Board of Directors Meeting Minutes - December 7, 1998

A meeting of the Board of Directors of the Universal Service Administrative Company (USAC) was held by conference call on Monday, December 7, 1998. The meeting was called to order at 4:05 p.m. EDST by Ms. Cheryl Parrino, CEO of USAC, on behalf of the Chair, Ms. Lisa Rosenblum. Ms. Cathy Howard, Executive Assistant to Ms. Cheryl Parrino called the roll for Mr. Robert Haga, Acting Secretary.

1. Merger Issues – Mr. Thurber reviewed the latest requests of the Rural Health Care Corporation (RHCC) regarding the pending merger agreement. He noted that these requests would significantly change the agreement. RHCC has requested that language be included in the merger agreement that would require USAC to expand the legal due diligence process currently being conducted to include an audited due diligence process to examine financial matters including the books, records, assets, liabilities, and results of operations of the other merger parties, and to then report to such parties the results of that examination. Mr. Thurber explained that this request would be impractical for two reasons. First, this latest proposal would require USAC to do much more work now, at ratepayer expense, which would eventually have to be done again anyway per the FCC order. The structure of that ultimate audit for the Federal Communications Commission (FCC) is not yet known, therefore, it would be difficult to carry forward the value of any work done now. Second, their request would eliminate the customary certifications or representations and warranties expected from RHCC with respect to the completeness and accuracy of the documents they provide as part of the due diligence process.
   
   Ms. Parrino stated that conversations have taken place between USAC’s and RHCC’s counsel as well as with the RHCC Chairman, Mr. Sanford Greenberg. The consequences of RHCC not signing the agreement as it now stands were communicated. Ms. Rosenblum volunteered to call Mr. Greenberg and try to get to the reasoning behind these requests, but the Board members felt that if anyone should talk to him, it should be the Chairman of the FCC as the FCC has already issued the merger order and the merger is going ahead whether RHCC signs on or not. Ms. Ouye also stated that granting these latest requests would negatively impact the programmatic side of the Schools and Libraries Corporation as it is in the process of sending out commitment letters.
   
   After further discussion, the consensus of the Board members was that USAC has made several concessions to the Chairman of the RHCC Board and that USAC is not willing to make any additional concessions.
   
   

There being no further business to attend to, Ms. Rosenblum adjourned the meeting at 4:32 p.m. EDST.

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Robert W. Haga
Acting Secretary/Treasurer

December 15, 1998
Date