Exhibit 10.24
STOCK REDEMPTION AGREEMENT
dated as of November 10, 2005
among
CITIZENS UTILITIES RURAL COMPANY, INC.
and
THE RURAL TELEPHONE BANK
STOCK REDEMPTION AGREEMENT (this "Agreement,") dated as of
November 10, 2005, is between the RURAL TELEPHONE BANK (the "Bank") a
corporation existing under the laws of the United States of America,
acting through the Chairman of the Bank and CITIZENS UTILITIES RURAL
COMPANY, INC. (the "Holder,") a corporation existing under the laws of
the State of Delaware.
WHEREAS, the Board of Directors of the Bank has authorized the liquidation
and dissolution of the Bank and approved a plan of liquidation in a Resolution
adopted at its board meeting held on August 4, 2005;
WHEREAS, the Bank and the United States of America ("Government,") acting
through the Rural Utilities Service ("RUS,") have entered into a Loan Transfer
Agreement, dated as of August 4, 2005, pursuant to which the Bank has conveyed
to RUS the Bank's liquidating account loan portfolio as part of the
consideration for RUS' agreement to return all of its Class A Stock to the Bank
for redemption and cancellation;
WHEREAS, upon transfer to the Government, no further advances will be made
on the Liquidating Account Loans, as hereinafter defined;
WHEREAS, pursuant to Section 411 of the Act (defined herein), the Bank will
pay all of its liabilities and will redeem and cancel all of its outstanding
Class A Stock;
WHEREAS, the Bank has converted the paper stock certificates of its
outstanding shares of Class B Stock and Class C Stock to electronic "book-entry"
certificates and has canceled its printed stock certificates;
WHEREAS, pursuant to the Board of Directors' plan of liquidation, the Bank
is required to redeem all of its outstanding Class B Stock and Class C Stock;
WHEREAS, pursuant to Sections 2.2 and 2.4 of the Bylaws of the Bank, as
amended, the Holder is the owner of certain shares of Class B Stock and/or Class
C Stock of the Bank; and
WHEREAS, the Holder has heretofore adopted, executed, and returned the
Redemption Resolution (defined herein), authorizing the undersigned to execute
and deliver this Agreement to the Bank on behalf of the Holder;
THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties agree and bind themselves as follows:
ARTICLE I
DEFINITIONS
"Act" means Title IV of the Rural Electrification Act of 1936, 7 U.S.C. ss.
941 et seq., as amended.
"Agreement" means this Stock Redemption Agreement between the Bank and the
Holder.
2
"Class A Stock" means all of the shares of Class A Stock of the Bank issued
and outstanding pursuant to Section 406(c) of the Act.
"Class B Stock" means all of the shares of Class B Stock of the Bank issued
and outstanding pursuant to Section 406(d) of the Act.
"Class C Stock" means all of the shares of Class C Stock of the Bank issued
and outstanding pursuant to Section 406(e) of the Act.
"Financing Account Loan(s)" mean all loans of the Holder owed to or held by
the Bank on or after October 1, 1991.
"Liquidating Account" means the Rural Telephone Bank Liquidating Account,
as identified by Treasury account code 12-4231-0-3-452.
"Liquidating Account Loan(s)" mean all loans of the Holder owed to or held
by the Bank before October 1, 1991, as listed on Schedule I.
"Loan Transfer Agreement" means the Loan Transfer Agreement, dated as of
August 4, 2005, between the United States of America, acting through the
Administrator of RUS, successor to the Rural Electrification Administration, and
the Bank.
"Redemption Resolution" means that certain resolution passed by the board
of directors or other governing body of the Holder which authorizes the
execution and delivery of this Agreement by the undersigned on behalf of the
Holder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE HOLDER
Section 2.1 Representations and Warranties. The Holder does hereby
represent and warrant as follows:
(a) The Holder is the lawful owner of Class B Stock and/or Class C Stock
of the Bank in the amounts listed on Schedule II hereto.
(b) All of the information on Schedule II hereto is true and correct.
(c) The undersigned signatory for the Holder is duly authorized by the
Holder to execute and deliver this Agreement on behalf of the Holder
and to bind the Holder hereunder.
(d) The Redemption Resolution has been duly adopted by the board of
directors or other governing body of the Holder and is currently in
full force and effect and has not been repealed, modified, or amended
by the Holder.
3
ARTICLE III
REDEMPTION OF CLASS B STOCK AND CLASS C STOCK
Section 3.1 Delivery of Shares. The Holder hereby delivers all of its Class
B Stock and/or Class C Stock of the Bank, in the amount(s) specified on Schedule
II hereto, for redemption and cancellation.
Section 3.2 Redemption of Class B Stock. From funds in the Liquidating
Account, the Bank shall redeem at par all of the Holder's Class B Stock, in the
amount specified in Schedule II hereto, pursuant to the terms of Section 411 of
the Act and Section 2.2 of the Bylaws and shall cancel such Class B Stock.
Section 3.3 Redemption of Class C Stock. Pursuant to Section 411 of the Act
and Section 2.2 of the Bylaws, after payment of all of the Bank's liabilities,
redemption of all outstanding Class A Stock, redemption of outstanding Class B
Stock and monetary set aside for any unredeemed Class B Stock, all of the
Holder's Class C Stock shall be redeemed from the remaining funds in the
Liquidating Account as follows:
(a) If the funds remaining in the Liquidating Account are sufficient to
redeem all outstanding Class C Stock at par, the Class C Stock shall
be redeemed at par, as specified in Schedule II hereto; or
(b) If the funds remaining in the Liquidating Account are insufficient to
redeem all outstanding Class C Stock at par, the Class C Stock shall
be redeemed, as determined by the following formula:
(Cash Remainder in Liquidating Account x Holder's number of Class C Stock)
Total outstanding number of Class C Stock
The Bank shall thereafter cancel such Class C Stock.
Section 3.4 Payment. All amounts to be paid to the Holder of Class B Stock
and Class C Stock shall be paid as follows:
(a) Via wire transfer to the banking institution and account specified by
the Holder on Schedule II hereto;
(b) No payments shall be made hereunder until one hundred and twenty (120)
days from the date hereof; the Bank shall use reasonable best efforts
to make payments on properly documented and undisputed claims received
by such date within sixty (60) days thereafter; and
(c) Notwithstanding Paragraph 3.4(b), the Holder shall have no claim, with
respect to the redemption of Class B or C Stock, to any amount other
than that provided in Sections 3.2 and 3.3 hereof, and shall not be
entitled to any interest or claims for payment delays.
4
Section 3.5 Release of Claims. By executing this Agreement, the Holder
hereby acknowledges and agrees that the redemption and cancellation by the Bank
of the Class B Stock and Class C Stock held by the Holder as contemplated by
this Agreement constitutes the full and complete satisfaction by the Bank of all
of its obligations with respect to the redemption, payment and cancellation of
the Class B Stock and Class C Stock owned by the Holder.
ARTICLE IV
NO FURTHER ADVANCES
Section 4.1 Liquidating Account. The Holder acknowledges and agrees that
the Government, upon acquisition of the Bank's loan portfolio, shall make no
further advances on the Liquidating Account Loan(s) and that unadvanced
Liquidating Account Loan funds are hereby rescinded.
Section 4.2 Unadvanced Financing Account Loan Funds for Stock Purchases.
The Holder acknowledges and agrees that the Government, upon liquidation or
dissolution of the Bank, shall make no further advances on the portion of the
Financing Account Loan(s) for purchases of Class B Stock and that such funds may
be rescinded at the discretion of the Government.
ARTICLE V
MISCELLANEOUS
Section 5.1 Entire Agreement. This Agreement, together with the attached
documents, which are incorporated herein, embodies the entire agreement of the
parties hereto in relation to the subject matter herein and supersedes all prior
understandings or agreements, oral or written, between the parties.
Section 5.2 Headings. The headings and subheadings contained in this
Agreement, except the terms identified for definition in Article I and elsewhere
in this Agreement, are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or any provision hereof.
Section 5.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
Section 5.4 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE FEDERAL LAW
OF THE UNITED STATES OF AMERICA, AND IN THE ABSENCE OF CONTROLLING FEDERAL LAW,
IN ACCORDANCE WITH THE LAWS OF THE DISTRICT OF COLUMBIA.
Section 5.5 Successors. All terms and conditions of this Agreement shall be
binding on the successors and assigns of the Bank and the Holder. Except as
5
otherwise specifically provided in this Agreement, nothing expressed or referred
to in this Agreement is intended or shall be construed to give any person other
than the Bank or the Holder, any legal or equitable right, remedy or claim under
or with respect to this Agreement or any provisions contained herein, it being
the intention of the parties hereto that this Agreement, the obligations and
statements of responsibilities hereunder, and all other conditions and
provisions hereof are for the sole and exclusive benefit of the Bank and the
Holder.
Section 5.6 Modification; Assignment. No amendment or other modification,
or assignment of any part of this Agreement shall be effective except pursuant
to a written agreement subscribed by the duly authorized representatives of the
parties hereto.
Section 5.7 Remedies. The Bank may pursue all rights and remedies available
to the Bank in connection with this Agreement, including, but not limited to, a
suit for specific performance, injunctive relief or damages in connection with
any fraud, misrepresentation, misstatement made by the Holder in this Agreement
(including Schedule II hereto).
Section 5.8 Notice. All notices and other communications hereunder to be
made to the parties shall be in writing and shall be addressed as specified
below as appropriate. The address, telephone number, or facsimile number for
either party may be changed at any time and from time to time upon written
notice given by such changing party to the other party. A properly addressed
notice or other communication shall be deemed to have been delivered at the time
it is sent by facsimile (fax) transmission, provided that the original of such
faxed notice or other communication shall have been received within five (5)
business days.
The Bank
United States Department of Agriculture
1400 Independence Avenue, S.W.
Washington, D.C. 20250-1500
Attention: Governor
Fax: (202) 720-0810
The Holder
As listed on Schedule II
Section 5.9 Severability. If any provision of this Agreement is declared
invalid or unenforceable, then, to the extent possible, all of the remaining
provisions of this Agreement shall remain in full force and effect and shall be
binding upon the parties hereto.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CITIZENS UTILITIES RURAL COMPANY, INC.
By: /s/ Donald B. Armour
----------------------
Name: Donald B. Armour
Title: VP & Treasurer
RURAL TELEPHONE BANK
By: /s/ Thomas C. Dorr
---------------------------------------
as Chairman of the Rural Telephone Bank
7
Schedule 1
RURAL TELEPHONE BANK STOCK LIQUIDATION
PROCEEDS TO CITIZENS COMMUNICATIONS COMPANY SUBSIDIARIES
Total RTB
LEGAL ENTITY OF RECORD Proceeds
- -----------------------------------------------------------------------
Frontier Communications of Ausable Valley, Inc. $ 3,008,208
Frontier Communications of Canton, LLC 560,871
Frontier Communications of Oswayo River LLC 156,030
Frontier Communications of Alabama, LLC 1,295,536
Frontier Communications of Illinois, Inc. 936,412
Frontier Communications of Lakeside, Inc. 1,000
Frontier Communications - Prairie, Inc. 1,000
Frontier Communications of Thorntown, Inc. 107,000
Frontier Communications of Mondovi LLC 363,976
Frontier Communications of Viroqua LLC 58,000
Frontier Communications of Lamar County, LLC 83,904
Frontier Communications - Midland, Inc. 1,005,315
Frontier Communications of Seneca-Gorham, Inc. 1,731,138
Frontier Communications- St. Croix LLC 1,943,360
Frontier Communications of Breezewood, LLC 878,221
Frontier Communications of Fairmont, LLC 493,623
Frontier Communications of Mississippi, Inc. 642,677
Frontier Communications of Michigan, Inc. 1,742,267
Frontier Communications of The South, LLC 8,562,528
Citizens Telecommunications Company of West Virginia 2,949,360
Rhinelander Telephone LLC 402,062
Rhinelander Telephone LLC 2,772,267
Rhinelander Telephone LLC 572,214
Frontier Communications of Pennsylvania, LLC 1,467,000
Citizens Utilities Rural Company, Inc. 31,880,076
Ogden Telephone Company 1,004,728
$64,618,773