agreement, "Prior Reimbursements" means all amounts reflected as a liability for Income Taxes on the Tax Schedule that have previously been (A) paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) or (B) paid by Buyer or the Company to Seller or to the applicable Governmental Authority with respect to Income Taxes properly attributable to Pre-Effective Date Taxable Periods that are reflected on Tax Returns described in Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e). (g) In order to assist Seller in the preparation of all Tax Returns that Seller is required to prepare pursuant to Section 11.23.1(b) and 11.23.1(d), Buyer will provide or cause to be provided to Seller access to such information and personnel as Seller may require in order to properly prepare such Tax Returns. (h) Buyer will pay or cause to be paid to Seller all refunds or credits of Taxes (including any interest received from or credited thereon by the applicable Governmental Authority) received by Buyer after the Effective Date and attributable to Taxes paid by Seller or the Company (or any predecessor or Affiliate thereof) with respect to any Pre-Effective Date Taxable Period (or, in the cases of Taxes other than Income Taxes, taxable periods or portions thereof ending on or before the Effective Date), net of any Taxes imposed upon Buyer or the Company by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). Such payment will be made to Seller within 30 days after receipt of any such refund from, or allowance of such credit by, the relevant Governmental Authority. (i) If after the Effective Date Seller or any affiliate receives or is credited with a refund of any Tax attributable to the utilization or carryback of any Tax Item of the Company arising after the Effective Date, Seller shall pay to Buyer an amount equal to the amount of such refund together with any interest received from or credited thereon the applicable Governmental Authority, net of any Taxes imposed upon Seller or any affiliate by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). (j) Buyer is eligible to and will make a timely and effective election under Section 338(g) of the IRC (and any comparable provision of state or local Law) with respect to the purchase of the Shares hereunder. Both Seller, as the common parent of the affiliated group of corporations (which includes the Company) that file a consolidated federal income Tax Return and Buyer are eligible to and will make a timely and effective election under Section 338(h)(10) of the IRC (and any comparable provision of state or local Law) with respect to such purchase (collectively, together with the elections under Section 338(g) of the Code and any comparable provision of state or local Law, the "Section 338(h)(10) Elections"). To facilitate such election, within thirty (30) days of the Closing, Buyer will deliver to Seller a completed Internal Revenue Service Form 8023 and the required schedules thereto and any similar forms under applicable state or local Law (the "Forms") with respect to Buyer's purchase of the Shares, which Forms shall have been duly executed by an authorized person for Buyer. Provided that the information on such Forms is, in the reasonable determination of Seller, correct and complete in all material respects, Seller will, at the Closing, cause such Forms to be duly executed by an authorized person for Seller and deliver such Forms to Buyer. If any changes or supplements are required to the Forms as a result of information that is first available after the Closing, Seller and Buyer will promptly agree upon and make such changes. Buyer will timely file the Forms, and any required supplements thereto, in the manner prescribed by Treasury Regulation 1.338(h)(10)-1T or the corresponding provisions of applicable state or local Law, and will provide written evidence to Seller that it has done so. Buyer and Seller agree that neither of them will take, or permit their affiliates to take, any action to modify or revoke the elections contained in or the content of any Forms without the express written consent of the other. (k) Seller agrees that it will cause any and all tax sharing agreements between Seller and the Company to be terminated on or prior to the Effective Date. 11.23.2 Tax Indemnifications. (a) Seller hereby agrees to protect, defend, indemnify and hold harmless Buyer and the Company from and against, and agrees to pay, all Taxes imposed and all indemnifiable Losses incurred (all herein referred to as "Tax Losses") as a result of: (i) A proposed adjustment, notice of deficiency Authority, or assessment by, or any obligation owing to, any Governmental Authority for: (A) Any income Taxes of the Company attributable to any Pre- Effective Date Taxable Period; (B) Any Taxes other than Income Taxes of the Company attributable to any taxable period or portion thereof ending prior to the Effective Date; (C) Any Taxes of any corporation (other than the Company) that (i) is or was a member of any affiliated group of corporations of which the Company was a member at any time prior to the Effective Date or (ii) joined in the filing of a combined or unitary Tax Return with the Company on or prior to the Effective Date; (D) Any Taxes resulting from the Section 338(h)(10) Elections; and (E) Except as otherwise provided in Section 11.23.1(a), any Taxes attributable to the transactions contemplated by this Agreement; and (ii) Any breach of any representation, warranty or covenants of Seller under this Agreement. (b) Buyer agrees to protect, defend, indemnify and hold harmless Seller from and against, and agrees to pay, all Tax Losses incurred as a result of: (i) A proposed adjustment, notice of deficiency, or assessment by, or any obligation owing to, any Governmental Authority for any Taxes of the Company which Taxes are not attributable to any Pre-Effective Date Taxable Period; and (ii) Any breach of any representation, warranty or covenant of Buyer under this Agreement. (c) (i) If a proposed adjustment shall be made by any Governmental Authority that, if successful, would result in the indemnification of a party under this Section 11.23.2 (referred to herein as a "Tax Indemnified Party"), the Tax Indemnified Party shall promptly notify the party obligated under this Section 11.23.2 to so indemnify (referred to herein as the "Tax Indemnifying Party") in writing of such fact. (ii) The Tax Indemnified Party shall take such action in connection with contesting such claim as the Tax Indemnifying Party shall reasonably request in writing from time to time, including the selection of counsel and experts and the execution of powers of attorney, provided that (A) within 30 days after the notice described in Section 11.23.2(c)(i) has been delivered (or such earlier date that any payment of Taxes is due by the Tax Indemnified Party but in no event sooner than 5 days after the Tax Indemnifying Party's receipt of such notice), the Tax Indemnifying Party requests that such claim be contested, (B) the Tax Indemnifying Party shall have agreed to pay the Tax Indemnified Party all costs and expenses that the Tax Indemnified Party incurs in connection with contesting such claim, including, without limitation, reasonable attorneys' and accountants' fees and disbursements, and (C) if the Tax Indemnified Party is requested by the Tax Indemnifying Party to pay the Tax claimed and sue for a refund, the Tax Indemnifying Party shall have advanced to the Tax Indemnified Party, on an interest-free basis, the amount of such claim. The Tax Indemnified Party shall not make any payment of such claim for at least 30 days (or such shorter period as may be required by applicable Law) after the giving of the notice required by Section 11.23.2(c)(i), shall give to the Tax Indemnifying Party any information reasonably requested relating to such claim, and otherwise shall cooperate with the Tax Indemnifying Party in good faith in order to contest effectively any such claim. (iii) Subject to the provisions of Section 11.23.2(c)(ii), the Tax Indemnified Party shall enter into a settlement of such contest with the applicable Governmental Authority or prosecute such contest to a determination in a court or other tribunal of initial or appellate jurisdiction, all as the Tax Indemnifying Party may request. (iv) If, after actual receipt by the Tax Indemnified Party of an amount advanced by the Tax Indemnifying Party pursuant to Section 11.23.2(c)(ii)(B), the extent of the liability of the Tax Indemnified Party with respect to the claim shall be established by the final judgment or decree of a court or other tribunal or a final and binding settlement with an administrative agency having jurisdiction thereof, the Tax Indemnified Party shall promptly repay to the Tax Indemnifying Party the amount advanced to the extent of any refund received by the Tax Indemnified Party with respect to a claim together with any interest received thereon from the applicable Governmental Authority and any recovery of legal fees from such Governmental Authority, net of any Taxes as are required to be paid by the Tax Indemnified Party with respect to such refund, interest or legal fees (calculated at the maximum applicable statutory rate of Tax without regard to any other Tax Items). Notwithstanding the foregoing, the Tax Indemnified Party shall not be required to make any payment hereunder before such time as the Tax Indemnifying Party shall have made all payments or indemnities then due with respect to the Tax Indemnified Party pursuant to this Agreement. (v) Promptly after a final determination the Tax Indemnifying Party shall pay to the Tax Indemnified Party the amount of any Tax Losses to which the Tax Indemnified Party may become entitled by reason of the provisions of this Section 11.23.2. (d) Anything to the contrary in this Agreement notwithstanding, the representations, warranties, covenants, agreements, rights and obligations of the parties hereto with respect to any Tax covered by this Agreement shall survive the Effective Date and shall not terminate until sixty days after the expiration of the statute of limitations (including extensions) applicable to such Tax. 11.24 Post-Execution Lease and Contract Review. Buyer shall have a period of forty-five (45) calendar days after the Execution Date to review the Leases and Contracts listed on Schedules 9.1.9 and 9.1.13 respectively, and to notify Seller in writing (which writing may be transmitted by facsimile) of the identity of those Leases and Contracts that Buyer reasonably believes are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur. If Buyer does not notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Buyer shall be deemed to have agreed that none of the Leases and Contracts which are listed on Schedules 9.1.9 and 9.1.13 require consent, in accordance with Section 7.1.6, before the Effective Date can occur. If Buyer does notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Seller shall have a period of ten (10) business days upon receipt of such notification to notify Buyer in writing (which writing may be transmitted by facsimile) of any objections thereto. Thereafter, Buyer and Seller shall negotiate in good faith and agree in writing as to the identity of those Leases and Contracts which are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur (the "Material Leases and Contracts"). The parties shall reflect their written agreement as to the identity of the Material Leases and Contracts by placing an asterisk next to the appropriate Lease or Contract on Schedule 9.1.9 or 9.1.13, which revised Schedule 9.1.9 or 9.1.13 shall be deemed to be an amendment to this Agreement. ARTICLE 12. EMPLOYEES AND EMPLOYEE MATTERS 12.1 Employee Transfer Agreement. The parties have addressed the transfer of employees and employee benefits matters in a separate agreement, entitled Employee Transfer Agreement, the terms and provisions of which are incorporated into this Agreement as if fully set forth herein and a copy of which is attached hereto as Schedule 12.1 (the "Employee Transfer Agreement"). ARTICLE 13. INDEMNIFICATION 13.1 Survival of Representations, Warranties and Covenants. (a) The representations and warranties made pursuant to this Agreement shall survive the Closing for the following periods after the Effective Date: (i) The representations and warranties set forth in Sections 9.1.6, 9.1.8, 9.1.32, 9.1.33, and 9.2.5 shall survive without limitation as to time. (ii) The representations and warranties set forth in Section 9.1.15 shall survive as set forth in Section 11.23.2(d). (iii) All other representations and warranties shall survive for eighteen (18) months. The date of expiration of any representation or warranty shall be referred to herein as the "Termination Date." Representations and warranties under this Agreement shall be of no further force or effect after the applicable Termination Date. Any claim for indemnification with respect to any alleged breach of any representation or warranty not asserted by notice given as herein provided that specifically identifies a particular breach and the underlying facts relating thereto, which notice is given prior to the Termination Date, may not be pursued and is irrevocably waived and released after such time. Without limiting the generality or effect of the foregoing, no claim for indemnification with respect to any representation or warranty will be deemed to have been properly made except to the extent it is based upon a Third Party Claim or a Direct Claim. (b) Unless a specified period is set forth in this Agreement (in which event such specified period will control), the covenants contained in Section 5.2, Section 5.3, this Article 13, and in Sections 11.1, 11.2, 11.3, 11.6, 11.7, 11.10, 11.12, 11.13, 11.16 and Articles 16 and 17 and in the Employee Transfer Agreement, will survive the Closing and remain in effect indefinitely. Covenants regarding Taxes shall survive as set forth in Section 11.23.2(d). All other covenants contained in this Agreement will terminate, without further action, upon the occurrence of the Effective Date and any claim following the Effective Date for an alleged breach of any such covenant may not be pursued, and is irrevocably waived, upon the occurrence of the Effective Date, except that Buyer may make a claim for Seller's breach of the covenants contained in Section 11.5 at any time within eighteen months after the Effective Date. The immediately preceding sentence shall not apply to, or limit to preclude, a party's rights and remedies if the sale contemplated by this Agreement is not concluded as a result of the other party's breach of this Agreement. 13.2 Limitations on Liability. (a) For purposes of this Agreement, (i) "Indemnification Payment" means any amount of Indemnifiable Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee" means any person or entity entitled to indemnification under this Agreement, (iii) "Indemnifying Party" means any person or entity required to provide indemnification under this Agreement, and (iv) "Indemnifiable Losses" means any losses, liabilities, costs, fines, penalties, damages (actual, punitive or other), and expenses and any claims, demands or suits by any person or entity, including, without limitation, any Governmental Authority, and costs and expenses actually incurred in connection with any actions, suits, demands, assessments, judgments and settlements and reasonable attorneys' fees and expenses, in any such case (x) reduced by the amount of insurance proceeds recovered from any person or entity as a result of the Indemnifiable Losses involved and (y) provided that the underlying liability or obligation is not solely the result of any action taken or omitted to be taken by the Indemnitee. (b) As between Seller and any Affiliate of Seller, on the one hand, and Buyer and any Affiliate of Buyer, on the other hand, the rights and obligations set forth in this Article 13 will be the exclusive rights and obligations with respect to the liabilities and obligations referred to in Section 13.3, and any breach of the representations, warranties or covenants referred to in Section 13.3., except for any liability, obligation or breach that results from the actual fraud under the common law, not otherwise implied or imputed, by a party to this Agreement. Without limiting the foregoing, as a material inducement to entering into this Agreement, to the fullest extent permitted by law, each of the parties waives any claim or cause of action that it otherwise might assert, including, without limitation, under the common law or federal or state securities, trade regulation or other laws, by reason of the liabilities and obligations, and any breach of the representations, warranties or covenants, referred to in Section 13.3, except for claims or causes of action brought under and subject to the terms and conditions of this Article 13, and except for claims or causes of action arising due to the actual fraud under the common law, not otherwise implied or imputed. (c) Notwithstanding any other provision of this Agreement or of any applicable law, no Indemnitee will be entitled to make a claim against an Indemnifying Party under Sections 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32 and 9.1.33) or 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) until the aggregate amount of claims that may be asserted for such Indemnifiable Losses incurred by the Indemnitee exceeds Eighty Thousand Two Hundred Seventy Seven Dollars ($80,277.00) and then only to the extent of the excess. (d) Notwithstanding any other provision of this Agreement, the indemnification obligations of Seller under Section 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32 and 9.1.33) and of Buyer under Section 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) will not exceed the sum of Two Million Four Hundred Eight Thousand Three Hundred Twenty Five Dollars ($2,408,325.00). (e) Notwithstanding anything to the contrary contained herein, no Indemnifying Party shall be liable to or obligated to indemnity any Indemnitee hereunder for any consequential, special, multiple, punitive or exemplary damages including, but not limited to, damages arising from loss or interruption of business, profits, business opportunities or goodwill, loss of use of facilities, loss of capital, claims of customers, or any cost or expense related thereto, except to the extent such damages have been recovered by a third person and are the subject of a Third Party Claim for which indemnification is available under the express terms of this Section 13. 13.3 Indemnification. (a) Subject to the other sections of this Article 13, Seller will indemnity, defend and hold harmless Buyer and its Affiliates (including the Company after the Effective Date), directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Seller of any of the representations and warranties contained in Section 9.1, except for any such breach of representations and warranties which was specified on Seller's Closing Certificate all of which are waived upon Closing, (ii) a breach by Seller of any covenant of Seller contained in this Agreement or in the Employee Transfer Agreement, except for any such breach of covenants which was specified on Seller's Closing Certificate all of which are waived upon Closing, (iii) the Retained Liabilities, (iv) any Third Party Claim, whether filed, asserted, or sought before or after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business (including contractual obligations in connection with sales or transfers of assets made by the Company prior to the Effective Date), or the ownership or operation of the Business, on or prior to the Effective Date, regardless of whether known or unknown, asserted or unasserted, on the Effective Date. As used in this Agreement, "Retained Liabilities" means all liabilities, responsibilities and obligations (whether known or unknown, fixed, contingent or otherwise) of the Company relating to, arising out of, or in connection with, or resulting from the use or ownership of the Property or the conduct of the Business during, the period ending on the Effective Date, including, without limitation,: (i) all liabilities, responsibilities and obligations with respect to the Excluded Property and the Excluded Contracts; (ii) all liabilities and obligations for prior period adjustments of revenues from the Business and for any customer overbillings and prospective refunds of overcharges (including rates collected under bond but excluding prospective rate reduction) occurring or relating to the period prior to the Effective Date, including without limitation all toll revenues, settlements, pools, separations studies or similar activities for which Seller is responsible pursuant to Section 11.10; and (iii) All liabilities, responsibilities and obligations arising out of or related to the litigation, claims and other matters set forth on Schedule 9.1.16 and any other litigation, claims, actions, lawsuits or legal proceedings based on facts, circumstances or conditions arising, existing or occurring on or before the Effective Date, regardless of whether known or unknown, asserted or unasserted, as of the Effective Date; but excluding all liabilities, responsibilities and obligations of the Company Date to the extent Buyer receives a Purchase Price adjustment in its favor pursuant to Section 3.2 therefor; (b) Subject to the other sections of this Article 13, Buyer will indemnity, defend and hold harmless Seller and its Affiliates, and their directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Buyer of any of the representations or warranties contained in Section 9.2, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (ii) a breach by Buyer of any covenant of Buyer contained in this Agreement or in the Employee Transfer Agreement, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (iii) any Third Party Claim, filed, asserted, or sought after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business or the ownership or operation of the Company or the Business, after the Effective Date. (c) All Tax and environmental matters or issues, including without limitation, the indemnification obligations with respect to Taxes and Environmental Liabilities, are to be governed by Sections 9.1.15 and 11.23 and Article 14, respectively, and are not addressed, limited or governed by the provisions of this Article 13. (d) Payments made under this Section 13.3 shall be treated by Buyer and Seller as purchase price adjustments and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. 13.4 Defense of Claims. (a) If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action, proceeding, or investigation by any entity or person that is not a party to this Agreement or an Affiliate of such a party (a "Third Party Claim") against such Indemnitee, with respect to which an Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of actual notice of such Third Party Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party during the required notification period shall only relieve the Indemnifying Party from its obligation to indemnity the Indemnitee pursuant to this Article 13 to the extent that Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. Indemnifying Party shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether or not the Indemnifying Party elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof, provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (i) the employment of such separate counsel has been specifically authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party has failed to assume the defense of such Third Party Claim within a reasonable time after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee or (iii) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnifying Party and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall not be liable for the fees and disbursements of more than one counsel for all Indemnified Parties in connection with any one proceeding or any similar or related proceedings arising from the same general allegations or circumstances. Without the prior written consent of the Indemnitee, the Indemnifying Party will not enter into any settlement of any Third Party Claim that would lead to liability or create any financial or other obligation on the part of the Indemnitee unless such settlement includes as an unconditional term thereof the release of the Indemnitee from all liability in respect of such Third Party Claim. (b) Any claim by an Indemnitee on account of an Indemnifiable Loss that does not result from a Third Party Claim (a "Direct Claim") will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after the Indemnitee actually becomes aware of the incurrence thereof, and the Indemnifying Party will have a period of thirty (30) calendar days within which to respond in writing to such Direct Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party shall only relieve the indemnifying Party from its obligation to indemnify the Indemnitee pursuant to this Article 13 to the extent the Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. If the Indemnifying Party does not so respond within such thirty (30) calendar day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article 13. (c) If after the making of any Indemnification Payment the amount of the Indemnifiable Loss to which such payment relates is reduced by recovery, settlement or otherwise under any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction (less any costs, expenses, premiums or taxes incurred in connection therewith) will promptly be repaid by the Indemnitee to the Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying Party will, to the extent of such Indemnification Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the Indemnification Payment relates; provided that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss, all claims of the Indemnifying Party against any such third party on account of said Indemnification Payment will be subrogated and subordinated in right of payment to the Indemnitee's rights against such third party. Without limiting the generality or effect of any other provision of this Article 13, each such Indemnitee and Indemnifying Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights. ARTICLE 14. ENVIRONMENTAL MATTERS 14.1 Environmental Due Diligence. 14.1.1 Right to Conduct Due Diligence. Buyer shall have the opportunity to conduct environmental due diligence regarding the Property in accordance with this Section 14.1, for a period not to exceed 120 days after the Environmental Data Delivery Date (as defined below). 14.1.2 Treatment of Data. All information collected and generated as a result of the environmental due diligence authorized by this Section 14.1 will be subject to the terms and conditions of the Confidentiality Agreement, except as otherwise expressly provided in this Section 14.l. Buyer shall provide to Seller copies of all reports, assessments and other information composed or compiled by Buyer's environmental consultant(s) and shall treat all such information in accordance with the procedures of Section 14.1.5(c). Within thirty (30) days after the Execution Date (the "Environmental Data Delivery Date"), Seller will provide to Buyer copies of all surveys and reports in Seller's or the Company's possession concerning the existence or possible existence of asbestos or materials containing asbestos relating to any of the Real Property, a list of all underground storage tanks which to Seller's or the Company's knowledge are located on, or have been removed within the last three years from, any Real Property owned or real estate leased or operated by the Company in connection with the Business and any other reports, studies or documents in Seller's or the Company's possession relating to the Company's potential liability under any Existing Environmental Requirements. The parties further agree that, if Seller discloses the existence or suspected existence of materials containing asbestos with respect to a given parcel of Real Property and the asbestos does not exceed applicable limits, if Buyer desires to make renovations or structural changes to the property after the Effective Date (which changes require the removal of asbestos), the removal will be at the expense of Buyer. 14.1.3 Environmental Consultants. Buyer may retain one or more outside environmental consultants to assist in its environmental due diligence concerning the Property and shall notify Seller of the environmental consultant or consultants Buyer intends to retain. Thereafter, Seller shall have five (5) business days after receipt of such notification to notify Buyer in writing of Seller's objection (which must be for good cause) and substantiate the basis for that objection. If Seller does not object for good cause and substantiate that objection within said five (5) business day period, Seller shall be deemed to have consented to Buyer's selection. 14.1.4 Phase I Reviews. Buyer may conduct the usual Phase I environmental assessment activities of the Property, including inspecting individual sites, submitting environmental questionnaires to Seller and the Company and reviewing existing environmental reports, correspondence, permits and related materials regarding the Property. Phase I environmental assessment activities shall not include any sampling or intrusive testing other than tank tightness testing and hand auger soil testing. (a) Buyer shall give Seller at least three (3) business days' notice prior to any entry onto the Property. (b) If Buyer enters the Property, a representative of Seller may be, but is not required to be, present during such entry on the Property. (c) All activities of Buyer regarding environmental due diligence shall be conducted to minimize any inconvenience or interruption of the normal use and enjoyment of the Business and the Property. 14.1.5 Phase II Reviews. Buyer may conduct the usual Phase II environmental assessment activities of the Property (including, but not limited to, the taking and analysis of soil, surface water and groundwater samples, testing of buildings, drilling wells and taking soil borings) after first conducting a Phase I assessment of a particular site provided that such Phase II assessment activities are conducted in accordance with this Section 14.1.5. (a) If Buyer desires to perform sampling or intrusive testing at a site included in the Property, Buyer must notify Seller of its desire at least five (5) business days in advance of the proposed date of such sampling or testing and provide a description of the scope of work regarding such sampling or intrusive testing. If Seller does not notify Buyer in writing of Seller's objection to such proposed sampling or testing within five (5) business days after receipt of such notice, Seller shall be deemed to have consented to the proposed sampling or testing. Seller shall not unreasonably object to Buyer's request to perform sampling or testing. (b) Buyer shall provide Seller with copies of field data, field reports, laboratory analyses, logs, laboratory reports and other material or information regarding the sampling or intrusive testing ("Environmental Data") within three (3) business days of Buyer's receipt of such data and shall promptly provide Seller with "matched" or "paired" samples, in accordance with standard sampling and testing protocols, that are obtained during the sampling or intrusive testing of a particular site; provided, however, that Seller shall have no obligation to Buyer to take any action whatsoever regarding such samples. (c) It is understood and agreed that neither Buyer nor its environmental consultant(s) shall disclose or release any Environmental Data without the prior written consent of Seller and that all such information shall be kept strictly confidential. The Environmental Data shall be prepared at the request of counsel to Buyer and, to the fullest extent permitted by law, shall be the work product of such counsel and constitute confidential attorney/client communications. The Environmental Data shall be transferred among Buyer and its consultant(s) in a manner that will preserve, to the greatest extent possible, such privileges. Buyer expressly agrees that until the Closing, it will not distribute the Environmental Data to any third party without Seller's written consent. After the Closing, Buyer agrees that it will not distribute the Environmental Data to any third party without Seller's written consent, except as required by law or by express provisions of Buyer's corporate compliance program if Seller is provided written notice at least ten (10) business days prior to such distribution, provided, however, that for a period of two (2) years after the Effective Date, Buyer may distribute the Environmental Data to any potential purchaser of the Company or the Property only after first notifying the Seller, and without such notice at any time after such two (2) year period. 14.1.6 Indemnity for Due Diligence Activities. Buyer hereby agrees to indemnify and hold harmless Seller, Seller's Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all claims, liabilities, damages, losses, orders, penalties, fines, costs, charges and expenses (including reasonable attorneys' fees and disbursements, and reasonable costs of experts and expert witnesses) with respect to persons or property arising out of or in connection with the entry of Buyer or its environmental consultant(s) onto the Property and resulting from any act or omission of Buyer or its environmental consultant(s) provided that Buyer shall not be liable for any Environmental Liabilities incurred by any such party merely discovered by the environmental due diligence performed by Buyer or its environmental consultants. In addition, in the event the transactions contemplated herein with regard to any portion of the Property do not close, Buyer agrees to restore such portion of the Property to the condition which existed prior to Buyer's inspections and testing thereof to the extent such portion of the Property was damaged by such inspections and testing. 14.1.7 Effect of Due Diligence Results. (a) Subject to Section 14.1.7(b) below, Buyer conditionally may terminate this Agreement by written notice to Seller at any time during the period set forth in Section 14.1.1 if: (i) the results of Buyer's environmental due diligence investigation, conducted in accordance with this Section 14. 1, indicate Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company; and (ii) Buyer reasonably determines (on the basis of its environmental due diligence) that responding to and remediating the foregoing Environmental Liabilities based upon Existing Environmental Requirements cannot be completed for less than Six Hundred Forty Two Thousand Two Hundred Twenty Dollars ($642,220.00) (the "Environmental Liabilities Amount") To be effective, any such conditional termination of this Agreement must be delivered in writing to Seller, which writing must specifically acknowledge that the termination is subject to the provisions of paragraph (b) below. (b) In the case of a conditional termination of this Agreement by Buyer in accordance with Section 14.1.7(a) above, Seller may nullify the termination by agreeing to: (i) cause the Company to respond to and fully remediate the Environmental Liabilities based upon Existing Environmental Requirements; or (ii) pay Buyer the cost thereof; or (iii) make other adjustments to the terms and conditions of the sale contemplated by this Agreement all in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller. Seller's election to nullify Buyer's conditional termination by selecting one of the above options shall be, in each case, specified in a writing mutually satisfactory to the parties, and thereafter on or before the Closing (subject to Section 14.1.7(d)), Seller shall perform its obligations under that writing in full. If the parties fail to sign the writing specifying Seller's obligations within thirty (30) days following Buyer's conditional termination (or such longer period acceptable to Buyer) or sign that writing but the Company fails to perform its obligations thereunder in full on or before the Closing (subject to Section 14.1.7(d)), Buyer's conditional termination under paragraph (a) above automatically shall become final and unconditional unless the parties agree otherwise. (c) If the results of Buyer's environmental due diligence conducted in accordance with this Section 14.1 indicate that the costs of responding to and remediating Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company are less than the Environmental Liabilities Amount in the aggregate, Seller agrees, to cause the Company at the Company's sole cost, to either (i) make a mutually satisfactory adjustment to the terms and conditions of the transactions contemplated by this Agreement prior to the Closing in accordance with Section 14.1.7(b)(iii) above, or (ii) prior to the Closing (subject to Section 14.1.7(d)), otherwise respond to and remediate those Environmental Liabilities based upon Existing Environmental Requirements in accordance with Section 14.1.7(b)(i) or Section 14.1.7(b)(ii) above, unless the cost of conducting such response action would exceed the Environmental Liabilities Amount in which case Seller's sole obligation under this Section 14.1.7(c) shall be to pay the Environmental Liabilities Amount toward the completion of such response and remediation actions. If Seller discharges its obligations under this Section 14.1.7 by expending the Environmental Liabilities Amount on such response and remediation action (such expenses to be verified by Seller by delivery by Seller to Buyer of a reasonably detailed statement setting forth such expenses), or paying to Buyer the Environmental Liabilities Amount, Buyer shall sign and deliver to Seller at the Closing a release of Seller from any further liability to Buyer for such remediation and shall indemnify Seller against any liability for such Environmental Liabilities or Environmental Requirements. (d) If Seller elects to cause the Company to respond to and fully remediate Environmental Liabilities based upon Existing Environmental Requirements pursuant to Section 14.1.7(b)(i) or (c)(ii), and such response and remediation has not been completed by the date scheduled for Closing, the parties on or prior to Closing shall enter into an Environmental Remediation Agreement in form and substance reasonably satisfactory to the parties and proceed to Closing; provided, however, that in the case of response and remediation under Section 14.1.7(b)(i), Buyer may elect to postpone the Closing until sufficient response and remediation has been completed so that the remaining response and remediation is equal to or less than the Environmental Liabilities Amount. 14.2 Environmental Indemnification. 14.2.1 Sole Remedy and Release. It is the intent of the parties that the indemnification provided under this Section 14.2 shall be the sole remedy for allocating responsibility regarding environmental matters related to the sale contemplated by this Agreement, the Company, the Business and the Property of which Buyer does not receive notice prior to the Closing (either from Seller in Schedule 14.3 or pursuant to notice given pursuant to Section 17.1 or in any written communication made to Buyer from Buyer's environmental consultants (collectively the "Known Environmental Matters")). Except as expressly provided in this Section 14.2, at Closing each party, for itself and its successors and assigns, by virtue of consummating the sale contemplated by this Agreement and without further action on the part of such party, shall waive and release the other party from any and all liability under any other cause of action at law or in equity concerning the Known Environmental Matters, whether raised pursuant to (i) Environmental Requirements, (ii) any other applicable federal, state or local statute, ordinance, rule or regulation, or (iii) common law. 14.2.2 Indemnification. Subject to the provisions of Sections 14.2.3, 14.2.4 and 14.2.5, Seller agrees to indemnify and hold harmless Buyer, its Affiliates (including the Company after the Effective Date) and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities under Existing Environmental Requirements arising from acts or omissions occurring with respect to, or from the use or ownership of, or any condition or circumstance relating to, the Company or the Property that occurred or arose prior to or on the Effective Date. The foregoing indemnity in this Section 14.2.2 shall only apply to matters that do not constitute Known Environmental Matters (such matters being referred to as the "Unknown Environmental Matters"). Such indemnification under this Section 14.2.2 shall be provided only for claims for Unknown Environmental Matters noticed to the other party pursuant to the procedures of Section 14.2.3, within eighteen (18) months after the Effective Date. Subject to the provisions of Sections 14.2.3 and 14.2.4, Buyer agrees to indemnify and hold harmless Seller, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities, with respect to any Environmental Requirements in existence now or hereafter in effect, arising from acts or omissions occurring after the Effective Date, or from the use or ownership of the Property after the Effective Date, or any condition or circumstance relating to the Company, the Property or the Business that occurred or arose after the Effective Date on the Property or in connection with the Company or the operation of the Business after the Effective Date. 14.2.3 Notice. A party seeking indemnification under this Section 14.2 must give written notice to the other party, including information sufficient to inform the other party of, and allow such other party to confirm the nature of, the claim and any activities required to address the claim, in sufficient detail for the indemnifying party to confirm that all costs incurred or to be incurred by the party to be indemnified under this Section 14.2 are required by Environmental Requirements, as applicable to Buyer, and Existing Environmental Requirements, as applicable to Seller, and are reasonable and cost-effective. If the indemnifying party disagrees with the party to be indemnified as to the necessity of costs or the reasonableness or cost-effectiveness of the remediation method selected, the parties shall negotiate in good faith to achieve at a mutually satisfactory solution. If the parties cannot agree as to costs or methods of remediation, the matter shall be resolved in accordance with Article 16. 14.2.4 Actual Damages. Any indemnifiable claim under this Section 14.2 shall not include incidental or consequential damages except to the extent such damages have been recovered by a third person and are the subject of a Third Party claim for which indemnification is available under the express terms of this Article 14. Any indemnifiable claim under this Section 14.2 shall be reduced to account for any insurance, storage tank fund, or other proceeds received by the party to be indemnified, as a result of the indemnifiable losses involved. The parties agree to take all reasonable steps to mitigate any indemnifiable claim under this Section 14.2, including complying with any registration and reporting requirements necessary to qualify for reimbursement from any storage tank fund. 14.2.5 Limitations on Indemnification. Notwithstanding any other provision of this Agreement, this Article 14, or any applicable law, the indemnification obligations of Seller under this Section 14.2 shall not exceed the aggregate amount of One Million Two Hundred Four Thousand One Hundred Sixty Two Dollars ($1,204,162.00). 14.2.6 Adjustments to Purchase Price. Payments made under this Article 14 shall be treated by Buyer and Seller as purchase price adjustments, and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. ARTICLE 15. TERMINATION 15.1 Termination Rights. This Agreement may be terminated at any time prior to the Closing Date: (a) at any time by mutual written consent of the parties; (b) by Seller or Buyer, as applicable, if there has been a material breach on the part of the other party of its respective representations, warranties or covenants set forth in this Agreement; provided, however, that a party shall not be entitled to exercise its right of termination under this subsection (b) if the breach is capable of being cured to the non-breaching party's reasonable satisfaction and the breaching party is proceeding diligently with its best efforts to effect such cure. (c) by Buyer, pursuant to Section 11.20 (Delivery of Schedules); (d) by Buyer and Seller, as the result of Section 14.1.7(a); (e) by Buyer or Seller, pursuant to Section 11.9; (f) by Seller or Buyer, if the Closing shall not have occurred by December 31, 1995 due to no fault or delay attributable to the party seeking termination; provided, however, that a party shall not be entitled to exercise any right of termination pursuant to this subsection (f) if such party shall not have performed diligently and in good faith the obligations required to be performed by such party hereunder prior to the date of termination; (g) by Buyer if a Governmental Authority, the approval of which is a condition to Buyer's obligations under Section 7.1, has provided written notice that it shall not consent to or approve the transactions contemplated hereby; or (h) by Seller, if a Governmental Authority, the approval of which is a condition to Seller's obligations under Section 7.2, has provided written notice that it shall not consent to or approve the transactions contemplated hereby. 15.2 Effect of Termination. (a) If this Agreement is terminated pursuant to Section 15. 1 (a), (c), (d), (e), (f), (g) or (h), this Agreement shall be of no further force and effect and there shall be no further liability hereunder on the part of either party or its Affiliates, directors, officers, shareholders, agents or other representatives. (b) A party's exercise of its right of termination under Section 15.1(b) shall not constitute a waiver of its rights to recover damages, whether pursuant to breach of contract or in tort, or other remedies available at law or in equity, from the other party as a result of the other party's breach of this Agreement. (c) Notwithstanding anything to the contrary contained herein, the provisions of this Section 15.2 and of Sections 17.1, 17.2, 17.3, 17.8, 17.11, 17.13, 17.14 and Article 16 shall survive any termination of this Agreement. ARTICLE 16. DISPUTE RESOLUTION 16.1 Exclusive Remedy. Subject to Section 16.5, the parties agree to resolve disputes arising out of this Agreement without litigation. Accordingly, except as provided in Section 16.5, or in the case of a suit to compel compliance with this dispute resolution process, the parties agree to use the following alternative dispute resolution procedure as their sole remedy with respect to any controversy or claim arising out of or relating to this Agreement or its breach. 16.2 Dispute Resolution Process. At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any dispute arising under this Agreement. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations. Discussions and correspondence among the parties' representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, exempt from discovery and production, and without the concurrence of both parties shall not be admissible in the arbitration described below or in any lawsuit. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration. 16.3 Arbitration. Subject to Section 16.5, if negotiations between the representatives of the parties do not resolve the dispute within sixty (60) days of the initial written request, the dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Either party may demand such arbitration in accordance with the procedures set out in those rules. The arbitration hearing shall be commenced within sixty (60) days of the demand for arbitration and the arbitration shall be held in a mutually agreeable location. The arbitrator shall control the scheduling (so as to process the matter expeditiously) and any discovery. The parties may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within thirty (30) days after the close of hearings. The times specified in this Section 16.3 may be extended upon mutual agreement of the parties or by the arbitrator upon a showing of good cause. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. 16.4 Costs and Attorneys' Fees. Each party will bear its own costs and expenses in submitting and presenting its position with respect to any such dispute to the arbitrator, and the fees and expenses of such arbitration procedures, including the fees of the arbitrator will be shared equally by Buyer and Seller, except that a party seeking discovery shall reimburse the responding party the cost of production of documents (including search time and reproduction costs); provided, however, that if the arbitrator determines that the position taken in the dispute by the non-prevailing party taken as a whole is unreasonable, the nonprevailing party will bear all such fees and expenses, and reimburse the prevailing party for all of its reasonable costs and expenses in submitting and presenting its position. 16.5 Certain Limitations. The provisions of this Article 16 with respect to the resolution of disputes without litigation shall not apply to any dispute, controversy or claim arising out of the provisions of Section 11.1, or the Confidentiality Agreement, or to a party's seeking to proceed under Section 17.14, it being understood and agreed that in the event of a breach by either party of the provisions of Section 11.1, or the Confidentiality Agreement, or in the event that a party seeks to proceed under Section 17.14, the non- defaulting party shall be entitled to proceed to protect and enforce its rights by an action at law, a suit in equity or other appropriate proceeding, whether for specific enforcement of any agreement contained in Section 11.1, or the Confidentiality Agreement or in aid of the exercise of any power granted by Section 11.1, 17.14 or the Confidentiality Agreement or by law or otherwise. ARTICLE 17. MISCELLANEOUS 17.1 Notices. All notices, consents and other communications required or permitted hereunder shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been given when delivered in person or dispatched by electronic facsimile transfer (confirmed in writing by certified mail, concurrently dispatched) or one business day after having been dispatched for next-day delivery by a nationally recognized overnight courier service to the appropriate party at the address specified below: (a) If to Buyer, to: Mr. Donald K. Roberton Vice President-Telecommunications Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4627 and L. Russell Mitten, II, Esq. Vice President-General Counsel Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4651 with a copy to: Jeffry L. Hardin, Esq. Fleischman and Walsh, L.L.P. 1400 Sixteenth Street, N.W. Washington, D.C. 20036 Facsimile No.: 202/745-0916 (b) If to Seller to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: President Facsimile No.: 501/661-0962 with a copy to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: General Counsel Facsimile No.: 501/661-0962 or to such other persons or address or addresses as any such party may from time to time designate for itself by like notice. 17.2 Press Releases. The parties shall consult with each other in preparing any press release, public announcement, news media response or other forth of release of information concerning this Agreement or the transactions contemplated hereby that is intended to provide such information to the news media or the public (a "Press Release"). Neither party shall issue or cause the publication of any such Press Release without the prior written consent of the other party; provided, however, that nothing herein will prohibit either party from issuing or causing publication of any such Press Release to the extent that such action is required by applicable Law or the rules of any national stock exchange applicable to such party or its Affiliates, in which case the party wishing to make such disclosure will, if practicable under the circumstances, notify the other party of the proposed time of issuance of such Press Release and consult with and allow the other party reasonable time to comment on such Press Release in advance of its issuance. 17.3 Expenses. Except as otherwise expressly provided herein, each party will pay any expenses (including, without limitation, attorneys' fees) incurred by it incident to this Agreement and in consummating the transactions provided for herein. All regulatory filing fees required pursuant to Sections 5.1, 5.4 and 5.5 shall be split equally between the parties. Each party will pay the appropriate costs and filing fees relating to any other applications required to be filed by such party. 17.4 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Buyer may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Seller; provided that Buyer may assign or delegate its rights and obligations under this Agreement without the prior written consent of Seller, to any directly or indirectly wholly owned subsidiary of Buyer provided such subsidiary assumes in writing all of the duties and obligations of Buyer hereunder, but no such assignment and assumption shall in any way operate to enlarge, alter or change any obligation of or due to Seller or relieve Buyer of its obligations hereunder and provided that Buyer agrees to cause such subsidiary to perform each of its agreements and covenants herein, and shall be jointly and severally liable for any non-performance thereof. Seller may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Buyer. Upon the sale, assignment or transfer by Buyer of the Company, the Business or the Property to a non-Affiliate of Buyer not in the ordinary course of business of Buyer, Seller's representations and warranties and indemnification obligation for breach thereof shall terminate. Any assignment made in violation of the foregoing provisions shall be void. 17.5 Amendments. This Agreement may be amended or modified only by a subsequent writing signed by authorized representatives of both parties. 17.6 Captions. The captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement, nor as in any way limiting or amplifying the terms and provisions hereof. 17.7 Entire Agreement. The term "this Agreement" shall mean collectively this document, the Schedules hereto, any agreements expressly incorporated herein, and the Confidentiality Agreement. This Agreement supersedes and revokes any prior discussions and representations, other agreements, commitments, arrangements or understandings of any sort whatsoever, whether oral or written, that may have been made or entered into by the parties relating to the matters contemplated hereby. This Agreement constitutes the entire agreement by and among the parties, and there are no representations, warranties, agreements, commitments, arrangements or understandings except as expressly set forth herein. 17.8 Waiver. Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege available to each party at law or in equity. 17.9 Third Parties. Except as expressly provided herein, nothing contained in this Agreement is intended to confer upon any person, other than the parties and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 17.10 Counterparts. This Agreement may be executed in two or more counterparts, any or all of which shall constitute one and the same instrument. 17.11 Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of Delaware (except that no effect shall be given to any conflicts of law principles of the State of Delaware that would require the application of the laws of any other jurisdiction). In accordance with Title 6, Section 2708 of the Delaware Code Annotated, the parties agree to the jurisdiction of the courts of Delaware and to be served with legal process from any of such courts. 17.12 Further Assurances. From time to time, as and when requested by one of the parties, the other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate and make effective the transactions contemplated by this Agreement. 17.13 Certain Interpretive Matters and Definitions. (a) Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning so assigned to it, (iii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (iii) all references to the "knowledge of a party" will be deemed to refer to the actual knowledge of the Executive Officers of the party after reasonable investigation, and (iv) all references to a party's "best efforts" and references of like import will be deemed to refer to the best efforts of such party in accordance with reasonable commercial practice and without the incurrence of unreasonable expense. (b) No provision of this Agreement will be interpreted in favor of, or against, either of the parties by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of such provision or of this Agreement. 17.14 Specific Performance. In addition to all other rights and remedies available at law or in equity, any party hereto may pursue, to the fullest extent available, the remedy of specific performance in order to compel the other party to close pursuant to Article 8. IN WITNESS WHEREOF, the parties, acting through their duly authorized agents, have caused this Agreement to be duly executed and delivered as of the date first above written. ALLTEL CORPORATION: By: /s/ Max E. Bobbitt ______________________ Name: Max E. Bobbitt Title: President and Chief Operating Officer CITIZENS TELECOMMUNICATIONS COMPANY OF OREGON: By: /s/ Leonard Tow Name: Leonard Tow Title: Chairman of the Board and Chief Executive Officer EX-10 9 EXHIBIT 10.20 EXECUTION COPY ASSET EXCHANGE AGREEMENT THIS ASSET EXCHANGE AGREEMENT (this "Agreement") is made and entered into as of the 28th day of November, 1994 (the "Execution Date"), by and among Citizens Utilities Company of Pennsylvania, a Pennsylvania corporation ("Citizens"), and Tuolumne Telephone Company, a California corporation ("Tuolumne"). RECITALS WHEREAS, Citizens is in the business of providing regulated local exchange telephone service in certain areas of the State of Pennsylvania; and WHEREAS, Tuolumne is in the business of providing regulated local exchange telephone service in certain areas of the State of California; and WHEREAS, Citizens and Tuolumne desire that Citizens exchange its telephone properties and related assets for Tuolumne's telephone properties and related assets, upon the terms and conditions set forth in this Agreement; and WHEREAS, it is the intent and desire of the parties that the exchange transaction contemplated by this Agreement constitute a "like-kind" exchange under Section 1031 of the Internal Revenue Code of 1986, as amended. NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement and any amendment hereto, the following terms are defined as set out below or in the Section referenced below: Additional Financial Statements is defined in Section 11.4. Advanced Billing Amounts is defined in Section 2.4. Affiliate has the meaning given to that term in Rule 405 under the Securities Act of 1933, as amended. Agreement is defined in Section 17.7. Assumed Liabilities is defined in Section 2.5. 1. Business means the Citizens Business or the Tuolumne Business, as the context requires. Buyer means Citizens in its capacity as transferee of the Tuolumne Purchased Property from Tuolumne, and Tuolumne in its capacity as transferee of the Citizens Purchased Property (and the Cash Consideration) from Citizens, as the context requires. Citizens Business means the business of providing local exchange and exchange access telecommunications services and other related regulated and non-regulated activities, services and products associated with the Citizens Purchased Exchanges, including without limitation such unregulated activities, services and products of Citizens conducted, offered or serviced by the Citizens Transferred Employees or provided or related to Citizens' subscribers or customers served in or from the Citizens Purchased Exchanges (such unregulated activities, services and products are considered an integral part of the Citizens Business for all purposes of this Agreement). Citizens Closing Certificate is defined in Section 7.2.1. Citizens Excluded Contracts is defined in Section 2.4(g). Citizens Materials and Supplies is the amount set forth on Citizens' balance sheet as of a date set forth on Citizens' balance sheet as of a date certain comprising Citizens' Materials and Supplies. Citizens Net Fixed Assets is the amount set forth on Citizens' balance sheet as of a date certain comprising Citizens' Net Fixed Assets. Citizens Net Plant Adjustment means the amount by which the sum of Citizens Net Fixed Assets and Citizens Materials and Supplies as of the Effective Date differs from the Citizens June 1994 Base Amount. Citizens June 1994 Base Amount means the sum of (i) the amount of Citizens Net Fixed Assets as of June 30, 1994 and (ii) the amount of Citizens Materials and Supplies as of June 30, 1994. Citizens Purchased Exchanges is defined in Section 2.2. Citizens Purchased Property is defined in Section 2.2. Citizens Real Property is defined in Section 2.2.1. Citizens Schedules means the schedules prepared by Citizens and attached to this Agreement. CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Casualty Notice is defined in Section 11.9. Casualty Termination Notice is defined in Section 11.9. Closing is defined in Section 8.1. Closing Date is defined in Section 8.1. Confidentiality Agreement means the Confidentiality Agreement dated September 30, 1994 between ALLTEL Corporation and Citizens Utilities Company which is attached and incorporated into this Agreement as Schedule 1-1. Construction Advances is defined in Section 11.11. Contracts is defined in Section 2.2.2. Customer Deposits is defined in Section 11.11. Damaged Property is defined in Section 11.9. Debtholder Consents is defined in Section 5.2(a). Direct Claim is defined in Section 13.4(b). Earned Accounts Receivable is defined in Section 2.4. Effective Date is defined in Section 8.1. Employee Plan Assets is defined in the Employee Transfer Agreement. Employee Transfer Agreement is defined in Section 12.1 Employment Agreements is defined in Section 9.1.18. Environmental Liabilities means all liabilities, obligations (including obligations to respond to, investigate and remediate conditions caused by any Regulated Material), responsibilities, losses, damages (including punitive or treble damages), costs and expenses (including reasonable fees, disbursements and expenses of counsel, experts, consultants and expert witnesses), fines, penalties, interest or bonds, based upon any Environmental Requirements of any Governmental Authority, or as a consequence of (a) the release or threatened release of a Regulated Material in amounts that require response or remediation into the outdoor environment, (b) any circumstance or condition relating to the ownership or operation of the Purchased Property by any person or party or the conduct of the Business or any part thereof, that does not comply with Environmental Requirements, or (c) any claim, demand, notice, cause of action, directive, order, judgment, fine or penalty asserted or sought under or pursuant to any Environmental Requirements by an entity or person not a party to this Agreement, to the extent that the condition or circumstance or event giving rise to the claim, demand, notice, cause of action, directive, order, judgment, fine or penalty relates to the ownership or operation of the Purchased Property by any person or party or the conduct of the Business or any part thereof. Environmental Requirements means (i) any federal, state and local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority and all valid and enforceable guidance documents and policies thereof, relating to (x) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (y) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Regulated Material, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Regulated Material in each case as now amended and as now or hereafter in effect. The term Environmental Requirements includes, without limitation, CERCLA, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the federal Solid Waste Disposal Act, the federal Toxic Substances Control Act and the federal Insecticide, Fungicide and Rodenticide Act, each as now amended and as now or hereafter in effect. ERISA means the Employee Retirement Income Security Act of 1974, as amended. ERISA Plans is defined in Section 9.1.18. Estimated Net Prorations is defined in Section 3.3(b). Estimated Cash Consideration is defined in Section 3.3(a). Evaluation Material is defined in the first paragraph of the Confidentiality Agreement. Excluded Contracts means the Citizens Excluded Contracts or the Tuolumne Excluded Contracts, as the context requires. Excluded Property is defined in Section 2.4. Execution Date is defined in the preamble to this Agreement. Executive Officers of an entity means the president and any vice president of the entity in charge of a principal business unit, division or function. Existing Environmental Requirements means those applicable provisions of any Environmental Requirements that are both in effect and applicable to Seller, the Business or the Purchased Property on or prior to the Effective Date. FCC means the Federal Communications Commission. FCC Consents is defined in Section 5.4. FCC Licenses is defined in Section 2.2.4. Final Order means an action by the FCC, the PUC, or any other Governmental Authority, as to which: (a) no request for stay of the action by the FCC, the PUC, or such other Governmental Authority, as the case may be, is pending, no such stay is in effect, and if any time period for filing any request for such a stay is provided by statute or regulation, such time period has passed; (b) no petition, motion or application for rehearing, reconsideration, or review, of the action is pending before the FCC, the PUC, or such other Governmental Authority, as the case may be, and the time provided for filing any such petition, motion or application has passed; (c) the FCC, the PUC, or such other Governmental Authority, as the case may be, does not have the action under reconsideration on its own motion and the time in which such reconsideration is permitted has passed; and (d) no appeal to a court, of the FCC's, the PUC's or such other Government Authority's action, as the case may be, is pending or in effect, and the deadline for filing any such appeal has passed. Final Net Prorations is defined in Section 3.4. Final Cash Consideration is defined in Section 3.4. Financial Statements is defined in Section 9.1.11. GAAP means generally accepted accounting principles. Governmental Authority is defined in Section 9.1.3. HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Indemnifiable Losses is defined in Section 13.2(a). Indemnification Payment is defined in Section 13.2(a). Indemnifying Party is defined in Section 13.2(a). Indemnitee is defined in Section 13.2(a). Intellectual Property is defined in Section 11.1.1. IRC means the Internal Revenue Code of 1986, as amended. IRS means the Internal Revenue Service. Law is defined in Section 9.1.4. Leases is defined in Section 2.3. Marks is defined in Section 11.1.5. NECA means the National Exchange Carrier Association. Non-FCC Authorizations is defined in 2.2.6. Original Cost Documents means all original cost documentation relating to the Telephone Plant. Other Assets is defined in Section 2.2.5. Parent means ALLTEL Corporation or Citizens Utilities Company, as the context requires. PBGC means the Pension Benefit Guaranty Corporation. Permitted Exceptions is defined in Section 11.16. Plans is defined in Section 9.1.18. Press Release is defined in Section 17.2. PUC means the California Public Utilities Commission (the "California PUC") or the Pennsylvania Public Utility Commission (the "Pennsylvania PUC"), as the context requires. Purchased Exchanges means the Citizens Purchased Exchanges or the Tuolumne Purchased Exchanges, as the context requires. Purchased Property means the Citizens Purchased Property or the Tuolumne Purchased Property, as the context requires. Regulated Material means (i) any "hazardous substance" as defined in CERCLA, (ii) any petroleum or petroleum substance, and (iii) any other pollutant, waste, contaminant, or other substance regulated under Environmental Requirements or, as applicable, Existing Environmental Requirements. Regulatory Approvals is defined in Section 5. 1. Retained Books and Records is defined in Section 2.4(e). Retained Liabilities is defined in Section 2.5.2. Secured Indebtedness is defined in Section 5.2. Secured Parties is defined in Section 5.2. Seller means Citizens in its capacity as transferor of the Citizens Purchased Property (and the Cash Consideration) to Tuolumne, and Tuolumne in its capacity as transferor of the Tuolumne Purchased Property to Citizens, as the context requires. Seller's Purchased Property, Seller's Business and similar terms shall refer to the Citizens Purchased Property or Citizens Business, or the Tuolumne Purchased Property or Tuolumne Business, as the context requires. Seller's Closing Certificate is defined in Section 7. 1. 1. Tax Returns means a report, return or other information statement required to be supplied to a federal, state or local taxing Governmental Authority with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes Seller. Tax(es) means any foreign, federal, state, provincial, county or local income, sales, use, transfer, excise, franchise, stamp duty, custom duty, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, recording, ad valorem, gains, value-added, unemployment compensation, general corporate, profits, registration, unincorporated business, alternative, social security, estimated, add-on, minimum, privilege or withholding tax and any interest and penalties and additions to such taxes (civil or criminal) related thereto or to the nonpayment thereof. Telephone Plant is defined in Section 2.2. 1. Third Party Claim is defined in Section 13.4(a). Transferred Employee is defined in Article II.A of the Employee Transfer Agreement. Transferred Books and Records is defined in Section 2.2.3. Transition Services Agreement is defined in Section 10.1. Tuolumne June 1994 Base Amount means the sum of (i) the amount of Tuolumne Net Telecommunications Plant as of June 30, 1994 and (ii) the amount of Tuolumne Materials and Supplies as of June 30, 1994 Tuolumne Business means the business of providing local exchange and exchange access telecommunications services and other related regulated and non-regulated activities, services and products associated with the Tuolumne Purchased Exchanges, including without limitation such unregulated activities, services and products of Tuolumne conducted, offered or serviced by the Tuolumne Transferred Employees or provided or related to Tuolumne's subscribers or customers served in or from the Tuolumne Purchased Exchanges (such unregulated activities, services and products are considered an integral part of the Tuolumne Business for all purposes of this Agreement). Tuolumne Closing Certificate is defined in Section 7.2.1. Tuolumne Excluded Contracts is defined in Section 2.4(g). Tuolumne Materials and Supplies is the amount set forth on Tuolumne's balance sheet as of a date certain comprising Tuolumne's Materials and Supplies. Tuolumne Net Telecommunications Plant is the amount set forth on Tuolumne's balance sheet as of a date certain comprising the sum of Tuolumne's Telecommunications Plant In Service, Plant Under Construction - - - Short Term, Plant Under Construction -- Long Term, and Telecommunications Plant -- Other, less Accumulated Depreciation and Amortization. Tuolumne Net Plant Adjustment means the amount by which the sum of Tuolumne Net Telecommunications Plant and Tuolumne Materials and Supplies as of the Effective Date differs from the Tuolumne June 1994 Base Amount. Tuolumne Purchased Exchanges is defined in Section 2.2. Tuolumne Purchased Property is defined in Section 2.2. Tuolumne Real Property is defined in Section 2.2. 1. Tuolumne Schedules means the Schedules prepared by Tuolumne and attached to this Agreement. Unregulated Business is defined in the definition of Business set forth in this Article 1. ARTICLE 2. EXCHANGE OF ASSETS 2.1 Exchange of Assets Subject to the terms and conditions of this Agreement, on the Closing Date, Tuolumne shall exchange, transfer, assign and deliver to Citizens, as of the Effective Date, all of Tuolumne's right, title and interest in and to the Tuolumne Purchased Property, and in exchange therefor, Citizens shall, on the Closing Date (a) exchange, transfer, assign and deliver to Tuolumne, as of the Effective Date, all of Citizens' right, title and interest in the Citizens Purchased Property, in each case, free and clear of all security interests, liens, or encumbrances (except for Permitted Exceptions), and (b) pay Tuolumne the Cash Consideration as set forth in Section 3.1. It is the intent and desire of the parties that the foregoing transaction constitute a "like- kind" exchange under Section 1031 of the IRC and the parties agree to treat this transaction as a "like-kind" exchange under Section 1031 of the IRC on their respective Tax Returns. 2.2 Purchased Property. For purposes of this Agreement, the "Citizens Purchased Property" and the "Tuolumne Purchased Property", as the case may be, shall consist of the Telephone Plant, Contracts and Leases (to the extent permitted following compliance with Section 5.3), Transferred Books and Records, FCC Licenses, Non-FCC Authorizations and Other Assets in effect or owned by Citizens or Tuolumne, as appropriate, as of the Effective Date that are associated with (i) the telephone exchanges listed in Citizens Schedule 2.2(a) (the "Citizens Purchased Exchanges"), in the case of Citizens Purchased Property, and the telephone exchanges listed in the Tuolumne Schedule 2.2(a) (the "Tuolumne Purchased Exchanges") in the case of the Tuolumne Purchased Property and (ii) the Unregulated Business described on Citizens Schedule 2.2(b) with respect to the Citizens Purchased Property and Tuolumne Schedule 2.2(b) with respect to the Tuolumne Purchased Property. 2.2.1 Telephone Plant. For purposes of this Agreement, "Telephone Plant" means the Real Property, machinery, equipment, vehicles and all other assets and properties used, or held for future use, in connection with the conduct of Seller's Business, including, without limitation, all improvements, plants, systems, structures, construction work in progress, telephone cable (wherever located and whether in service or under construction), microwave facilities (including frequency spectrum assignments), telephone line facilities, telephones, machinery, furniture, fixtures, tools, implements, conduits, stations, substations, equipment (including, without limitation, central office equipment, subscribers' station equipment and other equipment in general), instruments, house- wiring connections and all other equipment of every nature and kind owned by Seller or in which Seller holds an interest (other than as a lessee) and used in connection with Seller's Business. For purposes of this Agreement, "Real Property" means the real property owned by Seller and used in connection with Seller's Business, including, without limitation, all land, buildings, structures, easements, rights of way, appurtenances, improvements or privileges located thereon and relating thereto. Without limiting the generality of the foregoing, the Telephone Plant includes the assets that would be properly included in the fixed asset accounts referenced in Part 32 of the FCC's Rules and Regulations (47 C.F.R. Part 32), as such accounts are reflected in Citizens' Schedule 9.1.19 with respect to Citizen's Telephone Plant and Tuolumne Schedule 9.1.19 with respect to Tuolumne's Telephone Plant. 2.2.2 Contracts. For purposes of this Agreement, "Contracts" means all agreements that relate to Seller's Business between Seller or any Affiliate of Seller and (i) Seller's subscribers or customers, or (ii) other entities or persons who are not Affiliates of Seller and have business relationships with Seller relating to Seller's Business, except for the Excluded Contracts (some of which are specifically governed by other Sections in this Agreement or the Employee Transfer Agreement). 2.2.3 Transferred Books and Records. For purposes of this Agreement, "Transferred Books and Records" means all of Seller's customer or subscriber lists and records, accounts and billing records (including a copy of the detailed general ledger and the summary trial balances, where available for the past two fiscal years), detailed continuing property record list, plans, blueprints, specifications, designs, drawings, surveys, engineering reports, personnel records (where applicable), Seller's Original Cost Documents (where located in Seller's Purchased Exchanges but excluding Seller's Retained Books and Records) and all other documents, computer data and records (including records and files on computer disks or stored electronically) relating to Seller's Business (excluding Seller's Retained Books and Records), Seller's Purchased Property, Seller's Transferred Employees and/or Seller's Assumed Liabilities except for Seller's Retained Books and Records. 2.2.4 FCC Licenses. For purposes of this Agreement, "FCC Licenses" means all licenses, certificates, permits or other authorizations, including, without limitation, Section 214 authorizations, where applicable, granted to Seller by the FCC that are used in the conduct of Seller's Business. 2.2.5 Other Assets. For purposes of this Agreement, Other Assets means all of Seller's Non-FCC Authorizations to the extent transferable; all of Seller's telephone numbers to the extent transferable, Seller's listings, Seller's telephone directories and Seller's telephone directory advertisements within such telephone directories, used in the operation of Seller's Business; all Seller's prepaid expenses relating to such Business; all of Seller's non-operating plant relating to such Business; all warranties relating to Seller's Purchased Property, to the extent transferable and all of Seller's materials and supplies relating to such Business. 2.2.6 Non-FCC Authorizations. For purposes of this Agreement, "Non- FCC Authorizations" means all licenses, certificates, permits, franchises, or other authorizations (other than FCC Licenses) granted to Seller by Governmental Authorities that are used in or relate to the conduct of Seller's Business (including without limitation those that are listed or required to be listed on Citizens Schedule 9.1.17(c) with respect to Citizens and Tuolumne Schedule 9.1.7(c) with respect to Tuolumne). 2.3 Leased Assets. Subject to the provisions of Sections 2.5.2(i) and 5.3, as of the Effective Date, each Seller shall assign to Buyer all of its interests, rights, benefits and obligations as lessee with respect to all real and personal property leases that are necessary or useful in connection with such Seller's conduct of its Business (the "Leases"). 2.4 Excluded Property. The exchange contemplated by this Agreement shall not include the Excluded Property of either Seller. For purposes of this Agreement, "Excluded Property" means the following, subject to the provisions set forth in Article 4 and Sections 11.8, 11.9, 11.11, 11.12.3, 11.12.4, 11.12.5 and 11.13: (a) Cash, cash equivalents and investments. (b) All accounts receivable, trade or otherwise (excluding those related to interexchange carriers), of Seller outstanding as of the Effective Date relating to Seller's Business (the "Accounts Receivable"), including, without limitation, (i) any accounts receivable from any Affiliate of Seller; and (ii) all amounts that have been earned by Seller in connection with the conduct of Seller's Business whether billed or unbilled as of the Effective Date (the "Earned Accounts Receivable") which are addressed under Article 4; excluding, however, all amounts that have been billed as of the Effective Date by Seller in connection with the conduct of Seller's Business but are unearned as of the Effective Date, relating to service after the Effective Date (the "Advanced Billing Amounts"). (c) All accounts receivable of Seller from interexchange carriers whether billed or unbilled, relating to Seller's Business which are outstanding as of the Effective Date. (d) Seller's interest in any business other than Seller's Business, including without limitation the cellular telephone business or personal communication services business, and, in all cases, any applications or licenses granted with respect thereto. (e) Subject to Section 2.2.3, the general ledger and all books and records of Seller relating to (i) Seller's tax returns and tax records, (ii) the other assets and properties of Seller which are included in the Excluded Property, (iii) Seller's Retained Liabilities, (iv) employees of Seller who are not Transferred Employees or (v) subject to Section 11.13, all of Seller's Original Cost Documents that are not located in Seller's Purchased Exchanges (collectively, the "Retained Books and Records"). (f) All trademarks, trade names, trade dress, logos and any other intangible assets that use or incorporate the word "ALLTEL" or "CITIZENS" and any other Marks listed on Tuolumne Schedule 11.1.5 or Citizens Schedule 11.1.5. (g) The contracts, leases and agreements listed or identified on Citizens Schedule 2.4(g) (the "Citizens Excluded Contracts"), such other assets of Citizens which do not relate to the Citizens Business and which were not included in Citizens Net Fixed Assets as of June 30, 1994, such other assets, if any, as Citizens lists and identifies on Citizens Schedule 2.4(g), and such other assets, if any, as may be excluded from Citizens' Purchased Property in accordance with the provisions of Sections 11.9 or 14.1.7, the contracts, leases and agreements listed or identified on Tuolumne Schedule 2.4(g) (the "Tuolumne Excluded Contracts"), such other assets of Tuolumne which do not relate to the Tuolumne Business and which were not included in Tuolumne Net Telecommunications Plant as of June 30, 1994, such other assets, if any, as Tuolumne lists and identifies on Tuolumne Schedule 2.4(g), and such other assets, if any, as may be excluded from Tuolumne's Purchased Property in accordance with the provisions of Sections 11.9 or 14.1.7. (h) Any prepaid taxes or tax refunds relating to Seller's Purchased Property and Seller's Business for periods on or prior to the Effective Date. 2.5 Assumption of Liabilities. 2.5.1 Assumed Liabilities. Each Buyer hereby agrees to assume as of the Effective Date, and to timely perform and discharge after the Effective Date, and to indemnity Seller against the specific liabilities, responsibilities and obligations set forth below with respect to Seller's Purchased Property (the "Assumed Liabilities"): (a) Conduct of Business after the Effective Date. All liabilities, responsibilities and obligations relating to, arising out of, or in connection with, or resulting from the use or ownership of Seller's Purchased Property after the Effective Date or the conduct of Seller's Business by Buyer after the Effective Date, including, without limitation, any liabilities, responsibilities and obligations for Taxes relating to the conduct of such Business after the Effective Date or the ownership, use or operation of such Purchased Property after the Effective Date. (b) Employment Matters. All liabilities, responsibilities and obligations that are to be assumed by Buyer (or which Buyer may otherwise be liable for pursuant to applicable law and which are not otherwise expressly assumed or retained by Seller pursuant to this Agreement) under the Employee Transfer Agreement. (c) Environmental Matters. All liabilities, responsibilities and obligations that are to be assumed by Buyer under Article 14 (or which Buyer may otherwise be liable for pursuant to applicable law and which are not otherwise expressly assumed or retained by Seller pursuant to this Agreement) with respect to Environmental Liabilities. (d) Contracts, Leases. All liabilities, responsibilities and obligations that arise after the Effective Date in connection with or relating to the performance or nonperformance of the Contracts and the Leases, after the Effective Date. (e) Joint Construction Projects. All liabilities, responsibilities and obligations to third parties that arise or relate to the period after the Effective Date and that relate to arrangements and commitments permitted hereunder between Seller and a third party for the construction of mutual transmission facilities between various switching points (the "Joint Construction Projects"), which Joint Construction Projects are listed on Citizens Schedule 2.5.l(e) with respect to the Citizens Business and Tuolumne Schedule 2.5.1(e) with respect to the Tuolumne Business. (f) Construction in Progress. All liabilities, responsibilities and obligations to third parties that arise or relate to the period or are incurred after the Effective Date that relate to Seller's Purchased Property and Seller's Business, and relate to Seller's engineering and construction services or similar services which are required to complete the construction and other capital expenditure projects referred to in and permitted by Section 11.5. (g) Customer Deposits and Construction Advances. All liabilities, responsibilities and obligations relating to Customer Deposits and Construction Advances that relate to Seller's Purchased Property and Seller's Business. (h) Advanced Billing Amounts. All liabilities, responsibilities and obligations relating to Advanced Billing Amounts that relate to Seller's Purchased Property and Seller's Business. (i) Assumed Long Term Debt. With respect to Citizens only, all liabilities, obligations and responsibilities relating to long term debt assumed by Citizens, if any, pursuant to Section 5.2(a) including, without limitation, indebtedness to Secured Parties. 2.5.2 Retained Liabilities. Each Seller shall retain and have full responsibility and obligation with respect to, shall timely perform and discharge, and shall indemnify Buyer against, all liabilities, responsibilities and obligations of Seller relating to, arising out of, or in connection with, or resulting from the use or ownership of Seller's Purchased Property on or before the Effective Date or the conduct of Seller's Business by Seller on or before the Effective Date, including any liability, obligation or debt, known or unknown, fixed, contingent or otherwise, not specifically assumed by Buyer pursuant to Section 2.5.1 or any other provision of this Agreement, and excluding those liabilities, responsibilities and obligations that are specifically assumed by Buyer pursuant to Section 2.5.1 or any other express provision of this Agreement (the "Retained Liabilities"). Without limiting the generality of the foregoing, but subject to liabilities that are specifically assumed by Buyer pursuant to Section 2.5.1 or any other express provision of this Agreement, the Retained Liabilities shall include the following liabilities, responsibilities and obligations of Seller: (a) All liabilities, responsibilities and obligations relating to the use or ownership of Seller's Purchased Property on or before the Effective Date or to the conduct of Seller's Business on or before the Effective Date. (b) All current liabilities of Seller as of the Effective Date, including, without limitation, trade, interest and other payables. (c) All long-term debt of Seller not assumed by Buyer pursuant to Section 5.2(a), including, without limitation, indebtedness to the Secured Parties. (d) Subject to Sections 11.8 and 11.17, all Taxes of Seller or its consolidated or combined group relating to the conduct of Seller's Business on or before the Effective Date or the use, ownership or operation of Seller's Purchased Property on or before the Effective Date. (e) Except as otherwise provided in the Employee Transfer Agreement, all liabilities and obligations arising on or before the Effective Date with respect to Seller's Transferred Employees, and any such liabilities or obligations that arise after the Effective Date to the extent that such liabilities and obligations relate to facts, circumstances or conditions arising or occurring on or before the Effective Date. (f) All liabilities, responsibilities and obligations arising out of or related to the litigation, claims and other matters set forth in Seller's Schedule 9.1.16 and any other litigation claims, actions, lawsuits or legal proceedings based on facts, circumstances or conditions arising, existing or occurring on or before the Effective Date, regardless of whether known or unknown, asserted or unasserted, as of the Effective Date. (g) All liabilities, responsibilities and obligations arising on or before the Effective Date relating to collective bargaining or other union contracts with respect to Seller's Business. (h) All liabilities, responsibilities and obligations with respect to Seller's Excluded Property and Seller's Excluded Contracts. (i) All liabilities and obligations arising on or before the Effective Date with respect to Seller's Contracts and Seller's Leases. (j) All liabilities and obligations for prior period adjustments of revenues from Seller's Business and for any customer overbillings and prospective refunds of overcharges (including rates collected under bond but excluding prospective rate reductions) occurring or relating to the period prior to the Effective Date, including without limitation all of Seller's toll revenues, settlements, pools, separations studies or similar activities for which Seller is responsible pursuant to Section 11.10, but excluding any amounts which relate to Advanced Billing Amounts. Notwithstanding the foregoing, Buyer's and Seller's responsibility for Environmental Liabilities shall be governed by the provisions of Article 14. ARTICLE 3. CASH CONSIDERATION 3.1 Cash Consideration. (a) In consideration of the exchange of the Purchased Property as described in Section 2.1 and the other undertakings of Tuolumne in this Agreement, and subject to and in accordance with the other terms and conditions of this Agreement, on the Closing Date, Citizens shall pay to Tuolumne the sum of Five Million Two Hundred Thirty-Six Thousand Dollars ($5,236,000.00), subject to adjustment as provided in Section 3.2 (the "Cash Consideration"). (b) (i) On or before the Closing Date, Buyer shall deliver to Tuolumne, in immediately available funds in U.S. Dollars, the Estimated Cash Consideration, plus or minus, as the case may be, the Estimated Net Prorations. Such delivery shall be made by bank wire transfer to an account that Tuolumne shall designate at least two (2) business days prior to the Effective Date. (ii) Citizens will use its best efforts to make the wire transfer of the Estimated Cash Consideration, plus or minus, as the case may be, the Estimated Net Prorations, by 12:00 noon (Eastern Time) on the Closing Date, provided that all conditions to Closing set forth in Article 7 have been satisfied, or waived by the appropriate party, before such time. 3.2 Adjustments to Cash Consideration. (a) Adjustment Regarding Damaged Property. (1) If the provisions of Section 11.9(c)(i) are applicable, the Cash Consideration will be adjusted, plus or minus, as the case may be, by the reasonable estimate of the cost to repair or replace the Damaged Property, as determined by the mutual agreement of Citizens and Tuolumne. (2) If the provisions of Section 11.9(c)(ii) are applicable, the Cash Consideration will be adjusted, plus or minus, as the case may be, by the reasonable estimate of the cost to replace the Damaged Property, as determined by the mutual agreement of Citizens and Tuolumne (b) Adjustment Regarding Customer Deposits and Construction Advances. (1) If the amount of Customer Deposits and Construction Advances as of the Effective Date with respect to the Citizens Business exceeds the amount of Customer Deposits and Construction Advances as of the Effective Date with respect to the Tuolumne Business, the Cash Consideration will be increased by the amount of such excess. (2) If the amount of Customer Deposits and Construction Advances as of the Effective Date with respect to the Tuolumne Business exceeds the amount of Customer Deposits and Construction Advances as of the Effective Date with respect to the Citizens Business, the Cash Consideration will be decreased by the amount of such excess. (c) Adjustment Regarding June 1994 Base Amount. (1) If the amount of the Tuolumne Net Plant Adjustment exceeds the amount of the Citizens Net Plant Adjustment, the Cash Consideration will be increased by the amount of such excess. (2) If the amount of the Citizens Net Plant Adjustment exceeds the amount of the Tuolumne Net Plant Adjustment, the Cash Consideration will be decreased by the amount of such excess. (3) In determining Tuolumne Net Telecommunications Plant and Tuolumne Material and Supplies, and Citizens Net Fixed Assets and Citizens Materials and Supplies, as of the Effective Date for purposes of determining the Tuolumne Net Plant Adjustment and the Citizens Net Plant Adjustment, no effect will be given for: (i) any decrease thereof resulting from damage, loss or destruction of Damaged Property which is repaired or replaced by a Seller or for which such Seller makes a substitution, in accordance with Section 11.9(b); (ii) any increase thereof resulting from expenditures made by a Seller in connection with any such repair, replacement or substitution of Damaged Property in accordance with Section 11.9(b); or (iii) any increase thereof resulting from a Seller's expenditures pursuant to its obligations under Sections 14.1.7(b) and (c) except for the cost of purchasing specific items of new plant (i.e., storage tanks). (d) Adjustment Regarding FAS 106. The Cash Consideration shall be reduced by the amount included as "Other Current Liabilities" of Tuolumne (item 14-Liabilities of Tuolumne's balance sheet) as of the Effective Date which are associated with the requirements of Financial Accounting Standard 106 attributable to the active Tuolumne Transferred Employees, and shall be increased by the amount of liabilities included on the balance sheet of Citizens or Citizens Utilities Company as of the Effective Date which are associated with the requirements of Financial Accounting Standard 106 attributable to the active Citizens Transferred Employees. (e) Adjustment Regarding Long Term Debt. The Cash Consideration shall be reduced by the amount of long term indebtedness of Tuolumne that is assumed by Citizens pursuant to Section 5.2(a). Under no circumstances, shall Tuolumne assume or be deemed to have assumed any long term indebtedness of Citizens. 3.3 Estimate of Cash Consideration and Prorations. (a) At least ten (10) business days prior to the date scheduled for Closing, Citizens will deliver to Tuolumne Citizens' good faith estimate of (i) the amount of Citizens Net Fixed Assets and Citizens Materials and Supplies (determined in each case in accordance with Section 3.2(c)(3) and using Citizens Net Fixed Assets and Citizens Materials and Supplies as of the end of the month immediately preceding the month in which the Effective Date is scheduled to occur), (ii) the amount of Customer Deposits and Construction Advances relating to the Citizens Business estimated as of the Effective Date, and (iii) the amount of the prorations with respect to the Citizens Business determined in the manner provided in Section 11.8, as well as the amount of the other adjustments described in Section 3.2(d) and (e), in each case, estimated as of the Effective Date. Citizens shall calculate the above amounts on the same basis and in accordance with the same accounting principles, methods and practices applied in preparing its Financial Statements and Additional Financial Statements, if applicable, and accompanied by a reasonably detailed statement, certified by the chief financial or accounting officer of Citizens, describing how each such amount was determined. (b) At least five (5) business days prior to the date scheduled for Closing, Tuolumne shall deliver to Citizens: (1) An estimate of the Cash Consideration based on Tuolumne's good faith estimate of the amount of each adjustment described in Section 3.2 (the "Estimated Cash Consideration") on the same basis and in accordance with the same accounting principles, methods and practices applied in preparing its Financial Statements and Additional Financial Statements, if applicable, taking into account all adjustments required in Section 3.2 (using (i) Net Telecommunications Plant and Materials and Supplies as of the end of the month immediately preceding the month in which the Effective Date is scheduled to occur for purposes of the Tuolumne Net Plant Adjustment and (ii) the information supplied by Citizens pursuant to Section 3.3(a) for purposes of the adjustments provided for in Sections 3.2(b), (c), (d), and (e)) and accompanied by a reasonably detailed statement, certified by the chief financial or accounting officer of Tuolumne, describing how each such adjustment was determined; and (2) An estimate of the net prorations made by Tuolumne in good faith in the manner provided in Section 11.8, using its own information with respect to the Tuolumne prorations as of the Effective Date and the information supplied by Citizens pursuant to Section 3.3(a) with respect to the Citizens prorations as of the Effective Date (the "Estimated Net Prorations"). 3.4 Adjustments After Closing. (a) Within sixty (60) days following the Effective Date, Citizens shall deliver to Tuolumne final calculations of the adjustments made pursuant to Section 3.2 to the Cash Consideration to the extent such adjustments relate to the Tuolumne Business (prepared on the same basis (but using Tuolumne Net Telecommunications Plant and Tuolumne Materials and Supplies, as of the Effective Date) and in accordance with the same accounting principles, methods and practices used to prepare the Estimated Cash Consideration for the Tuolumne Business) which shall be accompanied by a reasonably detailed statement certified by the chief financial or accounting officer of Citizens describing how each such adjustment was determined, and final adjustments of the prorations for the Tuolumne Business referred to in Section 11.8. (For the purpose of preparing Citizens' calculations and adjustments, Tuolumne shall give Citizens access to all books, records, and other information available to Tuolumne that Citizens may reasonably determine appropriate.) (b) Within sixty (60) days following the Effective Date, Tuolumne shall deliver to Citizens final calculations of the adjustments made pursuant to Section 3.2 to the Cash Consideration to the extent such adjustments relate to the Citizens Business (prepared on the same basis (but using Citizens Net Fixed Assets and Citizens Materials and Supplies, as of the Effective Date) and in accordance with the same accounting principles, methods and practices used to prepare the Estimated Cash Consideration for the Citizens Business) which shall be accompanied by a reasonably detailed statement certified by the chief financial or accounting officer of Tuolumne describing how each such adjustment was determined, and the final adjustments of the prorations for the Citizens Business referred to in Section 11.8. (For the purpose of preparing Tuolumne's calculations and adjustments, Citizens shall give Tuolumne access to all books, records, and other information available to Citizens that Tuolumne may reasonably determine appropriate.) (c) Within thirty (30) days following the delivery of such calculations and adjustments, Tuolumne shall notify Citizens with respect to Citizens' calculations regarding the Tuolumne Business, and Citizens shall notify Tuolumne with respect to Tuolumne's calculations regarding the Citizens Business of any objection thereto, stating in reasonable detail the reasons therefor; otherwise, such calculations and adjustments of the Cash Consideration and the prorations shall be final and binding on Citizens and Tuolumne. (For the purpose of reviewing Citizens' and Tuolumne's calculations and adjustments, each party shall give the other party access to all of its books, records, and other information available to that party that the other party may reasonably determine appropriate.) If either Citizens or Tuolumne shall object to the other's calculations, Tuolumne and Citizens shall work in good faith to agree on the correct amounts for the final Cash Consideration and the final net Prorations, but if they fail to agree, either party may exercise its rights pursuant to Article 16. (b) Within three (3) business days following the day on which the Cash Consideration and the net prorations shall become final, whether by expiration of time or agreement of the parties, (respectively, the "Final Cash Consideration" and the "Final Net Prorations"): (i) if the Final Cash Consideration (plus or minus, as applicable, the Final Net Prorations) shall exceed the Estimated Cash Consideration (plus or minus, as applicable, the Estimated Net Prorations), Citizens shall cause to be transferred to such account in the United States as Tuolumne may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer, or (ii) if the Estimated Cash Consideration (plus or minus, as applicable, the Estimated Net Prorations) shall exceed the Final Cash Consideration (plus or minus, as applicable, the Final Net Prorations), Tuolumne shall cause to be transferred to such account in the United States as Citizens may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer. It is the intent of the parties that all adjustments of the Cash Consideration that are not disputed shall be paid by the appropriate party as soon as reasonably practicable, and any disputed amounts will not delay payments with respect to amounts not in dispute. ARTICLE 4. BILLING AND COLLECTION PROCEDURES 4.1 Determination of Earned Accounts Receivable. The parties acknowledge that each Seller's accounts receivable as of the Effective Date will include both Earned Accounts Receivable and Advanced Billing Amounts (collectively, the "Total Accounts Receivable"). Within thirty (30) days after the Effective Date, Citizens and Tuolumne shall agree on a statement setting forth, with respect to each Seller's Total Accounts Receivable as of the Effective Date, the portions that are Earned Accounts Receivable and the portions that are Advanced Billing Amounts; the methodology used to prepare the portion of such statement relating to the Tuolumne Business shall be consistent with that used to prepare, and described on, the sample statement set forth on Tuolumne Schedule 4.1 describing the portions of Tuolumne's June 30, 1994 Earned Accounts Receivable and June 30, 1994 Advance Billing Amounts, which the parties agree is a proper methodology for allocation of the Total Accounts Receivable with respect to the Tuolumne Business. In preparing such statement each party shall cooperate with the other and provide the other with reasonable access to its applicable books and records. If the parties fail to agree within the thirty (30) day period, Citizens and Tuolumne will continue to negotiate in good faith to resolve such differences, but if they fail to so resolve such difference, either party may exercise its rights pursuant to Article 16. 4.2 Purchase of Accounts Receivable. As of the Effective Date, Buyer shall purchase from Seller, Seller's Earned Accounts Receivable outstanding as of the Effective Date, with payment for such Earned Accounts Receivable being payable in the monthly installments set forth below. Buyer shall be entitled to receive all cash collections with respect to such Earned Accounts Receivable and, as payment for such Earned Accounts Receivable, shall pay Seller on the final business day of the first three calendar months following the Effective Date an amount equal to a percentage (as set forth below) of such Earned Accounts Receivable net of the Uncollectible Amount. The "Uncollectible Amount" shall be computed by multiplying such Earned Accounts Receivable by Seller's uncollectible factor based upon Seller's actual uncollectible net write-offs as a percentage of current billings for the calendar year immediately preceding the year in which the Closing occurs, which amount shall be agreed to by the parties at least thirty (30) days prior to the Effective Date. Payment for the Earned Accounts Receivable, net of the Uncollectible Amount purchased by each Buyer as of the Effective Date, shall be made in three installments, as follows: Final business day of first month after Closing: 80% Final business day of second month after Closing: 15% Final business day of third month after Closing: 5% Buyer shall have the right to review Seller's calculations of Seller's Earned Accounts Receivable and the Uncollectible Amount and Seller shall cooperate with Buyer and provide Buyer and its representatives with reasonable access to Seller's books and records in the course of such review. If such review results in amounts different from Seller's calculations, Buyer and Seller will negotiate in good faith to resolve such differences. The parties agree that notwithstanding any disagreement between them with respect to the calculation of the Earned Accounts Receivable or Advance Billing Amounts, Buyer shall pay Seller, in accordance with the above schedule, all agreed to Earned Accounts Receivable amounts net of the Uncollectible Amount. When the disagreement concerning any such unagreed to item has been resolved, the appropriate party shall promptly pay the other the amount of such resolved item plus interest from the regularly scheduled payment date at a rate of 7% per annum. 4.3 Carrier Access Billing. Each Seller shall render its own final carrier access bills to its interexchange carriers for minutes, messages and other applicable charges up to and including the Effective Date which bills shall contain no charges for services to be rendered after the Effective Date. Each Seller shall be responsible for collecting and settling any disputes associated with its bills to the interexchange carriers. ARTICLE 5. REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS 5.1 Governmental Regulatory Approval. Except as provided in Section 5.4, as promptly as practicable after the Execution Date with respect to applications to be filed with the California PUC and the Pennsylvania PUC and with respect to all Material Regulatory Approvals, but no later than forty-five (45) days after the Execution Date, the parties shall file the applications and notices described on Schedule 5.1 in such form as agreed to by the parties with the California PUC and Pennsylvania PUC and other appropriate Governmental Authorities, seeking an order permitting the transfer of service in the Purchased Exchanges, and the transfer or assignment of the Non-FCC Authorizations, to each Buyer (the "Regulatory Approvals"). Each Buyer will be responsible for establishing the tariff for its post-Effective Date operations in the state in which the Purchased Property acquired by it is located, by requesting adoption of tariffs which are the same or substantially the same as Seller's pre-Effective Date tariffs. To the extent assignable, each Seller will assign the Non-FCC Authorizations to Buyer. Each party agrees to use its best efforts to obtain the Regulatory Approvals and the parties agree to cooperate fully with each other and with all Governmental Authorities to obtain the Regulatory Approvals as described on Schedule 5.1 at the earliest practicable date. The parties agree that the Regulatory Approvals containing asterisks on each parties' Schedule 5.1 constitute material Regulatory Approvals (the "Material Regulatory Approvals") which are subject to Sections 7.1.3 and 7.2.4, and the Regulatory Approvals that do not contain an asterisk on Schedule 5.1 constitute Immaterial Regulatory Approvals (the "Immaterial Regulatory Approvals") which are subject to Section 5.3, but not Sections 7.1.3 and 7.2.4. 5.2 Debtholder Consents; Indebtedness Assumption, Releases or Terminations. (a) With respect to Tuolumne's long-term indebtedness identified on Schedule 5.2(a), as promptly as practicable following the Execution Date, but in any event no more than forty-five (45) days thereafter, the parties shall contact the holders of such indebtedness to request, and use their best efforts to obtain, such holders' consent ("Debtholder Consent") to Citizens' assumption of, and Tuolumne's release from, such indebtedness on terms acceptable to the parties. Each party shall bear their own costs and expenses in obtaining such Debtholder Consent. Neither party, however, shall be required to make any payment to the debtholder to obtain the Debtholder Consent, except that Tuolumne shall be responsible for any such payments as are specified in the relevant debt agreement. The parties acknowledge that all indebtedness of Tuolumne with respect to which Debtholder Consents are obtained and which is assumed by Citizens shall constitute an Assumed Liability of Citizens pursuant to Section 2.5.1(i), and all indebtedness of Tuolumne which is not so assumed by Citizens shall constitute a Retained Liability of Tuolumne. (b) If within thirty (30) days prior to the Closing Date, the parties have been unable to obtain the Debtholder Consent with respect to any indebtedness, Tuolumne shall have the right to repay such indebtedness owed to such non-consenting debtholder. (c) Except with respect to indebtedness assumed by Citizens pursuant to Section 5.2(a), each Seller shall take, at such Seller's sole cost and expense, all actions necessary with respect to all persons or entities (collectively, the "Secured Parties") holding a security interest or lien against Seller's Purchased Property to obtain the termination or release, as of the Effective Date, and the prompt removal after the Effective Date, of all security agreements, mortgages and financing statements relating to such Purchased Property (such terminations and releases being hereinafter collectively referred to as the "Secured Indebtedness Releases or Terminations"). Buyer agrees to cooperate in good faith with Seller in obtaining the required Secured Indebtedness Releases or Terminations. (d) Citizens represents and warrants to Tuolumne that it has no long-term indebtedness as of the Execution Date and covenants that it will incur no long-term indebtedness during the period from the Execution Date to and including the Effective Date. 5.3 Other Consents. (a) As promptly as practicable after the Execution Date, the parties hereto shall mutually seek the consent, approval or waiver of the other party to any Lease or Contract that requires consent, approval or waiver as a condition to an assignment of such Lease or Contract. To the extent any of the approvals, consents or waivers required to assign any Lease, Contract or Immaterial Authorization have not been obtained with respect to any Lease, Contract or Immaterial Authorization as of the Effective Date, the Seller to whose Business such Lease, contract or Immaterial Authorization relates shall continue to use its best efforts to obtain the consent of such other third party that is required for the transfer or assignment of such Lease, Contract or Immaterial Authorization after the Effective Date. Refusal by such other third party to release Seller from a Lease or Contract shall not excuse Seller from entering into an assignment of such Lease or Contract. From the Effective Date until the earlier of (i) the time such approval, consent or waiver is obtained, and (ii) six months after the Effective Date, Seller shall hold such Leases, Contracts and Immaterial Authorizations or ancillary rights as agent for Buyer, and preserve the benefit of and enforce the same as agent for Buyer to the fullest extent permissible under the applicable Lease, Contract or Immaterial Authorization. The parties agree that upon request by either party, at Closing, they will enter into an agency agreement in form and substance mutually satisfactory to each party specifying the terms and conditions upon which Seller will so act as Buyer's agent, which terms and conditions shall include a six month term. (b) If a third party refuses to consent to a Lease or Contract assignment, and if the applicable Lease or Contract permits a sublease or subcontract without the consent of the third party, the parties hereto, as of the Effective Date, shall enter into a sublease or subcontract upon terms and conditions as similar and comparable to an assignment of the Lease or Contract as is reasonably feasible so as to enable Buyer to retain the ultimate benefits of such Lease or Contract after the Effective Date. (c) Notwithstanding anything to the contrary contained herein, if a third party refuses or has failed to consent to a Lease, Contract or Immaterial Authorization assignment after the Seller has used its best efforts for a period of six months after the Effective Date to obtain such consent, waiver or approval, and if the applicable Lease or Contract does not permit a sublease or subcontract without the consent of the third party, then the parties shall within thirty (30) days after expiration of such six-month period negotiate in good faith and agree upon, and Seller shall pay to Buyer, an amount representing fair compensation to Buyer for the harm caused by the failure to obtain such consent, waiver or approval. Following such payment, Seller shall have no further obligation to Buyer with respect to such Lease, Contract or Immaterial Authorization except as otherwise provided in Section 11.12 with respect to the Contracts and Excluded Contracts addressed in Section 11.12. (d) Seller shall bear all reasonable costs and expenses in obtaining such consents, approvals or waivers to the extent such costs or expenses are specified in the relevant Lease, Contract or Immaterial Authorization, or under applicable Law, and shall reimburse Buyer to the extent Buyer makes any transfer payments which are specified in amount and required under any Lease or Contract to the lessor or other party thereto, provided that seven (7) business days before Buyer makes any transfer payments, Buyer will notify Seller of its intent to do so and after making such transfer payment, Buyer will provide evidence satisfactory to Seller that such transfer payment was made. Buyer and Seller will negotiate in good faith to determine the extent to which each will bear any other costs and expenses arising in connection with obtaining such consents, approvals and waivers. 5.4 FCC Consents. As promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date, the parties shall file all applications and requests described on Schedule 5.4 in such form as agreed to by the parties with the FCC seeking, and shall use their best efforts to obtain, the FCC's consent to assign all FCC Licenses (as listed in Schedule 9.1.17(b)) from Seller to Buyer (the "FCC Consents"). Citizens agrees that in connection with taking the immediately above described actions with respect to acquiring Tuolumne's FCC Licenses, it will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Tuolumne Purchased Exchanges shall remain in the National Exchange Carrier Association Tariff F.C.C. No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Citizens with respect to such study areas, in its sole discretion, shall determine. Tuolumne agrees that in connection with taking the actions described in the first sentence of this Section 5.4 with respect to acquiring Citizens' FCC Licenses, it will not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and that on the Effective Date the study areas relating to the Citizens Purchased Exchanges shall remain in the National Exchange Carrier Association Tariff F.C.C. No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Tuolumne, with respect to such study areas, in its sole discretion, shall determine. Each party agrees to use its best efforts, and the parties agree to cooperate fully with each other and with the FCC, to obtain the FCC Consents at the earliest practicable date. 5.5 HSR Act Review. As promptly as practicable after the Execution Date but in no event later than thirty (30) days after the Execution Date, the parties will make such filings as may be required by the HSR Act with respect to the exchange contemplated by this Agreement. Thereafter, the parties will file as promptly as practicable any supplemental information that may be requested by the U.S. Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR Act. The parties agree to cooperate in seeking early termination of the waiting periods under the HSR Act. ARTICLE 6. PRECLOSING COVENANTS 6.1 Investigation by Buyer. (a) Prior to the Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford to the authorized representatives of Buyer reasonable access during normal business hours to the books and records relating to Seller's Purchased Property (including, without limitation, relevant tax information) and to the personal property and Real Property comprising such Seller's Purchased Property. The parties will cooperate with each other to schedule such access. With the consent of Seller (which consent will not be unreasonably withheld), Buyer and its representatives shall have access to all interexchange carriers having business relationships with Seller's Business, to all customers of Seller's Business, and to all officers, employees and agents of Seller having knowledge or information concerning the operations of Seller's Business so as to afford Buyer the opportunity to make such review, examination and investigation of Seller's Business and Seller's Purchased Property as Buyer may desire to make, to evaluate the competitiveness of Seller's Business, and to enable Buyer to assimilate Seller's Business into Buyer's operations as soon as practicable after the Effective Date. To the extent it so desires, Seller shall accompany Buyer on all of Buyer's access to interexchange carriers, customers and agents of Seller. Buyer will be permitted to make extracts from or copies of Seller's books and records as may be reasonably necessary. Buyer will not contact any employee, customer or supplier of Seller as to this Agreement or the matters involved herein except in accordance with this Section 6.1. (b) Subject to applicable law, and upon Buyer's request and Seller's consent (which consent will not be unreasonably withheld), Seller shall permit, at Buyer's sole cost and expense: (i) certain key employees and officers of Seller selected by Buyer to attend workshops and training sessions of Buyer (including sessions to train such employees in Buyer's business planning process in order to have Seller's Business after the Effective Date follow Buyer's business planning process and procedures); (ii) Seller's management to work with Buyer during Buyer's planning process between the Execution Date and the Effective Date; (iii) Buyer to confer with Seller about, and to participate in Seller's planning for, any material reduction in work force or other arrangements regarding employees required or implemented pursuant to the Employee Transfer Agreement. (c) As promptly as reasonably practicable after Buyer's request, Seller will furnish such financial and operating data and other information pertaining to Seller's Business as Buyer may reasonably request in order, among other things, to comply with Buyer's disclosure obligations under the federal securities or other laws as such obligations relate to Buyer's prospective ownership of Seller's Business, including any disclosure required in connection with the sale of any securities by Buyer; provided, however, that nothing herein will obligate Seller to take actions that would unreasonably disrupt the normal course of the business of Seller or violate the terms of any applicable Law or any contract to which Seller is a party or to which any of its assets is subject in providing such information, or to incur any costs with respect to Buyer's external auditors (or Seller's external auditors in the event a report by such auditors is requested by Buyer) providing accounting services with respect to issuing an auditor's report required by Buyer. Any information or document provided to Buyer or acquired by Buyer during this investigation shall be deemed "Evaluation Material" as that term is defined in the Confidentiality Agreement and shall be subject in all cases to the terms of the Confidentiality Agreement; provided, however, that following consultation with Seller, Buyer may disseminate financial or other information with respect to the Business of Seller that Buyer, upon consultation with counsel, determines is required to be disclosed under federal securities laws. (d) Prior to Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford the authorized representatives of Buyer access to Seller's Purchased Properties in order to conduct the environmental audit contemplated by Section 14.1. (e) In connection with the continuing operation of Seller's Business between the Execution Date and the Effective Date, Seller shall confer in good faith with Buyer, as reasonably requested by Buyer from time to time, to report on material operational matters, material reductions in work force and other material employee matters, and the general status of ongoing operations. (f) Notwithstanding the provisions of this Agreement or the Confidentiality Agreement, from and after the Execution Date, upon the prior consent of Seller (which consent will not be unreasonably withheld), Buyer may disclose Evaluation Material (as defined in the Confidentiality Agreement) to representatives of rating agencies, underwriters, underwriters' counsel, public accountants, prospective lenders and other third parties involved in any of Buyer's offering of securities or other financings and to fixed income and equity analysts to the extent such parties reasonably have a need to know any such information; provided, that such parties shall (i) be advised of the confidential nature of any Evaluation Material they receive, and (ii) agree in writing to be bound to the provisions of the Confidentiality Agreement. 6.2 Satisfaction of Conditions. Without limiting the generality or effect of any provision of Article 7, the parties will use their best efforts to satisfy promptly all conditions required to be satisfied prior to the Closing. 6.3 Notification as to Certain Matters. (a) The Buyer will promptly notify Seller of (i) any information that would cause any representation or warranty of Buyer contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the transactions contemplated by this Agreement; of which in any such case, Buyer's representatives listed on Schedule 6.3(a) become aware on or before the Effective Date. Buyer shall use reasonable best efforts to keep Seller informed of the events described in this Section 6.3(a) and shall permit Seller access to all materials prepared by Buyer in connection therewith. (b) The Seller will promptly notify Buyer of (i) any information that would cause any representation or warranty of Seller contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving Seller's Business or the transactions contemplated by this Agreement; of which in any such case, Seller's representatives listed on Schedule 6.3(b) become aware on or before the Effective Date. Seller shall use reasonable best efforts to keep Buyer informed of the events described in this Section 6.3(b) and shall permit Buyer access to all materials prepared by Seller in connection therewith. ARTICLE 7. CONDITIONS PRECEDENT TO THE CLOSING 7.1 Conditions Precedent to Obligations of Citizens. The obligations of Citizens to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Citizens: 7.1.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been no material breach by Tuolumne of any of its covenants to be performed in whole or in part prior to the Closing and the representations and warranties of Tuolumne in Article 9 (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) shall be true and correct as of the Effective Date, except for such representations or warranties that are made expressly as of some other date, which shall be true and correct (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) as of such other date, and Tuolumne shall have delivered to Buyer a certificate in the form attached hereto as Schedule 7.1.1 ("Tuolumne's Closing Certificate"), dated as of the Effective Date and signed by one of Tuolumne's Executive Officers, certifying each of the foregoing, or specifying those respects in which such covenants have been materially breached or such representations and warranties (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) are not true and correct in which event, if the Closing occurs, any claim with respect to matters so specified shall be waived by Citizens unless otherwise expressly agreed by Tuolumne at Closing. 7.1.2 Documents. Tuolumne shall have delivered to Citizens all documents required by Section 8.2. 7.1.3 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Tuolumne's and Citizens' Schedule 5.1 and FCC Consents as set forth on Tuolumne's and Citizens' Schedule 5.4 shall have been obtained free of any special terms, conditions or restrictions which Citizens determines, in good faith and in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Citizens of the transactions contemplated by this Agreement. For purposes of this Section 7.1.3, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.1.4 Material Adverse Changes. There shall have been no material adverse changes to the Tuolumne Purchased Property as a whole or the financial position or results of operations of the Tuolumne Business as a whole, and, subject to Section 11.9, Tuolumne shall not have suffered any material loss or damage to the Tuolumne Purchased Property, whether or not insured, that would materially affect or impair Citizens' ability to conduct the Tuolumne Business after the Effective Date. None of the Additional Financial Statements of Tuolumne delivered pursuant to Section 11.4 shall reflect a material change in the financial position or results of operations of the Tuolumne Business from the financial position or results of operations reflected in the Financial Statements of Tuolumne. 7.1.5 Real Estate Transfers. Tuolumne shall have complied with Section 11.16 with respect to its Real Property to be transferred to Citizens. 7.1.6 Lessor and Other Third Party Consents. Tuolumne shall have delivered to Citizens all consents, approvals or waivers of lessors or other third parties to the Material Agreements as so identified by an asterisk on Tuolumne Schedules 9.1.9 and 9.1.13, as such Schedules may be amended pursuant to Section 11.22. All of such delivered consents, approvals or waivers shall be in effect as of the Effective Date. 7.1.7 [INTENTIONALLY DELETED] 7.1.8 Litigation. There shall not be any litigation or other proceeding pending or, to the best of Citizens' knowledge, threatened, to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Citizens, would involve material expense to Citizens. 7.1.9. Corporate Proceedings. All corporate proceedings required to be taken by Tuolumne in connection with the transactions contemplated by this Agreement shall have been taken. 7.1.10 Lien Searches. Tuolumne shall have delivered to Citizens reasonably comprehensive searches, dated as of a date within 30 days of the Execution Date or any time thereafter, of the public records regarding liens and judgments with respect to the Tuolumne Business and the Tuolumne Purchased Property. 7.1.11. Debtholder Consents. With respect to any long-term indebtedness to be assumed by Citizens pursuant to Section 5.2(a), Citizens shall have received the Debtholder Consents and shall have entered into an assignment and assumption agreement with the Debtholder in form and substance reasonably acceptable to Citizens. 7.2 Conditions Precedent to Obligations of Tuolumne. The obligations of Tuolumne to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Tuolumne. 7.2.1 No Misrepresentations or Breach of Covenants and Warranties. There shall have been no material breach by Citizens of any of its covenants to be performed in whole or in part prior to the Closing, and the representations and warranties of Citizens in Article 9 shall be true and correct as of the Effective Date, except for such representations or warranties that are made expressly as of some other date, which shall be true and correct (after giving effect to any material adverse effect qualification (or other materiality qualification) contained therein) as of such other date, and Citizens shall have delivered to Tuolumne a certificate in the form attached hereto as Schedule 7.2.1 ("Citizens' Closing Certificate"), dated as of the Effective Date and signed by one of Citizens' Executive Officers, certifying each of the foregoing, or specifying those respects in which such covenants have been materially breached or such representations and warranties (after giving effect to any material adverse effect qualification (or other materiality qualification) contained therein) are not true and correct in which event, if the Closing occurs, any claim with respect to matters so specified shall be waived by Tuolumne unless otherwise expressly agreed by Citizens at Closing. 7.2.2 Documents. Citizens shall have delivered to Tuolumne all documents required by Section 8.3. 7.2.3 Cash Consideration. Citizens shall have delivered to Tuolumne, in the manner specified in Section 3.1, the Estimated Cash Consideration as adjusted pursuant to Section 3.2. 7.2.4 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Citizens' and Tuolumne's Schedule 5.1 and FCC Consents as set forth on Citizens' and Tuolumne's Schedule 5.4 shall have been obtained free of any special terms, conditions, or restrictions which Tuolumne determines, in good faith in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Tuolumne of the transactions contemplated by this Agreement. For purposes of this Section 7.2.4, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.2.5 Corporate Proceedings. All corporate proceedings required to be taken by Citizens in connection with the transactions contemplated by this Agreement shall have been taken. 7.2.6 Litigation. There shall not be any litigation or other proceeding pending or, to the best of Tuolumne's knowledge, threatened, to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Tuolumne would involve a material expense to Tuolumne. 7.2.7 [INTENTIONALLY DELETED] 7.2.8 Debtholder Releases. With respect to any long-term indebtedness to be assumed by Citizens pursuant to Section 5.2(a), Tuolumne shall have received Debtholder Consents and release of debt (and, if applicable, lien) documentation reasonably acceptable to Tuolumne. 7.2.9 Material Adverse Changes. There shall have been no material adverse changes to the Citizens Purchased Property as a whole of the financial position or results of operations of the Citizens Business as a whole, and, subject to Section 11.9, Citizens shall not have suffered any material loss or damage to the Citizens Purchased Property, whether or not insured, that would materially affect or impair Tuolumne's ability to conduct the Citizens Business after the Effective Date. None of the Additional Financial Statements of Citizens delivered pursuant to Section 11.4 shall reflect a material change in the financial position or results of operations of the Citizens Business from the financial position or results of operations reflected in the Financial Statements of Citizens. 7.2.10 Real Estate Transfers. Citizens shall have complied with Section 11.16 with respect to its Real Property to be transferred to Tuolumne. 7.2.11 Lessor and Other Third Party Consents. Citizens shall have delivered to Tuolumne all consents, approvals or waivers of lessors or other third parties to the Material Agreements as so identified by an asterisk on Citizens Schedules 9.1.9 and 9.1.13 as such Schedules may be amended pursuant to Section 11.22. All of such delivered consents. approvals or waivers shall be in effect as of the Effective Date. 7.2.12 Lien Searches. Citizens shall have delivered to Tuolumne reasonably comprehensive searches, dated as of a date within 30 days of the Execution Date or any time thereafter, of the public records regarding liens and judgments with respect to the Citizens Business and the Citizens Purchased Property. ARTICLE 8. THE CLOSING 8.1 The Closing. (a) Subject to the terms and conditions set forth herein, on the Closing Date, Citizens and Tuolumne shall effect the exchange contemplated hereby as follows: (i) Citizens shall convey, assign and transfer the Citizens Purchased Property to Tuolumne (or its assignee pursuant to Section 17.4) free and clear of all liens and encumbrances except as otherwise contemplated herein and pay Tuolumne the Estimated Cash Consideration; and (ii) Tuolumne shall convey, assign and transfer the Tuolumne Purchased Property to Citizens (or its assignee pursuant to Section 17.4) free and clear of all liens and encumbrances except as otherwise contemplated herein. (b) Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall be held at a place mutually agreed upon by the parties at 9:00 a.m., local time, on the last calendar day (the "Closing Date") of the calendar month in which occurs the tenth (10th) business day after the date on which the parties agree that all required Material Regulatory Approvals and FCC Consents have been obtained and provided that the other conditions set forth in Article 7 shall have been satisfied, or at such other place and time as may be agreed upon by the parties. The transactions to be consummated at Closing shall be deemed to have been consummated as of 11:59 p.m. on the last calendar day of the calendar month in which occurs the tenth (10th) business day after the date on which the parties agree that all such Material Regulatory Approvals and FCC Consents have been obtained (the "Effective Date"). If the Effective Date is not a day on which financial institutions are open and operating, then the Closing Date shall be the immediately following business day on which financial institutions are open and operating. 8.2 Tuolumne's Obligations at Closing. At the Closing, Tuolumne shall deliver to Citizens the following documents duly executed and acknowledged, as appropriate: (a) Bills of sale, special warranty deeds, assignment and assumption agreements and other good and sufficient instruments of transfer and assumption (including, without limitation, vehicle titles) to effect and consummate the transactions contemplated by this Agreement, in form and substance mutually satisfactory to the parties. (b) Tuolumne's Closing Certificate. (c) Instruments of assignment and assumption or, to the extent required by Section 5.3, subleases or subcontracts for the Leases and the Contracts, in each case in form and substance mutually satisfactory to the parties. (d) Secured Indebtedness Releases and Terminations with respect to the Tuolumne Purchased Property. (e) All of the documents and papers required of Tuolumne as conditions to Closing, including without limitation, the Regulatory Approvals, FCC Consents and the documents required to be delivered by Tuolumne pursuant to Section 11.16. (f) The Transition Services Agreement, if requested by Citizens with respect to the Tuolumne Business pursuant to Section 10.1. (g) The Environmental Remediation Agreement if required pursuant to Section 14.1.7(d). (h) All documents required of Tuolumne under the Employee Transfer Agreement. (i) Certificate of the Secretary or Assistant Secretary of Tuolumne certifying as to Articles of Incorporation, Bylaws, Board of Director approval and incumbency. 8.3 Citizens Obligations at Closing. At the Closing, Citizens shall deliver to Tuolumne the following items and documents duly executed and acknowledged as appropriate: (a) The Estimated Cash Consideration (as adjusted under Section 3.2), in the manner specified in Section 3. 1; (b) Citizens Closing Certificate (c) All of the documents and papers required of Citizens as conditions to Closing, including, without limitation, the Regulatory Approval and FCC Consents and the documents required to be delivered by Citizens pursuant to Section 11.16. (d) The Transition Services Agreement, if requested by Tuolumne with respect to the Citizens Business pursuant to Section 10.1. (e) The Environmental Remediation Agreement if required pursuant to Section 14.17(d). (f) All documents required of Citizens under the Employee Transfer Agreement. (g) Instruments of assignment and assumption or, to the extent required by Section 5.3, subleases or subcontracts for the Leases and the Contracts, in each case in form and substance mutually satisfactory to the parties. (h) Secured Indebtedness Releases and Terminations with respect to the Citizens Purchased Property. (i) Certificate of the Secretary or Assistant Secretary of Citizens certifying as to Articles of Incorporation, Bylaws, Board of Director approval and incumbency. (j) Bills of sale, special warranty deeds, assignment and assumption agreements and other good and sufficient instruments of transfer and assumption (including, without limitation, vehicle titles) to effect and consummate the transactions contemplated by this Agreement, in form and substance mutually satisfactory to the parties. ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties of the Parties. Except as to the environmental matters which are exclusively addressed in Article 14 of this Agreement, Tuolumne represents and warrants to Citizens, and Citizens represents and warrants to Tuolumne (each party making such representations and warranties only with respect to its own status, assets and Business, and being referred to in this Section 9.1 with respect to such representations and warranties as a "Seller"): 9.1.1 Authorization and Effect of Agreement. Each Party has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement and to fulfill its respective obligations under this Agreement. The execution and delivery by each party of this Agreement and the fulfillment of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of each party. This Agreement has been duly executed and delivered by each party and, assuming the due execution and delivery of this Agreement by the other party hereto, constitutes a valid and binding obligation of each party, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualification that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.1.2 No Restrictions Against Exchange of the Purchased Property. The execution and delivery of this Agreement by each party does not, and the fulfillment by each party of its obligations under this Agreement will not, (i) conflict with or violate any provision of its certificate of incorporation or bylaws or, (ii) except as set forth in each party's Schedule 9.1.13, or subject to obtaining the approvals and consents reflected in Article 5, conflict with, violate or result in the breach of, constitute a default under, accelerate the performance required by, or result in the creation of any encumbrance upon any of each party's Purchased Property under any provision of any of its Contracts other than any such conflict, violation or breach that alone or in the aggregate would not have an adverse effect on the other party hereto, or each party's Business or its Purchased Property after the Effective Date. 9.1.3 Consents and Approvals of Governmental Authorities. No consent, approval, order or authorization of, or registration, declaration or filing with, any court or governmental agency, authority or instrumentality (" Governmental Authority") is required to be obtained or made by or with respect to Seller or in connection with the execution and delivery of this Agreement by Seller or the fulfillment by Seller of its obligations under this Agreement, except (i) the filings and approvals described in Article 5 (ii) real estate deeds and other documents filed in connection with the transfer of the Real Property included in the Seller's Purchased Property, (iii) certificates of title for the motor vehicles included in the Seller's Purchased Property, and (iv) such other consents, approvals, orders or authorizations, or registrations, declarations or filings, which if not obtained or made would not result in a material adverse effect on the other party hereto, or Seller's Business or its Purchased Property after the Effective Date. 9.1.4 No Violation of Law. Except as indicated in each party's Schedule 9.1.4, the execution and delivery of this Agreement and the fulfillment by each party of its obligations under this Agreement will not violate any applicable existing statute, ordinance, rule, regulation or common law obligation (collectively, "Law"), except where such violation would not have a material adverse effect on each party's Business as a whole or on any significant part of its Purchased Property after the Effective Date. 9.1.5 Corporate Organization. Tuolumne is a corporation duly organized, validly existing and in good standing under the laws of California; it has full corporate power and authority to own its properties and to carry on the Tuolumne Business as it is now being conducted and to own, or hold under lease the Tuolumne Purchased Property. Citizens is a corporation duly organized, validly existing and in good standing under the laws of Pennsylvania; it has full corporate power and authority to own its properties and to carry on the Citizens Business as it is now being conducted and to own, or hold under lease the Citizens Purchased Property. 9.1.6 Brokers. Neither party has paid nor become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against the other party hereto for any broker's or finder's fees or similar fees or expenses. 9.1.7 Assumed Liabilities. Seller is not in default with respect to any of its obligations or liabilities that will become Assumed Liabilities of the other party hereto at the Effective Date or the performance, observance or fulfillment of any covenant or condition relating thereto, and no event has occurred and is continuing that constitutes a material breach or default thereunder or that would constitute such a material breach or default with the giving of notice or lapse of time, or both. 9.1.8 Title to Purchased Property. Seller has good, valid, undivided, marketable and defensible title to all of its owned Purchased Property, free and clear of all restrictions, charges, liens, or encumbrances of any kind, except for (i) the Assumed Liabilities (ii) the liens, encumbrances and restrictions shown and disclosed on Seller's Schedule 9.1.8-1, (iii) current real and personal property taxes and other statutory liens covering amounts not yet due and payable, and (iv) such other imperfections of title and encumbrances, if any, as do not interfere in any material respect with the present use or value of the item of owned Purchased Property to which such imperfection or encumbrance relates. No condemnation proceeding is pending or, to the knowledge of Seller, threatened with respect to any part of its Purchased Property and such Purchased Property is not in any violation of any restrictive covenant relating thereto. Seller's Schedule 9.1.8-2 sets forth the address and a general description of each item of Real Property owned by Seller included in its Purchased Property. In addition, Seller's Schedule 9.1.8-2 sets forth a list of the Real Property included in the Purchased Property in which Seller holds other than a fee interest (such as easements and rights of way). Except to the extent indicated in Seller's Schedules 9.1.8-1 and 9.1.8-2, Seller has the unqualified right to transfer and convey to the other party hereto Seller's interest in such Real Property. 9.1.9 Leases. Seller has set forth on its Schedule 9.1.9 a list of all the Leases relating to Seller's Business. Each of such Leases is valid, binding and enforceable in accordance with its terms, and except as otherwise disclosed in Seller's Schedule 9.1.9, there is not any existing material default or existing material breach of a covenant by Seller under any such Lease. Seller enjoys peaceful and undisturbed possession under all material Leases and, to Seller's knowledge, the lessor under any such Lease is not (with or without notice or the lapse of time, or both) in material breach or default thereunder, has performed all material obligations required to be performed by it thereunder, and has not given notice of such lessor's intent to terminate such Lease. 9.1.10 Condition of Tangible Assets. All of the Seller's tangible Purchased Property is in substantially good operating condition and repair, normal wear and tear excepted, well maintained, adequate for the present uses thereof and in compliance in all material respects with applicable federal, state and local ordinances, regulations and statutes relating to the ownership and operation of such property. Except as set forth on Seller's Schedule 9.1.10, Seller has not received any written notice within the past twelve (12) months of a violation of any ordinances, regulations or building, zoning and other similar laws with respect to such assets that would have a material adverse effect on the Seller's Business as a whole or any significant part of the Seller's Purchased Property. Each parcel of Seller's Real Property and, to the knowledge of Seller, of real estate leased by Seller and material or necessary to its Business as presently conducted substantially complies with all applicable Laws except where the failure to so comply individually or in the aggregate, would not have a material adverse effect on Seller's Business as a whole or any such parcel after the Effective Date. Except as set forth on Schedule 9.1.10, other than Seller, no person or party has actual possession or has a right to possession of all or any material portion of any parcel of such Real Property or such leased real estate. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 9.1.10, Seller MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED OR STATUTORY, AS TO THE CONDITION OR FITNESS OF ITS TANGIBLE PERSONAL PURCHASED PROPERTY AND HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED OR STATUTORY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. 9.1.11 Financial Statements. (a) Seller has delivered to the other party hereto a true and correct copy of its audited financial statements, consisting of a balance sheet, income statement and related statement of cash flows as of and for the respective periods ended December 31, 1992, and December 31, 1993, together with in the case of Tuolumne, the auditor's report thereon (the "Financial Statements"). The Financial Statements were prepared based upon the books and records of Seller, and fairly present in all material respects the financial condition of Seller as of the appropriate periods and the results of operations for the year then ended, in each case in conformity with GAAP and to the best of Seller's knowledge and to the extent required by applicable law, have been prepared in all material respects in conformity with the regulations of the FCC and the applicable PUC. The Financial Statements of Seller contain no untrue statements of any material fact nor omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Additional Financial Statements of Seller to be delivered to the other party hereto pursuant to Section 11.4 hereof (i) will be prepared in each case in accordance with GAAP (except for the omission of notes thereto with respect to interim Additional Financial Statements), consistent with past practices, from the books and records of Seller; and (ii) will fairly present the financial condition of Seller and the results of operations of Seller for the periods indicated, subject, in the case of interim Additional Financial Statements, to normal year-end adjustments which will not be material in amount or effect; and (iii) to the best of Seller's knowledge and to the extent required by applicable Law, will be prepared in all material respects in conformity with the regulations of the FCC and the PUC; and (iv) will not contain any untrue statements of any material facts or omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) The unaudited balance sheet of Seller as of June 30, 1994 was prepared in accordance with GAAP except for the omission of notes thereto, consistent with past practices, from the books and records of Seller and fairly presents the financial condition of Seller as of such date subject to normal year-end adjustments which will not be material in amount or effect, and to the best of Seller's knowledge and to the extent required by applicable Law, was prepared in all material respects in conformity with the regulations of the FCC and the PUC. 9.1.12 Absence of Material Changes. Except as Seller may disclose in its Schedule 9.1.12, since December 31, 1993, there has not been: (a) Any material change in the financial condition, results of operations, assets, liabilities, operations or future business prospects of Seller's Business; (b) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting Seller's Purchased Property or its Business; (c) Any disposition (including, without limitation, the grant of a license, franchise, option or other right of any nature whatsoever to sell or distribute) or encumbrance or agreement to dispose of or to encumber, or pledge or grant of a security interest in or agreement to pledge or grant a security interest in, any of Seller's Purchased Property, or any increase or an agreement to increase any indebtedness of Seller related to its Business or its Purchased Property, except in the ordinary course of business; (d) Any material change in Seller's tariffs or in the manner of conducting its Business; (e) Any dispute, litigation or other event or condition that materially and adversely affects the business or prospects of Seller's Business or its Purchased Property; (f) Any waiver or release of any material rights or settlement of any material dispute involving Seller's Business or its Purchased Property; (g) Any granting of a material salary increase or other material benefits payable to any Employee of Seller, except for ordinary and routine salary increases or bonuses authorized or granted in the ordinary course of business and consistent with past practices; (h) Any transaction entered into by Seller that would have a material adverse effect on its Business as a whole or its Purchased Property as a whole; (i) Any change in the accounting methods or practices of Seller with respect to its Purchased Property or its Business except as required by GAAP or any change in depreciation or amortization policies or rates heretofore adopted by Seller with respect to its Purchased Property or its Business except as required by GAAP; (j) Any material labor dispute or threat thereof which affects generally the Transferred Employees of Seller's Business or, to Seller's knowledge, any attempt to organize the Transferred Employees of its Business for the purpose of collective bargaining; (k) Any event that would have been prohibited under Section 11.5 if Section 11.5 had been in effect since December 31, 1993; or (l) Any agreement or commitment by Seller (or any understanding between Seller and any third party) to do or to take any of the actions referred to in paragraphs (a) through (k) of this Section 9.1.12. 9.1.13 Contracts. Each of the Contracts relating to Seller's Business is in full force and effect as of the date of this Agreement in accordance with its terms, and there is no outstanding notice of cancellation or termination in connection therewith. Seller is not in material breach or default in connection with any of such Contracts, and there is no basis for any claim of breach or default by Seller, or to Seller's knowledge, any other party, in any material respect under any of such Contracts. None of such Contracts, either separately or in the aggregate, materially and adversely affects Seller's Business or its Purchased Property. After the Effective Date, all rights and obligations of Seller under such Contracts shall continue unimpaired in other party hereto (assuming that if any Contract requires the consent of the other party thereto, such consent will have been obtained by the parties hereto prior to the Effective Date). Except for the instruments specifically listed in Seller's Schedule 9.1.13, Seller is not a party to or subject to: (i) any agreement for the purchase or disposition of any material, equipment, supplies, inventory or service, except individual purchase orders and contracts in amounts less than Twenty-Five Thousand Dollars ($25,000); (ii) any agreement to which Seller is a party or by which any of its Purchased Property is bound relating to indebtedness for money borrowed including capital leases, security arrangements relating thereto and any amendment or waiver thereof; and (iii) any other agreement not of the type covered by any of the foregoing items of this Section 9.1.13 requiring payments by Seller in excess of Seventy-Five Thousand Dollars ($75,000) per agreement, on or after the Effective Date. Schedule 9.1.13 also lists (a) each Contract relating to Seller's Business or its Purchased Property between Seller and any Affiliate of Seller, and (b) each material Contract relating to Seller's Business or its Purchased Property between Seller or an Affiliate of Seller and any third party. Seller has made available to the other party hereto true and correct copies of all agreements and instruments listed in Seller's Schedule 9.1.13. Seller's Schedule 9.1.13 specifically identifies, with respect to those Contracts which are required to be listed thereon, the Contracts which require the consent, approval or waiver of the other party thereto for the assignment thereof. 9.1.14 Insurance. Seller's Purchased Property of an insurable nature and of a character usually insured by companies carrying on similar businesses is insured under insurance policies in such amounts and against such losses or casualties as is (i) usual in such companies and (ii) required under any of the Contracts or Leases relating to Seller's Business. The insurance policies referred to in this Section 9.1.14 are (i) listed on Seller's Schedule 9.1.14, and (ii) in full force and effect and the premiums due thereon have been duly and timely paid. The most current statement of values (the statement of values of property of an insurable nature that is submitted to an insurance company to be used as a basis for the calculation of premiums) relative to Seller's Purchased Property as presently insured has been made available to the other party hereto by Seller. On the Effective Date, the coverage under the insurance policies and programs applicable to Seller's Purchased Property will be terminated, and the other party hereto will be responsible for providing all insurance coverage for such Purchased Property. Following the Effective Date, Seller shall be responsible for and shall pay any additional premiums that might be required by an insurance company for insurance coverage prior to the Effective Date relating to such Purchased Property and shall be entitled to any refunds or dividends due from such companies relating to such coverage. All claims that relate to the operation of Seller's Purchased Property prior to the Effective Date shall remain the sole responsibility of Seller. Seller's Schedule 9.1.14 sets forth a list of the open material claims affecting Seller's Purchased Property, complete in all material respects, and a description of any self-insurance levels, underlying limits and deductibles. 9.1.15 Taxes. (a) Except as disclosed on Schedule 9.1.15, (i) all Tax Returns required to be filed by Seller on or before the Effective Date with respect to its Business or its Purchased Property have or will have been filed, and all taxes shown as due and payable on such Tax Returns have been or will be paid by Seller when required by law; (ii) all penalties, interest or other charges that have or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax have been or will be timely paid in full, (iii) no deficiencies for any taxes, assessments or other governmental charges have been asserted in writing or assessed against Seller with respect to its Business that remain unpaid and that individually or in the aggregate are material to such Business; (iv) Seller has withheld all required federal, state and local payroll taxes and other similar taxes with respect to creditors and third party vendors, and has remitted all amounts required to be remitted to the appropriate taxing authorities; (v) there are no tax liens upon any of such Seller's Purchased Property except for statutory liens covering taxes not yet due and payable; (vi) none of such Seller's Purchased Property is tax-exempt use property within the meaning of Section 168(h) of the IRC and none of such Purchased Property is property that is or will be required to be treated as being owned by another person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986; and (vii) Seller is not a "foreign person" within the meaning of Section 1445(b)(2) of the IRC and shall provide an appropriate affidavit for purposes of Section 1445(b)(2) of the IRC. (b) Seller has been subject to normal and routine audits, examinations and adjustments of Taxes from time to time, but there are no material, current audits or material audits for which notification has been received (in either case, with respect to Seller's Business) other than those set forth on Seller's Schedule 9.1.15. 9.1.16 No Material Claims. Except as disclosed in Seller's Schedule 9.1.16 or with respect to Taxes, there are no claims, actions, lawsuits or legal or administrative proceedings pending, or, to the knowledge of Seller, threatened against or affecting Seller or its properties that, if determined adversely to Seller, would reasonably be expected to have a material adverse effect on Seller's Business as a whole or any significant part of its Purchased Property. Seller does not know of any reasonable basis for any such action, claim, lawsuit or proceeding or any governmental or regulatory investigation relative to its Business or its Purchased Property. Seller is not in default under any judgment, order or decree of any Governmental Authority applicable to its Business or any significant part of its Purchased Property which would reasonably be expected to have a material adverse effect on such Business as a whole or any significant part of such Purchased Property after the Effective Date. 9.1.17 Tariffs: FCC Licenses, Non-FCC Authorizations. (a) With respect to federal tariffs, each of Citizens and Tuolumne is an issuing carrier in the National Exchange Carrier Association Tariff F.C.C. No. 5 for the purpose of providing interstate access service. Except as described on Seller's Schedule 9.1.17(a), the state regulatory tariffs applicable to Seller's Business stand in full force and effect on the date of this Agreement in accordance with all terms of such state tariffs, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's knowledge, any threatened suspension, cancellation or termination in connection therewith, nor is Seller subject to any restrictions or conditions applicable to its state regulatory tariffs that limit or would limit the operation of its Business (other than restrictions or conditions generally applicable to tariffs of that type). Except as described on Seller's Schedule 9.1.17(a), each such state tariff has been duly and validly approved by the appropriate state regulatory agency. Except as otherwise disclosed on Seller's Schedule 9.1.17(a), Seller is not in material violation under the terms and conditions of any such state tariff, and there is no basis for any claim of material violation by Seller in any material respect under any such state tariff. Except as described in Seller's Schedule 9.1.17(a), there are no applications by Seller or complaints or petitions by others or proceedings pending or threatened before the state regulatory authority relating to Seller's Business or its operations or the state regulatory tariffs. To the knowledge of Seller, there are no material violations by subscribers or others under any such state tariff that would be material to its Business. A true and correct copy of each state tariff applicable to Seller's Business has been delivered to Buyer. (b) Listed on Seller's Schedule 9.1.17(b) are the FCC Licenses held by Seller and used in the operation of its Business. Each such FCC License is in full force and effect in accordance with its terms, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's knowledge, any threatened suspension, cancellation or termination in connection therewith nor are any of such FCC Licenses subject to any restrictions or conditions that limit the operation of Seller's Business (other than restrictions or conditions generally applicable to licenses of that type). Subject to the Communications Act of 1934, as amended, and the regulations thereunder, Seller's FCC Licenses are free from all security interests, liens, claims, or encumbrances of any nature whatsoever. Except as set forth on Seller's Schedule 9.1.17(b), there are no applications by Seller or material complaints or material petitions by others or proceedings pending or threatened before the FCC relating to Seller's Business or FCC Licenses. (c) Listed on Seller's Schedule 9.1.17(c) are all Non-FCC Authorizations materially necessary for the conduct of Seller's Business which would include, without limitation, all FAA radio tower ownership authorizations. Each such Non-FCC Authorization is in full force and effect in accordance with its terms. To Seller's knowledge, no event has occurred with respect to any materially necessary Non-FCC Authorization which permits, or after notice or lapse of time or both would permit, revocation or termination thereof, or would result in any other material impairment of the rights of the holder of such materially necessary Non- FCC Authorization. 9.1.18 Employee Matters. (a) Seller's Schedule 9.1.18(a) lists (and identifies the sponsor of) each material "employee pension benefit plan, " as that term is defined in Section 3(2) of ERISA, each material " employee welfare benefit plan," as that term is defined in Section 3(1) of ERISA maintained or contributed to by Seller or any of its Affiliates in respect of any of Seller's Transferred Employee (as defined below) (such plans being hereinafter referred to collectively as the "ERISA Plans"), and each other material retirement, pension, profit-sharing, money purchase, deferred compensation, incentive compensation, bonus, stock option, stock purchase, severance pay, unemployment benefit, vacation pay, savings, medical, dental, post-retirement medical, accident, disability, weekly income, salary continuation, health, life or other insurance, fringe benefit, or other employee benefit plan, program, agreement, or arrangement maintained or contributed to by Seller or its Affiliates in respect of or for the benefit of any of Seller's Transferred Employee or former employee, excluding any such plan, program, agreement, or arrangement maintained or contributed to solely in respect of or for the benefit of Seller's Transferred Employees or former employees employed or formerly employed by Seller outside of the United States, as of the date hereof (collectively, together with the ERISA Plans, referred to hereinafter as the "Plans"). Seller's Schedule 9.1.18(a) also includes a list of each material written employment, severance, termination or similar-type agreement between Seller or its Affiliates and any of Seller's Transferred Employee (the "Employment Agreements"). Except to the extent that any assets, liabilities, or accounts are transferred from the Plans or Agreements (pursuant to an Employee Transfer Agreement or otherwise) to plan(s) or agreement(s) maintained or contributed to by the other party hereto, all such Plans and Agreements shall remain the liabilities of the Seller or its Affiliates and Seller shall take any and all steps necessary to ensure that such other party shall not be a sponsor of any such Plan or Agreement subsequent to the Effective Date. Except as otherwise disclosed on Seller's Schedule 9.1.18(a), the execution and delivery of this Agreement by Seller and the performance of this Agreement by Seller will not directly result now or at any time in the future in (i) the payment by Seller or its Affiliates to any Transferred Employee of any severance, termination, or similar type payments or benefits or (ii) any "parachute payment" (as such term is defined in Section 28OG of the IRC) being made by Seller or its Affiliates to any Transferred Employee. (b) Except as set forth on Seller's Schedule 9.1.18(b): (i) Neither Seller nor any of its Affiliates, any of the ERISA Plans, any trust created thereunder, or any trustee or administrator thereof, has engaged in any transaction as a result of which Seller could be subject to any material liability pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC; and (ii) Since the effective date of ERISA, no material liability under Title IV of ERISA with respect to the ERISA Plans has been incurred or is reasonably expected to be incurred by Seller or any of its Affiliates (other than liability for premiums due to the PBGC), unless such liability is reserved for or otherwise reflected on the Financial Statements or unless such liability has been, or prior to the Effective Date will be, satisfied in full. (iii) There is no contract or Employment Agreement covering any Transferred Employee or former employee of Seller that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the IRC. (iv) Neither Seller nor any of its Affiliates has engaged in, or is a successor or parent corporation to a person that has engaged in, a transaction described in Section 4069 of ERISA. (c) Except as set forth on Seller's Schedule 9.1.18(c), with respect to the ERISA Plans other than those ERISA Plans identified on Seller's Schedule 9.1.18(a) as "multi-employer plans": (i) the PBGC has not instituted proceedings to terminate any Plan that is subject to Title IV of ERISA (the "Retirement Plans") and no condition exists or has existed which could constitute grounds for any termination by PBGC; (ii) no filing has been made by Seller, or any of its Affiliates with the PBGC to terminate any Retirement Plan identified on Seller's Schedule 9.1.18(a); (iii) none of the ERISA Plans has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the IRC), whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to the Execution Date; (iv) each of the ERISA Plans has been operated and administered in all material respects in accordance with its provisions and with all applicable laws; (v) each of the ERISA Plans that is intended to be "qualified" within the meaning of Section 401(a) of the IRC and, to the extent applicable, Section 401(k) of the IRC, has been determined by the IRS to be so qualified, and nothing has occurred since the date of the most recent such determination (other than the effective date of certain amendments to the IRC, the remedial amendment period for which has not yet expired) that would adversely affect the qualified status of any of such ERISA Plans; (vi) there are no pending material actions, claims or lawsuits which have been asserted or instituted against any of the ERISA Plans, the assets of any of the trusts under such Plan, the plan sponsor, the plan administrator, trustee or any other fiduciary of such Plans with respect to any aspect of such ERISA Plans (except for routine benefit claims or routine expenses). (d) Except as set forth on Seller's Schedule 9.1.18(d), none of the ERISA Plans is a "multi-employer plan," as that term is defined in Section 3(37) of ERISA and with respect to any such multiemployer plans (as so defined) listed in Seller's Schedule 9.1.18(d), Seller has not made or incurred a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA that would result in the incurrence of a material liability by Seller that is not reserved for or otherwise reflected on the Financial Statements of Seller. (e) Except as set forth on Seller's Schedule 9.1.18(e), no post-retirement medical and life insurance benefit obligations exist with respect to any Transferred Employees or former employees of Seller. (f) No Plan identified on Seller's Schedule 9.1.18(a) has any restrictions against termination or modification, either by its terms or, to Seller's knowledge, due to any written or oral communications by any representative of the Seller nor any of its Affiliates. (g) Except as set forth on Seller's Schedule 9.1.18(g), (i) none of Seller's Transferred Employees are represented by a labor union or labor organization and (ii) neither Seller nor any of its Affiliates is a party to nor is Seller subject to, any collective bargaining agreement covering any Transferred Employee. There are currently no strikes, slowdowns, work stoppages or lockouts by or with respect to any Transferred Employee covered by collective bargaining agreements. Except as set forth on Seller's Schedule 9.1.18(g), to the best knowledge of Seller, during the twelve (12) months preceding the Execution Date there have not been any union organizational campaigns by or directed at the employees of Seller. Except as set forth on Seller's Schedule 9.1.18(g), no condition has existed or exists that has caused or could be expected to result in the imposition of any lien or encumbrance under ERISA or the IRC on any part of Seller's Purchased Property. (h) Seller will make available to the other party hereto, prior to the Closing Date, a list of those Transferred Employees that Seller believes to have participated in the health or dependent care reimbursement accounts of Seller, together with the elections made prior to the Effective Date with respect to such accounts through the Effective Date. 9.1.19 Schedules of the Telephone Plant. Seller has set forth on Seller's Schedule 9.1.19 copies of schedules (at the level of detail agreed to by the parties but in any case including details regarding net book value and continuing property records lists associated therewith) of its Telephone Plant as of June 30, 1994, including, to the extent available, a schedule specifically identifying the Telephone Plant that is associated with the Unregulated Business. The account balances reflected on the schedule of Telephone Plant correspond, in all material respects, to the associated account balances reflected on the Continuing Property Records. 9.1.20. Accuracy of Certain Information. (a) The information regarding type of central office switch and number of access lines in service for each exchange set forth on Seller's Schedule 9.1.20 (a) is true and complete in all material respects as of the respective dates set forth thereon. (b) Tuolumne represents and warrants that the information set forth only with respect to the 1993 column of the "Capital Budget Network Modernization Forecast" attached as Tuolumne Schedule 9.1.20(b) is true and complete as of December 31, 1993. (c) Seller's Schedule 9.1.20 (c) sets forth a substantially complete list of all vehicles included in Seller's Purchased Property (including trailers, equipment mounted on trailers and self-propelled equipment) together with the manufacturer, model and year of each such vehicle, and indicates whether such vehicle is owned or leased by Seller. (d) [INTENTIONALLY DELETED] (e) Schedule 9.1.20(e) sets forth a true and complete list of the interstate billing and collection revenues and intrastate interlata billing and collection revenues of Seller from its Business for the year 1993. 9.1.21 Rate Base. Except as set forth on Seller's Schedule 9.1.21, Seller has no materials and supplies, plant or equipment used in its Business that has been disallowed from rate base or excluded from the revenue calculations for any pool (unless due to the deregulation of the service for which such assets are used) or in the most recent rate order issued by the applicable PUC or the FCC or any determination by an administrator of an interstate or intrastate pool, and has not received written notification that the applicable PUC or the FCC or any pool administrator proposes to exclude any assets from rate base or revenue calculations for the pools, or any tariff filed with or approved in the most recent rate order of the applicable PUC or the FCC, in each case which materials and supplies, plant or equipment, in the aggregate, would be in excess of one percent (1%) of Net Telecommunications Plant. 9.1.22 Payments. All material payments of any kind required to be made by Seller to third parties under any Contract and maturing prior to the Effective Date have been, or will be as of the Effective Date, properly and timely paid or provided for, unless otherwise subject to a bona fide dispute disclosed in Schedule 9.1.22. 9.1.23 Compliance with Laws. Except as Seller shall specifically indicate on Seller's Schedule 9.1.23, (i) Seller is in compliance in all material respects with all Laws applicable to its Purchased Property and its Business and holds all governmental permits or licenses required in order to conduct its Business and to own and operate its Purchased Property; (ii) the present uses of Seller's Purchased Property in the conduct of Seller's Business do not violate in any material respect any Law and (iii) no written notice or warning from any governmental or regulatory authority with respect to any failure or alleged failure by Seller to comply with any Law or questioning the validity of any governmental permit or license, with respect to its Business or its Purchased Property has been issued or given, nor to the knowledge of Seller, is any such notice or warning proposed or threatened. Seller is not aware of any fact, event or circumstance relating to Seller that is reasonably likely to cause a regulatory agency to deny or withhold its approval to the transactions contemplated hereby. 9.1.24 Correct Records. The financial records, ledgers, account books and other accounting records of Seller relating to its Business are current, correct and complete and reasonably well organized, in all material respects and to the best of Seller's knowledge and to the extent required by applicable Law, conform in all material respects with the rules and regulations of the FCC and PUC. Seller and its Affiliates have retained substantially all Original Cost Documents regarding the expenditures made by Seller within the immediately preceding two-year period that relate to Seller's Net Telecommunications Plant or Net Fixed Assets, as the case may be, and such Original Cost Documents are correct and complete in all material respects. 9.1.25 Materials and Supplies. As of the Effective Date, the value (as reflected on Seller's books) of Seller's materials and supplies relating to its Business which are obsolete or in excess of the requirements of such Business, will not materially exceed Seller's reserve for obsolete or excess Materials and Supplies as reflected on Seller's books. 9.1.26 Assets Necessary to the Business. Seller's Purchased Property includes all of the assets and properties (including all licenses and agreements) currently being used or which are reasonably necessary to carry on Seller's Business as currently conducted, other than the assets and properties included in the Excluded Property. 9.1.27 [INTENTIONALLY DELETED] 9.1.28 Unregulated Business. Schedule 2.2(b) is an accurate summary description of Seller's Unregulated Business, in detail reasonably acceptable to the other party hereto. 9.1.29. Capital Improvements Required by PUC. Except as set forth on Seller's Schedule 9.1.29, there are no changes, modifications, upgrades or enhancements required by the applicable PUC to be made to Seller's Purchased Property or the operation thereof. 9.2 [INTENTIONALLY DELETED] ARTICLE 10. CONTINUING BUSINESS RELATIONSHIPS 10.1 Transition Services Agreement. If requested in writing by Citizens with respect to the Tuolumne Purchased Property or by Tuolumne with respect to the Citizens Purchased Property, on or prior to March 15, 1995, the parties shall, as promptly as practicable but in any event within 30 days after either party's written request, negotiate in good faith and enter into a Transition Services Agreement, to be effective no later than the Effective Date, pursuant to which Tuolumne will provide to Citizens with respect to the Tuolumne Purchased Property, at Citizens' expense, or Citizens will provide to Tuolumne with respect to the Citizens Purchased Property, at Tuolumne's expense, such financial, accounting, billing, computer, network, administrative and other services (including services relating to the conversion of systems and processes) as may be reasonably requested by Citizens or Tuolumne, which agreements shall be in form and substance as mutually agreed to by both Citizens and Tuolumne (the "Transition Services Agreement"). ARTICLE 11. ADDITIONAL COVENANTS OF THE PARTIES 11.1 Intellectual Property. 11.1.1 Definition. "Intellectual Property" means all inventions (whether patentable or not and whether or not such inventions are described or claimed in any patent or patent application), designs (useful or ornamental), and works subject to copyright that may be embodied in, without exclusion, invention disclosures, specifications, manuals, drawings, functional or system block diagrams, flow charts, circuit diagrams, design or user documentation, engineering notebooks, schematics, test programs, documented procedures, documented processes, documented flows, devices, software, or firmware, that relate to the function, design, development, manufacture, testing, use, operation, maintenance or repair of any product, apparatus, article of manufacture, process, method or service. "Intellectual Property" shall also include patents, patent applications (including continuations, continuations-in-part, divisions, reissues, reexamined patents and patent applications and extensions thereof), copyrights (whether common law or statutory, registered or unregistered), or trade secrets, residing in the subject matter above. 11.1.2 Grant by Seller. (a) Subject to the terms and conditions of this Agreement, effective on the Effective Date, Seller shall grant to Buyer, and Buyer shall accept, a nonexclusive, fully paid, royalty-free, perpetual license for the Intellectual Property that, on the Effective Date, Seller owns or controls or with respect to which Seller has an unrestricted right to grant such license without permission from, or any consideration to, any third party, and if Seller has a restricted right to grant such license, Seller will use its best efforts to assist Buyer (provided that Buyer shall be responsible for any fees associated therewith) in obtaining the consent for the use of any such license, provided that the above grant and any assistance required by Seller shall be effective with respect to only such Intellectual Property that Seller has placed in public use on, or prior to, the Effective Date and that is presently used by Seller, in the ordinary and normal course of its Business, and shall exclude any Intellectual Property listed in Seller's Schedule 2.4(g). The above license shall include the right of Buyer to grant sublicenses after the Effective Date to vendors and customers of Buyer and to other third parties, as is necessary in the ordinary and normal course of such Business with respect to Seller's Purchased Property after the Effective Date. (b) The grant set forth in Section 11.1.2(a) is made subject to preexisting agreements; however, Seller represents that it is aware of no other agreement that precludes the grant made herein. (c) The above Sections 11.1.2(a) and (b) set forth Seller's entire obligation with respect to the license of Intellectual Property to Buyer. Except as specifically provided otherwise in this Agreement or any other agreement between Buyer and Seller, Seller shall have no continuing obligation beyond the Effective Date to provide support of any kind in Buyer's use of such Intellectual Property. (d) Buyer agrees and understands that Seller or its Affiliates shall retain ownership of all Intellectual Property owned by Seller or its Affiliates as of the Effective Date. Buyer further agrees and understands that the retained ownership shall include the right of Seller to grant licenses to vendors and customers of Seller, and to other third parties. (e) Additional agreements, if any, between Buyer and Seller regarding possession and use by Buyer of computer software that is owned by Seller, or that is licensed by an Affiliate of Seller to Seller, are set forth in Seller's and Buyer's Schedule 11.1.2. 11.1.3 Nonassertion. In addition to granting to Buyer the license set forth in Section 11.1.2, Seller agrees that, with respect to the Intellectual Property that as of the Effective Date Seller owns or controls or under which it has the right to grant licenses, Seller shall not assert against Buyer, or Affiliates of Buyer, or vendees, mediate or immediate, of Buyer, a claim of infringement, misappropriation or misuse of such Intellectual Property right arising from Buyer's activities practiced in the ordinary and normal course of the conduct of Seller's Business after the Effective Date. 11.1.4 Infringement. (a) Notwithstanding any other provision of this Agreement and subject to the representation in Section 11.1.3, Buyer understands that Seller has not made or given, and does not make or give, any warranty as to the value, enforceability, or validity of any Intellectual Property or that the use by Buyer of any Intellectual Property under this Agreement will not infringe other intellectual property rights not licensed under this Agreement. (b) Nothing contained in this Agreement shall be construed as an agreement by, or obligation of, Seller to bring or prosecute actions or suits against third parties for infringement or violation of any Intellectual Property licensed hereunder. (c) Seller shall have no obligation to defend, indemnity or hold harmless Buyer from any damages, costs or expenses resulting from any obligation, proceeding or suit based upon any claim that any activity, subsequent to the Effective Date, engaged in by Buyer, a customer of Buyer's or anyone claiming under Buyer constitutes direct or contributory infringement or misuse of any intellectual property rights not licensed under this Agreement. (d) Buyer shall be liable for and shall hold Seller and its Affiliates harmless from and against any and all Indemnifiable Losses resulting from any obligation, proceeding or suit based upon any claim that any activity conducted or engaged in, subsequent to the Effective Date, by Buyer, a customer of Buyer's, or anyone claiming under Buyer constitutes direct or contributory infringement, or misuse, or misappropriation of any intellectual property right of any third party. 11.1.5 Trademark Phaseout. Buyer acknowledges that Seller or its Affiliates are the owners of certain trade names, trade dress, trademarks, service marks, logos and related intangible property (collectively, "Marks") used in connection with Seller's Business, including, without limitation, the items listed on Seller's Schedule 11.1.5, and Buyer understands and agrees that the Marks, or any right or license to the Marks are not being transferred pursuant to this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in the use of the Marks, and Buyer agrees that it shall not use the Marks (or any names or Marks confusingly similar to the Marks) except as expressly set forth in this Section 11.1.5. After the Effective Date, all Marks of Seller shall be replaced by Buyer as soon as possible, but in no event later than one hundred eighty (180) days after the Effective Date for Marks affixed to items with a valid continuing use in Buyer's conduct of Seller's Business after the Effective Date, including, without limitation, buildings, vehicles, heavy equipment, hard hats, tools, tool boxes, kits (safety and others), signs, manual covers and notebooks. After the Effective Date, Buyer will not use, and will destroy or deliver to Seller, all such items with Marks affixed to them that have no valid continuing use in Buyer's conduct of such Business after the Effective Date, including items affecting customer or employee relations or items that do not reflect Buyer's true identity. Specific items to be destroyed or returned include items with Marks affixed to them including, without limitation, giveaways; order, purchase or materials forms; requisitions; invoices; statements; time sheets/labor reports; bill inserts; stationery; personalized note pads; maps; organization charts; bulletins/releases; sales/price literature; manuals or catalogs; report covers/folders; program materials; and materials such as media contact lists/cards. The one hundred eighty (180) day time period for replacement of Marks affixed to telephone directories that were already published or closed for publication as of the Effective Date shall be extended to the production of replacements for such directories. 11.1.6 Goodwill. Buyer recognizes the value of the goodwill associated with the Marks, and acknowledges that the Marks and all rights therein and the goodwill pertaining thereto belong exclusively to Seller, and that the Marks have a secondary meaning in the minds of the public. 11.1.7 Quality of Goods. Buyer agrees that the conduct of Seller's Business after the Effective Date by Buyer using the Marks shall be provided in accordance with all applicable federal, state and local laws, and that the same shall not reflect adversely upon the good name of Seller, and that the conduct of such Business will be of a standard and skill equivalent to that employed by Seller prior to the Effective Date. 11.1.8 Seller's Remedies for Unauthorized Use of Marks. Buyer acknowledges that its failure to cease use of the Marks as provided in this Agreement, or its improper use of the Marks, will result in immediate and irreparable damage to Seller. Buyer acknowledges and admits that there is no adequate remedy at law for such failure to terminate use of the Marks, or for such improper use of the Marks, and Buyer agrees that in the event of such failure or improper use, Seller shall be entitled to equitable relief by way of temporary restraining order or injunction or any other relief available under this Agreement. 11.2 Effect of Due Diligence and Related Matters. Buyer represents that it is a sophisticated entity that was advised by knowledgeable counsel and, to the extent it deemed necessary, other advisors in connection with this Agreement and by the Effective Date will have conducted its own independent review and evaluation of Seller's Purchased Property. Accordingly, Buyer covenants and agrees that (i) except for the representations and warranties set forth in this Agreement and Seller's Schedules (and the Financial Statements of Seller, the Additional Financial Statements of Seller, and actuarial reports required of Seller pursuant to the Employee Transfer Agreement), Buyer has not relied and will not rely upon any document or written or oral information furnished to or discovered by it or its representatives, (ii) there are no representations or warranties by or on behalf of Seller or its Affiliates or representatives except for those expressly set forth in this Agreement and in any other written agreement entered into with Seller or any of its Affiliates in connection with this Agreement, and (iii) to the fullest extent permitted by law, Buyer's rights and obligations with respect to all of the foregoing matters will be solely as set forth in this Agreement or in such other written agreements. 11.3 Confidentiality. Whether or not the Closing occurs, the parties hereto and their respective officers, directors, employees and representatives will comply with the Confidentiality Agreement, the provisions of which are expressly incorporated herein in their entirety by this reference. 11.4 Additional Financial Statements. Seller shall deliver to Buyer the following financial statements of Seller (collectively, the "Additional Financial Statements") within the time periods set forth below: (a) Within forty-five (45) days after the Execution Date for the month of October, 1994, and within forty-five (45) days after the close of each month beginning with November, 1994, and continuing up to and including the month next preceding the month in which the Closing occurs, a balance sheet and income statement as of and for such month, and as of and for the year-to-date period then ended; and (b) By April 30, 1995, a balance sheet for the year ended December 31, 1994, and an income statement and statement of cash flows for 1994, together with the auditor's report thereon. 11.5 Conduct of Business. From the Execution Date until the Effective Date, Seller shall conduct its Business in the ordinary course in accordance with prudent business judgment and consistent with past practice and policy and shall (i) preserve its Business as an ongoing business, (ii) keep available to its Business its services and the services of its Affiliates at least to the same extent as such were generally available from January 1, 1994 through the Execution Date and are available on the date hereof, (iii) not take any action that would jeopardize any material and beneficial contractual relationships with persons having business dealings with its Business, and (iv) preserve all of its Business' tariffs, certificates, licenses, authorizations and other rights. From the Execution Date to the Effective Date, except with the prior written consent of Buyer, which the Buyer shall not unreasonably withhold: (a) Seller's Business will be conducted in substantially the same manner as it is presently being conducted on the Execution Date. With respect to its Business, Seller will refrain from entering into any material transaction or contract other than in the ordinary course of business and will not make any material change in the general nature of its Business or in its methods of management, marketing, accounting or operations (including repair and maintenance functions). (b) Seller will not, with respect to its Business, (i) create or incur any indebtedness for borrowed money or otherwise, except in the ordinary course of business, (ii) enter into or terminate, as lessor or lessee, any Lease other than in the ordinary course of business, (iii) create any liens or other security interest, except in the ordinary course of business, or (iv) change in any material respect or terminate any of the insurance policies referred to in Seller's Section 9.1.14, unless equivalent coverage is obtained. (c) Except as listed or described on Seller's Schedule 11.5(c), and except for dispositions of salvaged property that has been replaced in accordance with the plans attached in such Schedule 11.5(c), Seller will not sell, lease, dispose of or otherwise transfer, or make any contract for the sale, lease, disposition or transfer of any of its Purchased Property other than, with respect to any individual item (other than vehicles) having a value of less than Seventy-Five Thousand Dollars ($75,000) and with respect to all items (other than vehicles) the aggregate value of which shall not exceed Two Hundred Fifty Thousand Dollars ($250,000). (d) Without prior reasonable notification to Buyer, or unless otherwise expressly directed by the applicable PUC, Seller will not (i) institute any proceeding with respect to, or otherwise change, amend or supplement any tariff or (ii) enter into or agree to any stipulation, order, or decree of, or settlement with such PUC that, in case of (i) or (ii) above, would have a material adverse effect on the revenue, authorized return on equity or earnings of its Business. Seller will not file any application, petition, motion, brief, testimony, settlement agreement or other pleading in any proceeding before such PUC, or before the FCC (except for filings on behalf of all of Parent's local exchange telephone companies) or appeals related thereto, unless Seller shall have first provided Buyer with a copy of the same and provided Buyer a reasonable opportunity to comment to Seller with respect thereto. If Buyer determines it should intervene in any proceeding before such PUC in which Buyer's position is or may be different from Seller's, Seller, without waiving any other rights related thereto, will not oppose Buyer's intervention in such proceeding. (e) Except as listed on Schedule 11.5(e) or as required by law or in the ordinary course of business of Seller or pursuant to any Contract of Seller, not (i) enter into or amend any employment agreement with any individual that will become a Seller Transferred Employee, or enter into or amend any union agreement or commitment (including any new commitment to pay retirement or other benefits, or amendments to the Seller's retirement plans), (ii) effect any net increase over five percent (5%) since the Execution Date in the number of employees of the Seller who will become Seller Transferred Employees, or (iii) increase over 5% the benefit provided under any plans concerning employee benefits or increase the general rates of compensation of the Seller Transferred Employees, or change the manner by which compensation (including fringe benefits) is determined and paid to any Seller Transferred Employee. (f) Seller will not engage in any intercompany transactions with any Affiliate of Seller, except for transactions consistent with past practices. (g) Seller shall maintain its Purchased Property in good repair, order and condition, reasonable wear and use excepted, and shall maintain its Transferred Books and Records and Retained Books and Records in the usual, regular and ordinary manner on a basis consistent with prior years. (h) Seller will not make any commitment to take any actions prohibited by the provisions of this Section 11.5. (i) Notwithstanding Section 11.5(b), Citizens shall not create or incur any long term indebtedness with respect to its Business and Purchased Property. 11.6 Construction Projects and Capital Budget. By December 31, 1994, Buyer and Seller shall have met and reviewed Seller's construction and other capital expenditure plans for the calendar years 1994 and 1995 (or such later date agreed to by the parties). The construction and capital expenditure plans which Buyer shall have approved (both as to the type of project and the dollars expended) shall be set forth on Seller's Schedule 11.6, and the parties agree that when such expenditures have been incurred they will constitute an addition to a component of Tuolumne's Net Telecommunications Plant or Citizens' Net Fixed Assets, as the case may be, thereby becoming subject to Section 3.2(c). Seller agrees to use its best efforts substantially to complete such plans within the projected time schedules; provided, that Seller will not incur any liability for unbudgeted expenditures in excess of $200,000 in the aggregate without the prior written consent of Buyer. All construction work that is in progress on the Effective Date will be accounted for by identifying and accruing all associated time reporting, material invoices or contractor invoices inputted or received on or before the Effective Date, and all payments therefor shall be the responsibility of Seller and will constitute an addition to a component of Seller's Net Telecommunications Plant or Citizens' Net Fixed Assets, as the case may be, thereby becoming subject to Section 3.2(c). 11.7 Further Assurances. After the Closing, Seller will furnish to Buyer such other instruments and information as Buyer may reasonably request in order to convey to Buyer title to Seller's Purchased Property, to be delivered from time to time upon Buyer's reasonable request. 11.8 Prorations. (i) With respect to Seller's Purchased Property, the following liabilities shall be prorated between Seller and Buyer: (a) utility charges (which shall include, without limitation, water, sewer, electricity, gas and other utility charges) with respect to the Real Property, the property subject to the Leases and customer owned equipment, (b) rental charges (which shall include, without limitation, rental charges and other lease payments under the Leases), (c) real and personal property taxes and (d) regulatory and telephone relay service fees. With respect to measurement periods during which the Effective Date occurs (all such periods of time being hereinafter called "Proration Periods"), the liabilities described in clauses (a) and (b) of the preceding sentence shall be apportioned between Seller and Buyer as of the Effective Date, with Buyer bearing only the expense thereof in the proportion that the number of days in the applicable Proration Period after the Effective Date bears to the total number of days covered by such Proration Period. Real and personal property taxes shall be prorated between Buyer and Seller based on the period the Purchased Property was owned by each respective party during the fiscal period for which such taxes were unposed by the taxing jurisdiction (as such fiscal period is reflected on the bill rendered by such taxing jurisdiction). Buyer and Seller shall pay or be reimbursed for real and personal property taxes (including instances in which such property taxes have been paid before the Effective Date) prorated on this basis. Unless otherwise handled as an adjustment to the Cash Consideration and then, only to such extent, if a payment on a prorated bill is due after the Effective Date, the party that is legally or contractually required to make such payment shall make such payment and promptly forward an invoice to the other party for its pro rata share, if any. If the other party does not pay the invoice within thirty (30) calendar days of receipt, the amount of such payment shall bear interest at the rate of seven percent (7%) per annum beginning from the date thirty (30) calendar days after receipt until time of payment. (ii) All prepayments made by Seller with respect to service or maintenance agreements with third parties shall be prorated between Seller and Buyer to the extent Buyer shall receive the benefits of such prepayments after the Effective Date. (iii) All Universal Service Fund payments by NECA or its state equivalent received by either of the parties with respect to a Proration Period concerning the Purchased Exchange shall be apportioned between Seller and Buyer as of the Effective Date, with Buyer receiving and being allowed to retain only that portion of the payment that the number of days in the applicable Proration Period after the Effective Date bears to the total number of days covered by such Proration Period. 11.9 Risk of Loss Prior to the Effective Date. If any material damage, loss or destruction of any sort (including, without limitation, by theft, unauthorized use, fire, act of God or condemnation) occurs prior to the Effective Date to any of the tangible properties that constitute Seller's Purchased Property, Seller shall promptly notify Buyer thereof (the "Casualty Notice"). (a) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace such of Seller's damaged, lost or destroyed Purchased Properties (the "Damaged Property") will exceed Seven Hundred Fifty Eight Thousand One Hundred Dollars ($758,100.00), either party may, by written notice to the other party (the "Casualty Termination Notice") within thirty (30) days after the date of delivery of the Casualty Notice, terminate this Agreement. (b) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace the Damaged Property will not exceed Seven Hundred Fifty Eight Thousand One Hundred Dollars ($758,100.00), or the Casualty Termination Notice is not given by either party, then Seller, within forty-five (45) days after the damage or destruction, shall agree in writing, (i) to repair or replace, prior to the Effective Date or at some later date as may be mutually agreed to by the parties, at Seller's sole cost and expense, the Damaged Property, and Seller will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will be excluded from Seller's Purchased Property and will become Excluded Property, Seller will substitute therefor an equivalent item or items of Purchased Property if the Damaged Property is personal property and if the Damaged Property is Real Property substitute Real Property therefor but only if such substituted personal property or Real Property is satisfactory to Buyer, and Seller will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property. (c) if Seller fails to make an election pursuant to Section 11.9(b)(i) or (ii), the Buyer shall have the option, within thirty (30) days after the initial forty-five (45) day period, to elect one of the following options: (i) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will remain part of Seller's Purchased Property, the adjustment to the Cash Consideration contemplated by Section 3.2(a)(1) will be made, and Seller shall be entitled to make all claims related to the Damaged Property and to receive and retain any proceeds of insurance received by Seller with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will be excluded from Seller's Purchased Property and will become Excluded Property, Seller will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property, and the Cash Consideration adjustment contemplated by Section 3.2(a)(2) will be made. (d) Notwithstanding the other provisions of this Section 11.9, if the time periods pursuant to this Section 11.9 continue beyond the Effective Date or if Seller has not fully performed its obligations pursuant to Section 11.9(b)(i) or 11.9(b)(ii) prior to the Effective Date (or otherwise made reasonably satisfactory arrangements with Buyer), either party hereto may elect to postpone the Closing and the Effective Date, until the expiration of any such periods or the full performance of such obligations, which election shall be binding upon all parties hereto. 11.10 Settlements and Cost Studies. Seller agrees that, with respect to all toll revenues, settlements, pools, separations studies, Universal Service Fund payments or similar activities, Seller shall be responsible for (and shall receive the benefit or suffer the burden of) the results of any such activities that are related to the conduct of its Business or the ownership or operation of its Purchased Property on or before the Effective Date. 11.11 Construction Advances and Customer Deposits. Seller agrees to transfer to Buyer as of the Effective Date all of Seller's rights to hold and control the construction deposits of its Business (and interest thereon, if any) held by Seller as of the Effective Date (the "Construction Advances") and the customer deposits, advances and interest of its Business held by Seller as of the Effective Date (the "Customer Deposits"), and Buyer agrees to hold, disburse and retain such Construction Advances and Customer Deposits in accordance with the tariffs, laws and Contracts related thereto. The parties acknowledge that the adjustment to the Cash Consideration made pursuant to Section 3.2(b) is intended to compensate Buyer for the liability associated with the Construction Advances and Customer Deposits. 11.12 Other Contracts. 11.12.1 Telephone Directories Published by ALLTEL Publishing Corporation. (a) The Directory Publishing Agreement dated as of November 15, 1994, by and between Tuolumne and ALLTEL Publishing Corporation (the "Directory Publishing Agreement") is an Excluded Contract on Tuolumne Schedule 11.22(h), except as hereinafter provided. Within thirty days after the Execution Date, Citizens shall cause its existing directory provider to indicate in writing whether it will provide directory publication services to Citizens, as of the Effective Date (or as of such later date as described below) with regard to all of the Tuolumne Purchased Exchanges on the same terms and conditions as it is presently providing such services to Citizens, and Citizens shall inform Tuolumne within such thirty day period of Citizens' existing telephone directory provider's written intention. If Citizens' existing directory provider's indication is that it will not provide directory publication services for all of the Tuolumne Purchased Exchanges on the same terms and conditions that it is presently providing such services to Citizens, then the Directory Publishing Agreement shall be deemed to become a Contract for the purposes of this Agreement. Promptly, thereafter, Citizens and ALLTEL Publishing Corporation shall agree to meet in good faith to negotiate any necessary amendments to the Directory Publishing Agreement, to be effective as of the Effective Date, to provide for a retention rate equal to or greater than the higher of (x) 60% or (y) the retention rate provided for in any substantially similar directory publishing agreement between ALLTEL Publishing Corporation and a non-affiliate of ALLTEL Publishing Corporation that was entered into within 18 months prior to the Effective Date. If Citizens' existing directory provider indicates that it will provide directory publication for all the Tuolumne Purchased Exchanges, as provided above, the Directory Publishing Agreement shall remain in effect as to the directory of each of the Tuolumne Purchased Exchanges for which (i) the directory is scheduled to be or is published prior to the Effective Date or (ii) the canvass for the directory has begun prior to the Effective Date and it is scheduled to be published after the Effective Date. Under such circumstances, Citizens' existing directory provider will not begin providing directory publication services for such Tuolumne Purchased Exchange until canvass and production begins for the next succeeding directory related to such Tuolumne Purchased Exchange. (b) If Citizens' existing directory provider indicates that it will provide directory publication for all of the Tuolumne Purchased Exchanges, as provided in Section 11.12.1(a) of this Agreement, Tuolumne and Citizens agree to cooperate and to use their best efforts as follows: (i) Tuolumne will deliver to Citizens on a date mutually agreeable to Citizens and Tuolumne, copies of all records, documents, and materials of Tuolumne even if in the possession of a third party related to directories of the Tuolumne Purchased Exchanges that are published by Tuolumne or its Affiliate. (ii) Except as otherwise agreed between the parties, Tuolumne and its Affiliate shall have no responsibility for the canvass and production functions of any directories related to the Tuolumne Purchased Exchanges that are scheduled to begin canvassing and publication after the Effective Date. (iii) Tuolumne and Tuolumne's Affiliates and Citizens shall provide the other reasonable access to such documentation, reports and accounting records related to directory production as may be necessary to insure a proper transition of directory publication in accordance with the terms of such agreements in effect on the Effective Date. (iv) As promptly as practicable after receipt by Tuolumne of Citizens' existing directory provider's indication that it will provide directory publication services for all of the Tuolumne Purchased Exchanges, Tuolumne or its Affiliate (ALLTEL Publishing Corporation), and Citizens will meet to negotiate in good faith to agree upon the services or work, if any, that Tuolumne or its Affiliate (ALLTEL Publishing Corporation) will provide, and the compensation that Citizens will pay for such services and work, related to any directories that will be canvassed and published by Citizens' existing directory provider. 11.12.2 Telephone Directories Published by L. M. Berry and Company ("L.M. Berry"). (a) The Directory Publishing Agreement dated as of November 17, 1993, by and between Citizens Utilities Company and L. M. Berry (the "Berry Publishing Agreement") is an Excluded Contract on Citizens Schedule 11.22(h), except as hereinafter provided. The Berry Publishing Agreement shall remain in effect as to the directory of each of the Citizens Purchased Exchanges for which (i) the directory is scheduled to be or is published prior to the Effective Date or (ii) the canvass for the directory has begun prior to the Effective Date and it is scheduled to be published after the Effective Date. Under such circumstances, ALLTEL Publishing Corporation will not begin providing directory publication services for such Citizens Purchased Exchange until canvass and production begins for the next succeeding directory related to such Citizens Purchased Exchange. (b) Tuolumne and Citizens agree to cooperate and to use their best efforts as follows: (i) Citizens will deliver to Tuolumne on a date mutually agreeable to Tuolumne and Citizens, copies of all records, documents, and materials of Citizens even if in the possession of a third party related to directories of the Citizens Purchased Exchanges that are published by L. M. Berry. (ii) Except as otherwise agreed between the parties, Citizens and L. M. Berry shall have no responsibility for the canvass and production functions of any directories related to the Citizens Purchased Exchanges that are scheduled to begin canvassing and publication after the Effective Date. (iii) Citizens and Tuolumne shall provide the other reasonable access to such documentation, reports and accounting records related to directory production as may be necessary to insure a proper transition of directory publication in accordance with the terms of such agreements in effect on the Effective Date. (iv) As promptly as practicable after the Execution Date, Citizens and Tuolumne will meet to negotiate in good faith to agree upon the services or work, if any, that Citizens and L. M. Berry will provide, and the compensation that Tuolumne will pay for such services and work, related to any directories that will be canvassed and published by ALLTEL Publishing Corporation. 11.12.3 B&C Agreements. Seller and Buyer shall, prior to the Closing, use their best efforts to allow Buyer to negotiate a billing and collection agreement ("B&C Agreement") reasonably satisfactory to Buyer with each interexchange carrier ("IXC") and each local exchange carrier ("LEC") for which Seller provides, on the Execution Date, billing and collection services in any of its Purchased Exchanges (each such IXC or LEC is hereinafter referred to as a "Carrier"). Seller and Buyer shall cooperate with each other and make available to each other all documents and records relevant and necessary to allow Buyer to finalize negotiations of B&C Agreements, as necessary, and to perform such B&C Agreements after the Effective Date. 11.12.4 Equipment Manufacturers. Seller shall use its best efforts to assist Buyer in obtaining a written agreement with such equipment manufacturers (such as Northern Telecom and Stromberg-Carlson; collectively "Equipment Manufacturers") as Buyer may request, covering such software license agreements and other agreements as are necessary to enable Buyer to operate the equipment manufactured and sold by the Equipment Manufacturers included in Seller's Purchased Property in substantially the same manner as operated by Seller prior to the Effective Date. The agreements shall contain material terms and conditions (including license and warranty, but not necessarily including pricing) that are substantially the same as those provisions in the corresponding agreements between Seller and the Equipment Manufacturers. Buyer understands and agrees that the price and fee provisions of such agreements will be as negotiated between Buyer and the Equipment Manufacturers. The above obligation of Seller shall be expressly conditioned upon the acceptance by Buyer of all material obligations accepted by Seller in such corresponding agreements. It is the responsibility of Buyer to enter into appropriate agreements with the Equipment Manufacturers in respect of service, support, training, maintenance, and future development (hardware and software) for Seller's Purchased Property, such agreements to include terms and conditions agreed to between Buyer and the Equipment Manufacturers. To the extent assignable, Seller agrees to assign, and to the extent non-assignable, Seller agrees to assist Buyer in obtaining the Equipment Manufacturers' consent to the assignment of training credits remaining at the Effective Date on Seller's Purchased Property furnished by the Equipment Manufacturers. 11.12.5 Integrated Contracts. Seller and Buyer acknowledge that certain agreements between Seller (or Affiliates of Seller) and third parties relate both to Seller's Purchased Property and the Excluded Property. Seller agrees to use its best efforts to assist Buyer in obtaining contractual arrangements with such third parties relating to Seller's Purchased Property, which arrangements will be reasonably satisfactory to Buyer; provided that neither Seller nor any of its Affiliates shall be obligated under this Section 11.12.5 to make any payment to any such third party unless such payment is expressly provided for in such agreement. 11.13 Retention of Books and Records. After the Closing, the parties shall retain the Retained Books and Records or the Transferred Books and Records, as applicable, until the shorter of the date that other party consents in writing to their destruction or the seventh anniversary of the Effective Date. Each party shall provide full and free access to the Transferred Books and Records and Retained Books and Records, as the case may be, to duly authorized representatives of the other party at any time during regular business hours for the period in which such Books and Records are required to be retained. Either party may make copies of any such Books and Records as it deems desirable, at its own expense. After the Effective Date, upon reasonable notice, Seller shall provide Buyer with reasonable assistance in locating any of Seller's Original Cost Documents which Buyer may reasonably request after the Effective Date. 11.14 [INTENTIONALLY DELETED] 11.15 Allocation of Cash Consideration. Prior to the Effective Date Citizens and Tuolumne shall agree to the allocation (the "Allocation") of the Purchased Property, Cash Consideration and the Assumed Liabilities to the individual assets or classes of assets. Buyer, Seller, and their respective Affiliates, shall file all Tax Returns and schedules thereto consistent with the Allocation unless otherwise required by applicable Law. 11.16 Real Property Transfers. Within sixty (60) days after the Execution Date, Seller shall deliver to Buyer copies of all existing title insurance policies and surveys covering Seller's Real Property. Thereafter, no later than sixty (60) days before the Effective Date, Seller shall deliver (at its expense) to Buyer a preliminary title binder (on a standard form reasonably acceptable to Buyer), issued by Lawyers Title Insurance Corporation or another title insurance company reasonably acceptable to Buyer, with respect to all Real Property included in Seller's Purchased Property and in which Seller purports to own fee title. Such title binders shall be in form, substance and amount reasonably satisfactory to Buyer (ALTA Owners Policies where available but based upon boundary surveys as described below) and shall be current as of a date no earlier than ninety (90) days prior to the Effective Date. The parties agree that the dollar amount of title insurance to be inserted on each policy shall equal the dollar value set forth on Seller's continuing property records list as of December 31, 1993 for land and buildings. Such title binders shall reflect that, upon consummation of the sale contemplated by this Agreement, Buyer will be vested with good, fee simple, marketable and insurable title to such Real Property, subject only to (i) standard printed exceptions; (ii) inchoate liens for current taxes and assessments not yet delinquent, (iii) standard utility and roadway easements, covenants and restrictions whether or not of record that do not individually or in the aggregate materially detract from the value, or impair the use of the Real Property affected thereby, (iv) existing zoning or similar laws or ordinances that do not interfere with the operation of Seller's Business, (v) Leases and (vi) survey exceptions that do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby (collectively, the "Permitted Exceptions"). If a preliminary title binder indicates an exception other than a Permitted Exception that would impair marketability in any material respect, Seller shall, at its expense, cause such exception to be removed on or before the Effective Date. With respect to each parcel of Real Property covered by a preliminary title binder, Seller shall deliver to Buyer (at Seller's expense and on or prior to sixty (60) days before the Effective Date) a certified current boundary survey showing (x) access to the property, and (y) all improvements on the property and any encroachments across the property line by any improvements of Seller or owners of adjacent property and (at Seller's expense and within sixty (60) days after the Effective Date) owner's title insurance policies for the Real Property (ALTA Owners Policies where available but based upon boundary surveys as set forth above). 11.17 Transfer Taxes and Sales Taxes. (a) Citizens and Tuolumne shall take all reasonable measures to provide that the sale contemplated by this Agreement qualifies for any available exclusion from sales and use taxes for occasional, casual or isolated sales. (b) Citizens and Tuolumne each shall bear and be responsible for paying one-half of any sales, use, transfer, gross receipts, or similar taxes (including related penalties and interest) imposed by state or local tax authorities with respect to the exchange of Purchased Property pursuant to this Agreement (including, without limitation, the Real Property), regardless of whether the tax authority seeks to collect the tax from the transferor or the recipient. Seller shall be responsible for filing the applicable return in a timely manner and administering the payment of such sales, use, transfer, gross receipts or similar tax, and both parties shall be responsible for defending or pursuing any proceedings related thereto, provided that any expenses related thereto shall be shared equally between both parties. Twenty (20) days prior to filing of any such returns, Seller shall deliver to the Buyer those returns for review. Ten (10) business days prior to filing of any such returns, Buyer shall approve the information contained therein and the filing of such returns. (c) Citizens and Tuolumne shall each give prompt written notice to the other party of any proposed adjustment or assessment of a sales, use, transfer, gross receipts or similar tax on the sale contemplated hereby, or of any examination of the sale in a sales, use, transfer or similar tax audit. In any proceedings, whether formal or informal, Citizens and Tuolumne shall permit the other party to participate and defend such proceeding, and shall take all actions and execute all documents required to allow such participation. Neither party shall negotiate a settlement or compromise of any sales, use, transfer, gross receipts or similar tax on the exchange of the Purchased Property without the written consent of the other party, which consent shall not be unreasonably withheld. Seller shall be responsible for the income or franchise taxes imposed with respect to its transfer of its Purchased Property. 11.18 Bulk Sales Laws. Citizens and Tuolumne waive compliance with applicable laws under any version of Article 6 of the Uniform Commercial Code adopted by any state or any similar law relating to the sale of inventory, equipment or other assets in bulk in connection with the sale of the Purchased Property. 11.19 Customer Notification. For a period of at least two (2) months prior to the Effective Date, Seller will permit Buyer to insert preprinted single-page subscriber education materials into billing documentation to be delivered during such period to subscribers affected by the sale. All reasonable costs and expenses related to such insertion and delivery shall be borne and paid by Seller. Other means of notifying subscribers may be employed by either party, at the expense of the initiating party, but in no event shall any notification be initiated without the prior consent of the other party (which consent shall not be unreasonably withheld) or earlier than three (3) months prior to the Effective Date. 11.20. Delivery of Schedules. Except as provided in Section 11.22, Seller shall have a period of ten (10) business days after the Execution Date (the "Supplemental Schedule Period") to supplement or otherwise modify its Schedules to this Agreement by delivering to Buyer, within the Supplemental Schedule Period, a substitute schedule or schedules (collectively, the "Supplemental Schedules"), bearing the legend "This Schedule _, dated _______________, is executed and delivered in accordance with Section 11.20 of the Asset Purchase Agreement, dated as of November 28, 1994 which shall be duly executed by Seller and submitted to Buyer. Buyer shall have a period of ten (10) business days after the expiration of the Supplemental Schedule Period to review the Supplemental Schedules and within such ten (10) business day period notify Seller in writing (which writing may be transmitted by facsimile) of any objections thereto. If Buyer's objections are not resolved to the satisfaction of Buyer within five (5) days of such notification, Buyer may terminate this Agreement, effective immediately upon written notification of that termination. In the event that Buyer does not terminate this Agreement, then Buyer waives all rights to a claim of indemnification based upon or as the result of any changes in the Schedules as reflected in the Supplemental Schedules. For purposes of determining breaches of representations, warranties or covenants hereunder, the Supplemental Schedules provided by Seller shall be deemed Schedules for all purposes. 11.21 FCC Tariffs. In connection with obtaining assignment to Tuolumne's FCC Licenses, as described in Section 5.4, during the period from the Execution Date until the Effective Date, Citizens shall not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and on the Effective Date the study areas relating to the Tuolumne Purchased Exchanges shall remain in the National Exchange Carrier Association Tariff FCC No. 5; provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Citizens, in its sole discretion, shall determine. In connection with obtaining assignment of Citizens' FCC Licenses, as described in Section 5.4, during the period from the Execution Date until the Effective Date, Tuolumne shall not file any application or request for a waiver of Part 36 (study areas), Part 61 (tariffs), and Part 69 (price caps and study areas) of the FCC Rules, and on the Effective Date the study areas relating to the Citizens Purchased Exchanges shall remain in the National Exchange Carrier Association Tariff F.C.C. No. 5, provided, however, that such study areas shall remain in the NECA Tariff FCC No. 5 after the Effective Date only for so long as Tuolumne with respect to such study areas, in its sole discretion, shall determine. 11.22 Post-Execution Lease and Contract Review. Buyer shall have a period of forty-five (45) calendar days after the Execution Date to review Seller's Leases and Seller's Contracts listed on Citizens' and Tuolumne's Schedules 9.1.9 and 9.1.13 respectively, and to notify Seller in writing (which writing may be transmitted by facsimile) of the identity of those Leases and Contracts that Buyer reasonably believes are material to the operation of Seller's Business as a whole or any significant part of the Seller's Purchased Property and which will require Seller, in accordance with Section 7.1.6 or 7.2.11, as the case may be, to obtain a consent to their assignment before the Effective Date can occur. If Buyer does not notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Seller's Leases and Seller's Contracts requiring consent, then Buyer shall be deemed to have agreed that none of the Seller's Leases and Seller's Contracts which are listed on Citizens' or Tuolumne's Schedules 9.1.9 and 9.1.13 require consent to their assignment before the Effective Date can occur. If Buyer does notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Seller's Leases and Seller's Contracts requiring consent, then Seller shall have a period of ten (10) business days upon receipt of such notification to notify Buyer in writing (which writing may be transmitted by facsimile) of any objections thereto. Thereafter, Buyer and Seller shall negotiate in good faith and agree in writing as to the identity of those Seller's Leases and Seller's Contracts which are material to the operation of Seller's Business as a whole or any significant part of Seller's Purchased Property and which will require Seller, in accordance with Section 7.1.6 or 7.2.11, as the case may be, to obtain a consent to their assignment before the Effective Date can occur (the "Material Leases and Contracts"). The parties shall reflect their written agreement as to the identity of the Material Leases and Contracts by placing an asterisk next to the appropriate Lease or Contract on Seller's Schedule 9.1.9 or 9.1.13, which revised Seller's Schedule 9.1.9 or 9.1.13 shall be deemed to be an amendment to this Agreement. ARTICLE 12. EMPLOYEES AND EMPLOYEE MATTERS 12.1 Employee Transfer Agreement. The parties have addressed the transfer of employees and employee benefits matters in separate agreements, each entitled Employee Transfer Agreement, the terms and provisions of each of which are incorporated into this Agreement as if fully set forth herein and a copy of each of which is attached hereto as Schedule 12.1 (collectively, the "Employee Transfer Agreement"). ARTICLE 13. INDEMNIFICATION 13.1 Survival of Representations, Warranties and Covenants. (a) The representations and warranties of Seller made pursuant to this Agreement shall survive the Closing for the following periods after the Effective Date: (i) The representations and warranties of Seller set forth in Sections 9.1.6 and 9.1.8 shall survive without limitation as to time. (ii) The representations and warranties set forth in Section 9.1.15 shall survive until sixty (60) days after the expiration of the applicable statute of limitations (including all extensions). (iii) All other representations and warranties shall survive for eighteen (18) months. The date of expiration of any representation or warranty shall be referred to herein as the "Termination Date." Representations and warranties of Seller under this Agreement shall be of no further force or effect after the applicable Termination Date. Any claim for indemnification with respect to any alleged breach of any representation or warranty not asserted by notice given as herein provided that specifically identifies a particular breach and the underlying facts relating thereto, which notice is given prior to the Termination Date, may not be pursued and is irrevocably waived and released after such time. Without limiting the generality or effect of the foregoing, no claim for indemnification with respect to any representation or warranty of Seller will be deemed to have been properly made except to the extent it is based upon a Third Party Claim or a Direct Claim. (b) Unless a specified period is set forth in this Agreement (in which event such specified period will control), the covenants contained in Section 2.5.1 (except for Section 2.5.1(a) with respect to Taxes), Section 2.5.2 (except for Section 2.5.2(d)), Section 4.3, Section 5.2, Section 5.3, this Article 13, and in Sections 11.1, 11.2, 11.3, 11.6, 11.7, 11.10, 11.12, 11.13, 11.15, 11.16 and 11.18, Articles 16 and 17 and in the Employee Transfer Agreements, will survive the Closing and remain in effect indefinitely, or in the case of Sections 2.5.1(a) (with respect to Taxes), 2.5.2(d), 11.17, and the property tax proration provisions set forth in Section 11.8, will survive until sixty (60) days after expiration of the applicable statute of limitations. All other covenants contained in this Agreement will terminate, without further action, upon the occurrence of the Effective Date and any claim following the Effective Date for an alleged breach of any such covenant may not be pursued, and is irrevocably waived, upon the occurrence of the Effective Date, except that Buyer may make a claim for Seller's breach of the covenants contained in Section 11.5 at any time within eighteen months after the Effective Date. The immediately preceding sentence shall not apply to, or limit to preclude, a party's rights and remedies if the sale contemplated by this Agreement is not concluded as a result of the other party's breach of this Agreement. 13.2 Limitations on Liability. (a) For purposes of this Agreement, (i) "Indemnification Payment" means any amount of Indemnifiable Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee" means any person or entity entitled to indemnification under this Agreement, (iii) "Indemnifying Party" means any person or entity required to provide indemnification under this Agreement, and (iv) "Indemnifiable Losses" means any losses, liabilities, costs, fines, penalties, damages (actual, punitive or other), and expenses and any claims, demands or suits by any person or entity, including, without limitation, any Governmental Authority, and costs and expenses actually incurred in connection with any actions, suits, demands, assessments, judgments and settlements and reasonable attorneys' fees and expenses, in any such case (x) reduced by the amount of insurance proceeds recovered from any person or entity as a result of the Indemnifiable Losses involved and (y) provided that the underlying liability or obligation is not solely the result of any action taken or omitted to be taken by the Indemnitee. (b) As between Citizens and any Affiliate of Citizens, on the one hand, and Tuolumne and any Affiliate of Tuolumne, on the other hand, the rights and obligations set forth in this Article 13 will be the exclusive rights and obligations with respect to the liabilities and obligations referred to in Section 13.3, and any breach of the representations, warranties or covenants referred to in Section 13.3., except for any liability, obligation or breach that results from the actual fraud under the common law, not otherwise implied or imputed, by a party to this Agreement. Without limiting the foregoing, as a material inducement to entering into this Agreement, to the fullest extent permitted by law, each of the parties waives any claim or cause of action that it otherwise might assert, including, without limitation, under the common law or federal or state securities, trade regulation or other laws, by reason of the liabilities and obligations, and any breach of the representations, warranties or covenants, referred to in Section 13.3, except for claims or causes of action brought under and subject to the terms and conditions of this Article 13, and except for claims or causes of action arising due to the actual fraud under the common law, not otherwise implied or imputed. (c) Notwithstanding any other provision of this Agreement or of any applicable law, no Indemnitee will be entitled to make a claim against an Indemnifying Party under Sections 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6 and 9.1.8) or 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.1.6) until the aggregate amount of claims that may be asserted for such Indemnifiable Losses incurred by the Indemnitee exceeds Thirty Seven Thousand Nine Hundred Five Dollars ($37,905.00) and then only to the extent of the excess. (d) Notwithstanding any other provision of this Agreement, the indemnification obligations of Seller under Section 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6 and 9.1.8) and of Buyer under Section 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.1.6) will not exceed the sum of One Million One Hundred Thirty Seven Thousand One Hundred Fifty Dollars ($1,137,150.00). (e) Notwithstanding anything to the contrary contained herein, no Indemnifying Party shall be liable to or obligated to indemnity any Indemnitee hereunder for any consequential, special, multiple, punitive or exemplary damages including, but not limited to, damages arising from loss or interruption of business, profits, business opportunities or goodwill, loss of use of facilities, loss of capital, claims of customers, or any cost or expense related thereto, except to the extent such damages have been recovered by a third person and are the subject of a Third Party Claim for which indemnification is available under the express terms of this Section 13. 13.3 Indemnification. (a) Subject to the other sections of this Article 13, Seller will indemnity, defend and hold harmless Buyer and its Affiliates, directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Seller of any of Seller's representations and warranties contained in Article 9 except for any such breach of representations and warranties which was specified on Seller's Closing Certificate, all of which are waived upon Closing, (ii) a breach by Seller of any covenant of Seller contained in this Agreement or in the Employee Transfer Agreement except for any such breach of covenants which was specified on Seller's Closing Certificate, all of which are waived upon Closing, (iii) the Retained Liabilities with respect to Seller's Business and Seller's Purchased Property, (iv) any Third Party Claim, whether filed, asserted, or sought before or after the Effective Date, in respect of the conduct of Seller's Business or any part of such Business (including contractual obligations in connection with sales or transfers of assets made by Seller prior to the Effective Date), or the ownership or operation of such Business, on or prior to the Effective Date, regardless of whether known or unknown, asserted or unasserted, on the Effective Date. Notwithstanding anything to the contrary contained herein except for Section 11.17, Seller shall not be liable for and shall not be required to indemnify Buyer for any Taxes arising with respect to the post-Effective Date period, regardless of whether the claim is based on breach of a representation, warranty, covenant or otherwise. (b) Subject to the other sections of this Article 13, Buyer will indemnity, defend and hold harmless Seller and its Affiliates, and their directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Buyer of any of Buyer's representations or warranties contained in Article 9 except for any such breach which was specified on Buyer's Closing Certificate, all of which are waived upon Closing, (ii) a breach by Buyer of any covenant of Buyer contained in this Agreement or in the Employee Transfer Agreement, except for any such breach which was specified on Buyer's Closing Certificate, all of which are waived upon Closing, (iii) the Assumed Liabilities with respect to Seller's Business and Seller's Purchased Property, (iv) any Third Party Claim, filed, asserted, or sought after the Effective Date, in respect of the conduct of Seller's Business or any part of such Business or the ownership or operation of such Business, after the Effective Date. (c) All environmental matters or issues, including without limitation, the indemnification obligations contained in Article 14 with respect to Environmental Liabilities, are to be governed by Article 14 and are not addressed, limited or governed by the provisions of this Article 13. (d) Payments made under this Section 13.3 shall be treated by the parties as purchase price adjustments and the parties shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. 13.4 Defense of Claims. (a) If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action, proceeding, or investigation by any entity or person that is not a party to this Agreement or an Affiliate of such a party (a "Third Party Claim") against such Indemnitee, with respect to which an Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of actual notice of such Third Party Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party during the required notification period shall only relieve the Indemnifying Party from its obligation to indemnity the Indemnitee pursuant to this Article 13 to the extent that Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. Indemnifying Party shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether or not the Indemnifying Party elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof, provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (i) the employment of such separate counsel has been specifically authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party has failed to assume the defense of such Third Party Claim within a reasonable time after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee or (iii) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnifying Party and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall not be liable for the fees and disbursements of more than one counsel for all Indemnified Parties in connection with any one proceeding or any similar or related proceedings arising from the same general allegations or circumstances. Without the prior written consent of the Indemnitee, the Indemnifying Party will not enter into any settlement of any Third Party Claim that would lead to liability or create any financial or other obligation on the part of the Indemnitee unless such settlement includes as an unconditional term thereof the release of the Indemnitee from all liability in respect of such Third Party Claim. (b) Any claim by an Indemnitee on account of an Indemnifiable Loss that does not result from a Third Party Claim (a "Direct Claim") will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after the Indemnitee actually becomes aware of the incurrence thereof, and the Indemnifying Party will have a period of thirty (30) calendar days within which to respond in writing to such Direct Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party shall only relieve the indemnifying Party from its obligation to indemnify the Indemnitee pursuant to this Article 13 to the extent the Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. If the Indemnifying Party does not so respond within such thirty (30) calendar day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article 13. (c) If after the making of any Indemnification Payment the amount of the Indemnifiable Loss to which such payment relates is reduced by recovery, settlement or otherwise under any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction (less any costs, expenses, premiums or taxes incurred in connection therewith) will promptly be repaid by the Indemnitee to the Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying Party will, to the extent of such Indemnification Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the Indemnification Payment relates; provided that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss, all claims of the Indemnifying Party against any such third party on account of said Indemnification Payment will be subrogated and subordinated in right of payment to the Indemnitee's rights against such third party. Without limiting the generality or effect of any other provision of this Article 13, each such Indemnitee and Indemnifying Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above- described subrogation and subordination rights. ARTICLE 14. ENVIRONMENTAL MATTERS 14.1 Environmental Due Diligence. 14.1.1 Right to Conduct Due Diligence. Each party hereto, in its role as Buyer, shall have the opportunity to conduct environmental due diligence regarding Seller's Purchased Property in accordance with this Section 14.1, for a period not to exceed 120 days after the Environmental Data Delivery Date (as defined below). 14.1.2 Treatment of Data. All information collected and generated as a result of the environmental due diligence authorized by this Section 14.1 will be subject to the terms and conditions of the Confidentiality Agreement, except as otherwise expressly provided in this Section 14.l. Buyer shall provide to Seller copies of all reports, assessments and other information composed or compiled by Buyer's environmental consultant(s) and shall treat all such information in accordance with the procedures of Section 14.1.5(c). Within thirty (30) days after the Execution Date (the "Environmental Data Delivery Date"), Seller will provide to Buyer copies of all surveys and reports in Seller's possession concerning the existence or possible existence of asbestos or materials containing asbestos relating to any of Seller's Real Property, a list of all underground storage tanks which to Seller's knowledge are located on, or have been removed within the last three years from, any Real Property owned or real estate leased or operated by Seller in connection with its Business and any other reports, studies or documents in Seller's possession relating to Seller's potential liability under any Existing Environmental Requirements. The parties further agree that, if Seller discloses the existence or suspected existence of materials containing asbestos with respect to a given parcel of its Real Property and the asbestos does not exceed applicable limits, if Buyer desires to make renovations or structural changes to the property after the Effective Date (which changes require the removal of asbestos), the removal will be at the expense of Buyer. 14.1.3 Environmental Consultants. Buyer may retain one or more outside environmental consultants to assist in its environmental due diligence concerning Seller's Purchased Property and shall notify Seller of the environmental consultant or consultants Buyer intends to retain. Thereafter, Seller shall have five (5) business days after receipt of such notification to notify Buyer in writing of Seller's objection (which must be for good cause) and substantiate the basis for that objection. If Seller does not object for good cause and substantiate that objection within said five (5) business day period, Seller shall be deemed to have consented to Buyer's selection. 14.1.4 Phase I Reviews. Buyer may conduct the usual Phase I environmental assessment activities of Seller's Purchased Property, including inspecting individual sites, submitting environmental questionnaires to Seller and reviewing existing environmental reports, correspondence, permits and related materials regarding such Purchased Property. Phase I environmental assessment activities shall not include any sampling or intrusive testing other than tank tightness testing and hand auger soil testing. (a) Buyer shall give Seller at least three (3) business days' notice prior to any entry onto such Purchased Property. (b) If Buyer enters such Purchased Property, a representative of Seller may be, but is not required to be, present during such entry on such Purchased Property. (c) All activities of Buyer regarding environmental due diligence shall be conducted to minimize any inconvenience or interruption of the normal use and enjoyment of Seller's Business and its Purchased Property. 14.1.5 Phase II Reviews. Buyer may conduct the usual Phase II environmental assessment activities of Seller's Purchased Property (including, but not limited to, the taking and analysis of soil, surface water and groundwater samples, testing of buildings, drilling wells and taking soil borings) after first conducting a Phase I assessment of a particular site provided that such Phase II assessment activities are conducted in accordance with this Section 14.1.5. (a) If Buyer desires to perform sampling or intrusive testing at a site included in Seller's Purchased Property, Buyer must notify Seller of its desire at least five (5) business days in advance of the proposed date of such sampling or testing and provide a description of the scope of work regarding such sampling or intrusive testing. If Seller does not notify Buyer in writing of Seller's objection to such proposed sampling or testing within five (5) business days after receipt of such notice, Seller shall be deemed to have consented to the proposed sampling or testing. Seller shall not unreasonably object to Buyer's request to perform sampling or testing. (b) Buyer shall provide Seller with copies of field data, field reports, laboratory analyses, logs, laboratory reports and other material or information regarding the sampling or intrusive testing ("Environmental Data") within three (3) business days of Buyer's receipt of such data and shall promptly provide Seller with "matched" or "paired" samples, in accordance with standard sampling and testing protocols, that are obtained during the sampling or intrusive testing of a particular site; provided, however, that Seller shall have no obligation to Buyer to take any action whatsoever regarding such samples. (c) It is understood and agreed that neither Buyer nor its environmental consultant(s) shall disclose or release any Environmental Data without the prior written consent of Seller and that all such information shall be kept strictly confidential. The Environmental Data shall be prepared at the request of counsel to Buyer and, to the fullest extent permitted by law, shall be the work product of such counsel and constitute confidential attorney/client communications. The Environmental Data shall be transferred among Buyer and its consultant(s) in a manner that will preserve, to the greatest extent possible, such privileges. Buyer expressly agrees that until the Closing, it will not distribute the Environmental Data to any third party without Seller's written consent. After the Closing, Buyer agrees that it will not distribute the Environmental Data to any third party without Seller's written consent, except as required by law or by express provisions of Buyer's corporate compliance program if Seller is provided written notice at least ten (10) business days prior to such distribution, provided, however, that for a period of two (2) years after the Effective Date, Buyer may distribute the Environmental Data to any potential purchaser of the Seller's Purchased Property only after first notifying the Seller, and without such notice at any time after such two (2) year period. 14.1.6 Indemnity for Due Diligence Activities. Buyer hereby agrees to indemnify and hold harmless Seller, Seller's Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all claims, liabilities, damages, losses, orders, penalties, fines, costs, charges and expenses (including reasonable attorneys' fees and disbursements, and reasonable costs of experts and expert witnesses) with respect to persons or property arising out of or in connection with the entry of Buyer or its environmental consultant(s) onto Seller's Purchased Property and resulting from any act or omission of Buyer or its environmental consultant(s) provided that Buyer shall not be liable for any Environmental Liabilities incurred by any such party merely discovered by the environmental due diligence performed by Buyer or its environmental consultants. In addition, in the event the transactions contemplated herein with regard to any portion of Seller's Purchased Property do not close, Buyer agrees to restore such portion of such Purchased Property to the condition which existed prior to Buyer's inspections and testing thereof to the extent such portion of such Purchased Property was damaged by such inspections and testing. 14.1.7 Effect of Due Diligence Results. (a) Subject to Section 14.1.7(b) below, Buyer conditionally may terminate this Agreement by written notice to Seller at any time during the period set forth in Section 14.1.1 if: (i) the results of Buyer's environmental due diligence investigation, conducted in accordance with this Section 14. 1, indicate Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of Seller's Purchased Property; and (ii) Buyer reasonably determines (on the basis of its environmental due diligence) that responding to and remediating the foregoing Environmental Liabilities based upon Existing Environmental Requirements cannot be completed for less than Three Hundred Three Thousand Two Hundred Forty Dollars ($303,240.00) (the "Environmental Liabilities Amount") To be effective, any such conditional termination of this Agreement must be delivered in writing to Seller, which writing must specifically acknowledge that the termination is subject to the provisions of paragraph (b) below. (b) In the case of a conditional termination of this Agreement by Buyer in accordance with Section 14.1.7(a) above, Seller may nullify the termination by agreeing to: (i) respond to and fully remediate the Environmental Liabilities based upon Existing Environmental Requirements; or (ii) pay Buyer the cost thereof; or (iii) in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller, remove from Seller's Purchased Property the item or items of Seller's Purchased Property that have occasioned the Environmental Liabilities based upon Existing Environmental Requirements and either substitute therefor an equivalent item or items of Purchased Property satisfactory to Buyer, or make other adjustments to the terms and conditions of the sale contemplated by this Agreement all in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller. Seller's election to nullify Buyer's conditional termination by selecting one of the above options shall be, in each case, specified in a writing mutually satisfactory to the parties, and thereafter on or before the Closing (subject to Section 14.1.7(d)), Seller shall perform its obligations under that writing in full. If the parties fail to sign the writing specifying Seller's obligations within thirty (30) days following Buyer's conditional termination (or such longer period acceptable to Buyer) or sign that writing but Seller fails to perform its obligations thereunder in full on or before the Closing (subject to Section 14.1.7(d)), Buyer's conditional termination under paragraph (a) above automatically shall become final and unconditional unless the parties agree otherwise. (c) If the results of Buyer's environmental due diligence conducted in accordance with this Section 14.1 indicate that the costs of responding to and remediating Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of Seller's Purchased Property are less than the Environmental Liabilities Amount in the aggregate, Seller agrees, at its sole cost, to either (i) remove from such Purchased Property the item or items of Purchased Property that have occasioned the Environmental Liabilities based upon Existing Environmental Requirements and either make a substitution or other adjustment therefor prior to the Closing in accordance with Section 14.1.7(b)(iii) above, or (ii) prior to the Closing (subject to Section 14.1.7(d)), otherwise respond to and remediate those Environmental Liabilities based upon Existing Environmental Requirements in accordance with Section 14.1.7(b)(i) or Section 14.1.7(b)(ii) above, unless the cost of such substitution or the conduct of such response action would exceed the Environmental Liabilities Amount in which case Seller's sole obligation under this Section 14.1.7(c) shall be to pay the Environmental Liabilities Amount toward the completion of such substitution or response and remediation actions. If Seller discharges its obligations under this Section 14.1.7 by expending the Environmental Liabilities Amount on such substituted property or response and remediation action (such expenses to be verified by Seller by delivery by Seller to Buyer of a reasonably detailed statement setting forth such expenses), or paying to Buyer the Environmental Liabilities Amount, Buyer shall sign and deliver to Seller at the Closing a release of Seller from any further liability to Buyer for such remediation and shall indemnify Seller against any liability for such Environmental Liabilities or Environmental Requirements. (d) If Seller elects to respond to and fully remediate Environmental Liabilities based upon Existing Environmental Requirements pursuant to Section 14.1.7(b)(i) or (c)(ii), and such response and remediation has not been completed by the date scheduled for Closing, the parties on or prior to Closing shall enter into an Environmental Remediation Agreement in form and substance reasonably satisfactory to the parties and proceed to Closing; provided, however, that in the case of response and remediation under Section 14.1.7(b)(i), Buyer may elect to postpone the Closing until sufficient response and remediation has been completed so that the remaining response and remediation is equal to or less than the Environmental Liabilities Amount. 14.2 Environmental Indemnification. 14.2.1 Sole Remedy and Release. It is the intent of the parties that the indemnification provided under this Section 14.2 shall be the sole remedy for allocating responsibility regarding environmental matters related to the exchange contemplated by this Agreement, the Seller's Business and the Seller's Purchased Property of which Buyer does not receive notice prior to the Closing (either from Seller in Schedule 14.3 or pursuant to notice given pursuant to Section 17.1 or in any written communication made to Buyer from Buyer's environmental consultants (collectively the "Known Environmental Matters")). Except as expressly provided in this Section 14.2, at Closing each party, for itself and its successors and assigns, by virtue of consummating the sale contemplated by this Agreement and without further action on the part of such party, shall waive and release the other party from any and all liability under any other cause of action at law or in equity concerning the Known Environmental Matters, whether raised pursuant to (i) Environmental Requirements, (ii) any other applicable federal, state or local statute, ordinance, rule or regulation, or (iii) common law. 14.2.2 Indemnification. Subject to the provisions of Sections 14.2.3, 14.2.4 and 14.2.5, Seller agrees to indemnify and hold harmless Buyer, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities under Existing Environmental Requirements arising from acts or omissions occurring, or from the use or ownership of, or any condition or circumstance, relating to, Seller's Purchased Property or its Business that occurred or arose prior to or on the Effective Date on such Purchased Property or in connection with the operation of such Business prior to or on the Effective Date. The foregoing indemnity in this Section 14.2.2 shall only apply to matters that do not constitute Known Environmental Matters (such matters being referred to as the "Unknown Environmental Matters"). Such indemnification under this Section 14.2.2 shall be provided only for claims for Unknown Environmental Matters noticed to the other party pursuant to the procedures of Section 14.2.3, within eighteen (18) months after the Effective Date. Subject to the provisions of Sections 14.2.3 and 14.2.4, Buyer agrees to indemnify and hold harmless Seller, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities, with respect to any Environmental Requirements in existence now or hereafter in effect, arising from acts or omissions occurring after the Effective Date, or from the use or ownership of Seller's Purchased Property after the Effective Date, or any condition or circumstance relating to such Purchased Property or Seller's Business that occurred or arose after such Effective Date on such Purchased Property or in connection with the operation of such Business after the Effective Date. 14.2.3 Notice. A party seeking indemnification under this Section 14.2 must give written notice to the other party, including information sufficient to inform the other party of, and allow such other party to confirm the nature of, the claim and any activities required to address the claim, in sufficient detail for the indemnifying party to confirm that all costs incurred or to be incurred by the party to be indemnified under this Section 14.2 are required by Environmental Requirements, as applicable to Buyer, and Existing Environmental Requirements, as applicable to Seller, and are reasonable and cost-effective. If the indemnifying party disagrees with the party to be indemnified as to the necessity of costs or the reasonableness or cost-effectiveness of the remediation method selected, the parties shall negotiate in good faith to achieve at a mutually satisfactory solution. If the parties cannot agree as to costs or methods of remediation, the matter shall be resolved in accordance with Article 16. 14.2.4 Actual Damages. Any indemnifiable claim under this Section 14.2 shall not include incidental or consequential damages except to the extent such damages have been recovered by a third person and are the subject of a Third Party claim for which indemnification is available under the express terms of this Article 14. Any indemnifiable claim under this Section 14.2 shall be reduced to account for any insurance, storage tank fund, or other proceeds received by the party to be indemnified, as a result of the indemnifiable losses involved. The parties agree to take all reasonable steps to mitigate any indemnifiable claim under this Section 14.2, including complying with any registration and reporting requirements necessary to qualify for reimbursement from any storage tank fund. 14.2.5 Limitations on Indemnification. Notwithstanding any other provision of this Agreement, this Article 14, or any applicable law, the indemnification obligations of Seller under this Section 14.2 shall not exceed the aggregate amount of Five Hundred Sixty Eight Thousand Five Hundred Seventy Five Dollars ($568,575.00). 14.2.6 Adjustments to Cash Consideration. Payments made under this Article 14 shall be treated by Buyer and Seller as purchase price adjustments, and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the Cash Consideration or any additional or reduced taxes resulting from any such basis adjustment. ARTICLE 15. TERMINATION 15.1 Termination Rights. This Agreement may be terminated at any time prior to the Closing Date: (a) at any time by mutual written consent of the parties; (b) by Citizens or Tuolumne, as applicable, if there has been a material breach on the part of the other party of its respective representations, warranties or covenants set forth in this Agreement; provided, however, that a party shall not be entitled to exercise its right of termination under this subsection (b) if the breach is capable of being cured to the non-breaching party's reasonable satisfaction and the breaching party is proceeding diligently with its best efforts to effect such cure. (c) by either party in its role as Buyer, pursuant to Section 11.20 (Delivery of Schedules); (d) by Citizens and Tuolumne, as the result of Section 14.1.7(a); (e) by Citizens or Tuolumne, pursuant to Section 11.9; (f) by Citizens or Tuolumne, if the Closing shall not have occurred by December 31, 1995 due to no fault or delay attributable to the party seeking termination; provided, however, that a party shall not be entitled to exercise any right of termination pursuant to this subsection (f) if such party shall not have performed diligently and in good faith the obligations required to be performed by such party hereunder prior to the date of termination; (g) by Citizens if a Governmental Authority, the approval of which is a condition to Citizens' obligations under Section 7.1, has provided written notice that it shall not consent to or approve the transactions contemplated hereby; or (h) by Tuolumne, if a Governmental Authority, the approval of which is a condition to Tuolumne's obligations under Section 7.2, has provided written notice that it shall not consent to or approve the transactions contemplated hereby. 15.2 Effect of Termination. (a) If this Agreement is terminated pursuant to Section 15. 1 (a), (c), (d), (e), (f), (g) or (h), this Agreement shall be of no further force and effect and there shall be no further liability hereunder on the part of either party or its Affiliates, directors, officers, shareholders, agents or other representatives. (b) A party's exercise of its right of termination under Section 15.1(b) shall not constitute a waiver of its rights to recover damages, whether pursuant to breach of contract or in tort, or other remedies available at law or in equity, from the other party as a result of the other party's breach of this Agreement. (c) Notwithstanding anything to the contrary contained herein, the provisions of this Section 15.2 and of Sections 17.1, 17.2, 17.3, 17.8, 17.11, 17.13, 17.14 and Article 16 shall survive any termination of this Agreement. ARTICLE 16. DISPUTE RESOLUTION 16.1 Exclusive Remedy. Subject to Section 16.5, the parties agree to resolve disputes arising out of this Agreement without litigation. Accordingly, except as provided in Section 16.5, or in the case of a suit to compel compliance with this dispute resolution process, the parties agree to use the following alternative dispute resolution procedure as their sole remedy with respect to any controversy or claim arising out of or relating to this Agreement or its breach. 16.2 Dispute Resolution Process. At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any dispute arising under this Agreement. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations. Discussions and correspondence among the parties' representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, exempt from discovery and production, and without the concurrence of both parties shall not be admissible in the arbitration described below or in any lawsuit. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration. 16.3 Arbitration. Subject to Section 16.5, if negotiations between the representatives of the parties do not resolve the dispute within sixty (60) days of the initial written request, the dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Either party may demand such arbitration in accordance with the procedures set out in those rules. The arbitration hearing shall be commenced within sixty (60) days of the demand for arbitration and the arbitration shall be held in a mutually agreeable location. The arbitrator shall control the scheduling (so as to process the matter expeditiously) and any discovery. The parties may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within thirty (30) days after the close of hearings. The times specified in this Section 16.3 may be extended upon mutual agreement of the parties or by the arbitrator upon a showing of good cause. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. 16.4 Costs and Attorneys' Fees. Each party will bear its own costs and expenses in submitting and presenting its position with respect to any such dispute to the arbitrator, and the fees and expenses of such arbitration procedures, including the fees of the arbitrator will be shared equally by the parties, except that a party seeking discovery shall reimburse the responding party the cost of production of documents (including search time and reproduction costs); provided, however, that if the arbitrator determines that the position taken in the dispute by the non-prevailing party taken as a whole is unreasonable, the nonprevailing party will bear all such fees and expenses, and reimburse the prevailing party for all of its reasonable costs and expenses in submitting and presenting its position. 16.5 Certain Limitations. The provisions of this Article 16 with respect to the resolution of disputes without litigation shall not apply to any dispute, controversy or claim arising out of the provisions of Section 11.1, or the Confidentiality Agreement, or to a party's seeking to proceed under Section 17.14, it being understood and agreed that in the event of a breach by either party of the provisions of Section 11.1, or the Confidentiality Agreement, or in the event that a party seeks to proceed under Section 17.14, the non-defaulting party shall be entitled to proceed to protect and enforce its rights by an action at law, a suit in equity or other appropriate proceeding, whether for specific enforcement of any agreement contained in Section 11.1, or the Confidentiality Agreement or in aid of the exercise of any power granted by Section 11.1, 17.14 or the Confidentiality Agreement or by law or otherwise. ARTICLE 17. MISCELLANEOUS 17.1 Notices. All notices, consents and other communications required or permitted hereunder shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been given when delivered in person or dispatched by electronic facsimile transfer (confirmed in writing by certified mail, concurrently dispatched) or one business day after having been dispatched for next-day delivery by a nationally recognized overnight courier service to the appropriate party at the address specified below: (a) If to Buyer, to: Mr. Donald K. Roberton Vice President-Telecommunications Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4627 and L. Russell Mitten, II, Esq. Vice President-General Counsel Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4651 with a copy to: Jeffry L. Hardin, Esq. Fleischman and Walsh, L.L.P. 1400 Sixteenth Street, N.W. Washington, D.C. 20036 Facsimile No.: 202/745-0916 (b) If to Seller to: ALLTEL Corporation One Allied Drive Little Rock, AR 72202 Attn: President Facsimile No.: 501/661-0962 with a copy to: ALLTEL Corporation One Allied Drive Little Rock, AR 72202 Attn: General Counsel Facsimile No.: 501/661-0962 or to such other persons or address or addresses as any such party may from time to time designate for itself by like notice. 17.2 Press Releases. The parties shall consult with each other in preparing any press release, public announcement, news media response or other forth of release of information concerning this Agreement or the transactions contemplated hereby that is intended to provide such information to the news media or the public (a "Press Release"). Neither party shall issue or cause the publication of any such Press Release without the prior written consent of the other party; provided, however, that nothing herein will prohibit either party from issuing or causing publication of any such Press Release to the extent that such action is required by applicable Law or the rules of any national stock exchange applicable to such party or its Affiliates, in which case the party wishing to make such disclosure wig, if practicable under the circumstances, notify the other party of the proposed time of issuance of such Press Release and consult with and allow the other party reasonable tune to comment on such Press Release in advance of its issuance. 17.3 Expenses. Except as otherwise expressly provided herein, each party will pay any expenses (including, without limitation, attorneys' fees) incurred by it incident to this Agreement and in consummating the transactions provided for herein. All regulatory filing fees required pursuant to Sections 5.1, 5.4 and 5.5 shall be split equally between the parties. Each party will pay the appropriate costs and filing fees relating to any other applications required to be filed by such party. 17.4 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign or delegate any of its rights or duties hereunder without the prior written consent of the other party; provided that either party may assign its rights to receive the Seller's Purchased Property and Assumed Liabilities under this Agreement without the prior written consent of the other party, to any directly or indirectly wholly owned subsidiary of its Parent, but no such assignment and assumption shall in any way operate to relieve the assigning party of its obligations hereunder and provided that assigning party agrees to cause such subsidiary to perform the Assumed Liabilities received by such subsidiary, and shall be jointly and severally liable for any non- performance thereof. Upon the sale, assignment or transfer by Buyer of the Seller's Business or the Seller's Purchased Property to a non- Affiliate of Buyer not in the ordinary course of business of Buyer, Seller's representations and warranties and indemnification obligation for breach thereof shall terminate. Any assignment made in violation of the foregoing provisions shall be void. 17.5 Amendments. This Agreement may be amended or modified only by a subsequent writing signed by authorized representatives of both parties. 17.6 Captions. The captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement, nor as in any way limiting or amplifying the terms and provisions hereof. 17.7 Entire Agreement. The term "this Agreement" shall mean collectively this document, the Schedules hereto, any agreements expressly incorporated herein, and the Confidentiality Agreement. This Agreement supersedes and revokes any prior discussions and representations, other agreements, commitments, arrangements or understandings of any sort whatsoever, whether oral or written, that may have been made or entered into by the parties relating to the matters contemplated hereby. This Agreement constitutes the entire agreement by and among the parties, and there are no representations, warranties, agreements, commitments, arrangements or understandings except as expressly set forth herein. 17.8 Waiver. Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege available to each party at law or in equity. 17.9 Third Parties. Except as expressly provided herein, nothing contained in this Agreement is intended to confer upon any person, other than the parties and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 17.10 Counterparts. This Agreement may be executed in two or more counterparts, any or all of which shall constitute one and the same instrument. 17.11 Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of Delaware (except that no effect shall be given to any conflicts of law principles of the State of Delaware that would require the application of the laws of any other jurisdiction). In accordance with Title 6, Section 2708 of the Delaware Code Annotated, the parties agree to the jurisdiction of the courts of Delaware and to be served with legal process from any of such courts. 17.12 Further Assurances. From time to time, as and when requested by one of the parties, the other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate and make effective the transactions contemplated by this Agreement. 17.13 Certain Interpretive Matters and Definitions. (a) Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning so assigned to it, (iii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (iii) all references to the "knowledge of a party" will be deemed to refer to the actual knowledge of the Executive Officers of the party after reasonable investigation, and (iv) all references to a party's "best efforts" and references of like import will be deemed to refer to the best efforts of such party in accordance with reasonable commercial practice and without the incurrence of unreasonable expense. (b) No provision of this Agreement will be interpreted in favor of, or against, either of the parties by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of such provision or of this Agreement. 17.14 Specific Performance. In addition to all other rights and remedies available at law or in equity, any party hereto may pursue, to the fullest extent available, the remedy of specific performance in order to compel the other party to close pursuant to Article 8. 17.15 Alternative Payment Provisions. If the Effective Date has not occurred by November 30, 1995 due solely to the parties' failure to obtain all Regulatory Approvals and FCC Consents with respect to the transactions regarding the Citizens Purchased Property or the Tuolumne Purchased Property (as the case may be, the "Non-Approved Transaction") then, subject to the provisions of Section 15.1(f), either party by written notice to the other party shall have the right to terminate the Non-Approved Transaction, provided that this Agreement shall remain in effect with respect to the transaction regarding the transfer of the Purchased Property for which all of the Regulatory Approvals and FCC Consents have been obtained (the "Approved Transaction"). In such case, the parties shall promptly proceed to Closing with respect to the Approved Transaction and the Agreement shall be deemed amended to provide that the purchase price (Cash Consideration) of the Citizens Purchased Property shall be $9,926,000.00 payable at Closing by wire transfer of immediately available funds, or that the purchase price (Cash Consideration) of the Tuolumne Purchased Property shall be $15,162,000.00 payable at Closing by wire transfer of immediately available funds. The parties acknowledge that in filing their applications for the Regulatory Approvals, they will incorporate this alternative payment provision and attempt to obtain language in the Final Order which would allow the parties, in their discretion, to Close the transaction under either payment alternative. IN WITNESS WHEREOF, the parties, acting through their duly authorized agents, have caused this Agreement to be duly executed and delivered as of the date first above written. CITIZENS UTILITIES COMPANY OF PENNSYLVANIA By: /s/ Leonard Tow ______________________ Name: Leonard Tow Title: Chairman of the Board and Chief Executive Officer TUOLUMNE TELEPHONE COMPANY By: /s/ Charles R. Galloway _____________________________ Name: Charles R. Galloway Title: Senior Vice President - Accounting & Finance EX-10 10 EXHIBIT 10.20 EXECUTION COPY STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 28th day of November, 1994 (the "Execution Date"), by and among Citizens Utilities Company, a Delaware corporation ("Buyer"), and ALLTEL Corporation, a Delaware corporation ("Seller"). RECITALS WHEREAS, Seller is the record and beneficial owner of all of the issued and outstanding shares of capital stock of NCC Systems, Inc., a Texas corporation (the "Company"); and WHEREAS, Seller desires to sell and deliver to Buyer, and Buyer desires to purchase and accept from Seller, the Shares (as defined below), upon the terms and conditions set forth in this Agreement; and NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement and any amendment hereto, the following terms are defined as set out below or in the Section referenced below: Additional Financial Statements is defined in Section 11.4. Adjusted Total Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Telecommunications Accounts Receivable (item 2-Assets on the Company's Balance Sheet) less "Accounts Receivable Allowance" (item 3 - Assets on the Company's Balance Sheet) after adjusting "Accounts Receivable Allowance" to reflect an uncollectible percentage based upon the Company's actual uncollectible net write-off percentage for the calendar year immediately preceding the year in which the Closing occurs, (ii) Accounts Receivable - Other (item 5-Assets on the Company's Balance Sheet) less Accounts Receivable Allowance - Other (item 6 - Assets on the Company's Balance Sheet), (iii) Prepaid Expense (item 9-Assets on the Company's Balance Sheet), and (iv) Other Current Assets (item 10-Assets on the Company's Balance Sheet) to the extent such other current assets do not represent cash accounts. Adjusted Total Non-Current Assets means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Other Investments at Cost (item 15-Assets on the Company's Balance Sheet) to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and which RTB Stock is owned by the Company immediately after the Effective Date, (ii) Unamortized Debt Expense (item 16-Assets on the Company's Balance Sheet) to the extent such debt expense relates to debt which is to remain outstanding immediately after the Effective Date and (iii) Deferred Maintenance and Retirements (Item 17 - Assets on the Company's Balance Sheet). Adjusted Total Current And Non-Current Liabilities means the sum of the following accounts as reflected on the Company's Balance Sheet: (i) Current Maturities of Long Term Debt (item 1- Liabilities on the Company's Balance Sheet) to the extent such long term debt is to remain outstanding immediately after the Effective Date, (ii) Accounts Payable-Other (item 6-Liabilities on the Company's Balance Sheet), (iii) Advance Payments and Customer Deposits (item 7-Liabilities on the Company's Balance Sheet), (iv) Taxes Accrued - Other (item 9 - Liability on the Company's Balance Sheet), (v) Interest Accrued-Other (item 13-Liabilities on the Company's Balance Sheet) to the extent such interest relates to debt which is to remain outstanding immediately after the Effective Date, and (vi) that portion of Other Deferred Credits (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities that are associated with the requirements of Financial Accounting Standard 106 attributable to the active Transferred Employees. Affiliate has the meaning given to that term in Rule 405 under the Securities Act of 1933, as amended. Agreement is defined in Section 17.7. The Business means the business of the Company; i.e., providing cable television services to the communities served by the NCCSI Systems and other related regulated and non-regulated activities, services and products associated with the NCCSI Systems, including without limitation such unregulated activities, services and products of the Company conducted, offered or serviced by the Transferred Employees or provided or related to the Company's subscribers or customers served in or from the NCCSI Systems (such unregulated activities, services and products (the "Unregulated Business") are considered an integral part of the Business for all purposes of this Agreement). Buyer's Closing Certificate is defined in Section 7.2.1. CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Cable Act of 1992 means the Cable Television Consumer Protection and Competition Act of 1992 and rules and regulations promulgated thereunder. Cable Plant is defined in Section 2.2.1. Casualty Notice is defined in Section 11.9. Casualty Termination Notice is defined in Section 11.9. Closing is defined in Section 8.1. Closing Date is defined in Section 8.1. Common Stock means the common stock of the Company par value $1.00. Communications Act means the Communications Act of 1934, as amended, and rules and regulations promulgated thereunder. Company is defined in the recitals of this Agreement. Company Books and Records is defined in Section 2.2.3. Company's Balance Sheet means the balance sheet of the Company. Confidentiality Agreement means the Confidentiality Agreement dated September 30, 1994 between ALLTEL Corporation and Citizens Utilities Company which is attached and incorporated into this Agreement as Schedule 1-1. Contracts is defined in Section 2.2.2. Copyright Act means Title 17 of the United States Code, as amended, and rules and regulations promulgated thereunder. Damaged Property is defined in Section 11.9. Debtholder Consents is defined in Section 5.2(a). Direct Claim is defined in Section 13.4(b). Effective Date is defined in Section 8.1. Employee Plan Assets is defined in the Employee Transfer Agreement. Employee Transfer Agreement is defined in Section 12.1 Employment Agreements is defined in Section 9.1.18. Environmental Liabilities means all liabilities, obligations (including obligations to respond to, investigate and remediate conditions caused by any Regulated Material), responsibilities, losses, damages (including punitive or treble damages), costs and expenses (including reasonable fees, disbursements and expenses of counsel, experts, consultants and expert witnesses), fines, penalties, interest or bonds, based upon any Environmental Requirements of any Governmental Authority, or as a consequence of (a) the release or threatened release of a Regulated Material in amounts that require response or remediation into the outdoor environment, (b) any circumstance or condition relating to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof, that does not comply with Environmental Requirements, or (c) any claim, demand, notice, cause of action, directive, order, judgment, fine or penalty asserted or sought under or pursuant to any Environmental Requirements by an entity or person not a party to this Agreement, to the extent that the condition or circumstance or event giving rise to the claim, demand, notice, cause of action, directive, order, judgment, fine or penalty relates to the ownership or operation of the Property by any person or party or the conduct of the Business or any part thereof. Environmental Requirements means (i) any federal, state and local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority and all valid and enforceable guidance documents and policies thereof, relating to (x) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (y) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Regulated Material, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Regulated Material in each case as now amended and as now or hereafter in effect. The term Environmental Requirements includes, without limitation, CERCLA, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the federal Solid Waste Disposal Act, the federal Toxic Substances Control Act and the federal Insecticide, Fungicide and Rodenticide Act, each as now amended and as now or hereafter in effect. ERISA means the Employee Retirement Income Security Act of 1974, as amended. ERISA Plans is defined in Section 9.1.18. Estimated Purchase Price is defined in Section 3.3(a). Evaluation Material is defined in the first paragraph of the Confidentiality Agreement. Excluded Books and Records means the general ledger and all books and records relating to (i) tax returns and tax records, (ii) the Excluded Property or (iii) the Retained Liabilities, (iv) employees of the Company that are not Transferred Employees, and (v) subject to Section 11.13, all Original Cost Documents that are not located in the NCCSI Systems. Excluded Contracts means the contracts, leases and agreements listed or identified on Schedule 11.22. Excluded Property means the Excluded Books and Records, the trademarks, trade names, trade dress, logos, and any other intangible assets that use or incorporate the word "ALLTEL" and any other marks listed on Schedule 11.1.5, and the assets disposed, transferred or dividended by the Company pursuant to Section 11.22 and any assets excluded pursuant to Sections 11.9 and 14.1.7. Execution Date is defined in the preamble to this Agreement. Executive Officers of an entity means the president and any vice president of the entity in charge of a principal business unit, division or function. Existing Environmental Requirements means those applicable provisions of any Environmental Requirements that are both in effect and applicable to the Company, the Business or the Property on or prior to the Effective Date. F.A.A. means the U.S. Federal Aviation Administration FCC means the Federal Communications Commission. FCC Consents is defined in Section 5.4. FCC Licenses is defined in Section 2.2.4. Final Order means an action by the FCC, a Franchising Authority , or any other Governmental Authority, as to which: (a) no request for stay of the action by the FCC, a Franchising Authority, or such other Governmental Authority, as the case may be, is pending, no such stay is in effect, and if any time period for filing any request for such a stay is provided by statute or regulation, such time period has passed; (b) no petition, motion or application for rehearing, reconsideration, or review, of the action is pending before the FCC, a Franchising Authority, or such other Governmental Authority, as the case may be, and the time provided for filing any such petition, motion or application has passed; (c) the FCC, a Franchising Authority, or such other Governmental Authority, as the case may be, does not have the action under reconsideration on its own motion and the time in which such reconsideration is permitted has passed; and (d) no appeal to a court, of the FCC's, a Franchising Authority's or such other Government Authority's action, as the case may be, is pending or in effect, and the deadline for filing any such appeal has passed. Final Purchase Price is defined in Section 3.4. Financial Statements is defined in Section 9.1.11. Franchises is defined in Section 2.2.5. Franchising Authorities is defined in Section 2.2.5. GAAP means generally accepted accounting principles. Governmental Authority is defined in Section 9.1.3. HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Indebtedness Releases or Terminations is defined in Section 5.2. Indemnifiable Losses is defined in Section 13.2(a). Indemnification Payment is defined in Section 13.2(a). Indemnifying Party is defined in Section 13.2(a). Indemnitee is defined in Section 13.2(a). Intellectual Property is defined in Section 11.1.1. IRC means the Internal Revenue Code of 1986, as amended. IRS means the Internal Revenue Service. June 1994 Base Amount means the sum of (i) the amount of Net Telecommunications Plant as of June 30, 1994 and (ii) the amount of Materials and Supplies as of June 30, 1994 Law is defined in Section 9.1.4. Leases means all real and personal property leases to which the Company is a party, or to which any Affiliate of the Company is a party and which are used in connection with the Business. Marks is defined in Section 11.1.5. Materials and Supplies means the amount set forth on the Company's Balance Sheet as of a date certain comprising the Company's Materials and Supplies (item 8 - Assets on the Company's Balance Sheet). NCCSI Systems means the Navajo System, Needles System and Zuni System collectively. Navajo System means the Company's cable television systems that are franchised or hold other operating authority in and around Window Rock, Arizona; Fort Defiance, Arizona; Ganado, Arizona; Navajo, Arizona; Ship Rock, New Mexico; Chinlie, Arizona; Many Farms, Arizona; Tohatchi, New Mexico; Kayenta, Arizona; and Tsaile, Arizona. Needles System means the Company's cable television systems that are franchised or hold other operating authority in and around Needles, California and Mohave County, Arizona. Net Telecommunications Plant means the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of Telecommunications Plant In Service (item 22 - Assets on the Company's Balance Sheet, Plant Under Construction -- Short Term (item 23 - Assets on the Company's Balance Sheet), Plant Under Construction -- Long Term (item 24 - Assets on the Company's Balance Sheet), and Telecommunications Plant -- Other (item 25 - Assets on the Company's Balance Sheet), less Accumulated Depreciation and Amortization (item 27 - Assets on the Company's Balance Sheet). Non-FCC Authorizations is defined in 2.2.6. Original Cost Documents means all original cost documentation relating to the Cable Plant. PBGC means the Pension Benefit Guaranty Corporation. Permitted Exceptions is defined in Section 11.16. Plans is defined in Section 9.1.18. Potential Subscriber means, for each System, the total number of single family dwellings plus the total number of individual households in multiple dwelling units (apartments, condominiums, mobile home parks, etc.) for all locations with access to the existing cable plant within the relevant System as set forth on Schedule 9.1.20(a) and as reported to the FCC in the relevant Annual Reports of Cable Television Systems for 1993 (FCC Form 325). Press Release is defined in Section 17.2. Purchase Price is defined in Section 3. 1. Property is defined in Section 2.2. REA Debt means debt of the Company owed to the Rural Electrification Administration. Real Property is defined in Section 2.2. 1. Regulated Material means (i) any "hazardous substance" as defined in CERCLA, (ii) any petroleum or petroleum substance, and (iii) any other pollutant, waste, contaminant, or other substance regulated under Environmental Requirements or, as applicable, Existing Environmental Requirements. Regulatory Approvals is defined in Section 5. 1. Retained Liabilities is defined in Section 13.3(a). RTB Stock means stock of the Rural Telephone Bank. Seller's Closing Certificate is defined in Section 7. 1. 1. Shares means the 200,000 shares of the Common Stock owned by Seller. Subscriber means, for each System, the number of subscribers to cable television provided by the Company in each community unit computed according to the following method: Number of single family dwellings plus the number of individual households in multiple dwelling units (apartments, condominiums, mobile home parks, etc.) paying at the basic subscriber rate plus bulk rate customers plus courtesy and free service as set forth in Schedule 9.1.20(a) and as reported to the FCC in the relevant Annual Reports of Cable Television Systems for 1993 (FCC Form 325). System means any of the systems included within the Navajo System, Needles System or the Zuni System, as the context requires. Tax Returns means a report, return or other information statement required to be supplied to a federal, state or local taxing Governmental Authority with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes the Company. Tax(es) means any foreign, federal, state, provincial, county or local income, sales, use, transfer, excise, franchise, stamp duty, custom duty, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, recording, ad valorem, gains, value-added, unemployment compensation, general corporate, profits, registration, unincorporated business, alternative, social security, estimated, add-on, minimum, privilege or withholding tax and any interest and penalties and additions to such taxes (civil or criminal) related thereto or to the nonpayment thereof. Third Party Claim is defined in Section 13.4(a). Total Deferred Credits is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Unamortized Investment Tax Credit" (Item 22 - Liabilities on the Company's Balance Sheet), "Non-Current Deferred Income Taxes" (Item 23 - Liabilities on the Company's Balance Sheet), "Regulatory Liabilities" (Item 24 - Liabilities on the Company's Balance Sheet), "Other Deferred Credits" (Item 25 - Liabilities on the Company's Balance Sheet), and "Donations of Telephone Plant" (Item 26 - Liabilities on the Company's Balance Sheet). Total Long-Term Debt is the amount set forth on the Company's Balance Sheet as of a date certain comprising the sum of "Long-Term Debt" (Item 17 - Liabilities on the Company's Balance Sheet), "Premium/Discount on Long-Term Debt" (Item 18 - Liabilities on the Company's Balance Sheet), and "Capital Lease Obligations" (Item 19 - Liabilities on the Company's Balance Sheet). Transferred Employee is defined in Article II.A of the Employee Transfer Agreement. Transition Services Agreement is defined in Section 10.1. Unregulated Business is defined in the definition of Business set forth in this Article 1. Zuni System means the Company's cable television systems that are franchised in or hold other operating authority in and around Yah-Ta-Hey, New Mexico, Zuni, New Mexico, and Ramah, New Mexico. ARTICLE 2. PURCHASE AND SALE OF SHARES 2.1 Purchase and Sale of Shares. Subject to the terms and conditions of this Agreement, Seller agrees to sell and deliver to Buyer, and Buyer agrees to purchase and accept, as of the Effective Date, the Shares, free and clear of all security interests, liens, or encumbrances. 2.2 Property. For purposes of this Agreement, the "Property" consists of the Cable Plant, Contracts and Leases (to the extent permitted following compliance with Section 5.3), Company Books and Records, FCC Licenses, Franchises, the Non-FCC Authorizations and other assets in effect or owned by the Company as of the Effective Date that are associated with (i) the NCCSI Systems, and (ii) the Unregulated Business described on Schedule 2.2(b). 2.2.1 Cable Plant. For purposes of this Agreement, "Cable Plant" means the Real Property, machinery, equipment, vehicles and all other assets and properties used, or held for future use, in connection with the conduct of the Business, including, without limitation, all improvements, plants, systems, structures, construction work in progress, towers, tower equipment, antennas, aboveground and underground cable, distribution systems, headend amplifiers, line amplifiers, microwave equipment, converters, testing equipment, motor vehicles, office equipment, furniture, fixtures, supplies, inventory, and other physical assets of every nature and kind owned by the Company or in which the Company holds an interest (other than as a lessee) and used in connection with the Business. For purposes of this Agreement, "Real Property" means the real property owned by the Company and used in connection with the Business, including, without limitation, all land, buildings, structures, easements, rights of way, appurtenances, improvements or privileges located thereon and relating thereto. 2.2.2 Contracts. For purposes of this Agreement, "Contracts" means all agreements that relate to the Business between the Company or any Affiliate of the Company and (i) the Company's subscribers or customers, or (ii) other entities or persons who are not Affiliates of the Company and have business relationships with the Company relating to the Business, except for the Excluded Contracts (some of which are specifically governed by other Sections in this Agreement or the Employee Transfer Agreement). 2.2.3 Company Books and Records. For purposes of this Agreement, "Company Books and Records" means all of the Company's customer or subscriber lists and records, accounts and billing records (including a copy of the detailed general ledger and the summary trial balances, where available for the past two fiscal years), engineering records, files, data, drawings, blueprints, schematics, reports, lists, plans, and processes, and all files of correspondence, lists, records, and reports concerning subscribers and prospective subscribers, signal and program carriage, and dealings with Governmental Authorities, including but not limited to all reports filed on behalf of the Company with the F.C.C. and statements of account filed by or on behalf of the Company with the United States Copyright Office, personnel records (where applicable), Original Cost Documents (where located but excluding Excluded Books and Records) and all other documents, computer data and records (including records and files on computer disks or stored electronically) relating to the Business (excluding Excluded Books and Records), the Property and the Transferred Employees, except for the Excluded Books and Records. 2.2.4 FCC Licenses. For purposes of this Agreement, "FCC Licenses" means all licenses, certificates, permits or other authorizations granted to the Company by the FCC. 2.2.5 Franchises. For purposes of this Agreement, "Franchises" means all franchises and similar authorizations or permits issued or granted to the Company that are used in the conduct of the Business by any local, municipal, county, state or other regulatory authority (the "Franchising Authorities"). 2.2.6 Non-FCC Authorizations. For purposes of this Agreement, "Non-FCC Authorizations" means all licenses, certificates, permits, franchises, or other authorizations (other than FCC Licenses and Franchises) granted to the Company by Governmental Authorities (including without limitation those that are listed or required to be listed on Schedule 9.1.17(c)). ARTICLE 3. PURCHASE PRICE 3.1 Purchase Price. (a) In consideration of the sale of the Shares and the other undertakings of Seller in this Agreement, and subject to and in accordance with the other terms and conditions of this Agreement, on the Closing Date, Buyer will pay to Seller the sum of three million Three Hundred Fifty-Six Thousand Dollars ($3,356,000.00), subject to adjustment as provided in Section 3.2 (the "Purchase Price"). (b) (i) On or before the Closing Date, Buyer shall deliver to Seller, in immediately available funds in U.S. Dollars, the Estimated Purchase Price. Such delivery shall be made by bank wire transfer to an account that Seller shall designate at least two (2) business days prior to the Effective Date. (ii) Buyer will use its best efforts to make the wire transfer of the Estimated Purchase Price by 12:00 noon (Eastern Time) on the Closing Date, provided that all conditions to Closing set forth in Article 7 have been satisfied, or waived by the appropriate party, before such time. 3.2 Adjustments to Purchase Price. (a) Adjustment Regarding Damaged Property. (1) If the provisions of Section 11.9(c)(i) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to repair or replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (2) If the provisions of Section 11.9(c)(ii) are applicable, the Purchase Price will be decreased by the reasonable estimate of the cost to replace the Damaged Property, as determined by the mutual agreement of Buyer and Seller. (b) [INTENTIONALLY DELETED] (c) Adjustment Regarding June 1994 Base Amount. The Purchase Price shall be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which the sum of Net Telecommunications Plant and Materials and Supplies as of the Effective Date exceeds or is less than the June 1994 Base Amount; provided, however, that in determining Net Telecommunications Plant and Material and Supplies as of the Effective Date, no effect will be given for: (i) any decrease thereof resulting from damage, loss or destruction of Damaged Property which is repaired or replaced by Seller or the Company or for which Seller or the Company makes a substitution, in accordance with Section 11.9(b); (ii) any increase thereof resulting from expenditures made by Seller or the Company in connection with any such repair, replacement or substitution of Damaged Property in accordance with Section 11.9(b); or (iii) any increase thereof resulting from Seller's expenditures pursuant to its obligations under Section 14.1.7(b) and (c) except for the cost of purchasing specific items of new plant (i.e., storage tanks). (d) Adjustment Regarding Assets and Liabilities. The Purchase Price will be adjusted, plus or minus, as the case may be, in an amount equal to the amount by which, in each case as of the Effective Date: (i) Adjusted Total Current Assets plus Adjusted Total Non-Current Assets exceeds or is less than (ii) Adjusted Total Current and Non-Current Liabilities plus Total Long Term Debt to the extent such Total Long-Term Debt shall remain outstanding immediately after the Effective Date. 3.3 Estimate of Purchase Price. At least five (5) days prior to the date scheduled for Closing, Seller shall deliver to Buyer an estimate of the Purchase Price based on Seller's good faith estimate of the amount of each adjustment described in Section 3.2 (the "Estimated Purchase Price") on the same basis and in accordance with the same accounting principles, methods and practices applied in preparing the Financial Statements and the Additional Financial Statements, if applicable, taking into account all adjustments required in Section 3.2 (using the balances as reflected on the Company's Balance Sheet as of the end of the month immediately preceding the month in which the Effective Date is scheduled to occur for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and accompanied by a reasonably detailed statement, certified by the chief financial or accounting officer of Seller, describing how each such adjustment was determined. 3.4 Adjustments After Closing. (a) Within sixty (60) days following the Effective Date, Buyer shall deliver to Seller final calculations of the Purchase Price, as adjusted pursuant to Section 3.2 (prepared on the same basis (but using the balances reflected on the Company's Balance Sheet as of the Effective Date for purposes of the Adjustment Regarding June 1994 Base Amount in Section 3.2(c) and the Adjustment Regarding Assets and Liabilities in Section 3.2(d)) and in accordance with the same accounting principles, methods and practices used to prepare the Estimated Purchase Price) which shall be accompanied by a reasonably detailed statement certified by the chief financial or accounting officer of Buyer describing how each such adjustment was determined. (For the purpose of preparing Buyer's calculations and adjustments, Seller shall give Buyer access to all books, records, and other information regarding the Company available to Seller that Buyer may reasonably determine appropriate.) Within thirty (30) days following the delivery of such calculations and adjustments, Seller shall notify Buyer of any objection thereto, stating in reasonable detail the reasons therefor; otherwise, such calculations and adjustments of the Purchase Price shall be final and binding on Seller and Buyer. (For the purpose of reviewing Buyer's calculations and adjustments, Buyer shall give Seller access to all books, records, and other information regarding the Company available to Buyer that Seller may reasonably determine appropriate.) If Seller shall object, Seller and Buyer shall work in good faith to agree on the correct amounts for the final Purchase Price, but if they fail to agree, either party may exercise its rights pursuant to Article 16. (b) Within three (3) business days following the day on which the Purchase Price shall become final, whether by expiration of time or agreement of Seller and Buyer (the "Final Purchase Price"): (i) if the Final Purchase Price shall exceed the Estimated Purchase Price, Buyer shall cause to be transferred to such account in the United States as Seller may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer, or (ii) if the Estimated Purchase Price shall exceed the Final Purchase Price, Seller shall cause to be transferred to such account in the United States as Buyer may specify, immediately available funds, in U.S. Dollars, in an amount equal to such excess, together with interest thereon at a rate of seven percent (7%) per annum from the Effective Date through the date of such transfer. It is the intent of the parties that all Purchase Price adjustments that are not disputed shall be paid by the appropriate party as soon as reasonably practicable, and any disputed amounts will not delay payments with respect to amounts not in dispute. ARTICLE 4. [INTENTIONALLY DELETED] ARTICLE 5. REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS 5.1 Governmental Regulatory Approval. Except as provided in Section 5.4, as promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date with respect to applications to be filed with the Franchising Authorities and with respect to the Material Regulatory Approvals, the parties shall file the applications and notices described on Schedule 5.1 in such form as agreed to by the parties with the appropriate Governmental Authorities, including without limitation the Franchising Authorities, seeking an order permitting the transfer of control of the Company to Buyer (the "Regulatory Approvals"). Each party agrees to use its best efforts to obtain the Regulatory Approvals and the parties agree to cooperate fully with each other and with all Governmental Authorities to obtain the Regulatory Approvals as described on Schedule 5.1 at the earliest practicable date. The parties agree that the Regulatory Approvals containing asterisks on Schedule 5.1 constitute material Regulatory Approvals (the "Material Regulatory Approvals") which are subject to Sections 7.1.3 and 7.2.4, and the Regulatory Approvals that do not contain an asterisk on Schedule 5.1 constitute Immaterial Regulatory Approvals (the "Immaterial Regulatory Approvals") which are subject to Section 5.3, but not Sections 7.1.3 and 7.2.4. 5.2 Debtholder Consents; Indebtedness Releases or Terminations. (a) With respect to the Company's long-term indebtedness identified on Schedule 5.2(a) (the "Long Term Indebtedness"), where required by the underlying debt instruments, as promptly as practicable following the Execution Date, but in any event no more than forty-five (45) days thereafter, the parties shall contact the holders of such indebtedness to request, and use their best efforts to obtain, such holders' consent ("Debtholder Consents") to the transfer of control of the Company on terms acceptable to the parties. The parties acknowledge that all Long Term Indebtedness for which Debtholder Consents have been obtained before the Effective Date and all other Long Term Indebtedness for which Debtholder Consent is not required, shall remain outstanding immediately after the Effective Date and shall be included as a Purchase Price adjustment pursuant to Section 3.2(d). Each party shall bear their own costs and expenses in obtaining such Debtholder Consent. Neither party, however, shall be required to make any payment to the debtholder to obtain the Debtholder Consent, except that Seller shall be responsible for any such payments as are specified in the relevant debt agreement. (b) If within thirty (30) days prior to the Closing Date, the parties have been unable to obtain the Debtholder Consents with respect to any Long Term Indebtedness, the Company shall repay such Long Term Indebtedness in full (including all interest and premiums or penalties thereon). (c) With respect to Long Term Indebtedness that the Company shall repay on or prior to the Effective Date, Seller shall take, at Seller's sole cost and expense, all actions necessary with respect to all persons or entities (collectively, the "Secured Parties") holding any security interest or lien against the Property, to obtain the termination or release, as of the Effective Date, and the prompt removal after the Effective Date, of all security agreements, mortgages and financing statements relating to the Property (such terminations and releases being hereinafter collectively referred to as the "Indebtedness Releases or Terminations"). Buyer agrees to cooperate in good faith with Seller in obtaining the required Indebtedness Releases or Terminations. 5.3 Other Consents. (a) As promptly as practicable after the Execution Date, the parties hereto shall mutually seek the consent, approval or waiver of the other party to any Lease or Contract that requires consent, approval or waiver as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares. To the extent any of the approvals, consents or waivers required with respect to any Lease, Contract or Immaterial Authorization have not been obtained with respect to any Lease, Contract or Immaterial Authorization as of the Effective Date, Seller shall continue to use its best efforts to obtain the consent of such other third party that is required for the transfer of control of such Lease, Contract or Immaterial Authorization after the Effective Date. (b) Notwithstanding anything to the contrary contained herein, if a third party refuses or has failed to consent to the transfer of control of a Lease, Contract or Immaterial Authorization after the Seller has used its best efforts for a period of six months after the Effective Date to obtain such consent, waiver or approval, then Seller and Buyer shall within thirty (30) days after expiration of such six-month period negotiate in good faith and agree upon, and Seller shall pay to Buyer, an amount representing fair compensation to Buyer for the harm caused by the failure to obtain such consent, waiver or approval. Following such payment, Seller shall have no further obligation to Buyer with respect to such Lease, Contract or Immaterial Authorization except as otherwise provided in Section 11.12 with respect to the Contracts and Excluded Contracts addressed in Section 11.12. (c) Seller shall bear all reasonable costs and expenses in obtaining such consents, approvals or waivers to the extent such costs or expenses are specified in the relevant Lease, Contract or Immaterial Authorization, or under applicable Law, and shall reimburse Buyer to the extent Buyer makes any transfer payments which are specified in amount and required under any Lease or Contract to the lessor or other party thereto, provided that seven (7) business days before Buyer makes any transfer payments, Buyer will notify Seller of its intent to do so and after making such transfer payment, Buyer will provide evidence satisfactory to Seller that such transfer payment was made. Buyer and Seller will negotiate in good faith to determine the extent to which each will bear any other costs and expenses arising in connection with obtaining such consents, approvals and waivers. 5.4 FCC Consents. As promptly as practicable after the Execution Date, but no later than forty-five (45) days after the Execution Date, the parties shall file all applications and requests described on Schedule 5.4 in such form as agreed to by the parties with the FCC seeking, and shall use their best efforts to obtain, the FCC's consent to the transfer of control of all FCC Licenses (as listed in Schedule 9.1.17(a)) from Seller to Buyer (the "FCC Consents"). Each party agrees to use its best efforts, and the parties agree to cooperate fully with each other and with the FCC, to obtain the FCC Consents at the earliest practicable date. 5.5 HSR Act Review. As promptly as practicable after the Execution Date but in no event later than thirty (30) days after the Execution Date, the parties will make such filings as may be required by the HSR Act with respect to the sale contemplated by this Agreement. Thereafter, the parties will file as promptly as practicable any supplemental information that may be requested by the U.S. Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR Act. The parties agree to cooperate in seeking early termination of the waiting periods under the HSR Act. ARTICLE 6. PRECLOSING COVENANTS 6.1 Investigation by Buyer. (a) Prior to the Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will afford to the authorized representatives of Buyer reasonable access during normal business hours to the books and records of the Company (including, without limitation, relevant tax information) and to the personal property and Real Property comprising the Property. Buyer and Seller will cooperate with each other to schedule such access. With the consent of Seller (which consent will not be unreasonably withheld), Buyer and its representatives shall have access to all customers of the Company, and to all officers, employees and agents of the Company having knowledge or information concerning the operations of the Company so as to afford Buyer the opportunity to make such review, examination and investigation of the Company and the Property as Buyer may desire to make, to evaluate the competitiveness of the Company and the Business, and to enable Buyer to assimilate the Company and the Business into Buyer's operations as soon as practicable after the Effective Date. To the extent it so desires, Seller shall accompany Buyer on all of Buyer's access to the customers and agents of the Company. Buyer will be permitted to make extracts from or copies of such books and records as may be reasonably necessary. Buyer will not contact any employee, customer or supplier of the Company as to this Agreement or the matters involved herein except in accordance with this Section 6.1. (b) Subject to applicable law, and upon Buyer's request and Seller's consent (which consent will not be unreasonably withheld), Seller shall cause the Company to permit, at Buyer's sole cost and expense: (i) certain key employees and officers of the Company selected by Buyer to attend workshops and training sessions of Buyer (including sessions to train such employees in Buyer's business planning process in order to have the Company after the Effective Date follow Buyer's business planning process and procedures); (ii) The Company's management to work with Buyer during Buyer's planning process between the Execution Date and the Effective Date; (iii) Buyer to confer with the Company about, and to participate in the Company's planning for, any material reduction in work force or other arrangements regarding employees required or implemented pursuant to the Employee Transfer Agreement. (c) As promptly as reasonably practicable after Buyer's request, Seller will furnish, and cause the Company to furnish, such financial and operating data and other information pertaining to the Company as Buyer may reasonably request in order, among other things, to comply with Buyer's disclosure obligations under the federal securities or other laws as such obligations relate to Buyer's prospective ownership of the Company, including any disclosure required in connection with the sale of any securities by Buyer; provided, however, that nothing herein will obligate Seller or the Company to take actions that would unreasonably disrupt the normal course of the business of the Company or violate the terms of any applicable Law or any contract to which the Company is a party or to which any of its assets is subject in providing such information, or to incur any costs with respect to Buyer's external auditors (or the Company's external auditors in the event a report by such auditors is requested by Buyer) providing accounting services with respect to issuing an auditor's report required by Buyer. Any information or document provided to Buyer or acquired by Buyer during this investigation shall be deemed "Evaluation Material" as that term is defined in the Confidentiality Agreement and shall be subject in all cases to the terms of the Confidentiality Agreement; provided, however, that following consultation with Seller, Buyer may disseminate financial or other information with respect to the Business or the Company that Buyer, upon consultation with counsel, determines is required to be disclosed under federal securities laws. (d) Prior to Closing, upon reasonable notice from Buyer to Seller given in accordance with this Agreement, Seller will cause the Company to afford the authorized representatives of Buyer access to the Properties in order to conduct the environmental audit contemplated by Section 14.1. (e) In connection with the continuing operation of the Business between the Execution Date and the Effective Date, Seller shall cause the Company to confer in good faith with Buyer, as reasonably requested by Buyer from time to time, to report on material operational matters, material reductions in work force and other material employee matters, and the general status of ongoing operations. (f) Notwithstanding the provisions of this Agreement or the Confidentiality Agreement, from and after the Execution Date, upon the prior consent of Seller (which consent will not be unreasonably withheld), Buyer may disclose Evaluation Material (as defined in the Confidentiality Agreement) to representatives of rating agencies, underwriters, underwriters' counsel, public accountants, prospective lenders and other third parties involved in any of Buyer's offering of securities or other financings and to fixed income and equity analysts to the extent such parties reasonably have a need to know any such information; provided, that such parties shall (y) be advised of the confidential nature of any Evaluation Material they receive, and (z) agree in writing to be bound to the provisions of the Confidentiality Agreement. 6.2 Satisfaction of Conditions. Without limiting the generality or effect of any provision of Article 7, the parties will use their best efforts to satisfy promptly all conditions required to be satisfied prior to the Closing. 6.3 Notification as to Certain Matters. (a) The Buyer will promptly notify Seller of (i) any information that would cause any representation or warranty of Buyer contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the transactions contemplated by this Agreement; of which in any such case, Buyer's representatives listed on Schedule 6.3(a) become aware on or before the Effective Date. Buyer shall use reasonable best efforts to keep Seller informed of the events described in this Section 6.3(a) and shall permit Seller access to all materials prepared by Buyer in connection therewith. (b) The Seller will promptly notify Buyer of (i) any information that would cause any representation or warranty of Seller contained in this Agreement not to be true and correct as of the date on which it was made or as of the Effective Date, and (ii) any material governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), or the institution or overt threat or settlement of significant litigation, involving the Company, the Business or the transactions contemplated by this Agreement; of which in any such case, Seller's representatives listed on Schedule 6.3(b) become aware on or before the Effective Date. Seller shall use reasonable best efforts to keep Buyer informed of the events described in this Section 6.3(b) and shall permit Buyer access to all materials prepared by Seller in connection therewith. ARTICLE 7. CONDITIONS PRECEDENT TO THE CLOSING 7.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Buyer: 7.1.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been no material breach by Seller of any of its covenants to be performed in whole or in part prior to the Closing and the representations and warranties of Seller in Section 9.1 (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) shall be true and correct as of the Effective Date, except for such representations or warranties that are made expressly as of some other date, which shall be true and correct (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) as of such other date, and Seller shall have delivered to Buyer a certificate in the form attached hereto as Schedule 7.1.1 ("Seller's Closing Certificate"), dated as of the Effective Date and signed by one of Seller's Executive Officers, certifying each of the foregoing, or specifying those respects in which such covenants have been materially breached or such representations and warranties (after giving effect to any material adverse effect qualification (or any other materiality qualification) contained therein) are not true and correct in which event, if the Closing occurs, any claim with respect to matters so specified shall be waived by Buyer unless otherwise expressly agreed by Seller at Closing. 7.1.2 Documents. Seller shall have delivered to Buyer all documents required by Section 8.2. 7.1.3 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions or restrictions which Buyer determines, in good faith and in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Buyer of the transactions contemplated by this Agreement. For purposes of this Section 7.1.3, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.1.4 Material Adverse Changes. There shall have been no material adverse changes to the Property as a whole or the financial position or results of operations of the Company as a whole, and, subject to Section 11.9, the Company shall not have suffered any material loss or damage to the Property, whether or not insured, that would materially affect or impair the Company's ability to conduct the Business after the Effective Date. None of the Additional Financial Statements of the Company delivered pursuant to Section 11.4 shall reflect a material change in the financial position or results of operations of the Company from the financial position or results of operations reflected in the Financial Statements. 7.1.5 Real Estate Transfers. Seller shall have complied with Section 11.16 with respect to its Real Property to be transferred to Buyer. 7.1.6 Lessor and Other Third Party Consents. Seller shall have delivered to Buyer all consents, approvals or waivers of lessors or other third parties to the Material Agreements as so identified by an asterisk on Schedules 9.1.9 and 9.1.13, as such Schedules may be amended pursuant to Section 11.26. All of such delivered consents, approvals or waivers shall be in effect as of the Effective Date. 7.1.7 [INTENTIONALLY DELETED] 7.1.8 Litigation. There shall not be any litigation or other proceeding pending or to the best of Buyer's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Buyer, would involve material expense to Buyer. 7.1.9. Corporate Proceedings. All corporate proceedings required to be taken by Seller in connection with the transactions contemplated by this Agreement shall have been taken; 7.1.10 Lien Searches. Seller shall have delivered to Buyer reasonably comprehensive searches, dated as of a date within 30 days of the Execution Date or any time thereafter, of the public records regarding liens and judgments with respect to the Company, the Business and the Property. 7.1.11. Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Buyer if required by the underlying debt instrument shall have received the Debtholder Consents and shall have entered into any other necessary agreements with the holders of such Long-Term Indebtedness evidencing such Debtholder Consent in form and substance reasonably acceptable to Buyer. 7.1.12. Navajo Stock Purchase. The closing of this transaction shall be concurrent with the closing of Buyer's purchase of all the outstanding common stock of Navajo Communications Co., Inc. from ALLTEL Corporation, pursuant to that certain Stock Purchase Agreement between Buyer and ALLTEL Corporation dated November 28, 1994. 7.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions, any one or more of which may be waived at the option of Seller: 7.2.1 No Misrepresentations or Breach of Covenants and Warranties. There shall have shall have been no material breach by Buyer of any of its covenants to be performed in whole or in part prior to the Closing, and the representations and warranties of Buyer in Section 9.2 shall be true and correct as of the Effective Date, except for such representations or warranties made expressly as of some other date, which shall be true and correct as of such other date (all such representations and warranties to be qualified by any materiality standards contained therein), and Buyer shall have delivered to Seller a certificate ("Buyer's Closing Certificate"), dated as of the Effective Date and signed by one of Buyer's Executive Officers, certifying each of the foregoing or specifying those respects in which such covenants have not been performed or such representations and warranties are not true and correct in which event if the Closing occurs any claim with respect to matters so specified shall be waived by Seller unless otherwise expressly agreed by Buyer at Closing. 7.2.2 Documents. Buyer shall have delivered to Seller all documents required by Section 8.3. 7.2.3 Purchase Price. Buyer shall have delivered to Seller, in the manner specified in Section 3.1, the Estimated Purchase Price as adjusted pursuant to Section 3.2. 7.2.4 No Legal Obstruction. All required waiting periods under the HSR Act shall have expired or been terminated and each of the required Material Regulatory Approvals as set forth on Schedule 5.1 and FCC Consents as set forth on Schedule 5.4 shall have been obtained free of any special terms, conditions, or restrictions which Seller determines, in good faith in its reasonable discretion, will materially and adversely affect the anticipated operational and financial benefits to Seller of the transactions contemplated by this Agreement. For purposes of this Section 7.2.4, all such approvals and consents shall be deemed to have been obtained upon the grant thereof becoming a Final Order. In addition, there shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7.2.5 Corporate Proceedings. All corporate proceedings required to be taken by Buyer in connection with the transactions contemplated by this Agreement shall have been taken. 7.2.6 Litigation. There shall not be any litigation or other proceeding pending or to the best of Seller's knowledge threatened to restrain or invalidate any of the transactions contemplated hereby which, in the reasonable judgment of Seller would involve a material expense to Seller. 7.2.7 [INTENTIONALLY DELETED] 7.2.8 Debtholder Consents. With respect to any Long-Term Indebtedness to remain outstanding immediately after the Effective Date pursuant to Section 5.2(a), Seller, if required by the underlying debt instrument, shall have received the Debtholder Consent. ARTICLE 8. THE CLOSING 8.1 The Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall be held at a place mutually agreed upon by the parties at 9:00 a.m., local time, on the last calendar day (the "Closing Date") of the calendar month in which occurs the tenth (10th) business day after the date Seller notifies Buyer in writing (the "Notice") of its determination that all required Material Regulatory Approvals and FCC Consents have been obtained and provided that the other conditions set forth in Article 7 shall have been satisfied, or at such other place and time as may be agreed upon by Seller and Buyer. The transactions to be consummated at Closing shall be deemed to have been consummated as of 11:59 p.m. on the last calendar day of the calendar month in which occurs the tenth (10th) business day after the date of the Notice (the "Effective Date"). If the Effective Date is not a day on which financial institutions are open and operating, then the Closing Date shall be the immediately following business day on which financial institutions are open and operating. 8.2 Seller's Obligations at Closing. At the Closing, Seller shall deliver to Buyer the following documents duly executed and acknowledged, as appropriate: (a) Certificates representing the Shares, duly endorsed for transfer or accompanied by stock powers duly endorsed in blank. (b) Seller's Closing Certificate. (c) [INTENTIONALLY DELETED.] (d) Indebtedness Releases and Terminations and evidence satisfactory to Buyer that all Long-Term Indebtedness (and interest, premiums and penalties thereon) to be repaid pursuant to Section 5.2(b) has been (or will be at Closing) repaid in full. (e) All of the documents and papers required of Seller as conditions to Closing, including without limitation, the Regulatory Approvals, FCC Consents and the documents required to be delivered by Seller pursuant to Section 11.16. (f) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (g) The Environmental Remediation Agreement if required pursuant to Section 14.1.7(d). (h) All documents required of Seller under the Employee Transfer Agreement. (i) Certificate of the Secretary or Assistant Secretary of Seller certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. (j) Resignations of all officers and directors of the Company, effective as of the Effective Date. 8.3 Buyer's Obligations at Closing. At the Closing, Buyer shall deliver to Seller the following items and documents duly executed and acknowledged as appropriate: (a) The Estimated Purchase Price (as adjusted under Section 3.2), in the manner specified in Section 3.1; (b) Buyer's Closing Certificate (c) All of the documents and papers required of Buyer as conditions to Closing, including, without limitation, the Regulatory Approval and FCC Consents. (d) The Transition Services Agreement, if requested by Buyer pursuant to Section 10.1. (e) The Environmental Remediation Agreement if required pursuant to Section 14.17(d). (f) All documents required of Buyer under the Employee Transfer Agreement. (g) Certificate of the Secretary or Assistant Secretary of the Buyer certifying as to Articles of Incorporation, Bylaws, Board of Directors' approval and incumbency. ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties of Seller. Except as to the environmental matters which are exclusively addressed in Article 14 of this Agreement, Seller represents and warrants to Buyer as follows: 9.1.1 Authorization and Effect of Agreement. Seller has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement and to fulfill its respective obligations under this Agreement. The execution and delivery by Seller of this Agreement and the fulfillment of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and, assuming the due execution and delivery of this Agreement by Buyer, constitutes a valid and binding obligation of Seller, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualification that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.1.2 No Restrictions Against Sale of the Shares. The execution and delivery of this Agreement by Seller does not, and the fulfillment by Seller of its obligations under this Agreement will not, (i) conflict with or violate any provision of Seller's or the Company's certificate of incorporation or bylaws or, (ii) except as set forth in Schedule 9.1.13, or subject to obtaining the approvals and consents reflected in Article 5, conflict with, violate or result in the breach of, constitute a default under, accelerate the performance required by, or result in the creation of any encumbrance upon any of the Property under any provision of any Contract other than any such conflict, violation or breach that alone or in the aggregate would not have an adverse effect on the Buyer, the Company, the Business or the Property after the Effective Date. 9.1.3 Consents and Approvals of Governmental Authorities. No consent, approval, order or authorization of, or registration, declaration or filing with, any court or governmental agency, authority or instrumentality, including, without limitation, the Navajo Nation ("Governmental Authority") is required to be obtained or made by or with respect to Seller or the Company or in connection with the execution and delivery of this Agreement by Seller or the fulfillment by Seller of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, (ii) as described in Schedule 9.1.3, and (ii) such other consents, approvals, orders or authorizations, or registrations, declarations or filings, which if not obtained or made would not result in a material adverse effect on Buyer, the Company, the Business or the Property. 9.1.4 No Violation of Law. Except as indicated in Schedule 9.1.4, the execution and delivery of this Agreement and the fulfillment by Seller of its obligations under this Agreement will not violate any applicable existing statute, ordinance, rule, regulation or common law obligation (collectively, "Law"), except where such violation would not have a material adverse effect on the Company, the Business as a whole or on any significant part of Property after the Effective Date. 9.1.5 Corporate Organization of Seller. Seller is a corporation duly organized, validly existing and in good standing under the laws of Delaware; it has full corporate power and authority to own the Shares and perform its obligations under this Agreement. 9.1.6 Brokers. Seller has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Buyer for any broker's or finder's fees or similar fees or expenses. 9.1.7 Liabilities. The Company is not in default with respect to any of its obligations or liabilities, or the performance, observance or fulfillment of any covenant or condition relating thereto, and no event has occurred and is continuing that constitutes a material breach or default thereunder or that would constitute such a material breach or default with the giving of notice or lapse of time, or both. 9.1.8 Title to Property. The Company has good, valid, undivided, marketable and defensible title to all owned Property, free and clear of all restrictions, charges, liens, or encumbrances of any kind, except for (i) the liens, encumbrances and restrictions shown and disclosed on Schedule 9.1.8-1, (ii) current real and personal property taxes and other statutory liens covering amounts not yet due and payable, and (iii) such other imperfections of title and encumbrances, if any, as do not interfere in any material respect with the present use or value of the item of owned Property to which such imperfection or encumbrance relates. No condemnation proceeding is pending or, to the knowledge of Seller or the Company, threatened with respect to any part of the Property and such Property is not in any violation of any restrictive covenant relating thereto. Schedule 9.1.8-2 sets forth the address and a general description of each item of Real Property owned by the Company included in the Property. In addition, Schedule 9.1.8-2 sets forth a list of the Real Property included in the Property in which the Company holds other than a fee interest (such as easements and rights of way). 9.1.9 Leases. Seller has set forth on Schedule 9.1.9 a list of all the Leases. Each of the Leases is valid, binding and enforceable in accordance with its terms, and except as otherwise disclosed in Schedule 9.1.9, there is not any existing material default or existing material breach of a covenant by the Company under any Lease. The Company enjoys peaceful and undisturbed possession under all material Leases and, to Seller's and the Company's knowledge, the lessor under any such Lease is not (with or without notice or the lapse of time, or both) in material breach or default thereunder, has performed all material obligations required to be performed by it thereunder, and has not given notice of such lessor's intent to terminate such Lease. 9.1.10 Condition of Tangible Assets. All of the tangible Property is in substantially good operating condition and repair, normal wear and tear excepted, well maintained, adequate for the present uses thereof and in compliance in all material respects with applicable federal, state and local ordinances, regulations and statutes relating to the ownership and operation of such Property. Except as set forth on Schedule 9. 1. 10, the Company has not received any written notice within the past twelve (12) months of a violation of any ordinances, regulations or building, zoning and other similar laws with respect to such assets that would have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Each parcel of Real Property and, to the knowledge of Seller and the Company, of real estate leased by the Company and material or necessary to the Business as presently conducted substantially complies with all applicable Laws except where the failure to so comply individually or in the aggregate, would not have a material adverse effect on the Company, the Business as a whole or any such parcel after the Effective Date. Except as set forth on Schedule 9.1.10, other than the Company, no person or party has actual possession or has a right to possession of all or any material portion of any parcel of such Real Property or such leased real estate. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 9.1.10, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED OR STATUTORY, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE PERSONAL PROPERTY INCLUDED IN THE PROPERTY AND HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED OR STATUTORY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. 9.1.11 Financial Statements. (a) Seller has delivered to Buyer a true and correct copy of the Company's audited financial statements, consisting of a balance sheet, income statement and related statement of cash flows as of and for the respective periods ended December 31, 1992, and December 31, 1993, together with the auditor's report thereon (the "Financial Statements"). The Financial Statements were prepared based upon the books and records of the Company, and fairly present in all material respects the financial condition of the Company as of the appropriate periods and the results of operations for the year then ended, in each case in conformity with GAAP and to the best of Seller's knowledge and to the extent required by applicable Law, have been prepared in all material respects in conformity with the regulations of the FCC. The Financial Statements contain no untrue statements of any material fact nor omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Additional Financial Statements to be delivered to Buyer pursuant to Section 11.4 hereof (i) will be prepared in each case in accordance with GAAP (except for the omission of notes thereto with respect to interim Additional Financial Statements), consistent with past practices, from the books and records of the Company; and (ii) will fairly present the financial condition of the Company and the results of operations of the Company for the periods indicated, subject, in the case of interim Additional Financial Statements, to normal year-end adjustments which will not be material in amount or effect; and (iii) to the best of Seller's knowledge and to the extent required by applicable Law, will be prepared in all material respects in conformity with the regulations of the FCC; and (iv) will not contain any untrue statements of any material facts or omit to state any material facts required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) The unaudited balance sheet of the Company as of June 30, 1994 was prepared in accordance with GAAP except for the omission of notes thereto, consistent with past practices, from the books and records of the Company and fairly presents the financial condition of the Company as of such date subject to normal year-end adjustments which will not be material in amount or effect, and to the best of Seller's knowledge and to the extent required by applicable Law, was prepared in all material respects in conformity with the regulations of the FCC. 9.1.12 Absence of Material Changes. Except as Seller may disclose in Schedule 9.1.12, since December 31, 1993, there has not been: (a) Except as described in Section 11.22, any material change in the financial condition, results of operations, assets, liabilities, operations or future business prospects of the Company or the Business; (b) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the Property, the Company or the Business; (c) Except as described in Section 11.22, any disposition (including, without limitation, the grant of a license, franchise, option or other right of any nature whatsoever to sell or distribute) or encumbrance or agreement to dispose of or to encumber, or pledge or grant of a security interest in or agreement to pledge or grant a security interest in, any of the Property, or any increase or an agreement to increase any indebtedness of the Company, except in the ordinary course of business; (d) Any material change in the manner of conducting the Business; (e) Except as described in Section 11.22, any dispute, litigation or other event or condition that materially and adversely affects the business or prospects of the Company, the Business or the Property; (f) Any waiver or release of any material rights or settlement of any material dispute involving the Company, the Business or the Property; (g) Any granting of a material salary increase or other material benefits payable to any Employee, except for ordinary and routine salary increases or bonuses authorized or granted in the ordinary course of business and consistent with past practices; (h) Except as described in Section 11.22, any transaction entered into by Seller or the Company that would have a material adverse effect on the Company, the Business as a whole or the Property as a whole; (i) Any change in the accounting methods or practices of the Company except as required by GAAP or any change in depreciation or amortization policies or rates heretofore adopted by the Company except as required by GAAP; (j) Any material labor dispute or threat thereof which affects generally the Transferred Employees or, to Seller's or the Company's knowledge, any attempt to organize the Transferred Employees for the purpose of collective bargaining; (k) Any event that would have been prohibited under Section 11.5 if Section 11.5 had been in effect since December 31, 1993; (l) Except as described in Section 11.22, any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company of any outstanding shares of capital stock or other securities of, the Company; (m) any amendment of any material term of any outstanding capital stock of the Company; (n) any incurrence, assumption or guarantee by the Company of any indebtedness for borrowed money other than in the ordinary course of business and in amounts and on terms consistent with past practice; (o) Except as described in Section 11.22, any making of any loan, advance or capital contributions to or investment in any person or entity other than loans, advances, capital contributions or investments made in the ordinary course of business; or (p) Except as described in Section 11.22, any agreement or commitment by Seller or the Company (or any understanding between Seller or the Company and any third party) to do or to take any of the actions referred to in paragraphs (a) through (o) of this Section 9.1.12. 9.1.13 Contracts. Each of the Contracts is in full force and effect as of the date of this Agreement in accordance with its terms, and there is no outstanding notice of cancellation or termination in connection therewith. The Company is not in material breach or default in connection with any Contracts, and there is no basis for any claim of breach or default by the Company, or to Seller's the Company's knowledge, any other party, in any material respect under any of the Contracts. None of the Contracts, either separately or in the aggregate, materially and adversely affects the Company, the Business or the Property. After the Effective Date, all rights and obligations of the Company under the Contracts shall continue unimpaired in the Company (assuming that if any Contract requires the consent of the other party thereto, such consent will have been obtained by the parties hereto prior to the Effective Date). Except for the instruments specifically listed in Schedule 9.1.13, the Company is not a party to or subject to: (i) any agreement for the purchase or disposition of any material, equipment, supplies, inventory or service, except individual purchase orders and contracts in amounts less than Twenty-Five Thousand Dollars ($25,000.00); (ii) any agreement to which the Company is a party or by which any of the Property is bound relating to indebtedness for money borrowed including capital leases, security arrangements relating thereto and any amendment or waiver thereof; and (iii) any other agreement not of the type covered by any of the foregoing items of this Section 9.1.13 requiring payments by the Company in excess of Seventy-Five Thousand Dollars ($75,000.00) per agreement, on or after the Effective Date. Schedule 9.1.13 also lists (a) each Contract between the Company and any Affiliate of the Company, and (b) each material Contract between the Company, or an Affiliate of the Company and relating to the Business, and any third party. Seller has made available to Buyer true and correct copies of all agreements and instruments listed in Schedule 9.1.13. Schedule 9.1.13 specifically identifies, with respect to those Contracts which are required to be listed thereon, the Contracts which require the consent, approval or waiver of the other party thereto for the transfer of control of the Company. 9.1.14 Insurance. The Property of an insurable nature and of a character usually insured by companies carrying on similar businesses is insured under insurance policies in such amounts and against such losses or casualties as is (i) usual in such companies and (ii) required under any of the Contracts or Leases. The insurance policies referred to in this Section 9.1.14 are (i) listed on Schedule 9.1.14, and (ii) in full force and effect and the premiums due thereon have been duly and timely paid. The most current statement of values (the statement of values of property of an insurable nature that is submitted to an insurance company to be used as a basis for the calculation of premiums) relative to the Property as presently insured has been made available to Buyer by Seller. On the Effective Date, the coverage under the insurance policies and programs of Seller and its Affiliates applicable to the Company will be terminated, and Buyer will be responsible for providing all insurance coverage for the Company. Following the Effective Date, Seller shall be responsible for and shall pay any additional premiums that might be required by an insurance company for insurance coverage prior to the Effective Date relating to the Company and shall be entitled to any refunds or dividends due from such companies relating to such coverage. Schedule 9.1.14 sets forth a list of the open material claims affecting the Company complete in all material respects, and a description of any self-insurance levels, underlying limits and deductibles. 9.1.15 Taxes. (a) Except as set forth on Schedule 9.1.15(a): (i) Seller or the Company has filed or caused to be filed with the appropriate United States, state and local Governmental Authorities, all Tax Returns required to be filed on or prior to the Effective Date (taking into account all extensions of due dates) by or with respect to the Company and has paid or adequately provided for all Taxes shown thereon as owing, except where the failure to file such Tax Returns or pay any such Taxes would not, or could not reasonably be expected to, have a material adverse effect on Buyer, the Business, or the Company after the Effective Date, (ii) all such Tax Returns were or will be correct and complete in all material respects, (iii) to the knowledge of Seller, all withholding Tax requirements imposed on or with respect to the Company have been or will be satisfied in full in all respects, and (iv) all penalties, interest or other charges that have or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax have been or will be timely paid in full. (b) The Company has been subject to normal and routine audits, examinations and adjustments of Taxes from time to time, but there are no material current audits or material audits for which notification has been received (in either case with respect to the Company) other than those set forth on Schedule 9.1.15(b). (c) Except as set forth in Schedule 9.1.15(c), there is no material written claim against the Company for any Taxes, and no material assessment, deficiency or adjustment has been asserted or, to the knowledge of Seller proposed with respect to any Tax Return of or with respect to the Company. (d) Except as set forth in Schedule 9.1.15(d), there is not in force any extension of time with respect to the due date for the filing of any Tax Return of or with respect to the Company or any waiver or agreement for any extension of time for the assessment or payment of any Tax of or with respect to the Company. (e) Except for Taxes due with respect to Tax Returns that will be paid by Seller, the balance sheet included in the Financial Statements includes adequate provisions for the payment in full of all federal and state income taxes of the Company for all taxable periods or portions thereof during the period beginning with respect to each Tax Return statute of limitations and ending no later than December 31, 1993. The balance sheet included in the Financial Statements has attached thereto a schedule (the "Tax Schedule") which sets forth provisions for such federal and state income taxes. (f) All accrued rights or obligations under any written or unwritten Tax allocation or sharing agreements or arrangements affecting the Company are reflected in the intercompany accounts of the Company. All such Tax allocation or sharing agreements or arrangements have been or will be cancelled on or prior to the Effective Date. No payments are or will become due by the Company after the Effective Date pursuant to any such agreement or arrangement. (g) Except as set forth in Schedule 9.1.15(g), none of the property of the Company is held in an arrangement for which partnership Tax Returns are being filed, and the Company does not own any interest in any controlled foreign corporation (as defined in Section 957 of the Code) or passive foreign investment company (as defined in Section 1296 of the Code). (h) Except as set forth in Schedule 9.1.15(h), none of the property of the Company or any of its Subsidiaries is subject to a safe-harbor lease (pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect after the Economic Recovery Act of 1981 and before the Tax Reform Act of 1986) or is "tax-exempt use property" (within the meaning of Section 168(h) of the IRC) or "tax-exempt bond financed property" (within the meaning of Section 168(g)(5) of the IRC). (i) Except as set forth in Schedule 9.1.15(i), the Company will not be required to include any amount in income for any taxable period beginning after December 31, 1993 as a result of a change in accounting method for any taxable period ending on or before December 31, 1992 or pursuant to any agreement with any Tax authority with respect to any such taxable period. (j) The Company has not consented to have the provisions of Section 341(f)(2) of the IRC apply with respect to a sale of its stock. (k) As a result of the transactions contemplated by this Agreement, neither Buyer nor the Company will be obligated to make a payment to an individual that would be a "parachute payment" to a "disqualified individual" as those terms are defined in Section 280G of the IRC without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future. (l) All Taxes that the Company is required by law to withhold or collect through the Effective Date have been or will be duly withheld or collected and, to the extend required, have been or will be paid to the proper governmental authorities or properly deposited as required by applicable laws. 9.1.16 No Material Claims. Except as disclosed in Schedule 9.1.16 or with respect to Taxes, there are no claims, actions, lawsuits or legal or administrative proceedings pending, or, to the knowledge of Seller or the Company, threatened against or affecting the Company or its properties that, if determined adversely to the Company, would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property. Neither Seller nor the Company knows of any reasonable basis for any such action, claim, lawsuit or proceeding or any governmental or regulatory investigation relative to the Company, the Business as a whole or the Property. The Company is not in default under any judgment, order or decree of any Governmental Authority which would reasonably be expected to have a material adverse effect on the Company, the Business as a whole or any significant part of the Property after the Effective Date. 9.1.17 FCC Licenses, Franchises and Non-FCC Authorizations. (a) Listed on Schedule 9.1.17(a) are the FCC Licenses held by the Company. Each such FCC License is in full force and effect in accordance with its terms, and there is no outstanding notice of suspension, cancellation or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation or termination in connection therewith nor are any of such FCC Licenses subject to any restrictions or conditions that limit the operation of the Business (other than restrictions or conditions generally applicable to licenses of that type). The FCC Licenses are free from all security interests, liens, claims, or encumbrances of any nature whatsoever. Except as set forth on Schedule 9.1.17(a), there are no applications by the Company or material complaints or material petitions by others or proceedings pending or threatened before the FCC relating to the Company or the FCC Licenses. (b) Listed on Schedule 9.1.17(b) are the Franchising Authorities and the Franchises, including any amendments thereto, held by the Company. Seller has made available to Buyer a copy of each Franchise. The Company is in substantial compliance with each of the Franchises and there has not occurred any default (without regard to lapse of time or the giving of notice, or both) by the Company under any of the Franchises, except such defaults which individually or in the aggregate do not have a material adverse effect on the Property or the Business and each Franchise is in full force and effect in accordance with its terms, and there is no outstanding notice of suspension, cancellation, modification or termination or, to Seller's or the Company's knowledge, any threatened suspension, cancellation, modification or termination in connection therewith nor are any of such Franchises subject to any restrictions or conditions that limit the operations of the Business in any material respect. Schedule 9.1.17 (b) lists any Franchising Authority which has an option or right to purchase any Franchise. No Franchising Authority has notified Seller in writing of its intention to exercise its rights to purchase any System or portion thereof subject to such Franchise. Except as disclosed in Schedule 9.1.17(b), the Franchises are free from all security interests, liens, claims, or encumbrances of any nature whatsoever; there are no applications by the Company or material complaints or material petitions by others or proceedings pending or threatened before any Franchising Authority relating to the Company or the Franchises. (c) Listed on Schedule 9.1.17(c) are all Non-FCC Authorizations materially necessary for the conduct of the Business which would include, without limitation, all FAA radio tower ownership authorizations. Each such Non-FCC Authorization is in full force and effect in accordance with its terms. To Seller's and the Company's knowledge, no event has occurred with respect to any materially necessary Non-FCC Authorization which permits, or after notice or lapse of time or both would permit, revocation or termination thereof, or would result in any other material impairment of the rights of the holder of such materially necessary Non-FCC Authorization. 9.1.18 Employee Matters. (a) Schedule 9.1.18(a) lists (and identifies the sponsor of) each material "employee pension benefit plan, " as that term is defined in Section 3(2) of ERISA, each material " employee welfare benefit plan," as that term is defined in Section 3(1) of ERISA maintained or contributed to by the Company or any of its Affiliates in respect of any Transferred Employee (as defined below) (such plans being hereinafter referred to collectively as the "ERISA Plans"), and each other material retirement, pension, profit-sharing, money purchase, deferred compensation, incentive compensation, bonus, stock option, stock purchase, severance pay, unemployment benefit, vacation pay, savings, medical, dental, post-retirement medical, accident, disability, weekly income, salary continuation, health, life or other insurance, fringe benefit, or other employee benefit plan, program, agreement, or arrangement maintained or contributed to by the Company or its Affiliates in respect of or for the benefit of any Transferred Employee or former employee, excluding any such plan, program, agreement, or arrangement maintained or contributed to solely in respect of or for the benefit of Transferred Employees or former employees employed or formerly employed by the Company outside of the United States, as of the date hereof (collectively, together with the ERISA Plans, referred to hereinafter as the "Plans"). Seller has supplied Buyer with a true and complete copy of each Plan and all amendments thereto. Schedule 9.1.18(a) also includes a list of each material written employment, severance, termination or similar-type agreement between the Company or its Affiliates and any Transferred Employee (the "Employment Agreements"). Except to the extent that any assets, liabilities, or accounts are transferred from the Plans or Agreements (pursuant to an Employee Transfer Agreement or otherwise) to plan(s) or agreement(s) maintained or contributed to by Buyer, all such Plans and Agreements shall remain the liabilities of the Seller or its Affiliates and Seller shall take any and all steps necessary to ensure that neither Buyer nor the Company shall be a sponsor of any such Plan or Agreement subsequent to the Effective Date. Except as otherwise disclosed on Schedule 9.1.18(a), the execution and delivery of this Agreement by Seller and the performance of this Agreement by Seller will not directly result now or at any time in the future in (i) the payment by the Company or its Affiliates to any Transferred Employee of any severance, termination, or similar type payments or benefits or (ii) any "parachute payment" (as such term is defined in Section 28OG of the IRC) being made by the Company or its Affiliates to any Transferred Employee. (b) Except as set forth on Schedule 9.1.18(b): (i) Neither the Company nor any of its Affiliates, any of the ERISA Plans, any trust created thereunder, or any trustee or administrator thereof, has engaged in any transaction as a result of which the Company could be subject to any material liability pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC; and (ii) Since the effective date of ERISA, no material liability under Title IV of ERISA with respect to the ERISA Plans has been incurred or is reasonably expected to be incurred by the Company or any of its Affiliates (other than liability for premiums due to the PBGC), unless such liability is reserved for or otherwise reflected on the Financial Statements or unless such liability has been, or prior to the Effective Date will be, satisfied in full. (iii) There is no contract or Employment Agreement covering any Transferred Employee of the Company that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the IRC. (iv) Neither the Company nor any of its Affiliates has engaged in, or is a successor or parent corporation to a person that has engaged in, a transaction described in Section 4069 of ERISA. (c) Except as set forth on Schedule 9.1.18(c), with respect to the ERISA Plans other than those ERISA Plans identified on Schedule 9.1.18(a) as "multi-employer plans": (i) the PBGC has not instituted proceedings to terminate any Plan that is subject to Title IV of ERISA (the "Retirement Plans") and no condition exists or has existed which could constitute grounds for any termination by PBGC; (ii) no filing has been made by the Company, or any of its Affiliates with the PBGC to terminate any Retirement Plan identified on Schedule 9.1.18(a); (iii) none of the ERISA Plans has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the IRC), whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to the Execution Date; (iv) each of the ERISA Plans has been operated and administered in all material respects in accordance with its provisions and with all applicable laws; (v) each of the ERISA Plans that is intended to be "qualified" within the meaning of Section 401(a) of the IRC and, to the extent applicable, Section 401(k) of the IRC, has been determined by the IRS to be so qualified, and nothing has occurred since the date of the most recent such determination (other than the effective date of certain amendments to the IRC, the remedial amendment period for which has not yet expired) that would adversely affect the qualified status of any of such ERISA Plans; (vi) there are no pending material actions, claims or lawsuits which have been asserted or instituted against any of the ERISA Plans, the assets of any of the trusts under such Plan, the plan sponsor, the plan administrator, trustee or any other fiduciary of such Plans with respect to any aspect of such ERISA Plans (except for routine benefit claims or routine expenses). (d) Except as set forth on Schedule 9.1.18(d), none of the ERISA Plans is a "multi-employer plan," as that term is defined in Section 3(37) of ERISA and with respect to any such multiemployer plans (as so defined) listed in Schedule 9.1.18(d), Seller has not made or incurred a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA that would result in the incurrence of a material liability by the Company that is not reserved for or otherwise reflected on the Financial Statements. (e) Except as set forth on Schedule 9.1.18(e), no post-retirement medical and life insurance benefit obligations exist with respect to any Transferred Employees of the Company. (f) No Plan identified on Schedule 9.1.18(a) has any restrictions against termination or modification, either by its terms or, to Seller's or the Company's knowledge, due to any written or oral communications by any representative of the Company nor any of its Affiliates. (g) Except as set forth on Schedule 9.1.18(g), (i) none of the Transferred Employees are represented by a labor union or labor organization and (ii) neither the Company nor any of its Affiliates is a party to nor is the Company subject to, any collective bargaining agreement covering any Transferred Employee. There are currently no strikes, slowdowns, work stoppages or lockouts by or with respect to any Transferred Employee covered by collective bargaining agreements. Except as set forth on Schedule 9.1.18(g), to the best knowledge of Seller and the Company, during the twelve (12) months preceding the Execution Date there have not been any union organizational campaigns by or directed at the employees of the Company. Except as set forth on Schedule 9.1.18(g), no condition has existed or exists that has caused or could be expected to result in the imposition of any lien or encumbrance under ERISA or the IRC on any part of the Property. (h) Seller will make available to Buyer, prior to the Closing Date, a list of those Transferred Employees that Seller believes to have participated in the health or dependent care reimbursement accounts of the Company, together with the elections made prior to the Effective Date with respect to such accounts through the Effective Date. (i) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will cause any acceleration of benefits under any Plan. 9.1.19 Schedules of the Cable Plant. Seller has set forth on Schedule 9.1.19 copies of schedules (at the level of detail agreed to by the parties but in any case including details regarding net book value) of the Company's Cable Plant as of June 30, 1994, including, to the extent available, a schedule specifically identifying the Cable Plant that is associated with the Unregulated Business. 9.1.20. Accuracy of Certain Information. With respect to the Company's Business, Seller hereby represents and warrants to Buyer as follows: (a) Schedule 9.1.20 (a) sets forth, for each System, a material true and accurate description of the following information as of the dates specified: (i) the number of miles of plant included in the Property as reported to the FCC in the Annual Reports of Cable Television Systems for 1993 (FCC Form 325); (ii) the number of Subscribers served by the System as reported to the FCC in the Annual Reports of Cable Television Systems for 1993 (FCC Form 325); (iii) the number of Potential Subscribers as served by the System as reported to the FCC in the Annual Reports of Cable Television Systems for 1993 (FCC Form 325); (iv) the average monthly billings for the radio services; (v) the last twelve months total billing for the radio services for the month ending October 31, 1994; (vi) the number of radio services customers as of October 1994; (vii) the significant radio services customers (billings over $5,000.00 per month); (viii) a description of basic and optional or tier services available from the System, the rates charged for each, and the number of Subscribers receiving each optional or tier service as of June 30, 1994; (ix) the stations and signals carried by the System and the channel position of each such signal and station as of June 30, 1994; and (x) the cities, towns, villages and counties served by the System as of June 30, 1994.) (b) Schedule 9.1.20 (b) sets forth a substantially complete list of all vehicles included in the Property (including trailers, equipment mounted on trailers and self-propelled equipment) together with the manufacturer, model and year of each such vehicle, and indicates whether such vehicle is owned or leased by the Company. 9.1.21 [INTENTIONALLY DELETED] 9.1.22 Payments. All material payments of any kind required to be made by the Company to third parties under any Contract and maturing prior to the Effective Date have been, or will be as of the Effective Date, properly and timely paid or provided for, unless otherwise subject to a bona fide dispute disclosed in Schedule 9.1.22. 9.1.23 Compliance with Laws. (a) Except as Seller shall specifically indicate on Schedule 9.1.23(a), (i) the Company is in compliance in all material respects with all Laws (including, without limitation the Communications Act, the Copyright Act and the laws, rules and regulations of any Franchising Authority and the FAA) applicable to it, the Property and the Business and holds all governmental permits or licenses required in order to conduct the Business and to own and operate the Property; (ii) the present uses of the Property in the conduct of the Business do not violate in any material respect any Law and (iii) no written notice or warning from any governmental or regulatory authority with respect to any failure or alleged failure by the Company to comply with any Law or questioning the validity of any governmental permit or license, has been issued or given, nor to the knowledge of Seller or the Company, is any such notice or warning proposed or threatened. Neither Seller nor the Company is aware of any fact, event or circumstance relating to the Company that is reasonably likely to cause a regulatory agency to deny or withhold its approval to the transactions contemplated hereby. (b) Except as Seller shall specifically set forth in Schedule 9.1.23(b), the Company has made all material submissions under any laws, rules and regulations of the FCC, the U.S. Copyright Office, any Franchising Authority and the F.A.A. (c) (i) Except as Seller shall specifically set forth in Schedule 9.1.23(c)(i), the Company has timely filed all required forms and other materials with the Franchising Authorities and the FCC with regard to the rates charged by the Company to its subscribers and, except as Seller shall specifically set forth on Schedule 9.1.23(c)(i), to the best of Seller's and the Company's knowledge, the rates presently charged by the Company are in compliance with the FCC's rate regulations. (ii) Schedule 9.1.23(c)(ii) lists all of the Franchising Authorities which have been certified to regulate the rates charged by the Company and the status of all rate proceedings pending before said Franchising Authorities. (iii) Schedule 9.1.23(c)(iii) lists all complaints filed with the FCC or any other Governmental Authority regarding the rates charged by the Company in connection with the NCCSI Systems and the status of these complaints. (d) Except as Seller shall specifically disclose in Schedule 9.1.23(d), the Company is authorized to use all frequencies in the aeronautical bands currently being used in the Business. 9.1.24 Correct Records. The financial records, ledgers, account books and other accounting records of the Company are current, correct and complete and reasonably well organized, in all material respects and to the knowledge of Seller and the Company, to the extent required by applicable Law, conform in all material respects with the rules and regulations of the FCC. The Company and its Affiliates have retained substantially all Original Cost Documents regarding the expenditures made by the Company within the immediately preceding two-year period that relate to the Company's Net Telecommunications Plant, and such Original Cost Documents are correct and complete in all material respects. 9.1.25 Materials and Supplies. As of the Effective Date, the value (as reflected on the Company's books) of the Company's materials and supplies relating to the Business which are obsolete or in excess of the requirements of the Business, will not materially exceed the Company's reserve for obsolete or excess Materials and Supplies as reflected on the Company's books. 9.1.26 Assets Necessary to the Business. The Property includes all of the assets and properties (including all licenses and agreements) currently being used or which are reasonably necessary to carry on the Business as currently conducted, other than the assets and properties included in the Excluded Property. 9.1.27 Indian and BIA Consents. (a) Schedule 9.1.27 sets forth all easements, rights-of-way, franchises, licenses, permits, consents, approvals, certificates and other authorizations of tribal authorities and the United States Bureau of Indian Affairs (the "BIA") held by the Company (collectively "Indian Authorizations"). All such Indian Authorizations are in full force and effect, the Company is not in material default thereunder, and there are no other Indian Authorizations required to be obtained by the Company from, or filings required to be made by the Company with, any tribal authority or the BIA; except where the failure to obtain such Indian Authorizations or to make such filings would not have a material adverse effect on the Company, the Business as a whole or on any significant part of the Property after the Effective Date. (b) Except as disclosed on Schedule 9.1.27, there are no material claims, actions, lawsuits or other proceedings pending, or, to the knowledge of Seller or the Company threatened, with respect to any of the Property located, or any operations of the Business conducted, on Indian reservations or tribal lands, and no tribal authority has given written notice of or, to Seller's or the Company's knowledge, has threatened, any cancellation, revocation, termination or material amendment or modification of any Indian Authorization. (c) Except as set forth on Schedule 9.1.27, no consent, approval or waiver from, or filing with, any tribal authority or the BIA is required to be obtained or made in connection with the execution and delivery by Seller of this Agreement, or Seller's fulfillment of its obligations under this Agreement. 9.1.28 Unregulated Business. Schedule 2.2(b) is an accurate summary description of the Unregulated Business, in detail reasonably acceptable to Buyer. 9.1.29. Capital Improvements Required by the Franchising Authorities. Except as set forth on Schedule 9.1.29, there are no changes, modifications, upgrades or enhancements required by the Franchising Authorities to be made to the Property or the operation thereof. 9.1.30 Undisclosed Liabilities. Except as contemplated by this Agreement or as otherwise set forth in Schedule 9.1.30 the Company has no liabilities or obligations of any nature, secured or unsecured (absolute, accrued, contingent or otherwise and whether due or to become due), of a nature required to be recorded or disclosed in a corporate balance sheet prepared in accordance with GAAP, except liabilities and obligations which are not materially in excess of amounts reflected, reserved against or disclosed in the December 31, 1993 Financial Statements or the notes thereto and except for liabilities and obligations incurred in the ordinary course of business since December 31, 1993. Except as may be reflected in the December 31, 1993 Financial Statements or the notes thereto or on Schedule 9.1.30, the Company has no obligations under guarantees, endorsements or indemnities of the obligations of any other person or entity. 9.1.31 Banks. Schedule 9.1.31 lists the name of each bank in which the Company has an account or safe deposit box, and the names of all persons authorized to draw thereon or have access thereto, and the names of all persons holding a power of attorney from the Company. 9.1.32 Ownership of Shares. Seller is the record and beneficial owner of the Shares, which comprise 100% of the outstanding shares of all classes of capital stock of the Company. Seller has legal, valid and marketable title to the Shares, free and clear of all liens, claims, options, security interests or other encumbrances of any character whatsoever ("Encumbrances"). The sale and delivery of the Shares to Buyer pursuant to Article 2 will vest in Buyer legal, valid and marketable title to the Shares free and clear of all Encumbrances other than Encumbrances created or suffered by Buyer and restrictions on sales of the Shares under applicable federal and state securities laws. 9.1.33 Capital Stock. The Common Stock is the only capital stock authorized to be issued by the Company. The Shares are the only shares of Common Stock outstanding. All of the Shares are duly authorized, validly issued, fully paid and non-assessable. Except as described on Schedule 9.1.33, there are outstanding no securities convertible into, exchangeable for, or carrying the right to acquire, equity securities of the Company nor are there any subscriptions, warrants, options, rights or other arrangements or commitments (other than this Agreement) which could obligate Seller or the Company to issue any shares of capital stock or dispose of any ownership interest therein. There are no outstanding obligations of the Company to issue or deliver, or to repurchase, redeem or otherwise acquire any capital stock or other securities of the Company. 9.1.34 Investments. Set forth on Schedule 9.1.34 is the name of each corporation, partnership, joint venture or other entity in which the Company has, or pursuant to any agreement will have, directly or indirectly, the right to acquire by any means, an equity interest therein, together with a description of the Company's interest (or right to acquire the same) in such entity, including any Encumbrances on such interest. 9.1.35 Corporation Organization of Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of Texas; it has full corporate power and authority to own its properties and to carry on the Business as it is now being conducted, and to own or hold under the lease, the Property. 9.1.36 Copyright. (a) Except as disclosed on Schedule 9.1.36(a), for each relevant semi-annual reporting period within the last three years, the Company has timely filed with the U.S. Copyright Office all required statements of account in materially true and correct form, and has paid when due all required copyright royalty fee payments in correct amount, relating to the NCCSI Systems' carriage of television broadcast signals. (b) Except as disclosed on Schedule 9.1.36(b), the Company within the last three years has responded to all written inquiries received by the Company or brought to the Company's attention from the U. S. Copyright Office with respect to statements of account and other documents and instruments filed with respect to the NCCSI Systems, and has submitted or will submit factual information, amended statements of account and supplemental royalty fee payments as appropriate in response to such inquiries. 9.1.37 FAA Authorization. All necessary FAA approvals have been obtained with respect to the operation of the towers on which the equipment used or held for use in the Business is located, and all towers owned by the Company are properly marked and lighted pursuant to FAA regulations except where the failure to mark and light such towers would not have a materially adverse effect on the Company as a whole, the Business as a whole or any significant part of the Property after the Effective Date. 9.1.38 Overbuilds. Except as disclosed on Schedule 9.1.38, (i) to the best knowledge of the Seller and the Company, the Company is currently the only cable television operator providing or intending to provide cable television in the service area of the Systems; and (ii) to the best knowledge of the Seller and the Company, no person other than the Company possesses a valid cable television franchise to serve any of the communities or unincorporated areas presently served by the Systems. 9.2 Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows: 9.2.1 Corporate Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease or otherwise hold the assets owned, leased or held by it. 9.2.2 Authorization and Effect of Agreement. Buyer has the requisite corporate power and authority under its Certificate of Incorporation and Bylaws to execute and deliver this Agreement, to own the Shares and to fulfill all other obligations of Buyer under this Agreement. The execution and delivery by Buyer of this Agreement and the fulfillment by it of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Buyer. Buyer has the requisite legal capacity to purchase, own and hold the Shares upon the consummation of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Buyer and, assuming the due execution and delivery of this Agreement by Seller, constitutes a valid and binding obligation of Buyer, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally and subject to the qualifications that general equitable principles may limit the enforcement of certain remedies, including the remedy of specific performance. 9.2.3 No Restrictions Against Purchase of the Shares. The execution and delivery of this Agreement by Buyer do not, and the fulfillment by Buyer of its obligations under this Agreement will not, conflict with, violate or result in the breach of any provision of the certificate of incorporation or bylaws of Buyer or, subject to obtaining the approvals and consents referred to in Article 5, conflict with, violate or result in the breach of, constitute default under, or accelerate the performance required by any Contract to which Buyer is a party. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by or with respect to Buyer in connection with the execution and delivery of this Agreement by Buyer or the fulfillment by Buyer of its obligations under this Agreement, except (i) the filings and approvals described in Article 5, and (ii) the filings and approvals listed on Schedule 9.2.3. 9.2.4 No Violation of Law. The execution and delivery of this Agreement and the fulfillment by Buyer of its obligations under this Agreement will not violate any Law. 9.2.5 Brokers. Buyer has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with the transactions contemplated by this Agreement in such a manner as to give rise to a claim against Seller for any broker's or finder's fees or similar fees or expenses. 9.2.6 No Material Claims. There are no claims, actions, lawsuits or legal proceedings pending or, to the knowledge of Buyer, threatened against Buyer or its properties that would prevent the consummation of the transactions contemplated by this Agreement. 9.2.7 [INTENTIONALLY DELETED] 9.2.8 Investment. Buyer understands that the Shares that it will acquire pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended (the "Act"), and cannot be offered for sale, sold or otherwise transferred unless the Shares subsequently are so registered or qualified for exemption from registration under the Act. The Shares are being acquired under this Agreement by Buyer in good faith solely for its own account, for investment and not with a view toward resale or other distribution within the meaning of the Act. The Shares will not be offered for sale, sold or otherwise transferred by Buyer without either registration or exemption from registration under the Act and applicable state securities laws. Buyer has such knowledge and experience in financial and business matters that Buyer is capable of evaluating the merits and risks of Buyer's investment in the Shares. Buyer understands and is able to bear any economic risks associated with such investment (including the necessity of holding the Shares for an indefinite period of time, inasmuch as the Shares have not been registered under the Act). ARTICLE 10. CONTINUING BUSINESS RELATIONSHIPS 10.1 Transition Services Agreement. If requested in writing by Buyer on or prior to March 15, 1995, the parties shall, as promptly as practicable but in any event within 30 days after Buyer's written request, negotiate in good faith and enter into a Transition Services Agreement, to be effective no later than the Effective Date, pursuant to which Seller will provide to the Company, at the Company's expense, such financial, accounting, billing, computer, network, administrative and other services (including services relating to the conversion of systems and processes) as may be reasonably requested by Buyer, which agreement shall be in form and substance as mutually agreed to by both Buyer and Seller (the "Transition Services Agreement"). ARTICLE 11. ADDITIONAL COVENANTS OF THE PARTIES 11.1 Intellectual Property. 11.1.1 Definition. "Intellectual Property" means all inventions (whether patentable or not and whether or not such inventions are described or claimed in any patent or patent application), designs (useful or ornamental), and works subject to copyright that may be embodied in, without exclusion, invention disclosures, specifications, manuals, drawings, functional or system block diagrams, flow charts, circuit diagrams, design or user documentation, engineering notebooks, schematics, test programs, documented procedures, documented processes, documented flows, devices, software, or firmware, that relate to the function, design, development, manufacture, testing, use, operation, maintenance or repair of any product, apparatus, article of manufacture, process, method or service. "Intellectual Property" shall also include patents, patent applications (including continuations, continuations- in-part, divisions, reissues, reexamined patents and patent applications and extensions thereof), copyrights (whether common law or statutory, registered or unregistered), or trade secrets, residing in the subject matter above. 11.1.2 Grant by Seller. (a) Subject to the terms and conditions of this Agreement Seller will use its best efforts to assist the Company (provided that Buyer shall be responsible for any fees associated therewith) in obtaining the consent of any necessary third party for the use of any Intellectual Property that the Company has placed in public use on, or prior to, the Effective Date and that is presently used by the Company, but excluding any Intellectual Property listed in Schedule 11.22(h). (b) The above Section 11.1.2(a) sets forth Seller's entire obligation with respect to the Intellectual Property to the Company. Except as specifically provided otherwise in this Agreement or any other agreement between Buyer and Seller, Seller shall have no continuing obligation beyond the Effective Date to provide support of any kind in the Company's use of such Intellectual Property. (c) Buyer agrees and understands that Seller or its Affiliates shall retain ownership of all Intellectual Property owned by Seller or its Affiliates as of the Effective Date. Buyer further agrees and understands that the retained ownership shall include the right of Seller to grant licenses to vendors and customers of Seller, and to other third parties. (d) Additional agreements, if any, between Buyer and Seller regarding possession and use by the Company of computer software that is owned by Seller, or that is licensed by an Affiliate of Seller to Seller, are set forth in Schedule 11.1.2. 11.1.3 Nonassertion. Seller agrees that, with respect to the Intellectual Property that as of the Effective Date the Company owns or controls or under which it has the right to grant licenses, Seller shall not assert against Buyer, or Affiliates of Buyer, or vendees, mediate or immediate, of Buyer or the Company, a claim of infringement, misappropriation or misuse of such Intellectual Property right arising from the Company's activities practiced in the ordinary and normal course of the Business. 11.1.4 Infringement. (a) Notwithstanding any other provision of this Agreement and subject to the representation in Section 11.1.3, Buyer understands that Seller has not made or given, and does not make or give, any warranty as to the value, enforceability, or validity of any Intellectual Property or that the use by the Company of any Intellectual Property under this Agreement will not infringe other intellectual property rights not licensed under this Agreement. (b) Nothing contained in this Agreement shall be construed as an agreement by, or obligation of, Seller to bring or prosecute actions or suits against third parties for infringement or violation of any Intellectual Property licensed hereunder. (c) Seller shall have no obligation to defend, indemnify or hold harmless the Company or Buyer from any damages, costs or expenses resulting from any obligation, proceeding or suit based upon any claim that any activity, subsequent to the Effective Date, engaged in by Buyer, the Company, a customer of Buyer's or the Company's or anyone claiming under Buyer or the Company constitutes direct or contributory infringement or misuse of any intellectual property rights not licensed under this Agreement. (d) Buyer shall be liable for and shall hold Seller and its Affiliates harmless from and against any and all Indemnifiable Losses resulting from any obligation, proceeding or suit based upon any claim that any activity conducted or engaged in, subsequent to the Effective Date, by Buyer, the Company, a customer of Buyer's or the Company's, or anyone claiming under Buyer or the Company constitutes direct or contributory infringement, or misuse, or misappropriation of any intellectual property right of any third party. 11.1.5 Trademark Phaseout; Corporate Name Change. (a) Buyer acknowledges that Seller or its Affiliates are the owners of, and have permitted the Company to use, certain trade names, trade dress, trademarks, service marks, logos and related intangible property (collectively, "Marks") used in connection with the Business, including, without limitation, the items listed on Schedule 11.1.5, and Buyer understands and agrees that the Marks, or any right or license of the Company to the Marks are not being transferred pursuant to this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in the use of the Marks, and Buyer agrees that it shall cause the Company not to use the Marks (or any names or Marks confusingly similar to the Marks) except as expressly set forth in this Section 11.1.5. After the Effective Date, Buyer shall cause the Company to replace all Marks of Seller as soon as possible, but in no event later than one hundred eighty (180) days after the Effective Date for Marks affixed to items with a valid continuing use in the Company's conduct of the Business, including, without limitation, buildings, vehicles, heavy equipment, hard hats, tools, tool boxes, kits (safety and others), signs, manual covers and notebooks. After the Effective Date, Buyer will cause the Company to not use, and will destroy or deliver to Seller, all such items with Marks affixed to them that have no valid continuing use in the Company's conduct of the Business, including items affecting customer or employee relations or items that do not reflect the Company's true identity. Specific items to be destroyed or returned include items with Marks affixed to them including, without limitation, giveaways; order, purchase or materials forms; requisitions; invoices; statements; time sheets/labor reports; bill inserts; stationery; personalized note pads; maps; organization charts; bulletins/releases; sales/price literature; manuals or catalogs; report covers/folders; program materials; and materials such as media contact lists/cards. (b) Within two business days after the Effective Date, Buyer shall take all action necessary to change the corporate name of the Company so as to reflect that the Company is no longer an Affiliate of Seller. 11.1.6 Goodwill. Buyer recognizes the value of the goodwill associated with the Marks, and acknowledges that the Marks and all rights therein and the goodwill pertaining thereto belong exclusively to Seller, and that the Marks have a secondary meaning in the minds of the public. 11.1.7 Quality of Goods. Buyer agrees that the conduct of the Business after the Effective Date by the Company using the Marks shall be provided in accordance with all applicable federal, state and local laws, and that the same shall not reflect adversely upon the good name of Seller, and that the conduct of the Business will be of a standard and skill equivalent to that employed prior to the Effective Date. 11.1.8 Seller's Remedies for Unauthorized Use of Marks. Buyer acknowledges that the Company's failure to cease use of the Marks as provided in this Agreement, or its improper use of the Marks, will result in immediate and irreparable damage to Seller. Buyer acknowledges and admits that there is no adequate remedy at law for such failure to terminate use of the Marks, or for such improper use of the Marks, and Buyer agrees that in the event of such failure or improper use, Seller shall be entitled to equitable relief by way of temporary restraining order or injunction or any other relief available under this Agreement. 11.2 Effect of Due Diligence and Related Matters. Buyer represents that it is a sophisticated entity that was advised by knowledgeable counsel and, to the extent it deemed necessary, other advisors in connection with this Agreement and by the Effective Date will have conducted its own independent review and evaluation of the Company. Accordingly, Buyer covenants and agrees that (i) except for the representations and warranties set forth in this Agreement and the Schedules (and the Financial Statements, the Additional Financial Statements, and actuarial reports required pursuant to the Employee Transfer Agreement), Buyer has not relied and will not rely upon any document or written or oral information furnished to or discovered by it or its representatives, (ii) there are no representations or warranties by or on behalf of Seller or its Affiliates or representatives except for those expressly set forth in this Agreement and in any other written agreement entered into with Seller or any of its Affiliates in connection with this Agreement, and (iii) to the fullest extent permitted by law, Buyer's rights and obligations with respect to all of the foregoing matters will be solely as set forth in this Agreement or in such other written agreements. 11.3 Confidentiality. Whether or not the Closing occurs, the parties hereto and their respective officers, directors, employees and representatives will comply with the Confidentiality Agreement, the provisions of which are expressly incorporated herein in their entirety by this reference. 11.4 Additional Financial Statements. Seller shall deliver to Buyer the following financial statements of the Company (collectively, the "Additional Financial Statements") within the time periods set forth below: (a) Within forty-five (45) days after the Execution Date for the month of October, 1994, and within forty-five (45) days after the close of each month beginning with November, 1994, and continuing up to and including the month next preceding the month in which the Closing occurs, a balance sheet and income statement as of and for such month, and as of and for the year-to-date period then ended; and (b) By April 30, 1995, a balance sheet for the year ended December 31, 1994, and an income statement and statement of cash flows for 1994, together with the auditor's report thereon. 11.5 Conduct of Business. From the Execution Date until the Effective Date, except as described in Section 11.22, Seller shall cause the Company to conduct the Business in the ordinary course in accordance with prudent business judgment and consistent with past practice and policy and to (i) preserve the Business as an ongoing business, (ii) keep available to the Business its services and the services of its Affiliates at least to the same extent as such were generally available from January 1, 1994 through the Execution Date and are available on the date hereof, (iii) not take any action that would jeopardize any material and beneficial contractual relationships with persons having business dealings with the Business, and (iv) preserve all of the Business' Franchises, certificates, licenses, authorizations and other rights. From the Execution Date to the Effective Date, except as described in Section 11.22 and except with the prior written consent of Buyer, which the Buyer shall not unreasonably withhold: (a) The Business will be conducted in substantially the same manner as it is presently being conducted on the Execution Date. Seller will cause the Company to refrain from entering into any material transaction or contract other than in the ordinary course of business and to not make any material change in the general nature of the Business or in its methods of management, marketing, accounting or operations (including repair and maintenance functions). (b) Seller will cause the Company not to (i) create or incur any indebtedness for borrowed money or otherwise, except in the ordinary course of business, (ii) enter into or terminate, as lessor or lessee, any Lease other than in the ordinary course of business, (iii) create any liens or other security interest, except in the ordinary course of business, or (iv) change in any material respect or terminate any of the insurance policies referred to in Section 9.1.14, unless equivalent coverage is obtained. (c) Except as listed or described on Schedule 11.5(c), and except for dispositions of salvaged property that has been replaced in accordance with the plans attached in Schedule 11.5(c), Seller will cause the Company not to sell, lease, dispose of or otherwise transfer, or make any contract for the sale, lease, disposition or transfer of any Property other than, with respect to any individual item (other than vehicles) having a value of less than Seventy-Five Thousand Dollars ($75,000.00) and with respect to all items (other than vehicles) the aggregate value of which shall not exceed Two Hundred Fifty Thousand Dollars ($250,000.00). (d) Without prior reasonable notification to Buyer, or unless otherwise expressly directed by a Franchising Authority, Seller will cause the Company not to (i) institute any proceeding with respect to, or otherwise change, amend, supplement, terminate, renew, suspend or abrogate any Franchise or (ii) enter into or agree to any stipulation, order, or decree of, or settlement with any Franchising Authority that in the case of (i) or (ii) above, would have a material adverse effect on the revenue, authorized return on equity or earnings of the Business. Seller will cause the Company not to file any application, petition, motion, brief, testimony, settlement agreement or other pleading in any proceeding before any Franchising Authority, or before the FCC or appeals related thereto, unless Seller shall have first provided Buyer with a copy of the same and provided Buyer with a reasonable opportunity to comment to Seller with respect thereto. If Buyer determines it should intervene in any proceeding before any Franchising Authority in which Buyer's position is or may be different from the Seller's or the Company's, Seller will not, and will cause the Company not to oppose Buyer's intervention in such proceeding, without waiving any other rights related thereto. (e) Except as listed on Schedule 11.5(e) or as required by law or in the ordinary course of business of the Company or pursuant to any Contract, Seller will cause the Company not to (i) enter into or amend any employment agreement with any individual that will become a Transferred Employee, or enter into or amend any union agreement or commitment (including any new commitment to pay retirement or other benefits, or amendments to the Company's retirement plans), (ii) effect any net increase over five percent (5%) since the Execution Date in the number of employees of the Company who will become Transferred Employees, or (iii) increase over 5% the benefit provided under any plans concerning employee benefits or increase the general rates of compensation of the Transferred Employees, or change the manner by which compensation (including fringe benefits) is determined and paid to any Transferred Employee. (f) Seller will cause the Company not to engage in any intercompany transactions with any Affiliate thereof, except for transactions consistent with past practice. (g) Seller shall cause the Company to maintain the Property in good repair, order and condition, reasonable wear and use excepted, and shall maintain the Company Books and Records in the usual, regular and ordinary manner on a basis consistent with prior years. (h) Seller will cause the Company not to make any commitment to take any actions prohibited by the provisions of this Section 11.5. (i) Seller will cause the Company not to issue, sell, purchase or redeem, to grant any option or right to purchase, or to otherwise agree to issue, sell, purchase or redeem any shares of its capital stock or any other securities. (j) Seller will cause the Company not to amend its Articles of Incorporation or Bylaws. (k) Seller will not permit the Company to merge or consolidate with any other person or entity or acquire a material amount of assets of any other person or entity. 11.6 Construction Projects and Capital Budget. By December 31, 1994, Buyer and Seller shall have met and reviewed the Company's construction and other capital expenditure plans for the calendar years 1994 and 1995 (or such later date agreed to by the parties). The construction and capital expenditure plans which Buyer shall have approved (both as to the type of project and the dollars expended) shall be set forth on Schedule 11.6, and the parties agree that when such expenditures have been incurred they will constitute an addition to a component of Net Telecommunications Plant thereby becoming subject to Section 3.2(c). Seller agrees to cause the Company to use its best efforts substantially to complete such plans within the projected time schedules; provided, that the Company will not incur any liability for unbudgeted expenditures in excess of $200,000.00 in the aggregate without the prior written consent of Buyer. All construction work that is in progress on the Effective Date will be accounted for by identifying and accruing all associated time reporting, material invoices or contractor invoices inputted or received on or before the Effective Date, and all payments therefor shall be the responsibility of the Company and will constitute an addition to a component of Seller's Net Telecommunications Plant thereby becoming subject to Section 3.2(c). 11.7 Further Assurances. After the Closing, Seller will furnish to Buyer such other instruments and information about the Company as Buyer may reasonably request in order to convey to Buyer title to the Shares, to be delivered from time to time upon Buyer's reasonable request. 11.8 [INTENTIONALLY DELETED] 11.9 Risk of Loss Prior to the Effective Date. If any material damage, loss or destruction of any sort (including, without limitation, by theft, unauthorized use, fire, act of God or condemnation) occurs prior to the Effective Date to any of the tangible properties that constitute the Property, Seller shall promptly notify Buyer thereof (the "Casualty Notice"). (a) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace such damaged, lost or destroyed Properties (the "Damaged Property") will exceed One Hundred Sixty-Seven Thousand Eight Hundred Dollars ($167,800.00), either party may, by written notice to the other party (the "Casualty Termination Notice") within thirty (30) days after the date of delivery of the Casualty Notice, terminate this Agreement. (b) If Seller and Buyer, by mutual agreement, reasonably estimate that the cost to repair or replace the Damaged Property will not exceed One Hundred Sixty-Seven Thousand Eight Hundred Dollars ($167,800.00), or the Casualty Termination Notice is not given by either party, then Seller, within forty-five (45) days after the damage or destruction, shall agree in writing to take all action, and to cause the Company to take all action, (i) to repair or replace, prior to the Effective Date, at the Company's sole cost and expense, the Damaged Property, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will obtain as a substitute therefor an equivalent item or items of Property if the Damaged Property is personal property, and Real Property if the Damaged Property is Real Property, but only if such substituted personal property or Real Property is satisfactory to Buyer, and the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property. (c) If Seller fails to make an election pursuant to Section 11.9(b)(i) or (ii), the Buyer shall have the option, within thirty (30) days after the initial forty-five (45) day period, to elect one of the following options: (i) subject to the other terms and conditions of this Agreement, the parties will proceed to Closing in the manner contemplated by this Agreement, the Damaged Property will remain part of the Property, the adjustment to the Purchase Price contemplated by Section 3.2(a)(1) will be made, and the Company will be entitled to make, all claims related to the Damaged Property and to receive and retain any proceeds of insurance with respect to the Damaged Property; or (ii) subject to the other terms and conditions of this Agreement, prior to the Effective Date, the Damaged Property will be excluded from the Company and will become Excluded Property, the Company will be entitled to make all claims related to the Damaged Property and to receive and retain all proceeds of insurance payable with respect to the Damaged Property, and the Purchase Price Adjustment contemplated by Section 3.2(a)(2) will be made. (d) Notwithstanding the other provisions of this Section 11.9, if the time periods pursuant to this Section 11.9 continue beyond the Effective Date or if Seller has not fully performed its obligations pursuant to Section 11.9(b)(i) or 11.9(b)(ii) prior to the Effective Date (or otherwise made reasonably satisfactory arrangements with Buyer), either party hereto may elect to postpone the Closing and the Effective Date, until the expiration of any such periods or the full performance of such obligations, which election shall be binding upon all parties hereto. 11.10 [INTENTIONALLY DELETED] 11.11 [INTENTIONALLY DELETED] 11.12 Other Contracts. 11.12.1 Equipment Manufacturers. Seller shall use its best efforts to assist Buyer, on behalf of the Company, in obtaining a written agreement with such equipment manufacturers (collectively "Equipment Manufacturers") as Buyer may request, covering such software license agreements and other agreements as are necessary to enable the Company after the Effective Date to operate the equipment manufactured and sold by the Equipment Manufacturers included in the Property in substantially the same manner as operated by the Company prior to the Effective Date. The agreements shall contain material terms and conditions (including license and warranty, but not necessarily including pricing) that are substantially the same as those provisions in the corresponding agreements between the Company and the Equipment Manufacturers as of the Effective Date. Buyer understands and agrees that the price and fee provisions of such agreements will be as negotiated between Buyer, on behalf of the Company, and the Equipment Manufacturers. The above obligation of Seller shall be expressly conditioned upon the acceptance by Buyer, on behalf of the Company, of all material obligations accepted by Seller in such corresponding agreements. It is the responsibility of Buyer, on behalf of the Company, to enter into appropriate agreements with the Equipment Manufacturers in respect of service, support, training, maintenance, and future development (hardware and software) for the Property, such agreements to include terms and conditions agreed to between Buyer, on behalf of the Company, and the Equipment Manufacturers. Seller agrees to assist Buyer, on behalf of the Company, in obtaining the Equipment Manufacturers' consent, if necessary, to enable the Company after the Effective Date to avail itself of all training credits remaining at the Effective Date on Property furnished by the Equipment Manufacturers. 11.12.2 Integrated Contracts. Seller and Buyer acknowledge that certain agreements between the Company (or Affiliates of the Company) and third parties relate both to the Property and the Excluded Property. Seller agrees to use its best efforts to assist Buyer in obtaining, on behalf of the Company, contractual arrangements with such third parties relating to the Property, which arrangements will be reasonably satisfactory to Buyer; provided that neither the Company nor any Affiliate of the Company shall be obligated under this Section 11.12.5 to make any payment to any such third party unless such payment is expressly provided for in such agreement. 11.13 Retention of Books and Records. After the Effective Date, Seller will retain the Retained Books and Records, and Buyer will cause the Company to retain the Company Books and Records, in either case, until the shorter of the date that other party consents in writing to their destruction or the seventh anniversary of the Effective Date. Each party shall provide full and free access to the Company Books and Records and Retained Books and Records, as the case may be, to duly authorized representatives of the other party at any time during regular business hours for the period in which such Books and Records are required to be retained. Either party may make copies of any such Books and Records as it deems desirable, at its own expense. After the Effective Date, upon reasonable notice, Seller shall provide Buyer and the Company with reasonable assistance in locating any of the Company's Original Cost Documents which Buyer may reasonably request after the Effective Date. 11.14 [INTENTIONALLY DELETED] 11.15 [INTENTIONALLY DELETED] 11.16 Real Property Title Insurance. Within sixty (60) days after the Execution Date, Seller shall deliver to Buyer copies of all existing title insurance policies and surveys covering the Real Property. Thereafter, no later than sixty (60) days before the Effective Date, Seller shall deliver (at its expense) to Buyer a preliminary title binder (on a standard form reasonably acceptable to Buyer), issued by Lawyers Title Insurance Company or another title insurance company reasonably acceptable to Buyer, with respect to all Real Property included in the Property and in which the Company purports to own fee title. Such title binders shall be in form, substance and amount reasonably satisfactory to Buyer (ALTA Owners Policies where available but based upon boundary surveys as set forth below) and shall be current as of a date no earlier than ninety (90) days prior to the Effective Date. The parties agree that the dollar amount of title insurance to be inserted on each policy shall equal the dollar value set forth on the Company's continuing property records list as of December 31, 1993 for land and buildings. Such title binders shall reflect that the Company is vested with good, fee simple, marketable and insurable title to such Real Property, subject only to (i) standard printed exceptions; (ii) inchoate liens for current taxes and assessments not yet delinquent, (iii) standard utility and roadway easements, covenants and restrictions, whether or not of record, that do not individually or in the aggregate materially detract from the value, or impair the use of the Real Property affected thereby, (iv) existing zoning or similar laws or ordinances that do not interfere with the operation of the Business, (v) Leases, (vi) survey exceptions that do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby, (vii) title plat exceptions to the extent the matters shown on such title plats do not individually or in the aggregate materially detract from the value or impair the use of the Real Property affected thereby, and (viii) water rights exceptions (collectively, the "Permitted Exceptions"). If a preliminary title binder indicates an exception other than a Permitted Exception that would impair marketability in any material respect, Seller shall, at its expense, cause such exception to be removed on or before the Effective Date. With respect to each parcel of Real Property covered by a preliminary title binder, Seller shall deliver to Buyer (at Seller's expense and on or prior to sixty (60) days before the Effective Date) a certified current boundary survey showing (x) access to the property and (y) all improvements on the property and any encroachments across the property line by any improvements of the Company or owners of adjacent property and (at Seller's expense and within sixty (60) days after the Effective Date) owner's title insurance policies for the Real Property (ALTA Owners Policies where available but based upon boundary surveys as set forth above). 11.17 [INTENTIONALLY DELETED] 11.18 [INTENTIONALLY DELETED] 11.19 Customer Notification. For a period of at least two (2) months prior to the Effective Date, Seller will cause the Company to permit Buyer to insert preprinted single-page subscriber education materials into billing documentation to be delivered during such period to subscribers affected by the sale. All reasonable costs and expenses related to such insertion and delivery shall be borne and paid by the Company. Other means of notifying subscribers may be employed by either party, at the expense of the initiating party, but in no event shall any notification be initiated without the prior consent of the other party (which consent shall not be unreasonably withheld) or earlier than three (3) months prior to the Effective Date. 11.20. Delivery of Schedules. Except as provided in Section 11.26, Seller shall have a period of ten (10) business days after the Execution Date (the "Supplemental Schedule Period") to supplement or otherwise modify the Schedules to this Agreement by delivering to Buyer, within the Supplemental Schedule Period, a substitute schedule or schedules (collectively, the "Supplemental Schedules"), bearing the legend "This Schedule _, dated _______________, is executed and delivered in accordance with Section 11.20 of the Stock Purchase Agreement, dated as of November 28, 1994 which shall be duly executed by Seller and submitted to Buyer. Buyer shall have a period of ten (10) business days after the expiration of the Supplemental Schedule Period to review the Supplemental Schedules and within such ten (10) business day period notify Seller in writing (which writing may be transmitted by facsimile) of any objections thereto. If Buyer's objections are not resolved to the satisfaction of Buyer within five (5) days of such notification, Buyer may terminate this Agreement, effective immediately upon written notification of that termination. In the event that Buyer does not terminate this Agreement, then Buyer waives all rights to a claim of indemnification based upon or as the result of any changes in the Schedules as reflected in the Supplemental Schedules. For purposes of determining breaches of representations, warranties or covenants hereunder, the Supplemental Schedules provided by Seller shall be deemed Schedules for all purposes. 11.21 [INTENTIONALLY DELETED] 11.22 Pre-Effective Date Balance Sheet Transactions. Seller shall take, and shall cause the Company to take, all action necessary to effect, on or prior to the Effective Date, the following transactions: (a) The Company shall dispose of, transfer, dividend or otherwise cause to be zero as of the Effective Date, all "Cash" (item 1 - Assets on the Company's Balance Sheet). (b) All "Accounts Receivable-Affiliates" (item 4 - Assets on the Company's Balance Sheet) and "Dividends Receivable-Affiliates" (item 7 -- Assets on the Company's Balance Sheet) (collectively, "Affiliate Receivables") shall be netted against all "Advances and Notes-Parent Company" (item 2 - Liabilities on the Company's Balance Sheet), "Accounts Payable-Affiliates" (item 5 - Liabilities on the Company's Balance Sheet), "Dividends Accrued - Affiliates" (item 10 - Liabilities on the Company's Balance Sheet) and "Interest Accrued - Alltel" (item 12 - Liabilities on the Company's Balance Sheet) (collectively, "Affiliate Payables"). To the extent there is a net excess of Affiliate Receivables, a cash payment or payments will be made to the Company which cash will then be disposed of by the Company, and to the extent there is a net excess of Affiliate Payables, such Affiliate Payables will be contributed to the Company as a contribution to the Company's capital, and take any other action necessary, such that the balances of each of the Affiliate Receivable and Affiliate Payable accounts, and of any other intercompany accounts, as of the Effective Date will be zero. (c) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Excess Cost Over Equity" (item 13 - Assets on the Company's Balance Sheet) and all "Investments in Affiliates" (item 14 - Assets on the Company's Balance Sheet). (d) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Other Investments At Cost" (item 15 - Assets on the Company's Balance Sheet), except to the extent such investments consist of RTB Stock which relates to REA Debt which is to remain outstanding immediately after the Effective Date, and all "Unamortized Debt Expense" (Item 16 - Assets on the Company's Balance Sheet), except to the extent such unamortized debt expense relates to debt which is to remain outstanding immediately after the Effective Date. (e) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, all "Regulatory Assets" (item 18 - Assets on the Company's Balance Sheet). (f) The Company shall dispose of, transfer or otherwise cause to be zero as of the Effective Date, (i) all "Other Current Assets" (item 10 - Assets on the Company's Balance Sheet) to the extent such other current assets represent cash accounts, and (ii) all "Other Non-Current Assets" (item 19 - Assets on the Company's Balance Sheet). (g) The Company shall pay off or otherwise cause to be zero as of the Effective Date all Total Long-Term Debt, to the extent that such debt is not to remain outstanding immediately after the Effective Date. (h) The Company shall dispose of, transfer or assign, the Excluded Books and Records, the Marks listed on Schedule 11.1.5, the Company's interest in any business other than the Business, and those other assets, including agreements and contracts ("Excluded Contracts"), set forth on Schedule 11.22(h). (i) The balance in the Company's Total Deferred Credits shall be zero as of the Effective Date except for that portion of the Company's "Other Deferred Credits" (item 25 - Liabilities on the Company's Balance Sheet) that relates to liabilities associated with the requirements of Financial Accounting Standard 106 attributable to Transferred Employees. (j) The balance in the Company's Taxes Accrued-Federal Income (item 8 -Liabilities on the Company's Balance Sheet) shall be zero as of the Effective Date. (k) The balance in the Company's Other Current Liabilities (item 14 - Liabilities on the Company's Balance Sheet), Notes Payable-Other (item 3 - Liabilities on the Company's Balance Sheet), Commercial Paper Outstanding (item 4 - Liabilities on the Company's Balance Sheet) and Dividends Accrued - Other (item 11 - Liabilities on the Company's Balance Sheet) accounts shall be zero as of the Effective Date. (l) The balance in the Company's Current Maturities of Long-Term Debt (item 1 - Liabilities on the Company's Balance Sheet) and Interest Accrued - - Other (item 13 - Liabilities on the Company's Balance Sheet), to the extent each of such amounts relate to debt which is not to remain outstanding immediately after the Effective Date, shall be zero as of the Effective Date. 11.23 Taxes. 11.23.1 Certain Tax Matters. (a) Except as otherwise expressly provided in this Section 11.23.1, Buyer and Seller will share equally all sales, use, transfer, stamp, conveyance, value added or other similar taxes, duties, excise or governmental charges imposed by any taxing jurisdiction (but not including Income Taxes, as hereinafter defined, which shall be paid by Seller), and all recording or filing fees, notarial fees and other similar costs of Closing with respect to the transfer of the Shares or otherwise on account of this Agreement or the transactions contemplated herein (but not including any transactions contemplated by this Agreement to be effected pursuant to the transactions contemplated by Section 11.22 or otherwise between Seller and the Company, which shall be paid by Seller). (b) Seller will cause to be included in its consolidated federal income Tax Returns (and the state income Tax Returns of any state that permits consolidated, combined or unitary income Tax Returns, if any) for all periods ending on or before or which include the Effective Date, all items of income, gain, loss, deduction, and credit or other items (collectively "Tax Items") attributable to the operations of the Company during such periods or portions thereof determined by an interim closing of the books as of the Effective Date. Seller will sign and file timely all such Tax Returns with the appropriate United States, state and local Governmental Authorities. Buyer will provide or cause to be provided any consent request to file such Tax Returns on behalf of the Company. Seller will make all payments shown thereon as owing with respect to any such Tax Returns. (c) With respect to any taxable period that would otherwise include but not end on the Effective Date, to the extent permissible pursuant to applicable Law, Seller will, and Buyer will cause the Company to, take all steps as are or may be reasonably necessary, including without limitation the filing of elections or returns with applicable taxing authorities, to cause such period to end on the Effective Date. (d) Seller will prepare or cause to be prepared all state Income Tax Returns (other than Tax Returns described in Section 10.5.1(b)) for the Company required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period that ends on or before the Effective Date that have not been filed prior to the Effective Date. Seller will sign and file timely all such Tax Returns with the applicable Governmental Authority and make all payments shown thereon as owing with respect to such Tax Returns. If requested by Seller, Buyer will deliver or cause the Company to deliver to Seller a power of attorney authorizing Seller to sign such Tax Returns. Notwithstanding the foregoing, if Seller is legally precluded from filing any such Tax Return, Buyer shall sign such Tax Return. Seller shall deliver a copy of each such Tax Return to Buyer within 10 days prior to filing such Tax Return. (e) Except as otherwise provided in Section 11.23.1(b) or Section 11.23.1(d), Seller will have no obligation to file any Tax Return for the Company, and Buyer will prepare and file or cause to be prepared and filed all Tax Returns for the Company that are required to be filed with the appropriate United States, state, and local Governmental Authorities for any taxable period which begins before and ends after the Effective Date. In the case of Income Taxes, Buyer shall cause such Tax Return to be prepared and shall cause to be included in such Tax Return all Tax Items required to be included therein. Buyer shall determine (by an interim closing of the books as of the Effective Date) the portion, if any, of the Income Tax due with respect to the period covered by such Tax Return which is attributable to the Company for a Pre- Effective Date Taxable Period (as hereinafter defined). At least 15 days prior to the due date (taking into account all extensions of due date) of such Tax Return, Buyer shall deliver to Seller a copy of such Tax Return and of its determinations. If the amount reflected as a liability for Income Taxes on the Tax Schedule less Prior Reimbursements (as hereafter defined) is less than the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period, Seller shall pay to Buyer the amount of such shortfall not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). If the amount of Income Tax so determined to be attributable to the Pre-Effective Date Taxable Period is less than the amount reflected as a liability for Income Taxes on the Tax Schedule, to the extent not previously paid to Seller or the applicable Governmental Authority by the Company and subject to Section 11.23.1(f), Buyer will pay to Seller the amount of such excess not less than 5 days prior to the due date (taking into account all extensions of due dates) of such Tax Return (or the due date of the applicable estimated Tax payments, if earlier). As used in this Agreement, "Pre-Effective Date Taxable Period" means all or a portion of (i) any taxable period up to and including the Effective Date or (ii) any taxable period with respect to which the Tax is computed by reference to Tax Items, assets, capital or operations of the Company arising on or before, or existing as of, the Effective Date. As used in this Agreement, "Income Taxes" means all Taxes measured in whole or in part on or by net income imposed by the United States, any state of the United States or any political subdivision thereof, and will include any such Taxes even if denominated as franchise taxes. (f) The amount paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) will not exceed (i) the amount reflected as a liability for Income Taxes on the Tax Schedule, reduced by (ii) Prior Reimbursements. As used in this Agreement, "Prior Reimbursements" means all amounts reflected as a liability for Income Taxes on the Tax Schedule that have previously been (A) paid by Buyer (or by the Company at the Buyer's direction or consent) to Seller pursuant to Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e) or (B) paid by Buyer or the Company to Seller or to the applicable Governmental Authority with respect to Income Taxes properly attributable to Pre-Effective Date Taxable Periods that are reflected on Tax Returns described in Section 11.23.1(b), Section 11.23.1(d) or Section 11.23.1(e). (g) In order to assist Seller in the preparation of all Tax Returns that Seller is required to prepare pursuant to Section 11.23.1(b) and 11.23.1(d), Buyer will provide or cause to be provided to Seller access to such information and personnel as Seller may require in order to properly prepare such Tax Returns. (h) Buyer will pay or cause to be paid to Seller all refunds or credits of Taxes (including any interest received from or credited thereon by the applicable Governmental Authority) received by Buyer after the Effective Date and attributable to Taxes paid by Seller or the Company (or any predecessor or Affiliate thereof) with respect to any Pre-Effective Date Taxable Period (or, in the cases of Taxes other than Income Taxes, taxable periods or portions thereof ending on or before the Effective Date), net of any Taxes imposed upon Buyer or the Company by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). Such payment will be made to Seller within 30 days after receipt of any such refund from, or allowance of such credit by, the relevant Governmental Authority. (i) If after the Effective Date Seller or any affiliate receives or is credited with a refund of any Tax attributable to the utilization or carryback of any Tax Item of the Company arising after the Effective Date, Seller shall pay to Buyer an amount equal to the amount of such refund together with any interest received from or credited thereon the applicable Governmental Authority, net of any Taxes imposed upon Seller or any affiliate by reason of the receipt of such refund, credit or interest (calculated at the maximum statutory rate of Tax without regard to any other Tax Items). (j) Buyer is eligible to and will make a timely and effective election under Section 338(g) of the IRC (and any comparable provision of state or local Law) with respect to the purchase of the Shares hereunder. Both Seller, as the common parent of the affiliated group of corporations (which includes the Company) that file a consolidated federal income Tax Return and Buyer are eligible to and will make a timely and effective election under Section 338(h)(10) of the IRC (and any comparable provision of state or local Law) with respect to such purchase (collectively, together with the elections under Section 338(g) of the Code and any comparable provision of state or local Law, the "Section 338(h)(10) Elections"). To facilitate such election, within thirty (30) days of the Closing, Buyer will deliver to Seller a completed Internal Revenue Service Form 8023 and the required schedules thereto and any similar forms under applicable state or local Law (the "Forms") with respect to Buyer's purchase of the Shares, which Forms shall have been duly executed by an authorized person for Buyer. Provided that the information on such Forms is, in the reasonable determination of Seller, correct and complete in all material respects, Seller will, at the Closing, cause such Forms to be duly executed by an authorized person for Seller and deliver such Forms to Buyer. If any changes or supplements are required to the Forms as a result of information that is first available after the Closing, Seller and Buyer will promptly agree upon and make such changes. Buyer will timely file the Forms, and any required supplements thereto, in the manner prescribed by Treasury Regulation 1.338(h)(10)-1T or the corresponding provisions of applicable state or local Law, and will provide written evidence to Seller that it has done so. Buyer and Seller agree that neither of them will take, or permit their affiliates to take, any action to modify or revoke the elections contained in or the content of any Forms without the express written consent of the other. (k) Seller agrees that it will cause any and all tax sharing agreements between Seller and the Company to be terminated on or prior to the Effective Date. 11.23.2 Tax Indemnifications. (a) Seller hereby agrees to protect, defend, indemnify and hold harmless Buyer and the Company from and against, and agrees to pay, all Taxes imposed and all indemnifiable Losses incurred (all herein referred to as "Tax Losses") as a result of: (i) A proposed adjustment, notice of deficiency Authority, or assessment by, or any obligation owing to, any Governmental Authority for: (A) Any income Taxes of the Company attributable to any Pre- Effective Date Taxable Period; (B) Any Taxes other than Income Taxes of the Company attributable to any taxable period or portion thereof ending prior to the Effective Date; (C) Any Taxes of any corporation (other than the Company) that (i) is or was a member of any affiliated group of corporations of which the Company was a member at any time prior to the Effective Date or (ii) joined in the filing of a combined or unitary Tax Return with the Company on or prior to the Effective Date; (D) Any Taxes resulting from the Section 338(h)(10) Elections; and (E) Except as otherwise provided in Section 11.23.1(a), any Taxes attributable to the transactions contemplated by this Agreement; and (ii) Any breach of any representation, warranty or covenants of Seller under this Agreement. (b) Buyer agrees to protect, defend, indemnify and hold harmless Seller from and against, and agrees to pay, all Tax Losses incurred as a result of: (i) A proposed adjustment, notice of deficiency, or assessment by, or any obligation owing to, any Governmental Authority for any Taxes of the Company which Taxes are not attributable to any Pre-Effective Date Taxable Period; and (ii) Any breach of any representation, warranty or covenant of Buyer under this Agreement. (c) (i) If a proposed adjustment shall be made by any Governmental Authority that, if successful, would result in the indemnification of a party under this Section 11.23.2 (referred to herein as a "Tax Indemnified Party"), the Tax Indemnified Party shall promptly notify the party obligated under this Section 11.23.2 to so indemnify (referred to herein as the "Tax Indemnifying Party") in writing of such fact. (ii) The Tax Indemnified Party shall take such action in connection with contesting such claim as the Tax Indemnifying Party shall reasonably request in writing from time to time, including the selection of counsel and experts and the execution of powers of attorney, provided that (A) within 30 days after the notice described in Section 11.23.2(c)(i) has been delivered (or such earlier date that any payment of Taxes is due by the Tax Indemnified Party but in no event sooner than 5 days after the Tax Indemnifying Party's receipt of such notice), the Tax Indemnifying Party requests that such claim be contested, (B) the Tax Indemnifying Party shall have agreed to pay the Tax Indemnified Party all costs and expenses that the Tax Indemnified Party incurs in connection with contesting such claim, including, without limitation, reasonable attorneys' and accountants' fees and disbursements, and (C) if the Tax Indemnified Party is requested by the Tax Indemnifying Party to pay the Tax claimed and sue for a refund, the Tax Indemnifying Party shall have advanced to the Tax Indemnified Party, on an interest-free basis, the amount of such claim. The Tax Indemnified Party shall not make any payment of such claim for at least 30 days (or such shorter period as may be required by applicable Law) after the giving of the notice required by Section 11.23.2(c)(i), shall give to the Tax Indemnifying Party any information reasonably requested relating to such claim, and otherwise shall cooperate with the Tax Indemnifying Party in good faith in order to contest effectively any such claim. (iii) Subject to the provisions of Section 11.23.2(c)(ii), the Tax Indemnified Party shall enter into a settlement of such contest with the applicable Governmental Authority or prosecute such contest to a determination in a court or other tribunal of initial or appellate jurisdiction, all as the Tax Indemnifying Party may request. (iv) If, after actual receipt by the Tax Indemnified Party of an amount advanced by the Tax Indemnifying Party pursuant to Section 11.23.2(c)(ii)(B), the extent of the liability of the Tax Indemnified Party with respect to the claim shall be established by the final judgment or decree of a court or other tribunal or a final and binding settlement with an administrative agency having jurisdiction thereof, the Tax Indemnified Party shall promptly repay to the Tax Indemnifying Party the amount advanced to the extent of any refund received by the Tax Indemnified Party with respect to a claim together with any interest received thereon from the applicable Governmental Authority and any recovery of legal fees from such Governmental Authority, net of any Taxes as are required to be paid by the Tax Indemnified Party with respect to such refund, interest or legal fees (calculated at the maximum applicable statutory rate of Tax without regard to any other Tax Items). Notwithstanding the foregoing, the Tax Indemnified Party shall not be required to make any payment hereunder before such time as the Tax Indemnifying Party shall have made all payments or indemnities then due with respect to the Tax Indemnified Party pursuant to this Agreement. (v) Promptly after a final determination the Tax Indemnifying Party shall pay to the Tax Indemnified Party the amount of any Tax Losses to which the Tax Indemnified Party may become entitled by reason of the provisions of this Section 11.23.2. (d) Anything to the contrary in this Agreement notwithstanding, the representations, warranties, covenants, agreements, rights and obligations of the parties hereto with respect to any Tax covered by this Agreement shall survive the Effective Date and shall not terminate until sixty days after the expiration of the statute of limitations (including extensions) applicable to such Tax. 11.24 Cable Regulatory Due Diligence. Within twenty (20) business days after the Execution Date, Seller shall have complied with all reasonable requests by Buyer for copies of documentation, including but not limited to reports, filings, correspondence and complaints, relating to the NCCSI Systems or Business, made, filed, sent, received, or submitted by or on behalf of the Company with the FCC, the Franchising Authorities, the FAA or the U.S. Copyright Office (the "Cable Regulatory Due Diligence"). Buyer has provided Seller with an initial list of such requested documents to Seller. The Buyer shall have a period of thirty (30) business days after the expiration of such 20 business day period to review the Cable Regulatory Due Diligence and provide the Seller with a list of items from its review of the Cable Regulatory Due Diligence which list, taken as a whole, reasonably could be expected to have a materially adverse effect on the Company as a whole, the Business as a whole or any significant part of the Property. Within ten (10) business days thereafter, Seller and Buyer will discuss the list and agree on which items require corrective action and the corrective action that the Seller should cause the Company to take. Thereafter, the Seller will, at its or the Company's expense, cause the Company to take the agreed upon corrective action so as to correct the agreed upon problems before the Effective Date. 11.25 Renewal of Franchises. Seller and Buyer agree to have their representatives meet within sixty (60) days after the Execution Date to discuss the desirability of filing requests for renewals under Section 626(a) of the Cable Act of 1992, with the proper Governmental Authorities with respect to each Franchise (Zuni and Needles) expiring within 36 months after the Effective Date. Thereafter, the parties will agree to the action, reasonably satisfactorily to the parties, that should be taken with respect to such renewals and the parties shall take the agreed upon action at the appropriate agreed upon time. 11.26 Post-Execution Lease and Contract Review. Buyer shall have a period of forty-five (45) calendar days after the Execution Date to review the Leases and Contracts listed on Schedules 9.1.9 and 9.1.13 respectively, and to notify Seller in writing (which writing may be transmitted by facsimile) of the identity of those Leases and Contracts that Buyer reasonably believes are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur. If Buyer does not notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Buyer shall be deemed to have agreed that none of the Leases and Contracts which are listed on Schedules 9.1.9 and 9.1.13 require consent, in accordance with Section 7.1.6, before the Effective Date can occur. If Buyer does notify Seller in writing within such forty-five (45) calendar day period of the identity of the material Leases and Contracts requiring consent, then Seller shall have a period of ten (10) business days upon receipt of such notification to notify Buyer in writing (which writing may be transmitted by facsimile) of any objections thereto. Thereafter, Buyer and Seller shall negotiate in good faith and agree in writing as to the identity of those Leases and Contracts which are material to the operation of the Business as a whole or any significant part of the Property and which by their terms will require Seller, in accordance with Section 7.1.6, to obtain a third party consent as a condition to the transfer of control of the Company to Buyer as a result of Buyer's purchase of the Shares, before the Effective Date can occur (the "Material Leases and Contracts"). The parties shall reflect their written agreement as to the identity of the Material Leases and Contracts by placing an asterisk next to the appropriate Lease or Contract on Schedule 9.1.9 or 9.1.13, which revised Schedule 9.1.9 or 9.1.13 shall be deemed to be an amendment to this Agreement. ARTICLE 12. EMPLOYEES AND EMPLOYEE MATTERS 12.1 Employee Transfer Agreement. The parties have addressed the transfer of employees and employee benefits matters in a separate agreement, entitled Employee Transfer Agreement, the terms and provisions of which are incorporated into this Agreement as if fully set forth herein and a copy of which is attached hereto as Schedule 12.1 (the "Employee Transfer Agreement"). ARTICLE 13. INDEMNIFICATION 13.1 Survival of Representations, Warranties and Covenants. (a) The representations and warranties made pursuant to this Agreement shall survive the Closing for the following periods after the Effective Date: (i) The representations and warranties set forth in Sections 9.1.6, 9.1.8, 9.1.32, 9.1.33, and 9.2.5 shall survive without limitation as to time. (ii) The representations and warranties set forth in Section 9.1.15 shall survive as set forth in Section 11.23.2(d). (iii) The representations and warranties set forth in Section 9.1.36 shall survive the Effective Date and shall not terminate until sixty days after the expiration of the applicable statute of limitations (including extensions) as set forth within 17 U.S.C.. Section 507. (iv) All other representations and warranties shall survive for eighteen (18) months. The date of expiration of any representation or warranty shall be referred to herein as the "Termination Date." Representations and warranties under this Agreement shall be of no further force or effect after the applicable Termination Date. Any claim for indemnification with respect to any alleged breach of any representation or warranty not asserted by notice given as herein provided that specifically identifies a particular breach and the underlying facts relating thereto, which notice is given prior to the Termination Date, may not be pursued and is irrevocably waived and released after such time. Without limiting the generality or effect of the foregoing, no claim for indemnification with respect to any representation or warranty will be deemed to have been properly made except to the extent it is based upon a Third Party Claim or a Direct Claim. (b) Unless a specified period is set forth in this Agreement (in which event such specified period will control), the covenants contained in Section 5.2, Section 5.3, this Article 13, and in Sections 11.1, 11.2, 11.3, 11.6, 11.7, 11.12, 11.13, 11.16 and Articles 16 and 17 and in the Employee Transfer Agreement, will survive the Closing and remain in effect indefinitely. Covenants regarding Taxes shall survive as set forth in Section 11.23.2(d). All other covenants contained in this Agreement will terminate, without further action, upon the occurrence of the Effective Date and any claim following the Effective Date for an alleged breach of any such covenant may not be pursued, and is irrevocably waived, upon the occurrence of the Effective Date, except that Buyer may make a claim for Seller's breach of the covenants contained in Section 11.5 at any time within eighteen months after the Effective Date. The immediately preceding sentence shall not apply to, or limit to preclude, a party's rights and remedies if the sale contemplated by this Agreement is not concluded as a result of the other party's breach of this Agreement. 13.2 Limitations on Liability. (a) For purposes of this Agreement, (i) "Indemnification Payment" means any amount of Indemnifiable Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee" means any person or entity entitled to indemnification under this Agreement, (iii) "Indemnifying Party" means any person or entity required to provide indemnification under this Agreement, and (iv) "Indemnifiable Losses" means any losses, liabilities, costs, fines, penalties, damages (actual, punitive or other), and expenses and any claims, demands or suits by any person or entity, including, without limitation, any Governmental Authority, and costs and expenses actually incurred in connection with any actions, suits, demands, assessments, judgments and settlements and reasonable attorneys' fees and expenses, in any such case (x) reduced by the amount of insurance proceeds recovered from any person or entity as a result of the Indemnifiable Losses involved and (y) provided that the underlying liability or obligation is not solely the result of any action taken or omitted to be taken by the Indemnitee. (b) As between Seller and any Affiliate of Seller, on the one hand, and Buyer and any Affiliate of Buyer, on the other hand, the rights and obligations set forth in this Article 13 will be the exclusive rights and obligations with respect to the liabilities and obligations referred to in Section 13.3, and any breach of the representations, warranties or covenants referred to in Section 13.3., except for any liability, obligation or breach that results from the actual fraud under the common law, not otherwise implied or imputed, by a party to this Agreement. Without limiting the foregoing, as a material inducement to entering into this Agreement, to the fullest extent permitted by law, each of the parties waives any claim or cause of action that it otherwise might assert, including, without limitation, under the common law or federal or state securities, trade regulation or other laws, by reason of the liabilities and obligations, and any breach of the representations, warranties or covenants, referred to in Section 13.3, except for claims or causes of action brought under and subject to the terms and conditions of this Article 13, and except for claims or causes of action arising due to the actual fraud under the common law, not otherwise implied or imputed. (c) Notwithstanding any other provision of this Agreement or of any applicable law, no Indemnitee will be entitled to make a claim against an Indemnifying Party under Sections 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32 and 9.1.33) or 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) until the aggregate amount of claims that may be asserted for such Indemnifiable Losses incurred by the Indemnitee exceeds Eight Thousand Three Hundred Ninety Dollars ($8,390.00) and then only to the extent of the excess. (d) Notwithstanding any other provision of this Agreement, the indemnification obligations of Seller under Section 13.3(a)(i) (except with respect to indemnification for a breach of the representations contained in Sections 9.1.6, 9.1.8, 9.1.32, and 9.1.33) and of Buyer under Section 13.3(b)(i) (except with respect to indemnification for a breach of the representations contained in Section 9.2.5) will not exceed the sum of Two Hundred Fifty-One Thousand Seven Hundred Dollars ($251,700.00). (e) Notwithstanding anything to the contrary contained herein, no Indemnifying Party shall be liable to or obligated to indemnity any Indemnitee hereunder for any consequential, special, multiple, punitive or exemplary damages including, but not limited to, damages arising from loss or interruption of business, profits, business opportunities or goodwill, loss of use of facilities, loss of capital, claims of customers, or any cost or expense related thereto, except to the extent such damages have been recovered by a third person and are the subject of a Third Party Claim for which indemnification is available under the express terms of this Section 13. 13.3 Indemnification. (a) Subject to the other sections of this Article 13, Seller will indemnity, defend and hold harmless Buyer and its Affiliates (including the Company after the Effective Date), directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Seller of any of the representations and warranties contained in Section 9.1, except for any such breach of representations and warranties which was specified on Seller's Closing Certificate all of which are waived upon Closing, (ii) a breach by Seller of any covenant of Seller contained in this Agreement or in the Employee Transfer Agreement, except for any such breach of covenants which was specified on Seller's Closing Certificate all of which are waived upon Closing, (iii) the Retained Liabilities, (iv) any Third Party Claim, whether filed, asserted, or sought before or after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business (including contractual obligations in connection with sales or transfers of assets made by the Company prior to the Effective Date), or the ownership or operation of the Business, on or prior to the Effective Date, regardless of whether known or unknown, asserted or unasserted, on the Effective Date. As used in this Agreement, "Retained Liabilities" means all liabilities, responsibilities and obligations (whether known or unknown, fixed, contingent or otherwise) of the Company relating to, arising out of, or in connection with, or resulting from the use or ownership of the Property or the conduct of the Business during, the period ending on the Effective Date, including, without limitation,: (i) all liabilities, responsibilities and obligations with respect to the Excluded Property and the Excluded Contracts; (ii) all liabilities and obligations for prior period adjustments of revenues from the Business and for any customer overbillings and prospective refunds of overcharges (including rates collected under bond but excluding prospective rate reduction) occurring or relating to the period prior to the Effective Date; and (iii) All liabilities, responsibilities and obligations arising out of or related to the litigation, claims and other matters set forth on Schedule 9.1.16 and any other litigation, claims, actions, lawsuits or legal proceedings based on facts, circumstances or conditions arising, existing or occurring on or before the Effective Date, regardless of whether known or unknown, asserted or unasserted, as of the Effective Date; but excluding all liabilities, responsibilities and obligations of the Company Date to the extent Buyer receives a Purchase Price adjustment in its favor pursuant to Section 3.2 therefor; (b) Subject to the other sections of this Article 13, Buyer will indemnity, defend and hold harmless Seller and its Affiliates, and their directors, officers, agents and representatives from all Indemnifiable Losses relating to, resulting from or arising out of (i) a breach by Buyer of any of the representations or warranties contained in Section 9.2, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (ii) a breach by Buyer of any covenant of Buyer contained in this Agreement or in the Employee Transfer Agreement, except for any such breach which was specified on Buyer's Closing Certificate all of which are waived upon Closing, (iii) any Third Party Claim, filed, asserted, or sought after the Effective Date, in respect of the operations of the Company or the conduct of the Business or any part of the Business or the ownership or operation of the Company or the Business, after the Effective Date. (c) All Tax and environmental matters or issues, including without limitation, the indemnification obligations with respect to Taxes and Environmental Liabilities, are to be governed by Sections 9.1.15 and 11.23 and Article 14, respectively, and are not addressed, limited or governed by the provisions of this Article 13. (d) Payments made under this Section 13.3 shall be treated by Buyer and Seller as purchase price adjustments and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. 13.4 Defense of Claims. (a) If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action, proceeding, or investigation by any entity or person that is not a party to this Agreement or an Affiliate of such a party (a "Third Party Claim") against such Indemnitee, with respect to which an Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of actual notice of such Third Party Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party during the required notification period shall only relieve the Indemnifying Party from its obligation to indemnity the Indemnitee pursuant to this Article 13 to the extent that Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. Indemnifying Party shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether or not the Indemnifying Party elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof, provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (i) the employment of such separate counsel has been specifically authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party has failed to assume the defense of such Third Party Claim within a reasonable time after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee or (iii) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnifying Party and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall not be liable for the fees and disbursements of more than one counsel for all Indemnified Parties in connection with any one proceeding or any similar or related proceedings arising from the same general allegations or circumstances. Without the prior written consent of the Indemnitee, the Indemnifying Party will not enter into any settlement of any Third Party Claim that would lead to liability or create any financial or other obligation on the part of the Indemnitee unless such settlement includes as an unconditional term thereof the release of the Indemnitee from all liability in respect of such Third Party Claim. (b) Any claim by an Indemnitee on account of an Indemnifiable Loss that does not result from a Third Party Claim (a "Direct Claim") will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after the Indemnitee actually becomes aware of the incurrence thereof, and the Indemnifying Party will have a period of thirty (30) calendar days within which to respond in writing to such Direct Claim; provided, however, that the failure of the Indemnitee to notify the Indemnifying Party shall only relieve the indemnifying Party from its obligation to indemnify the Indemnitee pursuant to this Article 13 to the extent the Indemnifying Party is materially prejudiced by such failure (whether as a result of the forfeiture of substantive rights or defenses or otherwise); and provided, however, that the Indemnitee must, in any event, notify the Indemnifying Party prior to the Termination Date as required pursuant to Section 13.1(a) in order for such party to be indemnified. If the Indemnifying Party does not so respond within such thirty (30) calendar day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article 13. (c) If after the making of any Indemnification Payment the amount of the Indemnifiable Loss to which such payment relates is reduced by recovery, settlement or otherwise under any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction (less any costs, expenses, premiums or taxes incurred in connection therewith) will promptly be repaid by the Indemnitee to the Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying Party will, to the extent of such Indemnification Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Indemnifiable Loss to which the Indemnification Payment relates; provided that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss, all claims of the Indemnifying Party against any such third party on account of said Indemnification Payment will be subrogated and subordinated in right of payment to the Indemnitee's rights against such third party. Without limiting the generality or effect of any other provision of this Article 13, each such Indemnitee and Indemnifying Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights. ARTICLE 14. ENVIRONMENTAL MATTERS 14.1 Environmental Due Diligence. 14.1.1 Right to Conduct Due Diligence. Buyer shall have the opportunity to conduct environmental due diligence regarding the Property in accordance with this Section 14.1, for a period not to exceed 120 days after the Environmental Data Delivery Date (as defined below). 14.1.2 Treatment of Data. All information collected and generated as a result of the environmental due diligence authorized by this Section 14.1 will be subject to the terms and conditions of the Confidentiality Agreement, except as otherwise expressly provided in this Section 14.l. Buyer shall provide to Seller copies of all reports, assessments and other information composed or compiled by Buyer's environmental consultant(s) and shall treat all such information in accordance with the procedures of Section 14.1.5(c). Within thirty (30) days after the Execution Date (the "Environmental Data Delivery Date"), Seller will provide to Buyer copies of all surveys and reports in Seller's or the Company's possession concerning the existence or possible existence of asbestos or materials containing asbestos relating to any of the Real Property, a list of all underground storage tanks which to Seller's or the Company's knowledge are located on, or have been removed within the last three years from, any Real Property owned or real estate leased or operated by the Company in connection with the Business and any other reports, studies or documents in Seller's or the Company's possession relating to the Company's potential liability under any Existing Environmental Requirements. The parties further agree that, if Seller discloses the existence or suspected existence of materials containing asbestos with respect to a given parcel of Real Property and the asbestos does not exceed applicable limits, if Buyer desires to make renovations or structural changes to the property after the Effective Date (which changes require the removal of asbestos), the removal will be at the expense of Buyer. 14.1.3 Environmental Consultants. Buyer may retain one or more outside environmental consultants to assist in its environmental due diligence concerning the Property and shall notify Seller of the environmental consultant or consultants Buyer intends to retain. Thereafter, Seller shall have five (5) business days after receipt of such notification to notify Buyer in writing of Seller's objection (which must be for good cause) and substantiate the basis for that objection. If Seller does not object for good cause and substantiate that objection within said five (5) business day period, Seller shall be deemed to have consented to Buyer's selection. 14.1.4 Phase I Reviews. Buyer may conduct the usual Phase I environmental assessment activities of the Property, including inspecting individual sites, submitting environmental questionnaires to Seller and the Company and reviewing existing environmental reports, correspondence, permits and related materials regarding the Property. Phase I environmental assessment activities shall not include any sampling or intrusive testing other than tank tightness testing and hand auger soil testing. (a) Buyer shall give Seller at least three (3) business days' notice prior to any entry onto the Property. (b) If Buyer enters the Property, a representative of Seller may be, but is not required to be, present during such entry on the Property. (c) All activities of Buyer regarding environmental due diligence shall be conducted to minimize any inconvenience or interruption of the normal use and enjoyment of the Business and the Property. 14.1.5 Phase II Reviews. Buyer may conduct the usual Phase II environmental assessment activities of the Property (including, but not limited to, the taking and analysis of soil, surface water and groundwater samples, testing of buildings, drilling wells and taking soil borings) after first conducting a Phase I assessment of a particular site provided that such Phase II assessment activities are conducted in accordance with this Section 14.1.5. (a) If Buyer desires to perform sampling or intrusive testing at a site included in the Property, Buyer must notify Seller of its desire at least five (5) business days in advance of the proposed date of such sampling or testing and provide a description of the scope of work regarding such sampling or intrusive testing. If Seller does not notify Buyer in writing of Seller's objection to such proposed sampling or testing within five (5) business days after receipt of such notice, Seller shall be deemed to have consented to the proposed sampling or testing. Seller shall not unreasonably object to Buyer's request to perform sampling or testing. (b) Buyer shall provide Seller with copies of field data, field reports, laboratory analyses, logs, laboratory reports and other material or information regarding the sampling or intrusive testing ("Environmental Data") within three (3) business days of Buyer's receipt of such data and shall promptly provide Seller with "matched" or "paired" samples, in accordance with standard sampling and testing protocols, that are obtained during the sampling or intrusive testing of a particular site; provided, however, that Seller shall have no obligation to Buyer to take any action whatsoever regarding such samples. (c) It is understood and agreed that neither Buyer nor its environmental consultant(s) shall disclose or release any Environmental Data without the prior written consent of Seller and that all such information shall be kept strictly confidential. The Environmental Data shall be prepared at the request of counsel to Buyer and, to the fullest extent permitted by law, shall be the work product of such counsel and constitute confidential attorney/client communications. The Environmental Data shall be transferred among Buyer and its consultant(s) in a manner that will preserve, to the greatest extent possible, such privileges. Buyer expressly agrees that until the Closing, it will not distribute the Environmental Data to any third party without Seller's written consent. After the Closing, Buyer agrees that it will not distribute the Environmental Data to any third party without Seller's written consent, except as required by law or by express provisions of Buyer's corporate compliance program if Seller is provided written notice at least ten (10) business days prior to such distribution, provided, however, that for a period of two (2) years after the Effective Date, Buyer may distribute the Environmental Data to any potential purchaser of the Company or the Property only after first notifying the Seller, and without such notice at any time after such two (2) year period. 14.1.6 Indemnity for Due Diligence Activities. Buyer hereby agrees to indemnify and hold harmless Seller, Seller's Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all claims, liabilities, damages, losses, orders, penalties, fines, costs, charges and expenses (including reasonable attorneys' fees and disbursements, and reasonable costs of experts and expert witnesses) with respect to persons or property arising out of or in connection with the entry of Buyer or its environmental consultant(s) onto the Property and resulting from any act or omission of Buyer or its environmental consultant(s) provided that Buyer shall not be liable for any Environmental Liabilities incurred by any such party merely discovered by the environmental due diligence performed by Buyer or its environmental consultants. In addition, in the event the transactions contemplated herein with regard to any portion of the Property do not close, Buyer agrees to restore such portion of the Property to the condition which existed prior to Buyer's inspections and testing thereof to the extent such portion of the Property was damaged by such inspections and testing. 14.1.7 Effect of Due Diligence Results. (a) Subject to Section 14.1.7(b) below, Buyer conditionally may terminate this Agreement by written notice to Seller at any time during the period set forth in Section 14.1.1 if: (i) the results of Buyer's environmental due diligence investigation, conducted in accordance with this Section 14. 1, indicate Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company; and (ii) Buyer reasonably determines (on the basis of its environmental due diligence) that responding to and remediating the foregoing Environmental Liabilities based upon Existing Environmental Requirements cannot be completed for less than Sixty-Seven Thousand One Hundred Twenty Dollars ($67,120.00) (the "Environmental Liabilities Amount") To be effective, any such conditional termination of this Agreement must be delivered in writing to Seller, which writing must specifically acknowledge that the termination is subject to the provisions of paragraph (b) below. (b) In the case of a conditional termination of this Agreement by Buyer in accordance with Section 14.1.7(a) above, Seller may nullify the termination by agreeing to: (i) cause the Company to respond to and fully remediate the Environmental Liabilities based upon Existing Environmental Requirements; or (ii) pay Buyer the cost thereof; or (iii) make other adjustments to the terms and conditions of the sale contemplated by this Agreement all in such manner and on such terms and conditions as are mutually satisfactory to Buyer and Seller. Seller's election to nullify Buyer's conditional termination by selecting one of the above options shall be, in each case, specified in a writing mutually satisfactory to the parties, and thereafter on or before the Closing (subject to Section 14.1.7(d)), Seller shall perform its obligations under that writing in full. If the parties fail to sign the writing specifying Seller's obligations within thirty (30) days following Buyer's conditional termination (or such longer period acceptable to Buyer) or sign that writing but the Company fails to perform its obligations thereunder in full on or before the Closing (subject to Section 14.1.7(d)), Buyer's conditional termination under paragraph (a) above automatically shall become final and unconditional unless the parties agree otherwise. (c) If the results of Buyer's environmental due diligence conducted in accordance with this Section 14.1 indicate that the costs of responding to and remediating Environmental Liabilities based upon Existing Environmental Requirements with respect to one or more items of the Property or with respect to the Company are less than the Environmental Liabilities Amount in the aggregate, Seller agrees, to cause the Company at the Company's sole cost, to either (i) make a mutually satisfactory adjustment to the terms and conditions of the transactions contemplated by this Agreement prior to the Closing in accordance with Section 14.1.7(b)(iii) above, or (ii) prior to the Closing (subject to Section 14.1.7(d)), otherwise respond to and remediate those Environmental Liabilities based upon Existing Environmental Requirements in accordance with Section 14.1.7(b)(i) or Section 14.1.7(b)(ii) above, unless the cost of conducting such response action would exceed the Environmental Liabilities Amount in which case Seller's sole obligation under this Section 14.1.7(c) shall be to pay the Environmental Liabilities Amount toward the completion of such response and remediation actions. If Seller discharges its obligations under this Section 14.1.7 by expending the Environmental Liabilities Amount on such response and remediation action (such expenses to be verified by Seller by delivery by Seller to Buyer of a reasonably detailed statement setting forth such expenses), or paying to Buyer the Environmental Liabilities Amount, Buyer shall sign and deliver to Seller at the Closing a release of Seller from any further liability to Buyer for such remediation and shall indemnify Seller against any liability for such Environmental Liabilities or Environmental Requirements. (d) If Seller elects to cause the Company to respond to and fully remediate Environmental Liabilities based upon Existing Environmental Requirements pursuant to Section 14.1.7(b)(i) or (c)(ii), and such response and remediation has not been completed by the date scheduled for Closing, the parties on or prior to Closing shall enter into an Environmental Remediation Agreement in form and substance reasonably satisfactory to the parties and proceed to Closing; provided, however, that in the case of response and remediation under Section 14.1.7(b)(i), Buyer may elect to postpone the Closing until sufficient response and remediation has been completed so that the remaining response and remediation is equal to or less than the Environmental Liabilities Amount. 14.2 Environmental Indemnification. 14.2.1 Sole Remedy and Release. It is the intent of the parties that the indemnification provided under this Section 14.2 shall be the sole remedy for allocating responsibility regarding environmental matters related to the sale contemplated by this Agreement, the Company, the Business and the Property of which Buyer does not receive notice prior to the Closing (either from Seller in Schedule 14.3 or pursuant to notice given pursuant to Section 17.1 or in any written communication made to Buyer from Buyer's environmental consultants (collectively the "Known Environmental Matters")). Except as expressly provided in this Section 14.2, at Closing each party, for itself and its successors and assigns, by virtue of consummating the sale contemplated by this Agreement and without further action on the part of such party, shall waive and release the other party from any and all liability under any other cause of action at law or in equity concerning the Known Environmental Matters, whether raised pursuant to (i) Environmental Requirements, (ii) any other applicable federal, state or local statute, ordinance, rule or regulation, or (iii) common law. 14.2.2 Indemnification. Subject to the provisions of Sections 14.2.3, 14.2.4 and 14.2.5, Seller agrees to indemnify and hold harmless Buyer, its Affiliates (including the Company after the Effective Date) and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities under Existing Environmental Requirements arising from acts or omissions occurring with respect to, or from the use or ownership of, or any condition or circumstance relating to, the Company or the Property that occurred or arose prior to or on the Effective Date. The foregoing indemnity in this Section 14.2.2 shall only apply to matters that do not constitute Known Environmental Matters (such matters being referred to as the "Unknown Environmental Matters"). Such indemnification under this Section 14.2.2 shall be provided only for claims for Unknown Environmental Matters noticed to the other party pursuant to the procedures of Section 14.2.3, within eighteen (18) months after the Effective Date. Subject to the provisions of Sections 14.2.3 and 14.2.4, Buyer agrees to indemnify and hold harmless Seller, its Affiliates and their respective officers, directors, employees, agents, successors and assigns from and against any and all Environmental Liabilities, with respect to any Environmental Requirements in existence now or hereafter in effect, arising from acts or omissions occurring after the Effective Date, or from the use or ownership of the Property after the Effective Date, or any condition or circumstance relating to the Company, the Property or the Business that occurred or arose after the Effective Date on the Property or in connection with the Company or the operation of the Business after the Effective Date. 14.2.3 Notice. A party seeking indemnification under this Section 14.2 must give written notice to the other party, including information sufficient to inform the other party of, and allow such other party to confirm the nature of, the claim and any activities required to address the claim, in sufficient detail for the indemnifying party to confirm that all costs incurred or to be incurred by the party to be indemnified under this Section 14.2 are required by Environmental Requirements, as applicable to Buyer, and Existing Environmental Requirements, as applicable to Seller, and are reasonable and cost-effective. If the indemnifying party disagrees with the party to be indemnified as to the necessity of costs or the reasonableness or cost-effectiveness of the remediation method selected, the parties shall negotiate in good faith to achieve at a mutually satisfactory solution. If the parties cannot agree as to costs or methods of remediation, the matter shall be resolved in accordance with Article 16. 14.2.4 Actual Damages. Any indemnifiable claim under this Section 14.2 shall not include incidental or consequential damages except to the extent such damages have been recovered by a third person and are the subject of a Third Party claim for which indemnification is available under the express terms of this Article 14. Any indemnifiable claim under this Section 14.2 shall be reduced to account for any insurance, storage tank fund, or other proceeds received by the party to be indemnified, as a result of the indemnifiable losses involved. The parties agree to take all reasonable steps to mitigate any indemnifiable claim under this Section 14.2, including complying with any registration and reporting requirements necessary to qualify for reimbursement from any storage tank fund. 14.2.5 Limitations on Indemnification. Notwithstanding any other provision of this Agreement, this Article 14, or any applicable law, the indemnification obligations of Seller under this Section 14.2 shall not exceed the aggregate amount of One Hundred Twenty-Five Thousand Eight Hundred Fifty Dollars ($125,850.00). 14.2.6 Adjustments to Purchase Price. Payments made under this Article 14 shall be treated by Buyer and Seller as purchase price adjustments, and Buyer and Seller shall file all Tax Returns consistent with such treatment. Notwithstanding anything to the contrary contained herein, Buyer shall not be indemnified or reimbursed for any adjustment to the basis of any asset resulting from an adjustment to the purchase price or any additional or reduced taxes resulting from any such basis adjustment. ARTICLE 15. TERMINATION 15.1 Termination Rights. This Agreement may be terminated at any time prior to the Closing Date: (a) at any time by mutual written consent of the parties; (b) by Seller or Buyer, as applicable, if there has been a material breach on the part of the other party of its respective representations, warranties or covenants set forth in this Agreement; provided, however, that a party shall not be entitled to exercise its right of termination under this subsection (b) if the breach is capable of being cured to the non-breaching party's reasonable satisfaction and the breaching party is proceeding diligently with its best efforts to effect such cure. (c) by Buyer, pursuant to Section 11.20 (Delivery of Schedules); (d) by Buyer and Seller, as the result of Section 14.1.7(a); (e) by Buyer or Seller, pursuant to Section 11.9; (f) by Seller or Buyer, if the Closing shall not have occurred by December 31, 1995 due to no fault or delay attributable to the party seeking termination; provided, however, that a party shall not be entitled to exercise any right of termination pursuant to this subsection (f) if such party shall not have performed diligently and in good faith the obligations required to be performed by such party hereunder prior to the date of termination; (g) by Buyer if a Governmental Authority, the approval of which is a condition to Buyer's obligations under Section 7.1, has provided written notice that it shall not consent to or approve the transactions contemplated hereby; or (h) by Seller, if a Governmental Authority, the approval of which is a condition to Seller's obligations under Section 7.2, has provided written notice that it shall not consent to or approve the transactions contemplated hereby. 15.2 Effect of Termination. (a) If this Agreement is terminated pursuant to Section 15. 1 (a), (c), (d), (e), (f), (g) or (h), this Agreement shall be of no further force and effect and there shall be no further liability hereunder on the part of either party or its Affiliates, directors, officers, shareholders, agents or other representatives. (b) A party's exercise of its right of termination under Section 15.1(b) shall not constitute a waiver of its rights to recover damages, whether pursuant to breach of contract or in tort, or other remedies available at law or in equity, from the other party as a result of the other party's breach of this Agreement. (c) Notwithstanding anything to the contrary contained herein, the provisions of this Section 15.2 and of Sections 17.1, 17.2, 17.3, 17.8, 17.11, 17.13, 17.14 and Article 16 shall survive any termination of this Agreement. ARTICLE 16. DISPUTE RESOLUTION 16.1 Exclusive Remedy. Subject to Section 16.5, the parties agree to resolve disputes arising out of this Agreement without litigation. Accordingly, except as provided in Section 16.5, or in the case of a suit to compel compliance with this dispute resolution process, the parties agree to use the following alternative dispute resolution procedure as their sole remedy with respect to any controversy or claim arising out of or relating to this Agreement or its breach. 16.2 Dispute Resolution Process. At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any dispute arising under this Agreement. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations. Discussions and correspondence among the parties' representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, exempt from discovery and production, and without the concurrence of both parties shall not be admissible in the arbitration described below or in any lawsuit. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration. 16.3 Arbitration. Subject to Section 16.5, if negotiations between the representatives of the parties do not resolve the dispute within sixty (60) days of the initial written request, the dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Either party may demand such arbitration in accordance with the procedures set out in those rules. The arbitration hearing shall be commenced within sixty (60) days of the demand for arbitration and the arbitration shall be held in a mutually agreeable location. The arbitrator shall control the scheduling (so as to process the matter expeditiously) and any discovery. The parties may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within thirty (30) days after the close of hearings. The times specified in this Section 16.3 may be extended upon mutual agreement of the parties or by the arbitrator upon a showing of good cause. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. 16.4 Costs and Attorneys' Fees. Each party will bear its own costs and expenses in submitting and presenting its position with respect to any such dispute to the arbitrator, and the fees and expenses of such arbitration procedures, including the fees of the arbitrator will be shared equally by Buyer and Seller, except that a party seeking discovery shall reimburse the responding party the cost of production of documents (including search time and reproduction costs); provided, however, that if the arbitrator determines that the position taken in the dispute by the non-prevailing party taken as a whole is unreasonable, the nonprevailing party will bear all such fees and expenses, and reimburse the prevailing party for all of its reasonable costs and expenses in submitting and presenting its position. 16.5 Certain Limitations. The provisions of this Article 16 with respect to the resolution of disputes without litigation shall not apply to any dispute, controversy or claim arising out of the provisions of Section 11.1, or the Confidentiality Agreement, or to a party's seeking to proceed under Section 17.14, it being understood and agreed that in the event of a breach by either party of the provisions of Section 11.1, or the Confidentiality Agreement, or in the event that a party seeks to proceed under Section 17.14, the non- defaulting party shall be entitled to proceed to protect and enforce its rights by an action at law, a suit in equity or other appropriate proceeding, whether for specific enforcement of any agreement contained in Section 11.1, or the Confidentiality Agreement or in aid of the exercise of any power granted by Section 11.1, 17.14 or the Confidentiality Agreement or by law or otherwise. ARTICLE 17. MISCELLANEOUS 17.1 Notices. All notices, consents and other communications required or permitted hereunder shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been given when delivered in person or dispatched by electronic facsimile transfer (confirmed in writing by certified mail, concurrently dispatched) or one business day after having been dispatched for next-day delivery by a nationally recognized overnight courier service to the appropriate party at the address specified below: (a) If to Buyer, to: Mr. Donald K. Roberton Vice President-Telecommunications Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4627 and L. Russell Mitten, II, Esq. Vice President-General Counsel Citizens Utilities Company High Ridge Park Stamford, CT 06905 Facsimile No.: 203/329-4651 with a copy to: Jeffry L. Hardin, Esq. Fleischman and Walsh, L.L.P. 1400 Sixteenth Street, N.W. Washington, D.C. 20036 Facsimile No.: 202/745-0916 (b) If to Seller to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: President Facsimile No.: 501/661-0962 with a copy to: ALLTEL Corporation One Allied Drive Little Rock, AR 72203 Attn: General Counsel Facsimile No.: 501/661-0962 or to such other persons or address or addresses as any such party may from time to time designate for itself by like notice. 17.2 Press Releases. The parties shall consult with each other in preparing any press release, public announcement, news media response or other forth of release of information concerning this Agreement or the transactions contemplated hereby that is intended to provide such information to the news media or the public (a "Press Release"). Neither party shall issue or cause the publication of any such Press Release without the prior written consent of the other party; provided, however, that nothing herein will prohibit either party from issuing or causing publication of any such Press Release to the extent that such action is required by applicable Law or the rules of any national stock exchange applicable to such party or its Affiliates, in which case the party wishing to make such disclosure will, if practicable under the circumstances, notify the other party of the proposed time of issuance of such Press Release and consult with and allow the other party reasonable time to comment on such Press Release in advance of its issuance. 17.3 Expenses. Except as otherwise expressly provided herein, each party will pay any expenses (including, without limitation, attorneys' fees) incurred by it incident to this Agreement and in consummating the transactions provided for herein. All regulatory filing fees required pursuant to Sections 5.1, 5.4 and 5.5 shall be split equally between the parties. Each party will pay the appropriate costs and filing fees relating to any other applications required to be filed by such party. 17.4 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Buyer may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Seller; provided that Buyer may assign or delegate its rights and obligations under this Agreement without the prior written consent of Seller, to any directly or indirectly wholly owned subsidiary of Buyer provided such subsidiary assumes in writing all of the duties and obligations of Buyer hereunder, but no such assignment and assumption shall in any way operate to enlarge, alter or change any obligation of or due to Seller or relieve Buyer of its obligations hereunder and provided that Buyer agrees to cause such subsidiary to perform each of its agreements and covenants herein, and shall be jointly and severally liable for any non-performance thereof. Seller may not assign or delegate any of its rights or duties hereunder without the prior written consent of the Buyer. Upon the sale, assignment or transfer by Buyer of the Company, the Business or the Property to a non-Affiliate of Buyer not in the ordinary course of business of Buyer, Seller's representations and warranties and indemnification obligation for breach thereof shall terminate. Any assignment made in violation of the foregoing provisions shall be void. 17.5 Amendments. This Agreement may be amended or modified only by a subsequent writing signed by authorized representatives of both parties. 17.6 Captions. The captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement, nor as in any way limiting or amplifying the terms and provisions hereof. 17.7 Entire Agreement. The term "this Agreement" shall mean collectively this document, the Schedules hereto, any agreements expressly incorporated herein, and the Confidentiality Agreement. This Agreement supersedes and revokes any prior discussions and representations, other agreements, commitments, arrangements or understandings of any sort whatsoever, whether oral or written, that may have been made or entered into by the parties relating to the matters contemplated hereby. This Agreement constitutes the entire agreement by and among the parties, and there are no representations, warranties, agreements, commitments, arrangements or understandings except as expressly set forth herein. 17.8 Waiver. Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege available to each party at law or in equity. 17.9 Third Parties. Except as expressly provided herein, nothing contained in this Agreement is intended to confer upon any person, other than the parties and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 17.10 Counterparts. This Agreement may be executed in two or more counterparts, any or all of which shall constitute one and the same instrument. 17.11 Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of Delaware (except that no effect shall be given to any conflicts of law principles of the State of Delaware that would require the application of the laws of any other jurisdiction). In accordance with Title 6, Section 2708 of the Delaware Code Annotated, the parties agree to the jurisdiction of the courts of Delaware and to be served with legal process from any of such courts. 17.12 Further Assurances. From time to time, as and when requested by one of the parties, the other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate and make effective the transactions contemplated by this Agreement. 17.13 Certain Interpretive Matters and Definitions. (a) Unless the context otherwise requires, (i) all references to Sections, Articles or Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii) each term defined in this Agreement has the meaning so assigned to it, (iii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (iii) all references to the "knowledge of a party" will be deemed to refer to the actual knowledge of the Executive Officers of the party after reasonable investigation, and (iv) all references to a party's "best efforts" and references of like import will be deemed to refer to the best efforts of such party in accordance with reasonable commercial practice and without the incurrence of unreasonable expense. (b) No provision of this Agreement will be interpreted in favor of, or against, either of the parties by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of such provision or of this Agreement. 17.14 Specific Performance. In addition to all other rights and remedies available at law or in equity, any party hereto may pursue, to the fullest extent available, the remedy of specific performance in order to compel the other party to close pursuant to Article 8. IN WITNESS WHEREOF, the parties, acting through their duly authorized agents, have caused this Agreement to be duly executed and delivered as of the date first above written. ALLTEL CORPORATION By: /s/ Max E. Bobbitt ----------------------- Name: Max E. Bobbitt Title: President and Chief Operating Officer CITIZENS UTILITIES COMPANY By: /s/ Leonard Tow ------------------------ Name: Leonard Tow Title: Chairman of the Board and Chief Executive Officer EX-12 11 EXHIBIT NO. 12 CITIZENS UTILITIES COMPANY AND SUBSIDIARIES Statement Showing Computation of Ratio of Earnings to Fixed Charges for the year ended December 31, 1994 (dollars in thousands) A. Net income per Consolidated Statement of Income $143,997 B. Taxes based on income or profits $64,323 C. Earnings, before income taxes (A + B) $208,320 D. Fixed charges $77,458 E. Earnings before income taxes and fixed charges (C + D) $285,778 F. Ratio of Pre-tax Income to Net income (C / A) 1.45 G. Ratio of Earnings to Fixed charges (E / D) 3.69 EX-21 12 EXHIBIT NO. 21 21. SUBSIDIARIES (all wholly-owned, except where otherwise indicated) ------------ State of Name Incorporation ---- ------------- AAlert Paging Company Delaware Subsidiaries of AAlert Paging Company: AAlert Paging Company of Sacramento California AAlert Paging Company of San Diego California AAlert Paging Company of San Francisco California Blue Mountain Consolidated Water Company Pennsylvania Citizens Cable Company Delaware Citizens Communications Services, Inc. California Citizens Mohave Cellular Company Delaware Citizens Resources Company Delaware Citizens Telecommunications Company Delaware Citizens Telecommunications Company of California California Citizens Telecommunications Company of Idaho Delaware Citizens Telecommunications Company of Montana Delaware Citizens Telecommunications Company of New York New York Citizens Telecommunications Company of Oregon Delaware Citizens Telecommunications Company of Utah Delaware * Citizens Utilities Company of California California * Citizens Utilities Company of Illinois Illinois Citizens Utilities Company of Ohio Ohio * Citizens Utilities Company of Pennsylvania Pennsylvania Citizens Utilities Home Water Company Pennsylvania Citizens Utilities Rural Company, Inc. Delaware * Citizens Utilities Water Company of Pennsylvania Pennsylvania CU CapitalCorp Delaware Subsidiary of CU CapitalCorp: Electric Lightwave, Inc. Delaware Electric Energy Export Corporation Arizona * Flowing Wells, Inc. Indiana * Francis Land and Water Company California Glen Alsace Water Company Pennsylvania Havasu Water Company, Inc. Arizona * Lake Heritage Utilities, Inc. Pennsylvania * Larkfield Water Company California LGS Concord Corporation Minnesota LGS Natural Gas Company Louisiana LGS Securities, Inc. Louisiana Southwestern Capital Corporation Delaware Southwestern Investments, Inc. Nevada * Sun City Sewer Company Arizona * Sun City Water Company Arizona Sun City West Utilities Company Arizona * Tubac Valley Water Company, Inc. Arizona Utilities Advances Corporation New York Valley Utility Company Ohio * Subsidiaries subject to the Indenture of Mortgage and Deed of Trust dated as of March 1, 1947, as supplemented. EX-22 13 EXHIBIT No. 22 Independent Auditor's Consent ----------------------------- The Board of Directors Citizens Utilities Company: We consent to the incorporation by reference in the Registration Statement (No. 33-37602) on Form S-8, in the Registration Statement (No. 33-39566) on Form S-8, in the Registration Statement (No. 33-39455) on Form S-8, in the Registration Statement (No. 33-41682) on Form S-8, in the Registration Statement (No. 33-42972) on Form S-8, in the Registration Statement (No. 33-48683) on Form S-8, in the Registration Statement (No. 33-54376) on Form S-8, in the Registration Statement (No. 33-44069) on Form S-3, in the Registration Statement (No. 33-44068) on Form S-3 in the Registration Statement (No. 33-51529) on Form S-3 and in the Registration Statement (No. 33-55075) on Form S-3 of Citizens Utilities Company of our report dated March 8, 1995, relating to the consolidated balance sheets of Citizens Utilities Company and subsidiaries as of December 31, 1994, 1993, and 1992 and the related consolidated statements of income, shareholders' equity, and cash flows for the years then ended, which report appears in the December 31, 1994 annual report on Form 10-K of Citizens Utilities Company. KPMG PEAT MARWICK LLP New York, New York March 15, 1995 EX-24 14 EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 7, 1995 /s/ Robert A. Stanger --------------------- Robert A. Stanger EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 7, 1995 /s/ Norman I. Botwinik ---------------------- Norman I. Botwinik EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 27, 1995 /s/ Aaron I. Fleishman ----------------------- Aaron I. Fleishman EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 7, 1995 /s/ Stanley Harfenist ---------------------- Stanley Harfenist EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 17, 1995 /s/ Andrew N. Heine ---------------------- Andrew N. Heine EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 7, 1995 /s/ Elwood A. Rickless ---------------------- Elwood A. Rickless EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 7, 1995 /s/ John L. Schroeder ---------------------- John L. Schroeder EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 7, 1995 /s/ Robert D. Siff ---------------------- Robert D. Siff EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 8, 1995 /s/ Edwin Tornberg ---------------------- Edwin Tornberg EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 7, 1995 /s/ Leonard Tow ---------------------- Leonard Tow EXHIBIT No. 24 P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Citizens Utilities Company constitutes and appoints Robert J. DeSantis and Livingston E. Ross, jointly and severally, for him in any and all capacities to sign on Form 10-K for the fiscal year 1994 for Citizens Utilities Company, and any and all amendments to said Form 10-K, and to file the same, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof. February 7, 1995 /s/ Claire Tow ---------------------- Claire Tow EX-27 15
5 12-MOS DEC-31-1994 DEC-31-1994 14,224 433,829 169,223 (2,428) 18,330 314,054 3,583,723 1,014,068 3,576,566 879,177 994,189 48,368 0 0 1,108,538 3,576,566 916,014 916,014 202,995 484,895 0 0 72,744 208,320 64,323 143,997 0 0 0 143,997 0.77 0.77
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